Document:

Exhibit
4.53

 

RETIREMENT
COMPENSATION ARRANGEMENT

TRUST
AGREEMENT

 

This Agreement made as of this 1st day of June 2005.

 

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-

 

Richard
J. Flanagan, ***, and ***,
trustees of the Retirement Compensation Arrangement Trust for Richard J.
Flanagan 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 June 1st, 2005, 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 Richard J. Flanagan 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 $751,111 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 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;

 

“Financial
Institution” means a Canadian Chartered Bank, Foreign Bank
Branch, Credit Union, Trust or Loan Corporation or other lending institution
licensed by the Federal Government of Canada to transact business in Canada.

 

“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);

 

2

 

“Spouse”
means, in relation to a Member, either of a man or woman who has been expressly
designated as the sole and only Beneficiary at the time of the death of the
Member, and

 

1. are
married to each other or,

 

2. are
not married to each other and are living together in a conjugal relationship,

 

(i)            continuously
for a period of not less than three years, or

 

(ii)           in
a relationship of some permanence, if they are the natural or adoptive parent
of a child, both as defined in the Family Law Act.

 

and shall not include any
other Persons notwithstanding that such Person may be a spouse of the Member.

 

“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.         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

 

3

 

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. Notwithstanding the
foregoing, no payments shall be made from the Trust Fund to the Member, Spouse
or Beneficiary of such Member or to the Company at any time that any loan is
outstanding to a Financial Institution.

 

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, the Trustees may select the assets to be sold in the Trustees’
sole discretion.

 

5.         INVESTMENT
OF TRUST FUND

 

5.1       Investment Directions. The Trustees shall invest the
investments of the Trust Fund and may, from time to time, delegate the power to
direct the investments to one or more other persons.

 

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).

 

4

 

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 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

 

5

 

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 insurance or
permanent life insurance 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 directly or indirectly through one or
more of it’s nominees as Trustee(s), 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 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.

 

6

 

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 prepare 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 Schedule A to the Trust Deed
and with any other information required by the Trustees to fulfill their
responsibilities under this Agreement.

 

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”).

 

7

 

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 one or more
of the Trustee(s). A Trustee shall not be liable for the malfeasance or
negligence of another Trustee.

 

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(1), 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.

 

11.          TRUSTEES’
COMPENSATION AND 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.

 

8

 

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. 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 after thirty
(30) days.

 

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, in
which event the remaining Trustees shall immediately use their 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 terminating Trustee shall forthwith
transfer the Trust Fund, together with all records, accounts, receipts and
other documents in respect thereof, to the Trustees.

 

12.2         Removal of a Trustee. A Trustee may be removed by a majority
of the Trustees at any time by giving (60) days notice in writing to such
Trustee and in such event a majority of the remaining Trustees shall appoint a
new Trustee (which may be a trust company licensed to carry out the business of
a trust company in Canada). After receiving such notice of removal, the
terminating 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 remaining Trustees.

 

12.3         Successor Trustee. A new Trustee may be appointed by the
remaining Trustees 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.

 

13.          AMENDMENT

 

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

 

9

 

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 Member, Spouse or Beneficiary of such Member in
relation to the commission or omission of any acts, or otherwise, in the
execution of the Trusts herein, 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 representative, successors
and permitted assigns.

 

10

 

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/ Martin Barkin

  	
   

  
	
  Witness

  	
  Per: Martin Barkin

  
	
   

  	
  President & CEO

  
	
   

  	
  I have the authority to
  bind the Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ Richard J. Flanagan

  	
   

  
	
  Witness

  	
  Per: Richard J.
  Flanagan

  
	
   

  	
  I have the authority to
  bind the Trust

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ Maureen A. Flanagan

  	
   

  
	
  Witness

  	
  Per: Maureen A.
  Flanagan

  
	
   

  	
  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

  

 

11

 

SCHEDULE
A

 

RETIREMENT
COMPENSATION ARRANGEMENT (RCA) PLAN

 

FOR
RICHARD J. FLANAGAN OF

 

DRAXIS
HEALTH INC.

 

 

Effective Date:      June
1, 2005

 

 

	
  Signed on July 8, 2005
  at Kirkland, Québec

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Martin Barkin

  	
   

  
	
  Martin Barkin

  	
  President & CEO

  
				

 

 

CONSTRUCTION OF THE PLAN

 

The Plan provides Benefits to Members which are
intended to supplement their retirement income.

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page No.

  
	
   

  	
   

  	
   

  
	
  1.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  ELIGIBILITY AND ENROLMENT

  	
  4

  
	
   

  	
   

  	
   

  
	
  3.

  	
  CONTRIBUTIONS

  	
  5

  
	
   

  	
   

  	
   

  
	
  4.

  	
  BENEFIT OPTIONS ON TERMINATION OF EMPLOYMENT OR
  CHANGE OF CONTROL

  	
  6

  
	
   

  	
   

  	
   

  
	
  5.

  	
  PLAN BENEFITS

  	
  7

  
	
   

  	
   

  	
   

  
	
  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

  

 

 

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.

 

1

 

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
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 59th birthday. If the
Member’s birthday is the first day of a month, the Normal Retirement Date is
the Member’s 60th birthday.

 

Plan

 

means the Retirement Compensation
Arrangement for Richard J. Flanagan of DRAXIS Health Inc. 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.

 

2

 

Spouse

 

means, in relation
to a Member, either of a man or woman who,

 

1.     are
married to each other, or

 

2.     are
not married to each other and are living together in a conjugal relationship,

 

(i)            continuously
for a period of not less than three years, or

 

(ii)           in
a relationship of some permanence, if they are the natural or adoptive parents
of a child, both as defined in the Family Law Act.

 

Trustees

 

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

 

three or more
individuals, all 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.

 

3

 

2.             ELIGIBILITY AND ENROLMENT

 

2.1          Eligibility

 

An employee 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 each Member with a written
explanation of the Plan.

 

4

 

3.             CONTRIBUTIONS

 

3.1          Member
Contributions

 

Members may be required to contribute to this Plan by
the Company in such amounts as are required under their Employment Contract,
subject to a Certificate signed by an Actuary. Such contributions shall vest
immediately in the Member.

 

3.2          Company
Contributions

 

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

 

5

 

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

 

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

 

4.2          A
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 under
the terms and conditions of the benefit option selected by the Member.

 

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 annual installments of equivalent value
over a period of up to 20 years

 

2.     payment
from the Plan of equal annual installments over the lifetime of the Member and
Spouse.

 

At the option of the
Member such payments may have immediate effect or be deferred to the first day
of any subsequent month.

 

6

 

5.             PLAN BENEFITS

 

5.1          Retirement
Dates

 

1.     Normal
Retirement Date

 

A Member’s lump sum, installment payments or retirement payments may
begin on the Member’s Normal Retirement Date or, at the option of the Member,
on the first day of any subsequent month.

 

2.     Early
Retirement Date

 

A Member may elect to begin benefit payments on the first day of any
month.

 

3.     Postponed
Retirement Date

 

a)     A
Member who remains in the service of the Company after Normal Retirement Date
may elect to continue participation in the Plan.

 

b)    A
Member may elect to defer payments past Normal Retirement Date.

 

c)     A
Member who is 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 a Member’s lump sum or, installment
payments will be determined by applying the value of the Member Account to
instalment rates in effect at the date the benefit commences.

 

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 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.

 

7

 

5.4          Optional
Form of Benefits

 

A Member may elect, in
lieu of the Normal Form of Benefits:

 

1.     To
receive benefits in the form of a lump sum cash payment or installment payments
for up to 20 years, or

 

2.     To
receive payments in the form of equal annual installments over the Member’s
lifetime.

 

5.5          Transfer
Option

 

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

 

8

 

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

 

6.1          If
a Member dies or becomes disabled before actual retirement date, a benefit
equal to the value of the Member Account at the date of death or disability
shall be paid in a lump sum or in accordance with Article 5 to the Member,
or Beneficiary.

 

On disability the benefit shall be paid to the Member.

 

If a 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          The
Spouse or Beneficiary may elect one or a combination of the following options:

 

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

 

2.     to
receive payments from the Plan of equal annual installments over the lifetime
of the Spouse or Beneficiary.

 

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

 

6.4          The
amount of installment payments will be determined by applying the value of the
Member Account to the installment payment rates in effect on the date of the
Member’s death.

 

6.5          The
Company shall provide a statement of the Member’s death or disability benefit
upon receiving confirmation of the Member’s death or Disability.

 

6.6          The
death or disability benefit shall be paid upon receipt of the Member’s, Spouse’s
or Beneficiary’s written direction.

 

6.7          Notwithstanding
Articles 6.1 or 6.2 the Member, Spouse or Beneficiary of the Member, as the
case may be, may elect to defer receipt of payments to the first day of any
month subsequent to the Disability or death of the Member.

 

9

 

7.             RIGHT TO CEASE CONTRIBUTIONS TO THE PLAN

 

7.1          The
Company may 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 each affected Member with a written statement of the
benefits and options available to such Member following the cessation of
contributions by the Company to the Plan.

 

10

 

8.             FUNDING AND ADMINISTRATION OF THE PLAN

 

8.1          Administration

 

The Trustees have 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 Members,
in respect of their service as employees.

 

The administrator of the
Plan are the Trustees of the RCA Trust. The Trustees may delegate specific
administrative functions and tasks to other parties.

 

8.2          Funding

 

The Plan is financed by Company Contributions with the
exception of Member Contributions if required under Section 3.1.

 

8.3          Investments of the Fund

 

The Company shall establish an RCA Trust and the
Trustees shall invest contributions made to the Plan at their sole discretion,
subject to such investments being permitted under the terms of the Trust Deed
and approved by the Company and in the case of Member Contributions, by the
Member.

 

8.4          Administration
Fees

 

All fees arising due to the administration of the Plan
may be paid by the Company, failing which, they will be paid by the Trustees
from the Trust Fund.

 

11

 

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 a 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 breakdown.

 

9.3          Disclosure
Requirements

 

1.     Any
person entitled to benefits under the Plan, including a 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.     If
a Member terminates employment with the Company, dies, becomes disabled,
becomes a Non-Resident or retires, or on the sale of the Company or on the
Company undergoing a Change of Control shall provide the Member, Spouse or
Beneficiary with a written statement of the benefits and options available.

 

3.     The
Company shall provide Members 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 a Member or personal representative, dependent or any other person, is
capable of being assigned or otherwise alienated during the lifetime of the
Member.

 

12

 

10.          AMENDMENT OF THE PLAN

 

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

 

13Exhibit 4.54

 

DRAXIS HEALTH INC.

 

Charter of the Board of Directors

 

I.                                       General Purpose of the Board:

 

The
Board’s primary responsibility is to foster the long-term success of the
Corporation consistent with the Board’s fiduciary responsibility to the shareholders
to maximize shareholder value.

 

The
Board of Directors has plenary power. Any responsibility not delegated to
management or a Committee of the Board remains with the Board. These terms of
reference are prepared to assist the Board and management in clarifying
responsibilities and ensuring effective communication between the Board and
management.

 

The
specific statutory duties of the Directors are dictated by the Canada Business Corporations Act. The Board of Directors has
the statutory duty to supervise the management of the business and affairs of
the Corporation. The Board shall also oversee the current functioning and
future growth of the Corporation.

 

In
general, the Board is responsible for:

 

a)                                      adopting a strategic planning process for the
Corporation;

 

b)                                     adopting a communications policy for the
Corporation;

 

c)                                      overseeing the financial integrity of the
Corporation;

 

d)                                     monitoring compliance with the corporate
objectives of the Corporation;

 

e)                                      approving and ascertaining that the Corporation
monitor adherence to its Code of Ethics and Business Conduct;

 

f)                                        appointing the Chief Executive Officer (CEO),
monitoring his performance and ascertaining that succession plans are in place
with respect to the CEO and senior management;

 

g)                                     ensuring that appropriate structures and
procedures are in place so that the Board can function independently from
management;

 

h)                                     establishing performance measures for the
Corporation and its management;

 

i)                                         monitoring compliance with legal requirements
and ascertaining that the Corporation has procedures concerning the proper
preparation, approval and maintenance of documents and records;

 

 

j)                                         approving changes in the By-laws and Articles
of Incorporation, and agendas for shareholder meetings;

 

k)                                      approving the Corporation’s legal structure,
name and logo; and

 

l)                                         performing such functions as it reserves to
itself or which cannot, by law, be delegated to Committees of the Board or to
management.

 

II.                                   Delegation of Powers to Committees, the Chief Executive Officer and Management:

 

The
Board of Directors may:

 

a)                                      delegate their powers to Committees of the
Board and to the President and CEO;

 

b)                                     assign their duties to Committees of the Board;
and

 

c)                                      delegate to management powers to manage the
Corporation’s business and affairs.

 

Certain
matters cannot, however, be delegated by the Board, including filling vacancies
on the Board, declaring dividends, purchasing securities issued by the
Corporation, issuing securities except as authorized by the Board, and
approving a proxy circular or financial statements.

 

III.                               Standards of Performance Required of Directors:

 

1.                                       Fiduciary Duty

 

When
exercising their powers and discharging their duties, Directors must act
honestly and in good faith with a view to the best interests of the Corporation.
The Directors are thus fiduciaries vis-a-vis the Corporation and, as such, they
must advance the interests of the Corporation in an impartial and disinterested
manner. In particular, Directors must not allow personal or business interests
to conflict with the interests of the Corporation. Directors must not use their
position as such, and information and knowledge derived from their position,
for their personal gain or advantage.

 

Directors
are also subject to a duty of confidence regarding the affairs of the
Corporation. Directors should not disclose or provide to others access to
confidential information about the Corporation.

 

2.                                       Standard of Care

 

When
exercising their powers and discharging their duties, Directors must exercise
the care, diligence and skill that a reasonably prudent person would exercise
in comparable circumstances. This standard requires Directors to devote the
necessary time and attention to the affairs of the Corporation and its
subsidiaries, make necessary enquiries

 

2

 

of
management and others so as to make informed decisions, and make use of their
education and experience.

 

IV.                              Composition and Board Organization:

 

Nominees
for Directors are initially considered and recommended by the Nominating and
Corporate Governance Committee of the Board, approved by the entire Board and
elected annually by the shareholders of the Corporation.

 

A
majority of Directors comprising the Board must meet the independence and
unrelated director requirements of all applicable laws, regulations and listing
requirements to which the Corporation is subject.

 

Directors
who are not members of management will meet without management present and
without any director who is not considered an unrelated and independent
director in accordance with the above provisions at every regularly scheduled Board meeting to
discuss matters of interest independent of any influence from management.

 

Certain
of the responsibilities of the Board referred to herein may be delegated
to Committees of the Board. The responsibilities of those Committees will be as
set forth in their terms of reference, as amended from time to time.

 

V.                                  Duties and Responsibilities:

 

1.                                       Managing the Affairs of the Board

 

The
Board operates by delegating certain of its authorities, including spending
authorizations, to management and by reserving certain powers to itself.
Certain of the legal obligations of the Board are described in Section I. Subject
to these legal obligations and to the Articles and By-laws of the Corporation,
the Board retains the responsibility for managing its own affairs, including:

 

a)                                      planning its composition and size;

 

b)                                     selecting its Chair;

 

c)                                      nominating candidates for election to the
Board;

 

d)                                     approving Committees of the Board and
membership of Directors thereon;

 

e)                                      determining Director compensation, including
reviewing the adequacy and form of compensation of Directors to ensure
that it realistically reflects the responsibilities and risks involved in being
an effective Director;

 

f)                                        regularly assessing, through its Nominating and
Corporate Governance Committee, the effectiveness of the Board, Committees and
Directors in fulfilling their responsibilities; and

 

3

 

g)                                     adopting an orientation program for new
Directors and a continuing education program for Directors to assist them in
understanding the nature and operation of the business of the Corporation, the
role of the Board and its Committees and the individual contribution that
Directors are expected to make.

 

2.                                       Management and Human Resources

 

The
Board has the responsibility for:

 

a)                                      the appointment and succession of the CEO and
monitoring CEO performance, approving CEO compensation and providing advice and
counsel to the CEO in the execution of the CEO’s duties;

 

b)                                     approving position descriptions for directors
and for the CEO and approving the corporate objectives which the CEO is
responsible for meeting;

 

c)                                      reviewing CEO performance at least annually,
against agreed-upon written objectives;

 

d)                                     approving decisions relating to senior
management, including:

 

i                                             the appointment and discharge of officers of
the Corporation and members of the senior leadership team;

 

ii                                          the compensation and benefits for members of
the senior leadership team;

 

iii                                       the acceptance of outside Directorships on
public companies by executive officers;

 

iv                                      the annual corporate and business unit
performance objectives utilized in determining incentive compensation or other
awards to officers; and

 

v                                         the employment contracts, termination and other
special arrangements with executive officers, or other employee groups if such
action is likely to have a subsequent material impact on the Corporation or its
basic human resource and compensation policies;

 

e)                                      monitoring the performance of senior
management;

 

f)                                        to the extent feasible, satisfying itself as to
the integrity of the CEO and other senior officers and that the CEO and other
senior officers create a culture of integrity throughout the Corporation;

 

4

 

g)                                     ensuring succession planning programs are in
place, including programs to train and monitor senior management;

 

h)                                     approving any related party transaction or any
transaction involving a Director or officer of the Corporation, regardless of
materiality; and

 

i)                                         approving compensation and benefit program
matters relating to all employees.

 

3.                                       Strategy and Plans

 

The
Board has the responsibility to:

 

a)                                      adopt a strategic planning process and approve,
at least annually, a strategic plan which takes into account, among other
things, the opportunities and risks of the business of the Corporation which
management had identified. As part of its approval function, the Board
will approve the entering into, or withdrawing from, lines of business that
are, or are likely to be, material to the Corporation;

 

b)                                     approve capital commitment and expenditure
budgets and relating operating plans;

 

c)                                      approve the financial and operating objectives
used in determining compensation;

 

d)                                     approve corporate,  political and charitable donation budgets;

 

e)                                      approve material divestitures and acquisitions;
and

 

f)                                        monitor management’s achievements in
implementing major corporate strategies and objectives, in light of changing
circumstances.

 

4.                                       Financial and Corporate Issues

 

The
Board has the responsibility to:

 

a)                                      take reasonable steps to ensure the
implementation and integrity of the Corporation’s internal control and
management information systems;

 

b)                                     review operational and financial results;

 

c)                                      approve annual financial statements and
managements’ discussion and analysis relating thereto;

 

d)                                     approve quarterly financial results and
managements’ discussion and analysis relating thereto and approve the release
thereof and the release of earnings announcements by management.

 

5

 

e)                                      approve the Management Proxy Circular, Annual
Information Form, the Annual Report and documents incorporated by reference
therein;

 

f)                                        declare dividends, if any;

 

g)                                     approve any disposition or expenditure in
excess of $1,000,000;

 

h)                                     approve financings, changes in authorized
capital, issue and repurchase of shares, issue of debt securities, listing of
shares and other securities, issue of commercial paper, and related
prospectuses and trust indentures;

 

i)                                         following review of the recommendation of the
Audit Committee, recommend to shareholders the appointment of external
auditors;

 

j)                                         approve banking resolutions and significant
changes in banking relationships;

 

k)                                      approve contracts, leases and other
arrangements or commitments that may have a material impact on the
Corporation;

 

l)                                         approve spending authority guidelines; and

 

m)                                   approve the commencement or settlement of
litigation that may have a material impact on the Corporation.

 

5.                                       Business and Risk Management

 

The
Board has the responsibility to:

 

a)                                      ensure that management has identified the
principal risks of the Corporation’s business and implemented appropriate
systems to manage these risks, including insurance coverage, where appropriate;

 

b)                                     review reports on capital commitments and
expenditures relative to approved budgets;

 

c)                                      review operating and financial performance
relative to budgets or objectives;

 

d)                                     monitor management control systems:

 

i                                             evaluate and assess information provided by
management and others (e.g. internal and external auditors) about the
effectiveness of management control systems; and

 

ii                                          understand principal risks and determine
whether the Corporation achieves a proper balance between risk and returns and
that management ensures that systems are in place to address risks identified.

 

6

 

6.                                       Policies and Procedures

 

The
Board has the responsibility to:

 

a)                                      adopt a communications policy for the
Corporation;

 

b)                                     monitor compliance with all significant
policies and procedures by which the Corporation is operated;

 

c)                                      direct management to ensure the Corporation
operates at all times within applicable laws and regulations and in accordance
with the Code of Ethics and Business Conduct;

 

d)                                     provide policy direction to management while
respecting management’s responsibility for day-to-day management of the
Corporation’s businesses; and

 

e)                                      review significant new corporate policies or
material amendments to existing policies.

 

7.                                       Compliance Reporting and Corporate
Communications

 

The
Board has the responsibility to:

 

a)                                      ascertain that the Corporation has in place
effective communication processes with shareholders (including measures for
receiving feedback from shareholders) and other stakeholders and financial,
regulatory and other recipients;

 

b)                                     approve interaction with shareholders on all
items requiring shareholder response or approval;

 

c)                                      ascertain that the financial performance of the
Corporation is reported to shareholders, other security holders and regulators
on a timely and regular basis;

 

d)                                     ascertain that the Corporation shall have
measures in place for the timely reporting of any other developments that have
significant and material impact on the Corporation; and

 

e)                                      report annually to shareholders on the Board’s
stewardship for the preceding year.

 

8.                                       Notification

 

The
Board has adopted a policy that requires any Director who finds himself in a
conflict of interest situation to notify the Chair of the Nominating and
Corporate Governance Committee. The Nominating and Corporate Governance
Committee shall in turn advise

 

7

 

the
Board and provide recommendations on the member’s continued service to the
Corporation as a Director under such circumstances.

 

VI.                              Periodic Review of Board Effectiveness and Director’s Effectiveness:

 

The
Nominating and Corporate Governance Committee is responsible to make an annual
assessment of the overall performance of the Board and to report its findings
to the Board.

 

The
assessment will examine the effectiveness of the Board as a whole and will
specifically review areas that the Board and / or management believe could be
improved to ensure the continued effectiveness of the Board in the execution of
its responsibilities.

 

The
assessment of the performance of individual Directors is the responsibility of
the Nominating and Corporate Governance Committee.

 

VII.                          Meetings Without
Management:

 

The
Board appreciates the value of the regular attendance at each board meeting of
non-board members who are members of the Corporation’s senior management.

 

Attendance
by senior management who are not on the Board shall be determined by the CEO
with the concurrence of the Chair.

 

Management
attendees will be excused for any agenda items that are reserved for discussion
among Directors only.

 

VIII.                      Ability of
Directors to Retain Advisors:

 

Occasionally,
individual Directors may need the services of an advisor or expert to
assist on matters involving their responsibilities as board members. The Board
has determined that any Director who wishes to engage an outside advisor at the
expense of the Corporation may do so if he or she first obtains
authorization of the Chair.

 

IX.                              Committee Review:

 

The
Board periodically reviews the composition of Committees.

 

8

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