Exhibit
10.2


 


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STRICTLY PERSONAL AND CONFIDENTIAL


 


 ̈


 


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.


 

















 


(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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