PATENT AND TRADEMARK SECURITY AGREEMENT

Exhibit 10.12

PATENT AND TRADEMARK SECURITY AGREEMENT

This PATENT AND TRADEMARK SECURITY AGREEMENT (this “Agreement”), dated as of September 5, 2007, is entered into between Arius Two, Inc., a Delaware corporation (“Grantor”), which has a mailing address at 0000 Xxxxxx Xxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000, and QLT USA, Inc., a Delaware corporation (“Lender”), having its principal executive office at 0000 Xxxxxxxx Xxxxx, Xxxx Xxxxxxx, Xxxxxxxx 00000.

RECITALS

A. The Grantor, as borrower, and the Lender have entered into that certain Intellectual Property Assignment Agreement dated as of September 5, 2007 (the “Transfer Agreement”) and Secured Promissory Note dated as of September 5, 2007 (the “Note”) (all capitalized terms used in this Agreement and not otherwise defined herein having the meanings assigned to them in the Transfer Agreement);

B. Grantor is the owner of certain intellectual property, identified below, in which Grantor is granting a security interest to Lender;

C. It is a condition precedent under the Transfer Agreement that the Grantor enter into this Agreement and grant to the Lender the security interests hereinafter provided to secure the obligations of the Grantor described below

NOW THEREFORE, the parties hereto mutually agree as follows:

1. GRANT OF SECURITY INTEREST.

To secure the complete and timely payment and performance of all Obligations (as defined in the Security Agreement, dated as of September 5, 2007, between the Grantor and the Lender (the “Security Agreement”)), and without limiting any other security interest Grantor has granted to Lender, Grantor hereby grants, assigns, and conveys to Lender a security interest in Grantor’s entire right, title, and interest, whether now owned or hereafter acquired, in and to the following (the “Collateral”):

(i) All of Grantor’s right to the Marks and trademark registrations related thereto, including but not limited to those listed on Exhibit A, as the same may be updated hereafter from time to time, and all trademark rights with respect thereto throughout the Territory (as defined in the Transfer Agreement), including all proceeds thereof (including license royalties and proceeds of infringement suits), and rights to renew and extend such trademarks and trademark rights;

(ii) All of Grantor’s right, title, and interest, in and to BEMA Patent Rights, including but not limited to those listed on Exhibit B, as the same may be updated hereafter from time to time, and all patent rights with respect thereto throughout the Territory, including all proceeds thereof (including license royalties and proceeds of infringement suits), foreign filing rights, and rights to extend such patents and patent rights;

(iii) the entire goodwill of or associated with the businesses now or hereafter conducted by Grantor connected with and symbolized by any of the aforementioned properties and assets;

(iv) all commercial tort claims associated with or arising out of any of the aforementioned properties and assets;

(v) all accounts, all intangible intellectual or other similar property and other general intangibles associated with or arising out of any of the aforementioned properties and assets and not otherwise described above, including all license payments and payments under insurance (whether or not the Lender is the loss payee thereof) or any indemnity, warranty or guaranty payable by reason of loss or damage to or otherwise with respect to the foregoing Collateral; and

(vi) All products, proceeds and supporting obligations of or with respect to any and all of the foregoing Collateral.

2. AFTER-ACQUIRED PATENT OR TRADEMARK RIGHTS.

If Grantor shall obtain rights to any new trademarks, any new patentable inventions or become entitled to the benefit of any patent application or patent for any reissue, division, or continuation, of any patent, in each case in the Territory and in connection with, derived from, or arising out of, the BEMA Technology, the Marks or the Products, the provisions of this Agreement shall automatically apply thereto. Grantor shall give prompt notice in writing to Lender with respect to any such new trademarks or patents, or renewal or extension of any trademark registration. Without limiting Grantor’s obligation under this Section 2, Grantor authorizes Lender to modify this Agreement by amending Exhibits A or B to include any such new patent or trademark rights. Notwithstanding the foregoing, no failure to so modify this Agreement or amend Exhibits A or B shall in any way affect, invalidate or detract from Lender’s continuing security interest in all Collateral, whether or not listed on Exhibit A or B.

3. GENERAL PROVISIONS.

3.1 Rights Under Security Agreement. This Agreement has been granted in conjunction with the security interest granted to Lender under the Security Agreement. The rights and remedies of Lender with respect to the security interests granted herein are without prejudice to, and are in addition to those set forth in the Security Agreement, all terms and provisions of which are incorporated herein by reference.

3.2 Successors. The benefits and burdens of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties; provided that Grantor may not transfer any of the Collateral or any of its rights or obligations hereunder, without the prior written consent of Lender, except as specifically permitted by the Note or the Security Agreement.

3.3 Amendment; No Conflict. This Agreement is subject to modification only by a writing signed by the parties, except as provided in Section 2 of this Agreement. To the extent that any provision of this Agreement conflicts with any provision of the Security Agreement, the

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provision giving Lender greater rights or remedies shall govern, it being understood that the purpose of this Agreement is to add to, and not detract from, the rights granted to Lender under the Security Agreement.

3.4 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York (as permitted by Section 5-1401 of the New York General Obligations Law), without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of New York to the rights and duties of the parties, except as required by mandatory provisions of law and to the extent the validity or perfection of the security interests hereunder, or the remedies hereunder, in respect of any Collateral are governed by the law of a jurisdiction other than New York.

3.5 Waiver of Jury Trial. THE GRANTOR AND, BY ITS ACCEPTANCE HEREOF, THE LENDER, HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT.

4. TERMINATION. Upon payment and performance in full of all Obligations (as defined in that certain Security Agreement between the parties of even date herewith), the security interest created under this Agreement shall terminate and Lender shall promptly execute and deliver to Grantor such documents and instruments reasonably requested by Grantor as shall be necessary to evidence termination of all security interests given by Grantor to Lender hereunder.

IN WITNESS WHEREOF, the parties have executed this Agreement on the date first written above.

QLT USA, INC.				ARIUS TWO, INC.
By:		/s/ Xxxxxxx X. Xxxxxx		By:		/s/ Xxxx Xxxxx
Name:		Xxxxxxx X. Xxxxxx				Xxxx Xxxxx, Chief Executive Officer
Title:		President

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Exhibit A

MARKS

BEMA

COUNTRY		APPLICATION NO./ FILING DATE		REGISTRATION NO./ REGISTRATION DATE		EXPIRATION/ RENEWAL DATE
United States		78424675 May 25, 2004		Pending

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Exhibit B

PATENTS AND PATENT APPLICATIONS

App. No./ Patent No.		Filing Date/ Issue Date		Country		Title		Status		Attorney Docket No.
08/734,519 5,800,832		18-Oct-1996 01-Sep-1998		US		Bioerodable Film For Delivery Of Pharmaceutical Compounds To Mucosal Surfaces		Granted		092
09/144,827 6,159,498		01-Sep-1998 12-Dec-2000		US		Same As Above		Granted		092CN
PCT/US97/1 8605		16-Oct-1997		US		Pharmaceutical Carrier Device Suitable For Delivery Of Pharmaceutical Compounds To Mucosal Surfaces		Nationalized		092PC
09/069,703		29-Apr-1998		US		Same As Above		Pending		092CPRCE
09/684,682		04-Oct-2000		US		Same As Above		Abandoned		092CPDVRCE
10/962,833		12-Oct-2004		US		Same As Above		Pending		092CPDVCN
11/069,089		01-Mar-2005		US		Same As Above		Pending		092CPDVCN2
PCT/US99/0 9378		29-Apr-1999		PCT		Same As Above		Nationalized		093CPPC
60/495,356		15-Aug-2003		US		Adhesive Bioerodible Transmucosal Drug Delivery System		Expired		093-1
PCT/US04/0 26531		16-Aug-2004		PCT		Same As Above		Nationalized		093PC
11/355,312		15-Feb-2006		US		Same As Above		Pending		093CN
11/645,091		22-Dec-2006		US		Same As Above		Pending		093CN2
10/121,430		11-Apr-2002		US		Process For Loading A Drug Delivery Device		Abandoned		094
PCT/US03/1 1313		11-Apr-2003		PCT		Same As Above		Abandoned		094PC
60/441,829		22-Jan-2003		US		Bioerodable Film For Delivery Of Pharmaceutical Compounds To Mucosal Surfaces		Expired		095-1
10/763,063		22-Jan-2004		US		Same As Above		Unknown		095