<PAGE>

                                                                     Exhibit 4.7

                       UNANIMOUS SHAREHOLDERS' AGREEMENT

ENTERED INTO in the City of Montreal, Province of Quebec, as of February 18,
2000.

AMONG:              DRAXIS HEALTH INC., a corporation incorporated under the
                    laws of Canada, having its head office at 6870 Goreway
                    Drive, Mississauga, Ontario, L4V 1P1, acting and represented
                    herein by Dr. Martin Barkin, its President and CEO, duly
                    authorized for the purposes hereof as he so declares;

                    ("DHI")

AND:                SGF SANTE INC., a company duly incorporated under the laws
                    of Quebec, having its head office at 600 de La Gauchetiere
                    Street West, Suite 1700, Montreal, Quebec, H3B 4L8, acting
                    and represented herein by Francis Bellido, its President,
                    and by Michel Beland, its Secretary, duly authorized as they
                    so declare;

                    ("SGF Sante")

AND:                DRAXIS PHARMA INC., a corporation duly incorporated under
                    the laws of Canada, having its head office at 1170 Peel
                    Street, 5th Floor, Montreal, Quebec, H3B 4S8, acting and
                    represented herein by Dwight Gorham, its President, duly
                    authorized for the purposes hereof as he so declares;

                    (the "Corporation")

AND:                DWIGHT GORHAM, businessman, residing at 522 Macquet, L'Ile
                    Bizard, Quebec, H9C 2S4;

                    ("Gorham")

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                                      -2-


AND:                MOHAMMED BARKAT, businessman, residing at 146 MacDonald,
                    Kirkland, Quebec, H9J 3Z3;

                    ("Barkat")

                    (Gorham and Barkat are sometimes collectively referred to as
                    "Management")

WHEREAS the Corporation is authorized to issue an unlimited number of Common
shares, of which 19,663,632 common shares are issued and outstanding and
registered in the names of the following shareholders:

<TABLE>
<CAPTION>
          SHAREHOLDER                         NUMBER AND CLASS OF SHARES
          -----------                         --------------------------
<S>                                           <C>
          DHI                                 13,000,000 common shares (66.11%)
          SGF Sante                            6,302,521 common shares (32.05%)
          Management                             361,111 common shares (1.84%)
</TABLE>

WHEREAS the Parties hereto have agreed that it is in their best interests to set
forth certain terms and conditions governing the ownership, transfer and issue
of the Shares they currently hold in the share capital of the Corporation and of
any other subsequently issued Shares of the share capital of the Corporation and
to record their mutual understanding as to the manner in which certain affairs
of the Corporation shall be conducted and to provide for their respective rights
and obligations;

NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and other good and valuable consideration, the Parties
hereby agree as follows:

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                                       -3-


                                    ARTICLE 1

                    RECITALS, DEFINITIONS AND INTERPRETATION

1.1      RECITALS AND SCHEDULES. The recitals and the following schedules form
         an integral part of this Agreement:

         Schedule 1.1:          Equity Participation Plan
         Schedule 1.12:         Intervention Form
         Schedule 3.1.1:        Business Plan
         Schedule 3.1.17:       Delegation of authority
         Schedule 5.8.2:        Loan
         Schedule 9.4:          Management Employment Contracts

1.2      DEFINITIONS. In this Agreement, unless something in the subject matter
         or context is inconsistent therewith:

         "ACCEPTABLE SECURITIES" means securities listed on an Acceptable Stock
         Exchange, where, at the relevant time:

         (i)      such securities will be immediately freely tradeable in Canada
                  upon their acquisition;

         (ii)     the market capitalization of all such securities shall be not
                  less than $300,000,000 and such securities shall be widely
                  held;

         (iii)    such securities are securities of a company of which not less
                  than 40% of all its outstanding securities are so listed and
                  freely tradeable; and

         (iv)     there are not less than 40% of such freely tradeable
                  securities which were traded in the immediately preceding 12
                  months;

         "ACCEPTABLE STOCK EXCHANGE" means the Toronto Stock Exchange, the New
         York Stock Exchange or NASDAQ;

         "ADDITIONAL RIGHT" has the meaning ascribed to it in section 5.7;

         "AGREEMENT" means this shareholders' agreement including all attached
         Schedules, as the same may be supplemented, amended, restated or
         replaced from time to time;

         "APPLICABLE LAW" means any domestic or foreign statute, law, ordinance,
         regulation, by-law (zoning or otherwise) or order that applies to the
         Corporation or its Subsidiaries;

         "APPLICABLE FISCAL LAW" means the INCOME TAX ACT (Canada);
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         "AUDITORS" means the auditors of the Corporation in office at the date
         of the event by reason of which they are called upon to act hereunder,
         duly commissioned with respect to the fiscal period concerned or,
         failing this, any chartered accountant specifically designated by the
         interested Parties for such purpose;

         "BENEFICIARY(RIES)" has the meaning ascribed to it in section 7.1;

         "BOARD" has the meaning ascribed to such term in section 2.1 and
         "BOARDS" means more than one of them;

         "BUSINESS DAY" means a day other than a Saturday or Sunday, on which
         Canadian chartered banks are open for the transaction of domestic
         business in the City of Montreal, Province of Quebec;

         "BUSINESS PLAN" has the meaning ascribed to it in subsection 3.1.1;

         "CAPITAL AMOUNT" has the meaning ascribed to it in section 5.4;

         "CBCA" means the CANADA BUSINESS CORPORATIONS ACT and the regulations
         thereto as amended from time to time;

         "CONTROL" (and "CONTROLLING") for a legal person means the holding, or
         exercise of control or direction over, by a Person, directly or
         indirectly, other than as a creditor only, of securities which grant it
         more than 50% of the votes that may be cast for the election of the
         directors of the legal person in question, (irrespective of whether or
         not, at the time, shares of any other class or classes of such Person
         shall have or might have voting power by reason of the happening of any
         contingency);

         "CONVERTIBLE SECURITY" means a security of a body corporate, including
         a debt obligation, which is convertible into, exchangeable for or which
         carries a right or obligation to purchase, one or more shares, voting
         securities or participating securities of such body corporate
         including, for greater certainty, options and warrants;

         "DIRECTOR" or "DIRECTORS" means a member or members of the Boards;

         "DISPOSE" (and "DISPOSITION") means to sell, transfer, exchange, give,
         dispose of or otherwise assign in any manner whatsoever (including
         without limitation the grant of rights with respect to property), or
         any attempt to perform any of those operations;

         "EMERGENCY ADVANCE" has the meaning ascribed to it in section 5.4;

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                                      -5-


         "ENCUMBER" means to hypothecate, mortgage, encumber with a charge,
         lien, priority, appropriation or option or otherwise give as security
         or encumber in any manner whatsoever, or any attempt to perform any of
         those operations;

         "EQUITY INVESTMENT" has the meaning ascribed to it in section 5.8.1;

         "EQUITY PARTICIPATION PLAN" means the equity participation plan adopted
         by the Corporation, a copy of which is attached hereto as Schedule 1.1;

         "FAIR MARKET VALUE" of a Share means the fair market value of the
         Corporation and its Subsidiaries, if any, as a whole, without any
         discount such as, but not limited to, a discount for minority
         interests, low liquidity or absence of market, divided by the number of
         outstanding Shares of the Corporation at the relevant time. The fair
         market value of the Corporation shall be established by Certified
         Business Valuators selected among nationally-recognized accounting
         firms following the request by the Corporation, DHI or SGF Sante
         pursuant to the provisions of this Agreement. Each of DHI and SGF Sante
         shall nominate such a valuator within 10 days of the above request and
         the valuators shall have a period of 30 days following the expiry of
         such 10-day delay to establish a fair market value of the Corporation.
         If the difference between the values so established is less than 15% of
         the higher value, the fair market value of the Corporation shall then
         mean the average of the values submitted by such valuators within the
         delays referred to above. If such difference is equal to or greater
         than 15% of the higher value, DHI and SGF Sante shall immediately name
         a third Certified Business Valuator selected at random among the
         following: Line Racette of Arthur Andersen, Bernard Lauzon of
         Pricewaterhouse Coopers, Denis Labreche of Ernst & Young and Laurent
         Despres of Fuller Landau, it being understood that in the event any of
         such individuals is not available for selection or refuses to act or is
         no longer with the same firm, then a replacement individual of
         comparable experience and qualification shall be substituted from the
         same firm. The third such valuator shall have a period of 10 days to
         choose between the two above-mentioned valuations. The fair market
         value of the Corporation shall then mean the value chosen by such third
         valuator. The Fair Market Value determined in accordance with the
         foregoing shall be final and not subject to appeal or arbitration
         pursuant to this Agreement and shall be binding upon the Shareholders
         and the Corporation. If either party fails to appoint a valuator
         within the above-mentioned 10-day period, the determination by the
         valuator who is appointed by the other party shall be final. Each
         opposing party shall bear the costs of the valuator it nominates. The
         costs of a third valuator, if any, shall be borne by the party whose
         value is not chosen by the third valuator;

         "FULLY-PARTICIPATING SHAREHOLDER" has the meaning ascribed to it in
         section 5.7;

         "GAAP" means generally accepted accounting principles from time to time
         approved by the Canadian Institute of Chartered Accountants, or any
         successor institute, applicable as at the date on which any calculation
         or determination is required to be made in accordance with generally
         accepted accounting principles, and where the Canadian Institute of
         Chartered

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                                      -6-


         Accountants includes a recommendation in its Handbook concerning the
         treatment of any accounting matter, such recommendation shall be
         regarded as the only generally accepted accounting principle
         applicable to the circumstances that it covers;

         "GOOD FAITH OFFER" means an offer:

         (i)      which is addressed in writing by a Third Party to a
                  Shareholder for the Disposition of all, and not less than all,
                  of the Shares and Convertible Securities held by such
                  Shareholder;

         (ii)     where the purchase price of the Shares and Convertible
                  Securities, if any, is payable as follows:

                  A)       not less than 75% in cash; and

                  B)       not more than 25% in Acceptable Securities; for the
                           purposes of exercising the rights of first refusal
                           pursuant to section 6.5 of this Agreement, such
                           portion of the purchase price which is payable in
                           Acceptable Securities shall be deemed to be payable
                           in cash and to be equal to the Market Price of the
                           Acceptable Securities as at the date immediately
                           preceding the date of the Good Faith Offer;

         (iii)    in respect of which there accrues to the Shareholder no
                  collateral benefit other than the purchase price of the Shares
                  and Convertible Securities; and

         (iv)     which contains no unusual conditions for transactions of the
                  type contemplated and no conditions which one or more of the
                  Parties, as the case may be, would be unable to meet;

         "INCLUDING" means "including without limitation" and the term
         "including" shall not be construed to limit any general statement which
         it follows to the specific or similar items or matters immediately
         following it;

         "INTER-COMPANY ARRANGEMENTS" has the meaning ascribed to it in
         subsection 3.1.13;

         "LOAN" has the meaning ascribed to it in section 5.8.2;

         "MARKET PRICE" for securities listed on an Acceptable Stock Exchange
         means the price, net of all brokerage and transaction fees normally
         anticipated for the sale of such securities by reputable investment
         firms, determined as follows:
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                                      -7-


         (i)      except as provided in subparagraphs (ii) or (iii),
                  (A) if the Acceptable Stock Exchange provides a closing price,
                  an amount equal to the weighted average of the closing price
                  of securities of that class on the Acceptable Stock Exchange
                  for each trading day on which there was a closing price for
                  the period of 30 trading days immediately preceding the date
                  on which the market price is being determined (the "relevant
                  period"), and
                  (B) if the Acceptable Stock Exchange does not provide a
                  closing price, but provides only the highest and lowest prices
                  of securities traded, an amount equal to the weighted average
                  of the averages of the highest and lowest prices of the
                  securities of that class for each of the trading days on which
                  there were highest and lowest prices for the relevant period,

         (ii)     if there has been trading of the securities of the class on
                  the Acceptable Stock Exchange on fewer than half of the
                  trading days for the relevant period, the average, weighted by
                  number of trading days, of the following amounts established
                  for each trading day of the relevant period,

                  (A) the simple average of the bid and ask price for each
                  trading day on which there was no trading, and

                  (B) either
                           (I) the weighted average of the closing price of the
                           securities of that class for each trading day on
                           which there has been trading, if the Acceptable Stock
                           Exchange provides a closing price, or
                           (II) the weighted average of the averages of the
                           highest and lowest prices of the securities of that
                           class for each trading day on which there has been
                           trading, if the Acceptable Stock Exchange provides
                           only the highest and lowest prices of securities
                           traded on a trading day, or

         (iii)    if there has been no trading of the securities of the class on
                  the Acceptable Stock Exchange on any of the trading days
                  during the relevant period, the Market Price shall be deemed
                  to be nil;

         where there is more than one Acceptable Stock Exchange, the Market
         Price shall be determined by reference to the Acceptable Stock Exchange
         in Canada if there is one or, if there is no Acceptable Stock Exchange
         in Canada, by reference to the Acceptable Stock Exchange on which the
         greatest volume of trading in the securities occurred during the
         relevant period;

         "MERCK FROSST AGREEMENT" means the agreement entered into as of June
         12, 1998 among Merck Frosst Canada Inc., the Corporation, DHI and
         Draximage Inc.;

         "NON-PARTICIPATING SHAREHOLDER" has the meaning ascribed to it in
         section 5.7;

         "PARTICIPATING SHAREHOLDERS" has the meaning ascribed to it in section
         5.7;

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                                      -8-


         "PARTICIPATION RIGHT" has the meaning ascribed to it in section 5.4;

         "PARTIES" means, collectively, the Shareholders and the Corporation;

         "PARTLY-PARTICIPATING SHAREHOLDER" has the meaning ascribed to it in
         section 5.7;

         "PERSON" shall be broadly interpreted and includes an individual, body
         corporate, partnership, joint venture, trust, association,
         unincorporated organization, the Crown, any Governmental Authority or
         any other entity recognized by law;

         "PRIME RATE" means, for each day, the rate of interest charged by the
         principal banker of the Corporation expressed in annual percentage,
         published, advertised and commonly known from time to time as the
         reference rate on which the rates of interest of such financial
         institution are based in connection with commercial loans granted in
         Canada;

         "PRO RATA BASIS" means the proportion that the number of participating
         and voting Shares held by each Shareholder bears to the total number of
         outstanding voting and participating Shares, in both cases on a
         non-diluted basis;

         "RELATED PARTY" with respect to another Person means (i) a Person
         who/which does not deal at arm's length with this other Person or with
         any of the Persons described in subparagraphs (ii) to (vi) inclusively
         of this definition, within the meaning of the Applicable Fiscal Law;
         (ii) a Person who/which is an "associate" in relation to this other
         Person under the CANADA BUSINESS CORPORATIONS ACT; (iii) a Person in
         relation to whom/which this other Person is an "associate" under the
         CANADA BUSINESS CORPORATION ACT; (iv) a Subsidiary of this other
         Person; (v) a Person in relation to whom/which this other Person is a
         Subsidiary or (vi) a Person who/which is an "affiliate" of this other
         Person under the CANADA BUSINESS CORPORATIONS ACT;

         "SHARE" means any share of any class or series of the share capital of
         the Corporation, as the case may be;

         "SHARE PRICE" has the meaning ascribed to it in section 5.6;

         "SHAREHOLDERS" means DHI, SGF Sante, Management and any other Person
         which becomes a holder of Shares of the Corporation;

         "SUBSCRIPTION AGREEMENT" means the Subscription Agreement entered into
         between SGF Sante and the Corporation as of the date hereof, pursuant
         to which SGF Sante subscribed for 6,302,521 common shares of the
         Corporation;

         "SUBSIDIARY" means, with respect to any Person, any other Person of
         which more than 50% of the outstanding stock having ordinary voting
         power of such other Person (irrespective of

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                                      -9-


         whether or not, at the time, stock of any other class or classes of
         such other Person shall have or might have voting power by reason of
         the happening of any contingency) is at the time directly or indirectly
         owned by the first mentioned Person, or by one or more of its
         subsidiaries;

         "THIRD PARTY" means any Person who is neither a Shareholder, the
         Corporation, an Affiliate of the Corporation nor a Related Party of a
         Shareholder, the Corporation or an Affiliate; and

         "TSE" means the Toronto Stock Exchange;

         "$" means Canadian dollars.

1.3      EXTENDED MEANINGS. Words importing the singular number include the
         plural and vice versa and words importing the masculine gender include
         the feminine and neuter genders.

1.4      INTERPRETATION NOT AFFECTED BY HEADINGS. The division of this Agreement
         into articles and the insertion of headings are for convenience and
         reference only and shall not affect the construction or interpretation
         of this Agreement.

1.5      APPLICABLE LAW. This Agreement shall be deemed to have been made in the
         Province of Quebec and shall be interpreted in accordance with an
         governed by the laws of Quebec and the laws of Canada applicable
         therein.

1.6      FUNDS. All dollar amounts referred to in this Agreement are in lawful
         money of Canada.

1.7      CALCULATIONS. All calculations and financial documents required to be
         made or produced under or pursuant to this Agreement shall be made or
         produced in accordance with GAAP consistently applied.

1.8      SEVERABILITY. If any provision of this Agreement shall be held invalid
         or unenforceable in any jurisdiction, such invalidity or
         unenforceablity shall attach only to such provision in such
         jurisdiction and shall not in any manner affect or render invalid or
         unenforceable such provision in any other jurisdiction or any other
         provision of this Agreement in any jurisdiction.

1.9      BUSINESS DAY. In the event that any action to be taken hereunder falls
         on a day which is not a Business Day, then such action shall be taken
         on the next succeeding Business Day.

1.10     PREAMBLE. The preamble forms an integral part of this Agreement.

1.11     PARAMOUNTCY. If any provision of this Agreement conflicts with the
         articles or any by-laws of the Corporation, a Subsidiary or any
         shareholders agreement executed among any (but not all) of the Parties
         hereto dealing with any matter referred to herein, the provisions of
         this
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                                      -10-


         Agreement shall prevail and the Parties undertake and covenant to take
         and cause to be taken all actions necessary to amend such articles,
         by-laws or other agreement so as to eliminate any conflict.

1.12     INTERVENTION. Any new shareholder of the Corporation not a Party to
         this Agreement at the date hereof, including any transferee to whom
         Shares or Convertible Securities are transferred by a Shareholder and
         any new shareholder acquiring newly issued treasury Shares or
         Convertible Securities shall, prior to being registered as a
         shareholder or security holder of the Corporation, sign a declaration,
         in the form set out in Schedule 1.12, pursuant to which he shall become
         a party to this Agreement and shall agree to be bound by the terms and
         conditions hereof to the same effect as if originally named in this
         Agreement as a party hereto; in the case of a transfer, the transferor
         shall stipulate that such obligation of the transferee is a condition
         precedent to the validity of the transfer to be made and shall notify
         the Corporation of the transfer.

                                    ARTICLE 2

                               BOARDS OF DIRECTORS

2.1      NUMBER OF DIRECTORS. The board of directors of each of the Corporation
         and any of its Subsidiaries (the "Board"), at all times, shall consist
         of 3 Directors who shall be nominated and elected in accordance with
         the provisions of this Agreement.

2.2      COMPOSITION OF THE BOARDS. DHI shall be entitled to nominate two
         representatives as members of each Board and SGF Sante shall be
         entitled to nominate one representative as a member of each Board.
         Unless either DHI or SGF Sante decides otherwise with respect to that
         part of a meeting relating specifically to his performance or to his
         remuneration, the president, from time to time, of the Corporation
         shall be entitled to receive notice of and attend meetings of the
         Boards as an observer, with the right to be heard and to have his views
         and comments minuted, but no right to vote.

2.3      VACANCIES. Any vacancy on a Board shall be filled to give effect to the
         scheme of representation established in section 2.2.

2.4      ELECTION. The parties hereto shall vote at all meetings of shareholders
         of the Corporation and otherwise exercise their rights and take or
         cause to be taken all measures to ensure that Directors are elected or
         appointed and maintained in office and vacancies on each Board are
         filled in conformity with the provisions of sections 2.1, 2.2 and 2.3
         hereof and, in particular, to appoint the nominee(s) designated by a
         party hereto in case of vacancy or replacement.

2.5      UNDERTAKINGS. Each Party hereto shall at all times carry out and use
         its best efforts to cause the Corporation and its Subsidiaries and, to
         the extent permitted by Applicable Law, its

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                                      -11-


         nominees on each Board to carry out the provision of this Agreement.
         Each Party hereto shall duly and punctually do, or cause to be done,
         all such things, including without limitation, voting or causing to be
         voted all the shares held by such Party as shall be necessary or
         desirable to give effect to this Agreement.

2.6      QUORUM AT BOARD MEETINGS. The quorum at meetings of the Boards shall
         consist of a majority of the Directors in office, provided that each
         such majority must include the director nominated by SGF Sante. If a
         quorum is not reached at any meeting, that meeting may be adjourned by
         the Directors attending to a date no earlier than the third Business
         Day following the date of the original meeting date and no later than 6
         Business Days after such original meeting date, in which case, provided
         notice of such adjourned meeting has been given to all Directors as
         soon as possible, the quorum shall be constituted by the Directors
         present. Directors may attend meetings in person or by telephone.

2.7      CHAIRMAN AND CASTING VOTE. One of the Directors nominated to the Board
         by DHI shall be chosen as chairman of the Board provided such Director
         is present at the meeting and DHI continues to hold more than 50% of
         the outstanding Shares. No chairman of any meeting of a Board shall
         have a second or casting vote.

2.8      BOARD MEETINGS. Each Board shall hold meetings not less than 4 times in
         each fiscal year, the respective Board meetings taking place
         consecutively on the same day at the same place as the meeting of the
         board of directors of the Corporation, which quarterly meetings shall
         take place within 45 days of the end of each quarter of the financial
         year, except the fourth quarter when it shall take place within 75 days
         of the year end. Each Director shall be reimbursed his out-of-pocket
         expenses to attend each meeting of the Boards.

2.9      NOTICE OF BOARD MEETINGS. Notices of meetings of the Board shall be
         sent not less than 10 days in advance. They shall be accompanied by a
         brief but complete summary of all business on the agenda of the
         meeting. Not later than five days prior to the date of the meeting,
         each Director shall have received copies of all documents necessary or
         useful to allow the Directors to make an informed decision.

                                    ARTICLE 3

                    CONDUCT OF THE AFFAIRS OF THE CORPORATION
                              AND ITS SUBSIDIARIES

3.1      MAJOR DECISIONS. Notwithstanding any other provision of this Agreement
         but subject to section 3.3, no obligation of the Corporation will be
         binding on it, and no action will be taken by or with respect to the
         Corporation in respect of any of the matters set forth below, without
         the prior written approval of both DHI and SGF Sante; the powers of
         each of the

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                                      -12-


         Boards are restricted accordingly, this Agreement constituting a
         unanimous shareholders' agreement in accordance with subsection 146(2)
         CBCA:

         3.1.1    any change to the fundamental nature of the Corporation or of
                  the business it carries on from time to time, except as set
                  out in the existing 5-year business plan (which includes a
                  capital expenditure and financing plan) (the "Business Plan")
                  annexed hereto as Schedule 3.1.1;

         3.1.2    the approval of any amendment to the Business Plan;

         3.1.3    the adoption or modification of annual operating budgets,
                  capital expenditure budgets and research and development
                  budgets of the Corporation, including, without limitation, all
                  inter-company charges among the Corporation and its
                  Affiliates, and the authorization of any derogations from such
                  budgets which, in the case of the operating or capital
                  expenditure budget, as the case may be, exceed individually or
                  in the aggregate 10% of the amounts provided under the main
                  headings of the operating budget or globally under the capital
                  expenditure budget, as the case may be;

         3.1.4    the adoption or material modification of the annual marketing
                  plant of the Corporation;

         3.1.5    any amendment to the articles of the Corporation;

         3.1.6    the adoption, amendment or repeal of a by-law of the
                  Corporation;

         3.1.7    the allotment, issue, redemption or repurchase of Shares,
                  Convertible Securities or the entering into of any agreement
                  or the making of an offer or the granting of any right or
                  option which may constitute an undertaking to do any of the
                  foregoing transaction or any amendment to the existing Equity
                  Participation Plan or the adoption of a new share option plan
                  for the purchase of Shares for the benefit of management or
                  employees of the Corporation or a Subsidiary of the
                  Corporation;

         3.1.8    the voluntary liquidation, dissolution or winding-up of the
                  Corporation, its consolidation, amalgamation, reorganization,
                  association or merger with another Person, or the creation of
                  a Subsidiary of the Corporation;

         3.1.9    the filing by the Corporation of a petition in bankruptcy, the
                  Disposition its property in favour of its creditors or the
                  filing of a proposal pursuant to any law relating to
                  insolvency or protection from creditors or the filing of a
                  compromise or an arrangement or a proposal, as well as the
                  selection of a trustee in bankruptcy, if required;
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                                     -13-

     3.1.10 the institution or contestation of any legal proceeding material
            to the business and operations of the Corporation or the settlement
            of any such legal proceeding (excluding, in both cases, actions on
            accounts and lawsuits in respect of the rights and obligations of
            the Parties pursuant to this Agreement or otherwise);

     3.1.11 the approval of transactions out of the ordinary course of
            business of the Corporation, including, without limiting the
            generality of the foregoing, the following:

            (a)  any sale, acquisition or lease of immovable property;

            (b)  the borrowing of money or the giving of security where the
                 total amount, in each case, exceeds, singly or in the
                 aggregate, $500,000 in any one year;

            (c)  the granting of any loan (other than those contemplated in
                 the Corporation's Equity Participation Plan) or the making of
                 any investment by the Corporation or the granting of any
                 guarantee by the Corporation in favour of a Third Party;

            (d)  the Alienation or Disposition of a substantial part of the
                 assets of the Corporation or the granting by the Corporation
                 of an option to the same effect;

            (e)  the acquisition of capital assets where the total
                 consideration of the capital project as a whole exceeds
                 $500,000;

            (f)  the acquisition of an interest in another corporation,
                 partnership, firm or business;

     3.1.12 the entering into, modification or termination of any contract for
            the purchase of raw materials or the sale of products where the term
            of such contract, including any renewal options in favour of the
            other party, exceeds three years or where the total consideration
            thereunder exceeds $5,000,000 and the entering into, modification or
            termination of any material technological transfer or material
            licensing agreement;

     3.1.13 the approval of, modification or termination of any agreements or
            other arrangements ("Inter-company Arrangements") between the
            Corporation and a Person which is a Related Party to the
            Corporation; such Inter-company Arrangements must be reflected in
            writing;

     3.1.14 the approval of the annual audited consolidated and
            non-consolidated financial statements of the Corporation;
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                                     -14-

     3.1.15 the annual appointment or the hiring of the president or the
            hiring of any management employee reporting directly to the
            president;

     3.1.16 the adoption, replacement, repeal or modification of any
            remuneration policy and the payment of any remuneration which is
            not in accordance with such a duly adopted policy; for the purposes
            of this subsection, the expression "remuneration" includes any
            Directors' fees and tokens;

     3.1.17 the repeal of or modification to the delegation of authority by
            the Board to officers and other management of the Corporation as set
            out in Schedule 3.1.17;

     3.1.18 any decision to change the date of the end of the financial year
            of the Corporation from December 31 of each year to another date.

     Unless DHI and SGF Sante have otherwise given their express written
     consent, in order to obtain the prior written consent required under this
     section 3.1, the Chief Executive Officer of the Corporation shall send to
     each of DHI and SGF Sante a notice describing the decision or action
     requiring its consent and the date at which such consent must be given
     along with all the documentation necessary to make a decision (the
     "Notice"). To indicate their consent or refusal, DHI and SGF Sante must
     notify the Corporation within 10 days following the receipt of the Notice
     of their consent or refusal (the "Reply Notice"). If the Corporation has
     not received Reply Notices within the aforementioned delay, DHI or SGF
     Sante, as the case may be, shall be deemed not to have consented to the
     request of the Corporation. In the event of an emergency, the
     aforementioned delay shall be three Business Days and the Notice shall set
     forth the nature of the emergency.

3.2  DISAGREEMENT. In the event DHI and SGF Sante do not agree on a matter
     listed in section 3.1 above, the STATUS QUO will prevail until the dispute
     is resolved by agreement between them. Only those matters referred to in
     subsections 3.1.10, 3.1.13 and 3.1.14 may, if one of DHI or SGF Sante
     considers that it would not be in the best interests of the Corporation to
     all the STATUS QUO to prevail, be submitted to arbitration in accordance
     with the provisions of this Agreement. In rendering a decision with respect
     to any such matter, the arbitrator(s) shall only consider the best
     interests of the Corporation.

3.3  INTER-COMPANY ARRANGEMENTS. Prior to the making of any Inter-company
     Arrangement involving the Corporation, the nature of the contract, the
     parties thereto and any Person receiving any commission or consideration
     in respect of the proposed contract shall be fully disclosed to DHI and
     SGF Sante and each Party shall disclose to DHI and SGF Sante any material
     interest in the proposed contract or the identity of any Related Party or
     any Third Party who would receive any commission or consideration in
     respect thereof. The consent of the Shareholder with an interest in any
     such Related Party shall not be required in respect of any resolution
     relating thereto, and no representative of any such interested Shareholder
     on a Board shall be entitled to vote in respect of any resolution relating
     thereto. Subject to

<PAGE>

                                     -15-

     section 3.4, the determination of the rights to be asserted and course
     of action to be taken by the Corporation, if any, with respect to an
     Inter-company Arrangement, shall be made without the participation,
     approval or consent of any Shareholder having a direct or indirect interest
     in such Related Party, and the Directors and other Shareholder in making
     any determination with respect thereto shall act strictly in the best
     interests of the Corporation.

3.4  INTER-COMPANY REVIEW COMMITTEE. Notwithstanding section 3.2 and
     notwithstanding the fact that Inter-company Arrangements may contain
     provisions for the resolution of disputes by arbitration, prior to
     submitting any dispute to arbitration, any dispute regarding an
     Inter-company Agreement shall first by referred to an inter-company review
     committee. Such committee will be composed of one Director of the
     Corporation nominated by DHI, one Director of the Corporation nominated by
     SGF Sante, the president from time to time of the Corporation and one
     representative of the Related Party who/which is the other party to the
     arrangement. The committee will only have the power and authority to
     recommend a course of action to the Board of the Corporation.

3.5  REPORTS. A report listing all inter-company charges among the
     Corporation and its Related Parties for the immediately preceding financial
     year shall be presented annually to the Board for ratification no later
     than the 60th day following the end of the financial year. Such report
     shall include (i) the names of all employees of the Corporation who
     provided services to a Related Party of the Corporation and a description
     of the nature and extent of such services and charges therefor, and (ii)
     details of all transfers of funds between the Corporation and Persons
     who/which are Related Parties thereto, including their purpose and amounts.

3.6  REIMBURSEMENT OF ADVANCES. Notwithstanding the foregoing, it is
     expressly agreed that the Corporation shall reimburse the existing
     interest bearing advances from DHI in accordance with the agreement with
     respect thereto entered into as of the date hereof between DHI and the
     Corporation.

3.7  APPLICATION TO SUBSIDIARIES. This Article 3, except for section 3.6,
     shall apply MUTATIS MUTANDIS to the conduct of the affairs and business of
     each Subsidiary of the Corporation.

3.8  LEGEND. The share certificates or, if applicable, the Convertible
     Securities certificates issued or to be issued by the Corporation and its
     Subsidiaries shall bear a legend that the shares or, if applicable, the
     convertible securities evidenced thereby, are subject to the terms and
     conditions of a unanimous shareholders' agreement and that these shares or,
     if applicable, these convertible securities, cannot be Disposed of or
     Alienated except in accordance with the provisions of this Agreement.


<PAGE>

                                 -16-

                               ARTICLE 4
                        SHAREHOLDERS' MEETINGS

4.1   QUORUM. The quorum at meetings of the Shareholders shall consist of
      Shareholders present, in person or by proxy, representing not less than
      51% of the issued and outstanding Shares entitled to vote at such
      meeting provided that such Shareholders present, in person or by proxy,
      include each of DHI and SGF Sante. If a quorum is not reached at such
      meeting, that meeting may be adjourned by the Shareholders attending to
      a date no earlier than the third Business Day following the date of the
      original meeting date and no later than 6 Business Days after such
      original meeting date, in which case, provided notice of such adjourned
      meeting has been given to all Shareholders as soon as possible, the quorum
      shall be constituted by the Shareholders present.

4.2   MEETINGS. There shall be a Shareholders' meeting at the head office of
      the Corporation at least once a year. The chairman of the Board of DPI
      shall chair the meeting provided DHI is present and continues to hold
      more than 50% of the outstanding Shares.

4.3   NOTICES OF MEETING. Notices of meetings of the Shareholders shall be sent
      not less than 10 days in advance, each Shareholder hereby waiving its
      right to the longer notice period provided by Applicable Law. All
      notices of meetings of the Shareholders shall be accompanied by a brief
      but complete summary of all business on the agenda of the meeting. Not
      later than five days prior to the date of the meeting, each Shareholder
      shall have received copies of all documents necessary or useful to
      allow the Shareholders to make an informed decision.

4.4   AUDITORS. The appointment of Auditors shall require the approval of both
      DHI and SGF Sante. In the absence of agreement between them, the
      provision of section 3.2 shall apply MUTATIS MUTANDIS.

4.5   BY-LAWS. The Shareholders shall, to the extent necessary or appropriate,
      adopt or cause to be adopted a By-law of the Corporation and of each of
      its Subsidiaries to give effect to the provisions of this Agreement.

                                         ARTICLE 5

                                   ADDITIONAL FINANCING

5.1   ADDITIONAL SUBSCRIPTION. When and if the conditions set out in
      subparagraphs (i) and (ii) under heading "Capital Expenditure Plan -
      Second Lyophilization Unit" of the Business Plan attached hereto as
      Schedule 5.1 are met, DHI and SGF Sante agree to subscribe for the

<PAGE>

                                     -17-

      following additional common shares of the Corporation at a subscription
      price per share equal to approximately $1.19:

                                 NUMBER AND                     AGGREGATE
          SUBSCRIBER           CLASS OF SHARES              SUBSCRIPTION PRICE


         DHI                 840,336 common shares         $    1,000,000

         SGF Sante           420,168 common shares                500,000

      The provisions of the Subscription Agreement shall apply, MUTATIS
      MUTANDIS, to such subscription by SGF Sante. Such subscription
      accompanied by payment in full of the subscription price will take
      place within five Business Days of the receipt by the Shareholders of a
      written notice from the Corporation attesting to the fulfillment of the
      last of the above-mentioned conditions in the Business Plan, the
      Corporation hereby agreeing to send such notice as soon as it is aware
      of the fulfillment of such condition. Upon receipt of the subscription
      price therefor, the Corporation shall immediately cause such shares
      to be issued and allotted. In full or partial satisfaction of the
      subscription price by DHI, any amount then owing by the corporation to
      DHI may, at the option of SGF Sante, be set off against such subscription
      price.

5.2   NO FURTHER FINANCING. Except as provided in section 5.1, no Shareholder
      shall be required to invest additional funds in the Corporation.

5.3   SUBSCRIPTION RIGHTS. In the event the additional Subscription as provided
      in section 5.1 takes place, the Management Shareholders shall be
      entitled (but are not obliged) to subscribe for a number of additional
      common shares of the Corporation at a subscription price per share
      equal to $1.19 such that the percentage of outstanding Shares each such
      Management Shareholder owns after the subscriptions referred to herein
      and in section 5.1 is equal to the percentage of outstanding Shares
      each such Management Shareholder owned immediately before such
      subscriptions, in both cases calculated on a non-diluted basis. For
      greater certainty, such right to subscribe is limited to common shares
      of the Corporation only without any attached warrants. Such rights
      shall be exercised within 30 days of the subscription referred to in
      section 5.1 by written notice to the Corporation accompanied by payment
      in full, the whole subject to such additional terms, conditions and
      benefits as are contained in the Corporation's Equity Participation
      Plan and which pertain to the foregoing.

5.4   PARTICIPATION RIGHTS. In the event an injection of funds in the
      Corporation becomes necessary in order to prevent cessation or material
      curtailment of its activities, including, without limitation, in order
      to prevent the Corporation being in default under its material
      agreements (including pursuant to financial covenants), to prevent a
      petition in bankruptcy being filed against the Corporation or to
      prevent a seizure of a substantive portion of its assets, and provided
      the Corporation has exhausted all other avenues and recourses and no

<PAGE>

                                    -18-

      sources of conventional financing are available. As soon as this
      situation becomes apparent to either DHI or SGF Sante, either of them
      shall immediately advise the other and the Corporation of the situation
      notifying each of the amount of financing required ("Capital Amount").
      DHI and SGF Sante shall thereupon have the right to make such amounts
      available to the Corporation in the proportion that the number of
      voting and participating Shares held by each is to the total number of
      outstanding voting and participating Shares held by both (the
      "Participation Right") as follows. Subject to the eventual exercise of the
      Participation Rights and Additional Rights in accordance with the
      following, either DHI or SGF Sante may advance all or part of the
      Capital Amount to the Corporation to provide emergency funds as
      required (the "Emergency Advance"), on the same conditions as the Loan,
      such Emergency Advance to be reimbursed in part and/or converted into
      an Equity Investment and/or Loan, as the case may be, in accordance
      with the following.

5.5   NOTICE. To allow the exercise of the rights set forth in section 5.4
      above, either DHI or SGF Sante shall give to the other a written notice
      which shall refer to (i) the Capital Amount the Corporation requires
      and (ii) the amount of each such Participation Right.

5.6   PERIOD FOR EXERCISE OF PARTICIPATION RIGHTS. If DHI and SGF Sante wish to
      exercise their respective Participation Right in full, they shall,
      within 45 days of the receipt of the notice set out in section 5.5,
      advise each other and the Corporation of such intention, in writing,
      and within the expiry of such 45-day period, subject to section  5.8,
      invest the full amount of their Participation Right in equity voting
      shares of the Corporation at a price per share determined in accordance
      with section 5.9 (the "Share Price").

5.7   ADDITIONAL RIGHTS. In the event either DHI or SGF Sante does not exercise
      its Participation Rights in full accordance with section 5.6 (either a
      "Non-Participating Shareholder" or a "Partly-Participating Shareholder",
      as the case may be), the Corporation shall immediately send a notice to
      the the other Shareholder if the latter has advised the Corporation of
      its intention to exercise its Participation Rights in full (the
      "Fully-Participating Shareholder") setting out the balance of the
      Capital Amount remaining unsubscribed. The Fully-Participating
      Shareholder shall then have the additional right (the "Additional
      Right") to make such balance available to the Corporation. The
      Fully-Participating Shareholder that wishes to exercise its Additional
      Rights shall do so by sending a written notice to the Corporation
      within five days of its receipt of the above notice from the
      Corporation indicating the maximum amount it is willing to advance to the
      Corporation on account of its Additional Rights.

5.8   EQUITY INVESTMENT AND LOAN. Following the exercise of the Participation
      Rights and the Additional Rights, DHI and SGF Sante, as the case may be,
      shall thereupon immediately:

      5.8.1  if they are both Fully-Participating Shareholders, invest the
             whole of their Participation Rights by subscribing for voting and
             participating Shares at a price per Share equal to the Share Price
             (the "Equity Investment);
<PAGE>

                                     -19-

      5.8.2  if one is a Partly-Participating Shareholder and the other is a
             Fully-Participating Shareholder, the Partly-Participating
             Shareholder shall invest the whole of the amount which it has
             agreed to invest by way of an Equity Investment, and the
             Fully-Participating Shareholder shall (i) invest the proportion
             of its Participation Rights determined in section 5.11 by way of
             an Equity Investment, and (ii) advance the balance of its
             Participation Rights and, as the case may be, its Additional
             Rights to the Corporation (the "Loan") as a loan with the terms
             and conditions set out in Schedule 5.8.2; or

      5.8.3  if one is a Non-Participating Shareholder, the other shall
             invest the whole of the amount which it has agreed to invest by
             way of a Loan,

      provided that neither shall be obliged to make any investment hereunder
      unless the whole of the Capital Amount shall be made available to the
      Corporation as a result of the exercise of the Participation Rights and
      Additional Rights. Any amount owing on account of capital and interest
      pursuant to an Emergency Advance shall be converted into such Equity
      Investment and/or Loan and the portion of an Emergency Advance not so
      converted shall thereupon be reimbursed to the lender with interest.

5.9   SHARE PRICE.  The Share Price shall be equal to the Fair Market Value
      of the Shares on the date of the notice set out in section 5.5 and the
      Corporation shall immediately give the notice provided in the definition
      of "Fair Market Value" in Article 1 of this Agreement.

5.10  ISSUE OF SHARES.  All the Shares subscribed pursuant to sections 5.6
      and 5.8 above shall be fully paid and non-assessable upon their issue
      by the Corporation, which shall take place immediately following the
      establishment of the Share Price and, provided the Corporation shall
      have received their subscription price in full within the period
      provided in each said section, the Corporation shall remit to the
      Shareholders a certificate representing the Shares they subscribed for.

5.11  AMOUNT OF EQUITY INVESTMENTS.  The proportion of the Participation
      Rights to be invested in the Equity Investment in accordance with
      subsection 5.8.2 shall be determined pursuant to the following formula:

                   A
                  ---
                   B

      where:

           A = the amount of the Participation Rights which are exercised by
               the Partly-Participating Shareholder

           B = the total Participation Rights of the Partly-Participating
               Shareholder.


<PAGE>

                                      -20-

5.12  RIGHTS OF MANAGEMENT SHAREHOLDERS.  In the event that amounts have been
      invested in the Corporation by way of an Equity Investment or Loan in
      accordance with the foregoing, each of the Management Shareholders
      shall be entitled to acquire from each DHI and SGF Sante the portion of
      their respective Equity Investment and Loan determined in accordance
      with the following formula at a price equal to their cost:

           Q x R x S

      where:

           Q = the percentage of Shares held by the Management Shareholder on
               a Pro Rata Basis immediately before the Equity Investment and
               Loan

           R = the aggregate Equity Investment and Loan of both DHI and SGF
               Sante

           S = the proportion the number of Shares held by either DHI or SGF
               Sante, as the case may be, immediately before the Equity
               Investment and Loan bore to the total number of Shares held by
               DHI and SGF Sante together immediately before the Equity
               Investment and Loan.

      Such acquisition rights shall be exercised within 30 days of the
      completion of the Equity Investment and Loan by written notice to each
      of DHI and SGF Sante accompanied by payment in full. It is expressly
      agreed that the rights under this section 5.12 replace the pre-emptive
      rights provided for in the Equity Participation Plan which would
      otherwise have been available in respect of the Equity Investment.


                                   ARTICLE 6

                      RESTRICTIONS ON DISPOSITION OF SHARES
                          AND RIGHTS OF FIRST REFUSAL


6.1   GENERAL RESTRICTION ON DISPOSITION.  Except as expressly provided in
      this Agreement, the Shareholders shall not Encumber or Dispose of their
      Shares or Convertible Securities without the previous written consent
      of DHI and SGF Sante, which may be arbitrarily withheld.

6.2   MERCK FROSST AGREEMENT.  Nothing in this Agreement shall be interpreted
      or applied so as to modify or limit in any way the rights granted to
      Merck Frosst Canada Inc. under the Merck Frosst Agreement, it being
      expressly agreed that such rights prevail over the rights of the
      Parties under this Agreement.

6.3   EQUITY PARTICIPATION PLAN.  The Parties expressly acknowledge that the
      Management Shareholders benefit from certain rights (including
      piggy-back rights in certain cases) and


<PAGE>

                                      -21-

      are subject to certain obligations (including drag along obligations in
      certain cases) under provisions of the Equity Participation Plan and
      agree to be bound by such provisions and, to the extent applicable, to
      carry out any obligations incumbent on a Party pursuant to such
      provisions (including the obligation to give notice to Management
      Shareholders of certain Dispositions of Shares, as the case may be). To
      the extent necessary, the provisions of this Agreement shall be
      interpreted and applied so as to give effect to such rights and
      obligations. In the case of an irreconcilable inconsistency between the
      provisions of the Equity Participation Plan and the provisions of this
      Agreement, the latter shall prevail.

6.4   RIGHT OF FIRST OPPORTUNITY.  Subject to section 6.5, if, at any time
      after December 31, 2002, either of DHI or SGF Sante (the "Seller")
      wishes to Dispose of all and not less than all of its Shares and
      Convertible Securities (the "Offered Shares") to a Third Party, it
      first shall offer to the other (the "Offeree") an opportunity to
      purchase such Shares and Convertible Securities in accordance with the
      following provisions:

      6.4.1  the Seller first shall give the Offeree an opportunity to
             purchase all of the Offered Shares at a price in cash to be
             stipulated by the Seller in a written notice ("Notice of
             Intent") to be given to the Offeree.

      6.4.2  Within 90 days of receipt of the Notice of Intent, the Offeree
             shall give the Seller written notice of its acceptance of the
             offer to purchase all of the Offered Shares ("Notice of
             Acceptance") or written notice of its refusal of the said offer
             ("Notice of Refusal"). In the event that the Offeree fails to
             give either of the notices contemplated in this paragraph within
             the prescribed delays, it shall be deemed to have given a Notice
             of Refusal.

      6.4.3  In the event that the Offeree gives a Notice of Acceptance, the
             purchase of the Offered Shares shall take place on the 3rd day
             following receipt of the Notice of Acceptance at 10:00 A.M.
             Montreal time at the registered office of the Corporation or
             such other date, time and place as may be agreed in writing by
             the Seller and the Offeree (the "Closing").

      6.4.4  In the event that the Offeree gives a Notice of Refusal or is
             deemed to have given a Notice of Refusal, the Seller may Dispose
             of all and not less than all of the Offered Shares to a Third
             Party:

             (a)  for a consideration not less than 75% of which consists of
                  cash and not more than 25% of which consists of Acceptable
                  Securities, provided the cash equivalent of the aggregate
                  of such consideration is not less than 90% of the prices
                  stipulated in the Notice of Intent; for such purposes, the
                  cash equivalent of any Acceptable Securities included as
                  part of the consideration shall be equal to their Market
                  Price at the time of the Third-Party Closing under
                  subsection 6.4.5;

<PAGE>

                                     -22-

            (b) and on terms no more favourable to the Third Party than those
                offered to the Offeree.

      6.4.5 The Seller shall not Dispose of the Offered Shares to a Third
            Party unless:

            (a) the sale to the Third Party takes place and is completed
                within six months of receipt of Notice of Refusal or the
                date upon which Notice of Refusal was deemed to have been
                given (the "Third-Party Closing");

            (b) the consideration and terms of the sale respect the
                provisions of subsection 6.4.4; and

            (c) the Third Party becomes a party to this Agreement and agrees
                and undertakes to respect and be bound by its provisions.

6.5   RIGHT OF FIRST REFUSAL. If at any time after December 31, 2002 either
      of DHI or SGF Sante (the "Seller") wishes to Dispose of all and
      not less than all of the Shares and Convertible Securities to a Third
      Party pursuant to a Good Faith Offer (the "Offered Shares"), it first
      shall offer to the other (the "Offeree") an opportunity to purchase such
      Shares and Convertible Securities in accordance with the following
      provisions:

      6.5.1 The Seller first shall give the Offeree an opportunity to
            purchase all of the Offered Shares for the consideration
            stipulated in the Good Faith Offer by written notice ("Notice of
            Intent") to the Offeree accompanied by a copy of the Good Faith
            Offer.

      6.5.2 Within 90 days of receipt of the Notice of Intent, the Offeree
            shall give the Seller written notice of its acceptance of the
            offer to purchase the Offered Shares ("Notice of Acceptance")
            or written notice of its refusal of the said offer ("Notice of
            Refusal"). In the event that the Offeree fails to give either of
            the notices contemplated in this paragraph within the prescribed
            delays, it shall be deemed to have given a Notice of Refusal.

      6.5.3 In the event that the Offeree gives a Notice of Acceptance for
            all of the Offered Shares, the purchase of the Offered Shares
            shall take place on the 3rd day following receipt of the Notice
            of Acceptance at 10:00 A.M. Montreal time at the registered office
            of the Corporation or such other date, time and place as may be
            agreed in writing by the Seller and the Offeree (the "Closing").

      6.5.4 In the event that the Offeree gives a Notice of Refusal or is
            deemed to have given a Notice of Refusal, the Seller may Dispose of
            all and not less than all of the Offered Shares to the Third Party
            pursuant to the Good Faith Offer for the consideration and on terms
            no more favourable to the Third Party than those set out in the
            Good Faith Offer.


<PAGE>


                                     -23-

      6.5.5 The Seller shall not Dispose of the Offered Shares to a Third
            Party pursuant to the Good Faith Order unless:

            (a) the sale to the Third Party takes place and is completed
                within 120 days of receipt of Notice of Refusal or the date upon
                which Notice of Refusal was deemed to have been given
                (the "Third-Party Closing");

            (b) the consideration and terms of the sale respect the
                provisions of subsection 6.5.4; and

            (c) the Third Party becomes a party to this Agreement and agrees
                and undertakes to respect and be bound by its provisions.

6.6   EXCEPTION IN FAVOUR OF SGF SANTE. The provisions of sections 6.1,
      6.4 and 6.5 shall not apply to any Disposition by SGF Sante to
      any other entity ultimately controlled by the government of the province
      of Quebec provided the acquiror agrees and undertakes to respect and be
      bound by the provisions of this Agreement.

6.7   GENERAL EXCEPTION. The provisions of sections 6.1, 6.4 and 6.5 shall not
      be applicable if a Shareholder Disposes of or Alienates all or part of
      the Shares or Convertible Securities, if any, he/it holds, and the
      Directors shall authorize (or, for further clarity, the Shareholders shall
      cause any of their representatives acting as Directors to authorize) the
      said Disposition or Alienation notwithstanding any other provisions in the
      articles or by-laws of the Corporation (other than those necessary for the
      maintenance of its closed company status within the meaning of the
      SECURITIES ACT (Quebec)), the whole without prior authorization from the
      other Shareholders, provided that this Disposition or Alienation be made
      to, or in favour of, a Person wholly-owned by such Shareholder or in
      respect of which such Shareholder holds the entirety of beneficial
      interest in or in favour of a Person by whom or by which the Shareholder
      is wholly-owned, in all cases, subject to the following conditions:

      6.7.1 that the assignee (i) confirm to the other Shareholders and to
            the Corporation its irrevocable consent to be bound by the
            provisions of this Agreement by transmitting to them an intervention
            duly executed, (ii) succeed this Shareholder in all its rights,
            benefits, obligations and responsibilities under this Agreement and
            (iii) be substituted for this Shareholder as completely as if the
            assignee were named in each provision of this Agreement and
            undertake not to issue shares of its share capital or Convertible
            Securities to a Person other than the assignor without the prior
            written consent of the other Shareholders, which consent may be
            given or refused at their entire discretion;

      6.7.2 that the Shares and Convertible Securities, if any, thus Disposed
            of or Alienated remain subject to the provisions of this Agreement
            in the hands of the said assignee;


<PAGE>


                                      -24-


      6.7.3 that the Shareholder remain bound by this Agreement and undertake
            not to Dispose of or Alienate all or any part of the Shares of the
            assignee that it will hold without having obtained the prior written
            consent of the other Shareholders, which consent may be given or
            refused at their entire discretion.


                                   ARTICLE 7

                               PIGGY-BACK RIGHTS

7.1   NOTICE OF PIGGY-BACK RIGHT. If, after complying with the conditions of
      Article 6, DHI (the "Vendor") may Dispose of the Offered Shares to a Third
      Party (the "Buyer"), then the Vendor shall so notify SGF Sante
      (the "Beneficiary") and inform it of the identity of the Buyer and, in the
      case of an offer not triggered by a Good Faith Offer, the terms and
      conditions of the sale.

7.2   PIGGY-BACK RIGHT. The Beneficiary shall then be entitled (the
      "Piggy-Back Right") to require the Buyer to purchase all and not less than
      all of the Beneficiary's Shares and Convertible Securities, as the case
      may be, (the "Piggy-Back Securities").

7.3   CONDITIONS. The purchase by the Buyer of the Piggy-Back Securities
      shall be made for the same consideration, on the same terms and in full
      compliance with the terms and conditions of the sale by the Vendor.

7.4   EXERCISE OF PIGGY-BACK RIGHT. The Beneficiary must exercise its
      Piggy-Back Right by giving notice to the Vendor (indicating the Piggy-Back
      Securities) within 20 days following receipt of the notice transmitted
      under section 7.1, failing which the Beneficiary, as the case may be,
      shall be deemed to have waived its Piggy-Back Right.

7.5   DISPOSITION OF PIGGY-BACK SECURITIES. The Vendor may Dispose of the
      Offered Shares to the Buyer only on the condition that the Buyer purchase
      the Piggy-Back Securities at the same time as it purchases the Offered
      Shares for the same consideration, on the same terms and in full
      compliance with the terms and conditions of the sale by the Vendor.

7.6   EXPIRY OF PERIOD. If the Disposition to the Buyer in accordance with
      these provisions is not completed within the delay provided in Article 6,
      the Vendor may not longer Dispose of the Offered Shares to the Buyer and,
      if it still wishes to Dispose of them, must re-offer them in accordance
      with Articles 6 and 7.


<PAGE>

                                      -25-

                                    ARTICLE 8

                     PUT AND CALL SHARES OF THE CORPORATION

8.1   PUT AND CALL.  At any time after the fifth anniversary of the date
      hereof, subject to the provisions of section 8.10:

      8.1.1  SGF Sante may, from time to time, require DHI to purchase from
             it (the "Put"), all and not less than all of the Shares and
             Convertible Securities of the Corporation owned by SGF Sante
             (the "Put Shares"); and

      8.1.2  subject further to the provisions of section 8.4, DHI may, from
             time to time, require SGF Sante to sell to it (the "Call") all
             and not less than all of the Shares and Convertible Securities
             of the Corporation owned by SGF Sante (the "Call Shares"),

      at a price equal to the Fair Market Value thereof as of the date of the
      giving of the Put Notice or Call Notice, as the case may be, described
      in section 8.2.

8.2   NOTICE.  SGF Sante shall exercise the Put by giving a written notice
      (the "Put Notice") to DHI of its intent to do so, accompanied by the
      notice referred to in the definition of Fair Market Value in Article 1.
      DHI shall exercise the Call by giving a written notice (the "Call
      Notice") to SGF Sante of its intent to do so, accompanied by the notice
      referred to in the definition of Fair Market Value in Article 1.

8.3   OVERRIDE.  In the event of the exercise of the Put, DHI may, at its
      sole option and notwithstanding section 8.4, within five days of the
      receipt of the Put Notice, exercise the Call, in which case the Call
      shall override the Put and the Put Notice shall be considered to have
      been withdrawn.

8.4   CONDITIONS OF EXERCISE OF THE CALL.  Notwithstanding section 8.1, DHI
      shall not be entitled to exercise the Call unless:

      8.4.1  sales of the Corporation on a consolidated basis for the four
             consecutive completed fiscal quarters immediately preceding the
             date of the giving of the Call Notice equal or exceed
             $42,000,000; and

      8.4.2  the retained earnings of the Corporation on a consolidated basis
             as at the end of the quarter immediately preceding the date of
             the giving of the Call Notice equal or exceed $4,000,000.

8.5   PAYMENT TERMS.  Payment of the Fair Market Value of the Put Shares and
      the Call Shares, as the case may be, may be made by any combination, at
      DHI's sole discretion, of cash and newly issued, fully-paid common
      shares of DHI listed on the TSE provided that the portion


<PAGE>

                                      -26-

      of the price payable by way of the issue of common shares of DHI shall
      not exceed 40% of the total purchase price for the Put Shares and Call
      Shares, as the case may be. For such purposes, the common shares of DHI
      shall have a value equal to their Market Price as at the date of the
      giving of the Put Notice or Call Notice, as the case may be, and must be
      freely tradeable in Canada within 60 days of their issue.

8.6   SPECIAL CALL.  At any time after the first anniversary of the date
      hereof, DHI may, from time to time, require SGF Sante to sell to it
      (the "Special Call") all and not less than all of the Shares and
      Convertible Securities of the Corporation owned by SGF Sante (the
      "Special Call Shares") at a price determined in accordance with section
      8.9 (the "Special Call Price").

8.7   SPECIAL CALL NOTICE.  DHI shall exercise the Special Call by giving a
      written notice (the "Special Call Notice") to SGF Sante of its intent
      to do so, accompanied by the notice referred to in the definition of
      Fair Market Value in Article 1.

8.8   PAYMENT OF SPECIAL CALL PRICE.  The Payment of the Special Call Price
      shall be made in cash only.

8.9   SPECIAL CALL PRICE.  The price of the Special Call Shares shall be
      equal to the greater of:

      8.9.1  the Fair Market Value thereof as of the date of the giving of
             the Special Call Notice plus a premium equal to 10% of such Fair
             Market Value; and

      8.9.2  the amount which would provide SGF Sante with a 25%, pre-tax,
             annual compound rate of return on all sums invested by SGF Sante
             in the Corporation, calculated from the date of such
             investment(s) to the closing pursuant to section 8.11, together
             with a reimbursement of all such investment(s).

8.10  CHANGE OF CONTROL PROVISIONS.

      8.10.1 For the purposes of this Article 8, a "Non-Recommended Change of
             Control of DHI" means any transaction whereby shares of DHI
             representing more than 75% of the total outstanding voting
             rights attached to shares of DHI are ultimately acquired,
             directly or indirectly, by any Person or group of Related
             Parties without majority approval by the board of directors of
             DHI;

      8.10.2 For the purposes of this Article 8, a "Change of Control of SGF
             Sante" means any transaction whereby Control of SGF Sante is
             ultimately acquired, directly or indirectly, by any one other
             than the Government of Quebec;

      8.10.3 In the event of a Non-Recommended Change of Control of DHI, SGF
             Sante's Put, as described above, would become immediately
             exercisable, notwithstanding the


<PAGE>

                                      -27-

             delay set out in section 8.1. for a period of 60 days
             immediately following such Non-Recommended Change of Control of
             DHI;

      8.10.4 In the event of a Change of Control of SGF Sante, DHI's Call, as
             described above, would become immediately exercisable,
             notwithstanding the delay set out in section 8.1, for a period
             of 60 days immediately following such Change of Control of SGF
             Sante and it would not be subject to the provisions of section
             8.4.

      For greater certainty, the respective rights of DHI and SGF Sante
      pursuant to sections 8.1 and 8.6 remain in full force and effect
      notwithstanding any failure to exercise rights pursuant to subsections
      8.10.3 or 8.10.4.

8.11  CLOSING.  The purchase of the Put Shares, the Call Shares or the
      Special Call Shares, as the case may be, by DHI shall take place on the
      3rd Business Day following the determination of the Fair Market Value,
      at 10:00 A.M., Montreal time, at the registered office of the
      Corporation or such other date, time and place as may be agreed in
      writing by SGF Sante and DHI.


                                     ARTICLE 9

                                  NON-COMPETITION


9.1   NON-COMPETITION COVENANTS.  Each of DHI and SGF Sante undertakes in
      favour of the other Shareholders, the Corporation and its Subsidiaries
      for so long as they or any Person which is a Related Party of any of
      them remains a Shareholder of the Corporation whether directly or
      indirectly, alone or in partnership or in association or jointly with
      any other Person, as principal, agent, shareholder, lender, guarantor,
      employee, partner, consultant or subcontractor or in any other manner,
      not to:

      9.1.1  have an interest, direct or indirect, which enables it to
             exercise Control and direction over any commercial activities
             which include the manufacture of sterile biopharmaceutical
             products or lyophilics in North America (the "Activities"); or

      9.1.2  solicit, interfere or endeavor to direct or entice away from the
             Corporation or its Subsidiaries any customer, client, supplier
             or any Persons in the habit of dealing with the Corporation or
             its Subsidiaries on the relevant date or other customers,
             clients, suppliers or Person, approached by the Corporation or
             its Subsidiaries during the year preceding the end of such
             Shareholder's relationship with the Corporation or its
             Subsidiaries; or

      9.1.3  encourage any employee, consultant, officer or Director of the
             Corporation or its Subsidiaries or of a Person offering
             management services to the Corporation or its




<PAGE>

                                     -28-


         Subsidiaries to leave the Corporation or employ or solicit for
         employment any employee, consultant, officer or Director who is at
         the time of employment or solicitation employed or rendered services
         to the Corporation, its Subsidiaries or to a Person offering
         management services to the Corporation or its Subsidiaries.

9.2  EXTRAORDINARY REMEDIES.  Each of DHI and SGF Sante acknowledges that its
     failure to respect its commitments and obligations set out in section 9.1
     would cause the Corporation and its Subsidiaries sufficient prejudice to
     justify, in addition to the consequences contemplated in Article 9,
     recourse to the remedies of injunction and seizure before judgment.

9.3  REASONABLE SCOPE.  Each of DHI and SGF Sante recognizes that the
     restrictions contemplated in section 9.1 are reasonable and valid,
     particularly with regard to their duration, their extent and the Persons
     contemplated thereby, and that these restrictions are essential in order
     to enable the Corporation and its Subsidiaries to protect their position
     adequately in the field where they carry on business, operate or pursue
     their activities and therefore exempts DHI and SGF Sante, the Corporation
     and its Subsidiaries from establishing the validity of these restrictions
     before any arbitration board or other court.

9.4  MANAGEMENT UNDERTAKINGS.  Each of Gorham and Barkat undertakes in favour
     of the other Shareholders, the Corporation and its Subsidiaries to
     respect the non-compete and non-solicitation obligations incumbent on
     them pursuant to their respective employment contracts with the
     Corporation, copies of which are attached as Schedule 9.4, as if such
     obligations were incorporated in this Agreement.

9.5  LIMITATION OF SCOPE.  The Parties acknowledge that if the extent of any
     restriction contained in this Article 9 is judged to be unreasonable,
     which is not the opinion of the Parties on the date hereof, such a
     restriction shall then be applicable up to the maximum permitted by the
     Applicable Law and the Parties hereby agree and accept that the extent of
     this restriction may be modified accordingly by any arbitration board or
     other court within the context of any procedure to enforce and give
     effect to such restriction.

                                  ARTICLE 10

                                CONFIDENTIALITY

10.1  The Shareholders agree, as long as such information or knowledge is not
      part of the public domain or required to be disclosed in accordance with
      Applicable Laws, not to disclose, publish or reveal in any manner
      whatsoever and to whomever (except to duly authorized representatives,
      agents, advisers and professionals employed by them or hired in
      connection with their activities as Parties to this Agreement), any
      information or knowledge which is valuable to the Corporation, secret and
      confidential concerning the business operated by the

<PAGE>

                                     -29-


      Corporation or its Subsidiaries, including, without limiting the
      generality of the foregoing, trade secrets, inventions, software,
      computer programs, patents, licences, manufacturing processes,
      know-how, customer lists or contracts of the Corporation or its
      Subsidiaries, the Shareholders and the Shareholders hereby expressly
      acknowledging that such trade secrets, inventions, software, computer
      programs, patents, licences, manufacturing processes, know-how,
      customer lists or contracts and all other information which are
      valuable to the Corporation, secret and confidential concerning the
      business operated by the Corporation or its Subsidiaries have been
      disclosed to them on a confidential basis.

                                  ARTICLE 11

                                  ARBITRATION

11.1  CHOICE OF ARBITRATION.  Subject to section 11.11 below, any claim
      arising in respect of the present Agreement which is challenged, any
      controversy or dispute regarding the execution of the present
      Agreement, including its annulment, as well as any dispute with regard
      to the interpretation or application of the present Agreement must be
      submitted to arbitration to the exclusion of the courts, the whole in
      accordance with the procedure hereinafter established.

11.2  NOTICE TO ARBITRATE.  Any party or parties to the present Agreement
      wishing to submit a claim, conflict, dispute or disagreement
      (collectively a "Dispute") to arbitration must forward to the other
      parties to the Dispute a written notice (hereinafter referred to as
      "Notice to Arbitrate"), containing a reasonably detailed description of
      the claim, conflict, dispute or disagreement and the nomination of an
      arbitrator.

11.3  CHOICE OF SECOND ARBITRATOR.  Within 10 days of the receipt of Notice
      to Arbitrate, the other party or parties involved in the Dispute shall
      name a second arbitrator and send a notice to this effect to the party
      or parties making the submission, the first-named arbitrator and to the
      second-named arbitrator; in the absence of such a notice, the
      first-named arbitrator shall be the sole arbitrator and section 11.10
      inclusively shall apply MUTATIS MUTANDIS.

11.4  CHOICE OF THIRD ARBITRATOR.  The two arbitrators appointed in
      accordance with the above procedure shall, within 10 days following the
      appointment of the second arbitrator, name a third arbitrator who shall
      be a member in good standing of the Quebec Bar and will act as
      President of the Arbitration Committee; if the first two arbitrators
      fail to agree on a third arbitrator, either one or both may apply to a
      judge of the Superior Court of the Province of Quebec, District of
      Montreal, to appoint the third arbitrator.

11.5  CHOICE OF SINGLE ARBITRATOR.  In order to minimize costs, the parties
      involved in any dispute may agree, in writing, to appoint a single
      arbitrator in which event a notice of such appointment shall be sent to
      the arbitrator in question; sections 11.6 to 11.10 inclusively shall
      apply MUTATIS MUTANDIS to such sole arbitrator.

<PAGE>

                                     -30-


11.6  HEARING AND AWARD.  The hearing shall be held in Montreal. The date of
      hearing must be held within 30 days of the appointment of the third
      arbitrator. The award of the board of arbitrators must be rendered in
      writing and served to the parties within 90 days following the hearing.
      Any such award (including with respect to the payment of fees and
      disbursements related to the arbitration) which is rendered shall be
      final, binding and without appeal, and shall become executory as a
      judgement against the parties upon homologation.

11.7  PROCEDURE AND EVIDENCE.  Notice shall be given by the arbitrators, in
      writing, of the time and place of any hearings except where such
      hearings are adjourned by the arbitrators in the presence of both of
      the parties hereto. In the conduct of the hearing and particularly in
      the taking of testimony or other evidence in the course thereof, the
      arbitrators shall be bound by the rules of law applying to the
      competence, relevance and materiality of witnesses and testimony in the
      courts of the Province of Quebec and the rules of procedure set out in
      the CODE OF CIVIL PROCEDURE OF QUEBEC. The arbitrators shall have full
      power and authority to permit, before or during any hearing, any
      amendment to the arbitration submission requested by the parties so
      submitting as well as any cross-demand by the other party or parties.

11.8  RESPECT OF DELAYS.  In the event that the arbitration hearing is not
      held, or the arbitration award is not rendered, within the respective
      delays set out above, the arbitrators, upon the receipt of a written
      notice to this effect from any party to the arbitration, shall no
      longer have jurisdiction to decide the matter submitted to them, and
      any party may thereupon take all steps to submit the matter to
      arbitration once again pursuant to these rules of procedure.

11.9  REPLACEMENT OF ARBITRATORS.  In the event that one or more of such
      arbitrators resigns, refuses to act, withdraws, dies or otherwise
      becomes unable to fulfill the duties imposed upon him, then his place
      shall be filled by the parties originally naming him or if named by the
      other arbitrators, his place shall be filled by an appointment made by
      them; if no replacement has been named within 15 days following the
      date upon which the parties were advised of such failure to act, the
      vacancy may be filled by a judge of the Superior Court of the Province
      of Quebec, District of Montreal, upon motion by one of the parties.

11.10 SUPPLETIVE PROVISIONS.  The parties to these presents agree that the
      provisions presently in effect of the CODE OF CIVIL PROCEDURE OF QUEBEC
      shall receive suppletive application to any arbitration proceeding
      undertaken or held by virtue of the present agreement. In the event of
      a contradiction between the provisions of this Article 11 and the
      provisions of the aforementioned sections of the CODE OF CIVIL
      PROCEDURE OF QUEBEC, the provisions of this Article 11 shall have
      precedence.

11.11 EXCEPTIONS TO ARBITRATION.  Notwithstanding the provisions of this
      Article 11, any party shall be entitled to commence procedures in a
      court of law in order to obtain injunctive or attachment relief against
      a defaulting party.

<PAGE>

                                     -31-


11.12  LANGUAGE.  Each party to the arbitration shall be entitled to use
English or French at its or his sole discretion. The arbitrator(s) shall be
bilingual and able to communicate in both English and French.

                                  ARTICLE 12

                                 MISCELLANEOUS

12.1  SUCCESSORS AND PERMITTED ASSIGNS.  The provisions of this Agreement
shall, except as otherwise provided herein, enure to the benefit of and be
binding upon the Parties hereto and their respective representatives,
administrators, successors and permitted assigns and each and every person so
bound shall make, execute and deliver all documents necessary to carry out
this Agreement.

12.2  NO ASSIGNMENT.  Except as set forth in sections 6.6 and 6.7, no Party
may assign its rights or obligations under this Agreement without the express
written consent of all other parties.

12.3  NOTICES.  All communications, notices and demands required or permitted
hereunder shall be in writing and shall be deemed to have been duly given
upon personal delivery, including delivery by courier or facsimile (with
proof of receipt) to the addresses set forth below:

      IF TO SGF SANTE:

              SGF SANTE INC.
              C/O SOCIETE GENERALE DE FINANCEMENT DU QUEBEC
              600 de La Gauchetiere West
              Suite 1700
              Montreal, Quebec
              H3B 4L8

              Attention: The Secretary
              Fax: (514) 395-8055

      IF TO DHI:

              DRAXIS HEALTH INC.
              6870 Goreway Drive
              Mississauga, Ontario
              L4V 1P1

              Attention: The Secretary
              Fax: 905-677-5494

<PAGE>

                                     -32-


      IF TO GORHAM:

              Mr. Dwight Gorham
              522 Macquet
              L'Ile Bizard, Quebec
              H9C 2S4

              Fax: (514) 694-3841

      IF TO BARKAT:

              Mr. Mohammed Barkat
              146 MacDonald
              Kirkland, Quebec
              H9J 3Z3

              Fax: (514) 694-3841

      IF TO THE CORPORATION:

              DRAXIS PHARMA INC.
              16751 TransCanada Highway
              Kirkland, Quebec
              H9H 4J4

              Attention: President
              Fax: (514) 694-3841

      Each of the Parties shall be entitled to specify different or additional
      addresses by giving written notice to the other Parties in the manner
      set forth herein.

12.4  AMENDMENTS.  This Agreement may be amended only by written agreement
      duly executed by all the Parties hereto.

12.5  TERMINATION.

      12.5.1  This Agreement shall cease and terminate on the occurrence of
              any of the following events, namely:

              (a)  the bankruptcy or receivership of the Corporation, or the
                   issue, with respect to the Corporation, by the CBCA Director
                   of a certificate of dissolution pursuant to Section 211(15)
                   and Section 262 CBCA or any similar provisions enacted in
                   substitution therefor;

              (b)  a written agreement of termination executed by all the
                   Parties hereto;

<PAGE>

                                     -33-


              (c)  when and if the aggregate number of Shares and Convertible
                   Securities owned by either DHI or SGF Sante or their
                   respective successors or permitted assigns represents less
                   than 10% of the total outstanding Shares and Convertible
                   Securities; or

              (d)  when and if the aggregate number of Shares and Convertible
                   Securities owned by DHI and SGF Sante or their respective
                   successors or permitted assigns together is insufficient to
                   enable them, together, to Control the Corporation.

12.6  TIME OF ESSENCE.  Time shall be of the essence of this Agreement.

12.7  COUNTERPARTS.  This Agreement may be executed in one or more counterparts
      each of which when so executed shall be deemed to be an original and such
      counterparts together shall constitute but one of the same instrument.

12.8  LANGUAGE.  This Agreement is executed by all Parties hereto both in
      French and in English. The Parties hereto expressly agree that in case of
      any misunderstanding, conflict or controversy between them with respect to
      one of the provisions of this Agreement, the French version and the
      English version of this Agreement shall have equal value and neither of
      them shall prevail.


      IN WITNESS WHEREOF, this Agreement has been executed on the date
hereinabove first set forth.

                                             DRAXIS HEALTH INC.

                                       Per:  /s/ Dr. Martin Barkin
                                             -------------------------------
                                             Dr. Martin Barkin, President

                                             SGF SANTE INC.

                                       Per: /s/ Francis Bellido
                                            --------------------------------
                                            Francis Bellido

                                       Per: /s/ Michel Beland
                                            --------------------------------
                                            Michel Beland

<PAGE>

                                     -34-


                                       DRAXIS PHARMA INC.

                                  Per: /s/ Dwight Gorham
                                       -----------------------------------
                                       Dwight Gorham, President


                                       /s/ Dwight Gorham
                                       -----------------------------------
                                       DWIGHT GORHAM


                                       /s/ Mohammed Barkat
                                       -----------------------------------
                                       MOHAMMED BARKAT


<PAGE>

DRAXIS PHARMA INC.                                                       DRAFT
DELEGATION OF AUTHORITY                                       FEBRUARY 7, 2000
------------------------------------------------------------------------------

DEFINITION OF POSITIONS
SGF and DHI      SGF Sante Inc. and DRAXIS Health Inc.
Board            Board of Draxis Pharma Inc.
President        President of Draxis Pharma Inc.
C.F.O.           Chief Financial Officer of Draxis Pharma Inc.
                 (Initially, C.F.O. of DRAXIS Health Inc. will be
                 acting C.F.O. of Draxis Pharma Inc.)
Director         Reports directly to President of Draxis Pharma Inc.
Manager          Reports directly to Directors

<TABLE>
<CAPTION>
                                                                                       MOST SENIOR APPROVAL REQUIRED
                                                                              ------------------------------------------------
                                                                    REF. TO                                                SGF
                                                                     S/HER                                                  &
               BASIC ELEMENTS OF MANAGEMENT PROCESS                AGREEMENT  MANAGER  DIRECTOR  C.F.O.  PRESIDENT  BOARD  DHI
-----------------------------------------------------------------  ---------  -------  --------  ------  ---------  -----  ---
<S>                                                                <C>        <C>      <C>       <C>     <C>        <C>    <C>
A. GENERAL MANAGEMENT
   A.1 Changes to fundamental nature of business                     3.1.1                                                  o
   A.2 Management organization structure                                                                              o
   A.3 Annual business plan (Including: scope, goals, objectives,    3.1.2                                                  o
       organization, resources, budget, 5 year projections,
       capital plan, etc.) and changes thereto

B. CAPITAL EXPENDITURES
   B.1 Capital expenditures other than as described in 3.1.11
       (see Schedule 1)
   B.2 Disposal or write-off of fixed assets other than as                                                    o
       described in 3.1.11 (a) and (d)

C. OPERATIONS
   C.1 Derogation from annual operating or capital budgets by >      3.1.3                                                  o
       10%
   C.2 Contracts as described in 3.1.12                              3.1.12                                                 o
   C.3 Contracts and commitments other than those described in
       3.1.11 (see Schedule 1)
   C.4 Transactions outside of the normal course of business as      3.1.11                                                 o
       listed in 3.1.11
   C.5 Modifications to basic technologies and process equipment                                                      o
       in place or to quality standards established
</TABLE>

                                                           Page 1 of 4

<PAGE>


<TABLE>
<CAPTION>
                                                                                       MOST SENIOR APPROVAL REQUIRED
                                                                              ------------------------------------------------
                                                                    REF. TO                                                SGF
                                                                     S/HER                                                  &
               BASIC ELEMENTS OF MANAGEMENT PROCESS                AGREEMENT  MANAGER  DIRECTOR  C.F.O.  PRESIDENT  BOARD  DHI
-----------------------------------------------------------------  ---------  -------  --------  ------  ---------  -----  ---
<S>                                                                <C>        <C>      <C>       <C>     <C>        <C>    <C>
   C.6 Modifications to equipment or installations non-related to                                            o
       technology or process, and within limitations of specific
       delegation for capital expenditures
   C.7 Modifications to programs for training, health, safety,                                               o
       environment, emergencies, etc.

D. SALES AND MARKETING
   D.1 Annual marketing plan (Including: volume, sales, discount,    3.1.4                                                   o
       credit terms, publicity, alliances, etc.) and material
       changes thereto
   D.2 Changes in marketing strategies and policies                                                           o
   D.3 Corporate communications materials (including web site)                                                o

E. HUMAN RESOURCES
   E.1 Changes to remuneration policy as provided for in 3.1.16      3.1.16                                                  o
   E.2 Changes to general human resource policies other than as                                                        o
       provided for in 3.1.16 (Including salary, benefits, pension,
       bonus plan, hiring, relationship with employees, vacations,
       overtime, health and safety, etc.)
   E.3 Hiring, annual appointment and employment terms of            3.1.15                                                  o
       President
   E.4 Approval of President's expense reports                                                     o
   E.5 Entering into or changes to collective agreement                                                                o
   E.6 Hiring, promotion, changes to terms of employment
       (including salary) and termination of (including severance
       pay):
       o First line management reporting directly to President       3.1.15                                                  o
       o Second line management                                                                               o
       o Other employees                                                                  o
       o Temporary personnel                                                              o
   E.7 Setting of annual objectives and administration of annual
       bonus plan including annual performance reviews:
       o President                                                                                                     o
       o First line of management                                                                             o
       o Second line management                                                           o
       o Other salaried employees                                                         o
   E.8 Approval of last pay for a terminated employee                                                         o
</TABLE>

                                                           Page 2 of 4


<PAGE>


<TABLE>
<CAPTION>
                                                                                       MOST SENIOR APPROVAL REQUIRED
                                                                              ------------------------------------------------
                                                                    REF. TO                                                SGF
                                                                     S/HER                                                  &
               BASIC ELEMENTS OF MANAGEMENT PROCESS                AGREEMENT  MANAGER  DIRECTOR  C.F.O.  PRESIDENT  BOARD  DHI
-----------------------------------------------------------------  ---------  -------  --------  ------  ---------  -----  ---
<S>                                                                <C>        <C>      <C>       <C>     <C>        <C>    <C>
F. REGULATORY AND ENVIRONMENTAL
   F.1  Regulatory policies                                                                                            o
   F.2  Responses to regulatory authorities                                                                    o
   F.3  General compliance                                                                                     o

G. INSURANCE
   G.1  Insurance and risk management policies                                                                         o
   G.2  Insurance programs                                                                           o

H. INTERCOMPANY ARRANGEMENTS
   H.1  Establishment of or changes to any inter-company              3.1.13                                                  o
        (i.e. non-arm's length) arrangements

I. FINANCE
   I.1  Internal control procedures                                                                  o
   I.2  Financial reporting systems                                                                  o
   I.3  Bank signing authority (see Schedule 1)                                                                        o
   I.4  Investment as described in 3.1.11(c)                          3.1.11                                                  o
   I.5  Investments other than as described in 3.1.11(c) (see                                                          o
        Schedule 2)
   I.6  Interest rate and foreign exchange policies                                                  o
   I.7  Opening/closing of bank accounts                                                             o
   I.8  Incurrence of debt as described in 3.1.11(b)                  3.1.11                                                  o
   I.9  Establishment of/changes to credit facilities other than                                                       o
        those described in 3.1.11(b)
   I.10 Annual audited financial statements                           3.1.14                                                  o
   I.11 Accounting principles, methods and conventions                                                                 o
   I.12 Appointment of auditors                                        4.4                                                    o
   I.13 Audit fees plan                                                                              o
   I.14 Statutory reporting (incl. Income tax, RRQ, CSST,                                            o
        payroll, etc)
   I.15 Change in year-end                                            3.1.18                                                  o

J. TAXES
   J.1  Tax policy and planning                                                                                        o
   J.2  Compliance                                                                                   o

K. LEGAL
   K.1  Initiation, contestation or settlement of material legal      3.1.10                                                  o
</TABLE>

                                                           Page 3 of 4


<PAGE>


<TABLE>
<CAPTION>
                                                                                       MOST SENIOR APPROVAL REQUIRED
                                                                              ------------------------------------------------
                                                                    REF. TO                                                SGF
                                                                     S/HER                                                  &
               BASIC ELEMENTS OF MANAGEMENT PROCESS                AGREEMENT  MANAGER  DIRECTOR  C.F.O.  PRESIDENT  BOARD  DHI
-----------------------------------------------------------------  ---------  -------  --------  ------  ---------  -----  ---
<S>                                                                <C>        <C>      <C>       <C>     <C>        <C>    <C>
        proceeding
   K.2  Initiation, contestation or settlement of any other legal                                                     o
        proceeding
   K.3  Appointment of corporate legal counsel                                                               o
   K.4  Share transactions as described in 3.1.7                     3.1.7                                                  o
   K.5  Minutes of Board meetings                                                                                     o

L. OTHER
   L.1  Changes to delegation of authority as described herein       3.1.17                                                 o
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