SHAREHOLDERS AGREEMENT
between
WORLD HEART CORPORATION
and
XXXXXXX LIFESCIENCES LLC
and
XXXXXXX LIFESCIENCES (US) INC.
and
THE SHAREHOLDERS OF WORLD HEART CORPORATION
IDENTIFIED HEREIN
Dated as of
June 30, 2000
SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT (the "Agreement"), dated as of June 30, 2000,
among World Heart Corporation, an Ontario corporation ("World Heart"), Xxxxxxx
Lifesciences LLC, a Delaware limited liability company ("Xxxxxxx LLC"), Xxxxxxx
Lifesciences (US) Inc., a Delaware corporation ("Xxxxxxx US") and Xxxxxxxx X.
Xxxxxx, Dr. Tofy Mussivand and the Ottawa Heart Institute Research Corporation
(the "Other Shareholders").
WHEREAS (a) World Heart and Xxxxxxx LLC are parties to a Contribution
Agreement, dated as of May 24, 2000 (the "Contribution Agreement") and the other
Transaction Agreements (as defined in the Contribution Agreement), and (b)
Xxxxxxx US and World Heart are parties to a Convertible Preferred Shares
Purchase Agreement dated as of May 24, 2000 (the "World Heart Preferred
Agreement") and upon consummation of the transactions contemplated therein (the
"Transactions") Xxxxxxx LLC will hold 4,981,128 participating cumulative
preferred shares (the "Newco Preferred Shares") of Valentine Acquisition Corp.,
a Delaware corporation and a subsidiary of World Heart ("Newco"), and Xxxxxxx US
will hold 1,374,570 Cumulative Redeemable Convertible Preferred Shares, Series A
of World Heart (the "Series A Preferred Shares");
WHEREAS pursuant to the Exchange Agreement between Xxxxxxx LLC and
World Heart dated as of May 24, 2000 (as defined in the Contribution Agreement)
Xxxxxxx LLC will have the right to exchange the Newco Preferred Shares for
common shares of World Heart ("World Heart Common Shares") on the terms and
conditions set out therein;
WHEREAS the Series A Preferred Shares are convertible into World Heart
Common Shares at the times and on the terms and conditions set out in the
articles of World Heart;
WHEREAS the parties hereto wish to set forth their agreement
concerning certain governance matters of World Heart following consummation of
the Transactions as well as certain matters relating to Xxxxxxx ownership and
disposition of the World Heart Common Shares;
NOW, THEREFORE, in consideration of the mutual agreements and
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.1 Definitions. As used in this Agreement, the following
terms shall have the following meanings:
"affiliate" has the meaning specified in the Securities Act (Ontario)
as in effect on the date of this Agreement.
"Agreement" has the meaning set forth in the recitals to this
agreement.
"Applicable Law" shall mean, with respect to any Person, any statute,
law, regulation, ordinance, rule, judgment, rule of common law, order, decree,
award, Governmental Approval, concession, grant, franchise, license, agreement,
directive, guideline, policy, requirement, or other governmental restriction or
any similar form of decision of, or determination by, or any interpretation or
administration of any of the foregoing by, any Governmental Authority, whether
in effect as of the date hereof or thereafter and in each case as amended,
applicable to such Person or its subsidiaries or their respective assets.
A Person shall be deemed to "Beneficially Own", to have "Beneficial
Ownership" of, or to be "Beneficially Owning" any securities (which securities
shall also be deemed "Beneficially Owned" by such Person) that such Person is
deemed to "beneficially own" within the meaning of Rule 13d-3 under the Exchange
Act as in effect on the date of this Agreement and, for certainty, Xxxxxxx shall
be deemed to Beneficially Own the World Heart Common Shares issuable upon the
conversion of the Series A Preferred Shares and issuable upon the exchange of
the Newco Preferred Shares;
"Canadian Securities Acts" shall mean the Canadian securities
legislation and Canadian securities directions set out in National Instrument
14-101 adopted or made by the securities commissions and similar regulatory
authorities in the provinces of Canada;
"Contribution Agreement" has the meaning set forth in the recitals to
this Agreement.
"Xxxxxxx" means, collectively, Xxxxxxx US and Xxxxxxx LLC.
"Xxxxxxx Designee" means the Chief Executive Officer of Xxxxxxx LLC.
"Xxxxxxx LLC" has the meaning set forth in the recitals to this
Agreement.
"Xxxxxxx US" has the meaning set forth in the recitals to this
Agreement.
"Effective Date" means the date of the closing of the Transactions and
the transactions contemplated by the World Heart Preferred Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"First Offer Price" has the meaning set forth in Section 3.2(a).
"Governmental Approval" means any action, order, authorization,
consent, approval, license, lease, ruling, permit, tariff, rate, certification,
exemption, filing or registration by or with any Governmental Authority.
"Governmental Authority" means any government or political subdivision
thereof, governmental department, commission, board, bureau, agency, regulatory
authority, instrumentality, judicial or administrative body having jurisdiction
over the matter or matters in question.
"Incentive Securities" has the meaning set forth in Section 4.1.
"Losses" has the meaning set forth in Section 5.4.
"Newco Preferred Shares" has the meaning set forth in the preamble of
this Agreement.
"Offered Shares" has the meaning set forth in Section 3.2(a)
"Other Shareholders" has the meaning set forth in the recitals to this
Agreement.
"Permitted Transferee" has the meaning set forth in Section 3.1.
"Person" means any individual, group, corporation, firm, partnership,
limited liability company, joint venture, trust, business association,
organization, governmental entity or other entity.
"POP System" means the prompt offering prospectus qualification system
established under the Canadian Securities Acts or any equivalent system
established from time to time in Canada;
"Public Offering" means any offering of World Heart Common Shares
registered under the Securities Act or qualified under any of the Canadian
Securities Acts.
"Response Period" has the meaning set forth in Section 3.2(b).
"SEC" means the Securities and Exchange Commission or any successor
governmental entity.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Series A Preferred Shares" has the meaning set forth in the recitals
to this Agreement.
"Transactions" has the meaning set forth in the recitals to this
Agreement.
"Transfer Notice" has the meaning set forth in Section 3.2(a).
"World Heart" has the meaning set forth in the recitals to this
Agreement.
"World Heart Board" means the board of directors of World Heart.
"World Heart Common Shares" has the meaning set forth in the recitals
to this Agreement.
ARTICLE II
Corporate Governance
SECTION II.1 The World Heart Board of Directors. This Article II shall
be effective for so long as Xxxxxxx Beneficially Owns at least 10% of the World
Heart Common Shares outstanding on a fully diluted basis and does not
Beneficially Own a majority of the Series A Preferred Shares.
(a) Composition. World Heart and the Other Shareholders hereby agree
to take, at any time and from time to time, all action necessary and within
their power such that the World Heart Board shall consist of not more than eight
directors. Xxxxxxx shall be entitled to nominate the Xxxxxxx Designee for
election to the World Heart Board.
(b) Removal. Only Xxxxxxx shall be entitled to request the removal of
the Xxxxxxx Designee. If Xxxxxxx requests that the Xxxxxxx Designee be removed
(with or without cause), the Other Shareholders agree to take or cause to be
taken all appropriate action within their power to effect the removal of such
director from the Board of Directors of World Heart.
(c) Vacancies. In the event a vacancy is created on the World Heart
Board by the death, disability, retirement, resignation or removal of the
Xxxxxxx Designee (an "Xxxxxxx Vacancy"), then as soon as practicable thereafter
Xxxxxxx shall designate a new Xxxxxxx Designee and the Other Shareholders agree
to vote in favor of the new Xxxxxxx Designee to fill the Xxxxxxx Vacancy.
(d) Subsidiaries and Committees. At Xxxxxxx' election, unless
prohibited by applicable stock exchange rules or Applicable Law, any board of
directors of any subsidiary of World Heart, and any committee of the board of
directors of World Heart and such subsidiary shall include the Xxxxxxx Designee.
SECTION II.2 General Covenant to Vote.
(a) Each Other Shareholder agrees to take all actions within their
power necessary at any time or from time to time to call, or cause World Heart
or the appropriate officers or directors of World Heart to call, one or more
meetings of shareholders of World Heart and to vote all securities of World
Heart Beneficially Owned or which control or direction is exercised by such
Other Shareholder at any such meeting at which directors are to be elected in
favor of, or to consent by written consent in lieu of any such meeting to, the
election of a Board of Directors consistent with, and the taking of any other
action required by or to effect the intent of, this Agreement including, without
limiting the generality of the foregoing, the election of the Xxxxxxx Designee
as a director of World Heart.
(b) World Heart agrees to take all actions necessary at any time or
from time to time to call, or to cause its subsidiaries or the appropriate
officers or directors of its subsidiaries to call, one or more annual meetings
of shareholders of its subsidiaries and to vote all securities Beneficially
Owned or over which control or direction is exercised by World Heart at any such
annual meeting in favor of, or to consent by written consent in lieu of any such
meeting to, the election of a board of directors consistent with, and the taking
of any other action required by or to effect the intent of, this Agreement.
ARTICLE III
Transfer Restrictions
SECTION III.1 Restrictions on World Heart Common Shares. If World
Heart enters into an agreement with underwriters pursuant to which World Heart
agrees to issue and sell World Heart Common Shares or securities convertible
into or carrying the right to purchase World Heart Common Shares in a Public
Offering and if Xxxxxxx is requested to do so by the lead underwriter, Xxxxxxx
will agree not to sell, transfer or otherwise dispose of any World Heart Common
Shares for 90 days following the completion of World Heart's Public Offering
without the prior written consent of the underwriters, which shall not be
unreasonably withheld. The preceding sentence shall not restrict Xxxxxxx'
ability to sell securities concurrently with World Heart in such Public Offering
through such underwriters. So long as Xxxxxxx holds World Heart Common Shares,
Xxxxxxx shall not sell, transfer or otherwise dispose of any World Heart Common
Shares except in accordance with Section 3.2 or one of the following:
(a) pursuant to a sale or sales to any one or more Persons or groups
in an amount that, when combined with all other sales of World Heart Common
Shares effected by Xxxxxxx in the preceding 12 months represents, in the
aggregate, no more than 25% of the World Heart Common Shares Beneficially Owned
by Xxxxxxx on a fully-diluted basis as of the Effective Date;
(b) pursuant to a merger, consolidation or other business combination
of Xxxxxxx, where Xxxxxxx is not the surviving entity, or a sale of all or
substantially all of Victoria's assets; provided, however, that the surviving or
purchasing entity agrees in writing to be bound by the terms of this Agreement;
or
(c) pursuant to a transfer of World Heart Common Shares by Xxxxxxx to
an affiliate of Xxxxxxx, from an affiliate of Xxxxxxx to Xxxxxxx or between
affiliates of Xxxxxxx (any such transferee shall be referred to herein as a
"Permitted Transferee"), provided that in the case of any such transfer, Xxxxxxx
or a Permitted Transferee, as the case may be, shall have provided World Heart
with written notice of such proposed transfer at least five days prior to
consummating such transfer stating the name and address of the Permitted
Transferee and the relationship between the transferring party and the Permitted
Transferee, and the Permitted Transferee shall have executed a copy of this
Agreement as a shareholder of World Heart. If any Permitted Transferee to whom
World Heart Common Shares have been transferred pursuant to this Section 2.1
ceases to be a Permitted Transferee, such World Heart Common Shares shall be
transferred back to the transferor or another Permitted Transferee immediately
prior to the time such Person ceases to be a Permitted Transferee. Xxxxxxx and
any Permitted Transferee shall be jointly and severally liable for any breach of
this Agreement by such Permitted Transferee.
SECTION III.2 Right of First Refusal.
(a) If Xxxxxxx receives and desires to accept a bona fide offer (an
"Offer") to purchase World Heart Common Shares representing more than 25% of the
World Heart Common Shares Beneficially Owned by Xxxxxxx on a fully-diluted basis
as of the Effective Date from any Person who is not an affiliate of Xxxxxxx,
Xxxxxxx shall give written notice (a "Transfer Notice") to that effect to World
Heart. The Transfer Notice shall contain (i) the number of World Heart Common
Shares proposed to be transferred (the "Offered Shares"), (ii) the identity of
the offeror (the "Offeror") and (iii) the purchase price (the "First Offer
Price") offered by the Offeror.
(b) World Heart shall have the right, for a period of 30 days after
the date of the Transfer Notice (the "Response Period"), to purchase, pursuant
to the Transfer Notice, all but not less than all of the Offered Shares at the
First Offer Price, exercisable by delivering a written notice (the "Acceptance
Notice") to Xxxxxxx within the Response Period. The Acceptance Notice shall be
deemed to be an irrevocable commitment to purchase from Xxxxxxx all of the
Offered Shares.
(c) If, at the end of the Response Period, Xxxxxxx has not received an
Acceptance Notice pursuant to terms of Section 3.2(b) Xxxxxxx shall be entitled
for a period of 90 days beginning the day after the expiration of the Response
Period to sell to the Offeror the Offered Shares at a price not lower than the
First Offer Price and on terms no more favorable to the Offeror than were
contained in the Transfer Notice; provided, however, that if the market price of
the World Heart Common Stock has dropped since the date of the Transfer Notice,
Xxxxxxx shall be entitled to sell the Offered Shares to the Offeror at a
correspondingly reduced price. Promptly after any sale pursuant to this Section
3.2, Xxxxxxx shall notify World Heart of the consummation thereof and shall
furnish such evidence of the completion (including time of completion) of such
sale and of the terms thereof as World Heart may reasonably request.
(d) If, at the end of any such 90-day period provided for in this
Section 3.2, Xxxxxxx has not completed the sale of the Offered Shares, Xxxxxxx
shall no longer be permitted to sell such Offered Shares pursuant to this
Section 3.2 without again fully complying with the provisions of this Section
3.2 and all the restrictions on sale, transfer, assignment or other disposition
contained in this Agreement shall again be in effect.
SECTION III.3 Compliance with Applicable Law, Etc. The exercise of the
right of first refusal set forth in Section 3.2 and the completion of any
transfer or sale of World Heart Common Shares contemplated hereunder shall be
subject to compliance with Applicable Law. Xxxxxxx, World Heart and each of the
Other Shareholders shall cooperate with each other and shall take all such
action, including, without limitation, obtaining all Governmental Approvals
required to comply with Applicable Law in connection with the sale or transfer
of the World Heart Common Shares pursuant to this Agreement. Each of Xxxxxxx,
World Heart and the Other Shareholders shall bear its own costs and expenses in
connection with obtaining any such Governmental Approvals, provided, however,
that neither Xxxxxxx nor the Other Shareholders shall be required to bear any
costs or expenses in order for another shareholder to obtain any such
Governmental Approvals.
SECTION III.4 Legends on Shares. Victoria agrees that the certificates
representing the Valentine Common Shares and the Newco Preferred Shares may bear
a legend referring to the transfer restrictions of this Article III.
SECTION III.5 Effect. Any purported transfer of securities that is
inconsistent with the provisions of this Article III shall be null and void and
of no force or effect and will not be registered on the share registers of World
Heart.
ARTICLE IV
Preemptive Rights and Additional Stock Sales
SECTION IV.1 Preemptive Rights. For so long as Xxxxxxx Beneficially
Owns at least 10% of the World Heart Common Shares outstanding on a
fully-diluted basis, Xxxxxxx shall be entitled to participate in all future
issuances by World Heart of World Heart Common Shares (or rights to acquire
World Heart Common Shares or securities convertible into, or exchangeable for,
or carrying the right to purchase World Heart Common Shares) to the extent
necessary to maintain its proportionate fully diluted equity interest in World
Heart as that interest exists at the time of such issuance. World Heart will
provide Xxxxxxx with at least 20 days advance written notice of any such
proposed issuance (a "Proposed Issuance"), which notice shall contain all
relevant information pertaining thereto (including, without limitation, the
identity of the proposed beneficial and record owners of the World Heart Common
Shares to be issued and sold by World Heart and the issue price per security, or
proposed range of issue prices per security, if then known) and an offer to
Xxxxxxx to participate in the Proposed Issuance (at a price per security and
upon terms and conditions no less favorable than those provided to other
offerees or purchasers of World Heart Common Shares in the Proposed Issuance) to
the extent necessary for Xxxxxxx to maintain its proportionate fully diluted
equity interest in World Heart. At Xxxxxxx' sole option, it may participate in
the Proposed Issuance by purchasing the full number of World Heart Common Shares
necessary to maintain its proportionate equity interest or any lesser number
thereof. In the event the terms of the Proposed Issuance change, World Heart
will provide Xxxxxxx with a new 20-day advance notice period prior to
consummating the transaction contemplated by the Proposed Issuance. These
preemptive rights shall not apply to the following sales or issuances: (a)
pursuant to an employee stock option plan, stock purchase plan or similar
benefit program, agreement or sale or issuance to directors, employees or
consultants which sales or issuances do not exceed 20%, on a fully diluted
basis, of the outstanding equity shares of World Heart as of the date hereof
("Incentive Securities"); or (b) as consideration for the acquisition by World
Heart or any of its affiliates of all or a part of another business or the
merger of any business entity with or into World Heart or any of its affiliates.
ARTICLE V
Registration Rights
SECTION V.1 Registration on Request.
(a) Request. Upon the written request of Xxxxxxx requesting that World
Heart effect the registration under the Securities Act and the qualification
under the prospectus requirements of any or all of the Canadian Securities Acts
of all or part of its World Heart Common Shares and specifying the intended
method of disposition thereof, World Heart will, subject to the terms of this
Agreement, use its best efforts to effect the registration under the Securities
Act and the qualification under the prospectus requirements of any or all of the
Canadian Securities Acts of the World Heart Common Shares which World Heart has
been so requested to register or qualify by Xxxxxxx for disposition or
distribution in accordance with the intended method of disposition stated in
such request; provided, however, that Xxxxxxx shall be entitled to make a
request under this Section 5.1 no more than three times unless any such
registration or qualifications requested shall not have been effected as set
forth in 5.1(d) below.
(b) Registration Statement and Prospectus Form. Registrations under
the Securities Act under this Section 5.1 shall be on such appropriate
registration form of the SEC as shall be selected by Xxxxxxx and World Heart.
If, in connection with any registration under the Securities Act under Section
5.1(a) which is proposed by World Heart to be on Form F-3 or any similar short
form registration statement which is a successor to Form F-3, the managing
underwriters, if any, shall advise World Heart in writing that in their opinion
the use of another permitted form is of material importance to the success of
the offering, then such registration shall be on such other permitted form. If,
at the time a request is made by Xxxxxxx under Section 5.1(a) to qualify a
distribution of World Heart Common Shares in some or all of the provinces of
Canada, World Heart has in force a receipt for its annual information form from
the applicable Canadian provincial securities regulatory authorities in all of
the provinces in which the distribution is to be effected and meets the
eligibility criteria to be a POP System issuer, World Heart will effect the
qualification by way of a short form prospectus pursuant to the POP System.
(c) Expenses. World Heart will pay all Registration Expenses (as
defined in Section 5.2(d)) in connection with any registration or qualification
requested pursuant to this Section 5.1 by Xxxxxxx.
(d) Effective Registration Statement. A registration or qualification
requested pursuant to this Section 5.1 shall not be deemed to have been effected
(i) unless a registration statement with respect thereto has become effective or
a (final) prospectus has been filed and a receipt issued therefor under the
applicable Canadian Securities Acts, provided that a registration or
qualification which does not become effective after World Heart has filed a
registration statement or a preliminary prospectus with respect thereto solely
by reason of the refusal to proceed of Xxxxxxx(other than a refusal to proceed
based upon the advice of counsel relating to a matter with respect to World
Heart) shall be deemed to have been effected by World Heart at the request of
Xxxxxxx unless Xxxxxxx shall have elected to pay all Registration Expenses in
connection with such registration, (ii) if, after it has become effective, such
registration statement or distribution of World Heart Common Shares becomes
subject to any stop order, cease trading order, injunction or other order or
requirement of the SEC or applicable Canadian provincial securities regulatory
authority or other governmental agency or court for any reason other than by
reason of some act or omission by, or circumstance relating to, Xxxxxxx, or
(iii) the conditions to closing specified in the purchase agreement or
underwriting agreement entered into in connection with such registration are not
satisfied, other than by reason of some act or omission by, or circumstances
relating to, Xxxxxxx.
(e) Selection of Underwriters. If a requested registration or
qualification pursuant to this Section 5.1 involves an underwritten offering,
the managing underwriter or underwriters thereof shall be selected by Xxxxxxx on
reasonable prior notice to World Heart.
SECTION V.2 Incidental Registration. If World Heart proposes at any
time to register World Heart Common Shares under the Securities Act (other than
pursuant to a registration statement on Form S-8, Form S-4 or Form F-4 (or a
similar successor form)) or to file a prospectus under any of the Canadian
Securities Acts in respect of a proposed distribution of World Heart Common
Shares with respect to an offering of World Heart Common Shares for its own
account or for the account of any of its security holders, it will promptly (but
in no event less than 30 days before the anticipated filing date), give written
notice thereof to Xxxxxxx and offer Xxxxxxx the opportunity to register or
distribute such number of World Heart Common Shares as Xxxxxxx may request. Upon
the written request of Xxxxxxx made within 30 days after the receipt of any such
notice (which request shall specify the World Heart Common Shares intended to be
disposed of by Xxxxxxx and the intended method of disposition thereof), World
Heart will, subject to the terms of this Agreement, use its best efforts to
include the World Heart Common Shares which Xxxxxxx has been requested to
register in such registration or qualify for distribution.
(a) If the proposed registration by World Heart is an underwritten
Public Offering of World Heart Common Shares, then World Heart will use its best
efforts to cause the managing underwriter or underwriters to include such World
Heart Common Shares among those securities to be distributed by or through such
underwriters (on the same terms and conditions as the other World Heart Common
Shares included therein to the extent appropriate). Notwithstanding the
foregoing, if in the reasonable judgment of the managing underwriter or
underwriters, the success of the Public Offering would be adversely affected by
inclusion of the World Heart Common Shares requested to be included, World Heart
shall include in such registration or distribution the number (if any) of World
Heart Common Shares so requested to be included which, in the opinion of such
underwriters, can be sold.
(b) If, at any time after giving written notice of its intention to
register a Public Offering and prior to the effective date of the registration
statement or the filing of a (final) prospectus filed in connection with such
registration or distribution, World Heart shall determine for any reason either
not to register, or to delay registration of, or cease the distribution of, such
securities, World Heart may, at its election, give written notice of such
determination to Xxxxxxx and, thereupon, (i) in the case of a determination not
to register or distribute, shall be relieved of its obligation to register any
World Heart Common Shares or qualify any World Heart Common Shares for
distribution or (ii) in the case of a determination to delay registering or
filing a prospectus to qualify a distribution, shall be permitted to delay
registering or qualifying for distribution any of Xxxxxxx' World Heart Common
Shares, for the same period as the delay in registering such other World Heart
Common Shares.
(c) The selection of the underwriters for any such offering shall be
at the sole discretion of World Heart.
(d) World Heart will pay expenses associated with the registration and
sale of Xxxxxxx' World Heart Common Shares including without limitation legal,
accounting, printing, prospectus filing and distribution fees and expenses but
excluding underwriters' fees, commissions or discounts with respect to World
Heart Common Shares disposed of by Xxxxxxx ("Registration Expenses").
SECTION V.3 Registration Procedures.
(a) If and whenever World Heart is required by the provisions of
Section 5.1 or 5.2 hereof to effect the registration or qualify the distribution
of World Heart Common Shares, World Heart will as promptly as practicable:
(i) furnish to Xxxxxxx such number of conformed copies of
such preliminary prospectus, prospectus or registration statement and
of each such amendment and supplement thereto (in each case including
all exhibits, if any), such number of copies of the prospectus
included in any such registration statement (including each
preliminary prospectus and any summary prospectus), in conformity with
the requirements of the Securities Act, such documents incorporated by
reference in such registration statement or prospectus, and such other
documents, as Xxxxxxx may reasonably request to facilitate the
disposition of World Heart Common Shares owned by Xxxxxxx;
(ii) use its best efforts to register or qualify the
securities covered by such registration statement under such state
securities or blue sky laws of such jurisdictions, if applicable, as
shall be reasonably appropriate for distribution of the World Heart
Common Shares; provided, however, that World Heart shall not be
required, solely in order to accomplish the foregoing, to qualify to
do business as a foreign corporation in any jurisdiction where it
would not otherwise be required to qualify, subject itself to taxation
in any such jurisdiction or consent to general service of process in
any such jurisdiction;
(iii) advise Xxxxxxx, promptly after it shall receive notice
or obtain knowledge thereof, of the issuance of any cease trading
order by any Canadian provincial securities regulatory authority or
any stop order by the SEC or any state securities commission or agency
preventing the distribution by Xxxxxxx of its World Heart Common
Shares or suspending the effectiveness of such registration statement
or the initiation or threatening of any proceeding for that purpose
and use its best efforts to prevent the issuance of any cease trading
or stop order and to obtain its withdrawal if such cease trading or
stop order should be issued;
(iv) notify Xxxxxxx upon World Heart's discovery that, or
upon the happening of any event as a result of which any preliminary
prospectus or prospectus prepared in connection with a distribution of
Xxxxxxx' World Heart Common Shares or included in any registration
statement which includes Xxxxxxx' World Heart Common Shares, as then
in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances then existing, and at the request of Xxxxxxx prepare and
furnish to Xxxxxxx a reasonable number of copies of a supplement to or
an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of Xxxxxxx' World Heart Common
Shares, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances then existing; and
(v) use its best efforts to cause all of the outstanding
World Heart Common Shares to continue to be listed on each securities
exchange or inter-dealer quotation system on which the World Heart
Common Shares are now listed or posted for trading.
(b) Xxxxxxx agrees that, upon receipt of any notice from World Heart
of the occurrence of any event of the kind described in Section 5.3(a)(iv), it
will forthwith discontinue the disposition of World Heart Common Shares pursuant
to the prospectus or registration statement relating to such World Heart Common
Shares until its receipt of a supplemented or amended prospectus from World
Heart; provided, that if the registration statement is for an underwritten
Public Offering, Xxxxxxx will use its reasonable best efforts to cause the
underwriters of such Public Offering to discontinue the disposition of World
Heart Common Shares.
(c) If any of Xxxxxxx' World Heart Common Shares are included in any
registration or qualification pursuant to this Article V, Xxxxxxx shall take
such actions and furnish World Heart with such information regarding itself and
relating to the distribution of the World Heart Common Shares as World Heart may
from time to time reasonably request and as shall be required in connection with
any registration, qualification or compliance referred to in this Agreement,
including, without limitation, the following: (i) enter into an appropriate
underwriting agreement containing terms and provisions then customary in
agreements of that nature and cause each underwriter of the World Heart Common
Shares to be sold to agree in writing with World Heart to provisions with
respect to indemnification that are substantially the same as set forth in
Section 5.4 hereof; (ii) enter into such custody agreements, powers of attorney
and related documents at such time and on such terms and conditions as may then
be customarily required in connection with such offering; and (iii) distribute
the World Heart Common Shares in accordance with and in the manner of the
distribution contemplated by the applicable registration statement and
prospectus.
SECTION V.4 Indemnification.
(a) Indemnification by World Heart. In the event of any registration
or qualification for distribution of Xxxxxxx' World Heart Common Shares pursuant
to Section 5.1 or 5.2, World Heart agrees to indemnify and hold harmless Xxxxxxx
and its directors and officers and each other person, if any, who controls
Xxxxxxx within the meaning of the Securities Act (each, an "Indemnified Person")
from and against any and all losses, claims, damages, liabilities and expenses
(including reasonable attorneys' fees and costs of investigation) to which such
Indemnified Person becomes subject under the Securities Act, the Canadian
Securities Acts or otherwise (the "Losses"), insofar as such losses, claims,
damages, liabilities or expenses arise out of or are based upon (i) any untrue
statement or alleged untrue statement of material fact contained in any
prospectus or registration statement under which such securities were registered
or qualified under the Securities Act, the Canadian Securities Acts or
otherwise, any preliminary prospectus, final prospectus or summary prospectus
included therein, or any amendment or supplement thereto, or (ii) any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, provided
that World Heart shall not be liable to such Indemnified Person in any such case
to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and in
conformity with information furnished in writing by Xxxxxxx to World Heart
exclusively for use therein.
(b) Indemnification by Xxxxxxx. In the event of any registration or
qualification for distribution of Xxxxxxx' World Heart Common Shares pursuant to
Section 5.1 or 5.2, Xxxxxxx agrees to indemnify and hold harmless World Heart
and its directors and officers and each other person, if any, who controls World
Heart within the meaning of the Securities Act (each, an "Indemnified Person")
from and against any and all Losses, insofar as such Losses arise out of or
based upon (i) any untrue statement or alleged untrue statement of material fact
contained in any prospectus or registration statement under which such
securities were registered or qualified under the Securities Act, the Canadian
Securities Acts or otherwise, any preliminary prospectus, final prospectus or
summary prospectus included therein, or any amendment or supplement thereto, or
(ii) any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
if such statement or omission was made solely in reliance upon and in conformity
with information furnished in writing to World Heart by Xxxxxxx exclusively for
use in the preparation of such registration statement, preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement.
(c) Defense of Claim. If any action or proceeding (including any
governmental investigation) shall be brought or directed against any party
hereto (or its officers, directors or agents), the party against whom
indemnification is sought shall be permitted to (or, if requested, shall) assume
the defense of such claim, including the employment of counsel and the payment
of all expenses, unless a conflict of interest may exist with respect to such
claim or differing or additional defenses may be available to the other party.
If defense of a claim is assumed by an indemnifying party, the indemnified party
shall not be liable for any settlement of such action or proceedings effected
without their prior written consent. Any such indemnifying party shall not
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to the indemnified party an unconditional release from all liability in respect
to such claim or litigation. Any party entitled to indemnification hereunder
agrees to give prompt written notice to the other party of any written notice of
the commencement of any action, suit, proceedings or investigation or threat
thereof for which such party may claim indemnification or contribution pursuant
to this Agreement; provided, however, that failure to give such notice shall not
limit any party's right to indemnification or contribution hereunder.
Notwithstanding the foregoing, an indemnified party hereunder shall always have
the right to employ separate counsel in any such action and to participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such indemnified party.
(d) Survival. The indemnification provided for under this Agreement
will remain in full force and effect regardless of any investigation made by or
on behalf of the indemnified party or any officer, director or controlling
Person of such indemnified party, (ii) survive the transfer of securities and
(iii) survive the termination of this Agreement.
(e) Right of Contribution. If the indemnification provided for in this
Section 5.4 is unavailable to, or insufficient to hold harmless, an indemnified
party under Section 5.4(a) or Section 5.4(b) above in respect of any Losses
referred to in such Sections, then each applicable indemnifying party shall have
an obligation to contribute to the amount paid or payable by such indemnified
party as a result of such Losses in such proportion as is appropriate to reflect
the relative fault of World Heart, on the one hand, and of Xxxxxxx, on the
other, in connection with the misstatement or omission which resulted in such
Losses, taking into account any other relevant equitable considerations. The
amount paid or payable by a party as a result of the Losses referred to above
shall be deemed to include, subject to the limitations set forth in Section
5.4(c) above, any legal or other fees or expenses reasonably incurred by such
party in connection with any investigation, lawsuit or legal or administrative
action or proceeding.
ARTICLE VI
Termination
SECTION VI.1 Termination. This Agreement shall automatically terminate
on the date Xxxxxxx longer Beneficially Owns any World Heart Common Shares.
ARTICLE VII
Miscellaneous
SECTION VII.1 Effectiveness. This Agreement shall be effective as of
the Effective Date.
SECTION VII.2 Governing Law. This agreement shall be governed by,
interpreted under, and construed in accordance with the internal laws of the
Province of Ontario and each party hereby attorns to the non-exclusive
jurisdiction of the courts of such province and any courts competent to hear
appeals therefrom.
SECTION VII.3 Notices. All notices, demands, requests, consents,
approvals or other communications required or permitted to be given hereunder or
which are given with respect to this Agreement shall be in writing and shall be
delivered (charges prepaid, receipt confirmed or return receipt requested (if
available)) by hand, by nationally recognized air courier service, by certified
mail or facsimile, addressed as set forth below or to such other address as such
party shall have specified most recently by written notice. Notice shall be
deemed given and effective (i) if delivered by hand or by nationally recognized
courier service, when delivered at the address specified in this Section 7.3 or
in accordance with the latest unrevoked written direction from such party), (ii)
if by certified mail, upon mailing or (iii) if given by facsimile when such
facsimile is transmitted to the fax number specified in this Section 7.3 (or in
accordance with the latest unrevoked written direction from such party),
provided the appropriate confirmation is received.
(a) if to Xxxxxxx, to:
Xxxxxx Lifesciences (US) Inc.
Xxxxxxx Lifesciences LLC
Xxx Xxxxxxx Xxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Associate General Counsel
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
(b) if to World Heart, to:
World Heart Corporation
0 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxx
X0X 0X0
Attention: Chief Financial Officer
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
XxXxxxxx Xxxxxxxx
The Xxxxxxxx
1400 - 00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxx XxX 0X0
Attention: Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
SECTION VII.4 Interpretation. When a reference is made in this
Agreement to a Section, Schedule or Exhibit, such reference shall be to a
Section, Schedule or Exhibit of this Agreement unless otherwise indicated. When
a reference is made in this Agreement to a specific Schedule, such reference
shall be deemed to include, to the extent applicable, all the other Schedules.
The table of contents, table of definitions and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. When the words "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." All accounting terms not defined in this
Agreement shall have the meanings determined by generally accepted accounting
principles as of the date hereof. All capitalized terms defined herein are
equally applicable to both the singular and plural forms of such terms.
SECTION VII.5 Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
parties shall negotiate in good faith with a view to the substitution therefor
of a suitable and equitable solution in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid provision;
provided, however, that the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be in any way impaired thereby, it being intended that all of
the rights and privileges of the parties hereto shall be enforceable to the
fullest extent permitted by law.
SECTION VII.6 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
shall, taken together, be considered one and the same agreement, it being
understood that both parties need not sign the same counterpart.
SECTION VII.7 Entire Agreement; No Third Party Beneficiaries. This
Agreement together with the Other Transaction Agreements (as defined in the
Contribution Agreement) and the World Heart Preferred Agreement (a) constitute
the entire agreement and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and (b) is not intended to confer upon any Person, other than the parties
hereto, any rights or remedies hereunder.
SECTION VII.8 Further Assurances. Each party shall execute, deliver,
acknowledge and file such other documents and take such further actions as may
be reasonably requested from time to time by the other party hereto to give
effect to and carry out the transactions contemplated herein.
SECTION VII.9 Amendments and Modifications; Waivers and Extensions.
(a) No provision of this Agreement may be amended or modified unless
such amendment or modification is in writing and signed by the parties hereto
intending to be bound thereby;
(b) Any party to this Agreement may waive any right, breach or default
which such party has the right to waive; provided that such waiver will not be
effective against the waiving party unless it is in writing, is signed by such
party, and specifically refers to this Agreement. Waivers may be made in advance
or after the right waived has arisen or the breach or default waived has
occurred. Any waiver may be conditional. No waiver of any breach of any
agreement or provision herein contained shall be deemed a waiver of any
preceding or succeeding breach thereof nor of any other agreement or provision
herein contained. No failure or delay in exercising any right, power or
privilege hereunder shall be deemed a waiver or extension of the time for
performance of any other obligations or acts nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
SECTION VII.10 Assignment. Neither this Agreement nor any of the
rights or obligations hereunder shall be assigned by either of the parties
hereto without the prior written consent of the other party, except that (a)
either party may assign all its rights and obligations to the assignee of all or
substantially all of the assets of such party including an acquisition through
merger, provided that such party shall in no event be released from its
obligations hereunder without the prior written consent of the other party and
(b) Xxxxxxx may assign all of its rights and obligations to a transferee of the
Series A Preferred Shares or Newco Preferred Shares who, after giving effect to
the transfer Beneficially Owns at least 10% of the World Heart Common Shares
then outstanding on a fully-diluted basis, and who agrees in writing to be bound
by the terms of this Agreement provided that the rights of Xxxxxxx in Section
5.1(a) may only be assigned to a single Person or a group of Persons that agrees
to act jointly in exercising such rights and provided further that the rights of
Xxxxxxx in Section 2.1 may not be assigned. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns. Any attempted
assignment in contravention hereof shall be null and void.
SECTION VII.11 Equitable Remedies. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties hereto shall be
entitled to equitable relief, including in the form of injunctions, in order to
enforce specifically the provisions of this Agreement, in addition to any other
remedy to which they are entitled at law or in equity.
SECTION VII.12 Remedies Cumulative. The remedies provided for herein
shall be cumulative and shall not preclude the assertion by any party hereto of
any other rights or the seeking of any other remedies against the other party
hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered, all as of the date first set forth above.
XXXXXXX LIFESCIENCES LLC
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President and Chief Executive
Officer
XXXXXXX LIFESCIENCES (US) INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
WORLD HEART CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: President and Chief Executive
Officer
OTTAWA HEART INSTITUTE
RESEARCH CORPORATION
By:
---------------------------------------
Name:
Title:
XXXXXXXX X. XXXXXX
/s/ Xxxxxxxx X. Xxxxxx
---------------------------------------
DR. TOFY MUSSIVAND
/s/ Dr. Tofy Mussivand
--------------------------------------
TABLE OF CONTENTS
Page
ARTICLE I Definitions.........................................................1
SECTION I.1 Definitions....................................................1
ARTICLE II Corporate Governance...............................................4
SECTION II.1 The World Heart Board of Directors...........................4
SECTION II.2 General Covenant to Vote......................................5
ARTICLE III Transfer Restrictions.............................................5
SECTION III.1 Restrictions on World Heart Common Shares...................5
SECTION III.2 Right of First Refusal......................................6
SECTION III.3 Compliance with Applicable Law, Etc.........................7
SECTION III.4 Legends on Shares...........................................7
SECTION III.5 Effect.....................................................7
ARTICLE IV Preemptive Rights and Additional Stock Sales.......................7
SECTION IV.1 Preemptive Rights............................................7
ARTICLE V Registration Rights.................................................8
SECTION V.1 Registration on Request.......................................8
SECTION V.2 Incidental Registration.......................................9
SECTION V.3 Registration Procedures......................................10
SECTION V.4 Indemnification..............................................12
ARTICLE VI Termination.......................................................14
SECTION VI.1 Termination.................................................14
ARTICLE VII Miscellaneous....................................................14
SECTION VII.1 Effectiveness..............................................14
SECTION VII.4 Interpretation.............................................16
SECTION VII.5 Severability...............................................16
SECTION VII.6 Counterparts...............................................16
SECTION VII.7 Entire Agreement; No Third Party Beneficiaries.............16
SECTION VII.8 Further Assurances.........................................16
SECTION VII.9 Amendments and Modifications; Waivers and Extensions.......17
SECTION VII.10 Assignment.................................................17
SECTION VII.11 Equitable Remedies.........................................17
SECTION VII.12 Remedies Cumulative........................................18
