Document:

<PAGE>

                                                                 Exhibit 4.3

                              [DEPRENYL LOGO]

                                                     [LETTERHEAD]

CONFIDENTIAL
DELIVERED BY FAX AND MAIL

December 22, 1999

Mr. Robert W. Mullen
Vice President Business Development
Pfizer Animal Health
235 East 42nd Street
New York, NY 10017-5755

Dear Bob:

RE: ANIPRYL-Registered Trademark-

In November 1997, Pfizer, Inc. ("Pfizer"), Deprenyl Animal Health, Inc.
("DAHI") and Draxis Health Inc. ("Draxis") entered into a Master Agreement, a
License Agreement, a Research Agreement and a Manufacturing Agreement for
each of the US and Canada and the rest of the world (collectively, the
"Pfizer Agreements"). Terms capitalized herein and not otherwise defined
shall have the meanings attributed thereto in the Pfizer Agreements.

                                    *

       10841 West 87th Street, Suite 400, Overland Park, Kansas 66214

Telephone: (913) 338-2120                              Facsimile: (913) 338-1051

* Material has been omitted and filed separately with the Securities and
  Exchange Commission

<PAGE>

                                    - 2 -

                                     *

Pfizer and DAHI hereby agree to the following and, as required, the Master
Agreement is hereby amended:

1.    Section 3 of the Master Agreement is hereby amended to delete, in
      respect of Cushings Disease and Cognitive Dysfunction, milestones in
      respect of each of the United Kingdom, France and Germany, amounting to
      $9 million in total with no further application of such unpaid
      milestones to other Major Countries pursuant to Section 8(i) of the
      Master Agreement. For greater certainty, pursuant to Section 8(i) of
      the Master Agreement, Pfizer is not obligated to launch
      Anipryl-Registered Trademark- in Europe and reserves the right to
      decide on the feasibility of launching Anipryl-Registered Trademark- on
      a country by country basis if and when a Registration is obtained. In
      the event that Pfizer determines not to launch Anipryl-Registered
      Trademark- in any such country, it shall surrender such Registration
      and rights shall be reassigned to DAHI in accordance with Sections 8(I)
      and 8(j) of the Master Agreement. Where Pfizer does decide to launch
      Anipryl-Registered Trademark-, royalties on sales of Anipryl-Registered
      Trademark- in Europe shall be paid in accordance with Section 3 of the
      License Agreement;

2.    In the event that DAHI does not submit the regulatory dossier to the
      FDA in connection  *  within 6 months of completion of the statistical
      report referred to in paragraph 4(b) below, or such later date as may
      be reasonable in the circumstances, or having so submitted the dossier
      it is rejected by FDA, DAHI shall enter into the agreements with Pfizer
      and  *  provided  *  is in agreement at that time, on substantially the
      terms and conditions contained in the  *  with such amendments as may
      be necessary or desirable to exclude rights to the  *  in Europe and to
      delete milestones of US$3 million which would have been owing to DAHI
      in respect of the  *  provided that, other than the outcome of the ILE
      trial, there have been no material intervening developments affecting
      DAHI's and Pfizer's business rationale for entering into the  *

3.    Pfizer shall provide an additional US$244,000 of funding to  *

4.    Subject to extensions which may be agreed to by DAHI, acting
      reasonably, due to unexpected difficulties or factors outside Pfizer's
      control, and subject to DAHI's agreement as to content, acting
      reasonably, Pfizer shall for the benefit of, and under the supervision
      of DAHI:

      (a)     Return to DAHI the print outs of data entered by Pfizer on
              behalf of DAHI on  *  within two weeks of any request (or such
              later date as may be reasonable under the circumstances)
              therefor by DAHI, provided that the raw data has been submitted
              to DAHI at least two weeks in advance.

      (b)     Complete the statistical analysis and the Quality Assurance
              audit on  *    *  together with the statistical report, no
              later than eight (8) weeks (or such later date as may be
              reasonable under the circumstances) after the locking of the
              electronic database, such timeline to commence when the

* Material has been omitted and filed separately with the Securities and
  Exchange Commission

<PAGE>

                                     - 3 -

              Anipryl-Registered Trademark- Research Committee agrees that
              all data have been entered, verified and locked with all
              queries resolved, all original data in-house and all study
              files in order;

      (c)     Review and provide comments on the DAHI-authored Sponsor's
              report, including auditing of the Sponsor's report, no later
              than one month (or such later date as may be reasonable under
              the circumstances) after receipt of the draft report;

      (d)     Draft a summary module to accompany the US regulatory filing,
              to be completed no later than two weeks (or such later date as
              may be reasonable under the circumstances) after the
              finalization of the Sponsor's report, subject to review and
              approval by DAHI.

      (e)     Assemble the US regulatory dossier, including the summary
              module, within 30 days (or such later date as may be reasonable
              under the circumstances) of finalization of the Sponsor's
              report; and

      (f)     Provide to DAHI within 7 days (or such later date as may be
              reasonable under the circumstances) of completion of each item
              an electronic copy of the database and the completed dossier,
              including summary module, in a PC SAS format.

5.    Each of DAHI and Pfizer will be responsible for its own internal costs
      and DAHI shall be responsible for any regulatory fees payable in respect
      of filing  *  regulatory dossier in all countries, other than Japan
      where Pfizer shall be responsible for such expenses pursuant to
      Section 8(b) of the Master Agreement;

6.    Pfizer shall be entitled to participate in the registration process
      with the FDA and the HPB with DAHI in respect of the ILE indication for
      Anipryl-Registered Trademark- as described in Section 8(c) of the
      Master Agreement;

7.    Upon execution of this letter, Pfizer shall provide to DAHI a hard
      copy and, if available, an electronic copy, of the following:

      (a)     Available long term stability data for batches of
              Anipryl-Registered Trademark- manufactured by Mikart;

      (b)     for batches of Anipryl-Registered Trademark- manufactured by
              Pfizer using bulk from Chinoin:

              (i)     Manufacturing batch records;
              (ii)    Certificates of analysis; and
              (iii)   Available results on any long term stability studies.

      (c)     Certificates of Analysis for commercial batches of
              Anipryl-Registered Trademark- released by Pfizer and any
              available long term stability studies conducted by Pfizer on
              such batches.

      for DAHI's use in applications for foreign registrations of
      Anipryl-Registered Trademark-. At DAHI's request, Pfizer shall also
      authorize, in writing, such regulatory authorities as may be
      designated by DAHI to refer to the foregoing information for purposes
      only of

* Material has been omitted and filed separately with the Securities and
  Exchange Commission

<PAGE>

                                     - 4 -

      completing foreign registrations of Anipryl-Registered Trademark- and
      DAHI shall be entitled to designate Pfizer as an Anipryl-Registered
      Trademark- manufacturing site.

8.    All other terms of the Pfizer Agreements are ratified and confirmed.

Yours very truly,

DEPRENYL ANIMAL HEALTH, INC.           DRAXIS HEALTH INC.

Per:  /s/ Jacqueline Le Saux           Per:  /s/ Jacqueline Le Saux
    ----------------------------           -----------------------------
     Jacqueline H. R. Le Saux,             Jacqueline H. R. Le Saux,
     President                             Senior Vice President, Secretary and
                                           Chief Development Officer

The foregoing is acknowledged and agreed to:

PFIZER INC.

Per: /s/ Robert W. Mullen
    ----------------------------
    Robert W. Mullen
    Vice President Business Development

JHRLS/II

c.  Stuart Meikle
    Martin Barkin<PAGE>

                                                                     EXHIBIT 4.4

                            ASSET PURCHASE AGREEMENT

                                  BY AND AMONG

                               DRAXIS HEALTH INC.,

                                       AND

                       BLOCK DRUG COMPANY (CANADA) LIMITED

                                       AND

                            BLOCK DRUG COMPANY, INC.

                                      DATED

                                   MAY 3, 2000

<PAGE>

                                TABLE OF CONTENTS

1.       DEFINITIONS ........................................................ 1

2.       PURCHASE OF CERTAIN ASSETS ......................................... 4

         2.1    SALE AND PURCHASE ........................................... 4

         2.2    PURCHASE PRICE .............................................. 4

         2.3    ALLOCATION OF PURCHASE PRICE ................................ 5

         2.4    ADDITIONAL GOOD WILL PAYMENTS ............................... 5

         2.5    TRANSFER TAXES .............................................. 7

3.       PURCHASE OF ADDITIONAL ASSETS ...................................... 8

         3.1    ADDITIONAL ASSET AUDIT ...................................... 8

         3.2    ADDITIONAL ASSETS ........................................... 8

         3.3    PAYMENT AND PASSAGE OF TITLE ................................ 8

         3.4    PRE-CLOSING DATE PURCHASE OF ADDITIONAL ASSETS .............. 8

4.       SUPPLY OF PRODUCT BY SELLER ........................................ 9

         4.1    MANUFACTURE AND SUPPLY OF PRODUCT ........................... 9

         4.2    MANUFACTURE OF SPECTROGRAM 2 ................................ 9

         4.3    TRANSITIONAL REBATE ......................................... 9

         4.4    COST OF GOODS REDUCTION .................................... 10

5.       SELLER OBLIGATIONS NOT ASSUMED .................................... 10

         5.1    EXISTING OBLIGATIONS NOT ASSUMED ........................... 10

6.       REPRESENTATIONS AND WARRANTIES OF SELLER .......................... 11

         6.1    CORPORATE STANDING ......................................... 11

                                       i
<PAGE>

         6.2    AUTHORIZATION .............................................. 11

         6.3    TITLE TO ASSETS ............................................ 11

         6.4    UNDISCLOSED LIABILITIES .................................... 12

         6.5    ASSETS ..................................................... 12

         6.6    ASSETS/PRODUCT SHELF-LIFE .................................. 12

         6.7    PENDING PROCEEDINGS ........................................ 12

         6.8    SETTLED PROCEEDINGS ........................................ 13

         6.9    ASSET RELATED FILES ........................................ 13

         6.10   COMPLIANCE WITH LAWS ....................................... 13

         6.11   CONTRACTS .................................................. 13

         6.12   LEVY NON-COMPETITION AGREEMENTS ............................ 14

         6.13   LICENSES, PERMITS AND CONSENTS ............................. 15

         6.14   NO FINDER FEE DUE .......................................... 15

         6.15   FINANCIAL DATA ............................................. 15

         6.16   MATERIAL ADVERSE CHANGE .................................... 16

         6.17   NO PRIOR LICENSES OR OPTIONS ............................... 16

         6.18   ORDERS AFTER CLOSE OF BUSINESS ON THE CLOSING DATE ......... 16

         6.19   BUSINESS CONTINUATION ...................................... 16

         6.20   CLAIMS AND LITIGATION ...................................... 17

         6.21   SELLER IS NOT A NON-RESIDENT ............................... 17

         6.22   ASSET LOCATION ............................................. 17

         6.23   TAX MATTERS ................................................ 17

         6.24   DISCLOSURE OF FORMULA ...................................... 17

                                       ii
<PAGE>

         6.25   NO OTHER TRADEMARKS ........................................ 17

         6.26   COSMETIC CLASSIFICATION .................................... 18

         6.27   ACCURACY OF REPRESENTATIONS ................................ 18

7.       REPRESENTATIONS AND WARRANTIES OF BLOCK ........................... 18

         7.1    CORPORATE STANDING ......................................... 18

         7.2    AUTHORIZATION .............................................. 18

         7.3    FINDERS' FEE ............................................... 19

         7.4    LITIGATION AND COMPLAINTS .................................. 19

         7.5    ACCURACY OF REPRESENTATIONS ................................ 19

8.       COVENANTS OF SELLER ............................................... 20

         8.1    LIABILITY INSURANCE ........................................ 20

         8.2    CONTINUATION OF NORMAL BUSINESS PRACTICES .................. 20

         8.3    CONFIDENTIALITY ............................................ 20

         8.4    NO PUBLIC ANNOUNCEMENTS .................................... 20

         8.5    ORDER PROCESSING ........................................... 21

         8.6    ACCOUNTS RECEIVABLE ........................................ 21

         8.7    MAINTENANCE OF BOOKS AND RECORDS ........................... 21

         8.8    ACCESS TO BOOKS AND RECORDS ................................ 22

         8.9    BULK SALES ................................................. 22

         8.10   CUSTOMERS .................................................. 22

         8.11   LEVY NON-COMPETITION AGREEMENTS ............................ 23

         8.12   SELLER SALES BETWEEN EXECUTION DATE AND CLOSING DATE ....... 23

                                       iii

<PAGE>

     8.13  SELLER GUARANTEE ......................................... 23

     8.14  U.S. INVENTORY ........................................... 23

9.   COVENANTS OF BLOCK ............................................. 23

     9.1   CONFIDENTIALITY .......................................... 23

     9.2   PUBLIC ANNOUNCEMENTS ..................................... 23

     9.3   ACCOUNTS RECEIVABLE ...................................... 24

     9.4   BDC GUARANTEE ............................................ 24

     9.5   WALGREENS/SELLER DISPUTE ................................. 24

10.  THIRD PARTY CLAIMS ............................................. 25

     10.1  MANUFACTURED AND SOLD BY SELLER .......................... 25

     10.2  MANUFACTURED FOR SALE BY SELLER BUT SOLD BY BLOCK ........ 25

     10.3  MANUFACTURED BY DPI AND SOLD BY BLOCK .................... 25

     10.4  MANUFACTURED BY AND SOLD BY BLOCK ........................ 25

11.  TRADE PROMOTIONS ............................................... 25

     11.1  TRADE PROMOTIONS BY SELLER RELATING TO PRODUCT
           SOLD BY SELLER ........................................... 25

     11.2  TRADE PROMOTIONS BY SELLER BUT PRODUCT SOLD BY BLOCK ..... 26

12.  TRANSITIONAL PERIOD ............................................ 26

     12.1  PRODUCT PACKAGING ........................................ 26

     12.2  REASSIGNMENT OF DRUG IDENTIFICATION NUMBER ............... 26

13.  INTELLECTUAL PROPERTY/TOLL-FREE TELEPHONE NUMBERS .............. 27

     13.1  DOMAIN NAME .............................................. 27

     13.2  SELLER WEB PAGE DOCUMENTS ................................ 27

                                       iv

<PAGE>

     13.3  WEB SITE ACCESS .......................................... 27

     13.4  TOLL-FREE TELEPHONE NUMBERS .............................. 27

14.  INDEMNIFICATION ................................................ 27

     14.1  INDEMNIFICATION BY SELLER ................................ 27

     14.2  INDEMNIFICATION BY BLOCK ................................. 28

     14.3  PROMPT NOTICE REQUIRED ................................... 28

     14.4  INDEMNITOR MAY SETTLE .................................... 29

     14.5  NO SETTLEMENT BY INDEMNITEE .............................. 29

     14.6  MINIMUM CLAIMS ........................................... 30

15.  RESTRICTIVE COVENANT ........................................... 30

     15.1  NO COMPETITIVE PRODUCTS .................................. 30

     15.2  INCIDENTAL INVESTMENTS ................................... 31

16.  SURVIVAL OF REPRESENTATIONS AND WARRANTIES ..................... 31

17.  UNSUPPORTED DEDUCTIONS ......................................... 31

18.  PRODUCT RETURNS ................................................ 32

     18.1  ORDERS ON OR PRIOR TO CLOSING DATE ....................... 32

     18.2  SHIPPED AFTER CLOSING DATE ............................... 32

     18.3  PRESUMED SHIPPED PRIOR TO CLOSING DATE ................... 32

     18.4  BLOCK TO PURCHASE USABLE RETURNS ......................... 32

19.  CONTRACT CLOSING FOR SELLER .................................... 32

     19.1  TITLE TO TRADEMARKS ...................................... 32

     19.2  ESCROW AGREEMENT ......................................... 32

     19.3  SUPPLY AGREEMENT AND TECHNICAL ASSISTANCE AGREEMENT ...... 33

                                       v

<PAGE>

     19.4  FUNDS TO BE PAID ON CLOSING .............................. 33

     19.5  CONFIRMATION OF BLOCK SATISFACTION WITH SECTION 8.10 ..... 33

     19.6  ABOVE IS CONDITION PRECEDENT ............................. 33

20.  CONTRACT CLOSING FOR BLOCK ..................................... 33

     20.1  DELIVERY BY SELLER ....................................... 33

     20.2  CONDITIONS PRECEDENT ..................................... 35

21.  DISPUTE RESOLUTION ............................................. 35

     21.1  DISPUTES ................................................. 35

     21.2  NEGOTIATIONS ............................................. 35

     21.3  MEDIATION ................................................ 35

     21.4  ARBITRATION .............................................. 37

     21.5  ONLY PROCEDURE FOR SETTLING DISPUTES ..................... 39

22.  ASSIGNMENT ..................................................... 39

23.  NOTICES ........................................................ 40

     23.1  WRITTEN NOTICE ONLY ...................................... 40

     23.2  MANNER OF GIVING NOTICE .................................. 40

     23.3  CLOSING DATE OF NOTICE ................................... 40

     23.4  NOTICE TO BLOCK .......................................... 41

     23.5  NOTICE TO SELLER ......................................... 41

     23.6  NO ORAL NOTICE ........................................... 42

24.  MISCELLANEOUS .................................................. 42

     24.1  SECTION HEADINGS ......................................... 42

                                       vi

<PAGE>

     24.2  SEVERABILITY ............................................. 42

     24.3  ENTIRE AGREEMENT/MERGER .................................. 42

     24.4  AMENDMENT ................................................ 43

     24.5  COUNTERPARTS ............................................. 43

     24.6  NO WAIVER OF RIGHTS ...................................... 43

     24.7  FORCE MAJEURE ............................................ 43

     24.8  FURTHER COOPERATION AND ASSURANCES ....................... 43

     24.9  EXPENSES ................................................. 43

     24.10 BINDING EFFECT ........................................... 43

     24.11 TIME AND PLACE OF CLOSING ................................ 44

     24.12 GOVERNING LAW ............................................ 44

     24.13 NO STRICT CONSTRUCTION ................................... 44

     24.14 TAX AND FINANCIAL TREATMENT .............................. 44

EXHIBITS

Exhibit 1.10     Form of Escrow Agreement
Exhibit 4.1      Form of Assignment and Consent Agreement
Exhibit 6.12.1   Non-Competition Agreement between Mortimer Levy and
                 Spectro-Pharm Inc. Draxis Health Inc.
Exhibit 6.12.5   Non-Competition Agreement between Pearl Levy and
                 Spectro-Pharm Inc. Draxis Health Inc.
Exhibit 19.3     Form of Technical Assistance Agreement
Exhibit 19.5     Form of Confirmation of BLOCK Satisfaction WITH Section 8.10
Exhibit 20.1.2   Form of Bill of Sale
Exhibit 20.1.4   Form of Trademark Assignment

                                       vii

<PAGE>

SCHEDULES

Schedule 1.2     Finished Goods Inventory To Be Purchased by BLOCK
Schedule 1.12    Product Ingredients
Schedule 1.21    Trademarks
Schedule 2.3     Allocation of Purchase Price
Schedule 3.2     Additional Assets to be Purchased by BLOCK
Schedule 4.2     DPI SpectroGram Pricing Agreement
Schedule 5.1     Obligations Assumed by BLOCK
Schedule 6.5     Title to Assets
Schedule 6.6.1   Product Shelf-Life Under 2 Years Being Acquired by BLOCK
Schedule 6.6.2   Product To Be Destroyed or Distributed to Medical
                 Professionals
Schedule 6.7     Pending Proceedings Against Seller
Schedule 6.11.1  Agreements in Effect as of Closing Date
Schedule 6.11.2  Alleged Defaults
Schedule 6.11.3  Third Party Manufacturing Agreements
Schedule 6.13    Governmental Licenses, Permits, etc.
Schedule 6.15    Financial Data
Schedule 6.16    Products with Declining Sales and Circumstances Which Could
                 Result in Material Adverse Change
Schedule 6.20    Threatened or Pending Claims or Litigation Against SELLER
Schedule 6.22    Locations of Inventory
Schedule 6.25    Trademarks Being Assigned
Schedule 8.6     Accounts Receivable
Schedule 8.14    U.S. Inventory
Schedule 11.1    Trade Promotions by Seller Relating to Product Sold by Seller
Schedule 11.2    Trade Promotions by Seller But Product Sold by Block

                                       viii

<PAGE>
                                                               EXECUTION COPY

                             ASSET PURCHASE AGREEMENT

     This ASSET PURCHASE AGREEMENT is made and executed on May 3, 2000 by and
among DRAXIS HEALTH INC., a corporation incorporated under the laws of Canada
with its principal place of business being located at 6870 Goreway Drive,
Mississauga, Ontario, Canada L4V 1P1 (hereinafter defined as "SELLER") BLOCK
DRUG COMPANY (CANADA) LIMITED,  a corporation incorporated under the laws of
Ontario, with its principal place of business being located at 7600 Danbro
Crescent, Mississauga, Ontario, Canada L5N 6L6 (hereinafter defined as
"BLOCK"), and BLOCK DRUG COMPANY, INC. a corporation incorporated under the
laws of the State of New Jersey, U.S.A., with its principal place of business
being located at 257 Cornelison Avenue, Jersey City, New Jersey 07302
(hereinafter defined as "BDC").

     WHEREAS, SELLER owns certain assets which are related to Products (as
defined herein) and sold or distributed by SELLER under the Trademarks and to
the Business (as defined herein) established by SELLER under the Trademarks;
and

      WHEREAS, BLOCK desires to purchase from SELLER those certain Assets (as
defined herein) which are related to the Products sold or distributed by
SELLER under the Trademarks and to operate the Business established by
SELLER; and

     WHEREAS, SELLER desires to sell to BLOCK those certain Assets which are
related to the Products sold or distributed by SELLER under the Trademarks to
enable BLOCK to operate the Business established by SELLER under the
Trademarks;

     NOW, THEREFORE, in consideration of the premises and the mutual
agreements, covenants, representations, warranties, promises and provisions
hereinafter set forth, the receipt and sufficiency of which is hereby
irrevocably acknowledged, the parties agree as follows:

                                   ARTICLE I
                                  DEFINITIONS

     When used herein, the following words, terms or phrases, when beginning
with an initial upper case letter, or when appearing in all upper case
letters, whether used in the singular or plural, shall have the meanings set
forth below:

     1.1  "Affiliate" means with respect to any party hereto, any entity
which directly or indirectly controls, is controlled by or is under common
control with any such party.  The term "control" means the power to direct
the affairs of such entity by reason of ownership of at least fifty percent
(50%) of such entity by voting stock, equity interest, contract or otherwise.

     1.2  "Additional Assets" means all Product finished goods inventory
which are owned by SELLER and are to be purchased by BLOCK pursuant to
Article III. Listed on Schedule 1.2 are

                                       1

<PAGE>
                                                               EXECUTION COPY

SELLER's Product finished goods inventory as of April 28, 2000. Additional
Assets shall not include any accounts receivable or cash.

     1.3  "Assets" means the Primary Assets and the Additional Assets.

     1.4  "BDC" means Block Drug Company, Inc.

     1.5  "BLOCK" means Block Drug company (Canada) Limited.

     1.6  "Business" means all activities of SELLER which are directly and
exclusively related to developing, manufacturing, testing, advertising,
promotion, distribution and sale of the Product.

     1.7  "Closing Date" means May 12, 2000 or such earlier or later date as
may be agreed upon by the parties.

     1.8  "Contract" means any agreement, contract, license, commitment,
understanding or similar relationship which relates specifically to the
Assets or the development, manufacturing, distribution, marketing,
advertising, sale or promotion of the Product, between any third party and
SELLER, or any Affiliate of SELLER.

     1.9  "Escrow Agent" means Baker & McKenzie, Barristers and Solicitors.

     1.10 "Escrow Agreement" means an agreement substantially in the form
attached hereto as Exhibit 1.10

     1.11  "Execution Date" means the date that this Agreement has been signed
by the parties hereto on the date first written above.

     1.12  "Formula" means the composition or compositions of ingredients for
the Product, as listed on Schedule 1.12, which are or were manufactured for
or by SELLER and which are under or in development, investigation, testing or
being sold or distributed, or which were developed, investigated, tested,
sold or distributed, by SELLER under the Trademarks in Canada, the United
States or any other territory prior to or as of the Execution Date.

     1.13  "Liabilities" means any liability, indebtedness, claim, loss,
obligation or responsibility, fixed or unfixed, secured or unsecured,
absolute, contingent or otherwise.

     1.14  "Lien" means any mortgage, lien, pledge, charge, lease, security
interest, license, claim, restriction, encumbrance, limitation, hypothec or
any other defect of title of any kind or interest of any other person or
entity in respect of the Assets.

     1.15  "Net Sales" means in relation to Product Subject to AGPs sold by
BDC or a BLOCK Affiliate outside of Canada, the amount by which

                                       2

<PAGE>
                                                               EXECUTION COPY

           (i)  the gross selling price charged by BDC or a BLOCK Affiliate
                for such Product Subject to AGPs

     exceeds

           (ii) all discounts, allowances (in accordance with reasonable
           commercial practice), duties, excise and similar taxes (but not
           income taxes) applicable to the sale of Product Subject to AGPs and
           amounts included in Net Sales which relate to the sale of a Product
           Subject to AGPs by BDC or a BLOCK Affiliate that is thereafter
           returned.

     1.16  "SELLER" means Draxis Health Inc. and its Affiliates.

     1.17  "Primary Assets" means the Product, the Formula, and all other
Product-related Trademarks, goodwill, formulae, know-how, recipes,
technology, artwork, production/quality/R&D/marketing/sales records,
packaging materials including materials in development, market research
related to packaging, promotional and marketing materials including all
materials in development, customer lists, lists of professionals the Product
is promoted to along with all field force activity records, Internet sites
related to the Product, and all other intangible property relating
exclusively to the Product and necessary to operate the Business. Primary
Assets shall not include any accounts receivable or cash.

     1.18  "Product" means all formulations, including but not limited to the
Formula, of the "Spectro" brand line of over-the-counter dermatological
products including SpectroJel, SpectroDerm, SpectroGram, SpectroGluvs,
SpectroTar Shampoo and SpectroTar Wash, which have been developed and/or
manufactured by or on behalf of SELLER and which are or have been marketed or
distributed by SELLER, or which SELLER considered marketing or distributing
under the Trademarks and includes but is not limited to any and all new
"Spectro" brand Product developments, improvements, line extensions and
alternative formulations such as    *
           *

     1.19  "Product Subject to AGPs" means during the time period set forth
in Section 2.4.2, a product which

           (i)  is at the date hereof being sold under or known by one of the
                following brand or product names, namely,

                SpectroDerm
                SpectroGluvs "19"
                Spectro Gram "2"
                Spectro Gram "4"
                Spectro Jel "609 - Regular
                Spectro Jel "609" - Unscented
                Spectro Tar Antiseptic Shampoo
                Spectro Tar Skin Wash

                                       3

* Material has been omitted and filed separately with the
   Securities and Exchange Commission

<PAGE>
                                                               EXECUTION COPY

                    SpectroDerm Scented
                    SpectroDerm Unscented

           (ii)     is the same formulation as the products set out in (i)
                    above regardless of the brand or product name under which
                    it is sold or by which it is known,

           (iii)    is sold under or known by a brand or product name which is
                    the same as the brand or product name under which any
                    product set out in (i) above shall have been sold, or by
                    which any product set out in (i) above shall have been
                    known, at any time after the date hereof or

           (iv)     is in all material respects formulated in the same manner
                    as a product set out in (i) above.

     1.20  "Supply Agreement" means the agreements for the manufacture and
supply of Product as provided in Article IV.

     1.21  "Trademark" means any trademark, trade dress or package design
used by SELLER in connection with the advertising, sale, marketing, promotion
or distribution of the Formula and Product, all trade names and shall
include, but not be limited to, all of SELLER's common law rights in, all
goodwill represented by, and all federal, provincial, state and other foreign
registrations of, and all federal, provincial, state and other foreign
pending applications for the Trademarks listed on Schedule 1.21 which are
registered in, or applied for in, the name of SELLER.

                                    ARTICLE II
                           PURCHASE OF CERTAIN ASSETS

Section 2.1 Sale and Purchase

     SELLER hereby agrees to sell, and BLOCK hereby agrees to purchase, all
of SELLER's right, title and interest in and to the Primary Assets.

Section 2.2 Purchase Price

     In consideration for the purchase of the Primary Assets, BLOCK or BDC or
a BLOCK Affiliate (BDC or a BLOCK Affiliate in respect of any payments which
may become due and owing to SELLER pursuant to Section 2.2.2) shall make the
following payments:

     2.2.1  to SELLER on the Closing Date the sum of TWELVE MILLION FIVE
            HUNDRED THOUSAND CANADIAN DOLLARS (CAN$12,500,000.00), subject to
            Section 2.2.3, by wire transfer of immediately available funds to a
            SELLER account for which transfer data has been given to BLOCK in
            writing prior to the Closing Date;

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     2.2.2  to SELLER additional goodwill payments (hereinafter "AGPs") on Net
            Sales of Product Subject to AGPs in accordance with the provisions
            of Section 2.4; and

     2.2.3  on the Closing Date BLOCK and SELLER shall deposit on SELLER's
            behalf, out of that portion of the purchase price described in
            Section 2.2.1, the sum of Five Hundred Thousand Dollars CANADIAN
            (CAN$500,000.00) in an escrow account pursuant to the Escrow
            Agreement.

Section 2.3 Allocation of Purchase Price

     The purchase price for the Primary Assets shall be allocated as set out
in Schedule 2.3.

     The parties agree to be bound to make all tax filings, including any
federal, provincial, state and local tax returns, on a basis consistent with
such purchase price allocation.

Section 2.4 Additional Goodwill Payments

     Each of BLOCK, BDC or their Affiliates as applicable depending upon
which entity sells Product Subject to AGPs shall pay to SELLER AGPs on the
Net Sales of Product Subject to AGPs sold worldwide, but excluding for
purposes of this provision any and all sales to customers located in Canada.
BLOCK shall use its commercially reasonable efforts to ensure that Product
sold to third parties located in Canada will not be resold in the United
States or elsewhere outside of Canada. These AGPs shall be computed in the
manner and for the time period as follows:

     2.4.1  AGP Rate. BLOCK, BDC or their Affiliate as applicable shall pay to
            SELLER AGPs equal to FIVE PERCENT (5%) of such Net Sales of Product
            Subject to AGPs for the time period set forth in Section 2.4.2.

     2.4.2  Time Period. The AGPs shall be payable for the time period
            commencing on the Closing Date and ending on June 30, 2007,
            provided, however, that AGPs will become due or be paid only if
            Draxis has a corresponding payment obligation arising in respect of
            all or part of the AGPs under the Levy Non-Competition Agreements
            discussed in Section 6.12.

     2.4.3  Marketing and Sales Discretion. The parties agree that BLOCK, BDC
            and their Affiliates, in their sole and non-reviewable
            discretion, shall be free at all times to determine the degree,
            timing, scope, support appropriate for, and desirability of, the
            commencement, continuation, or termination of the marketing or sale
            of the Product Subject to AGPs within Canada and elsewhere.

     2.4.4  Quarterly Reports and Payment. Within forty-five (45) days after
            the end of each calendar quarter during the term hereof for which
            AGPs are due, BLOCK, BDC or their Affiliate as applicable shall
            submit to SELLER an AGPs report. This report shall indicate the Net
            Sales of Product Subject to AGPs sold worldwide, but excluding for
            purposes of this provision any and all sales in Canada, for the

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            immediately preceding calendar quarter and the calculation of the
            AGPs due SELLER for such calendar quarter. Along with the report,
            the AGPs amount due pursuant to such AGPs report shall be remitted
            to SELLER. Notwithstanding the foregoing, within thirty-five (35)
            days after the end of each calendar quarter during the term hereof
            for which AGPs are due, BLOCK, BDC or their Affiliate as applicable
            shall submit to SELLER either a preliminary AGPs report based upon
            commercially reasonable best estimates of the Net Sales of Product
            Subject to AGPs or the final AGPs report together with the
            applicable AGPs amount due. In the event that a preliminary AGPs
            report is submitted to SELLER, the final AGPs report shall be
            submitted by BLOCK, BDC or their Affiliate as applicable to SELLER
            within five days thereafter, together with the applicable AGPs
            amount due.

     2.4.5  Right to Verify Amounts Due. SELLER shall have the right, but
            only during BLOCK's, BDC's or their Affiliate's regular business
            hours, as applicable, and upon at least ten (10) days prior written
            notice, to have the books, records and accounting procedures used by
            BLOCK, BDC or their Affiliates in the determination of Net Sales and
            the calculation of the AGPs due thereon, reviewed by a Certified
            Public Accounting Firm; provided, however, that the sole purpose of
            any such review shall be to verify the accuracy of the computations
            made by BLOCK, BDC or their Affiliates as applicable in connection
            therewith and in no event shall the report of such accounting firm
            disclose individual customer data. Any disputes relating to the
            computations made or accounting procedures used by BLOCK, BDC or
            their Affiliates in its determination of Net Sales or the
            calculation of AGPs due thereon shall be resolved by a mutually
            acceptable "Big Six" accounting firm. Such reviews may occur not
            more than once in any twelve (12) month period, cover no more than
            the previous two (2) years, and cover only such periods which have
            not been previously reviewed. Notwithstanding the foregoing, BLOCK
            agrees to cooperate with and assist SELLER in responding to any
            request from Mortimer Levy or Pearl Levy relating to an examination
            of books and records made pursuant to the Levy Non-Competition
            Agreements referred to in Section 6.12 herein.

Section 2.5 Transfer Taxes

     To the extent that the sale and transfer of the Assets by SELLER to
BLOCK is subject to Canadian federal goods & services tax or harmonized sales
tax ("GST"), Quebec Sales Tax ("QST") or Ontario Retail Sales Tax ("RST"), if
any, such taxes are not included in the purchase price. To the extent that
the sale and transfer of the Assets by SELLER to BLOCK is subject to any
other commodity or transfer taxes, if any, such taxes are included in the
purchase price.

     CANADIAN GOODS & SERVICES TAX AND QUEBEC SALES TAX: BLOCK and SELLER
shall jointly make the election provided for under section 167 of the EXCISE
TAX ACT (Canada) (the "ETA") and the election provided for under section 75
of the ACT RESPECTING QUEBEC SALES TAX (the "QSTA")

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so that no GST or QST will be payable in respect of the sale and transfer of
the Assets. In this regard:

     (i)   BLOCK represents and warrants to SELLER that BLOCK is registered
           for purposes of Part IX of the ETA and that BLOCK'S GST registration
           number is 100546985;
     (ii)  BLOCK represents and warrants to SELLER that BLOCK is registered
           for the purposes of the QSTA and that BLOCK'S QST registration number
           is 1013227698;
     (iii) SELLER represents and warrants to BLOCK that SELLER is registered
           for purposes of Part IX of the ETA and that SELLER'S GST registration
           number is 871017356;
     (iv)  SELLER represents and warrants to BLOCK that SELLER is registered
           for purposes of the QSTA and that SELLER's QST registration number is
           1020899073; and
     (v)   SELLER represents and warrants to BLOCK that the Assets constitute
           a business or part of a business that was established or carried on
           by SELLER and that SELLER is providing to BLOCK all or substantially
           all of the property that can reasonably be regarded as being
           necessary for BLOCK to be capable of carrying on the business or part
           as a business.

     BLOCK shall file the ETA s.167 election with the Canada Customs &
Revenue Agency not later than the day on or before which the return under
Division V of Part IX of the ETA is required to be filed for BLOCK's first
reporting period in which GST would, but for the election, have become
payable in respect of the supply of any property or service made under this
Agreement.

     BLOCK shall file the QSTA s.75 election with the Ministere du Revenu du
Quebec not later than the day on or before which the return under Chapter VIII
of the QSTA is required to be filed for BLOCK's first reporting period
in which GST would, but for the election, have become payable in respect of
the supply of any property or service made under this Agreement.

                                   ARTICLE III
                         PURCHASE OF ADDITIONAL ASSETS

Section 3.1 Additional Asset Audit

     BLOCK, at its expense, shall on the day after the Closing Date conduct
or have conducted on its behalf, a physical count of the Additional Assets
which BLOCK shall purchase, and which SELLER shall sell, pursuant to section
3.2. Such physical count shall include the determination of the quantity of
Product in accordance with generally accepted accounting principles and the
shelf-life set forth in Schedule 6.6.1. SELLER may observe and participate in
such physical count. BLOCK shall provide SELLER with a report of the results
of the physical count of such Additional Assets on the first business day
after the Closing Date. In the event SELLER and BLOCK are unable to resolve
any differences in the Additional Asset audit, a mutually agreeable
accounting firm shall be

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retained by the parties to reconcile any differences. The findings of such
mutually agreeable firm shall be final and binding upon SELLER and BLOCK. The
costs of retaining such mutually agreeable firm shall be divided equally
between SELLER and BLOCK. Notwithstanding anything contained herein to the
contrary, BLOCK shall not purchase: (i) any U.S. Product finished goods
inventory wherever located; and (ii) any SPECTRO TAR product samples.

Section 3.2 Additional Assets

     On the first business day following the Closing Date BLOCK shall
purchase from SELLER, and SELLER shall sell to BLOCK the Additional Assets
identified in the quantities determined pursuant to Section 3.1 at SELLER's
actual cost to Draxis Health Inc. which shall not exceed SELLER's 1999 actual
cost, except for SpectroGram "2" which will be actual 2000 cost, as listed on
Schedule 3.2, which shall be subject to verification by BLOCK. BLOCK shall
have the responsibility for all shipping costs for transportation of such
Additional Assets.

Section 3.3 Payment and Passage of Title

     BLOCK shall pay the purchase price for the Additional Assets and the
pre-closing Additional Assets purchased pursuant to Section 3.4 by wire
transfer to SELLER's account identified in Section 2.2.1 for such Additional
Assets and title to such Additional Assets purchased by BLOCK pursuant to
Section 3.2 shall pass to BLOCK on the first business day after the Closing
Date.

Section 3.4 Pre-Closing Date Purchase of Additional Assets

     Five (5) days prior to the Closing Date, BLOCK shall purchase from SELLER
an amount of Additional Assets, excluding SpectroGram 200 ml size if
SpectroGram 200 ml size is not available prior to the Closing Date, equal to
regular domestic quantities for the one (1) week period directly preceding
the Execution Date in accordance with SELLER's past domestic trade practices.
The amount of such Additional Assets shall be determined from the customer
list provided by SELLER to BLOCK in accordance with Section 8.10 herein and
shall be purchased by BLOCK subject to BLOCK's reasonable satisfaction with
the BONA FIDES of the quantities all in accordance with Section 8.10 and BLOCK
shall pay SELLER for such pre-closing Additional Assets on the first business
day after the Closing Date.

                                   ARTICLE IV
                           SUPPLY OF PRODUCT BY SELLER

Section 4.1 Manufacture and Supply of Product

     SELLER agrees to cause its Affiliate, Draxis Pharma Inc. ("DPI"), to
manufacture Product for, and to supply Product to, BLOCK and BLOCK agrees to
purchase Product from DPI according

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to the terms of an Assignment and Consent Agreement ("Supply Agreement") in
the form attached hereto as Exhibit 4.1 which shall be entered into
contemporaneously herewith.

Section 4.2 - Manufacture of SpectroGram "2"

     Pursuant to the Supply Agreement, DPI shall be responsible for the
production of SpectroGram "2" (or such other suffix as BLOCK may select) for
the term of the Supply Agreement after purchase commitments to Entreprises
Import FAB have been resolved with BLOCK seeking the earliest possible
transfer to DPI consistent with DPI's reasonable ability to produce
SpectroGram "2".                     *

                               BLOCK shall be responsible for all costs of
transferring the production of SpectroGram "2" from Entreprises Import FAB to
DPI set forth on Schedule 4.2 (as modified by Exhibit 4.1, Schedule C,
Footnote 1) taking into account that DPI is a cGMP facility, including method
validation, process validation and, at BLOCK's option, the establishment of a
stability program. SELLER agrees to use its reasonable best efforts to assist
BLOCK in the cancellation of applicable purchase orders with Entreprises
Import FAB set out in Schedule 5.1 and to minimize the cost of such
cancellation. SELLER shall cause DPI to use its reasonable best efforts to
minimize production disruption.

Section 4.3 - Transitional Rebate

     By way of transitional assistance, SELLER shall reimburse to BLOCK
CDN$2.00 per litre of SpectroGram "2" finished product invoiced by DPI and
such SpectroGram "2" product purchased by BLOCK pursuant to Section 3.2 or
pursuant to purchase orders listed on Schedule 5.1 - Attachment B, subject to
the following conditions:

     4.3.1  for purposes of this Section 4.3, the cost of goods of
            SpectroGram "2" shall be deemed to exclude any new increases in
            the cost of goods due to packaging or other changes initiated by
            BLOCK.

     4.3.2  DPI's invoiced per litre cost of goods to BLOCK for SpectroGram "2"
            in any relevant year shall exceed forty-seven (47)% of BLOCK's
            weighted average worldwide list price of SpectroGram "2" per litre.

     4.3.3  The rebate shall be subject to a yearly maximum of CDN$35,000 in
            2000; CDN$45,000 in 2001, CDN$55,000 in 2002 and CDN$65,000 in 2003.

     4.3.4  within forty-five (45) days of the end of each relevant calendar
            year, BLOCK shall submit to SELLER its worldwide price list for
            SpectroGram "2", its worldwide unit sales volumes per jurisdiction
            and the total cost of goods invoiced by DPI to BLOCK.

     4.3.5  SELLER shall calculate the rebate due and pay BLOCK any rebate
            owing within 30 days of receipt of the information referred to in
            Section 4.3.4.

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* Material has been omitted and filed separately with the
   Securities and Exchange Commission

<PAGE>

      4.3.2  DPI's invoiced per litre cost of goods to BLOCK for SpectroGram
             "2" in any relevant year shall exceed forty-seven (47) % of
             BLOCK's weighted average world-wide list price of SpectroGram "2"
             per litre.

      4.3.3  The rebate shall be subject to a yearly maximum of CDN$35,000 in
             2000; CDN$45,000 in 2001, CDN$55,000 in 2002 and CDN$65,000 in
             2003.

      4.3.4  within forty-five (45) days of the end of each relevant calendar
             year, BLOCK shall submit to SELLER its worldwide price list for
             SpectroGram "2", its worldwide unit sales volumes per
             jurisdiction and the total cost of goods invoiced by DPI to BLOCK.

      4.3.5  SELLER shall calculate the rebate due and pay BLOCK any rebate
             owing within 30 days of receipt of the information referred to in
             Section 4.3.4.

Section 4.4 Cost of Goods Reduction

      SELLER agrees to cause DPI to use its commercially reasonable best
efforts, in accordance with industry practice, to work with BLOCK to achieve
a permanent reduction in the cost of goods of SpectoGram "2" through
manufacturing efficiencies and other methods. Where a reduction in the cost
of goods is achieved, the $2.00 rebate per litre shall be reduced by the per
litre cost of goods reduction and the yearly maximum shall be reduced by a
percentage equal to the dollar amount of the reduction per litre divided by
CDN$2.00, the total rebate per litre.

                                  ARTICLE V
                       SELLER OBLIGATIONS NOT ASSUMED

Section 5.1 Existing Obligations Not Assumed

      Except as set forth on Schedule 5.1 or in the Supply Agreement, no
obligation, Contract or other Liabilities of any nature whatsoever (whether
express or implied, due or to become due) of SELLER relating to the Assets,
is being assumed by BLOCK as a result of this Asset Purchase Agreement.
Nothing contained in this Asset Purchase Agreement shall be interpreted or
construed to create any obligation on the part of BLOCK to pay, perform,
assume or otherwise discharge any Liabilities of SELLER except as set forth
on Schedule 5.1. BLOCK is assuming only those purchase orders or partial
orders listed on Schedule 5.1 which are for Product which has not become part
of SELLER's inventory by close of business on the Closing Date.

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Section 4.4 Cost of Goods Reduction

      SELLER agrees to cause DPI to use its commercially reasonable best
efforts, in accordance with industry practice, to work with BLOCK to achieve
a permanent reduction in the cost of goods of SpectoGram "2" through
manufacturing efficiencies and other methods. Where a reduction in the cost
of goods is achieved, the $2.00 rebate per litre shall be reduced by the per
litre cost of goods reduction and the yearly maximum shall be reduced by a
percentage equal to the dollar amount of the reduction per litre divided by
CDN$2.00, the total rebate per litre.

                                  ARTICLE V
                       SELLER OBLIGATIONS NOT ASSUMED

Section 5.1 Existing Obligations Not Assumed

      Except as set forth on Schedule 5.1 or in the Supply Agreement, no
obligation, Contract or other Liabilities of any nature whatsoever (whether
express or implied, due or to become due) of SELLER relating to the Assets,
is being assumed by BLOCK as a result of this Asset Purchase Agreement.
Nothing contained in this Asset Purchase Agreement shall be interpreted or
construed to create any obligation on the part of BLOCK to pay, perform,
assume or otherwise discharge any Liabilities of SELLER except as set forth
on Schedule 5.1. BLOCK is assuming only the purchase orders or partial orders
listed in Schedule 5.1 which are for Product not received into inventory and
covered under Section 3.2 prior to the Closing Date.

                                  ARTICLE VI
                   REPRESENTATIONS AND WARRANTIES OF SELLER

Section 6.1 Corporate Standing

      SELLER represents and warrants that SELLER is a corporation duly
organized and subsisting under the laws of Canada and has the corporate power
to own, sell, license or lease its properties and assets and to carry on its
Business as now conducted. SELLER is duly qualified, except where the failure
to qualify is immaterial, admitted or otherwise authorized to transact
Business and is in good standing as a foreign corporation in all
jurisdictions in which the conduct or nature of SELLER's Business or the
ownership, sale, license or leasing of its properties or Assets requires it
to be so qualified, admitted or otherwise authorized.

Section 6.2 Authorization

      SELLER represents and warrants that SELLER has full corporate power and
authority to execute and deliver this Asset Purchase Agreement and to carry
out the transactions contemplated herein. SELLER has duly authorized the
execution and delivery of this Asset Purchase Agreement

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and the transactions contemplated hereby, and no other corporate action is
necessary to authorize this Asset Purchase Agreement and the transactions
contemplated hereby. This Asset Purchase Agreement has been duly executed and
delivered by a duly authorized officer of SELLER and constitutes the valid
and binding obligation of SELLER, enforceable in accordance with its terms,
except that enforceability may be limited by general principals of equity
and the exercise of judicial discretion in particular cases. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby will not result in a breach of the terms or
conditions of, or constitute a default under, or an event which with notice
or lapse of time or both would become a default, or violate, or require, as
the case may be: (i) any provision of any statute, law, regulation or
ordinance, (ii) the Certificate or Articles of Amalgamation or By-Laws of
SELLER, (iii) any agreement, lease, mortgage or other instrument or
undertaking, to which SELLER is a party or by which it or its property or
assets is or may be bound or affected, except for a General Security Agreement
in favour of National Bank from which the Primary Assets and the Additional
Assets will be released prior to the Closing Date and evidence of such
release satisfactory to BLOCK shall be provided to BLOCK prior to the Closing
Date, (iv) any judgment, order, writ, injunction or decree of any court,
administrative agency or governmental body, or (v) any action of or by, or
filing with, any governmental body, agency or official.

Section 6.3 Title to Assets

      SELLER represents and warrants that on the Closing Date SELLER has or
will have good, valid and marketable title to the Assets, in all cases
subject to no Liabilities or Liens and that SELLER has not transferred,
assigned, conveyed, pledged, licensed or otherwise encumbered the title to
any Asset and there are no agreements or understandings, whether oral or
written, relating to title to the Assets to which SELLER is a party and which
are in effect as of the Closing Date.
Section 6.4 Undisclosed Liabilities

      SELLER represents and warrants that there are no undisclosed
Liabilities or Liens relating to or affecting the Assets which BLOCK shall be
obligated to assume hereunder.

Section 6.5 Assets

      Except as disclosed in Schedule 6.5, SELLER represents and warrants
that SELLER is: (i) the sole and exclusive owner of, with all right, title
and interest in and to, the Assets and has the right to the use thereof; (ii)
vested with the full right and power to convey good, marketable and
unencumbered title to the Assets to BLOCK; (iii) not infringing any of the
rights of third parties concerning any of the Assets, nor is SELLER aware of
any facts on which a claim for such infringement can be based; and, (iv) not a
party to any agreement, contract, commitment, understanding or license with
any other party to convey title to the Assets.

Section 6.6 Assets/Product Shelf-Life

      SELLER represents and warrants that the Assets are of merchantable
quality and fit for their usual purpose and are all good, useable, saleable,
balanced and, except as indicated in Schedule 6.6.1, have a minimum of two
(2) years shelf-life remaining. Set forth on Schedule 6.6.1 is the shelf-

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life of the Product as measured from the date of manufacture when stored
under normal and customary conditions. SELLER covenants and agrees with BLOCK
that SELLER shall, at its sole cost and expense, cause all Product not
acquired by BLOCK under this Agreement, which is listed in Schedule 6.6.2, to
be destroyed, with the exception of Spectro-Tar product samples which SELLER
may distribute to medical practitioners, and SELLER shall provide BLOCK
within 45 days of the Closing Date with proof of such distribution or
destruction to BLOCK's reasonable satisfaction.

Section 6.7 Pending Proceedings

     SELLER represents and warrants that there are no legal, administrative,
arbitration or other proceedings or governmental investigation or enforcement
against or affecting SELLER relating to the Assets or the transactions
contemplated herein, and SELLER has not received notice of any event or facts
upon which any such proceedings, investigations or enforcement can be based.
Except as disclosed in Schedule 6.7, SELLER further represents and warrants
that to best of SELLER'S knowledge there are no pending or threatened legal,
administrative, arbitration or other proceedings or governmental
investigation or enforcement against or affecting SELLER relating to the
Assets or the transactions contemplated herein and there has not occurred any
event nor are there any facts upon which any such proceedings, investigations
or enforcement can be based.

Section 6.8 Settled Proceedings

     SELLER represents and warrants that SELLER has not settled any legal,
administrative, arbitration or other proceeding or governmental
investigation or enforcement involving the Assets or the transactions
contemplated herein. SELLER is not subject to, nor is there outstanding, any
judgment, award, order, writ, injunction or decree of any court,
administrative agency, governmental body or arbitration tribunal and relating
to the Assets or the transactions contemplated herein.

Section 6.9 Asset Related Files

     SELLER represents and warrants that BLOCK has been provided with access
to all files of SELLER relating to: (i) all customer complaints, reports,
demands or claims relating to the Assets; (ii) all recalls, complaints,
regulatory letters, directives or notices, claims or other regulatory actions
of any federal, provincial, state, municipal or local body, agency or
official with respect to the Assets; (iii) all litigation, demands or claims
against SELLER seeking damages for injuries resulting from the manufacture,
sale or use of the Assets; (iv) all litigation, demands or claims against
SELLER seeking damages or equitable relief concerning or relating to the
Assets; and (v) all reports of, records and files relating to and any
correspondence concerning Product diversion, as that term is generally
understood in the trade, relating to the presence in Canada of any Product
which was sold to any third party which represented to SELLER that such
Product would not be sold in Canada. All of SELLER's files referred to in
this Section 6.9 are maintained by SELLER in all respects in accordance with
all applicable federal, provincial, state, municipal and local

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statutes, laws and regulations and have been maintained by SELLER in the
ordinary course of SELLER's business.

Section 6.10 Compliance with Laws

     SELLER represents and warrants that the Product, as manufactured by or
on behalf of SELLER, and as sold and delivered by SELLER prior to or after
the Closing Date as set out in this Agreement, was developed, manufactured,
packaged, labeled, stored, promoted, sold and shipped in compliance with all
applicable federal and provincial health and safety statutes, laws, rules,
regulations, directives, policies and codes including but not limited to the
requirements of the Category IV monograph for Medicated Skin Care Products,
Antidandruff Products and Antiseptic Skin Cleansers.

Section 6.11 Contracts

     SELLER represents and warrants that:

     6.11.1      except as set forth on Schedule 6.11.1, there are no
                 agreements or understandings, whether oral or written,
                 relating to the development, manufacture, advertising,
                 sale, marketing, distribution or use or promotion of,
                 and non-competition with, the Assets to which SELLER is
                 a party and which are in effect as of the Closing Date.

     6.11.2      Except as set forth on Schedule 6.11.2, SELLER is not in
                 default in any respect, nor has it received notice or
                 allegation of default concerning any Contracts and there
                 has not occurred any event which would constitute a default.

     6.11.3      except as set forth on Schedule 6.11.3, there are no third
                 party manufacturing or supply agreements covering the Product
                 and such third party manufacturers supply on a purchase order
                 basis.

Section 6.12 Levy Non-Competition Agreements

     With respect to the Non-Competition Agreement between Mortimer Levy and
Spectro-Pharm Inc., Draxis Health Inc., it being understood that
Spectro-Pharm Inc. amalgamated with SELLER on or about October 1, 1997,
SELLER shall have the sole responsibility and shall be liable for any and all
matters pertaining to:

     6.12.1      the agreement to pay certain consideration to Mortimer Levy
                 as set out in Article 4 of a Non-Competition Agreement dated
                 the 14th day of February, 1997, at Exhibit 6.12.1;

     6.12.2      the enforcement of the confidentiality and non-competition
                 covenants and agreements of Mortimer Levy as set out in the
                 Non-Competition Agreement at Exhibit 6.12.1;

     6.12.3      any breach by SELLER of the obligations of SELLER set out in
                 the Non-

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                 Competition Agreement at Exhibit 6.12.1; and

     6.12.4      the observance and performance by SELLER of all other
                 obligations necessarily to be performed by SELLER in order
                 to maintain and ensure that this Non-Competition Agreement is
                 and at all times will remain in good standing and in full
                 force and effect.

     With respect to the Non-Competition Agreement between Pearl Levy and
Spectro-Pharm Inc., Draxis Health Inc., it being understood that
Spectro-Pharm Inc. amalgamated with SELLER on or about October 1, 1997,
SELLER shall have the sole responsibility and shall be liable for any and all
matters pertaining to:

     6.12.5      the agreement to pay certain consideration to Pearl Levy as
                 set out in Article 4 of a Non-Competition Agreement dated the
                 14th day of February, 1997, at Exhibit 6.12.5;

     6.12.6      the enforcement of the confidentiality and non-competition
                 covenants and agreements of Pearl Levy as set out in the
                 Non-Competition Agreement at Exhibit 6.12.5;

     6.12.7      any breach by SELLER of the obligations of SELLER set out in
                 the Non-Competition Agreement at Exhibit 6.12.5; and

     6.12.8      the observance and performance by SELLER of all other
                 obligations necessarily to be performed by SELLER in order to
                 maintain and ensure that this Non-Competition Agreement is
                 and at all times will remain in good standing and in full
                 force and effect.

     SELLER represents and warrants that:

     6.12.9      no notice is required to be given to either Mortimer Levy or
                 Pearl Levy to give effect to or concerning the sale of the
                 Assets to BLOCK;

     6.12.10     consent is not required from either Mortimer Levy or Pearl
                 Levy as a condition of, or pertaining to, the sale of the
                 Assets to BLOCK.

Section 6.13 Licenses, Permits and Consents

     SELLER represents and warrants that, except as set forth in Schedule
6.13, no governmental licenses, permits, authorizations, certificates or
approvals are required by, nor is notification required to be provided to,
any federal, provincial, state, municipal, local or foreign governmental
agency or department, for or pertaining to the manufacture, labeling,
packaging or sale of the Product or the ownership, use or conveyance of the
Assets.

Section 6.14 No Finder Fee Due

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     SELLER represents and warrants that there are no investment bankers,
brokers, finders or other intermediaries which have been retained by, or are
authorized to act on behalf of, SELLER who will be entitled to any fee or
commission from BLOCK or any BLOCK Affiliate upon the consummation of the
transactions contemplated herein. SELLER agrees to indemnify and defend BLOCK
and its Affiliates and hold them harmless from all liabilities, costs and
expenses, including attorney fees and disbursements, incurred by BLOCK, or
any BLOCK Affiliate, as a result of any claim or demand made against BLOCK,
or against any BLOCK Affiliate, by or on behalf of any third party claiming
to have acted on behalf of SELLER, for any fee, commission or other form of
compensation allegedly due such claimant as a result of the execution of this
Asset Purchase Agreement, or the closing of any transaction contemplated
hereunder.

Section 6.15 Financial Data

     SELLER represents and warrants that SELLER has provided BLOCK with the
financial information set out in Schedule 6.15 concerning the Assets which
are true, correct and complete for the periods indicated in all material
respects and such financial information completely, fairly and accurately
reflect the Business of the SELLER as it pertains to the Assets in Canada
together with additional products contained in the Spectro-Pharm division of
the SELLER and that the following information is true, correct and complete
for the periods indicated: sales outside Canada for the financial years
ending December 31, 1998 and 1999 and for the quarter ending March 31, 2000;
monthly gross sales commencing July 1999 and ending March 2000; sales by
customer accounts in Canada and the United States commencing July 1999 and
ending March 31, 2000. SELLER represents and warrants that it has made full
disclosure of and has provided to BLOCK all material financial data which is
reasonably necessary for a third party at arms length from the Business of
the SELLER to make a fully informed decision concerning entering into this
Agreement. SELLER has not withheld any material financial information.

Section 6.16 Material Adverse Change

     Except as set forth in Schedule 6.16, SELLER represents and warrants
that for the twelve (12) month period immediately preceding the Execution
Date in Canada, SELLER has conducted the Business in the ordinary course and
there has been no delisting of Products by major customers or decline in the
sales of the Products and; during the twelve months ending December 31, 1999
compared to the twelve months ending December 31, 1998 in the United States,
SELLER has conducted the Business in the ordinary course and there has been
no decline in sales of the Products. Except as set forth additionally on
Schedule 6.16, there has not been, nor is SELLER aware of any pending
circumstances, including but not limited to Product diversion as that term is
generally understood in the trade, disputes with labor or suppliers, which
could result in any material adverse change in the Business.

Section 6.17 No Prior Licenses or Options

     SELLER represents and warrants that no third party has been granted any
license, right or option pertaining to the Assets.

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Section 6.18 Orders After Close of Business on the Closing Date

     SELLER represents and warrants that all orders of Product received by
SELLER after the close of business on the Closing Date will be accepted on
behalf of, and will be fulfilled by, BLOCK.

Section 6.19 Business Continuation

     SELLER represents and warrants that for the one hundred and twenty (120)
day period immediately preceding the Closing Date, all Product sold and/or
provided as free goods by SELLER has been sold at SELLER's regular domestic
prices, or provided as free goods, in regular domestic quantities in
accordance with SELLER's past domestic trade practices. SELLER further
represents and warrants that any increase in sales during this time period is
the result of new customers or a BONA FIDE increase in orders from existing
customers. Between the Execution Date and the Closing Date, SELLER shall
provide BLOCK with a daily list of Product orders.

Section 6.20 Claims Litigation

     SELLER represents and warrants that there are no claims or litigation
and SELLER has received no notice of any pending claims or litigation
involving the Assets, the Business or the Products and to the best of
SELLER's knowledge, there no threatened claims or litigation involving the
Assets, the Business or the Products except as set forth on Schedule 6.20.

Section 6.21 SELLER is Not a Non-Resident

     SELLER represents and warrants that SELLER is not a non-resident of
Canada as that term is defined in the INCOME TAX ACT, CANADA.

Section 6.22 Asset Location

     SELLER represents and warrants that Schedule 6.22 sets forth the
complete list of all locations, including the full address thereof, of each
of the Assets.

Section 6.23 Tax Matters

     SELLER represents and warrants that there are no federal, foreign,
provincial, state, municipal or local taxes or levies of any kind, character
or description (including interest and penalties thereon) which constitute,
or which may constitute, a Lien with respect to the Assets.

Section 6.24 Disclosure of Formula

     Immediately following execution of this Agreement, SELLER shall disclose
to BLOCK in writing all Product formulations including, but not limited to,
the Formula, and all manufacturing procedures, test methods, all regulatory
documentation such as Notices of Compliance, analytical procedures, stability
data, know-how, recipes, specifications for the Product and the raw materials
and components and packaging, and such other trade secrets related to the
Product and the Formula

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as are necessary for BLOCK to fully utilize the Formula and to understand how
to manufacture the Product.

Section 6.25 No Other Trademarks

     SELLER represents and warrants that there are no other Trademarks or
Business Names used by SELLER in connection with the advertising, sale,
marketing, promotion or distribution of the Products and/or in connection
with the Business established by SELLER other than those listed on Schedule
6.25. Further, the SELLER agrees that it shall not use any trademark,
including trade dress and package design, which is substantially similar to
or so nearly resembles the Trademarks so as to cause deception or confusion
with the Trademarks.

Section 6.26 Cosmetic Classification

     SELLER represents and warrants that the following products were
registered as cosmetics with Health Canada on the dates indicated:
SpectroJel, January 1992; SpectroGluvs, March 1993 and SpectroDerm, December
1995. SELLER further represents and warrants that since the date of each of
these cosmetic classifications, SELLER has not altered or made any change to
the claims submitted to Health Canada or to the labeling of these products
which in any way would affect the classification of these products as
cosmetic.

Section 6.27 Accuracy of Representations

     The representations and warranties made by SELLER in this Agreement and
the Schedules attached hereto are now and will be as of the Closing Date
true, correct and complete in all material respects and do not contain now
and will not contain as of the Closing Date any statement which is false or
misleading with respect to any material fact.

                                  ARTICLE VII
                      REPRESENTATIONS AND WARRANTIES OF BLOCK

Section 7.1 Corporate Standing

     BLOCK represents and warrants that BLOCK is a corporation duly
organized, validly existing and in good standing under the laws of Ontario
and has the corporate power to own, acquire or lease its properties and
assets and to carry on its business as now being conducted. BLOCK is duly
qualified, admitted or otherwise authorized to transact business and is in
good standing as a foreign corporation in all jurisdictions in which the
conduct or nature of BLOCK's business or the ownership or leasing of its
properties or assets requires it to be so qualified, admitted or otherwise
authorized.

Section 7.2 Authorization

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         BLOCK represents and warrants that BLOCK has full corporate power
and authority to execute and deliver this Agreement, carry out the
transactions contemplated hereunder, and promote, market and sell the Product
as of the Closing Date and that the Executive Committee of the Board of
Directors of BLOCK has duly authorized the execution and delivery of this
Agreement and the transactions contemplated hereby. No other corporate action
on the part of BLOCK is necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement has been duly executed  and
delivered by a duly authorized officer of BLOCK and constitutes the valid and
binding obligation of BLOCK, enforceable in accordance with its terms, except
that enforceability may be limited by general principles of equity and the
exercise of judicial discretion in particular cases. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in a breach of the terms or conditions
of, or constitute a default under, or an event which with notice or lapse of
time or both would become a default, or violate, or require, as the case may
be, (i) any provision of any law, regulation or ordinance, (ii) the
Certificate or Articles of Incorporation or By-laws of BLOCK, (iii) any
agreement, lease, mortgage or other instrument or undertaking to which BLOCK
is a party or by  which it or its property or assets is or may be bound or
affected, (iv) any judgment, order, writ, injunction or decree of any court,
administrative agency or governmental body, or (v) any action of or by, or
filing with, any governmental body, agency or official.

Section 7.3 Finders' Fee

     BLOCK represents and warrants that there is no investment banker,
broker, finder or other intermediary which has been retained by, or is
authorized to act on behalf of, BLOCK who will be entitled to any fee or
commission from SELLER or any SELLER Affiliate upon the consummation of the
transactions contemplated herein. BLOCK agrees to indemnify SELLER and its
Affiliates and hold them harmless from all liabilities, costs and expenses
incurred by SELLER as a result of any claim or demand made against SELLER by
any such person claiming to have acted on behalf of BLOCK for any fee or
commission allegedly due to such person as a result of the execution of this
Asset Purchase Agreement, or the closing of any transaction contemplated
hereunder.

Section 7.4 Litigation and Complaints

     BLOCK represents and warrants that there are no legal, administrative,
arbitration or other proceeding or governmental investigation pending nor, to
the best of BLOCK's knowledge, threatened against or affecting BLOCK relating
to transactions contemplated hereby, and there has not occurred any event nor
are there any facts upon which any such proceedings or investigations can be
based. BLOCK has not settled any legal, administrative, arbitration or other
proceeding or governmental investigation involving the transactions
contemplated hereby. BLOCK is not subject to, nor is there outstanding, any
judgment, award, order, writ, injunction or decree of any court,
administrative agency, governmental body or arbitration tribunal and relating
to the transactions contemplated hereby.

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Section 7.5 Accuracy of Representations

     The representations and warranties made by BLOCK in this Agreement and
the Schedules attached hereto are now and will be as of the Closing Date
true, correct and complete in all material respects and do not contain now
and will not contain as of the Closing Date hereof, any statement which is
false or misleading with respect to any material fact.

                                 ARTICLE VIII
                             COVENANTS OF SELLER

Section 8.1 Liability Insurance

     SELLER at its own cost and expense shall maintain in full force and
effect, including necessary renewals thereof, or if necessary obtain, for a
period of three (3) years from the Closing Date, product liability and recall
insurance coverage in the amount of twenty (20) million Canadian Dollars
(CAN$20,000,000) per occurrence covering Product with respect to any
occurrence or event arising (i) prior to the Closing Date, (ii) prior to, on,
or subsequent to the Closing Date for Product sold or distributed by SELLER
prior to the Closing Date, (iii) on or subsequent to the Closing Date with
regard to Additional Assets, (iv) Product manufactured, packaged or provided
by DPI and purchased by BLOCK pursuant to Article IV. SELLER shall have BLOCK
named on such policies as an additional insured as BLOCK's interests may
appear.

Section 8.2 Continuation of Normal Business Practices

     Between the Execution Date and the Closing Date, SELLER agrees to and
shall continue to conduct itself and the Business in the same manner and with
the same degree of diligence as it exhibited for the twelve (12) month
period immediately preceding the Execution Date which includes but is not
limited to the maintenance of customers, the manufacture and supply of the
Product, the management of the broker network and its elimination at least
two (2) days prior to the Closing Date, and the continued maintenance of
levels of inventory sufficient to meet demand for the Product.

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Section 8.3 Confidentiality

     SELLER shall not disclose to any third party any oral or written
information concerning the terms of this transaction, except such information
that is required by law to be disclosed, which is in the public domain, or
which may be reasonably necessary in connection with the conduct of SELLER's
business.

Section 8.4 No Public Announcements

     SELLER shall not issue any press release, or make any other public
statement, with respect to this Asset Purchase Agreement and the transactions
contemplated hereby without the prior written approval of BLOCK.

Section 8.5 Order Processing

     SELLER agrees that any orders for the Product received by SELLER after
the close of business on the Closing Date and all of SELLER's backorders,
shall inure to the benefit of BLOCK and shall not be filled by SELLER. SELLER
agrees to reasonably cooperate with BLOCK in the transfer of order
processing, billing, shipping and record keeping to BLOCK. SELLER agrees to
promptly forward to BLOCK all correspondence and customer orders received by
SELLER after the Closing Date with respect to the Product. All orders for the
Product received by SELLER prior to the close of business on the Closing Date
other than backorders will be filled by SELLER. To the extent that such
orders are not shipped by SELLER by the close of business on the Closing
Date, SELLER shall segregate such quantities of Product finished goods
inventory as are necessary to fill such orders from the Additional Assets to
be purchased by BLOCK.

Section 8.6 Accounts Receivable

     SELLER shall be responsible for all and shall conduct any collection
procedures for its own Accounts receivable in respect of orders of the
Product made prior to the close of business on the Closing Date. The next
business day following the Closing Date, SELLER shall deliver to BLOCK as
Schedule 8.6 a list of all Accounts receivable and open invoices in respect
of sales of the Product make prior to the close of business on the Closing
Date. SELLER agrees to promptly pay to BLOCK any monies or checks which have
been mistakenly sent by customers to SELLER in respect of accounts receivable
arising after the close of business on the Closing Date. Any customer
remittance which does not identify a specific order or invoice or such order
or invoice is not readily identifiable shall be applied to the oldest
outstanding invoice with regard to the Product billed to the customer.

Section 8.7 Maintenance of Books and Records

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      To the extent that SELLER is required by law or regulation to keep
originals or copies of certain books and records of SELLER relating to the
Business after delivery to BLOCK of full and complete originals or copies,
as the case may be, of such books and records, then SELLER shall, consistent
with normal good business practices, maintain and keep available all such
books and records of SELLER relating to the Assets which are not delivered to
BLOCK pursuant to the Agreement, other than books and records of SELLER
relating to Asset-related taxes, until the later of either (i) the fifth
anniversary of the Closing Date, or (ii) the final termination, without
further possibility of appeal, of any judicial proceeding which may be
pending as of the fifth anniversary of the Closing Date, after which SELLER
may destroy the undelivered books and records, unless BLOCK has requested
that such books and records, or such certain books and records, of SELLER not
be destroyed, in which case SELLER shall give BLOCK reasonable opportunity to
copy such books and records which SELLER intends to destroy.

      SELLER shall maintain and keep available all books and records of
SELLER relating to Asset-related taxes, which are not delivered to BLOCK
pursuant to the Agreement, until the expiration of the applicable statutes of
limitation, including any extension or waiver thereof, after which SELLER may
destroy the undelivered books and records unless BLOCK has requested that
such books and records, or such certain books and records, of SELLER not be
destroyed, in which case SELLER shall give BLOCK reasonable opportunity to
copy such books and records which SELLER intends to destroy.

Section 8.8 Access to Books and Records

      SELLER shall permit BLOCK, at BLOCK's expense and during SELLER's
normal business hours, to inspect and copy, all books and records of SELLER
that relate to the Assets during the period prior to the Closing Date.

Section 8.9 Bulk Sales

      SELLER shall provide BLOCK with an indemnity for any losses, damages,
or expenses incurred by BLOCK by reason of non-compliance by SELLER with the
Ontario BULK SALES ACT.

Section 8.10 Customers

      At the Execution Date, BLOCK shall be provided with a customer list
evidencing all customers including contact name, telephone number, and
address, who have purchased the Product as well as total dollar amounts per
Product sold by SELLER to those customers on a monthly basis, with the
exception of the month in which the Execution Date falls which shall be
specified per week per Product on a month-to-date basis, during the twelve
(12) month period directly preceding the Execution Date and between the
Execution Date and the Closing Date, all for the purpose of enabling BLOCK to
discuss the purchase and sale of the Product, together with a representative
of SELLER with the top five (5) revenue generating wholesale customers of the
six months directly preceding the Execution Date as evidenced on the customer
list and satisfying itself, acting commercially reasonably, that there is no
commercially reasonable basis to believe that the aggregate sales of the
Product to such wholesale customers for six (6) months after the Closing Date

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would be materially less than that experienced over the six (6) months
immediately preceding the Closing Date. In the event that BLOCK is not
satisfied as aforesaid, BLOCK and the SELLER shall enter into good faith
negotiations within forty-eight (48) hours of BLOCK's notice of
dissatisfaction to SELLER to arrive at a mutually acceptable solution,
failing which the transaction may be terminated by either BLOCK or SELLER
without any liability and each party shall be deemed released from the other.
In the event of termination in accordance with this Section, BLOCK shall be
obligated to return to SELLER all documents delivered by SELLER to BLOCK and
Additional Assets purchased by BLOCK from SELLER in accordance with Section
3.4 herein in furtherance of this transaction and SELLER shall immediately
refund to BLOCK all amounts paid by BLOCK for such Additional Assets.

Section 8.11 Levy Non-Competition Agreements

      SELLER agrees to enforce, and to take all necessary measures to so
enforce, all provisions of the Levy Non-Competition Agreements as referred to
in Section 6.12 and otherwise to maintain those Levy Non-Competition
Agreements in good standing.

Section 8.12 SELLER Sales Between Execution Date and Closing Date

      SELLER covenants and agrees that its sales of Product between April 1,
2000 and the Closing Date will not exceed CDN$682,559.00, which includes
orders of Product shipped by SELLER after the Closing Date pursuant to
Section 8.5, and in the event that Product orders exceed such amounts, such
excess orders shall be fulfilled by BLOCK.

Section 8.13 SELLER Guarantee

      SELLER unconditionally guarantees the performance of all obligations of
and the payment of all amounts owing by DPI under this Agreement and the
Supply Agreement.

Section 8.14 U.S. Inventory

Set forth in Schedule 8.14 is the U.S. inventory of Product which SELLER
shall retain title to and shall sell to third parties located outside of
Canada for resale outside of Canada. Any such Product in SELLER's possession
or control forty-five (45) days from the Closing Date shall be immediately
destroyed by SELLER with satisfactory evidence of such destruction provided
to BLOCK, with BLOCK reimbursing SELLER for fifty (50) % of SELLER's
out-of-pocket cost of such destruction up to a total BLOCK liability of
CAN$25,000.

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                                  ARTICLE IX
                              COVENANTS OF BLOCK

Section 9.1 Confidentiality

      BLOCK shall not disclose to any third party any oral or written
information concerning the terms of this transaction, except such information
that is required by law to be disclosed, which is in the public domain, or
which may be reasonably necessary in connection with the conduct of BLOCK's
business.

Section 9.2 Public Announcements

      BLOCK shall not issue any press release or make any other public
statement with respect to this Asset Purchase Agreement and the transactions
contemplated hereby without the prior written approval of SELLER.
Section 9.3 Accounts Receivable

      In the event BLOCK receives payment on an account receivable of SELLER
relating to any Product order received for Product in inventory and not
backordered prior to the close of business on the Closing Date, as evidenced
by the list of account receivables and open invoices furnished to BLOCK by
SELLER pursuant to Section 8.6, BLOCK shall forward to SELLER any payment
which has been mistakenly sent by SELLER's customers to BLOCK. Any customer
remittance which does not identify a specific order or invoice or such order
or invoice is not readily identifiable shall be applied to the oldest
outstanding invoice with regard to the Product billed to the customer.

Section 9.4 BDC Guarantee

      BDC unconditionally guarantees the performance of all obligations of
and the payment of all amounts owing by BLOCK and its Affiliates, as the
case may be, under Article 2 of this Agreement.

Section 9.5 Walgreens/SELLER Dispute

With regard to the disputes between Walgreens Co. (U.S.) and CVS and SELLER
disclosed in Schedules 6.11.2, 6.16 and 6.20, BLOCK and BDC shall not seek
indemnification for any damages arising from Walgreens or CVS seeking to
deduct or credit any payment due BDC or BLOCK by an amount equal to
Walgreens' or CVS's claim against SELLER, provided that (i) SELLER has first
filed and served a Complaint against Walgreens in the United States over the
matters in dispute, proof of such service on Walgreens to be provided to BLOCK
by SELLER within one (1) day of service, and additionally that SELLER has
brought such suit no later than seven (7) days after the Closing Date and
that SELLER continues to make good faith efforts to settle the dispute at no
cost to BLOCK or BDC and (ii) in the event that CVS has deducted or credited
any payment due BDC or BLOCK by an amount equal to CVS's claim against
SELLER, SELLER pays to BLOCK the

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lesser of the amount deducted or credited and U.S.$91,000.00 and SELLER provides
to BLOCK such assistance as may be reasonably requested by BLOCK to pursue
CVS.

BLOCK and BDC shall not seek indemnification for any damages arising from
leakage of U.S. excess inventory of SpectroDerm into Canada, provided that
SELLER has been successful in ensuring that such excess U.S. inventory is
removed from store shelves within three (3) weeks of SELLER receiving actual
notice that such SpectroDerm products are available for sale in specific
locations in Canada.

                                    ARTICLE X
                               THIRD PARTY CLAIMS

Section 10.1 Manufactured and Sold By SELLER

         SELLER shall have sole responsibility and shall be liable for any
and all demands, actions, claims, losses, damages and costs and expenses,
including, without limitation, attorney's fees and disbursements, for claims
by third parties arising out of, from, pertaining to or in connection with the
purchase or use of Product (hereinafter "Third Party Claims") which is
identifiable as having been manufactured by or for, and sold or shipped by or
on behalf of, SELLER prior to the Closing Date, regardless of when such Third
Party Claim is brought or incurred.

Section 10.2 Manufactured For Sale by SELLER But Sold By BLOCK

         Except for Third Party Claims arising from the marketing or
promotion of the Product by BLOCK, SELLER shall have the sole responsibility
and shall be liable for any and all Third Party Claims arising out of, from,
pertaining to or in connection with all Additional Assets which are
identifiable as having been manufactured by or for SELLER, but which were
sold by BLOCK after the Closing Date, regardless of when such Third Party
Claim is brought or incurred.

Section 10.3 Manufactured By DPI and Sold By BLOCK

         DPI shall have the responsibility and shall be liable for any and
all Third Party Claims arising out of, from, pertaining to or in connection
with the manufacture and supply of Product by DPI for BLOCK in accordance
with the terms and conditions of the Supply Agreement.

Section 10.4 Manufactured By and Sold By BLOCK

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         BLOCK shall have sole responsibility and shall be liable for any and
all Third Party Claims arising out of, from, pertaining to or in connection
with all Product identifiable as manufactured solely by BLOCK and sold by
BLOCK after the Closing Date.

                                   ARTICLE XI
                                TRADE PROMOTIONS

Section 11.1 Trade Promotions By SELLER Relating to Product Sold by SELLER

         SELLER shall have sole responsibility and shall be liable for any
and all costs and expenses, arising out of, from, pertaining to or in
connection with trade promotions which are identifiable as having been made
by or on behalf of SELLER prior to the Closing Date as a result of which
SELLER and not BLOCK sold Product. Attached hereto as Schedule 11.1 is a list
of all outstanding trade promotion commitments and other promotion programs
made by SELLER as at the date hereof as a result of which SELLER and not
BLOCK shall sell Product. On the Closing Date SELLER shall provide BLOCK with
an updated Schedule 11.1 as at the Closing Date.

Section 11.2 Trade Promotions By SELLER But Product Sold By BLOCK

         BLOCK shall be liable for any and all costs and expenses, arising
out of, from, pertaining to or in connection with trade promotions and other
promotion programs which are identifiable as having been made by or on behalf
of SELLER prior to the Closing Date but as a result of which BLOCK and not
SELLER shall sell Product as set out in Schedule 11.2.

                                  ARTICLE XII
                              TRANSITIONAL PERIOD

Section 12.1 Product Packaging

         Subsequent to the Closing Date, BLOCK shall proceed in the normal
course to create its own Product packaging and SELLER agrees that BLOCK may
utilize and sell Product in SELLER'S packaging until such time as BLOCK has
its own Product packaging ready for use.

Section 12.2 Reassignment of Drug Identification Number

         SELLER shall provide all reasonably necessary assistance and
cooperation to enable BLOCK to have the Product Drug Identification Numbers
(hereinafter "DIN") transferred and reassigned to BLOCK. BLOCK and SELLER
shall cooperatively prepare, execute and file such documents as are required
to transfer and reassign the DINs for the SpectroGram "2" products within 45
days of the Closing Date. With respect to the DINs for the SpectroTar drug
products, SELLER shall permanently cancel those SpectroTar product DINs upon
written notice from BLOCK that it has sold all inventory of such products
which shall be provided by BLOCK as soon as reasonably practicable after all
such inventory has been sold but in no event later than thirteen (13) months
after

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the Closing Date. Until the date of transfer or reassignment or permanent
cancellation as provided for in this Section 12.2 of the Product DINs,
SELLER shall not cancel and shall continue the Product DINs in full force and
effect and SELLER shall continue the annual registration for the SpectroTar
products and maintain the SpectroTar products as part of SELLER'S
establishment license at the reasonable expense of BLOCK, provided that BLOCK
shall indemnify SELLER from any expenses incurred by SELLER by reason of
holding such DINs on behalf of BLOCK other than expenses covered by SELLER's
indemnification of BLOCK pursuant to Section 14.1.

                                  ARTICLE XIII
                 INTELLECTUAL PROPERTY/TOLL-FREE TELEPHONE NUMBERS

Section 13.1 Domain Name

         SELLER shall provide all necessary assistance and cooperation to
enable BLOCK to acquire the domain name "spectroderm.com" and other domain
names that incorporate the Trademarks for purposes of Internet facilitation
of marketing or promotion of the Products.

Section 13.2 SELLER Web Page Documents

         SELLER shall provide all documents, disks, html files, electronic
tapes and other mediums of information pertaining to all Product web pages
currently on the world wide web or in development by SELLER.

13.3     Web Site Access

         SELLER shall provide all necessary assistance and cooperation to
BLOCK to enable users of SELLER's web site to access and link to the web
sites at the domain names acquired by BLOCK as set out at Section 13.1.

13.4     Toll-Free Telephone Numbers

         SELLER shall cause the toll-free telephone number in Canada,
1-800-563-7546, and the toll-free telephone number in the United States,
1-888-777-DERM, to be transferred to BLOCK as at the Closing Date.

                                   ARTICLE XIV
                                 INDEMNIFICATION

Section 14.1 Indemnification by SELLER

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     Subject to Section 14.6 and Section 9.5, SELLER shall indemnify and
defend BLOCK and hold BLOCK, BLOCK's Affiliates and their directors and
officers harmless from and against any and all liabilities or obligations,
damages, injury, losses, claims, liens, encumbrances, judgments, costs or
expenses, whether in tort or contract, including reasonable attorneys' fees
and disbursements not exceeding CDN$12.5 million (any or all of the foregoing
herein referred to as "Loss"), insofar as such Loss or actions in respect
thereof, whether existing or occurring prior to , on or subsequent to the
Closing Date, arises out of or is based upon:

     14.1.1  any misrepresentation or breach of any of the representations,
             warranties, covenants or agreements made by SELLER in this Asset
             Purchase Agreement;

     14.1.2  SELLER's ownership, use or operation of the Assets, or
             manufacture by or on behalf of SELLER, packaging or sale,
             distribution or promotion of the Product prior to the Closing
             Date;

     14.1.3  Third Party Claims for which SELLER is responsible pursuant to
             Article X;

     14.1.4  SELLER's failure to pay any and all claims, whether or not
             disputed by SELLER, or by SELLER's creditors; but

     14.1.5  Excluding Losses resulting from the negligence or willful
             misconduct of BLOCK.

Section 14.2 Indemnification by BLOCK

     Subject to Section 14.6, BLOCK shall indemnify and hold harmless SELLER
from and against any Loss insofar as such Loss or actions in respect thereof
occurs subsequent to the Closing Date and arises out of or is based upon:

     14.2.1  any misrepresentation or breach of any of the representations,
             warranties, covenants or agreements made by BLOCK in this Asset
             Purchase Agreement;

     14.2.2  BLOCK's ownership, use or operation of the Assets, packaging or
             sale, distribution or promotion of the Product or manufacture by
             or on behalf of BLOCK except for Losses arising from the
             Additional Assets and the manufacturing or packaging of the
             Products by DPI for BLOCK pursuant to the provisions set out
             herein or in the Supply Agreement after the Closing Date;

     14.2.3  Third Party Claims for which BLOCK is responsible pursuant to
             Article X; but

     14.2.4  Excluding any Losses resulting from the negligence or willful
             misconduct of the SELLER.

Section 14.3 Prompt Notice Required

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     No claim for indemnification hereunder shall be valid unless notice of
the matter which may give rise to such claim is given in writing by the party
seeking indemnification (the "Indemnitee") to the party from whom
indemnification is sought (the "Indemnitor") as soon as reasonably practicable
after the Indemnitee becomes aware of such claim, provided that the failure
to notify the Indemnitor shall not relieve Indemnitor from any liability
which Indemnitor may have to the Indemnitee other than to the extent the
Indemnitor is prejudiced by such failure. Such notice shall state that the
Indemnitor is required to indemnify the Indemnitee for a Loss and shall
specify the nature of the Loss and relevant details thereof and shall specify
the time, if known and if any, within which applicable law or procedure
requires a response to the claim. The Indemnitor shall notify Indemnitee no
later than ten (10) days prior to the required response date, or such
shorter time as may be reasonable if a response is required in less than ten
(10) days, or if there is no such date, no later than sixty (60) days from
such notice of its intention to assume the defense of any such claim. In the
event the Indemnitor fails to give such Notice within that time the
Indemnitor shall no longer be entitled to assume such defense. If the
Indemnitor fails to give Indemnitee Notice of its intention to defend any
such claim as provided herein, the Indemnitee shall have the right to assume
the defense thereof with counsel of its choice, at the Indemnitor's expense,
and defend, settle or otherwise dispose of such claim. With respect to any
claim which the Indemnitor fails to promptly defend, the Indemnitor shall not
thereafter question the liability of the Indemnitor hereunder to the
Indemnitee for any Loss, including reasonable counsel fees and other
reasonable expenses of defense.

Section 14.4 Indemnitor May Settle

     The Indemnitor shall at its expense, have the right to settle and
defend, through counsel satisfactory to the Indemnitee, any claim which may
be brought in connection with all matters for which indemnification is
available. In such event the Indemnitee of the Loss in question and any
successor thereto shall, upon reasonable advance notice and during the
Indemnitee's regular business hours, permit the Indemnitor full and free
access to the books and records of the Indemnitee and otherwise reasonably
cooperate with the Indemnitor in connection with such claim, provided that the
Indemnitee shall have the right fully to participate in such defense at its
own expense. The defense by the Indemnitor of any such claims shall not be
deemed a waiver by the Indemnitor of its right to assert a claim with respect
to the responsibility of the Indemnitee with respect to the Loss in question.
The Indemnitor shall have the right to settle or compromise any claim against
the Indemnitee without the consent of the Indemnitee provided that the terms
thereof:

     14.4.1  provide for the unconditional release of the Indemnitee;

     14.4.2  require the payment of compensatory monetary damages only; and

     14.4.3  expressly state that neither the fact of settlement nor the
             settlement agreement shall constitute, or be construed or
             interpreted as, an admission by the Indemnitee of any issue,
             fact, allegation or any other aspect of the claim being settled.

Section 14.5 No Settlement by Indemnitee

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     Without the prior written consent of the Indemnitor, which shall not be
unreasonably withheld, the Indemnitee shall neither pay nor voluntarily
permit the determination of any liability which is subject to any action for
which indemnification is sought while the Indemnitor is negotiating the
settlement thereof or contesting the matter.

Section 14.6 Minimum Claims

     Notwithstanding any other provision in this Agreement and except as
provided for in this Section 14.6, no claim for indemnification hereunder
shall be made against any party hereunder, and no breach or failure of
representations and warranties contemplated herein shall be considered to
have occurred, unless and until the individual claim or aggregate of
individual claims exceeds CDN$10,000, in which event all breaches or failures
or representations and warranties contemplated herein shall be considered to
have occurred as if this section did not exist and the full amounts claimable
shall be the aggregate of the claims then being asserted and not be limited
to any amount only in excess of the above-noted limit with the express
exception of (i) Product returns, (ii) Product not in compliance with
specifications and (iii) Unsupported Deductions as defined in Article XVII
which shall not be subject to this Section 14.6 (iv) U.S. Product in Canada
which remains available for sale in Canada three (3) weeks after SELLER has
received actual notice that such U.S. Product is available for sale in
specific locations in Canada, it being understood and agreed that SELLER
shall be responsible for each of the foregoing exceptions with no minimum
claim.

                                  ARTICLE XV
                             RESTRICTIVE COVENANT

Section 15.1 No Competitive Products

     BLOCK is purchasing world-wide rights to the Products and SELLER
acknowledges receiving full and adequate compensation therefore. Commencing
on the Closing Date to June 30, 2007, SELLER, excluding DPI, shall not
directly or indirectly, sell, advertise, promote, or market (i) any drug or
cosmetic that falls into the category of skin cleansers, and (ii) any drug or
cosmetic that is a shampoo, moisturizer, skin protectant or any other
product for dry or sensitive skin that competes directly with the Products.
During the same time period, SELLER shall not and shall cause DPI to not
directly or indirectly advise on, participate in, provide, guide or develop
technical assistance, scientific and regulatory expertise, research and
development support, or modify, refine or convey any know-how, concerning or
in any way relating to formulas for manufacture of any competitive product to
the Products or for any private label product with a similar formulation to
the Products. SELLER shall use its reasonable best efforts to ensure that DPI
does not manufacture any private label product with a similar formulation to
the Products. For greater certainty, DPI shall be entitled to manufacture
products competitive to the Products, which are not private label products
with similar formulations to the Products, provided that it has not
participated in the formulation or development of such products, as described
above. Contemporaneously herewith, formulation or development of such
products, as described above. Contemporaneously herewith, SELLER and BLOCK
have agreed to enter into an exclusive Technical Assistance Agreement wherein
SELLER shall provide to BLOCK certain technical and other assistance relating
to the

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Assets in the aforementioned categories. It is acknowledged by BLOCK and
SELLER that this covenant constitutes a part of the purchase price of this
transaction.

Section 15.2 Incidental Investments

     Nothing contained in this Article shall be deemed to prohibit SELLER from
investing SELLER's funds in securities of any company, if the securities of
such company are listed for trading on a national stock exchange, or are
traded in over-the-counter market, and SELLER's holdings in any such company
represents less than five (5%) percent of the issued and outstanding shares
or principal amount of other securities of such company then outstanding.

                                  ARTICLE XVI
                   SURVIVAL OF REPRESENTATIONS AND WARRANTIES

     All statements contained herein, or in any Exhibit or Schedule hereto,
shall be considered a representation, warranty or covenant of the party
making such statement. The representations, warranties and covenants
contained herein, or in any Exhibit or Schedule hereto, shall survive and
continue as follows:

     (i)  those relating to title to the Canadian Trademarks shall continue
          in perpetuity and those relating to title to the Trademarks outside
          of Canada shall expire at midnight on the three (3) year anniversary
          of the Closing Date;

    (ii)  those relating to title to all other Assets shall expire at midnight
          on the three (3) year anniversary of the Closing Date;

    (iii) all other representations and warranties shall expire at midnight
          on the three (3) year anniversary of the Closing Date.

                                 ARTICLE XVII
                           UNSUPPORTED DEDUCTIONS

     SELLER shall be responsible for all unsupported deductions for eight
(8) months after the Closing Date. For the purposes of this Section and
Section 14.6, "unsupported deductions" shall mean those customer deductions
from payments which are not identifiable to a specific documented invoice,
credit note, returned goods authorization, contracted promotion or any other
explanatory document issued by SELLER and for which all subsequent reasonable
efforts by BLOCK were unsuccessful in obtaining the required documentation
from the customer.

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                                 ARTICLE XVIII
                                PRODUCT RETURNS

Section 18.1 Orders On or Prior to Closing Date

     SELLER agrees to be responsible for all costs relating to the return of
Product shipped by SELLER on orders received prior to the close of business
on the Closing Date, provided that such returns are in the normal course and
not induced by BLOCK.

Section 18.2 Shipped After Closing Date

     BLOCK agrees to be responsible for all costs relating to the return of
Product and to Additional Assets shipped by BLOCK to customers after the
Closing Date.

Section 18.3 Presumed Shipped Prior to Closing Date

     In the event it is not possible to determine whether a returned item was
attributable to an order received on or after the Closing Date, any item
returned within eight (8) months after the Closing Date shall be presumed to
have been shipped by SELLER prior to the Closing Date, thereafter returns
shall be presumed to have been shipped by BLOCK.

Section 18.4 BLOCK To Purchase Usable Returns

     BLOCK shall purchase from SELLER at SELLER's actual and verified cost
all good, useable and saleable returns at BLOCK's sole and absolute
discretion acting reasonably. Any returned Product which is unusable or
unsalable shall be returned to SELLER and immediately destroyed by SELLER and
SELLER shall provide confirmation of such destruction to BLOCK's satisfaction.

                                ARTICLE IXX
                        CONTRACT CLOSING FOR SELLER

Section 19.1 Title to Trademarks

     On or prior to the Closing Date, SELLER shall have obtained full,
unencumbered and undisputed ownership of the Trademarks.

Section 19.2 Escrow Agreement

     On the Closing Date, BLOCK and the Escrow Agent shall deliver the
executed Escrow Agreement.

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Section 19.3 Supply Agreement and Technical Assistance Agreement

     On the Closing Date, BLOCK shall have executed and will deliver the
Supply Agreement as set out in Article IV and the technical assistance
agreement ("Technical Assistance Agreement") attached as Exhibit 19.3 to
SELLER.

Section 19.4 Funds To Be Paid on Closing

     On the Closing Date, BLOCK will pay to SELLER the purchase price in
accordance with the provisions of Section 2.2.

Section 19.5 Confirmation of BLOCK Satisfaction with Section 8.10

     On or prior to the Closing Date, BLOCK shall convey to SELLER its
satisfaction with the conditions as set out in Section 8.10 in the form
attached hereto as Exhibit 19.5.

Section 19.6 Above is Condition Precedent

     In addition to the conditions as set out in Section 20, BLOCK shall have
no obligation to close this transaction or any of the transactions
contemplated under this Asset Purchase Agreement unless the requirements of
Sections 19.1 and 19.5 are satisfied or BLOCK has waived the requirements in
writing and SELLER shall have no obligation to close this transaction or any
of the transactions contemplated under this Asset Purchase Agreement unless
the requirements of Sections 19.3 and 19.4 are satisfied or SELLER has waived
the requirement in writing.

                                   ARTICLE XX
                            CONTRACT CLOSING FOR BLOCK

Section 20.1 Delivery by SELLER

     SELLER shall have delivered to BLOCK the following documents on the
Closing Date:

     20.1.1  the opinion of Douglas Parker, General Counsel to SELLER, dated
             as of the Closing Date, as to the authority of SELLER to enter into
             this Agreement, to perform the obligations of SELLER under this
             Agreement, and carry out the various transactions and enter into
             the various other agreements contemplated by this Agreement, and
             the enforceability of this Agreement and any other agreements
             contemplated by this Agreement.

     20.1.2  a Bill of Sale for the Assets, which shall be substantially in
             the form of Exhibit 20.1.2.

     20.1.3  written evidence that SELLER is the owner of record for all
             Trademarks used in connection with the Business.

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        20.1.4  a separate Trademark Assignment document, on a country-by-
                country basis, for each of the registrations or pending
                applications listed on Schedule 1.21, as may be amended from
                time-to-time, the form of which shall be in substantial
                conformity with Exhibit 20.1.4 or in such other form as may be
                required by the Trademark Office which issued the trademark
                registration or in which a pending application has been filed.

        20.1.5  the documents required by each of the Trademark Offices which
                issued the trademark registration or in which a pending
                application has been filed to record the Amalgamation of
                Spectro-Pharm Inc. and Draxis Health Inc./Sante Draxis Inc.,
                together with the applicable fee.

        20.1.6  a certificate from a senior officer of SELLER certifying the
                truth and accuracy of all representations, warranties and
                schedules of SELLER and the performance by SELLER of all
                obligations, current as of the Closing Date.

        20.1.7  clearance certificates from each province in which SELLER is
                subject to provincial sales taxes stating that SELLER is
                current with respect to payment of provincial sales taxes.

        20.1.8  a thorough written description of the course-of-dealing
                between the SELLER and any third party from whom SELLER
                purchases the Product or which manufactures the Product for
                SELLER, including such matters as terms, conditions,
                quantities, quality, price and turn around times.

        20.1.9  indemnity by SELLER for any losses, damages or expenses
                incurred by BLOCK by reason of non-compliance with the BULK
                SALES ACT (Ontario).

        20.1.10 the Escrow Agreement executed by SELLER and the Escrow Agent.

        20.1.11 the Supply Agreement and Technical Assistance Agreement
                executed by SELLER and BLOCK.

        20.1.12 a Registrant Name Change Agreement executed by SELLER and
                notarized, together with the Domain Name Registration Agreement
                or Service Agreement for the domain name "spectroderm.com".

Section 20.2 Conditions Precedent

      BLOCK shall have no obligation to close this transaction, or any of the
transactions contemplated under this Asset Purchase Agreement, unless all of
the conditions prior to the Closing Date established in the above sections
are satisfied or BLOCK has waived in writing any requirement that has not
been satisfied as of the desired Closing Date.

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                                   ARTICLE XXI
                                DISPUTE RESOLUTION

Section 21.1 Disputes

      It is agreed that notwithstanding anything in this Article XXI to the
contrary, the obligations related to Section 14.1 and to the Levy
Non-Competition Agreement as set out at Section 6.12 and Section 8.11 shall be
expressly excluded from this Article XXI. It is further agreed that
notwithstanding anything in this Article XVII to the contrary, BLOCK shall
have the ability to seek equitable and injunctive remedies in any appropriate
court.

Section 21.2 Negotiations

      BLOCK and SELLER will both attempt in good faith to resolve any dispute
or claim arising out of or relating to this Agreement or its subject matter
promptly by negotiations between representatives of the parties who have
authority to settle the dispute or claim and will follow the procedures set
out in Section 3.1 and 8.10 if applicable.

      The disputing party will give the other party written notice of the
dispute. Within fourteen calendar days after receipt of this notice, the
receiving party shall submit to the other a written response. The notice and
response shall include: (a) a statement of the party's understanding of the
dispute, and (b) the name and title of the person who will represent that
party at the negotiation. The notice and responses shall not exceed five
pages. The representatives shall meet at a mutually acceptable time and place
within fourteen calendar days of the Response Date (as such term is
hereinafter defined), and thereafter as often as they reasonably deem
necessary to exchange relevant information and to attempt to resolve the
dispute. "Response Date" shall mean the earlier of (i) the date of submission
of the aforesaid written response or (ii) the expiry of fourteen (14) days
after the giving of the written notice of dispute in the event the receiving
party does not provide a written response.

Section 21.3 Mediation

      If the dispute has not been resolved within twenty calendar days of the
Response Date, the twentieth (20th) day herein being defined as the
"Submission Date", the dispute shall be submitted to mediation in accordance
with the following procedure:

        21.3.1 Selection of Neutral. BLOCK and SELLER shall have five business
               days from the Submission Date to agree upon a mutually
               acceptable neutral person not affiliated with either of BLOCK
               or SELLER (the "Neutral"). If no Neutral has been selected
               within such time, BLOCK and SELLER agree jointly to request
               the Administrator, The Private Court, 150 King Street West,
               Suite 2512, Toronto, Ontario M5H 1J9 to supply within five
               days a list of five potential Neutrals from amongst its
               members with qualifications as specified by BLOCK and SELLER
               in the joint request. Within three business days of the
               receipt of the list, BLOCK

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               and SELLER shall independently rank the proposed candidates,
               shall simultaneously exchange rankings, and shall select as the
               Neutral the individual receiving the highest combined ranking
               who is available to serve. If either party does not rank and
               provided a copy of the ranking to the other party, the party who
               does rank the Neutral will be able to select the Neutral.

        21.3.2 Time and Place for Mediation. In consultation with the
               Neutral, BLOCK and SELLER shall promptly designate a mutually
               convenient time for the mediation which shall be held at a
               mutually agreed upon site in downtown Toronto, Ontario (and
               unless circumstances require otherwise, such time to be not
               later than ten (10) days after the selection of the Neutral).

        21.3.3 Summary of Views. Two days prior to the first scheduled
               session of the mediation, each party shall deliver to the
               Neutral and to the other party a concise written summary of its
               views on the facts and issues in dispute, not to exceed five
               pages.

        21.3.4 Staffing at Mediation. In the mediation, each party may be
               represented by counsel. In addition, each party may bring such
               additional persons as needed to respond to questions,
               contribute information and participate in the mediation.

        21.3.5 Conduct of Mediation. BLOCK and SELLER will attempt to resolve
               the dispute with the assistance of the Neutral. To this end,
               the Neutral is authorized to conduct both joint meetings and
               separate private caucuses with BLOCK and SELLER.

        21.3.6 Neutrals' Views. Neither the opinions nor recommendations of
               the Neutral(s) shall be binding on BLOCK or SELLER.

        21.3.7 Termination of Procedure. BLOCK and SELLER agree to
               participate in the first scheduled session of the mediation
               for at least four hours (unless terminated earlier by the
               Neutral). After that time, either BLOCK or SELLER may leave
               the mediation at any time. BLOCK and SELLER agree not to take
               any action in relation (other than good faith attempts to
               negotiate a settlement dispute) to the dispute prior to the
               conclusion of a ten-day post-mediation period that commences
               on the day after the conclusion of the mediation.

        21.3.8 Disqualification and Fees of Neutral(s). The fees of the
               Neutral shall be shared equally by BLOCK and SELLER. The
               Neutral shall be disqualified as a witness, consultant, expert
               or counsel for either party with respect to the matters in
               dispute and any related matters.

        21.3.9 Confidentiality. The parties shall at all times maintain as
               confidential all aspects of the mediation. Neither party shall
               make any stenographic, visual or audio records of the
               mediation. All conduct, statements, promises, offers, views or
               opinions, whether oral or written, made during the course of
               the mediation by BLOCK, SELLER, or their respective agents,
               employees, representatives or other

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                invitee, and by the Neutral (who will be the parties' joint
                agent for the purposes of the mediation) are confidential. No
                conduct, statements, promises, offers, views or opinions shall
                be discoverable or admissible for any purposes, including the
                impeachment of any witness in any litigation or other proceeding
                involving BLOCK or SELLER with regard to the Assets, and shall
                not be disclosed to anyone not an agent, employee, expert,
                witness, or representative of either BLOCK or SELLER; provided,
                however, that evidence otherwise discoverable or admissible is
                not excluded from discovery or admission as a result of its use
                in the mediation.

Section 21.4    Arbitration

        After the expiry of the ten-days post-mediation period referred to in
section 21.3.7, and with no agreement having been reached by the parties, the
controversy shall be finally settled by arbitration in accordance with the
provisions of the ARBITRATION ACT, 1991, Ontario and any amendments thereto.
The following rules shall apply to the arbitration.

        21.4.1  The arbitration tribunal shall consist of one arbitrator who
                is not affiliated with either of BLOCK or SELLER and is
                appointed by mutual agreement of BLOCK and SELLER or, in the
                event of failure to reach an agreement within ten (10) days
                after the expiry of the ten-days post-mediation period,
                either party may request the Co-ordinator, ADR Chambers, 48
                Yonge Street, Suite 1100, Toronto, Ontario M5E 1G6 (or any
                successor thereto) to provide a list of five arbitrators from
                amongst its members outlining their qualifications. Within
                three business days of the receipt of the list, BLOCK and
                SELLER shall independently rank the proposed candidates,
                shall simultaneously exchange rankings, and shall select as
                the arbitrator the individual receiving the highest combined
                ranking who is available to serve. If either party does not
                rank and provide a copy of the ranking to the other party,
                the party who does rank the arbitrator will be able to select
                the arbitrator.

        21.4.2  The arbitrator shall be instructed that time is of the
                essence in proceeding with his or her determination of any
                dispute, claim, question or difference. The arbitration
                tribunal shall determine the time, date and place of
                arbitration, taking into consideration the parties'
                convenience and the other circumstances of the case.

        21.4.3  BLOCK and SELLER will agree, in consultation with the
                arbitrator, on the rules for the arbitration. Absent
                agreement to the contrary, the following rules, designed to
                save time and expense for the parities, will apply:

                21.4.3.1     Statements shall be in writing and shall be no
                             more than five pages in length; and shall be
                             submitted to the arbitration tribunal and to the
                             other party two days prior to the arbitration.

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                21.4.3.2     Each party will provide to the other access to
                             any documents that may be relevant to the
                             arbitration. Each party will also provide to the
                             other a list and copies of up to (but not
                             exceeding) 20 documents that the party intends
                             to rely on at the arbitration. Such access will
                             be during normal business hours and will
                             commence one day after the appointment of the
                             arbitration tribunal and shall terminate one day
                             prior to submission of the statements.

                21.4.3.3     Each party will be entitled to oral discovery of
                             one representative of the other party if it
                             deems it appropriate at a mutually agreed upon
                             date, time and location. Each party may only
                             discover the other party's representative for a
                             maximum of one eight hour day. Any questions
                             refused will be put to the arbitrator for the
                             arbitrator's determination as to whether the
                             questions are appropriate and relevant;

                21.4.3.4     At the hearing, opening argument will be limited
                             to one half hour per party;

                21.4.3.5     Each party may produce up to two witnesses for
                             direct examination. The total time permitted for
                             direct examination will be two hours for each
                             witness. Total time for cross-examination will
                             also be two hours for each witness;

                21.4.3.6     The party may introduce any of its twenty
                             documents through either of its witnesses. The
                             other party may, if appropriate, challenge the
                             authenticity of any document produced through
                             those witnesses;

                21.4.3.7     Closing arguments will be limited to one hour
                             for each party;

                21.4.3.8     The arbitrator will attempt to produce a
                             decision within seven calendar days of the
                             conclusion of the arbitration, and written
                             reasons within two months of the arbitration.

        21.4.4  The arbitration shall be conducted in English and shall take
                place in Toronto, Ontario.

        21.4.5  The arbitration awards shall be given in writing and shall be
                final, and binding on BLOCK and SELLER, not subject to any
                appeal whatsoever, and shall deal with the question of costs
                of the arbitration and all matters related thereto. In his or
                her award of costs, the arbitrator may consider each party's
                effort to resolve the dispute through negotiation and
                mediation, and any settlement offer made at the arbitration.
                If either party refuses to participate in the negotiation or
                mediation, there shall be a presumption that solicitor and
                client costs shall be awarded against that party refusing to
                participate, regardless of the outcome of the arbitration.

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        21.4.6  Judgement upon the award rendered may be entered into any
                court having jurisdiction, or application may be made to such
                court for judicial recognition of the award or an order for
                enforcement thereof, as the case may be.

        21.4.7  The arbitrator will not be empowered to and shall not award
                punitive, exemplary, special, consequential or incidental
                damages.

Section 21.5    Only Procedures for Settling Disputes

        Subject to the provisions of subsection 21.1 hereof, the procedures
specified in this Article XVII are the only procedures for the resolution of
any dispute or claim arising out of or related to this Agreement, or the
breach, termination or validity thereof, or any other related agreement,
between BLOCK and SELLER. If any party attempts to have issues resolved in
court that should properly be resolved pursuant to this Article XXI, the
parties agree that this section can be used to stay any such proceedings.
However, before or during the time that BLOCK and SELLER follow these
procedures, either one can go to the appropriate court to get a preliminary
injunction or other preliminary judicial relief if such party reasonably
believes that such a step is necessary to avoid irreparable damage or harm.
Even if either party take such action, both parties will continue to
participate in good faith in the procedures specified in this Article XXI.

                                 ARTICLE XXII
                                  ASSIGNMENT

        In the event of SELLER's winding-up, insolvency or bankruptcy,
whether voluntary or involuntary, the Non-Competition Agreements, both dated
February 14, 1997, between Mortimer Levy and Spectro-Pharm Inc. Draxis Health
Inc. and Pearl Levy and Spectro-Pharm Inc. Draxis Health Inc. shall be deemed
to be assigned by SELLER to BLOCK, such assignment to take effect one day
prior to such winding-up insolvency or bankruptcy, all subject to the
obtaining of all necessary consents from the Levys'.

                                ARTICLE XXIII
                                   NOTICES

Section 23.1 Written Notice Only

        Every notice or other communication required or contemplated by this
Agreement be either party shall be in writing.

Section 23.2 Manner Of Giving Notice

        Every notice or other communication required or contemplated by this
Agreement by either party shall be delivered to the other party by either:

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         23.2.1  personal delivery; or

         23.2.2  facsimile; or

         23.2.3  certified or registered mail, postage prepaid, addressed to
                 the party for whom such notice was intended; or

         23.2.4  by overnight courier.

Section 23.3 Closing Date of Notice

         23.3.1  Notice delivered in person shall be deemed to have been
                 delivered upon receipt by the party to whom such notice was
                 sent.
         23.3.2  Notice delivered by facsimile shall be deemed to have been
                 delivered at noon on the first business day after the date on
                 which the facsimile was sent.

         23.3.3  Notice by certified or registered mail shall be deemed to
                 have been delivered on the date it is officially recorded as
                 delivered to the intended recipient by return receipt or
                 equivalent, and in the absence of such record of delivery, the
                 closing date of notice shall be presumed to have been the fifth
                 (5th) business day after it was deposited in the mail.

         23.3.4  Notice delivered by overnight courier shall be deemed to
                 have been delivered upon the first (1st) business day following
                 the date on which the courier service records the delivery as
                 having occurred.
Section 23.4 Notice to BLOCK

         Unless SELLER receives notice to the contrary, all Notices directed
to BLOCK shall be sent to the attention of:
                           President
                           Block Drug Company (Canada) Limited
                           7600 Danbro Crescent
                           Mississauga, Ontario
                           Canada L5N 6L6
                           905-542-3024 (facsimile)
                           905-542-7282 (telephone)

with a copy to:
                           Vice President-Law
                           Block Drug Company, Inc.
                           257 Cornelison Avenue
                           Jersey City, New Jersey 07302
                           201-451-2534 (facsimile)
                           201-434-3000 (telephone)

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Section 23.5 Notice to SELLER

         Unless BLOCK receives notice to the contrary, all Notices directed
to SELLER shall be sent to the attention of:

                           President
                           Draxis Health, Inc.
                           6870 Goreway Drive
                           Mississauga, Ontario
                           Canada L4V 1P1
                           905-677-5502 (facsimile)
                           905-677-5500 (telephone)

with a copy to:

                           Draxis General Counsel
                           Draxis Health Inc.
                           6870 Goreway Drive
                           Mississauga, Ontario
                           Canada L4V 1P1
                           905-677-5502 (facsimile)
                           905-677-5500 (telephone)

Section 23.6 No Oral Notice

         Oral notice, even if actually received, shall not be effective
against the party to whom such Notice was given.

                                ARTICLE XXIV
                                MISCELLANEOUS

Section 24.1 Section Headings

         The titles, headings or captions of sections and paragraphs in this
Agreement do not define, limit, extend, explain or describe the scope or
extent of this Agreement or any of its terms or conditions and therefore
shall not be considered in the interpretation, construction or application of
this Agreement.

Section 24.2 Severability

         Whenever possible, each clause, subclause, provision or condition of
this Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any clause, subclause, provision or
condition of this Agreement should be prohibited or invalid under

                                      40

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                                                               EXECUTION COPY

applicable law, such clause, subclause, provision or condition shall be
considered separate and severable from this Agreement to the extent of such
prohibition or invalidity without invalidating the remaining clauses,
subclauses, provisions and conditions of this Agreement.

Section 24.3 Entire Agreement/Merger

         This Agreement sets forth the entire agreement between the parties
hereto pertaining to the purchase of the Assets and supersedes all
negotiations, preliminary agreements, memoranda or letters of proposal or
intent, discussions and understandings of the parties hereto in connection
with the subject matter hereof.

         All discussion between the parties with respect to the Assets have
been merged into this Agreement, and neither party shall be bound by any
definition, condition, understanding, representation, warranty, covenant or
provision other than as expressly stated in or contemplated by this Agreement
or as subsequently shall be set forth in writing and executed by a duly
authorized representative of the party to be bound thereby.

Section 24.4 Amendment

         No amendment, change or modification of any of the terms, provisions
or conditions of this Agreement shall be effective unless made in writing and
signed on behalf of the parties hereto by their duly authorized
representatives.

Section 24.5 Counterparts

         This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original document, but all such separate
counterparts shall constitute only one and the same instrument.

Section 24.6 No Waiver of Rights

         No waiver of any term, provision, or condition of this Agreement,
whether by conduct or otherwise, in any one or more instances, shall be
deemed to be or construed as a further or continuing waiver of any such term,
provision, or condition of this Agreement.

Section 24.7 Force Majeure

         Neither party shall be liable hereunder to the other party nor shall
be in breach for failure to deliver, provided failure to deliver is no greater
than the delay in time caused by circumstances beyond the control of either
party, including but not limited to acts of God, fires, floods, riots, wars,

                                      41
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                                                               EXECUTION COPY

civil disturbances, sabotage, accidents, labor disputes, shortages, government
actions (including but not limited to priorities, requisitions, allocations
and price adjustment restrictions) and inability to obtain material,
equipment, labor or transportation.

Section 24.8 Further Cooperation and Assurances

     The parties hereto shall, without regard to when such need arises, each
perform such acts, execute and deliver such instruments and documents and do
all such other things as may be reasonably necessary to accomplish the
transactions contemplated in this Agreement.

Section 24.9 Expenses

     The parties hereto shall each bear their own costs and expenses
(including attorneys' fees) incurred in connection with the negotiation and
preparation of this Agreement and consummation of the transactions
contemplated hereby.

Section 24.10 Binding Effect

     This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective permitted successors and assigns.

Section 24.11 Time and Place of Closing

     The closing of the transactions contemplated hereunder shall be held at
2:00 p.m. on the Closing Date at the offices of Baker & McKenzie, BCE Place,
181 Bay Street, Suite 2100, Toronto, Ontario, Canada, M5J 2T3, or at such
other location and at such time as is mutually agreed to by the parties
hereto.

Section 24.12 Governing Law

     This Asset Purchase Agreement shall be construed and interpreted in
accordance with the laws of the province of Ontario, Canada.

Section 24.13 No Strict Construction

     This Agreement has been prepared jointly and shall not be strictly
construed against either party.

Section 24.14 Tax and Financial Treatment

     SELLER and BLOCK agree that this transaction is an Asset Purchase. Both
parties therefore agree to treat this transaction accordingly for financial
and tax purposes.

                                   42
<PAGE>

                                                               EXECUTION COPY

     IN WITNESS WHEREOF the parties have duly executed this Asset Purchase
Agreement on the date first written above.

BLOCK DRUG COMPANY (CANADA) LIMITED

By:
    -----------------------------------
Name:  Anthony G. Aiuvalasit, Jr.
Title: Assistant Secretary and Vice President Law

BLOCK DRUG COMPANY INC.

By:
    -----------------------------------
Name:  Anthony G. Aiuvalasit, Jr.
Title: Assistant Secretary and Vice President Law

DRAXIS HEALTH INC.

By: /s/ Jacqueline Le Saux
    -----------------------------------
Name:  Jacqueline H.R. Le Saux
Title: Senior VP, Secretary & Chief Development Officer

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                                                               EXECUTION COPY

Section 24.11 Time and Place of Closing

     The closing of the transactions contemplated hereunder shall be held at
2:00 p.m. on the Closing Date at the offices of Baker & McKenzie, BCE Place,
181 Bay Street, Suite 2100, Toronto, Ontario, Canada, M5J 2T3, or at such
other location and at such time as is mutually agreed to by the parties
hereto.

Section 24.12 Governing Law

     This Asset Purchase Agreement shall be construed and interpreted in
accordance with the laws of the province of Ontario, Canada.

Section 24.13 No Strict Construction

     This Agreement has been prepared jointly and shall not be strictly
construed against either party.

Section 24.14 Tax and Financial Treatment

     SELLER and BLOCK agree that this transaction is an Asset Purchase. Both
parties therefore agree to treat this transaction accordingly for financial
and tax purposes.

     IN WITNESS WHEREOF the parties have duly executed this Asset Purchase
Agreement on the date first written above.

BLOCK DRUG COMPANY (CANADA) LIMITED

By: /s/ Anthony G. Aiuvalasit, Jr.
    -----------------------------------------
Name:  Anthony G. Aiuvalasit, Jr.
Title: Assistant Secretary and Vice President Law

BLOCK DRUG COMPANY INC.

By: /s/ Anthony G. Aiuvalasit, Jr.
    -----------------------------------------
Name:  Anthony G. Aiuvalasit, Jr.
Title: Assistant Secretary and Vice President Law

                                    44

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