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                                                                    Exhibit 4.23

                                                               MR. BRIAN M. KING
                                  [DRAXIS LOGO]            CHAIRMAN OF THE BOARD


PRIVATE AND CONFIDENTIAL

HAND DELIVERED

September 24, 2003

Dr. Martin Barkin
54 Old Forest Hill Road
Toronto, ON M5P 2P9

Dear Dr. Barkin:

This letter is further to our agreement that Draxis Health Inc. ("Draxis") will
establish for your benefit a Retirement Compensation Allowance ("RCA").

We confirm that the RCA, which has been attached hereto as Schedule "A", is in
the total amount of $1.4 million and will be paid as follows:

        (1)     Payment of $600,000.00 in August, 2003; and

        (2)     The remaining $800,000.00 to be paid in quarterly instalments
                over the next eight (8) fiscal quarters at the beginning of each
                quarter commencing with the fourth quarter of 2003 (the
                "Commencement Date"), and ending with fourth quarter of 2005
                (the "Completion Date").

        (hereinafter the "RCA Payments")

We are writing to confirm that in consideration for the grant of the RCA, and
the RCA Payments, you agree that your Employment Agreement dated April 15, 1999,
as amended by letter dated June 14, 2000, (the "Agreement") shall be interpreted
in accordance with the following provisions:

TERMINATION BY DRAXIS FOR CAUSE - SECTION 16(a)

All RCA Payments shall cease effective immediately upon termination for cause.

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TERMINATION BY DRAXIS WITHOUT CAUSE BUT WITH NOTICE - SECTION 16(b)

The RCA Payments shall qualify as notice pursuant to Section 16(b) of the
Agreement for the purposes of calculating notice or pay in lieu thereof.

TERMINATION BY DRAXIS WITHOUT CAUSE AND WITHOUT NOTICE - SECTION 16(c)

(l)     The severance payments set out in Section 16 (c) of the Agreement (the
        "Severance Payments") shall be reduced by the RCA Payments. In the event
        that you are terminated in accordance with Section 16(c) of the
        Agreement prior to the Completion Date, the Severance Payments shall be
        reduced by the amount of the RCA payments made as at the date of
        termination.

(2)     Following the Completion Date all payments pursuant to the RCA shall
        cease and you acknowledge that you shall have no further entitlement for
        RCA Payments or Severance Payments thereafter.

(3)     The Severance Payments and RCA Payments constitute full and final
        payment of all monies payable pursuant to Section 16(c) of the
        Agreement, and are inclusive of all statutory payments which may be
        owing to you upon termination, including but not limited to any monies
        or payments for termination pay and severance under the provisions of
        the Ontario EMPLOYMENT STANDARDS ACT (the "Act"). You agree that upon
        termination in accordance with the Agreement, you shall have no right or
        claim to any further compensation, including but not limited to any
        claim pursuant to the Act for termination pay and severance pay.

(4)     You agree that the RCA Payments constitute appropriate consideration for
        the amendments to the Agreement set out herein, and further, that such
        payments constitute a greater right or benefit than the payments which
        you would have received upon termination for termination pay and
        severance pay pursuant to the Act.

TERMINATION PAYMENT FOLLOWING CHANGE OF CONTROL - SECTION 16(d)

Any payments pursuant to the Change of Control provisions of the Agreement shall
be reduced by the RCA Payments. For clarity, the RCA Payments made as at and/or
subsequent to the date of termination shall be deducted from the lump sum amount
payable pursuant to 16(d)(1)(C).

TERMINATION BY DRAXIS WITHOUT CAUSE UPON DISABILITY - 16(3)(e)

In the event that you qualify for payments pursuant to Section 16(3)(e) of the
Agreement, any monies deemed payable shall be reduced by the RCA Payments.

DEATH - 16(3)(f)

In the event that you should die during the term of the Agreement, your estate
shall be entitled to the benefit of any unpaid RCA Payments.

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Except as set out herein, the Agreement shall remain in full force and effect.

Please confirm your agreement with the terms and conditions of this letter by
signing below and returning the original to my attention.

Yours very truly,

DRAXIS HEALTH INC.

/s/ Brian M. King

Per:     Mr. Brian M. King
         Chairman of the Board

cc:      Doug Parker
         Jack Carter


I have read and understand and, having had the opportunity to seek independent
legal advice, I accept the terms outlined above in this letter agreement.

                                        /s/ Martin Barkin
-----------------------------------     ----------------------------------------
Date                                    Dr. Martin Barkin

                                        3
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                       RETIREMENT COMPENSATION ARRANGEMENT
                                 TRUST AGREEMENT

This Agreement made as of this 1st day of July 2003.

Between:  DRAXIS HEALTH INC., a company incorporated under the laws of the
          Province of Ontario, having its head office in the Province of Ontario
          (hereinafter referred to as the "Company")

          -and-

          DR. MARTIN BARKIN, ROBERT BARKIN, and GORDON B. LANG, trustees of the
          Retirement Compensation Arrangement Trust for Dr. Martin Barkin of
          Draxis Health Inc. (the "Trust") in the province of Ontario
          (hereinafter referred to as the "Trustees").


A.      WHEREAS pursuant to the terms of a Retirement Compensation Arrangement
        (hereinafter called the "RCA") dated July 1st, 2003, the parties hereto
        agree to enter into a trust agreement whereby the Trustees agree to act
        as Trustees and to administer a trust in accordance with the terms and
        conditions of this Agreement;

B.      AND WHEREAS the Company has established a trust for the purposes of
        providing retirement benefits for some or all of its employees, known as
        the Retirement Compensation Arrangement Trust for Dr. Martin Barkin of
        Draxis Health Inc. from the Effective Date and has appointed the
        Trustees to administer the Trust as of the Effective Date;

C.      AND WHEREAS the Trustees have agreed to act as Trustees in accordance
        with the terms and conditions contained herein;

D.      AND WHEREAS contributions by the Company are made in connection with
        benefits that are to be or may be received or enjoyed by the Members
        (hereinafter referred to as the "Member") on, after or in contemplation
        of a substantial change in the services rendered by the Member, the
        retirement of the Member, the disability or death of the Member or the
        loss of office or employment of the Member;

E.      The RCA Plan Text requires the Company to pay contributions into trust
        to fund the plan benefits and the Company hereby agrees to transfer to
        the Trustees the sum of $600,000.00 as an initial contribution.

NOW THEREFORE that in consideration of the member continuing to provide faithful
service to the Company and the Company providing the RCA Plan to the Member and
such other good and valuable consideration and the sum of $10.00 now paid by
each party to each of the other

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parties (receipt and sufficiency of which is hereby acknowledged by each of the
parties), the parties hereto agree as follows:

1.      INTERPRETATION

1.1     DEFINITIONS. The following terms have the meanings given:

        "AGREEMENT" means this trust agreement as amended from time to time;

        "BENEFICIARY" means the beneficiaries referred to in Schedule "A";

        "EFFECTIVE DATE" means the date on which the Company provides funds to
        establish the Trust Fund to the Trustee;

        "INCOME TAX ACT" means the Income Tax Act of Canada, as amended from
        time to time;

        "MEMBER" means a person who is enrolled in the Plan by the Company under
        the Terms and Conditions set out in Schedule "A";

        "PLAN" means the Retirement Compensation Arrangement ("RCA") Plan as
        amended from time to time attached hereto as Schedule "A";

        "POWERS" shall be deemed to mean and include those things which the
        Trustees may, in their sole and absolute discretion, do or refrain from
        doing in the management, supervision or carrying out of this Trust and
        the doing or refraining from doing any act shall not violate any duty to
        the Members and any Beneficiaries of the Trust and such powers shall not
        be limited by any statutory limitations set out in the Ontario Trustee
        Act or any other relevant provincial legislation;

        "RCA" means a Retirement Compensation Arrangement within the meaning of
        the INCOME TAX ACT (CANADA);

        "TRUSTEES" means the individuals that from time to time act as the
        Trustees of the Trust Fund;

        "TRUST FUND" means the trust fund established pursuant to this
        Agreement.

1.2     NUMBER AND GENDER. Unless the context requires otherwise, words
        importing the singular include the plural and vice versa, and words
        importing gender include both genders.

1.3     HEADINGS. The headings in this Agreement are included solely for the
        ease of reference and are not to be used to interpret this Agreement.

                                        2
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2.      ESTABLISHMENT AND ACCEPTANCE OF TRUST

2.1     ESTABLISHMENT. In order to establish and settle a trust to fund Plan
        benefits, the Company will contribute $10.00 to the Trustees.

2.2     TRUST FUND. All contributions received by the Trustees in connection
        with the Plan, together with any earnings, profits, increments and
        accruals arising thereon, reduced by authorized payments shall
        constitute a Trust Fund which shall be held by the Trustees pursuant to
        the trust provisions settling the trust set out within this Agreement
        and dealt with in accordance with the enabling powers contained within
        this Agreement.

2.3     ACCEPTANCE. The Trustees hereby accept the trusts created by the terms
        of the Agreement and the powers set out within this Agreement and agree
        to hold, invest, distribute and administer the Trust Fund in accordance
        with this Agreement.

2.4     SUBJECT TO AGREEMENTS. The Trust Fund shall be held by the Trustees in
        trust for the Member subject to the terms and conditions contained
        herein and at no time shall any part of the Trust Fund be used for or
        diverted to purposes other than those consistent with the terms of this
        Agreement and the RCA.

3.      USE OF TRUST FUND

3.1     The Trust Fund shall be used solely for the purposes of paying amounts
        that are payable under the Plan and any taxes, expenses for
        administration and other amounts payable in respect of the Trust Fund.

4.      PAYMENTS FROM THE TRUST FUND

4.1     PAYMENTS OF BENEFITS. The Trustees shall make payments from the Trust
        Fund in accordance with the terms of the Plan.

4.2     WITHHOLDING. The Trustees shall withhold from any plan payments to be
        made to the Member pursuant to this Agreement any amount required by the
        Income Tax Act or any other governing statute to be withheld.

4.3     TAXES. The Trustees shall pay from the Trust Fund all taxes of whatever
        kind that may be levied or assessed under existing or future laws upon
        or in respect of the Trust Fund or any assets forming a part thereof.
        This paragraph also applies to any interest or penalty applicable in
        respect of any taxes.

4.4     SALE OF ASSETS. If the Trustees must sell assets in order to make a
        payment and have not been directed by the Company as to which assets are
        to be sold for this purpose, the Trustees may select the assets to be
        sold in the Trustees' sole discretion.

                                        3
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5.      INVESTMENT OF TRUST FUND

5.1     INVESTMENT DIRECTIONS. The Company shall direct the Trustees in the
        investment of the Trust Fund and may, from time to time, delegate the
        power to direct the investments to one or more other persons, including
        the Trustees.

5.2     PERMISSIBLE INVESTMENTS. The Trustees may acquire any investments
        whatsoever, notwithstanding that the investments may not be authorized
        by law. For greater certainty, and without in any way limiting the
        foregoing, the Trustees may acquire interests in pooled funds,
        partnerships, life insurance policies, annuity contracts and loans of
        private companies including the Company.

6.      RETIREMENT COMPENSATION ARRANGEMENT

6.1     It is intended that the Plan and the Trust Fund be a retirement
        compensation arrangement for the purposes of the INCOME TAX ACT
        (CANADA).

7.      POWERS OF TRUSTEES

7.1     Without in any way limiting or derogating from the powers and
        authorities otherwise available to the Trustees, the Trustees have the
        following powers and authorities in the administration and investment of
        the Trust Fund, to be exercised in accordance with this Agreement:

        a)      PURCHASE OF PROPERTY. To invest the Trust Fund or any part
                thereof in such manner and in such loans, bonds, securities or
                other property (including securities issued by the Trustees or
                its affiliates or by the Company), and upon such terms as the
                Trustees shall consider advisable, without being restricted to a
                class of investments which the Trustees may be permitted by law
                to make.

        b)      SALE, EXCHANGE, CONVEYANCE AND TRANSFER OF PROPERTY. To sell,
                exchange, convey, transfer or otherwise dispose of any
                securities or other property held by it, upon such terms and for
                such consideration as the Trustees consider suitable.

        c)      EXERCISE OF OWNER'S RIGHTS. To vote upon any stocks, bonds or
                other securities; to give general or special proxies or powers
                of attorney with or without power of substitution; to exercise
                any conversion privileges, subscription rights, or other
                options, and to make any payments incidental thereto; to oppose,
                or consent to, or otherwise participate in corporate
                reorganizations or other changes affecting corporate securities;
                and generally to exercise any of the powers of an owner with
                respect to all stocks, bonds, securities or other property held
                as part of the Trust Fund.

        d)      REGISTRATION OF INVESTMENTS. To cause any securities or other
                property held or forming part of the Trust Fund to be registered
                in their own name as Trustees, or in the name of one or more of
                its nominees as Trustee(s), and to be represented by
                certificates which include securities of the same class and
                nature held for other accounts for which the Trustees act in a
                fiduciary capacity; to hold any securities

                                        4
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                in bearer form; and to hold securities of an issuer utilizing a
                book-based central depository system for which certificates are
                not being issued, in which case the books and records of the
                Trustees shall at all times show such securities or the
                proportionate interest thereof that are part of the Trust Fund.

        e)      ACQUIRE LIFE INSURANCE. To apply for and purchase as an
                authorized investment of the Trust Fund life insurance on the
                life of any person including the Member.

        f)      INSURANCE. To accept as assignee for consideration or as a
                donation to the Trust Fund any life insurance policy or policies
                on the life of any person and/or benefits under any such policy
                or policies and to use and apply any portion of the Trust Fund
                in the payment or pre-payment of premiums upon or for the
                purpose of maintaining in force any such insurance, whether
                applied for and purchased by the Trustees or accepted by them as
                assignees or donees and any insurance so purchased by or donated
                to or otherwise acquired and held by the Trustees shall be
                deemed to be an authorized investment in a like manner so shall
                any payment or pre-payment of any premium thereon. The Trustees
                are specifically authorized to acquire universal life policies
                with some or all of the contributions to the Trust Fund.

        g)      BORROWING. To borrow or raise money for the purposes of the
                Trust on such terms and conditions as the Trustees consider
                appropriate, and to use the property of the Trust Fund to secure
                the repayment of the amount borrowed or raised with the purpose
                of such borrowing to ultimately benefit the Member and
                Beneficiary.

        h)      RETENTION OF PROPERTY ACQUIRED. To accept and retain any
                securities or other property received or acquired by them as
                Trustees, whether or not such securities or other property would
                normally be purchased as investments for the Trust Fund.

        i)      BANK ACCOUNTS. To open and operate an account with a bank, trust
                company or securities brokerage firm and to retain cash in the
                account. Any cash deposited with the Trustees or an affiliate
                shall be credited with interest at the usual rate for such
                deposits (without any liability to account for any profit
                resulting from the use of the cash while on deposit).

        j)      EXECUTION OF INSTRUMENTS. To make, execute, acknowledge and
                deliver all documents of transfer and conveyance and all other
                instruments that may be necessary or appropriate to carry out
                the Trustees' powers.

        k)      TAX ELECTIONS. To make, or refrain from making, any election,
                determination, designation, allocation or apportionment that is
                required or permitted by any taxing statute. This power shall be
                exercised in accordance with the direction of the Member and, in
                the absence of such direction, in the Trustees' absolute
                discretion.

        l)      SETTLEMENT OF CLAIMS AND DEBTS. To settle, compromise, or submit
                to arbitration any claims, debts or damages due to owing to or
                from the Trust Fund; to

                                        5
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                commence or defend suits or legal or administrative proceedings;
                and to represent the Trust Fund in all suits and legal and
                administrative proceedings.

        m)      EMPLOYMENT OF AGENTS AND OTHERS. To retain suitable agents,
                lawyers (who may be counsel for the Company), accountants,
                actuaries and other competent and qualified persons for the
                purpose of seeking professional advice of issues and matters
                pertaining to the Trust Fund, the Plan, tax matters and any and
                all other issues that may or will impact upon the Plan, the
                Member or Beneficiary.

        n)      POWER TO COMMINGLE. To consolidate the Trust Fund where there
                are a number of employees covered as Members under the Plan, for
                the purposes of investment, or any part thereof, with any other
                trust funds for which the Trustees are trustee into a single
                common fund, and to divide the common fund into units or
                proportionate interests that are held by the trust funds for
                each respective Member.

        o)      NON-ARM'S LENGTH TRANSACTIONS. To enter into a transaction with
                the Trustees (acting in any other capacity), a Member or
                Beneficiary of the Trust Fund or any other non-arm's length
                person, if the Trustees are permitted to enter into the
                transaction with such a non-arm's length person.

        p)      POWER TO DO ANY NECESSARY ACT. To do all such acts, take all
                such proceedings, and exercise all such rights and privileges,
                not specifically mentioned, as the Trustees consider necessary
                to administer the Trust Fund.

8.      ACCOUNTS AND RECORDS

8.1     MAINTENANCE OF ACCOUNTS. The Trustees shall prepare and maintain
        accurate and detailed accounts of all investments and transactions in
        respect of the Trust Fund as set out herein. Within ninety (90) days
        following the end of each calendar year and within ninety (90) days
        after the removal, replacement or resignation of a Trustee, the Trustees
        shall file with the Company a statement setting forth all investments
        and cash transactions effected by it during such calendar year or during
        the period from the close of the last calendar year to the date of such
        removal, replacement or resignation, in respect of the Trust Fund.

8.2     INSPECTION OF RECORDS. The accounts and records of the Trust Fund will
        be open for inspection and audit upon written notice to the Trustee by
        any person specified by a Member or Beneficiary. The Trustee shall
        respond to such notice within ninety (90) days of receiving the request
        in writing.

9.      PROVISION OF INFORMATION

9.1     The Company shall provide the Trustees with a copy of the RCA Plan Text
        and of each amendment to that text, and with any other information
        required by the Trustees to fulfill their responsibilities under this
        Agreement.

                                        6
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10.     RESPONSIBILITIES AND LIMITATIONS

10.1    ADEQUACY OF THE TRUST FUND. The Trustees have no responsibility to
        ensure the adequacy of the Trust Fund to make payments under the Plan.

10.2    LOSS TO THE TRUST FUND. The Trustees shall not be liable for the making,
        retention or sale of any investment nor for any loss to or diminution of
        the Trust Fund, unless due to the Trustees' own bad faith, reckless
        disregard of duties, willful default or misconduct ("Fault").

10.3    RELIANCE ON INFORMATION AND ADVICE. The Trustees shall not be liable for
        any act or omission in reliance on information provided to them or on
        the advice of suitable counsel and advisors except where the liability
        arises because of Fault on the part of the Trustees.

10.4    RELIANCE ON DESIGNATION. The Trustees are hereby empowered to rely upon
        the Member's Beneficiary Designation pursuant to the RCA Plan in
        Schedule "A".

10.5    DIRECTIONS. The Trustees shall not be liable for any act or omission in
        respect of any direction given in accordance with this Agreement except
        where the liability arises because of Fault on the part of the Trustees.

10.6    PROCEEDINGS. The Trustees are not required to institute, prosecute or
        defend any proceedings relating to the Trust Fund, or to exercise any
        other powers referred to in subparagraph 7.1(l), unless they have been
        first indemnified to their satisfaction against any expenses or
        liabilities which may incur as a result thereof.

10.7    COMPLIANCE WITH THE LAW. The Trustees shall comply with any law, order
        or regulation which requires the Trustees to take or refrain from taking
        any action under this Agreement.

10.8    CONFLICT OF INTEREST. The Trustees may do the following:

        a)      On their own behalf or on behalf of other accounts that they
                manage, deal with securities of the same class or nature as are
                held by the Trust Fund;

        b)      Use in other capacities knowledge gained in their capacity as
                Trustees of the Trust Fund; and;

        c)      Hold any office, position or employment with a corporation, and
                receive remuneration therefor.

10.9    PERSONS DEALING WITH TRUSTEES. A person dealing with the Trustees need
        not inquire into the decisions or authority of the Trustees or to see
        the application of any money, securities or any other property paid,
        delivered or lent to the Trustees.

                                        7
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11.     TRUSTEES' COMPENSATION EXPENSES

11.1    AMOUNT OF COMPENSATION. The remuneration of the Trustees during the
        terms of this Agreement shall be paid by the Company and shall be set
        from time to time by the Company with the agreement of the Trustees and
        payable as set out in the Plan. The said sum shall be a global payment
        in respect of the duties and obligations of the Trustees under this
        Agreement, the Plan and under any other similar agreements between the
        Trustees and the Company.

11.2    PAYMENT FROM THE TRUST FUND. Subject to paragraph 11.3, the Trustees'
        compensation and all expenses incurred by the Trustees in the
        administration of the Trust Fund shall be paid from the Trust Fund.

11.3    PAYMENT BY COMPANY. If the Company and the member agree, the Company
        shall pay the Trustees' compensation and all expenses incurred by the
        Trustees in the administration of the Trust Fund, other than
        compensation and expenses relating to the custody and investment of the
        Trust Fund. The Trustees are entitled to payment from the Trust Fund for
        any compensation or expenses that remain unpaid for thirty (30) days.
        The Company shall reimburse the Trust Fund for any such amounts paid to
        the Trustees.

12.     RESIGNATION, REMOVAL, REPLACEMENT OF TRUSTEES

12.1    RESIGNATION BY A TRUSTEE. A Trustee may, terminate his or her duties and
        obligations by giving sixty (60) days notice in writing to the Company,
        in which event the Company shall immediately use its best efforts to
        appoint a new Trustee (which may be a trust company licensed to carry on
        the business of a trust company in Canada). The Trustees shall forthwith
        transfer the Trust Fund, together with all records, accounts, receipts
        and other documents in respect thereof, to such person and in such
        manner as the Company directs.

12.2    REMOVAL BY COMPANY. The Company may remove a Trustee at any time by
        giving sixty (60) days notice in writing to the Trustee and in such
        event shall appoint a new Trustee (which may be a trust company licensed
        to carry on the business of a trust company in Canada). After receiving
        such notice of removal, a Trustee shall forthwith transfer the Trust
        Fund, together with all records, accounts, receipts and other documents
        in respect thereof to such new Trustee, at the time and in the manner
        directed by the Company.

12.3    SUCCESSOR TRUSTEE. A new Trustee may be appointed by the Company as a
        successor Trustee and upon such appointment being made, the successor
        Trustee shall be bound by the terms of this trust Agreement including
        the same powers and duties in the Plan Text or any amended or similar
        version of this trust Agreement or the Plan Text. In that regard, the
        successor Trustee shall execute all the necessary documents to complete
        its appointment as successor Trustee.

                                        8
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13.     AMENDMENT

13.1    This Agreement may be amended from time to time by an instrument in
        writing executed by the Company and the Trustees. No amendment may be
        made that conflicts with the terms of the RCA Plan and this Agreement.

14.     GENERAL

14.1    PAYMENTS TO MINORS AND INCOMPETENTS. If any person to whom a payment is
        to be made is a minor or is otherwise incompetent to receive the payment
        or to give a release for it, the payment may be made to the legal
        representative of the person. If there is no legal representative, the
        payment may be made in the manner determined by the Trustees.

14.2    SEVERABILITY. If any provision in this Agreement is found to be invalid
        or unenforceable, the remaining provisions shall not be affected, and
        this Agreement shall be construed as if the invalid or unenforceable
        provision were not in the Agreement.

14.3    DISPUTES. Should any difference of opinion at any time exist between the
        Trustees, the Company, the Member or Beneficiary in relation to the
        commission or omission of any acts, or otherwise, in the execution of
        the Trusts herein, the decision of the person holding the position of
        President of the Company at the time the dispute arose, or should he or
        she be unwilling or unable to render such decision, an arbitrator agreed
        upon by the parties shall be selected and the decision of the arbitrator
        shall be final and binding upon the parties. The Parties shall share
        equally the cost of the arbitrator.

15.     GOVERNING LAW

15.1    This Agreement shall be subject to and construed under the laws of the
        Province of Ontario.

16.     BINDING UPON HEIRS AND SUCCESSORS

16.1    This Agreement shall endure to the benefit of and be binding on the
        parties to this Agreement and their respective legal and personal
        representatives, successors and permitted assigns.

                                        9
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IN WITNESS WHEREOF the Company and the Trustees have executed this Agreement as
of the date at the top of page 1.

SIGNED IN THE PRESENCE OF


                                        /s/ Douglas M. Parker
------------------------------------    ----------------------------------------
Witness                                 Per:  Douglas M. Parker, General Counsel
                                        I have the authority to bind the Company


                                        /s/ Martin Barkin
------------------------------------    ----------------------------------------
Witness                                 Per: Dr. Martin Barkin
                                        I have the authority to bind the Trust


                                        /s/ Robert Barkin
------------------------------------    ----------------------------------------
Witness                                 Per: Robert Barkin
                                        I have the authority to bind the Trust


                                        /s/ Gordon B. Lang
------------------------------------    ----------------- ----------------------
Witness                                 Per: Gordon B. Lang
                                        I have the authority to bind the Trust

                                       10
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                                   SCHEDULE A

                 RETIREMENT COMPENSATION ARRANGEMENT (RCA) PLAN

                              FOR DR. MARTIN BARKIN

                              OF DRAXIS HEALTH INC.


Effective Date:   July 1, 2003


Signed on August 28th, 2003 at City of Toronto, Canada


/s/ Douglas M. Parker
----------------------------------------
Douglas M. Parker


General Counsel & SECRETARY
----------------------------------------
Title

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TABLE OF CONTENTS

<Table>
<Caption>
                                                                            PAGE
<S>                                                                          <C>
1.   DEFINITIONS..............................................................1

2.   ELIGIBILITY AND ENROLMENT................................................5

3.   CONTRIBUTIONS............................................................6

4.   BENEFIT OPTIONS ON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL........7

5.   PLAN BENEFITS............................................................8

6.   BENEFITS ON DEATH OR DISABILITY PRIOR TO COMMENCEMENT OF ANNUITY.........9

7.   RIGHT TO CEASE CONTRIBUTIONS TO THE PLAN................................10

8.   FUNDING AND ADMINISTRATION OF THE PLAN..................................11

9.   MISCELLANEOUS PROVISIONS................................................12

10.  AMENDMENT OF THE PLAN...................................................13
</Table>

                                       -i-
<Page>

1.      DEFINITIONS

ACTUARY

means a Fellow of the Canadian Institute of Actuaries.

ANNIVERSARY DATE

means January 1st of each year following the Effective Date.

BENEFICIARY

means, if there is no Spouse, the person designated by a Member under the Plan
to receive benefits arising from the death of a Member. If the Member fails to
make a designation, any benefits will be paid to the Member's estate.

CHANGE OF CONTROL OF THE COMPANY

means the purchase by a third party of shares of the Company containing in
excess of 50% of the voting rights of shareholders.

COMPANY

means Draxis Health Inc.

CONTINUOUS

means, in relation to employment, membership or service, without regard to
periods of temporary suspension of the employment, membership or service of a
Member and without regard to periods of layoff from employment, not exceeding 26
consecutive weeks during such absence.

DISABILITY

means the continuous and complete inability of the Member to engage in any
gainful occupation or employment, whether with the Company or otherwise, for
which the Member is, or becomes, reasonably qualified by training, education or
experience. The Member must at all times be under the regular care of a legally
qualified doctor.

EARNINGS

means the base salary, bonus and taxable value of benefits of the Member.

INVESTMENT INCOME

means the investment income credited to a Member Account. The value of the
investment income shall be determined by the Company. Investment Income shall be
credited from the day

<Page>

a contribution is credited to the date the benefit is to be provided on death,
retirement, disability, withdrawal or the effective date of Canadian
non-residency of a Member or Change of Control or sale of the Company.

MEMBER

means a person who is enrolled in the Plan by the Company.

MEMBER ACCOUNT

means the contributions allocated under this Plan to the Account of a Member.
The Member Account will include accrued investment income.

NORMAL RETIREMENT DATE

means the first day of the month immediately following the Member's 70th
birthday. If the Member's birthday is the first day of a month, the Normal
Retirement Date is the Member's 70th birthday.

PLAN

means the Retirement Compensation Arrangement for Martin Barkin of Draxis Health
Inc. which is governed by subsection 248(1) of the Income Tax Act (Canada).

PLAN YEAR

means for the first Plan Year, the period beginning on the Effective Date to the
Anniversary Date. Subsequent Plan Years shall be 12 months commencing on the
Anniversary Date.

SALE OF COMPANY

means the sale of all voting shares of the Company to a third party.

SPOUSE

means, in relation to the Member, a person of the opposite sex

1.      who at the relevant time was married to the Member and not living
        separate or apart, or

2.      if there is no person to whom subclause 1 applies, a person of the
        opposite sex who is cohabitating with the Member or in a conjugal
        relationship for at least three years immediately preceding the relevant
        time and is presented as the consort of the Member in public.

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TRUSTEES

means either a trust company or an insurance company licensed to transact life
insurance business in Canada, or

three or more individuals, at least three of whom reside in Canada and one of
whom must be independent to the extent that the individual is neither a
shareholder, partner or employee of the Company.

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1.      CONSTRUCTION OF THE PLAN

1.1     GENERAL

        The Plan provides benefits to the Member which are intended to
        supplement his retirement income.

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2.      ELIGIBILITY AND ENROLMENT

2.1     ELIGIBILITY

        Dr. Martin Barkin, a Senior Executive shall join the Plan when
        designated by the Company.

2.2     ENROLMENT

        To enroll as a Member of the Plan, an eligible employee must complete a
        Plan enrolment form.

2.3     INFORMATION

        The Company will provide the Member with a written explanation of the
        Plan.

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3.      CONTRIBUTIONS

3.1     MEMBER CONTRIBUTIONS

        Members may contribute to this Plan on a voluntary basis subject to a
        Certificate signed by an Actuary.

3.2     COMPANY CONTRIBUTIONS

        Each Plan Year, the Company is required to allocate contributions on
        behalf of the Member, in such amounts, at such times, determined by the
        Company, subject to a Certificate signed by an Actuary.

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4.      BENEFIT OPTIONS ON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL

4.1     The Member must withdraw from the Plan if employment with the Company
        terminates before Normal Retirement Date.

4.2     The Member may elect to withdraw from the Plan if the Company undergoes
        a Change of Control. The Company will provide a statement of the
        Member's benefits to the Member upon termination of employment or Change
        of Control.

4.3     The Member will provide written confirmation of the benefit option
        chosen within 60 days of the receipt of the benefit statement.

4.4     The Company will provide funds in cash or in kind equal to the Member
        Account.

4.5     The Member may elect any one or a combination of the following options
        for the funds equal to the Member Account:

        1.      payment from the Plan of a single lump sum or equal annual
                installments of equivalent value over a period of up to 20 years

        2.      the purchase of a deferred or immediate annuity from a financial
                carrier licensed to provide life or other annuities.

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5.      PLAN BENEFITS

5.1     RETIREMENT DATES

        1.      NORMAL RETIREMENT DATE

                The Member's lump sum, installment payments or normal retirement
                annuity shall begin on or after the Member's Normal Retirement
                Date.

        2.      EARLY RETIREMENT DATE

                The Member may elect to begin annuity benefits or any other form
                of benefit payment on the first day of any month.

        3.      POSTPONED RETIREMENT DATE

                a)      The Member should he remain in the service of the
                        Company after Normal Retirement Date may elect to
                        continue participation in the Plan.

                b)      The Member may elect to defer the annuity benefits past
                        Normal Retirement Date.

                c)      The Member should he be past Normal Retirement Date and
                        elects to begin payment of benefits must cease
                        participation in the Plan no later than the day
                        preceding the first payment of such benefits.

5.2     AMOUNT OF BENEFITS

        The amount of the Member's lump sum, installment payments or annuity
        will be determined by applying the value of the Vested Member Account to
        installment or annuity rates in effect at the date the benefit commences
        or the annuity is purchased.

5.3     NORMAL FORM OF BENEFIT

        The normal form of benefit is payable annually for 20 years during the
        lifetime of the Member, whom failing the Spouse of the Member. In the
        event neither the Member or Spouse survives the 20 year period, the
        commuted value of the remaining payments shall be payable to the
        Beneficiary of the Member.

5.4     TRANSFER OPTION

        The Member may elect to transfer the value of the Member Account as
        outlined in Section 4.5.

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6.      BENEFITS ON DEATH OR DISABILITY PRIOR TO COMMENCEMENT OF ANNUITY

6.1     If the Member dies or becomes disabled before actual retirement date,
        the Company shall accelerate future Company Contributions to the Plan
        otherwise payable to December 2005 and a benefit equal to the value of
        the Member Account including such accelerated contributions at the date
        of death or disability shall be paid in a lump sum or in accordance with
        Article 6 to the Member or Beneficiary.

        On disability the benefit shall be paid to the Member.

        If the Member has a Spouse at the date of death, the Spouse will receive
        a death benefit representing the Member Account.

        If the Member does not have a Spouse at the date of death, the
        Beneficiary will receive a death benefit representing the Member
        Account.

6.2     If the Spouse is the Beneficiary, the Spouse may elect:

        1.      to receive the death benefit as a lump sum cash payment or in
                installment payments for up to 20 years

        2.      to purchase an immediate or deferred annuity with a financial
                carrier licensed to provide annuities. The annuity may be
                guaranteed for a maximum period equal to 15 years.

6.3     The Member and Spouse may jointly waive the Spouse's entitlement to the
        death benefit by filing the waiver.

6.4     The amount of annuity or installment payments, if applicable, will be
        determined by applying the value of the Member Account to the annuity or
        installment payment rates in effect on the date of the Member's death.

6.5     If the Beneficiary is an individual other than the Spouse, or the
        Member's estate, the Beneficiary shall receive the death benefit in a
        lump sum cash payment.

6.6     The Company shall provide a statement of the Member's death benefit upon
        receiving confirmation of the Member's death or disability.

6.7     THE DEATH OR DISABILITY BENEFIT SHALL be paid upon receipt of the
        Member's, Spouse's or Beneficiary's written direction.

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7.      RIGHT TO CEASE CONTRIBUTIONS TO THE PLAN

7.1     The Company may, on giving written prior notice to the Member,
        permanently cease making contributions to the Plan at any time.

7.2     The Company will make all contributions required by the terms of the
        Plan up to the date of termination of the Plan.

7.3     The Company will provide the Member with a written statement of the
        benefits and options available to the Member.

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8.      FUNDING AND ADMINISTRATION OF THE PLAN

8.1     ADMINISTRATION

        The Company has the final authority for all interpretations of the Plan
        provisions.

        The Company has adopted this Plan for the purpose of providing periodic
        retirement income to the Member, in respect of his service as an
        employee.

        The administrator of the Plan is the Company. The Company may delegate
        specific administrative functions and tasks to the Trustees or other
        parties.

8.2     FUNDING

        The Plan is financed by Company contributions with the exception of
        Member voluntary contributions.

8.3     INVESTMENTS OF THE FUND

        The Company shall establish an RCA Trust and the Trustees appointed by
        the Company to administer this Trust shall invest contributions made to
        the Plan at their sole discretion, subject to such investments being
        permitted under the terms of the Trust Deed.

8.4     ADMINISTRATION FEES

        All fees arising due to the administration of the Plan will be paid by
        the Company.

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9.      MISCELLANEOUS PROVISIONS

9.1     BENEFICIARY

        The Member may appoint a Beneficiary or change the Beneficiary
        previously appointed at any time under the terms and conditions of the
        Plan.

        Beneficiary appointments made under the Plan are revocable unless the
        Member instructs otherwise in writing.

9.2     MARRIAGE BREAKDOWN

        If, as the result of the breakdown of the Member's marriage or other
        conjugal relationship, a benefit will be paid to the Spouse of the
        Member, as ordered by a written agreement, decree, order or judgement,
        the Member will provide a copy to the Company. The Spouse will receive a
        benefit not greater than 50% of the benefit to which the Member is
        entitled under the terms of the Plan. The remaining Member benefit will
        not be adjusted or replaced as a result of the marriage breakdown.

9.3     DISCLOSURE REQUIREMENTS

        1.      Any person entitled to benefits under the Plan, including the
                Member, Spouse or a duly authorized agent, may request to
                examine or receive a copy of any document relating to the Plan.
                The request must be made in writing to the administrator of the
                Plan.

        2.      The Company shall provide the Member with a written statement of
                Plan benefits at least annually. If the Member terminates
                employment with the Company, dies, becomes disabled, becomes a
                Non-Resident or retires, or the Company is sold or undergoes a
                Change of Control the Company shall provide the Member or
                Beneficiary with a written statement of the benefits and options
                available.

        3.      The Company shall provide the Member with a written explanation
                of any amendment to the Plan.

9.4     SURRENDER OR ASSIGNMENT

        Benefits payable under this Plan are not capable of assignment or
        alienation during the lifetime of the Member. Benefits payable under
        this Plan shall not be charged, anticipated or given as security.
        Assignment of benefits may occur to the extent outlined in Section 9.2,
        Marriage Breakdown. No right or interest in the benefits of the Member
        or personal representative, dependent or any other person, is capable of
        being assigned or otherwise alienated during the lifetime of the Member.

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10.     AMENDMENT OF THE PLAN

10.1    The Company reserves the right to amend any provision of the Plan or to
        terminate the Plan. Any amendment will be signed by the Company.

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