**1.7 “Discount Percent”**means the percentage set forth in Exhibit D by QLT that is used byDistributor to reduce the Product’s Ex-Factory Price in determining the Contract Price forNon-Federal Price Customers.**1.8 “Effective Date”**shall have the meaning set forth in the preamble of this Agreement.**1.9 “Ex-Factory Price”**shall mean the QLT published list price for a Product, excludingpayment terms and freight charges, that is charged to purchasing wholesalers and distributors. TheEx-Factory Price is subject to change by QLT without notice.**1.10 “Kit”**shall have the meaning set forth in the first whereas clause of this Agreement.**1.11 “Product”**shall have the meaning set forth in the first whereas clause of this Agreement.**1.12 “United States”**shall mean the United States of America, its territories andpossessions.**Section 2 Appointment and Acceptance.****2.1**Subject to the terms and conditions of this Agreement, QLT hereby appoints Distributor asa distributor of Products and Kits in the United States, and an authorized distributor of record,of the Product and the Kits in the United States to Approved Customers. Distributor will not be**[*]**with respect to **[*]**. QLT shall comply with all applicable federal and state laws, includingany requirements to publicly disclose or make publicly available upon request the identity of itsauthorized distributors.**2.2**Distributor accepts such an appointment and agrees to perform, and carry out its dutiesand obligations under this Agreement.**2.3 [*]**shall be responsible for all Chargebacks and returns of Product arising from sales toNon-Federal or Federal Contract Price Customers in accordance with Sections 4.6 and 9, **[*]**pursuantto the **[*]**Agreement by and between **[*]**and Distributor effective **[*]**(the “**[*]**Agreement”). Anysuch Chargebacks and returns for **[*]**must occur within **[*]**after **[*]**. However, except as expresslyprovided in this Section 2.3, any **[*]**shall be handled in accordance with the **[*]**Agreement, andQLT shall **[*]**.**Section 3 Duties of Distributor****3.1**Distributor will provide adequate personnel, automation, telecommunications and all othermaterials and supplies needed to distribute the Product and Kits to Approved Customers in theUnited States, carry out its duties under this Section 3, provide the additional services to QLTset forth in Section 5 “Additional Services” herein, and to otherwise meet its obligations underthis Agreement, including but not limited to the application of the correct Contract Price to eachApproved Customer. Distributor will ensure that the personnel handling Product and Kits,interacting with Customers, and performing any other activities hereunder, are properly trained toperform their respective functions.**3.2**Distributor will make all final decisions on staffing relating to carrying out its dutiesand responsibilities under this Agreement. Distributor will review staffing levels on a continuousbasis with QLT and upon request, will provide relevant data and staffing formula used indetermining staffing including, but not limited to, transactions per person, average number ofcalls, call length, and other formula or standards used to assign staff. Distributor will provideadequate back-up personnel and floaters during anticipated peak demand and/or vacations.   **[*]** **Certain information in this document has been omitted and filed separately with the Securitiesand Exchange Commission. Confidential treatment has been requested with respect to the omittedportions.**
 
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**3.3**Distributor will appoint an individual who will serve as the manager of the relationshipwith QLT and will have overall managerial responsibility for the implementation of this Agreement(“Visudyne Program Manager”). The Distributor’s Visudyne Program Manager shall be **[*]**. QLT’sprimary contact to Distributor for this Agreement shall be **[*]**. The parties shall notify eachother of changes in such Visudyne Program Manager and primary contact person pursuant to Section 23“Notices” hereof.**3.4**Distributor will at all times handle, store and distribute the inventory of the Productand Kits in accordance with the specifications for storage and handling of the Product and Kitsprovided to Distributor by QLT in writing, and any deviations from such specifications should bereported to QLT immediately. In handling storing, selling and distributing the Product and Kitsand otherwise fulfilling its obligations under this Agreement, Distributor shall comply with allapplicable federal, state and local laws, regulations and ordinances, including but not limited tothe Prescription Drug Marketing Act of 1987, as amended, any regulations promulgated thereunder andany equivalent state laws and any laws and regulations relating to recall and the disposal ofhazardous wastes. At QLT’s request, Distributor shall provide QLT with evidence of its compliancewith laws, including but not limited to copies of state licenses, permits and, if legallypermitted, governmental inspection reports for Distributor’s facilities. Distributor shall notifyQLT immediately in the event of (a) any breach by Distributor of its obligations under this Sectionand/or (b) any notices, requests for information or other communications from the U.S. Departmentof Health and Human Services or any other government agency or any state healthcare program orother state agency (“Government Agency”) alleging that Distributor has violated any of therequirements of this Section and, if allowed by law, will give QLT copies of any suchcommunications. To the extent not prohibited by law, Distributor shall meaningfully discuss withQLT any corrective actions to be implemented by Distributor and shall enable representatives of QLTto participate in (including without limitation by providing reasonable advance notice of ) anycommunications or meetings on this subject with any Government Agency.**3.5**Distributor will place orders with QLT using purchase orders issued via fax or e-mailtransmissions. Distributor shall communicate inventory levels via the standard EXCEL spreadsheetsubmission.**3.6**Distributor will provide QLT with its documented process (i.e., by flow chart or StandardOperating Procedure (“SOP”) for involving the contracted reimbursement specialist for the Product.**3.7**Distributor’s Visudyne Program Manager and other Distributor representatives shall meet atleast once every calendar quarter with QLT representatives on a mutually agreed upon schedule toreview the service levels, savings potential, process improvements, and operations conducted underthis Agreement.**3.8**Distributor will maintain the customer service levels set forth in Exhibit A attachedhereto and made a part hereof.**3.9**It is understood that Distributor sells and distributes other ophthalmic products. Nothing in this Agreement shall prevent Distributor from listing such other products for sale (andtheir associated pricing) in its print materials, catalogs, web site, and other communicationmaterials.  Furthermore, nothing herein shall prevent Distributor or its affiliates from fillingorders for another ophthalmic product by or for Customers, or from promoting its distributionservices generally in accordance with its standard business practices, which typically includesinforming its purchasers of pricing available for all of the products distributed by Distributor.Notwithstanding the foregoing, Distributor shall not **[*]**or that **[*]**or that **[*]**.   **[*]** **Certain information in this document has been omitted and filed separately with the Securitiesand Exchange Commission. Confidential treatment has been requested with respect to the omittedportions.**
 
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**3.10**[Intentionally deleted]**3.11**[Intentionally deleted]**3.12**Distributor shall refer Approved Customers and potential Approved Customers to QLT’sCustomer Interactive Center for inquiries for medical and educational inquiries with respect to theProduct and the use of the Product.**3.13**Distributor shall maintain an inventory of the Product and the Kits which is adequate tosupply the Product and Kits to the Customers.**3.14**Distributor shall promptly, no later than by the close of the following business day,report to QLT’s safety unit at 1-800-663-5486, any and all Visudyne-related adverse events, and toQLT’s quality assurance unit, any and all technical or Visudyne-related product complaints, whichit receives relating to the Product or Kits in order to permit QLT to comply with regulatoryrequirements; provided any adverse medical events involving death or major injury shall be reportedimmediately.**3.15**Distributor shall not distribute or generate any promotional material containing claimsrelating to the Product or Kits. Distributor may, however, with QLT’s consent, provide ApprovedCustomers with educational information concerning the Product, provided that any such educationalinformation has been approved in advance in writing by QLT and has been provided for that purposeby QLT.**3.16**Distributor will cooperate with and assist QLT in the event of any recall or governmentalinvestigation of the Product or Kits. In connection therewith, Distributor will process recalls,**[*]**, in accordance with all applicable laws, rules and regulations, and any other standards agreedto by the parties, for Product distributed by Distributor.**Section 4 Pricing & Purchasing/Adding & Deleting Approved Customers/Chargeback Process****4.1 Applicable Contract Prices.**Distributor is responsible for ensuring that ApprovedCustomers receive the correct price for Product as set forth below in Section 4.2.**4.1.1**Approved Customers who are not Non-Federal or Federal Contract Price Customers maypurchase Product at no more than the prevailing QLT Ex-Factory Price as set forth in Exhibit D.Such customer may include specialty pharmacies and other entities approved by QLT from time totime. The Ex-Factory Price is subject to change without notice.**4.1.2**Federal Contract Price Customers shall **[*]**. QLT shall give Distributor timely **[*]**on aquarterly basis.**4.1.3**Non-Federal Contract Price Customers, such as ophthalmologists, clinics and hospitals asapproved by QLT from time to time, shall receive pricing at **[*]**the Contract Prices referenced inExhibit D.   **[*]** **Certain information in this document has been omitted and filed separately with the Securitiesand Exchange Commission. Confidential treatment has been requested with respect to the omittedportions.**
 
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**4.2 Contract Price Effective Dates and Change without Notice.**Contract Prices for Non- FederalContract Price Customers are effective no later than **[*]**and shall be subject to change withoutnotice as Ex-Factory Prices change. Contract Prices are equal to the Ex-Factory Price in effect atthe time of an Approved Customer’s purchase and will be reduced by an amount equal to the DiscountPercent in effect at the time of purchase multiplied by the Ex-Factory Price then in effect.**4.3 Contract Prices Creating a New “Best Price”**. If any price or other benefit offered to aNon-Federal Contract Price Customer under the terms of this Agreement, alone or in combination withany other pricing arrangement affecting an Approved Customer, would result in a Product “BestPrice” as the term is used in 42 U.S.C. §1396r-8(c) (1) (C), then such price or benefit to anApproved Customer shall **[*]**to the extent necessary so that **[*]**. If QLT notifies Distributor of**[*]**, then Distributor may, within sixty (60) days of receipt of such notice, **[*]**by written noticeto QLT.**4.4 Price Commitments.**QLT takes exception to and rejects any provision in any documentfurnished to QLT by Distributor which in any way requires QLT to make available to Distributor oran Approved Customer **[*]**available to any other customer or customer segment or group. Moreover,QLT takes exception to and rejects any purported requirement in any document furnished to QLT byDistributor that **[*]**therefor offered under this Agreement.**4.5 Purchase Through Distributor.**All purchases made by an Approved Customer shall be throughDistributor. Distributor represents that it has the capability to transmit Chargebacks to QLTthrough a manual process using an Excel spreadsheet (“Excel”). Distributor acknowledges that itsApproved Customers will agree (without any involvement of QLT) with Distributor on the final pricefor Products, including the consideration to be received by Distributor in exchange for itsperformance of the wholesaler function.**4.6 Chargeback Reconciliation**. Sales to Non-Federal or Federal Contract Price Customers shallbe handled via QLT’s normal Chargeback procedures. Distributor will submit all Chargeback claims,which shall be equal to **[*]**. Such submission shall be made on a **[*]**basis using an invoice in theform of an Excel spreadsheet, the form and content of which is acceptable to both parties. QLTwill make a good faith effort to use the Chargeback data submitted by Distributor to match theChargeback for the Products to this Agreement (or, to the extent that Section 2.3 applies, the **[*]**Agreement) such that Non-Federal and Federal Contract Price Customers receive the Contract Priceset forth in this Agreement. Due to the quality of data received and the limitations inherent inQLT’s systems, however, QLT cannot guarantee that all such Chargeback information will be appliedagainst this Agreement. Without limiting the foregoing, in the event that **[*]**, including but notlimited to this Agreement. If **[*]**within the database **[*]**. If a **[*]**the Chargeback will beprocessed **[*]**. If QLT’s system **[*]**. Once QLT has **[*]**, QLT will not **[*]**; provided however, thatDistributor may resubmit disputed Chargeback to QLT within **[*]**of receiving QLT’s reconciliationnotice, and QLT shall process any resubmitted Chargebacks within such **[*]**time period, providedthat Distributor can substantiate its claim for resubmission. QLT shall pay all submittedChargebacks that are applied against this Agreement as provided in this Section 4.6 within **[*]**after it receives the relevant invoice therefor.**4.7 “Own Use” Requirements**. QLT shall extend the pricing offered in this Agreement to Federaland Non-Federal Contracted Customers pursuant to this Agreement only if Distributor notifies eachsuch Customer that it must meet the following condition:**4.7.1**All Products purchased pursuant to this Agreement shall be for any Approved Customer’s“own use,” as that phrase is defined in Abbott Laboratories v. Portland Retail Druggists, 425 U.S.1 (1976), in supplying the pharmaceutical needs of patients at Customers’ facilities eligible forContract Prices pursuant to this Agreement, in combination with other health care services.   **[*]** **Certain information in this document has been omitted and filed separately with the Securitiesand Exchange Commission. Confidential treatment has been requested with respect to the omittedportions.**
 
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**4.8 Approved Customers.**QLT must approve, in its reasonable discretion, any customers who arenot already Approved Customers as of the Effective Date accessing the Product or, if applicable,Contract Prices, pursuant to this Agreement after Distributor submits the information listed onExhibit F attached hereto and as reasonably requested by QLT. No approval will be given forentities that are not so approved or do not meet the requirements of this Section 4.8 or otherapplicable requirements of this Agreement. Where applicable, QLT shall use **[*]**, in assisting it todetermine whether or not a Customer meets the requirements of this Agreement. No entity shall beadded as an Approved Customer unless and until QLT so notifies Distributor. QLT may revoke itsacceptance of any Customer by notifying Distributor. If QLT approves the addition of a Customer,any Contract Price for such new Approved Customer will become effective no later than **[*]**afterreceipt of Distributor’s written notification. Further, QLT reserves the right at any point duringthe term of the Agreement to revoke Distributor’s access to Approved Customers that do not meet therequirements of this Agreement, or for any commercially reasonable reason, **[*]**.**4.9 Participant Location.**The benefits of this Agreement, including access to Product and, ifapplicable, Contract Prices, shall be available only to Approved Customers, or Approved Customerfacilities as the case may be, located in the United States. In addition, QLT may, in its solediscretion, **[*]**in a manner **[*]**. Moreover, in the event that **[*]**described in this Agreement(including but not limited to, **[*]**, QLT may **[*]**or otherwise affected by **[*]**.**4.10 QLT Contracts with Non-Federal Contract Price Customers.**QLT takes exception to andrejects any purported requirement in any document furnished to QLT by Distributor that a directcontract between QLT and a Customer or other buying group member Customers must be previouslyapproved by Distributor. Any such contract shall be between QLT and the buying group member onlyand does not affect any of the terms and conditions of this Agreement.**4.11 Patient Assistance Program.**In addition to the distribution and other services describedin this Agreement, Distributor agrees to distribute the Product associated with patients enrolledin QLT’s patient assistance program (“PAP”). QLT administers the PAP through a third party serviceprovider, as identified by QLT from time to time (the “PAP Provider”). Upon notification from thePAP Provider, Distributor agrees to promptly ship the Product to medical practitioners for use withPAP patients in accordance with the instructions received from the PAP Provider **[*]**.Notwithstanding Section 4.8, the practitioner receiving the Product pursuant to the PAP shall beconsidered an “Approved Customer” hereunder solely for purposes of the PAP, **[*]**. Followingdistribution of the Product, Distributor shall report to QLT the amount of such Product distributedto practitioners for PAP patients and QLT shall then ship replacement Product to Distributor **[*]**toreplace the Product distributed to practitioners for PAP patients.**Section 5. Additional Services; Service Fees****5.1 Additional Services**. In addition to its normal distribution duties under this Agreement,Distributor will provide the following additional services to QLT in connection with thedistribution of the Product and Kits:**5.1.1**Distributor will enter into such agreements which will allow it to accept credit cardpurchases from Customers, subject to credit approval of such Customers by Distributor. The fees**[*]**. Distributor shall retain documentation of **[*]**.   **[*]** **Certain information in this document has been omitted and filed separately with the Securitiesand Exchange Commission. Confidential treatment has been requested with respect to the omittedportions.**
 
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**5.1.2**Distributor shall provide the specific data and reports set forth on Exhibit B attachedto this Agreement and made a part hereof, in the manner and frequency set forth in Exhibit B. Thefee for such data and reporting services shall be **[*]**. It is agreed and understood that if **[*]**inall material respects within **[*]**unless **[*]**.**5.1.3**Distributor shall ship all Product and Kits by a nationally recognized next day aircarrier. QLT shall **[*]**as demonstrated by **[*]**.**5.1.4**The fee paid to Distributor by QLT for **[*]**. The services provided by Distributor willinclude **[*]**.**5.1.5**QLT shall pay the **[*]**amounts set forth in this Section 5 with respect to Productshipped under QLT’s PAP pursuant to Section 4.11 of this Agreement to the same extent QLT pays the**[*]**amounts with respect to Product sold to Approved Customers. In addition, QLT shall payDistributor a **[*]**Ex-Factory Price **[*]**. The services provided by Distributor with respect to QLT’sPAP shall include **[*]**, beginning after QLT’s first shipment of replacement Product pursuant toSection 4.11 of this Agreement.**5.1.6**QLT and Distributor each believe that the **[*]**described in this Agreement constitute **[*]**under this Agreement, and that **[*]**were negotiated in good faith and at arms’ length. Distributoragrees that it **[*]**, in whole or part, to any Approved Customers.**5.2 Invoicing and Terms of Payment.**Distributor shall invoice QLT within **[*]**of the end **[*]**for the fees and actual reimbursable costs associated with the **[*]**set forth in this Section 5.Payment of undisputed amounts shall be due within **[*]**of receipt of the invoice. QLT will notifyDistributor of any disputed charges in writing within **[*]**of receipt of the invoice covering suchcharges. In the absence of any such notice of dispute, all invoices will be deemed to be correctand due in full per the payment terms above. A late fee of **[*]**(or any portion thereof) will becharged as of the due date on all amounts not paid after **[*]**receipt of the invoice, except anyamount disputed by QLT in good faith.**5.3 [*]**. If in any **[*]**Distributor can reasonably demonstrate to QLT that Distributor’s **[*]**providing the services described in this Section 5 **[*]**during the following **[*]**of the Term (assuch term is defined in Section 21 below)) as a result of any **[*]**, then Distributor may propose inwriting to QLT **[*]**. If Distributor so notifies QLT of any **[*]**the parties shall discuss **[*]**. Nosuch **[*]**unless and until **[*]**. If the parties do not agree upon **[*]**, then either party mayterminate this Agreement in accordance with Section 21. In addition, the **[*]**as **[*]**.Notwithstanding the foregoing, in no event shall the **[*]**. All **[*]**will be determined **[*]**.**Section 6 Price and Payment.****6.1**Price of Product and the Kits to Distributor shall be the Ex-Factory Price prevailing atthe time of purchase by Distributor. The Ex-Factory Price may change without notice. If the priceis **[*]**, QLT agrees that it will **[*]**based on data **[*]**that Distributor must submit to QLT **[*]**.Credit will be issued within thirty (30) days of QLT’s receipt and acceptance of such report.Prices are **[*]**.**Section 7 Forecasts, Orders, Invoices.****7.1**Distributor will provide QLT with a non-binding **[*]**rolling forecast of projectedpurchases of the Product and Kits on or before the **[*]**during the term of this Agreement.   **[*]** **Certain information in this document has been omitted and filed separately with the Securitiesand Exchange Commission. Confidential treatment has been requested with respect to the omittedportions.**
 
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**7.2**Distributor will provide QLT with purchase orders (“PO”) at least once every **[*]**and notmore than **[*]**in advance of the delivery date set forth on the PO. The PO will set forth thequantity of Product and Kits and the requested delivery date. QLT will inform Distributor of anyproblems with the PO within **[*]**of receipt.**7.3**QLT will invoice Distributor for the Product and Kits simultaneously with shipmentthereof. Payment shall be due within **[*]**of the date of the invoice and shall be payable byelectronic funds transfer. Distributor shall be entitled to a **[*]**if it pays within **[*]**. A latefee of **[*]**(or any portion thereof) will be charged as of the due date on all amounts not paidwithin **[*]**after receipt of the invoice.**Section 8. Delivery, Title and Risk of Loss, Damaged Shipments.****8.1**QLT will **[*]**on normal and customary orders shipped via regular methods directly toDistributor’s designated warehouse. Notwithstanding the foregoing, where the Distributor **[*]**, any**[*]**will be charged to and borne by **[*]**. QLT agrees to ship all Products and Kits **[*]**to thedestination specified by Distributor from whichever warehouse is the shipping origin selected byQLT. In all cases, title to Products and Kits purchased by Distributor and risk of loss anddamages to Products shipped by QLT will pass to Distributor upon **[*]**. Transfer by QLT **[*]**willconstitute full and complete performance by QLT of its obligations to ship Products and Kits toDistributor.**8.2 [*]**insurance for in transit damages to or losses of Products and Kits shipped hereunder(each a “**[*]**Damage or Loss”). QLT will process and manage any claim. Insurance proceeds of **[*]**Damage or Loss claims will be **[*]**.**8.3**Distributor shall visually inspect each shipment of Product and Kits for external damageor loss in transit and shall notify QLT in writing (or by e-mail or fax) of any shortage or othernon-conformity in any order delivery within five (5) business days of the delivery thereof(“Discoverable Defects”). With respect to non-conformities of Product and Kits that by theirnature are not discoverable upon a reasonable visual inspection (“Hidden Defects”), the partiesagree that Distributor shall notify QLT promptly upon learning of or discovering a Hidden Defect.Upon receipt of notice of any Discoverable Defect or Hidden Defect, QLT will at its option,promptly at its sole expense either replace any Product or Kits with the Discoverable Defect orHidden Defect, or issue Distributor a credit in the amount of the purchase price paid for suchProduct or Kit. THIS SETS FORTH QLT’S SOLE LIABILITY TO DISTRIBUTOR FOR PRODUCT WITH DISCOVERABLEDEFECTS AND HIDDEN DEFECTS; PROVIDED THAT THE FOREGOING DOES NOT APPLY TO CLAIMS OF THIRD PARTIESINVOLVING HIDDEN DEFECTS FOR WHICH INDEMNIFICATION OF DISTRIBUTOR IS APPLICABLE UNDER THISAGREEMENT OR THE CONTINUING GUARANTY (AS DEFINED BELOW).**Section 9 Returns.****9.1**All returns shall be subject to the QLT Returns Policy, Exhibit C, in effect at the timeof the return. The current QLT Returns Policy is attached hereto as Exhibit C and made a parthereof. QLT reserves the right to change its returns policy on five (5) days prior written notice;provided that such changes not apply to Products purchased prior to the effective date of change.   **[*]** **Certain information in this document has been omitted and filed separately with the Securitiesand Exchange Commission. Confidential treatment has been requested with respect to the omittedportions.**
 
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**Section 10 QLT Responsibilities.**QLT will supply the Product and Kits to Distributor under the terms and conditions of thisAgreement.**10.1**QLT will be responsible for the development and maintenance of the phone switch forrouting calls which come into QLT through an automated attendant to Distributor and the QLTCustomer Interaction Center.**10.2**In the event of a shortage of supply, QLT will **[*]**unless required by federal law orregulation to **[*]**. Distributor will ensure that Customers are aware of any such shortage and theguidelines Distributor has set up, in consultation with QLT, to allocate Product among patients**[*]**.**10.3**QLT will furnish Distributor with the Material Safety Data Sheet for the Product and anyrevised versions thereof.**10.4**If the Product or Kit is discontinued, Distributor’s remaining inventory shall be **[*]**.QLT will not **[*]**.**Section 11 Disclosures and Consents; HIPAA Compliance****11.1**To the extent required by applicable and regulations, including, but not limited to, 42U.S.C. 1320a-7b(b) and 42 C.F.R. 1001.952(h), Distributor shall advise and inform each of itsCustomers to fully report, as required by law or contract, any discounts, rebates, or reductions inprices on Product and provide the discount information supplied by Distributor to the Department ofHealth and Human Services or a state agency upon request, consistent with the requirements of 42U.S.C. 1320a-7b(b) and 42 C.F.R. 1001.952(h).**11.2**Distributor represents and warrants that it shall comply in all respects with applicableprovisions promulgated by the U.S. Department of Health and Human Services pursuant to Title II,Subtitle F of the Health Insurance Portability and Accountability Act of 1996, as amended (“HIPAA”)including, but not limited to, standards for the protection of the privacy of individuallyidentifiable health information, as well as any other applicable law, regulation or contractualobligation relating to privacy. At no time will Distributor provide to QLT, nor does QLT seek tocollect or receive, any protected health information (as such term is defined in HIPAA). Theprovision of any information to QLT hereunder shall be in compliance with all applicable laws,including those concerning patient confidentiality.**Section 12. Quality Audits.****12.1**Distributor will provide fully automated and manual quality control systems designed toensure compliance with applicable law. Such systems will be designed to verify the accuracy ofinventory and shipments to customers in order to effectively facilitate recall processing ifrequired. QLT is entitled to perform annual quality audits with Distributor to assure appropriatestorage conditions, accurate SOPs, customer shipping records, and adequate employee trainingrecords are in place. Any quality audit hereunder shall be consistent with Section 13 hereof.**Section 13 Right to Audit.****13.1**Distributor will maintain detailed records, books and accounts related to its Customersand activities under this Agreement. Distributor will permit QLT’s authorized agents orrepresentatives, during normal business hours at QLT’s expense, to inspect all such documents andother relevant information regardless of its form in retention, including, but not limited tocomputer files or tapes pertaining to this Agreement. QLT will provide Distributor at least seven(7) days notice in advance of any audit. Any audit hereunder shall be consistent with this Section13 hereof.   **[*]** **Certain information in this document has been omitted and filed separately with the Securitiesand Exchange Commission. Confidential treatment has been requested with respect to the omittedportions.**
 
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**13.2**Distributor will not dispose of any records related to this Agreement for a period of **[*]**from date of creation of such record, or for such longer amount of time as may be required underapplicable law. On request, Distributor will transfer such records to QLT prior to disposal, atQLT’s expense.**13.3**Distributor shall cooperate with QLT’s auditors to assure a prompt and accurate audit.Distributor shall also cooperate in good faith with QLT to correct any practices which are found tobe deficient as a result of any such audit. Within thirty (30) days after receipt by Distributorof QLT’s audit report containing findings of deficient practices which have caused or resulted inexcess fees paid to, or unauthorized or erroneous expenses incurred by, QLT, Distributor shallreimburse QLT for any such excess fees, unauthorized or erroneous expenses within thirty (30) daysof provision of such audit findings to Distributor. If Distributor objects to the results of theaudit, the parties will work diligently to resolve any issues under this Section 13.3, includingraising such issues to the next level of management within Distributor and QLT for resolution.Should the audit conducted by QLT result in a finding of underpayment by QLT to Distributor, QLTshall, within thirty (30) days of provision of such audit finding to Distributor, remit toDistributor all monies owed. If the parties cannot resolve such issues within sixty (60) days ofreceipt of QLT’s audit report, the parties shall retain an independent certified public accountant,to whom neither party has a reasonable objection, to audit Distributor’s records. The results ofsuch independent accountant’s audit shall be binding upon both parties. The Parties shall **[*]**ofsuch independent accountant **[*]**.**13.4**In the event the deficiencies relate to compliance with applicable laws or regulations,Distributor shall remedy such deficiencies as soon as possible.**13.5**The right to audit shall survive the expiration or termination of this Agreement by **[*]**.**13.6**QLT reserves the right, with reasonable advance notification, to enter and inspectDistributor’s returned goods facility or any Distributor’s authorized third party reversedistributor no more than once annually. Distributor shall provide or ensure access to saidfacilities. Such audit will be performed at the cost of QLT. Submission of returns to QLT shall bedeemed acceptance of the terms of QLT’s return policy. The audit will be conducted at QLT’s expenseonly for the expenses incurred in the hiring of the third party designated by QLT. Other expenses,including but not limited to, time spent by permanent or temporary employees of Distributor in thesupport of the audit will not be reimbursed by QLT.**Section 14 Confidentiality.****14.1**QLT (as successor and assignee of QLT Inc.) and Distributor are parties to a MutualNon-Disclosure Agreement dated as of November 2, 2009 (the “NDA”). The terms of the NDA areincorporated herein by reference; provided that Section 9 of the NDA (Term) is hereby revised so asto cover Confidential Information that is disclosed during the Term of this Agreement, and theobligations created in the NDA shall survive and continue to be binding on the parties for five (5)years from the date of termination of this Agreement. QLT shall be permitted to discloseConfidential Information to the extent required under applicable laws, rules, regulations,including relating to securities and regulatory requirements in accordance with Section 8 of theNDA, provided that notwithstanding the foregoing, the parties acknowledge and agree that QLT may berequired to file this Agreement with the U.S. Securities and Exchange Commission and its foreignequivalents (“SEC”) and/or make other public disclosures regarding this Agreement in its filingswith the SEC in order to comply with applicable securities laws, in which case QLT shall bepermitted to do so, provided that QLT shall seek, to the extent consistent with applicable laws, toobtain confidential treatment of, and redact from any version of this Agreement so filed with theSEC, all references to specific service fee amounts and discounts in this Agreement, and furtherprovided that if QLT, in consultation with its legal counsel, reasonably believes that such servicefee amounts and discounts are legally required to be disclosed, or the SEC or equivalent governmentauthority requires disclosure of such amounts and discounts, then QLT shall notify Distributor inwriting of such requirement and the basis therefor a reasonable time before such disclosure islegally required to be made, and shall be permitted to disclose such amounts and discounts whenmaking such filings after such time.**14.2**Distributor will not report **[*]**.   **[*]** **Certain information in this document has been omitted and filed separately with the Securitiesand Exchange Commission. Confidential treatment has been requested with respect to the omittedportions.**
 
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**Section 15 Representations, Warranties and Covenants.****15.1**Distributor represents and warrants that:**15.1.1**it has and will maintain in full force and effect all governmental licenses and permitsto sell and distribute the Products and Kits in the United States and to conduct all otheractivities it is required to perform under this Agreement, and shall immediately notify QLT of anydenial, revocation or suspension of any such licenses or permits that could reasonably have amaterial adverse effect on the Product or Kits, or Distributor’s ability to perform its obligationsunder this Agreement;**15.1.2**the services provided by Distributor hereunder will be performed in a good,professional and workmanlike manner, and Distributor shall ensure that its personnel adhere to theprovisions of this Agreement and that they have the requisite knowledge training and ability toperform such Services under this Agreement competently and in accordance with the terms hereof;**15.1.3**In performing services pursuant to this Agreement, Distributor and its employees andagents shall comply with all federal, state and local laws, rules, regulations and ordinances;**15.1.4**Distributor has the full right and authority to enter into this Agreement andDistributor has no obligations or commitments inconsistent with this Agreement and/or itsperformance hereunder;**15.1.5**The execution, delivery and performance of this Agreement by Distributor has been dulyauthorized by all necessary corporate actions; and**15.1.6**No Distributor employee or subcontractor shall be, and Distributor has not been,debarred under 21 U.S.C. §335a or convicted of a felony relating to the regulation, handling orstorage of any drug product, and Distributor shall promptly notify QLT in writing if Distributor orany Distributor employee or subcontractor (a) to Distributor’s knowledge comes under investigationby FDA for debarment or disqualification, (b) is debarred or disqualified by the FDA, (c), toDistributor’s knowledge comes under investigation by any federal, state, municipal or other lawenforcement agency in connection with the regulation or handling of any drug product, or (d) isconvicted of a felony relating to the regulation or handling of any drug product, in each of (a)through (d) where such event could trigger an obligation by QLT to file a report or other documentwith the FDA or reasonably have a material adverse effect on the Product or Kits or Distributor’sability to perform its obligations under this Agreement.   **[*]** **Certain information in this document has been omitted and filed separately with the Securitiesand Exchange Commission. Confidential treatment has been requested with respect to the omittedportions.**
 
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**15.2**QLT represents and warrants that:**15.2.1**QLT or its affiliates owns or holds the duly approved New Drug Application, as suchterm is defined in the Federal Food, Drug and Cosmetic Act, Title 21, United States Code, asamended, and the rules and regulations promulgated thereunder, for the Product, or is otherwiseconsidered the “manufacturer” of the Product within the meaning of any applicable federal, state orlocal law relating to pedigrees;**15.2.2**QLT has and will maintain, in full force and effect, all licenses and permits requiredunder applicable federal, state or local law for QLT to sell and distribute Products in the UnitedStates under this Agreement;**15.2.3**In performing its obligations pursuant to this Agreement, QLT and its employees andagents shall comply with all federal, state and local laws, rules, regulations and ordinances;**15.2.4**QLT has the full right and authority to enter into this Agreement and QLT has noobligations or commitments inconsistent with this Agreement and/or its performance hereunder;**15.2.5**The execution, delivery and performance of this Agreement by QLT has been dulyauthorized by all necessary corporate actions; and**15.2.6**QLT will convey to Distributor good title to the Product and Kits, free and clear ofany security interest, liens or other encumbrances of any kind or character.**15.2.7 EXCEPT AS PROVIDED ABOVE OR IN THE CONTINUING GUARANTY (AS DEFINED BELOW), QLTDISCLAIMS ALL OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, WITH REGARD TO THE PRODUCT PURCHASED BYDISTRIBUTOR PURSUANT TO THIS AGREEMENT, INCLUDING THE WARRANTY OF MERCHANTABILITY AND THE WARRANTYOF FITNESS FOR A PARTICULAR PURPOSE.****15.3**QLT has, on the Effective Date, executed and delivered to Distributor’s parent theContinuing Guaranty and Indemnification Agreement attached hereto as Exhibit E (the “ContinuingGuaranty”). The representations, warranties and indemnification provisions contained in theContinuing Guaranty are in addition to those contained in this Agreement. QLT acknowledges thatthe Products are covered by the Continuing Guaranty, and QLT shall perform its obligations setforth in the Continuing Guaranty.**Section 16 Compliance with Law.****16.1**Each party will comply with all applicable laws and regulations relating to itsobligations under this Agreement. Each party will comply with all applicable provisions of thefederal anti-kickback statute, 42 U.S.C. §1320a-7b and all applicable related regulations andsimilar state laws, including those laws and regulations related to federal healthcare programs,including Medicare. Without limiting the foregoing, each party warrants that it will comply allapplicable disclosure requirements in connection with pricing, or any other applicable mattersunder this Agreement.   **[*]** **Certain information in this document has been omitted and filed separately with the Securitiesand Exchange Commission. Confidential treatment has been requested with respect to the omittedportions.**
 
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**Section 17 Financial Disclosure.****17.1**QLT acknowledges that Distributor is a subsidiary of a publicly owned company whosefinancial statements are a matter of public record on file with the Securities and ExchangeCommission, and that as long as Distributor remains a subsidiary of a publicly owned company, QLTwill first obtain the publicly available financial statements prior to requesting any suchfinancial statements or any other financial information from Distributor.  If Distributor is nolonger a subsidiary of a publicly owned company or such company’s financial statements are not amatter of public record on file with the Securities and Exchange Commission, Distributor agrees toprovide QLT with audited annual financial statements and quarterly updates.**Section 18. Indemnification and Insurance.****18.1 By QLT.**QLT shall defend, indemnify, and hold harmless Distributor and its affiliates,directors, officers, employees and representatives from any claims, demands, costs, expenses(including reasonable attorneys’ fees) and liabilities or losses (“Claims”) that may be assertedagainst Distributor or such person or entity by or on behalf of a third party to the extent thatsuch Claims result from or arise out of the negligence or willful misconduct of QLT in connectionwith its manufacture or sale of the Product or QLT’s breach of this Agreement or applicable laws,rules and regulations.**18.2 By Distributor.**Distributor shall defend indemnify and hold harmless QLT and itsaffiliates, directors, officers, employees and representatives from any Claims that may be assertedagainst QLT or such person or entity by or on behalf of a third party to the extent that suchClaims result from or arise out of the negligence or willful misconduct of Distributor inconnection with its sale and distribution of the Products or Distributor’s breach of this Agreementor applicable laws, rules or regulations.**18.3 Indemnification Procedures.**The obligations and liabilities of the parties with respectto claims subject to indemnification under this Agreement (“Indemnified Claims”) are subject to thefollowing terms and conditions:**18.3.1**The party claiming a right to indemnification hereunder (“Indemnified Person”) willgive prompt written notice to the indemnifying party (“Indemnifying Person”) of any IndemnifiedClaim, stating its nature, basis and amount, to the extent known. Each such notice will beaccompanied by copies of all relevant documentation, including any summons, complaint or otherpleading that may have been served or any written demand or other document.**18.3.2**With respect to any Indemnified Claim: (a) the Indemnifying Person will defend orsettle the Indemnified Claim, subject to provisions of this subsection, (b) the Indemnified Personwill, at the Indemnifying Person’s sole cost and expense, cooperate in the defense by providingaccess to witnesses and evidence available to it, (c) the Indemnified Person will have the right toparticipate in any defense to the extent that, in its judgment, the Indemnified Person mayotherwise be prejudiced thereby (with the Indemnified Person paying for such participation exceptwhere counsel engaged by the Indemnifying Person could reasonably be deemed to have a conflict ofinterest in representing the Indemnified Person, in which case the Indemnifying Person shall payall costs of such participation), (d) the Indemnified Person will not settle, offer to settle oradmit liability as to any Indemnified Claim without the written consent of the Indemnifying Person,and (e) the Indemnifying Person will not settle, offer to settle or admit liability as to anyIndemnified Claim in which it controls the defense if such settlement, offer or admission containsany admission of fault or guilt on the part of the Indemnified Person, or would impose anyliability or other restriction or encumbrance on the Indemnified Person, without the writtenconsent of the Indemnified Person.**18.3.3**Each party will cooperate with, and comply with all reasonable requests of, each otherparty and act in a reasonable and good faith manner to minimize the scope of any Indemnified Claim.   **[*]** **Certain information in this document has been omitted and filed separately with the Securitiesand Exchange Commission. Confidential treatment has been requested with respect to the omittedportions.**
 
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**18.3.3**Distributor agrees that it will maintain, during the Term, insurance **[*]**, including butnot limited to general liability insurance and workers’ compensation insurance. Upon reasonablerequest, Distributor will promptly submit evidence of Distributor’s insurance to QLT.**18.4**QLT agrees that it will maintain the insurance set forth in the Continuing Guaranty.**Section 19 Use of Names.****19.1**Both parties reserve the right to control the use of their own names, trademarks, servicemarks, symbols, or trade names. Except as provided by law or as required by this Agreement,neither party may advertise or use any of the other party’s trademarks, service marks, symbols, ortrade names other than for the purpose of describing the Product in Distributor’s advertising orpromotional materials, without first receiving the prior written consent of the other party.Distributor shall not issue any press release concerning the Agreement or its relationship with QLTwithout the prior written approval of QLT.**Section 20 Liability; Force Majeure.****20.1**NO PARTY WILL BE LIABLE TO ANY OTHER PARTY FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT,SPECIAL, PUNITIVE, OR OTHER SIMILAR DAMAGES (INCLUDING WITHOUT LIMITATION, LOST PROFITS) ARISINGOUT OF OR IN CONNECTION WITH A BREACH OF THIS AGREEMENT EVEN IF SUCH DAMAGES ARE REASONABLYFORESEEABLE; PROVIDED THAT THE FOREGOING DOES NOT APPLY TO CLAIMS OF THIRD PARTIES FOR WHICHINDEMNIFICATION OF DISTRIBUTOR IS APPLICABLE UNDER THIS AGREEMENT OR THE CONTINUING GUARANTY.**20.2**Neither party shall be responsible for any failure to comply with the terms of thisAgreement due to: fire; flood; hurricane, explosions; acts of God; labor strikes; inability of athird party manufacturer to supply; acts of a government or agency thereof; judicial action; anyhealthcare or pharmaceutical legislation which materially alters the commercial benefit of thisAgreement; or any other cause outside the reasonable control of a party (financial inability to payexcepted). The party affected by a Force Majeure shall make diligent efforts to overcome suchevent and resume performance under this Agreement.**Section 21 Term and Termination.****21.1**The term of this Agreement (“Term”) shall commence on the Effective Date, and shallterminate on December 31, 2011, unless sooner terminated under the terms of this Agreement.Thereafter, this Agreement shall automatically renew for subsequent terms of one additional year,unless either party provides the other party with written notice of its intent not to renew thisAgreement at least 120 days before expiration of the current Term.**21.2**Either party may terminate this Agreement for cause, upon 30 days’ written notice of amaterial default to the other party with a reason for termination, and failure of that party tocure the default within the 30 day period. After the conclusion of the first year of the Term,either party may terminate this Agreement at will upon at least 120 days’ prior written notice tothe other party.**21.3**Either party may terminate this Agreement immediately on written notice in the event theother party becomes insolvent or files for bankruptcy or has filed against it any petition inbankruptcy, has a receiver appointed for its business or property, or makes a general assignmentfor the benefit of its creditors.   **[*]** **Certain information in this document has been omitted and filed separately with the Securitiesand Exchange Commission. Confidential treatment has been requested with respect to the omittedportions.**
 
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**21.4**Either party may immediately terminate this Agreement on written notice to the otherparty in the event of a change in law that would make this Agreement unlawful. In addition, QLT, atits sole election, may terminate this Agreement immediately, upon written notice to Distributor inthe event of (a) a withdrawal of the Product’s NDA; (b) a withdrawal of the Product from the marketfor medical or scientific concerns as to toxicity, safety and/or efficacy; (c) a withdrawal of theProduct at the request of the FDA or any other governmental or regulatory agency or (d) any licenseor registration required by Distributor under any federal, state or local law becoming suspended orrevoked that has a material adverse effect on Distributor’s ability to perform its obligationsunder this Agreement.**21.5**The rights and obligations of the parties contained in Sections 9, 13, 14, 15 (solely asto activities conducted during the Term), 18, 20 this Section 21.5 and Sections 11.1 and 11.2 and22 through 25 of this Agreement, any payment obligations, and any other provision if its contextshows that the parties intend it to survive, will survive expiration or termination of thisAgreement and, except as expressly provided, expiration or termination will not affect anyobligations arising prior to the expiration or termination date.**21.5.1**If this Agreement is terminated (i) by Distributor following an uncured material breachby QLT or (ii) by QLT at will, then at Distributor’s option exercised in writing within **[*]**after aparty receives notice of such termination from the terminating party, QLT shall promptly **[*]**, at**[*]**. Within **[*]**after Distributor provides or receives notice of such termination of thisAgreement, Distributor shall **[*]**at the time of termination.**21.5.2**If this Agreement is terminated (i) by QLT following a breach by Distributor or (ii) byDistributor without cause, then at QLT’s option exercised in writing within **[*]**after a partyreceives notice of such termination from the terminating party, QLT may promptly **[*]**, at **[*]**.Within **[*]**after Distributor provides or receives notice of such termination of this Agreement,Distributor shall **[*]**at the time of termination to enable QLT to determine whether to exercise theforegoing option.**21.6**Upon termination or expiration of this Agreement, Distributor shall immediately cease torepresent itself as an authorized distributor with respect to the Product and Kits; provided,however, that Distributor shall have the right to sell, during the **[*]**following such terminationor expiration only in accordance with the provisions of this Agreement, notwithstanding thetermination or expiration of this Agreement, those Products which are in its inventory on the dateof such termination and which QLT has not repurchased pursuant to the provisions of Section 21.5hereof.**Section 22 Miscellaneous.****22.1**No waiver of any breach of any one or more of the conditions or covenants of thisAgreement by a party shall be deemed to imply or constitute a waiver of a breach of the samecondition or covenant in the future, or a waiver of a breach of any other condition or covenant ofthis Agreement.**22.2**If any provision or the scope of any provision of this Agreement is found to beunenforceable or too broad by judicial decree, the parties agree that such provisions shall becurtailed only to the extent necessary to conform to law to permit enforcement of this Agreement toits full extent.   **[*]** **Certain information in this document has been omitted and filed separately with the Securitiesand Exchange Commission. Confidential treatment has been requested with respect to the omittedportions.**
 
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**22.3**Each of the parties agrees and acknowledges that this Agreement, including theattachments referred to herein and the NDA, (i) constitutes the entire agreement and supersedes allprior and contemporaneous agreements, understandings, negotiations and discussions, whether oral orwritten, among the parties with respect to the subject matter of this Agreement, and (ii) is notintended to confer any rights or remedies, or impose any obligations, on any person other than theparties hereto. Each of the parties expressly agrees and acknowledges that, other than thosestatements expressly set forth in this Agreement, it is not relying on any statement, whether oralor written, of any person or entity with respect to its entry into this Agreement or to theconsummation of the transactions contemplated by this Agreement, and each of the parties furtherwaives any claim against the other party that such other party has failed to disclose any fact,occurrence or other matter that relates in any way to its entry into this Agreement.**22.4**This Agreement may be modified only by a written agreement signed by both parties.**22.5**This Agreement may be assigned by Distributor to any affiliate but may not be otherwiseassigned without the consent of QLT, which consent will not be unreasonably withheld. For purposesof this Agreement, “affiliate” means any company or person that directly or indirectly controls, iscontrolled by or is under common control with the referenced party, as the case may be. ThisAgreement may be assigned by QLT without the consent of Distributor to an affiliate, to any entitywith whom it may merge or amalgamate or to any entity acquiring all or substantially all of theassets of QLT to which this Agreement relates, but may not otherwise be assigned without theconsent of Distributor, which consent will not be unreasonably withheld. Any permitted assigneeshall assume all obligations of its assignor under this Agreement. No assignment shall relieveeither party of responsibility for the performance of any accrued obligations which such party thenhas under this Agreement.**22.6**This Agreement and the rights and obligations of the parties under this Agreement will beconstrued and interpreted under the internal laws of the State of California, excluding itsconflict and choice of law principles. Both parties hereby waive their right to a trial by juryand, therefore, all disputes and conflicts regarding this Agreement and the parties’ performancehereunder will be heard before a judge in a court of competent jurisdiction.**22.7**Distributor’s relationship with QLT hereunder shall be that of independent contractor,and neither party shall be considered the agent of, partner of, employee or other member of theworkforce of, or participant in a joint venture with, the other party, in its performance of allduties under this Agreement. Neither party shall have authority to bind the other party unlessotherwise agreed to in writing by such parties.**22.8**Each party to this Agreement (i) has participated in the preparation of this Agreement,(ii) has read and understands this Agreement, and (iii) has been represented by counsel of its ownchoice in the negotiation and preparation of this Agreement. Each party represents that thisAgreement is executed voluntarily and should not be construed against a party solely because itdrafted all or a portion of this Agreement.**22.9**This Agreement may be executed in multiple counterparts, each of which shall be deemed anoriginal but all of which together shall constitute one and the same instrument. Facsimileexecution and delivery of this Agreement are legal, valid and binding execution and delivery forall purposes.   **[*]** **Certain information in this document has been omitted and filed separately with the Securitiesand Exchange Commission. Confidential treatment has been requested with respect to the omittedportions.**
 
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**Section 23 Notices.**Any notice, request or other document to be given hereunder to a party shallbe effective when received and shall be given in writing and delivered in person or sent byovernight courier or registered or certified mail, return receipt requested, as follows:   If to Distributor: Besse Medical  9075 Centre Pointe Drive  Suite 140  West Chester, Ohio 45069  Attention: VP Operations   With a copy to: AmerisourceBergen Specialty Group, Inc.  3101 Gaylord Parkway  Frisco, TX 75034  Attention: Group Counsel, 1N-E186   If to QLT: QLT Ophthalmics, Inc.