Document:

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                                                                   EXHIBIT 10.32

                     THE DIRECTORS' DEFERRED SHARE UNIT PLAN

                           FOR NON-EMPLOYEE DIRECTORS

                                   OF QLT INC.

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SECTION 1. PURPOSE

The purpose of the Directors' Deferred Share Unit Plan for Non-Employee
Directors of QLT Inc. is to significantly strengthen the link between Director
and shareholder interests by tying a portion of Director compensation to the
long term performance of the Shares.

SECTION 2. DEFINITIONS

For the purposes of the Plan:

(a) "Affiliate" means an affiliate of the Corporation as that term is defined in
paragraph 3 of the Canada Customs and Revenue Agency's interpretation bulletin
IT-337R4, Retiring Allowances;

(b) "Award Notice" means the notice, as it may be amended from time to time,
provided by the Corporation to the Director pursuant to Section 5 in connection
with the grant of DSUs hereunder to said Director;

(c) "Beneficiary" means an individual who, on the date of a Director's death, is
the person who has been designated in accordance with Section 13 and the laws
applying to the Plan, or where no such individual has been validly designated by
the Director, or where the individual does not survive the Director, the
Director's executor or legal representative.

(d) "Board" means the Board of Directors of the Corporation;

(e) "Change of Control" means any of the following events:

            (i)   Merger. A merger, consolidation, reorganization or arrangement
                  involving the Corporation other than a merger, consolidation,
                  reorganization or arrangement in which stockholders of the
                  Corporation immediately prior to such merger, consolidation,
                  reorganization or arrangement own, directly or indirectly,
                  securities possessing at least 65% of the total combined
                  voting power of the outstanding voting securities of the
                  corporation resulting from such merger, consolidation,
                  reorganization or arrangement in substantially the same
                  proportion as their ownership of such voting securities
                  immediately prior to such merger, consolidation,
                  reorganization or arrangement,

            (ii)  Tender Offer. The acquisition, directly or indirectly, by any
                  person or related group of persons acting jointly or in
                  concert (other than the Corporation or a person that directly
                  or indirectly controls, is controlled by, or is under common
                  control with, the Corporation) of beneficial ownership of
                  securities possessing more than 35% of the total combined
                  voting power of the Corporation's outstanding securities
                  pursuant to a tender offer made directly to the Corporation's
                  stockholders,

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            (iii) Sale. The sale, transfer or other disposition of all or
                  substantially all of the assets of the Corporation other than
                  to an affiliate of the Corporation as part of a corporate
                  reorganization of the Corporation (for purposes of clause
                  2(e), "affiliate" means, with respect to any entity, any
                  corporation, partnership, association, trust or other entity
                  or organization directly or indirectly controlled by,
                  controlling or under common control with such entity, and, for
                  the purposes of this definition, "control" will mean (1) the
                  possession, directly or indirectly, of the power to direct the
                  management or policies of any such entity or to veto any
                  material decision relating to the management or policies of
                  such entity, in each case whether through the ownership of
                  voting securities, by contract or otherwise, or (ii) direct or
                  indirect beneficial ownership of 40% or more of the voting
                  stock or other securities of, or a 40% or greater interest in
                  the income of, such entity, or such other relationship as, in
                  fact constitutes actual control), or

            (iv)  Board Change. A change in the composition of the Board over a
                  period of 24 consecutive months or less such that a two-thirds
                  majority of the Board members ceases to be comprised of
                  individuals who either:

                  A.    have been Board members continuously since the beginning
                        of such period, or

                  B.    have been elected or nominated for election as Board
                        members during such period by at least a majority of the
                        Board members described in clause (A) who were still in
                        office at the time the Board approved such election or
                        nomination.

(f) "Committee" means the committee of directors of the Corporation generally
responsible for matters relating to Directors' compensation and which is
currently named the Executive Compensation Committee. The Committee shall be
comprised of not less than such number of Directors as shall be required to
permit DSUs granted under the Plan to qualify under Rule 16b-3 under the
Securities Exchange Act of 1934, as amended ("Rule 16b-3"), and Section 162(m)
of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"),
and each member of the Committee shall be a "non-employee director" within the
meaning of Rule 16b-3 and an "outside director" within the meaning of Section
162(m) of the Code;

(g) "Controlled Group" shall mean all members of the Corporation's controlled
group (as defined under Sections 414(b) and 414(c) of the Internal Revenue Code)
for the purposes of Section 409A of the Internal Revenue Code;

(h) "Corporation" means QLT Inc.;

(i) "Director" means a member of the Board who is not otherwise an employee of
the Corporation or of an Affiliate;

(j) "Disability" means, with respect to a participant, when a participant (i) is
unable to engage is any substantial gainful activity by reason of any medically
determinable physical or

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mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, or (ii) is by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous period of not
less than 12 months, receiving income replacement benefits for a period of not
less than 3 months under an accident and health plan covering employees of the
participant's employer;

(k) "DSU" means a unit credited by means of a bookkeeping entry on the books of
the Corporation to a Participant's account in accordance with the terms and
conditions of the Plan, the value of which, on a particular date, shall be equal
to the Market Value on such date;

(l) "Grant Date" means the date of approval of the grant of DSUs by the Board;

(m) "Key Employee" means an employee defined as a "key employee" in section
4.16(i) of the Internal Revenue Code without regard to paragraph 5 of such
Section 416(i);

(n) "Market Value" on any particular day means the closing price of the Shares
on The Toronto Stock Exchange, or if the Shares are not listed on The Toronto
Stock Exchange, on such other stock exchange approved by the Committee and
agreed upon by the Board on which the Shares are listed, or if the Shares are
not listed on any stock exchange, then on the over-the-counter market, on the
trading day prior to the particular day on which at least one board lot of the
Shares was traded. The Market Value shall always depend on the fair market value
of a Share or a share of a corporation related to the Corporation;

(o) "Participant" means a Director who has been granted DSUs under the Plan;

(p) "Plan" means the Directors' Deferred Share Unit Plan for Non-Employee
Directors of QLT Inc. as amended from time to time;

(q) "Share" means a common share, without nominal or par value, of the
Corporation; and

(r) "Termination Date" shall mean the date on which both the following
conditions are met: the Director (1) has ceased to be a Director as defined
above for any reason whatsoever, including the death of the Director, and (2) is
neither an employee of the Corporation, an Affiliate, or any member of the
Controlled Group, nor a member of the board of an Affiliate or any member of the
Controlled Group.

SECTION 3. CONSTRUCTION AND INTERPRETATION

In this Plan, all references to the masculine include the feminine; reference to
the singular shall include the plural and vice versa, as the context shall
require.

The Plan shall be governed and interpreted in accordance with the laws of the
Province of British Columbia and the applicable laws of Canada.

If any provision of the Plan or part hereof is determined to be void or
unenforceable in whole or in part, such determination shall not affect the
validity or enforcement of any other provision or part thereof.

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Headings wherever used herein are for reference purposes only and do not limit
or extend the meaning of the provisions contained herein.

The Plan shall be effective with respect to the 2005 calendar year and all
subsequent calendar years until amended, suspended or terminated.

SECTION 4. ADMINISTRATION OF THE PLAN

The Plan shall be administered by the Committee, subject to applicable corporate
and securities law requirements.

The Committee is authorized, subject to the provisions of this Plan, to
establish from time to time such rules and regulations, make such determinations
and to take such steps in connection with this Plan as in the opinion of the
Committee are necessary or desirable for the proper administration of this Plan.
For greater certainty, without limiting the generality of the foregoing, the
Committee will have the power, where consistent with the general purpose and
intent of this Plan and subject to the specific provisions of this Plan and any
approval of The Toronto Stock Exchange or any other exchange or trading
facilities through which the Shares are traded or quoted from time to time, if
applicable:

(a) to interpret and construe this Plan and to determine all questions arising
out of this Plan and any DSU granted pursuant to this Plan;

(b) to determine to which Directors DSUs are granted, and to grant, DSUs subject
to Board approval;

(c) to determine the number of DSUs granted, subject to Board approval;

(d) to prescribe the form of instrument relating to the grant of DSUs;

(e) to enter into such grant notice with respect to each grant;

(f) to adopt such modifications, procedures and subplans as may be necessary or
desirable to comply with the laws of Canada, the United States and other
countries in which the Corporation or its Affiliates may operate to ensure the
viability and maximization of the DSUs granted to Participants residing in such
countries and to meet the objectives of the Plan; and

(g) to determine other matters as provided herein.

All actions taken and decisions made by the Committee shall be final, conclusive
and binding on all parties concerned, including, but not limited to, the
Participants and their beneficiaries and legal representatives, the Corporation,
its employees and shareholders. All expenses of administration of the Plan shall
be borne by the Corporation.

Notwithstanding anything to the contrary contained herein, the Board may, at any
time and from time to time, exercise the powers and duties of the Committee
under the Plan without any further action of the Committee.

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SECTION 5. GRANT OF DSUs

DSUs may be granted pursuant to this Plan from time to time by the Corporation
in accordance with the following procedure. The Committee shall recommend to the
Board the terms of the DSU grants as set forth in Section 4. The Board may
approve, modify or reject the recommendations of the Committee in its
discretion. Notwithstanding anything to the contrary contained herein, the Board
may, at any time and from time to time, exercise the powers and duties of the
Committee under the Plan without any further action of the Committee.

The Corporation shall provide to the Director an Award Notice with respect to
grant of DSUs.

The DSUs shall be credited to the account of the Participant as of the Grant
Date.

SECTION 6. VESTING OF DSUs

The DSUs will vest monthly in equal amounts over 36 months beginning on the
first day of the first month after the Grant Date.

If the Participant ceases to be a Director due to death or Disability, all DSUs
shall be immediately vested. Upon the occurrence of a Change of Control, all
DSUs shall be immediately vested. If the Participant is removed as a Director
for cause, all vested and unvested DSUs shall be cancelled.

If the Participant ceases to be a Director due to retirement unrelated to death,
Disability or a Change of Control, the Board may in its sole discretion
accelerate the vesting of the DSUs prior to such retirement to be effective upon
such retirement.

Participant's entitlement to payment of DSUs at the Termination Date shall only
apply to vested DSUs and all unvested DSUs as of the Termination Date shall be
cancelled.

SECTION 7. DIVIDENDLIKE AMOUNTS

A Participant's account shall, from time to time during the term of the
Participant's participation in the Plan, up to and including the Participant's
Termination Date, be credited with additional DSUs, the number of which shall be
equal to the quotient determined by dividing one hundred percent (100%) of the
dividends declared that would have been paid to the Participant if the DSUs in
his or her account on the relevant record date for dividends on the Shares had
been Shares (excluding stock dividends, but including dividends which may be
paid in cash or in shares at the option of the shareholder), by the Market Value
on the payment date of such dividend, with fractions computed to four decimal
places.

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SECTION 8. PAYMENT OF DSUs

The Market Value of the DSUs credited to a Participant's account as at such
Participant's Termination Date, to the extent vested in accordance with Section
6, shall be paid by the Corporation to the Participant (or if the Participant
has died, to the Participant's Beneficiary) in the form of a lump sum cash
payment within 30 days following the Termination Date, less any applicable taxes
and other source deductions required to be withheld by the Corporation;
provided, however, if the Participant is a Key Employee as of the Termination
Date, the payment shall be made on the date six months following the Termination
Date. If a payment date pursuant to this Section 8 falls on a Saturday, Sunday
or banking holiday, then payment shall be made on the next business day.

In the event that, at a Participant's Termination Date, there is no public
market for the Shares, the obligations of the Corporation under the Plan shall
be met by a payment in cash in such amount as is reasonably determined by the
Committee to be equitable in the circumstances based on the value of the Shares
at the time of payment, less applicable withholdings, such determination to be
final and binding for all purposes.

In the event that a Participant's Termination Date would otherwise fall between
the record date for a dividend on the Shares and the related dividend payment
date then, notwithstanding the foregoing provisions of this Section 8, such
Participant's Termination Date shall be deemed to be the day immediately
following the date of payment of such dividend for purposes of recording in the
Participant's account under the Plan amounts referred to in Section 7 hereof and
making the calculation of the value of a Participant's DSUs contemplated by this
Section 8. In the event that the Corporation is unable, by a Participant's
Termination Date, to compute the final value of the DSUs recorded in such
Participant's account under the Plan by reason of the fact that any data
required to compute the Market Value has not been made available to the
Corporation, then, notwithstanding the foregoing provisions of this Section 8,
the Termination Date shall be the next following trading day on which such data
is made available to the Corporation.

SECTION 9. PARTICIPANTS' ACCOUNTS/ADJUSTMENTS TO DSUs CREDITED TO ACCOUNTS

The Corporation shall maintain in its books an account for each Participant
recording at all times the number of DSUs standing to the credit of the
Participant. Upon payment in satisfaction of DSUs credited to a Participant in
the manner described herein, such DSUs shall be cancelled. A written
confirmation of the balance in a Participant's account hereunder shall be mailed
by the Corporation to the Participant at least annually.

In the event of any stock dividend, reorganization, recapitalization, stock
split, consolidation or similar event affecting the number of Shares, the DSUs
credited to a Participant's account under the Plan will be adjusted in the same
manner as if each DSU were a Share. In the event of any exchange of shares or
other change in the Shares into a different number or kind of shares of the
Corporation or of any corporation related thereto, or of any other change in the
Shares or shares into which Shares have been changed or for which they have been
exchanged, such equitable adjustments, as the Committee may reasonably
determine, shall be made with respect to the number of DSUs then recorded in the
Participant's account under the Plan. However, no amount

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will be paid to, or in respect of, a Participant under the Plan or pursuant to
any other arrangement, and no DSUs will be granted nor will any credit be made
to such Participant's DSU account under the Plan to compensate for a downward
fluctuation in the price of Shares, nor will any other form of benefit be
conferred upon, or in respect of, a Participant for such purpose.

SECTION 10. AMENDMENTS TO, SUSPENSION OR TERMINATION OF, THE PLAN

The Board may from time to time amend, suspend or terminate the Plan in whole or
in part. However, any such amendment, suspension or termination shall not
adversely affect the rights accrued to any Participant under any DSUs
outstanding at the time of such amendment, suspension or termination without the
consent of the affected Participant. Notwithstanding the foregoing, any
amendment, suspension or termination of the Plan shall be such that the Plan
continuously meets the requirements of paragraph 6801(d) of the regulations
under the Income Tax Act (Canada) or any successor provision thereto.

SECTION 11. RIGHTS OF PARTICIPANTS

Except as specifically set out in the Plan, no Director, Participant or other
person shall have any claim or right to any Shares or any other benefit in
respect of DSUs granted pursuant to the Plan.

Neither the Plan nor any grant thereunder shall be construed as granting a
Participant a right to be retained as a Director of the Corporation or a claim
or right to any future grants of DSUs.

Under no circumstances shall DSUs be considered Shares nor shall they entitle
any Participant to exercise voting rights or any other rights attaching to the
ownership of Shares, nor shall any Participant be considered the owner of Shares
by virtue of this Plan.

SECTION 12. DESIGNATION OF BENEFICIARY AND DEATH OF PARTICIPANT

Subject to the requirements of applicable laws, a Director may designate in
writing a person who is a dependant or relation of the Director as a beneficiary
to receive any benefits that are payable under the Plan upon the death of such
Director. The Director may, subject to applicable laws, change such designation
from time to time. Such designation or change shall be in such form and executed
and filed in such manner as the Committee may from time to time determine.

In the event of a Participant's death, any and all DSUs then credited to the
Participant's account shall become payable to the Participant's Beneficiary in
accordance with Section 8 hereof.

SECTION 13. COMPLIANCE WITH APPLICABLE LAWS

Any obligation of the Corporation pursuant to the terms of the Plan is subject
to compliance with all applicable laws and the rules of any stock exchange on
which shares of the Corporation are listed. The Participant shall comply with
all such laws and furnish the Corporation with any and all information and
undertakings as may be required to ensure compliance therewith.

SECTION 14. WITHHOLDING TAXES

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The Corporation shall be entitled to deduct any amount of applicable taxes and
other applicable withholdings from any amount paid or credited hereunder.

SECTION 15. TRANSFERABILITY

In no event may the rights or interests of a Participant under the Plan be
assigned, encumbered, pledged, transferred or alienated in any way, except to
the extent that certain rights may pass to a beneficiary or legal representative
upon death of a Participant, by will or by the laws of succession and
distribution.<PAGE>

                                                                   EXHIBIT 10.34

                 CHANGE OF CONTROL AGREEMENT FOR CAMERON NELSON

                                                                  August 8, 2005

STRICTLY PERSONAL AND CONFIDENTIAL

Mr. Cameron Nelson
Vice President, Finance and Acting Chief Financial Officer
QLT Inc.

Dear Cam:

                                  INTRODUCTION

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

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

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

                                     PART I
                                   DEFINITIONS

1.1 DEFINITIONS. In this Letter Agreement:

      (a)   "AFFILIATE" has the meaning given to it in the Business Corporations
            Act (British Columbia);

      (b)   "BENEFIT PLANS" means the coverage under the Company's group benefit
            plan for employees which the Company provides to you and your
            eligible dependants, including all medical, dental, life and other
            benefit plans but excluding short and long term disability coverage,
            out-of-province medical coverage and the RRSP contribution benefit;

<PAGE>

      (c)   "BOARD" means the Company's Board of Directors;

      (d)   "CHANGE OF CONTROL" means any of the following events:

            (i)   MERGER. A merger, consolidation, reorganization or arrangement
                  involving the Company other than a merger, consolidation,
                  reorganization or arrangement in which stockholders of the
                  Company immediately prior to such merger, consolidation,
                  reorganization or arrangement own, directly or indirectly,
                  securities possessing at least 65% of the total combined
                  voting power of the outstanding voting securities of the
                  corporation resulting from such merger, consolidation,
                  reorganization or arrangement in substantially the same
                  proportion as their ownership of such voting securities
                  immediately prior to such merger, consolidation,
                  reorganization or arrangement;

            (ii)  TENDER OFFER. The acquisition, directly or indirectly, by any
                  person or related group of persons acting jointly or in
                  concert (other than the Company or a person that directly or
                  indirectly controls, is controlled by, or is under common
                  control with, the Company) of beneficial ownership of
                  securities possessing more than 35% of the total combined
                  voting power of the Company's outstanding securities pursuant
                  to a tender offer made directly to the Company's stockholders;

            (iii) SALE. The sale, transfer or other disposition of all or
                  substantially all of the assets of the Company other than a
                  sale, transfer or other disposition to an Affiliate of the
                  Company or to an entity in which stockholders of the Company
                  immediately prior to such sale, transfer or other disposition
                  own, directly or indirectly, securities possessing at least
                  65% of the total combined voting power of the outstanding
                  voting securities of the purchasing entity in substantially
                  the same proportion as their ownership of such voting
                  securities immediately prior to sale, transfer or other
                  disposition; or

            (iv)  BOARD CHANGE. A change in the composition of the Board over a
                  period of 24 consecutive months or less such that a majority
                  of the Board members ceases to be comprised of individuals who
                  either have been:

                  (A)   Board members continuously since the beginning of such
                        period, or

                  (B)   appointed or nominated for election as Board members
                        during such period by at least a majority of the Board
                        members described in subsection (A) above who were still
                        in office at the time the Board approved such
                        appointment or nomination.

      (e)   "INVOLUNTARY TERMINATION" means any one of the following:

            (i)   the termination of your employment by the Company or the
                  giving of written notice to you by the Company of the intended
                  termination of your employment, in either case for reasons
                  other than cause, permanent disability or death, within the 24
                  month period following the occurrence of a Change of Control,
                  or

            (ii)  your giving written notice to the Company, within 24 months
                  after a Triggering Event, in which you advise that a
                  Triggering Event has occurred and tender your resignation from
                  employment with the Company;

<PAGE>

      (f)   "SUCCESSOR" shall mean any corporation which is the legal successor
            to the Company, or which acquires substantially all of the assets of
            the Company, pursuant to a Change of Control;

      (g)   "TRIGGERING EVENT" shall mean, without your express written consent,
            the occurrence of any one or more of the following circumstances
            after a Change of Control:

            (i)   the assignment to you of any duties which are materially
                  inconsistent, in an adverse respect, with your position,
                  authority, duties or responsibilities prior to the Change of
                  Control, or any other action by the Company or its Successor
                  which results in a material diminution in such position,
                  authority or responsibilities, except an isolated and
                  inadvertent action not taken in bad faith and which is
                  remedied by the Company or its Successor promptly after
                  receipt of notice thereof from you;

            (ii)  any reduction by the Company or a Successor in your base
                  salary;

            (iii) a reduction by the Company or a Successor of 25% or more of
                  your annual cash incentive compensation opportunity;

            (iv)  the Company or a Successor's requiring you to, or notifying
                  you that you will be required to, relocate to or be based at,
                  or situate one day or more per week in, a location which is
                  100 kilometers or more from the location where you were based
                  immediately prior to the Change of Control;

            (v)   the failure by the Company or a Successor to continue,
                  substantially as in effect immediately prior to the Change of
                  Control, all of the Company's Benefit Plans, in which you
                  participate (or substantially equivalent successor plans,
                  programs, policies, practices or arrangements) or the failure
                  by the Company or a Successor to continue your participation
                  therein on substantially the same basis as existed immediately
                  prior to the Change of Control;

            (vi)  the failure of the Company to obtain an agreement from any
                  Successor to assume and agree to perform this Letter
                  Agreement, as contemplated in Section 3.5 of this Letter
                  Agreement, and your Employment Agreement with the Company (the
                  "Employment Agreement"); or

            (vii) any purported termination by the Company or a Successor of
                  your employment other than for cause, permanent disability or
                  death.

                                     PART II
                           CHANGE OF CONTROL BENEFITS

2.1 SEVERANCE PAYMENT. Upon the occurrence of an Involuntary Termination, you
shall receive a severance payment from the Company equal to the base salary,
maximum bonus entitlement, and maximum RRSP contribution to which you would have
been entitled in an 18 MONTH PERIOD (the "Severance Period"), calculated as
follows:

                  (a)   the rate of base salary will be that in effect at the
                        time of the Involuntary Termination or as was in effect
                        immediately prior to the occurrence of a Triggering
                        Event, whichever rate is greater; and

<PAGE>

            (b)   the maximum bonus entitlement will be calculated as the
                  maximum amount available to you under the Company's cash
                  incentive compensation plan at the time of the Involuntary
                  Termination as if 100% of your individual goals and the
                  corporate goals were met but not exceeded or the entitlement
                  which was available to you immediately prior to the occurrence
                  of a Triggering Event, whichever amount is greater, pro-rated
                  for any portion of the Severance Period of less than a year;
                  and

            (c)   a contribution to your RRSP, equal to that to which you would
                  have been entitled had you been employed by the Company
                  throughout the Severance Period, pro-rated for any period of
                  less than a year, and subject to terms of the RRSP
                  contribution provisions set out in your Employment Agreement
                  with the Company.

2.2 OTHER COMPENSATION. In addition to the amounts paid under Section 2.1, upon
the occurrence of an Involuntary Termination, the Company shall:

            (a)   EXPENSES - reimburse you for all reasonable business related
                  promotion, entertainment and/or travel expenses incurred by
                  you during the course of your employment with the Company,
                  subject to the expense reimbursement provisions set out in
                  your Employment Agreement with the Company and the Company's
                  Policy and Procedures Manual, as amended from time to time;

            (b)   VACATION - make a payment to you in respect of your accrued
                  but unpaid vacation pay up to and including your last day of
                  employment with the Company;

            (c)   RRSP - make a prorated contribution to your RRSP, the
                  pro-ration to be with respect to the portion of the then
                  current calendar year worked by you up to and including the
                  last day of your employment with the Company and subject to
                  the RRSP contribution provisions set out in your Employment
                  Agreement with the Company;

            (d)   CASH INCENTIVE COMPENSATION EARNED PRIOR TO INVOLUNTARY
                  TERMINATION - in addition to the payments under Section 2.1(b)
                  above, the Company shall make a payment to you in respect of
                  your entitlement to participate in the Company's cash
                  incentive compensation plan in respect of the current calendar
                  year, and the prior year if such payment has not yet been
                  made, to be pro-rated with respect to the portion of the
                  current calendar year worked by you up to and including your
                  last day of employment with the Company and, in respect of the
                  current calendar year, shall be calculated at the maximum
                  annual bonus entitlement available to you under the Company's
                  cash incentive compensation plan at the time of the
                  Involuntary Termination as if 100% of your individual goals
                  and the corporate goals were met but not exceeded or the
                  entitlement which was available to you immediately prior to
                  the occurrence of any prior Triggering Event, whichever amount
                  is greater;

            (e)   BENEFITS - continue to provide you and your eligible
                  dependants with coverage under the Company's Benefit Plans for
                  a period of 30 days after your last day of employment with the
                  Company and, at your request, for such further period (the
                  aggregate of which shall not exceed the Severance Period) as
                  the insurer shall permit, and for any period of the Severance
                  Period during which such coverage is not maintained, the
                  Company shall pay to you compensation in the amount of 10% of
                  your base salary, calculated in accordance with Section
                  2.1(a), provided that the Company's obligation to maintain
                  coverage for you and

<PAGE>

                  your eligible dependants under this subsection will be
                  conditional upon your and your eligible dependants remaining
                  in Canada;

            (f)   MOVING EXPENSES - pay such moving expenses as may be
                  reasonably incurred by you to relocate you and your family to
                  a new location for future employment purposes or the location
                  from which you traveled to Vancouver, as the case may be,
                  including, in the event that you are unable to sell your home
                  in Vancouver before you are required to pay costs of
                  accommodation at your new location, the costs of such
                  accommodation until you derive proceeds from the sale of you
                  home in Vancouver, or six months, whichever period is longer,
                  together with any additional relocation reimbursement to which
                  you may then be entitled under the terms of your Employment
                  Agreement with the Company, such expenses to be calculated and
                  paid in accordance with terms of your Employment Agreement,
                  provided that there is no duplication of payments pursuant to
                  the Employment Agreement and this clause;

            (g)   OUT-PLACEMENT COUNSELLING - reimburse you for out-placement
                  counselling services from a qualified counsellor to be agreed
                  to by you and the Company to a maximum of CAD5,000 for
                  services rendered to you in seeking alternative employment.

2.3 TIMING OF PAYMENT. The amounts set out in Sections 2.1 and 2.2 shall be paid
to you in a lump sum payment within 30 days of your Involuntary Termination,
except for the RRSP payments described in Section 2.1(c) and 2.2(d), which will
be payable in accordance with the terms of your Employment Agreement in the same
manner as if you were employed throughout the Severance Period.

2.4 NO DUPLICATION. The Company agrees that an Involuntary Termination by you,
as defined in subsection 1.1(e)(ii), shall constitute a termination of your
employment by the Company without cause pursuant to your Employment Agreement
and any other agreement in effect between you and the Company. In the event that
the severance payment and other compensation provisions set out in Sections 2.1
and 2.2 of this Letter Agreement and the severance payment provisions in your
Employment Agreement with the Company are both applicable, you agree that, upon
the Company's request, you shall give written notice to the Company with respect
to which agreement you wish to be paid out under and that you shall not be
entitled to severance pay under both agreements.

2.5 OPTIONS. Upon the occurrence of an Involuntary Termination, the provisions
of your Stock Option Agreement(s) with the Company shall govern all stock option
issues, including, without limitation, acceleration of vesting and the time
period remaining to exercise any vested options.

2.6 ACKNOWLEDGEMENT. In the event of an Involuntary Termination, payment by the
Company of the amounts set out in Sections 2.1 and 2.2 or, if you elect to
receive severance under your Employment Agreement payment of the amounts set out
therein, in lieu of receiving a duplicative payment hereunder, shall be in full
and final satisfaction of all amounts that might otherwise be payable by the
Company to you by way of compensation for length of service, damages in lieu of
notice of termination or any other obligations arising under your employment
with the Company and the Company shall have no further obligations, statutory or
otherwise, arising out of or in respect of your employment and you shall execute
a complete and general release in the form set out in Schedule A as an express
condition of your right to receive the payments and benefits referred to in
Sections 2.1 and 2.2 or under your Employment Agreement, as the case may be.

<PAGE>

2.7 TERMINATION FOR CAUSE, PERMANENT DISABILITY OR DEATH. For greater certainty,
if your employment is terminated for cause, permanent disability or death or you
terminate your employment other than as an Involuntary Termination, you shall
not be entitled to payment of the amounts under this Letter Agreement and the
terms of your Employment Agreement with the Company shall govern.

2.8 WAIVER OF NON-COMPETITION COVENANT. Effective upon your Involuntary
Termination, the Company hereby waives any and all rights it has to insist upon
compliance with or to enforce any covenant, undertaking or agreement by you
under your Employment Agreement or otherwise, pursuant to which you have agreed
not to compete with the Company in your future employment or otherwise limit
your future employment opportunities. Your obligations of confidentiality to the
Company contained in your Employment Agreement shall remain in full force and
effect and are not altered by this Letter Agreement.

2.9 RIGHT TO WAIVE ANY AND ALL CONSIDERATION. In your discretion, upon your
written request to the Company made within 15 days of your Involuntary
Termination, you may elect to irrevocably waive your right to any of the
consideration payable by the Company pursuant to this Letter Agreement.

                                    PART III
                            MISCELLANEOUS PROVISIONS

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

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

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

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

3.5 SUCCESSORS; BINDING AGREEMENT. The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of its business and/or assets to assume and agree to
perform this Letter Agreement by express written agreement in the same manner
and to the same extent that it would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such assumption and
agreement within 30 days of any such succession

<PAGE>

shall be a breach of this Letter Agreement and shall entitle you to compensation
from the Company in the same amount and on the same terms as you would be
entitled under this Letter Agreement, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the date of the Involuntary Termination.

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

3.7 GOVERNING LAW. The provisions of this Letter Agreement shall be governed by
and interpreted in accordance with the laws of the Province of British Columbia
and the laws of Canada applicable to this Letter Agreement. All disputes arising
under this Letter Agreement shall be referred to the Courts of the Province of
British Columbia, which shall have exclusive jurisdiction, unless there is
mutual agreement to the contrary.

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

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

      (i)   If the conflict is with respect to an event, entitlement or
            obligation in the event of a Change of Control, the provisions of
            this Letter Agreement shall govern (unless you and the Company
            otherwise mutually agree).

      (ii)  If the conflict is with respect to an entitlement or obligation with
            respect to stock options of the Company, the provisions of the Stock
            Option Agreements shall govern (unless you and the Company otherwise
            mutually agree).

      (iii) In the event of any other conflict, the provisions of the Employment
            Agreement shall govern (unless you and the Company otherwise
            mutually agree).

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

      (i)   The application of that provision under circumstances different from
            those adjudicated by the court;

<PAGE>

      (ii)  The application of any other provision of this Letter Agreement; or

      (iii) The enforceability or invalidity of this Letter Agreement as a
            whole.

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

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

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

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

<PAGE>

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

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

QLT INC.

By:        /s/ LINDA LUPINI
           ------------------------
           Linda Lupini, Senior Vice President, Human Resources and
           Organizational Development

ACCEPTED AND AGREED TO this 8th day of August, 2005 by:

Signature: /s/ CAMERON NELSON
           ------------------------
           Cameron Nelson

<PAGE>

                                   SCHEDULE A

                                  FINAL RELEASE

IN CONSIDERATION OF the payments made to me by QLT INC. (hereinafter called
"QLT") pursuant to that letter dated _______ day of _______, 20___ from QLT to
me, effective the date of this Release, I, _________________ of
__________________ do hereby remise, release and forever discharge QLT, having a
place of business at 887 Great Northern Way, in the City of Vancouver, Province
of British Columbia, V5T 4T5, its officers, directors, servants, employees and
agents, and their heirs, executors, administrators, successors and assigns, as
the case may be, of and from any and all manner of actions, causes of action,
suits, contracts, claims, damages, costs and expenses of any nature or kind
whatsoever, whether in law or in equity, which as against QLT or such persons as
aforesaid or any of them, I have ever had, now have, or at any time hereafter I
or my personal representatives can, shall or may have, by reason of or arising
out of my employment with QLT and/or the subsequent termination of my employment
with QLT on or about _______________, 20___, or in any other way connected with
my employment with QLT and more specifically, without limiting the generality of
the foregoing, any and all claims for damages for termination of my employment,
constructive termination of my employment, loss of position, loss of status,
loss of future job opportunity, loss of opportunity to enhance my reputation,
the timing of the termination and the manner in which it was effected, loss of
bonuses, loss of shares and/or share options, loss of benefits, including life
insurance and short and long-term disability benefit coverage, and any other
type of damages arising from the above. Notwithstanding the foregoing, nothing
in this Release will act to remise, release or discharge QLT from obligations,
if any, which QLT may have pursuant to any indemnity agreements previously
entered into between me and QLT or from any rights I may have to claim coverage
under QLT's past, current or future director and/or officer insurance policies,
in either case with respect to existing or future claims that may be brought by
third parties.

IT IS UNDERSTOOD AND AGREED that this Release includes any and all claims
arising under the Employment Standards Act, Human Rights Code, or other
applicable legislation and that the consideration provided includes any amount
that I may be entitled to under such legislation.

IT IS FURTHER UNDERSTOOD AND AGREED that this Release is subject to compliance
by QLT with the said conditions as stipulated in the aforementioned letter from
QLT.

<PAGE>

IT IS FURTHER UNDERSTOOD AND AGREED THAT QLT will withhold and remit income tax
and other statutory deductions from the aforesaid consideration and I agree to
indemnify and hold harmless QLT from any further assessments for income tax,
repayment of any employment insurance benefits received by me, or other
statutory deductions which may be made under statutory authority.

IT IS FURTHER UNDERSTOOD AND AGREED that this is a compromise and is not to be
construed as an admission of liability on the part of QLT. The terms of this
Release set out the entire agreement between QLT and me with respect to the
matters described herein and are intended to be contractual and not a mere
recital.

IT IS FURTHER UNDERSTOOD AND AGREED that I will keep the contents of this
settlement and all communication relating thereto confidential except to Revenue
Canada or as is required to obtain legal and tax advice, or to enforce my rights
hereunder in a court of law, as is required by law.

IT IS FURTHER UNDERSTOOD AND AGREED that the consideration described herein was
voluntarily accepted by me for the purpose of making a full and final settlement
of all claims described above and that prior to agreeing to the settlement, I
was advised by QLT of my right to receive independent legal advice.

IN WITNESS WHEREOF this Release has been executed effective the ______ day of
__________, 20___.

SIGNED, SEALED AND DELIVERED              )
By _____________ in the presence of:      )
                                          )
                                          )        _____________________________
(SEAL)__________________________________  )        [INSERT NAME]
Name                                      )
________________________________________  )
Address                                   )
________________________________________  )
                                          )
________________________________________  )
Occupation                                )

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