Merus Labs International Inc.: Exhibit 4.3 - Filed by newsfilecorp.com






ARRANGEMENT AGREEMENT 

THIS ARRANGEMENT AGREEMENT made as of the 9 day of November,
2011. 

BETWEEN: 

ENVOY CAPITAL GROUP INC., a
corporation existing under the Ontario Business Corporations Act 

(“ENVOY”) 

AND: 

MERUS LABS INTERNATIONAL INC.,
a corporation existing under the British Columbia Business Corporations
Act 

(“MERUS”) 

WHEREAS: 

A. Envoy and Merus have agreed to proceed with a proposed
transaction by way of Plan of Arrangement (as hereinafter defined) whereby,
among other things, Merus and Envoy will amalgamate; and 

B. Merus and Envoy
  propose to have the their respective shareholders consider the Arrangement on
  the terms set forth in the Plan of Arrangement; 

NOW THEREFORE THIS AGREEMENT
  WITNESSES that, in consideration of the premises and the respective
  covenants and agreements herein contained, and for other good and valuable
  consideration, the receipt and sufficiency of which are hereby acknowledged by
  each of the Parties hereto, the Parties hereto hereby covenant and agree as
  follows: 

ARTICLE 1 
DEFINITIONS AND INTERPRETATION 

	1.1 	
      DEFINITIONS



In this Agreement, including the recitals and the schedules
hereto, unless there is something in the subject matter or context inconsistent
therewith, the following capitalized words and terms shall have the following
meanings: 

	 	(a) 	
      “Agreement” means this arrangement agreement,
      including the appendices attached hereto, as supplemented or amended from
      time to time;

	 	 	 
	 	(b) 	
      “Amalco” means the successor to Envoy and Merus
      under the BCBCA following the effectiveness of the Arrangement
      contemplated hereby;

	 	 	 
	 	(c) 	
      “Amalco Shares” means common shares in the capital
      of Amalco;







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	 	(d) 	
      “Arrangement” means the arrangement pursuant to
      the provisions of Section 288 of the BCBCA to be undertaken on the terms
      set forth in the Plan of Arrangement, subject to any amendment or
      supplement thereto made in accordance with this Agreement, the Plan of
      Arrangement or at the direction of the Court;

	 	 	 
	 	(e) 	
      “Arrangement Resolution” means the special
      resolution approving the Arrangement and the transactions contemplated
      thereunder, to be approved at the Meetings by the Merus Shareholders and
      Envoy Shareholders;

	 	 	 
	 	(f) 	
      “BCBCA” means the British Columbia Business
      Corporations Act, S.B.C. 2002, c. 57, and the regulations made under
      that enactment, as amended;

	 	 	 
	 	(g) 	
      “Business Day” means any day other than a
      Saturday, Sunday, a federal holiday in Canada or a day other than a day on
      which banks are not open for business in Vancouver, British
    Columbia;

	 	 	 
	 	(h) 	
      “Charter Documents” means the notice of articles,
      the articles, the by-laws or other constating documents of a
      corporation;

	 	 	 
	 	(i) 	
      “Circular” means the joint management information
      circular of Merus and Envoy to be prepared and sent to the Merus
      Shareholders and Envoy Shareholders in connection with the
  Meetings

	 	 	 
	 	(j) 	
      “Consolidation” means the consolidation of the
      Envoy Shares as determined by Envoy’s board of directors but in no event
      shall be greater than one new Envoy Share for every three Envoy
    Shares;

	 	 	 
	 	(k) 	
      “Consolidation Resolution” means the special
      resolution of the Envoy Shareholders approving the
Consolidation;

	 	 	 
	 	(l) 	
      “Continuation” means the proposed continuation of
      Envoy into British Columbia pursuant to section 303of the BCBCA;

	 	 	 
	 	(m) 	
      “Continuation Resolution” means the special
      resolution of the Envoy Shareholders approving the Continuation;

	 	 	 
	 	(n) 	
      “Court” means the Supreme Court of British
      Columbia;

	 	 	 
	 	(o) 	
      “EDGAR” means Electronic Data Gathering, Analysis,
      and Retrieval system, established by the SEC;

	 	 	 
	 	(p) 	
      “Effective Date” means the date on which the Final
      Order together with this Plan of Arrangement, and such other documents as
      are required to be filed under the BCBCA to give effect to the
      Arrangement, have been accepted for filing by the Registrar under the
      BCBCA giving effect to the Arrangement or such later date as determined by
      the board of directors of Merus or as specified by the Court;

	 	 	 
	 	(q) 	
      “Encumbrance” means pledges, liens, charges,
      security interests, leases, title retention agreements, mortgages,
      hypothecs, title defects, options or adverse claims or encumbrances of any
      kind or character whatsoever;







- 3 - 

	 	(r) 	
      “Envoy” means Envoy Capital Group Inc., a
      corporation existing under the OBCA;

	 	 	 
	 	(s) 	
      “Envoy Disclosure Documents” means all documents
      filed by Envoy on SEDAR and EDGAR up to the date of this
  Agreement;

	 	 	 
	 	(t) 	
      “Envoy Financial Statements” means the audited
      financial statements of Envoy for the fiscal year ended September 30, 2010
      and the unaudited financial statements of Envoy for the nine month period
      ended June 30, 2011;

	 	 	 
	 	(u) 	
      “Envoy Shareholders” means the holders of Envoy
      Shares at the applicable time;

	 	 	 
	 	(v) 	
      “Envoy Shares” means the common shares in the
      capital of Envoy;

	 	 	 
	 	(w) 	
      “Envoy Units” means units of Envoy consisting of
      one Envoy Share and one half of one Envoy Warrant;

	 	 	 
	 	(x) 	
      “Envoy Warrant” means the warrants of Envoy to be
      issued pursuant to the Private Placement, which entitle the holder to
      purchase one additional Envoy Share at an exercise price of no less than
      $3.00 per Envoy Share for a period of two years and is required to be
      exercised if the closing price of the Envoy Shares or Amalco Shares on the
      TSX is at or above $4.00 for thirty consecutive days;

	 	 	 
	 	(y) 	
      “Final Order” means the final order of the Court
      approving the Arrangement pursuant to the BCBCA;

	 	 	 
	 	(z) 	
      “Foreign Private Issuer” is as defined by Rule 405
      promulgated under the U.S. Securities Act;

	 	 	 
	 	(aa) 	
      “GAAP” means generally accepted accounting
      principles in effect in Canada, including the accounting recommendations
      published in the Handbook of the Canadian Institute of Chartered
      Accountants, including, as applicable, International Financial Reporting
      Standards;

	 	 	 
	 	(bb) 	
      “Governmental Entity “ means (a) any
      multinational, federal, provincial, state, regional, municipal, local or
      other government, governmental or public department, ministry, central
      bank, court, tribunal, arbitral body, commission, commissioner, board,
      bureau or agency, domestic or foreign, (b) any subdivision, agent or
      authority of any of the foregoing or (c) any quasigovernmental or private
      body, including any tribunal, commission, stock exchange, regulatory
      agency or self-regulatory organization, exercising any regulatory,
      expropriation or taxing authority under or for the account of any of the
      foregoing;

	 	 	 
	 	(cc) 	
      “Interim Order” means the interim order of the
      Court made pursuant to the application therefor contemplated by Sections
      2.1(a) and 4.5 hereof;

	 	 	 
	 	(dd) 	
      “law” or “laws” means all laws, statutes,
      codes, ordinances, decrees, rules, regulations, bylaws, statutory rules,
      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 licence of any
      Governmental Entity, statutory body or self-regulatory authority, and the
      term “applicable” with respect to such laws and in the context
      that refers to one or more Persons, means that such laws apply
      to such Person or Persons or its or their business, undertaking, property
      or securities and emanate from a Governmental Entity having jurisdiction
      over the Person or Persons or its or their business, undertaking or
  securities;







- 4 - 

	 	(ee) 	
      “Material Adverse Change” or “Material Adverse
      Effect” means an effect that is, or would reasonably be expected to
      be, materially adverse to the affairs, business, operations, prospects,
      cash flows, results of operations, assets, capitalization, condition
      (financial or otherwise), licenses, permits, properties, concessions,
      rights, liabilities (contingent or otherwise), privileges (whether
      contractual or otherwise) of a Party and its subsidiary considered on a
      consolidated basis, provided that a Material Adverse Effect shall not
      include an effect that arises or results from: (i) the announcement of the
      transactions contemplated by the Arrangement or the Agreement; (ii) any
      change in GAAP or the application of, or conversion to, International
      Financial Reporting Standards; (iii) any change in the market prices or
      trading volume of any securities of such Party; (iv) conditions affecting
      the pharmaceutical industry generally, in jurisdictions in which such
      Party carries on business, provided that such conditions or changes do not
      have a materially disproportionate effect on such Party relative to other
      comparable companies; (v) general economic, financial, currency exchange,
      securities or market conditions in Canada or elsewhere provided that such
      conditions or changes do not have a materially disproportionate effect on
      such Party relative to other comparable companies; or (vi) any action or
      inaction taken by such Party to which the other Party consented in
      writing;

	 	 	 	 	 
	 	(ff) 	
      “Material Event” means:

	 	 	 	 	 
	 		(i) 	
      any change in the business or financial condition of a
      Party which in the sole judgement of the other Party, acting reasonably,
      has or may have material adverse significance with respect to the value of
      the Party;

	 	 	 	 	 
	 		(ii) 	
      a tender or exchange for some or all of the shares of a
      Party is made or publicly proposed to be made by another Person or has
      been publicly disclosed or a Party shall have learned that the shares held
      by any shareholder of the Party, who holds more than 10% of the issued and
      outstanding shares of the Party at such date, shall have been acquired or
      agreed to be acquired by another Person or by Persons acting jointly or in
      concert therewith;

	 	 	 	 	 
	 		(iii) 	
      except as set forth herein, an event whereby a Party
      shall have:

	 	 	 	 	 
	 			A. 	
      issued or authorized, or proposed the issuance of: (1)
      any shares of capital stock of any class; (2) any securities convertible
      into, rights, warrants or options to acquire, any such shares; (3) other
      convertible securities, except the issuance of common shares in respect of
      currently issued and outstanding stock options of Merus and Envoy, as the
      case may be;

	 	 	 	 	 
	 			B. 	
      issued or authorized or proposed the issuance of any
      other securities in respect of, in lieu of, or in substitution for, all or
      any of the presently outstanding shares;








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	 	C. 	
      declared or paid any dividend on or distributed any
      shares of its capital stock or redeemed or repurchased any issued shares;
      or

	 	 	 
	 	D. 	
      authorized or proposed or announced its intention to
      propose any merger, consolidation or business combination transaction,
      shareholder rights protection plan or similar matters, acquisition or
      disposition of assets or material change in its capitalization or settled
      or forgiven any indebtedness or made a change in any terms of employment
      or compensation of any person, director or officer or grant any bonus to
      such Persons or created, assumed or increased any indebtedness, or created
      or assumed any encumbrance on the business, assets or operation of a
      Party, or any comparable event not in the ordinary course of
    business;




	 	(iv) 	
      any halt, suspension of, or cease trading in, securities
      of a Party;

	 	 	 
	 	(v) 	
      the existence of any threatened, instituted or pending
      action or proceeding before any court or governmental agency or other
      regulatory or administrative agency or commission or by any other Person
      which materially and adversely affects a Party, directly or indirectly
      other than as previously disclosed by one Party to the other;
and

	 	 	 
	 	(vi) 	
      any contractual obligation, liability or expense out of
      the ordinary course of business, which for purposes hereof, shall not
      include any contractual obligation, liability or expense related to the
      Arrangement by a Party in excess of $25,000;




	 	(gg) 	
      “Material Fact” has the meaning ascribed to it in
      the British Columbia Securities Act;

	 	 	 
	 	(hh) 	
      “Meetings” means the annual general and special
      meeting of the Merus Shareholders and the special meeting of the Envoy
      Shareholders to be held to consider, among other matters, the Arrangement,
      and any adjournment or postponement thereof;

	 	 	 
	 	(ii) 	
      “Merus” means Merus Labs International, Inc., a
      corporation existing under the BCBCA;

	 	 	 
	 	(jj) 	
      “Merus Disclosure Documents” means all documents
      filed by Merus on SEDAR up to the date of this Agreement;

	 	 	 
	 	(kk) 	
      “Merus Financial Statements” means the audited
      financial statements of Merus for the fiscal year ended May 31, 2011 and
      the unaudited financial statements of Merus for the three month period
      ended August 31, 2011 and audited financial statements of Merus for the
      twelve month period ended September 30, 2011;

	 	 	 
	 	(ll) 	
      “Merus Shareholders” means the holders of Merus
      Shares at the applicable time;

	 	 	 
	 	(mm) 	
      “Merus Shares” means the common shares in the
      capital of Merus;

	 	 	 
	 	(nn) 	
      “Notice of Dissent” means a notice given in
      respect of the dissent rights of the Shareholders as contemplated in the
      Interim Order and as described in the Plan;

	 	 	 
	 	(oo) 	
      “OBCA” means the Ontario Business Corporations
      Act, R.S.O. 1990, c B.16, and the regulations made under that
      enactment, as amended;







- 6 - 

	 	(pp) 	
      “Parties” means Merus and Envoy;

	 	 	 
	 	(qq) 	
      “Party” means either of Merus or Envoy;

	 	 	 
	 	(rr) 	
      “Person” means a natural person, partnership,
      limited partnership, limited liability partnership, estate, body
      corporate, limited liability company, unlimited liability company, joint
      stock company, trust, estate, unincorporated association, joint venture or
      other entity or Governmental Entity, and pronouns have a similarly
      extended meaning;

	 	 	 
	 	(ss) 	
      “Plan of Arrangement” means the plan of
      arrangement attached as Appendix I hereto as amended, modified or
      supplemented from time to time in accordance with the provisions of this
      Agreement, the Plan of Arrangement or at the direction of the
  Court;

	 	 	 
	 	(tt) 	
      “Private Placement” means the private placement to
      be completed by Envoy consisting of the sale of up to 4,500,000 Envoy
      Units at a minimum price of $2.00 and no less than such number of units as
      is required in order that Envoy Shareholders, upon completion of the
      Arrangement, receive more Amalco Shares than the Merus
  Shareholders;

	 	 	 
	 	(uu) 	
      “Registrar” means the Registrar of Companies
      appointed pursuant to Section 400 of the BCBCA;

	 	 	 
	 	(vv) 	
      “SEC” means the United States Securities and
      Exchange Commission;

	 	 	 
	 	(ww) 	
      “SEDAR” means the System for Electronic Document
      Analysis and Retrieval, established by the Canadian Securities
      Administrators;

	 	 	 
	 	(xx) 	
      “Special Resolution” means a resolution passed by
      a majority of not less than two-thirds of the votes cast by the Merus
      Shareholders or Envoy Shareholders in respect of such resolution at the
      Meetings;

	 	 	 
	 	(yy) 	
      “subsidiary” or “Subsidiaries” means, with
      respect to a specified body corporate, a body corporate of which more than
      50% of the outstanding shares ordinarily entitled to elect a majority of
      directors thereof, whether or not shares of any other class or classes
      shall or might be entitled to vote upon the happening of any event or
      contingency, are at the time owned, directly or indirectly, by such
      specified body corporate, and includes a body corporate in like relation
      to a subsidiary;

	 	 	 
	 	(zz) 	
      “U.S. Exchange Act” means the United States
      Securities Exchange Act of 1934, as amended;

	 	 	 
	 	(aaa) 	
      “U.S. Securities Act” means the United States
      Securities Act of 1933, as amended;

	 	 	 
	 	(bbb) 	
      “Tax Act” means the Income Tax Act (Canada)
      and the regulations made thereunder, as now in effect and as they may be
      promulgated or amended from time to time;

	 	 	 
	 	(ccc) 	
      “Tax Returns” means all returns, reports,
      declarations, elections statements, bills, schedules, forms or written
      information of, or in respect of, Taxes that are, or are required to be,
      filed with or supplied to any Governmental Entity;

	 	 	 
	 	(ddd) 	
      “Taxes” means any and all domestic and foreign
      federal, state, provincial, municipal, school and local taxes, assessments
      and other governmental charges, duties,
impositions and liabilities imposed by any Governmental Entity,
      including Canada Pension Plan and provincial pension plan contributions,
      instalments, employment insurance premium and contributions, worker’s
      compensation and deductions at source, including taxes based on or
      measured by gross receipts, income, profits, sales, capital, use, and
      occupation, and including goods and services, value added, ad valorem,
      transfer, franchise, withholding, customs, payroll, recapture, employment,
      excise and property duties and taxes, together with all interest,
      penalties, fines and additions imposed with respect to such
amounts;







- 7 - 

	 	(eee) 	
      “Termination Date” means December 31, 2011, or
      such other date as agreed to by the parties; and

	 	 	 
	 	(fff) 	
      “TSX” means the Toronto Stock
  Exchange.





	1.2 	
      HEADINGS



The division of this Agreement into articles, sections,
paragraphs and other portions and the insertion of headings are for convenience
of reference only and shall not affect the construction or interpretation of
this Agreement. The terms “this Agreement”, “hereof”, “hereunder” and similar
expressions refer to this Agreement (including the appendices hereto) as a whole
and not to any particular article, section, paragraph or other portion hereof
and include any agreement, document or instrument supplementary or ancillary
hereto. Unless something in the subject matter or context is inconsistent
therewith, all references herein to articles, sections, paragraphs and other
portions are to articles, sections, paragraphs and other portions of this
Agreement. 

	1.3 	
      CONSTRUCTION



In this Agreement, unless something in the context is
inconsistent therewith: 

	 	(a) 	
      the words “include” or “including” when following any
      general term or statement are not to be construed as limiting the general
      term or statement to the specific items or matters set forth or to similar
      items or matters, but rather as permitting it to refer to all other items
      or matters that could reasonably fall within its broadest possible
      scope;

	 	 	 
	 	(b) 	
      a reference to time or date is to the time or date in
      Vancouver, British Columbia, unless specifically indicated
    otherwise;

	 	 	 
	 	(c) 	
      a word importing the masculine gender includes the
      feminine gender or neuter and a word importing the singular includes the
      plural and vice versa; and

	 	 	 
	 	(d) 	
      a reference to “approval”, “authorization”, “consent”,
      “designation” or “notice” means written approval, authorization, consent,
      designation or notice unless specifically indicated
  otherwise.




	1.4 	
      DATE FOR ANY ACTION



In the event that any date on which any action is required to
be taken hereunder by either of the Parties is not a Business Day in the place
where the action is required to be taken, such action shall be required to be
taken on the next succeeding day which is a Business Day at such place, unless
otherwise agreed to by the Parties. 




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	1.5 	
      CURRENCY



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

	1.6 	
      ACCOUNTING PRINCIPLES



Whenever in this Agreement reference is made to GAAP, such
reference shall be deemed to be to the GAAP applicable as at the date on which a
calculation is made or required to be made. 

	1.7 	
      APPENDIX



The attached Appendix I, titled “Plan of Arrangement”, shall be
deemed to be incorporated into, and form part of, this Agreement. 

	1.8 	
      ENTIRE AGREEMENT



This Agreement, together with the appendices, agreements and
other documents herein or therein referred to, constitute the entire agreement
between the Parties pertaining to the subject manner hereof and supersedes all
prior agreements, understandings, negotiations and discussions, whether oral or
written, between the Parties with respect to the subject matter hereof. 

ARTICLE 2 
THE ARRANGEMENT 

	2.1 	
      ARRANGEMENT



Subject to the terms and conditions of this Agreement: 

	 	(a) 	
      prior to the mailing of the Circular, Merus shall
      have:

	 	 	 	 
	 		(i) 	
      prepared jointly with Envoy an application to the Court
      pursuant to Section 291 of the BCBCA for an Interim Order on terms
      acceptable to Merus providing for, among other things, the calling and
      holding of the Meetings; and

	 	 	 	 
	 		(ii) 	
      applied to the Court pursuant to Section 291 of the BCBCA
      for the Interim Order;

	 	 	 	 
	 	(b) 	
      both Merus and Envoy shall call and hold the Meetings as
      soon as practicable after obtaining the Interim Order;

	 	 	 	 
	 	(c) 	
      in connection with the Meetings, Merus and Envoy
      shall:

	 	 	 	 
	 		(i) 	
      jointly prepare the Circular and such other documents as
      may be necessary or desirable to permit the Merus Shareholders to vote on
      whether to approve the Arrangement Resolution, and the Envoy Shareholders
      to vote on whether to approve the Arrangement Resolution, Consolidation
      Resolution and Continuation Resolution;

	 	 	 	 
	 		(ii) 	
      prepare such other documents as may be necessary or
      desirable to give effect to the Arrangement;
and







- 9 - 

	 		(iii) 	
      cause the Circular and such other documents as may be
      necessary or desirable to give effect to the Arrangement to be sent to
      each of the Merus Shareholders and Envoy Shareholders as soon as
      reasonably practicable following receipt of the Interim Order, and shall
      cause such documents to be filed as required by the Interim Order and
      applicable law;

	 	 	 	 
	 	(d) 	
      if the Arrangement Resolution, Consolidation Resolution
      and Continuation Resolution are approved at the Meetings as set out in the
      Interim Order (or any variation thereof), as soon as reasonably
      practicable thereafter, Merus shall take the necessary steps to submit the
      Arrangement to the Court and apply for the Final Order in such manner as
      the Court may direct and Merus and Envoy may agree; and

	 	 	 	 
	 	(e) 	
      if the Final Order is obtained, as soon as reasonably
      practicable thereafter and subject to the fulfilment or the waiver of each
      of the conditions set out herein or therein, and completion of all steps
      required by the Plan of Arrangement to be completed prior to the Effective
      Date, Envoy shall complete the Continuation and Consolidation, if
      required, and Merus shall, immediately thereafter file a certified copy of
      the Final Order with the Plan of Arrangement, and such other documents as
      are required to be filed under the BCBCA, with the Registrar to give
      effect to the Arrangement pursuant to Section 292 of the
  BCBCA.



As part of its application for the Interim Order and the Final
Order, Merus shall, prior to the hearing in relation to the Final Order, advise
the Court that Merus and Envoy intend to rely on the exemption from the
registration requirements of the U.S. Securities Act provided by Section
3(a)(10) of that enactment based on the Court's approval of the fairness of the
Arrangement. 

	2.2 	
      CIRCULAR



Each of the Parties shall, in a timely and expeditious manner,
furnish to the other Party all such information regarding itself as may be
reasonably required to be included in the Circular. Each Party shall ensure that
the information relating to it contained in the Circular does not contain any
material misrepresentation (as such term is defined in Section 1(1) of the
British Columbia Securities Act). 

	2.3 	
      PUBLIC ANNOUNCEMENT

	 	 	 
		(a) 	
      Each Party shall consult with the other Party before
      issuing any news releases or otherwise making public statements with
      respect to this Agreement or the Arrangement and before making any filing
      with any governmental or regulatory agency or with any stock exchange
      relating to this Agreement or the Arrangement; and

	 	 	 
		(b) 	
      Before releasing a news release, making any other public
      statement, making a public filing or making a filing with any governmental
      entity, stock exchange or securities quotation system with respect to this
      Agreement or the Arrangement, each Party shall use all reasonable
      commercial efforts to allow the other Party to review and comment on, and
      shall adopt the other Party's reasonable comments on, the news release,
      other public statement or filing.

	 	 	 
	2.4 	
      EFFECTIVE DATE OF
ARRANGEMENT



Subject to the terms and conditions of this Agreement and the
Plan of Arrangement, the Arrangement shall become effective on the Effective
Date. 




- 10 - 

	2.5 	
      FILING UNDER THE BCBCA



Subject to the rights of termination contained in Article 6
hereof, upon the Merus Shareholders and Envoy Shareholders approving the
Arrangement by Special Resolution in accordance with the provisions of the
Interim Order and the BCBCA, Merus obtaining the Final Order, and the other
conditions contained in Article 5 hereof being complied with or waived, Merus
and Envoy shall file the Final Order with the Registrar in accordance with
Section 292 of the BCBCA together with such other documents as may be required
in order to effect the Arrangement. On, or as soon as practical after, the
Effective Date, Merus and Envoy shall exchange (to the extent not previously
exchanged) such other documents as may be necessary or desirable in connection
with the completion of the transactions contemplated by the Plan of Arrangement
and this Agreement. 

ARTICLE 3 
REPRESENTATIONS AND WARRANTIES 

	3.1 	
      REPRESENTATIONS AND WARRANTIES OF
  ENVOY



Envoy hereby represents and warrants to and in favour of Merus
that: 

	 	(a) 	
      Envoy is a valid and subsisting corporation under the
      OBCA. Envoy has all the requisite corporate power and authority to carry
      on its business as now being carried on by it and to own or lease and
      operate its properties and assets and is duly licensed or otherwise
      qualified to carry on business in each jurisdiction in which a material
      amount of its business is conducted or wherein the character of the
      properties and assets now owned by it makes such qualification necessary,
      except where such failure to be duly licensed or otherwise qualified would
      not have a Material Adverse Effect;

	 	 	 
	 	(b) 	
      Envoy has the requisite corporate power and authority to
      enter into this Agreement and perform its obligations hereunder. The
      execution, delivery and performance of this Agreement and the agreements,
      documents and transactions contemplated herein are within the corporate
      power and authority of Envoy and have been duly authorized by all
      necessary corporate action, and this Agreement constitutes a valid and
      binding obligation of Envoy, enforceable in accordance with its terms,
      subject to applicable bankruptcy, insolvency, fraudulent conveyance,
      reorganization or similar laws affecting the rights of creditors generally
      and subject to the general principles of equity;

	 	 	 
	 	(c) 	
      Except as otherwise disclosed in the Envoy Disclosure
      Documents or to Merus in writing, there are no actions, suits,
      proceedings, investigations or outstanding claims or demands, whether or
      not purportedly on behalf of Envoy or its subsidiary, instituted, pending,
      or to the knowledge of Envoy , threatened against or affecting Envoy or
      its subsidiary at law or in equity or before or by any governmental
      department, commission, board, bureau, agency or institution, domestic or
      foreign, or before any arbitrator, nor is there any judgment, order,
      decree or award of any court or other governmental authority having
      jurisdiction, obtained, pending, or to the knowledge of Envoy, threatened
      against Envoy or its subsidiary which could prevent or materially hinder
      the consummation of the Arrangement or the other transactions contemplated
      by this Agreement, or which could result in a Material Adverse Change in
      respect of Envoy;

	 	 	 
	 	(d) 	
      The execution and delivery of this Agreement, the
      consummation of the transactions contemplated hereby and the fulfilment of
      or compliance with the terms and provisions hereof do not or will not, nor will
  they with the giving of notice or the lapse of time or both: 







- 11 -

	 	(i) 	
      violate any provision of any law or provisions of the
      Charter Documents of Envoy;

	 	 	 
	 	(ii) 	
      conflict with, result in a breach of, constitute default
      under, or accelerate or permit the acceleration of the performance
      required by any material agreement, covenant, undertaking, commitment,
      instrument, judgment, order, decree or award to which Envoy or any
      subsidiary of Envoy is a Party or by which any of them is bound or to
      which the property of any of them is subject, all as of the Effective
      Date; or

	 	 	 
	 	(iii) 	
      result in the cancellation, suspension or material
      alteration in the terms of any material licence, permit or authority held
      by Envoy or any subsidiary of Envoy, or in the creation of any lien,
      charge, security interest or encumbrance upon any of the material assets
      of Envoy or any subsidiary of Envoy under such material agreement,
      covenant, undertaking, commitment, instrument, judgment, order, decree or
      award, or give to any other Person any material interest or rights,
      including rights of purchase, termination, cancellation or acceleration
      under any such material agreement, covenant, undertaking, commitment,
      instrument, judgment, order, decree or award;
and




	 	(e) 	
      Envoy is a Foreign Private Issuer;

	 	 	 
	 	(f) 	
      Envoy is not, nor has it been, required to register as an
      investment company under the

	 	 	 
	 		
      Investment Company Act of 1940;

	 	 	 
	 	(g) 	
      Envoy’s common shares are registered as a class under
      Section 12(b) of the U.S. Exchange Act, and Envoy has not been subject to
      any proceeding under Section 12(j) of the U.S. Exchange Act;

	 	 	 
	 	(h) 	
      Envoy is listed on TSX under the symbol “ECG” and is
      listed on NASDAQ under the symbol “ECGI” and is in good standing with both
      the TSX and NASDAQ;

	 	 	 
	 	(i) 	
      Envoy’s board of directors, after consultation with its
      financial and legal advisors, has determined unanimously that the
      Arrangement is fair to the Envoy Shareholders and is in the best interests
      of Envoy, and has resolved unanimously to recommend to the Envoy
      Shareholders that they vote their shares in favour of the Arrangement
      Resolution and Continuation Resolution, and has unanimously approved the
      Arrangement, Consolidation and Continuation, the execution and performance
      of this Agreement, and the performance of the Plan of
  Arrangement;

	 	 	 
	 	(j) 	
      The authorized share capital of Envoy consists of an
      unlimited number of Envoy Shares. As at the date hereof, there were
      8,028,377 Envoy Shares outstanding. All outstanding Envoy Shares have been
      duly authorized and validly issued, are fully paid and non- assessable.
      All securities of Envoy have been issued in compliance with all applicable
      laws. Except as previously disclosed to Merus, as at the date hereof,
      there are no options, warrants, conversion privileges or other rights
      (whether pre-emptive or contractual), agreements, arrangements or
      commitments obligating Envoy to issue or sell any shares
  of the capital of Envoy or securities or obligations of any
      kind convertible into or exchangeable for any shares of the capital of
  Envoy;







- 12 - 

	 	(k) 	
      Except as disclosed in the Envoy Disclosure Documents,
      neither Envoy nor its subsidiary has any ownership interest in any Person
      (other than securities in such subsidiary and any marketable securities of
      publicly-listed issuers or Governmental Entities). Envoy beneficially
      owns, directly or indirectly, all of the issued and outstanding securities
      of its subsidiary free and clear of all Encumbrances (except for
      restrictions on transfer contained in the constating documents of its
      subsidiary). All of the issued and outstanding shares in the capital of
      its subsidiary are validly issued, fully paid and non-assessable; there
      are no outstanding options, warrants or rights to purchase or acquire, or
      securities convertible into or exchangeable for, any shares in the share
      capital of such subsidiary; and there are no contracts which require such
      subsidiary to issue, sell or deliver any shares in its share capital or
      any securities or obligations convertible into or exchangeable for, any
      shares of its share capital;

	 	 	 
	 	(l) 	
      There are no shareholders agreements, registration rights
      agreements, voting trusts, proxies or similar agreements, arrangements or
      commitments to which Envoy or its subsidiary is a Party, or, to the
      knowledge of Envoy, with respect to the Envoy Shares or any other equity
      interests of Envoy or its subsidiary, or any other contract relating to
      disposition, voting or dividends with respect to any equity securities of
      Envoy or its subsidiary;

	 	 	 
	 	(m) 	
      Envoy has conducted and is conducting its business in
      compliance with all applicable laws, in all material respects;

	 	 	 
	 	(n) 	
      The Envoy Financial Statements have been prepared in
      accordance with GAAP, applied on a basis consistent with that of prior
      periods. The Envoy Financial Statements fairly present in all material
      respects the consolidated financial position of Envoy as of the dates
      thereof and the consolidated results of their operations and cash flows
      for the periods then ended. All indebtedness and liabilities have been
      reflected therein or in the notes thereto. Envoy has not engaged in any
      “off-balance sheet” or similar financing;

	 	 	 
	 	(o) 	
      The minute books of Envoy and the minute books of its
      subsidiary, since the date of creation or acquisition of such subsidiary,
      have been maintained in accordance with all applicable laws and are, in
      all material respects, complete and accurate. The financial books and
      records and accounts of Envoy and those of its subsidiary have been
      maintained in accordance with industry practices on a basis consistent
      with prior years and accurately and fairly reflect, in all material
      respects, the basis for the Envoy Financial Statements;

	 	 	 
	 	(p) 	
      There are no suits, claims, actions or proceedings
      pending or, to Envoy’s knowledge, threatened against Envoy or its
      subsidiary before any Governmental Entity or arbitral panel or tribunal or
      which involve or affect the Envoy Shares, Envoy or its subsidiary, their
      respective assets (including the title to or ownership of material
      assets), and, to Envoy’s knowledge, there are no grounds upon which such
      actions, suits or proceedings may be commenced with a reasonable
      likelihood of success. Neither Envoy nor its subsidiary is subject to any
      judgment, order or decree entered in any lawsuit or
  proceeding;








- 13 - 

	 	(q) 	
      No contract to which Envoy or its subsidiary is a Party
      or by which either are bound contains any non-competition obligation or
      otherwise restricts in any material way the business of Envoy, taken as a
      whole, except to the extent that such restrictions would not in the
      aggregate have a the Material Adverse Effect;

	 	 	 	 
	 	(r) 	
      Neither Envoy nor its subsidiary owns any real property
      other than two retail commercial properties located in the City of
      Toronto, Ontario;

	 	 	 	 
	 	(s) 	
      All accounts receivable of Envoy and its subsidiary were
      created in the ordinary course of business, are reflected property in
      their respective books and records and are valid and outstanding, except
      as provided therein;

	 	 	 	 
	 	(t) 	
      Envoy and its subsidiary have no material obligations or
      liabilities, direct or indirect, vested or contingent, in respect of any
      rate swap transactions, basis swaps, forward rate transactions, commodity
      swaps, commodity options, equity or equity index swaps, equity or equity
      index options, bond options, interest rate options, foreign exchange
      transactions, cap transactions, floor transactions, collar transactions,
      currency swap transactions, transactions having terms greater than 90
      days, or any similar transactions (including any option with respect to
      any of such transactions) or any combination of such
  transactions;

	 	 	 	 
	 	(u) 	
      Except as otherwise disclosed to Merus in
  writing:

	 	 	 	 
	 		(i) 	
      Envoy and its subsidiary has filed all Tax Returns
      required to be filed by it on or before the date of this Agreement, and
      those Tax Returns were complete and correct;

	 	 	 	 
	 		(ii) 	
      Envoy and its subsidiary has duly and timely paid all
      Taxes (including installments on account of Taxes for the current year)
      which are due and payable by it on or before the date hereof and have
      provided adequate accruals in the Envoy Financial Statements for any Taxes
      for the period covered by such Envoy Financial Statements that have not
      been paid whether or not shown as being due on any Tax Returns;

	 	 	 	 
	 		(iii) 	
      Since the date of the Envoy Financial Statements, no
      liability in respect of Taxes not reflected in such Envoy Financial
      Statements or otherwise provided for has been assessed, proposed to be
      assessed, incurred or accrued;

	 	 	 	 
	 		(iv) 	
      Envoy and its subsidiary has duly and timely withheld,
      deducted and collected, the amount of all Taxes and other amounts required
      under any applicable laws to be withheld, deducted or collected and has
      duly and timely remitted such amounts to the appropriate Governmental
      Entity;

	 	 	 	 
	 		(v) 	
      To Envoy’s knowledge, there are no actions, suits,
      proceedings, investigations or claims threatened against Envoy or its
      subsidiary in respect of Taxes, or any matters under discussion, audit or
      appeal with any Governmental Entity relating to Taxes asserted by any such
      Governmental Entity;

	 	 	 	 
	 		(vi) 	
      The income Tax liability of Envoy and its subsidiary has
      been assessed by the relevant tax authority in respect of the taxation
      years of Envoy and its subsidiary ending before the date
  hereof;







- 14 - 

	 		(vii) 	
      Envoy and its subsidiary have never been required to file
      any Tax Return with, and have never been liable to pay any Taxes to, any
      taxation authority outside Canada or any jurisdiction in which Envoy’s
      subsidiary resides. No claim has ever been made by any taxation authority
      in a jurisdiction where Envoy or its subsidiary does not file Tax Returns
      that it is or may be subject to the imposition of any Tax by that
      jurisdiction;

	 	 	 	 
	 		(viii) 	
      Envoy and its subsidiary have not requested, offered to
      enter into or entered into any agreement or other arrangement, or executed
      any waiver providing for any extension of time within which any
      Governmental Authority may assess or collect Taxes for which Envoy or its
      subsidiary is or may be liable;

	 	 	 	 
	 		(ix) 	
      the Envoy Disclosure Documents contain, at the time of
      their filing, full, true, and plain disclosure of all facts required to be
      disclosed at the time of such disclosure; and

	 	 	 	 
	 		(x) 	
      Neither Envoy nor its subsidiary has ever made an
      “excessive eligible dividend designation” within the meaning of the Tax
      Act;

	 	 	 	 
	 	(v) 	
      Except as publicly disclosed, since November 30, 2010,
      Envoy and its subsidiary have:

	 	 	 	 
	 		(i) 	
      not amended their respective articles, by-laws or other
      governing documents;

	 	 	 	 
	 		(ii) 	
      except for the transactions contemplated herein,
      conducted their respective businesses in the usual, ordinary and regular
      course and consistent with past practice;

	 	 	 	 
	 		(iii) 	
      not suffered any change that would have a Material
      Adverse Effect;

	 	 	 	 
	 		(iv) 	
      not made any change in their respective accounting
      principles and practices which are not required by GAAP as theretofore
      applied including, without limitation, the basis upon which its assets and
      liabilities are recorded on its books and its earnings and profits and
      losses are ascertained;

	 	 	 	 
	 		(v) 	
      not settled any litigation;

	 	 	 	 
	 		(vi) 	
      not sold, leased, transferred or assigned, in one or more
      transactions, any assets, tangible or intangible, except inventory in the
      ordinary course of business;

	 	 	 	 
	 		(vii) 	
      not made any loan to, or any other investment in, any
      other Person other than to Merus or its subsidiary;

	 	 	 	 
	 		(viii) 	
      not issued, sold or otherwise disposed of any of its
      share capital, or granted any options, warrants or other rights to
      purchase or obtain (including upon conversion, exchange or exercise) any
      of its share capital;

	 	 	 	 
	 		(ix) 	
      not declared, set aside or paid any dividend or made any
      distribution with respect to its share capital (whether in cash or in
      kind) or redeemed, purchased or otherwise acquired any of its capital;
      and







- 15 - 

	 		(x) 	
      not adopted, amended, modified or terminated any bonus,
      profit-sharing, incentive, severance, pension or other plan, contract or
      commitment (or taken any such action with respect to any other such plan)
      for the benefit of: (A) any of its or its subsidiary’s officers or
      directors; or (B) any of its or its subsidiary’s other employees;
    and

	 	 	 	 
	 	(w) 	
      No representation or warranty in this Agreement contains
      any untrue statement of a Material Fact and the representations and
      warranties contained in this Agreement do not omit to state any Material
      Fact necessary to make any of representations or warranties contained
      herein not misleading to a prospective purchaser of Envoy seeking full
      information as to Envoy and its subsidiary, the business and their
      respective assets.




	3.2 	
      REPRESENTATIONS AND WARRANTIES OF
  MERUS



Merus hereby represents and warrants to and in favour of Envoy
that: 

	 	(a) 	
      Merus is a valid and subsisting corporation under the
      BCBCA. Merus has all the requisite corporate power and authority to carry
      on its business as now being carried on by it and to own or lease and
      operate its properties and assets and is duly licensed or otherwise
      qualified to carry on business in each jurisdiction in which a material
      amount of its business is conducted or wherein the character of the
      properties and assets now owned by it makes such qualification necessary,
      except where such failure to be duly licensed or otherwise qualified would
      not have a Material Adverse Effect;

	 	 	 
	 	(b) 	
      Merus has the requisite corporate power and authority to
      enter into this Agreement and perform its obligations hereunder. The
      execution, delivery and performance of this Agreement and the agreements,
      documents and transactions contemplated herein are within the corporate
      power and authority of Merus and have been duly authorized by all
      necessary corporate action, and this Agreement constitutes a valid and
      binding obligation of Merus, enforceable in accordance with its terms,
      subject to applicable bankruptcy, insolvency, fraudulent conveyance,
      reorganization or similar laws affecting the rights of creditors generally
      and subject to the general principles of equity;

	 	 	 
	 	(c) 	
      Except as otherwise disclosed in the Merus Disclosure
      Documents or to Envoy, there are no actions, suits, proceedings,
      investigations or outstanding claims or demands, whether or not
      purportedly on behalf of Merus or its subsidiary, instituted, pending, or
      to the knowledge of Merus, threatened against or affecting Merus or its
      subsidiary at law or in equity or before or by any governmental
      department, commission, board, bureau, agency or institution, domestic or
      foreign, or before any arbitrator, nor is there any judgment, order,
      decree or award of any court or other governmental authority having
      jurisdiction, obtained, pending, or to the knowledge of Merus, threatened
      against Merus or its subsidiary which could prevent or materially hinder
      the consummation of the Arrangement or the other transactions contemplated
      by this Agreement, or which could result in a Material Adverse Change in
      respect of Merus;

	 	 	 
	 	(d) 	
      The execution and delivery of this Agreement, the
      consummation of the transactions contemplated hereby and the fulfilment of
      or compliance with the terms and provisions hereof do not or will not, nor
      will they with the giving of notice or the lapse of time or
  both:







- 16 - 

	 	(i) 	
      violate any provision of any law or provisions of the
      Charter Documents of Merus;

	 	 	 
	 	(ii) 	
      conflict with, result in a breach of, constitute default
      under, or accelerate or permit the acceleration of the performance
      required by any material agreement, covenant, undertaking, commitment,
      instrument, judgment, order, decree or award to which Merus or any
      subsidiary of Merus is a Party or by which any of them is bound or to
      which the property of any of them is subject, all as of the Effective
      Date; or

	 	 	 
	 	(iii) 	
      result in the cancellation, suspension or material
      alteration in the terms of any material licence, permit or authority held
      by Merus or any subsidiary of Merus, or in the creation of any lien,
      charge, security interest or encumbrance upon any of the material assets
      of Merus or any subsidiary of Merus under such material agreement,
      covenant, undertaking, commitment, instrument, judgment, order, decree or
      award, or give to any other Person any material interest or rights,
      including rights of purchase, termination, cancellation or acceleration
      under any such material agreement, covenant, undertaking, commitment,
      instrument, judgment, order, decree or award;




	 	(e) 	
      Merus is a Foreign Private Issuer;

	 	 	 
	 	(f) 	
      Merus does not and is not required to have a class of
      securities registered pursuant to Section 12 of the U.S. Exchange Act, and
      is not subject to a reporting obligation pursuant to Section 15(d) of the
      U.S. Exchange Act;

	 	 	 
	 	(g) 	
      Merus has not been subject to any proceeding under
      Section 12(j) of the U.S. Exchange Act;

	 	 	 
	 	(h) 	
      Merus’ board of directors, after consultation with its
      financial and legal advisors, has determined unanimously that the
      Arrangement is fair to the Merus Shareholders and is in the best interests
      of Merus, and has resolved unanimously to recommend to the Merus
      Shareholders that they vote their shares in favour of the Arrangement
      Resolution, and has unanimously approved the Arrangement pursuant to the
      Plan of Arrangement and the execution and performance of this Agreement,
      and the performance of the Plan of Arrangement;

	 	 	 
	 	(i) 	
      The authorized share capital of Merus consists of an
      unlimited number of Merus Shares and an unlimited number of preferred
      shares (the “Merus Preferred Shares”). As at the date hereof, there
      were 47,603,916 Merus Shares outstanding and no Merus Preferred Shares
      outstanding. All outstanding Merus Shares have been duly authorized and
      validly issued, are fully paid and non-assessable. All securities of Merus
      have been issued in compliance with all applicable laws. Except as
      previously disclosed to Envoy, as at the date hereof, there are no
      options, warrants, conversion privileges or other rights (whether
      pre-emptive or contractual), agreements, arrangements or commitments
      obligating Merus to issue or sell any shares of the capital of Merus or
      securities or obligations of any kind convertible into or exchangeable for
      any shares of the capital of Merus;

	 	 	 
	 	(j) 	
      Except as disclosed in the Merus Disclosure Documents,
      neither Merus nor its subsidiary has any ownership interest in any Person
      (other than securities in such subsidiary and any marketable securities of
      publicly-listed issuers or Governmental Entities).
Merus beneficially owns, directly or indirectly, all of the
      issued and outstanding securities of its subsidiary free and clear of all
      Encumbrances (except for restrictions on transfer contained in the
      constating documents of its subsidiary). All of the issued and outstanding
      shares in the capital of its subsidiary are validly issued, fully paid and
      non-assessable; there are no outstanding options, warrants or rights to
      purchase or acquire, or securities convertible into or exchangeable for,
      any shares in the share capital of such subsidiary; and there are no
      contracts which require such subsidiary to issue, sell or deliver any
      shares in its share capital or any securities or obligations convertible
  into or exchangeable for, any shares of its share capital;







- 17 - 

	 	(k) 	
      There are no shareholders, registration rights
      agreements, voting trusts, proxies or similar agreements, arrangements or
      commitments to which Merus or its subsidiary is a Party or, to the
      knowledge of Merus, with respect to the Merus Shares or any other equity
      interests of Merus or its subsidiary, or any other contract relating to
      disposition, voting or dividends with respect to any equity securities of
      Merus or its subsidiary;

	 	 	 
	 	(l) 	
      Merus has conducted and is conducting its business in
      compliance with all applicable laws, in all material respects;

	 	 	 
	 	(m) 	
      The Merus Financial Statements have been prepared in
      accordance with GAAP, applied on a basis consistent with that of prior
      periods. The Merus Financial Statements fairly present in all material
      respects the consolidated financial position of Merus as of the dates
      thereof and the consolidated results of their operations and cash flows
      for the periods then ended. All indebtedness and liabilities have been
      reflected therein or in the notes thereto. Merus has not engaged in any
      “off-balance sheet” or similar financing;

	 	 	 
	 	(n) 	
      The minute books of Merus and the minute books of its
      subsidiary, since the date of creation or acquisition of such subsidiary,
      have been maintained in accordance with all applicable laws and are, in
      all material respects, complete and accurate. The financial books and
      records and accounts of Merus and those of its subsidiary have been
      maintained in accordance with industry practices on a basis consistent
      with prior years and accurately and fairly reflect, in all material
      respects, the basis for the Merus Financial Statements;

	 	 	 
	 	(o) 	
      There are no suits, claims, actions or proceedings
      pending or, to Merus’ knowledge, threatened against Merus or its
      subsidiary before any Governmental Entity or arbitral panel or tribunal or
      which involve or affect the Merus Shares, Merus or its subsidiary, their
      respective assets (including the title to or ownership of material
      assets), and, to the Merus’s knowledge, there are no grounds upon which
      such actions, suits or proceedings may be commenced with a reasonable
      likelihood of success. Neither Merus nor its subsidiary is subject to any
      judgment, order or decree entered in any lawsuit or proceeding;

	 	 	 
	 	(p) 	
      No contract to which Merus or its subsidiary is a Party
      or by which either are bound contains any non-competition obligation or
      otherwise restricts in any material way the business of Merus, taken as a
      whole, except to the extent that such restrictions would not in the
      aggregate have a the Material Adverse Effect;

	 	 	 
	 	(q) 	
      Neither Merus nor its subsidiary owns any real
      property;








- 18 - 

	 	(r) 	
      All accounts receivable of Merus and its subsidiary were
      created in the ordinary course of business, are reflected property in
      their respective books and records and are valid and outstanding, except
      as provided therein;

	 	 	 	 
	 	(s) 	
      Merus and its subsidiary have no material obligations or
      liabilities, direct or indirect, vested or contingent, in respect of any
      rate swap transactions, basis swaps, forward rate transactions, commodity
      swaps, commodity options, equity or equity index swaps, equity or equity
      index options, bond options, interest rate options, foreign exchange
      transactions, cap transactions, floor transactions, collar transactions,
      currency swap transactions, transactions having terms greater than 90 days
      or any similar transactions (including any option with respect to any of
      such transactions) or any combination of such transactions;

	 	 	 	 
	 	(t) 	
      Except as otherwise disclosed to Envoy in
  writing:

	 	 	 	 
	 		(i) 	
      Merus and its subsidiary has filed all Tax Returns
      required to be filed by it on or before the date of this Agreement, and
      those Tax Returns were complete and correct;

	 	 	 	 
	 		(ii) 	
      Merus and its subsidiary has duly and timely paid all
      Taxes (including installments on account of Taxes for the current year)
      which are due and payable by it on or before the date hereof and have
      provided adequate accruals in the Merus Financial Statements for any Taxes
      for the period covered by such Merus Financial Statements that have not
      been paid whether or not shown as being due on any Tax Returns;

	 	 	 	 
	 		(iii) 	
      Since the date of the Merus Financial Statements, no
      liability in respect of Taxes not reflected in such Merus Financial
      Statements or otherwise provided for has been assessed, proposed to be
      assessed, incurred or accrued.

	 	 	 	 
	 		(iv) 	
      Merus and its subsidiary has duly and timely withheld,
      deducted and collected, the amount of all Taxes and other amounts required
      under any applicable laws to be withheld, deducted or collected and has
      duly and timely remitted such amounts to the appropriate Governmental
      Entity;

	 	 	 	 
	 		(v) 	
      To Merus’s knowledge, there are no actions, suits,
      proceedings, investigations or claims threatened against Merus or its
      subsidiary in respect of Taxes, or any matters under discussion, audit or
      appeal with any Governmental Entity relating to Taxes asserted by any such
      Governmental Entity;

	 	 	 	 
	 		(vi) 	
      The income Tax liability of Merus and its subsidiary has
      been assessed by the relevant tax authority in respect of the taxation
      years of Merus and its subsidiary ending before the date hereof;

	 	 	 	 
	 		(vii) 	
      Merus and its subsidiary have never been required to file
      any Tax Return with, and have never been liable to pay any Taxes to, any
      taxation authority outside Canada or any jurisdiction in which one of
      Merus’s subsidiary resides. No claim has ever been made by any taxation
      authority in a jurisdiction where Merus or its subsidiary does not file
      Tax Returns that it is or may be subject to the imposition of any Tax by
      that jurisdiction;







- 19 - 

	 		(viii) 	
      Merus and its subsidiary have not requested, offered to
      enter into or entered into any agreement or other arrangement, or executed
      any waiver providing for any extension of time within which any
      Governmental Authority may assess or collect Taxes for which Merus or its
      subsidiary is or may be liable;

	 	 	 	 
	 		(ix) 	
      the Merus Disclosure Documents contain, at the time of
      their filing, full, true, and plain disclosure of all facts required to be
      disclosed at the time of such disclosure; and

	 	 	 	 
	 		(x) 	
      Neither Merus nor its subsidiary has ever made an
      “excessive eligible dividend designation” within the meaning of the Tax
      Act;

	 	 	 	 
	 	(u) 	
      Except as publicly disclosed, since May 31, 2011, Merus
      and its subsidiary have:

	 	 	 	 
	 		(i) 	
      not amended their respective articles, by-laws or other
      governing documents;

	 	 	 	 
	 		(ii) 	
      except for the transactions contemplated herein,
      conducted the business in the usual, ordinary and regular course and
      consistent with past practice;

	 	 	 	 
	 		(iii) 	
      not suffered any change that would have a Material
      Adverse Effect;

	 	 	 	 
	 		(iv) 	
      not made any change in their respective accounting
      principles and practices which are not required by GAAP as theretofore
      applied including, without limitation, the basis upon which its assets and
      liabilities are recorded on its books and its earnings and profits and
      losses are ascertained;

	 	 	 	 
	 		(v) 	
      not settled any litigation;

	 	 	 	 
	 		(vi) 	
      not sold, leased, transferred or assigned, in one or more
      transactions, any assets, tangible or intangible, except inventory in the
      ordinary course of business;

	 	 	 	 
	 		(vii) 	
      not made any loan to, or any other investment in, any
      other Person;

	 	 	 	 
	 		(viii) 	
      not issued, sold or otherwise disposed of any of its
      share capital, or granted any options, warrants or other rights to
      purchase or obtain (including upon conversion, exchange or exercise) any
      of its share capital;

	 	 	 	 
	 		(ix) 	
      not declared, set aside or paid any dividend or made any
      distribution with respect to its share capital (whether in cash or in
      kind) or redeemed, purchased or otherwise acquired any of its capital;
      and

	 	 	 	 
	 		(x) 	
      not adopted, amended, modified or terminated any bonus,
      profit-sharing, incentive, severance, pension or other plan, contract or
      commitment (or taken any such action with respect to any other such plan)
      for the benefit of: (A) any of its or its subsidiary’s officers or
      directors; or (B) any of its or its subsidiary’s other employees;
    and

	 	 	 	 
	 	(v) 	
      No representation or warranty in this Agreement contains
      any untrue statement of a Material Fact and the representations and
      warranties contained in this Agreement do not omit to state any Material
      Fact necessary to make any of representations or
  warranties contained herein not misleading to a prospective purchaser of
Merus seeking full information as to Merus and its subsidiary, the business and
their respective assets.







- 20 - 

ARTICLE 4 
COVENANTS 

	4.1 	
      COVENANTS OF MERUS REGARDING
  ARRANGEMENT



Merus hereby covenants and agrees with Envoy as follows: 

	 	(a) 	
      subject to obtaining the Interim Order, Merus will
      convene the Meetings for the approval of the Arrangement and other matters
      incidental to the Arrangement;

	 	 	 	 
	 	(b) 	
      Merus will perform all such other acts and do such things
      as may be necessary or desirable in order to give effect to the
      Arrangement and, without limiting the generality of the foregoing, Merus
      will use its best efforts to apply for and obtain:

	 	 	 	 
	 		(i) 	
      the Interim Order;

	 	 	 	 
	 		(ii) 	
      the Final Order;

	 	 	 	 
	 		(iii) 	
      approval of the Arrangement from the Merus Shareholders;
      and

	 	 	 	 
	 		(iv) 	
      such other consents, orders and approvals as counsel may
      advise are necessary or desirable for the implementation of the
      Arrangement;

	 	 	 	 
	 	(c) 	
      Merus will use all reasonable efforts to cause each of
      the conditions precedent set forth in Article 5 hereof to be complied
      with, on or before the Effective Date; and

	 	 	 	 
	 	(d) 	
      Merus will ensure that the Circular will not contain an
      untrue statement of a Material Fact concerning Merus and will not omit to
      state a Material Fact concerning Merus that is required to be stated or
      that is necessary in order to render a statement contained therein not
      misleading in the light of the circumstances in which it was
  made.




	4.2 	
      COVENANTS OF ENVOY REGARDING
  ARRANGEMENT



Envoy hereby covenants and agrees with Merus as follows: 

	 	(a) 	
      Envoy shall complete the Continuation prior to the
      Effective Time;

	 	 	 
	 	(b) 	
      Envoy shall complete the Consolidation prior to the
      Effective Time if required to meet the initial listing requirements of
      NASDAQ and have the Amalco Shares listed on NASDAQ;

	 	 	 
	 	(c) 	
      Envoy shall complete the Private Placement prior to the
      Effective Time;

	 	 	 
	 	(d) 	
      apply for and use commercially reasonable efforts to
      obtain conditional approval of the listing and posting for trading on the
      TSX and NASDAQ of the Amalco Shares, subject only to the satisfaction by
      Merus and Envoy of customary post-closing conditions imposed by the TSX
      and NASDAQ in similar circumstances;







- 21 - 

	 	(e) 	
      subject to obtaining the Interim Order, Envoy will
      convene the Envoy Meeting for the approval of the Arrangement and other
      matters incidental to the Arrangement, including the Continuation and
      Consolidation;

	 	 	 	 
	 	(f) 	
      Envoy will perform all such other acts and do such things
      as may be necessary or desirable in order to give effect to the
      Arrangement and, without limiting the generality of the foregoing, Envoy
      will use its best efforts to apply for and obtain:

	 	 	 	 
	 		(i) 	
      the Interim Order;

	 	 	 	 
	 		(ii) 	
      the Final Order

	 	 	 	 
	 		(iii) 	
      approval of the Arrangement, Consolidation and
      Continuation from the Envoy Shareholders; and

	 	 	 	 
	 		(iv) 	
      such other consents, orders and approvals as counsel may
      advise are necessary or desirable for the implementation of the
      Arrangement;

	 	 	 	 
	 	(g) 	
      Envoy will use all reasonable efforts to cause each of
      the conditions precedent set forth in Article 5 hereof to be complied
      with, on or before the Effective Date;

	 	 	 	 
	 	(h) 	
      Envoy shall continue to be a Foreign Private Issuer;
      and

	 	 	 	 
	 	(i) 	
      Envoy will ensure that the Circular will not contain an
      untrue statement of a Material Fact concerning Envoy and will not omit to
      state a Material Fact concerning Envoy that is required to be stated or
      that is necessary in order to render a statement contained therein not
      misleading in the light of the circumstances in which it was
  made.




	4.3 	
      COVENANTS OF MERUS REGARDING CONDUCT OF
      BUSINESS



Merus covenants and agrees that it shall, and shall cause its
subsidiary to, during the period from the date of this Agreement until the
earlier of the Effective Time and the time that this Agreement is terminated in
accordance with its terms, unless Envoy shall otherwise agree in writing, or
except as is otherwise expressly permitted or contemplated by this Agreement or
the Plan of Arrangement or as otherwise required by law: 

	 	(a) 	
      not merge into or with or amalgamate or consolidate with
      or enter into any other corporate reorganization with any other Person or
      perform any act or enter into any transaction or negotiation which
      interferes or is inconsistent with the completion of the transactions
      contemplated hereby or would render inaccurate in any material way any of
      the representations and warranties set forth in Section 3.2 hereof if such
      representations and warranties were made at a date subsequent to such act,
      negotiation or transaction and all references to the date of this
      Agreement were deemed to be such later date, except as contemplated in
      this Agreement or as otherwise approved by Envoy;

	 	 	 
	 	(b) 	
      conduct its business only in, not take any action except
      in, and maintain its properties and facilities in, the ordinary course of
      business consistent with past practice;

	 	 	 
	 	(c) 	
      not amend or propose to amend its articles or
    by-laws;







- 22 - 

	 	(d) 	
      not split, consolidate, combine or reclassify any class
      of securities or declare, set aside or pay any dividend or other
      distribution payable in cash, securities, property or otherwise with
      respect to any class of securities;

	 	 	 
	 	(e) 	
      not redeem, purchase or offer to purchase any
      securities;

	 	 	 
	 	(f) 	
      not to amend any stock option plan or adopt any other
      bonus, profit sharing, incentive, compensation, stock option, pension,
      retirement, deferred compensation, employment or other employee benefit
      plan, agreement, trust, fund or arrangement for the benefit or welfare of
      any employee;

	 	 	 
	 	(g) 	
      to maintain insurance on and in respect of the property
      and assets owned or leased by Merus and its subsidiary in like kind to,
      and in an amount not less than the amount of, insurance in respect of such
      property and assets in effect on the date hereof;

	 	 	 
	 	(h) 	
      use its commercially reasonable efforts to preserve
      intact the business and the goodwill of Merus, to keep available the
      services of the officers and employees of Merus;

	 	 	 
	 	(i) 	
      not to take any action that would render, or that may
      reasonably be expected to render, any representation or warranty (except
      any representation and warranty which speaks solely as of a date prior to
      the occurrence of such action) made by it in this Agreement untrue at any
      time prior to the Effective Time;

	 	 	 
	 	(j) 	
      promptly notify Envoy of any change that could have a
      Material Adverse Effect;

	 	 	 
	 	(k) 	
      not repay any outstanding indebtedness in excess of an
      amount of $25,000 except such indebtedness disclosed in the Merus
      Financial Statements;

	 	 	 
	 	(l) 	
      not make capital expenditures from the date hereof to the
      Effective Date;

	 	 	 
	 	(m) 	
      not incur any new indebtedness or issue any debt
      securities or assume, guarantee, endorse or otherwise as an accommodation
      become responsible for the obligations of any other Person;

	 	 	 
	 	(n) 	
      not amend any Tax Returns or settle or compromise any
      material federal, national, provincial, foreign, state or local tax
      liability;

	 	 	 
	 	(o) 	
      not reduce the stated capital of the shares of
    Merus;

	 	 	 
	 	(p) 	
      not adopt a plan of liquidation or resolutions providing
      for the liquidation or dissolution;

	 	 	 
	 	(q) 	
      not pay, discharge, satisfy or settle any claims,
      liabilities or obligations other than the payment, discharge, settlement
      or satisfaction, in the ordinary course of business consistent with past
      practice, of liabilities reflected or reserved against in the Merus
      Financial Statements;

	 	 	 
	 	(r) 	
      not authorize, recommend or propose any release or
      relinquishment of any contractual right;

	 	 	 
	 	(s) 	
      not enter into any interest rate, currency swaps, hedges,
      caps, collars, forward sales or other similar financial
  instruments;







- 23 - 

	 	(t) 	
      not, except as required by GAAP or any applicable laws,
      make any changes to the existing accounting practices of Merus or make any
      tax election inconsistent with past practice;

	 	 	 
	 	(u) 	
      not terminate the employment of any employee;

	 	 	 
	 	(v) 	
      not increase the remuneration or benefits payable or to
      become payable to its directors, officers or, except as required pursuant
      to an existing contractual obligation, employees (whether from Merus or
      its subsidiary); or enter into or modify any employment, retention,
      severance or similar agreements or arrangements with, or grant any
      bonuses, salary increases, retention, severance or termination pay to, any
      member of its board of directors, officer or employee of Merus or its
      subsidiary;

	 	 	 
	 	(w) 	
      not waive, release, assign, settle or compromise any
      legal actions or any claim or liability other than in the ordinary course
      of business consistent with past practice; or

	 	 	 
	 	(x) 	
      not agree or commit to do any of the
  foregoing.




	4.4 	
      COVENANTS OF ENVOY REGARDING CONDUCT OF
      BUSINESS



Envoy covenants and agrees that it shall, and shall cause its
subsidiary to, during the period from the date of this Agreement until the
earlier of the Effective Time and the time that this Agreement is terminated in
accordance with its terms, unless Envoy shall otherwise agree in writing, or
except as is otherwise expressly permitted or contemplated by this Agreement or
the Plan of Arrangement or as otherwise required by law: 

	 	(a) 	
      Envoy will not merge into or with or amalgamate or
      consolidate with or enter into any other corporate reorganization with any
      other Person or perform any act or enter into any transaction or
      negotiation which interferes or is inconsistent with the completion of the
      transactions contemplated hereby or would render inaccurate in any
      material way any of the representations and warranties set forth in
      Section 3.2 hereof if such representations and warranties were made at a
      date subsequent to such act, negotiation or transaction and all references
      to the date of this Agreement were deemed to be such later date, except as
      contemplated in this Agreement or as otherwise approved by
Merus;

	 	 	 
	 	(b) 	
      conduct its business only in, not take any action except
      in, and maintain its properties and facilities in, the ordinary course of
      business consistent with past practice;

	 	 	 
	 	(c) 	
      not amend or propose to amend its articles or
    by-laws;

	 	 	 
	 	(d) 	
      not split, consolidate, combine or reclassify any class
      of securities or declare, set aside or pay any dividend or other
      distribution payable in cash, securities, property or otherwise with
      respect to any class of securities;

	 	 	 
	 	(e) 	
      not redeem, purchase or offer to purchase any
      securities;

	 	 	 
	 	(f) 	
      not to amend any stock option plan or adopt any other
      bonus, profit sharing, incentive, compensation, stock option, pension,
      retirement, deferred compensation, employment or other employee benefit
      plan, agreement, trust, fund or arrangement for the benefit or welfare of
      any employee;







- 24 - 

	 	(g) 	
      to maintain insurance on and in respect of the property
      and assets owned or leased by Envoy and its subsidiary in like kind to,
      and in an amount not less than the amount of, insurance in respect of such
      property and assets in effect on the date hereof;

	 	 	 
	 	(h) 	
      use its commercially reasonable efforts to preserve
      intact the business and the goodwill of Envoy , to keep available the
      services of the officers and employees of Envoy;

	 	 	 
	 	(i) 	
      not to take any action that would render, or that may
      reasonably be expected to render, any representation or warranty (except
      any representation and warranty which speaks solely as of a date prior to
      the occurrence of such action) made by it in this Agreement untrue at any
      time prior to the Effective Time;

	 	 	 
	 	(j) 	
      promptly notify Merus of any change that could have a
      Material Adverse Effect;

	 	 	 
	 	(k) 	
      not repay any outstanding indebtedness in excess of an
      amount of $25,000 except such indebtedness disclosed in the Envoy
      Financial Statements;

	 	 	 
	 	(l) 	
      not make capital expenditures from the date hereof to the
      Effective Date;

	 	 	 
	 	(m) 	
      not incur any new indebtedness or issue any debt
      securities or assume, guarantee, endorse or otherwise as an accommodation
      become responsible for the obligations of any other Person;

	 	 	 
	 	(n) 	
      not amend any Tax Returns or settle or compromise any
      material federal, national, provincial, foreign, state or local tax
      liability;

	 	 	 
	 	(o) 	
      not reduce the stated capital of the shares of
    Envoy;

	 	 	 
	 	(p) 	
      not adopt a plan of liquidation or resolutions providing
      for the liquidation or dissolution;

	 	 	 
	 	(q) 	
      not pay, discharge, satisfy or settle any claims,
      liabilities or obligations other than the payment, discharge, settlement
      or satisfaction, in the ordinary course of business consistent with past
      practice, of liabilities reflected or reserved against in the Envoy
      Financial Statements;

	 	 	 
	 	(r) 	
      not authorize, recommend or propose any release or
      relinquishment of any contractual right;

	 	 	 
	 	(s) 	
      not enter into any interest rate, currency swaps, hedges,
      caps, collars, forward sales or other similar financial
  instruments;

	 	 	 
	 	(t) 	
      not, except as required by GAAP or any applicable laws,
      make any changes to the existing accounting practices of Envoy or make any
      tax election inconsistent with past practice;

	 	 	 
	 	(u) 	
      not terminate the employment of any employee;

	 	 	 
	 	(v) 	
      not increase the remuneration or benefits payable or to
      become payable to its directors, officers or, except as required pursuant
      to an existing contractual obligation, employees (whether from Envoy or
      its subsidiary); or enter into or modify any employment, retention,
      severance or similar agreements or arrangements with, or grant any
      bonuses, salary increases, retention, severance or termination pay
      to, any member of its board of directors, officer or employee of Envoy or
  its subsidiary;







- 25 - 

	 	(w) 	
      not waive, release, assign, settle or compromise any
      legal actions or any claim or liability other than in the ordinary course
      of business consistent with past practice; or

	 	 	 
	 	(x) 	
      not agree or commit to do any of the
  foregoing.





	4.5 	
      INTERIM ORDER AND FINAL
ORDER



Merus covenants and agrees that it will, as soon as reasonably
practicable, apply to the Court pursuant to Section 291 of the BCBCA for the
Interim Order providing for, among other things, the calling and holding of the
Meetings for the purpose of, among other matters, the Merus Shareholders and
Envoy Shareholders considering and, if deemed advisable, approving the
Arrangement and that, if the approval of the Merus Shareholders and Envoy
Shareholders of the Arrangement as set forth in the Interim Order is obtained by
Merus, as soon as practicable thereafter Merus will take the necessary steps to
submit the Arrangement to the Court and apply for the Final Order in such
fashion as the Court may direct. As soon as practicable thereafter, and subject
to compliance with the other conditions provided in Article 5 hereof, Merus
shall send to the Registrar, in accordance with Section 292 of the BCBCA, the
necessary documents to give effect to the Arrangement. 

ARTICLE 5 
CONDITIONS 

	5.1 	
      MUTUAL CONDITIONS
PRECEDENT



The respective obligation of Merus and Envoy to complete the
transactions contemplated by this Agreement, including the Arrangement and the
obligation of each of Merus and Envoy to file the documents required by Section
292 of the BCBCA with the Registrar to give effect to the Arrangement, shall be
subject to the satisfaction, on or before the Effective Date, of the following
conditions: 

	 	(a) 	
      at the Meetings, the Arrangement Resolution, with or
      without amendment, shall have been approved by both the Merus Shareholders
      and Envoy Shareholders entitled to vote thereon, in accordance with the
      Interim Order and in accordance with the BCBCA and OBCA;

	 	 	 
	 	(b) 	
      at the Meetings, the Continuation Resolution, with or
      without amendment, shall have been approved by the Envoy Shareholders
      entitled to vote thereon, in accordance with the Interim Order and in
      accordance with the OBCA;

	 	 	 
	 	(c) 	
      the Continuation shall have been effected;

	 	 	 
	 	(d) 	
      the Consolidation, if required, shall have been
      effected

	 	 	 
	 	(e) 	
      the Private Placement shall have been completed prior to
      the Effective Time;

	 	 	 
	 	(f) 	
      the TSX shall have approved the listing of Amalco Shares
      on the TSX;

	 	 	 
	 	(g) 	
      NASDAQ shall have approved the listing of Amalco Shares
      on NASDAQ;







- 26 - 

	 	(h) 	
      Amalco shall continue to be a Foreign Private Issuer and
      not required to be registered under the US Investment Company
      Act;

	 	 	 	 
	 	(i) 	
      the Interim Order and the Final Order shall have been
      obtained in form and substance satisfactory to Merus and Envoy, acting
      reasonably, and shall not have been set aside or modified in a manner
      unacceptable to such Parties, acting reasonably, on appeal or
      otherwise;

	 	 	 	 
	 	(j) 	
      all consents, orders, regulations and approvals,
      including regulatory and judicial approvals and orders required, necessary
      or desirable for the completion of the transactions provided for in this
      Agreement and contemplated by the Arrangement shall have been obtained or
      received from the Persons, authorities or bodies having jurisdiction in
      the circumstances;

	 	 	 	 
	 	(k) 	
      the distribution of the Amalco Shares, as contemplated in
      the Plan of Arrangement, in the United States pursuant to the Arrangement
      shall be exempt from registration requirements under the U.S. Securities
      Act and except with respect to persons deemed “affiliates” under such
      enactment, the Amalco Shares, as contemplated in the Plan of Arrangement,
      to be distributed in the United States pursuant to the Arrangement shall
      not be subject to resale restrictions in the United States under such
      enactment;

	 	 	 	 
	 	(l) 	
      the distribution of the Amalco Shares, as contemplated in
      the Plan of Arrangement, in Canada pursuant to the Arrangement shall be
      exempt from registration and prospectus requirements of applicable
      Canadian securities legislation;

	 	 	 	 
	 	(m) 	
      there shall not be in force any law, ruling, order or
      decree that makes it illegal or restrains, or enjoins or prohibits the
      consummation of the transactions contemplated by this Agreement and the
      Arrangement;

	 	 	 	 
	 	(n) 	
      none of the consents, orders, regulations or approvals
      contemplated herein shall contain terms or conditions or require
      undertakings or security deemed unsatisfactory or unacceptable by any of
      the Parties, acting reasonably;

	 	 	 	 
	 	(o) 	
      other than as previously disclosed to the other Party, no
      Material Event shall have occurred or been threatened in the business,
      property, prospect or financial condition of Merus or Envoy;

	 	 	 	 
	 	(p) 	
      no judgment or order shall have been issued by any
      agency, no actions, suits or proceedings shall have been threatened or
      taken by any agency, and no law, regulation or policy shall have been
      proposed, enacted, or promulgated or applied:

	 	 	 	 
	 		(i) 	
      to cease trade, enjoin, prohibit or impose material
      limitations or conditions on the completion of the Arrangement;
  or

	 	 	 	 
	 		(ii) 	
      that, if the Arrangement were completed, could reasonably
      be expected to have a Material Adverse Effect on any of the Parties to
      this Agreement;

	 	 	 	 
	 	(q) 	
      Merus and Envoy shall be satisfied that the Arrangement
      can be consummated on commercially reasonable terms; and

	 	 	 	 
	 	(r) 	
      this Agreement shall not have been terminated under
      Article 6.







- 27 - 

	5.2 	
      CONDITIONS IN FAVOUR OF
MERUS



The obligations of Merus to complete the transactions
contemplated by this Agreement pursuant to Section 288 of the BCBCA to give
effect to the Arrangement shall be subject to the satisfaction of the following
conditions, unless otherwise waived by Merus: 

	 	(a) 	
      Envoy will have cash and cash equivalents on hand equal
      to $9,500,000 exclusive of the proceeds of the Private Placements and
      loans made by Envoy to Merus;

	 	 	 
	 	(b) 	
      the representations and warranties of Envoy contained in
      this Agreement shall be true as of the Effective Date (except to the
      extent that the representations and warranties speak as of an earlier
      date, in which event they shall be true as of such earlier date) as if
      made on and as of that date except for any failures or breaches of
      representations and warranties that have not had, or would not have,
      individually or in the aggregate, a Material Adverse Effect on Envoy or
      prevent or delay the completion of the Arrangement or the transactions
      contemplated by this Agreement to be completed on the Effective
    Date;

	 	 	 
	 	(c) 	
      Envoy shall have complied with its obligations under this
      Agreement, except to the extent the failure to comply with those
      obligations has not had, or would not have, individually or in the
      aggregate, a Material Adverse Effect on Envoy or prevent or delay the
      completion of the Arrangement or the transactions contemplated by this
      Agreement to be completed on the Effective Date; and

	 	 	 
	 	(d) 	
      the aggregate number of Merus Shares in respect of which
      the Merus Shareholders shall have exercised, and not withdrawn the
      exercise of, rights of dissent provided pursuant to the terms of the Plan
      of Arrangement and the Interim Order shall not be in excess of such number
      as Merus’ management believes would prevent the meeting of the objectives
      of the Arrangement.




	5.3 	
      CONDITIONS IN FAVOUR OF
ENVOY



The obligations of Envoy to complete the transactions
contemplated by this Agreement pursuant to Section 288 of the BCBCA to give
effect to the Arrangement shall be subject to the satisfaction of the following
conditions, unless otherwise waived by Envoy: 

	 	(a) 	
      the representations and warranties of Merus contained in
      this Agreement shall be true as of the Effective Date (except to the
      extent that the representations and warranties speak as of an earlier
      date, in which event they shall be true as of such earlier date) as if
      made on and as of that date except for any failures or breaches of
      representations and warranties that have not had, or would not have,
      individually or in the aggregate, a Material Adverse Effect on Merus or
      prevent or delay the completion of the Arrangement or the transactions
      contemplated by this Agreement to be completed on the Effective
    Date;

	 	 	 
	 	(b) 	
      Merus shall have complied with its obligations under this
      Agreement, except to the extent the failure to comply with those
      obligations has not had, or would not have, individually or in the
      aggregate, a Material Adverse Effect on Merus or prevent or delay the
      completion of the Arrangement or the transactions contemplated by this
      Agreement to be completed on the Effective Date; and

	 	 	 
	 	(c) 	
      the aggregate number of Envoy Shares in respect of which
      the Envoy Shareholders shall have exercised, and not withdrawn the
      exercise of, rights of dissent provided pursuant
to the terms of the Plan of Arrangement and the Interim Order
shall not be in excess of such number as Envoy’s management believes would
prevent the meeting of the objectives of the Arrangement.







- 28 - 

ARTICLE 6 
AMENDMENT AND TERMINATION 

	6.1 	
      AMENDMENT AND VARIATION



Subject to Sections 6.2 and 6.5 hereof, this Agreement may, at
any time and from time to time, before and after the holding of the Meetings,
but not later than the Effective Date, be amended or varied by written agreement
of Merus and Envoy, subject to applicable law, without further notice to or
authorization on the part of the Merus Shareholders and Envoy Shareholders.
Without limiting the generality of the foregoing, any such amendment may: 

	 	(a) 	
      change the time for the performance of any of the
      obligations or acts of the Parties;

	 	 	 
	 	(b) 	
      waive any inaccuracies or modify any representation or
      warranty contained herein or in any document to be delivered pursuant
      hereto; or

	 	 	 
	 	(c) 	
      waive compliance with or modify any of the covenants
      contained herein or waive or modify the performance of any of the
      obligations of the Parties contained herein.




	6.2 	
      AMENDMENT OF PLAN



The Plan of Arrangement may be amended, modified or
supplemented in accordance with Section 6.1 of the Plan of Arrangement. 

	6.3 	
      RIGHTS OF TERMINATION



If any of the conditions contained in Sections 5.1, 5.2 or 5.3
are not fulfilled or performed on or before the Effective Date, the Party not
responsible hereunder to fulfill or perform any such condition may terminate
this Agreement by notice to the other Party, as the case may be, in writing, and
in such event, Merus or Envoy, as the case may be, shall be released from all
obligations under this Agreement, all rights of specific performance by the
Parties shall terminate and the other Party shall also be released from all
obligations hereunder. 

	6.4 	
      NOTICE OF UNFULFILLED
CONDITIONS



If any Party shall determine at any time prior to the Effective
Date that it intends to refuse to consummate the Arrangement or any of the
transactions contemplated thereby because of any unfulfilled or unperformed
condition precedent contained in this Agreement on the part of the other Party
to be fulfilled or performed, such Party, as the case may be, shall so notify
the other Party forthwith upon making such determination in order that the other
Party shall have the right and opportunity to take such steps, at its own
expense, as may be necessary for the purpose of fulfilling or performing such
condition precedent within a reasonable period of time. 

	6.5 	
      MUTUAL TERMINATION



This Agreement may, at any time before or after the holding of
the Meetings, but no later than the Effective Date, be terminated by agreement
in writing executed by Merus and Envoy without further action on the part of either of the Merus Shareholders or Envoy
Shareholders, and if the Effective Date does not occur on or before the
Termination Date, each Party may unilaterally terminate this Agreement without
further action on the part of the Merus Shareholders and Envoy Shareholders,
which termination shall be effective upon notice thereof being given to the
other Party to this Agreement. 




- 29 - 

	6.6 	
      EFFECT OF TERMINATION



Upon the termination of this Agreement pursuant to Article 6
hereof, neither Party shall have any liability or further obligation to the
other Party. 

ARTICLE 7 
MERGER 

	7.1 	
      MERGER OF CONDITIONS



The conditions set out in Sections 5.1, 5.2 and 5.3 hereof
shall be conclusively deemed to have been satisfied or waived upon the later of
(i) the Effective Date of (ii) the date upon which the Registrar accepts for
filing the documents required to be filed pursuant to Section 292 of the BCBCA
giving effect to the Arrangement. 

	7.2 	
      MERGER OF COVENANTS



The provisions of Sections 4.1 and 4.2 hereof shall be
conclusively deemed to have been satisfied in all respects upon the Registrar
accepting for filing the documents required to be filed pursuant to Section 292
of the BCBCA giving effect to the Arrangement. 

	7.3 	
      INDEMNIFICATION



Each of the Parties hereto (the “Indemnifying Party”)
hereby undertakes with the other Party to this Agreement (the “Indemnified
Party”) to indemnify and hold harmless the Indemnified Party from and
against all losses, claims, damages, liabilities, actions or demands including,
without limiting the generality of the foregoing, amounts paid in any settlement
approved by the Indemnifying Party of any action, suit, proceeding or claim but
excluding lost profits and consequential damages of the Indemnified Party, to
which the Indemnified Party may become subject insofar as such losses, claims,
damages, liabilities, actions or demands arise out of or are based upon any
breach of a representation, warranty, covenant or obligation of the Indemnifying
Party contained in this Agreement or any certificate or notice delivered by it
in connection herewith, and will reimburse the Indemnified Party for any legal
or other expenses reasonably incurred by the Indemnified Party in connection
with investigating or defending any such loss, claim, damage, liability, action
or demand. 

	7.4 	
      DEFENCE



Promptly after receipt by the Indemnified Party of notice of a
possible action, suit, proceeding or claim referred to in Section 7.3 hereof,
the Indemnified Party, if a claim in respect thereof is to be made against the
Indemnifying Party under such section, shall provide the Indemnifying Party with
written particulars thereof; provided that the failure to so provide the
Indemnifying Party with such particulars shall not relieve such Indemnifying
Party from any liability which it might have on account of the indemnity
provided for in this Article 7, except insofar as such failure shall prejudice
such Indemnifying Party. The Indemnified Party shall also provide the
Indemnifying Party with copies of all relevant documentation, and unless the
Indemnifying Party assumes the defence thereof, shall keep such Indemnifying
Party advised of the progress thereof and shall keep such Indemnifying Party
advised of all significant actions proposed. An Indemnifying Party shall be entitled, at its own
expense, to participate in and, to the extent that it may wish, to assume the
defence of any such action, suit, proceeding or claim but such defence shall be
conducted by counsel of good standing approved by the Indemnified Party, such
approval not to be unreasonably withheld. Upon the Indemnifying Party notifying
the Indemnified Party of its election so to assume the defence and retaining
such counsel, the Indemnifying Party shall not be liable to the Indemnified
Party for any legal or other expenses subsequently incurred by it in connection
with such defence other than for reasonable costs of investigation. If such
defence is assumed by the Indemnifying Party, it shall, throughout the course
thereof, provide copies of all relevant documentation to the Indemnified Party,
keep such Indemnified Party advised of the progress thereof and shall discuss
with the Indemnified Party all significant actions proposed. No Indemnifying
Party shall enter into any settlement without the consent of the Indemnified
Party, but such consent shall not be unreasonably withheld. Notwithstanding the
foregoing, the Indemnified Party shall have the right, at the Indemnifying
Party's expense, to employ counsel of their own choice in respect of the defence
of any such action, suit, proceeding or claim if: 




- 30 - 

	 	(a) 	
      the employment of such counsel has been authorized by the
      Indemnifying Party in connection with such defence;

	 	 	 
	 	(b) 	
      counsel retained by the Indemnifying Party or the
      Indemnified Party shall have advised the Indemnified Party that there may
      be legal defences available to it which are different from or in addition
      to those available to the Indemnifying Party (in which event, and to that
      extent, the Indemnifying Party shall not have the right to assume or
      direct the defence on behalf of the Indemnified Party) or that there may
      be a conflict of interest between the Indemnifying Party and the
      Indemnified Party; or

	 	 	 
	 	(c) 	
      the Indemnifying Party shall not have assumed such
      defence and employed counsel therefor within a reasonable time after
      receiving notice of such action, suit, proceeding or
  claim.



7.5 TERM 

The obligations of the Parties under this Article 7 shall
terminate when the Arrangement is consummated, failing which they shall survive
and continue with respect to all losses, claims, damages, liabilities, actions
or demands, notice of which is given to the Indemnifying Party by the
Indemnified Party, on or before 12 months from the date hereof in compliance
with Section 7.4 hereof. 

ARTICLE 8 
GENERAL 

	8.1 	
      NOTICES



All notices which may or are required to be given pursuant to
any provision of this Agreement shall be given or made in writing and shall be
deemed to be validly given if served personally or by facsimile, in each case to
the attention of the senior officer at the following addresses or at such other
address as shall be specified by a Party by like notice: 




- 31 - 

	 	(a) 	if to Merus: 	  
	 	 	 	 
	 	  	         
             Suite 2007 – 1177 West Hastings Street    
	 	  	         
           Vancouver, British Columbia V6E 2K3  
	 	 	 
	 	  	           
             Attention: 	Ahmad Doroudian 
	 	  	           
             Facsimile: 	604.225.0588 
	 	 	 	 
	 	  	with a copy to: 	  
	 	 	 	 
	 	  	         
               Clark Wilson LLP 
	 	  	         
           Suite 800 – 885 West Georgia Street  
	 	  	         
           Vancouver, British Columbia V6C 3H1  
	 	 	 
	 	  	           
             Attention: 	Stewart Muglich 
	 	  	           
             Facsimile: 	604.687.6314 
	 	 	 	 
	 	(b) 	if to Envoy: 	  
	 	 	 
	 	  	         
               30 St. Patrick Street Ste. 301 
	 	  	                  
      Toronto, Ontario M5T 3A3 
	 	 	 
	 	  	           
             Attention: 	Andrew Patient 
	 	  	           
             Facsimile: 	416.593.4434 
	 	 	 	 
	 	  	with a copy to: 	  
	 	 	 	 
	 	  	         
               Peterson Law Professional
      Corporation 
	 	 	                  
      Suite 806 – 390 Bay Street 
	 	  	         
               Toronto, Ontario M5H 2Y2 
	 	 	 
	 	  	           
             Attention: 	Dennis Peterson 
	 	  	           
             Facsimile: 	416.777.6772 


Any notice that is delivered to such address shall be deemed to
be delivered on the date of delivery if delivered on a Business Day prior to
5:00 p.m. (local time at the place of receipt) or on the next Business Day if
delivered after 5:00 p.m. or on a non-Business Day. Any notice delivered by
facsimile transmission shall be deemed to be delivered on the date of
transmission if delivered on a Business Day prior to 5:00 p.m. (local time at
the place of receipt) or on the next Business Day if delivered after 5:00 p.m.
or on a non-Business Day. 

	8.2 	
      TIME OF THE ESSENCE



Time shall be of the essence in this Agreement. 

	8.3 	
      ASSIGNMENT



Neither Merus nor Envoy may assign its rights or obligations
under this Agreement or the Arrangement without the prior written consent of the
other of them. 




- 32 - 

	8.4 	
      BINDING EFFECT



This Agreement and the Plan of Arrangement shall be binding
upon and shall enure to the benefit of each of Envoy and Merus and the
respective successors and permitted assigns thereof. 

	8.5 	
      WAIVER



Any waiver or release of any of the provisions of this
Agreement, to be effective, must be in writing executed by the Party granting
such waiver or release. 

	8.6 	
      FURTHER ASSURANCES



Each Party shall, from time to time, and at all times
hereafter, at the request of the other of them, but without further
consideration, do, or cause to be done, all such other acts, and execute and
deliver, or cause to be executed and delivered, all such further agreements,
transfers, assurances, instruments or documents as may be reasonably required in
order to fully perform and carry out the terms and intent hereof including,
without limitation, the Arrangement. 

	8.7 	
      GOVERNING LAW



This Agreement shall be governed by, and be construed in
accordance with, the laws of the Province of British Columbia and the laws of
Canada applicable therein but the reference to such laws shall not, by conflict
of laws rules or otherwise, require the application of the law of any
jurisdiction other than the Province of British Columbia. Each Party hereby
irrevocably attorns to the exclusive jurisdiction of the courts of the Province
of British Columbia in respect of all matters arising under or in relation to
this Agreement. 

	8.8 	
      EXPENSES



Each Party to this Agreement will be responsible for all of its
own expenses, legal and other professional fees, disbursements, and all other
costs incurred in connection with the negotiation, preparation, execution, and
delivery of this Agreement and all documents and instruments relating hereto and
the consummation of the transactions contemplated hereby. 

	8.9 	
      SEVERABILITY



If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid, illegal or unenforceable, then: 

	 	(a) 	
      that provision shall (to the extent of the invalidity,
      illegality or unenforceability) be given no effect and shall be deemed not
      to be part of this Agreement; and

	 	 	 
	 	(b) 	
      the Parties hereto shall use all reasonable commercial
      efforts to replace each invalid, illegal or unenforceable provision with a
      valid, legal and enforceable substitute provision, the effect of which is
      as close as possible to the intended effect of the invalid, illegal or
      unenforceable provision.




	8.10 	
      PARTIES IN INTEREST



This Agreement will be binding upon and inure solely to the
benefit of each Party, and, other than pursuant to Article 7 hereof, nothing in
this Agreement, express or implied, is intended to or will confer upon any other Person any right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement. 




- 33 - 

	8.11 	
      COUNTERPARTS



This Agreement may be executed in one or more counterparts,
manually or by facsimile, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument. 

IN WITNESS WHEREOF the Parties hereto have executed this
Agreement as of the date and year first above written. 

MERUS LABS INTERNATIONAL INC. 

	Per: 	/s/ Ahmad Doroudian 	 
	Name: 	Ahmad Doroudian 	 
	Title: 	Chief Executive Officer 	 


ENVOY CAPITAL GROUP INC. 

	Per: 	/s/ Robert Pollock 	 
	Name: 	Robert Pollock 	 
	Title: 	Chief Executive Officer 	 






APPENDIX I 

TO THE ARRANGEMENT AGREEMENT MADE AS OF NOVEMBER 9, 2011

BETWEEN MERUS LABS INTERNATIONAL INC. AND ENVOY CAPITAL GROUP INC. 

PLAN OF ARRANGEMENT UNDER 
SECTION 291 OF THE
BRITISH COLUMBIA BUSINESS CORPORATIONS ACT 

ARTICLE 1 
INTERPRETATION 

	1.1 	
      Definitions



Certain capitalized terms used in this Plan of Arrangement
which are not defined herein are defined in the Arrangement Agreement. In this
Plan of Arrangement, unless there is something in the subject matter or context
inconsistent therewith, the following capitalized words and terms shall have the
following meanings: 

	 	(a) 	
      “Amalco” means the successor to Envoy and Merus
      under the BCBCA following the effectiveness of the Arrangement
      contemplated hereby;

	 	 	 
	 	(b) 	
      “Amalco Shares” means common shares in the capital
      of Amalco;

	 	 	 
	 	(c) 	
      “Arrangement” means the arrangement pursuant to
      the provisions of Section 288 of the BCBCA to be undertaken on the terms
      set out in this Plan of Arrangement, subject to any amendment or
      supplement thereto made in accordance with the Arrangement Agreement, this
      Plan of Arrangement or at the discretion of the Court;

	 	 	 
	 	(d) 	
      “Arrangement Agreement” means the arrangement
      agreement dated November 9, 2011 between Envoy and Merus, including the
      appendices attached thereto, as supplemented or amended from time to
      time;

	 	 	 
	 	(e) 	
      “BCBCA” means the British Columbia Business
      Corporations Act, S.B.C. 2002, c. 57, and the regulations made under
      that enactment, as amended;

	 	 	 
	 	(f) 	
      “Business Day” means any day other than a
      Saturday, Sunday, a federal holiday in Canada or a day on which banks are
      not open for business in Vancouver, British Columbia;

	 	 	 
	 	(g) 	
      “Court” means the Supreme Court of British
      Columbia;

	 	 	 
	 	(h) 	
      “Dissent Procedures” means the procedures set
      forth in Section 238 of the BCBCA required to be taken by a registered
      holder of Merus Shares to exercise the right of dissent in respect of such
      Merus Shares in connection with the Arrangement and the procedures set
      forth in Section 185 of the OBCA required to be taken by a registered
      holder of Envoy Shares to exercise the right of dissent of such Envoy
      Shares in connection with the Arrangement;







- 2 - 

	 	(i) 	
      “Dissenting Shareholder” means a registered holder
      of either Merus Shares or Envoy Shares who dissents in respect of the
      Arrangement in strict compliance with the Dissent Procedures;

	 	 	 
	 	(j) 	
      “Effective Date” means the date on which the Final
      Order together with this Plan of Arrangement, and such other documents as
      are required to be filed under the BCBCA to give effect to the
      Arrangement, have been accepted for filing by the Registrar under the
      BCBCA giving effect to the Arrangement or such later date as determined by
      the board of directors of Merus or as specified by the Court;

	 	 	 
	 	(k) 	
      “Effective Time” means the time on the Effective
      Date that the Arrangement becomes effective in accordance with its
      terms;

	 	 	 
	 	(l) 	
      “Envoy” means Envoy Capital Group Inc., a
      corporation existing under the OBCA;

	 	 	 
	 	(m) 	
      “Envoy Options” means the stock options to
      purchase Envoy Shares outstanding as of the Effective Date;

	 	 	 
	 	(n) 	
      “Envoy Shareholders” means the holders of Envoy
      Shares at the applicable time;

	 	 	 
	 	(o) 	
      “Envoy Shares” means the common shares in the
      capital of Envoy;

	 	 	 
	 	(p) 	
      “Envoy Warrants” means the warrants to purchase
      Envoy Shares outstanding as of the Effective Date;

	 	 	 
	 	(q) 	
      “Final Order” means the final order of the Court
      approving the Arrangement pursuant to the BCBCA;

	 	 	 
	 	(r) 	
      “Meetings” means the annual general and special
      meeting of the Merus Shareholders and the special meeting of the Envoy
      Shareholders to be held to consider, among other matters, the Arrangement,
      and any adjournment or postponement thereof;

	 	 	 
	 	(s) 	
      “Merus” means Merus Labs International, Inc., a
      corporation existing under the BCBCA;

	 	 	 
	 	(t) 	
      “Merus Options” means the stock options to
      purchase Merus Shares outstanding as of the Effective Date;

	 	 	 
	 	(u) 	
      “Merus Shareholders” means the holders of Merus
      Shares at the applicable time;

	 	 	 
	 	(v) 	
      “Merus Shares” means the common shares in the
      capital of Merus;

	 	 	 
	 	(w) 	
      “Merus Warrants” means the warrants to purchase
      Merus Shares outstanding as of the Effective Date;

	 	 	 
	 	(x) 	
      “Person” means and includes an individual, sole
      proprietorship, partnership, unincorporated association, unincorporated
      syndicate, unincorporated organization, trust, body corporate, trustee,
      executor, administrator or other legal representative and the Crown or any
      agency or instrumentality thereof;

	 	 	 
	 	(y) 	
      “Plan of Arrangement” means this plan of
      arrangement;







- 3 - 

	 	(z) 	
      “Registrar” means the Registrar of Companies
      appointed pursuant to Section 400 of the BCBCA; and

	 	 	 
	 	(aa) 	
      “Shareholders” means the Merus Shareholders and
      Envoy Shareholders Common Shares at the applicable time.

	 	 	 
	 	(bb) 	
      “Transfer Agent” means, in the case of Merus,
      Olympia Trust Company or, in the case of Envoy, Computershare Trust
      Company of Canada




	1.2 	
      Interpretation Not Affected By
  Headings



The division of this Plan of Arrangement into articles,
sections, paragraphs and other portions and the insertion of headings are for
the convenience of reference only and shall not affect the construction or
interpretation of this Plan of Arrangement. The terms “this Plan of
Arrangement”, “hereof”, “herein”, “hereunder” and similar expressions refer to
this Plan of Arrangement as a whole and not to any particular article, section,
paragraph or part hereof. Unless something in the subject matter or context is
inconsistent therewith, all references herein to articles, sections, paragraphs
and other portions are to articles, sections, paragraphs and other portions of
this Plan of Arrangement. 

	1.3 	
      Number and Gender



In this Plan of Arrangement, words importing the singular
number only shall include the plural and vice versa, words importing the
masculine gender shall include the feminine gender and neuter and words
importing persons shall include individuals, partnerships, associations, forms,
trusts, unincorporated organizations and corporations. 

	1.4 	
      Statutes



A reference to a statute shall be deemed to include every
regulation made pursuant thereto, all amendments to the statute or to any such
regulation enforced from time to time, and any statute or regulation that
supplements or supersedes such statute or any such regulation. 

	1.5 	
      Currency



All references to currency herein are to lawful money of Canada
unless otherwise specified herein. 

	1.6 	
      Time and Date for Action



Time shall be of the essence in each matter or thing herein
provided. Unless otherwise indicated, all times expressed herein are local time,
Vancouver, British Columbia. In the event that the date on or by which any
action is required to be taken hereunder is not a Business Day in the place
where the action is required to be taken, such action shall be required to be
taken on or by the next succeeding day which is a Business Day in such place.


	1.7 	
      Deeming Provisions



In this Plan of Arrangement, the deeming provisions are not
rebutable and are conclusive and irrevocable. 




- 4 - 

	1.8 	
      Successors, Assigns, Etc.



At the Effective Time, this Plan of Arrangement will be binding
upon Merus, Envoy, the Merus Shareholders and the Envoy Shareholders and their
respective heirs, executors, administrators, legal representatives, successors
and assigns. 

	1.9 	
      Legislation



References in this Plan of Arrangement to any statute or
sections thereof shall include any statute as amended or substituted, and any
regulations promulgated thereunder, from time to time in effect. 

	1.10 	
      Governing Law



This Plan of Arrangement shall be governed by and construed in
accordance with the laws of the Province of British Columbia and the federal
laws of Canada applicable therein. 

ARTICLE 2 
ARRANGEMENT AGREEMENT 

	2.1 	
      Arrangement Agreement



This Plan of Arrangement is made pursuant and subject to the
provisions of the Arrangement Agreement. 

ARTICLE 3
 THE ARRANGEMENT 

	3.1 	
      The Arrangement

	 	 	 	 
		(a) 	
      On the Effective Date (or on such other date as may be
      determined by the board of directors of Merus and Envoy) the events and
      transactions set out in Section 3.1(b) below shall occur and be deemed to
      occur on the Effective Date (or on such other date as may be determined by
      the board of directors of Merus and Envoy);

	 	 	 	 
		(b) 	
      The following events and transactions shall occur and be
      deemed to occur in the order in which they are listed and without further
      act or formality and with each transaction or event being deemed to occur
      immediately after the occurrence of the transaction or event immediately
      preceding it:

	 	 	 	 
			(i) 	
      Immediately prior to the Effective Time, the Merus Shares
      and Envoy Shares held by Dissenting Shareholders shall be deemed to have
      been surrendered for cancellation, and such Dissenting Shareholders shall
      cease to be the holders of such Merus Shares and Envoy Shares, as
      applicable, and to have any rights as holders of such Merus Shares and
      Envoy Shares, as applicable, other than the right to be paid the fair
      value for such Merus Shares and Envoy Shares, as applicable, and such
      Dissenting Shareholders’ names shall be removed as the holders of such
      Merus Shares and Envoy Shares, as applicable, from the central securities
      register of Merus or Envoy, as applicable;

	 	 	 	 
			(ii) 	
      Merus and Envoy shall amalgamate to form Amalco with the
      same effect as if they had amalgamated under Section 270 of the BCBCA, in
      accordance with the following:







- 5 - 

	 	A. 	
      Merus Shareholders (other than the Dissenting
      Shareholders) exchange each four Merus Shares for one Amalco Share, or
      such other ratio as necessary to account for the consolidation of the
      Envoy Shares (the “Merus Exchange Ratio”) provided that no
      fractional Amalco Shares will be distributed to Merus Shareholders and the
      number of Amalco Shares to which each Merus Shareholder is entitled will
      be rounded down to the next whole number and no payment will be made in
      respect of such a fractional share;

	 	 	 	 
	 	B. 	
      Envoy Shareholders (other than the Dissenting
      Shareholders) exchange each Envoy Share for one Amalco Share;

	 	 	 	 
	 	C. 	
      notwithstanding the terms of any of the Merus Warrant,
      holders of Merus Warrants shall be entitled to receive upon exercise of
      such holder’s Merus Warrants in accordance with its terms, the number of
      Amalco Shares as is equal to the product of:

	 	 	 	 
	 		I. 	
      the number of Merus Shares issuable pursuant to such
      Merus Warrant immediately prior to the Effective Time; and

	 	 	 	 
	 		II. 	
      the Merus Exchange Ratio; and

	 	 	 	 
	 		
      the exercise price per Amalco Share of any such amended
      Merus Warrant shall be the amount (rounded up to the nearest cent) equal
      to the quotient of:

	 	 	 	 
	 		III. 	
      the original exercise price per Merus Share of such Merus
      Warrant immediately before the Effective Time; and

	 	 	 	 
	 		IV. 	
      the Exchange Ratio;

	 	 	 	 
	 	D. 	
      notwithstanding the terms of any of the Merus Option,
      holders of Merus Options shall be entitled to receive upon exercise of
      such holder’s Merus Options in accordance with its terms, the number of
      Amalco Shares as is equal to the product of:

	 	 	 	 
	 		I. 	
      the number of Merus Shares issuable pursuant to such
      Merus Option immediately prior to the Effective Time; and

	 	 	 	 
	 		II. 	
      the Merus Exchange Ratio; and

	 	 	 	 
	 		
      the exercise price per Amalco Share of any such amended
      Merus Option shall be the amount (rounded up to the nearest cent) equal to
      the quotient of:

	 	 	 	 
	 		I. 	
      the original exercise price per Merus Share of such Merus
      Option immediately before the Effective Time; and

	 	 	 	 
	 		II. 	
      the Exchange Ratio;







- 6 - 

	 	E. 	
      notwithstanding the terms of any Envoy Warrant, holders
      of outstanding Envoy Warrants shall be entitled to receive upon exercise
      of such holder’s Envoy Warrant in accordance with its terms, the number of
      Amalco Shares as is equal to the number of Envoy Shares issuable pursuant
      to such Envoy Warrant immediately prior to the Effective Time. The
      exercise price per Amalco Share of any such amended Envoy Warrant shall be
      the amount equal to the original exercise price per Envoy Share of such
      Envoy Warrant immediately before the Effective Time;

	 	 	 
	 	F. 	
      notwithstanding the terms of any Envoy Option, holders of
      Envoy Options shall be entitled to receive upon exercise of such holder’s
      Envoy Options in accordance with its terms, the number of Amalco Shares as
      is equal to the number of Envoy Shares issuable pursuant to such Envoy
      Option immediately prior to the Effective Time and the exercise price per
      Amalco Share of any such amended Envoy Option shall be the original
      exercise price per Envoy Share of such Envoy Option immediately before the
      Effective Time;

	 	 	 
	 	G. 	
      the notice of articles of amalgamation and articles of
      Amalco shall be substantially in the form of the notice of articles and
      articles of Merus, taking into account the transactions set forth
      herein;

	 	 	 
	 	H. 	
      the property, rights and interests of Merus and Envoy
      will be the property, rights and interests of Amalco;

	 	 	 
	 	I. 	
      Amalco shall be liable for the obligations of Merus and
      Envoy;

	 	 	 
	 	J. 	
      any existing cause of action, claim or liability to
      prosecution of Merus or Envoy shall be unaffected;

	 	 	 
	 	K. 	
      any legal proceeding being prosecuted or pending by or
      against either Merus or Envoy may be prosecuted, or its prosecution may be
      continued, as the case may be, by or against Amalco;

	 	 	 
	 	L. 	
      a conviction against, or ruling, order or judgment in
      favour or against either Merus or Envoy may be enforced by or against
      Amalco;

	 	 	 
	 	M. 	
      Amalco’s name shall be Merus Labs International
    Inc.;

	 	 	 
	 	N. 	
      the board of directors of Amalco shall consist of the
      following Persons:




	 	Name 
	 	  
	 	Ahmad Doroudian 
	 	David Guebert 
	 	Robert Pollock 
	 	Joseph Rus 
	 	Timothy Sorensen 



	 	O. 	
      the officers of Amalco shall consist of the following
      Persons:







- 7 - 


	Name 	Title 
	Ahmad Doroudian 	President and Chief Executive Officer 
	Andrew Patient 	Chief Financial Officer 
	Moira Ong 	Vice President, Finance and Secretary 
	Ali Moghaddam 	V.P Business Development & Commercial

	  	Operations 




	 	P. 	
      the first auditors of Amalco shall be Saturna Group, who
      shall hold office until the first annual meeting of Amalco following the
      amalgamation or until their successors are elected or appointed, and for
      the purposes of Section 204 of the BCBCA.




	3.2 	
      Arrangement Effectiveness



The Arrangement shall be deemed effective as of the Effective
Time. 

	3.3 	
      Deemed Fully Paid and Non-Assessable
    Securities



All Amalco Shares distributed pursuant hereto shall be deemed
to be validly issued and outstanding as fully paid and non-assessable shares for
all purposes of the laws of British Columbia. 

	3.4 	
      Supplementary Actions



Notwithstanding that the transaction and events set out in
Section 3.1 hereof shall occur, and shall be deemed to occur, in the order
therein set out without any other act or formality, each of Merus and Envoy
shall make, do and execute, or cause to be made, done and executed, all such
further acts, deeds, agreements, transfers, assurances, instruments or documents
as may be required to further document or evidence any of the transactions or
events set out in Section 3.1 hereof, including without limitation, any
resolution of directors authorizing the issue, transfer or purchase for
cancellation of securities, any security transfer powers evidencing the transfer
of securities and any receipt therefor, any promissory notes and receipts
therefor and any necessary additions to, or deletions from, share registers.


ARTICLE 4 
DISSENT PROCEDURES 

	4.1 	
      Dissent Procedures



Holders of Merus Shares and Envoy Shares may exercise a right
of dissent in connection with the Arrangement in accordance with the Dissent
Procedures provided that, notwithstanding the provisions of subsection 238 of
the BCBCA and subsection 185 of the OBCA, the written objection to the special
resolution to approve the Arrangement contemplated by subsection 242 of the
BCBCA is received by Merus or Envoy, as applicable, not later than 5:00 p.m.
(Vancouver time) two Business Days prior to the date of the Meetings and
provided further that holders who exercise such right of dissent and who: 

	 	(a) 	
      are ultimately entitled to be paid fair value for their
      either their Merus Shares or Envoy Shares, shall be deemed to have
      transferred such shares to Amalco for cancellation at the Effective Time;
      or

	 	 	 
	 	(b) 	
      are ultimately not entitled, for any reason, to be paid
      fair value for their Merus Shares or Envoy Shares shall be deemed to have
      participated in the Arrangement on the basis set forth in Section 3.1
      hereof, but further provided that in no case shall Merus, Envoy or any
other Person be required to recognize Dissenting Shareholders as holders of
Amalco Shares after the Effective Time and the names of such Dissenting
Shareholders shall be deleted from the register of holders of Amalco Shares at
the Effective Time. 







- 8 - 

ARTICLE 5 
DISTRIBUTION OF AMALCO SHARES 

	5.1 	
      Delivery of Amalco Shares

	 	 	 
		(a) 	
      Subject to surrender to the Transfer Agent for
      cancellation of a certificate which immediately prior to the Effective
      Time represented either Merus Shares or Envoy Shares, together with a duly
      completed and executed Letter of Transmittal and such additional documents
      and instruments as the Transfer Agent may reasonably require, following
      the Effective Time the holder of such surrendered certificate shall be
      entitled to receive in exchange thereof, and the Transfer Agent shall
      deliver to such holder, the certificate representing that number of Amalco
      Shares which such holder has the right to receive, taking into account the
      transactions contemplated herein, and the certificate so surrendered shall
      forthwith be cancelled; and

	 	 	 
		(b) 	
      Until surrendered as contemplated by this Section 5.1,
      each certificate that immediately prior to the Effective Time represented
      either Merus Shares or Envoy Shares shall be deemed after the Effective
      Time to represent only the right to receive, upon such surrender, the
      certificate representing that number of Amalco Shares which such holder
      has the right to receive, taking into account the transactions
      contemplated herein.

	 	 	 
	5.2 	
      Withholding Rights



Merus, Envoy and their agents shall be entitled to deduct and
withhold from all dividends or other distributions otherwise payable to any
holder of either Merus Shares or Envoy Shares such amounts as Merus, Envoy or
their agents are required or permitted to deduct and withhold with respect to
such payment under the ITA and the regulations thereunder, the United States
Internal Revenue Code of 1986 or any provision of any applicable federal,
provincial, state, local or foreign tax law, in each case, as amended. To the
extent that amounts are so withheld, such withheld amounts shall be treated for
all purposes hereof as having been paid to the holder in respect of which such
deduction and withholding was made, provided that such withheld amounts are
actually remitted to the appropriate taxing authority. 

	5.3 	
      Limitation and
Proscription



To the extent that Amalco (or its designated agent) is unable
to deliver the Amalco Shares to which a Merus Shareholder or Envoy Shareholder
is entitled on or before the date which is six years after the Effective Date
(the “Final Proscription Date”), then the Amalco Shares which such
Shareholder was entitled to receive shall be automatically cancelled without any
repayment of capital in respect thereof and the certificate representing any
Merus Shares or Envoy Shares shall be delivered to Amalco (or its designated
agent) for cancellation and shall be cancelled by Amalco and the interest of
either the Merus Shareholder or Envoy Shareholder in such shares shall be
terminated as of the Final Proscription Date. 

	5.4 	
      Illegality of Delivery of Amalco
  Shares



Notwithstanding the foregoing, if it appears to Amalco, acting
reasonably, that it would be contrary to applicable law to deliver the Amalco
Shares pursuant to the Arrangement to a Person that is not a resident of Canada or the United States, the Amalco Shares that
otherwise would be delivered to that Person shall be held by Amalco or its
designated agent for sale by Amalco or such other Person as appointed by Amalco
on behalf of that Person. 




- 9 - 

ARTICLE 6 
AMENDMENT 

	6.1 	
      Amendment



This Plan of Arrangement may at any time and from time to time
before or after the holding of the Meetings, but not later than the Effective
Date, be amended provided that such amendment is filed with the Court.