AGENCY AGREEMENT
December 30, 2002
World Heart Corporation
0 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxx
Xxxxxx
X0X 0X0
Attention: Xx. Xxxxxxxx Xxxxxx, President and Chief Executive Officer
Dear Sirs/Mesdames:
Re: Private Placement of Common Shares
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We understand that:
(a) World Heart Corporation (the "Corporation") is authorized to issue an
unlimited number of Common Shares without par value(as defined
hereinafter) and an unlimited number of preferred shares without par
value, issuable in series;
(b) as at December 30, 2002, 17,970,127 Common Shares and 1,374,570 Series
A convertible preferred shares were outstanding as fully paid and
non-assessable shares and an aggregate of 14,222,792 Common Shares
were reserved for issue pursuant to outstanding options, warrants,
share incentive plans, convertible and exchangeable securities and
other rights to acquire Common Shares;
(c) the Corporation proposes to issue and sell up to an aggregate of
2,343,750 (the "Offered Units") Offered Units at a price of $1.28 per
Offered Unit for aggregate gross proceeds to the Corporation of up to
$3,000,000 on the terms and subject to the conditions contained
hereinafter; and
(d) we understand that each Offered Unit is to consist of one Common Share
and one Common Share purchase warrant (the "Warrant") of the
Corporation and that each Warrant entitles the holder to purchase one
Common Share at an exercise price of $1.60 per Common Share for a
period of five years from the Closing Date.
Based upon our understanding set out above and upon the terms and subject
to the conditions contained hereinafter, upon the acceptance hereof by the
Corporation, the Corporation hereby appoints the Agent (as hereinafter defined)
to act as the agent of the Corporation to solicit, on a "best efforts" basis,
offers to purchase the Offered Units, and the Agent hereby agrees to act as such
agent. It is understood and agreed that the Agent is under no obligation to
purchase any Offered Units, although it may subscribe for and purchase Offered
Units if it so desires.
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The "Closing" whenever used herein, shall be a reference to a Closing of the
transaction herein contemplated related to the offering of the Units. The first
Closing shall be at 10:00 a.m. (EST) on December 30, 2002 or such earlier or
later date as we and the Corporation may agree upon in writing. Subject to the
first Closing taking place as aforesaid, subsequent Closings may take place at
such time or times as we and the Corporation may agree.
The terms and conditions of this Agreement are as follows:
1. Definitions and Interpretation:
(a) Definitions: Whenever used in this Agreement:
(i) "1933 Act" means the United States Securities Act of 1933, as
amended;
(ii) "Agent" means Northern Securities Inc.;
(iii) "Agreement" means the agreement resulting from the acceptance by
the Corporation of the offer made by the Agent herein, as amended
or supplemented from time to time;
(iv) "Ancillary Documents" means all agreements and documents to be
executed and delivered by the Corporation in connection with the
transactions contemplated by this Agreement;
(v) "Auditors" means PriceWaterhouseCoopers LLP, Chartered
Accountants, the auditors of the Corporation;
(vi) "Broker's Shares" means the Common Shares to be issued on the
exercise of the Broker's Warrants;
(vii) "Broker's Warrants" means the broker's warrants, each Broker's
Warrant entitling the Agent to acquire one Broker's Share and one
Compensation Warrant at any time prior to 5:00 p.m. (Toronto
time) on the date which is 24 months after the Closing Date at an
exercise price of $1.60 per Broker's Warrant;
(viii) "Business" means the business of the Corporation as a medical
device company currently focused on the development and
commercialization of pulsatile ventricular assist devices;
(ix) "Business Day" means a day which is not a Saturday, a Sunday or a
statutory or civic holiday in Toronto, Ontario;
(x) "Closing" means the purchase and sale of the Offered Units
subscribed for under the Subscription Agreements;
(xi) "Closing Date" means, in the first instance, December 30, 2002,
but the parties acknowledge that Closing may take place in two or
more tranches on or after the date of Closing providing that the
final tranche will take place on or before January 10th, 2003.
the date of Closing of each such tranche shall
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be deemed to be the Closing Date in respect to the securities
issued on such date;
(xii) "Closing Time" means 10:00 a.m. (Toronto time) on the Closing
Date or at such other earlier or later time as the Corporation
and the Agent may mutually agree upon;
(xiii) "Common Shares" means the common shares which the Corporation
is authorized to issue as constituted on the date hereof;
(xiv) "Compensation Warrants" means the compensation warrants, each
Compensation Warrant entitling the holder to acquire one Common
Share at a price of $1.60 for a period of five years from the
Closing Date;
(xv) "Compensation Warrant Shares" means the Common Shares issuable
upon the exercise of the Compensation Warrants;
(xvi) "Copyright" means any copyright whether registered or not
relating to or used in connection with the Business owned by or
licensed (expressly or implied) to the Corporation;
(xvii) "Corporation" means World Heart Corporation, a corporation
incorporated under the Business Corporations Act (Ontario);
(xviii) "Engagement Letter" means the engagement letter dated December
13, 2002, between the Corporation and the Agent;
(xix) "Industrial Designs" means any industrial design or similar
rights, whether registered or subject to pending applications,
relating to the Business, owned by or licensed (expressly or
implied) to the Corporation;
(xx) "Information" means all information regarding the Corporation
that is, or becomes, publicly available together with all
information prepared by the Corporation and provided to the Agent
or to potential purchasers of Offered Units;
(xxi) "Intellectual Property Rights" means all Patent Rights,
Trade-marks, Copyrights, Industrial Designs, and Technical
Information (including any claims or rights to xxx for past
infringement of same), relating to the Business owned by or
licensed to the Corporation;
(xxii) "Offered Units" means the units, each consisting of one Common
Share and one Warrant, which the Agent has agreed to offer to
sell on a best efforts agency basis in accordance with the
provisions of this Agreement;
(xxiii) "Offering" means the offering for sale by the Corporation on a
private placement basis of up to an aggregate of 2,343,750
Offered Units at a price of $1.28 per Offered Unit;
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(xxiv) "Offering Jurisdictions" means the Provinces of British
Columbia and Ontario and such other jurisdictions outside of
Canada as may be determined by the Corporation and the Agent;
(xxv) "Patent Rights" means all patents and inventions relating to the
Business, and pending applications thereon, and patents which may
be issued out of pending applications (including divisions,
reissues, renewals, re-examinations, continuations,
continuations-in-part and extensions), which may be applied for
or registered in any jurisdiction, owned or controlled by, or
licensed (expressly or implied) to, the Corporation;
(xxvi) "Person" means an individual, a partnership, a corporation, a
trust, an unincorporated organization, a government or an agency
or political subdivision thereof or any other entity of any
nature or kind whatsoever;
(xxvii) "Principal Subsidiaries" means World Heart Inc. and 2007262
Ontario Inc.(50% of the shares of which are owned by the
Corporation and New Generation Biotech (Equity) Fund Inc.;
(xxviii) "Purchasers" means the purchasers of Offered Units
collectively;
(xxix) "Securities Laws" means the securities legislation and
regulations of, and the policies, rules, orders and
interpretation notes of the applicable securities regulatory
authorities of the Offering Jurisdictions;
(xxx) "Subscription Agreement" means the subscription agreement to be
entered into by the Corporation and each of the Purchasers with
respect to the purchase of Offered Units;
(xxxi) "Subscription Price" means the price to be paid by the
Purchasers for each Offered Unit under the Offering, being $1.28
per Offered Unit;
(xxxii) "Technical Information" means all know-how, trade secrets, and
related technical knowledge owned by or licensed (expressly or
implied), to the Corporation relating to the Business or arising
from the projects of the Corporation, including, without
limitation:
(A) all trade secrets, know-how, show-how, confidential
information or information with respect to inventions,
processes and business methods;
(B) all information of a scientific, technical or business
nature, regardless of its form;
(C) all documentation with respect to research, development,
demonstration or engineering work;
(D) all information that can be or is used to define a design or
process, or to procure, produce, support or operate
materials or equipment;
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(E) all information regarding methods of production;
(F) all other drawings, blueprints, patterns, plans, flow
charts, equipment part lists, computer software and
procedures, specifications, protocols, data structures,
formulas, designs, technical data, descriptions, related
instruction manuals, records, passwords, and procedures; and
(G) all data and databases, whether registered or unregistered;
(xxxiii) "Trade-marks" means the trade-marks, trade-names, domain names,
designs, logos and other commercial symbols, whether registered or
not, and including the goodwill associated therewith, which are owned
by or licensed to the Corporation in connection with the Business;
(xxxiv) "Warrant" means a Common Share purchase warrant of the Corporation
entitling the holder to purchase one Common Share at Cdn $1.60 for a
period of five years from the date of issue;
(xxxv) "Warrant Share" means the Common Shares issuable upon the exercise of
the Warrants.
(b) Other Defined Terms: Whenever used in this Agreement, the words and
terms "affiliate", "associate", "misrepresentation", "material fact",
"material change", "senior officer" and "subsidiary" shall have the
meaning given to such word or term in the Securities Act (Ontario)
unless specifically provided otherwise herein.
(c) Plural and Gender: Whenever used in this Agreement, words importing
the singular number only shall include the plural and vice versa and
words importing the masculine gender shall include the feminine gender
and neuter.
(d) Currency: All references to monetary amounts in this Agreement are to
lawful money of Canada.
(e) Knowledge: "to the best knowledge of the Corporation" (or similar
expressions) means the knowledge of the senior officers of the
Corporation after having made and caused to be made such enquiries of
the records and management employees of the Corporation and its
Principal Subsidiaries who are reasonably likely to have knowledge of
the relevant matter, as may be necessary to obtain informed knowledge.
2. The Offering:
(a) Sale on Exempt Basis: The Agent will use its best efforts to arrange
for Purchasers in the Offering Jurisdictions. The Agent shall offer
for sale on behalf of the Corporation the Offered Units:
(i) in the Province of Ontario; and
(ii) outside of Canada and of the United States in compliance with all
of the laws of the jurisdictions in which the relevant Purchasers
are resident, provided
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that the laws of the jurisdiction in which the relevant
Purchasers are resident do not require the Corporation to make
any filings or seek any approval of any kind whatsoever from any
regulatory authority of any kind whatsoever; and
only to such Purchasers and in such manner so that, pursuant to the
provisions of all such applicable laws, no prospectus or other similar
document need be filed or delivered and no ongoing reporting
obligations of any kind are imposed on the Corporation in connection
therewith.
(b) Appointment of Co-agents and Sub-agents. The Corporation agrees that,
subject to the consent of the Corporation, such consent not to be
unreasonably withheld, the Agent has the right to invite one or more
investment dealers to form an agency group to participate in the
soliciting of offers to purchase Offered Units. The Agent shall have
the exclusive right to control all compensation arrangements between
the members of the agency group.
(c) Covenants of the Agent. The Agent covenants with the Corporation that:
(i) it will comply with all applicable Securities Laws of each
Offering Jurisdiction in which it solicits or procures subscriptions
for Offered Units in connection with the Offering; (ii) it will not
solicit or procure subscriptions for Offered Units so as to require
the registration thereof or the filing of a prospectus or similar
document with respect thereto under the laws of any jurisdiction; and
(iii) it will obtain from each Purchaser an executed Subscription
Agreement in a form reasonably acceptable to the Corporation and to
the Agent. The Agent represents and warrants that it and all co-agents
and sub-agents are qualified to so act in the Offering Jurisdictions
in which it solicits or procures subscriptions for the Offered Units.
3. Due Diligence: The Corporation shall allow the Agent to conduct all due
diligence investigations which the Agent may reasonably determine,
including meeting with senior management of the Corporation and the
Auditors, as is appropriate in connection with the Offering.
4. Deliveries By Closing Time:
(a) Deliveries: By or at the Closing Time:
(i) all actions required to be taken by or on behalf of the
Corporation including, without limitation, the passing of all
required resolutions of the directors of the Corporation, shall
have occurred in order to complete all of the transactions
contemplated by this Agreement, including, without limitation, to
create and issue the Offered Units and the Broker's Warrants and
to reserve for issue the Warrant Shares, Broker's Shares and
Compensation Warrants, and a certified copy of all such
resolutions shall have been delivered by the Corporation to the
Agent;
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(ii) the Corporation shall have delivered or caused to be delivered to
the Agent (all in form and substance satisfactory to the Agent):
(A) favourable legal opinions of counsel to the Corporation
addressed to, among others, the Agent and the Purchasers
with respect to the laws of the Province of Ontario in the
form attached hereto as schedule A;
(B) certificates dated the Closing Date, signed by an
appropriate officer of the Corporation, addressed to, among
others, the Agent and the Purchasers, with respect to the
articles and by-laws of the Corporation, the resolutions of
the directors of the Corporation and any other corporate
action taken relating to this Agreement and to the creation,
allotment, issue and sale of the Offered Units and specimen
signatures of signing officers of the Corporation and with
respect to such other matters as the Agent may reasonably
request;
(C) a certificate dated the Closing Date, addressed to, among
others, the Agent and the Purchasers, signed by the
President and Chief Executive Officer of the Corporation or
any other senior officer of the Corporation acceptable to
the Agent substantially in the form attached hereto as
Schedule B;
(D) definitive certificates representing the Common Shares and
Warrants comprising the Offered Units registered in the
names of the Purchasers or in such other names as the
Purchasers or the Agent may direct;
(E) a definitive certificate representing the Broker's Warrants
in the form attached hereto as Schedule C, registered in the
name of the Agent or such other name as the Agent may
direct;
(F) payment of the fee payable by the Corporation to the Agent
in accordance with section 6 hereof and the expenses payable
by the Corporation in accordance with section 11 hereof by a
direction to the Agent to withhold from the certified cheque
or bank draft referred to below in paragraph 4(a)(iii)
hereof, (i) the fee payable by the Corporation to the Agent
as provided in section 6 of this Agreement against delivery
from the Agent to the Corporation of a receipt for such fee,
(ii) the expenses (excluding legal expenses) payable by the
Corporation to the Agent as provided in section 11 of this
Agreement against delivery from the Agent to the Corporation
of a receipt for such expenses, and (iii) the legal expenses
payable by the Corporation to counsel for the Agent as
provided in section 11 of this Agreement against delivery
from such legal counsel to the Corporation of a receipt for
such legal expenses;
(G) such further documents as may be contemplated by this
Agreement or as the Agent may reasonably require; and
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(iii) the Agent shall have delivered or cause to be delivered to the
Corporation (all in form and substance satisfactory to the
Corporation):
(A) payment of the purchase price for the Offered Units less the
amount withheld for the fee payable to the Agent pursuant to
section 6 hereof and the expenses payable pursuant to
section 11 hereof, by certified cheque or bank draft payable
to the Corporation or as the Corporation may otherwise
direct in writing against delivery from the Corporation to
the Agent of a receipt for the purchase price for the
Offered Units; and
(B) such further documents as may be contemplated by this
Agreement or as the Corporation may reasonably require.
5. Closing:
(a) Closing: The Closing provided for in this Agreement shall be completed
at the office of counsel for the Corporation, XxXxxxxx Xxxxxxxx LLP,
Suite 1400, 00 Xxxxx Xxxxxx, Xxxxxx Xxxxxxx, X0X 0X0 at the Closing
Time on the Closing Date or at such other time and place on the
Closing Date as the parties may agree.
(b) Conditions of Closing: The following are conditions precedent to the
obligations of the Agent to complete the Closing and of the Purchasers
to purchase the Offered Units, which conditions the Corporation
covenants and agrees to use its best efforts to fulfil within the
times set out herein therefor, and which conditions may be waived in
writing in whole or in part by the Agent:
(i) receipt by the Agent of the documents set forth in paragraph
4(a)(ii) of this Agreement; and
(ii) the Agent not having previously terminated its obligations
pursuant to this Agreement.
6. Fees:
(a) Fee: In consideration of the agreement of the Agent to act as agent in
respect of the Offering, and in consideration of the services to be
rendered by the Agent in connection therewith, including, without
limitation:
(i) acting as agent of the Corporation to solicit, on a best efforts
basis, offers to purchase the Offered Units;
(ii) participating in the preparation of the form of Subscription
Agreement; and
(iii) advising the Corporation with respect to the private placement of
the Offered Units;
the Corporation shall pay to the Agent at the Closing Time against
receipt of payment of the aggregate purchase price for the Offered
Units, a fee equal to eight per cent (8%) of the aggregate purchase
price for the Offered Units.
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(b) Broker's Warrants: In addition to the fee, as additional consideration
for the performance of its obligations hereunder, the Corporation
shall issue to the Agent at Closing, that number of Broker's Warrants
as is equal to ten per cent (10%) of the number of Offered Units sold,
in form and substance satisfactory to the Agent.
7. Representations and Warranties: The Corporation hereby represents and
warrants to the Agent and the Purchasers and acknowledges that the Agent
and the Purchasers are relying upon such representations and warranties in
completing the Closing, as follows:
(a) the Corporation and each of the Principal Subsidiaries (i) has been
incorporated and organized and are validly subsisting under the laws
of their respective jurisdictions of incorporation and (ii) has all
requisite corporate power and authority and are qualified or
authorized to carry on their respective businesses as now conducted
and to own, lease and operate their respective property and assets in
all jurisdictions where such qualification or authorization is
required and (iii) the Corporation has the requisite corporate power
and authority to enter into, execute and deliver under this Agreement,
the Broker's Warrants and each of the Ancillary Documents to which
they are a party and to carry out their respective obligations
hereunder and thereunder;
(b) the Corporation is authorized to issue an unlimited number of Common
Shares and an unlimited number of preferred shares issuable in series,
of which, as of the date hereof, 17,970,127 Common Shares and
1,374,570 Series A convertible preferred shares are issued and
outstanding as fully paid and non-assessable shares;
(c) no Person has any agreement, option, right or privilege (whether
pre-emptive, contractual or otherwise) capable of becoming an
agreement for the purchase, acquisition, subscription for or issue of
any of the unissued shares or other securities of the Corporation,
except as set out in Schedule 7(c) hereto;
(d) all of the outstanding shares of the Principal Subsidiaries are fully
paid and non-assessable and the Corporation beneficially owns,
directly or indirectly, all of the issued and outstanding shares in
the capital of such companies, free and clear of all mortgages, liens,
charges, pledges, security interests, encumbrances, claims or demands
of any kind whatsoever, except with respect to a general security
agreement in favour of The Rose Corporation, which is not in default
at the date hereof and no Person has any agreement, option, right or
privilege (whether pre-emptive, contractual or otherwise) capable of
becoming an agreement for the purchase, acquisition, subscription for
or issue of any of the unissued shares or other securities of such
companies;
(e) the minute books of the Corporation, which have been made available to
the Agent or their counsel, are complete and accurate in all material
respects and the excerpts of the corporate records of each of the
Principal Subsidiaries which have been made available to the Agent or
their counsel are accurate in all material respects;
(f) the issue of the Offered Units will not be subject to any pre-emptive
right or other contractual right to purchase securities granted by the
Corporation except for a pre-
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emptive right by Xxxxxxx Lifesciences LLC which has waived such right
and consented to the transactions contemplated herein;
(g) all necessary corporate action has been taken to authorize the issue
and sale of, and the delivery of certificates representing, the
Offered Units and, upon payment of the requisite consideration
therefor, the Offered Units will be validly issued as fully paid and
non-assessable;
(h) by the Closing Time, the Offered Units and the Broker's Warrants will
be created and issued and the Warrant Shares, Broker's Shares and
Compensation Warrant Shares will be allotted and reserved for issue
upon the exercise of the Warrants, Broker's Warrants and Compensation
Warrant Shares and when issued will be fully paid and non-assessable
shares of the Corporation;
(i) the offering and sale of the Offered Units, the compliance by the
Corporation with the provisions of this Agreement and the consummation
of the transactions contemplated herein do not (i) require the
consent, approval or authorization of, or registration or
qualification with, any governmental authority, securities regulatory
authority or other Person, except (A) such as have been obtained, or
(B) such as may be required (and shall be obtained as provided in this
Agreement) under the Securities Laws of the Offering Jurisdictions, or
(ii) conflict with or result in any breach or violation of any of the
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, lease or other agreement or instrument to which the
Corporation or any of the Principal Subsidiaries or any of their
respective properties is bound, or the articles or by-laws or other
applicable incorporating documents of the Corporation or any of the
Principal Subsidiaries, or any statute or any judgment, decree, order,
rule or regulation of any court or other governmental authority or any
arbitrator, stock exchange or securities regulatory authority
applicable to the Corporation or any of the Principal Subsidiaries or
any of their respective properties or assets which could have a
material adverse effect on the condition (financial or otherwise),
business, properties or results of operations of the Corporation or
any of the Principal Subsidiaries;
(j) each of this Agreement, the certificates representing the Offered
Units and the Broker's Warrants and the Ancillary Documents has been,
or will be prior to the Closing Time, authorized, executed and
delivered by the Corporation and each of them constitutes, or will
constitute, a valid and binding obligation of the Corporation,
enforceable against the Corporation in accordance with the terms
thereof, except that (i) the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally, (ii) equitable remedies,
including, without limitation, specific performance and injunction,
may be granted only in the discretion of a court of competent
jurisdiction, and (iii) rights of indemnity, contribution and the
waiver of contribution provided for herein may be limited under
applicable law;
(k) each of the documents comprising the Information are, as of their
respective dates, in compliance in all material respects with
applicable securities laws and do not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
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circumstances under which they were made, not misleading and the
documents comprising the Information were true and correct in all
material respects as of the date thereof;
(l) no order preventing or suspending trading in any securities of the
Corporation or prohibiting the issue and sale of securities by the
Corporation has been issued and no such proceedings for either of such
purposes are pending or, to the best of the knowledge of the
Corporation, threatened;
(m) except as disclosed in the Information, there has not occurred any
material adverse change, financial or otherwise, in the assets,
liabilities (contingent or otherwise), business, financial condition
or prospects of the Corporation or any of the Principal Subsidiaries
or in the capital of the Corporation or any of the Principal
Subsidiaries since December 31, 2001;
(n) the Corporation and each of the Principal Subsidiaries has conducted
and are conducting their respective businesses in compliance in all
material respects with all applicable laws, rules, regulations,
tariffs, orders and directives of each jurisdiction in which they
carry on business and possess all material certificates, authorities,
permits or licences issued by the appropriate provincial, state,
municipal, federal or other regulatory agency or body necessary to
carry on the respective businesses currently carried on, or
contemplated to be carried on, by them, are in compliance in all
material respects with such certificates, authorities, permits and
licences and with all laws, regulations, tariffs, rules, orders and
directives material to their respective operations and none of the
Corporation or any of the Principal Subsidiaries have received any
notice of proceedings relating to the revocation or modification of
any such certificates, authorities, permits or licences which, singly
or in the aggregate, if the subject of an unfavourable decision,
order, ruling or finding, would materially and adversely affect the
conduct of the respective businesses, operations, financial condition
or income of the Corporation or any of the Principal Subsidiaries and
none of them have received notice of the revocation or cancellation
of, or any intention to revoke or cancel, any such licence, permit,
approval, consent, certificate, registration or authorization;
(o) the Corporation and the Principal Subsidiaries are the absolute legal
and beneficial owner of, and have good and marketable title to, all of
their respective interests in their respective material assets as
described in the Information, free of all mortgages, liens, charges,
pledges, security interests, encumbrances, claims or demands
whatsoever except for the security interest of The Rose Corporation
and the security interest of Xxxxxxx Lifesciences LLC, neither of
which is in default as at the date hereof, and no other property
rights are necessary for the conduct of the business of the
Corporation or any of the Principal Subsidiaries, the Corporation and
the Principal Subsidiaries do not know of any claim or basis for a
claim that might or could adversely affect their respective rights to
use, transfer or otherwise exploit such property rights and none of
the Corporation or any of the Principal Subsidiaries have any
responsibility or obligation to pay any commission, royalty, licence
fee or similar payment to any Person with respect to the property
rights thereof;
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(p) any and all agreements pursuant to which the Corporation or any of the
Principal Subsidiaries holds their respective assets are valid and
subsisting agreements in full force and effect, enforceable in
accordance with their respective terms, none of the Corporation or any
of the Principal Subsidiaries is in material default of any of the
provisions of any such agreements nor has any such material default
been alleged and such assets are in good standing under the applicable
statutes and regulations of the jurisdictions in which they are
situate, all leases and licences pursuant to which the Corporation or
any of the Principal Subsidiaries derives their respective interests
in such assets are in good standing and except as disclosed in the
Information there has been no material default under any such leases
and all taxes required to be paid with respect to such assets to the
date hereof have been paid;
(q) the audited annual financial statements of the Corporation for the
year ended December 31, 2001, together with the auditors' report
thereon and the notes thereto, and the unaudited interim financial
statements of the Corporation for the quarterly period ended September
30, 2002, and the notes thereto, have been prepared in accordance with
Canadian generally accepted accounting principles applied on a basis
consistent with prior periods (except as disclosed in such financial
statements), are substantially correct in every particular and present
fairly the financial condition and position of the Corporation as at
their respective dates and such financial statements contain no direct
or implied statement of a material fact which is untrue on the date of
such financial statements and do not omit to state any material fact
which is required by Canadian generally accepted accounting principles
or by applicable law to be stated or reflected therein or which is
necessary to make the statements contained therein not misleading;
(r) since December 31, 2001, none of:
(i) the Corporation or any of the Principal Subsidiaries has paid or
declared any dividends or incurred any material capital
expenditure or made any commitment therefor,
(ii) the Corporation or any of the Principal Subsidiaries have
incurred any obligation or liability, direct or indirect,
contingent or otherwise, except in the ordinary course of
business and which is not, and which in the aggregate are not,
material, and
(iii) the Corporation or any of the Principal Subsidiaries have
entered into any material transaction except as disclosed in the
Information;
(s) none of the Corporation or any of the Principal Subsidiaries has
approved, is contemplating, has entered into any agreement in respect
of, or has any knowledge of:
(i) the purchase of any assets or any interest therein or the sale,
transfer or other disposition of any property or any interest
therein currently owned, directly or indirectly, by the
Corporation or any of the Principal Subsidiaries whether by asset
sale, transfer of shares or otherwise,
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(ii) the change of control (by sale or transfer of shares or sale of
all or substantially all of the assets of the Corporation or any
of the Principal Subsidiaries or otherwise) of the Corporation or
any of the Principal Subsidiaries, or
(iii) a proposed or planned disposition of shares by any shareholder
who owns, directly or indirectly, five per cent or more of the
outstanding shares of the Corporation or any of the Principal
Subsidiaries excepting only dealings with the holdings of a
significant shareholder in respect of the completion of the
transactions contemplated herein;
(t) the properties and the operations of the Corporation and of each of
the Principal Subsidiaries comply in all material respects with all
applicable federal, state, provincial and local environmental, health
and safety statutes, regulations and permits, none of such properties
or operations is subject to any judicial or administrative proceeding
alleging the violation of any federal, state, provincial or local
environmental, health or safety statute or regulation or is subject to
any investigation;
(u) to the best of the knowledge of the Corporation, none of the directors
or officers of the Corporation or any of the Principal Subsidiaries or
any associate or affiliate of any of the foregoing had, has or intends
to have any material interest, direct or indirect, in the transactions
contemplated by this Agreement or in any proposed material transaction
with the Corporation or any of the Principal Subsidiaries which, as
the case may be, materially affects, is material to or will or may
materially affect the Corporation or any of the Principal Subsidiaries
except for dealings with the holdings of a significant shareholder in
respect of the completion of the transactions contemplated herein or
as disclosed in the Information;
(v) no federal, provincial, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, has given written notice or has threatened in
writing to modify or remove any licence, permit or operating
certificate necessary in order for the Corporation and the Principal
Subsidiaries to carry on the respective businesses thereof and the
Corporation and the Principal Subsidiaries are in compliance in all
material respects with the terms and conditions of all licences,
permits and operating certificates held by them;
(w) the Corporation and each of the Principal Subsidiaries has filed in a
timely manner all necessary tax returns and notices and has paid all
applicable taxes of whatsoever nature for all tax years to the date
hereof to the extent that such taxes have become due or have been
alleged to be due and none of the Corporation or any of the Principal
Subsidiaries is aware of any tax deficiencies or interest or penalties
accrued or accruing, or alleged to be accrued or accruing, thereon
where, in any of the above cases, it might reasonably be expected to
result in any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects
of the Corporation or any of the Principal Subsidiaries;
(x) except as disclosed in the Information or orally by the Corporation to
the Agent, there are no actions, suits, proceedings or enquiries
pending or, to the best of the
-14-
knowledge of the Corporation, threatened, against or affecting the
Corporation or any of the Principal Subsidiaries or to which any
property of the Corporation or any of the Principal Subsidiaries is
subject, at law or in equity, or before or by any federal, provincial,
state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which may in
any way materially and adversely affect the Corporation or any of the
Principal Subsidiaries;
(y) Except as disclosed in the Information, to the best of the
Corporation's knowledge the business carried on by the Corporation and
each of the Principal Subsidiaries complies with and has at all times
complied with all federal, state, provincial or local laws,
regulations directives, orders, policies or guidelines or licenses,
certificates of approval or permits issued thereunder relating to
pollution or protection of health, safety or the environment;
(z) the assets of the Corporation and its business and operations are
insured against loss or damage with responsible insurers on a basis
consistent with insurance obtained by reasonably prudent participants
in comparable businesses, and such coverage is in full force and
effect, and the Corporation has not failed to promptly give any notice
or present any claim thereunder;
(aa) except with respect to the security interest of The Rose Corporation,
the Corporation has all right, title and interest in and to the
Intellectual Property Rights to the extent necessary to conduct the
Business as currently conducted;
(bb) with respect to Intellectual Property Rights not owned by the
Corporation, to the best knowledge of the Corporation, no such
Intellectual Property Rights are used by the Corporation other than
with the consent of or licence from the rightful owner thereof;
(cc) the Intellectual Property Rights owned by the Corporation are in full
force and effect, all required registration or other fees have been
paid to maintain the Intellectual Property Rights in good standing in
those jurisdictions where the Intellectual Property Rights are used;
(dd) with respect to Intellectual Property Rights created or developed by
the Corporation, to the best knowledge of the Corporation, such
Intellectual Property Rights are new and original to the Corporation,
use of such rights does not infringe any third party rights, and such
rights have only been created by persons who have an obligation to
assign all of their rights therein to the Corporation;
(ee) the Intellectual Property Rights are complete to the extent necessary
to enable the Business to be carried on in all material respects in
the manner in which it is carried on by the Corporation at the date
hereof;
(ff) to the best knowledge of the Corporation:
(i) there is no claim of adverse ownership, non-inventorship,
invalidity or other opposition to or conflict with any
Intellectual Property Rights, nor of any pending or threatened
suit, proceeding, claim, demand, action or investigation
-15-
of any nature or kind against the Corporation relating to the
Intellectual Property Rights;
(ii) there are no outstanding orders, rulings, decrees, judgments or
stipulations by or with any court, arbitrator or administrative
agency relating to the Intellectual Property Rights and there has
been no public dedication or expropriation of any of the
Intellectual Property Rights;
(iii) the Corporation is not a licensee of, nor is making payments or
is obligated to make payments for the use of any patent,
trade-name, technology, trade-xxxx, copyright or industrial
design of another Person that is material to the Business; and
(iv) there is no claim that the Business, or any product of the
Business which the Corporation manufactures, uses or sells, or
any process, method, packaging, advertising, or material that the
Corporation employs in the manufacture, marketing or sale of any
such product, or the use of any of the Intellectual Property
Rights, breaches, violates, infringes or interferes with any
rights of any third party; and
(gg) the Corporation and the Principal Subsidiaries are in compliance with
the continuous disclosure obligations of all applicable securities
laws.
8. Covenants of the Corporation:
(a) Consents and Approvals: Immediately following the acceptance hereof,
the Corporation will make all necessary filings and use its best
efforts to obtain all necessary regulatory and other consents and
approvals required in connection with the transactions contemplated by
this Agreement.
(b) General: The Corporation hereby covenants and agrees with the Agent
that:
(i) The Corporation will fulfil all legal requirements to permit the
creation, issue, offering and sale of the Offered Units, the
Broker's Warrants and the Broker's Shares as contemplated in this
Agreement including, without limitation, compliance with the
Securities Laws of the Offering Jurisdictions to enable the
Offered Units to be offered for sale and sold to the Purchasers
without the necessity of filing a prospectus or similar document
in the Offering Jurisdictions.
(ii) The Corporation will forthwith after the Closing, file such
documents as may be required under the Securities Laws of the
Offering Jurisdictions relating to the private placement of the
Offered Units.
(iii) Proceeds of the offering will be used: to fund pre-clinical and
clinical trials for the Corporation's HeartSaver VADTM; (ii) to
fund clinical trials and marketing expenses related to the
Corporation's Novacor LVAS(R); and (iii) for general corporate
purposes.
-16-
(iv) The Corporation will notify the Agent in writing of the terms of
any further equity or debt financings (whether public or private
and whether or not an investment dealer is or proposes to be
involved) that it requires or proposes to obtain in Canada during
the 6 months following the Closing Date (except for those pending
transactions already identified with Argosy, Apotex, Rose
Corporation and Technology Partnerships Canada) and the Agent
will have the right of first refusal to act as lead agent or
underwriter on such financings. The right of first refusal must
be exercised by the Agent within five business days following the
receipt of the notice by notifying the Corporation in writing
that it will act on such financing on the terms set out in the
notice. If the Agent fails to give notice within the five
business days that it will act on such financing upon the terms
set out in the notice, the Corporation will then be free to make
other arrangements on the same terms or on terms no less
favourable to the Corporation. The right of first refusal will
not terminate if, on receipt of any notice form the Corporation
under this subsection, the Agent fails to exercise the right.
(v) If at any time during the 6 months following the Closing Date the
Corporation enters into any type of understanding or agreement
(including, without limitation, a binding or non-binding letter
of intent) whether written or oral, with any party (a "Party") in
Canada introduced to the Corporation by the Agent, in regards to
any transaction (the "Transaction") falling outside of the scope
of this Offering and clause 8(b)(iv) (including, but not limited
to, a possible business combination, direct or indirect
acquisition of issued shares of the Corporation, a joint venture,
the sale of equipment or services by the Corporation to a Party,
or other business relationship). The Corporation and the Agent
agree, acting reasonably to determine any fees payable to the
Agent at the time of the Transaction. The Transaction Fee shall
be paid by the Corporation to the Agent on the closing of the
Transaction or, if no closing is held, on the commencement of the
Transaction. If the Transaction involves ongoing payments, the
Corporation shall pay to the Agent three per cent on all such
ongoing payments until completion of the Transaction.
9. Termination:
(a) Right of Termination: The Agent shall be entitled, at the sole option
thereof, to terminate and cancel, without any liability on the part
thereof, all of its obligations under this Agreement and the
obligations of any Person who has executed a Subscription Agreement,
by notice in writing to that effect delivered to the Corporation prior
to the Closing Time if:
(i) the Agent is not satisfied in its sole discretion, acting
reasonably, with the results of the due diligence review and
investigation of the Corporation;
(ii) there is in the sole opinion of the Agent, acting reasonably, a
material change or change in a material fact or new material fact
or an undisclosed material fact or material change which might be
expected to have an adverse effect on the business, affairs,
profitability or prospects of the Corporation or on the
-17-
market price or value of the Common Shares or any other securities of
the Corporation;
(iii) there should develop, occur or come into effect any occurrence
of national or international consequence, or any event, action,
condition, law, governmental regulation, enquiry or other
development or occurrence, whether in any financial market or
otherwise, of any nature whatsoever which, in the opinion of the
Agent, acting reasonably, materially adversely affects or will
materially adversely affect the Canadian financial markets or the
business, operations or affairs of the Corporation;
(iv) the state of the financial markets is such that in the sole
opinion of the Agent, acting reasonably, it would be
impracticable to offer, or continue to offer, for sale the
Offered Units;
(v) any inquiry, investigation or other proceeding (whether formal or
informal) is threatened, announced or commenced or any order or
ruling is issued in relation to the Corporation or any of the
directors, officers or principal shareholders of the Corporation,
or there is announced or enacted any change of law, or the
interpretation or administration thereof, which in the reasonable
opinion of the Agent would be expected to operate to prevent or
restrict trading in the Offered Units, the Common Shares or any
other securities of the Corporation or the distribution of the
Offered Units, the Common Shares or any other securities of the
Corporation;
(vi) any order to cease or suspend trading in any securities of the
Corporation is made, threatened or announced by any securities
regulatory authority; or
(vii) the Corporation is in breach of any material term, condition,
covenant or agreement contained in this Agreement or any
representation or warranty given by the Corporation in this
Agreement is or becomes untrue, false or misleading.
(b) Rights on Termination: Any termination by the Agent pursuant to
subsection 9(a) hereof shall be effected by notice in writing
delivered to the Corporation at the address therefor as set out in
section 13 hereof. The right of the Agent to so terminate its
obligations under this Agreement is in addition to such other remedies
as the Agent may have in respect of any default, act or failure to act
of the Corporation in respect of any of the matters contemplated by
this Agreement. In the event of a termination by the Agent pursuant to
subsection 9(a) hereof there shall be no further liability on the part
of the Agent to the Corporation or of the Corporation to the Agent
except any liability which may have arisen or may thereafter arise
under sections 10 and 11 hereof.
10. Indemnity and Contribution: The indemnity and contribution provisions set
out at Schedule B to the Engagement Letter are hereby incorporated into
this Agreement by reference.
11. Expenses: Whether or not the purchase and sale of the Offered Units shall
be completed as contemplated by this Agreement, all reasonable expenses of
or incidental to the allotment,
-18-
issue, sale and delivery of the Offered Units and of or incidental to all
matters in connection with the transactions herein set out shall be borne
by the Corporation including, without limitation, the reasonable fees and
disbursements (including applicable taxes) of legal counsel for the Agent
and the reasonable out-of-pocket expenses (including applicable taxes) of
the Agent, which, to the extent that they are then determinable, shall be
paid to the Agent at the Closing Time.
12. Conditions: The obligation of the Agent to complete the Closing shall be
subject to the accuracy of the representations and warranties of the
Corporation contained herein as of the Closing Time and to the fulfilment
and compliance by the Corporation with all of the covenants and agreements
given by it herein. All of the terms and conditions contained in this
Agreement to be satisfied by the Corporation prior to the Closing Time
shall be construed as conditions, and any breach or failure by the
Corporation to comply with any of such terms and conditions shall entitle
the Agent to terminate its obligation to complete the Closing by written
notice to that effect given to the Corporation prior to the Closing Time.
It is understood and agreed that the Agent may waive in whole or in part,
or extend the time for compliance with, any of such terms and conditions
without prejudice to its rights in respect of any such terms and conditions
or any other or subsequent breach or non-compliance; provided that to be
binding on the Agent any such waiver or extension must be in writing. If
the Agent shall elect to terminate its obligations to complete the Closing
as aforesaid, whether the reason for such termination is within or beyond
the control of the Corporation, the liability of the Corporation to the
Agent hereunder shall be limited to the indemnity and referred to in
subsection 10 hereof, the right to contribution referred to in section 10
hereof and the payment of expenses referred to in section 11 hereof.
13. Notices: Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be personally delivered or
sent by telecopier on a Business Day to the following addresses:
(a) in the case of the Corporation:
World Heart Corporation
0 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxx
Xxxxxx
X0X 0X0
Attention: Xxxxxxxx Xxxxxx, President and CEO
Telecopier Number: (000) 000-0000
with a copy to:
XxXxxxxx Xxxxxxxx
Suite 1400, 00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxx
Xxxxxx
X0X 0X0
-19-
Attention: Xxxxxxxx X. Xxxxxxxxxx
Telecopier Number: (000) 000-0000
(b) in the case of the Agent:
Northern Securities Inc.
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX
X0X 0X0
Attention: Xxxxx X. Xxxxxx, Vice-President, Investment Banking
Telecopier Number: (000) 000-0000
with a copy to:
Gowling Xxxxxxx Xxxxxxxxx XXX
Xxxxx 0000, Xxxxxx Plaza
00 Xxxx Xxxxxx Xxxx
Xxxxxxx, XX
X0X 0X0
Attention: Xxxx X. X. Xxxxxxxxx
Telecopier Number: (000) 000-0000
The Corporation or the Agent may change their address for notice by notice
given in the manner aforesaid. Any such notice or other communication shall
be in writing, and unless delivered to a responsible officer of the
addressee, shall be given by telecopier, and shall be deemed to have been
given on the day on which it was delivered or sent by telecopier.
14. Miscellaneous:
(a) Governing Law: This Agreement shall be governed by and be interpreted
in accordance with the laws of the Province of Ontario and the federal
laws of Canada applicable therein.
(b) Time of Essence: Time shall be of the essence of this Agreement.
(c) Survival: All representations, warranties, covenants and agreements of
the Corporation herein contained or contained in any documents
contemplated by, or delivered pursuant to, this Agreement or in
connection with the purchase and sale of the Offered Units shall
survive the purchase and sale of the Offered Units and the termination
of this Agreement and shall continue in full force and effect for the
benefit of the Agent in accordance with applicable law, regardless of
any subsequent disposition of the Offered Units or any investigation
by or on behalf of the Agent with respect thereto.
-20-
(d) Counterparts: This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and
the same agreement.
(e) Entire Agreement: This Agreement constitutes the entire agreement
between the Corporation and the Agent in connection with the issue and
sale of the Offered Units by the Corporation and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral
or written, including, but not limited to, the Engagement Letter,
except for Schedule "B" thereto containing indemnity and contribution
provisions.
(f) Severability: If any provision of this Agreement is determined to be
void or unenforceable in whole or in part, it shall be deemed not to
affect or impair the validity of any other provision of this Agreement
and such void or unenforceable provision shall be severed from this
Agreement.
Would you kindly confirm the agreement of the Corporation to the foregoing
by executing four duplicate copies of this letter and thereafter returning two
such executed copies to the Agent.
Yours truly,
NORTHERN SECURITIES INC.
By:
------------------------------------
Name:
Title:
The undersigned hereby accepts and agrees to the foregoing as of the 30th
day of December, 2002.
WORLD HEART CORPORATION
By:
------------------------------------
Name:
Title:
Schedule A
Form of Legal Opinion
Omitted pursuant to Item 601(b)(2) of Regulation S-K.
Schedule B
Form of Officer's Certificate
Pursuant to subparagraph 4(a)(ii)(C) of the agency agreement dated December 30,
2002 (the "Agency Agreement") between World Heart Corporation and Northern
Securities Inc.
TO: NORTHERN SECURITIES INC.
AND TO: THE PURCHASERS OF COMMON SHARES OF
WORLD HEART CORPORATION
AND TO: GOWLING XXXXXXX XXXXXXXXX LLP
CERTIFICATE
The undersigned, Xxx X. Xxxxxx, signing in his capacity as Vice President,
Finance and Chief Financial Officer of World Heart Corporation (the
"Corporation"), and not in a personal capacity, hereby certifies to the best of
his knowledge, information and belief, after having made due inquiry, that
(capitalized words and phrases used herein have the same meaning ascribed to
such words and phrases in the Agency Agreement):
1. The facts, matters and information certified to herein are based on one or
more of knowledge and information available or provided to me and my honest
belief and all statements made in this certificate represent my reasonably
held honest belief as to the facts, matters, information and belief
possessed by me. I have used my best efforts to become informed of and
about the facts, matters and information certified to herein and have
sought the advice of counsel for the Corporation on those matters certified
to herein which involve matters of laws and have relied upon such advice to
the extent that those matters involve matters of law.
2. The Corporation has complied with all covenants and agreements contained
in, and has satisfied all of the terms and conditions of, the Agency
Agreement to be complied with and satisfied by the Corporation at or prior
to the Closing Time.
3. The representations and warranties of the Corporation contained in the
Agency Agreement are true and correct as of the Closing Time with the same
force and effect as if made at and as of the Closing Time after giving
effect to the transactions contemplated thereby.
4. Since December 31, 2001, except as disclosed in the Information, there has
been no material adverse change (whether actual, anticipated, proposed,
prospective or threatened) in the financial condition, assets, liabilities
(contingent or otherwise), business, affairs, operations or prospects of
the Corporation or any of the Principal Subsidiaries or in the capital of
the Corporation.
5. Since December 31, 2001, no transaction of a nature material to the
Corporation or any of the Principal Subsidiaries has been entered into by
the Corporation or any of the Principal Subsidiaries, except as disclosed
in the Information.
6. No order, ruling or determination having the effect of ceasing or
suspending trading in the Common Shares, the Offered Units or any other
securities of the Corporation has been issued or made by any securities
commission or other regulatory authority and is continuing in effect and no
proceedings for such purpose have been instituted or are pending, or are
contemplated or threatened by any securities commission or other regulatory
authority.
7. Except as disclosed in the Information or to the Agent, there are no
actions, suits, proceedings or enquiries pending or, to the best of their
knowledge, threatened against or affecting the Corporation or any of the
Subsidiaries or to which any property of the Corporation or any of the
Principal Subsidiaries is subject, at law or in equity, or before or by any
federal, provincial, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
which may, in any way, materially and adversely affect the Corporation or
any of the Principal Subsidiaries.
8. Except as disclosed in the Information or to the Agent, no failure or
default on the part of the Corporation or any Principal Subsidiary exists
under any law or regulation applicable to the Corporation or any Subsidiary
or under any licence, permit, contract, agreement or other instrument to
which the Corporation or any Principal Subsidiary is a party or by which
the Corporation or any Principal Subsidiary is bound, which may in any way
materially and adversely affect the Corporation or any Subsidiary and the
execution, delivery and performance of the Agency Agreement and the
performance by the Corporation of its obligations thereunder will not
result in any such default.
IN WITNESS WHEREOF the undersigned has executed this certificate as of the
30th day of December, 2002.
By:
-----------------------------------
Xxx Xxxxxx, Vice President, Finance and
Chief Financial Officer, World Heart
Corporation
2.
Schedule C
Form of Broker's Warrant
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE SHALL NOT TRADE THE SECURITIES BEFORE MAY 1,
2003.
THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON THE EXERCISE
THEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR UNDER ANY STATE SECURITIES LAWS.
THE HOLDER HEREOF AGREES FOR THE BENEFIT OF THE COMPANY THAT THE SECURITIES
REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B)
OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE
U.S. SECURITIES ACT, IF APPLICABLE (C) INSIDE THE UNITED STATES (1) PURSUANT TO
THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAW OR (2) IN A TRANSACTION THAT DOES NOT OTHERWISE REQUIRE
REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES
LAW, PROVIDED THE HOLDER HAS FURNISHED TO THE COMPANY AN OPINION OF COUNSEL OF
RECOGNIZED STANDING TO THE EFFECT REASONABLE SATISFACTORY TO THE COMPANY. AS
USED HEREIN, THE TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS
ASCRIBED TO THEM IN REGULATION S UNDER THE U.S. SECURITIES ACT.
his warrant expires at 5:00 p.m., Ottawa time, on December 30, 2004.
BROKER'S WARRANT
to purchase up to 163,152 common shares and 163,152 warrants
of
WORLD HEART CORPORATION
(Incorporated under the laws of the Province of Ontario)
THIS IS TO CERTIFY THAT, for valuable consideration, NORTHERN SECURITIES INC.
(the "Agent") is entitled, at any time prior to 5:00 p.m., Ottawa time, on
December 30, 2004, upon and subject to the terms and conditions set forth herein
and in the schedules attached hereto which form an integral part hereof and
shall be deemed to be incorporated herein (the whole being referred to as
-2-
this "Broker's Warrant"), to subscribe in whole or in part for 163,152 common
shares ("Common Shares") and 163,152 compensation warrants, the form of which is
attached hereto as Schedule C ("Warrants") of World Heart Corporation (the
"Corporation"), by delivering to the Corporation at its registered office this
Broker's Warrant, with the form of subscription attached hereto as schedule B
duly completed and executed, together with a certified cheque, bank draft, money
order or good same day funds transmitted by wire or other similar transfer, in
lawful money of Canada, payable to or to the order of the Corporation at par in
Toronto, in an amount equal to the purchase price of the Common Shares so
subscribed for.
The purchase price payable for each Common Share subscribed for upon the
exercise of this Broker's Warrant shall be $1.60, subject to adjustment in the
events and in the manner set forth herein.
This Broker's Warrant shall become wholly void and the unexercised portion of
the subscription rights evidenced hereby will expire and terminate at 5:00 p.m.,
Ottawa time, on December 30, 2004.
This Broker's Warrant is non-transferable.
All Common Shares and Warrants which shall be issued upon the exercise of this
Broker's Warrant shall be issued to the Agent, upon payment therefor of the
amount at which the Common Shares and Warrants which may at the time be
purchased pursuant to the provisions hereof, and the Agent shall be deemed to
have become the holder of record of such Common Shares and Warrants on the date
of delivery of this Broker's Warrant, together with payment for the Common
Shares and Warrants subscribed for, unless the transfer books of the Corporation
shall be closed on such date, in which event the Common Shares and Warrants so
subscribed for shall be deemed to be issued and the Agent shall be deemed to
have become the holder of record of such Common Shares on the date on which such
transfer books are reopened and such Common Shares and Warrants shall be issued
at the purchase price in effect on the date of delivery of this Broker's
Warrant, together with payment for the Common Shares and Warrants subscribed
for.
The Agent may purchase less than the number of Common Shares and Warrants which
the Agent is entitled to purchase hereunder on delivery of this Broker's
Warrant, in which event a new broker's warrant, in form identical hereto,
representing the Common Shares not purchased, will be issued to the Agent.
This Broker's Warrant does not entitle the Agent to any rights or interest
whatsoever as a shareholder of the Corporation or any other rights or interest
except as expressly provided in this Broker's Warrant.
If this Broker's Warrant or any replacement hereof becomes stolen, lost,
mutilated or destroyed, the Corporation shall, on such terms as it may in its
discretion impose, acting reasonably, issue and deliver a new broker's warrant,
in form identical hereto, evidencing any unexercised portion of the subscription
rights evidenced hereby to replace the Broker's Warrant so stolen, lost,
mutilated or destroyed.
By acceptance hereof, the Agent hereby represents and warrants to the
Corporation that the Agent is acquiring this Broker's Warrant as principal for
its own account, and not for the benefit of any other person.
All amounts of money referred to in this Broker's Warrant are expressed in
lawful money of Canada.
-3-
This Broker's Warrant shall enure to the benefit of and shall be binding upon
the Agent and the Corporation and their respective successors.
This Broker's Warrant shall be governed by the laws of the Province of Ontario
and the laws of Canada applicable therein.
IN WITNESS WHEREOF the Corporation has caused this Broker's Warrant to be issued
in its name by the signature of its duly authorized officer in that behalf.
DATED as of the 30th day of December, 2002.
WORLD HEART CORPORATION
By:
--------------------------------------
Name: Xxx Xxxxxx
Title: Chief Financial Officer
SCHEDULE A
Additional Terms and Conditions of this Broker's Warrant
Common Shares Reserved for Issuance. The Corporation covenants and agrees that
so long as the within this Broker's Warrant (hereinafter in this schedule A
referred to as the "Broker's Warrant") is outstanding, it will at all times
reserve out of its unissued common shares against the exercise by the
Subscriber of the Broker's Warrant, a sufficient number of common shares to
enable the Subscriber to exercise in full its subscription rights upon the
basis and upon the terms and conditions provided for by this Broker's
Warrant.
Adjustments
2.1 The rights of the holder of the Broker's Warrant, shall be adjusted from
time to time in the events and in the manner provided in and in accordance
with this Section 2 and for such purposes:
"Adjustment Period" means in respect of each Broker's Warrant, the period
commencing on the Issue Date thereof and ending at the Expiry Time
thereof;
"Current Market Price", on any date, means the average, during the period
of 20 consecutive Trading Days ending on the second Trading Day before
such date, of the average of the high and low prices per share at
which the Common Shares have traded on the principal stock exchange or
quotation system on which the Common Shares are listed or, if the
Common Shares have not been listed on a stock exchange of quotation
system for such number of Trading Days, then such lesser number of
Trading Days as the Common Shares have been so listed, or, if the
Common Shares are not listed on any stock exchange or quotation
system, then in the over-the-counter market as reported by such other
stock exchange or as quoted by the most commonly quoted or carried
source of quotations for shares traded in the over-the-counter market,
provided that if, on any such Trading Day, there are no such reported
or quoted high and low prices, the average of the closing bid and
asked prices per share for board lots of the Common Shares reported by
such stock exchange or as quoted by the most commonly quoted or
carried source of quotations for shares traded in the over-the-counter
market, for such Trading Day shall be utilized in computing such
average, and provided further that if the Common Shares are not listed
on any stock exchange or traded in any over-the-counter market, then
the Current Market Price of the Common Shares shall be determined by
the directors;
"Exchange Rate" means the rate at which Common Shares are issuable upon the
exercise of this Broker's Warrant, which rate, subject to adjustment
in accordance with this Section is one Common Share and one Warrant
for each Broker's Warrant as of date hereof;
"Trading Day", with respect to any stock exchange or over-the-counter
market, means a day on which shares may be traded through the
facilities of such stock exchange or in such over-the-counter market,
and, otherwise, means a day on which shares may be traded through the
facilities of the principal stock exchange on which the Common
-2-
Shares are listed (or, if the Common Shares are not listed on any
stock exchange, then in the over-the-counter market).
For greater certainty, notwithstanding any other provision of this Section
2, the holders of this Broker's Warrant shall not be entitled to any
adjustment upon the conversion or exercise of (i) any Series A convertible
preferred shares of the Corporation and (ii) any Series A participating
preferred shares of World Heart Inc., a subsidiary of the Corporation.
2.2 The Exchange Rate in effect at any date will be subject to adjustment from
time to time and whenever at any time during the Adjustment Period, the
Corporation shall (i) subdivide, or redivide its outstanding Common Shares
into a greater number of Common Shares, or (ii) consolidate, combine or
reduce its outstanding Common Shares into a lesser number of Common Shares,
or (iii) issue Common Shares or other securities of the Corporation that
are convertible into Common Shares ("convertible securities") to all or
substantially all of the holders of Common Shares or convertible securities
(as the case may be) by way of a stock dividend or other distribution. In
any such event, the Exchange Rate shall, on the effective date of such
event, be adjusted so that it will equal the rate determined by multiplying
the Exchange Rate in effect immediately prior to such date by a fraction,
of which the denominator shall be the total number of Common Shares
outstanding on such date before giving effect to such event, and of which
the numerator shall be the total number of Common Shares outstanding on
such date after giving effect to such event. Such adjustment will be made
successively whenever any such event shall occur and any such issue of
Common Shares or convertible securities by way of a stock dividend is
deemed to have occurred on the record date for the stock dividend for the
purpose of calculating the number of outstanding Common Shares under this
Subsection 2.2(a). To the extent that this Subsection 2.2(a) has become
operative because of an issue of convertible securities referred to in
clause (iii) above, the number of Common Shares or Warrants obtainable
under this Broker's Warrant shall be readjusted based on the number of
Common Shares issuable upon conversion or exchange of such convertible or
exchangeable securities.
If and whenever at any time during the Adjustment Period, there is (i)
any reclassification of the Common Shares at any time outstanding, any
change of the Common Shares into other shares or any other capital
reorganization of the Corporation (other than as described in
Subsection 2.2(a)), (ii) any consolidation, amalgamation, arrangement,
merger or other form of business combination of the Corporation with
or into any other corporation, trust, partnership, or other entity
resulting in any reclassification of the outstanding Common Shares,
any change of the Common Shares into other shares or any other capital
reorganization of the Corporation, (iii) any triggering of a
shareholders rights plan, or (iv) any sale, lease, exchange or
transfer of the undertaking or assets of the Corporation as an
entirety or substantially as an entirety to another corporation,
trust, partnership or other entity, then, in each such event, each
holder of this Broker's Warrant which is thereafter exercised on or
after the effective date of such event will be entitled to receive,
and shall accept, in lieu of the number of Common Shares to which such
holder was theretofore entitled upon such
-3-
exercise, the kind and number or amount of shares or other securities
or property which such holder would have been entitled to receive as a
result of such event if, on the effective date thereof, such holder
had been the registered holder of the number of Common Shares to which
such holder was theretofore entitled upon such exercise. If necessary
as a result of any such event, appropriate adjustments will be made in
the application of the provisions set forth in this Section 2 with
respect to the rights and interests thereafter of the holder of this
Broker's Warrant to the end that the provisions set forth in this
Section 2 will thereafter correspondingly be made applicable, as
nearly as may reasonably be possible, in the relation to any shares or
other securities or property thereafter deliverable upon the exercise
or deemed exercise of this Broker's Warrant. Any such adjustments will
be made by and set forth in a supplement hereto approved by the
directors of the Corporation and shall for all purposes be
conclusively deemed to be an appropriate adjustment.
2.3 The Exercise Price in effect at any date will be subject to adjustment from
time to time if and whenever at any time during the Adjustment Period, the
Corporation shall (i) subdivide, or redivide its outstanding Common Shares
into a greater number of Common Shares, or (ii) consolidate, combine or
reduce its outstanding Common Shares into a lesser number of Common Shares,
or (iii) issue Common Shares to all or substantially all of the holders of
Common Shares by way of a stock dividend or other distribution. In any such
event, the Exercise Price shall, on the effective date of such event, be
adjusted so that it will equal the price determined by multiplying the
Exercise Price in effect immediately prior to such date by a fraction, the
numerator of which shall be the total number of Common Shares outstanding
on such effective date or record date before giving effect to such event
and the denominator of which shall be the total number of Common Shares
outstanding immediately after giving effect to such event. Such adjustment
will be made successively whenever any such event shall occur.
If and whenever at any time during the Adjustment Period, the Corporation
shall fix a record date for the making of a distribution to all or
substantially all of the holders of Common Shares of:
shares of any class other than Common Shares whether of the
Corporation or any other corporation;
rights, options or warrants (other than rights, options or warrants
exercisable by the holders thereof within a period expiring not
more than 45 days after the date of issue thereof);
evidences of indebtedness; or
cash, securities or other property or assets;
then, in each such case, the Exercise Price will be adjusted immediately
after such record date so that it will equal the price determined by
multiplying the Exercise price in effect on
-4-
such record date by a fraction, of which the numerator shall be the total
number of Common Shares outstanding on such record date multiplied by the
Current Market Price on the earlier of such record date and the date on
which the Corporation announces its intention to make such distribution,
less the excess, if any, aggregate fair market value on such record date
(as determined by the directors at the time such distribution is
authorized) of such shares or rights, options or warrants or evidences of
indebtedness or cash, securities or other property or assets so distributed
over the fair market value of the consideration received therefor by the
Corporation from the holders of the Common Shares (as determined by the
directors), and of which the denominator shall be the total number of
Common Shares outstanding on such record date multiplied by such Current
Market Price. Any Common Shares owned by or held for the account of the
Corporation or any subsidiary of the Corporation shall be deemed not to be
outstanding for the purpose of such computation. Such adjustment will be
made successively whenever such a record date is fixed, provided that if
two or more such record dates or record dates referred to in paragraph
2.3(b) are fixed within a period of 25 Trading Days, such adjustment will
be made successively as if each of such record dates occurred on the
earliest of such record dates. To the extent that such distribution is not
so made or to the extent that any such rights, options or warrants so
distributed are not exercised prior to the expiration thereof, the Exercise
Price will then be readjusted to the Exercise Price which would then be in
effect if such record date had not been fixed or to the Exercise Price
which would then be in effect based upon such shares or rights, options or
warrants or evidences of indebtedness or cash, securities or other property
or assets actually distributed or based upon the number or amount of
securities or the property or assets actually issued or distributed upon
the exercise of such rights, options or Warrants, as the case may be.
If and whenever at anytime during the Adjustment Period, the Corporation
shall fix a record date for the issue of rights, options or warrants
to all or substantially all of the holders of Common Shares under
which such holders are entitled, during a period expiring not more
than 45 days after the record date for such issue ("Rights Period"),
to subscribe for and purchase Common Shares at a price per share to
the holder of less than 95% of the Current Market Price for the Common
Shares on such record date (any of such events being called a "Rights
Offering"), then the Exercise Price shall be adjusted effective
immediately after the end of the Rights Period to a price determined
by multiplying the Exercise Price in effect immediately prior to the
end of the Rights Period by a fraction:
the numerator of which shall be the aggregate of:
the number of Common Shares outstanding as of the record date
for the Rights Offering, and
a number determined by dividing (1) the product of the number
of Common Shares issued or subscribed for during the Rights
Period upon the exercise of the rights, warrants, or options
under the Rights Offering and the price at which such Common
Shares are offered by (2) the Current Market Price of the
Common Shares as of the record date for the Rights Offering;
and
-5-
the denominator of which shall be the number of Common Shares
outstanding after giving effect to the Rights Offering and
including the number of Common Shares actually issued or
subscribed for during the Rights Period upon exercise of the
rights, warrants or options under the Rights Offering.
The holder of this Broker's Warrant who shall have exercised his right to
purchase Common Shares and Warrants in accordance with this Broker's Warrant
Certificate during the period beginning immediately after the record date for a
Rights Offering and ending on the last day of the Rights Period therefor shall,
in addition to the Common Shares to which he is otherwise entitled upon such
exercise in accordance with this Broker's Warrant Certificate, be entitled to
that number of additional Common Shares equal to the result obtained when the
difference, if any, resulting from the subtraction of the Exercise Price as
adjusted for such Rights Offering pursuant to this Subsection 2.3(c) from the
Exercise Price in effect immediately prior to the end of such Rights Offering is
multiplied by the number of Common Shares purchased upon exercise of this
Broker's Warrant held by such holder of this Broker's Warrant during such
period, and the resulting product is divided by the Exercise Price as adjusted
for such Rights Offering pursuant to this Subsection 2.3(c); provided that the
provisions of this Broker's Warrant Certificate shall be applicable to any
fractional interest in any Common Share to which such holder of this Broker's
Warrant might otherwise be entitled under the foregoing provisions of this
Subsection 2.3(c). Such additional Common Shares shall be deemed to have been
issued to the holder of this Broker's Warrant immediately following the end of
the Rights Period and a certificate for such additional Common Shares shall be
delivered to such holder of this Broker's Warrant within ten business days
following the end of the Rights Period. To the extent that any such rights,
options or warrants are not so exercised on or before the expiry thereof, the
Exercise Price will be readjusted to the Exercise Price which would then be in
effect based on the number of Common Shares (or the securities convertible or
exchangeable for Common Shares) actually delivered on the exercise of such
rights, options or warrants.
2.4 In any case in which this section 2 shall require that an adjustment
shall
become effective immediately after a record date for or effective date of
an event referred to herein, the Corporation may defer, until the
occurrence and consummation of such event, issuing to the holder of this
Broker's Warrant exercised after such record date or effective date and
before the occurrence and consummation of such event the additional Common
Shares or other securities or property issuable upon such exercise by
reason of the adjustment required by such event, provided, however, that
the Corporation or successor to the undertaking or assets of the
Corporation, will deliver to such holder, as soon as reasonably practicable
after such record date or effective dates, as applicable, an appropriate
instrument evidencing such holder's right to receive such additional Common
Shares or other securities or property upon the occurrence and consummation
of such event and the right to receive any dividend or other distribution
in respect of such additional Common Shares or other securities or property
declared in favour of the holders of record of Common Shares or of such
other securities or property on or after the Exercise Date, or such later
date as such holder would, but for the provisions of this Section 2.4, have
become the holder of
-6-
record of such additional Common Shares, warrants or of such other
securities or property.
If the Corporation shall set a record date to determine the holders of
the Common Shares or other securities for the purpose of entitling
them to receive any dividend or distribution or any subscription or
exercise rights and shall, thereafter and before the distribution to
such securityholders of any such dividend, distribution or
subscription or exercise rights, legally abandon its plan to pay or
deliver such dividend, distribution or subscription or exercise
rights, then no adjustment in the Exercise Price or the Exchange Rate
shall be required by reason of the setting of such record date.
The adjustments provided for in this Section 2 are cumulative, and shall,
in the case of any adjustment to the Exchange Rate or the Exercise
Price, be computed to the nearest one one-hundredth of a Common Share
and will apply (without duplication) to successive subdivisions,
consolidations, distributions, issuances or other events resulting in
any adjustment under the provisions of this Section 2, provided that,
notwithstanding any other provision of this Section 2.4, no adjustment
of the Exchange Rate or the Exercise Price will be required (i) unless
such adjustment would require an increase or decrease of at least 1%
in the Exchange Rate or the Exercise Price then in effect (provided,
however, that any adjustment which by reason of this Subsection 2.4(c)
is not required to be made will be carried forward and taken into
account in any subsequent adjustment), or (ii) in respect of any
Common Shares issuable or issued pursuant to any option, warrant,
share option or share purchase plan of the Corporation as otherwise
specified in the Agency Agreement, or (iii) in respect of any Common
Shares issuable or issued pursuant to the exercise of this Broker's
Warrant.
If any question arises with respect to the adjustments provided in this
Section 2, such question shall be conclusively determined by the
Corporation's auditors or, if they are unable or unwilling to act, by
such firm of chartered accountants as is appointed by the Corporation.
Such accountants shall have access to all necessary records of the
Corporation and such determination shall be binding upon the
Corporation, and the holder of Warrants.
All shares of any class or other securities or property which a holder of
Warrants is at the time in question entitled to receive on the full
exercise of his Warrants, whether or not as a result of adjustments
made pursuant to this Section 2 shall, for the purposes of the
interpretation of this Warrant Certificate, be deemed to be Common
Shares which such holder of Warrants is entitled to subscribe for
pursuant to the exercise of this Broker's Warrant.
If and whenever at any time during the Adjustment Period, the Corporation
shall take any action affecting or relating to the Common Shares,
other than any and all action described in this Section 2, which in
the opinion of the directors of the Corporation, would adversely
affect the rights of the holder of this Broker's Warrant, the Exchange
Rate and/or the Exercise Price shall be adjusted by the directors in
such manner, if
-7-
any, and at such time, as the directors, may in their sole discretion
determine to be equitable in the circumstances to such holders.
As a condition precedent to the taking of any action which would require
an adjustment in any of the rights under this Broker's Warrant, the
Corporation will take any and all action which may, in the opinion of
counsel to the Corporation, be necessary in order that the
Corporation, or any successor to the Corporation or successor to the
undertaking or assets of the Corporation, shall be obligated to and
may validly and legally issue all the Common Shares or other
securities or property which the holder of this Broker's Warrant would
be entitled to receive thereafter on the exercise thereof in
accordance with the provisions hereof.
At least seven days before the earlier of the effective date of or record
date for any event referred to in this Section 2 that requires or
might require an adjustment in any of the rights under this Broker's
Warrant or such longer notice period as may be applicable in respect
of notices required to be delivered by the Corporation to holders of
its Common Shares, the Corporation will give notice to the holder of
this Broker's Warrant of the particulars of such event and, to the
extent determinable, any adjustment required and a description of how
such adjustment will be calculated.
Such notice need only set forth such particulars as have been
determined at the date such notice is given. If any adjustment for
which such notice is given is not then determinable, promptly after
such adjustment is determinable the Corporation will give notice to
the holder of this Broker'sWarrant of such adjustment.
Legends
Any certificate representing Common Shares issued upon the exercise of the
this Broker's Warrant prior to the date which is four months and one
day after the date hereof will bear the following legend:
"UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE SHALL NOT TRADE THE
SECURITIES BEFORE MAY 1, 2003."
All certificates issued in exchange for or in substitution of, the Warrant
Certificates, shall bear the following legend (the "US Legend"):
THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON THE
EXERCISE THEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR
UNDER ANY STATE SECURITIES LAWS. THE HOLDER HEREOF AGREES FOR THE
BENEFIT OF THE COMPANY THAT THE SECURITIES REPRESENTED HEREBY AND THE
SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) OUTSIDE
THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER
THE U.S.
-8-
SECURITIES ACT, IF APPLICABLE (C) INSIDE THE UNITED STATES (1)
PURSUANT TO THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAW OR (2) IN A
TRANSACTION THAT DOES NOT OTHERWISE REQUIRE REGISTRATION UNDER THE
U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW, PROVIDED
THE HOLDER HAS FURNISHED TO THE COMPANY AN OPINION OF COUNSEL OF
RECOGNIZED STANDING TO THE EFFECT REASONABLE SATISFACTORY TO THE
COMPANY. AS USED HEREIN, THE TERMS "UNITED STATES" AND "U.S. PERSON"
HAVE THE MEANINGS ASCRIBED TO THEM IN REGULATION S UNDER THE U.S.
SECURITIES ACT.
In the event that the Broker's Warrant is exercised by the Subscriber at
any time, the certificates evidencing the Common Shares will bear the
US Legend.
Notices
Unless herein otherwise expressly provided, a notice to be given hereunder
to a holder of this Broker's Warrant will be deemed to be validly
given if the notice is sent by ordinary surface or air mail, postage
prepaid, addressed to the holder of this Broker's Warrant or delivered
(or so mailed to certain holders of this Broker's Warrant and so
delivered to the other holders of this Broker's Warrant) at their
respective addresses appearing on any of the registers of holders
described in this Broker's Warrant Certificate provided, however, that
if, by reason of a strike, lockout or other work stoppage, actual or
threatened, involving Canadian postal employers, the notice could
reasonably be considered unlikely to reach or likely to be delayed in
reaching its destination, the notice will be valid and effective only
if it is so delivered or is given by publication twice in the Report
on Business section in the national edition of The Globe and Mail
newspaper.
A notice so given by mail or so delivered will be deemed to have been
given on the fifth business day after it has been mailed or on the day
which it has been delivered, as the case may be, and a notice so given
by publication will be deemed to have been given on the day on which
it has been published as required. In determining under any provision
hereof the date when notice of a meeting or other event must be given,
the date of giving notice will be included and the date of the meeting
or other event will be excluded. Accidental error or omission in
giving notice or accidental failure to mail notice to any holder of
this Broker's Warrant will not invalidate any action or proceeding
founded thereon.
Any notice to be given hereunder may be given by delivery to the
Corporation, shall be at the following address:
-9-
To World Heart Corporation
0 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxx
X0X 0X0
Attention: Chief Financial Officer
with a copy to:
XxXxxxxx Xxxxxxxx LLP
00 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxxx X. Xxxxxxxxxx
or to such other address as the Subscriber may from time to time in
writing notify the Corporation.
SCHEDULE B
Subscription Form for the Broker's Warrants
TO: WORLD HEART CORPORATION
The undersigned Agent hereby subscribes for common shares of the Corporation
("Common Shares") and ______________ compensation warrants of the Corporation
("Warrants") (or such number of Common Shares or Warrants or other securities to
which such subscription entitles it in lieu thereof or in addition thereto under
the provisions of the broker's warrant (the "Broker's Warrant") dated as of the
30th day of December, 2002) at the purchase price per Common Share of $1.60 (or
at such purchase price per share as may be in effect under the provisions of the
Broker's Warrant) and on and subject to the other terms and conditions specified
in the Broker's Warrant and hereunder and encloses herewith the certified
cheque, bank draft or money order or has transmitted good same day funds by wire
or other similar transfer in lawful money of Canada payable to or to the order
of World Heart Corporation in payment of the subscription price.
The undersigned hereby directs that the said Common Shares and Warrants
subscribed for be issued and delivered as follows:
--------------------------------------------------------------------------------
Address Number of
Name in Full (include Postal Code) Common Shares and Warrants
--------------------------------------------------------------------------------
Northern Securities Inc.
--------------------------------------------------------------------------------
DATED this day of , 200 .
------- -------------------- ----
NORTHERN SECURITIES INC.
By:
-------------------------------
SCHEDULE C
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE SHALL NOT TRADE THE SECURITIES BEFORE MAY 1,
2003.
THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON THE EXERCISE
THEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR UNDER ANY STATE SECURITIES LAWS.
THE HOLDER HEREOF AGREES FOR THE BENEFIT OF THE COMPANY THAT THE SECURITIES
REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B)
OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE
U.S. SECURITIES ACT, IF APPLICABLE (C) INSIDE THE UNITED STATES (1) PURSUANT TO
THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAW OR (2) IN A TRANSACTION THAT DOES NOT OTHERWISE REQUIRE
REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES
LAW, PROVIDED THE HOLDER HAS FURNISHED TO THE COMPANY AN OPINION OF COUNSEL OF
RECOGNIZED STANDING TO THE EFFECT REASONABLE SATISFACTORY TO THE COMPANY. AS
USED HEREIN, THE TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS
ASCRIBED TO THEM IN REGULATION S UNDER THE U.S. SECURITIES ACT.
THE WARRANTS EVIDENCED HEREBY ARE EXERCISABLE ON OR BEFORE 5:00 P.M. (OTTAWA
TIME) ON DECEMBER 30, 2007 AFTER WHICH TIME THE WARRANTS EVIDENCED HEREBY SHALL
BE VOID AND OF NO FURTHER FORCE OR EFFECT.
163,525 Warrants Certificate No. 1
------- -----
COMPENSATION WARRANT CERTIFICATE
WORLD HEART CORPORATION
(incorporated under the laws of the Province of Ontario)
THIS IS TO CERTIFY THAT, for valuable consideration, _____________________
Northern Securities Inc. ____________________________ (the "Subscriber") is
entitled, at any time prior to 5:00 p.m., Ottawa time, on December 30, 2007,
upon and subject to the terms and conditions set forth herein and in the
schedules attached hereto which form an integral part hereof and shall be deemed
to be incorporated herein (the whole being referred to as this "Warrant"), to
subscribe in whole or in part for that number of common shares
-2-
("Common Shares") of World Heart Corporation (the "Corporation"),specified above
by delivering to the Corporation at its registered office this Warrant, with the
form of subscription attached hereto as schedule B duly completed and executed,
together with a certified cheque, bank draft, money order or good same day funds
transmitted by wire or other similar transfer, in lawful money of Canada,
payable to or to the order of the Corporation at par in Ottawa, in an amount
equal to the purchase price of the Common Shares so subscribed for.
The purchase price payable for each Common Share subscribed for upon the
exercise of this Warrant shall be $1.60, subject to adjustment in the events and
in the manner set forth herein (the "Exercise Price").
This Warrant shall become wholly void and the unexercised portion of the
subscription rights evidenced hereby will expire and terminate at 5:00 p.m.,
Ottawa time, on December 30, 2007 (the "Expiry Time").
Surrender of this Warrant will be deemed to have been effected only on personal
delivery thereof to, or , if sent by mail or other means of transmission, on
actual receipt thereof by, the Corporation at the offices of the Corporation at
0 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxx, X0X 0X0 (the "Date of Delivery"). All Common
Shares shall be issued upon the exercise of this Warrant shall be issued to the
Subscriber, upon payment therefor of the Exercise Price and the Subscriber shall
be deemed to have become the holder of record of such Common Shares on the Date
of Delivery of this Warrant, together with payment for the Common Shares
subscribed for, unless the transfer books of the Corporation shall be closed on
such date, in which event the Common Shares and Warrants so subscribed for shall
be deemed to be issued and the Subscriber shall be deemed to have become the
holder of record of such Common Shares on the date on which such transfer books
are reopened and such Common Shares shall be issued at the purchase price in
effect on the Date of Delivery of this Warrant, together with payment for the
Common Shares subscribed for.
The Corporation will not be obligated to issue any fraction of a Common Share on
the exercise of any Warrant. To the extent that a holder of Warrants would
otherwise have been entitled to receive, on the exercise of the Warrants, a
fraction of a Common Share such right may only be exercised in respect of such
fraction in connection with another Warrant which in the aggregate entitle the
holder to receive a whole number of Common Shares. If a holder of Warrants is
not able to combine Warrants so as to be entitled to acquire a whole number of
Common Shares the number Common Shares which such holder of Warrants is entitled
to receive shall be rounded down to the nearest whole number.
The Subscriber may purchase less than the number of Common Shares which the
Subscriber is entitled to purchase hereunder on delivery of this Warrant, in
which event a new Warrant, in form identical hereto, entitling the Subscriber to
purchase the number of Common Shares not purchased, will be issued to the
Subscriber.
This Warrant does not entitle the Subscriber to any rights or interest
whatsoever as a shareholder of the Corporation or any other rights or interest
except as expressly provided in this Warrant.
No Common Share will be issued pursuant to any Warrant if the issuance of such
security would constitute a violation of the securities laws of any applicable
jurisdiction.
-3-
If this Warrant or any replacement hereof becomes stolen, lost, mutilated or
destroyed, the Corporation shall, on such terms as it may in its discretion
impose, acting reasonably, issue and deliver a new Warrant, in form identical
hereto, evidencing any unexercised portion of the subscription rights evidenced
hereby to replace the Warrant so stolen, lost, mutilated or destroyed.
On presentation at the principal office of the Corporation in Ottawa, Ontario,
subject to the provisions of the Warrant and on compliance with the reasonable
requirements of the Corporation, one or more certificates for Warrants may be
exchanged for one or more certificates for Warrants of different denominations
evidencing in the aggregate the same number of Warrants as the certificates for
Warrants being exchanged, and such holder shall pay the reasonable cost thereof.
All amounts of money referred to in this Warrant are expressed in lawful money
of Canada.
The Warrants evidenced by this certificate may only be transferred, upon
compliance with the conditions set forth in this Warrant and schedules and
appendices hereto, on the register of transfer to be kept at the principal
office of the Corporation in Xxxxxx, Xxxxxxx, Xxxxxx by the holder or the
holder's executors, administrators or other legal representatives or the holder
or the holder's attorney duly appointed by an instrument in writing in form and
execution satisfactory to the Corporation and subject to the compliance with
certain other terms of the Warrant, and upon compliance with the requirements
and such other reasonable requirements as the Corporation may prescribe, such
transfer will be duly noted on such register of transfer by the Corporation.
Notwithstanding the foregoing, the Corporation will be entitled to refuse to
record any transfer of any Warrant on such register if such transfer would
constitute a violation of securities laws of any jurisdiction.
This Warrant shall enure to the benefit of and shall be binding upon the
Subscriber and the Corporation and their respective successors.
This Warrant shall be governed by the laws of the Province of Ontario and the
laws of Canada applicable therein.
IN WITNESS WHEREOF the Corporation has caused this Warrant to be issued in its
name by the signature of its duly authorized officer in that behalf.
DATED as of the 30th day of December, 2002.
WORLD HEART CORPORATION
By:
----------------------------
Name: Xxx X. Xxxxxx
Title: Chief Financial Officer
SCHEDULE A
Additional Terms and Conditions of the Warrant
Common Shares Reserved for Issuance. The Corporation covenants and agrees that
so long as the within Warrant (hereinafter in this schedule A referred to
as the "Warrant") is outstanding, it will at all times reserve out of its
unissued common shares against the exercise by the Subscriber of the
Warrant, a sufficient number of common shares to enable the Subscriber to
exercise in full its subscription rights upon the basis and upon the terms
and conditions provided for by the Warrant.
Adjustments
2.1 The rights of the holder of any Warrant, including the number of Common
Shares issuable upon the exercise of such Warrant and the Exercise Price
payable on exercise of such Warrant, shall be adjusted from time to time in
the events and in the manner provided in, and in accordance with this
Section 2 and for such purposes:
Adjustment Period" means in respect of each Warrant, the period commencing
on the Issue Date thereof and ending at the Expiry Time thereof;
"Current Market Price", on any date, means the average, during the period
of 20 consecutive Trading Days ending on the second Trading Day before
such date, of the average of the high and low prices per share at
which the Common Shares have traded on the principal stock exchange or
quotation system on which the Common Shares are listed or, if the
Common Shares have not been listed on a stock exchange of quotation
system for such number of Trading Days, then such lesser number of
Trading Days as the Common Shares have been so listed, or, if the
Common Shares are not listed on any stock exchange or quotation
system, then in the over-the-counter market as reported by such other
stock exchange or as quoted by the most commonly quoted or carried
source of quotations for shares traded in the over-the-counter market,
provided that if, on any such Trading Day, there are no such reported
or quoted high and low prices, the average of the closing bid and
asked prices per share for board lots of the Common Shares reported by
such stock exchange or as quoted by the most commonly quoted or
carried source of quotations for shares traded in the over-the-counter
market, for such Trading Day shall be utilized in computing such
average, and provided further that if the Common Shares are not listed
on any stock exchange or traded in any over-the-counter market, then
the Current Market Price of the Common Shares shall be determined by
the directors;
"Exchange Rate" means the rate at which Common Shares are issuable upon the
exercise of any Warrant, which rate, subject to adjustment in
accordance with this Section is one Common Share for each Warrant as
of date hereof;
"Trading Day", with respect to any stock exchange or over-the-counter
market, means a day on which shares may be traded through the
facilities of such stock exchange or in such over-the-counter market,
and, otherwise, means a day on which shares may be traded through the
facilities of the principal stock exchange on which the Common
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Shares are listed (or, if the Common Shares are not listed on any
stock exchange, then in the over-the-counter market).
For greater certainty, notwithstanding any other provision of this Section
2, the holders of Warrants shall not be entitled to any adjustment upon the
conversion or exercise of (i) any Series A convertible preferred shares of
the Corporation and (ii) any Series A participating preferred shares of
World Heart Inc., a subsidiary of the Corporation.
2.2 The Exchange Rate in effect at any date will be subject to adjustment from
time to time and whenever at any time during the Adjustment Period, the
Corporation shall (i) subdivide, or redivide its outstanding Common Shares
into a greater number of Common Shares, or (ii) consolidate, combine or
reduce its outstanding Common Shares into a lesser number of Common Shares,
or (iii) issue Common Shares or other securities of the Corporation that
are convertible into Common Shares ("convertible securities") to all or
substantially all of the holders of Common Shares or convertible securities
(as the case may be) by way of a stock dividend or other distribution. In
any such event, the Exchange Rate shall, on the effective date of such
event, be adjusted so that it will equal the rate determined by multiplying
the Exchange Rate in effect immediately prior to such date by a fraction,
of which the denominator shall be the total number of Common Shares
outstanding on such date before giving effect to such event, and of which
the numerator shall be the total number of Common Shares outstanding on
such date after giving effect to such event. Such adjustment will be made
successively whenever any such event shall occur and any such issue of
Common Shares or convertible securities by way of a stock dividend is
deemed to have occurred on the record date for the stock dividend for the
purpose of calculating the number of outstanding Common Shares under this
Subsection 2.2(a). To the extent that this Subsection 2.2(a) has become
operative because of an issue of convertible securities referred to in
clause (iii) above, the number of Common Shares obtainable under each
Warrant shall be readjusted based on the number of Common Shares issuable
upon conversion or exchange of such convertible or exchangeable securities.
If and whenever at any time during the Adjustment Period, there is (i)
any reclassification of the Common Shares at any time outstanding, any
change of the Common Shares into other shares or any other capital
reorganization of the Corporation (other than as described in
Subsection 2.2(a)), (ii) any consolidation, amalgamation, arrangement,
merger or other form of business combination of the Corporation with
or into any other corporation, trust, partnership, or other entity
resulting in any reclassification of the outstanding Common Shares,
any change of the Common Shares into other shares or any other capital
reorganization of the Corporation, (iii) any triggering of a
shareholders rights plan, or (iv) any sale, lease, exchange or
transfer of the undertaking or assets of the Corporation as an
entirety or substantially as an entirety to another corporation,
trust, partnership or other entity, then, in each such event, each
holder of any Warrant which is thereafter exercised on or after the
effective date of such event will be entitled to receive, and shall
accept, in lieu of the number of Common Shares to which such holder
was theretofore entitled upon such exercise,
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the kind and number or amount of shares or other securities or
property which such holder would have been entitled to receive as a
result of such event if, on the effective date thereof, such holder
had been the registered holder of the number of Common Shares to which
such holder was theretofore entitled upon such exercise. If necessary
as a result of any such event, appropriate adjustments will be made in
the application of the provisions set forth in this Section 2 with
respect to the rights and interests thereafter of the holders of
Warrants to the end that the provisions set forth in this Section 2
will thereafter correspondingly be made applicable, as nearly as may
reasonably be possible, in the relation to any shares or other
securities or property thereafter deliverable upon the exercise or
deemed exercise of any Warrant. Any such adjustments will be made by
and set forth in a supplement hereto approved by the directors of the
Corporation and shall for all purposes be conclusively deemed to be an
appropriate adjustment.
2.3 The Exercise Price in effect at any date will be subject to adjustment from
time to time if and whenever at any time during the Adjustment Period, the
Corporation shall (i) subdivide, or redivide its outstanding Common Shares
into a greater number of Common Shares, or (ii) consolidate, combine or
reduce its outstanding Common Shares into a lesser number of Common Shares,
or (iii) issue Common Shares to all or substantially all of the holders of
Common Shares by way of a stock dividend or other distribution. In any such
event, the Exercise Price shall, on the effective date of such event, be
adjusted so that it will equal the price determined by multiplying the
Exercise Price in effect immediately prior to such date by a fraction, the
numerator of which shall be the total number of Common Shares outstanding
on such effective date or record date before giving effect to such event
and the denominator of which shall be the total number of Common Shares
outstanding immediately after giving effect to such event. Such adjustment
will be made successively whenever any such event shall occur.
If and whenever at any time during the Adjustment Period, the Corporation
shall fix a record date for the making of a distribution to all or
substantially all of the holders of Common Shares of:
shares of any class other than Common Shares whether of the
Corporation or any other corporation;
rights, options or warrants (other than rights, options or warrants
exercisable by the holders thereof within a period expiring not
more than 45 days after the date of issue thereof);
evidences of indebtedness; or
cash, securities or other property or assets;
then, in each such case, the Exercise Price will be adjusted immediately
after such record date so that it will equal the price determined by
multiplying the Exercise price in effect on
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such record date by a fraction, of which the numerator shall be the total
number of Common Shares outstanding on such record date multiplied by the
Current Market Price on the earlier of such record date and the date on
which the Corporation announces its intention to make such distribution,
less the excess, if any, aggregate fair market value on such record date
(as determined by the directors at the time such distribution is
authorized) of such shares or rights, options or warrants or evidences of
indebtedness or cash, securities or other property or assets so distributed
over the fair market value of the consideration received therefor by the
Corporation from the holders of the Common Shares (as determined by the
directors), and of which the denominator shall be the total number of
Common Shares outstanding on such record date multiplied by such Current
Market Price. Any Common Shares owned by or held for the account of the
Corporation or any subsidiary of the Corporation shall be deemed not to be
outstanding for the purpose of such computation. Such adjustment will be
made successively whenever such a record date is fixed, provided that if
two or more such record dates or record dates referred to in paragraph
2.3(b) are fixed within a period of 25 Trading Days, such adjustment will
be made successively as if each of such record dates occurred on the
earliest of such record dates. To the extent that such distribution is not
so made or to the extent that any such rights, options or warrants so
distributed are not exercised prior to the expiration thereof, the Exercise
Price will then be readjusted to the Exercise Price which would then be in
effect if such record date had not been fixed or to the Exercise Price
which would then be in effect based upon such shares or rights, options or
warrants or evidences of indebtedness or cash, securities or other property
or assets actually distributed or based upon the number or amount of
securities or the property or assets actually issued or distributed upon
the exercise of such rights, options or Warrants, as the case may be.
If and whenever at anytime during the Adjustment Period, the Corporation
shall fix a record date for the issue of rights, options or warrants
to all or substantially all of the holders of Common Shares under
which such holders are entitled, during a period expiring not more
than 45 days after the record date for such issue ("Rights Period"),
to subscribe for and purchase Common Shares at a price per share to
the holder of less than 95% of the Current Market Price for the Common
Shares on such record date (any of such events being called a "Rights
Offering"), then the Exercise Price shall be adjusted effective
immediately after the end of the Rights Period to a price determined
by multiplying the Exercise Price in effect immediately prior to the
end of the Rights Period by a fraction:
the numerator of which shall be the aggregate of:
the number of Common Shares outstanding as of the record date for
the Rights Offering, and
a number determined by dividing (1) the product of the number of
Common Shares issued or subscribed for during the Rights
Period upon the exercise of the rights, warrants, or options
under the Rights Offering and the price at which such Common
Shares are offered by (2) the Current Market Price of the
Common Shares as of the record date for the Rights Offering;
and
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the denominator of which shall be the number of Common Shares
outstanding after giving effect to the Rights Offering and
including the number of Common Shares actually issued or
subscribed for during the Rights Period upon exercise of the
rights, warrants or options under the Rights Offering.
Any holder of Warrants who shall have exercised his right to purchase
Common Shares in accordance with this Warrant Certificate during the period
beginning immediately after the record date for a Rights Offering and
ending on the last day of the Rights Period therefor shall, in addition to
the Common Shares to which he is otherwise entitled upon such exercise in
accordance with this Warrant Certificate, be entitled to that number of
additional Common Shares equal to the result obtained when the difference,
if any, resulting from the subtraction of the Exercise Price as adjusted
for such Rights Offering pursuant to this Subsection 2.3(c) from the
Exercise Price in effect immediately prior to the end of such Rights
Offering is multiplied by the number of Common Shares purchased upon
exercise of the Warrants held by such holder of Warrants during such
period, and the resulting product is divided by the Exercise Price as
adjusted for such Rights Offering pursuant to this Subsection 2.3(c);
provided that the provisions of this Warrant Certificate shall be
applicable to any fractional interest in any Common Share to which such
holder of Warrants might otherwise be entitled under the foregoing
provisions of this Subsection 2.3(c). Such additional Common Shares shall
be deemed to have been issued to the holder of Warrants immediately
following the end of the Rights Period and a certificate for such
additional Common Shares shall be delivered to such holder of Warrants
within ten business days following the end of the Rights Period. To the
extent that any such rights, options or warrants are not so exercised on or
before the expiry thereof, the Exercise Price will be readjusted to the
Exercise Price which would then be in effect based on the number of Common
Shares (or the securities convertible or exchangeable for Common Shares)
actually delivered on the exercise of such rights, options or warrants.
2.4 In any case in which this section 2 shall require that an adjustment shall
become effective immediately after a record date for or effective date of
an event referred to herein, the Corporation may defer, until the
occurrence and consummation of such event, issuing to the holder of any
Warrant exercised after such record date or effective date and before the
occurrence and consummation of such event the additional Common Shares or
other securities or property issuable upon such exercise by reason of the
adjustment required by such event, provided, however, that the Corporation
or successor to the undertaking or assets of the Corporation, will deliver
to such holder, as soon as reasonably practicable after such record date or
effective dates, as applicable, an appropriate instrument evidencing such
holder's right to receive such additional Common Shares or other securities
or property upon the occurrence and consummation of such event and the
right to receive any dividend or other distribution in respect of such
additional Common Shares or other securities or property declared in favour
of the holders of record of Common Shares or of such other securities or
property on or after the Exercise Date, or such later date as such holder
would, but for the provisions of this Section 2.4, have become the holder
of record of such additional Common Shares, warrants or of such other
securities or property.
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If the Corporation shall set a record date to determine the holders of the
Common Shares or other securities for the purpose of entitling them to
receive any dividend or distribution or any subscription or exercise
rights and shall, thereafter and before the distribution to such
securityholders of any such dividend, distribution or subscription or
exercise rights, legally abandon its plan to pay or deliver such
dividend, distribution or subscription or exercise rights, then no
adjustment in the Exercise Price or the Exchange Rate shall be
required by reason of the setting of such record date.
The adjustments provided for in this Section 2 are cumulative, and shall,
in the case of any adjustment to the Exchange Rate or the Exercise
Price, be computed to the nearest one one-hundredth of a Common Share
and will apply (without duplication) to successive subdivisions,
consolidations, distributions, issuances or other events resulting in
any adjustment under the provisions of this Section 2, provided that,
notwithstanding any other provision of this Section 2.4, no adjustment
of the Exchange Rate or the Exercise Price will be required (i) unless
such adjustment would require an increase or decrease of at least 1%
in the Exchange Rate or the Exercise Price then in effect (provided,
however, that any adjustment which by reason of this Subsection 2.4(c)
is not required to be made will be carried forward and taken into
account in any subsequent adjustment), or (ii) in respect of any
Common Shares issuable or issued pursuant to any option, warrant,
share option or share purchase plan of the Corporation as otherwise
specified in the Underwriting Agreement, or (iii) in respect of any
Common Shares issuable or issued pursuant to the Special Warrants or
upon exercise of the Warrants.
If any question arises with respect to the adjustments provided in this
Section 2, such question shall be conclusively determined by the
Corporation's auditors or, if they are unable or unwilling to act, by
such firm of chartered accountants as is appointed by the Corporation.
Such accountants shall have access to all necessary records of the
Corporation and such determination shall be binding upon the
Corporation, and the holder of Warrants.
All shares of any class or other securities or property which a holder of
Warrants is at the time in question entitled to receive on the full
exercise of his Warrants, whether or not as a result of adjustments
made pursuant to this Section 2 shall, for the purposes of the
interpretation of this Warrant Certificate, be deemed to be Common
Shares which such holder of Warrants is entitled to subscribe for
pursuant to the exercise of such Warrants.
If and whenever at any time during the Adjustment Period, the Corporation
shall take any action affecting or relating to the Common Shares,
other than any and all action described in this Section 2, which in
the opinion of the directors of the Corporation, would adversely
affect the rights of any holders of Warrants, the Exchange Rate and/or
the Exercise Price shall be adjusted by the directors in such manner,
if any, and at such time, as the directors, may in their sole
discretion determine to be equitable in the circumstances to such
holders.
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As a condition precedent to the taking of any action which would require an
adjustment in any of the rights under the Warrants, the Corporation
will take any and all action which may, in the opinion of counsel to
the Corporation, be necessary in order that the Corporation, or any
successor to the Corporation or successor to the undertaking or assets
of the Corporation, shall be obligated to and may validly and legally
issue all the Common Shares or other securities or property which the
holders of Warrants would be entitled to receive thereafter on the
exercise thereof in accordance with the provisions hereof.
At least seven days before the earlier of the effective date of or record
date for any event referred to in this Section 2 that requires or
might require an adjustment in any of the rights under the Warrants or
such longer notice period as may be applicable in respect of notices
required to be delivered by the Corporation to holders of its Common
Shares, the Corporation will give notice to the holder of Warrants of
the particulars of such event and, to the extent determinable, any
adjustment required and a description of how such adjustment will be
calculated.
Such notice need only set forth such particulars as have been
determined at the date such notice is given. If any adjustment for
which such notice is given is not then determinable, promptly after
such adjustment is determinable the Corporation will give notice to
the holder of Warrants of such adjustment.
Legends
Any certificate representing Common Shares issued upon the exercise of the
Warrants prior to the date which is four months and one day after the
date hereof will bear the following legend:
"UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE SHALL NOT TRADE THE
SECURITIES BEFORE MAY 1, 2003."
All certificates issued in exchange for or in substitution of, the Warrant
Certificates, shall bear the following legend (the "US Legend"):
THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON THE
EXERCISE THEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR
UNDER ANY STATE SECURITIES LAWS. THE HOLDER HEREOF AGREES FOR THE
BENEFIT OF THE COMPANY THAT THE SECURITIES REPRESENTED HEREBY AND THE
SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) OUTSIDE
THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER
THE U.S. SECURITIES ACT, IF APPLICABLE (C) INSIDE THE UNITED STATES
(1) PURSUANT TO THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER
THE U.S. SECURITIES ACT PROVIDED BY
-8-
RULE 144 THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAW OR (2) IN A TRANSACTION THAT DOES NOT OTHERWISE
REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE
STATE SECURITIES LAW, PROVIDED THE HOLDER HAS FURNISHED TO THE COMPANY
AN OPINION OF COUNSEL OF RECOGNIZED STANDING TO THE EFFECT REASONABLE
SATISFACTORY TO THE COMPANY. AS USED HEREIN, THE TERMS "UNITED STATES"
AND "U.S. PERSON" HAVE THE MEANINGS ASCRIBED TO THEM IN REGULATION S
UNDER THE U.S. SECURITIES ACT.
In the event that the Warrants are exercised by the Subscriber or any
transferee at any time, the certificates evidencing the Common Shares
will bear the US Legend.
The Common Shares issued upon the exercise of the Warrants, may be sold or
transferred to a Canadian resident without bearing the US Legend
provided the Shares have been sold through the facilities of the
Toronto Stock Exchange or such other Canadian exchange as the Common
Shares may be listed on from time to time. A declaration in the form
of Schedule C to this Certificate must be delivered with to the
Corporation or such person as the Corporation directs, with the
certificates for the Shares.
Meetings of Holders of Warrants
4.1 The Corporation may at any time and from time to time to call and convene a
meeting of the holders of Warrants, and will do so on receipt of a written
request of the holders of Warrants and on being funded and indemnified to
its reasonable satisfaction by the Corporation or by one or more of the
holders of Warrants signing such request against the costs which it may
incur in connection with calling and holding the meeting.
If the Corporation fails, within five business days after receipt of such
written request of the request and indemnity, to give notice convening
a meeting, any of such holders of Warrants, as the case may be, may
convene such meeting.
Every such meeting will be held in Ottawa, Ontario or such other place as
is approved or determined by the Corporation. However, if the meeting
is convened by the holders of Warrants as a result of the
Corporation's failure or refusal to convene such meeting, the meeting
must be held in Ottawa.
At least 21 days' notice of any meeting must be given by the holders of
Warrants, to the Corporation (unless the meeting has been called by
it).
The notice to be delivered in accordance with paragraph (d) must state the
time when and the place where the meeting is to be held and shall
describe (with sufficient detail to permit a holder of Warrants to
make a reasoned decision with respect to the matters for
consideration) the general nature of the business to be transacted
thereat, but it
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will not be necessary for the notice to set out the terms of any
resolution to be proposed or any of the provisions of this Section 4.
Some individual (who need not be a holder of Warrants) designated in
writing will be chair of the meeting or, if no individual is so
designated or the individual so designated is not present within 15
minutes after the time fixed for the holding of the meeting, the
holder of Warrants present in person or by proxy may choose some
person present to be chair.
At any meeting of holder of Warrants a quorum will consist of two or more
holder of Warrants present in person or by proxy at the commencement
of business holding in the aggregate not less than 50% of the total
number of Warrants then outstanding provided however that in the event
there are two or more holder of Warrants, at least two persons
entitled to vote there at are personally present.
If a quorum of holder of Warrants is not present within 30 minutes after
the time fixed for holding a meeting, the meeting, if summoned by
holder of Warrants or on a holder of Warrants' Request, will be
dissolved, but, subject to Section 4.2, in any other case will be
adjourned to the seventh calendar day following the meeting (unless
such day is not a business day, in which case it shall be adjourned
tot he next business day), at the same time of day and place and no
notice of the adjournment need be given.
At the adjourned meeting the holder of Warrants present in person or by
proxy will form a quorum and may transact any business for which the
meeting was originally convened notwithstanding the number of Warrants
that they hold.
The chairman of a meeting at which a quorum of the holder of Warrants is
present may, with the consent of the meeting, adjourn the meeting, and
no notice of such adjournment need be given except as the meeting
prescribes.
Every question submitted to a meeting, other than an Extraordinary
Resolution, will be decided in the first place by a majority of the
votes given on a show of hands and, unless a poll is duly demanded as
herein provided, a declaration by the chairman that a resolution has
been carried or carried unanimously or by a particular majority or
lost or not carried by a particular majority will be conclusive
evidence of the fact
On every Extraordinary Resolution, and on every other question submitted to
a meeting on which a poll is directed by the chairman or requested by
one or more holder of Warrants acting in person or by proxy, a poll
will be taken in such manner as the chairman directs.
Questions other than those required to be determined by Extraordinary
Resolution will be decided by a majority of the votes cast on the
poll.
On a show of hands each person present and entitled to vote, whether as a
holder of Warrants or as proxy for one or more absent holder of
Warrants, or both, will have one vote, and on a poll each holder of
Warrants present in person or represented by a proxy
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duly appointed by instrument in writing will be entitled to one vote
in respect of each Warrant held by such holder.
A proxy need not be a holder of Warrants. The Chair of any meeting shall be
entitled both on a show of hands and on a poll, to vote in respect of
the Warrants, if any held or represented by the Chair.
4.2 The Corporation may from time to time make or vary such regulations as it
thinks fit:
for the issue of voting certificates by any bank, trust company or
other depository satisfactory to the Corporation stating that the
Warrants specified therein have been deposited with it by a named
person and will remain on deposit until a specified date, which
voting certificates will entitle the persons named therein to be
present and vote at any meeting of holder of Warrants and at any
adjournment thereof held before that date or to appoint a proxy
or proxies to represent them and vote for them at any such
meeting and at any adjournment thereof held before that date in
the same manner and with the same effect as though the persons so
named in such voting certificates were the actual holders of the
Warrants specified therein;
for the form of instrument appointing a proxy, the manner in which it
must be executed, and verification of the authority of a person
who executes it on behalf of a holder of Warrants;
governing the places at which and the times by which voting
certificates or instruments appointing proxies must be deposited;
for the deposit of voting certificates or instruments appointing
proxies at some approved place or places other than the place at
which the meeting is to be held and enabling particulars of such
voting certificates or instruments appointing proxies to be sent
by mail, cable, telex or other means of prepaid, transmitted,
recorded communication before the meeting to the Corporation at
the place where the meeting is to be held and for voting pursuant
to instruments appointing proxies so deposited as though the
instruments themselves were produced at the meeting; and
generally for the calling of meetings of holder of Warrants and the
conduct of business thereat.
Any regulations so made will be binding and effective and the votes given
in accordance therewith will be valid and will be counted.
Except as such regulations provide, the only persons who will be recognized
at a meeting as the holders of any Warrants, or as entitled to vote,
be present at the meeting in respect thereof, will be the registered
holders of such Warrants or their duly appointed proxies.
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The Corporation by its respective employees, officers or directors, and
the counsel of the Corporation and counsel of the holder of Warrants
may attend any meeting of holder of Warrants, but will have no vote as
such.
4.3 In addition to all other powers conferred on them by the other provisions
of this Warrant Certificate, by the Warrants or by law, the holder of
Warrants at a meeting will, subject to the provisions of this Article 4,
have the power, exercisable from time to time by Extraordinary Resolution:
(a) subject to the agreement of the Corporation to assent to or sanction
any amendment, modification, abrogation, alteration, compromise or
arrangement of any right of the holders of Warrants;
(b) to amend, alter or repeal any Extraordinary Resolution previously
passed subject to the approval of the Corporation if the rights and
duties of the Corporation are affected;
(c) to enforce any right of the holder of Warrants in any manner specified
in the Extraordinary Resolution;
(d) to refrain from enforcing any obligation or right referred to in
paragraph (c);
(e) to waive any default by the Corporation in complying with any
provision of this Warrant Certificate, either unconditionally or on
any condition specified in the Extraordinary Resolution;
(f) to appoint a committee with power and authority to exercise, such of
the powers of the holder of Warrants as are exercisable by
Extraordinary Resolution;
(g) to restrain any holder of Warrants from taking or instituting any
suit, action or proceeding against the Corporation for the enforcement
of any obligation of the Corporation under this Warrant Certificate or
to enforce any right of the holder of Warrants;
(h) to direct any holder of Warrants who, as such, has brought any suit,
action or proceeding, to stay or discontinue or otherwise deal
therewith on payment of the costs, charges and expenses reasonably and
properly incurred by him in connection therewith; and
(i) to assent to any compromise or arrangement with any creditor or
creditors or any class or classes of creditors, whether secured or
otherwise, and with holders of any shares or other securities of the
Corporation.
4.4 The expression "Extraordinary Resolution" when used in this Warrant
Certificate means, subject to the provisions of this Section 4, a
resolution proposed at a meeting of holder of Warrants duly convened for
that purpose and held in accordance with the provisions of this Section 4
at which there are present in person or by proxy holder of Warrants holding
in the aggregate not less than 50% of the total number of Warrants then
outstanding and passed by the affirmative votes of holder of Warrants who
hold in the aggregate not less than 66 2/3% of the total number of Warrants
then outstanding represented at the meeting and voted on the poll on the
resolution.
If, at a meeting called for the purpose of passing an Extraordinary
Resolution, the quorum required by this Section 4 is not present
within 30 minutes after the time appointed
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for the meeting, the meeting, if convened by holder of Warrants or on
a holder of Warrants' Request, will be dissolved, but in any other
case will stand adjourned to such day, being not less than seventeen
calendar days or more than 30 calendar days later, and to such place
and time, as is appointed by the chairman.
Not less than seven calendar days' notice must be given to the holder of
Warrants of the time and place of such adjourned meeting.
The notice must state that at the adjourned meeting the holder of Warrants
present in person or by proxy will form a quorum but it will not be
necessary to set forth the purposes for which the meeting was
originally called or any other particulars.
At the adjourned meeting the holder of Warrants present in person or by
proxy will form a quorum and may transact any business for which the
meeting was originally convened, and a resolution proposed at such
adjourned meeting and passed by the requisite vote as provided in this
Section 4 will be an Extraordinary Resolution within the meaning of
this Warrant Certificate notwithstanding that holder of Warrants
holding in the aggregate of not less than 50% of the total number of
Warrants outstanding may not be present.
Votes on an Extraordinary Resolution must always be given on a poll and no
demand for a poll on an Extraordinary Resolution will be necessary.
4.5 Minutes of all resolutions passed and proceedings taken at every meeting of
the holder of Warrants will be made and duly entered in books from time to
time provided for such purpose at the expense of the Corporation, and any
such minutes, if signed by the chairman of the meeting at which such
resolutions were passed or such proceedings were taken, will be prima facie
evidence of the matters therein stated, and, until the contrary is proved,
every such meeting in respect of the proceedings of which minutes have been
so made, entered and signed will be deemed to have been duly convened and
held, and all resolutions passed and proceedings taken thereat to have been
duly passed and taken.
The Corporation shall be provided with, in a timely manner and at its own
expense, copies of any and all resolutions passed at any meeting of
the holder of Warrants pursuant to this Section 4
Any action that may be taken and any power that may be exercised by holder
of Warrants at a meeting held as provided in this Article 8 by way of
an Extraordinary Resolution may also be taken and exercised by holder
of Warrants who hold in the aggregate not less than 66 2/3% of the
total number of Warrants at the time outstanding, by their signing,
each in person or by attorney duly appointed in writing, an instrument
in writing in one or more counterparts, and the expression
"Extraordinary Resolution" when used in this Warrant Certificate
includes a resolution embodied in an instrument so signed.
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The Corporation shall be provided with, in a timely manner and at its own
expense, copies of any and all instruments in writing signed by the
holder of Warrants.
Everyresolution and every Extraordinary Resolution passed in accordance
with the provisions of this Article at a meeting of holder of Warrants
will be binding on all holder of Warrants, whether present at or
absent from the meeting and whether voting for or against the
resolution or abstaining, and every instrument in writing signed by
holder of Warrants in accordance with Section 4 will be binding on all
holder of Warrants, whether signatories thereto or not, and every
holder of Warrants will be bound to give effect accordingly to every
such resolution and instrument in writing.
In determining whether holder of Warrants holding the required total
number of Warrants are present in person or by proxy for the purpose
of constituting a quorum, or have voted or consented to a resolution,
Extraordinary Resolution, consent, waiver, holder of Warrants' Request
or other action under this Warrant Certificate, a Warrant held by the
Corporation or by any Affiliate of the Corporation will be deemed to
be not outstanding. Upon a request in writing the Corporation shall
provide a certificate of the Corporation detailing the registration
and denomination of any Warrants held by the Corporation or by any
affiliate of the Corporation.
Notices
Unless herein otherwise expressly provided, a notice to be given hereunder
to a holder of Warrants will be deemed to be validly given if the
notice is sent by ordinary surface or air mail, postage prepaid,
addressed to the holder of Warrants or delivered (or so mailed to
certain holders of Warrants and so delivered to the other holders of
Warrants) at their respective addresses appearing on any of the
registers of holders described in this Warrant Certificate provided,
however, that if, by reason of a strike, lockout or other work
stoppage, actual or threatened, involving Canadian postal employers,
the notice could reasonably be considered unlikely to reach or likely
to be delayed in reaching its destination, the notice will be valid
and effective only if it is so delivered or is given by publication
twice in the Report on Business section in the national edition of The
Globe and Mail newspaper.
A notice so given by mail or so delivered will be deemed to have been
given on the fifth business day after it has been mailed or on the day
which it has been delivered, as the case may be, and a notice so given
by publication will be deemed to have been given on the day on which
it has been published as required. In determining under any provision
hereof the date when notice of a meeting or other event must be given,
the date of giving notice will be included and the date of the meeting
or other event will be excluded. Accidental error or omission in
giving notice or accidental failure to mail notice to any holder of
Warrants will not invalidate any action or proceeding founded thereon.
Any notice to be given hereunder may be given by delivery to the
Corporation, shall be at the following address:
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To World Heart Corporation
0 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxx
X0X 0X0
Attention: Chief Financial Officer
with a copy to:
XxXxxxxx Xxxxxxxx LLP
00 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxxx X. Xxxxxxxxxx
or to such other address as the Subscriber may from time to time in
writing notify the Corporation.
SCHEDULE B
NOTICE OF EXERCISE
------------------
To: WORLD HEART CORPORATION
The undersigned holder of the Warrants evidenced by this Warrant Certificate
hereby exercises its right to be issued Common Shares of World Heart Corporation
(or such other securities or property to which such exercise entitles him in
lieu thereof or in addition thereto under the provisions of the Warrant
Certificate) that are issuable upon the exercise of such Warrants, on the terms
specified in such Warrant Certificate and in connection therewith was enclosed a
certified cheque or bank draft payable to the Corporation in an amount equal to
$1.60 (or price as adjusted) in respect of each Common Share to be issued.
The undersigned hereby acknowledges that it is aware that the Common Shares
received on exercise may be subject to restrictions on resale under applicable
securities legislation.
The undersigned hereby irrevocably directs that the said Common Shares be
issued, registered and delivered as follows:
Name(s) in Full Address(es) in Full, Account No., S.I.N. Number(s) of Common
Shares
--------------- ---------------------------------------- -------------------
--------------- ---------------------------------------- -------------------
(Please print full name in which certificates for Common Shares are to be
issued. If any securities are to be issued to a person or persons other than the
holder, the holder must pay to the Corporation all exigible transfer taxes or
other government charges and sign the Form of Transfer.)
DATED this day of , .
---------------- ------------------ -----------------
)
) ---------------------------------------
) Signature of Registered Holder
)
----------------------------------- ---------------------------------------
Witness ) Name of Registered Holder
Note: The name of the Registered Holder of this Notice of Exercise must be
the same as the name appearing on the face page of the Warrant
Certificate to which this Schedule is attached.
[ ] Please check if the Common Share certificates are to be delivered at
the office where this Warrant Certificate is surrendered, failing
which such certificates will be mailed.
Certificates will be delivered or mailed as soon as practicable after
the due surrender of this Warrant Certificate to which this Appendix
is attached.
If this Notice of Exercise is delivered by hand or by mail: World Heart
Corporation, 0 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxx, X0X 0X0, Attention: Chief
Financial Officer.
DATED this day of , 200 .
APPENDIX 1
FORM OF TRANSFER
Any transfer of Warrants will require compliance with applicable securities
legislation. Transferors and transferees are urged to contact legal counsel
before effecting any such transfers.
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers to
Name: -----------------------------------
Address: -----------------------------------
-----------------------------------
(such person, the "Transferee"----------------------------- Warrants of World
Heart Corporation ("the Corporation") registered in the name of the undersigned
on the records of the Corporation maintained by the Corporation represented by
the attached Warrant Certificate and does hereby appoint as its attorney with
full power of a substitution to transfer the Warrants on the appropriate
register of the Corporation.
The undersigned confirms that the transfers are made in compliance with all
applicable securities legislation and requirements of regulatory authorities
including without limitation any undertaking given to the Toronto Stock
Exchange.
If the sale evidenced hereby is being made to a U.S. Person (as such term is
defined in Regulation S to the United States Securities Act of 1933 (the "1933
Act"), the undersigned by the execution of this form of transfer hereby
certifies that such sale does not require registration of the Warrants being
transferred hereby under the 1933 Act and tenders herewith evidence satisfactory
to the Corporation to such effect.
DATED this day of , .
---------------- ---------------------------- -------
) -----------------------------------
) Signature of Transferor
--------------------------------------)
) -----------------------------------
) Name of Transferor
Signature of Transferor must be guaranteed by a Canadian chartered bank, a major
Canadian trust company or by a Medallion signature guarantee from a member of a
recognized signature Medallion program
Schedule C
FORM OF DECLARATION FOR REMOVAL OF LEGEND
TO: World Heart Corporation
0 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxx X0X 0X0
The undersigned (a) acknowledges that the sale of the securities of World Heart
Corporation (the "Corporation") to which this declaration relates is being made
in reliance on Rule 904 of Regulation S under the United States Securities Act
of 1933, as amended (the "1933 Act") and (b) certifies that (1) it is not an
affiliate of the Corporation as that term is defined in the 1933 Act, (2) the
offer of such securities was not made to a person in the United States and
either (A) at the time the buy order was originated, the buyer was outside the
United States, or the seller and any person acting on its behalf reasonably
believe that the buyer was outside the United States; or (B) the transaction is
being executed on or through the facilities of the Toronto Stock Exchange, the
TSX Venture Exchange or any other designated offshore securities market and
neither the seller nor any person acting on its behalf knows that the
transaction has been prearranged with a buyer in the United States, (3) neither
the seller nor any affiliate of the seller nor any person acting on any of their
behalf has engaged or will engage in any directed selling efforts in the United
States in connection with the offer and sale of such securities, (4) the sale is
bona fide and not for the purpose of "washing off" the resale restrictions
imposed because the securities are "restricted securities" (as such term is
defined in Rule 144(a)(3) under the 1933 Act), (5) the seller does not intend to
replace the securities sold in reliance on Rule 904 of the 1933 Act with
fungible unrestricted securities and (6) the contemplated sale is not a
transaction, or part of a series of transactions which, although in technical
compliance with Regulation S, is part of a plan or scheme to evade the
registration provisions of the 1933 Act. Terms used herein have the meanings
given to them by Regulation S.
Dated:
-------------------------
By:
----------------------------
Name:
Title:
