Document:

<PAGE>

                                                                   EXHIBIT 10.76

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

                                    QLT INC.

                                       AND

                                 XENOVA LIMITED

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

                        DEVELOPMENT AND COMMERCIALIZATION

                                    AGREEMENT

<PAGE>

                   DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

                                TABLE OF CONTENTS

<TABLE>

<S>                                                                                                             <C>
ARTICLE 1 - INTERPRETATION........................................................................................1
         1.1      Definitions.....................................................................................1
         1.2      Other Definitions..............................................................................10

ARTICLE 2 - PRODUCT DEVELOPMENT..................................................................................10
         2.1      Program Commencement...........................................................................10
         2.2      Development Committee..........................................................................10

ARTICLE 3 - CMC, MANUFACTURING AND SUPPLY........................................................................12
         3.1      Overview.......................................................................................12
         3.2      Development Supply.............................................................................12
         3.3      Commercial Supply in the Territory.............................................................12
         3.4      Xenova Retains All Other Manufacturing Rights..................................................13
         3.5      Transfer of Technology.........................................................................13
         3.6      Manufacturing Quality..........................................................................13
         3.7      Manufacturing Co-Operation.....................................................................14
         3.8      Equivalency of Finished Product................................................................16
         3.9      Reciprocal Right of Inspection.................................................................16
         3.10     Implementation of Recalls......................................................................16
         3.11     Mutual Liability for Recall....................................................................17
         3.12     Manufacture and Supply Agreement Requirements..................................................17

ARTICLE 4 - CLINICAL AND REGULATORY DEVELOPMENT..................................................................17
         4.1      Grant of Rights................................................................................17
         4.2      Initial Development in the Development Territory...............................................17
         4.3      QLT's Contributions............................................................................18
         4.4      Prior Program Commitments......................................................................18
         4.5      Development Progress Reports...................................................................18
         4.6      Regulatory Responsibility in the Territory.....................................................19
         4.7      Regulatory Responsibility in Europe............................................................19
         4.7A     Xenova and QLT Review of Regulatory Filings....................................................20
         4.8      Adverse Event Reporting........................................................................21
         4.9      Personnel......................................................................................21
         4.10     Xenova Contribution............................................................................21

ARTICLE 5 - COMMERCIALIZATION AND MARKETING......................................................................22
         5.1      Grant of Rights................................................................................22
         5.2      Commercialization Diligence....................................................................22
         5.3      Marketing Diligence............................................................................22
         5.4      Arbitration Rights Alternative not Cumulative..................................................24
         5.5      Commercialization by Xenova....................................................................24

ARTICLE 6 - ACTIVITIES, NON-COMPETITION, GLOBAL FRANCHISE AND FURTHER OPPORTUNITIES..............................24
         6.1      Xenova Activities..............................................................................24
         6.2      Xenova Activities in the ODD Field in the Territory............................................24
         6.3      No Other Xenova Activities during the First Year...............................................25
         6.4      Reciprocal Non-Compete.........................................................................25
         6.5      Global Franchise...............................................................................25
         6.6      Notice and Discussion of Other Opportunities...................................................25
         6.7      Cross-Over Use and Cross-Pricing Protection....................................................25

</TABLE>

<PAGE>

                                      -ii-
<TABLE>
<S>                                                                                                            <C>
         6.8      Consequences of Arbitration....................................................................26

ARTICLE 7 - CONFIDENTIALITY AND USE OF INFORMATION...............................................................26
         7.1      Ownership of Confidential Information..........................................................26
         7.2      Obligation of Confidentiality..................................................................26
         7.3      Xenova Use of QLT Program Information..........................................................27
         7.4      QLT Use of Xenova Program Information..........................................................27
         7.5      Third Party Access.............................................................................27
         7.6      No Use of QLT Program Information for ODD......................................................28
         7.7      Publications...................................................................................28
         7.8      Acknowledgement of Prior Disclosures...........................................................29
         7.9      Return of Confidential Information.............................................................29

ARTICLE 8 - INTELLECTUAL PROPERTY; ADDITIONAL TECHNOLOGY; LICENSES...............................................29
         8.1      Ownership of Intellectual Property.............................................................29
         8.2      Ownership of Program Information...............................................................30
         8.3      Additional Technology..........................................................................30
         8.4      License to QLT.................................................................................31
         8.5      License to Xenova..............................................................................33
         8.6      Grants of Xenova Intellectual Property.........................................................34

ARTICLE 9 - MILESTONE PAYMENTS...................................................................................34
         9.1      Upfront Payment................................................................................34
         9.2      Milestone Payments.............................................................................34
         9.3      Currency of Payment............................................................................35

ARTICLE 10 - ROYALTIES...........................................................................................35
         10.1     Royalties......................................................................................35
         10.2     Exclusions from Royalties......................................................................35
         10.3     Third Party License Fees and Royalties.........................................................36
         10.4     Adjustment of Royalties........................................................................36
         10.5     Royalty Payments Upon Termination..............................................................36
         10.6     Compensation for Use of Program Information....................................................36

ARTICLE 11 - PAYMENT TERMS.......................................................................................37
         11.1     Payment of Royalties...........................................................................37
         11.2     Currency for Royalty Payments..................................................................37
         11.3     Currency Transfer Restrictions.................................................................37
         11.4     Taxes..........................................................................................37
         11.5     Sales and Payment Reports......................................................................38
         11.6     Net Proceeds Reports...........................................................................38
         11.7     Accounts and Audit.............................................................................38
         11.8     Confidentiality of Reports.....................................................................39

ARTICLE 12 - REPRESENTATIONS, WARRANTIES AND COVENANTS...........................................................39
         12.1     Xenova's Representations, Warranties and Covenants.............................................39
         12.2     QLT's Representations, Warranties and Covenants................................................40

ARTICLE 13 - PATENT PROSECUTION, MAINTENANCE AND ENFORCEMENT.....................................................41
         13.1     Xenova Patents - Prosecution and Maintenance...................................................41
         13.2     QLT Patents - Prosecution and Maintenance......................................................42
         13.3     Patentable Improvements........................................................................42
         13.4     Xenova Patents - Infringement..................................................................42
         13.5     QLT Patents - Infringement.....................................................................43
         13.6     Third Party Claims of Infringement.............................................................43
         13.7     Infringement of Third Party Patents............................................................44

</TABLE>

<PAGE>

                                     -iii-
<TABLE>

<S>                                                                                                            <C>
ARTICLE 14 - TRADEMARKS..........................................................................................44
         14.1     Product Trademarks.............................................................................44
         14.2     Use of Trademarks..............................................................................45

ARTICLE 15 - INDEMNITY AND LIMITATIONS OF LIABILITY..............................................................45
         15.1     Mutual Indemnification.........................................................................45
         15.2     Product Liability Indemnity....................................................................45
         15.3     Indemnification Procedure......................................................................46
         15.4     No Consequential Damages.......................................................................46

ARTICLE 16 - TERM AND TERMINATION................................................................................46
         16.1     Termination....................................................................................46
         16.2     Expiration.....................................................................................47
         16.3     Early Termination by QLT.......................................................................47
         16.4     Early Termination by Xenova....................................................................48
         16.5     Termination on Bankruptcy......................................................................48
         16.6     Effect of Termination..........................................................................48
         16.7     Xenova License in the Case of Certain Early Terminations.......................................49
         16.8     QLT License in the Case of Certain Early Terminations..........................................50
         16.9     Survival.......................................................................................50

ARTICLE 17 - MISCELLANEOUS PROVISIONS............................................................................51
         17.1     Governing Law..................................................................................51
         17.2     Expedited Arbitration..........................................................................51
         17.3     Traditional Arbitration........................................................................52
         17.4     Amendment......................................................................................52
         17.5     Assignment.....................................................................................52
         17.6     Compliance with Laws...........................................................................53
         17.7     Entire Agreement...............................................................................53
         17.8     Exhibits.......................................................................................53
         17.9     Force Majeure..................................................................................53
         17.10    Further Assurances.............................................................................53
         17.11    Headings.......................................................................................53
         17.12    Injunction.....................................................................................53
         17.13    Inurement......................................................................................54
         17.14    Notice.........................................................................................54
         17.15    Press Releases/Publicity.......................................................................54
         17.16    Relationship of Parties........................................................................55
         17.17    Rights and Remedies............................................................................55
         17.18    Severability...................................................................................55
         17.19    Waiver.........................................................................................55
         17.20    Wording........................................................................................56
         17.21    Third Party Rights.............................................................................56

</TABLE>

EXHIBIT 1.1(p)   DESCRIPTION OF XR9576

EXHIBIT 1.1(q)   DRUG SPECIFICATION

EXHIBIT 1.1(CCC) SUMMARY OF PROGRAM ACTIVITIES

EXHIBIT 1.1(HHH) REGISTRATION PACKAGE

EXHIBIT 1.1(WWW) LIST OF XENOVA PATENTS

EXHIBIT 12.1(c)  ISSUES RELATING TO XENOVA PATENTS

<PAGE>

                   DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

THIS DEVELOPMENT AND COMMERCIALIZATION AGREEMENT (this "AGREEMENT") is entered
into with effect from the 13th day of August, 2001 (the "EFFECTIVE DATE")

BETWEEN:

                  QLT INC., a company incorporated under the laws of the
                  Province of British Columbia, Canada and having an office at
                  887 Great Northern Way, Vancouver, British Columbia, Canada
                  V5T 4T5

                  (hereinafter referred to as "QLT")

                                                               OF THE FIRST PART

AND:

                  XENOVA LIMITED incorporated under the laws of England and
                  Wales, United Kingdom and having an office at 957 Buckingham
                  Avenue, Slough, Berkshire, England, United Kingdom SL1 4NL

                  (hereinafter referred to as "XENOVA")

                                                              OF THE SECOND PART

Recitals

A. QLT and Xenova have executed a Confidentiality Agreement dated April 20, 2001
(the "CONFIDENTIALITY AGREEMENT");

B. QLT and Xenova have executed an interim Development and Commercialization
Agreement dated August 13, 2001 setting out their respective obligations for the
development, manufacturing and commercialization of a product incorporating
Xenova's XR9576 compound (the "INTERIM AGREEMENT");

C. The Interim Agreement provides for the negotiation, settlement and execution
of a more comprehensive "Definitive Agreement" consistent with the terms set out
in the Interim Agreement and setting out such additional terms, conditions and
other provisions or amendments, as may be settled by the parties and relating
(among other matters) to the parties' respective obligations for the continued
development, manufacturing and commercialization of a product or products
incorporating Xenova's XR9576 compound; and

D. This Agreement will be the "Definitive Agreement" referred to in the Interim
Agreement, which the parties have negotiated and now desire to settle and
execute on the terms and conditions set out herein.

NOW THEREFORE, in consideration of the mutual covenants and agreements set out
in this Agreement and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:

                   ARTICLE 1 - INTERPRETATION

1.1 DEFINITIONS

For the purposes of this Agreement, the following terms will have the respective
meanings set forth below:

(a)      "ACT" shall mean the United States Food, Drug and Cosmetic Act, as
         amended from time to time, and regulations promulgated thereunder.

(b)      "ACTIVE PHARMACEUTICAL INGREDIENT" shall mean a substance or compound
         that is incorporated in a pharmaceutical product as a therapeutically
         active compound (ingredient).

<PAGE>
                                     - 2 -

(c)      "ADDITIONAL TECHNOLOGY" shall have the meaning set out in Section
         8.3(a).

(d)      "AFFILIATE" shall mean any corporation or other entity that directly,
         or indirectly through one or more intermediaries, controls, is
         controlled by or is under common control with the designated party, but
         only so long as such relationship exists. For purposes of this
         definition, "control" means ownership of at least 50% of the shares of
         stock entitled to vote for directors in the case of a corporation and
         at least 50% of the interests in profits in the case of a business
         entity other than a corporation.

(e)      "ASSERTING PARTY" shall have the meaning set out in Section 17.2(a).

(f)      "AVAILABLE XENOVA INDEPENDENT PROGRAM INFORMATION" shall mean Xenova
         Independent Program Information that would reasonably be expected to
         enable QLT to increase the Net Sales obtained from commercialization of
         the Drug or Product inside the Field inside the Territory except,
         subject to Section 7.5, Xenova Independent Program Information that
         Xenova is restricted from making available to QLT by the terms of any
         agreement with a Third Party.

(g)      "BUSINESS DAY" shall mean any day other than a day which is a Saturday,
         Sunday or a statutory holiday in the Province of British Columbia,
         Canada or in England, United Kingdom.

(h)      "COMMERCIAL LAUNCH" shall mean the first sale of the Finished Product
         in the Field in a country or regulatory jurisdiction in the Territory
         by or on behalf of QLT or an Affiliate or sub-licensee of QLT after
         obtaining all required Regulatory Approvals in such country or
         regulatory jurisdiction.

(i)      "CONFIDENTIAL INFORMATION" shall mean:

         (i)      in the case of Xenova, all Information disclosed by Xenova to
                  QLT concerning the Drug and/or Product, or the use or
                  manufacture thereof, that is:

                  (A)      owned by or licensed to Xenova prior to the Effective
                           Date, or

                  (B)      developed by Xenova after the Effective Date outside
                           the Program and without reference to or use of any
                           Program Information or QLT Confidential Information;
                           and

         (ii)     in the case of QLT, all Information disclosed by QLT to Xenova
                  concerning the Drug and/or Product, or the use or manufacture
                  thereof, or otherwise useful to the Program, that is:

                  (A)      owned by or licensed to QLT prior to the Effective
                           Date, or

                  (B)      developed by QLT after the Effective Date outside the
                           Program and without reference to or use of any
                           Program Information or Xenova Confidential
                           Information;

         provided that "Confidential Information" will not include any
         Information that:

         (iii)    is Program Information;

         (iv)     is in the public domain at the time of disclosure or
                  subsequently enters the public domain without fault on the
                  part of the receiving party;

         (v)      is known by the receiving party from its own sources, as
                  evidenced by the receiving party's written records made prior
                  to the disclosure by the disclosing party ; or

         (vi)     after disclosure, can be demonstrated by the receiving party
                  by written record to have been subsequently provided to the
                  receiving party by a Third Party if and for as long as the
                  receiving party has no reason to believe the Third Party is
                  under any obligation to keep such information confidential.

         A combination of features will not be deemed within the foregoing
         exceptions merely because individual features are in the public domain
         or in the possession of the receiving party unless the combination
         itself is in the public domain or in the possession of the receiving
         party.

(j)      "CONFIDENTIALITY AGREEMENT" shall have the meaning ascribed thereto in
         Recital A.

<PAGE>
                                     - 3 -

(k)      "CROSS-OVER USE" shall mean the use or sale in the Territory of a
         compound, in whatever form, by Xenova (or by an Affiliate, licensee or
         sub-licensee of Xenova or by a Third Party contracting with Xenova or
         an Affiliate of Xenova) that can reasonably be seen as competing
         directly and in a commercially significant way with the use or sale of
         the Product within the Field in the Territory.

(l)      "CROSS-PRICING RISK" shall mean the use or sale in the Territory of a
         compound that incorporates the Drug, in whatever form, that is owned,
         controlled or licensed by Xenova or by an Affiliate of Xenova, that has
         the same or substantially the same chemical structure, or similar
         performance characteristics, to the Product so that the compound could
         reasonably be considered to be substituted in medical practice and
         subject to commercially significant competitive pricing in relation to
         the Product.

(m)      "CTX" shall mean a Notice under the Medicines (Exemption from Licences)
         (Clinical Trials) Order 1995 (S.I. 1995/2808) pursuant to the rules and
         policies of the Medicines Control Agency.

(n)      "DEVELOPMENT COMMITTEE" shall mean the committee constituted by the
         parties in accordance with Section 2.2.

(o)      "DEVELOPMENT TERRITORY" shall mean the Territory and Europe, subject to
         amendment in accordance with Section 4.2(b) following completion of the
         Initial Development.

(p)      "DRUG" will mean Xenova's proprietary active pharmaceutical compound
         currently known as XR9576 (having the chemical structure attached
         hereto as EXHIBIT 1.1(p)) in its pure form (free base form and any
         pharmaceutically acceptable salt form) and any formulations thereof or
         improvements thereto.

(q)      "DRUG SPECIFICATION" shall mean the specifications for the Drug and/or
         Product attached hereto as EXHIBIT 1.1(q), as may be revised from time
         to time by QLT as part of the regulatory process with the approval of
         applicable regulatory authorities.

(r)      "EMEA" shall mean the European Medicines Evaluation Agency or any
         successor agency thereof.

(s)      "EUROPE" will mean the United Kingdom, Ireland, Germany, France, Italy,
         Belgium, The Netherlands, Luxembourg, Liechtenstein, Monaco,
         Switzerland, Austria, Spain, Portugal, Greece, Cyprus, Malta, Norway,
         Sweden, Denmark, Finland, Greenland, Iceland, Andorra, Vatican City,
         San Marino and any other countries that join the European Union during
         the Term, and any successor states or countries thereto.

(t)      "EXISTING XENOVA PROGRAM INFORMATION" shall mean any Information
         generated, developed or owned by, or licensed to, Xenova as of the
         Effective Date that (i) relates to the Drug and/or Product or (ii) is
         necessary or useful to the Program.

(u)      "FDA" shall mean the United States Food and Drug Administration or any
         successor agency thereof.

(v)      "FIELD" will mean any human therapeutic, diagnostic or prophylactic use
         of the Drug in oncology, including oral uses thereof, but excluding the
         ODD Field; provided that if, within [*]after the Effective Date, Xenova
         does not complete a bona fide agreement with a Third Party that grants
         rights to that Third Party to develop and commercialize the Drug in the
         ODD Field in the Territory, then the Field shall include the ODD Field.

(w)      "FINISHED PRODUCT" shall mean the Product, whether alone or in
         combination with one or more other Active Pharmaceutical Ingredient(s),
         that has undergone all stages of production, including packaging in its
         final container and labeling, in accordance with GMPs, for commercial
         distribution to Third Parties.

(x)      "FIRST LINE INDICATION" shall mean Regulatory Approval by the FDA in
         the United States of America for the use of Product as a single agent
         or in combination with a chemotherapeutic agent for the treatment of
         patients who have not received prior cancer chemotherapy.

(y)      "GAAP" shall mean, in the case of accounting to be undertaken by QLT,
         those accounting principles that are recognized as being generally
         accepted in Canada from time to time as set

<PAGE>
                                     - 4 -

         forth by the Accounting Standards Board of the Canadian Institute of
         Chartered Accountants and, in the case of accounting to be undertaken
         by Xenova, those accounting principles that are recognized as being
         Generally Accepted Accounting Principles in the United Kingdom from
         time to time.

(z)      "GMPS" shall mean the current Good Manufacturing Practices as defined
         from time to time by the Act and the applicable FDA regulations,
         policies or guidelines in effect for the manufacture, handling,
         testing, storage and control of pharmaceutical materials as applied to
         "finished products" in the United States of America and the
         corresponding requirements of each applicable jurisdiction in the
         Territory for which QLT informs Xenova from time to time that the
         Product is to be marketed and sold in such jurisdiction.

(aa)     "GLPS" shall mean the current Good Laboratory Practices as defined by
         the Act and the applicable FDA regulations, policies or guidelines in
         effect for the manufacture, handling, testing, storage and control of
         pharmaceutical materials in the United States of America and the
         corresponding requirements of each applicable jurisdiction in the
         Territory for which QLT informs Xenova from time to time that the
         Product is to be marketed and sold in such jurisdiction.

(bb)     "ICH" shall mean the International Conference on Harmonization of
         Technical Requirements for Registration of Pharmaceuticals for Human
         Use.

(cc)     "ICH GUIDELINES" shall mean the guidelines established by the ICH in
         effect from time to time.

(dd)     "IMPROVEMENTS" shall mean, in relation to any Intellectual Property,
         any and all improvements, enhancements, modifications, revisions,
         adaptations and derivative works (whether complete or incomplete), of,
         to, in or based upon such Intellectual Property.

(ee)     "IND" shall mean an Investigational New Drug Application under 21
         C.F.R. Part 312 pursuant to the rules and policies of the FDA.

(ff)     "INFORMATION", for the purposes of this Agreement, shall mean
         scientific, medical, clinical, toxicological, regulatory, marketing,
         financial and commercial information or data developed or acquired by a
         party, including, without limitation, information that forms part of,
         or otherwise relates to, any of the following, namely: the Intellectual
         Property, methodologies, techniques, formulations, compositions,
         compounds, processes, research, specifications, data, technical
         information, instructions, manuals, papers, financial information,
         market research, marketing reports and any other information provided
         by either Party under this Agreement, manufacturing and commercial
         strategies, programs, devices, and all analyses, compilations, data,
         studies, reports or other documents prepared or derived therefrom.

(gg)     "INITIAL DEVELOPMENT" shall have the meaning set out in Section 4.2.

(hh)     "INTELLECTUAL PROPERTY" shall mean any and all rights arising under or
         by virtue of technology, inventions, discoveries, Improvements,
         Patents, copyrights, copyright applications, industrial designs,
         industrial design applications, trademarks, trademark applications,
         mask works, and rights in respect of Know-How, whether or not patented
         or copyrighted or registered or protected, or capable of such
         registration or protection.

(ii)     "INTERIM AGREEMENT" shall have the meaning ascribed thereto in Recital
         B.

(jj)     "INTERIM AGREEMENT EFFECTIVE DATE" shall mean August 13, 2001.

(kk)     "KNOW-HOW" shall mean any and all data, instructions, processes,
         formulae, concepts, ideas, trade secrets, and other information (in
         written or other tangible form) including, without limitation, any
         chemical, pharmacological, toxicological, clinical, assay, control and
         manufacturing data, information relating to biological materials,
         manufacturing or related technology, analytical methodology, chemical
         and quality control procedures, protocols, techniques, improvements and
         results of experimentation and testing.

(ll)     "MANUFACTURING AND SUPPLY REQUIREMENTS" shall have the meaning set out
         in Section 3.12;

(mm)     "MARKETING DEFAULT" shall have the meaning set out in Section 5.3(b).

<PAGE>
                                     - 5 -

(nn)     "MARKETING DEFAULT NOTICE" shall have the meaning set out in Section
         5.3(c).

(oo)     "MARKETING PLAN" shall mean an annual written marketing plan delivered
         by QLT to Xenova on March 31 of each year and setting out, for the 12
         month periods preceding and following the date thereof all activities
         undertaken or proposed to be undertaken by QLT to bring the Product to
         market, to market the Product and maximize the distribution and sale of
         the Product in the Field in the Territory, as amended by QLT from time
         to time in accordance with this Agreement.

(pp)     "NDA" means a complete New Drug Application and all supplements thereto
         filed with the FDA including all documents, data, and other information
         which are necessary for, or included in, FDA approval to market a new
         drug in the United States of America, as more fully defined in 21
         C.F.R. Part 314.5 et seq ;

(qq)     "NET PROCEEDS" shall mean, without duplication, all revenues, receipts,
         monies and the fair market value of all other consideration received or
         collected, directly or indirectly, by Xenova, or any Affiliate, from
         end users or any independent Third Parties as consideration for the
         commercialization and sale of the Product in the Field outside the
         Territory or, as applicable, the ODD Product in the Territory, provided
         however that "Net Proceeds" shall not include, without duplication:

         (i)      bona fide milestone payments, license and sublicense fees or
                  equity investments received or collected by Xenova or any
                  Affiliate of Xenova from any sub-licensee or other Third
                  Party, in exchange for rights to exploit and commercialize the
                  Product or the ODD Product, or

         (ii)     any revenues, receipts or monies received by Xenova, or any
                  Affiliate of Xenova, on account of (as applicable):

                  (A)      research, development or manufacturing expenses,
                           including a commercially reasonable research,
                           development or manufacturing profit mark up,

                  (B)      bona fide commercially reasonable marketing and
                           distribution expenses, and

                  (C)      other bona fide Third Party expenses and financial
                           obligations of Xenova, or any Affiliate of Xenova,

                  attributable to the research, development, commercialization
                  and/or sale of the Product or the ODD Product.

         For greater clarity, it is the intention of the parties that:

         (iii)    in the event Xenova sublicenses to a Third Party the marketing
                  and distribution of the Product in any country outside the
                  Territory or the ODD Product in the Territory, then "Net
                  Proceeds" would comprise revenues received or collected by
                  Xenova in the nature of "running royalties", after deduction
                  (without duplication) of royalty obligations to Third Parties
                  with respect to the Product or the ODD Product and any other
                  Third Party expenditure directly related to unit sales of the
                  Product or the ODD Product;

         (iv)     in the event Xenova enters into a profit share collaboration
                  or similar arrangement with a Third Party in respect of the
                  marketing and distribution of the Product in any country
                  outside the Territory or the ODD Product in the Territory,
                  then "Net Proceeds" would comprise Xenova's share in the
                  profits from that profit share collaboration, after deduction
                  (without duplication, and to the extent not already deducted
                  in calculating Xenova's share in the profits) of royalty
                  obligations to Third Parties with respect to the Product or
                  ODD Product and any other Third Party expenditure directly
                  related to unit sales of the Product or ODD Product; and

         (v)      in the event Xenova directly markets and distributes the
                  Product in any country outside the Territory or the ODD
                  Product in the Territory, then "Net Proceeds" would also
                  include Net Sales, after deduction of bona fide commercially
                  reasonable marketing and distribution expenses and other bona
                  fide commercially reasonable Third Party expenses and
                  financial obligations of Xenova, or any Affiliate,
                  sub-licensee or sub-distributor of

<PAGE>
                                     - 6 -

                  Xenova, attributable to the commercialization and sale of the
                  Product or ODD Product in that country after deduction
                  (without duplication) of royalty obligations to Third Parties
                  with respect to the Product or ODD Product and any other Third
                  Party expenditure directly related to unit sales of the
                  Product or ODD Product (including any royalties paid to the
                  Third Party in connection with such commercialization and
                  sale).

         In any case, in the event that Xenova directly manufactures the Product
         or the ODD Product, commercially reasonable manufacturing profits
         attributable to the manufacturing of the Product or the ODD Product are
         not intended to be included in "Net Proceeds".

(rr)     "NET SALES" shall mean, in respect of either party, without
         duplication, the invoiced sales price of Finished Products in the Field
         in the Territory received by such party, its Affiliates, or
         sub-licensees from end users or any independent Third Parties in bona
         fide arm's length transactions exclusively for money or, where the sale
         is not at arm's length or exclusively for money, the price that would
         have been so invoiced if it had been at arm's length or exclusively for
         money, as the case may be, less the following deductions:

         (i)      credits or allowances, if any, given or made for purchase
                  charge backs, price reductions, returns, rebates, rejections,
                  recalls or destruction of spoiled, damaged, out-dated,
                  returned or otherwise unacceptable Product (voluntarily made
                  or requested or made by an appropriate governmental agency,
                  subdivision or department), quantity, trade, early-settlement
                  and/or cash discounts, allowances and/or incentives on account
                  of or in relation to the invoiced sales price of Finished
                  Products;

         (ii)     any duty, tax, excise or governmental charge upon or measured
                  by the production, sale, transportation, delivery or use of
                  Finished Products related to or based upon sales of Finished
                  Products (including value added taxes);

         (iii)    transportation and handling charges or allowances (freight,
                  postage, shipping and insurance), if any, incurred on account
                  of or in relation to the invoiced sales price of Finished
                  Products and provided the amounts are separately charged on
                  the relevant invoice; and

         (iv)     allowances for bad debts and unpaid accounts in respect of the
                  sale of Finished Products;

         provided that in no event will the total of these above-detailed
         deductions in any calendar quarter during the Term be greater than:

         (v)      for any calendar quarter during the first year of sales, [*]of
                  the cumulative total of the invoiced sales prices for such
                  calendar quarter prior to deduction; and

         (vi)     for each subsequent calendar quarter during the Term of this
                  Agreement, [*] of the cumulative total of the invoiced sales
                  prices for such calendar quarter prior to deduction.

         In the event that Finished Products are sold in a combination with
         other Active Pharmaceutical Ingredient(s):

         (vii)    Net Sales, for purposes of royalty payments on the
                  combination, shall be calculated by multiplying the Net Sales
                  of that combination by the fraction A/B, where A is the gross
                  selling price of such Finished Product sold separately and B
                  is the gross selling price of the combination, and

         (viii)   in the event that no such separate sales of the Finished
                  Product are made by QLT, an Affiliate, sub-licensee and/or
                  sub-distributor, or there is no readily determinable market
                  price, Net Sales for royalty determination shall be calculated
                  by multiplying Net Sales of the combination by the fraction
                  C/(C+D) where C is the fully allocated cost of such

<PAGE>
                                     - 7 -

                  Finished Product and D is the fully allocated cost of such
                  other Active Pharmaceutical Ingredient(s). *

(ss)     "ODD" shall mean oral drug delivery. *

(tt)     "ODD FIELD" shall mean the use of the Drug solely as an oral drug
         delivery system in oncology in the Territory:

         (i)      [*]

         (ii)     [*]

         (iii)    [*]

         (iv)     [*]

         The combined product, which meets each of the criteria as set out in
         this Section 1.1(tt) is hereinafter referred to in this Agreement as
         the "ODD PRODUCT".

(uu)     "PATENT" shall mean:

         (i)      an issued patent or a patent application;

         (ii)     all continuations and continuation(s)-in-part to the issued
                  patent or patent application set out in clause (i);

         (iii)    all divisions, patents of addition, reissues, renewals and
                  extensions of any of the patent, patent application,
                  continuations and continuation(s)-in-part set out in clauses
                  (i) and (ii); and

         (iv)     all foreign counterparts of any of the foregoing.

(vv)     "PERSON" shall mean and include any individual, corporation,
         partnership, firm, joint venture, syndicate, association, trust,
         government body, and any other form of entity or organization.

(ww)     "PHASE I" shall mean that portion of the FDA submission and approval
         process and that stage of clinical development which provides for the
         first introduction into humans of a Drug and/or Product for the purpose
         of determining human toxicity, metabolism, absorption, elimination and
         other pharmacological action as more fully defined in 21 C.F.R. Part
         312.21(a), and such equivalent regulations or standards of countries
         outside the United States of America as may be applicable to activities
         conducted hereunder.

(xx)     "PHASE II" shall mean that portion of the FDA submission and approval
         process and that stage of clinical development which provides for the
         initial trials of a Drug and/or Product on a limited number of patients
         for the purposes of determining dose and evaluating safety and
         preliminary efficacy in the proposed therapeutic indication, as more
         fully defined in 21 C.F.R. Part 312.21(b), and such equivalent
         regulations or standards of countries outside the United States of
         America as may be applicable to activities conducted hereunder.

(yy)     "PHASE ILB" shall mean a Phase II small scale efficacy study on an
         insufficient number of patients to support Regulatory Approvals in the
         proposed therapeutic indication.

(zz)     "PHASE III" shall mean that portion of the FDA submission and approval
         process and that stage of clinical development which provides for
         expanded trials of a Drug and/or Product on sufficient numbers of
         patients to establish the safety and efficacy of a Drug and/or Product,
         to support regulatory approval in the proposed therapeutic indication,
         as more fully defined in 21 C.F.R. Part 312.21(c), and such equivalent
         regulations or standards of countries outside the United States of
         America as may be applicable to activities conducted hereunder.

<PAGE>
                                     - 8 -

(aaa)    "PHASE IV" shall mean the stage of clinical development that includes
         those post-marketing studies, usually not required as a condition for
         approval, that may be conducted to delineate additional information
         about the risks, benefits, and optimal use of a Drug and/or Product.

(bbb)    "PRODUCT" shall mean any product for use in the Field in the Territory
         which incorporates the Drug in any formulation or dosage form, and any
         improvements to such product, including products having a different
         strength (i.e., a different amount of active ingredient delivered in
         the same dosage form), or having only cosmetic differences such as
         size, colour, shape, etc., or similar non-therapeutic changes.

(ccc)    "PROGRAM" shall mean all activities undertaken by the parties, whether
         alone or together or through Third Parties for the development of the
         Product in the Development Territory, in accordance with the terms and
         conditions of the Interim Agreement and this Agreement, which shall
         include the Initial Development and the regulatory, clinical testing
         and other development activities summarized in EXHIBIT 1.1(CCC).

(ddd)    "PROGRAM INFORMATION" shall mean:

         (i)      any Information generated, developed or acquired by or on
                  behalf of either party under or as a result of the Program;

         (ii)     any Available Xenova Independent Program Information;

         (iii)    any other Xenova Independent Program Information generated,
                  developed or acquired by or on behalf of Xenova with reference
                  to or use of:

                  (A)      QLT's Confidential Information, or

                  (B)      any Information referenced under clause (i) owned by
                           QLT; and

         (iv)     any Existing Xenova Program Information,

         provided that, notwithstanding the foregoing, Program Information will
         not include any trademarks.

(eee)    "QLT PATENTS" shall mean any and all Patents developed or acquired by
         or on behalf of QLT that are required for QLT to continue the Program
         and under which Xenova would require a license or sub-license to
         lawfully develop, make, have made, use, sell, have sold, offer for
         sale, import or export the Drug and/or the Product for commercial sale:

         (i)      in the Field, outside the Territory; or

         (ii)     outside the Field, anywhere, world-wide;

         as contemplated by and in accordance with the terms and conditions set
         out in this Agreement.

(fff)    "QLT'S PROGRAM INFORMATION" shall mean any Program Information
         generated, developed or acquired by or on behalf of QLT under or as a
         result of the Program.

(ggg)    "RECALL" shall mean:

         (i)      any action by QLT, Xenova or any of their respective
                  Affiliates, to recover possession of the Drug, Product or
                  Finished Product shipped to Third Parties; or

         (ii)     any action by the FDA or any other applicable governmental or
                  regulatory agency in any jurisdiction, to detain or destroy
                  the Drug, Product or Finished Product or prevent release of
                  the Drug, Product or Finished Product.

         "RECALLED" and "RECALLING" shall have comparable meanings.

(hhh)    "REGISTRATION PACKAGE" shall mean:

         (i)      Modules 1-5 of the ICH M4 Common Technical Document submitted
                  to the FDA in respect of the Product, the Table of Contents
                  summary of which is attached as EXHIBIT 1.1(HHH) -
                  REGISTRATION PACKAGE for illustrative purposes; and

<PAGE>
                                     - 9 -

         (ii)     all data generated from the studies specified by the FDA
                  during Xenova's meeting with the FDA on 25 April, 2001 (which
                  studies are listed at the end of EXHIBIT 1.1(HHH) -
                  REGISTRATION PACKAGE), unless it is later determined that any
                  of the studies are no longer required or would not be required
                  by the FDA.

(iii)    "REGULATORY APPROVAL" shall mean any and all approvals, licenses,
         registrations or authorizations of any federal, state, provincial or
         local regulatory agency, department, bureau or other governmental
         entity, necessary for the manufacture, use, storage, import, export,
         transport, marketing, distribution or sale of the Drug and/or the
         Product in a country or regulatory jurisdiction.

(jjj)    "SECOND LINE INDICATION" shall mean Regulatory Approval by the FDA in
         the United States of America for the use of the Product as a single
         agent or in combination with a chemotherapeutic agent for the treatment
         of patients after failure of first line cancer chemotherapy.

(kkk)    "SERIOUS ADVERSE EVENT" shall mean any Adverse Event (as defined in
         Section 4.8(a) that (at any dose):

         (i)      results in death;

         (ii)     is life-threatening (i.e., the patient was at risk of death at
                  the time of the event);

         (iii)    requires inpatient hospitalization or prolongation of existing
                  hospitalization;

         (iv)     results in persistent or significant disability/incapacity;

         (v)      results in congenital anomaly/birth defect; or

         (vi)     other medically significant events that may jeopardize the
                  patient or may require intervention to prevent one of the
                  outcomes listed in the definition above should be considered
                  serious. Examples of such events are intensive treatment for
                  allergic bronchospasm, blood dyscrasias or convulsions that do
                  not result in hospitalization, or development of drug
                  dependency or drug abuse.;

(lll)    "SEIZURE" shall mean any action by the FDA or any other applicable
         governmental or regulatory agency in any jurisdiction, to detain or
         destroy the Drug, Product or Finished Product or prevent release of the
         Drug, Product or Finished Product. "Seized" and "SEIZING" shall have
         comparable meanings.

(mmm)     "SPECIFIC ACTION" shall have the meaning set out in Section 5.2(c).

(nnn)    "SPENDING CAP" shall have the meaning set out in Section 4.3.

(ooo)    "TERM" shall have the meaning set out in Section 16.2(a).

(ppp)    "TERRITORY" shall mean the United States of America (including the US
         Territories), Canada and Mexico.

(qqq)    "THIRD PARTY" shall mean any Person other than a party to this
         Agreement or, where the context permits or requires, other than an
         Affiliate of a party to this Agreement;

(rrr)    "THIRD PARTY LICENSES" shall mean any agreement(s), whether written or
         oral, to which Xenova is a party and under which Xenova is expressly
         granted and obtains legal rights to use Intellectual Property of any
         Person other than Xenova in the manner to be used by Xenova or QLT in
         the development, manufacturing, marketing, supply and other
         commercialization activities contemplated by this Agreement;

(sss)    "US TERRITORIES" shall mean the territories and possessions of the
         United States of America, including, the Commonwealth of Puerto Rico,
         the territories of Guam, American Samoa, and the Virgin Islands, the
         Trust Territory of the Pacific Islands, and the possessions of Midway
         and Wake Islands;

(ttt)    "VALID CLAIM" shall mean, with respect to each country in the
         Territory:

         (i)      a claim of an issued, unexpired patent; or

<PAGE>
                                     - 10 -

         (ii)     a claim of a pending patent application for a patent, provided
                  the application has not been pending for more than [*],

         that has not been, as applicable:

         (iii)    permanently revoked, held invalid, unpatentable or
                  unenforceable by a final decision of a court or governmental
                  agency of competent jurisdiction, which decision is
                  unappealable or was not appealed within the time allowed
                  therefor;

         (iv)     admitted in writing to be invalid or unenforceable by the
                  holder(s) by reissue, disclaimer or otherwise; or

         (v)      lost through an interference proceeding.

(uuu)    "XENOVA INDEPENDENT PROGRAM" shall mean any studies or other activities
         conducted by or on behalf of Xenova:

         (i)      in the Field, outside the Territory (subject to QLT's
                  exclusive development rights in the Development Territory
                  under Article 4, for as long as those rights continue); or

         (ii)     outside the Field, including in the field of ODD, anywhere,
                  world-wide;

         relating to the Drug or the Product or the use or manufacture thereof,
         provided that any such studies or other activities shall not be in
         breach of the restrictions set out in Article 6 or the exclusivity of
         any exclusive license granted by Xenova to QLT under this Agreement.

(vvv)    "XENOVA INDEPENDENT PROGRAM INFORMATION" shall mean any Information
         generated, developed or acquired by or on behalf of Xenova under or as
         a result of a Xenova Independent Program.

(www)    "XENOVA PATENTS" shall mean:

         (i)      all Patents listed in EXHIBIT 1.1(WWW); and

         (ii)     any and all Patents hereafter owned by or licensed to Xenova,
                  including any Patents to any Improvements to the Patents
                  listed in EXHIBIT 1.1(WWW), under which QLT would require a
                  license or sub-license to lawfully develop, make, have made,
                  use, sell, have sold, offer for sale, import or export (from
                  one part of the Territory to another) the Drug and/or the
                  Product for commercial sale in the Field in the Territory (and
                  the Development Territory for as long as QLT's development
                  rights under Article 4 continue), as contemplated by and in
                  accordance with the terms and conditions set out in this
                  Agreement.

(xxx)    "XENOVA'S PROGRAM INFORMATION" shall mean any Program Information that
         is not QLT Program Information.

1.2      OTHER DEFINITIONS

Any words defined elsewhere in this Agreement shall have the meaning assigned
thereto.

                        ARTICLE 2 - PRODUCT DEVELOPMENT

2.1      PROGRAM COMMENCEMENT

The parties acknowledge and agree that, following execution of the Interim
Agreement, the parties commenced the Program in accordance with the terms and
conditions of the Interim Agreement and, upon execution of this Agreement, they
shall continue the Program in accordance with the terms and conditions of this
Agreement.

2.2      DEVELOPMENT COMMITTEE

(a)      Establishment. The parties acknowledge that they have, in accordance
         with the terms and conditions of the Interim Agreement, established and
         shall continue under this Agreement, a Development Committee.

<PAGE>
                                     - 11 -

(b)      Mandate. The Development Committee shall have authority over the
         following areas:

         (i)      promoting the pooling of expertise and information exchange by
                  the parties with respect to the development of the Drug and
                  the Product under the Program (including the work conducted by
                  Xenova as contemplated in Section 4.4);

         (ii)     overview of QLT's strategies for clinical, regulatory and
                  manufacturing issues within the Development Territory,
                  including the selection of primary and alternative Third Party
                  contract manufacturers;

         (iii)    receiving overviews of Xenova's strategies for clinical,
                  regulatory and manufacturing issues within Europe and the rest
                  of the world, including overviews of the selection of primary
                  and alternative Third Party contract manufacturers [*];

         (iv)     receiving reports of marketing matters from QLT in respect of
                  the Territory and from Xenova in respect of Europe and the
                  rest of the world [*] and

         (v)      consideration of and making of decisions on any other material
                  matters set out in this Agreement that the parties agree shall
                  be referred to the Development Committee for determination.

(c)      Number of Members. The Development Committee shall consist of an equal
         number of members appointed by each party. Each member shall have the
         appropriate background and expertise to contribute to the Development
         Committee. Each party may change its members on the Development
         Committee from time to time.

(d)      Chair and Secretary. Unless the parties otherwise agree, QLT shall
         appoint the chair of the Development Committee from among its members
         on the Development Committee and Xenova shall appoint the secretary of
         the Development Committee from among its members on the Development
         Committee. The Chairman and Secretary shall not have any additional or
         casting vote.

(e)      Meetings. The Development Committee shall meet at a minimum 4 times per
         calendar year, at least once in person and otherwise by videoconference
         or telephone conference, provided that the parties may, upon mutual
         agreement of the Parties following completion of the Initial
         Development, dissolve the Development Committee or reduce the number of
         meetings held per calendar year.

(f)      Voting. Each member of the Development Committee shall have one vote.
         In the event of a tie vote, either party may refer the matter to their
         respective Chief Executive Officers for resolution. Notwithstanding the
         foregoing, the representatives of QLT shall collectively have one
         additional tie-breaking or casting vote with respect to:

         (i)      all matters relating to any clinical studies and/or
                  development activities (including regulatory and manufacturing
                  activities) for the Drug and the Product in the Field in the
                  Development Territory, but only until completion of the
                  Initial Development, or thereafter in the Territory; and

         (ii)     all matters relating to any commercialization activities for
                  the Product in the Field in the Territory, except in the event
                  that Xenova has exercised its rights (if any) under Section
                  5.3(d)).

         When QLT wishes to exercise the tie-breaking or casting vote in respect
         of the matters set out in clauses (i) and (ii), QLT shall first refer
         the matter to the Chief Executive Officers of each party for
         resolution. Failing resolution, QLT's tie-breaking or casting vote
         shall be exercised by the Chief Executive Officer of QLT (or another
         Executive Officer of QLT as his or her designee), irrespective of
         whether that Executive Officer is a regular member of the Development
         Committee. With respect to any other matters for which the Development
         Committee has a tie vote, such deadlock shall be referred for
         resolution in accordance with Sections 17.2 or 17.3, as applicable.

<PAGE>
                                     - 12 -

         While the general mandate of the Development Committee to promote,
         review, receive and consider matters shall continue for the Term of
         this Agreement, its powers shall be limited as follows:

         (iii)    [*];

         (A)      (iv)              [*].

(g)      Sub-Committees. The Development Committee may, from time to time in its
         discretion, form sub-committees (standing or ad hoc) to consider and/or
         to provide guidance and oversight on specific development matters (for
         example, the Development Committee will set up a European development
         sub-committee to consider the European aspects of the Program).

                   ARTICLE 3 - CMC, MANUFACTURING AND SUPPLY

3.1      OVERVIEW

In connection with the rights and licenses granted by Xenova to QLT under this
Agreement, Xenova will transfer or otherwise make available to QLT the Drug, the
Product and all Information as are and to the extent necessary or useful for QLT
to carry out its activities as contemplated by this Article 3.

3.2      DEVELOPMENT SUPPLY

Subject to and in accordance with the provisions of this Agreement (including
Section 8.4), Xenova hereby grants to QLT the exclusive right and QLT shall have
the responsibility to manufacture and supply, at QLT's cost, the Drug and the
Product (with the right to sub-contract the manufacture and supply to QLT of
Drug and Product) for development of the Drug and the Product in the Field in
the Development Territory, on the terms and conditions set out in this
Agreement. For greater certainty, the parties agree that QLT may manufacture or
have manufactured the Drug and the Product at any location, world-wide, provided
that all such quantities of the Drug and the Product shall be used solely for
development activities in the Field in the Territory and for Initial Development
activities in the Field in Europe. In connection with the foregoing grant of
rights, the parties acknowledge and agree as follows:

(a)      Drug. Xenova has transferred or will complete the transfer, as the case
         may be, to QLT of approximately [*] of the Drug in its possession or
         control, including quantities of the Drug ordered from [*] but not
         released as of the Effective Date. Xenova will supply such quantities
         of the Drug to QLT at no charge to QLT.

(b)      Product. Xenova has transferred or will complete the transfer, as the
         case may be, to QLT of at least [*] of the Product in its possession or
         control, including quantities of the Product ordered from [*] but not
         released as of the Effective Date, and any other ampoules of the
         Product not required for Xenova's activities under the Program or for
         any Xenova Independent Program. Xenova will supply such quantities of
         the Product to QLT at no charge to QLT.

3.3      COMMERCIAL SUPPLY IN THE TERRITORY

(a)      Subject to and in accordance with the provisions of this Agreement,
         including Section 8.4 and Xenova's rights under Section 5.3(d), Xenova
         hereby grants to QLT the exclusive right and QLT shall have the
         responsibility to manufacture and supply the Drug and/or the Product
         (with the right to sub-contract the manufacture and supply to QLT of
         the Drug and the Product) for commercialization and sale of the Drug
         and/or Product in the Field in the Territory, on the terms and
         conditions set out in this Agreement.

(b)      Subject to the terms and conditions in this Agreement, Xenova agrees
         that it will not, and will not grant to any Person any rights to
         conduct any activity that is and remains exclusively licensed to QLT
         under this Agreement.

<PAGE>
                                     - 13 -

3.4      XENOVA RETAINS ALL OTHER MANUFACTURING RIGHTS

Except as granted to QLT under this Article 3, Xenova will retain all rights to
manufacture and supply the Drug and/or the Product. For greater certainty, the
parties agree that Xenova may manufacture or have manufactured the Drug and/or
the Product at any location, world-wide, provided that all such quantities of
the Drug and the Product shall be used solely for commercialization and sale by
Xenova, its affiliates and its licensee(s):

(a)      in the Field outside the Territory; or

(b)      outside the Field, anywhere, world-wide.

3.5      TRANSFER OF TECHNOLOGY

In order to ensure a smooth and efficient transfer from Xenova to QLT of
responsibility for the manufacture and supply of the Drug and the Product for
Initial Development, for further development under the Program in the Field in
the Development Territory and commercial sale of the Drug and the Product in the
Field in the Territory, the parties acknowledge and agree as follows:

(a)      Safety. Xenova has provided to QLT copies of the Material Safety Data
         Sheets for the Drug and the Product and has provided QLT with all other
         relevant information available and known to Xenova concerning the
         safety, handling, use, disposal and environmental effects of the Drug
         and the Product or as may be necessary or useful to conduct the
         Program.

(b)      Manufacturing Information. Xenova will provide to QLT all Information
         relating to the manufacture, testing and supply of the Drug and the
         Product reasonably necessary or useful for QLT to assume conduct of the
         manufacturing activities contemplated by this Article 3, including,
         without limitation, copies of:

         (i)      all specifications and formulations for the Drug and the
                  Product in addition to the Drug Specification;

         (ii)     all manufacturing instructions, protocols and procedures for
                  the manufacture and processing of the Drug and the Product,
                  including any test data, development reports and master batch
                  records,

         (iii)    all test data, analytical reports, protocols and procedures
                  for raw material testing, in-process testing, release testing
                  and any other analytical testing required for the manufacture
                  and processing of the Drug and the Product, and

         (iv)     all validation reports (if any) in support of the
                  qualification and validation of facilities to GMPs for the
                  manufacture and processing of the Drug and the Product,
                  including reports relating to installation qualification,
                  operational qualification, process validation, sterilization
                  validation and cleaning validation.

(c)      Samples. Xenova shall provide to QLT manufacturing batch samples of the
         Drug and the Product provided to it by its manufacturing contractors
         (if available) and samples of all reference standards reasonably
         necessary for QLT to assume conduct of the manufacturing activities
         contemplated by this Article 3.

3.6      MANUFACTURING QUALITY

(a)      Except for the development activities to be conducted under the
         Program, the sharing of Program Information under this Agreement, and
         the provision of the development supply of the Drug and/or Product by
         Xenova to QLT in accordance with Section 3.2, QLT and Xenova will each
         be responsible for the qualification and validation of their respective
         Drug and/or Product manufacturers' facilities to GMPs for the
         manufacture and processing of the Drug and/or the Product.

(b)      Each party shall use commercially reasonable efforts to ensure that any
         Person with whom it contracts for the manufacture and processing of the
         Drug and/or the Product for clinical or commercial use shall undertake
         to comply with the following requirements:

<PAGE>
                                     - 14 -

         (i)      all manufacturing and processing activities shall be conducted
                  in a competent fashion and in accordance with GMPs, any
                  quality system agreement executed by the parties, the
                  applicable specification and the applicable validation
                  protocol or master batch record, as the case may be;

         (ii)     all manufacturing facilities, equipment, utilities and systems
                  used for the manufacture and processing of the Drug and/or the
                  Product shall comply with GMPs or GLPs, as applicable,
                  including installation qualification and operational
                  qualification requirements, requirements for environmental
                  monitoring in manufacturing areas and requirements relating to
                  the conveyance of bulk materials within such facilities;

         (iii)    all analytical work shall be performed in a manner and in a
                  laboratory which complies with GMPs and all related testing
                  procedures and equipment shall be validated prior to use;

         (iv)     all personnel furnished to perform the work shall be qualified
                  to perform the tasks and functions which they are assigned;

         (v)      all Drug and/or Product manufactured or processed shall
                  satisfy the applicable specification as at the date of
                  delivery;

         (vi)     all Finished Product manufactured or processed, and any other
                  batch of the Product designated in advance as a batch to be
                  used as clinical or commercial supplies, shall be
                  merchantable, free from defects and shall not be adulterated
                  or misbranded within the meaning of the Act, or any equivalent
                  legislation in any jurisdiction in which the Finished Product
                  is to be marketed and sold;

         (vii)    all Drug and/or Product manufactured or processed shall be
                  delivered free and clear of any security interests, liens,
                  claims, pledges or encumbrances of any kind or nature;

         (viii)   all transportation and storage of raw materials, Drug and
                  Product shall be performed in compliance with GMPs and in
                  accordance with the applicable specification, any applicable
                  quality system agreement and applicable shipping instructions;

         (ix)     all manufacturing and processing activities, including waste
                  disposal, shall be performed in accordance with applicable
                  United States of America and other foreign federal, state,
                  provincial and local laws, regulations and bylaws, including,
                  without limitation, all environmental laws;

         (x)      all applicable licenses, permits, certificates, authorizations
                  or approvals from all applicable United States of America and
                  other foreign federal, state, provincial, local and other
                  authorities necessary to conduct its business and manufacture,
                  package, label, ship, export, import and deliver the Drug
                  and/or the Product shall have been obtained and shall be
                  maintained in full force and effect;

         (xi)     appropriate records and reports shall be recorded and
                  maintained and shall be accurate and complete in all material
                  respects; and

         (xii)    no Intellectual Property of any Third Party shall be used in
                  the manufacture and processing of the Drug and/or the Product,
                  except with prior written consent of such Third Party.

3.7      MANUFACTURING CO-OPERATION

(a)      QLT and Xenova acknowledge and agree that, notwithstanding their
         respective rights and responsibilities under this Agreement, they
         desire to minimize unnecessary costs and time delays in their
         respective development and commercialization activities world-wide,
         particularly manufacturing and supply aspects including the
         qualification and validation of facilities for the manufacture and
         processing of the Drug and the Product.

(b)      In connection with the foregoing, the parties agree that [*]:

<PAGE>
                                     - 15 -

         (i)      the manufacturing facility and its equipment, utilities and
                  systems used for the manufacture and processing of the Drug
                  and/or the Product shall comply with GMPs or GLPs, as
                  applicable, including installation qualification and
                  operational qualification requirements, requirements for
                  environmental monitoring in manufacturing areas and
                  requirements relating to the conveyance of bulk materials
                  within such facilities, for the jurisdictions where the Drug
                  and/or Product is to be marketed and sold;

         (ii)     the manufacturing facility has obtained and maintains in full
                  force and effect all applicable licenses, permits,
                  certificates, authorizations or approvals from all applicable
                  United States of America and other foreign federal, state,
                  provincial, local and other authorities necessary to conduct
                  its business and manufacture, package, label, ship, export,
                  import and deliver the Drug and/or the Product;

         (iii)    the manufacturing facility has the capability to manufacture
                  and process the Drug and/or the Product in a competent fashion
                  and in accordance with GMPs, any quality system agreement
                  executed by the parties, the applicable specification and the
                  applicable validation protocol or master batch record, as the
                  case may be;

         (iv)     the manufacturing facility has the production capacity to
                  manufacture and process the Drug and/or the Product in
                  accordance with the appointing party's projected forecasts for
                  the supply of the Drug and/or the Product; and

         (v)      the manufacturing facility has the capability to manufacture
                  and process the Drug and/or the Product at a similar or better
                  quality or upon similar or better commercial terms than an
                  alternate site identified by the appointing party.

(c)      [*]Xenova shall provide an introduction for QLT to [*] so that QLT may
         establish its own working relationship and enter into appropriate
         agreements with [*] for the development, manufacture and supply of the
         Drug and/or the Product for QLT for development of the Drug and/or the
         Product in the Field in the Development Territory and for QLT for
         commercialization of the Drug and/or the Product in the Field in the
         Territory.

(d)      Xenova and QLT agree that they will use commercially reasonable efforts
         to ensure that the manufacturing processes, in-process analytical
         methods, release analytical methods and specifications used in the
         manufacture and processing of the Drug and the Product by or for QLT
         and those used in the manufacture and processing of the Drug and the
         Product by or for Xenova are as similar as possible.

(e)      Xenova and QLT agree to co-operate fully to ensure that all inspections
         and audits by regulatory authorities of each party's manufacturing
         facilities used in the manufacture and processing of the Drug and/or
         the Product are conducted as required and that appropriate support is
         provided by the parties for investigations and implementations of
         Recalls.

(f)      In the event that [*] relating to the subject matter of this Agreement,
         and in the event that QLT's (or QLT [*]) [*] is in material breach of
         its Manufacture and Supply Requirements, Xenova may deliver written
         notice to QLT (or QLT's [*]) of a curable material breach of the
         Manufacturing and Supply Requirements by QLT's (or QLT's [*]) [*], in
         which case QLT or QLT's [*] shall have a period of 6 months to ensure
         that the [*]:

         (i)      cures the material breach within the 6 month period; or

         (ii)     if the breach is not capable of cure within the 6 month cure
                  period, to diligently commence pursuing a cure within one
                  month following such notice and continue to diligently pursue
                  the cure to completion within a reasonable period,

         to [*]. If the [*] fails to cure the material breach with the 6 month
         cure period or such longer reasonable period, or if the material breach
         of the Manufacturing and Supply Requirements by QLT's (or QLT's [*])[*]
         is one that, by its nature, is incurable, Xenova may, in its sole
         discretion:

         [*]

* material has been omitted and filed separately with the Commission
<PAGE>
                                     - 16 -

         If the parties are in dispute over whether Xenova is entitled to
         exercise either of the rights stated in Sections 3.73.7(f)(i)or
         3.73.7(f)(i), either party may refer the dispute to expedited
         arbitration under Section 17.2.

3.8      EQUIVALENCY OF FINISHED PRODUCT

(a)      QLT and Xenova will use commercially reasonable efforts to ensure that
         the Finished Product manufactured and used for:

         (i)     Initial Development in the Development Territory (by QLT and/or
                 its Third Party contractors);

         (i)     commercial supply in Europe (by Xenova and/or its Third Party
                 contractors); and

         (ii)    commercial supply in the Territory (by QLT and/or its Third
                 Party contractors),

         is manufactured using the same method and meets the same Drug
         Specifications, provided that neither party will be required to utilize
         more than commercially reasonable efforts to effect a change in the
         Drug Specifications once implemented by that party or that would
         require the destruction or non-use of Finished Product that has already
         been manufactured.

3.9      RECIPROCAL RIGHT OF INSPECTION

Each of Xenova and QLT shall have the right, on reasonable written notice to the
other, to conduct periodic inspections of the other party's records and
manufacturing facilities, as follows:

(a)      Manufacturing Facilities. Each party may, no more than once per
         calendar year (unless there exist ongoing manufacturing problems,
         sterility failures, recalls or other similar events, in which case such
         inspections may take place on a more frequent basis), itself, or
         through its representatives, audit and inspect that portion of the
         manufacturing facilities used by or for the other party in the
         manufacture and processing of the Drug and the Product, including, to
         the extent possible with the other party's assistance, the
         manufacturing facilities of the other party's Third Party manufacturers
         of the Drug and/or the Product.

(b)      Records. Each party may itself, or through its representatives, audit,
         review and make such copies of records and documents relating to the
         manufacture and processing of the Drug and the Product as reasonably
         necessary for the purpose of assessing the other party's compliance
         with GMPs and its contractual obligations regarding the manufacture and
         processing of the Drug and the Product, including, to the extent
         possible with the other party's assistance, any records and documents
         maintained at the offices and manufacturing facilities of the other
         party's Third Party manufacturers of the Drug and/or the Product or
         their representatives.

Any audit, inspection or review under this section shall be conducted during
regular business hours at a time and date mutually agreeable between the
parties. Each party shall provide the other party with reasonable co-operation
in carrying out any inspections or audits conducted pursuant to this Section
3.9.

3.10     IMPLEMENTATION OF RECALLS

(a)      If either party has grounds to implement a Recall, the party
         recommending such Recall shall immediately notify the other party in
         writing of such grounds and identify those batches of Product that may
         be affected.

(b)      QLT and its designees shall have the sole responsibility to implement
         any Recall of any Drug and/or Product manufactured and processed by or
         for QLT or any Drug and/or Product sold in the Field in the Territory.
         Xenova shall provide QLT and its designees with reasonable co-operation
         and take such other actions in connection therewith as QLT and its
         designees may reasonably request in implementing any Recall of the Drug
         and/or the Product by QLT and responding to any Seizure of the Drug
         and/or the Product in the Field in the Territory.

<PAGE>
                                     - 17 -

(c)      Xenova and its designees shall have the sole responsibility to
         implement any Recall of any Drug and/or Product manufactured and
         processed by or for Xenova or any Drug and/or Product sold in the Field
         outside the Territory or outside the Field world-wide. QLT shall
         provide Xenova and its designees with reasonable co-operation and take
         such other actions in connection therewith as Xenova and its designees
         may reasonably request in implementing any Recall of the Drug and/or
         the Product by Xenova and responding to any Seizure of the Drug and/or
         the Product in the Field outside the Territory or outside the Field
         worldwide.

3.11     MUTUAL LIABILITY FOR RECALL

In the event of a Recall, Seizure or other similar governmental action with
respect to the Drug and/or the Product arising from breach of this Agreement by
either party, the breaching party shall reimburse or credit the non-breaching
party, at the option of the non-breaching party, for reasonable out of pocket
expenses expended by the non-breaching party and its designees as a result of
the Recall or Seizure, except as otherwise specifically set out in this
Agreement.

3.12     MANUFACTURE AND SUPPLY AGREEMENT REQUIREMENTS

Each of Xenova and QLT shall include, in agreements with Third Parties for the
manufacture and processing of the Drug and/or the Product, terms and conditions
that:

[*](collectively, the "MANUFACTURING AND SUPPLY REQUIREMENTS").

                ARTICLE 4 - CLINICAL AND REGULATORY DEVELOPMENT

4.1      GRANT OF RIGHTS

Except for Drug and Product provided by Xenova to QLT under Section 3.2, Xenova
hereby grants to QLT the exclusive right and QLT shall have the responsibility
to conduct (without the right to sub-license but with the right to sub-contract)
at QLT's cost, all clinical studies and other development activities for the
Drug and/or the Product in the Field in the Territory and (for as long as QLT is
responsible for Initial Development) in Europe, on and subject to the terms and
conditions set out in this Agreement (including Sections 5.2 and 8.4).

From time to time during the period in which QLT is responsible for Initial
Development, Xenova may request that [*]. Xenova may proceed with such studies
and/or activities if the same have been expressly approved in advance as
evidenced by a written resolution of the Development Committee.

4.2      INITIAL DEVELOPMENT IN THE DEVELOPMENT TERRITORY

(a)      QLT will be responsible for conducting, at its cost, clinical and other
         studies for the development of the Drug and/or the Product in the Field
         in the Development Territory. In particular, QLT will work diligently
         and utilize sound and reasonable scientific, business and medical
         practice and judgement to:

         (i)      conduct the Program in accordance with the development plan
                  set out in EXHIBIT 1.1(CCC);

         (ii)     file with the FDA an NDA for the Product in the Field in the
                  United States of America in a timely manner; and

         (iii)    deliver to Xenova the Registration Package for use by Xenova
                  in support of its registration of the Product in Europe;

         (collectively, the "INITIAL DEVELOPMENT").

(b)      The Initial Development shall be considered completed upon the earlier
         to occur of:

<PAGE>
                                     - 18 -

         (i)      QLT spending an amount equal to the Spending Cap on the
                  Initial Development and declining to spend any further amounts
                  thereon; or

         (ii)     the later of:

                  (A)      delivery by QLT to Xenova of the Registration Package
                           as set out above; or

                  (B)      receipt by QLT of the first NDA approval for the
                           Product in the Field;

         whereupon:

         (iii)    Europe will be excluded from the geographic scope of the
                  Development Territory and QLT's rights and obligations with
                  respect to Initial Development in Europe only shall cease;

                  Notwithstanding the foregoing, QLT shall have the right to
                  continue to conduct all clinical studies and other development
                  activities for the Drug and/or Product in the Field in Europe
                  which have been approved by the Development Committee; and

         (iv)     QLT will have no further obligations to Xenova with respect to
                  development of the Product in the Field in Europe, except for
                  the assistance provisions set out in Section 4.7 and elsewhere
                  in this Agreement.

4.3      QLT'S CONTRIBUTIONS

Xenova acknowledges and agrees that in no event will QLT, in performing its
obligations under this Agreement, be obligated to expend in excess of [*] (the
"SPENDING CAP") on the Initial Development. In the event that QLT, in conducting
the Initial Development, expends or anticipates expending an amount that exceeds
the Spending Cap, the parties will reasonably discuss in good faith, having
regard to the contributions of each party, some form of cut-back in the Program
in order to maintain Initial Development costs within the Spending Cap, which
may include resource re-allocation, alterations in the development exclusivity
provisions for Europe, cost sharing or other arrangements for the continuation
of the Program. This provision will not be subject to (expedited or traditional)
arbitration in the event that the parties do not in good faith come to any
resolution hereunder and, in such case, Section 4.2(b) will apply.

4.4      PRIOR PROGRAM COMMITMENTS

Xenova shall be responsible for and shall satisfy all obligations, liabilities
and commitments pertaining to the development of the Drug and/or Product
accruing prior to the Effective Date. In addition, Xenova shall be responsible,
at its own cost, to complete the following contractually-committed activities
which are ongoing as of the Effective Date:

(a)      complete the ongoing clinical studies and non-clinical studies
         (including completion of the study reports therefor) set out in EXHIBIT
         1.1(HHH) except the Phase IIb study being conducted at MD Anderson
         Medical Centre; and

(b)      [*]

The parties acknowledge that they have discussed ongoing responsibility for
ongoing stability and analytical studies for the Drug and/or the Product at [*],
and have determined that [*].

4.5      DEVELOPMENT PROGRESS REPORTS

Notwithstanding any reports prepared by the Development Committee during the
Term, each party will deliver to the other party annual progress reports
regarding such party's research and development activities relating to the Drug
and/or the Product, which shall include:

(a)      a summary of such party's research and development activities during
         the preceding calendar year and its anticipated activities in the
         forthcoming calendar year; and

(b)      in the case of the report to be delivered by QLT to Xenova only, until
         completion of the Initial Development pursuant to Section 4.2(b), a
         summary of such party's proposed budgets for such research and
         development activities, as they become available.

* material has been omitted and filed separately with the Commission
<PAGE>
                                     - 19 -

In the case of the summary to be provided by Xenova to QLT under clause (a),
subject to Section 7.5, Xenova may limit its disclosure where such disclosure is
[*].

4.6      REGULATORY RESPONSIBILITY IN THE TERRITORY

(a)      Grant of Rights. Xenova hereby grants to QLT, for the Term, the
         exclusive right (to the exclusion of Xenova and all other Persons) and
         QLT shall have the responsibility, at QLT's cost, to conduct (whether
         itself or through one or more sub-contractors) all regulatory
         activities for the development and commercialization in the Field in
         the Territory of the Drug and/or the Product, including the submission
         of applications for Regulatory Approvals for the development and
         commercialization of the Drug and/or the Product in the Field in the
         Territory, the qualification and validation of facilities for the
         manufacture and processing of the Drug and/or the Product for
         commercialization and sale in the Field in the Territory, and all
         communication with the FDA and other regulatory authorities regarding
         such applications and other regulatory filings for the development,
         commercialization and sale of the Drug and/or the Product in the Field
         in the Territory, on and subject to the terms and conditions set out in
         this Agreement (including Sections 3.4 and 8.4).

(b)      Transfer. Xenova will, at its cost, work to provide the following as
         soon as practicable:

         (i)      the assignment and transfer to QLT of all regulatory
                  applications, filings and correspondence for the Drug and/or
                  the Product in the Field in the Territory, including any IND
                  in the United States of America; and

         (ii)     access to QLT to all regulatory applications, filings and
                  correspondence for the Drug and/or the Product outside the
                  Field in the Territory, including any IND in the United States
                  of America.

         QLT will co-operate with Xenova in such matters, as reasonably
         required, at QLT's expense.

(c)      Quality Module Section. QLT will prepare, in consultation with Xenova,
         Module 3 of the ICH M4 Common Technical Document of an NDA filing in
         support of Regulatory Approvals for the Drug and/or the Product in the
         Field in the Territory and the qualification and validation of
         facilities to GMPs for the manufacture and processing of the Drug
         and/or the Product.

         QLT will retain ownership of all regulatory applications and filings
         for the Drug and/or the Product in the Field in the Territory after
         completion of development of the Product in the Field in the Territory.

(d)      Xenova Observer Role. During the Term, Xenova shall have the right to
         participate, at Xenova's cost, as an observer:

         (i)      in any material meetings to be held between QLT (or its
                  Affiliate or sub-licensee) and the FDA or any other regulatory
                  authorities in the Territory relating to any Regulatory
                  Approvals for the Drug and/or the Product in the Field,

         (ii)     in any regulatory inspections at manufacturing, clinical and
                  testing sites for the Drug and/or the Product;

         to the extent that QLT is not restricted from providing such access by
         the applicable regulatory authorities or by the terms of any licence
         granted by QLT in respect of the Territory.

(e)      Correspondence. Each party will promptly (and in any event within [*])
         provide the other party with copies of all material correspondence from
         or to the FDA and any other regulatory authorities in the Territory
         concerning the Drug and/or the Product.

4.7      REGULATORY RESPONSIBILITY IN EUROPE

(a)      Responsibility. Xenova shall retain, at Xenova's cost, the exclusive
         right and responsibility to conduct (whether itself or through one or
         more sub-contractors, licensees or other Third Parties) all regulatory
         activities for the development and commercialization of the Drug and
         the Product in the Field in Europe, including the submission of
         applications for Regulatory Approvals for the

<PAGE>
                                     - 20 -

         Drug and the Product in the Field in Europe, the qualification and
         validation of facilities for the manufacture and processing of the Drug
         and/or the Product and all communication with the EMEA and other
         regulatory authorities regarding such applications and other regulatory
         filings, on the terms and conditions set out in this Agreement.

(b)      QLT Assistance. Notwithstanding Xenova's responsibilities set out in
         Section 4.7(a), QLT agrees that it will, during the Term:

         (i)      cooperate with and assist Xenova or its licensee by reviewing
                  the regulatory filings prepared by Xenova or its licensee for
                  the Drug and/or the Product in the Field in Europe, at QLT's
                  cost (provided that these costs are not unreasonable);

         (ii)     at the request of Xenova, and on reasonable notice,
                  participate with Xenova in any meetings with the EMEA or other
                  European regulatory authorities relating to any Regulatory
                  Approvals for the Drug and/or the Product in the Field, at
                  Xenova's cost; and

         (iii)    provide to Xenova any letters of authorization required to
                  facilitate Xenova's or its licensee's use of or access to any
                  clinical study data and other data generated by or on behalf
                  of QLT for the Drug and/or the Product in the Field for use in
                  supporting any applications for Regulatory Approvals for the
                  Drug and/or the Product in the Field in Europe.

(c)      Access to European Filings. In order for QLT to conduct the Initial
         Development in Europe pursuant to Section 4.2, Xenova hereby grants to
         QLT such access to Xenova's regulatory applications and filings in the
         Field in Europe for the Drug and the Product, including the equivalent
         of the United States of America IND, as may be reasonable and necessary
         or useful for QLT to conduct the Initial Development as contemplated by
         Section 4.2.

(d)      QLT Observer Role. In the event that Xenova does not request QLT's
         participation under Section 4.7(b)(ii), QLT shall have the right to
         participate, at QLT's cost, as an observer:

         (i)      in any material meetings to be held between Xenova and the
                  EMEA or any other regulatory authorities in Europe relating to
                  any Regulatory Approvals for the Drug and/or the Product in
                  the Field,

         (ii)     in any regulatory inspections at manufacturing, clinical and
                  testing sites for the Drug and/or the Product in Europe;

         to the extent that Xenova is not restricted from providing such access
         by the applicable regulatory authorities in Europe or by the terms of
         any licence granted by Xenova in Europe.

(e)      Correspondence. Each party will promptly provide the other party with
         copies of all material correspondence from or to the EMEA or any other
         regulatory authorities in Europe concerning the Drug and/or the
         Product. The Parties do not anticipate that it will be necessary for
         QLT to be in direct contact with the EMEA in relation to the Drug
         and/or Product under applicable laws and regulations or in response to
         any request of the EMEA and QLT shall not do so without Xenova's prior
         written consent, such consent not to be unreasonably withheld or
         delayed.

4.7A     XENOVA AND QLT REVIEW OF REGULATORY FILINGS

Each Party ("PROVIDER") will promptly provide to the other Party ("RECEIVER")
copies of each draft and final copies of any of the following documents that it
may intend to file for the Drug and/or Product in the Development Territory.

(i)      [*]

(ii)     [*]

The Receiver shall provide its comments to the Provider within [*] after receipt
of any drafts thereof, unless the Provider agrees to extend that time thereof.

QLT and Xenova acknowledge that the [*] shall be used in support of Regulatory
Approvals for the Drug and/or Product in the Field in both Europe and the
Territory and QLT will consider incorporating the

* material has been omitted and filed separately with the Commission
<PAGE>
                                     - 21 -

comments of Xenova in that document where they are determined by QLT to be
appropriate and reasonable. However, QLT shall have no obligation to incorporate
Xenova's comments. In addition, Xenova shall have no obligation to incorporate
QLT's comments in any additional documents submitted by Xenova or its licensees
in support of Regulatory Approvals for the Drug and/or Product in the Field in
Europe.

4.8      ADVERSE EVENT REPORTING

(a)      Definitions. For the purposes of this Section 4.8 "ADVERSE EVENT" shall
         mean any unfavourable and unintended sign (including an abnormal
         laboratory finding), symptom or disease associated with the
         administration of a medicinal product whether or not considered related
         to the Drug and/or Product.

(b)      Reporting. During the Term, each party shall, and shall use
         commercially reasonable efforts to cause its respective licensees and
         sub-licensees to, promptly notify the other party as soon as
         practicable (subject to the following provisions of this paragraph (b))
         of:

         (i)      any information that it obtains or develops regarding the
                  efficacy or safety of the Drug and/or the Product, that is
                  required for, and which shall be made available for, the
                  annual update of the IND or CTX or any periodic post marketing
                  safety reporting which is required to be made to the
                  applicable regulatory authorities with whom the IND, CTX or
                  Marketing Application is filed;

         (ii)     any findings associated with the use of the Drug and/or the
                  Product that may suggest significant hazards, significant
                  contraindications, significant side effects or significant
                  precautions pertinent to the safety of the Drug and/or the
                  Product;

         (iii)    any information concerning any Adverse Event.

         Upon receipt of any such findings or information, each party shall
         provide the other party with reasonable cooperation to help the other
         party investigate the Adverse Events. The parties agree to exchange
         Adverse Event reports in a manner and time frame that will allow either
         party to comply with regulatory reporting requirements, including any
         requirements of the Act and regulations promulgated thereunder (and, if
         applicable, the ICH Guidelines), and to pursue an ongoing safety review
         of the Drug and/or the Product. The parties will agree in writing upon
         standard operating procedures for the reporting of Adverse Events to
         regulatory authorities and to each other, which standard operating
         procedures shall include the [*].

(c)      Third Party Reporting. Each party also agrees that if it contracts with
         a Third Party for research to be performed by such Third Party on the
         Drug and/or Product, that party agrees to require such Third Party to
         report to the contracting party the information set forth in clauses
         (b)(i) through (b)(ii) above, and such contracting party shall provide
         this information to the other party.

(d)      Information Confidential. Except as otherwise required by the
         provisions of this Agreement or as required by law or regulation, each
         party to hold all information disclosed to it under this Section 4.8 as
         Confidential Information under Article 7 and neither party may use the
         information received from the other without the consent of the
         disclosing party.

4.9      PERSONNEL

In connection with the Program, each of Xenova and QLT will make available
appropriate scientific, clinical, regulatory, manufacturing, engineering,
executive and other personnel to perform their respective activities under the
Program.

4.10     XENOVA CONTRIBUTION

(a)      As its contribution to the cost of the Program, Xenova shall [*].

(b)      In the event that this Agreement is terminated due to Xenova's breach
         under Section 16.3(d) or Xenova's default under Section 16.5 prior to
         Xenova [*].

* material has been omitted and filed separately with the Commission
<PAGE>
                                     - 22 -

                  ARTICLE 5 - COMMERCIALIZATION AND MARKETING

5.1      GRANT OF RIGHTS

Xenova hereby grants to QLT the exclusive right and QLT shall have the
responsibility, at QLT's cost, for the commercialization, marketing and sale of
the Drug and/or the Product in the Field in the Territory, on and subject to the
terms and conditions set out in this Agreement (including Section 8.4).

5.2      COMMERCIALIZATION DILIGENCE

(a)      General Statement. QLT shall work diligently and utilize sound and
         reasonable scientific, business and medical practice and judgement in
         the commercialization, marketing and sale of the Product to maximize
         the overall commercial potential of the Product in the Field in the
         Territory as a whole, subject to Section 5.2(b).

(b)      Clarification. For greater certainty, Xenova acknowledges and agrees
         that QLT will not be obligated under Section 5.2(a) to make application
         for Regulatory Approvals for the Drug or the Product or seek Commercial
         Launch of the Product in [*], if doing so would have an adverse effect
         on the maximization of Net Sales in the Territory as a whole. If the
         parties disagree whether the making of application(s) for Regulatory
         Approvals for the Drug or the Product or Commercial Launch of the
         Product in [*] would have an adverse effect on the maximization of Net
         Sales in the Territory as a whole, either party may refer the dispute
         to expedited arbitration under Section 17.2. If, under Section 17.2, an
         arbitrator determines that the making of application(s) or Regulatory
         Approvals for the Drug or the Product or Commercial Launch of the
         Product in [*] would not adversely affect the maximization of Net Sales
         in the Territory as a whole, QLT shall:

         (i)      promptly make application for Regulatory Approvals for the
                  Drug and the Product in such countr(ies), if not already
                  pending; and

         (ii)     achieve Commercial Launch of the Product in such countr(ies)
                  within [*].

         If QLT fails to achieve Commercial Launch of the Product in [*]within
         the [*] period set out in Section 5.2(b)(ii), Xenova may, within [*]
         period, by written notice delivered to QLT immediately delete the
         countr(ies) from the Territory and this Agreement shall be deemed to be
         amended accordingly. QLT's rights and obligations in respect of any
         countr(ies) deleted from the Territory shall be governed by Section
         16.7, except that no royalty shall be payable under Section 16.7(f) .

(c)      Review of Commercialization Activities. If, at any time during the
         Term, Xenova reasonably believes that QLT has without legitimate reason
         failed to discharge its obligations under Section 5.2(a), Xenova may
         refer the following questions to expedited arbitration under Section
         17.2:

         (i)      whether QLT has discharged its obligations under Section
                  5.2(a); and

         (ii)     if QLT has not discharged its obligations under Section
                  5.2(a), what specific action would be required to achieve
                  compliance with its obligations under Section 5.2(a)
                  ("SPECIFIC ACTION").

         If, under Section 17.2, an arbitrator determines that that QLT has
         failed to discharge its obligations under Section 5.2(a) and provides
         QLT with Specific Action, QLT shall have a cure period of [*] following
         the arbitral decision during which to take the Specific Action. If QLT
         fails to take the Specific Action within the [*] cure period, Xenova
         may, by written notice delivered to QLT within [*] following the
         expiration of the [*] cure period, immediately terminate this
         Agreement. Termination by Xenova under this Section 5.2(c) shall be
         deemed to be termination by Xenova for material breach by QLT under
         Section 16.4, provided that QLT shall not have any further opportunity
         to cure or commence the cure of such breach as described in that
         Section 16.4 and no royalty shall be payable under Section 16.7(f).

5.3      MARKETING DILIGENCE

(a)      Marketing Plans. Without limiting the generality of Section 5.2, QLT
         shall provide to Xenova at least annually an updated Marketing Plan on
         or before [*] of each year during the Term,

* material has been omitted and filed separately with the Commission
<PAGE>
                                     - 23 -

         commencing in the year [*]. QLT may, in its sole discretion, from time
         to time and at any time update and amend the then current Marketing
         Plan (including amendments to the Marketing Plan made by separate
         memoranda or reports identifying changes made by QLT to the Marketing
         Plan) using sound and reasonable scientific, business, medical and
         marketing practice and judgement, taking into account the commercial
         prospects for the sale of the Finished Product in those countries where
         QLT has achieved or is intending to achieve Commercial Launch. Xenova
         may provide written comments to QLT regarding the Marketing Plan,
         provided that any such comments or lack thereof, or the receipt of the
         Marketing Plan, shall not be taken as Xenova's acquiescence as to the
         sufficiency of the activities set out therein or as a waiver of QLT's
         obligations under Section 5.2 nor will QLT be under any obligation to
         incorporate such comments.

(b)      Definition of Marketing Default. For the purposes of this Section 5.3,
         a "MARKETING DEFAULT" by QLT in the marketing of the Product in the
         Field in the Territory shall mean:

         (i)      [*], provided that there has not been a significant change in
                  oncology marketing practices in the pharmaceutical industry in
                  the Territory, the failure of QLT or its permitted
                  sub-licensees to promptly commence and actively pursue:

                  (A)      [*] promptly after the receipt of the [*] data from
                           the [*];

                  (B)      [*] promptly after the first [*];

                  (C)      [*] promptly after the [*]; and

         (ii)     [*], provided that there has not been a significant change in
                  oncology marketing practices in the pharmaceutical industry in
                  the Territory, the occurrence of any of the following events:

                  (A)      the failure of QLT or its permitted sub-licensees to
                           [*] following the receipt of the [*];

                  (B)      the failure of QLT to [*];

                  (C)      the failure of QLT to [*] provided for in the [*],
                           within the [*] set out therefor in the[*] ; or

                  (D)      subject to the outcome of expedited arbitration under
                           Section 5.3(c), if any, Xenova otherwise reasonably
                           considers that QLT has not worked diligently and
                           utilized sound and reasonable scientific, business
                           and medical practice and judgement in its marketing
                           of the Finished Product in the Field as appropriate
                           in the Territory.

(c)      Marketing Default Notice. If, at any time during the Term, Xenova
         reasonably considers that QLT has without legitimate reason committed a
         Marketing Default, Xenova may provide written notice thereof to QLT
         stating that it wishes to exercise the co-promotion and manufacturing
         rights set out in Section 5.3(d) (the "MARKETING DEFAULT NOTICE"). If
         there is any disagreement between the parties as to whether QLT has
         committed a Marketing Default, either party may refer the question to
         expedited arbitration under Section 17.2. Subject to the outcome of
         expedited arbitration hereunder, if any, Xenova may assume the
         co-promotion and manufacturing rights more specifically set out in
         Section 5.3(d).

(d)      Consequences of Marketing Default. In the event that QLT has committed
         an uncured Marketing Default, subject to confirmation by expedited
         arbitration, if any, Xenova shall have the right, either alone or
         through any licensees or sub-contractors, to:

         (i)      co-promote and sell, [*], the Product in the Field in the
                  Territory with QLT; and

         (ii)     manufacture and supply the Drug and the Product for sale of
                  the Product in the Field in the Territory;

         provided that the parties agree that if Xenova exercises its rights
         hereunder, they will reasonably negotiate revised financial terms under
         this Agreement, including, without limitation, the assignment of duties
         and the allocation of costs for Xenova's co-promotion and manufacturing

* material has been omitted and filed separately with the Commission
<PAGE>
                                     - 24 -

         activities, revisions to the amount of royalties payable by QLT and the
         allocation of costs and revenues. If the parties are not able to reach
         agreement on the revised financial terms within 45 days after the later
         of the delivery of the Marketing Default Notice by Xenova to QLT and
         the confirmation by expedited arbitration of the occurrence of a
         Marketing Default by QLT, if any, the matter shall immediately be
         submitted to expedited arbitration under Section 17.2.

(e)      Sole Remedy. Xenova's sole remedy for any Marketing Default by QLT in
         respect of which Xenova has served a Marketing Default Notice on QLT,
         shall be limited to the exercise of the co-promotion and manufacturing
         rights set out in Section 5.3(d).

5.4      ARBITRATION RIGHTS ALTERNATIVE NOT CUMULATIVE

Notwithstanding Section 17.17, the parties acknowledge and agree that the right
to refer a claim to arbitration under Sections 5.2 and 5.3 shall be alternative
and not cumulative with respect to the same or substantially the same set of
facts or circumstances, but not any subsequent occurrence of such facts and
circumstances.

5.5      COMMERCIALIZATION BY XENOVA

(a)      General. Xenova shall work diligently and utilize sound and reasonable
         scientific, business and medical practice and judgement in:

         (i)      the commercialization of the Product in the Field as
                  appropriate outside the Territory; and

         (ii)     the commercialization of the ODD Product in the ODD Field as
                  appropriate in the Territory.

(b)      Sub-License Revenues. Xenova agrees that in establishing any
         relationships for the marketing and distribution of the Product in the
         Field in any country outside the Territory or the marketing and
         distribution of the ODD Product in the ODD Field world-wide, whether
         alone or through any licensees or sub-contractors, it will not use
         unusual efforts in structuring such marketing and distribution
         relationships in ways that are uncommon to the pharmaceutical industry
         and that would have the effect of reducing Xenova's Net Proceeds or
         reducing or avoiding post-commercialization payments due and payable to
         QLT under this Agreement.

     ARTICLE 6 - ACTIVITIES, NON-COMPETITION, GLOBAL FRANCHISE AND FURTHER
                                 OPPORTUNITIES

6.1      XENOVA ACTIVITIES

The parties acknowledge that, subject to the provisions and restrictions set out
in this Article 6, contemporaneously with the Program Xenova may enter into
agreements with Third Parties in respect of any Xenova Independent Program and
may be conducting activities (provided that Xenova complies with its obligations
under this Agreement applicable to such activities) relating to:

(a)      development and/or commercialization of the Drug outside the Field,
         anywhere, world-wide;

(b)      development of the Drug inside the Field and outside the Development
         Territory; or

(c)      commercialization of the Drug inside the Field and outside the
         Territory.

6.2      XENOVA ACTIVITIES IN THE [*] IN THE TERRITORY

Xenova will not, and will ensure that its Affiliates do not, whether directly or
indirectly, undertake any development or commercialization activities with
respect to the Drug in the [*] in the Territory, except as permitted under this
Agreement; provided that the restriction set out in this Section 6.2 shall not
apply to development and commercialization activities undertaken by Xenova or
its Affiliates with respect to the [*].

* material has been omitted and filed separately with the Commission
<PAGE>
                                     - 25 -

6.3      NO OTHER XENOVA ACTIVITIES DURING THE [*]

For the purpose of protecting the development of the Drug and/or the Product in
the Field in the Development Territory, Xenova agrees that for a period of
[*]after the Effective Date, Xenova will not, and will ensure that its
Affiliates and licensees do not, without the prior written consent of QLT, such
consent not to be unreasonably withheld or delayed, either alone or in
partnership or in conjunction with any Person, whether as principal, agent,
employee, director, officer or shareholder or in any capacity or manner, whether
directly or indirectly, participate in any [*]development activities [*] with
respect to:

(a)      the Drug and/or the Product for use in the [*] outside the [*]; and/or

(b)      the Drug and/or the Product for use outside the [*], provided that the
         restrictions set out in this Section 6.3(b) shall not apply to
         development activities in the ODD Field, anywhere, world-wide, or any
         ODD activities outside the Field.

6.4      RECIPROCAL NON-COMPETE

During the Term, each of QLT and Xenova will not, and will ensure that their
respective Affiliates do not, either alone or in partnership or in conjunction
with any Person, whether as principal, agent, employee, director, officer or
shareholder or in any capacity or manner whatsoever, whether directly or
indirectly, participate in any material development or commercialization
activities in the Territory with respect to any [*]for use in oncology, other
than the Drug or the Product.

6.5      GLOBAL FRANCHISE

The parties acknowledge that in the development and commercialization of the
Product in the Field in their respective territories, the parties will endeavour
to maximize the overall global potential of the Product in the Field and will
endeavour to ensure that any licenses, sub-licenses or other contracts with any
Person entered into by the parties with respect to the Drug and/or the Product
in the Field will also have this same goal of maximization of the overall global
franchise for the Product in the Field.

6.6      NOTICE AND DISCUSSION OF OTHER OPPORTUNITIES

If Xenova intends at any time after the Effective Date to develop the Drug
and/or the Product outside the Field, either alone or in partnership or in
conjunction with any Person, it will give written notice of this intention to
QLT and discuss with QLT the possibility of a relationship with QLT for this
additional development and use of the Drug or the Product.

6.7      CROSS-OVER USE AND CROSS-PRICING PROTECTION

Except as set out in Section 6.3 and this Section 6.7, and subject to compliance
with Section 6.6, Xenova shall be free to pursue development and
commercialization opportunities for the Drug and/or the Product outside the
Field, either alone or in partnership or in conjunction with any Person, and
including through licensees or sub-licensees ("XENOVA PARTNER"), it being
intended that any such development and commercialization shall not result in or
otherwise cause Cross-Over Use or Cross-Pricing Risk. Xenova agrees that it
shall be a term of any such agreement with the Xenova Partner that the Xenova
Partner will comply with the provisions of this Section 6.7. Where either party
in good faith believes that any such development and commercialization
opportunity, whether actual or proposed, has resulted in or caused, or could
reasonably be expected to result in or cause, Cross-Over Use or Cross-Pricing
Risk, the parties agree to enter into discussions aimed at preventing or
otherwise mitigating, in a mutually-acceptable manner, the risk of any
Cross-Over Use or Cross-Pricing Risk resulting from the development and
commercialization opportunity. If the parties disagree as to whether there
exists any actual or potential Cross-Over Use or Cross Pricing Risk, or they
disagree on the measures required to prevent or otherwise mitigate the risk of
Cross-Over Use or Cross-Pricing Risk, then:

(a)      [*]

(b)      [*]

* material has been omitted and filed separately with the Commission
<PAGE>
                                     - 26 -

6.8      CONSEQUENCES OF ARBITRATION

If any arbitral decision under Section 6.7(a) includes a determination that the
additional development and commercialization opportunity does result in or
cause, or could reasonably be expected to result in or cause, Cross-Over Use or
Cross-Pricing Risk, as the case may be, Xenova shall not, and shall cause any
Person with whom Xenova Partners not to, commence or cease pursuing or not
pursue, as the case may be, the additional development and commercialization
opportunity that is the subject of the arbitration.

               ARTICLE 7 - CONFIDENTIALITY AND USE OF INFORMATION

7.1 OWNERSHIP OF CONFIDENTIAL INFORMATION

(a)      All Confidential Information disclosed by one party to the other shall
         remain the property of the disclosing party.

(b)      In the event that a court or other legal or administrative tribunal,
         directly or through an appointed master, trustee or receiver, assumes
         partial or complete control over the assets of a party to this
         Agreement based on the insolvency or bankruptcy of the party, the
         bankrupt or insolvent party shall promptly notify the court, other
         tribunal or appointee:

         (i)      that Confidential Information received from the other party
                  under this Agreement remains the property of the other party;
                  and

         (ii)     of the confidentiality obligations under this Agreement.

         In addition, the bankrupt or insolvent party shall, to the extent
         permitted by law, take all steps necessary or desirable to maintain the
         confidentiality of the other party's Confidential Information and to
         ensure that the court, other tribunal or appointee maintains the
         information in confidence in accordance with the terms of this
         Agreement.

7.2      OBLIGATION OF CONFIDENTIALITY

Except as otherwise agreed in writing by Xenova and QLT, each party will, for
the Term and for 10 years after its expiration or termination for any reason, in
respect of all Confidential Information of the other party and all Program
Information owned by the other party:

(a)      maintain such Confidential Information and Program Information in
         strict confidence and not to disclose any portion of such Confidential
         Information or Program Information to any Person, without the prior
         written consent of the disclosing party, other than to its legal
         counsel, accountants, employees and consultants who are bound by
         obligations of confidentiality and non-use in connection therewith at
         least as stringent as those set forth in this Agreement, provided that
         each party shall remain responsible for the actions, uses and
         disclosures of its legal counsel, accountants, employees and
         consultants; and

(b)      not use such Confidential Information or Program Information for any
         purpose other than the development and/or commercialization of the Drug
         and/or the Product (including performance of the Program) under this
         Agreement, or as otherwise permitted under this Agreement, without the
         prior written consent of the disclosing party; and

(c)      take reasonable measures to assure that no unauthorized use or
         disclosure is made by others to whom access to such Confidential
         Information and Program Information is granted.

Nothing herein shall be construed as preventing either party from disclosing any
Confidential Information or Program Information:

(d)      Required for Regulatory Filings. to government agencies where such
         information is required to be included in regulatory filings permitted
         under the terms of this Agreement;

(e)      Under Confidentiality. to its Affiliates or to Third Parties for
         consulting, development, clinical and analytical testing,
         manufacturing, marketing, distribution and other purposes for the
         development and commercialization of the Product under this Agreement,
         including such activities under the

<PAGE>
                                     - 27 -

         Program, provided that such Affiliate or Third Party has undertaken in
         writing an obligation of confidentiality and non-use with respect to
         the Confidential Information and Program information similar to that
         set out in this Agreement;

(f)      Published if Approved. by publication in accordance with Section 7.7;
         or

(g)      Required by Law. to the extent required by applicable laws or
         regulations or as ordered by a court or other regulatory body having
         competent jurisdiction.

In each of the foregoing cases, the receiving party will use diligent efforts to
limit the disclosure and maintain confidentiality to the extent possible and to
promptly inform the disclosing party of any intended or actual disclosure in
order to allow the disclosing party to seek protective treatment, as the case
may be.

7.3      XENOVA USE OF QLT PROGRAM INFORMATION

Subject to Sections 6.7 and 7.6, QLT shall provide to Xenova, from time to time
(i) annually, a general update on QLT's Program Information, whether or not
Xenova has requested it, and (ii) detailed Program Information as reasonably
requested by Xenova, and Xenova shall have the right to use and cross-reference,
whether alone or through any licensees or other Persons, all of QLT's Program
Information, including:

(a)      QLT's regulatory filings and clinical data (including Phase IV data)
         for the Drug and the Product; and

(b)      any other data which would reasonably be expected to enable Xenova to
         increase its Net Proceeds from commercialization of the Drug and/or the
         Product outside the Territory;

for the sole purpose of developing and/or commercializing the Drug and/or the
Product:

(c)      inside the Field but outside the Territory (subject to QLT's exclusive
         development rights in the Development Territory under Article 4, for as
         long as those rights continue); and/or (d) outside the Field (excluding
         the ODD Field), anywhere, world-wide.

Xenova shall provide compensation to QLT for the foregoing right to use QLT's
Program Information in accordance with Section 10.6.

7.4      QLT USE OF XENOVA PROGRAM INFORMATION

Subject to Section 7.5, except to the extent that Xenova is restricted by any
Third Party agreements in respect of any Xenova Independent Program Information,
QLT shall have the right to use and to cross-reference, whether alone or through
any licensees or subcontractors, all of Xenova's Program Information and Xenova
shall provide to QLT, from time to time (i) annually, a general update on
Xenova's Program Information, whether or not QLT has requested it, and (ii)
detailed Program Information as reasonably requested by QLT from time-to-time,
including:

(a)      Xenova's regulatory filings and clinical data (including Phase IV data)
         for the Drug and/or the Product; and

(b)      Available Xenova Independent Program Information;

for the purpose of developing and/or commercializing the Drug and/or the Product
in the Field in the Territory.

7.5 THIRD PARTY ACCESS

Each of QLT and Xenova will use reasonable endeavours to ensure that any Person
with whom it contracts for the performance of any activities relating to the
development or commercialization of the Drug and/or the Product, whether under
the Program or under any Xenova Independent Program, will allow QLT or Xenova,
as the case may be, to use and share with the Development Committee as
contemplated in Section 2.2 and with the other party as contemplated by Sections
4.5, 7.3 and 7.4, all Information generated by such Person during the course of
such activities. QLT and Xenova shall use

<PAGE>
                                     - 28 -

reasonable endeavours to ensure that any written agreement with any such Person
shall include provisions allowing such use and sharing of Information.

[*]

7.6      NO USE OF QLT PROGRAM INFORMATION FOR ODD

Notwithstanding any provision of this Agreement, and in recognition of the
rights reserved to Xenova for the ODD Field under this Agreement, QLT shall have
no obligation to provide to Xenova, nor shall Xenova have any right of access to
or right to use or cross-reference, whether alone or through any licensees, any
of QLT's Program Information to develop and/or commercialize the Drug and/or the
ODD Product in the ODD Field, whether such Program information is received from
QLT or any other Person, including:

(a)      QLT's regulatory filings and clinical data (including Phase IV data)
         for the Drug and/or the Product; and

(b)      any other data which would enable Xenova to increase its Net Proceeds
         from commercialization of the Drug and/or the Product outside the
         Territory.

However, the provisions of this Section 7.6 shall not entitle QLT to withhold
from Xenova any QLT Program Information, including QLT's regulatory filings and
clinical data (including Phase IV data) for the Drug and/or the Product which,
in the absence of this Section 7.6, QLT would be obligated to provide to Xenova
under this Agreement and which Xenova requires for the purpose of developing
and/or commercializing the Drug and/or the Product in the fields and territories
referenced in Section 7.3.

7.7      PUBLICATIONS

(a)      Neither party shall publish or provide public disclosure of any
         Information or Improvements relating to the Drug and/or the Product in
         the Field except in accordance with this Section 7.7 (except that the
         issuing of press releases relating to the Drug and/or Product in the
         Field shall be governed by Section 17.15 and not by this Section 7.7).

(b)      A party proposing to publish, present or make oral public disclosure of
         any Information or Improvements relating to the Drug and/or the Product
         in the Field (in this Section 7.7, the "PRESENTING PARTY") shall
         furnish a copy of the proposed manuscript to the other party (in this
         Section 7.7, the "REVIEWING PARTY") at least [*] prior to submission
         for publication or presentation or the date of oral public disclosure,
         as the case may be, except for disclosures required by securities
         regulatory authorities pursuant to Section 7.2(d). The Reviewing Party
         shall return materials provided by the Presenting Party pursuant to
         this Section 7.7 within [*] thereafter. The Parties anticipate that the
         furnishing of copies and comments under this Section 7.7 may, in
         practice, be conducted through the Development Committee; however, any
         decision-making on publications shall be governed by the provisions of
         this Section 7.7 and not by the provisions of Section 2.2.

(c)      The Reviewing Party shall provide to the Presenting Party, without
         undue delay, its comments on or proposed changes to the proposed
         manuscript. If the proposed manuscript is not acceptable to the
         Reviewing Party, the parties shall discuss and agree upon the final
         wording and/or disposition thereof.

(d)      The parties shall use commercially reasonable efforts to cooperate and
         give due regard to the parties' legitimate interests in the Drug and/or
         the Product and to ensure that no rights of the Reviewing Party are
         jeopardized or forfeited by the proposed publication, presentation or
         oral public disclosure, including, without limitation, obtaining
         optimal patent protection, coordinating and maintaining the proprietary
         nature of submissions for Regulatory Approvals, coordinating with other
         ongoing studies in the same field and protecting the confidentiality of
         Confidential Information and Program Information.

(e)      Without limiting the generality of the foregoing, the Reviewing Party
         may, by written notice to the Presenting Party, have the right to delay
         publication, presentation or oral public disclosure of any proposed
         manuscript for a period of [*] to obtain patent protection or until any
         patent applications

           * Material has been omitted and filed with the Commission
<PAGE>
                                     - 29 -

         have been filed, whichever shall first occur. Upon expiration of the
         [*] period, the Presenting Party may submit the manuscript for
         publication with the wording agreed upon by the parties. The filing of
         patent applications shall be governed by Sections 13.1 and 13.2.

(f)      Nothing in this Section 7.7 shall be construed in any way as
         prohibiting either party from making truthful disclosures arising from
         the results of the Program or any other development activities under
         this Agreement, once compliance with the foregoing procedures is
         observed. For greater certainty, nothing in this Section 7.7 shall
         require a Party to utilize greater than commercially reasonable efforts
         to impose obligations on any Third Party (as between that Party and any
         Third Party), including any licensee, investigator or manufacturer
         appointed by such Party, in relation to any publication or public
         disclosure of any Information or Improvements of the Third Party
         relating to the Drug and/or Product in the Field.

7.8      ACKNOWLEDGEMENT OF PRIOR DISCLOSURES

The parties hereby acknowledge and agree that, in respect of all Confidential
Information relating to the Drug and/or the Product, the provisions of the
Confidentiality Agreement are superseded by the provisions of this Article 7 and
all "Confidential Information" relating to the Drug and/or Product disclosed
under the Confidentiality Agreement, as defined therein, shall be Confidential
Information under this Agreement and shall be subject to a continuing obligation
of confidentiality as set out in this Article 7. In respect of all other
Confidential Information under the Confidentiality Agreement, the
Confidentiality Agreement shall continue in full force and effect.

7.9      RETURN OF CONFIDENTIAL INFORMATION

Upon the early termination of this Agreement, unless otherwise required to
exercise the grants of license set out in Sections 16.7 and 16.8 or as otherwise
agreed between the parties, each party shall:

(a)      promptly cease all use of the Confidential Information of the other
         party and the Program Information of the other party and ensure that
         its employees cease all use thereof and use reasonable efforts to
         ensure that its corporate counsel, accountants and consultants cease
         all use thereof; and

(b)      upon written request of the other party,

         (i)      return to the other party all original copies of the
                  Confidential Information of the other party and the Program
                  Information of the other party in its control or possession;
                  and

         (ii)     destroy any and all copies or other reproductions or extracts
                  of the Confidential Information of the other party and the
                  Program Information of the other party and all summaries,
                  abstracts, extracts, computer files, memoranda, notes or other
                  documents which contain or were prepared based on such
                  Confidential Information and Program Information of the other
                  party;

subject to the retention of one complete copy for archival and/or regulatory or
legal purposes. If a party requests destruction of its Confidential Information,
the other party shall document the destruction of the Confidential Information
and shall provide a copy of this documentation to the requesting party.

       ARTICLE 8 - INTELLECTUAL PROPERTY; ADDITIONAL TECHNOLOGY; LICENSES

8.1      OWNERSHIP OF INTELLECTUAL PROPERTY

As between QLT and Xenova:

(a)      title to and ownership of all rights in and to all Intellectual
         Property owned by QLT or licensed to QLT by Third Parties as of the
         Effective Date shall at all times remain with QLT and, except as
         expressly granted under this Agreement, no rights in or to any such
         Intellectual Property shall vest in Xenova; and

           * Material has been omitted and filed with the Commission

<PAGE>
                                     - 30 -

(b)      title to and ownership of all rights in and to all Intellectual
         Property owned by Xenova or licensed to Xenova by Third Parties as of
         the Effective Date shall at all times remain with Xenova and, except as
         expressly granted under this Agreement, no rights in or to any such
         Intellectual Property shall vest in QLT.

8.2      OWNERSHIP OF PROGRAM INFORMATION

Subject to the licenses granted under this Agreement, the parties agree that all
Program Information will be owned as follows:

(a)      subject to Section 8.2(c), all Program Information related solely to
         the Drug itself, or the manufacture or use of the Drug itself, but
         excluding Program Information generated by or on behalf of QLT and
         relating to marketing strategies, plans and reports, will be solely
         owned by Xenova, and

         (i)      QLT will assign to Xenova all right, title and interest it may
                  have in and to such Program Information, and

         (ii)     upon such assignment, such Program Information will be
                  automatically included in the exclusive license granted by
                  Xenova to QLT under Section 8.4;

(b)      all Available Xenova Independent Program Information, as between Xenova
         and QLT, will be solely owned by Xenova;

(c)      notwithstanding Section 8.2(a), any Program Information generated,
         developed or acquired, whether solely or jointly with any Third Party,
         by QLT under the Interim Agreement and this Agreement comprising
         manufacturing processes having application to the Drug and/or the
         Product, as between Xenova and QLT will be solely owned by QLT, and:

         (i)      Xenova will assign to QLT all right, title and interest it may
                  have in and to such Program Information, and

         (ii)     upon such assignment:

                  (A)      if the manufacturing processes do not have
                           application beyond the Drug and/or the Product, the
                           Program Information will be included in the exclusive
                           license granted by QLT to Xenova under Section
                           8.5(a), or

                  (B)      if the manufacturing processes do have application
                           beyond the Drug and/or the Product, paragraph (A)
                           above shall apply to the extent that it relates to
                           the Drug and/or Product and in addition QLT will
                           grant to Xenova a non-exclusive license on the terms
                           and conditions set out in Section 8.5(b); and

(d)      all other Program Information:

         (i)      if solely created by a party, will be solely owned by the
                  party that created it, and will be automatically included in
                  the exclusive licenses granted by each party to the other
                  party under Sections 8.4 and 8.5(a); or

         (ii)     if jointly created by Xenova and QLT, will be jointly owned by
                  Xenova and QLT, and in respect of Xenova's joint interest in
                  such Program Information, will be automatically included in
                  the exclusive license granted by Xenova to QLT under Section
                  8.4. QLT's joint interest in such Program Information will be
                  automatically included in the licenses granted by QLT to
                  Xenova under Section 8.5.

8.3      ADDITIONAL TECHNOLOGY

(a)      If at any time during the Term, QLT and/or Xenova reasonably determine
         that any technology controlled by a Third Party ("ADDITIONAL
         TECHNOLOGY") may be necessary or useful for the development or
         commercialization of the Drug and/or the Product in the Field in any
         country of the world, QLT or Xenova, as appropriate, shall present such
         Additional Technology, along with a written report with respect
         thereto, to the Development Committee (or in the event that the

<PAGE>
                                     - 31 -

         Development Committee has been dissolved, to the other party), which
         shall then consider the acquisition or licensing of the Additional
         Technology, but the Development Committee shall have no power to
         require either party to enter into any agreement, or have any financial
         or other commitments, with respect to any Additional Technology.

(b)      In the case of Additional Technology that may be necessary or useful in
         the Field, the Development Committee (or in the event that the
         Development Committee has been dissolved, the parties) shall then
         determine, whether licenses to, and/or acquisitions of, such Additional
         Technology are desirable, and what recommendations to make to the
         parties as to which party shall approach and negotiate with the Third
         Party.

(c)      In negotiating any agreements for the licensing or acquisition of
         Additional Technology under this Section 8.3, the party conducting such
         negotiations shall, on an ongoing basis throughout such negotiations,
         consult with the other party to ensure that the scope of the
         Intellectual Property rights licensed or otherwise acquired are
         adequate for the uses contemplated by the other party for the
         Additional Technology. The parties intend that each party shall be
         licensed in respect of its territory directly by the licensing party.

(d)      The costs of licensing or otherwise acquiring any Additional Technology
         under this Section 8.3 shall be borne, on a territory-by-territory and
         field-by-field basis, by the party that has rights in that territory
         and field in respect of Drug and/or Product.

(e)      In the absence of agreement to proceed with the licensing or
         acquisition of any Additional Technology hereunder, nothing in this
         Section 8.3 shall be deemed to preclude either party from licensing
         and/or acquiring such Additional Technology for its own benefit.

8.4      LICENSE TO QLT

(a)      Grant of License. Xenova hereby grants to QLT an exclusive
         royalty-bearing license:

         (i)      to use the Drug and/or the Product in the Field for the
                  purpose of conducting research and development of the Drug
                  and/or the Product in the Field in the Territory and (for as
                  long as QLT is responsible for Initial Development and to the
                  extent necessary for Initial Development) in Europe;

         (ii)     to sell, have sold, offer for sale, export (from one part of
                  the Territory to another) or import the Drug and/or the
                  Product in the Field in the Territory and to use the Drug
                  and/or Product for those purposes; and

         (iii)    to make, have made, export or import the Drug and/or the
                  Product, anywhere, world-wide for the purpose of exercising
                  the rights granted under Sections 8.4(a)(i) and 8.4(a)(ii);

         under the Xenova Patents and such Program Information as may be now or
         hereafter owned or controlled by Xenova during the Term as may be
         necessary or useful for such purposes, all on the terms and conditions
         set out in this Agreement. For greater certainty:

         (iv)     the license granted to QLT under Sections 4.1 and 8.4(a)(i):

                  (A)      shall be exclusive in the Field in the Development
                           Territory for the purpose referred to in those
                           Sections, to the exclusion of Xenova and all other
                           Persons, and

                  (B)      shall be subject to the reduction in the geographic
                           scope of the Development Territory, as provided in
                           Section 4.2(b); and

         (v)      the license granted to QLT under Section 8.4(a)(ii) shall be
                  exclusive in the Field in the Territory for the purpose
                  referred to in that Section, to the exclusion of Xenova and
                  all other Persons,

         all on and subject to the terms and conditions set out in this
         Agreement.

         Nothing in this Agreement shall prevent Xenova from making application
         for, prosecuting or maintaining any Patents in respect of patentable
         Intellectual Property owned by Xenova, including

<PAGE>
                                     - 32 -

         the Xenova Patents; or entering into agreements with Third Parties in
         respect of any Xenova Independent Program.

(b)      No right to Sub-License Development. QLT shall not have the right to
         sub-license the research and development rights granted under Section
         8.4(a)(i) above, provided that notwithstanding the foregoing, QLT may
         sub-contract any of its research and development activities to any
         Person upon notice to Xenova.

(c)      Sub-License Marketing. If QLT wishes to sub-license the rights granted
         under Section 8.4(a)(ii) to any Person, the following provisions shall
         apply:

         (i)      QLT shall first give written notice to Xenova of any intention
                  to sub-license such rights;

         (ii)     [*] and

         (iii)    QLT may only sub-license its rights under Section 8.4(a)(ii)
                  to a Third Party if it shall have received the consent of
                  Xenova with respect to the proposed sub-license, which consent
                  shall not be unreasonably withheld or delayed. The criteria to
                  be considered by Xenova when determining whether to give such
                  consent shall include whether the proposed sub-licensee:

                  (A)      is appropriately qualified, experienced and competent
                           in oncology marketing for the area of the Territory
                           proposed to be sublicensed, and

                  (B)      has the necessary resources to carry out the proposed
                           activities in such area.

         If there is any disagreement between the parties in relation to the
         withholding of Xenova's consent under this section, either party may
         refer the disagreement to expedited arbitration under Section 17.2.

(d)      Sub-License Manufacturing. QLT may only sub-license the rights granted
         under Section 8.4(a)(iii) to any Person if QLT shall have received the
         consent of Xenova with respect to the proposed sub-license, which
         consent shall not be unreasonably withheld or delayed. The criteria to
         be considered by Xenova when determining whether to give such consent
         shall include whether the proposed sub-licensee:

         (i)      is appropriately qualified and has been approved by the
                  relevant health regulatory body for the area of the Territory
                  where the Drug and/or Product is proposed to be sold,

         (ii)     is competent to manufacture and process the Drug and/or the
                  Product (as the case may be) to an appropriate manufacturing
                  quality; and

         (iii)    has the production capacity to manufacture and process the
                  Drug and/or the Product (as the case may be).

         If there is any disagreement between the parties in relation to the
         withholding Xenova's consent under this section, either party may refer
         the matter to expedited arbitration under Section 17.2.

(e)      Requirements for Sub-License Agreements. All sublicenses granted by QLT
         under this Agreement shall:

         (i)      be in writing executed by QLT and the sub-licensee;

         (ii)     not relieve QLT of any obligations, whether financial or
                  otherwise, under this Agreement and QLT shall make all
                  required payments to Xenova as if the sublicensed activities
                  were conducted by QLT; and

         (iii)    contain [*] substantially similar to those contained in this
                  Agreement, which provisions shall allow [*] by Xenova and its
                  representatives as if the sub-licensee had contracted directly
                  with Xenova.

(f)      Compulsory Sub-licenses. Notwithstanding Section 8.4(e), if at any time
         in any country in the Territory, QLT is required pursuant to an order
         issued by a competent government authority or

           * Material has been omitted and filed with the Commission
<PAGE>
                                     - 33 -

         other applicable law to grant to a government entity or other Third
         Party a compulsory sub-license to manufacture, use or sell the Drug
         and/or the Product, [*]

(g)      Copies of Sub-Licenses. On request of Xenova, QLT will provide to
         Xenova a copy of each sublicense agreement entered into by it under
         this Agreement.

8.5      LICENSE TO XENOVA

(a)      Grant of Exclusive License. Subject to Sections 7.6, 8.5(b), 8.5(c) and
         8.5(d), QLT hereby grants to Xenova an exclusive, royalty-bearing (but
         only royalty-bearing in the circumstances described in Section 10.6)
         license (with the right to sub-license):

         (i)      to use the Drug and/or the Product for the purpose of
                  conducting research and development: (i) in the Field outside
                  the Development Territory (to the extent that and for as long
                  as such a license to Xenova in the Field in Europe would
                  conflict with the grant of exclusive development rights in
                  Europe to QLT under 8.4(a)), and thereafter in the Field
                  outside the Territory; and (ii) outside the Field anywhere,
                  world-wide;

         (ii)     to use, sell, have sold, offer for sale, export or import the
                  Drug and/or the Product in the Field outside the Territory,
                  and outside the Field, anywhere, world-wide; and

         (iii)    to make, have made, export or import the Drug and/or the
                  Product, anywhere, world-wide for use in exercising the rights
                  granted under Sections 8.5(a)(i) and (ii);

         under the QLT Patents and such Program Information and other
         Intellectual Property as may be now or hereafter owned or controlled by
         QLT during the Term as may be necessary or useful for such purposes,
         all on the terms and conditions set out in this Agreement. For greater
         certainty:

         (iv)     the license granted to Xenova under Section 8.5(a)(i):

                  (A)      shall be exclusive in the Field outside the
                           Development Territory and outside the Field,
                           anywhere, world-wide, to the exclusion of QLT and all
                           other Persons, and

                  (B)      shall benefit from the reduction in the geographic
                           scope of the Development Territory, as provided in
                           Section 4.2(b); and

         (v)      the license granted to Xenova under Section 8.5(a)(ii) shall
                  be exclusive in the Field outside the Territory and outside
                  the Field, anywhere, world-wide, to the exclusion of QLT and
                  all other Persons.

(b)      Grant of Non-Exclusive License. Notwithstanding Section 8.5(a), in
         respect of any Program Information assigned by Xenova to QLT under
         Section 8.2(c) having application beyond the Drug and/or the Product,
         QLT hereby grants to Xenova in addition to the exclusive licence
         granted under Section 8.5(a), a non-exclusive license (royalty bearing
         in the circumstances described in Section 10.6 where relevant) to such
         Program Information on the terms and conditions set out in Section
         8.5(a), applied mutatis mutandis (such necessary changes including the
         terms that such licenses are for products other than Drug or Product
         and shall have no field or territory restrictions).

(c)      Marketing Default. In the event that QLT has committed an uncured
         Marketing Default under Section 5.3, subject to confirmation by
         expedited arbitration thereunder, if any, the scope of the licenses set
         out in Sections 8.5(a) and 8.5(b) shall be automatically [*] and Xenova
         shall have a [*]:

         (i)      [*]

         (ii)     [*]

         under the QLT Patents and such Program Information as may be now or
         hereafter owned or controlled by QLT during the Term as may be
         necessary or useful for such purposes, all on the terms and conditions
         set out in this Agreement as may be amended by the parties pursuant to
         Section 5.3(d).

           * Material has been omitted and filed with the Commission
<PAGE>
                                     - 34 -

(d)      Requirements for Sub-License Agreements. All sublicenses granted by
         Xenova under this Agreement shall:

         (i)      be in writing executed by Xenova and the sub-licensee;

         (ii)     not relieve Xenova of any obligations, whether financial or
                  otherwise, under this Agreement and Xenova shall make all
                  required payments to QLT as if the sublicensed activities were
                  conducted by Xenova; and

         (iii)    contain [*] provisions substantially similar to those
                  contained in this Agreement, which provisions shall allow [*]
                  by QLT and its representatives as if the sub-licensee had
                  contracted directly with QLT.

(e)      Copies of Sub-Licenses. On request of QLT, Xenova will provide to QLT a
         copy of each sublicense agreement entered into by it under this
         Agreement.

8.6      GRANTS OF XENOVA INTELLECTUAL PROPERTY

(a)      Without limiting the grants set forth in Section 8.4, Xenova shall
         ensure that there are no Intellectual Property rights owned or
         controlled by Xenova as of the Effective Date related to the Drug
         and/or the Product or the use thereof, that are necessary or useful to
         permit QLT to perform the Program to completion and to perform the
         manufacturing, marketing, supply and other commercialization activities
         contemplated by this Agreement for the Drug and/or the Product in the
         Field in the Territory ("FURTHER INTELLECTUAL PROPERTY"), other than
         those granted to QLT under this Agreement.

(b)      In the event that Xenova or QLT determines that the Intellectual
         Property rights granted under Section 8.4 or elsewhere in this
         Agreement are insufficient for QLT to perform the Program to completion
         and/or perform the manufacturing, marketing, supply and other
         commercialization activities contemplated by this Agreement for the
         Drug and/or the Product in the Field in the Territory and that QLT
         requests access to Further Intellectual Property for such purposes,
         Xenova will license to QLT, at no additional cost to QLT, such Further
         Intellectual Property as may be owned or controlled by Xenova as of the
         Effective Date related to the Drug and/or the Product or the use
         thereof, as may be necessary or useful for QLT to complete the Program
         and/or perform the manufacturing, marketing, supply and other
         commercialization activities, as the case may be.

                         ARTICLE 9 - MILESTONE PAYMENTS

9.1      UPFRONT PAYMENT

The parties acknowledge that, pursuant to the Interim Agreement and in partial
consideration for Xenova's commitments under the Interim Agreement and this
Agreement, QLT has paid to Xenova an upfront non-refundable, non-creditable fee
of US$10,000,000.

9.2      MILESTONE PAYMENTS

QLT shall pay to Xenova the following milestone payments within 30 days after
achievement of the respective milestone: (a) First US NDA filing. US[*] upon QLT
filing with the FDA the first NDA for the Product in the Field; and (b) US FDA
Approval.

         (i)      [*] upon the granting of first Regulatory Approval by the FDA
                  (whether for a [*]) for the Product in the Field,

         (ii)     [*] upon the granting of each subsequent Regulatory Approval
                  by the FDA for any [*] for the Product in the Field, and

           * Material has been omitted and filed with the Commission
<PAGE>
                                     - 35 -

         (iii)    [*] upon the granting of each subsequent Regulatory Approval
                  by the FDA for any [*] for the Product in the Field;

         provided that the total of all milestone payments paid by QLT under
         this Section 9.2 shall not exceed US$50,000,000 over the Term.

9.3      CURRENCY OF PAYMENT

(a)      U.S. Dollars. The upfront and milestone payments set out in this
         Agreement are and shall be respectively denominated in United States
         dollars.

(b)      Currency Choice. At least 10 days prior to the due date of any upfront
         and milestone payments to be made by QLT to Xenova under Section 9.2,
         Xenova shall notify QLT in writing that Xenova wishes to receive the
         payment in United States dollars, British pounds sterling or a
         combination thereof. If Xenova does not give this currency choice
         notice to QLT, QLT will make the payment in United States dollars.

(c)      Foreign Exchange. If Xenova elects to receive any upfront and milestone
         payment or part thereof in British pounds sterling, Xenova shall notify
         QLT in writing of the date on which it wishes to receive the payment 2
         business days prior to the payment date, which shall be no earlier than
         the due date, and QLT shall make the payment to Xenova in British
         pounds sterling where the exchange rate for United States dollars to
         British pounds sterling will be the buying rate for British pounds
         sterling quoted by QLT's primary banker.

                             ARTICLE 10 - ROYALTIES

10.1     ROYALTIES

Subject to the remainder of this Article 10, QLT shall pay to Xenova, without
duplication, on the terms and conditions set out in this Agreement, the
following royalties in respect of the Finished Product:

(a)      15% of Net Sales, in respect of any aggregate Net Sales of all Finished
         Products that are less than [*] in a particular calendar year;

(b)      18% of Net Sales, in respect of that portion of aggregate Net Sales of
         all Finished Products that are equal to and/or greater than [*] and
         less than and/or equal to [*] of such Net Sales in a particular
         calendar year; and

(c)      22% of Net Sales, in respect of that portion of aggregate Net Sales of
         all Finished Products that are greater than [*] of such Net Sales in a
         particular calendar year;

provided that, subject to Section 13.1(e), the royalties payable under this
Section 10.1 shall be earned and payable as follows:

(d)      where one or more Valid Claims applicable to the Finished Product under
         the Xenova Patents licensed to QLT under Section 8.4 exist in the
         country of sale on the date of Commercial Launch of the Finished
         Product therein, the royalties hereunder shall be earned and payable
         for such country until the expiration of the last of such Valid Claims
         in such country;

(e)      where no Valid Claims are applicable to the Finished Product under the
         Xenova Patents licensed to QLT under Section 8.4 in the country of sale
         on the date of Commercial Launch of the Finished Product therein, the
         royalties hereunder shall be earned and payable for such country for a
         period of 10 years commencing on the date of Commercial Launch of the
         Finished Product therein, provided that in respect of [*], if, at any
         time during such 10 year period, there is a [*] for such portion of the
         10 year period, whether all or part, that [*].

10.2     EXCLUSIONS FROM ROYALTIES

No royalties will be payable under Section 10.1 in respect of:

           * Material has been omitted and filed with the Commission
<PAGE>
                                     - 36 -

(a)      Finished Products used in clinical trials or for compassionate use for
         which QLT does not receive consideration; and

(b)      amounts derived from sales of Finished Products by QLT to its
         Affiliates or by QLT or its Affiliates to their respective
         sub-licensees, unless the Affiliates and/or sub-licensees purchasing
         the Finished Products, as the case may be, are the end-users of the
         Finished Products sold.

10.3     THIRD PARTY LICENSE FEES AND ROYALTIES

Notwithstanding Section 13.7, Xenova shall have sole responsibility for:

(a)      the payment of all costs and expenses; and

(b)      the performance of all financial (including license fees and
         royalties), administrative and other obligations, under any Third Party
         Licenses.

10.4     ADJUSTMENT OF ROYALTIES

(a)      Compulsory Licenses or Sub-Licenses. If at any time in the Field in any
         country in the Territory:

         (i)      a competent governmental authority grants to a government
                  entity or other Third Party a compulsory license to
                  manufacture, use or sell the Drug and/or the Product with
                  respect to which royalties would be payable pursuant to
                  Section 10.1; or

         (ii)     QLT or Xenova is required pursuant to an order issued by a
                  competent government authority or other applicable law to
                  grant to a government entity or other Third Party a compulsory
                  sub-license or license, as the case may be, to manufacture,
                  use or sell the Drug and/or the Product with respect to which
                  royalties would be payable pursuant to Section 10.1;

         then QLT may [*] for the compulsory license or sub-license. In the
         event that a competent governmental authority grants, or QLT or Xenova
         is required to grant, a compulsory license in the Field in the
         Territory to a government entity or other Third Party on [*], Xenova
         agrees that the [*] by the parties [*].

(b)      Dispute Resolution - Evaluation/Arbitration. If the parties fail to
         agree on an adjustment to the royalty rate under this Section 10.4
         within [*] after commencing negotiations, either party may refer the
         matter to expedited arbitration under Section 17.2.

10.5     ROYALTY PAYMENTS UPON TERMINATION

If this Agreement is terminated in accordance with Article 16 with respect to
all or some of the Finished Products, QLT shall continue to pay Xenova all
amounts earned pursuant to this Article 10 prior to the date of termination and
any amounts earned thereafter as a result of sales of residual inventory of such
terminated Finished Products. In addition, QLT shall continue to pay to Xenova
all amounts payable hereunder with respect to the Finished Products, if any,
with respect to which this Agreement is not terminated. Such payments shall be
payable on the terms and conditions set out in Article 11, notwithstanding the
termination of this Agreement.

10.6     COMPENSATION FOR USE OF PROGRAM INFORMATION

In consideration of the licenses granted to Xenova by QLT under Section 8.5(a),
Xenova shall pay to QLT, without duplication, during the Term:

(a)      Europe. [*] of the Net Proceeds received by Xenova from the
         commercialization and sale of the Finished Product in the Field in any
         country or regulatory jurisdiction in Europe after Regulatory Approval
         has been obtained therefor;

           * Material has been omitted and filed with the Commission
<PAGE>
                                     - 37 -

(b)      Rest of World. [*] of the Net Proceeds received by Xenova from the
         commercialization and sale of the Finished Product in the Field in any
         country or regulatory jurisdiction outside the Development Territory
         after Regulatory Approval has been obtained therefor; and

(c)      ODD. [*] of the Net Proceeds received by Xenova from the
         commercialization and sale of the Drug in the ODD Field in any country
         or regulatory jurisdiction in the Territory after Regulatory Approval
         has been obtained therefor.

                           ARTICLE 11 - PAYMENT TERMS

11.1     PAYMENT OF ROYALTIES

All amounts payable under Sections 10.1 and 10.6 shall be due and payable within
45 days after the close of each calendar quarter during the periods for which
such amounts are earned and payable.

11.2     CURRENCY FOR ROYALTY PAYMENTS

All amounts payable by either party to the other party under Sections 10.1 and
10.6 shall be payable in United States Dollars, by wire transfer, to a bank
account designated by the party receiving such funds. Monthly sales amounts
shall be translated from other currencies to United States Dollars by using an
average rate of exchange computed as the arithmetic average of daily 12 noon
buying rates in New York certified by the New York Federal Reserve Bank for
Customs purposes for each month. [RATE SOURCE: http://www.stls.frb.org/fred;
http://www.federalreserve.gov/release].

11.3     CURRENCY TRANSFER RESTRICTIONS

If in any country payment or transfer of funds out of such country is prohibited
by law or regulation, the parties hereto shall confer regarding the terms and
conditions on which Finished Products shall be sold in such countries, including
the possibility of payment of royalties to Xenova or QLT, as the case may be, in
local currency to a bank account in such country or the renegotiation of
royalties for such sales, and in the absence of any other agreement by the
parties, such funds payable to Xenova or QLT, as the case may be, shall be
deposited by the other party in whatever currency is allowable in a bank
designated in that country as acceptable to Xenova or QLT, as the case may be.

11.4     TAXES

(a)      For the purposes of this Section 11.4, "TAXES" shall include taxes,
         tariffs, customs duties, brokerage fees and other related charges,
         including, without limitation, social services taxes, goods and
         services tax, value added, excise and other sales taxes.

(b)      Without prejudice to any obligation that Xenova may have to charge, and
         recover from QLT, Value Added Tax on any invoice issued to QLT, Xenova
         shall pay all Taxes assessed or levied in connection with any
         activities performed by Xenova or payments made to Xenova under this
         Agreement. Xenova will remit all Taxes to the appropriate governmental
         body within the time legally required for such remittances and shall
         promptly provide QLT with written evidence of all such remittances.

(c)      Without prejudice to any obligation that QLT may have to charge, and
         recover from Xenova, Value Added Tax on any invoice issued to Xenova,
         QLT shall pay all Taxes assessed or levied in connection with any
         activities performed by QLT or payments made to QLT under this
         Agreement. QLT will remit all such Taxes to the appropriate
         governmental body within the time legally required for such remittances
         and shall promptly provide Xenova with written evidence of all such
         remittances.

(d)      If any law or regulation in any country requires the withholding by
         either party of any Taxes due on payments to be remitted to the other
         party under this Agreement, such Taxes shall be deducted from the
         amounts paid to the other party, provided that the remitting party
         shall take all reasonable measures to reduce the amount of such Taxes.
         If the Taxes are deducted from the amounts paid, the remitting party
         shall furnish the other party with the originals of all official

           * Material has been omitted and filed with the Commission
<PAGE>
                                     - 38 -

         receipts for such Taxes and such other evidence of such Taxes and
         payment thereof as may be reasonably requested by the other party and
         shall provide any reasonable assistance or co-operation which may be
         requested by the other party in connection with any efforts by the
         other party to obtain a credit for such Taxes.

11.5     SALES AND PAYMENT REPORTS

After first Regulatory Approval of the Finished Product in the Field, and for
the remainder of the Term, QLT shall submit to Xenova, concurrently with the
quarterly payments made pursuant to Section 10.1, written reports consistent
with GAAP setting out for the calendar quarter, for each type of Finished
Product, on a country-by-country basis (where reasonably feasible):

(a)      a report of milestone payments under Section 9.2 owing to Xenova, if
         any;

(b)      all amounts received by QLT or its Affiliates or sub-licensees, as
         applicable, from the sale of the Finished Product to end-users thereof;

(c)      details of the quantities of the Finished Product sold in each country;

(d)      the amount of any deductions taken from the amounts received by QLT or
         its Affiliates, as applicable, from the sale of the Finished Product to
         end-users of the Finished Product in calculating Net Sales of the
         Finished Product, and

(e)      the amount of Net Sales of the Finished Product; and

(f)      the amount due and payable pursuant to Section 10.1.

11.6     NET PROCEEDS REPORTS

After first Regulatory Approval of the Finished Product in the Field outside the
Territory and/or after first Regulatory Approval of the ODD Product in the ODD
Field in the Territory, as the case may be, and for the remainder of the Term,
Xenova agrees to submit to QLT, concurrently with the quarterly payments made
pursuant to Section 10.6, written reports consistent with GAAP setting out for
the calendar quarter, for each type of Finished Product or ODD Product, as the
case may be, on a country-by-country basis (where reasonably feasible) and being
sufficient to calculate royalties due to QLT under Section 10.6:

(a)      all amounts received by Xenova or its Affiliates or sub-licensees, as
         applicable, from the sale of the Finished Product to end-users thereof;

(b)      details of the quantities of Finished Product and/or ODD Product sold
         in each country;

(c)      the amount of any deductions taken from the amounts received by Xenova
        or its Affiliates, as applicable, from the sale of the Finished Product
         to end-users of the Finished Product in calculating Net Sales of the
         Finished Product,

(d)      the amount of Net Proceeds for the Product and/or the ODD Product, as
         the case may be; and

(e)      the amount due and payable pursuant to Section 10.6;

11.7     ACCOUNTS AND AUDIT

(a)      Each party shall maintain clear, accurate and complete records in
         accordance with GAAP, for a period of at least [*] for each calendar
         quarter for which such party is obligated to make payments under
         Sections 10.1 or 10.6, as the case may be. In respect of QLT, such
         records shall show the manufacturing, sales, use and other disposition
         of Finished Products in sufficient detail to determine the royalties
         payable to Xenova pursuant to Section 10.1, if any. In respect of
         Xenova, such records shall show the manufacturing, sales, use and other
         disposition of Products and/or ODD Products and royalties received or
         collected from Third Parties from the marketing and distribution of the
         Product and/or ODD products, to determine the amounts to QLT pursuant
         to Section 10.6.

(b)      During the periods set out in Sections 10.1 or 10.6 and for a period of
         [*] thereafter, each party (in this section, the "AUDITED PARTY") shall
         permit the other party (in this section, the "REQUESTING

           * Material has been omitted and filed with the Commission
<PAGE>
                                     - 39 -

         PARTY"), on reasonable notice and at the Requesting Party's cost and
         expense, to arrange for the books and records maintained by the Audited
         Party pursuant to Section 11.7(a) to be examined from time to time
         during the Audited Party's regular business hours, but not more than
         [*], by an independent accounting firm selected by the Requesting Party
         and reasonably acceptable to the Audited Party, provided that such
         independent accounting firm and its accountants are bound by an
         obligation of confidentiality to disclose to the Requesting Party only
         whether the royalty statements and payments made by the Audited Party
         under this Agreement are accurate and, if not accurate, any evidence of
         non-compliance with the terms and conditions of this Agreement. Any
         such examination shall be restricted to records covering the preceding
         [*] period. The Requesting Party shall provide to the Audited Party a
         copy of any audit reports prepared under this subsection.

(c)      In the event the report demonstrates that a party has underpaid the
         other party, the underpaying party shall pay the amount of such
         underpayment immediately. In the event that the underpaid party is the
         Requesting Party, if the underpayment is more than [*] for the audited
         period, the Audited Party shall reimburse the Requesting Party for the
         expense of the audit.

(d)      In the event the report demonstrates that a party has overpaid the
         other party, the overpaying party may deduct the amount of such
         overpayments from future amounts owed to the other party.

11.8     CONFIDENTIALITY OF REPORTS

Each party agrees that:

(a)      the information set forth in the reports required by Sections 11.5 and
         11.6; and

(b)      the records subject to examination under Section 11.7;

shall be subject to the obligations of confidentiality set out in Article 7 and
shall be maintained in confidence by the receiving party and by any independent
accounting firm selected by such party, shall not be used by such party or such
accounting firm for any purpose other than verification of the performance by
the other party of its obligations hereunder, and shall not be disclosed by the
receiving party or such accounting firm to any other person except for purposes
of enforcing this Agreement.

             ARTICLE 12 - REPRESENTATIONS, WARRANTIES AND COVENANTS

12.1     XENOVA'S REPRESENTATIONS, WARRANTIES AND COVENANTS

Xenova hereby represents, warrants and covenants to QLT that:

(a)      Authority. Xenova is a corporation duly organized, existing, and in
         good standing under the laws of England and Wales and has the power,
         authority, and capacity to enter into this Agreement and to carry out
         the transactions and grant the licenses contemplated by this Agreement,
         all of which have been duly and validly authorised by all requisite
         corporate proceedings;

(b)      No Conflicting Agreements. Xenova has not entered and during the Term
         will not enter into any agreement, arrangement or commitment with any
         Person regarding the Drug or the Product that is inconsistent with or
         in derogation of Xenova's obligations under this Agreement and Xenova
         is not subject to any obligations that would prevent it from entering
         into or carrying out its obligations under this Agreement;

(c)      Ownership and Rights. Except as set forth in EXHIBIT 12.1(c), (i)
         Xenova holds all right, title and interest in and to the Xenova
         Patents, free and clear of any rights or encumbrances of any Third
         Parties in, or in respect of, the Xenova Patents which would impact the
         rights granted to QLT under this Agreement; and (ii) the Existing
         Xenova Program Information was generated either by Xenova employees or
         by Third Party contractors, and in each case the terms of employment or
         engagement of such employees or contractors vested in Xenova all right,
         title and interest in and to any Intellectual Property generated by
         them in respect of such Existing Xenova Program Information, and (iii)
         Xenova is not aware (but without necessarily having conducted any

           * Material has been omitted and filed with the Commission
<PAGE>
                                     - 40 -

         searches or investigations) that any Third Party has rights in any
         Existing Xenova Program Information that would adversely affect QLT's
         rights under this Agreement;

(d)      List of Xenova Patents. As far as Xenova is aware (but without
         necessarily having conducted any searches or investigations), EXHIBIT
         1.1(WWW) sets forth a complete list of all Patents that are owned or
         controlled by Xenova as of the Effective Date that are necessary or
         useful for the rights and licenses to the Drug and/or Product granted
         to QLT hereunder;

(e)      Patent Applications Accurate. All statements contained in any
         applications for the registration of the Xenova Patents were true and
         correct as of the date of such applications. For the purposes hereof,
         [*] Patent;

(f)      Patents in Good Standing. As of the Effective Date, in respect of all
         issued Xenova Patents, all maintenance fees and similar annuity
         payments have been made in each of the jurisdictions requiring such
         payments;

(g)      Disclosure. Xenova has disclosed all material data in its possession,
         in any form concerning, and experimental reports in its possession in
         writing of, the Drug and/or Product known to or performed by or at the
         request of Xenova;

(h)      Future Patents. Xenova shall utilize commercially reasonable efforts in
         prosecuting all applications for registration of Xenova Patents filed,
         and in maintaining all Xenova Patents issued as of and after the
         Effective Date;

(i)      Sufficiency of Grants. As far as Xenova is aware (but without
         necessarily having conducted any searches or investigations), and
         except as set forth on EXHIBIT 12.1(c), (A) there are no Intellectual
         Property rights owned or controlled by Xenova as of the Effective Date
         related to the Drug and/or the Product or the use thereof, that are
         necessary or useful to permit QLT to perform the Program to completion
         and to perform the manufacturing, marketing, supply and other
         commercialization activities contemplated by this Agreement for the
         Drug and/or the Product in the Territory, other than those granted to
         QLT under this Agreement, and (B) no Third Party Patent or other
         proprietary right would be infringed by the development, manufacturing,
         marketing, supply and other commercialization activities for the Drug
         and/or the Product in the Territory as contemplated by this Agreement;

(j)      No Third Party Licenses. Xenova is not a party to any Third Party
         Licenses;

(k)      No Complaints. Except as set forth in EXHIBIT 12.1(c), Xenova has not
         received, in respect of any of the Xenova Patents, any notice,
         complaint, threat or claim alleging infringement of, any Patent,
         industrial design, trade secret or other Intellectual Property right or
         proprietary right of any other Person.

(l)      No Regulatory Actions. Xenova has not received, in respect of the Drug,
         any hold/seize (medical) actions from any regulatory agency,
         department, bureau or other governmental entity.

12.2     QLT'S REPRESENTATIONS, WARRANTIES AND COVENANTS

QLT hereby represents, warrants and covenants to Xenova that:

(a)      Authority. QLT is a corporation duly organized, existing, and in good
         standing under the laws of the Province of British Columbia and has the
         power, authority, and capacity to enter into this Agreement and to
         carry out the transactions and grant the licenses contemplated by this
         Agreement, all of which have been duly and validly authorised by all
         requisite corporate proceedings;

(b)      No Conflicting Agreements. QLT has not entered and during the Term will
         not enter into any agreement, arrangement or commitment with any Person
         regarding the Drug or the Product that is inconsistent with or in
         derogation of QLT's obligations under this Agreement and QLT is not
         subject to any obligations that would prevent it from entering into or
         carrying out its obligations under this Agreement;

           * Material has been omitted and filed with the Commission
<PAGE>

                                     - 41 -

(c)      Program. QLT shall utilize sound and reasonable business practice and
         judgment in performance of the Program, including the conduct of
         clinical studies thereunder;

(d)      Future Patents. QLT shall utilize commercially reasonable efforts in
         prosecuting all applications for registration of QLT Patents filed, and
         in maintaining all QLT Patents issued as of and after the Effective
         Date.

          ARTICLE 13 - PATENT PROSECUTION, MAINTENANCE AND ENFORCEMENT

13.1     XENOVA PATENTS - PROSECUTION AND MAINTENANCE

(a)      Xenova's Responsibility. During the Term, except as otherwise set out
         in this section, Xenova shall be responsible for, in its sole
         discretion and at its sole expense, the prosecution and maintenance of
         the Xenova Patents.

(b)      Review. QLT shall have the right to:

         (i)      review all pending applications, Patents, other proceedings,
                  communications, reports and observations relating to the
                  Xenova Patents; and

         (ii)     make recommendations to Xenova concerning the Xenova Patents.
                  Xenova shall reasonably consider such comments but shall have
                  no obligation to revise the filings or other communications.

(c)      Disclosure. Xenova shall promptly disclose to QLT and keep QLT fully
         informed and/or supply QLT in a timely fashion with:

         (i)      the complete texts of all Xenova Patents and all relevant
                  patent applications filed and/or controlled by Xenova; and

         (ii)     all information received concerning:

                  (A)      the institution or possible institution of any
                           interference, opposition, re-examination, reissue,
                           revocation, nullification or any official proceeding
                           involving any Xenova Patents; or

                  (B)      the course of patent prosecution or other proceedings
                           related to any Xenova Patents;

                  including by providing QLT with copies of substantive
                  communications, search reports and third-party observations
                  submitted to or received from patent offices.

(d)      Notice to QLT.

         (i)      Xenova shall notify QLT in writing of its intentions with
                  regard to ceasing prosecution or maintenance of Patent
                  protection for any Xenova Patent in any country in the
                  Territory in reasonable time for QLT to continue prosecuting
                  or maintaining the Patent protection at its own discretion and
                  expense, with a rebuttable presumption that less than [*]
                  notice is not sufficient notice; and

         (ii)     Xenova will execute such documents and otherwise cooperate
                  with QLT as may be necessary (but without significant expense
                  to Xenova) to perfect and maintain the Patent protection that
                  Xenova is ceasing and QLT elects to continue pursuant to
                  Section 13.1(d)(i).

(e)      No Royalty. In the event that QLT elects to continue prosecution or
         maintenance of any Patent forming part of the Xenova Patents in any
         country of the Territory, no royalty obligations shall accrue with
         respect to sales of Finished Products in that country unless Xenova
         agrees to pay the costs of such prosecution or maintenance.

           * Material has been omitted and filed with the Commission
<PAGE>
                                     - 42 -

13.2     QLT PATENTS - PROSECUTION AND MAINTENANCE

(a)      QLT's Responsibility. During the Term, except as otherwise set out in
         this Section, QLT shall be responsible for, in its sole discretion and
         at its sole expense, prosecution and maintenance of the QLT Patents.

(b)      Review. Xenova shall have the right to:

         (i)      review all pending applications, Patents, other proceedings,
                  communications, reports and observations relating to the QLT
                  Patents; and

         (ii)     make recommendations to QLT concerning the QLT Patents. QLT
                  shall reasonably consider such comments but shall have no
                  obligation to revise the filings or other communications.

(c)      Disclosure. QLT shall promptly disclose to Xenova and keep Xenova fully
         informed, and/or supply Xenova in a timely fashion with:

         (i)      the complete texts of all QLT Patents, and

         (ii)     all information received concerning:

                  (A)      the institution or possible institution of any
                           interference, opposition, re-examination, reissue,
                           revocation, nullification or any official proceeding
                           involving any QLT Patents; and

                  (B)      the course of patent prosecution or other proceedings
                           related to any QLT Patents;

                  including by providing Xenova with copies of substantive
                  communications, search reports and Third Party observations
                  submitted to or received from patent offices.

(d)      Notice to Xenova.

         (i)      QLT shall notify Xenova in writing of its intentions with
                  regard to ceasing prosecution or maintenance of Patent
                  protection for any QLT Patent in any country in the Territory
                  in reasonable time for Xenova to continue prosecuting or
                  maintaining the Patent protection at its own discretion and
                  expense, with a rebuttable presumption that less than [*]
                  notice is not sufficient notice; and

         (ii)     QLT will execute such documents and otherwise cooperate with
                  Xenova as may be necessary (but without significant expense to
                  QLT) to perfect and maintain the Patent protection that QLT is
                  ceasing and Xenova elects to continue pursuant to Section
                  13.2(d)(i).

13.3     PATENTABLE IMPROVEMENTS

In the event of any Program Information comprising patentable Intellectual
Property, each party will, at the request of the party owning such Program
Information, reasonably cooperate with the other party in seeking Patent
protection therefor.

13.4     XENOVA PATENTS - INFRINGEMENT

(a)      Notice. Each of QLT and Xenova agrees that during the Term it will
         promptly notify the other party in the event that it becomes aware of
         any infringement or potential infringement of the Xenova Patents.

(b)      QLT to Prosecute. QLT agrees that during the Term it will prosecute
         infringers of the Xenova Patents or otherwise act to eliminate
         infringement of the Xenova Patents by Third Parties in the Territory
         when, in the sole judgement and discretion of QLT, such action is
         necessary, proper and justified in relation to the Product in the Field
         in the Territory. In the event litigation is initiated, the costs of
         litigation shall be funded as follows:

         (i)      subject to clause (ii), [*] of the costs of litigation shall
                  be borne by QLT; and

           * Material has been omitted and filed with the Commission
<PAGE>
                                     - 43 -

         (ii)     [*] of the costs of litigation shall be borne by Xenova,
                  subject to the following:

                  (A)      Xenova's funding obligations will be fully satisfied
                           by QLT setting off such costs against royalties
                           payable by QLT to Xenova under Section 10.1 and
                           Xenova will not be obligated to make out-of-pocket
                           expenditures to satisfy this funding obligation; and

                  (B)      in no event will Xenova's funding obligations under
                           this Section 13.4(b) exceed [*] in any calendar year.

(c)      Costs and Awards. The costs of the litigation shall be deemed to be
         QLT's actual Third Party expenses directly related to or incurred in
         connection with the alleged infringement. At such time as the
         infringement ceases (whether voluntarily, by settlement or by court
         order), QLT's full royalty obligations shall resume. Any award,
         recovery, lump-sum settlement or royalty payment (in this section, an
         "AWARD") made to QLT by the alleged infringer shall be treated as
         follows:

         (i)      Xenova Reimbursed. first, the Award shall be applied to pay
                  Xenova in respect of any amounts set-off against royalties
                  pursuant to Section 13.4(b)(ii)(A);

         (ii)     QLT Reimbursed. secondly, the Award shall be applied to
                  reimburse QLT for all actual Third Party expenses directly
                  related to or incurred in connection with the alleged
                  infringement for which royalty payments were not withheld; and

         (iii)    Remainder. thirdly, any remaining amount of the Award shall be
                  treated as if it were Net Sales of Finished Product, with
                  Xenova receiving a royalty on the remaining amount in
                  accordance with Section 10.1 and QLT retaining the balance.

(d)      QLT Does Not Prosecute. If QLT elects not to bring or prosecute
         infringement litigation pursuant to this Section 13.4 it will promptly
         notify Xenova and Xenova may elect to bring suit against the alleged
         infringer at its sole expense, and in its sole discretion. In this
         case, any award, recovery, lump-sum settlement or royalty payment made
         by the alleged infringer shall be retained by Xenova.

13.5     QLT PATENTS - INFRINGEMENT

(a)      QLT's Responsibility. QLT agrees that during the Term, it will, at
         QLT's sole cost and expense, protect its interests in the QLT Patents
         from infringement by Third Parties and that it will prosecute
         infringers or otherwise act to eliminate infringement when, in the sole
         judgement and discretion of QLT, such action is necessary, proper and
         justified.

(b)      Xenova's Assistance. Xenova agrees that during the Term it will
         promptly notify QLT in the event that it becomes aware of any
         infringement or potential infringement of the QLT Patents and agrees
         that it will, at QLT's request and expense, reasonably assist QLT to
         prevent or discontinue any such infringement or potential infringement.

13.6     THIRD PARTY CLAIMS OF INFRINGEMENT

(a)      In the event of the initiation of any suit (an "INFRINGEMENT SUIT") in
         the Territory by a Third Party against Xenova or QLT or any of their
         respective Affiliates for Patent infringement arising from the
         manufacture, use, sale, distribution or marketing of the Drug and/or
         the Product, the party sued shall promptly notify the other party in
         writing.

(b)      In the event that a party alone is subject to an Infringement Suit:

         (i)      that party shall have the first right, but not the obligation,
                  to defend the Infringement Suit;

         (ii)     that party will provide the other party with the opportunity
                  to participate in the defense of such Infringement Suit; and

         (iii)    the other party shall assist and cooperate with the party
                  being sued in any such litigation.

         If the party being sued fails to defend the Infringement Suit within a
         reasonable time after receiving notice of the Infringement Suit, then
         the other party shall have the right, but not the

           * Material has been omitted and filed with the Commission
<PAGE>
                                     - 44 -

         obligation, to defend the Infringement Suit and the party being sued
         shall assist and cooperate with the other party in any such litigation.

(c)      In the event that both QLT and Xenova are subject to an Infringement
         Suit:

         (i)      each of Xenova and QLT shall have the right, but not the
                  obligation, to jointly defend the Infringement Suit; and

         (ii)     the parties shall assist and cooperate with each other in any
                  such litigation.

         If either party fails to jointly defend the Infringement Suit with the
         other party within a reasonable time after receiving notice of the
         Infringement Suit, then the other party shall have the right, but not
         the obligation, to solely defend the Infringement Suit and the
         declining party shall assist and cooperate with the defending party in
         any such litigation.

(d)      The party or parties conducting the defense of an Infringement Suit
         shall have full or joint control over its conduct, as the case may be,
         provided that neither party shall make any admissions or concessions
         nor enter into any settlements with respect to an Infringement Suit
         without the other party's prior written consent, which consent shall
         not be unreasonably withheld, conditioned or delayed.

(e)      The costs of defending any Infringement Suit incurred by either party
         (i) shall be borne by Xenova if the infringement arises primarily from
         [*][*] (and primarily not [*][*]) or from a breach by Xenova of any of
         the warranties given by it under Section 12.1, (ii) shall be borne by
         QLT if the infringement arises from a breach by QLT of any of the
         warranties given by it under Section 12.2, and (iii) shall otherwise be
         borne by each party [*]to the extent that [*] (thus, by way of example,
         if the costs relate to the defence of a claim that is [*]).

13.7     INFRINGEMENT OF THIRD PARTY PATENTS

(a)      Without limiting Xenova's obligation to indemnify QLT under Section
         15.1, and notwithstanding Section 10.1, in the event that any
         activities licensed to QLT under this Agreement are found to infringe
         the Intellectual Property rights of a Third Party and result in the
         payment of Third Party royalties or other compensation by QLT or a QLT
         Affiliate or sub-licensee to the Third Party, QLT may, in its sole
         discretion, reduce its royalty payments to Xenova under Section 10.1 in
         an amount equal to the Third Party royalties or other compensation paid
         to the Third Party, up to a maximum of [*] of the royalties payable to
         Xenova under Section 10.1, in respect of each country in the Territory
         for which Third Party royalties are being paid, provided that such
         reductions shall only be made where the infringement arises from the
         use of Intellectual Property licensed to QLT under this Agreement, and
         not any other Intellectual Property that QLT chooses to use in the
         manufacture, use, sale, distribution or marketing of the Drug and/or
         the Product.

                            ARTICLE 14 - TRADEMARKS

14.1     PRODUCT TRADEMARKS

(a)      During the Term, QLT shall be responsible for, in its sole discretion
         and at its sole expense, the origination, selection, application,
         prosecution, registration and maintenance of one or more trademarks and
         trade-names under which the Product and/or the Finished Product will be
         marketed, distributed and sold in the Field in the Territory.

(b)      QLT will, at Xenova's request, add or cause to be added, a marking in a
         form proposed by Xenova and reasonably acceptable to QLT on the
         packaging of all Finished Product sold by QLT, its Affiliates or
         sub-licensees hereunder, to indicate the connection of Xenova as
         licensor of the Product, provided that such marking shall not cause any
         contravention of GMPs or any United States of America or other foreign
         federal, state, provincial or local laws, regulations or bylaws,
         including those relating to labelling or packaging.

           * Material has been omitted and filed with the Commission
<PAGE>
                                     - 45 -

14.2     USE OF TRADEMARKS

Nothing contained in this Agreement shall give either party any right to use any
trademark or trade-name of the other party, except with the prior written
consent of the other party.

              ARTICLE 15 - INDEMNITY AND LIMITATIONS OF LIABILITY

15.1     MUTUAL INDEMNIFICATION

Except as otherwise specifically provided in this Agreement, each of the parties
(in this section, an "INDEMNIFYING PARTY") agrees to defend, indemnify and hold
harmless the other party and its Affiliates and their respective directors,
officers, employees and agents (in this section, the "INDEMNIFIED PARTIES") from
and against all threatened or actual actions, claims, demands, proceedings,
suits, losses, damages, costs and expenses (including reasonable attorney fees)
but excluding punitive damages (collectively, in this Article, "CLAIMS") of
Third Parties of whatsoever kind or nature (including but not limiting the
generality of the foregoing, in respect of death, injury, loss or damage to any
person or property) incurred, caused, arising out of or relating to:

(a)      any breach or violation of, or failure to properly perform, any
         covenant made in this Agreement by the Indemnifying Party, unless
         waived in writing by the applicable Indemnified Party;

(b)      any breach of any of the representations or warranties made in this
         Agreement by the Indemnifying Party; or

(c)      the gross negligence or willful misconduct of the Indemnifying Party;

except to the extent that such Claims are attributable to the negligence or
willful misconduct of any of the Indemnified Parties.

15.2     PRODUCT LIABILITY INDEMNITY

In addition to Section 15.1,

(a)      QLT agrees to defend, indemnify and hold harmless Xenova and its
         Affiliates and their respective directors, officers, employees and
         agents (in this section, the "XENOVA INDEMNIFIED PARTIES") from and
         against all Claims of Third Parties of whatsoever kind or nature
         (including but not limiting the generality of the foregoing, in respect
         of death, injury, loss or damage to any person or property) incurred,
         caused, arising out of or relating to:

         (i)      the administration, utilization and/or ingestion of the Drug
                  and/or the Product in the Field in the Development Territory
                  pursuant to any clinical trials conducted by or on behalf of
                  QLT under this Agreement; and

         (ii)     the administration, utilization and/or ingestion of the Drug
                  and/or the Product in the Field in the Territory provided to
                  the injured Third Party by or on behalf of QLT under this
                  Agreement;

         except to the extent that such Claims are attributable to the
         negligence or willful misconduct of the Xenova Indemnified Parties; and

(b)      Xenova agrees to defend, indemnify and hold harmless QLT and its
         Affiliates and their respective directors, officers, employees and
         agents (in this section, the "QLT INDEMNIFIED PARTIES") from and
         against all Claims of Third Parties of whatsoever kind or nature
         (including but not limiting the generality of the foregoing, in respect
         of death, injury, loss or damage to any person or property) incurred,
         caused, arising out of or relating to:

         (i)      the administration, utilization and/or ingestion of the Drug
                  and/or the Product:

                  (A)      in the Field outside the Development Territory, or

                  (B)      outside the Field, anywhere, worldwide,

                  pursuant to any clinical trials conducted by or on behalf of
                  Xenova; and

<PAGE>
                                     - 46 -

         (ii)     the administration, utilization and/or ingestion of the Drug
                  and/or the Product:

                  (A)      in the Field outside the Development Territory, or

                  (B)      outside the Field, anywhere, worldwide,

                  provided to the injured Third Party by or on behalf of Xenova;

         except to the extent that such Claims are attributable to the
         negligence or willful misconduct of the QLT Indemnified Parties.

15.3     INDEMNIFICATION PROCEDURE

If either QLT or Xenova or any of their respective Affiliates (in this section,
an "INDEMNIFIED PARTY"), receives any written Claim which it believes is the
subject of, or otherwise believes that circumstances exist giving rise to, an
indemnity under this Agreement by either Xenova or QLT, as the case may be (in
this section, an "INDEMNIFYING PARTY"), the Indemnified Party shall, as soon as
reasonably practicable after forming such belief, give notice of the Claim or
circumstances to the Indemnifying Party, including full particulars of the claim
or circumstances to the extent known to the Indemnified Party, provided,
however, that the failure to give timely notice to the Indemnifying Party as
contemplated hereby shall not release the Indemnifying Party from any liability
to indemnify any persons indemnified under this Article 15, and, subject to
Article 13 in respect of infringement claims and infringement actions, the
following shall apply:

(a)      the Indemnifying Party shall have the right, by prompt notice to the
         Indemnified Party, to assume the defense of the Claim with counsel
         reasonably satisfactory to the Indemnified Party, and at the cost of
         the Indemnifying Party;

(b)      if the Indemnifying Party does not so assume the defense of the Claim,
         the Indemnified Party may assume the defense with counsel of its choice
         at the sole expense of the Indemnifying Party;

(c)      if the Indemnifying Party assumes the defense of the Claim, the
         Indemnified Party may participate therein through counsel of its
         choice, but the cost of such counsel shall be borne solely by the
         Indemnified Party;

(d)      any party not assuming the defense of any such Claim shall render all
         reasonable assistance to the party assuming the defense, and all
         out-of-pocket costs of this assistance shall be borne solely by the
         Indemnifying Party; and

(e)      no Claim shall be settled other than by the party defending the Claim,
         and then only with the consent of the other party, which shall not be
         unreasonably withheld, provided, however, that the Indemnified Party
         shall have no obligation to consent to any settlement of any Claim
         which imposes on the Indemnified Party any liability or obligation
         which cannot be assumed and performed in full by the Indemnifying
         Party.

15.4     NO CONSEQUENTIAL DAMAGES

EXCEPT FOR, AND WITHOUT LIMITING THE SCOPE OF THE INDEMNIFICATION OBLIGATION
UNDER, Sections 15.1 AND 15.2, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER PARTY FOR ANY LOST PROFITS, LOST SAVINGS OR ANY PUNITIVE, EXEMPLARY,
INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES ARISING OUT OF ANY BREACH OR
BREACHES OF THIS AGREEMENT OR THE POSSESSION OR USE OF THE DRUG, THE PRODUCT OR
ANY OTHER MATERIALS OR SERVICES TO BE SUPPLIED HEREUNDER, EVEN IF THE OTHER
PARTY HAS KNOWLEDGE OF THE POSSIBILITY OF SUCH POTENTIAL LOSS OR DAMAGES.

                       ARTICLE 16 - TERM AND TERMINATION

16.1     TERMINATION

This Agreement may not be terminated by either party except in accordance with
this Article 16. Termination of this Agreement, in whole or in part, before the
expiration of the term shall be without

<PAGE>
                                     - 47 -

prejudice to the right of any party accrued to the effective date of
termination, without prejudice to the remedies in respect of any previous breach
of any of the representations, warranties and covenants herein contained and
without prejudice to any rights to indemnification set forth herein and to any
other provisions referred to in Section 16.9 and without prejudice to any other
right or remedy that the terminating party may have.

16.2 EXPIRATION

(a)      This Agreement shall commence on the Effective Date and shall expire
         upon the later of:

         (i)      the expiration, lapse or invalidation of the last Valid Claim
                  under any Xenova Patent licensed to QLT under Section 8.4 in
                  all countries in the Territory; and

         (ii)     the expiration 10 years after the date of Commercial Launch in
                  the last country in the Territory for which QLT chooses to
                  undertake Commercial Launch;

         unless otherwise agreed by the parties, and subject to any earlier
         termination in accordance with the provisions of this Agreement (the
         "TERM").

(b)      Notwithstanding the Term set out in Section 16.2(a), in each country in
         the Territory, upon the later of the expiration, lapse or invalidation
         of the last Valid Claim licensed to QLT under Section 8.4 in such
         country and the expiration of 10 years after Commercial Launch in such
         country, if applicable:

         (i)      this Agreement shall be terminated with respect to the grant
                  of license set out under Section 8.4 in such country, and
                  without further action on the part of either party, QLT shall
                  be granted a perpetual, non-exclusive, fully paid,
                  royalty-free license, with the right to sub-license, under the
                  Program Information and other Intellectual Property owned or
                  controlled by Xenova to develop, make, have made, use, have
                  used, sell, have sold, offer for sale, import and export the
                  Drug and/or the Product in the Field in such country; and

         (ii)     all regulatory licenses and filings in such country related to
                  the Drug and/or the Product shall remain owned by QLT.

16.3     EARLY TERMINATION BY QLT

(a)      Before Commercial Launch. At any time before Commercial Launch of the
         Product in any country in the Territory, QLT may terminate this
         Agreement for convenience, in its entirety, upon not less than 90 days'
         prior written notice to Xenova; provided that if such termination
         notice is to be given within the [*]after the Effective Date, QLT shall
         first offer to discuss with Xenova QLT's intention to terminate and the
         reasons therefor before delivering any such termination notice.

(b)      After Commercial Launch. At any time after Commercial Launch of the
         Product in any country in the Territory, QLT may terminate this
         Agreement for convenience, in its entirety, upon not less than 180
         days' prior written notice to Xenova.

(c)      Adverse Change. Notwithstanding Sections 16.3(a) and 16.3(b), in the
         event of any confirmed information of Serious Adverse Events related to
         the utilization, medical administration, safety or efficacy profile of
         the Drug or the Product, QLT may terminate this Agreement, in its
         entirety, at any time upon 60 days prior written notice to Xenova.

(d)      Material Breach. At any time during the Term, in the event of a
         material breach by Xenova of any of its material obligations under this
         Agreement, QLT may terminate this Agreement, in its entirety:

         (i)      upon not less than 45 days' prior written notice to Xenova, if
                  the breach is, by its nature, reasonably expected to be
                  curable, provided that Xenova shall have the opportunity to:

                  (A)      cure the breach within the 45-day period; or

           * Material has been omitted and filed with the Commission
<PAGE>
                                     - 48 -

                  (B)      if the breach is not capable of cure within the
                           45-day cure period, commence a cure within the 45-day
                           period and diligently pursue the cure to completion
                           within a reasonable period;

                  to avoid termination of this Agreement; or

         (ii)     immediately by written notice, if the breach is, by its
                  nature, incurable.

16.4     EARLY TERMINATION BY XENOVA

Material Breach. At any time during the Term, in the event of a material breach
by QLT of any of its material obligations under this Agreement, Xenova may
terminate this Agreement, in its entirety:

(a)      upon not less than 45 days' prior written notice to QLT, if the breach
         is, by its nature, reasonably expected to be curable, provided that QLT
         shall have the opportunity to:

         (i)      cure the breach within the 45-day period; or

         (ii)     if the breach is not capable of cure within the 45-day cure
                  period, commence a cure within the 45-day period and
                  diligently pursue the cure to completion within a reasonable
                  period;

         to avoid termination of this Agreement; or

(b)      immediately by written notice, if the breach is, by its nature,
         incurable.

For greater certainty, the parties acknowledge and agree that a Marketing
Default shall not, in and of itself, constitute a material breach by QLT of a
material obligation under this Agreement and that Xenova's sole remedies in
respect of a Marketing Default (for which Xenova pursues remedies under Section
5.3) shall be as set out in Section 5.3(d).

16.5     TERMINATION ON BANKRUPTCY

During the Term, either party may, at its option, on 10 days prior written
notice, terminate this Agreement upon the happening of any one or more of the
following events by delivering written notice to that effect to the other party:

(a)      if the other party is adjudged bankrupt or insolvent;

(b)      if any petition under the Bankruptcy and Insolvency Act (Canada), the
         Insolvency Act (UK), or any other statute of similar purport, is filed
         by or against the other party and such petition is not dismissed within
         90 days after it has been filed;

(c)      if the other party makes a general assignment for the benefit of its
         creditors;

(d)      if the other party applies for, or appoints, a receiver, trustee,
         custodian, or liquidator of the party or of its assets;

(e)      if any resolution is passed or order made or other steps taken for the
         winding up, liquidation or other termination of the existence of the
         other party; or

(f)      if the other party ceases to carry on its business.

16.6     EFFECT OF TERMINATION

In the event that this Agreement is terminated:

(a)      both parties hereto shall be released from all obligations and duties
         imposed or assumed under this Agreement except as expressly provided
         under Section 16.9;

(b)      each of QLT and Xenova shall remain responsible to pay to the other
         party all royalty payments and other amounts accruing prior to the
         effective date of termination, which shall be payable on the terms and
         conditions set out in Article 11 notwithstanding the termination of
         this Agreement, and may proceed to enforce payment thereof through
         exercise any or all of the rights and

<PAGE>
                                     - 49 -

         remedies contained herein or otherwise available to it at law or in
         equity, successively or concurrently at the option of such party; and

(c)      QLT and its sub-licensees shall have a reasonable time to liquidate all
         inventory of Finished Product in QLT's possession or control, provided
         that QLT will continue to make royalty payments to Xenova in the manner
         specified under this Agreement on Net Sales of such inventories,
         notwithstanding the termination of this Agreement.

16.7     XENOVA LICENSE IN THE CASE OF CERTAIN EARLY TERMINATIONS

In the event that:

(a)      QLT terminates this Agreement under any of Sections 16.3(a), 16.3(b) or
         16.3(c);

(b)      Xenova terminates this Agreement under Section 16.4;

(c)      a country is deleted from the Territory under Section 5.2(b), with
         respect to the country deleted; or

(d)      either Party terminates this Agreement under Section 16.5;

then the following shall occur:

(e)      if the effective date of termination occurs prior to the receipt of the
         first NDA approval of the Product in the Field in the Territory:

         (i)     QLT shall grant to Xenova an irrevocable, royalty-free,
                 world-wide (or in the case of a country deleted from the
                 Territory pursuant to Section 5.2(b), for such country),
                 exclusive license, with the right to sublicense, to use the
                 Drug and/or the Product for the purpose of researching,
                 developing, making, having made, using, having used, selling,
                 having sold, offering for sale, importing and exporting the
                 Drug and/or the Product in the Field, anywhere, world-wide (or
                 in the case of a country deleted from the Territory pursuant to
                 Section 5.2(b), for such country), under the QLT Patents and
                 such Program Information and other Intellectual Property as may
                 be owned or controlled by QLT as of the effective date of
                 termination as may be necessary or useful for such purposes,
                 all on the terms and conditions set out in this Agreement,
                 provided that, in respect of any Program Information assigned
                 by Xenova to QLT under Section 8.2(c) having application beyond
                 the Drug and/or the Product, the license set out herein shall
                 be non-exclusive, and

         (ii)    QLT will assign and transfer to Xenova all registered
                 trademarks, trademark applications and trade-names, including
                 all goodwill associated therewith, used solely to market,
                 distribute and sell the Product and/or the Finished Product in
                 the Field in the Territory, and

         (iii)   subject to the Act and other applicable laws, QLT will use
                 commercially reasonable efforts to assign and transfer to
                 Xenova all regulatory filings made by or on behalf of QLT in
                 connection with the Drug and/or the Product in the Field in the
                 Territory; and

(f)      if the effective date of termination occurs after the receipt of the
         first NDA approval of the Product in the Field in the Territory, the
         provisions of Sections 16.7(e)(i), 16.7(e)(ii) and 16.7(e)(iii) shall
         apply, provided that the license granted under Section 16.7(e)(i) shall
         be a royalty-bearing license. In this case, the royalty to be paid by
         Xenova to QLT shall:

         (i)      be paid in consideration for the development and
                  commercialization work performed by QLT prior to the effective
                  date of termination,

         (ii)     be mutually agreed by the parties negotiating in good faith,
                  provided that:

                  (A)      the royalty rates shall be lower than those set out
                           in Section 10.1, which shall be the maximum royalty
                           rates available, and

                  (B)      if the parties do not agree to a royalty rate within
                           45 days after the effective date of termination, the
                           matter will be referred to expedited arbitration
                           under Section 17.2, and

<PAGE>
                                     - 50 -

         (iii)    be payable on terms and conditions set out in Article 11,
                  notwithstanding the termination of this Agreement,

         provided that if Xenova has terminated this Agreement for QLT's failure
         to implement a Specific Action under Section 5.2(c), the cumulative
         amount payable by Xenova in respect of the royalty payable hereunder
         shall be capped at a maximum amount equal to QLT's cumulative
         development and commercialization costs with respect to the Drug and/or
         the Product in the Field.

16.8     QLT LICENSE IN THE CASE OF CERTAIN EARLY TERMINATIONS

In the event that:

(a)      QLT terminates this Agreement under Section 16.3(d) due to a material
         breach by Xenova; or

(b)      QLT terminates this Agreement under Section 16.5;

all rights and licenses granted by Xenova to QLT under this Agreement shall
continue as exclusive or non-exclusive royalty-bearing licenses, as the case may
be, granted by Xenova to QLT on the terms and conditions set out in this
Agreement, provided that:

(c)      the royalty rates to be paid by QLT to Xenova after the effective date
         of termination shall:

         (i)      be mutually agreed by the parties negotiating in good faith,
                  and

         (ii)     be lower than the royalty rates set out in Section 10.1, which
                  shall be the maximum royalty rates available, and

(d)      if the parties do not agree to a royalty rate within 45 days after the
         effective date of termination, the matter will be referred to expedited
         arbitration under Section 17.2.

Such royalty payments shall be payable on the terms and conditions set out in
Article 11 notwithstanding the termination of this Agreement.

16.9     SURVIVAL

Expiration or early termination of this Agreement shall not relieve either party
of its obligations incurred prior to such expiration or early termination. In
addition, the following provisions shall survive any expiration or early
termination of this Agreement:

(a)      Article 1 (Interpretation);

(b)      Section 3.11 (QLT's Liability for Recall);

(c)      Article 7 (Confidentiality and Use of Information);

(d)      8.1 (Ownership of Confidential Information) and 8.2 (Ownership of
         Program Information);

(e)      Section 10.5 (Royalty Payments Upon Termination);

(f)      Sections 11.1 to 11.6 inclusive (Payment Terms) shall survive in
         respect of any payments that may be due under this Agreement after the
         date of termination;

(g)      Section 11.7 (Accounts and Audit) and 11.8 (Confidentiality of
         Reports);

(h)      Article 12 (Representations, Warranties and Covenants);

(i)      Article 15 (Indemnity and Limitations of Liability);

(j)      Sections 16.6 (Effect of Termination), 16.7 (Xenova License in the case
         of Certain Early Terminations), 16.8 (QLT License in the case of
         Certain Early Terminations) and 16.9 (Survival); and

(k)      Article 17 (Miscellaneous Provisions).

<PAGE>
                                     - 51 -

                     ARTICLE 17 - MISCELLANEOUS PROVISIONS

17.1     GOVERNING LAW

This Agreement will be governed by and construed in accordance with the laws of
England, excluding any choice of law rules that may direct the application of
the laws of another jurisdiction. The parties acknowledge and agree that the
International Sale of Goods Act and the United Nations Convention on Contracts
for the International Sale of Goods shall have no application to this Agreement.

17.2 EXPEDITED ARBITRATION

(a)      Notice. In the event of any dispute, controversy or claim arising
         under, out of or in connection with the subject matter of this
         Agreement or the breach, termination or invalidity of this Agreement
         (each, a "DISPUTE") that relates to:

         (i)      the matters described in Section 3.7(f);

         (ii)     disagreement as to whether Commercial Launch of the Product in
                  [*] as a whole, as set out in Section 5.2(b);

         (iii)    whether QLT has failed to diligently discharge its
                  commercialization obligations, as set out in Section 5.2(a);

         (iv)     confirmation of whether QLT has committed a Marketing Default,
                  as set out in Section 5.3(c);

         (v)      the inability of the parties to mutually agree on revised
                  financial terms in the event of a Marketing Default, as set
                  out in Section 5.3(d);

         (vi)     disagreement as to whether there exists any actual or
                  potential Cross-Over Use or Cross Pricing Risk or disagreement
                  with respect to mitigation measures, as set out in Section 6.7
                  (where the arbitrator shall be instructed to attempt to find a
                  mutually acceptable solution to avoid the Cross-Over Use or
                  Cross-Pricing Risk whilst giving reasonable protection to each
                  party's commercial interests);

         (vii)    the refusal of Xenova to grant its consent to a sub-license
                  proposed to be granted by QLT, as set out in Sections 8.4(c)
                  and 8.4(d); or

         (viii)   the inability of the parties to mutually agree on revised
                  financial terms in the event of certain early terminations, as
                  set out in Sections 16.7 and 16.8;

         the party asserting the claim (the "ASSERTING PARTY") shall first
         inform the other party, in writing, of the specific nature of the
         Dispute, the pertinent provisions of this Agreement and its proposed
         resolution.

(b)      Executive Resolution Efforts. Any Dispute shall first be submitted to
         the senior management of the parties for amicable resolution for a
         period of not less than [*] to resolve the Dispute prior to engaging in
         a formal Dispute resolution process. Any Dispute that cannot be settled
         amicably by the senior management of the parties shall be finally
         settled by arbitration in accordance with the clauses (b) to (c) of
         this Section 17.2 .

(c)      Submission to Arbitration. Each Dispute hereunder shall be submitted to
         arbitration in accordance with the Commercial Arbitration Rules of the
         American Arbitration Association (the "AAA") by a panel of one
         arbitrator (unless the parties agree otherwise) appointed by the AAA
         and who is knowledgeable as to the subject matter of the Dispute.

(d)      AAA Expedited and Optional Emergency Rules to Apply. The parties agree
         that the AAA Expedited Procedures and Optional Rules for Emergency
         Measures of Protection shall apply to all arbitral proceedings under
         this Section 17.2, notwithstanding the amount or complexity of any
         Dispute.

(e)      Procedures. The arbitrator shall have the right to order discovery as
         he or she deems appropriate, and to order injunctive relief and the
         payment of legal fees, costs and other

           * Material has been omitted and filed with the Commission
<PAGE>
                                     - 52 -

         damages, excluding punitive damages. Judgement upon the award rendered
         by the arbitrator may be entered in any court having jurisdiction.

(f)      Place of Arbitration. Any arbitration conducted under this Section 17.2
         shall take place in New York City, New York, USA.

17.3     TRADITIONAL ARBITRATION

Except for:

(a)      applications for injunctions for the protection of the Xenova Patents,
         the QLT Patents, Program Information, Confidential Information or any
         other Intellectual Property of either party, which shall not be subject
         to arbitration, but shall be submitted to a court of competent
         jurisdiction for resolution; and

(b)      matters subject to expedited arbitration as set out in Section 17.2;

any Dispute shall be first submitted to the senior management of the parties for
amicable resolution for a period not less than [*] to resolve the Dispute prior
to engaging in a formal dispute resolution process. Any Dispute that cannot be
settled amicably by the senior management of the parties shall be finally
settled by arbitration in accordance with the procedures set out in Section
17.2, except that the Dispute shall be submitted to arbitration before a panel
of 3 arbitrators appointed by the AAA and the AAA Expedited Procedures and
Optional Rules for Emergency Measures of Protection referred to in Section
17.2(d) shall not apply.

17.4 AMENDMENT

Neither party shall claim any amendment, modification, or release from any
provision hereof by mutual agreement, acknowledgement or acceptance or purchase
order forms or otherwise, unless in writing signed by an authorized
representative of each party.

17.5 ASSIGNMENT

No party shall assign this Agreement, in whole or in part, to any person without
the prior written consent of the other parties, such consent not to be
unreasonably withheld or delayed, provided that either party may assign and
transfer all of its rights and obligations under this Agreement without consent
of the other parties,

(a)      to an Affiliate (with a provision for assignment back to the assigning
         party in the event the Affiliate ceases to be an Affiliate) ;

(b)      to a successor or assignee of all or substantially all of the assigning
         party's assets (including intellectual property rights) and business in
         the field of oncology (which must include all rights associated with
         the Drug and/or Product but, in the case of [*]) ("Oncology Assets"),
         provided that written notice is delivered to the other parties.
         However, a party shall not have any right to assign and transfer its
         Oncology Assets under this paragraph (b) if the [*]; or

(c)      to a successor or assignee of all or substantially all of the assigning
         party's assets;

Any permitted assignee shall assume all obligations of its assignor under this
Agreement. Unless:

(d)      such assignment has been consented to in writing by the other party; or

(e)      in the event of an assignment under paragraphs (b) and (c) hereof, the
         successor or assignee agrees to assume such obligations;

then no assignment shall relieve any party of responsibility for the performance
of any obligations arising from and after the effective date of such assignment
which such party has hereunder, and in any event the assignor shall remain bound
by the provisions of Article 7 and Sections 8.1 and 8.2. Any assignment in
violation of the foregoing shall be null and void.

           * Material has been omitted and filed with the Commission
<PAGE>
                                     - 53 -

17.6     COMPLIANCE WITH LAWS

Each party will be responsible for assuring that all applicable rules, laws and
regulations are met in the performance of its duties
under this Agreement.

17.7     ENTIRE AGREEMENT

This Agreement, together with the Exhibits hereto, constitutes the entire
agreement and understanding between the parties with respect to the subject
matter hereof, and supersedes all written or oral prior agreements and
understandings between the parties with respect to the subject matter hereof,
including, without limitation, the Interim Agreement. In the event of conflict
between the terms and conditions of this Agreement and those of any Exhibit
attached to this Agreement, the terms and conditions of this Agreement shall
govern, unless the parties expressly provide that the conflicting term or
condition of such Exhibit or agreement shall supersede the corresponding term or
condition of this Agreement.

17.8     EXHIBITS

The Exhibits listed below and attached hereto shall be deemed to form an
integral part of this Agreement:

        Exhibit 1.1(p)             Description of XR9576

        Exhibit 1.1(q)             Drug Specification

        Exhibit 1.1(ccc)           Summary of Program Activities

        Exhibit 1.1(hhh)           Definition of Registration Package

        Exhibit 1.1(www)           List of Xenova Patents

        Exhibit 12.1(c)            Issues Relating to Xenova Patents

17.9     FORCE MAJEURE

If the performance of any part of this Agreement by either party, or of any
obligation under this Agreement, is prevented, restricted, interfered with or
delayed by reason of any cause beyond the reasonable control of the party liable
to perform, unless conclusive evidence to the contrary is provided, the party so
affected shall, upon giving written notice to the other party, be excused from
such performance to the extent of such prevention, restriction, interference or
delay, provided that the affected party shall use its reasonable commercial
efforts to avoid or remove such causes of non-performance and shall continue
performance with the utmost dispatch whenever the causes are removed. When such
circumstances arise, the parties shall discuss what, if any, modification of the
terms of this Agreement may be required in order to arrive at an equitable
solution.

17.10    FURTHER ASSURANCES

The parties hereby covenant and agree without the necessity of any further
consideration, to execute, acknowledge and deliver any and all such other
documents and take any such other action as may be reasonably necessary to carry
out the intent and purpose of this Agreement.

17.11    HEADINGS

The headings in this Agreement are solely for convenience of reference and shall
not be used for purposes of interpreting or construing the provisions hereof.

17.12    INJUNCTION

Each party agrees that the other parties may be irreparably damaged if any
provision of this Agreement is not performed in accordance with its terms.
Accordingly, each party will be entitled to apply for an injunction or
injunctions to prevent breaches of any of the provisions of this Agreement by
the other parties, without showing or proving any actual or threatened damage,
notwithstanding any rule of law or equity to the contrary, and may specifically
enforce such provisions by an action instituted in a court

<PAGE>
                                     - 54 -

having jurisdiction. These specific remedies are in addition to any other remedy
to which the parties may be entitled at law or in equity.

17.13 INUREMENT

This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.

17.14    NOTICE

All notices, requests and other communications required or permitted to be given
hereunder or with respect hereto will be in writing, and may be given by:

(a)      personal delivery;

(b)      registered first-class Canada or United Kingdom air mail, postage
         prepaid by the sender, return receipt requested;

(c)      overnight delivery service, charges prepaid by the sender; or

(d)      via facsimile (confirmed by delivery by one of the 3 methods stated
         above);

and, in each case, addressed to the other party at the address for such party as
set forth below, and will be effective one Business Day after receipt in the
case of deliveries under Sections 17.14(a), 17.14(c) or 17.14(d), and 5 Business
Days after mailing in the case of deliveries under Section 17.14(b).

If to QLT:

         QLT Inc.
         887 Great Northern Way
         Vancouver, British Columbia
         Canada V5T 4T5

         Attention:   Chief Executive Officer

         Fax No.: +1 604 707-7001

With a copy to:

        Farris, Vaughan, Wills & Murphy
        P.O. Box 10026, Pacific Centre South
        Toronto Dominion Bank Tower
        700 West Georgia Street, 26th Floor
        Vancouver, British Columbia
        CANADA V7Y 1B3

        Attention:R. Hector MacKay-Dunn

        Fax No.:  +1 604 661-9349

If to Xenova:

         Xenova Limited
         957 Buckingham Avenue
         Slough
         Berkshire, England
         UNITED KINGDOM SL1 4NL

         Attention:  Chief Executive Officer

         Fax No.:  +44 1753 706615

Any party may change its address at which notice is to be received by written
notice provided pursuant to this Section 17.14.

17.15    PRESS RELEASES/PUBLICITY

Each party agrees that it will not, without the prior written consent of the
other party:

(a)      originate any publicity, news release or public announcement, written
         or oral, whether to the public, the press, stockholders or otherwise,
         referring to the existence or to the terms of this

<PAGE>
                                     - 55 -

         Agreement, including its existence, the subject matter to which it
         relates, the performance under it (including the progress of
         development activities in relation to the Drug in the Field in the
         Development Territory) or any of its specific terms and conditions,
         except for:

         (i)      disclosures that are substantially the same as the disclosure
                  in the initial press releases; or

         (ii)     such announcements as, in the opinion of the counsel for the
                  party making such announcement, are required by law, including
                  Canadian, United Kingdom and United States of America
                  securities laws, rules or regulations, and the regulations of
                  the London Stock Exchange or the Toronto Stock Exchange, or
                  NASDAQ.

         If a party decides to make an announcement it believes to be required
         by law with respect to this Agreement, it will give the other party
         such notice as is reasonably practicable and an opportunity to comment
         upon the announcement; or

(b)      disclose the existence of this Agreement, any of the subject matter
         hereof, or any of the terms hereof to any Third Party, without the
         prior written consent of the other party, except as reasonably required
         for a party to perform its obligations under this Agreement or as
         otherwise provided in this Agreement.

17.16    RELATIONSHIP OF PARTIES

It is not the intent of QLT and Xenova to form any partnership or joint venture.
QLT and Xenova shall, in relation to their respective obligations hereunder, act
as independent contractors, and nothing in this Agreement shall be construed to
give either QLT or Xenova the power or authority to act for, bind or commit the
other in any way whatsoever.

17.17    RIGHTS AND REMEDIES

The rights and remedies available under this Agreement shall be cumulative and
not alternative and shall be in addition to and not a limitation of any rights
and remedies otherwise available to the parties at law or in equity, except as
expressly set out in this Agreement.

17.18    SEVERABILITY

If any term or provision of this Agreement shall for any reason be held invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other term or provision hereof, and this
Agreement shall be interpreted and construed as if such term or provision, to
the extent the same shall have been held to be invalid, illegal or
unenforceable, had never been contained herein.

17.19    WAIVER

No waiver or modification of any of the terms of this Agreement shall be valid
unless in writing and signed by an authorized representative of each of the
parties hereto. Failure by any party to enforce any rights under this Agreement
shall not be construed as a waiver of such rights, nor shall a waiver by any
party in one or more instances be construed as constituting a continuing waiver
or as a waiver in other instances.

<PAGE>
                                     - 56 -

17.20    WORDING

Wherever the singular or masculine form is used in this Agreement, it will be
construed as the plural or feminine or neuter form, as the case may be, and vice
versa, as the context or the parties require. The parties agree that whenever
the phrase "including" is used in this Agreement that it shall mean "including,
without limitation".

17.21    THIRD PARTY RIGHTS

Each of the persons identified in Sections 15.1 and 15.2 may in his own right
enforce the provisions of those respective Sections. Except as provided in the
previous sentence of this Section 17.21, this Agreement is not made for the
benefit of, nor shall any of its provisions be enforceable by, any person other
than the parties to this Agreement and their respective successors and permitted
assignees.

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

QLT INC.                                  XENOVA LIMITED
by its authorized signatory:              by its authorized signatory:

By:    __________________________         By:    __________________________
       Name:                                     Name:
       Title:                                    Title:

<PAGE>

                                 EXHIBIT 1.1(p)
                              DESCRIPTION OF XR9576

[*]

           * Material has been omitted and filed with the Commission
<PAGE>

                                     - 2 -

                                 EXHIBIT 1.1(q)
                               DRUG SPECIFICATION

As set out in [*] as delivered by QLT to Xenova.

           * Material has been omitted and filed with the Commission
<PAGE>

                                EXHIBIT 1.1(CCC)
                          SUMMARY OF PROGRAM ACTIVITIES

The following summarizes the proposed Development Plan for the Product. This
Development Plan as it relates to the primary indication is subject to change at
the discretion of the Development Committee or as a result of any requirements
of the FDA.

Primary (Initial) Indication to be Pursued

- First line therapy of advanced NSCLC (Stage IIIb/IV NSCLC) in combination with
chemotherapy.

Clinical Development

QLT will conduct two international [*] randomized placebo-controlled trials of
chemotherapy plus placebo versus chemotherapy plus the Product, as follows:

- Each study to investigate a different chemotherapy regimen ([*]).

- European involvement will include a minimum of [*] European sites for the two
combined trials in [*] countries.

- Approximately [*] patients per trial (a total of [*] patients) for the two
combined trials.

- [*].

CMC

- Establish product monographs for the Drug and the Product.

- Produce final validated form of the Product in [*].

- Establish scaled up manufacturing process capable of supplying commercial
requirements.

Preclinical Toxicology

- Perform additional toxicology studies required to file NDA ([*] briefing
document).

Regulatory

- [*].

- Manage all ongoing interactions with FDA during the Program.

- Assemble NDA filing to take through FDA review to approval.

- Provide NDA dossier to support Xenova's registration in Europe.

Other Studies in the Primary Indication and Other Indications

- [*].

- Any additional studies required by the FDA for registration in the primary
indication will be conducted after a [*] decision.

- Other additional studies in the primary or subsequent indications will be
reviewed and approved, if appropriate, by the Development Committee before
commencement.

           * Material has been omitted and filed with the Commission
<PAGE>

                                EXHIBIT 1.1(hhh)
                              REGISTRATION PACKAGE

(a)  Common Technical Document Structure:

MODULE 1:  ADMINISTRATIVE INFORMATION

1.       MODULE 1 TABLE OF CONTENTS

2.       DOCUMENTS SPECIFIC TO EACH REGION (APPLICATION FORMS AND PRESCRIBING
         INFORMATION)

MODULE 2:  CTD SUMMARIES

1.       OVERALL CTD TABLE OF CONTENTS

2.       INTRODUCTION

3.       QUALITY OVERALL SUMMARY

4.       NONCLINICAL OVERVIEW

5.       CLINICAL OVERVIEW

6.       NONCLINICAL SUMMARY

7.       PHARMACOLOGY

(A)      WRITTEN SUMMARY

(B)      TABULATED SUMMARY

8.       PHARMACOKINETICS

(A)      WRITTEN SUMMARY

(B)      TABULATED SUMMARY

9.       TOXICOLOGY

(A)      WRITTEN SUMMARY

(B)      TABULATED SUMMARY

10.      CLINICAL SUMMARY

(A)      SUMMARY OF BIOPHARMACEUTICS AND ASSOCIATED ANALYTICAL METHODS

(B)      SUMMARY OF CLINICAL PHARMACOLOGY STUDIES

(C)      SUMMARY OF CLINICAL EFFICACY

(D)      SUMMARY OF CLINICAL SAFETY

(E)      SYNOPSES INDIVIDUAL STUDIES

MODULE 3:  QUALITY

1.       TABLE OF CONTENTS

2.       BODY OF DATA

3.       KEY LITERATURE REFERENCES

MODULE 4:  NONCLINICAL STUDY REPORTS

1.       TABLE OF CONTENTS

2.       STUDY REPORTS

3.       LITERATURE REFERENCES

MODULE 5:  CLINICAL STUDY REPORTS

1.       TABLE OF CONTENTS OF CLINICAL STUDY REPORTS

2.       TABULAR LISTINGS OF ALL CLINICAL STUDIES

3.       CLINICAL STUDY REPORTS

4.       LITERATURE REFERENCES

<PAGE>

                                     - 2 -

(b)      List of additional studies required by the FDA prior to NDA submission
         for the Product ([*]):

     1.  NON-CLINICAL: The following table lists the planned non-clinical
         studies that have been identified by Xenova as necessary prior to a NDA
         submission. These studies were presented to the FDA in the briefing
         document that was sent prior to the end of Phase II meeting. It is
         anticipated that these studies would not need to be initiated until the
         results from the [*] are known.

         STUDY
         -----------------------------------------------------------------------
         -----------------------------------------------------------------------
         [*]
         -----------------------------------------------------------------------
         -----------------------------------------------------------------------
         [*]
         -----------------------------------------------------------------------
         -----------------------------------------------------------------------
         [*]
         -----------------------------------------------------------------------
         -----------------------------------------------------------------------
         [*]
         -----------------------------------------------------------------------
         -----------------------------------------------------------------------
         [*]
         -----------------------------------------------------------------------
         -----------------------------------------------------------------------
         -----------------------------------------------------------------------

       2. CLINICAL STUDIES: In the clinical section of the minutes to the end
          of the Phase II meeting with the FDA, the FDA requested [*].

           * Material has been omitted and filed with the Commission
<PAGE>

                                EXHIBIT 1.1(www)
                             LIST OF XENOVA PATENTS

[*].

[*].

[*]

           * Material has been omitted and filed with the Commission
<PAGE>

                                 EXHIBIT 12.1(c)
                        ISSUES RELATING TO XENOVA PATENTS

(1)      All matters that would be shown by searches of publicly available
         patent prosecution files in respect of Xenova's patents covering the
         Drug, held at Patent Offices in the Territory, are disclosed or deemed
         to be disclosed to QLT.

(2)      Xenova has not conducted searches or inquiries in relation to the
         existence of Third Party patents or other proprietary rights, and makes
         no representation and gives no warranty in relation to any Third Party
         patents and other proprietary rights not known to it.

(3)      [*].

--------

           * Material has been omitted and filed with the Commission<PAGE>
                                                                   EXHIBIT 10.77
                              EMPLOYMENT AGREEMENT

        This Employment Agreement dated for reference December 18, 2001.

BETWEEN:

          QLT INC., having an address of 887 Great Northern Way, Vancouver,
          British Columbia, V5T 4T5,

          ("QLT" or the "COMPANY")

AND:

          PAUL J. HASTINGS, having an address of 61 Hartford, San Francisco,
          California, U.S.A, 94114,

          ("MR. HASTINGS")

WHEREAS:

A.   QLT is a world leader in the development and commercialization of
     proprietary pharmaceutical products for use in photodynamic therapy, a
     field of medicine utilizing light-activated drugs in the treatment of
     disease and has other active development programs ongoing in areas outside
     of photodynamic therapy;

B.   QLT wishes to offer to Mr. Hastings, and Mr. Hastings wishes to accept,
     employment with QLT as President and Chief Executive Officer of QLT;

C.   QLT and Mr. Hastings wish to enter into this Agreement to set out the terms
     and conditions of Mr. Hastings' employment with QLT; and

D.   The employment of Mr. Hastings by QLT is subject to Mr. Hastings obtaining
     and maintaining the permission of Canada Immigration to work in Canada in
     this position. QLT will reimburse Mr. Hastings for the costs associated
     with obtaining employment and permanent resident status in Canada.

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

1.   POSITION AND DUTIES

1.1  POSITION - Effective the 17th day of February, 2002 (the "COMMENCEMENT
     DATE"), QLT will employ Mr. Hastings in the position of President and Chief
     Executive Officer, and Mr. Hastings agrees to accept employment with QLT in
     this position, subject to the terms and conditions of this Agreement.

1.2  DUTIES, REPORTING AND EFFORTS - In the performance of his duties as
     President and Chief Executive Officer, Mr. Hastings will:

<PAGE>
                                      - 2 -

     (a)  OVERALL RESPONSIBILITIES - Have the responsibilities commensurate with
          the position of President and Chief Executive Officer, including those
          set out in SCHEDULE A to this Agreement and with the goal of achieving
          QLT's overall long-term strategic objectives.

     (b)  REPORT - Report, as and when required, to the Board of Directors of
          QLT (the "BOARD").

     (c)  BEST EFFORTS - Use his best efforts, industry and knowledge to improve
          and increase QLT's business, to comply with all of QLT's rules,
          regulations, policies and procedures, as established from time to time
          and to ensure that QLT is at all times in compliance with applicable
          provincial, state, federal and other governing statutes, policies and
          regulations.

     (d)  WORKING DAY - Devote the whole of his working day attention and
          energies to the business and affairs of QLT.

2.   COMPENSATION

2.1  ANNUAL COMPENSATION - In return for his services under this Agreement, QLT
     agrees to pay or otherwise provide the following total annual compensation
     to Mr. Hastings:

     (a)  BASE SALARY - A base annual salary in the amount of US$500,000, in 24
          equal installments payable semi-monthly in arrears, subject to
          periodic reviews and increases at the discretion of the Board.

     (b)  BENEFIT PLANS - Coverage for Mr. Hastings and his eligible dependents
          under any employee benefit plans provided by/through QLT to its
          employees, subject to:

          I.   each plan's terms for eligibility,

          II.  Mr. Hastings taking the necessary steps to ensure effective
               enrollment or registration under each plan, and

          III. deductions of applicable employee contributions for the premiums
               of each plan.

          As at the date of this Agreement, the employee benefit plans provided
          by/through QLT to its employees include life insurance, accidental
          death and dismemberment insurance, dependent life insurance,
          vision-care insurance, health insurance (including basic British
          Columbia medical services plan coverage and extended health coverage),
          dental insurance and short and long term disability insurance. QLT and
          Mr. Hastings agree that the employee benefit plans provided by/through
          QLT to its employees may change from time to time.

     (c)  EXPENSE REIMBURSEMENT - Reimbursement, in accordance with QLT's Policy
          and Procedures Manual (as amended from time to time), of all
          reasonable business related promotion, entertainment and/or travel
          expenses incurred by Mr. Hastings, subject to him maintaining proper
          accounts and providing documentation for these expenses upon request.

     (d)  VACATION -Mr. Hastings is entitled to four weeks' paid vacation during
          each calendar year, including the first, of his employment and
          pro-rated for any partial calendar year of employment which may be
          increased from time to time in accordance with QLT's standard vacation
          policy. As per QLT's Policy and Procedures Manual (as amended from
          time to time), unless agreed to in writing by QLT:

          I.   all vacation must be taken within one year of the year in which
               it is earned by Mr. Hastings, and

<PAGE>
                                      - 3 -

          II.  except as set out in clause I above, vacation entitlement will
               not be cumulative from year to year.

     (e)  RRSP CONTRIBUTIONS - Provided the conditions set out below have been
          satisfied, no later than February 28 of the year following the year in
          which the income is earned by Mr. Hastings (the "INCOME YEAR"), QLT
          will make a contribution of up to 7% of Mr. Hastings' annual base
          salary for the Income Year to Mr. Hastings' Canadian Registered
          Retired Savings Plan ("RRSP"). The contribution to Mr. Hastings' RRSP
          as set out above is subject the following conditions:

          I.   the maximum contribution to be made by QLT to Mr. Hastings' RRSP
               is 50% of the annual limit for Registered Retirement Savings
               Plans as established by Canada Customs & Revenue Agency for the
               Income Year,

          II.  Mr. Hastings must have contributed an equal amount into his RRSP,
               and

          III. Mr. Hastings is still actively employed by QLT when the matching
               contribution would otherwise be made.

     (f)  CASH INCENTIVE COMPENSATION PLAN - Mr. Hastings will be eligible to
          participate in the Cash Incentive Compensation Plan offered by QLT to
          its senior executives in accordance with the terms of such Plan, as
          amended from time to time by the Board. Mr. Hastings will be eligible
          to receive each year as a lump sum payment an amount up to 50% of his
          base salary under the Cash Incentive Compensation Plan. The amount of
          that payment will be determined at the sole discretion of the
          Executive Compensation Committee of the Board annually following the
          completion of each fiscal year of QLT and will be based on the
          performance of Mr. Hastings and QLT relative to pre-set corporate and
          individual objectives and milestones to have been achieved in the
          immediately preceding fiscal year. Those goals and milestones will be
          set for each year by the Board after discussion with Mr. Hastings. For
          greater certainty, Mr. Hastings will not be eligible to receive any
          such amount in 2002 for the preceding fiscal year but will be eligible
          to receive that incentive payment in 2003 and subsequent years, based
          on his employment in 2002 and in subsequent years.

     (g)  ANNUAL STOCK OPTIONS - Mr. Hastings will be eligible for participation
          in QLT's Incentive Stock Option Plans, in accordance with the terms of
          the plan in effect at the time of the stock option offer. QLT's
          management responsible for the Stock Option Plan will recommend to the
          Board each year during the term of this Agreement commencing in 2003
          to approve options in that year for Mr. Hastings to purchase an
          aggregate of 100,000 common shares of QLT, which amount may be reduced
          or increased on a year-to-year basis at the sole discretion of the
          Board. The grant of options may, at the sole discretion of the Board,
          be spread over one or more separate grants during the course of each
          year in a manner consistent with QLT's stock option practices and
          policies then in effect.

     (h)  SIGNING STOCK OPTIONS - Conditional on Mr. Hastings entering into this
          Agreement, the Board has approved and will grant the option for Mr.
          Hastings to purchase 500,000 common shares of QLT plus an additional
          option to be granted at a date in April, 2002 to be set by QLT for Mr.
          Hastings to purchase 100,000 common shares of QLT. The options will be
          subject to the terms and conditions set out in QLT's current Stock
          Option Incentive Plan, have a five-year term from the date of grant
          and will vest monthly in equal numbers over three years. The exercise
          price of these signing options will be determined by the closing price
          on the Toronto Stock Exchange on the day prior to granting. Stock
          options may not be exercised until Mr. Hastings has successfully
          completed six months' employment with QLT from the Commencement Date
          and the grant will be conditional upon Mr. Hastings not having
          provided a Resignation Notice (as

<PAGE>
                                     - 4 -

          later defined) nor having received a written notice of termination
          from QLT on or before the end of that six month period.

     (i)  SIGNING BONUS - QLT will pay to Mr. Hastings an amount equal to
          US$25,000 as a signing bonus promptly following the Commencement Date.

2.2  HOME RELOCATION AND HOME RELOCATION LOAN - The Company and Mr. Hastings
     agree to the terms of relocation assistance, relocation repayment, and
     relocation assistance upon termination by QLT as set out in SCHEDULES B and
     C to this Agreement.

2.3  COMPLIANCE WITH INSIDER TRADING GUIDELINES AND RESTRICTIONS - As a result
     of his position as President and Chief Executive Officer, Mr Hastings is
     subject to insider trading regulations and restrictions and is required to
     file insider reports disclosing the grant of any options as well as the
     purchase and sale of any shares in the capital of QLT. QLT publishes
     trading guidelines and restrictions for its employees, officers and
     directors as are considered by the Board, in its discretion, prudent and
     necessary for a publicly listed company. It is a term of Mr. Hastings'
     employment as the Chief Executive Officer of QLT that he comply with such
     guidelines and restrictions, as may be amended from time to time.

3.   RESIGNATION

3.1  RESIGNATION - Mr. Hastings may resign from his employment with QLT by
     giving QLT 90 days prior written notice (the "RESIGNATION NOTICE") of the
     effective date of his resignation. On receiving a Resignation Notice, QLT
     may elect to provide the following payments and benefits in lieu of notice
     to Mr. Hastings and require him to cease providing employment services and
     leave the premises forthwith:

     (a)  BASE SALARY - Base salary owing to Mr. Hastings for the 90-day notice
          period.

     (b)  BENEFITS - Except as set out below in this subparagraph 3.1(b), for
          the 90-day notice period all employee benefit plan coverage enjoyed by
          Mr. Hastings and his eligible dependents prior to the date of the
          Resignation Notice. Mr. Hastings acknowledges and agrees that accruals
          under any pension plan (if any) and short and long term disability
          plans provided through QLT will not be continued beyond the last day
          that Mr. Hastings is in active full-time employment (the "LAST ACTIVE
          DAY").

     (c)  EXPENSE REIMBURSEMENT - Reimbursement (in accordance with QLT's Policy
          and Procedures Manual, as amended from time to time) of all reasonable
          business related promotion, entertainment and/or travel expenses
          incurred by Mr. Hastings prior to his Last Active Day, subject to the
          expense reimbursement provisions set out in subparagraph 2.1(c).

     (d)  VACATION PAY - Payment in respect of accrued but unpaid vacation pay
          owing to Mr. Hastings as at the expiry of the 90-day notice period.

     (e)  PRORATED RRSP CONTRIBUTION - A prorated contribution to Mr. Hastings'
          RRSP, the pro-ration to be with respect to the portion of the current
          calendar year, up to and including the 90-day notice period, and the
          contribution to be subject to the conditions set out in subparagraph
          2.1(e), except 2.1(e)(III).

<PAGE>
                                     - 5 -

3.2  OTHERS - In the event of resignation of Mr. Hastings as set out in
     paragraph 3.1, the parties agree:

     (a)  NO BONUS - Mr. Hastings will be entitled to receive payments owing or
          that become owing under the Cash Incentive Compensation Plan for the
          year preceding the year in which the effective date of the resignation
          occurs but Mr. Hastings will have no entitlement to participate in
          QLT's Cash Incentive Compensation Plan for the year in which the
          effective date of resignation occurs; and

     (b)  STOCK OPTION PLAN - Mr. Hastings' participation in any stock option
          plan offered by QLT to its employees will be in accordance with the
          terms of the plan in effect at the time of the stock option offer(s)
          to Mr. Hastings.

4.        RETIREMENT

4.1  RETIREMENT - Effective the date of retirement (as defined in QLT's Policy
     and Procedures Manual, as amended from time to time) of Mr. Hastings from
     active employment with QLT, the parties agree that:

     (a)  BONUS - The Company will make a prorated payment to Mr. Hastings in
          respect of his entitlement to participate in QLT's Cash Incentive
          Compensation Plan, the pro-ration to be with respect to the portion of
          the current calendar year worked by Mr. Hastings and the entitlement
          at the maximum level Mr. Hastings would have otherwise been eligible
          to receive in the current calendar year.

     (b)  EXPENSE REIMBURSEMENT - Reimbursement (in accordance with QLT's Policy
          and Procedures Manual, as amended from time to time) of all reasonable
          business related promotion, entertainment and/or travel expenses
          incurred by Mr. Hastings prior to his date of retirement, subject to
          the expense reimbursement provisions set out in subparagraph 2.1(c).

     (c)  VACATION PAY - QLT will pay Mr. Hastings accrued but unpaid vacation
          owing to Mr. Hastings as at the retirement date.

     (d)  PRORATED RRSP CONTRIBUTION - The Company will make a prorated
          contribution to Mr. Hastings' RRSP, the pro-ration to be with respect
          to the portion of the current calendar year worked by Mr. Hastings and
          the contribution to be subject to the conditions set out in
          subparagraph 2.1(e), except 2.1(e)(III).

     (e)  STOCK OPTIONS - Mr. Hastings' participation in any stock option plan
          offered by QLT to its employees will be in accordance with and subject
          to the terms of the plan in effect at the time of the stock option
          offer(s) to Mr. Hastings, including conditions which relate to vesting
          and exercise of stock options on retirement.

     (f)  THIS AGREEMENT - Subject to the provisions of paragraph 10.6, both
          parties' rights and obligations under this Agreement will terminate
          without further notice or action by either party.

5.        TERMINATION

5.1  TERMINATION FOR CAUSE - QLT reserves the right to immediately terminate Mr.
     Hastings' employment for cause. Should Mr. Hastings be terminated for
     cause, he will not be entitled to any advance notice of termination or pay
     in lieu thereof.

<PAGE>
                                     - 6 -

5.2  TERMINATION OTHER THAN FOR CAUSE - QLT reserves the right to terminate Mr.
     Hastings' employment at any time without cause. However, if QLT terminates
     Mr. Hastings' employment for:

     (a)  any reason other than cause, or

     (b)  any reason not covered by a separate Change in Control Letter
          Agreement dated of even date between QLT and Mr. Hastings,

     then, except in the case of Mr. Hastings becoming completely disabled
     (which is provided for in paragraph 5.7) and subject to the provisions set
     forth below, Mr. Hastings will be entitled to receive notice, pay and/or
     benefits (or any combination of notice, pay and/or benefits) as more
     particularly set out in paragraph 5.3.

5.3  SEVERANCE NOTICE AND PAY - In the event QLT terminates Mr. Hastings'
     employment as set out in paragraph 5.2, Mr. Hastings will be entitled to:

     (a)  NOTICE - advance written notice of termination ("SEVERANCE NOTICE"),
          or pay in lieu thereof ("SEVERANCE PAY"), or any combination of
          Severance Notice and Severance Pay, equal to 24 months' Severance
          Notice, or Severance Pay in lieu of Severance Notice (the "SEVERANCE
          NOTICE PERIOD"). Mr. Hastings acknowledges and agrees that Severance
          Pay is in respect of (i) base salary and (ii) an amount equal to Mr.
          Hastings' entitlement under the Cash Incentive Compensation Plan over
          the Severance Notice Period pro-rated for any partial years included
          in the Severance Notice Period and will be made on a bi-weekly or
          monthly basis, at QLT's discretion. Mr. Hastings' entitlement under
          the Cash Incentive Compensation Plan payable under (ii) above will be
          calculated at the target level of 50% referred to in subparagraph
          2.1(f) that Mr. Hastings would have otherwise been eligible to receive
          for the year in which the termination occurs.

     (b)  BENEFITS - except as set out below, for 30 days after Mr. Hastings'
          Last Active Day, all employee benefit plan coverage enjoyed by Mr.
          Hastings and his dependents prior to the date of termination.
          Thereafter, and in lieu of employee benefit plan coverage, Mr.
          Hastings will receive compensation ("BENEFITS COMPENSATION") in the
          amount of 10% of his base salary for the balance of his Severance
          Notice period. Notwithstanding the foregoing, Mr. Hastings
          acknowledges and agrees that accruals under any pension plan (if any)
          and short and long term disability plans provided through QLT will not
          be continued beyond Mr. Hastings's Last Active Day.

     (c)  OUT PLACEMENT COUNSELING - in the event QLT terminates Mr. Hastings'
          employment as set out in paragraph 5.2, QLT will pay to a qualified
          out placement counseling service (to be agreed to by Mr. Hastings and
          QLT) a maximum of Cdn$5,000 for assistance rendered to Mr. Hastings in
          the year following termination in seeking alternative employment.

     (d)  OTHER COMPENSATION -the parties further agree as follows:

          I.   the Company will reimburse (in accordance with QLT's Policy and
               Procedures Manual, as amended from time to time) Mr. Hastings for
               all reasonable business related promotion, entertainment and/or
               travel expenses incurred by Mr. Hastings prior to the date of
               termination, subject to the expense reimbursement provisions set
               out in subparagraph 2.1(c).

          II.  the Company will make a payment to Mr. Hastings in respect of his
               accrued but unpaid vacation pay to the date of termination.

<PAGE>
                                     - 7 -

          III. the Company will make a prorated contribution to Mr. Hastings'
               RRSP, the pro-ration to be with respect to the portion of the
               current calendar year worked by Mr. Hastings and for the
               Severance Notice Period and the contribution to be subject to the
               conditions set out in subparagraph 2.1(e), except 2.1(e)(III).

          IV.  in addition to the payments under subparagraph 5.3(a), the
               Company will make a prorated payment to Mr. Hastings in respect
               of his entitlement to participate in QLT's Cash Incentive
               Compensation Plan, the pro-ration to be with respect to the
               portion of the current calendar year worked by Mr. Hastings and
               the entitlement at the target level of 50% referred to in
               subparagraph 2(f) that Mr. Hastings would have otherwise been
               eligible to receive in the current calendar year.

          V.   Mr. Hastings' participation in any stock option plan offered by
               QLT to its employees will be in accordance with the terms of the
               plan in effect at the time of the stock option offer(s) to Mr.
               Hastings.

5.4  ACKNOWLEDGEMENT - Mr. Hastings acknowledges and agrees that in the event
     QLT terminates Mr. Hastings' employment as set out in paragraph 5.2, in
     providing:

     (a)  The Severance Notice or Severance Pay, or any combination thereof;

     (b)  The Benefits Compensation;

     (c)  Out placement counseling service as more particularly set out in
          subparagraph 5.3(c); and

     (d)  The other compensation set out in subparagraph 5.3(d);

     (e)  All compensation owing to the date of termination;

     as set out in paragraph 5.10, QLT will have no further obligations,
     statutory or otherwise, to Mr. Hastings in respect of this Agreement and
     Mr. Hastings' employment under this Agreement.

5.5  FUNDAMENTAL BREACH - Mr. Hastings acknowledges and agrees that material
     violation any of the restrictions set out in Section 7 or paragraph 8.1,
     will be deemed to be a fundamental breach of this Agreement and QLT's
     obligations to pay Severance Pay, Benefits Compensation and other
     compensation as set out in paragraph 5.3 will cease immediately.

5.6  NO DUPLICATION - In the event that the Severance Pay provisions of this
     Agreement and the payment provisions of the Change in Control Letter
     Agreement are both applicable, Mr. Hastings agrees that he will give
     written notice to QLT with respect to which agreement he wishes to be paid
     out under and that he is not entitled to severance pay under both
     agreements.

5.7  TERMINATION DUE TO INABILITY TO ACT

     (a)  TERMINATION - QLT may immediately terminate this Agreement by giving
          written notice to Mr. Hastings if he becomes completely disabled (as
          defined below) to the extent that he cannot perform his duties under
          this Agreement either:

          I.   for a period exceeding six consecutive months, or

          II.  for a period of 180 days (not necessarily consecutive) occurring
               during any period of 365 consecutive days,

<PAGE>
                                     - 8 -

          and no other reasonable accommodation can be reached between QLT and
          Mr. Hastings. Notwithstanding the foregoing, QLT agrees that it will
          not terminate Mr. Hastings pursuant to this provision unless and until
          Mr. Hastings has been accepted by the insurer for ongoing long-term
          disability payments or, alternatively, has been ruled after all
          available appeals ineligible for such payments.

     (b)  PAYMENTS - In the event of termination of Mr. Hastings' employment
          with QLT pursuant to the provisions of this paragraph 5.7, QLT agrees
          to pay to Mr. Hastings Severance Pay, Benefits Compensation and other
          compensation as set out in paragraph 5.3.

     (c)  DEFINITION - The term "completely disabled" as used in this paragraph
          5.7 will mean the inability of Mr. Hastings to perform the essential
          functions of his position under this Agreement by reason of any
          incapacity, physical or mental, which the Board, based upon medical
          advice or an opinion provided by a licensed physician acceptable to
          the Board, determines to keep Mr. Hastings from satisfactorily
          performing any and all essential functions of his position for QLT
          during the foreseeable future.

5.8  DEATH - Except as set out below, effective the date of death of Mr.
     Hastings (the "DATE OF DEATH"), this Agreement and both parties' rights and
     obligations under this Agreement will terminate without further notice or
     action by either party. QLT will fulfill any obligations of QLT under the
     group life insurance plan or any other applicable benefit plan of QLT.
     Within 30 days after the Date of Death (and the automatic concurrent
     termination of this Agreement), QLT will pay the following amounts to Mr.
     Hastings' estate:

(a)  BASE SALARY - Base salary owing to Mr. Hastings up to his Date of Death.

(b)  PAYMENT IN LIEU OF BENEFITS - In lieu of employee benefit coverage for his
     eligible dependents after his Date of Death (except for group life
     insurance and other benefits payable as a result of the death), a payment
     in the amount of 10% of his annual base salary in effect at his Date of
     Death.

(c)  EXPENSE REIMBURSEMENT - Reimbursement (in accordance with QLT's Policy and
     Procedures Manual, as amended from time to time) of all reasonable business
     related promotion, entertainment and/or travel expenses incurred by Mr.
     Hastings prior to his Date of Death, subject to the expense reimbursement
     provisions set out in subparagraph 2.1(c).

(d)  VACATION PAY - Payment in respect of accrued but unpaid vacation pay owing
     to Mr. Hastings as at his Date of Death.

(e)  RRSP CONTRIBUTION - A prorated contribution to Mr. Hastings' RRSP, the
     pro-ration to be with respect to the portion of the current calendar year
     worked by Mr. Hastings and the contribution to be subject to the conditions
     set out in subparagraph 2.1(e), except 2.1(e)(III).

(f)  BONUS - A prorated payment to Mr. Hastings in respect of his entitlement to
     participate in QLT's Cash Incentive Compensation Plan, the pro-ration to be
     with respect to the portion of the current calendar year worked by Mr.
     Hastings and the entitlement to be at the maximum level Mr. Hastings would
     have otherwise been eligible to receive in the current calendar year.

     After his Date of Death, Mr. Hastings' participation and/or entitlement
     under any stock option plan offered by QLT to its employees will be in
     accordance with the terms of the plan in effect at the time of the stock
     option offer(s) to Mr. Hastings.

<PAGE>
                                     - 9 -

5.10 ACKNOWLEDGEMENT - Mr. Hastings expressly acknowledges and agrees that he
     will not be entitled by reason of this Agreement, his employment with QLT
     or any termination of such employment, to any renumeration, compensation or
     benefits other than as expressly set forth in this Agreement.

6A.  RESIGNATION FROM BOARD ON RESIGNATION OR TERMINATION

6A.1 RESIGNATION FROM BOARD POSITIONS UPON RESIGNATION OR TERMINATION - In the
     event Mr. Hastings resigns from his employment with QLT or upon receiving
     written notice of termination from QLT under paragraphs 5.1, 5.2 or 5.7,
     then the following will apply:

     (a)  RESIGNATION - in the case of a resignation, Mr. Hastings will
          immediately tender his resignation from the Board of QLT and its
          subsidiaries and affiliates. For this purpose, the Resignation Notice
          will be deemed to constitute the resignation of Mr. Hastings from the
          Board of QLT and its affiliates effective, in QLT's discretion, on or
          before the expiry of the 90 day notice period set out in paragraph
          3.1; or

     (b)  TERMINATION - upon receiving written notice of termination from QLT
          under paragraphs 5.1, 5.2 or 5.7, Mr. Hastings will immediately tender
          his resignation from the Board of QLT and its subsidiaries and
          affiliates. For this purpose, written notice of termination from QLT
          will be deemed to constitute the resignation of Mr. Hastings from the
          Board of QLT and its subsidiaries and affiliates effective on the date
          Mr. Hastings receives written notice of termination from QLT.

6.   CONFLICT OF INTEREST

6.1  AVOID CONFLICT OF INTEREST - Except as set out below, during the term of
     his employment with QLT, Mr. Hastings agrees to conduct himself at all
     times so as to avoid any real or apparent conflict of interest with the
     activities, policies, operations and interests of QLT. To avoid improper
     appearances, Mr. Hastings agrees that he will not accept any financial
     compensation of any kind, nor any special discount, loan or favour from
     persons, corporations or organizations having dealings or potential
     dealings with QLT, either as a customer or a supplier or a co-venturer.
     This does not prevent Mr. Hastings from accepting customary or ordinary
     accommodation of modest value such as meals. QLT and Mr. Hastings
     acknowledge and agree that from time to time the Board may consent in
     writing to activities by Mr. Hastings which might otherwise appear to be a
     real or apparent conflict of interest.

6.2  NO FINANCIAL ADVANTAGE - During the term of his employment with QLT, Mr.
     Hastings agrees that he will not disclose or take financial advantage of or
     benefit financially from or allow or permit any member of his immediate
     family to receive financial advantage or benefit financially from
     information that is obtained in the course of his employment related duties
     and responsibilities unless the disclosure is required by law or the
     information is generally available to the public.

6.3  COMPLY WITH POLICIES - During the term of his employment with QLT, Mr.
     Hastings agrees to comply with all written policies issued by QLT dealing
     with conflicts of interest.

6.4  BREACH EQUALS CAUSE - Mr. Hastings acknowledges and agrees that a material
     breach by him of the provisions of this Section 6 will be cause for
     immediate termination by QLT of his employment with QLT.

7.       CONFIDENTIALITY

<PAGE>
                                     - 10 -

7.1  INFORMATION HELD IN TRUST - Mr. Hastings acknowledges and agrees that all
     business and trade secrets, confidential information and confidential
     knowledge which Mr. Hastings acquires during his employment with QLT
     relating to the business and affairs of QLT or to technology, systems,
     programs, ideas, products or services which have been or are being
     developed or utilized by QLT, or in which QLT is or may become interested
     (collectively, "CONFIDENTIAL INFORMATION"), will for all purposes and at
     all times, both during the term of Mr. Hastings' employment with QLT and at
     all times thereafter, be the sole property of QLT and be held by Mr.
     Hastings in trust for the exclusive benefit of QLT.

7.2  NON DISCLOSURE - Mr. Hastings acknowledges and agrees that both during the
     term of his employment with QLT and at all times thereafter, without the
     express or implied consent of QLT, Mr. Hastings will not:

     (a)  DISCLOSE - except as required by law, disclose to any company, firm or
          person, other than QLT, its directors and officers and its employees
          on a need to know basis, any of the private affairs of QLT or any
          Confidential Information of QLT or of third parties to whom QLT owes
          an obligation of confidentiality; or

     (b)  USE - Use or copy any Confidential Information that he may acquire
          with respect to QLT's affairs for his own purposes or for any purposes
          other than those of QLT.

7.3  INTELLECTUAL PROPERTY RIGHTS

     (a)  DISCLOSE INVENTIONS - Mr. Hastings agrees to promptly disclose to QLT
          any and all ideas, developments, designs, articles, inventions,
          improvements, discoveries, machines, appliances, processes, methods,
          products or the like that Mr. Hastings may invent, conceive, create,
          design, develop, prepare, author, produce or reduce to practice,
          either solely or jointly with others, in the course of his employment,
          or involvement in any capacity, with QLT (collectively, "INVENTIONS").

     (b)  INVENTIONS ARE QLT PROPERTY - All Inventions and all other work of Mr.
          Hastings in the course of his employment, or involvement in any
          capacity, with QLT will at all times and for all purposes be the
          property of QLT for QLT to use, alter, vary, adapt and exploit as it
          will see fit, and will be acquired or held by Mr. Hastings in a
          fiduciary capacity solely for the benefit of QLT.

     (c)  ADDITIONAL REQUIREMENTS - Mr. Hastings agrees to:

          I.   Treat all information with respect to Inventions as Confidential
               Information unless the information is generally available to the
               public.

          II.  Keep complete and accurate records of Inventions, which records
               will be the property of QLT and copies of which records will be
               maintained at the premises of QLT.

          III. Execute all assignments and other documents required to assign
               and transfer to QLT (or such other persons as QLT may direct) all
               right, title and interest in and to the Inventions and all other
               work of Mr. Hastings in the course of his employment, or
               involvement in any capacity, with QLT, and all writings,
               drawings, diagrams, photographs, pictures, plans, manuals,
               software and other materials, goodwill and ideas relating
               thereto, including, but not limited to, all rights to acquire in
               the name of QLT or its nominee(s) patents, registration of
               copyrights, design patents and registrations, trade marks and
               other forms of protection that may be available.

          IV.  Execute all documents and do all acts reasonably requested by QLT
               to give effect to this provision.

<PAGE>
                                     - 11 -

7.4  RECORDS - Mr. Hastings agrees that all records or copies of records
     concerning QLT's activities, business interests or investigations and any
     other Confidential Information of QLT made or received by him during his
     employment with QLT are and will remain the property of QLT. Mr. Hastings
     further agrees to keep such records or copies in the custody of QLT and
     subject to its control, and to surrender the same at the termination of his
     employment or at any time during his employment at QLT's request.

7.5  NO USE OF FORMER EMPLOYER'S MATERIALS - Mr. Hastings certifies that he will
     not bring to QLT and will not use while performing his employment duties
     for QLT any materials or documents of any former employer which are not
     generally available to the public, except if the right to use the materials
     or documents has been acquired by QLT.

8.       POST-EMPLOYMENT RESTRICTIONS

8.1  NON-COMPETE - Mr. Hastings agrees that, without the prior written consent
     of QLT, for a period of two years following termination of his employment
     with QLT for any reason (by resignation or otherwise), as measured from his
     Last Active Day, Mr. Hastings will not:

     (a)  PARTICIPATE IN A COMPETITIVE BUSINESS - Directly or indirectly, own,
          manage, operate, join, control or participate in the ownership,
          management, operation or control of, or be a director or an employee
          of, or a consultant to, any business, firm or corporation that, as a
          part of conducting its business, is in any way competitive with QLT
          with respect to the development, commercialization and/or marketing of
          light-activated pharmaceutical products for photodynamic therapy in
          the treatment of cancer, ophthalmology and auto-immune disease
          anywhere in the United States, Canada, Mexico or the European Union.

     (b)  SOLICIT ON BEHALF OF A COMPETITIVE BUSINESS - Directly or indirectly
          call upon or solicit any QLT employee or QLT customer or known
          prospective customer of QLT as at the date of termination on behalf of
          any business, firm or corporation that, as part of conducting its
          business, is in any way competitive with QLT with respect to:

          I.   The development, commercialization and/or marketing of
               light-activated pharmaceutical products for photodynamic therapy
               in the treatment of cancer, ophthalmology and auto-immune
               disease, or

          II.  The development, commercialization and/or marketing of other
               pharmaceutical products that are based on a significantly similar
               technology platform and are used in the treatment of
               substantially the same medical indications as products which have
               become a significant component of QLT's core business,

         anywhere in the United States, Canada, Mexico or the European Union.

     (c)  SOLICIT EMPLOYEES - Directly or indirectly solicit any individual to
          leave QLT's employment for any reason or interfere in any other manner
          with the employment relationship existing between QLT and its current
          or known prospective employees as at the date of termination.

     (d)  SOLICIT CUSTOMERS - Directly or indirectly induce or attempt to induce
          any customer, supplier, distributor, licensee or other business
          relation of QLT to cease doing business with QLT or in any way
          interfere with the business relationship between any such customer,
          supplier, distributor, licensee or other business relation and QLT
          existing as at the date of termination.

<PAGE>
                                     - 12 -

8.2  MINORITY SHARE INTERESTS ALLOWED - The parties agree that nothing contained
     in paragraph 8.1 is intended to prohibit Mr. Hastings from owning any
     minority interest (less than 5%) in any company where stock or shares are
     traded publicly.

9.   REMEDIES

9.1  IRREPARABLE DAMAGE - Mr. Hastings acknowledges and agrees that:

     (a)  BREACH - Any breach of any provision of this Agreement could cause
          irreparable damage to QLT; and

     (b)  CONSEQUENCES OF BREACH - In the event of a breach of any provision of
          this Agreement by him, QLT will have, in addition to any and all other
          remedies at law or in equity, the right to an injunction, specific
          performance or other equitable relief to prevent any violation by him
          of any of the provisions of this Agreement including, without
          limitation, the provisions of Sections 7 and 8.

9.2  INJUNCTION - In the event of any dispute under Sections 7 and/or 8, Mr.
     Hastings agrees that QLT will be entitled, without showing actual damages,
     to a temporary or permanent injunction restraining his conduct, pending a
     determination of such dispute and that no bond or other security will be
     required from QLT in connection therewith.

9.3  ADDITIONAL REMEDIES - Mr. Hastings acknowledges and agrees that the
     remedies of QLT specified in this Agreement are in addition to, and not in
     substitution for, any other rights and remedies of QLT at law or in equity
     and that all such rights and remedies are cumulative and not alternative or
     exclusive of any other rights or remedies and that QLT may have recourse to
     any one or more of its available rights and remedies as it will see fit.

10.  GENERAL MATTERS

10.1 TAX WITHHELD - The parties acknowledge and agree that all payments to be
     made by QLT to Mr. Hastings under this Agreement will be subject to
     withholding by QLT of applicable withholding taxes.

10.2 INDEPENDENT LEGAL ADVICE - Mr. Hastings acknowledges that he has obtained
     or had the opportunity to obtain independent legal advice with respect to
     this Agreement and all of its terms and conditions. QLT will compensate Mr.
     Hastings for the cost of obtaining independent legal advice concerning this
     Agreement.

10.3 BINDING AGREEMENT - The parties agree that this Agreement will enure to the
     benefit of and be binding upon each of them and their respective heirs,
     executors, successors and assigns.

10.4 GOVERNING LAW - The parties agree that this Agreement will be governed by
     and interpreted in accordance with the laws of the Province of British
     Columbia and the laws of Canada applicable to this Agreement. All disputes
     arising under this Agreement will be referred to the Courts of the Province
     of British Columbia, which will have exclusive jurisdiction, unless there
     is mutual agreement to the contrary.

10.5 NOTICE - The parties agree that any notice or other communication required
     to be given under this Agreement will be in writing and will be delivered
     personally or by facsimile transmission to the addresses set forth on page
     1 of this Agreement to the attention of the following persons:

<PAGE>
                                     - 13 -

     (a)  IF TO QLT - Attention: Chairman of the Board of QLT c/o QLT, Fax No.
          (604) 875-0001,

          WITH A COPY TO:

          Farris, Vaughn, Wills & Murphy
          Barristers & Solicitors
          26th Floor, 700 West Georgia Street
          Vancouver, British Columbia
          V7Y 1B3
          Attention:  R. Hector MacKay-Dunn
          Fax No.:   (604) 661-1730

     (b)  IF TO MR. HASTINGS - Fax No. (415) 252-0488,

          WITH A COPY TO:

          Bull, Housser & Tupper
          Barristers & Solicitors
          30th Floor, 1055 West Georgia Street
          Vancouver, British Columbia
          V6E 3R3
          Attention:  Herbert J. Isherwood
          Fax No.:   (604) 641-4949

     or to such other addresses and persons as may from time to time be notified
     in writing by the parties. Any notice delivered personally will be deemed
     to have been given and received at the time of delivery. Any notice
     delivered by facsimile transmission will be deemed to have been given and
     received on the next business day following the date of transmission.

10.6     SURVIVAL OF TERMS

     (a)  EMPLOYEE'S OBLIGATIONS - Mr. Hastings acknowledges and agrees that his
          representations, warranties, covenants, agreements, obligations and
          liabilities under any and all of Sections 6, 7, 8 and 10 of this
          Agreement will survive any termination of this Agreement.

     (b)  COMPANY'S OBLIGATIONS - The Company acknowledges and agrees that its
          representations, warranties, covenants, agreements, obligations and
          liabilities under any and all of Sections 3, 4, 5 and 10 of this
          Agreement will survive any termination of this Agreement.

     (c)  WITHOUT PREJUDICE - Any termination of this Agreement will be without
          prejudice to any rights and obligations of the parties arising or
          existing up to the effective date of such expiration or termination,
          or any remedies of the parties with respect thereto.

10.7 WAIVER - The parties agree that any waiver of any breach or default under
     this Agreement will only be effective if in writing signed by the party
     against whom the waiver is sought to be enforced, and no waiver will be
     implied by indulgence, delay or other act, omission or conduct. Any waiver
     will only apply to the specific matter waived and only in the specific
     instance in which it is waived.

10.8 ENTIRE AGREEMENT - The parties agree that the provisions contained in this
     Agreement, Mr. Hastings' Change in Control Letter Agreement and any Stock
     Option Agreements between QLT and

<PAGE>
                                     - 14 -

     Mr. Hastings constitute the entire agreement between QLT and Mr. Hastings
     with respect to the subject matters hereof, and supersede all previous
     communications, understandings and agreements (whether verbal or written)
     between QLT and Mr. Hastings regarding the subject matters hereof. To the
     extent that there is any conflict between the provisions of this Agreement,
     Mr. Hastings' Change in Control Letter Agreement and any Stock Option
     Agreements between QLT and Mr. Hastings, the following provisions will
     apply:

     (a)  CHANGE IN CONTROL - If the conflict is with respect to an event,
          entitlement or obligation in the case of a Change in Control of QLT
          (as defined in the Change in Control Letter Agreement), the provisions
          of the Change in Control Letter Agreement will govern (unless Mr.
          Hastings otherwise elects).

     (b)  STOCK OPTIONS - If the conflict is with respect to an entitlement or
          obligation with respect to stock options of QLT, the provisions of the
          Stock Option Agreements will govern (unless the parties otherwise
          mutually agree).

     (c)  OTHER - In the event of any other conflict, the provisions of this
          Agreement will govern (unless the parties otherwise mutually agree).

10.9  SEVERABILITY OF PROVISIONS - If any provision of this Agreement as applied
      to either party or to any circumstance is adjudged by a court of competent
      jurisdiction to be void or unenforceable for any reason, the invalidity of
      that provision will 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 Agreement; or

     (c)  The enforceability or invalidity of this Agreement as a whole.

     If any provision of this 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 will 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 will be stricken
     and the remainder of this Agreement will continue in full force and effect.

10.10 CAPTIONS - The parties agree that the captions appearing in this 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 Agreement or any
     provision.

10.10A TIME - Time is of the essence.

<PAGE>
                                     - 15 -

10.11 AMENDMENTS - Any amendment to this Agreement will only be effective if the
     amendment is in writing and is signed by QLT and Mr. Hastings.

     IN WITNESS WHEREOF the parties have executed this Agreement as of the day
and year first written above.

QLT INC.

BY:   ___________________________                 ______________________________
      E. DUFFSCOTT                                    PAUL J. HASTINGS
      CHAIRMAN OF THE BOARD

<PAGE>
                                     - 16 -

                                  SCHEDULE "A"

                           DUTIES AND RESPONSIBILITIES

To be attached.

<PAGE>
                                     - 17 -

                                  SCHEDULE "B"

                              RELOCATION ASSISTANCE

                      (THESE AMOUNTS ARE IN CANADIAN FUNDS)

CERTAIN PAYMENTS MADE TO MR. HASTINGS UNDER SCHEDULE "B" WILL BE TAXABLE
BENEFITS. THESE PAYMENTS WILL BE GROSSED UP TO MAKE WHOLE ANY TAXABLE BENEFITS
MR. HASTINGS RECEIVES UNDER SCHEDULE "B" AND MR. HASTINGS WILL BE PROVIDED WITH
A CHEQUE FOR THIS AMOUNT AT THE END OF THE TAXATION YEAR (MARCH) IN WHICH THE
EXPENSE WAS INCURRED.

1.   Return air fare to Vancouver (tickets provided by QLT) for Mr. Hastings to
     find suitable accommodation together with hotel and rental of an economy
     car for a period of 3-4 days.

2.   Six (6) months of interim accommodation upon arrival in Vancouver to a
     maximum of $3,000.00 per month. QLT will assist in locating this
     accommodation, if necessary. As required under the Income Tax Act, these
     payments must be used to provide for temporary accommodation while Mr.
     Hastings is waiting to occupy Mr. Hastings' new permanent residence,
     otherwise, they will be subject to the same required statutory withholdings
     in Canada as base salary.

3.   Reimbursement of real estate commission fees and reasonable legal expenses
     relating to the sale of Mr. Hastings' existing single principal residence
     within two years from Mr. Hastings' Commencement Date. These payments will
     be subject to the same required statutory withholdings in Canada as base
     salary.

4.   Reimbursement for reasonable legal expenses on Mr. Hastings' purchase of a
     single permanent principal residence in Greater Vancouver Regional District
     within two years from Mr. Hastings' Commencement Date and subject to a
     maximum reimbursement of $2,000.00.

5.   Reimbursement of the B.C. Property Purchase Tax paid on Mr. Hastings'
     residence.

6.   Moving costs for household possessions, including two (2) automobiles, and
     excluding bulky items of low value. QLT will assign a corporate moving
     company.

7.   Moving expenses incurred as a result of moving from Mr. Hastings' interim
     accommodations to Mr. Hastings' permanent residence in the Greater
     Vancouver area, to a maximum of $2,000.00. QLT will assign a corporate
     moving company.

8.   Reimbursement for the rental of an economy car for a one-month period if
     necessary.

9.   One-way air fares for Mr. Hastings and Mr. Hastings' immediate family from
     Mr. Hastings' present location to Vancouver at the time of the move (or
     return air fare for Mr. Hastings if Mr. Hastings relocates to Vancouver
     prior to Mr. Hastings' family).

10.  Accountable allowance: Reimbursement of up to $10,000.00 to cover other
     reasonable expenses associated with Mr. Hastings' move. The attached list
     "Other Allowable Expenses" outlines those moving-related expenses which
     Revenue Canada allows us to reimburse Mr. Hastings for without incurring a
     taxable benefit. Supporting receipts will be required.

<PAGE>
                                     - 18 -

11.  Non-accountable allowance: As part of Mr. Hastings' relocation, Mr.
     Hastings will likely incur a number of incidental expenses which may not
     appear on the attached list (eg. cleaning costs). QLT will reimburse Mr.
     Hastings for these costs up to $650.00 on a tax-free basis in line with
     Revenue Canada's accepted policy for non-accountable allowances (this is in
     addition to the accountable allowance noted above). Note that we do not
     require Mr. Hastings to supply supporting receipts for this reimbursement,
     however, Mr. Hastings will be required to provide us with a memo certifying
     that Mr. Hastings incurred at least this much in incidental costs. Any
     additional reimbursement Mr. Hastings receives for "incidentals" that are
     not on the attached list will be considered a taxable benefit.

POTENTIAL REPAYMENT OF RELOCATION ASSISTANCE. In the event of a termination of
employment by Mr. Hastings pursuant to Section 3.1 within twenty-four (24)
months from the Commencement Date, Mr. Hastings shall be required to reimburse
QLT for a portion of the financial assistance provided by QLT under this
Schedule "B". The amount of the repayment shall be computed by prorating the
amount of the financial assistance by the time remaining in the twenty-four (24)
month period. Such amount shall be payable to QLT within one hundred and twenty
(120) days from the effective date of termination of Mr. Hastings' employment.

RELOCATION ASSISTANCE UPON TERMINATION BY QLT. In the event of a termination by
QLT, other than for cause, within twenty-four (24) months from the Commencement
Date, QLT shall provide financial assistance for Mr. Hastings to relocate to
another location in North America for purposes of new employment. The amount of
such financial assistance shall be computed in accordance with this Schedule
"B", but in no event shall the amount payable exceed the amount paid under this
Schedule "B" to relocate Mr. Hastings to Vancouver. In addition, the assistance
will only be provided by QLT in the event that the relocation by Mr. Hastings
occurs within six (6) months from the effective date of termination of Mr.
Hastings' employment.

<PAGE>
                                     - 19 -

                                  SCHEDULE "C"

                              HOME RELOCATION LOAN

HOME RELOCATION LOAN - QLT will make available to Mr. Hastings a home relocation
loan of US$400,000.00 upon his purchase of a principal residence in the Greater
Vancouver Regional District within two years from the Commencement Date. The
loan will be non-interest bearing and forgivable over a 4-year period with 25%
forgivable for each full 12 month period of continuous employment with QLT that
is completed by Mr. Hastings calculated from the date of the initial advance of
the loan from QLT to Mr. Hastings. There are certain taxable benefit
implications associated with non-interest bearing, forgivable home relocation
loans. As a condition of QLT advancing the loan to Mr. Hastings, Mr. Hastings
(and any other persons with a fee simple ownership interest in the home) will
grant to QLT a mortgage in the form reasonably requested by QLT, which mortgage
will be registered 1st in priority to all other financial encumbrances against
title to the home. In the event that Mr. Hastings' employment with QLT is
terminated for any reason prior to the end of the 4-year period then:

(a)      in the case of a resignation by Mr. Hastings or his termination for
         cause prior to full forgiveness of the loan, the outstanding balance of
         the loan will revert to an interest-bearing loan due the earlier of the
         end of the 4-year period or the date of the sale of the house. The loan
         will convert to interest bearing at the commercial rate for residential
         fixed term mortgage loans of the same duration as set from time to time
         by the Royal Bank of Canada; or

(b)      in the case Mr. Hastings' employment with QLT is terminated by QLT
         other than for cause or by reason of his death, the entire amount then
         outstanding under the relocation loan will be forgiven by QLT effective
         on the date of Mr. Hastings' termination.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00049-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00049-of-00352.parquet"}]]