NOTE PURCHASE AGREEMENT By and Among

Exhibit 10.1

NOTE PURCHASE AGREEMENT

By and Among

WORLD HEART CORPORATION,

WORLD HEART INC.,

and

ABIOMED, INC.

Dated: December 11, 2007

Table of Contents

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NOTE PURCHASE AGREEMENT

This Note Purchase Agreement (this “ Agreement ”) is dated as of December 11, 2007, by and among World Heart Corporation , a Canadian corporation (the “ Company ”), World Heart Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“ WHI ”), and ABIOMED, Inc. , a Delaware corporation (the “ Investor ”).

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “ Securities Act ”) and Rule 506 promulgated thereunder and Canadian Securities Laws (as defined below), the Company desires to issue and sell to the Investor and the Investor desires to purchase from the Company securities of the Company, as more fully described in this Agreement.

WHEREAS, the Company anticipates that most of the net proceeds from the sale of the Note hereunder will be used by WHI for working capital purposes, the Investor has required, as an inducement and a condition to the Investor entering into this Agreement, that WHI become a party to this Agreement and co-borrower under the Note.

WHEREAS, as an inducement and a condition to the Investor entering into this Agreement, certain shareholders of the Company representing at least a majority of the Common Stock issued and outstanding have executed voting agreements, dated as of the date hereof, pursuant to which each such shareholder has agreed to vote or consent in writing with respect to shares of Common Stock owned by such shareholder in favor of the transactions contemplated by the Transaction Documents (the “ Voting Agreements ”).

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company, WHI and the Investor hereby agree as follows:

ARTICLE I.

DEFINITIONS

1.1 Definitions . In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Note (as defined herein), and (b) the following terms shall have the meanings indicated in this Section 1.1:

“ Action ” means any action, suit, inquiry, notice of violation, proceeding (including any partial proceeding such as a deposition) or investigation pending or threatened in writing against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency, regulatory authority (federal, state, county, local or foreign), stock market, stock exchange or trading facility.

“ Affiliate ” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144.

“ Benefit Arrangement ” means at any time an employee benefit plan within the meaning of Section 3(3) of ERISA which is not a Plan or “multiemployer plan” (as such term is defined in Section 3(37) of ERISA) and which is maintained or otherwise contributed by the Company.

“ Benefit Plan ” has the meaning set forth in Section 3.1(cc)(ii).

“ Business Day ” means any day except Saturday, Sunday and any day that is a federal legal holiday in the United States, Canada or a day on which banking institutions in the State of New York or the Province of Ontario are authorized or required by law or other governmental action to close.

“ Canadian Securities Laws ” means the Securities Act (Ontario) and all other applicable Canadian provincial securities laws and the rules, regulations and published policies made thereunder.

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Commission ” means the Securities and Exchange Commission.

“ Common Stock ” means the common shares of the Company and any securities into which such common shares may hereafter be reclassified.

“ Common Stock Equivalents ” means any securities of the Company or any Subsidiary which entitle the holder thereof to acquire Common Stock at any time, including without limitation, any debt, preferred shares, rights, options, warrants or other instrument that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock or other securities that entitle the holder to receive, directly or indirectly, Common Stock.

“ Company Deliverables ” has the meaning set forth in Section 2.2(a)(i).

“ Company Reports ” has the meaning set forth in Section 3.1(h).

“ Consents from Ethics Committees ” shall mean approvals or opinions from any Ethics Committee relating to the conduct of any Product clinical trial sponsored by the Company within the European Union.

“ Debt ” of any Person means at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes, or other similar instruments issued by such Person, (iii) all obligations of such Person as lessee which (y) are capitalized in accordance with GAAP or (z) arise pursuant to sale-leaseback transactions, (iv) all reimbursement obligations of such Person in respect of letters of credit or other similar instruments, (v) all Debt of others secured by a Lien on any asset of such Person, whether or not such Debt is otherwise an obligation of such Person and (vi) all Debt of others guaranteed by such Person.

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“ Disclosure Materials ” has the meaning set forth in Section 3.1(h).

“ dollars ” or “ $ ” shall mean lawful money of the United States.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute.

“ ERISA Group ” means the Company and each Subsidiary and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Company or any Subsidiary, are treated as a single employer under the Code.

“ EU ” means the European Union.

“ Event of Default ” has the meaning set forth in the Note.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ FDA ” shall mean the United States Food and Drug Administration.

“ GAAP ” means U.S. generally accepted accounting principles, as in effect from time to time.

“ Governmental Authority ” shall mean any nation, territory or government, foreign or domestic, any state, province, local or other political subdivision thereof, and any bureau, tribunal, board, commission, department, agency or other entity exercising executive, legislative, judicial, regulatory or administrative functions of government, including all taxing authorities and all European notification bodies and all other entities exercising regulatory authority over medical products or devices including any Notified Body and Ethics Committee as defined in any EU medical device legislation.

“ Initial Closing ” means the initial closing of the purchase and sale of the Note pursuant to Article II, and the advancement of $1,000,000 of the principal amount thereunder.

“ Initial Closing Date ” means the Business Day immediately following the date on which all of the conditions set forth in Sections 5.1 and 5.2 hereof are satisfied, or such other date as the parties may agree.

“ Intellectual Property Rights ” has the meaning set forth in Section 3.1(p).

“ Investment ” means, with respect to any Person, directly or indirectly, (a) to own, purchase or otherwise acquire, in each case whether beneficially or otherwise, any interest in any security of any other Person (other than any evidence of any obligation under the Transaction Documents), (b) to incur, or to remain liable under, any guaranty obligation for Debt of any other Person, to assume the Debt of any other Person or to make, hold, purchase or

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otherwise acquire, in each case directly or indirectly, any deposit, loan, advance, commitment to lend or advance or other extension of credit (including by deferring or extending the date of, in each case outside the ordinary course of business, the payment of the purchase price for Sales of property or services to any other Person, to the extent such payment obligation constitutes Indebtedness of such other Person), excluding deposits with financial institutions available for withdrawal on demand, prepaid expenses, accounts receivable and similar items created in the ordinary course of business and other than the assumption of any Debt resulting from an acquisition of intellectual property or other strategic assets, or (c) to make, directly or indirectly, any contribution to the capital of any other Person.

“ Investment Amount ” has the meaning set forth in Section 2.1.

“ Investor Deliverables ” has the meaning set forth in Section 2.2(b).

“ Investor Party ” has the meaning set forth in Section 4.11.

“ Lien ” means any lien, charge, encumbrance, security interest, right of first refusal or other restrictions of any kind.

“ Losses ” has the meaning set forth in Section 4.11.

“ Machinery and Equipment ” means all machinery, equipment, furniture and fixtures (including, by way of example, all dies, jigs, and tooling), owned, used or held for use or planned to be used or held for use in connection with the design, development, manufacture, operation, sale or use of any Product.

“ Material Adverse Effect ” means any of (i) a material and adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material and adverse effect on the results of operations, assets, business or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) an adverse impairment to the Company’s ability to perform on a timely basis its obligations under any Transaction Document.

“ MDRs ” shall mean medical device reports of adverse events required to be filed by medical device manufacturers and user facilities pursuant to Regulatory Laws of jurisdictions in which human clinical studies have been conducted (including observational studies) or other clinical use has occurred.

“ Note ” means the 8% secured convertible promissory note, in the Form of Exhibit A , due, subject to the terms therein, on the two year anniversary of the Initial Closing Date, issued by the Company and WHI to the Investor hereunder.

“ Outside Date ” means December 20, 2007.

“ PBGC ” means the Pension Benefit Guarantee Corporation or any entity succeeding to any or all of its functions under ERISA.

“ Permitted Indebtedness ” has the meaning set forth in Section 6.4.

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“ Permitted Liens ” means: (a) liens for taxes, assessments or governmental charges not delinquent or being contested in good faith and by appropriate proceedings and for which adequate reserves in accordance with GAAP are maintained on the books of the Company or the applicable Subsidiary; (b) liens arising out of deposits in connection with workers’ compensation, unemployment insurance, old age pensions or other social security or retirement benefits legislation; (c) deposits or pledges to secure bids, tenders, contracts (other than contracts for the payment of money), leases, statutory obligations, surety and appeal bonds, and other obligations of like nature arising in the ordinary course of business of the Company or a Subsidiary; (d) liens imposed by law, such as mechanics’, workers’, materialmens’, carriers’ or other like liens arising in the ordinary course of business of the Company or a Subsidiary which secure the payment of obligations which are not past due or which are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP are maintained on the books of the Company or the applicable Subsidiary; (e) purchase money security interests or liens for the purchase of fixed assets to be used in the business of the Company or a Subsidiary, securing solely the fixed assets so purchased and the proceeds thereof; (f) capitalized leases which do not violate any provision of this Agreement; (g) liens of commercial depository institutions, arising in the ordinary course of business, constituting a statutory or common law right of setoff against amounts on deposit with such institution; (h) rights of way, zoning restrictions, easements and similar encumbrances affecting the Company’s real property which do not materially interfere with the use of such property; and (i) liens on any asset existing at the time of acquisition of such asset by the Company or WHI.

“ Person ” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“ PIPE ” means a private placement transaction in which the Company sells up to 12 million shares of Common Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar event with respect to the Common Stock) and may also include warrants to purchase additional shares of Common Stock subject to Section 6.1.

“ Plan ” means at any time an employee pension plan benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under the Code and either (i) is maintained, or contributed to, by any member of the ERISA group for employees of any member of the ERISA group or (ii) has at any time within the preceding five years been maintained, or contributed to, by any Person which was at such time a member of the ERISA Group for employees of any Person which was at such time a member of the ERISA group.

“ Proceeding ” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.

“ Products ” shall mean all items manufactured by or for, sold or distributed by, or under development by, the Company or any Subsidiary on or before the date of this Agreement.

“ Purchase Money Financing ” has the meaning set forth in Section 6.4.

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“ Registration Rights Agreement ” means the Registration Rights Agreement, dated as of the Initial Closing Date, by and between the Company and the Investor, in the form of Exhibit B hereto.

“ Registration Statement ” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale by the Investor of the Underlying Shares and Warrant Shares.

“ Regulated Product ” shall mean any Product or component, including any medical device, that is required to bear a CE Mark under applicable EU law and related national legislation respectively or that is required to be cleared or approved by the FDA, and that is studied, used, held or offered for sale for human use, including for human research or investigation or clinical use.

“ Regulatory Law ” shall mean any statute, regulation or judicial interpretation applicable to any Regulated Product, including, without limitation: (i) the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et seq., the Food and Drug Administration Modernization Act of 1997, Stand Alone Provisions, Pub. L. No. 105-115, 111 Stat. 2295 (1997), the Public Health Service Act, 42 U.S.C. § 201 et seq., all regulations promulgated under such statutes, including 21 C.F.R. § 820; (ii) EU Directives 90/385/EEC of June 20, 1990 on the Approximation of the Laws of the Member States Relating to Active Implantable Medical Devices, and 93/42/EEC of June 14, 1993 concerning medical devices, and any laws, rules or regulations promulgated by any Governmental Authority of any EU member state in furtherance of these Directives; and (iii) equivalent statutes and regulations adopted by other countries, international bodies and jurisdictions outside the United States and EU, in which the Company has facilities, does business, or directly or through others, sells or offers for sale any Regulated Product.

“ Reincorporation Plan ” means any recapitalization, restructuring, subsidiary spin-off or other reorganization transaction solely for the purposes of the Company’s reincorporation in the United States, provided, that, as a result of such transaction: (a) the shareholders of and lenders to the Company, including the Investor, and their respective shareholdings, rights, economic interests and voting interests in the Company immediately prior to such transaction shall be substantially equivalent as their respective shareholdings, rights, economic interests and voting interests in the corporation surviving such transaction immediately following such transaction, and (b) the Company shall have taken all necessary steps to ensure that the Investor’s security interest and economic and other rights provided for in the Transaction Documents shall be properly assigned to and enforceable against the surviving corporation.

“ Required Minimum ” means, as of any date, the maximum aggregate number of shares of Common Stock potentially issuable in the future pursuant to the Transaction Documents, including any Underlying Shares or Warrant Shares issuable upon conversion or exercise in full of the Note and the Warrant, ignoring any conversion or exercise limits set forth therein.

“ Restricted Payment ” means (a) any dividend, return of capital, distribution or any other payment or Sale of property for less than fair market value, whether direct or indirect

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and whether in cash, securities or other property, in each case on account of any stock or stock equivalent of any Borrower, in each case now or hereafter outstanding, including with respect to a claim for rescission of a Sale of such stock or stock equivalent, and (b) any redemption, retirement, termination, defeasance, cancellation, purchase or other acquisition for value, whether direct or indirect, of any stock or stock equivalent of either Borrower, now or hereafter outstanding, and any payment or other transfer setting aside funds for any such redemption, retirement, termination, cancellation, purchase or other acquisition, whether directly or indirectly and whether to a sinking fund, a similar fund or otherwise.

“ Rule 144 ” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“ Sale and Leaseback Transaction ” means, with respect to any Person (the “obligor”), any contractual obligation or other arrangement with any other Person (the “counterparty”) consisting of a lease by such obligor of any property that, directly or indirectly, has been or is to be Sold by the obligor to such counterparty or to any other Person to whom funds have been advanced by such counterparty based on a Lien on, or an assignment of, such property or any obligations of such obligor under such lease.

“ Second Closing ” means the additional closing pursuant to Article II, pursuant to which the Investor is to advance the remaining $4,000,000 of the principal amount of the Note.

“ Second Closing Date ” means January 3, 2008 or such later date as of which all of the conditions set forth in Sections 5.3 and 5.4 hereof are first satisfied, or such other date as the parties may agree.

“ Securities ” means the Note, the Underlying Shares, the Warrant and the Warrant Shares.

“ Security Agreements ” has the meaning set forth in Section 2.2(a).

“ Sell ” means, with respect to any property, to sell, convey, transfer, assign, license, lease or otherwise dispose of, any interest therein or to permit any Person to acquire any such interest, including, in each case, through a Sale and Leaseback Transaction or through a sale, factoring at maturity, collection of or other disposal, with or without recourse, of any notes or accounts receivable. Conjugated forms thereof and the noun “Sale” have correlative meanings.

“ Subsidiary ” means any subsidiary of the Company included in the Company Reports.

“ Support Services Agreement ” has the meaning set forth in Section 2.2(a).

“ Trading Day ” means (i) a day on which the Common Stock is traded on a Trading Market (other than the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a Trading Market (other than the OTC Bulletin Board), a day on which the Common Stock is traded in the over-the-counter market, as reported by the OTC Bulletin Board, (iii) if the

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Common Stock is not quoted on any Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding to its functions of reporting prices), or (iv) in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day.

“ Trading Market ” means whichever one or more of the Toronto Stock Exchange, the New York Stock Exchange, the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or OTC Bulletin Board on which the Common Stock is listed or quoted for trading on the date in question.

“ Transaction Documents ” means this Agreement, the Note, the Registration Rights Agreement, the Warrant, the Security Agreements, the Support Services Agreement and any other documents or agreements executed in connection with the transactions contemplated hereunder.

“ TSX ” means the Toronto Stock Exchange.

“ Underlying Shares ” means the shares of Common Stock issuable upon conversion of the Note, including the conversion of any interest under the Note.

“ Warrant ” means the Common Stock purchase warrant issued to the Investor pursuant to the Support Services Agreement.

“ Warrant Shares ” means the shares of Common Stock issuable upon exercise of the Warrant.

ARTICLE II.

PURCHASE AND SALE

2.1 Initial Closing . Subject to the terms and conditions set forth in this Agreement, at the Initial Closing the Company and WHI shall issue and sell to the Investor, and the Investor shall purchase from the Company and WHI, the Note having a stated maximum amount of $5,000,000 (the “ Investment Amount ”). The Initial Closing shall take place at the offices of Foley Hoag LLP, counsel for the Investor, 155 Seaport Boulevard, Boston, Massachusetts on the Initial Closing Date or at such other location or date as the parties may agree.

2.2 Initial Closing Deliveries .

(a) At or prior to the Initial Closing, the Company shall deliver or cause to be delivered to the Investor the following (the “ Company Deliverables ”):

(i) the Note in the aggregate principal amount of the Investment Amount, registered in the name of the Investor;

(ii) the legal opinion of McCarthy Tétrault LLP, in the form of Exhibit C , addressed to the Investor;

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(iii) the legal opinion of Howard Rice Nemerovski Canady Falk & Rabkin, A Professional Corporation, in the form of Exhibit D , addressed to the Investor;

(iv) the Registration Rights Agreement, duly executed by the Company;

(v) security agreements, duly executed by each of the Company and WHI, in the forms attached hereto as Exhibit E and Exhibit F , respectively (as amended, supplemented or otherwise modified from time to time, the “ Security Agreements ”);

(vi) a clinical and marketing support services agreement, duly executed by the Company, in the form attached hereto as Exhibit G (as amended, supplemented or otherwise modified from time to time, the “ Support Services Agreement ”);

(vii) appropriate Lien and record search reports as of the most recent practicable date, showing that there are no liens on the collateral security granted under the Security Agreements, other than Permitted Liens;

(viii) the Voting Agreements, duly executed by each of the Company’s shareholders listed on Exhibit 2.2(a)(viii) , in the form attached hereto as Exhibit H ;

(ix) this Agreement duly executed by the Company and WHI; and

(x) any other documents reasonably requested by the Investor.

(b) At the Initial Closing, the Investor shall deliver or cause to be delivered to the Company the following (the “ Investor Deliverables ”):

(i) $1,000,000 of its Investment Amount in immediately available funds, by wire transfer to an account designated in writing by the Company for such purpose;

(ii) the Registration Rights Agreement, duly executed by the Investor;

(iii) the Security Agreements, duly executed by the Investor;

(iv) the Support Services Agreement, duly executed by the Investor; and

(v) this Agreement, duly executed by the Investor.

2.3 Second Closing . Subject to the terms and conditions set forth in this Agreement, including the conditions to the Second Closing set forth in Sections 5.3 and 5.4, at the Second Closing, the Investor shall deliver or cause to be delivered to the Company the remaining $4,000,000 of the Investment Amount. The Second Closing shall take place at the offices of Foley Hoag LLP, counsel for the Investor, 155 Seaport Boulevard, Boston, Massachusetts on the Second Closing Date or at such other location or date as the parties may agree.

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ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company . The Company hereby makes the following representations and warranties to the Investor:

(a) Subsidiaries . The Company has no direct or indirect Subsidiaries other than as specified on Schedule 3.1(a) . Except as disclosed in Schedule 3.1(a) , the Company owns, directly or indirectly, all of the capital stock of each Subsidiary free and clear of any and all Liens, and all the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights.

(b) Organization and Qualification . The Company and each Subsidiary are duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. The Company and each Subsidiary are duly qualified to conduct its respective businesses and are in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.

(c) Authorization; Enforcement . The Company and WHI have the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out their obligations thereunder. The execution and delivery of each of the Transaction Documents by the Company and WHI and the consummation by them of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Company and WHI and, subject to shareholder approval as required for compliance with Nasdaq Marketplace Rule 4350(i) and any applicable rule of the TSX solely for the purpose of removing the limitations set forth in the Note and Warrant with respect to the issuance of more than 19.9% of the outstanding shares of the Company’s Common Stock, no further action is required by the Company or WHI in connection therewith. Each Transaction Document has been (or upon delivery will have been) duly executed by the Company or WHI, as applicable, and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company and WHI enforceable against the Company and WHI in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.

(d) No Conflicts . Except as disclosed in Schedule 3.1(d) , the execution, delivery and performance of the Transaction Documents by the Company and WHI and the consummation by the Company and WHI of the transactions contemplated thereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate

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or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or Governmental Authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect. Payments of cash on account of principal of or interest under the Note, upon any Event of Default under the Note, or as a result of liquidated damages under any Transaction Document will not require the consent of, any payment to, or the springing of any Lien in favor of any lender to or creditor of the Company or any Subsidiary (under a credit facility, loan agreement or otherwise) and will not result in a default under any such credit facilities, loans or other agreements.

(e) Filings, Consents and Approvals . Except as disclosed in Schedule 3.1(e) , the Company and WHI are not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company and WHI of the Transaction Documents, other than (i) the filing with the Commission of one or more Registration Statements in accordance with the requirements of the Registration Rights Agreement, (ii) filings required by state securities laws, (iii) the filing of a Notice of Sale of Securities on Form D with the Commission under Regulation D of the Securities Act (iv) the filings required in accordance with Section 4.10, (v) those that have been made or obtained prior to the date of this Agreement, and (vi) any filings required in connection with the security interests granted pursuant to the Security Agreements.

(f) Issuance of the Securities . The Securities have been duly authorized and, when issued and paid for in accordance with the Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens. The Company has reserved from its duly authorized capital stock a number of shares of Common Stock issuable upon conversion of the Note and upon exercise of the Warrant which number of reserved shares is not less than the Required Minimum calculated as of the date hereof.

(g) Capitalization . The number of shares and type of all authorized, issued and outstanding capital stock of the Company, and all shares of Common Stock reserved for issuance under the Company’s various option and incentive plans, is specified in Schedule 3.1(g) . Except as specified in Schedule 3.1(g) , no securities of the Company are entitled to preemptive or similar rights, and no Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as specified in Schedule 3.1(g) , there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any

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Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. The issue and sale of the Securities will not, immediately or with the passage of time, obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Investor) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities. Schedule 3.1(g) sets forth the name, address, and number of shares of Common Stock held by each shareholder of the Company holding ten percent or more of the outstanding shares of Common Stock.

(h) Company Reports; Financial Statements . The Company has filed all documents, reports and information required to be filed by it under the Securities Act, the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, Canadian Securities Laws and with the TSX for the twelve (12) months preceding the date hereof (or such shorter period as the Company was required by law to file such reports) (the foregoing materials being collectively referred to herein as the “ Company Reports ” and, together with the Schedules to this Agreement (if any), the “ Disclosure Materials ”) on a timely basis. As of their respective dates, the Company Reports complied in all material respects with the requirements of the Securities Act, the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and Canadian Securities Laws and none of the Company Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the Company Reports comply in all material respects with applicable accounting requirements, the rules and regulations of the Commission and Canadian Securities Laws with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with GAAP applied on a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

(i) Material Changes . Except as set forth in Schedule 3.1(i) , since the date of the latest audited financial statements included within the Company Reports, except as specifically disclosed in the Company Reports, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables, accrued expenses and other liabilities incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting or the identity of its auditors, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its shareholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans and other equity compensation arrangements. The Company does not have pending before the Commission any request for confidential treatment of information.

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(j) Litigation . Except as disclosed in Schedule 3.1(j) , to the knowledge of the Company, there is no Action which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) except as specifically disclosed in the Company Reports, would, if there were an unfavorable decision, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect. To the knowledge of the Company, neither the Company nor any Subsidiary, nor any director or officer thereof (in his or her capacity as such), is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws, Canadian Securities Laws, or a claim of breach of fiduciary duty, except as specifically disclosed in the Company Reports. There has not been, and to the knowledge of the Company, there is not pending any investigation by the Commission involving the Company or any current or former director or officer of the Company (in his or her capacity as such). The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.

(k) Labor Relations . No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company or any Subsidiary.

(l) Compliance . Neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect. The Company is in compliance with all effective requirements of the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations thereunder, that are applicable to it, except where such noncompliance could not have or reasonably be expected to result in a Material Adverse Effect.

(m) Regulatory Permits . The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, provincial, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the Company Reports, except where the failure to possess such permits could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any such permits.

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(n) Title to Assets . The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them that is material to their respective businesses and good and valid title in all personal property owned by them that is material to their respective businesses, in each case free and clear of all Liens, except for Permitted Liens. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases of which the Company and the Subsidiaries are in compliance, except as could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.

(o) Matters Relating to the Assets .

(i) In the Security Agreements the Company and WHI have disclosed to the Investor all locations at which the inventory and equipment in excess of $25,000 (other than inventory and equipment in-transit) of the Company and Subsidiaries are located, and the Company’s inventory and equipment that is kept at other locations (other than inventory or equipment in transit or in the possession of a third party for repair or service in the ordinary course of business) does not have a value in the aggregate in excess of $150,000; and

(ii) Other than WHI, no other Subsidiaries of the Company own any material assets.

(p) Intellectual Property Rights .

(i) The Company and the Subsidiaries own, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights and other similar rights that are necessary or material for use in connection with their respective businesses as described in the Company Reports and which the failure to so have could, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect (collectively, the “ Intellectual Property Rights ”). Schedule 3.1(p) sets forth, for the Company’s owned and licensed Intellectual Property Rights, a complete and accurate list of all United States, international and foreign patent, copyright, trademark, service mark, trade dress, and domain name registrations and current applications, indicating, where applicable, for each applicable jurisdiction, the registration number (or application number) and date issued or filed.

(ii) Neither the Company or any Subsidiary, nor to the knowledge of the Company, any employee, officer, director or consultant to the Company or its Subsidiaries, has intentionally misappropriated any patent, invention, process, method, compound, design, formula or other proprietary or intellectual property rights of any third Person. To the knowledge of the Company, the practice of the Intellectual Property Rights, as practiced by the Company and the Subsidiaries prior to the Initial Closing, does not infringe or otherwise violate any proprietary rights of any third Person and except as set forth in Schedule 3.1(p) , the Company and the Subsidiaries have not received any written notice alleging any such infringement prior to the Initial Closing Date. The consummation of the transactions contemplated by this Agreement and the Transaction Documents and, to the Company’s knowledge, the use by the Company and the Subsidiaries immediately after the Initial Closing of the Intellectual Property Rights will not infringe or otherwise violate any proprietary rights of

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any third Person. To the knowledge of the Company, there are no rights owned by any third party which would prevent the development, manufacture, operation, sale or use by the Company or any Affiliate of the Company of any Product or that would materially impede the ongoing operation of the business. The Company and the Subsidiaries have received no written notice from a third Person that threatens legal proceedings against the Company or a Subsidiary if the Company or Subsidiary does not execute a license with such third Person, to use such third Person’s intellectual property rights that such third Person claims apply to any Product.

(iii) The Company and the Subsidiaries have taken all reasonable steps to protect the confidentiality of all Intellectual Property Rights, including entering into appropriate forms of confidentiality and assignment agreements with all employees and consultants having access to confidential information requiring them not to disclose such information or to use the same for their own benefit or for the benefit of any other Person. To the knowledge of the Company, no Person is in breach of any such Confidentiality and Assignment Agreement in any respect that could adversely affect the Intellectual Property Rights or the Company’s rights therein.

(q) Accounts Receivable . The Company and WHI have provided to Investor a true, correct and complete list, including aging information, of all of the Company’s and WHI’s accounts receivable as of September 30, 2007.

(r) Conduct of Business in Compliance with Regulatory Requirements .

(i) Compliance . The Company is in compliance with all applicable Regulatory Laws in each jurisdiction in which the Company has facilities or does business. Except as set forth in Schedule 3.1(r) , since January 1, 2005, the Company has not been required by any Governmental Authority to make, nor has voluntarily undertaken, any Product recall, nor has the Company been prevented from carrying out the research and development, manufacture, clinical testing, production, marketing, advertising, distribution, use, offer for sale or sale of any Product as a result of any specific action of, or notification from, any Governmental Authority, and, to the knowledge of the Company, there is no action or proceeding threatened by any European Union, United States (including FDA) or other Governmental Authority or multinational organization against the Company, other than regulatory actions and proceedings commenced prior to the date of this Agreement generally known to the public affecting the medical device industry generally (and not solely relating to the Company or its business).

(ii) No Notices . Except as set forth in Schedule 3.1(r) , since January 1, 2005, the Company has not received written notice of and, to the knowledge of the Company, is not subject to, any adverse inspection, finding of deficiency, finding of non-compliance, compelled or voluntary recall, investigation, penalty, fine, sanction, assessment, request for corrective or remedial action, audit, or other compliance