TRUST AGREEMENT
THIS AGREEMENT is made as of the 30th day of June, 2000.
AMONG: XXXXXXX LIFESCIENCES LLC, a Delaware
limited liability company (hereinafter called a
"Shareholder" or the "First Shareholder")
-and-
XXXXXXX LIFESCIENCES (U.S.) INC.,
a Delaware corporation (hereinafter called
a "Shareholder" or the "Second Shareholder", and together
with the First Shareholder, the "Shareholders")
-and-
WORLD HEART CORPORATION, a corporation incorporated
under the laws of the Province of Ontario
(hereinafter called the "Company")
-and-
CIBC MELLON TRUST COMPANY, a trust company
incorporated under the laws of Canada (hereinafter
called the "Trustee").
WHEREAS there are issued and outstanding 4,981,128 shares of Series A
Cumulative Participating Preferred Stock of World Heart Inc. ("WorldHeart US"),
the Company's wholly-owned Delaware subsidiary (the "Exchangeable Shares") and
1,374,570 Series A convertible preferred shares of the Company (the "Convertible
Shares" and, together with the Exchangeable Shares, the "Xxxxxxx Shares");
AND WHEREAS the First Shareholder owns all of the Exchangeable Shares
and the Second Shareholder owns all of the Convertible Shares;
AND WHEREAS the Common Shares issuable upon the exchange of the
Exchangeable Shares and the conversion of the Convertible Shares would, in the
aggregate, represent more than 20% of the common shares of the Company ("Common
Shares") outstanding after giving effect to such exchange and conversion if such
exchange and conversion were not otherwise restricted pursuant to the terms of
agreements between the Shareholders and the Company and by the articles of the
Company;
AND WHEREAS the Shareholders and the Company are desirous of entering
into this Agreement to secure the listing of the Common Shares issuable on the
exchange of the Exchangeable Shares and on the conversion of the Convertible
Shares on The Toronto Stock Exchange and to derive the benefits of such listing,
and for the purpose of ensuring that the holders from time to time of the Common
Shares will not be deprived of any rights under applicable take-over bid
legislation to which they would have been entitled in the event of a take-over
bid if the Xxxxxxx Shares and the Common Shares were of a single class of
shares.
AND WHEREAS the Shareholders and the Company desire to constitute the
Trustee as a trustee for the holders from time to time of the Common Shares to
the intent that such holders, through the Trustee, will receive the benefits of
the covenants of the Shareholders and the Company contained in this Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
premises and agreements herein contained and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree as follows:
1. Subject to Sections 2, 3 and 20, the Shareholders shall not sell any
Xxxxxxx Shares, directly or indirectly, pursuant to a take-over bid, as defined
by applicable Canadian provincial securities legislation, under circumstances in
which, having regard to the price per share at which the sale would take place
(the "Sale Price"), securities legislation would have required the same offer or
a follow-up offer to be made to holders of Common Shares if the sale had been of
Common Shares (at the Sale Price per share) rather than Xxxxxxx Shares. For this
purpose, it shall be assumed that the offer that would have resulted in such an
assumed sale of Common Shares would have constituted a take-over bid under
applicable securities legislation, regardless of whether this actually would
have been the case, if, after giving effect to the purchase, the purchaser
would, or would be deemed to, beneficially own or exercise control or direction
over 20 percent or more of the outstanding Common Shares.
2. Section 1 shall not apply to prevent a sale by a Shareholder of Xxxxxxx
Shares pursuant to a take-over bid if:
(a) such sale is made pursuant to an offer to purchase the Xxxxxxx Shares
made to all holders of the Xxxxxxx Shares, and an identical offer (in
terms of price per share, percentage of outstanding shares to be taken
up exclusive of shares owned immediately prior to the offer by the
offeror, or associates or affiliates of the offeror, and in all other
material respects) concurrently is made to purchase Common Shares,
which identical offer has no condition attached other than the right
not to take up and pay for shares tendered if no shares are purchased
pursuant to the offer for the Xxxxxxx Shares; or
(b) there is a concurrent unconditional offer to purchase all of the Common
Shares at an equivalent price per share at least as high as the highest
price per share paid pursuant to the take-over bid for the Xxxxxxx
Shares,
and for the purposes of this Section 2 the varying of any term of an offer shall
be deemed to constitute the making of a new offer.
3. For greater certainty, any sale which would result in a direct or
indirect acquisition of Xxxxxxx Shares or Common Shares, or in a direct or
indirect acquisition of control or direction over such shares, other than an
acquisition of shares of Xxxxxxx Lifesciences Corporation ("Xxxxxxx Corp."), the
parent company of the Shareholders, the shares of which are currently listed and
traded on the New York Stock Exchange and other than a sale where the purchaser
is a wholly-owned , direct or indirect subsidiary of Xxxxxxx Corp., shall be
construed to be a sale of such Xxxxxxx Shares or Common Shares, as the case may
be, for the purposes of Section 1.
4. Subject to Section 20, each Shareholder shall use its reasonable
commercial efforts to prevent any person or company from carrying out a sale
(including an indirect sale) described in Section 1 in respect of any Xxxxxxx
Shares owned from time to time by that Shareholder, regardless of whether such
person or company is a party to this Agreement, unless Clause 2(a) or 2(b)
applies in respect of such sale.
5. Subject to Section 20, if any person or company, other than a
Shareholder, carries out a sale (including an indirect sale) described at
Section 1 in respect of any Xxxxxxx Shares owned from time to time by the
Shareholders, and if neither Clause 2(a) nor 2(b) applies in respect of such
sale, the Shareholders shall not at the time such sale becomes effective or
thereafter do any of the following with respect to any of the Xxxxxxx Shares so
sold: (a) dispose of them without the prior written consent of the Trustee, (b)
convert them into or exchange them for Common Shares without the prior written
consent of the Trustee; or (c) exercise any voting rights attaching to them
except in accordance with the written instructions of the Trustee, and the
Shareholders shall comply with such instructions. The Trustee may attach
conditions to any consent the Trustee gives in exercising its rights hereunder.
The Trustee shall exercise such rights in a manner that the Trustee considers,
relying on the advice of counsel, to be consistent with the purpose of this
Agreement, that the holders from time to time of the Common Shares will not be
deprived of any rights under applicable take-over bid legislation to which they
would have been entitled if the Xxxxxxx Shares and the Common Shares were a
single class of shares.
6. Subject to Section 20, the Shareholders shall not dispose of any Xxxxxxx
Shares, directly or indirectly, unless the disposition is conditional upon the
person or company acquiring the shares entering into an agreement in the form of
this Agreement and under which such person or company shall have the same rights
and obligations as have the Shareholders hereunder. Neither the exercise of the
right of exchange pursuant to the Exchange Agreement dated as of May 24, 2000 by
and between the Second Shareholder and the Company or the exercise of the right
of conversion pursuant to the Convertible Shares, nor the subsequent sale of the
Common Shares resulting from such exchange or conversion shall constitute a
disposition of Xxxxxxx Shares for the purposes of this Section 6.
7. Subject to Section 9, if and whenever the Trustee receives written
notice from an interested party other than a Shareholder, stating in sufficient
detail that they have reasonable cause to believe that the Shareholders or the
Company may have breached, or may intend to breach, any provision of this
Agreement, the Trustee shall make reasonable enquiry to determine whether such a
breach has occurred or is intended and if the Trustee thereupon determines that
such is the case the Trustee shall forthwith deliver to the Company a
certificate stating that the Trustee has made such determination. The Trustee
shall thereupon be entitled to take and, subject to Section 9, shall take such
action as the Trustee considers reasonably necessary, relying on the advice of
counsel, to enforce its rights under this Agreement on behalf of the holders of
the Common Shares.
8. Subject to Section 9, if and whenever holders of not less than 10% of
the then outstanding Common Shares determine that the Shareholders or the
Company have breached, or intend to breach, any provision of this Agreement,
such holders may require the Trustee to take action in connection therewith by
delivering to the Trustee a requisition in writing signed in one or more
counterparts by such holders and setting forth the action to be taken by the
Trustee, and upon receipt by the Trustee of such a requisition the Trustee,
subject to Section 9, shall forthwith take such action as is specified in the
requisition and any other action that the Trustee considers necessary, relying
on the advice of counsel, to enforce its rights under this Agreement on behalf
of the holders of the Common Shares. Upon receipt of the requisition, the
Trustee shall deliver to the Company a certificate stating that the Trustee has
received such requisition from the holders of outstanding Common Shares and that
the holders have directed that action be taken.
9. The obligation of the Trustee to take any action on behalf of the
holders of the Common Shares shall be conditional upon the Trustee receiving
from the Company or from one or more holders of Common Shares such funds and
indemnity as the Trustee may reasonably require in respect of any costs of
expenses which it may incur in connection with any such action. The Company
shall provide such funds and indemnity to the Trustee if the Trustee has
delivered to the Company the certificate referred to in Sections 7 or 8. Except
as set out in Sections 7 and 8, nothing in this Agreement shall impose on the
Trustee any obligation to make enquiries as to any breach or intended breach of
this Agreement by the Shareholders or the Company.
10. No holder of Common Shares shall have the right, other than through the
Trustee, to institute any action or proceeding or to exercise any other remedy
for the purpose of enforcing any rights arising from this Agreement unless
holders of Common Shares shall have requested in the manner specified in Section
8 that the Trustee act and shall have provided reasonable funds and indemnity to
the Trustee and the Trustee shall have failed to so act within 30 days after the
provision of such funds and indemnity. In such case any holder of Common Shares
acting on behalf of such holder and all other holders of Common Shares shall be
entitled to take proceedings in any court of competent jurisdiction such as the
Trustee might have taken.
11. The Company shall do all things necessary to facilitate the due
performance of this Agreement including the fulfilment by the Shareholders of
their obligations hereunder.
12. The Trustee may resign and be discharged from all further duties and
obligations hereunder, subject to this Section 12, after giving 30 days' written
notice to the Company or such shorter notice as the Company may accept as
sufficient. In the event that the office of trustee becomes vacant, the Company
shall forthwith appoint a new trustee which shall be a corporation authorized to
carry on the business of a trust company in Ontario, failing such appointment,
the Shareholders, the Trustee, at the expense of the Company, or any holder of
Common Shares may apply to a judge of the Ontario Superior Court of Justice for
the appointment of a new trustee. Upon any new appointment the new trustee shall
be vested with the same powers, rights, duties and responsibilities as if it had
been originally named herein as the trustee, but there shall be immediately
executed, at the expense of the Company, necessary or desirable to assure such
vesting. Any resignation of the Trustee shall not become effective until the
successor party shall have executed an appropriate instrument accepting the
appointment as the new trustee.
13. (i) The Shareholders and the Company hereby, jointly and severally,
indemnify and save harmless the Trustee and its officers, directors,
employees and agents from and against any and all liabilities, losses,
costs, claims, actions or demands whatsoever which may be brought
against the Trustee or which it may suffer or incur as a result of or
arising out of the performance of its duties and obligations under
this Agreement, save only in the event of the negligent action, the
negligent failure to act, or the willful misconduct or bad faith of
the Trustee. It is understood and agreed that this indemnification
shall survive the termination or discharge of this Agreement or the
resignation of the Trustee.
(ii) The Trustee may employ or retain such counsel (which may be counsel to
the Company), auditors, accountants, or other experts or advisors, as
it may reasonably require for the purpose of determining and
discharging its duties hereunder and will not be responsible for any
misconduct or negligence on the part of any of them. The Trustee may,
if it is acting in good faith, rely on the accuracy of any opinion or
report delivered by such experts or advisors. The Company shall
reimburse the Trustee for all reasonable fees, expenses and
disbursements of such counsel or advisors.
(iii) The Trust shall have no responsibility, if it is acting in good
faith, for the genuineness or validity of any securities, documents or
other things deposited with it. In the exercise of its rights, duties
and obligations hereunder, the Trustee may, if it is acting in good
faith, rely as to the truth of the statements and the accuracy of the
opinions expressed in statutory declarations, opinions, written
requests, consents, orders or other evidence made in any certificates
or documents provided to it.
(iv) The Trustee shall have the power to institute and maintain such
actions and proceedings as it may consider necessary or expedient to
preserve, protect or enforce its interest and the interests of the
holders of Common Shares subject to the provisions of Sections 8 and
9.
(v) None of the provisions contained in this Agreement shall require the
Trustee to expend or risk its own funds or otherwise incur financial
liability in the performance of any of its duties or in the exercise
of its rights or powers hereunder.
14. The Company shall pay the reasonable fees and expenses of the Trustee
in connection with the performance of the Trustee's obligations hereunder,
including the reasonable fees and disbursements of counsel, but this Section 14
shall not require the Company to pay any fees or expenses in connection with any
action taken by the Trustee pursuant to Sections 7 or 8 if the Trustee has not
delivered to the Company the certificate referred in Sections 7 or 8 in respect
of such action.
15. The Trustee hereby accepts the appointment as trustee for the holders
from time to time of the Common Shares upon the terms and conditions herein set
forth.
16. This Agreement shall not be amended, and no provision thereof shall be
waived, except with the approval of at least a majority of the votes cast by the
holders of Common Shares present or represented at a meeting duly called for the
purpose of considering such amendment or waiver.
17. Any notice or other communication made pursuant to or in connection
with this Agreement shall be sufficiently given if it is in writing and
delivered or sent by registered mail, or by facsimile transmission or other form
of recorded communication, to:
if to the Shareholders: c/o Edwards Lifesciences Corporation
Xxx Xxxxxxx Xxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Associate General Counsel
if to the Company World Heart Corporation
0 Xxxxx Xx.
Xxxxxx, Xxxxxxx
X0X 0X0
Attention: Secretary
if to the Trustee: CIBC Mellon Trust Company
000 Xxx Xxxxxx, Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: V.P., Client Services
or to such other address as the party to whom such notice or communication is to
be given shall have last designated to the party giving the same in the manner
specified in this Section 17. Any such notice or communication shall be deemed
to have been given and received on the day it is so delivered or sent.
18. This Agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario.
19. This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, legal representatives, successors and
assigns, as applicable.
20. The restrictions contained in Sections 1, 4, 5 and 6 shall only apply
when the Xxxxxxx Shares, if converted and exchanged into and for Common Shares,
would result in the Shareholders beneficially owning, in the aggregate, more
than 20% of the Common Shares outstanding after giving effect to such conversion
and exchange.
21. This Agreement shall terminate on June 30, 2007.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
XXXXXXX LIFESCIENCES LLC XXXXXXX LIFESCIENCES (U.S.) INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxx Name: Xxxxxxx X. Xxxxxxxxx
Title: President Title: President
WORLD HEART CORPORATION CIBC MELLON TRUST COMPANY
By: /s/ Xxx X. Xxxxxx By: /s/ Xxxxx Xxx
Name: Xxx X. Xxxxxx Name: Xxxxx Xxx
Title: VP Finance and CEO Title: Authorized Officer
By: /s/ Xxxxxx XxXxxxxx
Name: Xxxxxx XxXxxxxx
Title: Authorized Officer
