Exhibit 10.2

FORM OF

AMENDMENT, WAIVER AND CONSENT

 

TO: INSITE VISION INCORPORATED (the “Corporation”)

 

RE: 12% SECURED SENIOR NOTES OF THE CORPORATION

 

 

WHEREAS:

 

A. The undersigned (the “Holder”) is the holder of a 12% senior secured notes in
the aggregate principal amount of US$[●] (the “Holder Notes”, and together with
all other notes issued pursuant to the Purchase Agreement (as defined below),
the “Notes”) issued by the Corporation to the Holder pursuant to a securities
purchase agreement (the “Purchase Agreement”) dated October 9, 2014, as amended
on November 21, 2014 among the Corporation, Riverbank Capital Securities, Inc.,
the Holder and certain other purchasers party thereto.

 

B. The Corporation, QLT Inc. (“QLT”) and Isotope Acquisition Corp., a Delaware
corporation (“Merger Sub”) entered into an agreement and plan of merger (the
“Merger Agreement”) dated the date hereof pursuant to which, among other things,
Merger Sub will merge with and into the Corporation, on the terms and conditions
of the Merger Agreement (the “Merger”).

 

C. Pursuant to the Merger Agreement, either party may terminate the Merger
Agreement if the consummation of the Merger (the “Merger Closing”) does not
occur on or before December 8, 2015, as it may be extended by the parties
pursuant to the terms of the Merger Agreement (the “End Date”).

 

D. Pursuant to Section 2 of the Notes, the Notes and the outstanding principal
balance of the Note together with all accrued and unpaid interest thereunder
becomes due and payable in a lump sum on October 9, 2015 (the “Maturity Date”).

 

E. Pursuant to Section 9(b) of the Notes, the Merger will constitute a “Sale of
Maker” as such term is defined in the Notes, and trigger an obligation of the
Corporation to redeem (the “Mandatory Redemption”) the Note at the Redemption
Price, as defined in the Notes, within ten days after the Merger Closing.

 

F.

In connection with the Merger (i) QLT agreed to advance a loan (the “QLT Loan”)
to the Corporation of up to US$9,853,333.00 on the terms and conditions of a
secured note (the “QLT Note”) issued by Corporation to QLT dated the date hereof
and (ii) QLT, the Corporation and U.S. Bank National Association (the
“Collateral Agent”), as collateral agent for the Holder and certain other
purchasers under the Purchase Agreement, entered into an intercreditor agreement
(the “Intercreditor Agreement”) pursuant to which, among other things, the
Collateral Agent agreed to subordinate security interests (the “Holder’s
Security”) granted by the Corporation to secure its obligations under the
Purchase Agreement pursuant to the terms of that certain Security Agreement,
dated

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  October 9, 2014 by and between Corporation and the Collateral Agent (the
“Holder Security Agreement”) to the security interest granted by the Corporation
to secure its obligations under the QLT Note (the “QLT Security”).

 

G. The Holder, along with certain other holders of the Notes which together
constitute the Majority Holders (as defined in the Purchase Agreement) wishes to
provide its consent to amend the Note to extend the Maturity Date under the
Note, waive its rights pursuant to the Mandatory Redemption under the Note, and
provide its consent to the QLT Loan and priority of the QLT Security on the
terms and conditions hereof.

THEREFORE, for valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, effective as of the date hereof, the Holder hereby agrees
as follows:

 

1. Pursuant to Section 12 of the Notes, the Holder agrees to amend the Notes as
follows:

 

  (a) Section 2 of the Notes is deleted in its entirety and replaced with the
following:

“2. Due Date. Unless earlier accelerated pursuant to the terms hereof, this Note
matures and the outstanding principal balance of this Note together with all
accrued and unpaid interest hereunder becomes due and payable in a lump sum on
the day (the “Maturity Date”) which is the earlier to occur of (i) 6 months
following the Closing Date, as such term is defined in an agreement and plan of
merger (the “Merger Agreement Closing Date”) dated June 8, 2015, entered into
between the Maker, QLT and a wholly owned subsidiary of QLT, as such agreement
may be amended, restated and in effect from time to time (the “Merger
Agreement”) and (ii) 12 months after the date on which the Merger Agreement is
terminated.”

 

  (b) The first sentence of Section 3 of the Notes is deleted in its entirety
and replaced with the following:

“3. Interest. Interest accrues on the unpaid balance outstanding from time to
time under this Note at the rate of 12% per annum until the Maturity Date,
provided that upon an Event of Acceleration, at the written election of the
Majority Holders (as defined in the Purchase Agreement), any outstanding
principal amount and accrued but unpaid interest bears interest at the rate of
20% per annum from the date of such Event of Acceleration.”

 

  (c) All references to the term “Extended Maturity Date” are deleted in their
entirety.

 

  (d) Section 5(B) of the Notes is deleted in its entirety and replaced with the
following:

(B) not, without the written consent of the Majority Holders (i) incur any
indebtedness for money borrowed, other than indebtedness (a) in an aggregate
amount not to exceed $100,000, (b) owing to a seller incurred solely for the

 

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purpose of financing the purchase price of an asset of a type customarily
purchased by the Maker acquired from such seller, (c) that is subordinated to
this Note in a manner reasonably satisfactory to the Holder or (d) owing to QLT
Inc. or any of its affiliates, provided that any Liens granted to secure such
Indebtedness shall, after the Merger Agreement Closing Date, be junior to the
Lien securing the Notes or (ii) grant, or permit to be created, any lien other
than the security interests created under the Security Agreement and any
security interest which would constitute a Permitted Lien (as defined in the
Security Agreement);

 

  (e) Section 8 of the Notes is deleted in its entirety and replaced with the
following:

“8. Optional Redemption. This Note may be redeemed by the Maker at any time upon
10 days prior written notice to the Holder, in whole or in part, at the
redemption price equal to 100% of the principal amount of this Note plus accrued
but unpaid interest thereon (the “Redemption Price”).”

 

2. Pursuant to Section 12 of the Notes, the Holder, along with certain other
holders of the Notes which together constitute the Majority Holders (as defined
in the Purchase Agreement), hereby irrevocably and unconditionally waives all of
the rights of the holders of the Notes pursuant to the Mandatory Redemption in
connection with the Merger and the Merger Agreement, and agrees that,
notwithstanding any other provision of the Notes, the Merger and any transaction
contemplated under the Merger Agreement shall be deemed not to constitute a
“Sale of Maker”, as such term is defined under the Notes.

 

3. Pursuant to Section 5 of the Notes, the Holder, along with certain other
holders of the Notes which together constitute the Majority Holders, hereby
irrevocably and unconditionally consents to the QLT Loan on the terms and
conditions of the QLT Note, the granting of the QLT Security and the
subordination of the Holder’s Security to the QLT Security on the terms and
conditions of the Intercreditor Agreement, and agrees that, notwithstanding any
other provision of the Notes or the Purchase Agreement, the QLT Note, the
Intercreditor Agreement and any one or more transactions contemplated thereby
shall be deemed not to constitute and Event of Acceleration, as such term is
defined in the Notes.

 

4. Holder, along with certain other holders of the Notes which together
constitute the Majority Holders, hereby instructs Collateral Agent to execute
the Intercreditor Agreement substantially in the form set out in Exhibit A
hereto.

 

5. The Holder represents and warrants that as of the date hereof: (i) it is the
sole registered and beneficial owner of the Holder Notes free and clear of all
encumbrances, and that it has not transferred or in any way disposed of any of
its rights under the Holder Notes or any portion thereof; and (ii) no Event of
Acceleration, as such term is defined in the Holder Notes, has occurred and is
continuing.

 

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6. The Holder acknowledges and understands that the Corporation is relying on
this amendment, waiver and consent in connection with the entering into the
Merger Agreement and performance of its obligations thereunder.

 

7. Time is the essence of this amendment, waiver and consent.

 

8. Except as amended or supplemented by this amendment, waiver and consent, the
Notes remain unchanged and in full force and effect. This amendment, waiver and
consent shall be governed by the laws of the State of New York.

 

9. If any provision of this amendment, waiver and consent is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this amendment, waiver and consent shall remain in full force and effect. Any
provision of this amendment, waiver and consent held invalid only in part or
degree shall remain in full force and effect to the extent not held invalid or
unenforceable.

 

10. This amendment, waiver and consent shall be binding upon and shall inure to
the benefit of the Holder and the Corporation and their respective successors
and permitted assigns.

 

11. This amendment, waiver and consent may be executed in several counterparts
(including by facsimile), each of which when so executed shall be deemed to be
an original and shall have the same force and effect as an original, and such
counterparts together shall constitute one and the same instrument.

 

12. The parties hereto acknowledge and agree that all outstanding principal,
fees and interests owing on those certain Notes set forth on Exhibit B will be
repaid within 10 days after the consummation of the Merger

 

13. The Corporation and the Holder acknowledge that the indemnities and
reimbursement provisions of the Holder Security Agreement and the other
Collateral Documents (as defined in the Holder Security Agreement) apply to the
transactions contemplated by this amendment, waiver and consent.

 

14. Pursuant to Section 17 of the Holder Security Agreement, the Corporation and
the Holder acknowledge the Collateral Agent’s has designated the following
address as its address for purposes of Section 12 of the Holder Security
Agreement and agree the Holder Security Agreement is amended to reflect such
address:

U.S. Bank National Association

Global Trust Services

100 Wall Street, Suite 1600

New York, New York 10005

Facsimile: 212-951-6986

Attention: Jean Clarke, Vice President

Email: jean.clarke@usbank.com

[Signature page follows]

 

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IN WITNESS WHEREOF, the Holder has duly executed this amendment, waiver and
consent on the [●] day of June, 2015.

 

  [Name]

[SIGNATURE PAGE TO AMENDMENT, WAIVER AND CONSENT]

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The Corporation has agreed to and accepted this amendment, waiver and consent on
the [●] day of June, 2015.

 

INSITE VISION INCORPORATED by

its authorized signatory:

  Authorized Signatory Name: Timothy M. Ruane Title: Chief Executive Officer

[SIGNATURE PAGE TO AMENDMENT, WAIVER AND CONSENT]

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Exhibit A

INTERCREDITOR AGREEMENT

Intercreditor Agreement (this “Agreement”), dated as of June [     ], 2015,
among QLT INC., as secured party (in such capacity, with its successors and
assigns, and as more specifically defined below, the “First Priority Creditor”)
for the First Priority Secured Parties (as defined below), U.S. BANK NATIONAL
ASSOCIATION, as collateral agent (in such capacity, with its successors and
assigns, and as more specifically defined below, the “Second Priority
Representative”) for the Second Priority Secured Parties (as defined below) and
INSITE VISION INCORPORATED (the “Company”).

WHEREAS, the Company and the First Priority Creditor are parties to the Secured
Note, dated as of June 8, 2015 (the “Existing First Priority Agreement”),
pursuant to which the First Priority Creditor agreed to make advances to the
Company; and

WHEREAS, the Company, Riverbank Capital Securities, Inc. and the purchasers
party thereto are parties to the Securities Purchase Agreement, dated as of
October 9, 2014 (and as amended on November 21, 2014) (the “Existing Second
Priority Agreement”), pursuant to which the Company has issued secured notes
(the “Second-Lien Notes”); and

WHEREAS, the Company has granted to the First Priority Creditor security
interests in the Common Collateral as security for payment and performance of
the First Priority Obligations; and

WHEREAS, the Company has granted to the Second Priority Representative security
interests in the Common Collateral as security for payment and performance of
the Second Priority Obligations and the Second Priority Representative, on
behalf of the Second Priority Secured Parties, is hereby agreeing to subordinate
such security interests to the security interest of the First Priority Creditor;

NOW THEREFORE, in consideration of the foregoing and the mutual covenants herein
contained and other good and valuable consideration, the existence and
sufficiency of which are expressly recognized by all of the parties hereto, the
parties agree as follows:

SECTION 1. Definitions.

1.1. Defined Terms. The following terms, as used herein, have the following
meanings: “Agreement” has the meaning set forth in the introductory paragraph
hereof.

“Bankruptcy Code” means the United States Bankruptcy Code (11 U.S.C. §101 et
seq.), as amended from time to time.

“Common Collateral” means all assets that are both First Priority Collateral and
Second Priority Collateral.

“Company” has the meaning set forth in the introductory paragraph hereof.

“Comparable Second Priority Security Document” means, in relation to any Common
Collateral subject to any First Priority Security Document, that Second Priority
Security Document that creates a security interest in the same Common
Collateral, granted by the Company.

“DIP Financing” has the meaning set forth in Section 5.2.

“Enforcement Action” means, with respect to the First Priority Obligations or
the Second Priority Obligations, the exercise of any rights and remedies with
respect to any Common Collateral

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securing such obligations or the commencement or prosecution of enforcement of
any of the rights and remedies with respect to the Common Collateral under, as
applicable, the First Priority Documents or the Second Priority Documents, or
applicable law, including without limitation the exercise of any rights of
set-off or recoupment, and the exercise of any rights or remedies of a secured
creditor under the Uniform Commercial Code of any applicable jurisdiction or
under the Bankruptcy Code.

“Existing First Priority Agreement” has the meaning set forth in the first
WHEREAS clause of this Agreement.

“Existing Second Priority Agreement” has the meaning set forth in the second
WHEREAS clause of this Agreement.

“First Priority Agreement” means the collective reference to (a) the Existing
First Priority Agreement and (b) any other credit agreement, loan agreement,
note agreement, promissory note, indenture or other agreement or instrument
evidencing or governing the terms of any indebtedness or other financial
accommodation that has been incurred to extend, increase, renew, refund, replace
(whether upon or after termination or otherwise) or refinance (including by
means of sales of debt securities to institutional investors) in whole or in
part from time to time the indebtedness and other obligations outstanding under
the Existing First Priority Agreement or any other agreement or instrument
referred to in this clause (b) unless such agreement or instrument expressly
provides that it is not intended to be and is not a First Priority Agreement
hereunder (a “Replacement First Priority Agreement”). Any reference to the First
Priority Agreement hereunder shall be deemed a reference to any First Priority
Agreement then extant.

“First Priority Collateral” means all assets, whether now owned or hereafter
acquired by the Company, in which a Lien is granted or purported to be granted
to any First Priority Secured Party as security for any First Priority
Obligation.

“First Priority Creditor” means QLT Inc. or any Persons that become holders or
lenders under a First Priority Agreement from time to time.

“First Priority Documents” means the First Priority Agreement and each First
Priority Security Document.

“First Priority Lien” means any Lien created by the First Priority Security
Documents.

“First Priority Obligations” means (a) with respect to the Existing First
Priority Agreement, all “Secured Obligations” of the Company as defined in the
First Priority Security Documents and (b) with respect to each other First
Priority Agreement, (i) all principal of and interest (including without
limitation any Post-Petition Interest) and premium (if any) on all loans made or
other indebtedness issued or incurred pursuant to the First Priority Agreement
and (ii) all guarantee obligations, fees, expenses and other amounts payable
from time to time pursuant to the First Priority Documents, in each case whether
or not allowed or allowable in an Insolvency Proceeding. To the extent any
payment with respect to any First Priority Obligation (whether by or on behalf
of the Company, as proceeds of security, enforcement of any right of setoff or
otherwise) is declared to be a fraudulent conveyance or a preference in any
respect, set aside or required to be paid to a debtor in possession, any Second
Priority Secured Party, receiver or similar Person, then the obligation or part
thereof originally intended to be satisfied shall, for the purposes of this
Agreement and the rights and obligations of the First Priority Secured Parties
and the Second Priority Secured Parties, be deemed to be reinstated and
outstanding as if such payment had not occurred.

 

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“First Priority Obligations Payment Date” means the first date on which (a) the
First Priority Obligations (other than those that constitute Unasserted
Contingent Obligations) have been paid in full (or cash collateralized or
defeased in a manner reasonably satisfactory to the First Priority Creditor),
(b) all commitments to extend credit under the First Priority Documents have
been terminated and (c) the First Priority Creditor has delivered a written
notice to the Second Priority Representative stating that the events described
in clauses (a) and (b) have occurred to the satisfaction of the First Priority
Secured Parties, which notice shall be delivered by the First Priority Creditor
promptly after the occurrence of the events described in clauses (a) and (b).

“First Priority Secured Parties” means the First Priority Creditor and any other
holders of the First Priority Obligations.

“First Priority Security Documents” means the “Security Agreement” as defined in
the First Priority Agreement, and any other documents pursuant to which a Lien
is granted to the First Priority Creditor for the benefit of the First Priority
Secured Parties.

“Insolvency Proceeding” means any proceeding in respect of bankruptcy,
insolvency, winding up, receivership, dissolution or assignment for the benefit
of creditors, in each of the foregoing events whether under the Bankruptcy Code
or any similar federal, state or foreign bankruptcy, insolvency, reorganization,
receivership or similar law.

“Lien” means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement or any lease in the nature
thereof).

“Merger Agreement” means that certain Agreement and Plan of Merger, of even date
herewith, by and among the First Priority Creditor, Isotope Acquisition Corp., a
Delaware corporation and the Company, as it may be amended from time to time in
accordance with the terms thereof.

“Merger” has the meaning set forth in the Merger Agreement.

“Person” means any person, individual, sole proprietorship, partnership, joint
venture, corporation, limited liability company, unincorporated organization,
association, institution, entity, party, including any government and any
political subdivision, agency or instrumentality thereof.

“Post-Petition Interest” means any interest or entitlement to fees or expenses
or other charges that accrues after the commencement of any Insolvency
Proceeding, whether or not allowed or allowable in any such Insolvency
Proceeding.

“QLT Default” means the termination of the Merger Agreement by the Company
pursuant to Section 7.1(f) thereof.

“Real Property” means any right, title or interest in and to real property,
including any fee interest, leasehold interest, easement, or license and any
other right to use or occupy real property, including any right arising by
contract.

“Replacement First Priority Agreement” has the meaning set forth in the
definition of “First Priority Agreement.”

“Second-Lien Notes” has the meaning set forth in the second “WHEREAS” clause of
this Agreement.

 

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“Second Priority Agreement” means the collective reference to (a) the Existing
Second Priority Agreement and (b) any other credit agreement, loan agreement,
note agreement, promissory note, indenture, or other agreement or instrument
evidencing or governing the terms of any indebtedness or other financial
accommodation that has been incurred to extend, increase, renew, refund, replace
(whether upon or after termination or otherwise) or refinance (including by
means of sales of debt securities to institutional investors) in whole or in
part from time to time the indebtedness and other obligations outstanding under
the Existing Second Priority Agreement or any other agreement or instrument
referred to in this clause (b). Any reference to the Second Priority Agreement
hereunder shall be deemed a reference to any Second Priority Agreement then
extant.

“Second Priority Collateral” means all assets, whether now owned or hereafter
acquired by the Company, in which a Lien is granted or purported to be granted
to any Second Priority Secured Party as security for any Second Priority
Obligation.

“Second Priority Creditors” means the “Holders” as defined in the Second
Priority Agreement and any holder of a Second-Lien Note and the Second Priority
Representative.

“Second Priority Documents” means each Second Priority Agreement and each Second
Priority Security Document.

“Second Priority Lien” means any Lien created by the Second Priority Security
Documents.

“Second Priority Obligations” means (a) with respect to the Existing Second
Priority Agreement, all “Secured Obligations” as defined in the Second Priority
Security Documents and (b) with respect to each other Second Priority Agreement,
(i) all principal of and interest (including without limitation any
Post-Petition Interest) and premium (if any) on all indebtedness under the
Second Priority Agreement, and (ii) all guarantee obligations, fees, expenses
and other amounts payable from time to time pursuant to the Second Priority
Documents, in each case whether or not allowed or allowable in an Insolvency
Proceeding. To the extent any payment with respect to any Second Priority
Obligation (whether by or on behalf of the Company, as proceeds of security,
enforcement of any right of setoff or otherwise) is declared to be a fraudulent
conveyance or a preference in any respect, set aside or required to be paid to a
debtor in possession, any First Priority Secured Party, receiver or similar
Person, then the obligation or part thereof originally intended to be satisfied
shall, for the purposes of this Agreement and the rights and obligations of the
First Priority Secured Parties and the Second Priority Secured Parties, be
deemed to be reinstated and outstanding as if such payment had not occurred.

“Second Priority Representative” has the meaning set forth in the introductory
paragraph hereof, but shall also include any Person identified as a “Second
Priority Representative” in any Second Priority Agreement other than the
Existing Second Priority Agreement.

“Second Priority Secured Parties” means the Second Priority Representative, the
Second Priority Creditors and any other holders of the Second Priority
Obligations.

“Second Priority Security Documents” means the “Security Agreement” as defined
in the Second Priority Agreement and any other documents pursuant to which a
Lien is granted to the Second Priority Representative for the benefit of the
Second Priority Secured Parties.

“Secured Parties” means the First Priority Secured Parties and the Second
Priority Secured Parties.

“Standstill Period” has the meaning set forth in Section 3.2.

 

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“Unasserted Contingent Obligations” shall mean, at any time, First Priority
Obligations for taxes, costs, indemnifications, reimbursements, damages and
other liabilities (excluding the principal of, and interest and premium (if any)
on, and fees and expenses relating to, any First Priority Obligation) in respect
of which no assertion of liability (whether oral or written) and no claim or
demand for payment (whether oral or written) has been made (and, in the case of
First Priority Obligations for indemnification, no notice for indemnification
has been issued by the indemnitee) at such time.

“Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect
from time to time in the applicable jurisdiction.

1.2. Terms Generally. The definitions of terms herein shall apply equally to the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words “include”, “includes” and “including” shall be deemed to
be followed by the phrase “without limitation”. The word “will” shall be
construed to have the same meaning and effect as the word “shall”. Unless the
context requires otherwise (i) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended, restated,
supplemented or otherwise modified, (ii) any reference herein to any Person
shall be construed to include such Person’s successors or permitted assigns,
(iii) the words “herein”, “hereof” and “hereunder”, and words of similar import,
shall be construed to refer to this Agreement in its entirety and not to any
particular provision hereof, (iv) all references herein to Sections shall be
construed to refer to Sections of this Agreement and (v) the words “asset” and
“property” shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.

SECTION 2. Lien Priorities.

2.1. Subordination of Liens. (a) Any and all Liens now existing or hereafter
created or arising in favor of any Second Priority Secured Party securing the
Second Priority Obligations, regardless of how acquired, whether by grant,
statute, operation of law, subrogation or otherwise are expressly junior in
priority, operation and effect to any and all Liens now existing or hereafter
created or arising in favor of the First Priority Secured Parties securing the
First Priority Obligations, notwithstanding (i) anything to the contrary
contained in any agreement or filing to which any Second Priority Secured Party
may now or hereafter be a party, and regardless of the time, order or method of
grant, attachment, recording or perfection of any financing statements or other
security interests, assignments, pledges, deeds, mortgages and other liens,
charges or encumbrances or any defect or deficiency or alleged defect or
deficiency in any of the foregoing, (ii) any provision of the Uniform Commercial
Code or any applicable law or any First Priority Document or Second Priority
Document or any other circumstance whatsoever and (iii) the fact that any such
Liens in favor of any First Priority Secured Party securing any of the First
Priority Obligations are (x) subordinated to any Lien securing any obligation of
the Company other than the Second Priority Obligations or (y) otherwise
subordinated, voided, avoided, invalidated or lapsed.

(b) No First Priority Secured Party or Second Priority Secured Party shall
object to or contest, or support any other Person in contesting or objecting to,
in any proceeding (including without limitation, any Insolvency Proceeding), the
validity, extent, perfection, priority or enforceability of any security
interest in the Common Collateral granted to the other. Notwithstanding any
failure by any First Priority Secured Party or Second Priority Secured Party to
perfect its security interests in the Common Collateral or any avoidance,
invalidation or subordination by any third party or court of competent
jurisdiction of the security interests in the Common Collateral granted to the
First Priority Secured Parties or the Second Priority Secured parties, the
priority and rights as between the First Priority Secured Parties and the Second
Priority Secured Parties with respect to the Common Collateral shall be as set
forth herein.

 

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2.2. Nature of First Priority Obligations. The Second Priority Representative on
behalf of itself and the other Second Priority Secured Parties acknowledges that
the terms of the First Priority Obligations may be modified, extended or amended
from time to time, and that the aggregate amount of the First Priority
Obligations may be increased, replaced or refinanced, in each event, without
notice to or consent by the Second Priority Secured Parties and without
affecting the provisions hereof. The lien priorities provided in Section 2.1
shall not be altered or otherwise affected by any such amendment, modification,
supplement, extension, repayment, reborrowing, increase, replacement, renewal,
restatement or refinancing of either the First Priority Obligations or the
Second Priority Obligations, or any portion thereof.

2.3. Agreements Regarding Actions to Perfect Liens. (a) The Second Priority
Representative on behalf of itself and the other Second Priority Secured Parties
agrees that UCC-1 financing statements, patent, trademark or copyright filings
or other filings or recordings filed or recorded by or on behalf of the Second
Priority Representative shall be in form satisfactory to the First Priority
Creditor.

(b) The Second Priority Representative agrees on behalf of itself and the other
Second Priority Secured Parties that all mortgages, deeds of trust, deeds and
similar instruments (collectively, “mortgages”) now or hereafter filed against
Real Property that constitutes Common Collateral in favor of or for the benefit
of the Second Priority Representative and the other Second Priority Secured
Parties shall be in form satisfactory to the First Priority Creditor and shall
contain the following notation: “The lien created by this mortgage on the
property described herein is junior and subordinate to the lien on such property
created by any mortgage, deed of trust or similar instrument now or hereafter
granted to the First Priority Creditor, and its successors and assigns, in such
property, in accordance with the provisions of the Intercreditor Agreement dated
as of June [ ], 2015 among QLT Inc., U.S. Bank National Association and InSite
Vision Incorporated, as amended from time to time.”

(c) The First Priority Creditor hereby acknowledges that, to the extent that it
holds, or a third party holds on its behalf, physical possession of or “control”
(as defined in the Uniform Commercial Code) over Common Collateral pursuant to
the First Priority Security Documents, such possession or control is also for
the benefit of and on behalf of, and the First Priority Creditor or such third
party holds such possession or control as bailee and agent for, the Second
Priority Representative and the other Second Priority Secured Parties solely to
the extent required to perfect their security interest in such Common Collateral
(such bailment and agency for perfection being intended, among other things, to
satisfy the requirements of Sections 8-301(a)(2) and 9-313(c) of the Uniform
Commercial Code). Nothing in the preceding sentence shall be construed to impose
any duty on the First Priority Creditor (or any third party acting on its
behalf) with respect to such Common Collateral or provide the Second Priority
Representative or any other Second Priority Secured Party with any rights with
respect to such Common Collateral beyond those specified in this Agreement and
the Second Priority Security Documents, provided that subsequent to the
occurrence of the First Priority Obligations Payment Date, the First Priority
Creditor shall (i) deliver to the Second Priority Representative, at the
Company’s sole cost and expense, the Common Collateral in its possession or
control together with any necessary endorsements to the extent required by the
Second Priority Documents (and to the extent not so required, such delivery
shall be made to the Company) or (ii) direct and deliver such Common Collateral
as a court of competent jurisdiction otherwise directs, and provided, further,
that the provisions of this Agreement are intended solely to govern the
respective Lien priorities as between the First Priority Secured Parties and the
Second Priority Secured Parties and shall not impose on the First Priority
Secured Parties any obligations in respect of the disposition of any Common
Collateral (or any proceeds thereof) that would conflict with prior perfected
Liens or any claims thereon in favor of any other Person that is not a Secured
Party.

 

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2.4. No New Liens. So long as the First Priority Obligations Payment Date has
not occurred, the parties hereto agree that (a) neither the Company nor any of
its subsidiaries shall have any right to create any Lien, on any assets of the
Company or any such subsidiary securing any Second Priority Obligation and
(b) if any Second Priority Secured Party shall acquire or hold any Lien on any
assets of the Borrower securing any Second Priority Obligation which assets are
not also subject to the first-priority Lien of the First Priority Creditor under
the First Priority Documents, then the Second Priority Representative, upon
demand by the First Priority Creditor, will without the need for any further
consent of any other Second Priority Secured Party, notwithstanding anything to
the contrary in any other Second Priority Document either (i) release such Lien
or (ii) assign it to the First Priority Creditor as security for the First
Priority Obligations (in which case the Second Priority Representative may
retain a junior lien on such assets subject to the terms hereof). To the extent
that the foregoing provisions are not complied with for any reason, without
limiting any other rights and remedies available to the First Priority Secured
Parties, the Second Priority Representative and the other Second Priority
Secured Parties agree that any amounts received by or distributed to any of them
pursuant to or as a result of Liens granted in contravention of this Section 2.4
shall be subject to Section 4.1.

SECTION 3. Enforcement Rights.

3.1. Exclusive Enforcement. Until the First Priority Obligations Payment Date
has occurred, whether or not an Insolvency Proceeding has been commenced by or
against the Company, the First Priority Creditor shall have the exclusive right
to take and continue any Enforcement Action with respect to the Common
Collateral, without any consultation with or consent of any Second Priority
Secured Party, but subject to the provisos set forth in Sections 3.2 and 5.1.
Upon the occurrence and during the continuance of a default or an event of
acceleration under the First Priority Documents, the First Priority Creditor and
the other First Priority Secured Parties may take and continue any Enforcement
Action with respect to the First Priority Obligations and the Common Collateral
in such order and manner as they may determine in their sole discretion.

3.2. Standstill and Waivers. The Second Priority Representative, on behalf of
itself and the other Second Priority Secured Parties, and the Second Priority
Secured Parties, agree that, until the First Priority Obligations Payment Date
has occurred, subject to the proviso set forth in Section 5.1:

(a) they will not take or cause to be taken any Enforcement Action;

(b) they will not take or cause to be taken any action, the purpose or effect of
which is to make any Lien in respect of any Second Priority Obligation pari
passu with or senior to, or to give any Second Priority Secured Party any
preference or priority relative to, the Liens with respect to the First Priority
Obligations or the First Priority Secured Parties with respect to any of the
Common Collateral;

(c) they will not contest, oppose, object to, interfere with, hinder or delay,
in any manner, whether by judicial proceedings (including without limitation the
filing of an Insolvency Proceeding) or otherwise, any foreclosure, sale, lease,
exchange, transfer or other disposition of the Common Collateral by any First
Priority Secured Party or any other Enforcement Action taken (or any forbearance
from taking any Enforcement Action) by or on behalf of any First Priority
Secured Party;

(d) they have no right to (i) direct either the First Priority Creditor or any
other First Priority Secured Party to exercise any right, remedy or power with
respect to the Common Collateral or pursuant to the First Priority Security
Documents or (ii) consent or object to the exercise by the First

 

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Priority Creditor or any other First Priority Secured Party of any right, remedy
or power with respect to the Common Collateral or pursuant to the First Priority
Security Documents or to the timing or manner in which any such right is
exercised or not exercised (or, to the extent they may have any such right
described in this clause (d), whether as a junior lien creditor or otherwise,
they hereby irrevocably waive such right);

(e) they will not institute any suit or other proceeding or assert in any suit,
Insolvency Proceeding or other proceeding any claim against any First Priority
Secured Party seeking damages from or other relief by way of specific
performance, injunction or otherwise, with respect to, and no First Priority
Secured Party shall be liable for, any action taken or omitted to be taken by
any First Priority Secured Party with respect to the Common Collateral or
pursuant to the First Priority Documents; (f) they will not seek, and hereby
waive any right, to have the Common Collateral or any part thereof marshaled
upon any foreclosure or other disposition of the Common Collateral;

(g) they will not make any judicial or nonjudicial claim or demand or commence
any judicial or non-judicial proceedings against the Company or any of its
subsidiaries or affiliates under or with respect to any Second Priority Security
Document seeking payment or damages from or other relief by way of specific
performance, instructions or otherwise under or with respect to any Second
Priority Security Document (other than filing a proof of claim) or exercise any
right, remedy or power under or with respect to, or otherwise take any action to
enforce (other than filing a proof of claim and other filings and making any
arguments and motions that are necessary to preserve their rights with respect
to the Second Priority Obligations and the Common Collateral) any Second
Priority Security Document; and

(h) they will not commence judicial or nonjudicial foreclosure proceedings with
respect to, seek to have a trustee, receiver, liquidator or similar official
appointed for or over, attempt any action to take possession of any Common
Collateral, exercise any right, remedy or power with respect to, or otherwise
take any action to enforce their interest in or realize upon, the Common
Collateral or pursuant to the Second Priority Security Documents;

provided that, notwithstanding the foregoing, any Second Priority Secured Party
may exercise its rights and remedies in respect of the Common Collateral under
the Second Priority Security Documents or applicable law after the passage of a
period of 180 days (the “Standstill Period”) from the date of delivery of a
notice in writing to the First Priority Creditor of its intention to exercise
such rights and remedies, which notice may only be delivered following the
occurrence of and during the continuation of an “Event of Acceleration” under
and as defined in the Second Priority Agreement; provided, further, however,
that, notwithstanding the foregoing, in no event shall any Second Priority
Secured Party exercise or continue to exercise any such rights or remedies if,
notwithstanding the expiration of the Standstill Period, (i) any First Priority
Secured Party shall have commenced and be diligently pursuing the exercise of
any of its rights and remedies with respect to any of the Common Collateral
(prompt notice of such exercise to be given to the Second Priority
Representative by such First Priority Secured Party) or (ii) an Insolvency
Proceeding in respect of the Company shall have been commenced; and provided,
further, that in any Insolvency Proceeding commenced by or against the Company,
the Second Priority Representative and the Second Priority Secured Parties may
take any action expressly permitted by Section 5.

3.3. Judgment Creditors. In the event that any Second Priority Secured Party
becomes a judgment lien creditor as a result of its enforcement of its rights as
an unsecured creditor, any such judgment lien shall be subject to the terms of
this Agreement for all purposes (including in relation to the First Priority
Liens and the First Priority Obligations) to the same extent as other Liens
securing the Second Priority Obligations are subject to the terms of this
Agreement.

 

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3.4. Cooperation. The Second Priority Representative, on behalf of itself and
the other Second Priority Secured Parties and at the sole cost and expense of
the Company, agrees that each of them shall take such actions as the First
Priority Creditor shall request in connection with the exercise by the First
Priority Secured Parties of their rights set forth herein.

3.5. No Additional Rights For the Company Hereunder. Except as provided in
Section 3.6, if any First Priority Secured Party or Second Priority Secured
Party shall enforce its rights or remedies in violation of the terms of this
Agreement, the Company shall not be entitled to use such violation as a defense
to any action by any First Priority Secured Party or Second Priority Secured
Party, nor to assert such violation as a counterclaim or basis for set off or
recoupment against any First Priority Secured Party or Second Priority Secured
Party.

3.6. Actions Upon Breach. (a) If any Second Priority Secured Party, contrary to
this Agreement, commences or participates in any action or proceeding against
the Company or the Common Collateral, the Company, with the prior written
consent of the First Priority Secured Representative, may interpose as a defense
or dilatory plea the making of this Agreement, and any First Priority Secured
Party may intervene and interpose such defense or plea in its or their name or
in the name of the Company.

(b) Should any Second Priority Secured Party, contrary to this Agreement, in any
way take, attempt to or threaten to take any action with respect to the Common
Collateral (including, without limitation, any attempt to realize upon or
enforce any remedy with respect to this Agreement), or fail to take any action
required by this Agreement, any First Priority Secured Party (in its own name or
in the name of the Company) or the Company may obtain relief against such Second
Priority Secured Party by injunction, specific performance and/or other
appropriate equitable relief, it being understood and agreed by the Second
Priority Representative on behalf of each Second Priority Secured Party that
(i) the First Priority Secured Parties’ damages from its actions may at that
time be difficult to ascertain and may be irreparable, and (ii) each Second
Priority Secured Party waives any defense that the Company and/or the First
Priority Secured Parties cannot demonstrate damage and/or be made whole by the
awarding of damages.

SECTION 4. Application of Proceeds of Common Collateral; Dispositions and
Releases of Common Collateral; Inspection and Insurance.

4.1. Application of Proceeds; Turnover Provisions. All proceeds of Common
Collateral (including without limitation any interest earned thereon) resulting
from the sale, collection or other disposition of Common Collateral in
connection with an Enforcement Action, whether or not pursuant to an Insolvency
Proceeding, shall be distributed as follows: first to the First Priority
Creditor for application to the First Priority Obligations in accordance with
the terms of the First Priority Documents, until the First Priority Obligations
Payment Date has occurred and thereafter, to the Second Priority Representative
for application in accordance with the Second Priority Documents. Until the
occurrence of the First Priority Obligations Payment Date, any Common
Collateral, including without limitation any such Common Collateral constituting
proceeds, that may be received by any Second Priority Secured Party in violation
of this Agreement shall be segregated and held in trust and promptly paid over
to the First Priority Creditor, for the benefit of the First Priority Secured
Parties, in the same form as received, with any necessary endorsements, and each
Second Priority Secured Party hereby authorizes the First Priority Creditor to
make any such endorsements as agent for the Second Priority Representative
(which authorization, being coupled with an interest, is irrevocable).

4.2. Releases of Second Priority Lien. (a) Upon any release, sale or disposition
of Common Collateral permitted pursuant to the terms of the First Priority
Documents that results in the release of the First Priority Lien on any Common
Collateral (excluding (i) any sale or other disposition that is expressly

 

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prohibited by the Second Priority Agreement unless such sale or disposition is
consummated in connection with an Enforcement Action or consummated after the
institution of any Insolvency Proceeding and (ii) the release of all First
Priority Liens after the occurrence of the First Priority Obligations Payment
Date), the Second Priority Lien on such Common Collateral (excluding any portion
of the proceeds of such Common Collateral remaining after the First Priority
Obligations Payment Date occurs) shall be automatically and unconditionally
released with no further consent or action of any Person.

(b) The Second Priority Representative shall promptly execute and deliver such
release documents and instruments at the expense of the Company and shall take
such further actions as the First Priority Creditor shall request to evidence
any release, without representation, warranty, indemnity or recourse, express or
implied, of the Second Priority Lien described in paragraph (a). The Second
Priority Representative hereby appoints the First Priority Creditor and any
officer or duly authorized person of the First Priority Creditor, with full
power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power of attorney in the place and stead of the Second Priority
Representative and in the name of the Second Priority Representative or in the
First Priority Creditor’s own name, from time to time, in the First Priority
Creditor’s sole discretion, for the purposes of carrying out the terms of this
Section 4.2, to take any and all appropriate action and to execute and deliver
any and all documents and instruments as may be necessary or desirable to
accomplish the purposes of this Section 4.2, including, without limitation, any
financing statements, endorsements, assignments, releases or other documents or
instruments of transfer (which appointment, being coupled with an interest, is
irrevocable).

4.3. Inspection Rights and Insurance. (a) Any First Priority Secured Party and
its representatives and invitees may at any time inspect, repossess, remove and
otherwise deal with the Common Collateral, and the First Priority Creditor may
advertise and conduct public auctions or private sales of the Common Collateral,
in each case without notice to, the involvement of or interference by any Second
Priority Secured Party or liability to any Second Priority Secured Party.

(b) Until the First Priority Obligations Payment Date has occurred, the First
Priority Creditor will have the sole and exclusive right (i) to be named as
additional insured and loss payee under any insurance policies maintained from
time to time by the Company (except that the Second Priority Representative
shall have the right to be named as additional insured and loss payee so long as
its second lien status is identified in a manner satisfactory to the First
Priority Creditor); (ii) to adjust or settle any insurance policy or claim
covering the Common Collateral in the event of any loss thereunder and (iii) to
approve any award granted in any condemnation or similar proceeding affecting
the Common Collateral.

SECTION 5. Insolvency Proceedings.

5.1. Filing of Motions. Until the First Priority Obligations Payment Date has
occurred, the Second Priority Representative agrees on behalf of itself and the
other Second Priority Secured Parties that no Second Priority Secured Party
shall, in or in connection with any Insolvency Proceeding, file any pleadings or
motions, take any position at any hearing or proceeding of any nature, or
otherwise take any action whatsoever, in each case that (a) violates, or is
prohibited by, this Section 5 (or, in the absence of an Insolvency Proceeding,
otherwise would violate or be prohibited by this Agreement), (b) asserts any
right, benefit or privilege that arises in favor of the Second Priority
Representative or Second Priority Secured Parties, in whole or in part, as a
result of their interest in the Common Collateral or in the Second Priority Lien
(unless the assertion of such right is expressly permitted by this Agreement) or
(c) challenges the validity, priority, enforceability or voidability of any
Liens or claims held by the First Priority Creditor or any other First Priority
Secured Party with respect to the Common Collateral, or the extent to which the
First Priority Obligations constitute secured claims or the value thereof under
Section

 

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506(a) of the Bankruptcy Code or otherwise; provided that the Second Priority
Representative may file a proof of claim in an Insolvency Proceeding, subject to
the limitations contained in this Agreement and only if consistent with the
terms and the limitations on the Second Priority Representative imposed hereby.

5.2. Financing Matters. If the Company becomes subject to any Insolvency
Proceeding, and if the First Priority Creditor or the other First Priority
Secured Parties desire to consent (or not object) to the use of cash collateral
under the Bankruptcy Code or to provide financing to the Company under the
Bankruptcy Code or to consent (or not object) to the provision of such financing
to the Company by any third party (any such financing, “DIP Financing”), then
the Second Priority Representative agrees, on behalf of itself and the other
Second Priority Secured Parties, that each Second Priority Secured Party
(a) will be deemed to have consented to, will raise no objection to, nor support
any other Person objecting to, the use of such cash collateral or to such DIP
Financing, (b) will not request or accept adequate protection or any other
relief in connection with the use of such cash collateral or such DIP Financing
except as set forth in Section 5.4 below, (c) will subordinate (and will be
deemed hereunder to have subordinated) the Second Priority Liens on any Common
Collateral (i) to such DIP Financing on the same terms as the First Priority
Liens are subordinated thereto (and such subordination will not alter in any
manner the terms of this Agreement), (ii) to any adequate protection provided to
the First Priority Secured Parties and (iii) to any “carve-out” agreed to by the
First Priority Creditor or the other First Priority Secured Parties, and
(d) agrees that notice received two calendar days prior to the entry of an order
approving such usage of cash collateral or approving such financing shall be
adequate notice.

5.3. Relief From the Automatic Stay. The Second Priority Representative agrees,
on behalf of itself and the other Second Priority Secured Parties, that none of
them will seek relief from the automatic stay or from any other stay in any
Insolvency Proceeding or take any action in derogation thereof, in each case in
respect of any Common Collateral, without the prior written consent of the First
Priority Creditor.

5.4. Adequate Protection. The Second Priority Representative, on behalf of
itself and the other Second Priority Secured Parties, agrees that none of them
shall object, contest, or support any other Person objecting to or contesting,
(a) any request by the First Priority Creditor or the other First Priority
Secured Parties for adequate protection of its interest in the Common Collateral
or any adequate protection provided to the First Priority Creditor or the other
First Priority Secured Parties, (b) any objection by the First Priority Creditor
or any other First Priority Secured Parties to any motion, relief, action or
proceeding based on a claim of a lack of adequate protection in the Common
Collateral or (c) the payment of interest, fees, expenses or other amounts to
the First Priority Creditor or any other First Priority Secured Party under
Section 506(b) or 506(c) of the Bankruptcy Code or otherwise. The Second
Priority Representative, on behalf of itself and the other Second Priority
Secured Parties, further agrees that, prior to the First Priority Obligations
Payment Date, none of them shall assert or enforce any claim under
Section 506(b) or 506(c) of the Bankruptcy Code or otherwise that is senior to
or on a parity with the First Priority Liens for costs or expenses of preserving
or disposing of any Common Collateral. Notwithstanding anything to the contrary
set forth in this Section and in Section 5.2(b), but subject to all other
provisions of this Agreement (including, without limitation, Section 5.2(a) and
Section 5.3), in any Insolvency Proceeding, (i) if the First Priority Secured
Parties (or any subset thereof) are granted adequate protection consisting of
additional collateral that constitutes Common Collateral (with replacement liens
on such additional collateral) and superpriority claims in connection with any
DIP Financing or use of cash collateral with respect to the Common Collateral,
and the First Priority Secured Parties do not object to the adequate protection
being provided to them, then in connection with any such DIP Financing or use of
cash collateral the Second Priority Representative, on behalf of itself and any
of the Second Priority Secured Parties, may, as adequate protection of their
interests in the Common Collateral, seek or accept adequate protection
consisting solely of (x) a replacement Lien on the same additional collateral,
subordinated to the Liens securing the First Priority Obligations and such DIP
Financing on the same

 

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basis as the other Second Priority Liens on the Common Collateral are so
subordinated to the First Priority Obligations under this Agreement,
(y) superpriority claims junior in all respects to the superpriority claims
granted to the First Priority Secured Parties and (z) subject to the right of
the First Priority Secured Parties to object thereto, the payment of
post-petition interest at the pre- default rate (provided, in the case of this
clause (z), that the First Priority Secured Parties have been granted adequate
protection in the form of post-petition interest at a rate no lower than the
pre-default rate), provided, however, that the Second Priority Representative
shall have irrevocably agreed, pursuant to Section 1129(a)(9) of the Bankruptcy
Code, on behalf of itself and the Second Priority Secured Parties, in any
stipulation and/or order granting such adequate protection, that such junior
superpriority claims may be paid under any plan of reorganization in any
combination of cash, debt, equity or other property having a value on the
effective date of such plan equal to the allowed amount of such claims and
(ii) in the event the Second Priority Representative, on behalf of itself and
the Second Priority Secured Parties, seeks or accepts adequate protection in
accordance with clause (i) above and such adequate protection is granted in the
form of additional collateral, then the Second Priority Representative, on
behalf of itself or any of the Second Priority Secured Parties, agrees that the
First Priority Creditor shall also be granted a senior Lien on such additional
collateral as security for the First Priority Obligations and any such DIP
Financing and that any Lien on such additional collateral securing the Second
Priority Obligations shall be subordinated to the Liens on such collateral
securing the First Priority Obligations and any such DIP Financing (and all
Obligations relating thereto) and any other Liens granted to the First Priority
Secured Parties as adequate protection, with such subordination to be on the
same terms that the other Liens securing the Second Priority Obligations are
subordinated to such First Priority Obligations under this Agreement. The Second
Priority Representative, on behalf of itself and the other Second Priority
Secured Parties, agrees that except as expressly set forth in this Section none
of them shall seek or accept adequate protection with respect to their interests
in the Common Collateral without the prior written consent of the First Priority
Creditor.

5.5. Avoidance Issues. If any First Priority Secured Party is required in any
Insolvency Proceeding or otherwise to disgorge, turn over or otherwise pay to
the estate of the Company, because such amount was avoided or ordered to be paid
or disgorged for any reason, including without limitation because it was found
to be a fraudulent or preferential transfer, any amount (a “Recovery”), whether
received as proceeds of security, enforcement of any right of set-off or
otherwise, then the First Priority Obligations shall be reinstated to the extent
of such Recovery and deemed to be outstanding as if such payment had not
occurred and the First Priority Obligations Payment Date shall be deemed not to
have occurred. If this Agreement shall have been terminated prior to such
Recovery, this Agreement shall be reinstated in full force and effect, and such
prior termination shall not diminish, release, discharge, impair or otherwise
affect the obligations of the parties hereto. The Second Priority Secured
Parties agree that none of them shall be entitled to benefit from any avoidance
action affecting or otherwise relating to any distribution or allocation made in
accordance with this Agreement, whether by preference or otherwise, it being
understood and agreed that the benefit of such avoidance action otherwise
allocable to them shall instead be allocated and turned over for application in
accordance with the priorities set forth in this Agreement.

5.6. Asset Dispositions in an Insolvency Proceeding. In an Insolvency Proceeding
or otherwise, neither the Second Priority Representative nor any other Second
Priority Secured Party shall oppose any sale or disposition of any assets of the
Company that is supported by the First Priority Secured Parties, and the Second
Priority Representative and each other Second Priority Secured Party will be
deemed to have consented under Section 363 of the Bankruptcy Code (or otherwise)
to any sale supported by the First Priority Secured Parties and to have released
their Liens on such assets.

 

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5.7. Separate Grants of Security and Separate Classification. Each Secured Party
acknowledges and agrees that (a) the grants of Liens pursuant to the First
Priority Security Documents and the Second Priority Security Documents
constitute two separate and distinct grants of Liens and (b) because of, among
other things, their differing rights in the Common Collateral, the First
Priority Obligations and the Second Priority Obligations are fundamentally
different from each other and must be separately classified in any plan of
reorganization proposed or adopted in an Insolvency Proceeding. To further
effectuate the intent of the parties as provided in the immediately preceding
sentence, if it is held that the claims of the First Priority Secured Parties
and Second Priority Secured Parties in respect of the Common Collateral
constitute only one secured claim (rather than separate classes of senior and
junior secured claims), then the Second Priority Secured Parties hereby
acknowledge and agree that all distributions shall be made as if there were
separate classes of senior and junior secured claims against the Company in
respect of the Common Collateral, with the effect being that, to the extent that
the aggregate value of the Common Collateral is sufficient (for this purpose
ignoring all claims held by the Second Priority Secured Parties), the First
Priority Secured Parties shall be entitled to receive, in addition to amounts
distributed to them in respect of principal, pre-petition interest and other
claims, all amounts owing in respect of Post-Petition Interest before any
distribution is made in respect of the claims held by the Second Secured
Priority Secured Parties. The Second Priority Secured Parties hereby acknowledge
and agree to turn over to the First Priority Secured Parties amounts otherwise
received or receivable by them to the extent necessary to effectuate the intent
of the preceding sentence, even if such turnover has the effect of reducing the
claim or recovery of the Second Priority Secured Parties.

5.8. No Waivers of Rights of First Priority Secured Parties. Nothing contained
herein shall prohibit or in any way limit the First Priority Creditor or any
other First Priority Secured Party from objecting in any Insolvency Proceeding
or otherwise to any action taken by any Second Priority Secured Party, including
the seeking by any Second Priority Secured Party of adequate protection (except
as provided in Section 5.4).

5.9. Plans of Reorganization. No Second Priority Secured Party shall propose,
support or vote in favor of any plan of reorganization (and each shall be deemed
to have voted to reject any plan of reorganization) unless such plan (a) pays
off, in cash in full, all First Priority Obligations or (b) is accepted by the
class of holders of First Priority Obligations voting thereon and is supported
by the First Priority Creditor.

5.10. Other Matters. To the extent that the Second Priority Representative or
any Second Priority Secured Party has or acquires rights under Section 363 or
Section 364 of the Bankruptcy Code (or otherwise) with respect to any of the
Common Collateral, the Second Priority Representative agrees, on behalf of
itself and the other Second Priority Secured Parties not to assert any of such
rights without the prior written consent of the First Priority Creditor;
provided that if requested by the First Priority Creditor, the Second Priority
Representative shall, at the sole cost and expenses of the Company, timely
exercise such rights in the manner requested by the First Priority Creditor,
including any rights to payments in respect of such rights.

5.11. Effectiveness in Insolvency Proceedings. This Agreement, which the parties
hereto expressly acknowledge is a “subordination agreement” under section 510(a)
of the Bankruptcy Code, shall be effective before, during and after the
commencement of an Insolvency Proceeding.

SECTION 6. Security Documents.

(a) The Company and the Second Priority Representative, on behalf of itself and
the Second Priority Secured Parties, agrees that it shall not at any time
execute or deliver any amendment or other modification to any of the Second
Priority Documents in violation of this Agreement.

 

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(b) The Company and the First Priority Creditor, on behalf of itself and the
First Priority Secured Parties, agrees that it shall not at any time execute or
deliver any amendment or other modification to any of the First Priority
Documents in violation of this Agreement.

(c) In the event the First Priority Creditor enters into any amendment, waiver
or consent in respect of any of the First Priority Security Documents for the
purpose of adding to, or deleting from, or waiving or consenting to any
departures from any provisions of, any First Priority Security Document or
changing in any manner the rights of any parties thereunder (other than with
respect to amendments, modifications or waivers that secure additional
extensions of credit and add additional secured creditors or add additional
guarantees or collateral), then such amendment, waiver or consent shall apply
automatically to any comparable provision of the Comparable Second Priority
Security Document without the consent of or action by any Second Priority
Secured Party (with all such amendments, waivers and modifications subject to
the terms hereof); provided, that (i) no such amendment, waiver or consent shall
have the effect of removing assets subject to the Lien of any Second Priority
Security Document, except to the extent that a release of such Lien is permitted
by Section 4.2, (ii) any such amendment, waiver or consent that materially and
adversely affects the rights of the Second Priority Secured Parties (other than
the Second Priority Representative) and does not affect the First Priority
Secured Parties in a like or similar manner shall not apply to the Second
Priority Security Documents without the consent of the Second Priority
Representative (to be given or withheld in accordance with the Second Priority
Agreement), and (iii) notice of such amendment, waiver or consent shall be given
to the Second Priority Representative no later than 30 days after its
effectiveness; provided that the failure to give such notice shall not affect
the effectiveness and validity thereof. The Second Priority Documents may not be
amended in a manner that would increase (i) the principal amount thereunder or
(ii) the interest rate thereon, in each case, without the prior written consent
of the First Priority Creditor.

(d) The First Priority Obligations and the Second Priority Obligations may be
refinanced or replaced, in whole or in part, in each case, without notice to, or
the consent (except to the extent a consent is otherwise required to permit the
refinancing transaction under any First Priority Agreement or any Second
Priority Agreement) of any First Priority Secured Party or any Second Priority
Secured Party, all without affecting the Lien priorities provided for herein or
the other provisions hereof; provided, however, that the holders of any such
refinancing or replacement Indebtedness (or an authorized agent or trustee on
their behalf) bind themselves in writing to the terms of this Agreement pursuant
to such documents or agreements (including amendments or supplements to this
Agreement) as the First Priority Creditor or the Second Priority Representative,
as the case may be, shall reasonably request and in form and substance
reasonably acceptable to the First Priority Creditor or the Second Priority
Representative, as the case may be; provided that such documents or agreements
shall comply with Section 6(a) and Section 6(b).

(e) If at any time in connection with or after the discharge of all First
Priority Obligations, the Company enters into any replacement First Priority
Agreement secured by all or a portion of the First Priority Collateral on a
first-priority basis, then such prior discharge of First Priority Obligations
shall automatically be deemed not to have occurred for the purposes of this
Agreement, and the obligations under such replacement First Priority Agreement
shall automatically be treated as First Priority Obligations for all purposes of
this Agreement, including for purposes of the Lien priorities and rights in
respect of the First Priority Collateral (or such portion thereof) set forth
therein.

(f) In connection with any refinancing or replacement contemplated by
Section 6(d) or 6(e), this Agreement may be amended at the request and sole
expense of the Company, and without the consent of the First Priority Creditor,
the First Priority Secured Parties, or the Second Priority Representative or the
Second Priority Secured Parties (a) to add parties (or any authorized agent or
trustee

 

14

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therefor) providing any such refinancing or replacement indebtedness, (b) to
establish that Liens on any First Priority Collateral securing such refinancing
or replacement indebtedness shall have the same priority (or junior priority) as
the Liens on any First Priority Collateral securing the Indebtedness being
refinanced or replaced and (c) to establish that Liens on any Second Priority
Collateral securing such refinancing or replacement indebtedness shall have the
same priority as the Liens on any Second Priority Collateral securing the
indebtedness being refinanced or replaced, all on the terms provided for
immediately prior to such refinancing or replacement.

SECTION 7. Reliance; Waivers; etc.

7.1. Reliance. The First Priority Documents are deemed to have been executed and
delivered, and all extensions of credit thereunder are deemed to have been made
or incurred, in reliance upon this Agreement. The Second Priority
Representative, on behalf of itself and the Second Priority Secured Parties,
expressly waives all notice of the acceptance of and reliance on this Agreement
by the First Priority Secured Parties. The Second Priority Documents are deemed
to have been executed and delivered and all extensions of credit thereunder are
deemed to have been made or incurred, in reliance upon this Agreement. The First
Priority Creditor expressly waives all notices of the acceptance of and reliance
by the Second Priority Representative and the Second Priority Secured Parties.

7.2. No Warranties or Liability. The Second Priority Representative and the
First Priority Creditor acknowledge and agree that neither has made any
representation or warranty with respect to the execution, validity, legality,
completeness, collectability or enforceability of any other First Priority
Document or any Second Priority Document. Except as otherwise provided in this
Agreement, the Second Priority Representative and the First Priority Creditor
will be entitled to manage and supervise their respective extensions of credit
to the Company in accordance with law, the relevant First Priority Documents and
Second Priority Documents and their usual practices, modified from time to time
as they deem appropriate.

7.3. No Waivers. No right or benefit of any party hereunder shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
such party or any other party hereto or by any noncompliance by the Company with
the terms and conditions of any of the First Priority Documents or the Second
Priority Documents.

SECTION 8. Obligations Unconditional.

8.1. First Priority Obligations Unconditional. All rights and interests of the
First Priority Secured Parties hereunder, and all agreements and obligations of
the Second Priority Secured Parties (and, to the extent applicable, the Company)
hereunder, shall remain in full force and effect irrespective of:

(a) any lack of validity or enforceability of any First Priority Document;

(b) any change in the time, place or manner of payment of, or in any other term
of, all or any portion of the First Priority Obligations, or any amendment,
waiver or other modification, whether by course of conduct or otherwise, or any
refinancing, replacement, refunding or restatement of any First Priority
Document;

(c) prior to the First Priority Obligations Payment Date, any exchange, release,
voiding, avoidance or non-perfection of any security interest in any Common
Collateral or any other collateral, or any release, amendment, waiver or other
modification, whether by course of conduct or otherwise, or any refinancing,
replacement, refunding or restatement of all or any portion of the First
Priority Obligations or any guarantee or guaranty thereof; or

 

15

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(d) any other circumstances that otherwise might constitute a defense available
to, or a discharge of, the Company in respect of the First Priority Obligations,
or of any Second Priority Secured Party, or the Company, to the extent
applicable, in respect of this Agreement.

8.2. Second Priority Obligations Unconditional. All rights and interests of the
Second Priority Secured Parties hereunder, and all agreements and obligations of
the First Priority Secured Parties (and, to the extent applicable, the Company)
hereunder, shall remain in full force and effect irrespective of:

(a) any lack of validity or enforceability of any Second Priority Document;

(b) any change in the time, place or manner of payment of, or in any other term
of, all or any portion of the Second Priority Obligations, or any amendment,
waiver or other modification, whether by course of conduct or otherwise, or any
refinancing, replacement, refunding or restatement of any Second Priority
Document;

(c) any exchange, release, voiding, avoidance or non-perfection of any security
interest in any Common Collateral or any other collateral, or any release,
amendment, waiver or other modification, whether by course of conduct or
otherwise, or any refinancing, replacement, refunding or restatement of all or
any portion of the Second Priority Obligations or any guarantee or guaranty
thereof; or

(d) any other circumstances that otherwise might constitute a defense available
to, or a discharge of, the Company in respect of the Second Priority Obligations
or any First Priority Secured Party, or the Company, to the extent applicable,
in respect of this Agreement.

SECTION 9. Miscellaneous.

9.1. Conflicts. In the event of any conflict between the provisions of this
Agreement and the provisions of any First Priority Document or any Second
Priority Document, the provisions of this Agreement shall govern.
Notwithstanding the foregoing, the parties hereto acknowledge that the terms of
this Agreement are not intended to and shall not, as between the Company and the
Secured Parties, negate, impair, waive or cancel any rights granted to, or carry
liability or obligation of, the Company in the First Priority Documents and the
Second Priority Documents or impose any additional obligations on the Company
(other than as expressly set forth herein).

9.2. Continuing Nature of Provisions. This Agreement shall continue to be
effective, and shall not be revocable by any party hereto, until the First
Priority Obligation Payment Date shall have occurred. This is a continuing
agreement and the First Priority Secured Parties and the Second Priority Secured
Parties may continue, at any time and without notice to the other parties
hereto, to extend credit and other financial accommodations, lend monies and
provide indebtedness to, or for the benefit of, the Company on the faith hereof.

9.3. Amendments; Waivers. (a) No amendment or modification of any of the
provisions of this Agreement shall be effective unless the same shall be in
writing and signed by the First Priority Creditor (in accordance with the First
Priority Agreement) and the Second Priority Representative (in accordance with
the Second Priority Agreement), and, in the case of amendments or modifications
of Sections 3.5, 3.6, 5.2, 5.4, 6(c), 6(d), 6(e), 6(f), 9.3, 9.5 or 9.6, the
Company, and each waiver, if any,

 

16

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shall be a waiver only with respect to the specific instance involved and shall
in no way impair the rights of the parties making such waiver or the obligations
of the other parties to such party in any other respect or at any other time.
Anything herein to the contrary notwithstanding, no consent of the Company shall
be required for amendments, modifications or waivers of any other provisions of
this Agreement other than those that (i) directly affect any obligation or right
of the Company hereunder or under the First Priority Documents or the Second
Priority Documents or that would impose any additional obligations on the
Company or (ii) change the rights of the Company to refinance the First Priority
Obligations or the Second Priority Obligations.

9.4. Information Concerning Financial Condition of the Company. Neither the
Second Priority Representative nor the First Priority Creditor hereby assumes
responsibility for keeping each other informed of the financial condition of the
Company and all other circumstances bearing upon the risk of nonpayment of the
First Priority Obligations or the Second Priority Obligations. The Second
Priority Representative and the First Priority Creditor hereby agree that no
party shall have any duty to advise any other party of information known to it
regarding such condition or any such circumstances. In the event the Second
Priority Representative or the First Priority Creditor, in its sole discretion,
undertakes at any time or from time to time to provide any information to any
other party to this Agreement, it shall be under no obligation (a) to provide or
update any such information to such other party or any other party on any
subsequent occasion, (b) to undertake any investigation not a part of its
regular business routine, or (c) to disclose any other information. Neither the
First Priority Creditor nor the Second Priority Representative shall have any
responsibility to monitor or verify the financial condition of the Company.

9.5. Governing Law. This Agreement shall be construed in accordance with and
governed by the law of the State of New York, except as otherwise required by
mandatory provisions of law and except to the extent that remedies provided by
the laws of any jurisdiction other than the State of New York are governed by
the laws of such jurisdiction.

9.6. Submission to Jurisdiction. (a) Each First Priority Secured Party, each
Second Priority Secured Party and the Company hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the courts of the State of New York and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each such
party hereby irrevocably and unconditionally agrees that all claims in respect
of any such action or proceeding may be heard and determined in such New York
State or, to the extent permitted by law, in such Federal court. Each such party
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the any First Priority Secured Party or Second Priority Secured Party
may otherwise have to bring any action or proceeding against the Company or its
properties in the courts of any jurisdiction.

(b) Each First Priority Secured Party, each Second Priority Secured Party and
the Company hereby irrevocably and unconditionally waives, to the fullest extent
it may legally and effectively do so (i) any objection it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement in any court referred to in paragraph (a) of this
Section and (ii) the defense of an inconvenient forum to the maintenance of such
action or proceeding.

(c) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 9.7. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.

 

17

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9.7. Notices. Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by facsimile. All such notices and other communications
(i) sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received or (ii) sent
by facsimile shall be deemed to have been given when sent, provided that if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next business day for the
recipient. For the purposes hereof, the addresses of the parties hereto (until
notice of a change thereof is delivered as provided in this Section) shall be as
set forth below each party’s name on the signature pages hereof, or, as to each
party, at such other address as may be designated by such party in a written
notice to all of the other parties.

9.8. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of each of the parties hereto and each of the First Priority Secured
Parties and Second Priority Secured Parties and their respective successors and
permitted assigns, and nothing herein is intended, or shall be construed to
give, any other Person any right, remedy or claim under, to or in respect of
this Agreement or any Common Collateral.

9.9. Headings. Section headings used herein are for convenience of reference
only, are not part of this Agreement and shall not affect the construction of,
or be taken into consideration in interpreting, this Agreement.

9.10. Severability. Any provision of this Agreement held to be invalid, illegal
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.

9.11. Counterparts; Integration; Effectiveness. This Agreement may be executed
in counterparts (and by different parties hereto on different counterparts),
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. Delivery of an executed counterpart of a
signature page of this Agreement by email or telecopy shall be effective as
delivery of a manually executed counterpart of this Agreement. This Agreement
shall become effective when it shall have been executed by each party hereto.

9.12. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.

9.13. Termination; QLT Default. Notwithstanding anything to the contrary
contained in this Agreement:

(a) upon the occurrence of the Closing Date (as defined in the Merger Agreement,
the “Merger Agreement Closing Date”)), (i) all Liens in favor of any Second
Priority Secured Party securing the Second Priority Obligations shall be deemed
to rank senior in all respects to the Liens in favor of the First Priority
Secured Parties securing the First Priority Secured Obligations, (ii) the First
Priority Creditor shall promptly deliver to the Second Priority Representative
or its designees any and all possessory Common Collateral that it is holding
pursuant to the terms of the First Priority Documents, and (iii) in furtherance
of the foregoing, the First Priority Creditor and the Majority Holders (as
defined in the Existing Second Priority Agreement) (who shall instruct the
Second Priority Representative to execute

 

18

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the same) will work in good faith to promptly negotiate and execute an amendment
to this Agreement providing that QLT Inc., as the First Priority Creditor under
this Agreement, shall become the second priority creditor and U.S. Bank National
Association, as collateral agent, and as the Second Priority Representative
under this Agreement, shall become the first priority creditor, all on terms
substantially equivalent to those set forth in this Agreement governing the
relative priorities and rights of the First Priority Creditor and Second
Priority Creditors (the “Post Merger Amended Intercreditor Agreement”), upon and
after which the Post Merger Amended Intercreditor Agreement shall be deemed the
“Intercreditor Agreement” as defined in the Existing First Priority Agreement;
and

(b) upon the occurrence, and during the continuation of, a QLT Default (i) all
Liens in favor of any Second Priority Secured Party securing the Second Priority
Obligations shall be deemed to rank pari passu in all respects with the Liens in
favor of the First Priority Secured Parties securing the First Priority Secured
Obligations and (ii) in furtherance of the foregoing, the First Priority
Creditor and the Majority Holders (as defined in the Existing Second Priority
Agreement) (who shall instruct the Second Priority Representative to execute the
same) will work in good faith to promptly negotiate and execute an amendment to
this Agreement to give effect to such pari passu ranking.

9.14. Amendment to Second Priority Documents. Notwithstanding anything contained
in the Second Priority Documents, Company and the Second Priority Representative
agree that the First Priority Security Documents shall be deemed a “Permitted
Lien” thereunder.

[Signature Pages Follow]

 

19

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

 

QLT INC., as First Priority Creditor for and on behalf of the First Priority
Secured Parties By:

 

Name: Geoffrey Cox Title: Interim Chief Executive Officer Address for Notices:
QLT Inc.

887 Great Northern Way, Suite 250 Vancouver, BC V5T 4T5 Canada
Attention: Glen Ibbott, Interim Chief Financial Officer Facsimile No.:
(604) 873-0816 With a copies to: QLT Inc. 887 Great Northern Way, Suite 250
Vancouver, BC V5T 4T5 Canada Attention: Dori Assaly, Vice President Legal
Affairs Facsimile No.: (604) 873-081 and Weil, Gotshal & Manges LLP 767 Fifth
Avenue New York, NY 10153 Attention: Raymond O. Gietz Facsimile: 212-310-8702

[SIGNATURE PAGE TO INTERCREDITOR AGREEMENT]

--------------------------------------------------------------------------------

U.S. BANK NATIONAL ASSOCIATION, as Second
Priority Representative for and on behalf of the Second Priority Secured Parties
By:

 

Name: Melinda Valentine Title: Vice President Address for Notices: U.S. Bank
National Association Global Trust Services 100 Wall Street, Suite 1600 New York,
New York 10005 Facsimile: 212-951-6986 Attention: Karen Hall, Vice President
Email: Karen.Hall@unionbank.com

[SIGNATURE PAGE TO INTERCREDITOR AGREEMENT]

--------------------------------------------------------------------------------

INSITE VISION INCORPORATED By:

 

Name: Timothy M. Ruane Title: Chief Executive Officer Address for Notices:
InSite Vision Incorporated 965 Atlantic Avenue Alameda, California 94501
Facsimile: (510) 747-1382 Attention: Timothy M. Ruane Email: TRuane@insite.com

[SIGNATURE PAGE TO INTERCREDITOR AGREEMENT]

--------------------------------------------------------------------------------

Exhibit B

 

     Note Date & Principal Amount  

Holder

   9-Oct-14      21-Nov-14      10-Dec-14      17-Apr-15  

Anthony J. Gerace

   $ 166,666.67          $ 166,666.67       $ 166,666.67   

Kingsbrook Opportunities Masterfund LP

      $ 150,000.00       $ 150,000.00       $ 150,000.00   

Garo H. Armen

   $ 100,000.00          $ 100,000.00       $ 100,000.00   

Jay Moorin

   $ 83,333.33          $ 83,333.33       $ 83,333.33   

LM Plus 4 Corporation

   $ 75,000.00          $ 75,000.00       $ 75,000.00   

Warrenton Ventures LLC

   $ 33,333.33          $ 33,333.33       $ 33,333.33   

Nicholas Ponzio

   $ 33,333.33          $ 33,333.33       $ 33,333.33   

Anthony G. Polak

   $ 25,000.00          $ 25,000.00       $ 25,000.00   

James G. Kelly

   $ 25,000.00          $ 25,000.00       $ 25,000.00   

Domaco Venture Capital Fund

   $ 25,000.00          $ 25,000.00       $ 25,000.00   

Amy Polak

   $ 25,000.00          $ 25,000.00       $ 25,000.00   

Joshua Kazam Trust

      $ 25,000.00       $ 25,000.00       $ 25,000.00   

Ezra S. Kazam

      $ 25,000.00       $ 25,000.00       $ 25,000.00   

RL Capital Partners, L.P.

   $ 20,000.00          $ 20,000.00       $ 20,000.00   

Kesef Investments, LLC

      $ 16,666.67       $ 16,666.67       $ 16,666.67   

RBC Capital Markets LLC Custodian

           

FBO Ronald Lazar (IRA)

   $ 10,000.00          $ 10,000.00       $ 10,000.00   

Jamie Polak

   $ 10,000.00          $ 10,000.00       $ 10,000.00      

 

 

    

 

 

    

 

 

    

 

 

  $ 631,666.67    $ 216,666.67    $ 848,333.33    $ 848,333.33   

 

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