Document:

<PAGE>

                                                                     EXHBIT 4.9

                                  Schedule "A"

[NATIONAL BANK LOGO]

February 18, 2000

Mr. Jim A.H. Garner
Senior Vice President
Draxis Health Inc.
6870 Goreway Drive
Mississauga, ON
L4V 1P1

Dear Mr. Garner:

                                CREDIT AGREEMENT

National Bank of Canada ("NBC" or the "Bank") is pleased to establish in favour
of Draxis Pharma Inc. ("DPI") the following additional credit facilities (each a
"Facility") as set out below subject to the ensuing terms and conditions. These
facilities are additional to that established in the Credit Agreement dated June
9, 1998 between Draxis Pharma Inc. and National Bank of Canada except as amended
hereunder.

                           FACILITY C - OPERATING LOAN

CREDIT LIMIT                The lesser at any time of:
                            (a) C$2,000,000
                            (b) 80% of acceptable assigned accounts receivable
                            under 90 days, less priority payables plus 20% of
                            inventory to a maximum of $500,000. Receivables
                            originating outside of Canada or the United States
                            are to be covered by EDC Insurance and/or Letters of
                            Credit acceptable to NBC. Acceptable receivables
                            that are EDC insured or backed by acceptable Letters
                            of Credit will be eligible for a 90% margin.

                            Acceptable accounts receivable are defined as trade
                            receivables excluding holdbacks receivable, contra
                            or inter-company accounts (other than inter-company
                            trade receivables), accounts of doubtful quality and
                            those aged 90 days or more. Priority payables are
                            defined as those amounts due or accrued that have
                            priority or super-priority over the Bank's security
                            position which include employee source deductions,
                            goods and services tax, pension benefits, vacation
                            pay, one pay period of accrued wages and any other
                            amounts that may rank ahead of the Bank.

TYPE & AVAILMENT & RATE     A demand credit facility under which DPI may at its
                            option obtain on a revolving basis the following,
                            subject to the specified rate:
                            Canadian dollar Prime Rate loans: Prime +.75%,
                            calculated on an annual basis, payable monthly in
                            arrears.

PURPOSE                     For day to day business purposes.

<PAGE>

REPAYMENT AND               NBC may on demand require immediate payment of all
CANCELLATION                amounts outstanding or accrued in connection with
                            this Facility. NBC may, at any time, for any reason
                            and without notice, cancel the undrawn portion of
                            this Facility.

                            The loan is to revolve in multiples of $50,000.

                    FACILITY D - BUSINESS MASTERCARD FACILITY

CREDIT LIMIT                C$20,000

TYPE & AVAILMENT            Corporate Business MasterCard facility subject to
                            the Customer signing the Bank's usual documentation.

                               GENERAL PROVISIONS

COVENANTS                   DPI is to be in compliance with the terms of the SGF
                            Sante investment agreement at all times.

                            Draxis Health Inc. will not take any actions which
                            would materially adversely affect the operations or
                            the financial position of the Borrower.

                            At your request we have amended the following terms
                            of the June 9, 1998 credit and confirm the
                            following:

                            1.   The cost of leasehold improvements totaling
                                 $2,723,695 which were incurred by Draxis Pharma
                                 Inc. for the renovation of hot labs may be
                                 transferred to Draximage Inc. Further in this
                                 connection, repayment of $2,209,860 loans due
                                 to Draxis Health Inc. is also approved.

                            2.   Repayment of up to $5,500,000 in loans to
                                 Draxis Health Inc. by Draxis Pharma Inc. is
                                 approved in accordance with the terms of the
                                 investment of $7,500,000 by SGF Sante, a
                                 wholly-owned subsidiary of Societe generale de
                                 financement du Quebec.

                            3.   Repayment of up to $1,000,000 in loans to
                                 Draxis Health Inc. by Draxis Pharma Inc. is
                                 approved for purposes of refunding a
                                 proportionate share of the ERP computer system
                                 that was purchased last year. This repayment is
                                 to be in accordance with the terms of the
                                 investment of $7,500,000 by SGF Sante, a
                                 wholly-owned subsidiary of Societe generale de
                                 financement du Quebec.

                            4.   The making of $400,000 in loans by DPI to DPI
                                 management for purposes of subscription by
                                 management in DPI shares, such loans not to
                                 exceed 80% of the subscription price.

                            5.   Change in the composition of DPI's Board of
                                 Directors to include the appointment of a
                                 representative of SGF Sante to DPI's Board of
                                 Directors

                            6.   The termination of employment of DPI's former
                                 Plant Manager and the hiring of a replacement
                                 employee.

                            7.   The entering into of the Lease Agreement
                                 between DPI and Draximage Inc.

                            8.   The deletion of all references to Draxis Health
                                 Inc. in Articles 13.1.1 to 13.1.8 of the June
                                 9, 1998 term sheet. References to Draxis Health
                                 Inc. in Articles 13.1.9 and 13.1.10 remain
                                 unchanged.

                                                                               2
<PAGE>

                                    Security

SECURITY                    The following additional security will be provided
                            to the Bank in support of the whole account:
                            First ranking general hypothec on movable property
                            of $2,300,000 on the universality of the Borrower's
                            inventory and accounts receivable in present and
                            future wherever the inventory and debtors of these
                            receivables are located.

REPORTING REQUIREMENTS      The Company will provide to NBC:

                            1.   Within 25 days of each calendar month-end, an
                                 aged receivables summary and an inventory
                                 declaration

                            2.   Within 60 days of each quarter end, financial
                                 statement statements for that quarter on an
                                 unaudited basis for DPI alone

                            3.   Within 90 days of each fiscal year end,
                                 financial statements for that year end on an
                                 audited basis for DPI alone

                            4.   By the end of each fiscal year end, a business
                                 plan/forecast for the next fiscal year
                                 incorporating 12 month projections

SET UP FEE                  A set up fee of $10,000 will be payable to NBC upon
                            acceptance of this agreement.

NEXT SCHEDULED REVIEW       June 30, 2000
DATE

CONDITIONS PRECEDENT TO     The following documentation satisfactory to NBC is
FACILITY C                  to be provided prior to advance of funds:

                            1.   All legal and security documents to be, in form
                                 and substance, satisfactory to NBC and its
                                 solicitors acting reasonably and with customary
                                 input from the Borrower and its solicitors,
                                 accompanied by the relevant legal opinions and
                                 registered in the appropriate jurisdictions

                            2.   An investment of $7,500,000 will be made into
                                 Draxis Pharma Inc. by SGF Sante, a wholly owned
                                 subsidiary of Societe generale de financement
                                 du Quebec.

                            3.   Management subscription of $361,111 as per
                                 the terms of the SGF Sante investment
                                 agreement.

All other terms and conditions of the credit as outlined in our June 9, 1998
agreement remain unchanged and in full force and effect.

If these conditions are acceptable to you, please indicate your acceptance
thereof by signing and returning a copy of this letter to the Bank before
February 28, 2000 after which time this offer is null and void.
Yours truly,

/s/ K.M. Gufler

K.M. Gufler
Senior Manager
Knowledge Based Industries

                                                                               3
<PAGE>

Acknowledged and accepted this 18th day of February 2000

DRAXIS PHARMA INC.

Per: /s/ J.A.H. GARNER
     ----------------------------
     Name & Title    J.A.H. GARNER
                     S.V.P. FINANCE & C.F.O.

Per:
     ----------------------------
     Name & Title

                                                                               4
<PAGE>

[NATIONAL
BANK
OF CANADA LETTERHEAD]

February 16, 2000

Mr. Jim A.H. Garner
Senior Vice President
Draxis Health Inc.
6870 Goreway Drive
Mississauga, ON
L4V 1P1

Dear Mr. Garner:

RE: AMENDMENT TO CREDIT AGREEMENT DATED JUNE 28, 1999 AND OCTOBER 26, 1999
AMENDING AGREEMENT

We refer to our Credit Agreement dated June 28, 1999 and amending agreement
dated October 26, 1999 in favour of Draxis Health Inc.

At your request we have amended the credit and confirm the following:

The guarantee from Draxis Pharma Inc. in favour of Draxis Health Inc. is
hereby released as part of the security requirements.

All other terms and conditions of the credit as outlined in our June 28
agreement and October 26, 1999 amending agreement remain unchanged and in
full force and effect.

If these conditions are acceptable to you, please indicate your acceptance
thereof by signing and returning a copy of this letter to the Bank before
February 28, 2000 after which time this offer is null and void.

Yours truly,

/s/ K.M. Gufler

K.M. Gufler
Senior Manager
Knowledge Based Industries

<PAGE>

Acknowledged and accepted this 18th day of February 2000

DRAXIS HEALTH INC.

Per: /s/ J.A.H. Garner
    ---------------------------------
    Name & Title  J.A.H. Garner
                  S.V.P. FINANCE & C.F.O.

Per:
    ----------------------------------
    Name & Title

<PAGE>

                                                           GENERAL HYPOTHEC ON
                                                              MOVABLE PROPERTY
------------------------------------------------------------------------------

1.  HYPOTHEC

    1.1  For good and valid consideration, the undersigned (the "Customer")
         hypothecates in favour of the National Bank of Canada (the "Bank") the
         property referred to in paragraph 1.3 hereof (the "mortgaged
         property"). This hypothec is granted for the sum of TWO MILLION THREE
         HUNDRED THOUSAND DOLLARS ($2,300,000.00) with interest at the rate of
         25% per annum from the date hereof.

    1.2  The terms "mortgaged property" also include the following property to
         the extent that it is not already included in the description in
         paragraph 1.3. The following property is therefore also charged by the
         hypothec created hereunder:

         a)  the proceeds of any sale, lease or other disposition of the
             property referred to in paragraph 1.3, any debt resulting from
             the sale, lease or other disposition of this property, as well as
             any property acquired to replace same;

         b)  any insurance or expropriation proceeds payable in respect of
             the mortgaged property;

         c)  the principal and the income of the mortgaged property as well
             as any right attached to the mortgaged property;

         d)  where the property described in paragraph 1.3 includes shares or
             securities, all shares and securities issued in replacement of
             these shares or securities;

         e)  all deeds, documents, registers, invoices and books of accounts
             evidencing the mortgaged property or relating thereto.

    1.3  Description of property:

         All the Customer's movable property, corporeal and incorporeal,
         present and future, wherever they may be.

2.  OBLIGATIONS SECURED

    2.1  The hypothec is granted to secure all obligations of the Customer to
         the Bank resulting from the terms of the Bank's offer of financing
         dated the eighteenth day of February, Two Thousand (February 18, 2000)
         and from all increase of the credit described therein including,
         without limitation, any contract, document or agreement related
         thereto, as well as any amendment, renewal or replacement thereof
         (collectively the "Offer").

<PAGE>

                                      -2-

    2.2  This hypothec is also granted to secure all other obligations of the
         Customer to the Bank, present and future, direct and indirect.

3.  DECLARATIONS

    The Debtor declares, confirms and reaffirms that all the representations,
    obligations and warranties made in the Offer are still true and exact.

4.  COVENANTS

    4.1  The Customer shall inform the Bank without delay of any change to
         its name.

    4.2  The Customer shall provide the Bank with a copy of each policy and,
         at least thirty (30) days prior to the expiration or cancellation of a
         policy, a copy of the renewal or replacement thereof.

    4.3  The Customer shall do all things and sign all documents necessary to
         preserve its rights in the mortgaged property and for the hypothec
         constituted hereunder to have full effect and be perfected and
         constantly enforceable against third parties in all jurisdictions where
         the mortgaged property may be situated or used.

    4.4  The Customer shall comply, in all material respects, with all laws
         and regulations applicable to the operation of its business and to the
         mortgaged property.

    4.5  The Customer shall not dispose of mortgaged property having a value
         in excess of 100,000.00$ per transaction or, in the aggregate in any
         calendar year of this agreement in excess of 300,000.00$, nor lease
         same unless the Bank consents thereto in writing. However, if not in
         default hereunder, the Customer may sell or lease its inventory in the
         ordinary course of its business.

    4.6  The Customer shall not change the use, destination or nature of the
         mortgaged property nor remove same from its present location unless the
         Bank consents thereto in writing.

    4.7  Where the mortgaged property includes intellectual property rights,
         the Customer shall furnish a description of it to the Bank and shall
         inform the Bank without delay of all new acquisition or use of said
         rights. The Customer shall register and renew all registration
         necessary or useful for the protection of its intellectual property
         rights and shall also advise the Bank of all claims or litigations
         concerning them.

5.  RIGHTS OF THE BANK

    5.1  The Bank may inspect or have the mortgaged property appraised from
         time to time at the Customer's expense and, for that purpose, shall be
         permitted access to the premises where the mortgaged property is
         located and to the Customer's places of business. The Customer shall
         also allow the Bank to examine and obtain copies of all books of
         accounts and documents relating to the mortgaged property.

<PAGE>

                                      -3-

    5.2  The Bank may, without being bound to do so, perform any or all of
         the obligations of the Customer hereunder.

    5.3  The Customer may collect all debts forming part of the mortgaged
         property until the Bank withdraws its authorization to the Customer
         to do so. If the Bank withdraws its authorization from the Customer to
         collect the debts forming part of the mortgaged property, the Bank may
         collect such debts and shall be entitled to a reasonable commission
         which it may deduct from any amount collected.

    5.4  When the mortgaged property includes shares or securities, the Bank
         may, without being bound to do so, cause itself to be registered as the
         holder of these shares or securities and exercise any right attached
         thereto, including any right to vote and any right of conversion or
         redemption.

    5.5  If the Bank has possession of the mortgaged property, it shall have
         no obligation to maintain the use for which the mortgaged property is
         normally intended nor to make it productive nor to continue its use or
         operation.

    5.6  The Bank may, without being bound to do so, sell the mortgaged
         property in its possession where it believes in good faith that the
         mortgaged property is likely to perish, decrease in value or
         depreciate.

    5.7  The Customer constitutes and appoints the Bank as its irrevocable
         attorney, with full power of substitution, in order to do any act and
         to sign any document necessary or useful to the exercise of the rights
         conferred on the Bank hereunder.

    5.8  The rights conferred on the Bank under this article 5 may be
         exercised by the Bank irrespective of whether the Customer is or is not
         in default hereunder.

6.  DEFAULT AND RECOURSES

    6.1  The Customer shall be in default in each and everyone of the
         following events:

         a)  if any or all of the obligations secured under this agreement
             are not paid or performed when due.

         b)  if there is a default under the Offer.

    6.2  Upon the Customer's default, the Bank may terminate any obligation
         it may have had to grant credit or make advances to the Customer and
         declare eligible all obligations of the Customer which are not yet due.
         Upon such default, the Bank may also exercise all recourses available
         to it under applicable law, including the rights resulting from its
         hypothec.

    6.3  In order to realize on its hypothec, the Bank may use the premises
         where the mortgaged property and other property of the Customer are
         situated at the expense of the Customer. Where the mortgaged property
         includes debts, the Bank may compromise or transact with the debtors of
         these debts and may grant releases and discharges in respect of same.
         Where the mortgaged property includes inventory, the Bank may complete
         the manufacture of such inventory and do all things necessary or useful
         to its sale.

<PAGE>

                                      -4-

7.  ADDITIONAL HYPOTHEC

    7.1  To secure the payment of interest not already secured by the
         hypothec created in article 1 and to further secure the performance
         of its obligations hereunder, the Customer hypothecates all of the
         property described in article 1 for an additional amount equal to
         twenty percent (20%) of the principal amount of the hypothec created
         in article 1.

8.  GENERAL PROVISIONS

    8.1  The hypothec created hereby is in addition to and not in
         substitution for any other hypothec or security held by the Bank.

    8.2  This hypothec is a continuing security and shall subsist
         notwithstanding the payment from time to time, in whole or in part, of
         the obligations secured hereunder.

    8.3  In each case provided in paragraph 6.1, the Customer shall be in
         default by the mere lapse of time, without the necessity of any notice
         or demand.

    8.4  If more than one person is referred to as "Customer", such persons
         shall be solidarily liable for all obligations stipulated herein.

    8.5  Any sum collected by the Bank in the exercise of its rights may be
         held by the Bank as mortgaged property, or may be applied to the
         payment of the obligations secured hereunder, whether or not yet due.
         The Bank shall have discretion as to how any such collected sum shall
         be applied.

    8.6  The exercise of the Bank of any of its rights shall not preclude the
         Bank from exercising any other right resulting from the present
         agreement. The failure of or forbearance by the Bank to exercise any of
         its rights shall not constitute a renunciation to the later exercise of
         such right. The Bank may exercise its rights resulting from this
         agreement without being required to exercise its other rights against
         the Customer or against any other person liable for the payment of the
         obligations secured hereunder or to realize on any other security held
         for the payment of such obligations.

    8.7  The Bank shall only be required to exercise reasonable care in the
         exercise of its rights and the performance of its obligations.
         Moreover, it shall only be liable for its intentional fault or gross
         negligence.

    8.8  The Bank may delegate to another person the exercise of its rights
         or the performance of its obligations resulting from the present
         agreement. In such a case the Bank is authorized to provide that person
         with any information it may have concerning the Customer or the
         mortgaged property.

    8.9  This agreement shall be binding upon the Customer and enure to the
         benefit of the Bank and any successor thereof by way of amalgamation or
         otherwise.

    8.10 Any notice to the Customer may be given at the address indicated
         below or any other address communicated in writing by the Customer to
         the Bank.

<PAGE>

                                      -5-

    8.11 Should any clause hereof be invalid or inoperative, the other
         clauses of the present agreement shall remain fully operative.

    8.12 This agreement shall be governed and interpreted by the law in force
         in the Province of Quebec. It must also be interpreted so that
         mortgaged property located in another jurisdiction is affected by a
         valid security under the applicable law of this other jurisdiction.

    8.13 The parties hereto have expressly agreed that this agreement and all
         deeds, documents or notices relating thereto be executed in English/
         Les parties aux presentes ont expressement convenu que cet acte et tout
         autre actc, document ou avis y afferent soient rediges anglais.

SIGNED AND DELIVERED at Montreal, Province of Quebec, this 4th day of April,
2000.

                                      DRAXIS PHARMA INC     C.S.

/s/ Olha Luszowski                    Per: /s/ James A. Garner
----------------------------------        -----------------------------------
Witness: Olha Luszowski                   Name:   JAMES A. GARNER
         361 Markland Dr.                 Title:  Chief Financial Officer
         Etobicoke, ON M9C 1S1

                                      Address of Customer
                                      (for notice and correspondence purposes):

                                      16751 Trans Canada Highway
                                      Kirkland (Quebec)
                                      H9H 4J4

                                      Address of head office
                                      or domicile of Customer
                                      (if different from above):

                                      1170 Peel Street, 5th Floor
                                      Montreal (Quebec)
                                      H3B 4S8<PAGE>
                                                                    EXHIBIT 4.10
                       AS AMENDED AND SUBMITTED TO THE TSE
                                 August 26,1998

                                Stock Option Plan

                                       of

                               Draxis Health Inc.

1.       PURPOSE OF THE PLAN

         The Draxis Health Inc. Stock Option Plan (the "Plan) is intended to
attract and retain highly qualified officers, directors and employees who will
be motivated towards the success of Draxis Health Inc. (the "Corporation") or
any of its subsidiaries.

2.       ADMINISTRATION

         This Plan shall be administered by the Board of Directors of the
Corporation (the "Board"). Subject to the terms of the Plan, the Board is
authorized to approve persons to whom options may be granted, to construe and
interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to the Plan, and to make all determinations and take all actions
necessary or advisable for the Plan's administration.

3.       GRANTING OF OPTIONS

         The Board may from time to time in the manner herein provided grant
options ("Options") to purchase common shares ("Shares") of the Corporation to
directors, officers, employees or area managers or arm's length consultants of
the Corporation and may provide for the number of Shares to be optioned to each
such director, officer, employee or area manager. Options shall be exercised on
or prior to a date determined by the Board of Directors at the date of the
grant, which shall be no later than ten years from the date of the grant and
shall be subject to the terms, conditions, limitations and prohibitions as are
herein contained or as may be in effect at the date of the grant.

4.       SHARES SUBJECT TO PLAN

         The aggregate number of Shares that may be issued pursuant to the Plan
shall be 5,500,000 Shares. The number of Shares reserved for issuance to any one
person pursuant to options granted pursuant to this Plan or otherwise shall not
exceed 5% of the outstanding Shares.

<PAGE>

                                      -2-

5.       PARTICIPANTS

         The individuals who are eligible to receive Options hereunder shall be
directors, officers or employees of the Corporation or a subsidiary of the
Corporation or arm's length consultants of the Corporation or a subsidiary of
the Corporation (the "Eligible Optionees"). The Board shall from time to time,
in its sole discretion, determine which of those Eligible Optionees will be
granted Options under the Plan (the "Optionees") and the number of Shares to be
optioned to such Eligible Optionees. The Board shall not be precluded from
granting an Option to an Eligible Optionee solely because such Eligible Optionee
may previously have been granted an Option under the plan.

6.       OPTION PRICE

         The exercise price for an Option shall be fixed by the Board when such
Option is granted. Under no circumstances shall the exercise price for any
Option be less than the closing price of the Shares on The Toronto Stock
Exchange on the trading day immediately preceding the date of the grant.

7.       OPTION TERMS

         (a)      Subject to paragraph 3 hereof, the period during which any
                  Option may be exercised, in whole or in part, shall be such
                  period as the Board may determine (the "Option Period").

         (b)      In the event that any Option has not been exercised in respect
                  of all Shares covered by the Option at the expiry of the
                  Option Period, the Option shall thereupon expire.

         (c)      In the event of the death of an Optionee on or prior to the
                  expiry of an Option, while in office and at a time when such
                  Optionee has not fully exercised any outstanding Options, such
                  Options, to the extent then exercisable but unexercised, shall
                  be exercisable by such Optionee's executors or personal
                  representatives within six (6) months after such Optionee's
                  death notwithstanding the expiration date of the Option. In
                  the event such Options are not exercised at the expiry of such
                  six-month period, such Options shall expire.

         (d)      In the event of the total and permanent disability of an
                  Optionee (as determined by the Board of Directors), such
                  Optionee may, within six months after the date of such
                  determination of disability, notwithstanding the expiration
                  date of the Option, exercise such part of the Option as is
                  then exercisable. In the event the Optionee has not exercised
                  such Option at the expiry of such six-month period, the Option
                  shall expire.

<PAGE>

                                      -3-

         (e)      Except as provided in subparagraphs 7(c) and (d) above, if an
                  Optionee ceases to hold office as a director, officer,
                  employee or area manager of the Corporation during the Option
                  Period, such part of the Option as is then exercisable may be
                  exercised by such Optionee for a period of thirty (30) days
                  after such Optionee ceases to hold such office or position or
                  for such longer period as the Board of Directors may approve,
                  after which time the Option shall terminate; provided,
                  however, that in no event may any option be exercised outside
                  the Option Period.

8.       NON-ASSIGNABILITY

         Each Option shall be non-assignable and non-transferable and shall,
subject to the terms hereof, be exercisable only by the Optionee to whom it is
granted.

9.       RIGHTS OF OPTIONEES BEFORE EXERCISE OF OPTION

         The Optionees shall not have any rights whatsoever as shareholders in
respect of the Shares covered by such Options until such Options are exercised
and payment for such Shares has been made.

10.      EXERCISE OF OPTION

         Subject to the provisions of the Plan, an Option may be exercised from
time to time by delivery to the Corporation at its registered office of a
written notice of exercise in the form attached hereto as Schedule A specifying
the number of Shares with respect to which the Option is being exercised, and
accompanied by payment in full of the purchase price for the Shares then being
purchased and a duly executed Stock Option Agreement.

11.      SHARE CAPITAL ADJUSTMENTS

         If the outstanding Shares subject to this Plan are changed into or
exchanged for a different number or kind of shares or securities, as a result of
one or more amalgamations, reorganizations, re-capitalization, stock splits,
consolidations, stock dividends in the nature of stock splits or the like,
appropriate adjustments shall be made in the number and/or kind of shares or
securities for which the Options may thereafter be granted under this Plan and
for which Options then outstanding under this Plan may thereafter be exercised.
Any such adjustment in outstanding Options shall be made without changing the
aggregate exercise price applicable to the unexercised portions of such Option.

         No fractional securities shall be issued upon the exercise of an
Option. Accordingly, if as a result of any adjustment under this paragraph, an
Optionee would be entitled to a fractional security, the Optionee shall have the
right to acquire only the
<PAGE>

                                       -4-

adjusted number of whole securities and no payment or other adjustment will be
made with respect to fractional securities so disregarded.

12.      LIQUIDATION, DISSOLUTION OR WINDING-UP

         In the event that the Corporation proposes to liquidate, dissolve or
windup, the Corporation shall give written notice thereof to each Optionee and
such Optionee shall be entitled to exercise all then exercisable Options within
thirty (30) days of the giving of such notice, provided, however, that in no
event may such Option be exercised outside of the Option Period. Upon the
expiration of such thirty (30) day period, all rights of Optionees to such
Options or to exercise the same shall terminate and cease to have any further
force or effect, unless otherwise determined by the Board of Directors.

13.      CHANGE OF CONTROL

         Notwithstanding the foregoing, in the event that:

         (a)      an offeror makes a cash offer or an exchange offer to purchase
                  50% or more of the outstanding Shares to substantially all
                  holders of the Shares;

         (b)      an insider of the Corporation makes an offer to purchase
                  Shares to substantially all holders of the Shares;

         (c)      an offeror makes an offer, by way of merger, amalgamation,
                  reorganization, consolidation, exchange or otherwise, the
                  result of which would be the acquisition by such offeror
                  directly or indirectly of 50% or more of the outstanding
                  equity securities of the Corporation or the successor entity;
                  or

         (d)      an offeror makes an offer to purchase substantially all of the
                  assets of the Corporation;

and the Board of Directors recommends acceptance of such offer to the
Shareholders of the Corporation or, if the Board of Directors has made no
recommendation, the Shareholders have approved or accepted the proposed
transaction, then any Option outstanding hereunder, including Options not then
otherwise exercisable, shall become immediately exercisable upon the issuance
of the recommendation of the Board of Directors or the approval or acceptance of
the Shareholders, as the case may be.

14.      AMENDMENT OR TERMINATION

         The Board of Directors may terminate the Plan any time or, with the
consent of The Toronto Stock Exchange, amend the Plan at any time provided,
however, that except as permitted herein, the Board may not, without the
approval of the Optionee to whom Options have been granted, alter or impair
such Option.

<PAGE>

                                       -5-

         The Board may from time to time make, amend and repeal such regulations
under the Plan as they deem expedient for the purpose of carrying out the Plan
and such regulations from time to time in force shall, together with the Plan,
be binding and conclusive on the Corporation and on all holders of Options
granted under the Plan and their legal personal representatives.

<PAGE>

                                       -6-

                                  SCHEDULE "A"

                                STOCK OPTION PLAN

                               DRAXIS HEALTH INC.

                              ELECTION TO PURCHASE

TO:               The Secretary of
                  Draxis Health Inc.

         Pursuant to the terms of the stock option granted to me on         (the
"Date of the Grant"), I hereby elect to purchase          common shares of
Draxis Health Inc. which were the subject of such stock option. I understand
that such purchase is subject to all the terms and conditions of such stock
option and of the Draxis Health Inc. Stock Option Plan.

         Enclosed is a certified cheque, bank draft or money order payable to
Draxis Health Inc. in the amount of $          , the full amount of the exercise
price for the number of common shares indicated above.

--------------------------------------    --------------------------------------
DATE                                      (PRINT NAME)

                                          --------------------------------------
                                          (SIGNATURE)
<PAGE>

                       AS AMENDED AND SUBMITTED TO THE TSE
                                October 29, 1997

                                Stock Option Plan

                                       of

                               Draxis Health Inc.

1.       PURPOSE OF THE PLAN

         The Draxis Health Inc. Stock Option Plan (the "Plan) is intended to
attract and retain highly qualified officers, directors and employees who will
be motivated towards the success of Draxis Health Inc. (the "Corporation") or
any of its subsidiaries.

2.       ADMINISTRATION

         This Plan shall be administered by the Board of Directors of the
Corporation (the "Board"). Subject to the terms of the Plan, the Board is
authorized to approve persons to whom options may be granted, to construe and
interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to the Plan, and to make all determinations and take all actions
necessary or advisable for the Plan's administration.

3.       GRANTING OF OPTIONS

         The Board may from time to time in the manner herein provided grant
options ("Options") to purchase common shares ("Shares") of the Corporation
to directors, officers, employees or area managers or arm's length
consultants of the Corporation and may provide for the number of Shares to be
optioned to each such director, officer, employee or area manager. Options
shall be exercised on or prior to a date determined by the Board of Directors
at the date of the grant, which shall be no later than ten years from the
date of the grant and shall be subject to the terms, conditions, limitations
and prohibitions as are herein contained or as may be in effect at the date
of the grant.

4.       SHARES SUBJECT TO PLAN

         The aggregate number of Shares that may be issued pursuant to the Plan
shall be 4,500,000 Shares. The number of Shares reserved for issuance to any
one person pursuant to options granted pursuant to this Plan or otherwise
shall not exceed 5% of the outstanding Shares.

<PAGE>

                                      -2-

5.       PARTICIPANTS

         The individuals who are eligible to receive Options hereunder shall be
directors, officers or employees of the Corporation or a subsidiary of the
Corporation or arm's length consultants of the Corporation or a subsidiary of
the Corporation (the "Eligible Optionees"). The Board shall from time to time,
in its sole discretion, determine which of those Eligible Optionees will be
granted Options under the Plan (the "Optionees") and the number of Shares to be
optioned to such Eligible Optionees. The Board shall not be precluded from
granting an Option to an Eligible Optionee solely because such Eligible Optionee
may previously have been granted an Option under the plan.

6.       OPTION PRICE

         The exercise price for an Option shall be fixed by the Board when such
Option is granted. Under no circumstances shall the exercise price for any
Option be less than the closing price of the Shares on The Toronto Stock
Exchange on the trading day immediately preceding the date of the grant.

7.       OPTION TERMS

         (a)      Subject to paragraph 3 hereof, the period during which any
                  Option may be exercised, in whole or in part, shall be such
                  period as the Board may determine (the "Option Period").

         (b)      In the event that any Option has not been exercised in respect
                  of all Shares covered by the Option at the expiry of the
                  Option Period, the Option shall thereupon expire.

         (c)      In the event of the death of an Optionee on or prior to the
                  expiry of an Option, while in office and at a time when such
                  Optionee has not fully exercised any outstanding Options, such
                  Options, to the extent then exercisable but unexercised, shall
                  be exercisable by such Optionee's executors or personal
                  representatives within six (6) months after such Optionee's
                  death notwithstanding the expiration date of the Option. In
                  the event such Options are not exercised at the expiry of such
                  six-month period, such Options shall expire.

         (d)      In the event of the total and permanent disability of an
                  Optionee (as determined by the Board of Directors), such
                  Optionee may, within six months after the date of such
                  determination of disability, notwithstanding the expiration
                  date of the Option, exercise such part of the Option as is
                  then exercisable. In the event the Optionee has not exercised
                  such Option at the expiry of such six-month period, the
                  Option shall expire.

<PAGE>

                                      -3-

         (e)      Except as provided in subparagraphs 7(c) and (d) above, if an
                  Optionee ceases to hold office as a director, officer,
                  employee or area manager of the Corporation during the Option
                  Period, such part of the Option as is then exercisable may be
                  exercised by such Optionee for a period of thirty (30) days
                  after such Optionee ceases to hold such office or position or
                  for such longer period as the Board of Directors may approve,
                  after which time the Option shall terminate; provided,
                  however, that in no event may any option be exercised outside
                  the Option Period.

8.       NON-ASSIGNABILITY

         Each Option shall be non-assignable and non-transferable and shall,
subject to the terms hereof, be exercisable only by the Optionee to whom it is
granted.

9.       RIGHTS OF OPTIONEES BEFORE EXERCISE OF OPTION

         The Optionees shall not have any rights whatsoever as shareholders in
respect of the Shares covered by such Options until such Options are exercised
and payment for such Shares has been made.

10.      EXERCISE OF OPTION

         Subject to the provisions of the Plan, an Option may be exercised from
time to time by delivery to the Corporation at its registered office of a
written notice of exercise in the form attached hereto as Schedule A specifying
the number of Shares with respect to which the Option is being exercised, and
accompanied by payment in full of the purchase price for the Shares then being
purchased and a duly executed Stock Option Agreement.

11.      SHARE CAPITAL ADJUSTMENTS

         If the outstanding Shares subject to this Plan are changed into or
exchanged for a different number or kind of shares or securities, as a result of
one or more amalgamations, reorganizations, re-capitalization, stock splits,
consolidations, stock dividends in the nature of stock splits or the like,
appropriate adjustments shall be made in the number and/or kind of shares or
securities for which the Options may thereafter be granted under this Plan and
for which Options then outstanding under this Plan may thereafter be exercised.
Any such adjustment in outstanding Options shall be made without changing the
aggregate exercise price applicable to the unexercised portions of such Option.

         No fractional securities shall be issued upon the exercise of an
Option. Accordingly, if as a result of any adjustment under this paragraph, an
Optionee would be
<PAGE>

                                       -4-

entitled to a fractional security, the Optionee shall have the right to acquire
only the adjusted number of whole securities and no payment or other adjustment
will be made with respect to fractional securities so disregarded.

12.      LIQUIDATION, DISSOLUTION OR WINDING-UP

         In the event that the Corporation proposes to liquidate, dissolve or
wind-up, the Corporation shall give written notice thereof to each Optionee and
such Optionee shall be entitled to exercise all then exercisable Options within
thirty (30) days of the giving of such notice, provided, however, that in no
event may such Option be exercised outside of the Option Period. Upon the
expiration of such thirty (30) day period, all rights of Optionees to such
Options or to exercise the same shall terminate and cease to have any further
force or effect, unless otherwise determined by the Board of Directors.

13.      CHANGE OF CONTROL

         Notwithstanding the foregoing, in the event that:

         (a)      an offeror makes a cash offer or an exchange offer to purchase
                  50% or more of the outstanding Shares to substantially all
                  holders of the Shares;

         (b)      an insider of the Corporation makes an offer to purchase
                  Shares to substantially all holders of the Shares;

         (c)      an offeror makes an offer, by way of merger, amalgamation,
                  reorganization, consolidation, exchange or otherwise, the
                  result of which would be the acquisition by such offeror
                  directly or indirectly of 50% or more of the outstanding
                  equity securities of the Corporation or the successor entity;
                  or

         (d)      an offeror makes an offer to purchase substantially all of the
                  assets of the Corporation;

and the Board of Directors recommends acceptance of such offer to the
Shareholders of the Corporation or, if the Board of Directors has made no
recommendation, the Shareholders have approved or accepted the proposed
transaction, then any Option outstanding hereunder, including Options not
then otherwise exercisable, shall become immediately exercisable upon the
issuance of the recommendation of the Board of Directors or the approval or
acceptance of the Shareholders, as the case may be.

14.      AMENDMENT OR TERMINATION

         The Board of Directors may terminate the Plan any time or, with the
consent of The Toronto Stock Exchange, amend the Plan at any time provided,
however,

<PAGE>

                                       -5-

that except as permitted herein, the Board may not, without the approval of the
Optionee to whom Options have been granted, alter or impair such Option.

         The Board may from time to time make, amend and repeal such regulations
under the Plan as they deem expedient for the purpose of carrying out the Plan
and such regulations from time to time in force shall, together with the Plan,
be binding and conclusive on the Corporation and on all holders of Options
granted under the Plan and their legal personal representatives.

<PAGE>

                                       -6-

                                  SCHEDULE "A"

                                STOCK OPTION PLAN

                               DRAXIS HEALTH INC.

                              ELECTION TO PURCHASE

TO:      The Secretary of
         Draxis Health Inc.

         Pursuant to the terms of the stock option granted to me on
(the "Date of the Grant"), I hereby elect to purchase               common
shares of Draxis Health Inc. which were the subject of such stock option. I
understand that such purchase is subject to all the terms and conditions of
such stock option and of the Draxis Health Inc. Stock Option Plan.

         Enclosed is a certified cheque, bank draft or money order payable to
Draxis Health Inc. in the amount of $           , the full amount of the
exercise price for the number of common shares indicated above.

--------------------------------------    --------------------------------------
DATE                                      (PRINT NAME)

                                          --------------------------------------
                                          (SIGNATURE)

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