**Exhibit 4.65**

**DRAXIS HEALTH INC.**

**DEFERRED SHARE UNIT PLAN**

**FOR EMPLOYEES**

 

**1.             INTRODUCTION**

 

1.1                                 **Purpose**

 

The DRAXIS Health Inc. Deferred Share UnitPlan for senior management employees has been established to provide suchemployees of DRAXIS Health Inc. and its subsidiaries with the opportunity toacquire share equivalent units convertible to cash or Common Shares of DRAXISHealth Inc. upon the termination of employment of an employee.  Acquiring such units will allow theseemployees to participate in the long-term success of DRAXIS Health Inc. andwill promote a greater alignment of interests between such employees and theshareholders.

 

1.2                                 **Definitions**

 

Forpurposes of the Plan:

 

(a)                                  “AnnualRemuneration” means the Base Salary and Bonus payable to an Eligible Employeeby the Company in or in respect of each financial year;

 

(b)                                 “ApplicableWithholding Taxes” means any and all taxes and other source deductions or otheramounts which the Company is required by law to withhold from any amounts to bepaid or credited hereunder;

 

(c)                                  “Award Date” means each date on whichDeferred Share Units are credited to an Eligible Employee in accordance withSection 3.1, which shall be, unless otherwise determined by the Committee,January 1st of each financial year in which the Eligible Employee iseligible to participate in the Plan, except (i) in 2000 the first year ofthe Plan in which case the Award Date shall be February 1, 2000; and(ii) in the case of bonuses earned in respect of any particular year in whichcase the Award Date shall be the day, within the first calendar quarter of theyear following the particular year, on which the amount of the Bonus isawarded;

 

(d)                                 “AwardMarket Value” means the last reported sale price of Common Shares on TheToronto or NASDAQ Stock Exchanges (as selected by the Committee) on December 31of the fiscal year just ended, or if such day is not a business day, then thelast business day in December except in respect of 1999 when the dateshall be deemed to be February 1, 2000;

 

(e)                                  “BaseSalary” means the regular base salary received by an Eligible Employee from theCompany during the relevant financial year as 

 

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determined by the Companyfrom time to time excluding vacation pay in lieu of time off, Bonuses, serviceawards or any special compensation;

 

(f)                                    “Bonus”means an amount in addition to Base Remuneration calculated and awarded by theBoard to an Eligible Employee following completion of a financial year inrespect of such Employee’s contribution to the operations of the Company forsuch financial year, excluding for greater certainty, any payments under theStock Ownership Plan or, its predecessor, the Stock Purchases and Bonus Plan;

 

(g)                                 “Board” means the board ofdirectors of the Company;

 

(h)                                 “Committee”means the committee of the Board responsible for recommending to the Board theeligibility of an employee to participate in this Plan;

 

(i)                                     “Common Shares” means thecommon shares of the Company;

 

(j)                                     “Company”means DRAXIS Health Inc. or any of its subsidiaries or affiliates’ as definedin the Canada Revenue Agency Interpretation Bulletin IT-337R4, that may adoptthe Plan pursuant to its terms;

 

(k)                                  “DeferredShare Unit” means a unit equivalent in value to a Common Share, credited bymeans of a bookkeeping entry in the books of the Company in accordance with anelection made by an Eligible Employee pursuant to Section 3;

 

(l)                                     “DeferredShare Units outstanding under the Plan” or “Deferred Share Units credited to anEmployee’s Account” at a particular time for the purposes of Articles 4 and 5shall be deemed to include at any particular time in any particular financialyear Deferred Share Units subsequently granted in respect of a Bonus determinedin respect of a completed financial year and in respect of which an EligibleEmployee has made an election pursuant to Section 3.2;

 

(m)                               “DeferredShare Unit Amount” has the meaning given thereto in Section 4.1;

 

(n)                                 “DividendEquivalents” means a bookkeeping entry whereby each Deferred Share Unit iscredited with the equivalent amount of the dividend or other distribution paidon a Common Share in accordance with Section 3.3;

 

(o)                                 “DividendMarket Value” means the average of the daily high and low board lot tradingprices of Common Shares on The Toronto or Nasdaq Stock Exchanges (as selectedby the Committee) on each of the five

 

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trading days prior to theAward Date on which there was a trade of a board lot of Common Shares;

 

(p)                                 “ElectionForm” means a document substantially in the form of Schedule “A” to this Plan;

 

(q)                                 “EligibleEmployee” means a person who is, at the relevant time, an employee of theCompany or any of its subsidiaries and is designated by the Committee aseligible to participate in the Plan;

 

(r)                                    “Plan”means this DRAXIS Health Inc. Deferred Share Unit Plan for Employees, asamended from time to time;

 

(s)                                  “RedemptionDate” means a date selected by the Eligible Employee which shall in no event beearlier than the date of the Eligible Employee’s Termination and no later thanthe end of the first calendar year commencing after the Eligible Employee’sTermination.

 

(t)                                    “RedemptionValue” means the average of the daily high and low board lot trading prices ofCommon Shares on The Toronto or Nasdaq Stock Exchanges on each of the fivetrading days prior to the Redemption Date on which there was a trade of a boardlot of Common Shares.  Should CommonShares (as selected by the Committee) no longer be publicly traded at therelevant time such that the Redemption Value cannot be determined in accordancewith the formula set out herein, such value shall be determined by theCommittee in good faith and shall depend upon the fair market value of theCommon Shares at the Redemption Date, which fair market value shall not be lessthan the trading value of the Common Shares on the last day they were publiclytraded unless the Board determines that such trading value does not reflect thefair market value of the Common Shares at the Redemption Date based upon avaluation obtained by a third party qualified business valuator as may bedesignated by the Company’s auditors.

 

(u)                                 “Termination”with respect to an Eligible Employee means the date upon which such employeeceases to hold any position as a director, officer or employee of the Company,any of its subsidiaries or affiliates, and is no longer otherwise employed byany such company, all as determined in accordance with Interpretation BulletinIT-337R4, and which includes the date of the death of an Eligible Employee.

 

1.3                                 **Effective Dateof Plan**

 

The effective date of the Plan shall be February 1,2000 or such other later date as the Board may determine.

 

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**2.****                                     ****ADMINISTRATION**

 

2.1                                 **Administrationof the Plan**

 

The Plan shall be administered by the Boardof Directors which shall, without limitation, have full and final authority inits discretion, but subject to the express provisions of the Plan, to interpretthe Plan, to prescribe, amend and rescind rules and regulations relatingto it and to make all other determinations deemed necessary or advisable forthe administration of the Plan.  TheBoard of Directors may delegate any or all of its authority with respect to theadministration of the Plan and any or all of the rights, powers and discretionswith respect to the Plan granted to it hereunder to the Committee or such othercommittee of directors of the Company as the Board of Directors may designateand upon such delegation the Committee or other committee of directors, as thecase may be, as well as the Board of Directors, shall be entitled to exerciseany or all of such authority, rights, powers and discretions with respect tothe Plan.  The directors of the Companymay fully participate in voting and in other deliberations or proceedings ofthe Board of Directors in respect of the Plan, notwithstanding: (i) theeligibility of any of the directors to participate in the Plan; and (ii) thatany of the directors may hold Deferred Share Units granted pursuant to thePlan.

 

2.2                                 **Taxes andOther Source Deductions**

 

The Company shall be authorized to deductfrom any amount to be paid or credited hereunder any Applicable WithholdingTaxes in such manner as the Company determines.

 

**3.****                                     ****DEFERRED SHAREUNITS**

 

3.1                                 **Award ofDeferred Share Units**

 

(a)           EachEligible Employee shall be credited with Deferred Share Units in respect ofthat part of an Eligible Employee’s Base Salary which such Eligible Employeehas elected to receive in the form of Deferred Share Units as provided in Section 3.2,in the manner set forth in this Plan. All Deferred Share Units to be credited to an Eligible Employee will becredited to an account maintained for the Eligible Employee on the books of theCompany.  The Deferred Share Units to becredited to an Eligible Employee will be credited to such account on each AwardDate in respect of the portion of his or her base Salary to be credited inDeferred Share Units to be earned in the financial year commencing on the AwardDate.  The number of Deferred Share Units(including fractional Deferred Share Units) to be credited on each Award Dateshall be determined by dividing (a) the amount of the applicable portionof the Base Salary to be credited in Deferred Share Units on that Award Date by(b) the Award Market Value.

 

(b)           EachEligible Employee shall be credited with Deferred Share Units in respect ofthat part of an Eligible Employee’s Bonus which such Eligible Employee haselected to 

 

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receive in the form of Deferred Share Units as providedin Section 3.2, in the manner set forth in this Plan.  All Deferred Share Units to be credited to anEligible Employee will be credited to an account maintained for the EligibleEmployee on the books of the Company. The Deferred Share Units to be credited to an Eligible Employee will becredited to such account as of the Award Date for a relevant financial yearupon determination of the Bonus earned following completion of such financialyear.  The number of Deferred Share Units(including fractional Deferred Share Units) to be credited effective each AwardDate shall be determined by dividing (a) the amount of the applicableportion of the Bonus to be credited in Deferred Share Units effective thatAward Date by (b) the Award Market Value determined in respect of thatAward Date.

 

3.2                                 **Election**

 

Each Eligible Employee shall have the rightto elect on December 1 of each financial year (except 2000 the first yearof the Plan in which case the date shall be February 1, 2000) whether suchEmployee wishes to receive some of such Employee’s Annual Remuneration for theimmediately succeeding financial year (or for that part of the year remainingin the case of 2000) in the form of Deferred Share Units.  This election shall be made by completing,signing and delivering to the Secretary of the Company the Election Form: (a) inthe case of an existing employee, by December of the financial yearpreceding the financial year to which such election is to apply; or (b) inthe case of 2000 by February 1, 2000. In each case, the election, when made, shall only apply prospectivelywith respect to the Eligible Employee’s Annual Remuneration yet to be earned.

 

3.3                                 **Credits forDividends**

 

(a)           An Eligible Employee’s account shall be credited withDividend Equivalents in the form of additional Deferred Share Units on eachdividend payment date in respect of which ordinary course cash dividends arepaid on Common Shares.  Such DividendEquivalents shall be computed by dividing: (a) the amount obtained bymultiplying the amount of the dividend declared and paid per Common Share bythe number of Deferred Share Units recorded in the Eligible Employee’s accounton the record date for the payment of such dividend, by (b) the DividendMarket Value, with fractions computed to three decimal places.

 

(b)           AllDividend Equivalents credited hereunder at any particular time in a year to anEligible Employee in the form of Deferred Share Units shall be adjusted as ofthe particular dividend payment date to reflect the determination at the end ofa year of additional Deferred Share Units in respect of a Bonus concerningwhich an Eligible Employee has made an election pursuant to the provisions of3.1 and 3.2.

 

3.4                                 **Reporting ofDeferred Share Units**

 

Statements of the Deferred Share Unitaccounts will be provided to the Eligible Employees at least annually.

 

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**4.****                                     ****REDEMPTION OFDEFERRED SHARE UNITS**

 

4.1                                 **Redemption ofDeferred Share Units**

 

(a)           AnEligible Employee shall be entitled on the Redemption Date to redeem theDeferred Share Units credited to the Eligible Employee’s account for an amount(the “Deferred Share Unit Amount”) equal to the product that results frommultiplying (i) the number of Deferred Share Units recorded in theEligible Employee’s account on the Redemption Date by (ii) the RedemptionValue. Upon payment in full by the Company to the Eligible Employee of thevalue of the Deferred Share Unit Amount, the Deferred Share Units shall becancelled. An Eligible Employee wishing to redeem any Deferred Share Unitsshall give notice of the redemption to the Company not later than ten (10) businessdays prior to the Redemption Date selected by such employee.

 

(b)           The Deferred Share Unit Amountpayable to an Eligible Employee, less any Applicable Withholding Taxes, may beused to acquire Common Shares on the open market through an independent brokerdesignated by the Company (the “Designated Broker”) or may be paid in cash lessApplicable Withholding Taxes to the Eligible Employee, at the discretion of theCompany.** **The Company will also make a cash payment, less anyApplicable Withholding Taxes, to the Eligible Employee with respect to thevalue of fractional Deferred Share Units standing to the Eligible Employee’scredit.

 

(c)           If the Company has determined, thatpayment of the Deferred Share Unit Amount be made in the form of Common Sharespurchased on the open market through a Designated Broker, as described in Section 4.1(b) above, the Company will calculate the number of whole Common Shares tobe purchased by the Designated Broker on the open market on behalf and for thebenefit of the Eligible Employee.  Thenumber of Common Shares will be determined by dividing (i) the DeferredShare Unit Amount payable, less any Applicable Withholding Taxes, by (ii) theRedemption Value of a Common Share as determined on the Redemption Date or, ifthe Redemption Date is not a trading date for shares on the Toronto and NasdaqStock Exchanges, on the next such trading date and the Company shall advise theDesignated Broker of the specified number of whole Common Shares to bepurchased on behalf of the Eligible Employee. The Designated Broker willpurchase the specified number of whole Common Shares as soon practicable afterbeing notified by the Company.  On or beforethe date of settlement with respect to the purchase of the Common Shares by theDesignated Broker, the Company, acting as agent for the Eligible Employee, willpay the purchase price of the specified number of Common Shares to theDesignated Broker, together with any reasonable brokerage fees or commissionsrelated thereto.  The Company will alsomake a cash payment, less any Applicable Withholding Taxes, to the EligibleEmployee with respect to the value of fractional Deferred Share Units stillstanding to the Eligible Employee’s credit after the maximum number of wholeCommon Shares has been purchased as described above.

 

(d)           DeferredShare Unit Amounts paid by the Company in accordance with (a) through (c) abovewill be paid to or on behalf of the Eligible Employee no later than 60 

 

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days after the Redemption Date. Notwithstanding theforegoing and anything else in this Plan, any Deferred Share Unit Amount shallbe received by an Eligible Employee (or a successor described in Section 4.2)not later than the end of the first calendar year commencing after the EligibleEmployee’s Termination.

 

4.2                                 **Death ofEligible Employee Prior to Redemption**

 

Upon the death of an Eligible Employee priorto the redemption of the Deferred Share Units credited to the account of suchEligible Employee under the Plan, a dependant relation or legal representative,shall be entitled to redeem the Deferred Share Units in accordance with Section 4.1.  For greater certainty, the Deferred ShareUnit Amount payable shall be equivalent to the amount which would have beenpaid to the Eligible Employee pursuant to and subject to Section 4.1,calculated as if the Redemption Date were the date following the Employee’sdeath.

 

4.3           Inthe event a Redemption Date occurs prior to the end of a financial year, thenumber of Deferred Share Units awarded to an Eligible Employee in respect ofhis Annual Remuneration for that particular year shall, for the purposes ofcalculating the Redemption Value, be reduced proportionately to reflect thatthe Eligible Employee was employed by the Company for less than that particularfull financial year.

 

**5.****                                     ****GENERAL**

 

5.1                                 **Adjustments toDeferred Share Units**

 

In the event of the declaration of any stockdividend, a subdivision, consolidation, reclassification, exchange, or otherchange with respect to the Common Shares, or a merger, consolidation, spin-off,acquisition of control or other distribution (other than ordinary course cashdividends) of the Company’s assets to its shareholders, the account of eachEligible Employee and the Deferred Share Units outstanding under the Plan shallbe adjusted to appropriately reflect the event. However, no amount will be paid to, or in respect of, an EligibleEmployee under the Plan or pursuant to any other arrangement, and no DeferredShare Units will be granted to such Eligible Employee to compensate for adownward fluctuation in the price of Common Shares, nor will any other form ofbenefit be conferred upon, or in respect of, an Eligible Employee for suchpurpose.

 

5.2                                 **Designation ofBeneficiary**

 

An Eligible Employee may, by written noticeto the Secretary of the Company, designate a person to receive the benefitspayable under the Plan on the Eligible Employee’s death, and may also bywritten notice to the Secretary of the Company alter or revoke such designationfrom time to time, subject always to the provisions of any applicable law.  Such written notice shall be in such form andshall be executed in such manner as the Committee in its discretion may fromtime to time determine.

 

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5.3                                 **Amendment,Suspension, or Termination of Plan**

 

(a)           The Board may from time to time amend or suspend the Planin whole or in part and may at any time terminate the Plan.  However, any such amendment, suspension, ortermination shall not adversely affect the right of any Eligible Employee withrespect to Deferred Share Units credited to such Eligible Employee at the timeof such amendment, suspension or termination, without the consent of theaffected Eligible Employee.

 

(b)           Ifthe Board terminates the Plan, no new Deferred Share Units will be credited tothe account of an Eligible Employee, but previously credited Deferred ShareUnits and Deferred Share Units to be credited to the end of a financial yearwith respect to any Bonus pursuant to Section 3.1 shall remain outstandingand shall be entitled to Dividend Equivalents as provided under section 3.3,and be paid in accordance with the terms and conditions of the Plan existing atthe time of termination.  The Plan willfinally cease to operate for all purposes when the last remaining EligibleEmployee receives payment, in cash or Common Shares (in accordance with Section 4.1(b)),in satisfaction of all Deferred Share Units recorded in the Eligible Employee’saccount.

 

5.4                                 **Compliancewith Laws**

 

The administration of the Plan shall besubject to and performed in conformity with all applicable laws and anyapplicable regulations of a duly constituted authority.  In particular, the Plan shall at all times beoperated in accordance with the requirements of subsection 6801(d) of theRegulations to the *Income Tax Act*(Canada).  Should the Committee, in itssole discretion, determine that it is not feasible or desirable to honour anelection in favour of Deferred Share Units due to such laws or regulations, itsobligation shall be satisfied by means of an equivalent cash payment(equivalence being determined on a before-tax basis).

 

5.5                                 **Reorganizationof the Company**

 

The existence of any Deferred Share Unitsshall not affect in any way the right or power of the Company or itsshareholders to make or authorize any adjustment, recapitalization,reorganization or other change in the Company’s capital structure or itsbusiness, or any amalgamation, combination, merger or consolidation involvingthe Company or to create or issue any bonds, debentures, shares or othersecurities of the Company or the rights and conditions attaching thereto or toeffect the dissolution or liquidation of the Company or any sale or transfer ofall or any part of its assets or business, or any other corporate act orproceeding, whether of a similar nature or otherwise.

 

5.6                                 **GeneralRestrictions and Assignment**

 

(a)           Exceptas required by law, the rights of an Eligible Employee under the Plan are notcapable of being anticipated, assigned, transferred, alienated, sold,encumbered, 

 

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pledged, mortgaged or charged and are not capable ofbeing subject to attachment or legal process for the payment of any debts orobligations of the Eligible Employee.

 

(b)           Rightsand obligations under the Plan may be assigned by the Company to a successor inthe business of the Company.

 

5.7                                 **No Right toService**

 

Neitherparticipation in the Plan nor any action taken under the Plan shall give or bedeemed to give any Eligible Employee a right to continued employment with theCompany or any of its subsidiaries and shall not interfere with any right ofthe Company to terminate the employment of any Eligible Employee at any time.

 

5.8                                 **No ShareholderRights**

 

Under no circumstances shall Deferred ShareUnits be considered Common Shares or shares of any other class of the Company,nor entitle any Eligible Employee to exercise voting rights or any other rightsattaching to the ownership of Common Shares, nor shall any Eligible Employee beconsidered the owner of the Common Shares by virtue of the award of DeferredShare Units.

 

5.9                                 **Governing Law**

 

The Plan shall be governed by, andinterpreted in accordance with, the laws of the Province of Ontario and thelaws of Canada applicable therein.

 

5.10                           **Interpretation**

 

Inthis text words importing the singular meaning shall include the plural and *vice versa*, and words importing themasculine shall include the feminine and neuter genders.

 

5.11                           **Severability**

 

The invalidity or unenforceability of anyprovision of this Plan shall not affect the validity or enforceability of anyother provision and any invalid or unenforceable provision shall be severedfrom this Plan.

 

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**SCHEDULE “A”**

 

**DRAXIS HEALTH INC.  DEFERRED SHARE UNIT PLAN**

**FOR DIRECTORS (the “Plan”)**

 

**ANNUAL ELECTION FORM**

 

**1.****                                     ****AnnualRemuneration**

 

(a)                                  I elect to receive my Base Remunerationas follows (please check either Box “A” or Box “B”):

 

A.                                                   % in Deferred Share Units (not to exceed 20%)

 

and

 

B.                                                     % in cash.

 

(b)                                 I elect to receive my Bonus, ifany, as follows: (Please check either Box “C” or Box “D”

 

C.                                     % in Deferred Share Units (notto exceed 100%)

 

D.                                    % in cash.

 

**2.****                                     ****Designation ofBeneficiary**

 

In accordance with the terms of the Plan, I appoint as designatedbeneficiary, or if previously done, I hereby revoke any designation ofbeneficiary heretofore made by me under the Plan, and hereby appoint asdesignated beneficiary to receive any payment in accordance with the Plan thatmay fall due after my death:

 

                                                                            **[insert full name]**; provided,however, that if the above named beneficiary predeceases me such payment shallbe made to my estate.

 

 

 

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**3.**             **I understandthat:**

 

·                  All capitalized terms shall have the meaningsattributed to them under the Plan.

 

·                  All payments will be net of any ApplicableWithholding Taxes.

 

 
|                        | ) |   |                                         |
|-----------------------------|---|--------|----------------------------------------------|
| Witness Signature           | ) |   |                                         |
|                        | ) |   | Eligible Employee’s Signature           |
|                        | ) |   |                                         |
|                        | ) |   |                                         |
| Witness Name (please print) | ) |   | Eligible Employee’s Name (please print) |
|                        | ) |   |                                         |
|                        | ) |   |                                         |
|                        | ) |   | Date                                         |

** **

**Untilthis Election Form is returned to the Secretary of the Company, 100% ofthe Annual Remuneration will be received in the form of cash.**

 

 

 

 

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