Exhibit 10.2

 

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STRICTLY PERSONAL AND CONFIDENTIAL

 

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Dear ¨:

 

INTRODUCTION

 

A dedicated executive management team is essential to protecting and enhancing
the best interests of the Company and its shareholders.  The Company wishes to
provide its executives with compensation and benefits arrangements which would
come into effect in circumstances related to a change in control which are
competitive with those of other corporations, in order to ensure the Company
receives the benefit of the full attention and dedication of the executives at
all times, and notwithstanding any threatened or pending change in control of
the Company.

 

The purpose of this Letter Agreement is to document the terms of the severance
package to which you as a Company executive shall be entitled if material
changes in the terms of your employment with the Company occur without your
consent, or if your employment with the Company is terminated, in connection
with a change in control of the Company.

 

NOW THEREFORE in consideration of $10.00, the promises made by each party to the
other as set out in this Letter Agreement and other good and valuable
consideration, the receipt and sufficiency of which each of the parties
acknowledges, QLT and you agree as follows:

 

PART I

DEFINITIONS

 

1.1                                 DEFINITIONS.  IN THIS LETTER AGREEMENT:

 

(A)                                  “AFFILIATE” HAS THE MEANING GIVEN TO IT IN
THE COMPANY ACT (BRITISH COLUMBIA).

 

(B)                                 “BENEFIT PLANS” MEANS THE COVERAGE UNDER THE
COMPANY’S GROUP BENEFIT PLAN FOR EMPLOYEES WHICH THE COMPANY PROVIDES TO YOU AND
YOUR ELIGIBLE DEPENDANTS, INCLUDING ALL MEDICAL, DENTAL, LIFE AND OTHER BENEFIT
PLANS BUT EXCLUDING SHORT AND LONG TERM DISABILITY COVERAGE, OUT-OF-PROVINCE
MEDICAL COVERAGE AND THE RRSP CONTRIBUTION BENEFIT.

 

(C)                                  “BOARD” MEANS THE COMPANY’S BOARD OF
DIRECTORS.

 

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(D)                                 “CHANGE IN CONTROL” MEANS ANY OF THE
FOLLOWING EVENTS:

 

(I)                                     MERGER.  A MERGER, CONSOLIDATION,
REORGANIZATION OR ARRANGEMENT INVOLVING THE COMPANY OTHER THAN A MERGER,
CONSOLIDATION, REORGANIZATION OR ARRANGEMENT IN WHICH STOCKHOLDERS OF THE
COMPANY IMMEDIATELY PRIOR TO SUCH MERGER, CONSOLIDATION, REORGANIZATION OR
ARRANGEMENT OWN, DIRECTLY OR INDIRECTLY, SECURITIES POSSESSING AT LEAST 65% OF
THE TOTAL COMBINED VOTING POWER OF THE OUTSTANDING VOTING SECURITIES OF THE
CORPORATION RESULTING FROM SUCH MERGER, CONSOLIDATION, REORGANIZATION OR
ARRANGEMENT IN SUBSTANTIALLY THE SAME PROPORTION AS THEIR OWNERSHIP OF SUCH
VOTING SECURITIES IMMEDIATELY PRIOR TO SUCH MERGER, CONSOLIDATION,
REORGANIZATION OR ARRANGEMENT;

 

(II)                                  TENDER OFFER.  THE ACQUISITION, DIRECTLY
OR INDIRECTLY, BY ANY PERSON OR RELATED GROUP OF PERSONS ACTING JOINTLY OR IN
CONCERT (OTHER THAN THE COMPANY OR A PERSON THAT DIRECTLY OR INDIRECTLY
CONTROLS, IS CONTROLLED BY, OR IS UNDER COMMON CONTROL WITH, THE COMPANY) OF
BENEFICIAL OWNERSHIP OF SECURITIES POSSESSING MORE THAN 35% OF THE TOTAL
COMBINED VOTING POWER OF THE COMPANY’S OUTSTANDING SECURITIES PURSUANT TO A
TENDER OFFER MADE DIRECTLY TO THE COMPANY’S STOCKHOLDERS;

 

(III)                               SALE.  THE SALE, TRANSFER OR OTHER
DISPOSITION OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY OTHER THAN
A SALE, TRANSFER OR OTHER DISPOSITION TO AN AFFILIATE OF THE COMPANY OR TO AN
ENTITY IN WHICH STOCKHOLDERS OF THE COMPANY IMMEDIATELY PRIOR TO SUCH SALE,
TRANSFER OR OTHER DISPOSITION OWN, DIRECTLY OR INDIRECTLY, SECURITIES POSSESSING
AT LEAST 65% OF THE TOTAL COMBINED VOTING POWER OF THE OUTSTANDING VOTING
SECURITIES OF THE PURCHASING ENTITY IN SUBSTANTIALLY THE SAME PROPORTION AS
THEIR OWNERSHIP OF SUCH VOTING SECURITIES IMMEDIATELY PRIOR TO SALE, TRANSFER OR
OTHER DISPOSITION; OR

 

(IV)                              BOARD CHANGE.  A CHANGE IN THE COMPOSITION OF
THE BOARD OVER A PERIOD OF 24 CONSECUTIVE MONTHS OR LESS SUCH THAT A MAJORITY OF
THE BOARD MEMBERS CEASES TO BE COMPRISED OF INDIVIDUALS WHO EITHER HAVE BEEN:

 

(A)                              BOARD MEMBERS CONTINUOUSLY SINCE THE BEGINNING
OF SUCH PERIOD, OR

(B)                                APPOINTED OR NOMINATED FOR ELECTION AS BOARD
MEMBERS DURING SUCH PERIOD BY AT LEAST A MAJORITY OF THE BOARD MEMBERS DESCRIBED
IN SUBSECTION (A) ABOVE WHO WERE STILL IN OFFICE AT THE TIME THE BOARD APPROVED
SUCH APPOINTMENT OR NOMINATION.

 

(E)                                  “INVOLUNTARY TERMINATION” MEANS ANY ONE OF
THE FOLLOWING:

 

(I)                                     THE TERMINATION OF YOUR EMPLOYMENT BY
THE COMPANY OR THE GIVING OF WRITTEN NOTICE TO YOU BY THE COMPANY OF THE
INTENDED TERMINATION OF YOUR EMPLOYMENT, IN EITHER CASE FOR REASONS OTHER THAN
CAUSE, PERMANENT DISABILITY OR DEATH, WITHIN THE 24 MONTH PERIOD FOLLOWING

 

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THE OCCURRENCE OF A CHANGE OF CONTROL, OR

 

(V)                                 YOUR  GIVING WRITTEN NOTICE TO THE COMPANY,
WITHIN 24 MONTHS AFTER A TRIGGERING EVENT,  IN WHICH YOU ADVISE THAT A
TRIGGERING EVENT HAS OCCURRED AND TENDER YOUR RESIGNATION FROM EMPLOYMENT WITH
THE COMPANY;

 

(F)                                    “SUCCESSOR” SHALL MEAN ANY CORPORATION
WHICH IS THE LEGAL SUCCESSOR TO THE COMPANY, OR WHICH ACQUIRES SUBSTANTIALLY ALL
OF THE ASSETS OF THE COMPANY, PURSUANT TO A CHANGE OF CONTROL;

 

(G)                                 “TRIGGERING EVENT” SHALL MEAN, WITHOUT YOUR
EXPRESS WRITTEN CONSENT, THE OCCURRENCE OF ANY ONE OR MORE OF THE FOLLOWING
CIRCUMSTANCES AFTER A CHANGE OF CONTROL:

 

(I)                                     THE ASSIGNMENT TO YOU  OF ANY DUTIES
WHICH ARE MATERIALLY INCONSISTENT, IN AN ADVERSE RESPECT, WITH YOUR POSITION,
AUTHORITY, DUTIES OR RESPONSIBILITIES PRIOR TO THE CHANGE OF CONTROL, OR ANY
OTHER ACTION BY THE COMPANY OR ITS SUCCESSOR WHICH RESULTS IN A MATERIAL
DIMINUTION IN SUCH POSITION, AUTHORITY OR RESPONSIBILITIES,  EXCEPT AN ISOLATED
AND INADVERTENT ACTION NOT TAKEN IN BAD FAITH AND WHICH IS REMEDIED BY THE
COMPANY OR ITS SUCCESSOR PROMPTLY AFTER RECEIPT OF NOTICE THEREOF FROM YOU;

 

(II)                                  ANY REDUCTION BY THE COMPANY  OR A
SUCCESSOR IN YOUR BASE SALARY;

 

(III)                               A REDUCTION BY THE COMPANY OR A SUCCESSOR OF
25% OR MORE OF YOUR ANNUAL CASH INCENTIVE COMPENSATION OPPORTUNITY;

 

(IV)                              THE COMPANY OR A SUCCESSOR’S REQUIRING YOU TO,
OR NOTIFYING YOU THAT YOU WILL BE REQUIRED TO, RELOCATE TO OR BE BASED AT, OR
SITUATE ONE DAY OR MORE PER WEEK IN,  A LOCATION WHICH IS 100 KILOMETERS OR MORE
FROM THE LOCATION WHERE YOU WERE BASED IMMEDIATELY PRIOR TO THE CHANGE OF
CONTROL;

 

(V)                                 THE FAILURE BY THE COMPANY OR A SUCCESSOR TO
CONTINUE, SUBSTANTIALLY AS IN EFFECT IMMEDIATELY PRIOR TO THE CHANGE IN CONTROL,
ALL OF THE COMPANY’S BENEFIT PLANS, IN WHICH YOU PARTICIPATE (OR SUBSTANTIALLY
EQUIVALENT SUCCESSOR PLANS, PROGRAMS, POLICIES, PRACTICES OR ARRANGEMENTS) OR
THE FAILURE BY THE COMPANY OR A SUCCESSOR TO CONTINUE YOUR PARTICIPATION THEREIN
ON SUBSTANTIALLY THE SAME BASIS AS EXISTED IMMEDIATELY PRIOR TO THE CHANGE OF
CONTROL;

 

(VI)                              THE FAILURE OF THE COMPANY TO OBTAIN AN
AGREEMENT FROM ANY SUCCESSOR TO ASSUME AND AGREE TO PERFORM THIS LETTER
AGREEMENT, AS CONTEMPLATED IN SECTION 3.5 OF THIS LETTER AGREEMENT, AND YOUR
EMPLOYMENT AGREEMENT WITH THE COMPANY; OR

 

(VII)                           ANY PURPORTED TERMINATION BY THE COMPANY OR A
SUCCESSOR OF YOUR

 

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EMPLOYMENT OTHER THAN FOR CAUSE, PERMANENT DISABILITY OR DEATH.

 

 

PART II

CHANGE IN CONTROL BENEFITS

 

2.1                                 SEVERANCE PAYMENT.  UPON THE OCCURRENCE OF
AN INVOLUNTARY TERMINATION, YOU SHALL RECEIVE A SEVERANCE PAYMENT FROM THE
COMPANY EQUAL TO THE BASE SALARY, MAXIMUM BONUS ENTITLEMENT, AND MAXIMUM RRSP
CONTRIBUTION TO WHICH YOU WOULD HAVE BEEN ENTITLED IN A ¨ MONTH PERIOD (THE
“SEVERANCE PERIOD”), CALCULATED AS FOLLOWS:

 

(A)                                  THE RATE OF BASE SALARY WILL BE THAT IN
EFFECT  AT THE TIME OF THE INVOLUNTARY TERMINATION OR AS WAS IN EFFECT
IMMEDIATELY PRIOR TO THE OCCURRENCE OF A TRIGGERING EVENT, WHICHEVER RATE IS
GREATER; AND

 

(B)                                 THE MAXIMUM  BONUS ENTITLEMENT WILL BE
CALCULATED AS THE MAXIMUM AMOUNT  AVAILABLE TO YOU UNDER THE COMPANY’S CASH
INCENTIVE COMPENSATION PLAN AT THE TIME OF THE INVOLUNTARY TERMINATION OR THE
ENTITLEMENT WHICH WAS AVAILABLE TO YOU IMMEDIATELY PRIOR TO THE OCCURRENCE OF A
TRIGGERING EVENT, WHICHEVER AMOUNT IS GREATER, PRO-RATED FOR ANY PORTION OF THE
SEVERANCE PERIOD OF LESS THAN A YEAR; AND

 

(C)                                  A CONTRIBUTION TO YOUR RRSP, EQUAL TO THAT
TO WHICH YOU WOULD HAVE BEEN ENTITLED HAD YOU BEEN EMPLOYED BY THE COMPANY
THROUGHOUT THE SEVERANCE PERIOD, PRO-RATED FOR ANY PERIOD OF LESS THAN A YEAR,
AND SUBJECT TO TERMS OF THE RRSP CONTRIBUTION PROVISIONS SET OUT IN YOUR
EMPLOYMENT AGREEMENT WITH THE COMPANY.

 

2.2                                 OTHER COMPENSATION.  IN ADDITION TO THE
AMOUNTS PAID UNDER SECTION 2.1, UPON THE OCCURRENCE OF AN INVOLUNTARY
TERMINATION, THE COMPANY SHALL:

 

(A)                                  EXPENSES - REIMBURSE YOU FOR ALL REASONABLE
BUSINESS RELATED PROMOTION, ENTERTAINMENT AND/OR TRAVEL EXPENSES INCURRED BY YOU
DURING THE COURSE OF YOUR EMPLOYMENT WITH THE COMPANY, SUBJECT TO THE EXPENSE
REIMBURSEMENT PROVISIONS SET OUT IN YOUR EMPLOYMENT AGREEMENT WITH THE COMPANY
AND THE COMPANY’S POLICY AND PROCEDURES MANUAL, AS AMENDED FROM TIME TO TIME;

 

(B)                                 VACATION - MAKE A PAYMENT TO YOU IN RESPECT
OF YOUR ACCRUED BUT UNPAID VACATION PAY UP TO AND INCLUDING YOUR LAST DAY OF
EMPLOYMENT WITH THE COMPANY;

 

(C)                                  RRSP - MAKE A PRORATED CONTRIBUTION TO YOUR
RRSP, THE PRO-RATION TO BE WITH RESPECT TO THE PORTION OF THE THEN CURRENT
CALENDAR YEAR WORKED BY YOU UP TO AND INCLUDING THE LAST DAY OF YOUR EMPLOYMENT
WITH THE COMPANY AND SUBJECT TO THE RRSP CONTRIBUTION PROVISIONS SET OUT IN
YOUR  EMPLOYMENT AGREEMENT WITH THE COMPANY;

 

(D)                                 CASH INCENTIVE COMPENSATION EARNED PRIOR TO
INVOLUNTARY TERMINATION - IN ADDITION TO THE PAYMENTS UNDER SECTION 2.1(B)
ABOVE, THE COMPANY SHALL

 

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MAKE A PAYMENT TO YOU IN RESPECT OF YOUR ENTITLEMENT TO PARTICIPATE IN THE
COMPANY’S CASH INCENTIVE COMPENSATION PLAN IN RESPECT OF THE CURRENT CALENDAR
YEAR, AND THE PRIOR YEAR IF SUCH PAYMENT HAS NOT YET BEEN MADE,  TO BE PRO-RATED
WITH RESPECT TO THE PORTION OF THE CURRENT CALENDAR YEAR WORKED BY YOU UP TO AND
INCLUDING YOUR LAST DAY OF EMPLOYMENT WITH THE COMPANY AND, IN RESPECT OF THE
CURRENT CALENDAR YEAR,  SHALL BE CALCULATED AT THE MAXIMUM ANNUAL BONUS
ENTITLEMENT AVAILABLE TO YOU UNDER THE COMPANY’S CASH INCENTIVE COMPENSATION
PLAN AT THE TIME OF THE INVOLUNTARY TERMINATION OR THE ENTITLEMENT WHICH WAS
AVAILABLE TO YOU IMMEDIATELY PRIOR TO THE OCCURRENCE OF ANY PRIOR TRIGGERING
EVENT, WHICHEVER AMOUNT IS GREATER;

 

(E)                                  BENEFITS – CONTINUE TO PROVIDE YOU AND YOUR
ELIGIBLE DEPENDANTS WITH COVERAGE UNDER THE COMPANY’S BENEFIT PLANS FOR A PERIOD
OF 30 DAYS AFTER YOUR LAST DAY OF EMPLOYMENT WITH THE COMPANY AND, AT YOUR
REQUEST,  FOR SUCH FURTHER PERIOD (THE AGGREGATE OF WHICH SHALL NOT EXCEED THE
SEVERANCE PERIOD) AS THE INSURER SHALL PERMIT, AND FOR ANY PERIOD OF THE
SEVERANCE PERIOD DURING WHICH SUCH COVERAGE IS NOT MAINTAINED, THE COMPANY SHALL
PAY TO YOU COMPENSATION IN THE AMOUNT OF 10% OF  YOUR BASE SALARY, CALCULATED IN
ACCORDANCE WITH SECTION 2.1(A), PROVIDED THAT THE COMPANY’S OBLIGATION TO
MAINTAIN COVERAGE FOR YOU AND YOUR ELIGIBLE DEPENDANTS UNDER THIS SUBSECTION
WILL BE CONDITIONAL UPON YOUR AND YOUR ELIGIBLE DEPENDANTS REMAINING IN CANADA;

 

(F)                                    MOVING EXPENSES - PAY SUCH MOVING
EXPENSES AS MAY BE REASONABLY INCURRED BY YOU TO RELOCATE YOU AND YOUR FAMILY TO
A NEW LOCATION FOR FUTURE EMPLOYMENT PURPOSES OR THE LOCATION FROM WHICH YOU
TRAVELED TO VANCOUVER, AS THE CASE MAY BE, INCLUDING, IN THE EVENT THAT YOU ARE
UNABLE TO SELL YOUR HOME IN VANCOUVER BEFORE YOU ARE REQUIRED TO PAY COSTS OF
ACCOMMODATION AT YOUR NEW LOCATION, THE COSTS OF SUCH ACCOMMODATION UNTIL YOU
DERIVE PROCEEDS FROM THE SALE OF YOU HOME IN VANCOUVER, OR SIX MONTHS, WHICHEVER
PERIOD IS LONGER,  TOGETHER WITH ANY ADDITIONAL RELOCATION REIMBURSEMENT TO
WHICH YOU MAY THEN BE ENTITLED UNDER THE TERMS OF YOUR EMPLOYMENT AGREEMENT WITH
THE COMPANY, SUCH EXPENSES TO BE CALCULATED AND PAID IN ACCORDANCE WITH TERMS OF
YOUR EMPLOYMENT AGREEMENT, PROVIDED THAT THERE IS NO DUPLICATION OF PAYMENTS
PURSUANT TO THE EMPLOYMENT AGREEMENT AND THIS CLAUSE;

 

(G)                                 OUT-PLACEMENT COUNSELLING - REIMBURSE YOU
FOR OUT-PLACEMENT COUNSELLING SERVICES FROM A QUALIFIED COUNSELLOR TO BE AGREED
TO BY YOU AND THE COMPANY TO A MAXIMUM OF CDN$5,000 FOR SERVICES RENDERED TO YOU
IN SEEKING ALTERNATIVE EMPLOYMENT.

 

2.3                                 TIMING OF PAYMENT.  THE AMOUNTS SET OUT IN
SECTIONS 2.1 AND 2.2 SHALL BE PAID TO YOU IN A LUMP SUM PAYMENT WITHIN 30 DAYS
OF YOUR INVOLUNTARY TERMINATION, EXCEPT FOR THE RRSP PAYMENTS DESCRIBED IN
SECTION 2.1(C) AND 2.2(D), WHICH WILL BE PAYABLE IN ACCORDANCE WITH THE TERMS OF
YOUR EMPLOYMENT AGREEMENT IN THE SAME MANNER AS IF YOU WERE EMPLOYED THROUGHOUT
THE SEVERANCE PERIOD.

 

2.4                                 NO DUPLICATION. THE COMPANY AGREES THAT AN
INVOLUNTARY TERMINATION BY YOU, AS DEFINED IN SUBSECTION 1.1(E)(II), SHALL
CONSTITUTE A TERMINATION OF YOUR EMPLOYMENT BY THE COMPANY WITHOUT CAUSE
PURSUANT TO YOUR EMPLOYMENT AGREEMENT AND ANY OTHER

 

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AGREEMENT IN EFFECT BETWEEN YOU AND THE COMPANY. IN THE EVENT THAT THE SEVERANCE
PAYMENT AND OTHER COMPENSATION PROVISIONS SET OUT IN SECTIONS 2.1 AND 2.2 OF
THIS LETTER AGREEMENT AND THE SEVERANCE PAYMENT PROVISIONS IN YOUR EMPLOYMENT
AGREEMENT WITH THE COMPANY ARE BOTH APPLICABLE, YOU AGREE THAT, UPON THE
COMPANY’S REQUEST, YOU SHALL GIVEN WRITTEN NOTICE TO THE COMPANY WITH RESPECT TO
WHICH AGREEMENT WHICH YOU WISH TO BE PAID OUT UNDER AND THAT YOU SHALL NOT BE
ENTITLED TO SEVERANCE PAY UNDER BOTH AGREEMENTS.

 

2.5                                 OPTIONS.  UPON THE OCCURRENCE OF AN
INVOLUNTARY TERMINATION, THE PROVISIONS OF YOUR STOCK OPTION AGREEMENT(S) WITH
THE COMPANY SHALL GOVERN ALL STOCK OPTION ISSUES, INCLUDING, WITHOUT LIMITATION,
ACCELERATION OF VESTING AND THE TIME PERIOD REMAINING TO EXERCISE ANY VESTED
OPTIONS.

 

2.6                                 ACKNOWLEDGEMENT. IN THE EVENT OF AN
INVOLUNTARY TERMINATION, PAYMENT BY THE COMPANY OF THE AMOUNTS SET OUT IN
SECTIONS 2.1 AND 2.2 OR, IF YOU ELECT TO RECEIVE SEVERANCE UNDER YOUR EMPLOYMENT
AGREEMENT PAYMENT OF THE AMOUNTS SET OUT THEREIN, IN LIEU OF RECEIVING A
DUPLICATIVE PAYMENT HEREUNDER, SHALL BE IN FULL AND FINAL SATISFACTION OF ALL
AMOUNTS THAT MIGHT OTHERWISE BE PAYABLE BY THE COMPANY TO YOU BY WAY OF
COMPENSATION FOR LENGTH OF SERVICE, DAMAGES IN LIEU OF NOTICE OF TERMINATION OR
ANY OTHER OBLIGATIONS ARISING UNDER YOUR EMPLOYMENT  WITH THE COMPANY AND THE
COMPANY SHALL HAVE NO FURTHER OBLIGATIONS, STATUTORY OR OTHERWISE, ARISING OUT
OF OR IN RESPECT OF YOUR EMPLOYMENT AND YOU SHALL EXECUTE A COMPLETE AND GENERAL
RELEASE IN THE FORM SET OUT IN SCHEDULE A AS AN EXPRESS CONDITION OF YOUR RIGHT
TO RECEIVE THE PAYMENTS AND BENEFITS REFERRED TO IN SECTIONS 2.1 AND 2.2 OR
UNDER YOUR EMPLOYMENT AGREEMENT, AS THE CASE MAY BE.

 

2.7                                 TERMINATION FOR CAUSE, PERMANENT DISABILITY
OR DEATH.  FOR GREATER CERTAINTY, IF YOUR EMPLOYMENT IS TERMINATED FOR CAUSE,
PERMANENT DISABILITY OR DEATH OR YOU TERMINATE YOUR EMPLOYMENT OTHER THAN AS AN
INVOLUNTARY TERMINATION, YOU SHALL NOT BE ENTITLED TO PAYMENT OF THE AMOUNTS
UNDER THIS LETTER AGREEMENT AND THE TERMS OF YOUR EMPLOYMENT AGREEMENT WITH THE
COMPANY SHALL GOVERN.

 

2.8                               WAIVER OF NON-COMPETITION COVENANT.  EFFECTIVE
UPON YOUR INVOLUNTARY TERMINATION, THE COMPANY HEREBY WAIVES ANY AND ALL RIGHTS
IT HAS TO INSIST UPON COMPLIANCE WITH OR TO ENFORCE ANY COVENANT, UNDERTAKING OR
AGREEMENT BY YOU UNDER YOUR EMPLOYMENT AGREEMENT OR OTHERWISE, PURSUANT TO WHICH
YOU HAVE AGREED NOT TO COMPETE WITH THE COMPANY IN YOUR FUTURE EMPLOYMENT OR
OTHERWISE LIMIT YOUR FUTURE EMPLOYMENT OPPORTUNITIES. YOUR OBLIGATIONS OF
CONFIDENTIALITY TO THE COMPANY CONTAINED IN YOUR EMPLOYMENT AGREEMENT SHALL
REMAIN IN FULL FORCE AND EFFECT AND ARE NOT ALTERED BY THIS LETTER AGREEMENT.

 

2.9                                 RIGHT TO WAIVE ANY AND ALL CONSIDERATION.
 IN YOUR DISCRETION, UPON YOUR WRITTEN REQUEST TO THE COMPANY MADE WITHIN 15
DAYS OF YOUR INVOLUNTARY TERMINATION, YOU MAY ELECT TO IRREVOCABLY WAIVE YOUR
RIGHT TO ANY OF THE CONSIDERATION PAYABLE BY THE COMPANY PURSUANT TO THIS LETTER
AGREEMENT.

 

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PART III

MISCELLANEOUS PROVISIONS

 

3.1                                 Term of Agreement.  This Letter Agreement
shall remain in effect for the term of your employment with the Company and for
a further six month period thereafter, unless the parties mutually agree to an
earlier termination, provided that the expiry or termination of this Letter
Agreement shall not affect the rights and obligations of the parties arising
under this Letter Agreement prior to its termination or expiry.

 

3.2                                 Legal Fees. The Company shall pay, to the
full extent permitted by law, all legal fees and expenses which you may
reasonably incur as a result of any contest (regardless of the outcome thereof)
by the Company or its successors or Affiliates, you or others of the validity or
enforceability of, or liability under, any provision of this Letter Agreement or
any guarantee of performance thereof (including as a result of any contest by
you about the amount of any payment pursuant to this Letter Agreement).

 

3.3                                 Withholding Taxes. The Company may withhold
from any amounts payable under this Letter Agreement such federal, provincial,
local or foreign taxes as shall be required to be withheld pursuant to any
applicable law or regulation.

 

3.4                                 General Creditor Status. The benefits to
which you may become entitled under this Letter Agreement shall be paid, when
due, from the general assets of the Company.  Your right (or the right of the
executors or administrators of your estate) to receive any such payments shall
at all times be that of a general creditor of the Company and shall have no
priority over the claims of other general creditors of the Company.

 

3.5                                 Successors; Binding Agreement. The Company
shall require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of its business and/or
assets to assume and agree to perform this Letter Agreement by express written
agreement in the same manner and to the same extent that it would be required to
perform it if no such succession had taken place. Failure of the Company to
obtain such assumption and agreement within 30 days of any such succession shall
be a breach of this Letter Agreement and shall entitle you to compensation from
the Company in the same amount and on the same terms as you would be entitled
under this Letter Agreement, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the date of the Involuntary Termination.

 

3.6                                 Death.  Notwithstanding anything else in
this Letter Agreement, should you die after becoming entitled to benefits under
this Letter Agreement but before receipt of all benefits to which you became
entitled under this Letter Agreement, then the payment of such benefits shall be
made, on the due date or dates hereunder had you survived, to the executors or
administrators of your estate.

 

3.7                                 Prior Agreement. This Letter Agreement
replaces the letter agreement dated March 1, 2000 between you and the Company
with respect to your entitlements following a change of control of the Company,
which letter agreement is hereby terminated.

 

3.8                                 Governing Law. The provisions of this Letter
Agreement shall be governed by and interpreted in accordance with the laws of
the Province of British Columbia and the laws of Canada applicable to this
Letter Agreement.  All disputes arising under this

 

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Letter Agreement shall be referred to the Courts of the Province of British
Columbia, which shall have exclusive jurisdiction, unless there is mutual
agreement to the contrary.

 

3.9                                 Notice. The parties agree that any notice or
other communication required to be given under this Letter Agreement will be in
writing and will be delivered personally to the addresses set forth on page 1 of
this Letter Agreement (or, in your case, to the most recent address for you
which the Company has on record), or to such other addresses and persons as may
from time to time be notified in writing by the parties.

 

3.10                           Entire Agreement. This Letter Agreement, the
Employment Agreement and any Stock Option Agreements you have with the Company
constitute the entire agreement between the Company and you with respect to the
subject matter hereof, and supersede all previous communications, understandings
and agreements (whether verbal or written) between the Company and you regarding
the subject matter hereof.  To the extent that there is any conflict between the
provisions of this Letter Agreement, the Employment Agreement and any Stock
Option Agreements between you and the Company, the following provisions shall
apply:

 

(A)                                  IF THE CONFLICT IS WITH RESPECT TO AN
EVENT, ENTITLEMENT OR OBLIGATION IN THE EVENT OF A CHANGE IN CONTROL, THE
PROVISIONS OF THIS LETTER AGREEMENT SHALL GOVERN (UNLESS YOU AND THE COMPANY
OTHERWISE MUTUALLY AGREE).

 

(B)                                 IF THE CONFLICT IS WITH RESPECT TO AN
ENTITLEMENT OR OBLIGATION WITH RESPECT TO STOCK OPTIONS OF THE COMPANY, THE
PROVISIONS OF THE STOCK OPTION AGREEMENTS SHALL GOVERN (UNLESS YOU AND THE
COMPANY OTHERWISE MUTUALLY AGREE).

 

(C)                                  IN THE EVENT OF ANY OTHER CONFLICT, THE
PROVISIONS OF THE EMPLOYMENT AGREEMENT SHALL GOVERN (UNLESS YOU AND THE COMPANY
OTHERWISE MUTUALLY AGREE).

 

3.11                           Severability of Provisions. If any provision of
this Letter Agreement as applied to either party or to any circumstance should
be adjudged by a court of competent jurisdiction to be void or unenforceable for
any reason, the invalidity of that provision shall in no way affect (to the
maximum extent permissible by law):

 

(A)                                  THE APPLICATION OF THAT PROVISION UNDER
CIRCUMSTANCES DIFFERENT FROM THOSE ADJUDICATED BY THE COURT;

 

(B)                                 THE APPLICATION OF ANY OTHER PROVISION OF
THIS LETTER AGREEMENT; OR

 

(C)                                  THE ENFORCEABILITY OR INVALIDITY OF THIS
LETTER AGREEMENT AS A WHOLE.

 

If any provision of this Letter Agreement becomes or is deemed invalid, illegal
or unenforceable in any jurisdiction by reason of the scope, extent or duration
of its coverage, then the provision shall be deemed amended to the extent
necessary to conform to applicable law so as to be valid and enforceable or, if
the provision cannot be so amended without materially altering the intention of
the parties, then such provision shall be stricken and the remainder of this
Letter Agreement shall continue in full force and effect.

 

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3.12                           Captions. The captions appearing in this Letter
Agreement have been inserted for reference and as a matter of convenience and in
no way define, limit or enlarge the scope or meaning of this Letter Agreement or
any provision.

 

3.13                           Amendments. Any amendment to this Letter
Agreement shall only be effective if the amendment is in writing and is signed
by the Company and by you.

 

3.14                           Remedies. All rights and remedies provided
pursuant to this Letter Agreement or by law shall be cumulative, and no such
right or remedy shall be exclusive of any other.  A party may pursue any one or
more rights or remedies hereunder or may seek damages or specific performance in
the event of another party’s breach hereunder or may pursue any other remedy by
law or equity, whether or not stated in this Letter Agreement.

 

3.15                           No Employment or Service Contract. Nothing in
this Letter Agreement shall confer upon you any right to continue in the
employment of the Company for any period of specific duration or interfere with
or otherwise restrict in any way the rights of the Company or you, which rights
are hereby expressly reserved by each, to terminate your employment at any time
in accordance with the terms of your Employment Agreement.

 

                Please indicate your acceptance of the foregoing provisions of
this Letter Agreement by signing the enclosed copy of this Letter Agreement and
returning it to the Company.

 

QLT INC.

 

 

 

 

 

By:

 

 

 

 

 

 

Title:

¨

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACCEPTED AND AGREED TO this           day of                 , 2003 by:

 

 

 

 

 

Signature:

 

 

 

 

 

¨

 

 

 

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