Document:

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                                  EXHIBIT 10.36

                                                              September 26, 2005

STRICTLY PERSONAL AND CONFIDENTIAL

Mr. Robert L. Butchofsky
Acting Chief Executive Officer
c/o QLT Inc.
887 Great Northern Way
Vancouver, BC
V5T 4T5

Dear Bob:

                                  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. This letter agreement
replaces the letter agreement dated February 18, 2003 entered into between you
and the Company and also related to the events upon a change of 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

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        other benefit plans but excluding short and long term disability
        coverage, out-of-province medical coverage and the RRSP contribution
        benefit;

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

     (d)  "CHANGE 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

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          (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;

     (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 a 24 MONTH PERIOD (the "Severance Period"), calculated as
follows:

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

     (b)  the maximum bonus entitlement will be calculated as the maximum amount
          available to you under the Company's cash incentive compensation plan
          at the time of the Involuntary Termination as if 100% of your
          individual goals (if applicable) 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 (if applicable) 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;

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

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

     (g)  OUT-PLACEMENT COUNSELLING - reimburse you for out-placement
          counselling services from a qualified counsellor to be agreed to by
          you and the Company to a maximum of 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.

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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. We
also both agree that the letter agreement dated February 18, 2003 entered into
between us is hereby terminated and is replaced by this letter agreement.

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).

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

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

3.5 SUCCESSORS; BINDING AGREEMENT. The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of its business and/or assets to assume and agree to
perform this Letter Agreement by express written agreement in the same manner
and to the same extent that it would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such assumption and
agreement within 30 days of any such succession shall be a breach of this Letter
Agreement and shall entitle you to compensation from the Company in the same
amount and on the same terms as you would be entitled under this Letter
Agreement, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the date of the
Involuntary Termination.

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

3.7 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, including that certain letter dated February 18, 2003 from the
Company to you. 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).

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     (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;

     (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.

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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/ E. Duff Scott
    ------------------------------------
    E. Duff Scott, Chairman of the Board

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

Signature:    /s/ Robert. L. Butchofsky
            ------------------------------
            Robert L. Butchofsky<PAGE>

                                  EXHIBIT 10.37

                              EMPLOYMENT AGREEMENT

(QLT INC. LOGO)

     This Employment Agreement made effective as of November 8, 2005 (the
"EFFECTIVE DATE").

BETWEEN:

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

     ("QLT" or the "COMPANY")

AND:

     CAMERON NELSON, having an address of [Redacted], Vancouver, British
     Columbia, [Redacted], Canada.

     ("MR. NELSON")

WHEREAS:

A.   Mr. Nelson has been employed by QLT since May 23, 2000 and currently serves
     as Vice President, Finance and Chief Financial Officer of QLT.

B.   QLT has offered to Mr. Nelson, and Mr. Nelson has accepted, a salary
     increase retroactive to the date of his appointment as Chief Financial
     Officer of QLT.

C.   QLT and Mr. Nelson wish to replace the employment agreement entered into on
     April 12, 2000 with this Agreement to set out the new terms and conditions
     of Mr. Nelson's employment with QLT in the position as Vice President,
     Finance and Chief Financial Officer.

NOW THEREFORE in consideration of the increase in compensation to be paid under
this Agreement by QLT to Mr. Nelson, 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. Nelson agree as follows:

1.   POSITION AND DUTIES

1.1  POSITION -- Mr. Nelson will continue to be employed by QLT in the position
     of Vice President, Finance and Chief Financial Officer and Mr. Nelson
     agrees to be employed by QLT in that position, subject to the terms and
     conditions of this Agreement.

1.2  DUTIES, REPORTING AND EFFORTS -- In the performance of his duties as Vice
     President, Finance and Chief Financial Officer, Mr. Nelson will:

     (a)  OVERALL RESPONSIBILITIES -- Have overall responsibility for building
          the financial resources and financial infrastructure of QLT and its
          affiliates and subsidiaries, for building positive relationships with
          the financial analyst community and for generally overseeing the
          Finance groups within QLT and its affiliates and subsidiaries.

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     (b)  REPORT -- Report, as and when required, to the Chief Executive Officer
          of QLT or such person appointed by the Board of Directors of QLT (the
          "BOARD") to act in that capacity.

     (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 (including QLT's Code of Ethics and Code
          of Exemplary Conduct) 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,
     effective immediately, QLT agrees to pay or otherwise provide the following
     total annual compensation to Mr. Nelson:

     (a) BASE SALARY -- A base salary in the amount of Cdn.$325,000 in 24 equal
         installments payable semi-monthly in arrears, subject to periodic
         annual reviews at the discretion of QLT. QLT will make such increase in
         base salary retroactive to August 8, 2005, the date of Mr. Nelson's
         appointment to the position of Chief Financial Officer.

     (b) BENEFIT PLANS -- Coverage for Mr. Nelson 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. Nelson taking the necessary steps to ensure effective
              enrollment or registration under each plan, and

         III. Customary deductions of 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, dental insurance and short and
         long term disability insurance. QLT and Mr. Nelson agree that 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. Nelson, subject to him maintaining proper accounts and
         providing documentation for these expenses upon request.

     (d) VACATION -- That number of weeks of paid vacation per year as
         determined in accordance with QLT's standard vacation policy for
         executive level employees. 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. Nelson, and
         II.  Vacation entitlement will not be cumulative from year to year.

     (e) RRSP CONTRIBUTIONS -- Provided the conditions set out below have been
         satisfied, in January or February of the year following the year in
         which the income is earned by Mr. Nelson (the "INCOME YEAR"), QLT will
         make a contribution of up to 7% of Mr. Nelson's annual base salary for
         the Income Year to Mr. Nelson's Registered Retired Savings Plan
         ("RRSP"). The contribution to Mr.

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         Nelson's RRSP as set out above is subject the following conditions:

         I.   The maximum contribution to be made by QLT to Mr. Nelson's RRSP
              is 50% of the annual limit for Registered Retirement Savings
              Plans as established by Canada Customs and Revenue Agency for the
              Income Year,

         II.  Mr. Nelson must have contributed an equal amount into his RRSP,
              and

         III. Mr. Nelson is still actively employed by QLT when the matching
              contribution would otherwise be made.

     (f) CASH INCENTIVE COMPENSATION PLAN -- Participation 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.
         The amount of that payment each year will be determined at the sole
         discretion of the Board and will be based on the performance of QLT
         relative to pre-set individual and corporate objectives and milestones
         for the immediately preceding fiscal year.

     (g) STOCK OPTION PLAN -- Participation in any stock option plan offered by
         QLT to its employees, in accordance with the terms of the plan in
         effect at the time of the stock option offer(s).

3.   RESIGNATION

3.1  RESIGNATION -- Mr. Nelson may resign from his employment with QLT by giving
     QLT 60 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 in lieu of notice to Mr. Nelson
     and require him to leave the premises forthwith:

     (a) BASE SALARY -- Base salary owing to Mr. Nelson for the 60-day notice
         period.

     (b) BENEFITS -- Except as set out below in this subparagraph 3.1(b), for
         the 60-day notice period, all employee benefit plan coverage enjoyed by
         Mr. Nelson and his eligible dependents prior to the date of his
         Resignation Notice. Mr. Nelson acknowledges and agrees that any pension
         and short and long term disability plans provided through QLT will not
         be continued beyond the last day that Mr. Nelson works at QLT's
         premises (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. Nelson 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. Nelson as at the expiry of the 60-day notice period.

     (e) PRORATED RRSP CONTRIBUTION -- A prorated contribution to Mr. Nelson's
         RRSP, the pro-ration to be with respect to the portion of the current
         calendar year worked by Mr. Nelson, up to and including the 60-day
         notice period, and the contribution to be subject to the conditions set
         out in subparagraph 2.1(e), except condition III.

3.2  OTHERS -- In the event of resignation of Mr. Nelson as set out in paragraph
     3.1, the parties agree:

     (a)  NO BONUS -- Mr. Nelson will have no entitlement to participate in
          QLT's Cash Incentive Compensation Plan for the year in which he
          resigns his employment with QLT; and

                                     Page 3
<PAGE>

     (b)  STOCK OPTION PLAN -- Mr. Nelson's 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. Nelson.

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. Nelson from
     active employment with QLT, the parties agree that:

     (a)  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.

     (b)  STOCK OPTIONS -- Mr. Nelson's 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.
          Nelson.

5.   TERMINATION

5.1  TERMINATION FOR CAUSE -- QLT reserves the right to terminate Mr. Nelson's
     employment at any time for any reason. Should Mr. Nelson be terminated for
     cause, he will not be entitled to any advance notice of termination or pay
     in lieu thereof.

5.2  TERMINATION OTHER THAN FOR CAUSE -- QLT reserves the right to terminate Mr.
     Nelson's employment at any time without reason. However, if QLT terminates
     Mr. Nelson's employment for any reason other than for cause, then, except
     in the case of Mr. Nelson becoming completely disabled (which is provided
     for in paragraph 5.6) and subject to the provisions set forth below, Mr.
     Nelson 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. Nelson's
     employment as set out in paragraph 5.2, Mr. Nelson 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, as more particularly set out below:

         I.   A minimum of six months Severance Notice, or Severance Pay in
              lieu thereof, and

         II.  One additional month's Severance Notice, or Severance Pay in lieu
              thereof, for each complete year of continuous employment with QLT
              (which, for greater certainty commenced on May 23, 2000,

         up to a maximum total of 24 months' Severance Notice, or Severance Pay
         in lieu of Severance Notice. MR. NELSON ACKNOWLEDGES AND AGREES THAT
         SEVERANCE PAY IS IN RESPECT OF BASE SALARY ONLY AND WILL BE MADE ON A
         BI-WEEKLY OR MONTHLY BASIS, AT QLT'S DISCRETION.

     (b) BENEFITS -- Except as set out below, for 30 days after Mr. Nelson's
         Last Active Day, all employee benefit plan coverage enjoyed by Mr.
         Nelson and his dependents prior to the date of termination. Thereafter,
         and in lieu of employee benefit plan coverage, Mr. Nelson will receive
         compensation ("BENEFITS COMPENSATION") in the amount of 10% of his base
         salary for the balance of his Severance Notice period. Mr. Nelson
         acknowledges and agrees that pension and short and long term disability
         plans provided through QLT will not be continued beyond Mr. Nelson's
         Last Active Day.

                                     Page 4
<PAGE>

     (c) OUT PLACEMENT COUNSELING -- QLT will pay to an out placement counseling
         service (to be agreed to by Mr. Nelson and QLT, each acting reasonably)
         a maximum of Cdn$5,000 for assistance rendered to Mr. Nelson in seeking
         alternative employment.

     (d) OTHER COMPENSATION -- QLT will provide the following additional
         compensation:

         I.   QLT will reimburse (in accordance with QLT's Policy and Procedures
              Manual, as amended from time to time) Mr. Nelson for all
              reasonable business related promotion, entertainment and/or travel
              expenses incurred by Mr. Nelson on or prior to his Last Active
              Day, subject to the expense reimbursement provisions set out in
              subparagraph 2.1(c).

         II.  QLT will make a payment to Mr. Nelson in respect of his accrued
              but unpaid vacation pay to the date of termination of his
              employment with QLT.

         III. QLT will make a prorated contribution to Mr. Nelson's RRSP, the
              pro-ration to be with respect to the portion of the current
              calendar year worked by Mr. Nelson and the contribution to be
              subject to the conditions set out in subparagraph 2.1(e), except
              condition III.

         IV.  QLT will make a prorated payment to Mr. Nelson 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. Nelson and the entitlement to
              be at the target level Mr. Nelson would have otherwise been
              eligible to receive in the current calendar year if all corporate,
              and, if applicable, individual goals were met but not exceeded.

         V.   Mr. Nelson's 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.
              Nelson.

5.4  ACKNOWLEDGEMENT AND RELEASE -- Mr. Nelson acknowledges and agrees that in
     the event QLT terminates Mr. Nelson's 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);

     QLT will have no further obligations, statutory or otherwise, to Mr. Nelson
     in respect of this Agreement and Mr. Nelson's employment under this
     Agreement.

5.5  DUTY TO MITIGATE

     (a) DUTY TO MITIGATE -- Mr. Nelson acknowledges and agrees that if his
         employment is terminated without cause as set out in paragraph 5.2, his
         entitlement to Severance Pay, Benefits Compensation and other
         compensation as set out in paragraph 5.3 is subject to his duty to
         mitigate such payments by looking for and accepting suitable
         alternative employment or contract(s) for services. If Mr. Nelson
         obtains new employment or contract(s) for services of four weeks or
         longer, Mr. Nelson agrees that he will notify QLT of this fact in
         writing (the "NEW EMPLOYMENT NOTICE") within five working days of such
         an occurrence and in this event the following provisions apply:

         I.   Mr. Nelson acknowledges and agrees that his entitlement to
              Severance Pay and Benefits Compensation will cease as of the date
              on which his new employment or contract for services commences.

                                     Page 5
<PAGE>

         II.  Within 10 working days of receipt of the New Employment Notice
              from Mr. Nelson, QLT agrees that it will pay Mr. Nelson a lump
              sum amount equivalent to 50% of the Severance Pay and Benefits
              Compensation as set out in paragraph 5.3 otherwise owing to Mr.
              Nelson for the balance of the Severance Notice period.

     (b) WAIVER OF DUTY TO MITIGATE ON DELIVERY OF RELEASE -- In the event that,
         either on or before the date of termination of Mr. Nelson's employment
         with QLT or within 30 days after termination of his employment, Mr.
         Nelson executes and delivers to QLT a release in the form set out in
         Appendix "A" to this Agreement, the provisions of paragraph 5.5(a)
         shall be deemed to not apply and Mr. Nelson shall have no duty to
         mitigate nor any reduction in the Severance Pay or Benefits
         Compensation in the event that he obtains alternative employment or
         contract(s) for service.

5.6  TERMINATION DUE TO INABILITY TO ACT

     (a) TERMINATION -- QLT may immediately terminate this Agreement by giving
         written notice to Mr. Nelson if he becomes completely disabled (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,

         and no other reasonable accommodation can be reached between QLT and
         Mr. Nelson. Notwithstanding the foregoing, QLT agrees that it will not
         terminate Mr. Nelson pursuant to this provision unless and until Mr.
         Nelson has been accepted by the insurer for ongoing long-term
         disability payments or, alternatively, has been ruled definitively
         ineligible for such payments.

     (b) PAYMENTS -- In the event of termination of Mr. Nelson's employment with
         QLT pursuant to the provisions of this paragraph 5.6, QLT agrees to pay
         to Mr. Nelson Severance Pay and Benefits Compensation as set out in
         paragraph 5.3 and if Mr. Nelson ceases to be completely disabled, then
         the provisions of paragraph 5.3(c) (out placement counseling) will
         apply.

     (c) DEFINITION -- The term "completely disabled" as used in this paragraph
         5.6 will mean the inability of Mr. Nelson 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. Nelson from satisfactorily performing any
         and all essential functions of his position for QLT during the
         foreseeable future.

5.7  DEATH -- Except as set out below, effective the date of death (the "DATE OF
     DEATH") of Mr. Nelson, this Agreement and both parties' rights and
     obligations under this Agreement will terminate without further notice or
     action by either party. Within 30 days after the Date of Death (and the
     automatic concurrent termination of this Agreement), QLT will pay the
     following amounts to Mr. Nelson's estate:

     (a) BASE SALARY -- Base salary owing to  Mr. Nelson 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, 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

                                     Page 6
<PAGE>

         and/or travel expenses incurred by Mr. Nelson 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. Nelson as at his Date of Death.

     (e) RRSP CONTRIBUTION -- A prorated contribution to Mr. Nelson's RRSP, the
         pro-ration to be with respect to the portion of the current calendar
         year worked by Mr. Nelson and the contribution to be subject to the
         conditions set out in subparagraph 2.1(e), except condition III.

     (f) BONUS -- A prorated payment to Mr. Nelson 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. Nelson and the entitlement to be at the target level
         Mr. Nelson would have otherwise been eligible to receive in the current
         calendar year if all corporate, and, if applicable, individual goals
         were met but not exceeded.

     After his Date of Death, Mr. Nelson's 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. Nelson.

5.8  NO DUPLICATION -- In the event that the Severance Pay provisions of this
     Agreement and the payment provisions of any other agreement that have been
     or may be entered into between QLT and Mr. Nelson with respect to a change
     of control of QLT are both applicable, Mr. Nelson 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.

6.   CONFLICT OF INTEREST

6.1  AVOID CONFLICT OF INTEREST -- Except as set out below, during the term of
     his employment with QLT, Mr. Nelson 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. Nelson agrees that he will not accept any financial
     compensation of any kind, nor any special discount or loan from persons,
     corporations or organizations having dealings or potential dealings with
     QLT, either as a customer or a supplier or a co-venturer. QLT and Mr.
     Nelson acknowledge and agree that from time to time the Chief Executive
     Officer of QLT may consent in writing to activities by Mr. Nelson 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.
     Nelson agrees that neither he nor any members of his immediate family will
     take financial advantage of or benefit financially from information that is
     obtained in the course of his employment related duties and
     responsibilities unless the information is generally available to the
     public.

6.3  COMPLY WITH POLICIES -- During the term of his employment with QLT, Mr.
     Nelson agrees to comply with all written policies issued by QLT dealing
     with conflicts of interest.

6.4  BREACH EQUALS CAUSE -- Mr. Nelson acknowledges and agrees that 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

7.1  INFORMATION HELD IN TRUST -- Mr. Nelson acknowledges and agrees that all
     business and trade secrets, confidential information and knowledge which
     Mr. Nelson acquires during his employment with QLT relating to the business
     and affairs of QLT, its affiliates or subsidiaries or to technology,
     systems,

                                     Page 7
<PAGE>

     programs, ideas, products or services which have been or are being
     developed or utilized by QLT, its affiliates or subsidiaries or in which
     QLT, its affiliates or subsidiaries are or may become interested
     (collectively, "CONFIDENTIAL INFORMATION"), will for all purposes and at
     all times, both during the term of Mr. Nelson's employment with QLT and at
     all times thereafter, be held by Mr. Nelson in trust for the exclusive
     benefit of QLT.

7.2  NON DISCLOSURE -- Mr. Nelson 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. Nelson will not:

     (a) DISCLOSE -- Disclose to any company, firm or person, other than QLT and
         its directors and officers, any of the private affairs of QLT or any
         Confidential Information; or

     (b) USE -- Use any Confidential Information that he may acquire for his own
         purposes or for any purposes, other than those of QLT.

7.3  INTELLECTUAL PROPERTY RIGHTS

     (a) DISCLOSE INVENTIONS -- Mr. Nelson agrees to promptly disclose to QLT
         any and all ideas, developments, designs, articles, inventions,
         improvements, discoveries, machines, appliances, processes, methods,
         products or the like (collectively, "INVENTIONS") that Mr. Nelson 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 with QLT.

     (b) INVENTIONS ARE QLT PROPERTY -- All Inventions and all other work of Mr.
         Nelson in the course of his employment 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. Nelson in a fiduciary capacity solely for the benefit of QLT.

     (c) ADDITIONAL REQUIREMENTS -- Mr. Nelson agrees to:

         I.   Treat all information with respect to Inventions as Confidential
              Information.
         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. Nelson in the course of his employment 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.

7.4  RECORDS -- Mr. Nelson agrees that all records or copies of records
     concerning QLT's activities, business interests or investigations made or
     received by him during his employment with QLT are and will remain the
     property of QLT. He 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. Nelson certifies that he has
     not brought 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 duly licensed to QLT by the former employer.

                                     Page 8
<PAGE>

8.   POST-EMPLOYMENT RESTRICTIONS

8.1  NON-COMPETE -- Mr. Nelson agrees that, by virtue of his senior position
     with QLT, he possesses strategic sensitive information concerning the
     business of QLT, its affiliates and subsidiaries. As a result, and in
     consideration of the payments to be made by QLT to Mr. Nelson under this
     Agreement, without the prior written consent of QLT, for a period of one
     year following termination of his employment with QLT for any reason (by
     resignation or otherwise), as measured from his Last Active Day, Mr. Nelson
     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 or
         any of its affiliates or subsidiaries (including, without limitation,
         QLT USA, Inc.) with respect to:

         I.   The development and/or commercialization and/or marketing of
              pharmaceutical products that are directly competitive with QLT's
              then current commercial products, Visudyne or Eligard or any other
              products then being commercialized by or on behalf of QLT or its
              affiliates or subsidiaries which individually have worldwide
              annual net sales of U.S.$50 million or more in the calendar year
              preceding Mr. Nelson's Last Active Day,

         II.  The development and/or commercialization and/or marketing of
              light-activated pharmaceutical products for photodynamic therapy
              in the treatment of cancer, ophthalmic, dermatology, urology and
              auto-immune disease, or

         III. the development and/or commercialization and/or marketing of
              pharmaceutical products that are based on a polymer based drug
              delivery 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 or the core
              business of any affiliate or subsidiary of QLT,

              anywhere in Canada, the United States or Europe.

     (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 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 and/or commercialization and/or marketing of
              pharmaceutical products that are directly competitive with QLT's
              then current commercial products, Visudyne or Eligard or any
              other products then being commercialized by or on behalf of QLT
              or its affiliates or subsidiaries which individually have
              worldwide annual net sales of U.S.$50 million or more in the
              calendar year preceding Mr. Nelson's Last Active Day,

         II.  The development and/or commercialization and/or marketing of
              light-activated pharmaceutical products for photodynamic therapy
              in the treatment of cancer, ophthalmic, dermatology, urology and
              auto-immune disease, or

         III. the development and/or commercialization and/or marketing of
              pharmaceutical products that are based on a polymer based drug
              delivery 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 or the core
              business of any affiliate or subsidiary of QLT,

                                     Page 9

<PAGE>

          anywhere in Canada, the United States or Europe.

     (c) SOLICIT EMPLOYEES -- Directly or indirectly solicit any individual to
         leave the employment of QLT or any of its affiliates or subsidiaries
         for any reason or interfere in any other manner with the employment
         relationship existing between QLT, its affiliates or subsidiaries and
         its current or prospective employees.

     (d) SOLICIT CUSTOMERS -- Directly or indirectly induce or attempt to induce
         any customer, supplier, distributor, licensee or other business
         relation of QLT or its affiliates or subsidiaries to cease doing
         business with them or in any way interfere with the existing business
         relationship between any such customer, supplier, distributor, licensee
         or other business relation and QLT or its affiliates or subsidiaries.

8.2  MINORITY SHARE INTERESTS ALLOWED -- The parties agree that nothing
     contained in paragraph 8.1 is intended to prohibit Mr. Nelson from owning
     less than 5% of the issued and outstanding stock of any company whose stock
     or shares are traded publicly on a recognized exchange.

9.   REMEDIES

9.1  IRREPARABLE DAMAGE -- Mr. Nelson 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.
     Nelson 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. Nelson 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. Nelson under this Agreement will be subject to QLT's
     withholding of applicable withholding taxes.

10.2 INDEPENDENT LEGAL ADVICE -- Mr. Nelson 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.

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

                                    Page 10
<PAGE>

     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:

     (a)  IF TO QLT -- Attention: Chief Executive Officer, Fax No. (604)
          707-7001,

          WITH A COPY TO:

          QLT Inc.
          887 Great Northern Way
          Vancouver, British Columbia
          Attention:        Principal Legal Officer
          Fax No.:          (604) 873-0816

     (b)  IF TO MR. NELSON -- To the address for Mr. Nelson specified on page 1
          of this Agreement;

     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)  MR. NELSON'S OBLIGATIONS -- Mr. Nelson acknowledges and agrees that
          his representations, warranties, covenants, agreements, obligations
          and liabilities under any and all of Sections 7, 8 and 10 of this
          Agreement will survive any termination of this Agreement.

     (b)  COMPANY'S OBLIGATIONS -- QLT 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, any Stock Option Agreements or agreements relating to a change
     of control of QLT entered into between QLT and Mr. Nelson constitute the
     entire agreement between QLT and Mr. Nelson with respect to the subject
     matters hereof or thereof, and supersede all previous communications,
     understandings and agreements (whether verbal or written) between QLT and
     Mr. Nelson regarding the subject matters hereof or thereof. QLT and Mr.
     Nelson hereby agree that the employment agreement previously entered into
     between them dated April 12, 2000 is terminated and replaced by this
     Agreement. To the extent that there is any conflict between the provisions
     of this Agreement and any Stock Option Agreements

                                    Page 11
<PAGE>

     between QLT and Mr. Nelson, the following provisions will apply:

     (a) CHANGE OF CONTROL - If the conflict is with respect to an event,
         entitlement or obligation in the case of a Change of Control of QLT (as
         defined in any agreement relating to a change of control of QLT entered
         into between QLT and Mr. Nelson), the provisions of that change of
         control agreement will govern (unless Mr. Nelson otherwise elects as
         contemplated in paragraph 5.8 of this Agreement).

     (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.

10.11 AMENDMENTS -- Any amendment to this Agreement will only be effective if
      the amendment is in writing and is signed by QLT and Mr. Nelson.

     IN WITNESS WHEREOF the parties have executed this Agreement as of the day
and year first written above.

QLT INC.

BY:      /s/ Robert L. Butchofsky                      /s/ Cameron Nelson
         ------------------------                      ------------------
         ROBERT L. BUTCHOFSKY                          CAMERON NELSON
         ACTING CHIEF EXECUTIVE OFFICER

                                    Page 12

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