Document:

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                                                                    EXHIBIT 4.27

                                                               Dr. Martin Barkin
                                                               President and CEO
                                                  Telephone: (905) 677-5500 #236
                                                       FACSIMILE: (905) 677-5494
                                                        CELLULAR: (416) 726-8870
                                                              mbarkin@draxis.com

                                                                    May 14, 2001

                                                         PERSONAL & CONFIDENTIAL
DELIVERED VIA COURIER
---------------------

Mr. Jerry Ormiston 416-364-8558
28 Eagle Road,
Toronto, Ontario
M8Z 4H5

Dear Mr. Ormiston:

         We are pleased to offer you employment with DRAXIS Health Inc.
("DRAXIS") on the terms set out below.

1.       EMPLOYMENT

         Effective May 30, 2001, you shall be employed with DRAXIS as its
Executive Director Communications and Investor Relations on the terms and
conditions contained in this Agreement. You shall report to the Chief Executive
Officer of DRAXIS. Without limiting the scope of your duties and
responsibilities as Executive Director Communications and Investor Relations,
you shall be responsible for developing and overseeing DRAXIS' Communications
and Investor Relations Programs and you shall participate in the Business
Development activities of the Company. You will also be a member of DRAXIS'
executive team with participation on the Corporate Management Committee and
advisory to the Executive Operations Committee. In addition, you will perform
any additional employment responsibilities assigned to you by the Chief
Executive Officer of DRAXIS from time to time, provided that such
responsibilities are consistent with the executive nature of the position.

2.       BASE SALARY

         DRAXIS will pay to you during the term of this Agreement, effective May
30, 2001, a gross salary of $130,000 per annum, payable semi-monthly, in
arrears, in 24 equal installments of $5,416.66 ("Base Salary"). Such salary
shall be subject to annual review in accordance with DRAXIS' regular
administrative practices of salary review applicable to the executive officers
of DRAXIS. Any salary increases shall be determined on merit by the Chief
Executive Officer of DRAXIS. The Chief Executive Officer will inform you of any
increases in your salary in advance of the implementation date.

         As an officer of the company, DRAXIS will provide and pay for
directors' and officers' liability insurance and in any event will indemnify and
save you harmless from any action arising within the scope of your employment
responsibilities for DRAXIS and its affiliates (as such term is defined in the
CANADA BUSINESS CORPORATION ACT) ("Affiliates").

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Mr. Jerry Ormiston                                                  May 14, 2001
PERSONAL & CONFIDENTIAL                                                   Page 2

3.       BENEFITS

         You will be entitled to participate in all benefit plans which DRAXIS
shall from time to time make available to its executive employees, subject to
applicable eligibility rules thereof. The benefits currently offered are:

         o  major medical
         o  dental
         o  group life
         o  long term disability
         o  accidental death and dismemberment

4.       STOCK OPTION PLAN

         You will be eligible to participate in the Stock Option Plan of DRAXIS,
which DRAXIS, from time to time, shall make available to employees, in
accordance with the terms and conditions of that plan.

         DRAXIS will grant you options to purchase 25,000 shares within 30 days
of the commencement of your employment (the "Initial Grant"). These options
shall vest as follows:

          a)   8,333 shares on the first anniversary of the Initial Grant;
          b)   8,333 shares on the second anniversary of the Initial Grant; and
          c)   8,334 shares on the third anniversary of the Initial Grant.

         The price of each option shall be the closing price of the DRAXIS
shares on the Toronto Stock Exchange on the trading date immediately preceding
the date of the Initial Grant. The options may be exercised in whole or in part
at any time within five years after the date of the Initial Grant, subject to
vesting as set out above.

         The CEO agrees to recommend to the Board of Directors, within 90
calendar days after the first Board meeting following the Annual General
Meeting, to be held on June 20, 2001, the granting to you of options to purchase
an additional 75,000 shares. The award of these additional 75,000 options is
totally conditional upon the Board of Directors' approval to make additional
stock options available.

5.       DEFERRED SHARE UNIT PLAN

         You will be eligible to participate in the Deferred Share Unit Plan, in
accordance with the terms and conditions of that plan. The Deferred Share Unit
Plan has been established to provide selected employees of DRAXIS and its
Affiliates with the opportunity to acquire share equivalent units convertible to
cash or common shares of DRAXIS. A plan document is available for review.

6.       DRAXIS RETIREMENT PROGRAM  (Under Development)

         You will be eligible to participate in the DRAXIS Retirement Program
which DRAXIS is currently developing to make available to employees, subject to
applicable eligibility rules thereof and in accordance with the terms and
conditions of that plan and approval of the plan by the Board of Directors.

7.       EMPLOYEE PARTICIPATION SHARE PURCHASE PLAN

         You will be eligible to participate in the Employee Participation Share
Purchase Plan which DRAXIS shall from time to time make available to its
employees, subject to applicable eligibility rules thereof and in accordance
with the terms and conditions of that plan.

<PAGE>

Mr. Jerry Ormiston                                                  May 14, 2001
PERSONAL & CONFIDENTIAL                                                   Page 3

8.       DISCRETIONARY BONUS

         The Chief Executive Officer and the Compensation Committee, in their
sole discretion, may declare a bonus payable. Such bonus payment is not
guaranteed and payment of a discretionary bonus in any prior year is not a
promise or guarantee of payment in subsequent years. Further, to receive any
discretionary bonus payment, should one be declared, you must be employed on
December 31st of the calendar year for which the bonus is declared. Should a
discretionary bonus be declared, you may be eligible to receive an amount up to
a maximum equivalent to 30% of your Base Salary, or such other amount as may be
determined by the Chief Executive Officer of DRAXIS and the Compensation
Committee of the Board of Directors, in their sole discretion. For the calendar
year 2001 the above mentioned 30% bonus eligibility will be pro-rated to January
1, 2001.

9.       SIGNING BONUS

         DRAXIS will pay to you a signing bonus consisting of the gross amount
of $10,000 which shall be paid to you within 10 business days of your
commencement of employment.

10.      MEMBERSHIPS AND PUBLICATIONS

         DRAXIS will pay all professional memberships, dues and levies required
for membership in the Canadian Investor Relations Institute and other approved
memberships or publications deemed necessary to the conduct of your position.

11.      VACATION

         Commencing in 2001, you shall be entitled to four weeks vacation per
annum to be taken at a time or times acceptable to DRAXIS, having regard to its
operations. There shall be no vacation time carried over from one calendar year
into the following calendar year, unless previous authorization has been
received from the Chief Executive Officer of DRAXIS.

12.      LEGAL FEES

         DRAXIS will reimburse you for independent legal counsel with respect to
the review of this agreement to a maximum of $1,000 upon presentation of
appropriate receipts.

13.      EXPENSES

         DRAXIS agrees that it shall reimburse you for all reasonable traveling
and other out-of-pocket expenses actually and properly incurred in connection
with your duties with DRAXIS and its Affiliates (the "Company"). For all such
expenses you agree you will furnish statements and vouchers as and when required
by DRAXIS.

14.      DEDUCTIONS

         All salary and other payments and allowances outlined in this Agreement
are subject to such withholding and deduction at source as may be required by
law.

15.      EMPLOYEE'S COVENANTS

         You agree that you shall devote the whole of your working time,
attention and ability to the business of DRAXIS and shall use reasonable best
efforts to promote the interests of DRAXIS.

         Further, you agree that you shall duly and diligently perform all the
duties assigned to you while in our employ and shall well and faithfully serve
DRAXIS. You agree that while employed with DRAXIS you shall not, without the
prior written consent of DRAXIS, engage or otherwise be concerned in any other
business or occupation, or become a director, officer, agent or employee of any
other entity.

<PAGE>

Mr. Jerry Ormiston                                                  May 14, 2001
PERSONAL & CONFIDENTIAL                                                   Page 4

16.      CONFIDENTIAL INFORMATION, NON-SOLICITATION AND NON-COMPETITION

(a)      NON-DISCLOSURE OF CONFIDENTIAL INFORMATION

         As DRAXIS' Executive Director Communications and Investor Relations,
you acknowledge that you are creating, having access to, and require knowledge
of confidential and commercially valuable information of the Company, the
unauthorized use or disclosure of which could cause the Company serious and
irreparable damage.

         (1) "Confidential Information" means all information, and all documents
and other tangible things recording any such information, relating to or useful
in connection with the business of the Company, whether or not a trade secret
within the meaning of the applicable law, which at the time or times concerned
is not generally known to Competitors (as defined below) and which has been or
is from time to time disclosed to or developed by you as a result of your
employment with DRAXIS. Confidential Information includes, but is not limited
to, the following information of the Company:

                (i) new products;
               (ii) marketing strategies and plans;
              (iii) development strategies and plans;
               (iv) manufacturing processes and technologies;
                (v) research in progress and unpublished manuals or know how;
               (vi) regulatory filings;
              (vii) identity of and relationship with licensees, licensors or
                    suppliers;
             (viii) finances, financial information, financial management
                    systems;
               (ix) market research;
                (x) market experience with products;
               (xi) customer lists;
              (xii) compensation and benefits provided to employees;
             (xiii) any other research, information or documents which you are
                    told or reasonably ought to know that the Company regards as
                    proprietary or confidential; and
              (xiv) any legal advice provided to DRAXIS, its offcers,
                    directors, employees or agents during the course or your
                    employment and any details involving the DRAXIS position
                    with respect to any litigation matter or prospective
                    litigation matter which exists at the time of termination.

         (2) You agree that you shall hold all Confidential Information in the
strictest confidence, as a fiduciary. Without limiting such obligation, you
shall use Confidential Information only at times and places designated by the
Company in furtherance of the business of the Company. You shall not, except
where the Company otherwise provides its prior written consent or where required
by law, directly or indirectly disclose to any Person any Confidential
Information, directly or indirectly sell, give, loan or otherwise transfer any
Confidential Information or copy thereof to any Person, publish, lecture on or
display any Confidential Information to any Person or use Confidential
Information for your own benefit or the benefit of any other Person.

         (3) Your obligations under this Section shall remain in effect with
respect to each item of Confidential Information until the date upon which such
Confidential Information has been publicly disclosed in a manner properly
authorized by the Company or otherwise has become known to Competitors without
any breach of this Section by you.

<PAGE>

Mr. Jerry Ormiston                                                  May 14, 2001
PERSONAL & CONFIDENTIAL                                                   Page 5

         (4) For purposes of this Agreement, "Competitor" shall mean any Person
which engages or is preparing to engage, in whole or in part, in the design,
development, manufacture, marketing or sale of any products or services which
compete directly with a product or service which, during the 12 months prior to
the termination of this Agreement and your employment hereunder for any reason,
the Company marketed or at the time of termination of this Agreement and your
employment hereunder, is then preparing to market.

         (5) For purpose of this Agreement, "Person" shall include individuals,
partnerships, associations, trusts, unincorporated organizations and
corporations.

(b)      NON-SOLICITATION AND NON-COMPETITION

         (1) You acknowledge that the pharmaceutical and over-the-counter drug
industries are highly competitive businesses. You are a key executive of DRAXIS,
and as a result of your senior position, you confirm that you have acquired
extensive background in and knowledge of the Company's business and the
pharmaceutical and over-the-counter drug industries in which the Company
operates. You further acknowledge that the Company develops and markets its
products on a North American basis. Accordingly, you agree that in the course of
your employment with DRAXIS, and thereafter for a period of one year (or if such
period is held to be excessive by a court of competent jurisdiction then for a
period of six months) you shall not, without the prior written authorization of
the Chief Executive Officer of DRAXIS whether as principal, as agent, or as an
employee of, or in partnership, or association with any other Person, in any
manner whatsoever directly or indirectly:

              (i)               become employed by or associated or affiliated
                                with any Competitor of the Company in North
                                America in a function dealing with a product or
                                service, which during the twelve-month period
                                immediately prior to the termination of this
                                Agreement and your employment hereunder, for any
                                reason, competed directly with a product or
                                service of the Company;
              (ii)              seek to employ or encourage others to employ or
                                otherwise engage employees, agents or
                                subcontractors of the Company (who are
                                employees, agents or subcontractors on the date
                                this Agreement terminated) or seek to in any way
                                disrupt their business relationship with the
                                Company;
              (iii)             obtain by any means whatsoever the business of
                                any Person who at the time of the termination of
                                this Agreement and your employment hereunder,
                                was a customer of the Company, if to obtain such
                                business may result in a reduction of that
                                Person's business with the Company;
              (iv)              approach any Person who at the time of the
                                termination of this Agreement and your
                                employment hereunder was a customer of the
                                Company with the intention of soliciting or
                                enticing the business of that Person away from
                                the Company.
(c)      REASONABLENESS

         You agree that the obligations set out in Sections 16(a) and (b)
together with your other obligations under this Agreement are reasonably
necessary for the protection of the Company's proprietary and business interests
and you expressly agree that:

              (i)               the scope of each of the covenants set out in
                                Sections 16(a) and (b) above are in all
                                respects, and in particular, in respect of area,
                                time and subject matter, necessary and
                                reasonable because the Company is marketing its
                                products on a North American basis;

<PAGE>

Mr. Jerry Ormiston                                                  May 14, 2001
PERSONAL & CONFIDENTIAL                                                   Page 6

              (ii)              given your general knowledge and experience, the
                                obligations contained in this Agreement will not
                                preclude you from becoming gainfully employed
                                with other employers who are not Competitors
                                following termination of this Agreement and your
                                employment hereunder for any reason;
              (iii)             your agreement to Sections 16(a) and (b) is a
                                key incentive to DRAXIS formalizing the current
                                terms and conditions of your employment.
(d)      BREACH OF AGREEMENT

         You also recognize that any breach of the terms and conditions of this
Agreement by you will result in material damage to the Company, although it may
be difficult for DRAXIS to establish the monetary value of such damage. You
therefore agree that DRAXIS shall be entitled to injunctive relief, in addition
to any other remedies available to it, in a court of appropriate jurisdiction in
the event of any breach or threatened breach by you of any of the provisions of
this Agreement.

17.      TERMINATION OF EMPLOYMENT

(a)      TERMINATION BY DRAXIS FOR CAUSE

         DRAXIS may terminate this Agreement and your employment hereunder at
any time for cause without notice and without payment of any kind of
compensation either by way of anticipated earnings or damages of any kind.

(b)      TERMINATION BY DRAXIS WITHOUT CAUSE BUT WITH NOTICE

         DRAXIS may terminate this Agreement and your employment hereunder by
providing to you one year's actual notice of termination. At its sole
discretion, DRAXIS may provide to you a shorter period of notice of termination,
in which case, the payments referred to in Section 17(c) shall be applicable,
but such payments as may be required by Sections 17(c)(1) and (4) shall be
reduced by the notice provided, so that the total notice and compensation in
lieu of notice provided to you shall be equivalent to one year from the date you
are advised of the termination.

(c)      TERMINATION BY DRAXIS WITHOUT CAUSE AND WITHOUT NOTICE

         DRAXIS may terminate this Agreement and your employment hereunder, in
its sole discretion, without notice and without cause, effective immediately
upon the date you are advised of the termination.

         Except as outlined in Section 17(b), if your employment is terminated
without cause pursuant to this Section, DRAXIS shall:

               1)   Pay to you a severance allowance equivalent to one year of
                    your then current Base Salary; in a lump sum within two
                    weeks following the date of such termination.
               2)   Pay to you all outstanding vacation pay and any earned but
                    unpaid salary up to the date of such termination within two
                    weeks of the date of termination.
               3)   Reimburse you for any business expenses incurred by you up
                    to and including the date of such termination following
                    provision by you of applicable receipts.
               4)   Ensure it has complied with all statutory obligations
                    imposed by the EMPLOYMENT STANDARDS ACT.

         The payment referred to in paragraph 1, above, shall be guaranteed and
shall not be subject to set off or deduction as a result of your obtaining
alternate employment following such termination or otherwise mitigating any
damages arising from such termination. Further, the payment referred to in
paragraph 1,

<PAGE>

Mr. Jerry Ormiston                                                  May 14, 2001
PERSONAL & CONFIDENTIAL                                                   Page 7

above, is inclusive of all statutory payments, including statutory termination
and severance, which may be owed to you.

         The amounts paid to you pursuant to this paragraph shall be subject to
all required deductions.

         Upon termination of your employment in accordance with this Section
17(c), you shall return to DRAXIS all stock options, Employee Participation
Shares and other securities which have not vested or accrued during your
employment with DRAXIS.

(d)      TERMINATION PAYMENT FOLLOWING A CHANGE OF CONTROL

         (1) In accordance with paragraph 17(d)(2) below, if there is a Change
of Control (as hereinafter defined) you shall be entitled to the following:

               A.   the amounts of any unpaid salary earned up to and including
                    date of termination;

               B.   any unpaid vacation pay earned up to and including date of
                    termination;

               C.   a lump sum amount, equal to: (A) two times your then current
                    Base Salary in effect immediately prior to the date of the
                    Change of Control; and (B) two times the amount paid to you,
                    for the preceding calendar year immediately prior to the
                    date of the Change of Control, as a discretionary bonus;

               D.   any additional statutory obligations imposed by the
                    EMPLOYMENT STANDARDS ACT;

               E.   the right to retain and exercise all stock options, Employee
                    Participation Shares and other securities which have vested
                    or accrued during your employment with DRAXIS and which will
                    accrue or vest during the two year period immediately
                    following the Change of Control, as if you were employed by
                    the successor employer for that two year period.

         The payment referred to in paragraph 17(d)(1)(C), above, shall be
guaranteed and shall not be subject to set off or deduction as a result of your
obtaining alternate employment following termination or otherwise mitigating any
damages arising from termination. Further, notwithstanding 17(d)(1)(D) above,
the payment referred to in 17(d)(1)(C) above, is inclusive of all statutory
payments, including statutory termination and severance, which may be owed to
you following termination.

         The amounts paid to you pursuant to this paragraph shall be subject to
all required deductions.

         Upon termination of your employment in accordance with this Section
17(d), you shall return to DRAXIS all stock options, Employee Participation
Shares and other securities which have not vested or accrued during your
employment with DRAXIS, and will not vest or accrue during the two year period
following termination of this Agreement.

         (2) These payments and entitlements outlined in 17(d)(1) shall become
due and payable if, and only if:

               A.   there has been a Change of Control; and

               B.   within 12 months following any Change of Control:

                    (i)  your employment is terminated without cause by DRAXIS
                         or by any successor employer to DRAXIS, as the case may
                         be; or

                    (ii) by its conduct as described below, DRAXIS or any
                         successor employer to DRAXIS, as the case may be,
                         constructively terminates your employment by:

<PAGE>

Mr. Jerry Ormiston                                                  May 14, 2001
PERSONAL & CONFIDENTIAL                                                   Page 8

                         o    relocating the position and/or location of your
                              principal office more than 20 kilometers from the
                              location of your office on the date immediately
                              prior to the Change of Control, without your
                              consent; or

                         o    materially reducing your title, reporting
                              relationship, responsibilities or authority
                              without your consent; or

                         o    reducing the salary paid to you by the successor
                              employer or terminating or materially reducing the
                              value of your benefit programs, including, but not
                              limited to, life insurance benefits, accidental
                              death and dismemberment benefits, long term
                              disability benefits, extended health coverage,
                              dental benefit, which are referred to in Section 3
                              above;

               C.   and, you elect in writing to receive the payments outlined
                    in Section 17(d)(1).

         (3) For purposes of this Agreement "Change in Control" means a
transaction or series of transactions whereby directly or indirectly;

               A.   any Person or combination of Persons acting jointly and in
                    concert (other than you or a corporation controlled directly
                    or indirectly by you) acquires a sufficient number of
                    securities of DRAXIS to materially affect the control of
                    DRAXIS as defined below. For the purposes of this Agreement,
                    a Person or combination of Persons acting jointly and in
                    concert, holding shares or other securities in excess of the
                    number which, directly or following the conversion or
                    exercise thereof, would entitle the holders thereof to cast
                    20% or more of the votes attached to all shares of DRAXIS
                    which may be cast to elect directors of DRAXIS, shall be
                    deemed to affect materially the control of DRAXIS, in which
                    case the Change in Control shall be deemed to occur on the
                    date that is the later of the date that the security
                    representing one more than that required to cast 20% of the
                    votes attached to all shares of DRAXIS which may be cast to
                    elect directors of DRAXIS is acquired or the date on which
                    the Persons acting jointly and in concert agree to so act;

               B.   DRAXIS shall consolidate or merge with or into, amalgamate
                    with, or enter into a statutory arrangement or business
                    combination with, any other Person (other than a corporation
                    controlled directly or indirectly by you) and, in connection
                    therewith, all or part of the outstanding shares of DRAXIS
                    which have voting rights attached thereto shall be changed
                    in any way, reclassified or converted into, exchanged or
                    otherwise acquired for shares or other securities of DRAXIS
                    or any other Person or for cash or any other property and
                    control of DRAXIS is thereby materially affected, as defined
                    above, in which case the Change in Control shall be deemed
                    to occur on the date of closing of the consolidation,
                    merger, amalgamation, statutory arrangement or business
                    combination, as the case may be; or

               C.   DRAXIS shall sell or otherwise transfer, including by way of
                    the grant of a leasehold interest (or one or more Affiliates
                    of DRAXIS shall sell or otherwise transfer, including
                    without limitation by way of the grant of a leasehold
                    interest) property or assets aggregating more than 50% of
                    the consolidated assets (measured by either book value or
                    fair market value based on the most recent audited financial
                    statements) of DRAXIS and its Affiliates as at the end of
                    the most recently completed financial year to any

<PAGE>

Mr. Jerry Ormiston                                                  May 14, 2001
PERSONAL & CONFIDENTIAL                                                   Page 9

                    other Person or Persons, in which case the Change in Control
                    shall be deemed to occur on the date of transfer of the
                    assets representing one dollar more than 50% of the
                    consolidated assets;

         other than a transaction or series of transactions which involves a
         sale of securities or assets of DRAXIS with which you are involved as a
         purchaser in any manner, whether directly or indirectly, and whether by
         way of participation in a corporation or partnership that is a
         purchaser or by provision of debt, equity or purchase leaseback
         financing (but excluding where your sole involvement with such a
         purchase is the ownership of an equity interest of less than 5% of the
         acquirer where the acquirer is a public company) and you and persons
         acting jointly and in concert with you hold securities of the acquirer
         which, directly, or following the conversion or exercise thereof, would
         entitle the holders thereof to cast 5% or more of the votes attached to
         all shares or other interests of the acquirer which may be cast to
         elect directors or the management of the acquirer

         DRAXIS shall use its reasonable best efforts to require any successor
(whether direct or indirect) to all or substantially all of its shares and/or
assets to expressly agree in writing to assume and to perform this Agreement in
the same manner that DRAXIS would have been required to perform it if no such
succession had occurred. If DRAXIS fails to obtain any such successor's express
written agreement prior to the effective date of such succession, such failure
shall be deemed to be a termination of your employment by DRAXIS and such
termination shall be deemed to have occurred on the date immediately prior to
the Change of Control date. In such event, at the discretion of DRAXIS, Section
17(b) or (c) will not be applicable, and DRAXIS shall pay to you those amounts
outlined in Section 17(d)(1) above and Section 17(h) shall be applicable.

(e)      TERMINATION BY DRAXIS WITHOUT CAUSE UPON DISABILITY

         If, as a result of incapacity due to physical or mental illness, you
are unable to render services of substantially the kind and nature, and
substantially to the extent required to be rendered in accordance with this
Agreement, and if such incapacity is expected to continue for a period of at
least twelve consecutive months from the date such incapacity commenced
("Absence Date") this Agreement may be deemed to be frustrated. Your employment
hereunder shall cease to be effective on the tenth day after written notice of
cessation of employment ("Notice of Cessation") to you, provided that prior to
such cessation DRAXIS has been furnished with the written certification of a
qualified medical doctor designated by DRAXIS and you jointly which states that
you are and are expected to continue to be for at least twelve consecutive
months from the Absence Date, unable to render such services by reason of such
incapacity and the date upon which such incapacity commenced. If DRAXIS and you
are unable to agree on the designation of a qualified medical doctor to make
such determination, then each party shall designate a medical doctor who,
together, shall agree upon a third qualified medical doctor to make such
determination. The decision of the third medical doctor shall be binding on
DRAXIS and you. You consent to submit to such examination as may be required by
any such medical doctor or doctors.

         If your employment ceases pursuant to this Section, you shall be
entitled to receive a total amount equivalent to one year of your then current
Base Salary, commencing on the date upon which the Notice of Cessation is
delivered and payable in 24 regular payments equivalent to your regular
semi-monthly Base Salary on the regular DRAXIS pay days. If you are in receipt
of disability benefits payable pursuant to the benefit plans described above,
then each semi-monthly payment payable by DRAXIS shall be reduced by an amount
equivalent to the disability benefits payment received during that pay period.
Notwithstanding the cessation of your employment pursuant to this Section, you
shall be entitled to retain and exercise all stock options and Employee
Participation Shares granted to you during your employment with DRAXIS.

<PAGE>

Mr. Jerry Ormiston                                                  May 14, 2001
PERSONAL & CONFIDENTIAL                                                  Page 10

(f)      DEATH

         In the event that you should die during the term of this Agreement,
your employment shall automatically terminate. All salary, vacation pay and any
bonus payments earned to date of death but unpaid will be paid to your estate,
however, no other payment of any compensation either by way of anticipated
earnings or damages of any kind shall be paid and Section 17(h) shall be
applicable.

(g)      RESIGNATION AND RETIREMENT

         You shall provide DRAXIS with three months' notice, in writing, of your
resignation or your retirement from DRAXIS. Unless the Board of Directors of
DRAXIS otherwise determines, you shall return to DRAXIS all stock options and
Employee Participation Shares granted to you during your employment with DRAXIS
which become exercisable after the date you cease to be an employee of DRAXIS or
any of its Affiliates.

(h)      NO FURTHER NOTICE OR COMPENSATION

         Upon termination of your employment under this Agreement, you shall not
be entitled to any further grants of stock options or Employee Participation
Shares nor shall you be entitled to any further participation in any other
incentive plan of DRAXIS other than as specifically set forth in Sections
17(d)(E), 17(e) and this 17(h). For further clarity, in the event of termination
of this Agreement and your employment hereunder for any reason, the provisions
of Section 17(d)(E) and 17(e), and the terms provided in the event of
termination under the DRAXIS Stock Option Plan, and Employee Participation Share
Purchase Plan shall apply. For all purposes, "termination of your employment"
and "termination date" shall be the final day of employment with DRAXIS, and
shall not be deemed to include any period during which you may be entitled to
statutory notice, statutory termination pay or any contractual or common law
notice period and in particular, shall not be deemed to include the notice
period identified in Sections 17(c) (1) or 17(d) (1) (C).

18.      FAIR AND REASONABLE

         The parties confirm that the notice requirements and pay in lieu of
notice provisions set out above in Section 17 are fair and reasonable and that
no further notice or payments of any kind are owed or required. The parties
agree that upon any termination of this Agreement by DRAXIS or upon any
termination of this Agreement by you, that you shall have no action, cause of
action, claim or demand, either statutory or at common law, against DRAXIS or
any other Person as a consequence of such termination.

19.      RETURN OF PROPERTY

         In the event your employment with DRAXIS is terminated for any reason,
including resignation or retirement, you will immediately return all DRAXIS
property in your possession or under your control.

20.      PROVISIONS OPERATING FOLLOWING TERMINATION

         Notwithstanding any termination of your employment with or without
cause, Sections 16, 17, 18, 21 and any provision of this Agreement necessary to
give it efficacy shall continue in full force and effect following such
termination.

21.      ACKNOWLEDGEMENT

         You acknowledge that DRAXIS shall not, for any purpose, including in
the event of a subsequent termination, be required to recognize or take into
account any prior service with your previous employers.

<PAGE>

Mr. Jerry Ormiston                                                  May 14, 2001
PERSONAL & CONFIDENTIAL                                                  Page 11

22.      SEVERABILITY

         If any provision of this Agreement is determined to be invalid or
unenforceable, in whole or in part, such invalidity or unenforceability shall
attach only to such provision or part thereof and the remaining part of such
provision and all other provisions hereof shall continue in full force and
effect.

23.      NOTICE

         Any notice to be given in connection with this Agreement shall be given
in writing and may be given by personal delivery or by registered mail addressed
to the recipient as follows:

         To:      Jerry Ormiston
                  28 Eagle Road
                  Toronto, Ontario
                  M8Z 4H5

         To:      DRAXIS Health Inc.
                  6870 Goreway Drive, 2nd Floor
                  Mississauga, Ontario
                  L4V 1P1
                  Attention:  President and Chief Executive Officer

or such other address or individual as may be designated by notice by either
party to the other. Any notice given by personal delivery or by fax shall be
deemed to have been given on the day of actual delivery and, if made or given by
registered mail on the third day, other than a Saturday, Sunday or a statutory
holiday in Ontario, following the deposit thereof in the mail.

24.      GOVERNING LAW

         This Agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario.

25.      BENEFIT OF AGREEMENT

         This Agreement shall enure to the benefit of and be binding upon your
heirs, executors, administrators and legal personal representatives and the
successors and assigns of DRAXIS respectively.

26.      ENTIRE AGREEMENT

         This Agreement and the DRAXIS Code of Ethics constitute the entire
agreement between the parties with respect to your terms and conditions of
employment and cancel and supersede any prior understandings and agreements
between the parties to this Agreement. There are no representations, warranties,
forms, conditions, undertakings or collateral agreements expressed, implied or
statutory between the parties other than as expressly set forth in this
Agreement and the DRAXIS Code of Ethics. You waive any right to assert a claim
in tort based on any pre-contractual representations, negligent, or otherwise,
made by DRAXIS.

<PAGE>

Mr. Jerry Ormiston                                                  May 14, 2001
PERSONAL & CONFIDENTIAL                                                  Page 12

         To acknowledge that the terms of employment as expressed in this
Agreement are acceptable to you, please execute the enclosed copy of this letter
as indicated below and return it to me at your earliest opportunity.

                                       Yours truly,

                                       DRAXIS Health Inc.

                                       /s/ Martin Barkin

                            Per:
                                       Martin Barkin, M.D., F.R.C.S.C.
                                       President and Chief Executive Officer

         I accept the above-noted terms of employment with DRAXIS as Executive
Director Communications and Investor Relations, and in consideration of my
continued employment with DRAXIS and the payment of $5.00, the sufficiency and
receipt of which is acknowledged, I agree to comply with and be bound by the
terms of employment outlined in this Agreement.

         Dated at Mississauga, the 22nd day of May, 2001.

/s/ A. Joyce                              /s/  Jerry Ormiston
------------------------------------      -----------------------------------
Witness                                   Jerry Ormiston<PAGE>

                                                                    EXHIBIT 4.28

                        SHAREHOLDER RIGHTS PLAN AGREEMENT

                           DATED AS OF APRIL 23, 2002

                                     BETWEEN

                               DRAXIS HEALTH INC.

                                       AND

                      COMPUTERSHARE TRUST COMPANY OF CANADA

                                 AS RIGHTS AGENT

                              McCarthy Tetrault LLP

<PAGE>

                        SHAREHOLDER RIGHTS PLAN AGREEMENT

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                           <C>
ARTICLE 1 - INTERPRETATION........................................................................................1

   1.1   CERTAIN DEFINITIONS......................................................................................1
   1.2   CURRENCY................................................................................................12
   1.3   HEADINGS................................................................................................12
   1.4   CALCULATION OF NUMBER AND PERCENTAGE OF BENEFICIAL OWNERSHIP OF OUTSTANDING VOTING SHARES...............13
   1.5   ACTING JOINTLY OR IN CONCERT............................................................................13
   1.6   GENERALLY ACCEPTED ACCOUNTING PRINCIPLES................................................................13

ARTICLE 2 - THE RIGHTS...........................................................................................13

   2.1   ISSUE OF RIGHTS:  LEGEND ON COMMON SHARE CERTIFICATES...................................................13
   2.2   INITIAL EXERCISE PRICE; EXERCISE OF RIGHTS; DETACHMENT OF RIGHTS........................................14
   2.3   ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS.........................................................17
   2.4   DATE ON WHICH EXERCISE IS EFFECTIVE.....................................................................21
   2.5   EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS CERTIFICATES...................................21
   2.6   REGISTRATION, TRANSFER AND EXCHANGE.....................................................................22
   2.7   MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES...............................................22
   2.8   PERSONS DEEMED OWNERS OF RIGHTS.........................................................................23
   2.9   DELIVERY AND CANCELLATION OF CERTIFICATES...............................................................23
   2.10    AGREEMENT OF RIGHTS HOLDERS...........................................................................23
   2.11    RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER....................................................24

ARTICLE 3 - ADJUSTMENTS TO THE RIGHTS............................................................................25

   3.1   FLIP-IN EVENT...........................................................................................25

ARTICLE 4 - THE RIGHTS AGENT.....................................................................................26

   4.1   GENERAL.................................................................................................26
   4.2   MERGER, AMALGAMATION OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.................................27
   4.3   DUTIES OF RIGHTS AGENT..................................................................................27
   4.4   CHANGE OF RIGHTS AGENT..................................................................................29

ARTICLE 5 - MISCELLANEOUS........................................................................................29

   5.1   REDEMPTION AND WAIVER...................................................................................29
   5.2   EXPIRATION..............................................................................................31
   5.3   ISSUANCE OF NEW RIGHTS CERTIFICATES.....................................................................31
   5.4   SUPPLEMENTS AND AMENDMENTS..............................................................................31
   5.5   FRACTIONAL RIGHTS AND FRACTIONAL SHARES.................................................................32
   5.6   RIGHTS OF ACTION........................................................................................33
   5.7   REGULATORY APPROVALS....................................................................................33
   5.8   DECLARATION AS TO NON-CANADIAN OR NON-U.S. HOLDERS......................................................33
   5.9   NOTICES.................................................................................................34
   5.10    COSTS OF ENFORCEMENT..................................................................................35
   5.11    SUCCESSORS............................................................................................35
   5.12    BENEFITS OF THIS AGREEMENT............................................................................35
   5.13    GOVERNING LAW.........................................................................................35
   5.14    SEVERABILITY..........................................................................................35
   5.15    COMING INTO EFFECT....................................................................................35
   5.16    RECONFIRMATION........................................................................................36
   5.17    DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS..................................................36
   5.18    TIME OF THE ESSENCE...................................................................................36
   5.19    EXECUTION IN COUNTERPARTS.............................................................................36
</TABLE>

<PAGE>

                        SHAREHOLDER RIGHTS PLAN AGREEMENT

     MEMORANDUM OF AGREEMENT dated as of April 23, 2002 between Draxis Health
Inc. (the "Corporation"), a corporation incorporated under the CANADA BUSINESS
CORPORATIONS ACT and Computershare Trust Company of Canada, a trust company
incorporated under the laws of Canada (the "Rights Agent");

     WHEREAS the Shareholder Rights Plan Agreement made as of April 23, 1997
between the Corporation and the Rights Agent expires in accordance with its
terms at the close of business on the date hereof;

     AND WHEREAS the Board of Directors of the Corporation has determined that
it is in the best interests of the Corporation to adopt, with effect on the
Effective Date (as defined below), a shareholder rights plan to ensure, to the
extent possible, that all shareholders of the Corporation are treated fairly in
connection with any take-over bid for the Corporation;

     AND WHEREAS each Right entitles the holder thereof, after the Separation
Time, to purchase securities of the Corporation pursuant to the terms and
subject to the conditions set forth herein;

     AND WHEREAS the Corporation desires to appoint the Rights Agent to act on
behalf of the Corporation and the holders of Rights and the Rights Agent is
willing to so act, in connection with the issuance, transfer, exchange and
replacement of Rights Certificates (as hereinafter defined), the exercise of
Rights and other matters referred to herein;

     AND WHEREAS the Board of Directors proposes that this Agreement be in place
for a period of ten years, subject to the Agreement being reconfirmed by
shareholders of the Corporation every three years;

     NOW THEREFORE, in consideration of the premises and the respective
covenants and agreements set forth herein, and subject to such covenants and
agreements, the parties hereby agree as follows:

                           ARTICLE 1 - INTERPRETATION

1.1  CERTAIN DEFINITIONS

     For purposes of this Agreement, the following terms have the meanings
indicated:

(a)  "Acquiring Person" means any Person who is the Beneficial Owner of 20% or
     more of the outstanding Voting Shares provided, however, that the term
     "Acquiring Person" shall not include:

     (i)  the Corporation or any Subsidiary of the Corporation;

     (ii) any Person who becomes the Beneficial Owner of 20% or more of the
          outstanding Voting Shares as a result of one or any combination of (A)
          a Voting Share Reduction, (B) Permitted Bid Acquisitions, (C) an
          Exempt Acquisition or (D) Pro Rata Acquisitions; provided, however,
          that if a Person becomes the Beneficial Owner of 20% or more of the
          outstanding Voting Shares by reason of

<PAGE>

                                       2

          one or any combination of the operation of Paragraphs (A), (B), (C) or
          (D) above and such Person's Beneficial Ownership of Voting Shares
          thereafter increases by more than 1.0% of the number of Voting Shares
          outstanding (other than pursuant to one or any combination of a Voting
          Share Reduction, a Permitted Bid Acquisition, an Exempt Acquisition or
          a Pro Rata Acquisition), then as of the date such Person becomes the
          Beneficial Owner of such additional Voting Shares, such Person shall
          become an "Acquiring Person";

    (iii) for a period of ten days after the Disqualification Date (as defined
          below), any Person who becomes the Beneficial Owner of 20% or more of
          the outstanding Voting Shares as a result of such Person becoming
          disqualified from relying on Clause 1.1(f)(v) solely because such
          Person or the Beneficial Owner of such Voting Shares is making or has
          announced an intention to make a Take-over Bid, either alone or by
          acting jointly or in concert with any other Person. For the purposes
          of this definition, "Disqualification Date" means the first date of
          public announcement that any Person is making or has announced an
          intention to make a Take-over Bid;

     (iv) an underwriter or member of a banking or selling group that becomes
          the Beneficial Owner of 20% or more of the Voting Shares in connection
          with a distribution of securities of the Corporation; or

     (v)  a Person (a "Grandfathered Person") who is the Beneficial Owner of 20%
          or more of the outstanding Voting Shares of the Corporation determined
          as at the Record Time, provided, however, that this exception shall
          not be, and shall cease to be, applicable to a Grandfathered Person in
          the event that such Grandfathered Person shall, after the Record Time,
          become the Beneficial Owner of additional Voting Shares of the
          Corporation that increases its Beneficial Ownership of Voting Shares
          by more than 1% of the number of Voting Shares outstanding as at the
          Record Time (other than pursuant to one or any combination of a Voting
          Share Reduction, a Permitted Bid Acquisition, an Exempt Acquisition or
          a Pro Rata Acquisition);

(b)  "Affiliate": when used to indicate a relationship with a Person means a
     Person that directly, or indirectly through one or more intermediaries,
     controls, or is controlled by, or is under common control with, such
     specified Person;

(c)  "Agreement" means this shareholder rights plan agreement dated as of April
     23, 2002 between the Corporation and the Rights Agent, as the same may be
     further amended or supplemented from time to time; "hereof", "herein",
     "hereto" and similar expressions mean and refer to this Agreement as a
     whole and not to any particular part of this Agreement;

(d)  "annual cash dividend" means cash dividends paid in any fiscal year of the
     Corporation to the extent that such cash dividends do not exceed, in the
     aggregate, the greatest of:

     (i)  200 per cent of the aggregate amount of cash dividends declared
          payable by the Corporation (including any predecessor thereto) on its
          Common Shares in its immediately preceding fiscal year;

<PAGE>

                                       3

     (ii) 300 per cent of the arithmetic mean of the aggregate amounts of the
          annual cash dividends declared payable by the Corporation (including
          any predecessor thereto) on its Common Shares in its three immediately
          preceding fiscal years; and

    (iii) 100 per cent of the aggregate consolidated net income of the
          Corporation (including any predecessor thereto), before extraordinary
          items, for its immediately preceding fiscal year;

(e)  "Associate" means, when used to indicate a relationship with a specified
     Person, a spouse of that Person, any Person of the same or opposite sex
     with whom that Person is living in a conjugal relationship outside
     marriage, a child of that Person or a relative of that Person if that
     relative has the same residence as that Person;

(f)  A Person shall be deemed the "Beneficial Owner" of, and to have "Beneficial
     Ownership" of, and to "Beneficially Own",

     (i)  any securities as to which such Person or any of such Person's
          Affiliates or Associates is the owner at law or in equity;

     (ii) any securities as to which such Person or any of such Person's
          Affiliates or Associates has the right to become the owner at law or
          in equity (where such right is exercisable immediately or within a
          period of 60 days and whether or not on condition or the happening of
          any contingency or the making of any payment) pursuant to any
          agreement, arrangement, pledge or understanding, whether or not in
          writing (other than (x) customary agreements with and between
          underwriters and/or banking group members and/or selling group members
          with respect to a public offering or private placement of securities
          and (y) pledges of securities in the ordinary course of business), or
          upon the exercise of any conversion right, exchange right, share
          purchase right (other than the Rights), warrant or option; or

    (iii) any securities which are Beneficially Owned within the meaning of
          Clauses 1.1(f)(i) and (ii) by any other Person with whom such Person
          is acting jointly or in concert;

     provided, however, that a Person shall not be deemed the "Beneficial Owner"
     of, or to have "Beneficial Ownership" of, or to "Beneficially Own", any
     security:

     (iv) where such security has been agreed to be deposited or tendered
          pursuant to a Lock-up Agreement or is otherwise deposited to any
          Take-over Bid made by such Person, made by any of such Person's
          Affiliates or Associates or made by any other Person acting jointly or
          in concert with such Person until such deposited or tendered security
          has been taken up or paid for, whichever shall first occur;

     (v)  where such Person, any of such Person's Affiliates or Associates or
          any other Person acting jointly or in concert with such Person holds
          such security provided that:

<PAGE>

                                       4

          (A)  the ordinary business of any such Person (the "Investment
               Manager") includes the management of investment funds for others
               (which others, for greater certainty, may include or be limited
               to one or more employee benefit plans or pension plans) and such
               security is held by the Investment Manager in the ordinary course
               of such business in the performance of such Investment Manager's
               duties for the account of any other Person (a "Client") including
               a non-discretionary account held on behalf of a Client by a
               broker or dealer registered under applicable law;

          (B)  such Person (the "Trust Company") is licensed to carry on the
               business of a trust company under applicable laws and, as such,
               acts as trustee or administrator or in a similar capacity in
               relation to the estates of deceased or incompetent Persons (each
               an "Estate Account") or in relation to other accounts (each an
               "Other Account") and holds such security in the ordinary course
               of such duties for such Estate Account or for such Other
               Accounts;

          (C)  such Person is established by statute for purposes that include,
               and the ordinary business or activity of such Person (the
               "Statutory Body") includes, the management of investment funds
               for employee benefit plans, pension plans, insurance plans or
               various public bodies;

          (D)  such Person (the "Administrator") is the administrator or trustee
               of one or more pension funds or plans (a "Plan"), or is a Plan,
               registered or qualified under the laws of Canada or any Province
               thereof or the laws of the United States of America or any State
               thereof; or

          (E)  such Person (the "Crown Agent") is a Crown agent or agency;

          provided, in any of the above cases, that the Investment Manager, the
          Trust Company, the Statutory Body, the Administrator, the Plan or the
          Crown Agent, as the case may be, is not then making a Take-over Bid or
          has not then announced an intention to make a Take-over Bid alone or
          acting jointly or in concert with any other Person, other than an
          Offer to Acquire Voting Shares or other securities (x) pursuant to a
          distribution by the Corporation, (y) by means of a Permitted Bid or
          (z) by means of ordinary market transactions (including prearranged
          trades entered into in the ordinary course of business of such Person)
          executed through the facilities of a stock exchange or organized
          over-the-counter market;

     (vi) where such Person is (A) a Client of the same Investment Manager as
          another Person on whose account the Investment Manager holds such
          security, (B) an Estate Account or an Other Account of the same Trust
          Company as another Person on whose account the Trust Company holds
          such security or (C) a Plan with the same Administrator as another
          Plan on whose account the Administrator holds such security;

    (vii) where such Person is (A) a Client of an Investment Manager and such
          security is owned at law or in equity by the Investment Manager, (B)
          an Estate Account or an Other Account of a Trust Company and such
          security is owned at law or in

<PAGE>

                                       5

          equity by the Trust Company or (C) a Plan and such security is owned
          at law or in equity by the Administrator of the Plan; or

   (viii) where such Person is a registered holder of such security as a
          result of carrying on the business of, or acting as a nominee of, a
          securities depositary;

(g)  "Board of Directors" means the board of directors of the Corporation or any
     duly constituted and empowered committee thereof;

(h)  "Business Day" means any day other than a Saturday, Sunday or a day on
     which banking institutions in Toronto are authorized or obligated by law to
     close;

(i)  "CANADA BUSINESS CORPORATIONS ACT" means the CANADA BUSINESS CORPORATIONS
     ACT, R.S.C. 1985, C. 44, as amended, and the regulations made thereunder,
     and any comparable or successor laws or regulations thereto;

(j)  "Canadian Dollar Equivalent" of any amount which is expressed in United
     States Dollars means, on any date, the Canadian dollar equivalent of such
     amount determined by multiplying such amount by the U.S. - Canadian
     Exchange Rate in effect on such date;

(k) "Canadian - U.S. Exchange Rate" means, on any date, the inverse of the U.S.
     - Canadian Exchange Rate in effect on such date;

(l)  "close of business" on any given date means the time on such date (or, if
     such date is not a Business Day, the time on the next succeeding Business
     Day) at which the principal transfer office in Toronto of the transfer
     agent for the Common Shares of the Corporation (or, after the Separation
     Time, the principal transfer office in Toronto of the Rights Agent) is
     closed to the public;

(m)  "Common Shares" means the common shares in the capital of the Corporation;

(n)  "Competing Permitted Bid" means a Take-over Bid that:

     (i)  is made after a Permitted Bid has been made and prior to the expiry of
          the Permitted Bid;

     (ii) satisfies all components of the definition of a Permitted Bid other
          than the requirements set out in Clause 1.1(kk)(ii)(A) of the
          definition of a Permitted Bid; and

    (iii) contains, and the take-up and payment for securities tendered or
          deposited is subject to, an irrevocable and unqualified condition that
          no Voting Shares will be taken up or paid for pursuant to the
          Take-over Bid prior to the close of business on a date that is no
          earlier than the later of: (A) the 60th day after the date on which
          the earliest Permitted Bid which preceded the Competing Permitted Bid
          was made; and (B) 35 days after the date of the Take-over Bid
          constituting the Competing Permitted Bid;

(o)  "controlled": a Person is "controlled" by another Person or two or more
     other Persons acting jointly or in concert if:

<PAGE>

                                       6

     (i)  in the case of a body corporate, securities entitled to vote in the
          election of directors of such body corporate carrying more than 50% of
          the votes for the election of directors are held, directly or
          indirectly, by or for the benefit of the other Person or Persons and
          the votes carried by such securities are entitled, if exercised, to
          elect a majority of the board of directors of such body corporate; or

     (ii) in the case of a Person which is not a body corporate, more than 50%
          of the voting or equity interests of such entity are held, directly or
          indirectly, by or for the benefit of the other Person or Persons;

     and "controls", "controlling" and "under common control with" shall be
     interpreted accordingly;

(p)  "Co-Rights Agents" has the meaning ascribed thereto in Subsection 4.1(a);

(q)  "Disposition Date" has the meaning ascribed thereto in Subsection 5.1(h);

(r)  "Dividend Reinvestment Acquisition" means an acquisition of Voting Shares
     pursuant to a Dividend Reinvestment Plan;

(s)  "Dividend Reinvestment Plan" means a regular dividend reinvestment or other
     plan of the Corporation made available by the Corporation to holders of its
     securities or holders of securities of a Subsidiary where such plan permits
     the holder to direct that some or all of:

     (i)  dividends paid in respect of shares of any class of the Corporation or
          a Subsidiary;

     (ii) proceeds of redemption of shares of the Corporation or a Subsidiary;

    (iii) interest paid on evidences of indebtedness of the Corporation or a
          Subsidiary; or

     (iv) optional cash payments;

     be applied to the purchase from the Corporation of Voting Shares;

(t)  "Election to Exercise" has the meaning ascribed thereto in Clause
     2.2(d)(ii);

(u)  "Effective Date" means the date hereof;

(v)  "Exempt Acquisition" means a share acquisition in respect of which the
     Board of Directors has waived the application of Section 3.1 pursuant to
     the provisions of Subsection 5.1(a) or (h);

(w)  "Exercise Price" means, as of any date, the price at which a holder may
     purchase the securities issuable upon exercise of one whole Right which,
     until adjustment thereof in accordance with the terms hereof, shall be 5
     times the weighted average trading price of the Common Shares on The
     Toronto Stock Exchange on the Effective Date and the immediately following
     four consecutive trading days on The Toronto Stock Exchange;

<PAGE>

                                       7

(x)  "Expansion Factor" has the meaning ascribed thereto in Clause 2.3(a)(x);

(y)  "Expiration Time" means the close of business on that date which is the
     earlier of the date of termination of this Agreement pursuant to Section
     5.15 or, if this Agreement is confirmed pursuant to Section 5.15, the date
     of termination of this Agreement pursuant to Section 5.16 or, if this
     Agreement is reconfirmed pursuant to Section 5.16, the close of business on
     the tenth anniversary following the Effective Date;

(z)  "Flip-in Event" means a transaction or other event, including the
     occurrence of the Effective Date, in or pursuant to which any Person
     becomes an Acquiring Person;

(aa) "holder" has the meaning ascribed thereto in Section 2.8;

(bb) "Independent Shareholders" means holders of Voting Shares, other than:

     (i)  any Acquiring Person;

     (ii) any Offeror (other than any Person who, by virtue of Clause 1.1(f)(v),
          is not deemed to Beneficially Own the Voting Shares held by such
          Person);

    (iii) any Affiliate or Associate of any Acquiring Person or Offeror;

     (iv) any Person acting jointly or in concert with any Acquiring Person or
          Offeror; and

     (v)  any employee benefit plan, deferred profit sharing plan, stock
          participation plan and any other similar plan or trust for the benefit
          of employees of the Corporation or a Subsidiary unless the
          beneficiaries of the plan or trust direct the manner in which the
          Voting Shares are to be voted or withheld from voting or direct
          whether the Voting Shares are to be tendered to a Take-over Bid;

(cc) "Lock-up Agreement" means an agreement between an Offeror, any of its
     Affiliates or Associates or any other Person acting jointly or in concert
     with the Offeror and a Person (the "Locked-up Person") who is not an
     Affiliate or Associate of the Offeror or a Person acting jointly or in
     concert with the Offeror whereby the Locked-up Person agrees to deposit or
     tender the Voting Shares held by the Locked-up Person to the Offeror's
     Take-over Bid or to any Take-over Bid made by any of the Offeror's
     Affiliates or Associates or made by any other Person acting jointly or in
     concert with the Offeror (the "Subject Bid") where the agreement:

     (i)  permits the Locked-up Person to withdraw the Voting Shares from the
          agreement in order to tender or deposit the Voting Shares to another
          Take-over Bid or to support another transaction that in either case
          will provide greater value to the Locked-up Person than the Subject
          Bid; or

     (ii) (a) permits the Locked-up Person to withdraw the Voting Shares from
          the agreement in order to tender or deposit the Voting Shares to
          another Take-over Bid or to support another transaction that contains
          an offering price for each Voting Share that exceeds by as much as or
          more than a specified amount (the "Specified Amount") the offering
          price for each Voting Share contained in or proposed to be contained
          in the Subject Bid; and (b) does not by its terms provide

<PAGE>

                                       8

          for a Specified Amount that is greater than 7% of the offering price
          contained in or proposed to be contained in the Subject Bid;

     and, for greater clarity, an agreement may contain a right of first refusal
     or require a period of delay to give an offeror an opportunity to match a
     higher price in another Take-over Bid or other similar limitation on a
     Locked-up Person as long as the Locked-up Person can accept another bid or
     tender to another transaction;

(dd) "Market Price" per share of any securities on any date of determination
     means the average of the daily closing prices per share of the securities
     (determined as described below) on each of the 20 consecutive Trading Days
     through and including the Trading Day immediately preceding such date;
     provided, however, that if an event of a type analogous to any of the
     events described in Section 2.3 hereof shall have caused the closing prices
     used to determine the Market Price on any Trading Days not to be fully
     comparable with the closing price on the date of determination or, if the
     date of determination is not a Trading Day, on the immediately preceding
     Trading Day, each closing price so used shall be appropriately adjusted in
     a manner analogous to the applicable adjustment provided for in Section 2.3
     hereof in order to make it fully comparable with the closing price on the
     date of determination or, if the date of determination is not a Trading
     Day, on the immediately preceding Trading Day. The closing price per share
     of any securities on any date shall be:

     (i)  the closing board lot sale price or, in case no such sale takes place
          on such date, the average of the closing bid and asked prices for each
          of the securities as reported by the principal Canadian stock exchange
          (as determined by volume of trading) on which the securities are
          listed or admitted to trading;

     (ii) if for any reason none of such prices is available on such day or the
          securities are not listed or admitted to trading on a Canadian stock
          exchange, the last sale price or, in case no such sale takes place on
          the date, the average of the closing bid and asked prices for each of
          the securities as reported by the principal national United States
          securities exchange (as determined by volume of trading) on which the
          securities are listed or admitted to trading;

    (iii) if for any reason none of such prices is available on such day or the
          securities are not listed or admitted to trading on a Canadian stock
          exchange or a national United States securities exchange, the last
          sale price or, in case no sale takes place on such date, the average
          of the high bid and low asked prices for each of the securities in the
          over-the-counter market, as quoted by any recognized reporting system
          then in use; or

     (iv) if for any reason none of such prices is available on such day or the
          securities are not listed or admitted to trading on a Canadian stock
          exchange or a national United States securities exchange or quoted by
          any reporting system, the average of the closing bid and asked prices
          as furnished by a recognized professional market maker making a market
          in the securities;

     provided, however, that if for any reason none of such prices is available
     on such day, the closing price per share of the securities on such date
     means the fair value per share of the securities on such date as determined
     by an internationally recognized investment dealer

<PAGE>

                                       9

     or investment banker; provided further that if an event of a type analogous
     to any of the events described in Section 2.3 hereof has caused any price
     used to determine the Market Price on any Trading Day not to be fully
     comparable with the price as so determined on the Trading Day immediately
     preceding such date of determination, each price so used shall be
     appropriately adjusted in a manner analogous to the applicable adjustment
     provided for in Section 2.3 hereof in order to make it fully comparable
     with the price on the Trading Day immediately preceding such date of
     determination. The Market Price shall be expressed in Canadian dollars and,
     if initially determined in respect of any day forming part of the 20
     consecutive Trading Day period in question in United States dollars, such
     amount shall be translated into Canadian dollars on that date at the
     Canadian Dollar Equivalent thereof;

(ee) "1933 SECURITIES ACT" means the SECURITIES ACT OF 1933 of the United
     States, as amended, and the rules and regulations thereunder, as now in
     effect or as the same may from time to time be amended, re-enacted or
     replaced;

(ff) "1934 EXCHANGE ACT" means the SECURITIES EXCHANGE ACT OF 1934 of the United
     States, as amended, and the rules and regulations thereunder as now in
     effect or as the same may from time to time be amended, re-enacted or
     replaced;

(gg) "Nominee" has the meaning ascribed thereto in Subsection 2.2(c);

(hh) "Offer to Acquire" includes:

     (i)  an offer to purchase or a solicitation of an offer to sell Voting
          Shares; and

     (ii) an acceptance of an offer to sell Voting Shares, whether or not such
          offer to sell has been solicited;

     or any combination thereof, and the Person accepting an offer to sell shall
     be deemed to be making an Offer to Acquire to the Person that made the
     offer to sell;

(ii) "Offeror" means a Person who has announced, and has not withdrawn, an
     intention to make or who has made, and has not withdrawn, a Take-over Bid,
     other than a Person who has completed a Permitted Bid, a Competing
     Permitted Bid or an Exempt Acquisition;

(jj) "Offeror's Securities" means Voting Shares Beneficially Owned by an Offeror
     on the date of the Offer to Acquire;

(kk) "Permitted Bid" means a Take-over Bid made by an Offeror by way of
     take-over bid circular which also complies with the following additional
     provisions:

     (i)  the Take-over Bid is made to all holders of Voting Shares as
          registered on the books of the Corporation, other than the Offeror;

     (ii) the Take-over Bid contains, and the take-up and payment for securities
          tendered or deposited is subject to, an irrevocable and unqualified
          provision that no Voting Shares will be taken up or paid for pursuant
          to the Take-over Bid:

<PAGE>

                                       10

          (A)  prior to the close of business on the date which is not less than
               60 days following the date of the Take-over Bid; and

          (B)  only if at such date more than 50% of the Voting Shares held by
               Independent Shareholders shall have been deposited or tendered
               pursuant to the Take-over Bid and not withdrawn;

    (iii) unless the Take-over Bid is withdrawn, the Take-over Bid contains an
          irrevocable and unqualified provision that Voting Shares may be
          deposited pursuant to such Take-over Bid at any time during the period
          of time described in Clause 1.1(kk)(ii)(A) and that any Voting Shares
          deposited pursuant to the Take-over Bid may be withdrawn until taken
          up and paid for; and

     (iv) unless the Take-over Bid is withdrawn, the Take-over Bid contains an
          irrevocable and unqualified provision that in the event that the
          deposit condition set forth in Clause 1.1(kk)(ii)(B) is satisfied the
          Offeror will make a public announcement of that fact and the Take-over
          Bid will remain open for deposits and tenders of Voting Shares for not
          less than ten Business Days from the date of such public announcement;

(ll) "Permitted Bid Acquisition" means an acquisition of Voting Shares made
     pursuant to a Permitted Bid or a Competing Permitted Bid;

(mm) "Person" includes any individual, firm, partnership, association, trust,
     trustee, executor, administrator, legal personal representative, body
     corporate, corporation, unincorporated organization, syndicate,
     governmental entity or other entity;

(nn) "Pro Rata Acquisition" means an acquisition by a Person of Voting Shares
     pursuant to:

     (i)  a Dividend Reinvestment Acquisition;

     (ii) a stock dividend, stock split or other event in respect of securities
          of the Corporation of one or more particular classes or series
          pursuant to which such Person becomes the Beneficial Owner of Voting
          Shares on the same pro rata basis as all other holders of securities
          of the particular class, classes or series;

    (iii) the acquisition or the exercise by the Person of only those rights to
          purchase Voting Shares distributed to that Person in the course of a
          distribution to all holders of securities of the Corporation of one or
          more particular classes or series pursuant to a rights offering or
          pursuant to a prospectus, provided that the Person does not thereby
          acquire a greater percentage of such Voting Shares, or securities
          convertible into or exchangeable for Voting Shares, so offered than
          the Person's percentage of Voting Shares Beneficially Owned
          immediately prior to such acquisition; or

     (iv) a distribution of Voting Shares, or securities convertible into or
          exchangeable for Voting Shares (and the conversion or exchange of such
          convertible or exchangeable securities), made pursuant to a prospectus
          or by way of a private placement, provided that the Person does not
          thereby acquire a greater percentage of such Voting Shares, or
          securities convertible into or exchangeable for Voting

<PAGE>

                                       11

          Shares, so offered than the Person's percentage of Voting Shares
          Beneficially Owned immediately prior to such acquisition;

(oo) "Record Time" means the close of business on the date hereof;

(pp) "Right" means a right to purchase a Common Share of the Corporation upon
     the terms and subject to the conditions set forth in this Agreement;

(qq) "Rights Certificate" means the certificates representing the Rights after
     the Separation Time, which shall be substantially in the form attached
     hereto as Attachment 1;

(rr) "Rights Register" has the meaning ascribed thereto in Subsection 2.6(a);

(ss) "SECURITIES ACT (Ontario)" means the SECURITIES ACT, R.S.O. 1990, c.S.5, as
     amended, and the regulations thereunder, and any comparable or successor
     laws or regulations thereto;

(tt) "Separation Time" means the close of business on the tenth Trading Day
     after the earlier of:

     (i)  the Stock Acquisition Date;

     (ii) the date of the commencement of or first public announcement of the
          intent of any Person (other than the Corporation or any Subsidiary of
          the Corporation) to commence a Take-over Bid (other than a Permitted
          Bid or a Competing Permitted Bid), or such later time as may be
          determined by the Board of Directors, provided that, if any Take-over
          Bid referred to in this Clause (ii) expires, is cancelled, terminated
          or otherwise withdrawn prior to the Separation Time, such Take-over
          Bid shall be deemed, for the purposes of this definition, never to
          have been made; and

    (iii) the date on which a Permitted Bid or Competing Permitted Bid ceases
          to be such;

(uu) "Stock Acquisition Date" means the first date of public announcement
     (which, for purposes of this definition, shall include, without limitation,
     a report filed pursuant to section 101 of the SECURITIES ACT (Ontario) or
     Section 13(d) of the 1934 EXCHANGE ACT by the Corporation or an Acquiring
     Person that an Acquiring Person has become such;

(vv) "Subsidiary": a corporation is a Subsidiary of another corporation if:

     (i)  it is controlled by:

          (A)  that other; or

          (B)  that other and one or more corporations, each of which is
               controlled by that other; or

          (C)  two or more corporations, each of which is controlled by that
               other; or

     (ii) it is a Subsidiary of a corporation that is that other's Subsidiary;

<PAGE>

                                       12

(ww) "Take-over Bid" means an Offer to Acquire Voting Shares, or securities
     convertible into Voting Shares if, assuming that the Voting Shares or
     convertible securities subject to the Offer to Acquire are acquired and are
     Beneficially Owned at the date of such Offer to Acquire by the Person
     making such Offer to Acquire, such Voting Shares (including Voting Shares
     that may be acquired upon conversion of securities convertible into Voting
     Shares) together with the Offeror's Securities, constitute in the aggregate
     20% or more of the outstanding Voting Shares at the date of the Offer to
     Acquire;

(xx) "Trading Day", when used with respect to any securities, means a day on
     which the principal Canadian stock exchange on which such securities are
     listed or admitted to trading is open for the transaction of business or,
     if the securities are not listed or admitted to trading on any Canadian
     stock exchange, a Business Day;

(yy) "U.S.-Canadian Exchange Rate" means, on any date:

     (i)  if on such date the Bank of Canada sets an average noon spot rate of
          exchange for the conversion of one United States dollar into Canadian
          dollars, such rate; and

     (ii) in any other case, the rate for such date for the conversion of one
          United States dollar into Canadian dollars calculated in such manner
          as may be determined by the Board of Directors from time to time
          acting in good faith;

(zz) "U.S. Dollar Equivalent" of any amount which is expressed in Canadian
     dollars means, on any date, the United States dollar equivalent of the
     amount determined by multiplying the amount by the Canadian-U.S. Exchange
     Rate in effect on such date;

(aaa) "Voting Share Reduction" means an acquisition or redemption by the
     Corporation of Voting Shares which, by reducing the number of Voting Shares
     outstanding, increases the proportionate number of Voting Shares
     Beneficially Owned by any Person to 20% or more of the Voting Shares then
     outstanding; and

(bbb) "Voting Shares" means the Common Shares of the Corporation and any other
     shares in the capital of the Corporation entitled to vote generally in the
     election of all directors.

1.2  CURRENCY

     All sums of money which are referred to in this Agreement are expressed in
lawful money of Canada, unless otherwise specified.

1.3  HEADINGS

     The division of this Agreement into Articles, Sections, Subsections,
Clauses, Paragraphs, Subparagraphs or other portions hereof and the insertion of
headings, subheadings and a table of contents are for convenience of reference
only and shall not affect the construction or interpretation of this Agreement.

<PAGE>

                                       13

1.4 CALCULATION OF NUMBER AND PERCENTAGE OF BENEFICIAL OWNERSHIP OF OUTSTANDING
    VOTING SHARES

     For purposes of this Agreement, the percentage of Voting Shares
Beneficially Owned by any Person, shall be and be deemed to be the product
(expressed as a percentage) determined by the formula:

     100 x A/B

where:

     A = the number of votes for the election of all directors generally
         attaching to the Voting Shares Beneficially Owned by such Person; and

     B = the number of votes for the election of all directors generally
         attaching to all outstanding Voting Shares.

Where any Person is deemed to Beneficially Own unissued Voting Shares, such
Voting Shares shall be deemed to be outstanding for the purpose of calculating
the percentage of Voting Shares Beneficially Owned by such Person.

1.5  ACTING JOINTLY OR IN CONCERT

     For the purposes hereof, a Person is acting jointly or in concert with
every Person who, as a result of any agreement, commitment or understanding,
whether formal or informal, with the first Person or any Affiliate thereof,
acquires or offers to acquire Voting Shares (other than customary agreements
with and between underwriters and/or banking group members and/or selling group
members with respect to a public offering or private placement of securities or
pledges of securities in the ordinary course of business).

1.6  GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

     Wherever in this Agreement reference is made to generally accepted
accounting principles, such reference shall be deemed to be the recommendations
at the relevant time of the Canadian Institute of Chartered Accountants, or any
successor institute, applicable on a consolidated basis (unless otherwise
specifically provided herein to be applicable on an unconsolidated basis) as at
the date on which a calculation is made or required to be made in accordance
with generally accepted accounting principles. Where the character or amount of
any asset or liability or item of revenue or expense is required to be
determined, or any consolidation or other accounting computation is required to
be made for the purpose of this Agreement or any document, such determination or
calculation shall, to the extent applicable and except as otherwise specified
herein or as otherwise agreed in writing by the parties, be made in accordance
with generally accepted accounting principles applied on a consistent basis.

                             ARTICLE 2 - THE RIGHTS

2.1 ISSUE OF RIGHTS:  LEGEND ON COMMON SHARE CERTIFICATES

(a)  One Right shall be issued on the Effective Date in respect of each Common
     Share of the Corporation outstanding at the Record Time and one Right shall
     be issued in respect of

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                                       14

     each Common Share of the Corporation issued after the Record Time and prior
     to the earlier of the Separation Time and the Expiration Time.

(b)  Certificates representing Common Shares which are issued at and after the
     Record Time but prior to the earlier of the Separation Time and the
     Expiration Time, shall also evidence one Right for each Common Share
     represented thereby and shall have impressed on, printed on, written on or
     otherwise affixed to them the following legend:

          Until the Separation Time (defined in the Agreement below), this
          certificate also evidences the holder's rights described in a
          Shareholder Rights Plan Agreement dated as of April 23, 2002 (the
          "Agreement") between Draxis Health Inc. and Computershare Trust
          Company of Canada, as amended, the terms of which are incorporated
          herein and a copy of which is available on demand without charge.
          Under certain circumstances set out in the Agreement, the rights may
          expire, may become null and void or may be evidenced by separate
          certificates and no longer evidenced by this certificate.

2.2 INITIAL EXERCISE PRICE; EXERCISE OF RIGHTS; DETACHMENT OF RIGHTS

(a)  Subject to adjustment as herein set forth, each Right will entitle the
     holder thereof, from and after the Separation Time and prior to the
     Expiration Time, to purchase one Common Share for the Exercise Price (and
     the Exercise Price and number of Common Shares are subject to adjustment as
     set forth below). Notwithstanding any other provision of this Agreement,
     any Rights held by the Corporation or any of its Subsidiaries shall be
     void.

(b)  Until the Separation Time:

     (i)  the Rights shall not be exercisable and no Right may be exercised; and

     (ii) each Right will be evidenced by the certificate for the associated
          Common Share of the Corporation registered in the name of the holder
          thereof (which certificate shall also be deemed to represent a Rights
          Certificate) and will be transferable only together with, and will be
          transferred by a transfer of, such associated Common Share of the
          Corporation.

(c)  From and after the Separation Time and prior to the Expiration Time:

     (i)  the Rights shall be exercisable; and

     (ii) the registration and transfer of Rights shall be separate from and
          independent of Common Shares of the Corporation.

     Promptly following the Separation Time, the Corporation will prepare and
     the Rights Agent will mail to each holder of record of Common Shares as of
     the Separation Time (other than an Acquiring Person and, in respect of any
     Rights Beneficially Owned by such Acquiring Person which are not held of
     record by such Acquiring Person, the holder of record of such Rights (a
     "Nominee")) at such holder's address as shown by the records of the
     Corporation (the Corporation hereby agreeing to furnish copies of such
     records to the Rights Agent for this purpose):

<PAGE>

                                       15

     (x)  a Rights Certificate appropriately completed, representing the number
          of Rights held by such holder at the Separation Time and having such
          marks of identification or designation and such legends, summaries or
          endorsements printed thereon as the Corporation may deem appropriate
          and as are not inconsistent with the provisions of this Agreement, or
          as may be required to comply with any law, rule or regulation or with
          any rule or regulation of any self-regulatory organization, stock
          exchange or quotation system on which the Rights may from time to time
          be listed or traded, or to conform to usage; and

     (y)  a disclosure statement prepared by the Corporation describing the
          Rights,

     provided that a Nominee shall be sent the materials provided for in (x) and
     (y) in respect of all Common Shares of the Corporation held of record by it
     which are not Beneficially Owned by an Acquiring Person.

(d)  Rights may be exercised, in whole or in part, on any Business Day after the
     Separation Time and prior to the Expiration Time by submitting to the
     Rights Agent:

     (i)  the Rights Certificate evidencing such Rights;

     (ii) an election to exercise such Rights (an "Election to Exercise")
          substantially in the form attached to the Rights Certificate
          appropriately completed and executed by the holder or his executors or
          administrators or other personal representatives or his or their legal
          attorney duly appointed by an instrument in writing in form and
          executed in a manner satisfactory to the Rights Agent; and

    (iii) payment by certified cheque, banker's draft or money order payable to
          the order of the Corporation, of a sum equal to the Exercise Price
          multiplied by the number of Rights being exercised and a sum
          sufficient to cover any transfer tax or governmental charge which may
          be payable in respect of any transfer involved in the transfer or
          delivery of Rights Certificates or the issuance or delivery of
          certificates for Common Shares in a name other than that of the holder
          of the Rights being exercised.

(e)  Upon receipt of a Rights Certificate, together with a completed Election to
     Exercise executed in accordance with Clause 2.2(d)(ii), which does not
     indicate that such Right is null and void as provided by Subsection 3.1(b),
     and payment as set forth in Clause 2.2(d)(iii), the Rights Agent (unless
     otherwise instructed by the Corporation in the event that the Corporation
     is of the opinion that the Rights cannot be exercised in accordance with
     this Agreement) will thereupon promptly:

     (i)  requisition from the transfer agent certificates representing the
          number of such Common Shares to be purchased (the Corporation hereby
          irrevocably authorizing its transfer agent to comply with all such
          requisitions);

     (ii) when appropriate, requisition from the Corporation the amount of cash
          to be paid in lieu of issuing fractional Common Shares in accordance
          with Subsection 5.5(b);

<PAGE>

                                       16

    (iii) after receipt of the certificates referred to in Clause 2.2(e)(i),
          deliver the same to or upon the order of the registered holder of such
          Rights Certificates, registered in such name or names as may be
          designated by such holder;

     (iv) when appropriate, after receipt, deliver the cash referred to in
          Clause 2.2(e)(ii) to or to the order of the registered holder of such
          Rights Certificate; and

     (v)  tender to the Corporation all payments received on exercise of Rights.

(f)  In case the holder of any Rights shall exercise less than all the Rights
     evidenced by such holder's Rights Certificate, a new Rights Certificate
     evidencing the Rights remaining unexercised (subject to the provisions of
     Subsection 5.5(a)) will be issued by the Rights Agent to such holder or to
     such holder's duly authorized assigns.

(g)  The Corporation covenants and agrees that it will:

     (i)  take all such action as may be necessary and within its power to
          ensure that all Common Shares delivered upon exercise of Rights shall,
          at the time of delivery of the certificates for such Common Shares
          (subject to payment of the Exercise Price), be duly and validly
          authorized, executed, issued and delivered as fully paid and
          non-assessable;

     (ii) take all such action as may be necessary and within its power to
          comply with the requirements of the CANADA BUSINESS CORPORATIONS ACT,
          the SECURITIES ACT (Ontario), the securities laws or comparable
          legislation of each of the provinces of Canada, the 1933 SECURITIES
          ACT and the 1934 EXCHANGE ACT and the rules and regulations thereunder
          and any other applicable law, rule or regulation, in connection with
          the issuance and delivery of the Rights Certificates and the issuance
          of any Common Shares upon exercise of Rights;

    (iii) use reasonable efforts to cause all Common Shares issued upon
          exercise of Rights to be listed on the principal stock exchanges on
          which such Common Shares were traded immediately prior to the Stock
          Acquisition Date;

     (iv) cause to be reserved and kept available out of the authorized and
          unissued Common Shares, the number of Common Shares that, as provided
          in this Agreement, will from time to time be sufficient to permit the
          exercise in full of all outstanding Rights;

     (v)  pay when due and payable, if applicable, any and all federal,
          provincial and municipal transfer taxes and charges (not including any
          income or capital taxes of the holder or exercising holder or any
          liability of the Corporation to withhold tax) which may be payable in
          respect of the original issuance or delivery of the Rights
          Certificates, or certificates for Common Shares to be issued upon
          exercise of any Rights, provided that the Corporation shall not be
          required to pay any transfer tax or charge which may be payable in
          respect of any transfer involved in the transfer or delivery of Rights
          Certificates or the issuance or delivery of certificates for Common
          Shares in a name other than that of the holder of the Rights being
          transferred or exercised; and

<PAGE>

                                       17

     (vi) after the Separation Time, except as permitted by Section 5.1, not
          take (or permit any Subsidiary to take) any action if at the time such
          action is taken it is reasonably foreseeable that such action will
          diminish substantially or otherwise eliminate the benefits intended to
          be afforded by the Rights.

2.3  ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS

     The Exercise Price, the number and kind of securities subject to purchase
upon exercise of each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 2.3.

(a)  In the event the Corporation shall at any time after the date of this
     Agreement:

     (i)  declare or pay a dividend on Common Shares payable in Common Shares
          (or other securities exchangeable for or convertible into or giving a
          right to acquire Common Shares or other securities of the Corporation)
          other than pursuant to any optional stock dividend program;

     (ii) subdivide or change the then outstanding Common Shares into a greater
          number of Common Shares;

    (iii) consolidate or change the then outstanding Common Shares into a
          smaller number of Common Shares; or

     (iv) issue any Common Shares (or other securities exchangeable for or
          convertible into or giving a right to acquire Common Shares or other
          securities of the Corporation) in respect of, in lieu of or in
          exchange for existing Common Shares except as otherwise provided in
          this Section 2.3,

     the Exercise Price and the number of Rights outstanding, or, if the payment
     or effective date therefor shall occur after the Separation Time, the
     securities purchasable upon exercise of Rights shall be adjusted as of the
     payment or effective date in the manner set forth below.

     If the Exercise Price and number of Rights outstanding are to be adjusted:

     (x)  the Exercise Price in effect after such adjustment will be equal to
          the Exercise Price in effect immediately prior to such adjustment
          divided by the number of Common Shares (or other capital stock) (the
          "Expansion Factor") that a holder of one Common Share immediately
          prior to such dividend, subdivision, change, consolidation or issuance
          would hold thereafter as a result thereof; and

     (y)  each Right held prior to such adjustment will become that number of
          Rights equal to the Expansion Factor,

     and the adjusted number of Rights will be deemed to be distributed among
     the Common Shares with respect to which the original Rights were associated
     (if they remain outstanding) and the shares issued in respect of such
     dividend, subdivision, change, consolidation or issuance, so that each such
     Common Share (or other capital stock) will have exactly one Right
     associated with it.

<PAGE>

                                       18

     For greater certainty, if the securities purchasable upon exercise of
     Rights are to be adjusted, the securities purchasable upon exercise of each
     Right after such adjustment will be the securities that a holder of the
     securities purchasable upon exercise of one Right immediately prior to such
     dividend, subdivision, change, consolidation or issuance would hold
     thereafter as a result of such dividend, subdivision, change, consolidation
     or issuance.

     If, after the Record Time and prior to the Expiration Time, the Corporation
     shall issue any shares of capital stock other than Common Shares in a
     transaction of a type described in Clause 2.3(a)(i) or (iv), shares of such
     capital stock shall be treated herein as nearly equivalent to Common Shares
     as may be practicable and appropriate under the circumstances and the
     Corporation and the Rights Agent agree to amend this Agreement in order to
     effect such treatment. If an event occurs which would require an adjustment
     under both this Section 2.3 and Section 3.1(a) hereof, the adjustment
     provided for in this Section 2.3 shall be in addition to and shall be made
     prior to any adjustment required pursuant to Section 3.1(a) hereof.
     Adjustments pursuant to subsection 2.3(a) shall be made successively,
     whenever an event referred to in Section 2.3(a) occurs.

     In the event the Corporation shall at any time after the Record Time and
     prior to the Separation Time issue any Common Shares otherwise than in a
     transaction referred to in this Subsection 2.3(a), each such Common Share
     so issued shall automatically have one new Right associated with it, which
     Right shall be evidenced by the certificate representing such associated
     Common Share.

(b)  In the event the Corporation shall at any time after the Record Time and
     prior to the Separation Time fix a record date for the issuance of rights,
     options or warrants to all holders of Common Shares entitling them (for a
     period expiring within 45 calendar days after such record date) to
     subscribe for or purchase Common Shares (or securities convertible into or
     exchangeable for or carrying a right to purchase Common Shares) at a price
     per Common Share (or, if a security convertible into or exchangeable for or
     carrying a right to purchase or subscribe for Common Shares, having a
     conversion, exchange or exercise price, including the price required to be
     paid to purchase such convertible or exchangeable security or right per
     share) less than the Market Price per Common Share on such record date, the
     Exercise Price to be in effect after such record date shall be determined
     by multiplying the Exercise Price in effect immediately prior to such
     record date by a fraction:

     (i)  the numerator of which shall be the number of Common Shares
          outstanding on such record date, plus the number of Common Shares that
          the aggregate offering price of the total number of Common Shares so
          to be offered (and/or the aggregate initial conversion, exchange or
          exercise price of the convertible or exchangeable securities or rights
          so to be offered, including the price required to be paid to purchase
          such convertible or exchangeable securities or rights) would purchase
          at such Market Price per Common Share; and

     (ii) the denominator of which shall be the number of Common Shares
          outstanding on such record date, plus the number of additional Common
          Shares to be offered for subscription or purchase (or into which the
          convertible or exchangeable securities or rights so to be offered are
          initially convertible, exchangeable or exercisable).

<PAGE>

                                       19

     In case such subscription price may be paid by delivery of consideration,
     part or all of which may be in a form other than cash, the value of such
     consideration shall be as determined in good faith by the Board of
     Directors, whose determination shall be described in a statement filed with
     the Rights Agent and shall be binding on the Rights Agent and the holders
     of Rights. Such adjustment shall be made successively whenever such a
     record date is fixed, and in the event that such rights, options or
     warrants are not so issued, or if issued, are not exercised prior to the
     expiration thereof, the Exercise Price shall be readjusted to the Exercise
     Price which would then be in effect if such record date had not been fixed,
     or to the Exercise Price which would be in effect based upon the number of
     Common Shares (or securities convertible into, or exchangeable or
     exercisable for Common Shares) actually issued upon the exercise of such
     rights, options or warrants, as the case may be.

     For purposes of this Agreement, the granting of the right to purchase
     Common Shares (whether from treasury or otherwise) pursuant to any Dividend
     Reinvestment Plan or any employee benefit, stock option or similar plans
     shall be deemed not to constitute an issue of rights, options or warrants
     by the Corporation; provided, however, that, in all such cases, the right
     to purchase Common Shares is at a price per share of not less than 95 per
     cent of the current market price per share (determined as provided in such
     plans) of the Common Shares.

(c)  In the event the Corporation shall at any time after the Record Time and
     prior to the Separation Time fix a record date for the making of a
     distribution to all holders of Common Shares (including any such
     distribution made in connection with a merger or amalgamation) of evidences
     of indebtedness, cash (other than an annual cash dividend or a dividend
     referred to in Section 2.3(a)(i), but including any dividend payable in
     other securities of the Corporation other than Common Shares), assets or
     rights, options or warrants (excluding those referred to in Subsection
     2.3(b)), the Exercise Price to be in effect after such record date shall be
     determined by multiplying the Exercise Price in effect immediately prior to
     such record date by a fraction:

     (i)  the numerator of which shall be the Market Price per Common Share on
          such record date, less the fair market value (as determined in good
          faith by the Board of Directors, whose determination shall be
          described in a statement filed with the Rights Agent and shall be
          binding on the Rights Agent and the holders of Rights), on a per share
          basis, of the portion of the cash, assets, evidences of indebtedness,
          rights, options or warrants so to be distributed; and

     (ii) the denominator of which shall be such Market Price per Common Share.

     Such adjustments shall be made successively whenever such a record date is
     fixed, and in the event that such a distribution is not so made, the
     Exercise Price shall be adjusted to be the Exercise Price which would have
     been in effect if such record date had not been fixed.

(d)  Notwithstanding anything herein to the contrary, no adjustment in the
     Exercise Price shall be required unless such adjustment would require an
     increase or decrease of at least one per cent in the Exercise Price;
     provided, however, that any adjustments which by reason of this Subsection
     2.3(d) are not required to be made shall be carried forward and taken into
     account in any subsequent adjustment. All calculations under Section 2.3
     shall

<PAGE>

                                       20

     be made to the nearest cent or to the nearest ten-thousandth of a share.
     Notwithstanding the first sentence of this Subsection 2.3(d), any
     adjustment required by Section 2.3 shall be made no later than the earlier
     of:

     (i)  three years from the date of the transaction which gives rise to such
          adjustment; or

     (ii) the Expiration Date.

(e)  In the event the Corporation shall at any time after the Record Time and
     prior to the Separation Time issue any shares of capital stock (other than
     Common Shares), or rights, options or warrants to subscribe for or purchase
     any such capital stock, or securities convertible into or exchangeable for
     any such capital stock, in a transaction referred to in Clause 2.3(a)(i) or
     (iv), if the Board of Directors acting in good faith determines that the
     adjustments contemplated by Subsections 2.3(a), (b) and (c) in connection
     with such transaction will not appropriately protect the interests of the
     holders of Rights, the Board of Directors may determine what other
     adjustments to the Exercise Price, number of Rights and/or securities
     purchasable upon exercise of Rights would be appropriate and,
     notwithstanding Subsections 2.3(a), (b) and (c), and subject to prior
     approval of the holders of Voting Shares or of Rights, as the case may be,
     as provided in section 5.4, such adjustments, rather than the adjustments
     contemplated by Subsections 2.3(a), (b) and (c), shall be made. The
     Corporation and the Rights Agent shall have authority to amend this
     Agreement as appropriate to provide for such adjustments.

(f)  Each Right originally issued by the Corporation subsequent to any
     adjustment made to the Exercise Price hereunder shall evidence the right to
     purchase, at the adjusted Exercise Price, the number of Common Shares
     purchasable from time to time hereunder upon exercise of a Right
     immediately prior to such issue, all subject to further adjustment as
     provided herein.

(g)  Irrespective of any adjustment or change in the Exercise Price or the
     number of Common Shares issuable upon the exercise of the Rights, the
     Rights Certificates theretofore and thereafter issued may continue to
     express the Exercise Price per Common Share and the number of Common Shares
     which were expressed in the initial Rights Certificates issued hereunder.

(h)  In any case in which this Section 2.3 shall require that an adjustment in
     the Exercise Price be made effective as of a record date for a specified
     event, the Corporation may elect to defer until the occurrence of such
     event the issuance to the holder of any Right exercised after such record
     date the number of Common Shares and other securities of the Corporation,
     if any, issuable upon such exercise over and above the number of Common
     Shares and other securities of the Corporation, if any, issuable upon such
     exercise on the basis of the Exercise Price in effect prior to such
     adjustment; provided, however, that the Corporation shall deliver to such
     holder an appropriate instrument evidencing such holder's right to receive
     such additional shares (fractional or otherwise) or other securities upon
     the occurrence of the event requiring such adjustment.

(i)  Notwithstanding anything contained in this Section 2.3 to the contrary, the
     Corporation shall be entitled to make such reductions in the Exercise
     Price, in addition to those

<PAGE>

                                       21

     adjustments expressly required by this Section 2.3, as and to the extent
     that in their good faith judgment the Board of Directors determines to be
     advisable, in order that any:

     (i)  consolidation or subdivision of Common Shares;

     (ii) issuance (wholly or in part for cash) of Common Shares or securities
          that by their terms are convertible into or exchangeable for Common
          Shares;

    (iii) stock dividends; or

     (iv) issuance of rights, options or warrants referred to in this Section
          2.3,

     hereafter made by the Corporation to holders of its Common Shares, shall
     not be taxable to such shareholders.

2.4  DATE ON WHICH EXERCISE IS EFFECTIVE

     Each Person in whose name any certificate for Common Shares or other
securities, if applicable, is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the Common Shares or
other securities, if applicable, represented thereon, and such certificate shall
be dated the date upon which the Rights Certificate evidencing such Rights was
duly surrendered in accordance with Subsection 2.2(d) (together with a duly
completed Election to Exercise) and payment of the Exercise Price for such
Rights (and any applicable transfer taxes and other governmental charges payable
by the exercising holder hereunder) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Common Share
transfer books of the Corporation are closed, such Person shall be deemed to
have become the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the Common Share transfer books
of the Corporation are open.

2.5  EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS CERTIFICATES

(a)  The Rights Certificates shall be executed on behalf of the Corporation by
     its Chairman of the Board, President or any Vice-President and by its
     Corporate Secretary or any Assistant Secretary under the corporate seal of
     the Corporation reproduced thereon. The signature of any of these officers
     on the Rights Certificates may be manual or facsimile. Rights Certificates
     bearing the manual or facsimile signatures of individuals who were at any
     time the proper officers of the Corporation shall bind the Corporation,
     notwithstanding that such individuals or any of them have ceased to hold
     such offices either before or after the countersignature and delivery of
     such Rights Certificates.

(b)  Promptly after the Corporation learns of the Separation Time, the
     Corporation will notify the Rights Agent of such Separation Time and will
     deliver Rights Certificates executed by the Corporation to the Rights Agent
     for countersignature, and the Rights Agent shall manually countersign (in a
     manner satisfactory to the Corporation) and send such Rights Certificates
     to the holders of the Rights pursuant to Subsection 2.2(c) hereof. No
     Rights Certificate shall be valid for any purpose until countersigned by
     the Rights Agent as aforesaid.

(c)  Each Rights Certificate shall be dated the date of countersignature
     thereof.

<PAGE>

                                       22

2.6  REGISTRATION, TRANSFER AND EXCHANGE

(a)  The Corporation will cause to be kept a register (the "Rights Register") in
     which, subject to such reasonable regulations as it may prescribe, the
     Corporation will provide for the registration and transfer of Rights. The
     Rights Agent is hereby appointed registrar for the Rights (the "Rights
     Registrar") for the purpose of maintaining the Rights Register for the
     Corporation and registering Rights and transfers of Rights as herein
     provided and the Rights Agent hereby accepts such appointment. In the event
     that the Rights Agent shall cease to be the Rights Registrar, the Rights
     Agent will have the right to examine the Rights Register at all reasonable
     times.

     After the Separation Time and prior to the Expiration Time, upon surrender
     for registration of transfer or exchange of any Rights Certificate, and
     subject to the provisions of Subsection 2.6(c), the Corporation will
     execute, and the Rights Agent will manually countersign and deliver, in the
     name of the holder or the designated transferee or transferees, as required
     pursuant to the holder's instructions, one or more new Rights Certificates
     evidencing the same aggregate number of Rights as did the Rights
     Certificates so surrendered.

(b)  All Rights issued upon any registration of transfer or exchange of Rights
     Certificates shall be the valid obligations of the Corporation, and such
     Rights shall be entitled to the same benefits under this Agreement as the
     Rights surrendered upon such registration of transfer or exchange.

(c)  Every Rights Certificate surrendered for registration of transfer or
     exchange shall be duly endorsed, or be accompanied by a written instrument
     of transfer satisfactory in form to the Corporation or the Rights Agent, as
     the case may be, duly executed by the holder thereof or such holder's
     attorney duly authorized in writing. As a condition to the issuance of any
     new Rights Certificate under this Section 2.6, the Corporation may require
     the payment of a sum sufficient to cover any tax or other governmental
     charge that may be imposed in relation thereto and any other expenses
     (including the reasonable fees and expenses of the Rights Agent) connected
     therewith.

2.7  MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES

(a)  If any mutilated Rights Certificate is surrendered to the Rights Agent
     prior to the Expiration Time, the Corporation shall execute and the Rights
     Agent shall countersign and deliver in exchange therefor a new Rights
     Certificate evidencing the same number of Rights as did the Rights
     Certificate so surrendered.

(b)  If there shall be delivered to the Corporation and the Rights Agent prior
     to the Expiration Time:

     (i)  evidence to their reasonable satisfaction of the destruction, loss or
          theft of any Rights Certificate; and

     (ii) such security or indemnity as may be reasonably required by them to
          save each of them and any of their agents harmless;

<PAGE>

                                       23

     then, in the absence of notice to the Corporation or the Rights Agent that
     such Rights Certificate has been acquired by a BONA FIDE purchaser, the
     Corporation shall execute and upon the Corporation's request the Rights
     Agent shall countersign and deliver, in lieu of any such destroyed, lost or
     stolen Rights Certificate, a new Rights Certificate evidencing the same
     number of Rights as did the destroyed, lost or stolen Rights Certificate.

(c)  As a condition to the issuance of any new Rights Certificate under this
     Section 2.7, the Corporation may require the payment of a sum sufficient to
     cover any tax or other governmental charge that may be imposed in relation
     thereto and any other expenses (including the reasonable fees and expenses
     of the Rights Agent) connected therewith.

(d)  Every new Rights Certificate issued pursuant to this Section 2.7 in lieu of
     any destroyed, lost or stolen Rights Certificate shall evidence the
     contractual obligation of the Corporation, whether or not the destroyed,
     lost or stolen Rights Certificate shall be at any time enforceable by
     anyone, and shall be entitled to all the benefits of this Agreement equally
     and proportionately with any and all other Rights duly issued hereunder.

2.8  PERSONS DEEMED OWNERS OF RIGHTS

     The Corporation, the Rights Agent and any agent of the Corporation or the
Rights Agent may deem and treat the Person in whose name a Rights Certificate
(or, prior to the Separation Time, the associated Common Share certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby for
all purposes whatsoever. As used in this Agreement, unless the context otherwise
requires, the term "holder" of any Rights shall mean the registered holder of
such Rights (or, prior to the Separation Time, of the associated Common Shares).

2.9  DELIVERY AND CANCELLATION OF CERTIFICATES

     All Rights Certificates surrendered upon exercise or for redemption,
registration of transfer or exchange shall, if surrendered to any Person other
than the Rights Agent, be delivered to the Rights Agent and, in any case, shall
be promptly cancelled by the Rights Agent. The Corporation may at any time
deliver to the Rights Agent for cancellation any Rights Certificates previously
countersigned and delivered hereunder which the Corporation may have acquired in
any manner whatsoever, and all Rights Certificates so delivered shall be
promptly cancelled by the Rights Agent. No Rights Certificate shall be
countersigned in lieu of or in exchange for any Rights Certificates cancelled as
provided in this Section 2.9, except as expressly permitted by this Agreement.
The Rights Agent shall, subject to applicable laws, and its ordinary business
practices, destroy all cancelled Rights Certificates and deliver a certificate
of destruction to the Corporation.

2.10 AGREEMENT OF RIGHTS HOLDERS

     Every holder of Rights, by accepting the same, consents and agrees with the
Corporation and the Rights Agent and with every other holder of Rights:

(a)  to be bound by and subject to the provisions of this Agreement, as amended
     from time to time in accordance with the terms hereof, in respect of all
     Rights held;

(b)  that prior to the Separation Time, each Right will be transferable only
     together with, and will be transferred by a transfer of, the associated
     Common Share certificate representing such Right;

<PAGE>

                                       24

(c)  that after the Separation Time, the Rights Certificates will be
     transferable only on the Rights Register as provided herein;

(d)  that prior to due presentment of a Rights Certificate (or, prior to the
     Separation Time, the associated Common Share certificate) for registration
     of transfer, the Corporation, the Rights Agent and any agent of the
     Corporation or the Rights Agent may deem and treat the Person in whose name
     the Rights Certificate (or, prior to the Separation Time, the associated
     Common Share certificate) is registered as the absolute owner thereof and
     of the Rights evidenced thereby (notwithstanding any notations of ownership
     or writing on such Rights Certificate or the associated Common Share
     certificate made by anyone other than the Corporation or the Rights Agent)
     for all purposes whatsoever, and neither the Corporation nor the Rights
     Agent shall be affected by any notice to the contrary;

(e)  that such holder of Rights has waived his right to receive any fractional
     Rights or any fractional shares or other securities upon exercise of a
     Right (except as provided herein);

(f)  that, subject to the provisions of Section 5.4, without the approval of any
     holder of Rights or Voting Shares and upon the sole authority of the Board
     of Directors, acting in good faith, this Agreement may be supplemented or
     amended from time to time to cure any ambiguity or to correct or supplement
     any provision contained herein which may be inconsistent with the intent of
     this Agreement or is otherwise defective, as provided herein; and

(g)  notwithstanding anything in this Agreement to the contrary, neither the
     Corporation nor the Rights Agent shall have any liability to any holder of
     a Right or any other Person as a result of its inability to perform any of
     its obligations under this Agreement by reason of any preliminary or
     permanent injunction or other order, decree or ruling issued by a court of
     competent jurisdiction or by a governmental, regulatory or administrative
     agency or commission, or any statute, rule, regulation or executive order
     promulgated or enacted by any governmental authority, prohibiting or
     otherwise restraining performance of such obligation.

2.11 RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER

     No holder, as such, of any Rights or Rights Certificate shall be entitled
to vote, receive dividends or be deemed for any purpose whatsoever the holder of
any Common Share or any other share or security of the Corporation which may at
any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Rights Certificate be construed or
deemed or confer upon the holder of any Right or Rights Certificate, as such,
any right, title, benefit or privilege of a holder of Common Shares or any other
shares or securities of the Corporation or any right to vote at any meeting of
shareholders of the Corporation whether for the election of directors or
otherwise or upon any matter submitted to holders of Common Shares or any other
shares of the Corporation at any meeting thereof, or to give or withhold consent
to any action of the Corporation, or to receive notice of any meeting or other
action affecting any holder of Common Shares or any other shares of the
Corporation except as expressly provided herein, or to receive dividends,
distributions or subscription rights, or otherwise, until the Right or Rights
evidenced by Rights Certificates shall have been duly exercised in accordance
with the terms and provisions hereof.

<PAGE>

                                       25

                     ARTICLE 3 - ADJUSTMENTS TO THE RIGHTS

3.1  FLIP-IN EVENT

(a)  Subject to Subsection 3.1(b) and Section 5.1, if prior to the Expiration
     Time a Flip-in Event occurs, each Right shall constitute, effective at the
     close of business on the tenth Trading Day after the Stock Acquisition
     Date, the right to purchase from the Corporation, upon exercise thereof in
     accordance with the terms hereof, that number of Common Shares having an
     aggregate Market Price on the date of consummation or occurrence of such
     Flip-in Event equal to twice the Exercise Price for an amount in cash equal
     to the Exercise Price (such right to be appropriately adjusted in a manner
     analogous to the applicable adjustment provided for in Section 2.3 in the
     event that after such consummation or occurrence, an event of a type
     analogous to any of the events described in Section 2.3 shall have
     occurred).

(b)  Notwithstanding anything in this Agreement to the contrary, upon the
     occurrence of any Flip-in Event, any Rights that are or were Beneficially
     Owned on or after the earlier of the Separation Time or the Stock
     Acquisition Date by:

     (i)  an Acquiring Person (or any Affiliate or Associate of an Acquiring
          Person or any Person acting jointly or in concert with an Acquiring
          Person or any Affiliate or Associate of an Acquiring Person); or

     (ii) a transferee of Rights, directly or indirectly, from an Acquiring
          Person (or any Affiliate or Associate of an Acquiring Person or any
          Person acting jointly or in concert with an Acquiring Person or any
          Affiliate or Associate of an Acquiring Person), where such transferee
          becomes a transferee concurrently with or subsequent to the Acquiring
          Person becoming such in a transfer that the Board of Directors has
          determined is part of a plan, arrangement or scheme of an Acquiring
          Person (or any Affiliate or Associate of an Acquiring Person or any
          Person acting jointly or in concert with an Acquiring Person or any
          Affiliate or Associate of an Acquiring Person), that has the purpose
          or effect of avoiding Clause 3.1(b)(i),

     shall become null and void without any further action, and any holder of
     such Rights (including transferees) shall thereafter have no right to
     exercise such Rights under any provision of this Agreement and further
     shall thereafter not have any other rights whatsoever with respect to such
     Rights, whether under any provision of this Agreement or otherwise.

(c)  From and after the Separation Time, the Corporation shall do all such acts
     and things as shall be necessary and within its power to ensure compliance
     with the provisions of this Section 3.1, including without limitation, all
     such acts and things as may be required to satisfy the requirements of the
     CANADA BUSINESS CORPORATIONS ACT, the SECURITIES ACT (Ontario) and the
     securities laws or comparable legislation of each of the provinces of
     Canada and of the United States and each of the states thereof in respect
     of the issue of Common Shares upon the exercise of Rights in accordance
     with this Agreement.

(d)  Any Rights Certificate that represents Rights Beneficially Owned by a
     Person described in either Clause 3.1(b)(i) or (ii) or transferred to any
     nominee of any such Person, and any

<PAGE>

                                       26

     Rights Certificate issued upon transfer, exchange, replacement or
     adjustment of any other Rights Certificate referred to in this sentence,
     shall contain the following legend:

          The Rights represented by this Rights Certificate were issued to a
          Person who was an Acquiring Person or an Affiliate or an Associate of
          an Acquiring Person (as such terms are defined in the Shareholder
          Rights Plan Agreement) or a Person who was acting jointly or in
          concert with an Acquiring Person or an Affiliate or Associate of an
          Acquiring Person. This Rights Certificate and the Rights represented
          hereby are void or shall become void in the circumstances specified in
          Subsection 3.1(b) of the Shareholder Rights Plan Agreement.

     provided, however, that the Rights Agent shall not be under any
     responsibility to ascertain the existence of facts that would require the
     imposition of such legend but shall impose such legend only if instructed
     to do so by the Corporation in writing or if a holder fails to certify upon
     transfer or exchange in the space provided on the Rights Certificate that
     such holder is not a Person described in such legend.

                          ARTICLE 4 - THE RIGHTS AGENT

4.1  GENERAL

(a)  The Corporation hereby appoints the Rights Agent to act as agent for the
     Corporation and the holders of the Rights in accordance with the terms and
     conditions hereof, and the Rights Agent hereby accepts such appointment.
     The Corporation may from time to time appoint such co-Rights Agents
     ("Co-Rights Agents") as it may deem necessary or desirable, subject to the
     approval of the Rights Agent. In the event the Corporation appoints one or
     more Co-Rights Agents, the respective duties of the Rights Agent and
     Co-Rights Agents shall be as the Corporation may determine, with the
     approval of the Rights Agent and the Co-Rights Agent. The Corporation
     agrees to pay all reasonable fees and expenses of the Rights Agent in
     respect of the performance of its duties under this Agreement. The
     Corporation also agrees to indemnify the Rights Agent for, and to hold it
     harmless against, any loss, liability, or expense, incurred without
     negligence, bad faith or wilful misconduct on the part of the Rights Agent,
     for anything done or omitted by the Rights Agent in connection with the
     acceptance and administration of this Agreement, including the costs and
     expenses of defending against any claim of liability, which right to
     indemnification will survive the termination of this Agreement or the
     resignation or removal of the Rights Agent.

(b)  The Rights Agent shall be protected and shall incur no liability for or in
     respect of any action taken, suffered or omitted by it in connection with
     its administration of this Agreement in reliance upon any certificate for
     Common Shares, Rights Certificate, certificate for other securities of the
     Corporation, instrument of assignment or transfer, power of attorney,
     endorsement, affidavit, letter, notice, direction, consent, certificate,
     opinion, statement, or other paper or document believed by it to be genuine
     and to be signed, executed and, where necessary, verified or acknowledged,
     by the proper Person or Persons.

<PAGE>

                                       27

4.2  MERGER, AMALGAMATION OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT

(a)  Any corporation into which the Rights Agent may be merged or amalgamated or
     with which it may be consolidated, or any corporation resulting from any
     merger, amalgamation, statutory arrangement or consolidation to which the
     Rights Agent is a party, or any corporation succeeding to the shareholder
     or stockholder services business of the Rights Agent, will be the successor
     to the Rights Agent under this Agreement without the execution or filing of
     any paper or any further act on the part of any of the parties hereto,
     provided that such corporation would be eligible for appointment as a
     successor Rights Agent under the provisions of Section 4.4 hereof. If, at
     the time such successor Rights Agent succeeds to the agency created by this
     Agreement, any of the Rights Certificates have been countersigned but not
     delivered, the successor Rights Agent may adopt the countersignature of the
     predecessor Rights Agent and deliver such Rights Certificates so
     countersigned; and if, at that time, any of the Rights have not been
     countersigned, any successor Rights Agent may countersign such Rights
     Certificates in the name of the predecessor Rights Agent or in the name of
     the successor Rights Agent; and in all such cases such Rights Certificates
     will have the full force provided in the Rights Certificates and in this
     Agreement.

(b)  If, at any time, the name of the Rights Agent is changed and at such time
     any of the Rights Certificates have been countersigned but not delivered,
     the Rights Agent may adopt the countersignature under its prior name and
     deliver Rights Certificates so countersigned; and if, at that time, any of
     the Rights Certificates have not been countersigned, the Rights Agent may
     countersign such Rights Certificates either in its prior name or in its
     changed name; and in all such cases such Rights Certificates shall have the
     full force provided in the Rights Certificates and in this Agreement.

4.3  DUTIES OF RIGHTS AGENT

     The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, all of which the Corporation
and the holders of certificates for Common Shares and the holders of Rights
Certificates, by their acceptance thereof, shall be bound:

(a)  the Rights Agent, at the expense of the Corporation, may consult with and
     retain legal counsel (who may be legal counsel for the Corporation) and
     such other experts as it reasonably considers necessary to perform its
     duties hereunder, and the opinion of such counsel or other expert will be
     full and complete authorization and protection to the Rights Agent as to
     any action taken or omitted by it in good faith and in accordance with such
     opinion;

(b)  whenever in the performance of its duties under this Agreement, the Rights
     Agent deems it necessary or desirable that any fact or matter be proved or
     established by the Corporation prior to taking or suffering any action
     hereunder, such fact or matter (unless other evidence in respect thereof is
     specifically prescribed herein) is deemed to be conclusively proved and
     established by a certificate signed by a Person believed by the Rights
     Agent to be the Chairman of the Board, President, Chief Executive Officer,
     Chief Financial Officer, any Vice-President, Treasurer, Corporate
     Secretary, or any Assistant Secretary of the Corporation and delivered to
     the Rights Agent; and such certificate will be full authorization to the
     Rights Agent for any action taken or suffered in good faith by it under the
     provisions of this Agreement in reliance upon such certificate;

<PAGE>

                                       28

(c)  the Rights Agent will be liable hereunder for its own negligence, bad faith
     or wilful misconduct;

(d)  the Rights Agent will not be liable for or by reason of any of the
     statements of fact or recitals contained in this Agreement or in the
     certificates for Common Shares or the Rights Certificates (except its
     countersignature thereof) or be required to verify the same, but all such
     statements and recitals are and will be deemed to have been made by the
     Corporation only;

(e)  the Rights Agent will not have any responsibility in respect of the
     validity of this Agreement or the execution and delivery hereof (except the
     due authorization, execution and delivery hereof by the Rights Agent) or in
     respect of the validity or execution of any certificate for a Common Share
     or a Rights Certificate (except its countersignature thereof); nor will it
     be responsible for any breach by the Corporation of any covenant or
     condition contained in this Agreement or in any Rights Certificate; nor
     will it be responsible for any change in the exerciseability of the Rights
     (including the Rights becoming void pursuant to Subsection 3.1(b) hereof)
     or any adjustment required under the provisions of Section 2.3 hereof or
     responsible for the manner, method or amount of any such adjustment or the
     ascertaining of the existence of facts that would require any such
     adjustment (except with respect to the exercise of Rights after receipt of
     the certificate contemplated by Section 2.3 describing any such
     adjustment); nor is it deemed by any act hereunder to make any
     representation or warranty as to the authorization of any Common Shares to
     be issued pursuant to this Agreement or any Rights or as to whether any
     Common Shares will, when issued, be duly and validly authorized, executed,
     issued and delivered and fully paid and non-assessable;

(f)  the Corporation agrees that it will perform, execute, acknowledge and
     deliver or cause to be performed, executed, acknowledged and delivered all
     such further and other acts, instruments and assurances as may reasonably
     be required by the Rights Agent for the carrying out or performing by the
     Rights Agent of the provisions of this Agreement;

(g)  the Rights Agent is hereby authorized and directed to accept instructions
     in writing with respect to the performance of its duties hereunder from any
     individual believed by the Rights Agent to be the Chairman of the Board,
     President, Chief Executive Officer, Chief Financial Officer, any
     Vice-President, Treasurer, Corporate Secretary or any Assistant Secretary
     of the Corporation, and to apply to such individuals for advice or
     instructions in connection with its duties, and it shall not be liable for
     any action taken or suffered by it in good faith in accordance with
     instructions of any such individual;

(h)  the Rights Agent and any shareholder or stockholder, director, officer or
     employee of the Rights Agent may buy, sell or deal in Common Shares, Rights
     or other securities of the Corporation or become pecuniarily interested in
     any transaction in which the Corporation may be interested, or contract
     with or lend money to the Corporation or otherwise act as fully and freely
     as though it were not Rights Agent under this Agreement and nothing herein
     shall preclude the Rights Agent from acting in any other capacity for the
     Corporation or for any other legal entity; and

(i)  the Rights Agent may execute and exercise any of the rights or powers
     hereby vested in it or perform any duty hereunder either itself or by or
     through its attorneys or agents, and the Rights Agent will not be
     answerable or accountable for any act, default, neglect or

<PAGE>

                                       29

     misconduct of any such attorneys or agents or for any loss to the
     Corporation resulting from any such act, default, neglect or misconduct,
     provided reasonable care was exercised in the selection and continued
     employment thereof.

4.4  CHANGE OF RIGHTS AGENT

     The Rights Agent may resign and be discharged from its duties under this
Agreement upon 60 days" notice (or such lesser notice as is acceptable to the
Corporation) in writing mailed to the Corporation and to each transfer agent of
Common Shares by registered or certified mail. The Corporation may remove the
Rights Agent upon 60 days" notice in writing, mailed to the Rights Agent and to
each transfer agent of the Common Shares by registered or certified mail. If the
Rights Agent should resign or be removed or otherwise become incapable of
acting, the Corporation will appoint a successor to the Rights Agent. If the
Corporation fails to make such appointment within a period of 60 days after
removal or after it has been notified in writing of the resignation or
incapacity by the resigning or incapacitated Rights Agent, then by prior written
notice to the Corporation the resigning Rights Agent or the holder of any Rights
(which holder shall, with such notice, submit such holder's Rights Certificate,
if any, for inspection by the Corporation), may apply to a court of competent
jurisdiction for the appointment of a new Rights Agent, at the Corporation's
expense. Any successor Rights Agent, whether appointed by the Corporation or by
such a court, shall be a corporation incorporated under the laws of Canada or a
province thereof authorized to carry on the business of a trust company in the
Province of Ontario. After appointment, the successor Rights Agent will be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent, upon receipt of all outstanding fees and expenses
owing to it, shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment, the Corporation will file notice thereof
in writing with the predecessor Rights Agent and each transfer agent of the
Common Shares and mail a notice thereof in writing to the holders of the Rights
in accordance with Section 5.9. Failure to give any notice provided for in this
Section 4.4, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
any successor Rights Agent, as the case may be.

                            ARTICLE 5 - MISCELLANEOUS

5.1  REDEMPTION AND WAIVER

(a)  The Board of Directors acting in good faith may, until the occurrence of a
     Flip-in Event, upon prior written notice delivered to the Rights Agent,
     waive the application of Section 3.1 to a particular Flip-in Event that
     would result from a Take-over Bid made by way of take-over bid circular to
     all holders of record of Voting Shares (which for greater certainty shall
     not include the circumstances described in Subsection 5.1(h)); provided
     that if the Board of Directors waives the application of Section 3.1 to a
     particular Flip-in Event pursuant to this Subsection 5.1(a), the Board of
     Directors shall be deemed to have waived the application of Section 3.1 to
     any other Flip-in Event occurring by reason of any Take-over Bid which is
     made by means of a take-over bid circular to all holders of record of
     Voting Shares prior to the expiry of any Take-over Bid (as the same may be
     extended from time to time) in respect of which a waiver is, or is deemed
     to have been, granted under this Subsection 5.1(a).

<PAGE>

                                       30

(b)  Subject to the prior consent of the holders of the Voting Shares or the
     Rights as set forth in Subsection 5.4(b) or (c) the Board of Directors of
     the Corporation acting in good faith may, at its option, at any time prior
     to the provisions of Section 3.1 becoming applicable as a result of the
     occurrence of a Flip-in Event, elect to redeem all but not less than all of
     the outstanding Rights at a redemption price of $0.000001 per Right
     appropriately adjusted in a manner analogous to the applicable adjustment
     provided for in Section 2.3 if an event of the type analogous to any of the
     events described in Section 2.3 shall have occurred (such redemption price
     being herein referred to as the "Redemption Price").

(c)  Where, pursuant to a Permitted Bid, a Competing Permitted Bid or an Exempt
     Acquisition under Subsection 5.1(a), a Person acquires outstanding Voting
     Shares, other than Voting Shares Beneficially Owned by such Person at the
     date of the Permitted Bid, the Competing Permitted Bid or the Exempt
     Acquisition under Subsection 5.1(a), then the Board of Directors of the
     Corporation shall immediately upon the consummation of such acquisition
     without further formality and without any approval under Subsection 5.4(b)
     or (c) be deemed to have elected to redeem the Rights at the Redemption
     Price.

(d)  Where a Take-over Bid that is not a Permitted Bid Acquisition is withdrawn
     or otherwise terminated after the Separation Time has occurred and prior to
     the occurrence of a Flip-in Event, the Board of Directors may elect to
     redeem all the outstanding Rights at the Redemption Price.

(e)  If the Board of Directors is deemed under Subsection 5.1(c) to have
     elected, or elects under either of Subsection 5.1(b) or (d), to redeem the
     Rights, the right to exercise the Rights will thereupon, without further
     action and without notice, terminate and the only right thereafter of the
     holders of Rights shall be to receive the Redemption Price.

(f)  Within 10 days after the Board of Directors is deemed under Subsection
     5.1(c) to have elected, or elects under Subsection 5.1(b) or (d), to redeem
     the Rights, the Corporation shall give notice of redemption to the holders
     of the then outstanding Rights by mailing such notice to each such holder
     at his last address as it appears upon the registry books of the Rights
     Agent or, prior to the Separation Time, on the registry books of the
     transfer agent for the Voting Shares. Any notice which is mailed in the
     manner provided herein shall be deemed given, whether or not the holder
     receives the notice. Each notice of redemption will state the method by
     which the payment of the Redemption Price will be made.

(g)  Upon the Rights being redeemed pursuant to Subsection 5.1(d), all the
     provisions of this Agreement shall continue to apply as if the Separation
     Time had not occurred and Rights Certificates representing the number of
     Rights held by each holder of record of Common Shares as of the Separation
     Time had not been mailed to each such holder and for all purposes of this
     Agreement the Separation Time shall be deemed not to have occurred and the
     Rights shall remain attached to the outstanding Common Shares, subject to
     and in accordance with the provisions of this Agreement.

(h)  The Board of Directors may waive the application of Section 3.1 in respect
     of the occurrence of any Flip-in Event if the Board of Directors has
     determined within ten Trading Days following a Stock Acquisition Date that
     a Person became an Acquiring Person by inadvertence and without any
     intention to become, or knowledge that it would become, an Acquiring Person
     under this Agreement and, in the event that such a waiver

<PAGE>

                                       31

     is granted by the Board of Directors, such Stock Acquisition Date shall be
     deemed not to have occurred. Any such waiver pursuant to this Subsection
     5.1(h) must be on the condition that such Person, within 14 days after the
     foregoing determination by the Board of Directors or such earlier or later
     date as the Board of Directors may determine (the "Disposition Date"), has
     reduced its Beneficial Ownership of Voting Shares so that the Person is no
     longer an Acquiring Person. If the Person remains an Acquiring Person at
     the close of business on the Disposition Date, the Disposition Date shall
     be deemed to be the date of occurrence of a further Stock Acquisition Date
     and Section 3.1 shall apply thereto.

(i)  The Corporation shall give prompt written notice to the Rights Agent of any
     waiver of the application of Section 3.1 made by the Board of Directors
     under this Section 5.1.

5.2  EXPIRATION

     No Person shall have any rights whatsoever pursuant to this Agreement or in
respect of any Right after the Expiration Time, except the Rights Agent as
specified in Subsection 4.1(a) of this Agreement.

5.3  ISSUANCE OF NEW RIGHTS CERTIFICATES

     Notwithstanding any of the provisions of this Agreement or the Rights to
the contrary, the Corporation may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by the Board of Directors to
reflect any adjustment or change in the number or kind or class of securities
purchasable upon exercise of Rights made in accordance with the provisions of
this Agreement.

5.4  SUPPLEMENTS AND AMENDMENTS

(a)  The Corporation may make amendments to this Agreement to correct any
     clerical or typographical error or, subject to Subsection 5.4(e), which are
     required to maintain the validity of this Agreement as a result of any
     change in any applicable legislation, rules or regulations thereunder. The
     Corporation may, prior to the date of its shareholders" meeting referred to
     in Section 5.15, supplement or amend this Agreement without the approval of
     any holders of Rights or Voting Shares in order to make any changes which
     the Board of Directors acting in good faith may deem necessary or
     desirable. Notwithstanding anything in this Section 5.4 to the contrary, no
     such supplement or amendment shall be made to the provisions of Article 4
     except with the written concurrence of the Rights Agent to such supplement
     or amendment.

(b)  Subject to Section 5.4(a), the Corporation may, with the prior consent of
     the holders of Voting Shares obtained as set forth below, at any time prior
     to the Separation Time, amend, vary or rescind any of the provisions of
     this Agreement and the Rights (whether or not such action would materially
     adversely affect the interests of the holders of Rights generally). Such
     consent shall be deemed to have been given if the action requiring such
     approval is authorized by the affirmative vote of a majority of the votes
     cast by Independent Shareholders present or represented at and entitled to
     be voted at a meeting of the holders of Voting Shares duly called and held
     in compliance with applicable laws and the articles and by-laws of the
     Corporation.

<PAGE>

                                       32

(c)  The Corporation may, with the prior consent of the holders of Rights, at
     any time on or after the Separation Time, amend, vary or delete any of the
     provisions of this Agreement and the Rights (whether or not such action
     would materially adversely affect the interests of the holders of Rights
     generally), provided that no such amendment, variation or deletion shall be
     made to the provisions of Article 4 except with the written concurrence of
     the Rights Agent thereto. Such consent shall be deemed to have been given
     if such amendment, variation or deletion is authorized by the affirmative
     votes of the holders of Rights present or represented at and entitled to be
     voted at a meeting of the holders and representing 50% plus one of the
     votes cast in respect thereof.

(d)  Any approval of the holders of Rights shall be deemed to have been given if
     the action requiring such approval is authorized by the affirmative votes
     of the holders of Rights present or represented at and entitled to be voted
     at a meeting of the holders of Rights and representing a majority of the
     votes cast in respect thereof. For the purposes hereof, each outstanding
     Right (other than Rights which are void pursuant to the provisions hereof)
     shall be entitled to one vote, and the procedures for the calling, holding
     and conduct of the meeting shall be those, as nearly as may be, which are
     provided in the Corporation's by-laws and the CANADA BUSINESS CORPORATIONS
     ACT with respect to meetings of shareholders of the Corporation.

(e)  Any amendments made by the Corporation to this Agreement pursuant to
     Subsection 5.4(a) which are required to maintain the validity of this
     Agreement as a result of any change in any applicable legislation, rule or
     regulation thereunder shall:

     (i)  if made before the Separation Time, be submitted to the shareholders
          of the Corporation at the next meeting of shareholders and the
          shareholders may, by the majority referred to in Subsection 5.4(b),
          confirm or reject such amendment;

     (ii) if made after the Separation Time, be submitted to the holders of
          Rights at a meeting to be called for on a date not later than
          immediately following the next meeting of shareholders of the
          Corporation and the holders of Rights may, by resolution passed by the
          majority referred to in Subsection 5.4(d), confirm or reject such
          amendment.

     Any such amendment shall be effective from the date of the resolution of
     the Board of Directors adopting such amendment, until it is confirmed or
     rejected or until it ceases to be effective (as described in the next
     sentence) and, where such amendment is confirmed, it continues in effect in
     the form so confirmed. If such amendment is rejected by the shareholders or
     the holders of Rights or is not submitted to the shareholders or holders of
     Rights as required, then such amendment shall cease to be effective from
     and after the termination of the meeting at which it was rejected or to
     which it should have been but was not submitted or from and after the date
     of the meeting of holders of Rights that should have been but was not held,
     and no subsequent resolution of the Board of Directors to amend this
     Agreement to substantially the same effect shall be effective until
     confirmed by the shareholders or holders of Rights as the case may be.

5.5  FRACTIONAL RIGHTS AND FRACTIONAL SHARES

(a)  The Corporation shall not be required to issue fractions of Rights or to
     distribute Rights Certificates which evidence fractional Rights. After the
     Separation Time, in lieu of

<PAGE>

                                       33

     issuing fractional Rights, the Corporation shall pay to the holders of
     record of the Rights Certificates (provided the Rights represented by such
     Rights Certificates are not void pursuant to the provisions of Subsection
     3.1(b), at the time such fractional Rights would otherwise be issuable), an
     amount in cash equal to the fraction of the Market Price of one whole Right
     that the fraction of a Right that would otherwise be issuable is of one
     whole Right.

(b)  The Corporation shall not be required to issue fractions of Common Shares
     upon exercise of Rights or to distribute certificates which evidence
     fractional Common Shares. In lieu of issuing fractional Common Shares, the
     Corporation shall pay to the registered holders of Rights Certificates, at
     the time such Rights are exercised as herein provided, an amount in cash
     equal to the fraction of the Market Price of one Common Share that the
     fraction of a Common Share that would otherwise be issuable upon the
     exercise of such Right is of one whole Common Share at the date of such
     exercise.

5.6  RIGHTS OF ACTION

     Subject to the terms of this Agreement, all rights of action in respect of
this Agreement, other than rights of action vested solely in the Rights Agent,
are vested in the holders of the Rights. Any holder of Rights, without the
consent of the Rights Agent or of the holder of any other Rights, may, on such
holder's own behalf and for such holder's own benefit and the benefit of other
holders of Rights, enforce, and may institute and maintain any suit, action or
proceeding against the Corporation to enforce such holder's right to exercise
such holder's Rights, or Rights to which such holder is entitled, in the manner
provided in such holder's Rights and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.

5.7  REGULATORY APPROVALS

     Any obligation of the Corporation or action or event contemplated by this
Agreement shall be subject to the receipt of requisite approval or consent from
any governmental or regulatory authority, and without limiting the generality of
the foregoing, necessary approvals of The Toronto Stock Exchange and other
exchanges shall be obtained, in relation to the issuance of Common Shares upon
the exercise of Rights under Subsection 2.2(d).

5.8  DECLARATION AS TO NON-CANADIAN OR NON-U.S. HOLDERS

     If in the opinion of the Board of Directors (who may rely upon the advice
of counsel) any action or event contemplated by this Agreement would require
compliance by the Corporation with the securities laws or comparable legislation
of a jurisdiction outside Canada, the Board of Directors acting in good faith
shall take such actions as it may deem appropriate to ensure such compliance. In
no event shall the Corporation or the Rights Agent be required to issue or
deliver Rights or securities issuable on exercise of Rights to persons who are
citizens, residents or nationals of any jurisdiction other than Canada or the
United States, in which such issue or delivery would be unlawful without
registration of the relevant Persons or securities for such purposes.

<PAGE>

                                       34

5.9      NOTICES

(a)  Notices or demands authorized or required by this Agreement to be given or
     made by the Rights Agent or by the holder of any Rights to or on the
     Corporation shall be sufficiently given or made if delivered, sent by
     registered or certified mail, postage prepaid (until another address is
     filed in writing with the Rights Agent), or sent by facsimile or other form
     of recorded electronic communication, charges prepaid and confirmed in
     writing, as follows:

                           Draxis Health Inc.
                           2nd Floor
                           6870 Goreway Drive
                           Mississauga, Ontario
                           L4V 1P1

                           Attention:       Corporate Secretary
                           Fax No.          (905) 677-5494

(b)  Notices or demands authorized or required by this Agreement to be given or
     made by the Corporation or by the holder of any Rights to or on the Rights
     Agent shall be sufficiently given or made if delivered, sent by registered
     or certified mail, postage prepaid (until another address is filed in
     writing with the Corporation), or sent by facsimile or other form of
     recorded electronic communication, charges prepaid and confirmed in
     writing, as follows:

                           Computershare Trust Company of Canada
                           100 University Avenue
                           12th Floor, South Tower
                           Toronto, Ontario
                           M5J 2Y1

                           Attention:       Stock Transfer Services
                           Fax No.: (416) 981-9777

(c)  Notices or demands authorized or required by this Agreement to be given or
     made by the Corporation or the Rights Agent to or on the holder of any
     Rights shall be sufficiently given or made if delivered or sent by first
     class mail, postage prepaid, addressed to such holder at the address of
     such holder as it appears upon the register of the Rights Agent or, prior
     to the Separation Time, on the register of the Corporation for its Common
     Shares. Any notice which is mailed or sent in the manner herein provided
     shall be deemed given, whether or not the holder receives the notice.

(d)  Any notice given or made in accordance with this Section 5.9 shall be
     deemed to have been given and to have been received on the day of delivery,
     if so delivered, on the third Business Day (excluding each day during which
     there exists any general interruption of postal service due to strike,
     lockout or other cause) following the mailing thereof, if so mailed, and on
     the day of telegraphing, telecopying or sending of the same by other means
     of recorded electronic communication (provided such sending is during the
     normal business hours of the addressee on a Business Day and if not, on the
     first Business Day

<PAGE>

                                       35

     thereafter). Each of the Corporation and the Rights Agent may from time to
     time change its address for notice by notice to the other given in the
     manner aforesaid.

5.10 COSTS OF ENFORCEMENT

     The Corporation agrees that if the Corporation fails to fulfil any of its
obligations pursuant to this Agreement, then the Corporation will reimburse the
holder of any Rights for the costs and expenses (including legal fees) incurred
by such holder to enforce his rights pursuant to any Rights or this Agreement.

5.11 SUCCESSORS

     All the covenants and provisions of this Agreement by or for the benefit of
the Corporation or the Rights Agent shall bind and enure to the benefit of their
respective successors and assigns hereunder.

5.12 BENEFITS OF THIS AGREEMENT

     Nothing in this Agreement shall be construed to give to any Person other
than the Corporation, the Rights Agent and the holders of the Rights any legal
or equitable right, remedy or claim under this Agreement; further, this
Agreement shall be for the sole and exclusive benefit of the Corporation, the
Rights Agent and the holders of the Rights.

5.13 GOVERNING LAW

     This Agreement and each Right issued hereunder shall be deemed to be a
contract made under the laws of the Province of Ontario and for all purposes
shall be governed by and construed in accordance with the laws of such Province
applicable to contracts to be made and performed entirely within such Province.

5.14 SEVERABILITY

     If any term or provision hereof or the application thereof to any
circumstance shall, in any jurisdiction and to any extent, be invalid or
unenforceable, such term or provision shall be ineffective only as to such
jurisdiction and to the extent of such invalidity or unenforceability in such
jurisdiction without invalidating or rendering unenforceable or ineffective the
remaining terms and provisions hereof in such jurisdiction or the application of
such term or provision in any other jurisdiction or to circumstances other than
those as to which it is specifically held invalid or unenforceable.

5.15 COMING INTO EFFECT

     This Agreement is effective and in full force and effect in accordance with
its terms from and after the Effective Date. If this Agreement is not confirmed
by resolution passed by a majority of the votes cast by holders of Voting Shares
of the Corporation who vote in respect of confirmation of this Agreement at a
meeting of the Corporation's shareholders to be held on or prior to May 16,
2002, then this Agreement and all outstanding Rights shall terminate and be void
and of no further force and effect on and from that date which is the earlier of
(a) the date of termination of the meeting called to consider the confirmation
of this Agreement under this Section 5.15 and (b) May 16, 2002.

<PAGE>

                                       36

5.16 RECONFIRMATION

     This Agreement must be reconfirmed by a resolution passed by a majority of
greater than 50 percent of the votes cast by all holders of Voting Shares who
vote in respect of such reconfirmation at the annual meeting of the Corporation
to be held in 2005 and at every third annual meeting of the Corporation
thereafter. If the Agreement is not so reconfirmed or is not presented for
reconfirmation at such annual meeting, the Agreement and all outstanding Rights
shall terminate and be void and of no further force and effect on and from the
date of termination of the annual meeting; provided that termination shall not
occur if a Flip-in Event has occurred (other than a Flip-in Event which has been
waived pursuant to Subsection 5.1(a) or (h) hereof), prior to the date upon
which this Agreement would otherwise terminate pursuant to this Section 5.16.

5.17 DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS

     All actions, calculations and determinations (including all omissions with
respect to the foregoing) which are done or made by the Board of Directors, in
good faith, for the purposes hereof shall not subject the Board of Directors or
any director of the Corporation to any liability to the holders of the Rights.

5.18 TIME OF THE ESSENCE

     Time shall be of the essence in this Agreement.

5.19 EXECUTION IN COUNTERPARTS

     This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute one and the same instrument.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

                                   DRAXIS HEALTH INC.
                                   By:
                                          --------------------------------------

                                   By:
                                          --------------------------------------
                                                                            c/s
                                   COMPUTERSHARE TRUST COMPANY OF CANADA
                                   By:
                                          --------------------------------------

                                   By:
                                          --------------------------------------
                                                                            c/s

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