6-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

For the month of June, 2014

Commission File No. 00-30082

MERUS LABS INTERNATIONAL INC.
(Translation of registrant's name into English)

100 Wellington St. West, Suite 2110 P.O. Box 151
Toronto, ON M5K 1H1
(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F
Form 20-F [X]      Form 40-F [   ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1) [   ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7) [   ]

SUBMITTED HEREWITH

Exhibits
99.1	News Release dated June 10, 2014
99.2	Material Change Report dated June 10, 2014
99.3	Form of Subscription Agreement dated June 10, 2014
99.4	Letter Agreement dated June 10, 2014

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: June 10, 2014

MERUS LABS INTERNATIONAL INC.

“Andrew Patient”
_____________________________________________
Andrew Patient
Chief Financial Officer

EX-99.1

MERUS LABS INTERNATIONAL INC

ANNOUNCES AGGREGATE $21 MILLION FINANCING TRANSACTIONS

Toronto, June 10, 2014 - Merus Labs International Inc. (“Merus” or the “Company”) [TSX: MSL, NASDAQ: MSLI] is pleased to announce today that the Company has entered into a private placement subscription agreement to issue $10 million of Series A convertible preferred shares (the “Series A Preferred Shares”) to a large Canadian institutional investor. Concurrent with this transaction, Merus has also signed a letter agreement to acquire a new corporation to be incorporated by Dacha Strategic Metals Inc. (“Dacha”) [TSXV: DSM] which upon closing will have approximately $11 million in cash and no other assets or liabilities in exchange for Merus common shares. The $21 million in proceeds from the two financing transactions are expected to be used by the Company for future acquisition opportunities as well as for general corporate purposes.

“These financing transactions will result in a substantial increase in capital available for product deals going forward as the Company executes on its acquisition strategy,” said Elie Farah, President and CEO of Merus Labs International Inc.

The $10 million Series A Preferred Shares will pay a dividend of 8% per annum, subject to adjustment if the Company does not redeem after October 31, 2019. At any time at the option of the holder, the Series A Preferred Shares may be converted into the Company’s common shares at a conversion price of $2.20 per share. The Series A Preferred Shares are redeemable at the option of the Company at any time after October 31, 2019. The Series A Preferred Shares are also redeemable by the Company at any time in the event of a change of control subject to payment of a change of control premium. The Series A Preferred Shares are only redeemable by the holder if the Company does not complete a product acquisition transaction by December 31, 2014. The transaction is expected to close on July 11, 2014, subject to TSX and NASDAQ approval.

The letter agreement with Dacha contemplates that Dacha will convert its current liquid assets into cash and cash equivalents and contribute the proceeds to a new corporation to be incorporated by Dacha. This subsidiary will have not less than $11 million in cash and no other assets or liabilities when acquired by Merus. The purchase price will equal the total value of the cash held by the newly incorporated subsidiary and will be paid for by the issuance to Dacha of Merus common shares valued at $1.70 per share, subject to certain purchase price adjustments. Dacha will be granted certain equity participation rights and will be paid a transaction structuring fee of 3.5%, which will be paid by the issuance of Merus common shares on closing. The transaction is subject to certain conditions to closing, including completion of due diligence, approval of the TSX, NASDAQ and the TSX Venture exchanges and Dacha shareholder approval. Dacha’s management and directors unanimously support the transaction. The acquisition is expected to close on or before August 15, 2014.

About Merus Labs International Inc.

Merus is a specialty pharmaceutical company engaged in the acquisition and licensing of pharmaceutical products. The Company utilizes its expertise in pharmaceutical markets and its access to capital to acquire and license niche branded products. Merus further enhances the sale and distribution of these products by the introduction of a focused marketing and promotion plan.

Cautionary Statement

Certain statements contained in this press release may constitute “forward-looking statements” within the meaning of Section 21E (i) (1) of the United States Securities Exchange Act of 1934. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Merus’ actual results to be materially different from any future results expressed or implied by these statements. Such factors include the following: the ability of Merus to complete the Series A preferred share financing, the ability of Merus to complete the financing acquisition transaction with Dacha, general economic and business conditions, changes in demand for Merus’ products, changes in competition, the ability of Merus to integrate acquisitions or complete future acquisitions, Merus’ ability to complete any financing under its short form prospectus or otherwise, interest rate fluctuations, currency exchange rate fluctuations, dependence upon and availability of qualified personnel and changes in government regulation. In light of these and other uncertainties, the forward-looking statements included in this press release should not be regarded as a representation by Merus that Merus’ plans and objectives will be achieved. These forward-looking statements speak only as of the date of this press release, and we undertake no obligation to update or revise the statements.

For further information please contact:

Merus Labs International Inc.

Tel: (416) 593-3725

Or contact our investor relations department at: info@meruslabs.com

EX-99.2

FORM 51-102F3

MATERIAL CHANGE REPORT

Item 1              Name and Address of Company

Merus Labs International Inc. (the “Company” or “Merus”)
100 Wellington Street West
Suite 2110, PO Box 151
Toronto, Ontario, M5K 1H1

Item 2              Date of Material Change

June 10, 2014

Item 3              News Release

A news release was issued by the Company on June 10, 2014 and distributed through Marketwired and filed on SEDAR.

Item 4              Summary of Material Change

The Company has entered into a private placement subscription agreement to issue $10 million of Series A convertible preferred shares (the “Series A Preferred Shares”) to a large Canadian institutional investor. Concurrent with this transaction, Merus has also signed a letter agreement to acquire a new corporation to be incorporated by TSX Venture Exchange listed Dacha Strategic Metals Inc. (“Dacha”) which upon closing will have approximately $11 million in cash and no other assets or liabilities in exchange for Merus common shares. The $21 million in proceeds from the two financing transactions are expected to be used by the Company for future acquisition opportunities as well as for general corporate purposes.

Item 5              Full Description of Material Change

5.1              Full Description of Material Change

On June 10, 2014, the Company entered into a private placement subscription agreement to issue $10 million of the Series A Preferred Shares to a large Canadian institutional investor. Concurrent with this transaction, Merus has also signed a letter agreement to acquire a new corporation to be incorporated by TSX Venture Exchange listed Dacha which upon closing will have approximately $11 million in cash and no other assets or liabilities in exchange for Merus common shares. The $21 million in proceeds from the two financing transactions are expected to be used by the Company for future acquisition opportunities as well as for general corporate purposes.

The terms and conditions of the Series A Preferred Shares are set forth in the term sheet for Series A Preferred Shares attached as Exhibit A. The $10 million Series A Preferred Shares will pay a dividend of 8% per annum, subject to adjustment if the Company does not redeem after October 31, 2019. At any time at the option of the holder, the Series A Preferred Shares may be converted into the Company’s common shares at a conversion price of $2.20 per share. The Series A Preferred Shares are redeemable at the option of the Company at any time after October 31, 2019. The Series A Preferred Shares are also redeemable by the Company at any time in the event of a change of control subject to payment of a change of control premium. The Series A Preferred Shares are only redeemable by the holder if the Company does not complete a product acquisition transaction by December 31, 2014. The transaction is expected to close on July 11, 2014, subject to satisfaction of conditions to closing, including receipt of TSX and NASDAQ approval.

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The letter agreement with Dacha contemplates that Dacha will convert its current liquid assets into cash and cash equivalents and contribute the proceeds to a new corporation to be incorporated by Dacha. This subsidiary will have not less than $11 million in cash and no other assets or liabilities when acquired by Merus. The purchase price will equal the total value of the cash held by the newly incorporated subsidiary and will be paid for by the issuance to Dacha of Merus common shares valued at $1.70 per share, subject to certain purchase price adjustments. Dacha will be granted certain equity participation rights and will be paid a transaction structuring fee of 3.5%, which will be paid by the issuance of Merus common shares on closing. The transaction is subject to certain conditions to closing, including completion of due diligence, approval of the TSX, NASDAQ and TSX Venture Exchange and Dacha shareholder approval. Dacha’s management and directors unanimously support the transaction. Merus and Dacha have agreed to use commercially reasonable best efforts to complete the acquisition transaction by August 15, 2014, subject to the satisfaction or waiver of the closing conditions. If a definitive acquisition agreement for the transaction has not been executed by June 30, 2014 or if the acquisition transaction has not been completed by August 31, 2014, either party may terminate today’s letter agreement.

5.2              Disclosure for Restructuring Transactions

Not applicable.

Item 6              Reliance on subsection 7.1(2) of National Instrument 51-102

Not applicable

Item 7              Omitted Information

Not applicable

Item 8              Executive Officer

Andrew Patient
Chief Financial Officer
Telephone: (416) 593-3725

Item 9              Date of Report

June 10, 2014

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EXHIBIT A

TERM SHEET FOR SERIES A PREFERRED SHARES

Issuer	Merus Labs International Inc. (“Merus”)
Securities Offered	10,000 Series A Preferred Shares
Offering Price	CDN$1,000 per Series A Share
Liquidation Preference Amount	CDN$1,000 per Series A Share
Redemption	The Series A Preferred Shares will only be redeemable as follows:
	•	by the holders of Series A Preferred Shares if Merus does not complete a “Product Acquisition Transaction” by December 31, 2014, as described below under “Mandatory Redemption”,
	•	by Merus in the event of a “Change of Control”, as described below under “Change of Control Redemption, and
	•	by Merus at its option at any time after October 31, 2019 (the “Optional Redemption Date”), as described below under “Optional Redemption”.
		In the event that Merus does not exercise its option to redeem the Series A Preferred Shares within 90 days of the Optional Redemption Date, the Applicable Dividend Rate for determination of the dividends payable on the Series A Preferred Shares will increase as provided below under “Applicable Dividend Rate”.
	The Series A Preferred Shares may remain outstanding indefinitely should the Series A Preferred Shares not be redeemed or converted .
Applicable Dividend Rate	The Applicable Dividend Rate for determination of the dividends payable on the Series A Preferred Shares will be as follows:
	•	8% per annum from the date of issuance to the Optional Redemption Date,
	•	LIBOR plus 10% per annum during the one year period following the Optional Redemption Date should Merus elect not to redeem the Series A Preferred Shares within 90 days of the Optional Redemption Date,
	•	LIBOR plus 12% per annum during the period following the one year anniversary of the Optional Redemption Date should Merus elect not to redeem the Series A Preferred Shares during the one year period following the Optional Redemption Date.

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Dividends	Holders of the Series A Preferred Shares will be entitled to receive, when and as declared by the Board of Directors of Merus, out of funds legally available for the payment of dividends, cumulative cash dividends at the Applicable Dividend Rate multiplied by the $1,000.00 per share Liquidation Preference, initially equivalent to $80.00 per annum per Series A Preferred Share.
	Dividends on the Series A Preferred Shares will accrue daily and will be cumulative from, and including, the date of original issuance. Dividends will be payable quarterly on the 1st day of each April, July, October and January (each of which is referred to as a “dividend payment date”), provided that if any dividend payment date is not a business day, then the dividend which would have been payable on that dividend payment date will be paid on the next succeeding business day, and no interest, additional dividends or other sums will accrue on the amount so payable for the period from and after that dividend payment date to that next succeeding business day.
	Dividends payable on the shares of Series A Preferred Shares for any partial dividend period will be computed on the basis of a 360-day year consisting of twelve 30-day months. Merus will pay dividends to holders of record as they appear in the stock records of Merus at the close of business on the applicable dividend record date, which will be the tenth day preceding the applicable dividend payment date, or such other date as established by Merus that is no less than 10 days and no more than 30 days preceding the dividend payment date (the “dividend record date”).
	Merus will not declare or pay or set aside for payment any dividend on the shares of Series A Preferred Shares if the terms of any of the agreements to which Merus is party, including agreements relating to indebtedness of Merus, prohibit that declaration, payment or setting aside of funds or provide that the declaration, payment or setting aside of funds is a breach of or a default under that agreement, or if the declaration, payment or setting aside of funds is restricted or prohibited by law.
	Notwithstanding the foregoing, however, dividends on the shares of Series A Preferred Shares will accrue regardless of whether: (i) the terms of senior existing or future indebtedness of Merus at any time prohibit the current payment of dividends; (ii) Merus has surplus or earnings; (iii) there are funds legally available for the payment of such dividends; or (iv) such dividends are declared by the Board of Directors. Accrued but unpaid distributions on the shares of Series A Preferred Shares will not bear interest, and holders of the shares of Series A Preferred Shares will not be entitled to any distributions in excess of full cumulative distributions as described above. All dividends paid on the shares of Series A Preferred Shares will be credited to the previously accrued dividends on the shares of Series A Preferred Shares. Merus will credit any dividends paid on the shares of Series A Preferred Shares first to the earliest accrued and unpaid dividend due.

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Conversion

Each outstanding Series A Preferred Share shall be convertible at any time at the option of the holder into that number of whole the common shares of Merus (the “Common Shares”) as is equal to the Liquidation Preference amount of $1,000.00 per share, plus accrued and unpaid dividends, divided by an initial conversion price of $2.20 per share. The initial conversion price and the conversion price as adjusted are referred to as the “Conversion Price”. Each Common Share issuable upon conversion of a Series A Preferred Share is referred to as a “Conversion Share”. A Series A Preferred Share called for redemption shall be convertible into Common Shares up to and including, but not after, the close of business on the date fixed for redemption unless Merus is in default in the payment of the amount payable upon redemption.

Fundamental Changes

If at any time while any Series A Preferred Shares are outstanding, Merus effects (i) any merger, consolidation, amalgamation, arrangement or combination of Merus with or into another entity, (ii) any sale of all or substantially all of its assets in one or more transactions, (iii) any tender offer or exchange offer (whether by Merus or another entity) pursuant to which holders of Common Shares are permitted to tender or exchange their common shares for other securities, cash or property, or (iv) any reclassification or recapitalization of the common shares or any compulsory share exchange pursuant to which the common shares are effectively converted into or exchanged for other securities, cash or property (other than a subdivision, consolidation or common share reorganization contemplated below under “Adjustments”) (in any such case, a “Fundamental Change”), then, upon any subsequent conversion of any Series A Preferred Shares, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion absent such Fundamental Change, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Change if it had been, immediately prior to such Fundamental Change, the holder of one Common Share (the “Alternate Consideration”). If holders of common shares are given any choice as to the securities, cash or property to be received in a Fundamental Change, then each holder of Series A Preferred Shares shall be given the same choice as to the Alternate Consideration it receives upon any conversion of any Series A Preferred Shares following such Fundamental Change.

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Mandatory Redemption	If Merus does not complete a “Product Acquisition Transaction”, as defined below, by December 31, 2014, at any time, the holders of the Series A Preferred Shares will have the option to cause Merus to redeem the Series A Preferred Shares for cash at a redemption price equal to the Liquidation Preference of $1,000.00 per share, plus all accrued and unpaid dividends thereon (whether or not earned or declared) to, but excluding, the date fixed for redemption, without interest (a “Mandatory Redemption”). The holders of the Series A Preferred Shares must exercise their right to cause Merus to complete a Mandatory Redemption by 5 business days’ written notice to Merus. Upon receipt of notice of a Mandatory Redemption, Merus will complete the redemption of the Series A Preferred Shares within 15 days of receipt of the notice.
	“Product Acquisition Transaction” means the completion of a pharmaceutical product acquisition with a purchase price of not less than $10,000,000 and includes the execution of a binding agreement for the completion of a Product Acquisition Transaction notwithstanding that the transaction may not have completed by December 31, 2014.
Optional Redemption	On and after the Optional Redemption Date, Merus may, at its option, upon not less than 15 nor more than 30 days' written notice, redeem the Series A Preferred Shares, in whole or in part, at any time or from time to time, for cash at a redemption price equal to the Liquidation Preference of $1,000.00 per share, plus all accrued and unpaid dividends thereon (whether or not earned or declared) to, but excluding, the date fixed for redemption, without interest. If fewer than all of the outstanding shares of Series A Preferred Shares are to be redeemed, the number of shares to be redeemed will be determined by Merus and such shares may be redeemed pro rata from the holders of record of such shares in proportion to the number of such shares held by such holders (with adjustments to avoid redemption of fractional shares) or by lot in an equitable manner determined by us.
	From and after the redemption date, all dividends will cease to accumulate on the Series A Preferred Shares, such Series A Preferred Shares shall no longer be deemed to be outstanding, and all rights as a holder of Series A Preferred Shares will terminate with respect to such Series A Preferred Shares, except the right to receive the redemption price and all accrued and unpaid dividends up to, but excluding, the redemption date.

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Change of Control Redemption	At any time during which the Series A Preferred Shares are outstanding, in the event of a “Change of Control” of Merus by a person, entity or group Merus (or the entity acquiring Merus) may, at its option, upon not less than 15 nor more than 30 days’ written notice, redeem the Series A Preferred Shares, in whole but not in part, within 120 days after the date on which the Change of Control has occurred, for cash at a redemption price equal to (i) the Liquidation Preference of $1,000.00 per share multiplied by 105%, plus (ii) all accrued and unpaid dividends thereon (whether or not earned or declared) to, but excluding, the redemption date, without interest (a “Change of Control Redemption”). Notwithstanding the foregoing, holders of Series A Preferred Shares shall at all times have the right, up to any applicable redemption date, to convert the Series A Preferred Shares into Common Shares at a conversion price of $2.20 per share, as such conversion price may be adjusted.
	A “Change of Control” is deemed to occur when, after the original issuance of the Series A Preferred Shares, any of following has occurred and is continuing:
	•	a “person,” “group” or “entity” (within the meaning of Sections 13(d) and 14(d) of the Exchange Act) becomes the ultimate “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or group shall be deemed to have beneficial ownership of all shares of voting stock that such person or group has the right to acquire regardless of when such right is first exercisable), directly or indirectly, of voting stock representing more than 50% of the total voting power of the total voting stock of Merus;
	•	Merus sells, transfers or otherwise disposes of all or substantially all of its assets; or
	•	the consummation of an amalgamation, arrangement, merger, share exchange or other business combination involving Merus with another entity where the shareholders of Merus immediately prior to the merger or share exchange would not beneficially own, immediately after the merger or share exchange, securities representing 50% or more of the outstanding voting stock of the entity issuing cash or securities in the merger or share exchange (without consideration of the rights of any class of stock to elect directors by a separate group vote), or where members of the Board of Directors immediately prior to the merger or share exchange would not, immediately after the merger or share exchange, constitute a majority of the board of directors of the entity issuing cash or securities in the merger or share exchange.

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Liquidation Preference	Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of Merus, then, before any distribution or payment shall be made to the holders of any common shares or any other class or series of junior shares in the distribution of assets upon any liquidation, dissolution or winding up of Merus, the holders of Series A Preferred Shares shall be entitled to receive out of the assets of Merus legally available for distribution to shareholders, liquidating distributions in the amount of the Liquidation Preference, or $1,000.00 per share, plus an amount equal to all dividends (whether or not earned or declared) accrued and unpaid thereon to, but excluding, the date of payment. After payment of the full amount of the liquidating distributions to which they are entitled, the holders of Series A Preferred Shares will have no right or claim to any of the remaining assets of Merus. In the event that, upon any such voluntary or involuntary liquidation, dissolution or winding up, the available assets of Merus are insufficient to pay the amount of the liquidating distributions on all outstanding Series A Preferred Shares and the corresponding amounts payable on all parity shares, then the holders of the Series A Preferred Shares and all other such classes or series of parity shares shall share ratably in any such distribution of assets in proportion to the full liquidating distributions to which they would otherwise be respectively entitled. For such purposes, the consolidation or merger of Merus with or into any other entity, or the sale, lease or conveyance of all or substantially all of the property or business of Merus, or a statutory share exchange shall not be deemed to constitute a voluntary or involuntary liquidation, dissolution or winding up of Merus.
Ranking	The Series A Preferred Shares will rank:
	•	senior to the Common Shares and any other class or series of preferred shares that Merus may issue in the future, the terms of which specifically provide that such shares ranks junior to the Series A Preferred Shares, in each case with respect to payment of dividends and amounts distributed upon liquidation, dissolution or winding up, which are referred to as “junior shares”;
	•	equal to any other class or series of preferred shares that Merus may issue in the future, the terms of which specifically provide that such shares ranks on parity with such Series A Preferred Shares, in each case with respect to payment of dividends and amounts distributed upon liquidation, dissolution or winding up (any such creation would require the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series A Preferred Shares), which are referred to as “parity shares”; and
	•	junior to all existing and future indebtedness of Merus.
	Merus shall not issue any other class or series of preferred shares that rank senior to the Series A Preferred Shares, with respect to the payment of dividends and amounts distributed upon liquidation, dissolution or winding up.

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Voting Rights	The Series A Preferred Shares will not have any voting rights, except as prescribed by the BCBCA and as provided below. On each matter on which holders of Series A Preferred Shares are entitled to vote, each share of Series A Preferred Shares will be entitled to one vote. So long as any shares of Series A Preferred Shares remain outstanding, Merus will not, without the affirmative vote of the holders of at least two-thirds of the Series A Preferred Shares outstanding at the time, given in person or by proxy, either in writing or at a meeting, authorize or create any class or series of preferred shares of Merus or issue any of such shares that will rank as “parity shares”, as defined above. The foregoing voting provisions will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of Series A Preferred Shares shall have been redeemed or called for redemption upon proper notice and sufficient funds shall have been deposited in trust to effect such redemption.
Sinking Fund Provisions	The Series A Preferred Shares will not be subject to any sinking fund provisions.
Adjustments	The number of Common Shares issuable upon conversion of the Series A Preferred Shares and the Conversion Price will be subject to customary pro rata adjustments to any reflect any consolidation, stock split or other common share reorganization.
Limits on Conversion	A holder of Series A Preferred Shares (a “Holder”) shall not have the right to convert any Series A Preferred Shares to the extent that, after giving effect to such conversion, the Holder (together with the Holder’s affiliates and Persons acting jointly or in concert with such Persons (together, the “Joint Actors”)) would beneficially own in excess of 19.9% (the “Maximum Percentage”) of the number of Common Shares outstanding immediately after giving effect to such conversion on a diluted basis, assuming the conversion of all securities of the Joint Actors which are convertible into Common Shares within sixty (60) days from the proposed date of conversion.
Listing	The Series A Preferred Shares will not be listed on any stock exchange.

EX-99.3

FORM OF SERIES A PREFERRED SHARE SUBSCRIPTION AGREEMENT

MERUS LABS INTERNATIONAL INC.

SERIES A PREFERRED SHARES

PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT

The undersigned (the “Subscriber”) hereby irrevocably subscribes for and agrees to purchase from Merus Labs International Inc. (the “Issuer”) the number of Series A Preferred Shares to be created and designated by the Issuer (the “Preferred Shares”) set forth below at a purchase price of CDN$1,000 per Preferred Share for the aggregate purchase price set forth below (the “Offering”). The Subscriber agrees to be bound by the terms and conditions set forth in the attached “Terms and Conditions of Subscription for Preferred Shares”.

Subscriber Information	Preferred Shares to be Purchased
	Number of Preferred Shares:         __________ Series A Preferred Shares
[NAME OF SUBSCRIBER]	Aggregate Subscription Price:      CDN$__________
	(Based on $1,000 per Preferred Share)
(Name of Subscriber)	Number and kind of securities of the Issuer held, directly or indirectly, or over which control or direction is exercised by the Subscriber, if any:
Account Reference (if applicable): ___________________
	Register the Preferred Shares as set forth below:
X
(Signature of Authorized Signatory – if the Subscriber is not an Individual)
	(Name to Appear on Preferred Share Certificate)
X
(Signature of Authorized Signatory – if the Subscriber is not an Individual)
	(Address, including Postal Code)
(Name and Title of Authorized Signatory – if the Subscriber is not an
Individual)	Deliver the Preferred Shares as set forth below:
	(Attention - Name)
(Subscriber’s Address, including city and Postal Code)
	(Street Address, including Postal Code) (No PO Box)
(Telephone Number)                                                                   (Email Address)
	(Telephone Number)

ACCEPTANCE

The Issuer hereby accepts the subscription as set forth above on the terms and conditions contained in this Private Placement Subscription Agreement (including the Terms and Conditions and Exhibits attached hereto) as of the 10th day of June, 2014.

MERUS LABS INTERNATIONAL INC.

Per:   _________________________________________

         Authorized Signatory

Address:       100 Wellington St. West

                       Suite 2110, P.O. Box 151

                       Toronto, ON M5K 1H1 Canada

Email:             ___________________________________

Attention:     ___________________________________

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TERMS AND CONDITIONS OF SUBSCRIPTION FOR PREFERRED SHARES

1.                      Subscription

1.1        On the basis of the representations and warranties and subject to the terms and conditions set forth herein, the Subscriber hereby irrevocably subscribes for and agrees to purchase _________ Preferred Shares of the Issuer for the purchase price of $_________ (the “Purchase Price”) (such subscription and agreement to purchase being the “Subscription”) pursuant to this subscription agreement (the “Agreement”) on the basis of the representations and warranties and subject to the terms and conditions set forth in this Agreement.

1.2        The Preferred Shares will have the terms and conditions as set forth in Exhibit A of this Agreement, which terms and conditions will be reflected in an amendment to the articles of the Issuer to be filed by the Issuer under the British Columbia Business Corporations Act (the “BCBCA”).

1.3        The Issuer hereby agrees to sell the Preferred Shares to the Subscriber on the basis of the representations and warranties and subject to the terms and conditions set forth in this Agreement. Subject to the terms of this Agreement, this Agreement will be effective upon its acceptance by the Issuer.

1.4        Unless otherwise provided, all dollar amounts referred to in this Agreement are in lawful money of Canada.

2.                      Payment and Closing

2.1        The closing of the purchase and sale of the Preferred Shares (the “Closing”) will take place on July 11, 2014 (the “Closing Date”), provided that the Issuer and the Subscriber may agree on an alternate Closing Date which will be no later than July 18, 2014.

2.2        On the Closing Date, the Issuer will deliver a certificate representing the Preferred Shares to the Subscriber, in accordance with the registration instructions on page 1 of this Agreement, against payment of the Purchase Price by the Subscriber to the Issuer. The Purchase Price shall be paid by wire to the Issuer pursuant to the wire instructions set out in Exhibit B on or before the Closing Date.

2.3        The Closing is conditional upon and subject to:

(a)	the filing of a Form 11 – Notice of Alteration with the British Columbia Registrar of Companies under the BCBA to create and designate the Series A Preferred Shares;
(b)	the Issuer having obtained all necessary approvals and consents (the “Required Consents and Approvals”), including regulatory approvals for the Offering which will include the approval of the Toronto Stock Exchange and NASDAQ to the completion of the Offering and the listing of the common shares of the Issuer (the “Common Shares”) issuable upon conversion of the Preferred Shares (the “Conversion Shares”); and
(c)	the issue and sale of the Preferred Shares being exempt from the requirement to file a prospectus and the requirement to deliver an offering memorandum under applicable securities legislation relating to the sale of the Preferred Shares, or the Issuer having received such orders, consents or approvals as may be required to permit such sale without the requirement to file a prospectus or deliver an offering memorandum.

2.4        Notwithstanding anything to the contrary contained in this Agreement, if the Closing does not occur by July 18, 2014, the Subscriber may terminate this Agreement by providing written notice to the Issuer, following which the Issuer shall forthwith deliver all funds tendered in connection with this Agreement to the Subscriber without deduction.

2.5        The Subscriber shall complete, sign and return to the Issuer as soon as possible, on request by the Issuer, any additional documents, questionnaires, notices and undertakings as may be reasonably required by any regulatory authorities and applicable law.

2.6        Both parties to this Agreement acknowledge and agree that McMillan LLP has acted as counsel only to the Issuer and is not protecting the rights and interests of the Subscriber. The Subscriber acknowledges and agrees that the Issuer and McMillan LLP have given the Subscriber the opportunity to seek, and are hereby recommending that the Subscriber obtain, independent legal advice with respect to the subject matter of this Agreement and, further, the Subscriber hereby represents and warrants to the Issuer and McMillan LLP that the Subscriber has sought independent legal advice or waives such advice.

3.                      Right of First Refusal

3.1        During the period from the Closing Date through to and including the second anniversary of the Closing Date, the Issuer will give the Subscriber notice (an “Equity Financing Notice”) of any offering (an “Equity Financing”) of any common shares or preferred shares of the Issuer or securities convertible into or exercisable or exchangeable for common shares or preferred shares of the Issuer (together, any “Equity Securities”) as follows:

              (a)        if the Equity Securities are to be sold on a private placement basis, the Issuer will deliver the Equity Financing Notice to the Subscriber at least seven business days prior to the earlier of (i) the public announcement of the private placement, or (ii) the execution of any binding subscription agreements in connection with the private placement,

               (b)        if the Equity Securities are to be sold in a bought deal financing as described under Part 7 of National Instrument 44-101 – Short Form Prospectus Distributions, or any successor rule or policy (a “Bought Deal Offering”), the Issuer will deliver the Equity Financing Notice to the Subscriber as early as possible and in no event later than the time of execution by the Issuer of a bought deal letter or other form of binding agreement in connection with the Bought Deal Offering, and

               (c)        in all other cases, the Issuer will deliver the Equity Financing Notice to the Subscriber as early as possible and, in any event, at least 5 business days prior to the public announcement of the Equity Financing.

3.2        The requirements in this Section 3 will not apply to the issuance of any Equity Securities in connection with (i) a strategic merger, acquisition, consolidation or purchase of assets or securities of another company, (ii) any strategic license agreements and other partnering arrangements entered into by the Issuer, (iii) the Issuer’s issuance of common shares or the issuances or grants of options to purchase common shares pursuant to stock option plans and employee stock purchase plans, or (iv) as a result of the exercise of warrants or conversion of convertible Equity Securities which are granted or issued prior to the Closing Date all on the original terms thereof (collectively the foregoing are “Excepted Issuances”).

3.3        Upon receipt of an Equity Financing Notice, the Subscriber shall have the right, subject to any required approval of the TSX, NASDAQ or any exchange on which the shares of the Issuer are listed at the time, to subscribe for and purchase up to 15% of the Equity Securities (in aggregate, including any Equity Securities that may be purchased under any other agreements between the Subscriber and its affiliated entities and the Issuer) that the Issuer actually issues and sells in the Equity Financing for the consideration and on the same terms and conditions as offered to the other potential purchasers. If the Subscriber elects to subscribe for such Equity Securities, the Subscriber shall provide written notice to the Issuer (i) other than in the case of a Bought Deal Offering, by the close of business on the third Business Day following the day upon which the Equity Financing Notice is delivered by the Issuer, or (ii) in the case of a Bought Deal Offering, not less than 24 hours following the day upon which the Equity Financing Notice is delivered by the Issuer to the Subscriber.

3.4        Closing of the purchase of any additional Equity Securities by the Subscriber under these provisions will be completed concurrently with the closing of the issuance of the Equity Securities in the Equity Financing.

4.                      Acknowledgements and Agreements of Subscriber

4.1        The Subscriber acknowledges and agrees that:

(a)	the Subscriber will not make any short sales of any Common Shares while the Preferred Shares are outstanding;
(b)	the Subscriber is purchasing the Preferred Shares as principal for its own account and not for the benefit of any other person;
(c)	the Preferred Shares have an acquisition cost to the Subscriber of not less than $150,000, payable in cash at the Closing;
(d)	the Subscriber was not created and is not being used solely to purchase or hold securities in reliance on the registration and prospectus exemptions provided under Section 2.10 of National Instrument 45-106, it pre-existed this offering and has a bona fide purpose other than investment in the Preferred Shares;
(e)	none of the Preferred Shares nor any of the Conversion Shares (together, the “Securities”) have been or will be registered under the United States Securities Act of 1933, as amended, (the “1933 Act”), or under any securities or “blue sky” laws of any state of the United States, and, unless so registered, may not be offered or sold in the United States or, directly or indirectly, to U.S. Persons, as that term is defined in Regulation S under the 1933 Act (“Regulation S”), except in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act and in each case only in accordance with applicable state, provincial and foreign securities laws;
(f)	the Issuer has not undertaken, and will have no obligation, to register any of the Securities under the 1933 Act or any other securities legislation;
(g)	the decision to execute this Agreement and acquire the Securities agreed to be purchased hereunder has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of the Issuer and such decision is based entirely upon a review of any public information which has been filed by the Issuer with any Canadian provincial securities commissions (collectively, the “Public Record”);
(h)	the Subscriber understands and agrees that the Issuer and others will rely upon the truth and accuracy of the acknowledgements, representations, warranties, covenants and agreements contained in this Agreement, as applicable, and agrees that if any of such acknowledgements, representations and agreements are no longer accurate or have been breached, the Subscriber shall promptly notify the Issuer;
(i)	there are risks associated with the purchase of the Securities, as more fully described in the Issuer’s periodic disclosure forming part of the Public Record;
(j)	the Subscriber and the Subscriber’s advisor(s) have had a reasonable opportunity to ask questions of and receive answers from the Issuer in connection with the distribution of the Securities hereunder, and to obtain additional information, to the extent possessed or obtainable without unreasonable effort or expense, necessary to verify the accuracy of the information about the Issuer;
(k)	the Issuer is entitled to rely on the representations and warranties of the Subscriber contained in this Agreement, as applicable, and the Subscriber will hold harmless the Issuer from any loss or damage it or they may suffer as a result of the Subscriber’s failure to correctly complete this Agreement, as applicable;

(l)	the Subscriber has been advised to consult the Subscriber’s own legal, tax and other advisors with respect to the merits and risks of an investment in the Securities and with respect to applicable resale restrictions, and it is solely responsible (and the Issuer is not in any way responsible) for compliance with:
	(i)	any applicable laws of the jurisdiction in which the Subscriber is resident in connection with the distribution of the Securities hereunder, and
	(ii)	applicable resale restrictions;
(m)	the Subscriber understands and agrees that there may be material tax consequences to the Subscriber of an acquisition or disposition of the Securities and that the Issuer gives no opinion and makes no representation with respect to the tax consequences to the Subscriber under federal, state, provincial, local or foreign tax law of the Subscriber’s acquisition or disposition of the Securities;
(n)	the Subscriber consents to the placement of a legend or legends on any certificate or other document evidencing any of the Securities setting forth or referring to the restrictions on transferability and sale thereof contained in this Agreement, with such legend to be substantially as follows:

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES SHALL NOT TRADE THE SECURITIES BEFORE [four months and one day from the Closing Date.]

THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE ARE LISTED ON THE TORONTO STOCK EXCHANGE (“TSX”); HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE FACILITIES OF TSX SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON TSX.

(o)	the Issuer has advised the Subscriber that the Issuer is relying on an exemption from the requirements to provide the Subscriber with a prospectus and to sell the Securities through a person registered to sell securities under provincial securities legislation and other applicable securities laws, and, as a consequence of acquiring the Securities pursuant to such exemption, certain protections, rights and remedies provided by applicable securities legislation (including the various provincial securities acts), including statutory rights of rescission or damages, will not be available to the Subscriber;
(p)	no securities commission or similar regulatory authority has reviewed or passed on the merits of any of the Securities;
(q)	there is no government or other insurance covering any of the Securities;
(r)	there are restrictions on the Subscriber’s ability to resell the Securities and it is the responsibility of the Subscriber to find out what those restrictions are and to comply with such restrictions before selling any of the Securities;
(s)	the Issuer will refuse to register the transfer of any of the Securities to a U.S. Person not made pursuant to an effective registration statement under the 1933 Act or pursuant to an available exemption from the registration requirements of the 1933 Act and in each case in accordance with applicable laws; and

(t) this Agreement is not enforceable by the Subscriber unless it has been accepted by the Issuer, and the Subscriber acknowledges and agrees that the Issuer reserves the right to reject any Subscription for any reason whatsoever.

5.                      Representations, Warranties and Covenants of the Subscriber

5.1        The Subscriber hereby represents and warrants to and covenants with the Issuer (which representations, warranties and covenants shall survive the Closing for a period of two years) that:

(a)	the Subscriber is not a U.S. Person and did not receive any offer to purchase the Preferred Shares or agree to purchase the Preferred Shares while in the United States;
(b)	the Subscriber is resident in Canada;
(c)	the Subscriber has the legal capacity and competence to enter into and execute this Agreement and to take all actions required pursuant hereto and, if the Subscriber is a corporate entity, it is duly incorporated and validly subsisting under the laws of its jurisdiction of incorporation and all necessary approvals by its directors, shareholders and others have been obtained to authorize execution and performance of this Agreement on behalf of the Subscriber;
(d)	the entering into of this Agreement and the transactions contemplated hereby do not result in the violation of any of the terms and provisions of any law applicable to, or, if applicable, the constating documents of, the Subscriber or of any agreement, written or oral, to which the Subscriber may be a party or by which the Subscriber is or may be bound;
(e)	the Subscriber has duly executed and delivered this Agreement and it constitutes a valid and binding agreement of the Subscriber enforceable against the Subscriber;
(f)	the Subscriber has received and carefully read this Agreement;
(g)	the Subscriber has made an independent examination and investigation of an investment in the Securities and the Issuer and agrees that the Issuer will not be responsible in any way whatsoever for the Subscriber’s decision to invest in the Securities and the Issuer;
(h)	the Subscriber is not an underwriter of, or dealer in, any of the Securities, nor is the Subscriber participating, pursuant to a contractual agreement or otherwise, in the distribution of the Securities or any of them;
(i)	the Subscriber is not aware of any advertisement of any of the Securities and is not acquiring the Securities as a result of any form of general solicitation or general advertising, including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media, or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; and
(j)	no person has made to the Subscriber any written or oral representations:
	(i)	that any person will resell or repurchase any of the Securities,
	(ii)	that any person will refund the purchase price of any of the Securities, or
	(iii)	as to the future price or value of any of the Securities.

5.2        In this Agreement, the term “U.S. Person” shall have the meaning ascribed thereto in Regulation S promulgated under the 1933 Act and for the purpose of the Agreement includes any person in the United States.

6.                      Representations and Warranties will be Relied Upon by the Issuer

6.1        The Subscriber acknowledges that the representations and warranties contained herein are made by it with the intention that such representations and warranties may be relied upon by the Issuer and its legal counsel. The Subscriber further agrees that by accepting delivery of the certificates representing the Preferred Shares on the Closing Date, it will be representing and warranting that the representations and warranties contained herein are true and correct as at the Closing Date with the same force and effect as if they had been made by the Subscriber on the Closing Date and that they will survive the purchase by the Subscriber of the Securities and will continue in full force and effect notwithstanding any subsequent disposition by the Subscriber of such Securities.

7.                      Representations, Warranties, Covenants and Acknowledgements of the Issuer

7.1        The Issuer hereby represents and warrants to and covenants with the Subscriber (which representations, warranties and covenants shall survive the Closing for a period of two years) that:

(a)	the Issuer has been duly incorporated and organized and is a valid and subsisting company under the laws of the province of British Columbia, and has all requisite corporate power and authority to carry on and is duly qualified to carry on business in each jurisdiction wherein the carrying out of the activities contemplated makes such qualifications necessary and to own, lease and operate its properties and assets and to carry out the transactions contemplated by this Agreement;
(b)	no proceedings have been instituted or, to the knowledge of the Issuer, are pending for the dissolution or liquidation or winding-up of the Issuer;
(c)	upon the conversion of the Preferred Shares in accordance with their terms, the Conversion Shares will, upon issue and delivery, be validly issued as fully paid and non-assessable;
(d)	the Issuer has the full corporate right, power and authority to execute this Subscription Agreement, and to issue the Preferred Shares and, upon conversion of the Preferred Shares, the Conversion Shares to the Subscriber pursuant to the terms of this Subscription Agreement;
(e)	this Subscription Agreement has been duly authorized, executed and delivered by the Issuer and constitutes a valid, binding and enforceable obligation of the Issuer, enforceable in accordance with its terms;
(f)	the Issuer is licensed, registered or qualified, has all requisite government approvals and owns and has the right to use all intellectual property relating to its products and business in all jurisdictions in which it owns, leases or operates its properties or carries on business to enable its business to be carried on as now conducted and as currently proposed to be conducted and all such licences, registrations, qualifications, intellectual property rights and governmental approvals are valid, subsisting and in good standing and it does not know of and it has not received a notice of non- compliance or opposition, nor knows of, nor has reasonable grounds to know of, any facts that could give rise to a notice of non-compliance or opposition with any such laws, regulations, rights, approvals or permits which could have a material adverse effect on the Issuer or its ability to carry on its business as now conducted and as currently proposed to be conducted;
(g)	the Issuer is a “reporting issuer” (as such term is defined under applicable Canadian securities laws) in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, and Prince Edward Island;
(h)	the issuance of the Preferred Shares and the Conversion Shares upon conversion of the Preferred Shares, are not subject to the pre-emptive rights of any shareholder of the Issuer and all necessary corporate action has been taken by the Issuer to authorize the issuance, sale and delivery of the Preferred Shares and the Conversion Shares upon conversion of the Preferred Shares;

(i)	the Preferred Shares, when issued, will conform to all statements relating thereto contained in this Agreement and such description conforms to the rights set forth in the instrument defining the same;
(j)	the execution and delivery of this Agreement and the Preferred Shares, and the performance of each of the Issuer’s obligations hereunder and thereunder do not and will not result in a breach, violation, termination or revocation of or default under:
	(i)	any of the terms, conditions or provisions of the constating documents of the Issuer and its subsidiaries or any resolution of their respective directors (or committees of directors) or shareholders;
	(ii)	any statute, rule or regulation applicable to the Issuer; or
	(iii)	any mortgage, hypothec, note, indenture, contract, agreement (written or oral), instrument, lease, licence, permit or other document to which it is a party or is subject or by which the Issuer or its subsidiaries or any of their respective property or assets is bound, or any applicable law, or which would give rise to the acceleration or maturity of any indebtedness or other material liabilities or obligations under any of the foregoing or which would materially adversely affect the consummation of the Offering.

(k)	the Issuer and its subsidiaries are conducting their respective businesses in compliance with all applicable laws, rules and regulations in each of the jurisdictions in which they carry on business and are not in breach of any such applicable laws, rules and regulations;
(l)	no securities commission, stock exchange or any other regulatory authority in any jurisdiction has issued any order which is currently outstanding preventing or suspending trading in any securities of the Issuer and no such proceeding is, to the knowledge of the Issuer, pending, contemplated or threatened;
(m)	there is no action, suit, proceeding, inquiry or investigation before or brought by any court or governmental agency, governmental instrumentality or body, domestic or foreign, now pending or, to the knowledge of the Issuer, threatened against or affecting the Issuer, any subsidiary, any of their respective properties or assets currently owned, which if determined adversely, would reasonably be expected to have a material adverse effect on the Issuer;
(n)	the information and statements set forth in the Issuer’s public disclosure record are true, correct, and complete in all material respects and do not contain any misrepresentation, as of the date of such information or statement, and no material change has occurred in relation to the Issuer and its subsidiaries which is not disclosed in the Issuer’s public disclosure record and the Issuer has not filed any confidential material change reports which continue to be confidential;
(o)	the financial statements of the Issuer present fairly, in all material respects, the financial position of the Issuer and its subsidiaries, and the statements of operations, retained earnings, cash flow from operations and changes in financial information of the Issuer and its subsidiaries for the periods specified in such financial statements and such financial statements contain no misrepresentation and have been prepared in conformity with generally accepted accounting principles in Canada applied on a consistent basis throughout the periods involved;
(p)	the Issuer has (i) on a timely basis, filed all necessary tax returns and notices and has paid or made provision for all applicable taxes of whatever nature for all tax years to the date hereof to the extent such taxes have become due or have been alleged to be due; and (ii) is not aware of any material tax deficiencies or material interest or penalties accrued or accruing or alleged to be accrued or accruing, thereon which have not otherwise been provided for by the Issuer;

(q)	except for (i) options to acquire up to 3,490,000 Common Shares, (ii) warrants to acquire up to 2,295,950 Common Shares, (iii) outstanding convertible debentures in the principal amount of $10,000,000, and (iv) an agreement to acquire a newly incorporated company from Dacha Strategic Metals Inc. (“Dacha”) with cash assets of not less than $11.0 million (subject to adjustment for shares of the Issuer purchased by Dacha) in exchange for the issuance of Common Shares of the Issuer, no person has any right, agreement or option, present or future, contingent or absolute, or any right capable of becoming a right, agreement or option, for the issue or allotment of any of the unissued Common Shares or any other securities of the Issuer or any other security convertible into or exchangeable for any such Shares or other securities or to require the Issuer to purchase, redeem or otherwise acquire any of its issued and outstanding Common Shares as of the date hereof;
(r)	as of the date hereof, the authorized share capital of the Issuer consists of an unlimited number of Common Shares and as of the close of business on May 29, 2014, 51,921,262 Common Shares, 2,295,950 share-purchase warrants and 3,490,000 options were issued and outstanding; and
(s)	the Issuer acknowledges that, in making its decision to invest in the Preferred Shares, the Subscriber is relying on this Subscription Agreement and the Issuer’s public disclosure record.

8.                      Representations and Warranties will be Relied Upon by the Subscriber

8.1        The Issuer acknowledges that the representations and warranties contained herein are made by it with the intention that such representations and warranties may be relied upon by the Subscriber and its legal counsel. The Issuer further agrees that by delivering the certificate representing the Preferred Shares on the Closing Date, it will be representing and warranting that the representations and warranties contained herein are true and correct as at the Closing Date with the same force and effect as if they had been made by the Issuer on the Closing Date and that they will survive the purchase by the Subscriber of the Securities and will continue in full force and effect notwithstanding any subsequent disposition by the Subscriber of such Securities.

9.                      Acknowledgement and Waiver

9.1        The Subscriber has acknowledged that the decision to acquire the Securities was solely made on the basis of publicly available information. The Subscriber hereby waives, to the fullest extent permitted by law, any rights of withdrawal, rescission or compensation for damages to which the Subscriber might be entitled in connection with the distribution of any of the Securities.

10.                   Collection of Personal Information

10.1      The Subscriber acknowledges and consents to the fact that the Issuer is collecting the Subscriber’s personal information for the purpose of fulfilling this Agreement and completing the Offering. The Subscriber’s personal information (and, if applicable, the personal information of those on whose behalf the Subscriber is contracting hereunder) may be disclosed by the Issuer to (a) stock exchanges or securities regulatory authorities, (b) the Issuer's registrar and transfer agent, (c) Canadian tax authorities, (d) authorities pursuant to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) and (e) any of the other parties involved in the Offering, including legal counsel, and may be included in record books in connection with the Offering. By executing this Agreement, the Subscriber is deemed to be consenting to the foregoing collection, use and disclosure of the Subscriber's personal information (and, if applicable, the personal information of those on whose behalf the Subscriber is contracting hereunder) for the foregoing purposes and to the retention of such personal information for as long as permitted or required by law or business practice. Notwithstanding that the Subscriber may be purchasing the Preferred Shares as agent on behalf of an undisclosed principal, the Subscriber agrees to provide, on request, particulars as to the nature and identity of such undisclosed principal, and any interest that such undisclosed principal has in the Issuer, all as may be required by the Issuer in order to comply with the foregoing.

Furthermore, the Subscriber is hereby notified that:

(a)	the Issuer may deliver to any securities commission having jurisdiction over the Issuer, the Subscriber or this subscription, including any Canadian provincial securities commissions and/or the SEC (collectively, the “Commissions”) certain personal information pertaining to the Subscriber, including such Subscriber’s full name, residential address and telephone number, the number of shares or other securities of the Issuer owned by the Subscriber, the number of Preferred Shares purchased by the Subscriber and the total purchase price paid for such Preferred Shares, the prospectus exemption relied on by the Issuer and the date of distribution of the Preferred Shares,
(b)	such information is being collected indirectly by the Commissions under the authority granted to them in securities legislation,
(c)	such information is being collected for the purposes of the administration and enforcement of the securities laws, and
(d)	the Subscriber may contact the following public official in Ontario with respect to questions about the Ontario Securities Commission’s indirect collection of such information at the following address and telephone number:

Administrative Assistant to the Director of Corporate Finance
Ontario Securities Commission
Suite 1903, Box 55
20 Queen Street West
Toronto, ON M5H 3S8
Telephone: (416) 593-8086

11.                Confidentiality

11.1      Except where required by law or to comply with the policies of any stock exchange on which the Common Shares are traded, no public announcement or news release concerning the matters provided for in this Agreement may be made by the Issuer without each Subscriber’s prior written approval and consent and (ii) no copy of this Subscription Agreement may be provided by the Issuer to any person (except to its affiliates, and their respective directors, officers, employees, advisors or lenders (collectively, “Issuer Representatives”)) without each Subscriber’s prior consent. The Issuer shall be entitled to disclose confidential information only to those Issuer Representatives who, in all cases, need to know such confidential information, directed to hold such information in the strictest of confidence and agree and undertake to maintain the confidential nature of such confidential information and act in accordance with the terms of this provision. To the extent that the Issuer must make the contents of this Agreement public under the terms of applicable laws or pursuant to the rules and regulations of any regulatory body, including any stock exchange on which the Common Shares are listed, the Issuer agrees to omit or censor, in consultation with each Subscriber, acting reasonably, any information that would be prejudicial to the interests of the Subscribers, to the extent permitted pursuant to applicable laws.

12.                Costs

12.1      The Subscriber acknowledges and agrees that all costs and expenses incurred by the Subscriber (including any fees and disbursements of any special counsel retained by the Subscriber) relating to the purchase of the Preferred Shares shall be borne by the Subscriber.

13.                Governing Law

13.1      This Agreement is governed by the laws of the Province of Ontario and the federal laws of Canada applicable therein. The Subscriber, in its personal or corporate capacity irrevocably attorns to the exclusive jurisdiction of the courts of the Province of Ontario.

14.                Currency

14.1      Any reference to currency in this Agreement is to the currency of Canada unless otherwise indicated.

15.                Survival

15.1      This Agreement, including, without limitation, the representations, warranties and covenants contained herein, shall survive and continue in full force and effect and be binding upon the parties hereto notwithstanding the completion of the purchase of the Securities by the Subscriber pursuant hereto.

16.                Assignment

16.1      This Agreement will be binding upon and enure to the benefit of the parties and their respective successors, heirs, executors, administrators and legal representatives. This Agreement is not transferable or assignable.

17.                Severability

17.1      The invalidity or unenforceability of any particular provision of this Agreement shall not affect or limit the validity or enforceability of the remaining provisions of this Agreement.

18.                Entire Agreement

18.1      Except as expressly provided in this Agreement and in the exhibits, agreements, instruments and other documents attached hereto or contemplated or provided for herein, this Agreement contains the entire agreement between the parties with respect to the sale of the Preferred Shares and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties and there are no other terms, conditions, representations or warranties, whether expressed, implied, oral or written, by statute or common law, by the Issuer or by anyone else. The parties have not relied and are not relying on any other information, discussion or understanding in entering into and completing the transactions contemplated by this Agreement.

19.                Time of Essence

19.1      Time is of the essence in this Agreement.

20.                Notices

20.1      All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication, including facsimile, electronic mail or other means of electronic communication capable of producing a printed copy. Notices to the Subscriber shall be directed to the address of the Subscriber set forth on page 1 of this Agreement and notices to the Issuer shall be directed to it at the address of the Issuer set forth on page 1 of this Agreement.

21.                Counterparts and Electronic Means

21.1      This Agreement may be executed in any number of counterparts, each of which, when so executed and delivered, shall constitute an original and all of which together shall constitute one instrument. Delivery of an executed copy of this Agreement by electronic facsimile transmission or other means of electronic communication capable of producing a printed copy will be deemed to be execution and delivery of this Agreement as of the date hereinafter set forth.

EXHIBIT A

TERM SHEET FOR SERIES A PREFERRED SHARES

Issuer	Merus Labs International Inc. (“Merus”)
Securities Offered	10,000 Series A Preferred Shares
Offering Price	CDN$1,000 per Series A Share
Liquidation Preference Amount	CDN$1,000 per Series A Share
Redemption	The Series A Preferred Shares will only be redeemable as follows:
	•	by the holders of Series A Preferred Shares if Merus does not complete a “Product Acquisition Transaction” by December 31, 2014, as described below under “Mandatory Redemption”,
	•	by Merus in the event of a “Change of Control”, as described below under “Change of Control Redemption, and
	•	by Merus at its option at any time after October 31, 2019 (the “Optional Redemption Date”), as described below under “Optional Redemption”.
	In the event that Merus does not exercise its option to redeem the Series A Preferred Shares within 90 days of the Optional Redemption Date, the Applicable Dividend Rate for determination of the dividends payable on the Series A Preferred Shares will increase as provided below under “Applicable Dividend Rate”.
	The Series A Preferred Shares may remain outstanding indefinitely should the Series A Preferred Shares not be redeemed or converted .
Applicable Dividend Rate	The Applicable Dividend Rate for determination of the dividends payable on the Series A Preferred Shares will be as follows:
	•	8% per annum from the date of issuance to the Optional Redemption Date,
	•	LIBOR plus 10% per annum during the one year period following the Optional Redemption Date should Merus elect not to redeem the Series A Preferred Shares within 90 days of the Optional Redemption Date,
	•	LIBOR plus 12% per annum during the period following the one year anniversary of the Optional Redemption Date should Merus elect not to redeem the Series A Preferred Shares during the one year period following the Optional Redemption Date.
Dividends	Holders of the Series A Preferred Shares will be entitled to receive, when and as declared by the Board of Directors of Merus, out of funds legally available for the payment of dividends, cumulative cash dividends at the Applicable Dividend Rate multiplied by the $1,000.00 per share Liquidation Preference, initially equivalent to $80.00 per annum per Series A Preferred Share.
	Dividends on the Series A Preferred Shares will accrue daily and will be cumulative from, and including, the date of original issuance. Dividends will be payable quarterly on the 1st day of each April, July, October and January (each of which is referred to as a “dividend payment date”), provided that if any dividend payment date is not a business day, then the dividend which would have been payable on that dividend payment date will be paid on the next succeeding business day, and no interest, additional dividends or other sums will accrue on the amount so payable for the period from and after that dividend payment date to that next succeeding business day.

	Dividends payable on the shares of Series A Preferred Shares for any partial dividend period will be computed on the basis of a 360-day year consisting of twelve 30-day months. Merus will pay dividends to holders of record as they appear in the stock records of Merus at the close of business on the applicable dividend record date, which will be the tenth day preceding the applicable dividend payment date, or such other date as established by Merus that is no less than 10 days and no more than 30 days preceding the dividend payment date (the “dividend record date”).
	Merus will not declare or pay or set aside for payment any dividend on the shares of Series A Preferred Shares if the terms of any of the agreements to which Merus is party, including agreements relating to indebtedness of Merus, prohibit that declaration, payment or setting aside of funds or provide that the declaration, payment or setting aside of funds is a breach of or a default under that agreement, or if the declaration, payment or setting aside of funds is restricted or prohibited by law.
	Notwithstanding the foregoing, however, dividends on the shares of Series A Preferred Shares will accrue regardless of whether: (i) the terms of senior existing or future indebtedness of Merus at any time prohibit the current payment of dividends; (ii) Merus has surplus or earnings; (iii) there are funds legally available for the payment of such dividends; or (iv) such dividends are declared by the Board of Directors. Accrued but unpaid distributions on the shares of Series A Preferred Shares will not bear interest, and holders of the shares of Series A Preferred Shares will not be entitled to any distributions in excess of full cumulative distributions as described above. All dividends paid on the shares of Series A Preferred Shares will be credited to the previously accrued dividends on the shares of Series A Preferred Shares. Merus will credit any dividends paid on the shares of Series A Preferred Shares first to the earliest accrued and unpaid dividend due.
Conversion	Each outstanding Series A Preferred Share shall be convertible at any time at the option of the holder into that number of whole the common shares of Merus (the “Common Shares”) as is equal to the Liquidation Preference amount of $1,000.00 per share, plus accrued and unpaid dividends, divided by an initial conversion price of $2.20 per share. The initial conversion price and the conversion price as adjusted are referred to as the “Conversion Price”. Each Common Share issuable upon conversion of a Series A Preferred Share is referred to as a “Conversion Share”. A Series A Preferred Share called for redemption shall be convertible into Common Shares up to and including, but not after, the close of business on the date fixed for redemption unless Merus is in default in the payment of the amount payable upon redemption.
Fundamental Changes	If at any time while any Series A Preferred Shares are outstanding, Merus effects (i) any merger, consolidation, amalgamation, arrangement or combination of Merus with or into another entity, (ii) any sale of all or substantially all of its assets in one or more transactions, (iii) any tender offer or exchange offer (whether by Merus or another entity) pursuant to which holders of Common Shares are permitted to tender or exchange their common shares for other securities, cash or property, or (iv) any reclassification or recapitalization of the common shares or any compulsory share exchange pursuant to which the common shares are effectively converted into or exchanged for other securities, cash or property (other than a subdivision, consolidation or common share reorganization contemplated below under “Adjustments”) (in any such case, a “Fundamental Change”), then, upon any subsequent conversion of any Series A Preferred Shares, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion absent such Fundamental Change, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Change if it had been, immediately prior to such Fundamental Change, the holder of one Common Share (the “Alternate Consideration”). If holders of common shares are given any choice as to the securities, cash or property to be received in a Fundamental Change, then each holder of Series A Preferred Shares shall be given the same choice as to the Alternate Consideration it receives upon any conversion of any Series A Preferred Shares following such Fundamental Change.

Mandatory Redemption	If Merus does not complete a “Product Acquisition Transaction”, as defined below, by December 31, 2014, at any time, the holders of the Series A Preferred Shares will have the option to cause Merus to redeem the Series A Preferred Shares for cash at a redemption price equal to the Liquidation Preference of $1,000.00 per share, plus all accrued and unpaid dividends thereon (whether or not earned or declared) to, but excluding, the date fixed for redemption, without interest (a “Mandatory Redemption”). The holders of the Series A Preferred Shares must exercise their right to cause Merus to complete a Mandatory Redemption by 5 business days’ written notice to Merus. Upon receipt of notice of a Mandatory Redemption, Merus will complete the redemption of the Series A Preferred Shares within 15 days of receipt of the notice.
	“Product Acquisition Transaction” means the completion of a pharmaceutical product acquisition with a purchase price of not less than $10,000,000 and includes the execution of a binding agreement for the completion of a Product Acquisition Transaction notwithstanding that the transaction may not have completed by December 31, 2014.
Optional Redemption	On and after the Optional Redemption Date, Merus may, at its option, upon not less than 15 nor more than 30 days' written notice, redeem the Series A Preferred Shares, in whole or in part, at any time or from time to time, for cash at a redemption price equal to the Liquidation Preference of $1,000.00 per share, plus all accrued and unpaid dividends thereon (whether or not earned or declared) to, but excluding, the date fixed for redemption, without interest. If fewer than all of the outstanding shares of Series A Preferred Shares are to be redeemed, the number of shares to be redeemed will be determined by Merus and such shares may be redeemed pro rata from the holders of record of such shares in proportion to the number of such shares held by such holders (with adjustments to avoid redemption of fractional shares) or by lot in an equitable manner determined by us.
	From and after the redemption date, all dividends will cease to accumulate on the Series A Preferred Shares, such Series A Preferred Shares shall no longer be deemed to be outstanding, and all rights as a holder of Series A Preferred Shares will terminate with respect to such Series A Preferred Shares, except the right to receive the redemption price and all accrued and unpaid dividends up to, but excluding, the redemption date.
Change of Control Redemption	At any time during which the Series A Preferred Shares are outstanding, in the event of a “Change of Control” of Merus by a person, entity or group Merus (or the entity acquiring Merus) may, at its option, upon not less than 15 nor more than 30 days’ written notice, redeem the Series A Preferred Shares, in whole but not in part, within 120 days after the date on which the Change of Control has occurred, for cash at a redemption price equal to (i) the Liquidation Preference of $1,000.00 per share multiplied by 105%, plus (ii) all accrued and unpaid dividends thereon (whether or not earned or declared) to, but excluding, the redemption date, without interest (a “Change of Control Redemption”). Notwithstanding the foregoing, holders of Series A Preferred Shares shall at all times have the right, up to any applicable redemption date, to convert the Series A Preferred Shares into Common Shares at a conversion price of $2.20 per share, as such conversion price may be adjusted.

	A “Change of Control” is deemed to occur when, after the original issuance of the Series A Preferred Shares, any of following has occurred and is continuing:
	•	a “person,” “group” or “entity” (within the meaning of Sections 13(d) and 14(d) of the Exchange Act) becomes the ultimate “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or group shall be deemed to have beneficial ownership of all shares of voting stock that such person or group has the right to acquire regardless of when such right is first exercisable), directly or indirectly, of voting stock representing more than 50% of the total voting power of the total voting stock of Merus;
	•	Merus sells, transfers or otherwise disposes of all or substantially all of its assets; or
	•	the consummation of an amalgamation, arrangement, merger, share exchange or other business combination involving Merus with another entity where the shareholders of Merus immediately prior to the merger or share exchange would not beneficially own, immediately after the merger or share exchange, securities representing 50% or more of the outstanding voting stock of the entity issuing cash or securities in the merger or share exchange (without consideration of the rights of any class of stock to elect directors by a separate group vote), or where members of the Board of Directors immediately prior to the merger or share exchange would not, immediately after the merger or share exchange, constitute a majority of the board of directors of the entity issuing cash or securities in the merger or share exchange.
Liquidation Preference	Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of Merus, then, before any distribution or payment shall be made to the holders of any common shares or any other class or series of junior shares in the distribution of assets upon any liquidation, dissolution or winding up of Merus, the holders of Series A Preferred Shares shall be entitled to receive out of the assets of Merus legally available for distribution to shareholders, liquidating distributions in the amount of the Liquidation Preference, or $1,000.00 per share, plus an amount equal to all dividends (whether or not earned or declared) accrued and unpaid thereon to, but excluding, the date of payment. After payment of the full amount of the liquidating distributions to which they are entitled, the holders of Series A Preferred Shares will have no right or claim to any of the remaining assets of Merus. In the event that, upon any such voluntary or involuntary liquidation, dissolution or winding up, the available assets of Merus are insufficient to pay the amount of the liquidating distributions on all outstanding Series A Preferred Shares and the corresponding amounts payable on all parity shares, then the holders of the Series A Preferred Shares and all other such classes or series of parity shares shall share ratably in any such distribution of assets in proportion to the full liquidating distributions to which they would otherwise be respectively entitled. For such purposes, the consolidation or merger of Merus with or into any other entity, or the sale, lease or conveyance of all or substantially all of the property or business of Merus, or a statutory share exchange shall not be deemed to constitute a voluntary or involuntary liquidation, dissolution or winding up of Merus.
Ranking	The Series A Preferred Shares will rank:

	•	senior to the Common Shares and any other class or series of preferred shares that Merus may issue in the future, the terms of which specifically provide that such shares ranks junior to the Series A Preferred Shares, in each case with respect to payment of dividends and amounts distributed upon liquidation, dissolution or winding up, which are referred to as “junior shares”;
	•	equal to any other class or series of preferred shares that Merus may issue in the future, the terms of which specifically provide that such shares ranks on parity with such Series A Preferred Shares, in each case with respect to payment of dividends and amounts distributed upon liquidation, dissolution or winding up (any such creation would require the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series A Preferred Shares), which are referred to as “parity shares”; and
	•	junior to all existing and future indebtedness of Merus.
	Merus shall not issue any other class or series of preferred shares that rank senior to the Series A Preferred Shares, with respect to the payment of dividends and amounts distributed upon liquidation, dissolution or winding up.
Voting Rights	The Series A Preferred Shares will not have any voting rights, except as prescribed by the BCBCA and as provided below.
	On each matter on which holders of Series A Preferred Shares are entitled to vote, each share of Series A Preferred Shares will be entitled to one vote.
	So long as any shares of Series A Preferred Shares remain outstanding, Merus will not, without the affirmative vote of the holders of at least two-thirds of the Series A Preferred Shares outstanding at the time, given in person or by proxy, either in writing or at a meeting, authorize or create any class or series of preferred shares of Merus or issue any of such shares that will rank as “parity shares”, as defined above.
	The foregoing voting provisions will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of Series A Preferred Shares shall have been redeemed or called for redemption upon proper notice and sufficient funds shall have been deposited in trust to effect such redemption.
Sinking Fund Provisions	The Series A Preferred Shares will not be subject to any sinking fund provisions.
Adjustments	The number of Common Shares issuable upon conversion of the Series A Preferred Shares and the Conversion Price will be subject to customary pro rata adjustments to any reflect any consolidation, stock split or other common share reorganization.
Limits on Conversion	A holder of Series A Preferred Shares (a “Holder”) shall not have the right to convert any Series A Preferred Shares to the extent that, after giving effect to such conversion, the Holder (together with the Holder’s affiliates and Persons acting jointly or in concert with such Persons (together, the “Joint Actors”)) would beneficially own in excess of 19.9% (the “Maximum Percentage”) of the number of Common Shares outstanding immediately after giving effect to such conversion on a diluted basis, assuming the conversion of all securities of the Joint Actors which are convertible into Common Shares within sixty (60) days from the proposed date of conversion.
Listing	The Series A Preferred Shares will not be listed on any stock exchange.

EXHIBIT B

CANADIAN DOLLAR WIRE INSTRUCTIONS

CAD WIRE INSTRUCTIONS FOR MERUS LABS INTERNATIONAL INC.

Beneficiary Bank:	[Redacted]
Beneficiary:	Merus Labs International Inc.
Account:	[Redacted]
Swift Code:	[Redacted]

If you should require any further information, please contact Andrew Patient at (416) 593-3725.

EX-99.4

MERUS LABS INTERNATIONAL INC.
100 Wellington Street West, Suite 2110
Toronto, Ontario
M5K 1H1

June 10, 2014

CONFIDENTIAL

DACHA STRATEGIC METALS INC.
212 King Street West, Suite 201
Toronto, Ontario
M5H 1K5

Attn: Mr. Peter Puccetti, Chief Executive Officer

Dear Sirs:

The purpose of this Letter Agreement is to confirm the terms of an agreement (the “Agreement”) between Merus Labs International Inc. (“Merus Labs”) and Dacha Strategic Metals Inc. (“Dacha”) pursuant to which Merus Labs will acquire all of the issued and outstanding shares (the “Newco Shares”) of a corporation to be incorporated and organized by Dacha (“Newco”) in exchange for the issuance of common shares of Merus Labs (the “Merus Shares”) to Dacha (the “Acquisition”).

1.                         Transaction. Subject to the Merus Labs Closing Conditions and the Dacha Closing Conditions (each as hereinafter defined) and all other terms and conditions herein, Merus Labs and Dacha agree to complete the Acquisition by the issuance of the Merus Shares to Dacha as provided for in Section 3 of this Agreement. In order to give effect to the Acquisition, Newco will be incorporated and organized by Dacha in a manner to be agreed upon by Merus Labs and Dacha, each acting reasonably, as required to give effect to the following agreements:

(a)           Newco will be organized under the Canada Business Corporations Act,

(b)           Newco will, upon organization and at closing of the Acquisition (the “Closing”), be a wholly owned subsidiary of Dacha,

(c)           Dacha will capitalize Newco by way of cash subscriptions for common shares,

(d)           the capital structure of Newco and the form of the contributions by Dacha to Newco will be as agreed to by Merus Labs and Dacha, each acting reasonably,

(e)           Newco will not enter into any agreements, conduct any business or incur any liabilities prior to the completion of the Acquisition, except to the extent contemplated by this Agreement or agreed to by Merus Labs and Dacha,

(f)           Newco’s assets as at Closing will be comprised exclusively of cash; and

(g)           the amount of cash held by Newco at Closing (the “Newco Closing Cash”) will be not less than $11.0 million, less the purchase price paid by Dacha for any securities of Merus Labs acquired by Dacha prior to Closing under any Merus Equity Financing (as hereinafter defined).

2.                      The Acquisition Agreement. The structure of the Acquisition, including form of the Acquisition (whether share purchase, amalgamation or otherwise) and the details of the steps to complete the Acquisition, will be set out in an acquisition agreement to be entered into between Merus Labs and Dacha (the “Acquisition Agreement”). The Acquisition Agreement will also set forth the steps required to give effect to the incorporation and organization of Newco in the manner contemplated by this Agreement. Merus Labs and Dacha agree to structure the transactions contemplated herein to give effect to the agreements in Section 1 of this Agreement in the most efficient manner possible having regard to the Income Tax Act (Canada) without prejudice to either party. Each of Merus Labs and Dacha will use their best efforts to structure the Acquisition such that the Merus Acquisition Shares shall not be subject to a “restricted period” on trading under Section 2.5 of National Instrument 45-102. Each of Merus Labs and Dacha will use their best efforts to negotiate and enter into the Acquisition Agreement on or before June 30, 2014 and undertake to negotiate such agreement in good faith.

3.                      Consideration. The number of Merus Shares to be issued to Dacha upon completion of the Acquisition (the “Merus Acquisition Shares”) will be determined as follows:

Merus Acquisition Shares	=	Newco Closing Cash
		Agreed Market Value of Merus Shares of $1.70 per Merus Share

4.                      Effect of Acquisition. Upon Closing:

(a)	Newco will be a wholly-owned subsidiary of Merus Labs, and
(b)	Dacha will own the Merus Acquisition Shares.

5.                      Financing Options.

(a) Merus Labs agrees that Dacha will have the right and option during the period from the date of this Letter Agreement to the earlier of (i) the date of termination of this Letter Agreement (or, if the Acquisition Agreement is executed, the date of termination of the Acquisition Agreement) and (ii) the date the Acquisition is completed, to participate in any equity financing undertaken by Merus Labs (a “Merus Equity Financing”) to an aggregate maximum of $6.0 million. A Merus Equity Financing for the purpose of this Letter Agreement will include any offering of common shares of Merus Labs, or any other security convertible, exchangeable or exercisable into common shares of Merus Labs. Participation by Dacha in any such Merus Equity Financing will be on the same terms and at the same offering price as offered to other investors in the financing and will be conditional upon Dacha receiving all required regulatory approvals for its participation in the financing. Dacha will exercise such option within five (5) business days of receipt from Merus Labs of any written notice of offering that sets out the price and terms of such offering, or one (1) business day in the event of a bought deal offering. If Dacha elects to participate in any such Merus Equity Financing and purchases a minimum amount of $4.0 million of the offered securities, then the “Agreed Market Value of Merus Shares”, as provided for in Section 3 of this Letter Agreement will be adjusted to equal the per share price of the common shares of Merus Labs offered and sold in such Merus Equity Financing and the number of Merus Shares to be issued to Dacha upon closing of the Acquisition will be adjusted accordingly.

(b) If the Acquisition is not completed due to the failure of Merus Labs to satisfy the condition precedent to closing in favour of Dacha set forth in Section 13(c) of this Agreement, Dacha will have the right and option for a period of one year from the date of this Agreement to participate in any public equity financing of Merus Labs up to a maximum of 15% of the total equity securities sold in the offering for an aggregate investment of up to $10.0 million, subject to the same terms and conditions regarding notification that apply to its participation in a Merus Equity Financing pursuant to Section 5(a), mutatis mutandis. This Section 5(b) will survive any termination of this Agreement or the Acquisition Agreement.

6.                      Dacha Shareholders Meeting. The Acquisition will be submitted to the shareholders of Dacha for consideration and approval at a special meeting (the “Meeting”) to be convened by Dacha as soon as reasonably possible after its execution of this Agreement. Merus Labs shall provide to Dacha all information regarding Merus Labs, its affiliates and the Merus Shares as required by Applicable Laws for inclusion in any information circular prepared by Dacha in connection with the Meeting. Merus Labs shall ensure that such information does not include any misrepresentation (as defined in the Securities Act (Ontario)) concerning Merus Labs or the Merus Shares.

7.                      Voting Agreements. As a condition of execution of the Acquisition Agreement by Merus Labs, Dacha will secure the agreement of its directors, officers, Salida Capital International Limited and Goodwood Inc., to vote their common shares of Dacha in favour of the Acquisition at the Meeting. The form of voting agreement will be in a customary form subject to the reasonable approval of Merus Labs.

8.                      Representations and Warranties of Dacha. Dacha hereby provides to Merus Lab the key representations and warranties of Dacha set forth in Section 1.2 of Schedule A of this Agreement and acknowledges that Merus Labs is relying on these key representations and warranties in entering into this Agreement. The Dacha key representations and warranties will be incorporated into the Acquisition Agreement. The Acquisition Agreement will also include such further additional representations and warranties of Dacha as are customary and reasonable for a transaction of the nature of the Acquisition. The Acquisition Agreement will also include additional and customary representations and warranties of Dacha regarding Newco, including (i) those representations and warranties set forth in Section 1.2 of Schedule A, as appropriate, (ii) representations and warranties regarding the financial statements of Newco to be delivered pursuant to Section 12(g) of this Agreement, and (iii) representations and warranties of Dacha that Newco and the assets owned by Newco are free and clear or all Liens and liabilities, contingent and otherwise.

9.                      Representations and Warranties of Merus Labs. Merus Labs hereby provides to Dacha the key representations and warranties of Merus Labs set forth in Section 1.3 of Schedule A of this Agreement and acknowledges that Dacha is relying on these key representations and warranties in entering into this Agreement. The Merus Labs key representations and warranties will be incorporated into the Acquisition Agreement. The Acquisition Agreement will also include such further additional representations and warranties of Merus Labs as are customary and reasonable for a transaction of the nature of the Acquisition.

10.                    Closing. Dacha and Merus Labs will use commercially reasonable best efforts to complete the Closing on or before August 15, 2014, or such other date as is acceptable to the parties hereto acting reasonably.

11.                    Transaction Structuring Fee. At the Closing. Merus Labs will pay to Dacha a transaction structuring fee (the “Structuring Fee”) equal to 3.5% of the aggregate value of the Merus Acquisition Shares based on the Agreed Market Value of the Merus Shares. The Structuring Fee will be paid by Merus Labs issuing to Dacha that number of Merus Shares (in addition to the Merus Acquisition Shares) equal to the Structuring Fee divided by the Agreed Market Value of the Merus Shares, rounded to the nearest whole number of Merus Shares.

12.                    Merus Labs Conditions. The obligations of Merus Labs to complete the Acquisition will be subject to the following conditions (the “Merus Labs Closing Conditions”), each of which Merus Labs Closing Conditions is for the exclusive benefit of Merus Labs and may waived in whole or in part by it at any time:

(a)	incorporation and organization of Newco in the manner contemplated by this Agreement and the Acquisition Agreement;
(b)	receipt by Merus Labs of all required regulatory approvals, including approval of the Toronto Stock Exchange (the “TSX”) and NASDAQ:
(c)	no Material Adverse Change with respect to Dacha will have occurred from the date hereof to the date of completion of the Acquisition;
(d)	all of the representations and warranties of Dacha set forth in this Agreement and in the Acquisition Agreement will be true and correct in all material respects as at the date made and as at the date of completion of the Acquisition;
(e)	Dacha will have complied, in all material respects, with all of its covenants and obligations as set forth in this Agreement and in the Acquisition Agreement;
(f)	the completion of a business, tax, legal and financial review of Newco by Merus Labs and its advisors to the satisfaction of Merus Labs, acting reasonably, to confirm the organization of Newco as contemplated by this Agreement; and
(g)	as at Closing, Newco will have cash of not less than $11,000,000 less the purchase price paid by Dacha for any securities of Merus Labs acquired by Dacha prior to Closing under any Merus Equity Financing, no other assets and no liabilities, all as reflected on a unaudited balance sheet of Newco signed by two officers of Dacha dated as at the date of Closing.

13.                    Dacha Conditions. The obligations of Dacha to complete the Acquisition will be subject to the following conditions (the “Dacha Closing Conditions”), each of which Dacha Closing Conditions is for the exclusive benefit of Dacha and may waived in whole or in part by it at any time:

(a)	receipt by Dacha of all required regulatory approvals, including approval of the TSX Venture Exchange (the “TSX-V”) and the shareholders of Dacha;
(b)	Merus Labs shall have paid the Structuring Fee to Dacha in accordance with Section 11;
(c)	Dacha shall be satisfied, acting reasonably, that Merus Labs’ capitalization upon completion of the Acquisition will be consistent with the pro forma capitalization disclosed by Merus Labs to Dacha prior to the date hereof;
(d)	no Material Adverse Change with respect to Merus Labs will have occurred from the date hereof to the date of completion of the Acquisition;
(e)	all of the representations and warranties of Merus Labs set forth in this Agreement and in the Acquisition Agreement will be true and correct in all material respects as at the date made and as at the date of completion of the Acquisition; and
(f)	Merus Labs will have complied, in all material respects, with all of its covenants and obligations as set forth in this Agreement and in the Acquisition Agreement.

14.                    Material Adverse Change. For the purposes of this Agreement, “Material Adverse Change” means, with respect to Dacha or Merus Labs, as applicable, any change, effect, event or occurrence which either individually is or in the aggregate are, or individually or in the aggregate would reasonably be expected to be, material and adverse to the business, operations, results of operations, properties, prospects, assets, liabilities, obligations (whether absolute, accrued, conditional or otherwise) or condition (financial or otherwise) of Dacha or Merus Labs, as applicable and on a consolidated basis, except to the extent of any change, effect, event or occurrence results from or in connection with: (i) any change in general economic, business, or market conditions or in national or global financial, currency exchange or capital markets or (ii) any change generally affecting the industry in which the Dacha or Merus Labs, as applicable, carry on their business, provided, however, that with respect to clauses (i) and (ii) such matter does not have a materially disproportionate effect on Dacha or Merus Labs, as applicable.

15.                    Due Diligence. Dacha will provide Merus Labs and its representatives and professional advisors with access to all of Dacha’s (and Newco’s, upon incorporation) businesses, operations, properties and facilities, its books, documents and records and access to its officers, employees and professional advisors as Merus Labs may reasonably request for the purposes of confirming the satisfaction of the conditions precedent to Closing set forth in Section 12 of this Agreement.

16.                    Confidentiality. Each party hereto agrees that all information and documents received from the other party in connection with the evaluation of the transactions contemplated by this Letter Agreement will be kept confidential and Merus Labs and Dacha in accordance with the terms of the confidentiality agreement between them dated the date hereof (the “Confidentiality Agreement”).

17.                    Conduct of Business. Except as contemplated in this Agreement, between the date hereof and the Closing of the Acquisition, Dacha will operate its businesses in the ordinary course and consistent with past practice and not enter into any transactions other than in the ordinary course of business.

18.                    Merus Material Transactions. Dacha expressly acknowledges that Merus Labs will be entitled to complete, at its discretion, material debt and equity financings, which may include the issuances of common shares, preferred shares or securities convertible into equity shares, debt financings and product acquisitions during the period between the date hereof and the Closing.

19.                    Covenants of Merus Labs. Merus Labs will proceed forthwith to cause to be prepared an Acquisition Agreement for review by Dacha. Merus Labs and its counsel will co-operate fully with Dacha and its counsel in preparing and finalizing such Acquisition Agreement as quickly as possible. Merus Labs will act expeditiously and in good faith in:

(a)	finalizing and executing the Acquisition Agreement,
(b)	reviewing and finalizing the information circular for the Meeting in form satisfactory to both Dacha and, only with respect to information included in the information circular relating to Merus Labs and the Merus Shares, Merus Labs, each acting reasonably,
(c)	seeking applicable regulatory approvals for the Acquisition, and
(d)	completing the Acquisition.

20.                    Covenants of Dacha. Dacha will proceed forthwith to prepare an information circular and all other required material for the Meeting. Dacha and its counsel will co-operate fully with Merus Labs and its counsel in preparing and finalizing such material as quickly as possible. Dacha will act expeditiously and in good faith in:

(a)	finalizing and executing the Acquisition Agreement,
(b)	convening the Meeting,
(c)	preparing and finalizing the information circular for the Meeting in form satisfactory to both Dacha and, only with respect to information included in the information circular relating to Merus Labs and the Merus Shares, Merus Labs, each acting reasonably,
(d)	soliciting shareholder approval for the Acquisition;
(e)	seeking applicable regulatory approvals for the Acquisition, and
(f)	completing the Acquisition.

21.                    Termination. This Agreement may be terminated by either party, provided such party is not in breach of this Agreement, if the Acquisition Agreement is not entered into by June 30, 2014 or if the Acquisition has not been completed on or before August 31, 2014, provided that no such termination will relieve any party from liability for any breach of any provision of this Agreement. Time shall be of the essence in this Agreement.

22.                    Transaction Expenses. Merus Labs, on the one hand, and Dacha, on the other hand, will each pay their respective costs and expenses incurred in connection with the transactions contemplated by this Letter Agreement (including fees and expenses of legal counsel, accountants and other representatives and advisors).

23.                    Press Releases. Merus Labs and Dacha will jointly issue a news release concerning the Acquisition forthwith upon execution of this Agreement. Neither Merus Labs nor Dacha will make any press release, public announcement or public statement about the Acquisition and other transactions contemplated herein which has not been previously approved by the other, each acting reasonably. Notwithstanding the foregoing, either party may make a press release or filing with a regulatory authority if counsel for such party advises that such press release or filing is necessary in order to comply with applicable law or the rules and policies of any securities regulatory authority or stock exchange having jurisdiction over the party, in which case such party will first make a reasonable effort to obtain the approval of the other party.

24.                    Governing Law. This Letter Agreement shall be governed by, and construed in accordance with, the laws of the Province of Ontario and the federal laws of Canada applicable therein.

25.                    Assignment. Neither this Agreement nor the rights, interests and obligations hereunder shall be assignable without the prior written consent of the other party, provided that Merus Labs may assign this Agreement to a wholly-owned subsidiary and further provided that Merus Labs guarantees the performance of all obligations herein by such subsidiary.

26.                    Currency. Unless otherwise indicated, all references to dollar amounts in this Letter Agreement are expressed in Canadian dollars.

27.                    No Other Arrangements. This Letter Agreement is being executed by Merus Labs in reliance upon the representation that Dacha has no legal obligation, absolute or contingent, to any other person or entity to sell any substantial portion of the assets of Dacha, to sell a majority of Dacha Shares or to effect any merger, consolidation, recapitalization or other business combination of Dacha or to enter into any agreement with respect thereto or which is otherwise in conflict with the proposed Acquisition or the provisions hereof.

28.                    Effect of Agreement. This Agreement constitutes, together with the Confidentiality Agreement, the entire agreement between the parties and supersedes all other prior agreements and understandings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. Notwithstanding that this Agreement contemplates the negotiation and execution of the Acquisition Agreement, the negotiation and execution of the Acquisition Agreement does not constitute a condition subsequent to this Agreement and this Agreement is intended to constitute a legal, valid and binding obligation of Merus Labs and Dacha.

29.                    Counterparts. This Letter Agreement may be executed in counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument.

[Remainder of Page Intentionally Left Blank]

Kindly signify your acceptance of the terms contained herein by executing the enclosed duplicate copy hereof in the place indicated and returning such executed copy to Merus Labs by no later than 5:00 p.m. Toronto time on the 10^th day of June, 2014, failing which this Agreement shall be of no force or effect.

Yours truly,

MERUS LABS INTERNATIONAL INC.

                “Andrew Patient”
By:  _______________________________
Name:     Andrew Patient
Title:       Chief Financial Officer

Dacha hereby confirms the terms of this Agreement as set out herein on June 10, 2014.

DACHA STRATEGIC METALS INC.

By:         “Peter Puccetti”                                      
Name:     Peter Puccetti
Title:       CEO

SCHEDULE A

REPRESENTATIONS AND WARRANTIES

Section 1.1 Definitions

            The following terms will have the meanings set forth below in this Schedule A and in the Agreement and terms defined in the Agreement will have such meanings in this Schedule A:

(a)	“Applicable Laws” means all laws, statutes, codes, ordinances, decrees, rules, regulations, by-laws, statutory rules, published policies and guidelines, judicial or arbitral or administrative or ministerial or departmental or regulatory judgments, orders, decisions, rulings or awards, including general principles of common and civil law, and terms and conditions of any grant of approval, permission, authority or license of any Governmental Authority, statutory body or self-regulatory authority;
(b)	“Applicable Securities Laws” means, collectively, the applicable securities laws of each of the Reporting Jurisdictions, their respective regulations, rulings, rules, orders and prescribed forms thereunder, and the applicable published policy statements issued by the Securities Commissions thereunder;
(c)	“Debt Instrument” means any loans, notes, bonds, debentures, indentures, promissory notes (including those issued in connection with various acquisitions), mortgages, guarantees or other instruments evidencing indebtedness (demand or otherwise) for borrowed money or other liability;
(d)	“Governmental Authority” means any government, parliament, legislature, regulatory authority, agency, commission, board or court or other law, rule, or regulation-making entity having jurisdiction on behalf of any nation or state or province or other subdivision thereof including any municipality or district;
(e)	“Governmental Authorization” means any authorization, order, permit, approval, grant, license, quota, consent, commitment, right, franchise, privilege, certificate, judgment, writ, injunction, award, determination, direction, decree or demand or the like which may be issued or granted by law or by rule or regulation of any Governmental Authority;
(f)	“Governmental Charges” means all Taxes, levies, assessments, reassessments and other charges together with all related penalties, interest and fines, due and payable to any Governmental Authority;
(g)	“Knowledge” means, with respect to either Dacha or Merus Labs, the actual knowledge of the senior executive officers of Dacha or Merus Labs, as applicable, after reasonable inquiry of the relevant subject matter;
(h)	“Lien” means any lien, pledge, security interest, charge, claim, mortgage, deed of trust, option, warrant, purchase right or option, right of first refusal or similar right, lease, easement, adverse claim, title retention agreement or other encumbrance or restriction of any kind;

(i)	“Person” means any individual, partnership, limited partnership, joint venture, syndicate, sole proprietorship, company or corporation with or without stock capital, unincorporated association, trust, trustee, executor, administrator or other legal personal representative, or Governmental Authority however designated or constituted;
(j)	“Reporting Jurisdictions” means, collectively, the provinces in which Dacha or Merus Labs, as applicable, is a reporting issuer;
(k)	“Securities Commissions” means, collectively, the securities commissions in each of the Reporting Jurisdictions, as applicable;
(l)	“Tax” or Taxes” means all taxes of any kind or nature whatsoever including, without limitation, income taxes, sales or value-added taxes, levies, stamp taxes, royalties, duties, and all fees, deductions, compulsory loans and withholdings imposed, levied, collected, withheld or assessed as of the Closing or at any time in the future, by any Governmental Authority of or within Canada and the United States, together with penalties, fines, additions to tax and interest on or in respect of, or in lieu of or for non-payment of, any such taxes;
(m)	“Tax Returns” means any return, report, information return or other document relating to Taxes.

Section 1.2 Key Representations and Warranties of Dacha

            Dacha represents and warrants to Merus Labs as follows and acknowledges that Merus Labs is relying upon such representations and warranties in entering into the Agreement:

(1)      Definitions. The following terms will have the meanings set forth below in this Section 1.2 of Schedule A:

(a)	“Dacha Audited Financial Statements” means the consolidated audited financial statements of Dacha for the fiscal year ending March 31, 2013, and, upon issuance and release, the fiscal year ending March 31, 2014, including the consolidated statements of financial position, consolidated statements of operating and comprehensive loss, consolidated statements of cash flows and consolidated statements of changes in shareholders equity, for the period then ended and the notes thereto;
(b)	“Dacha Business” means the business of Dacha as disclosed in the Dacha Disclosure Record;
(c)	“Dacha Business Assets” means all tangible and intangible property and assets owned by Dacha and its subsidiaries in connection with the Dacha Business, including those assets reflected in the Dacha Financial Statements;
(d)	“Dacha Disclosure Record” means all financial statements, related management’s discussion and analysis, management information circulars, joint information circulars, annual information forms, material change reports, and other documents filed by Dacha since April 1, 2012, whether before or after the date of this Agreement, on SEDAR under Applicable Securities Laws;
(e)	“Dacha Financial Statements” means the Dacha Audited Financial Statements and the Dacha Interim Financial Statements;
(f)	“Dacha Interim Financial Statements” means the consolidated unaudited financial statements of the Corporation for the three and nine month periods ending December 31, 2013 including the condensed consolidated interim statements of financial position, condensed consolidated interim statements of operating and comprehensive loss, condensed consolidated interim statements of cash flows and condensed consolidated interim statements of changes in shareholders’ equity for the periods then ended and the notes thereto;
(g)	“Dacha Required Consents and Approvals” means the following consents and approvals required to enable Dacha to complete the Acquisition and the transactions contemplated pursuant to this Agreement and the Acquisition Agreement:
	(i)	the approval of the TSX Venture Exchange, and
	(ii)	the approval of the shareholders of Dacha to the Acquisition;

(h) “Material Agreements” means any and all contracts, commitments, agreements (written or oral), instruments, leases or other documents, including without limitation joint venture agreements, licences, sub-licenses, finance leases, supply agreements, distribution agreements, transportation agreements, sales agreements or any other similar type agreements, to which to which Dacha or its subsidiaries, as applicable, is a party or to which their business assets are otherwise bound, and which is material to Dacha or its subsidiaries, as applicable, on a consolidated basis;

(2)         Corporate Authorization. The execution and delivery of this Agreement and the performance of the transactions contemplated hereby have been duly authorized by all necessary corporate action of the board of directors of Dacha.

(3)         Enforceability. This Agreement has been duly executed by Dacha and constitutes valid and binding obligations of Dacha enforceable against Dacha in accordance with its terms subject to the usual exceptions as to bankruptcy and the availability of equitable remedies.

(4)         No Conflict. None of (i) the entering into of this Agreement by Dacha, or, (ii) the performance by Dacha of any of its obligations under this Agreement has or will:

(a)	contravene, breach or result in any default under the articles, by-laws, constating documents or other organizational documents of Dacha;
(b)	provided the Required Consents and Approvals are obtained, any Material Agreement or Governmental Authorization to which Dacha is a party or by which it may be bound; or
(c)	contravene or breach any Applicable Laws, Applicable Securities Laws or TSX Venture Exchange policies.

(5)         Consents and Approvals. Except for the Dacha Required Consents and Approvals, no Governmental Authorization or authorization, consent or approval of, or filing with or notice to any other Person, stock exchange or Securities Commission is required in connection with the execution, delivery or performance of this Agreement and the completion of the Acquisition and the fulfillment of the terms hereof and thereof by Dacha.

(6)         Stock Exchange Compliance. Dacha is, and will at Closing be, in compliance in all material respects with the by-laws, rules, policies and regulations of the TSX Venture Exchange.

(7)         Reporting Issuer Status. As at the date hereof, Dacha is a “reporting issuer” in each of the Reporting Jurisdictions within the meaning of Applicable Securities Laws, and is not currently in default of any material requirement of the Applicable Securities Laws of such jurisdictions and Dacha is not included on a list of defaulting reporting issuers maintained by any of the Securities Commissions of such jurisdictions.

(8)         Continuous Disclosure. Dacha is in compliance in all material respects with its timely disclosure obligations under Applicable Securities Laws and, without limiting the generality of the foregoing, there has not occurred a Material Adverse Change with respect to Dacha which has not been publicly disclosed and the information and statements in the Dacha Disclosure Record were true and correct in all material respects as of the respective dates of such information and statements and at the time such documents were filed on SEDAR, do not contain any misrepresentations and no material facts have been omitted therefrom which would make such information materially misleading, and Dacha has not filed any confidential material change reports which remain confidential as at the date hereof.

(9)         Financial Statements.

(a)	The Dacha Financial Statements have been prepared in accordance with the applicable IFRS applied on a consistent basis throughout the periods involved.
(b)	The Dacha Financial Statements fairly, completely and accurately present the consolidated financial position of Dacha and the results of its consolidated operations as of the dates and throughout the periods indicated in all material respects.
(c)	Except as disclosed in the Dacha Disclosure Record, there has been no material adverse change in the financial position of Dacha since the date of the latest balance sheet included in the Dacha Financial Statements.
(d)	On the date hereof, there are no material off-balance sheet transactions, arrangements, obligations or other relationships of Dacha or its subsidiaries with unconsolidated entities or other persons that could reasonably be expected to result in a Material Adverse Change with respect to Dacha.
(e)	The auditors of Dacha who audited the Audited Financial Statements and delivered their report with respect thereto are independent public accountants as required by the Applicable Securities Laws.
(f)	There has not been any reportable disagreement (within the meaning of NI 51-102) with the auditor of Dacha.
(g)	Except as disclosed in the Dacha Disclosure Record, there has been no change in accounting policies or practices of Dacha or its subsidiaries since the date of the latest balance sheet included in the Dacha Financial Statements, other than the adoption of certain additional IFRS measures as disclosed in the Dacha Financial Statements.

(10)       Absence of Undisclosed Liabilities. Dacha, on a consolidated basis, do not have any outstanding liabilities, contingent or otherwise, other than:

(a)	liabilities set out in the Dacha Financial Statements; and
(b)	liabilities in respect of trade or business obligations incurred after since the date of the latest balance sheet included in the Dacha Financial Statements in the ordinary course of the Dacha Business, consistent with past practice, none of which, individually or collectively, has had or would reasonably be expected to result in a Material Adverse Change with respect to Dacha.

(11)       Absence of Changes. Since the date of the latest balance sheet included in the Dacha Financial Statements and except as set out in the Dacha Disclosure Record, there has not been:

(a) any Material Adverse Change with respect to Dacha, or

(b) any transaction or transactions entered into by Dacha or its subsidiaries, other than those in the ordinary course of business, which are material with respect to Dacha and its subsidiaries on a consolidated basis.

(12)      Guarantees etc. Neither Dacha nor any Subsidiary is a party to or is bound by any agreement of guarantee, support, indemnification, assumption or endorsement of, or any other similar commitment with respect to, the obligations, liabilities (contingent or otherwise) or indebtedness of any Person.

(13)      Material Agreements.All of the Material Agreements to which Dacha and its subsidiaries are party is valid, subsisting, in good standing and in full force and effect, enforceable in accordance with the terms thereof. Dacha and its subsidiaries have performed all material obligations (including payment obligations) in a timely manner under, and are in compliance with all material terms and conditions (including all financial covenants) contained in each Material Agreement. Except as disclosed in the Dacha Disclosure Record neither Dacha nor any of its subsidiaries is in violation, breach or default nor has it received any notification from any party claiming that Dacha or any of its subsidiaries is in breach, violation or default under any Material Agreement in any material respect and no other party, to Dacha’s Knowledge, is in breach, violation or default of any material term under any Material Agreement.

(14)      Debt Instruments.Neither Dacha nor any of its subsidiaries is party or subject to any Debt Instruments.

(15)      Title to the Business Assets. The Dacha Business Assets are owned by Dacha free and clear of all Liens.

(16)      Litigation. Except as disclosed in the Dacha Disclosure Record, there is no court, administrative, regulatory or similar proceeding (whether civil, quasi-criminal or criminal); arbitration or other dispute settlement procedure; to Dacha’s Knowledge, investigation or inquiry by any governmental, administrative, regulatory or similar body; or any similar matter or proceeding (collectively “Proceedings”) against or involving Dacha, or any of its subsidiaries (whether in progress or threatened) which, if determined adversely to Dacha or the applicable subsidiary would result in a Material Adverse Change with respect to Dacha; and to Dacha’s Knowledge, no event has occurred which might give rise to any Proceedings against or involving Dacha, or any of its subsidiaries, which, if determined adversely to Dacha or the applicable subsidiary would result in a Material Adverse Change with respect to Dacha. There is no judgment, decree, injunction, rule, award or order of any Governmental Authority outstanding against Dacha or any of its subsidiaries.

(17)      Taxes.

(a) Except as disclosed or as set out in the Dacha Disclosure Record, Dacha and each Dacha Material Subsidiary has filed, in a timely manner, all material Tax Returns required to be filed by them in accordance with all Applicable Laws with the appropriate Governmental Authority in all jurisdictions in which such Tax Returns are required to be filed. All such Tax Returns are correct and complete in all material respects. All Taxes owed and due by Dacha or any of its subsidiaries (whether or not shown on any tax return) have been fully paid when due. Dacha has maintained adequate provision on its books and records for all Taxes that have accrued but are not yet due. Any Taxes payable in respect of any period prior to the date hereof are, in aggregate, not greater than the aggregate reserve for Taxes included in the Interim Financial Statements. Neither Dacha nor any Subsidiary has received any written notice of any claim made by any Governmental Authority in any jurisdiction where such entity did not file Tax Returns that Dacha or any of its subsidiaries was or may be subject to taxation therein.

(b)	There are no material proceedings in progress, pending or threatened against Dacha or any of its subsidiaries in respect of any Governmental Charges and, in particular, there are no currently outstanding material assessments, reassessments or written enquiries which have been issued to, or raised in respect of, Dacha or any of its subsidiaries by any Governmental Authority relating to any Governmental Charges.
(c)	Dacha and each of its subsidiaries has withheld or collected and remitted when due all amounts required to be withheld or collected and remitted by them in respect of any Governmental Charges.
(d)	There are no Liens for Governmental Charges (other than Liens for Governmental Charges not yet due) upon, pending against or, to the Knowledge of Dacha, threatened against any assets of Dacha or any of its subsidiaries.
(e)	Neither Dacha nor any Subsidiary has any actual or potential liability as a transferee or successor, pursuant to any contractual obligation, Tax sharing arrangement, Tax indemnification agreement or otherwise for any Taxes of any Person other than Dacha or any of its subsidiaries.

(18)      No Fees or Commissions. Except as expressly provided by this Agreement, neither Dacha nor any of its subsidiaries is or will be obligated to pay any fee or commission to any Person in connection with the transactions contemplated by this Agreement.

Section 1.3 Key Representations and Warranties of Merus Labs

            Merus Labs represents and warrants to Dacha as follows and acknowledges that Dacha is relying upon such representations and warranties in entering into the Agreement:

(1)        Definitions. The following terms will have the meanings set forth below in this Section 1.3 of Schedule A:

(a)	“Merus Labs Audited Financial Statements” means the consolidated audited financial statements of Merus Labs for the fiscal year ending September 30, 2013, including the consolidated balance sheets, consolidated statements of operations, consolidated statements of comprehensive income (loss), consolidated statements of cash flows and consolidated statements of changes in equity, for the period then ended and the notes thereto;
(b)	“Merus Labs Disclosure Record” means all financial statements, related management’s discussion and analysis, management information circulars, joint information circulars, annual information forms, material change reports, and other documents filed by Merus Labs since October 1, 2013, whether before or after the date of this Agreement, on SEDAR under Applicable Securities Laws;
(c)	“Merus Labs Financial Statements” means the Merus Labs Audited Financial Statements and the Merus Labs Interim Financial Statements;
(d)	“Merus Labs Interim Financial Statements” means the consolidated unaudited financial statements of the Corporation for the three and six month period ending March 31, 2014 including the condensed consolidated interim balance sheets, condensed consolidated interim statements of operations, condensed consolidated interim statements of cash flows and condensed consolidated interim statements of changes in equity for the periods then ended and the notes thereto;
(e)	“Merus Labs Material Subsidiaries” means
	(i)	Merus Labs Luxco S.a.r.l., a Luxembourg company, and
	(ii)	Merus Labs Netherlands BV, a Netherlands company;
(f)	“Merus Labs Required Consents and Approvals” means the following consents and approvals required to enable Merus Labs to complete the Acquisition and the transactions contemplated pursuant to this Agreement and the Acquisition Agreements:
	(i)	the approval of the TSX Venture Exchange; and
	(ii)	the approval of NASDAQ.

(2)        Corporate Authorization. The execution and delivery of this Agreement and the performance of the transactions contemplated hereby have been duly authorized by all necessary corporate action of the board of directors of Merus Labs.

(3)        Enforceability. This Agreement has been duly executed by Merus Labs and constitutes valid and binding obligations of Merus Labs enforceable against Merus Labs in accordance with their terms subject to the usual exceptions as to bankruptcy and the availability of equitable remedies.

(4)        No Conflict. None of (i) the entering into of this Agreement by Merus Labs, or, (ii) the performance by Merus Labs of any of its obligations under this Agreement has or will:

(a)	contravene, breach or result in any default under the articles, by-laws, constating documents or other organizational documents of Merus Labs;
(b)	provided the Required Consents and Approvals are obtained, any Material Agreement or Governmental Authorization to which Merus Labs is a party or by which it may be bound; or
(c)	contravene or breach any Applicable Laws, Applicable Securities Laws or Exchange policies.

(5)        Consents and Approvals. Except for the Merus Labs Required Consents and Approvals, no Governmental Authorization or authorization, consent or approval of, or filing with or notice to any other Person, stock exchange or Securities Commission is required in connection with the execution, delivery or performance of this Agreement and the Transaction Agreements, the completion of the Acquisition and the fulfillment of the terms hereof and thereof by Merus Labs.

(6)        Capitalization. The authorized capital of Merus Labs consists of an unlimited number of Common Shares, of which, as of the date hereof, 51,921,262 Common Shares are outstanding as fully paid and non-assessable shares of Merus Labs, and an unlimited number of preferred shares, none of which are currently outstanding. All of the issued and outstanding Common Shares of Merus Labs are fully paid and non-assessable and have been duly and validly authorized and issued, in compliance with all Applicable Laws.

(7)        Obligations to Issue Securities. Except (i) as set out in this Agreement, (ii) as otherwise publicly disclosed in the Merus Labs Disclosure Record, and (iii) a contemplated private placement offering of a new series of preferred shares, there are no agreements, options, warrants, rights of conversion or exchange or other rights under which Merus Labs is, has been or may become, obligated to issue any securities or any securities convertible or exchangeable, directly or indirectly, into any securities of Merus Labs and no person now has any agreement or option or right or privilege (whether at law, pre-emptive or contractual) capable of becoming an agreement for the purchase, subscription or issuance of, or conversion into, any unissued common shares, warrants, other securities or convertible obligations of any nature of Merus Labs.

(8)        Stock Exchange Compliance.

(a) Merus Labs is, and will at Closing be, in compliance in all material respects with the by- laws, rules, policies and regulations of the TSX and NASDAQ; and

(b) As of the date hereof, the currently issued and outstanding Common Shares of Merus Labs are listed and posted for trading on the TSX and no order ceasing or suspending trading in any securities of Merus Labs or prohibiting the sale of the Common Shares or the trading of any of Merus Labs’s issued securities has been issued and no proceedings for such purpose are pending or, to the best of Merus Labs’s Knowledge, information and belief, threatened.

(9)        Reporting Issuer Status. As at the date hereof, Merus Labs is a “reporting issuer” in each of the Reporting Jurisdictions within the meaning of Applicable Securities Laws, and is not currently in default of any material requirement of the Applicable Securities Laws of such jurisdictions and Merus Labs is not included on a list of defaulting reporting issuers maintained by any of the Securities Commissions of such jurisdictions.

(10)      Continuous Disclosure. Merus Labs is in compliance in all material respects with its timely disclosure obligations under Applicable Securities Laws and, without limiting the generality of the foregoing, there has not occurred a Material Adverse Change with respect to Merus Labs which has not been publicly disclosed and the information and statements in the Merus Labs Disclosure Record were true and correct in all material respects as of the respective dates of such information and statements and at the time such documents were filed on SEDAR, do not contain any misrepresentations and no material facts have been omitted therefrom which would make such information materially misleading, and Merus Labs has not filed any confidential material change reports which remain confidential as at the date hereof.

(11)      Financial Statements.

(a)	The Merus Labs Financial Statements have been prepared in accordance with the applicable IFRS applied on a consistent basis throughout the periods involved.
(b)	The Merus Labs Financial Statements fairly, completely and accurately present the consolidated financial position of Merus Labs and the results of its consolidated operations as of the dates and throughout the periods indicated in all material respects.
(c)	Except as disclosed in the Merus Labs Disclosure Record, there has been no material adverse change in the financial position of Merus Labs since the date of the latest balance sheet included in the Merus Labs Financial Statements.
(d)	On the date hereof, there are no material off-balance sheet transactions, arrangements, obligations or other relationships of Merus Labs or the Merus Labs Material Subsidiaries with unconsolidated entities or other persons that could reasonably be expected to result in a Material Adverse Change with respect to Merus Labs.
(e)	The respective auditors of Merus Labs who audited the Audited Financial Statements and delivered their report with respect thereto are independent public accountants as required by the Applicable Securities Laws.
(f)	There has not been any reportable disagreement (within the meaning of NI 51-102) with the auditor of Merus Labs.

(g) Except as disclosed in the Merus Labs Disclosure Record, there has been no change in accounting policies or practices of Merus Labs or its subsidiaries since the date of the latest balance sheet included in the Merus Labs Financial Statements, other than the adoption of certain additional IFRS measures as disclosed in the Merus Labs Financial Statements.

(12)      Absence of Undisclosed Liabilities. Merus Labs, on a consolidated basis, does not have any outstanding liabilities, contingent or otherwise, other than:

(a)	liabilities set out in the Merus Labs Financial Statements; and
(b)	liabilities in respect of trade or business obligations incurred after since the date of the latest balance sheet included in the Merus Labs Financial Statements in the ordinary course of the Merus Labs Business, consistent with past practice, none of which, individually or collectively, has had or would reasonably be expected to result in a Material Adverse Change with respect to Merus Labs.

(13)      Absence of Changes. Since the date of the latest balance sheet included in the Merus Labs Financial Statements and except as set out in the Merus Labs Disclosure Record, there has not been:

(a)	any Material Adverse Change with respect to Merus Labs, or
(b)	any transaction or transactions entered into by Merus Labs or its subsidiaries, other than those in the ordinary course of business, which are material with respect to Merus Labs and its subsidiaries on a consolidated basis.

(14)      Guarantees etc. Neither Merus Labs nor any subsidiary is a party to or is bound by any agreement of guarantee, support, indemnification, assumption or endorsement of, or any other similar commitment with respect to, the obligations, liabilities (contingent or otherwise) or indebtedness of any Person other than with respect to inter-corporate guarantees among Merus Labs and its subsidiaries.

(15)      Material Agreements.All of the Material Agreements and Debt Instruments to which Merus Labs and its subsidiaries are party are valid, subsisting, in good standing and in full force and effect, enforceable in accordance with the terms thereof. Merus Labs and its subsidiaries have performed all material obligations (including payment obligations) in a timely manner under, and are in compliance with all material terms and conditions (including all financial covenants) contained in each Material Agreement and each Debt Instrument. Except as disclosed in the Merus Labs Disclosure Record neither Merus Labs nor any of its subsidiaries is in violation, breach or default nor has it received any notification from any party claiming that Merus Labs or any of its subsidiaries is in breach, violation or default under any Material Agreement or Debt Instrument in any material respect and no other party, to Merus Labs’ Knowledge, is in breach, violation or default of any material term under any Material Agreement or Debt Instrument.

(16)      Litigation. Except as disclosed in the Merus Labs Disclosure Record, there is no court, administrative, regulatory or similar proceeding (whether civil, quasi-criminal or criminal); arbitration or other dispute settlement procedure; to Merus Labs’ Knowledge, investigation or inquiry by any governmental, administrative, regulatory or similar body; or any similar matter or proceeding (collectively “Proceedings”) against or involving Merus Labs, or any of its subsidiaries (whether in progress or threatened) which, if determined adversely to Merus Labs or the applicable subsidiary would result in a Material Adverse Change with respect to Merus Labs; and to Merus Labs’ Knowledge, no event has occurred which might give rise to any Proceedings against or involving Merus Labs, or any of its subsidiaries, which, if determined adversely to Merus Labs or the applicable subsidiary would result in a Material Adverse Change with respect to Merus Labs. There is no judgment, decree, injunction, rule, award or order of any Governmental Authority outstanding against Merus Labs.