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FORM OF UNSECURED CONVERTIBLE DEBENTURE

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF
THIS SECURITY AND THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE SHALL
NOT TRADE SUCH SECURITIES BEFORE JANUARY 21, 2014.

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

Issue Date: September 20, 2013

Conversion Price: $1.50 per Conversion Share (subject to
adjustment as contemplated herein)

UNSECURED CONVERTIBLE DEBENTURE

FOR VALUE RECEIVED, MERUS LABS INTERNATIONAL INC.(the
Company) promises to pay to [NAME OF HOLDER] or its registered
assigns (the Holder), the principal sum of$[PRINCIPAL AMOUNT]in lawful currency of Canada (the Principal Amount) on or before
September 20, 2018 (the Maturity Date), subject to the terms and
conditions hereof. This Debenture shall bear interest calculated per quarter at
the Interest Rate (as defined herein).

This Debenture is subject to the following additional terms and
conditions:

|1.  | Definitions                                                                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                           
|1.1 | For the purposes hereof, in addition to the terms defined
      elsewhere in this Debenture: (i) capitalized terms not otherwise defined
      herein have the meanings given to such terms in the Subscription Agreement
      (as defined herein), and (ii) the following terms shall have the following
      meanings:

| | (a) | Business Day means any day except Saturday,
      Sunday and any day which shall be a statutory holiday in the province of
      Ontario or a day on which banking institutions in the province of Ontario
      are authorized or required by law or other government action to
    close;                                 
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                               
| | (b) | Common Shares means the common shares in the
      capital of the Company and shares of any other class into which such
      Common Shares may hereafter have been reclassified or changed;                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                               
| | (c) | Conversion Date has the meaning set forth in
      Section 4.2 hereof;                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                               
| | (d) | Conversion Price means (i) $1.50 per Conversion
      Share with respect to the Principal Amount and (ii) the greater of (A)
      $1.50 per Conversion Share and (B) the Market Price on the date of any
      Notice of Conversion per Conversion Share for any accrued but unpaid
      interest on the Principal Amount;
| |     |                                                                                                                                                                                                                                                                                                                               
| | (e) | Conversion Share means a Common Share issuable
      upon conversion of the Principal Amount and any accrued but unpaid
      interest thereon;                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                               
| | (f) | Debenture means this unsecured convertible
      debenture;                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                               
| | (g) | Interest Rate means 8% per
  annum;                                                                                                                                                                                                                                                                                         

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| | (h) | Issue Date means September 20, 2013;                                                                                                                                                                                                                                                                       
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                              
| | (i) | Market Price has the meaning ascribed to it in
      the TSX Company Manual;                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                              
| | (j) | Person means a corporation, association,
      partnership, organization, business, individual, government or political
      subdivision thereof;                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                              
| | (k) | Principal Amount means the principal amount as
      may be due and owing by the Company to the Holder from time to time under
      this Debenture;                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                              
| | (l) | Subscription Agreement means the Subscription
      Agreement, dated as of September 20, 2013, to which the Company and the
      Holder are parties and pursuant to which the Holder agreed to purchase
      this Debenture;                                                                             
| |     |                                                                                                                                                                                                                                                                                                              
| | (m) | Trading Day means a day on which the Common
      Shares are traded on the TSX or other trading market on which the Common
      Shares are then listed or quoted, provided that, in the event that the
      Common Shares are not listed or quoted, then Trading Day shall mean a
      Business Day; and
| |     |                                                                                                                                                                                                                                                                                                              
| | (n) | TSX means the Toronto Stock
  Exchange.                                                                                                                                                                                                                                                                    

|1.2 | Unless otherwise provided, all dollar amounts referred to
      in this Debenture are in lawful money of Canada.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|2.  | Subscription Agreement and Senior
  Security                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|2.1 | This Debenture has been issued pursuant to the
      Subscription Agreement, is subject in all respects to the terms of the
      Subscription Agreement, and incorporates the terms of the Subscription
      Agreement to the extent that they do not conflict with the terms of this
      Debenture. This Debenture may not be transferred or exchanged without the
      prior written consent of the Company and then only in compliance with
      applicable securities laws and regulations.                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|2.2 | The Holder acknowledges and agrees that, notwithstanding
      the provisions of this Debenture, this Debenture is subject to the
      Subordination and Postponement Agreement executed by the Holder, the Royal
      Bank of Canada, and the Company on September 20, 2013.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|3.  | Interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|3.1 | The Principal Amount shall bear simple interest both
      before and after maturity, default and judgment from and including the
      Issue Date to the date of repayment in full at the Interest Rate. Such
      interest will be calculated quarterly, not in advance, on the basis of a
      year of 365 days and payable on the first day of each fiscal quarter of
      the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.  | Conversion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.1 | At any time after the Issue Date until the Maturity Date,
      and provided that this Debenture is then outstanding, the Principal Amount
      then outstanding and any accrued but unpaid interest thereon may be
      converted into Conversion Shares at the option of the Holder, in whole or
      in part, at any time and from time to time. The Holder shall convert a
      minimum of $50,000 of the Principal Amount for any conversion, unless
      there is less than $50,000 of the Principal Amount then
  outstanding.                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.2 | The Holder shall effect conversions by delivering to the
      Company a duly completed and executed Notice of Conversion in the form
      attached hereto as Appendix A (a Notice of Conversion),
      specifying the amount of the Principal Amount and any accrued but unpaid
      interest thereon to be converted and the date on which such conversion is
      to be effected (a Conversion Date), which date shall not be more
      than ten (10) days following the date of delivery of the Notice of
      Conversion. If no Conversion Date is specified in a Notice of Conversion,
      the Conversion Date shall be the date that is five (5) days following the
      date of delivery of the Notice of Conversion. To effect conversions
      hereunder, the Holder shall not be required to physically surrender the
      Debenture to the Company unless the entire Principal Amount has been
  converted.

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|4.3 | If the trading price of the Shares closes at $2.30 or
      greater on the TSX or NASDAQ for 20 consecutive Trading Days, the Company
      may provide, at its sole option, notice to the Holder that the Principal
      Amount and any accrued but unpaid interest thereon, or any portion
      thereof, must be converted pursuant to the terms of the
  Debenture.                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4.4 | Any conversions of the Principal Amount hereunder shall
      have the effect of lowering the outstanding Principal Amount in an amount
      equal to the applicable amount of the Principal Amount being converted.
      The Holder and the Company shall maintain records showing all Principal
      Amounts and/or any accrued but unpaid interest converted and the date of
      such conversions. The Company shall deliver any objection to any Notice of
      Conversion within five (5) Business Days of receipt of such notice. The
      Holder, by acceptance of this Debenture, acknowledges and agrees that,
      following conversion of a portion of the Principle Amount of this
      Debenture, the unpaid and unconverted Principal Amount may be less than
      the amount stated on the face hereof.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4.5 | The number of Conversion Shares issuable upon any
      conversion shall be determined by the sum of:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

| | (a) | the quotient obtained by dividing (x)by (y)where (x)is equal to the amount of the Principal Amount and
      (y)is the Conversion Price for the Principal Amount; and                    
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                          
| | (b) | the quotient obtained by dividing (w)by (z)where (w)is equal to the amount of accrued but unpaid interest
      and (z)is the Conversion Price for the accrued but unpaid
      interest.

|4.6  | Any Conversion Shares issuable upon the conversion of
      accrued but unpaid interest is subject to the approval of the
  TSX.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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|4.7  | Not later than ten (10) Trading Days after any Conversion
      Date, the Company will deliver to the Holder a certificate representing
      the number of Conversion Shares being issued, which certificate shall bear
      such restrictive legends and trading restrictions as are required by
      applicable laws and by the TSX.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.8  | If the Company shall at any time or from time to time,
      while any Principal Amount is still outstanding, effect a subdivision or
      consolidation of the outstanding Common Shares, the Conversion Price in
      effect immediately before a subdivision shall be proportionately
      decreased, and, conversely, the Conversion Price in effect immediately
      before a consolidation shall be proportionately increased. Any adjustment
      under this Section 4.8 shall become effective at the close of business on
      the date the subdivision or consolidation becomes effective.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.9  | If the Company at any time or from time to time while
      this Debenture is outstanding, issues, or fixes a record date for the
      determination of holders of Common Shares entitled to receive, a dividend
      or other distribution payable solely in Common Shares, the Conversion
      Price that is then in effect shall be decreased as of the time of such
      issuance or, in the event such record date is fixed, as of the close of
      business on such record date, by multiplying the Conversion Price by a
      fraction (i) the numerator of which is the total number of Common Shares
      issued and outstanding immediately prior to the time of such issuance or
      the close of business on such record date, and (ii) the denominator of
      which is the sum of the total number of Common Shares issued and
      outstanding immediately prior to the time of such issuance or the close of
      business on such record date plus the number of Common Shares issuable in
      payment of such dividend or distribution; provided, however, that if such
      record date is fixed and such dividend is not fully paid or if such
      distribution is not fully made on the date fixed therefore, the Conversion
      Price shall be recomputed accordingly as of the close of business on such
      record date and thereafter the Conversion Price shall be adjusted pursuant
      to this Section 4.9 to reflect the actual payment of such dividend or
      distribution.                                                                                                                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.10 | If at any time while this Debenture is outstanding, (i)
      the Company effects any merger, consolidation, amalgamation, arrangement
      or combination of the Company with or into another entity, (ii) the
      Company effects any sale of all or
substantially all of its assets in one or more transactions, (iii) any tender
offer or exchange offer (whether by the Company or another entity) is completed
pursuant to which holders of Common Shares are permitted to tender or exchange
their Common Shares for other securities, cash or property, or (iv) the Company
effects any reclassification or recapitalization of the Common Shares or any
compulsory share exchange pursuant to which the Common Shares are effectively
converted into or exchanged for other securities, cash or property (other than a
subdivision, consolidation or dividend provided for elsewhere in this Section 4)
(in any such case, a Fundamental Change), then, upon any subsequent
conversion of this Debenture, the Holder shall have the right to receive, for
each Conversion Share that would have been issuable upon such conversion absent
such Fundamental Change, the same kind and amount of securities, cash or
property as it would have been entitled to receive upon the occurrence of such
Fundamental Change if it had been, immediately prior to such Fundamental Change,
the holder of one Common Share (the Alternate Consideration). If
holders of Common Shares are given any choice as to the securities, cash or
property to be received in a Fundamental Change, then the Holder shall be given
the same choice as to the Alternate Consideration it receives upon any
conversion of this Debenture following such Fundamental Change. In the event of
a Fundamental Change, the Company or the successor or purchasing entity, as the
case may be, shall execute with the Holder a written agreement providing that:

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| | (a) | this Debenture shall thereafter entitle the Holder to
      purchase the Alternate Consideration; and                                                                                                                                                                                                                                                                                                                                                                              
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (b) | in the case of any such successor or purchasing entity,
      upon such consolidation, merger, amalgamation, arrangement, statutory
      exchange, combination, sale or conveyance, such successor or purchasing
      entity shall be jointly and severally liable with the Company for the
      performance of all of the Companys obligations under this Debenture and
      the Subscription Agreement entered into in connection with the issuance of
      this Debenture.

|4.11 | If, in the case of any Fundamental Change, the Alternate
      Consideration includes shares, other securities, other property or assets
      of an entity other than the Company or any such successor or purchasing
      entity, as the case may be, then such written agreement shall also be
      executed by such other entity and shall contain such additional provisions
      to protect the interests of the Holder as the board of directors of the
      Company shall reasonably consider necessary by reason of the foregoing. At
      the Holders request, any successor to the Company or surviving entity in
      such Fundamental Change shall issue to the Holder a new Debenture
      consistent with the foregoing provisions and evidencing the Holders right
      to convert such Debenture into Alternate Consideration. The terms of any
      agreement pursuant to which a Fundamental Change is effected shall include
      terms requiring any such successor or surviving entity to comply with the
      provisions of this Section 4 and insuring that this Debenture (or any such
      replacement security) will be similarly adjusted upon any subsequent
      transaction analogous to a Fundamental Change.                                                                                                                                                                                
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.12 | If at any time after the issuance of the Convertible
      Debenture and prior to the Maturity Date, the Company issues or
      distributes to the holders of all or substantially all of the outstanding
      Common Shares, securities of the Company, including rights, options or
      warrants to acquire Common Shares or securities convertible into or
      exchangeable for Common Shares or property or assets, including evidences
      of indebtedness, other than dividends or distributions paid in the
      ordinary course and other than as provided herein, or a record date for
      any of the foregoing events occurs, there will be an appropriate
      adjustment in the number of Conversion Shares to be issued in accordance
      with this Section or, at the option of the Company and subject to the
      approval of the TSX, such securities, property or assets may be issued to
      the Holder and, for the same aggregate consideration payable, if any, in
      addition to the number of Conversion Shares to which such Holder was
      theretofore entitled, the Holder will be entitled to receive such
      securities, property or assets as if, on the record date at which holders
      of Common Shares are determined for the purpose thereof, such Holder had
      been the registered holder of the number of Conversion Shares to which the
      Holder was then entitled.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.13 | The Company covenants that it will at all times reserve
      and keep available out of its authorized and unissued Common Shares,
      Conversion Shares for the purpose of issuance upon conversion of the
      Debenture, free from pre-emptive rights or any other actual contingent
      purchase rights of Persons other than the Holder, not less than such
      number of Conversion Shares as shall be issuable upon the
  conversion of the Principal Amount and accrued but unpaid interest
      thereon. The Company covenants that all Conversion Shares that shall be so
      issuable shall, upon issue, be duly and validly authorized, issued and
  fully paid and non-assessable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

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|4.14 | Upon a conversion hereunder, the Company shall not be
      required to issue share certificates representing fractions of Conversion
      Shares and the Company shall be entitled to round the number of Conversion
      Shares down to the nearest whole number. The Company shall issue cash to
      the Holder in lieu of any fractional Conversion Share. The Holder agrees
      to waive any rights or entitlements to fractional Conversion Shares that
      the Holder may have in connection with a conversion hereunder.                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.15 | In each case of an adjustment or readjustment provided
      under this Section 4, the Company, at its own expense, shall cause its
      Secretary or other officer as directed by the board of directors of the
      Company to compute such adjustment or readjustment in accordance with the
      provisions hereof and prepare a certificate showing such adjustment or
      readjustment, and shall deliver such certificate to the Holder in
      accordance with Section 8.1. The certificate shall set forth such
      adjustment or readjustment, showing in detail the facts upon which such
      adjustment or readjustment is based. No adjustment in the Conversion Price
      shall be required to be made unless it would result in an increase or
      decrease of at least one cent, but any adjustments not made because of
      this sentence shall be carried forward and taken into account in any
      subsequent adjustment otherwise required hereunder.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|5.   | Prepayment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|5.1  | Subject to conversion as set forth in Section 4.4 hereof,
      the Principal Amount of the Convertible Debenture may only be prepaid with
      the prior written approval of the Holder.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|6.   | Limitations on Conversion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|6.1  | The Holder shall not have the right to convert any
      portion of the Principal Amount plus any accrued but unpaid interest
      thereon pursuant to the terms and conditions of this Debenture to the
      extent that, after giving effect to such conversion, the Holder (together
      with the Holders affiliates and Persons acting jointly or in concert with
      such Persons (together, the Joint Actors)) would beneficially own
      in excess of 19.9% (the Maximum Percentage) of the number of
      Common Shares outstanding immediately after giving effect to such
      conversion on a diluted basis, assuming the conversion of all securities
      of the Joint Actors which are convertible into Common Shares within sixty
      (60) days from the proposed Conversion Date, including without limitation,
      the Conversion Shares issuable upon conversion of this
Debenture.                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|7.   | Events of Default                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|7.1  | The occurrence of any of the following shall constitute
      an Event of Default under this
Debenture:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

| | (a) | the Company failing to pay any Principal Amount or
      interest payment thereon on the due date hereunder and such failure
      continuing for ten (10) days after written notice thereof is delivered to
      the Company by the Holder advising of such failure to pay;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (b) | the Company failing to observe or perform any other
      material covenant contained in this Debenture or the Subscription
      Agreement which failure is not cured, if possible to cure, within thirty
      (30) calendar days after notice of such default is sent by the Holder to
      the Company;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (c) | the Company (i) applying for or consenting to the
      appointment of a receiver, trustee, liquidator or custodian of itself or
      of all or a substantial part of its property, (ii) being unable, or
      admitting in writing its inability, to pay its debts generally as they
      mature, (iii) making a general assignment for the benefit of its or any of
      its creditors, (iv) being dissolved or liquidated in full or in part (v)
      commencing a voluntary case or other proceeding seeking liquidation,
      reorganization or other relief with respect to itself or its debts under
      any bankruptcy, insolvency or other similar law now or hereafter in effect
      or consenting to any such relief or to the appointment of or taking
      possession of its property by any official in an involuntary case or
      other proceeding commenced against it, or (vi) taking any action for the
  purpose of effecting any of the foregoing; and

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| | (d) | proceedings for the appointment of a receiver, trustee,
      liquidator or custodian of the Company or of all or a substantial part of
      the property thereof, or an involuntary case or other proceedings seeking
      liquidation, reorganization or other relief with respect to the Company or
      the debts thereof under any bankruptcy, insolvency or other similar law
      now or hereafter in effect being commenced and an order for relief entered
      or such proceeding is not dismissed or discharged within thirty (30) days
      of commencement.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7.2 | Upon the occurrence or existence of any Event of Default
      and following the expiry of any applicable grace periods and at any time
      thereafter during the continuance of such Event of Default, the Holder
      may, by written notice to the Company, declare all outstanding amounts
      payable by the Company hereunder to be immediately due and payable without
      presentment, demand, protest or any other notice of any kind, all of which
      are hereby expressly waived, anything contained herein to the contrary
      notwithstanding. Upon the occurrence or existence of any Event of Default
      described in subsections 6.1(c) hereof, immediately and without notice,
      all outstanding amounts payable by the Company hereunder shall
      automatically become immediately due and payable, without presentment,
      demand, protest or any other notice of any kind, all of which are hereby
      expressly waived, anything contained herein to the contrary
      notwithstanding. In addition to the foregoing remedies, upon the
      occurrence or existence of any Event of Default, the Holder may exercise
      any other right, power or remedy permitted to it by law, either by suit in
      equity or by action at law, or both.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|8.  | Notices                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|8.1 | Any notice required or permitted to be given to the
      Company or the Holder will be in writing and may be given by prepaid
      registered post, electronic facsimile transmission or other means of
      electronic communication capable of producing a printed copy to the
      address of the party set forth below or such other address as such party
      may specify by notice in writing to the other party, and any such notice
      will be deemed to have been given and received by the party to whom it was
      addressed if mailed, on the third day following the mailing thereof, if by
      facsimile or other electronic communication, on the date sent, or, if
      delivered, on delivery; but if at the time of mailing or between the time
      of mailing and the third Business Day thereafter there is a strike,
      lockout, or other labour disturbance affecting postal service, then the
      notice will not be effectively given until actually
  delivered:                                                                                                                                                                                                                                                                                     

To the Company:

100 Wellington St. West Suite
2110, P.O. Box 151 Toronto, ON M5K 1H1 Canada

Attention: Chief Financial Officer
Facsimile: 416.593.4434 Email: apatient@meruslabs.com

with a copy, which shall not
constitute notice, to:

Clark Wilson LLP Barristers and
Solicitors 900  885 West Georgia Street Vancouver, British Columbia V6C
3H1

Attention: Stewart Muglich
Facsimile: 604.891.7701 Email: slm@cwilson.com

---

To the Holder:

[ADDRESS]

Fax:

Attention:

With a copy to:

|9.   | Exchange or Replacement of Debenture                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|9.1  | The Holder may, at its option, in person or by duly
      authorized attorney, surrender this Debenture for exchange at the
      principal business office of the Company and receive in exchange therefor
      a new Debenture in the same principal amount as the unpaid Principal
      Amount of this Debenture and bearing interest at the same annual rate as
      this Debenture, each such new Debenture to be dated as of the date of this
      Debenture and to be in such Principal Amount as remains unpaid and payable
      to such Holder.                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|9.2  | Upon receipt by the Company of evidence satisfactory to
      it of the loss, theft, destruction, or mutilation of this Debenture and
      (in the case of loss, theft or destruction) of an indemnity reasonably
      satisfactory to it, and upon surrender and cancellation of this Debenture,
      if mutilated, the Company will deliver a new Debenture of like tenor in
      lieu of this Debenture. Any Debenture delivered in accordance with the
      provisions of this Section 9.2 shall be dated as of the date of this
      Debenture.                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|10.  | Governing Law                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|10.1 | All questions concerning the construction, validity,
      enforcement and interpretation of this Debenture shall be governed by and
      construed and enforced in accordance with the laws of the Province of
      British Columbia and the federal laws of Canada applicable therein,
      without regard to the principles of conflicts of law thereof.                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|11.  | Waivers                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|11.1 | The Company hereby waives presentment, demand for
      payment, notice of dishonour, notice of protest and all other notices or
      demands in connection with the delivery, acceptance, performance or
      default of this Debenture. No delay by the Holder in exercising any power
      or right hereunder shall operate as a waiver of any power or right, nor
      shall any single or partial exercise of any power or right preclude other
      or further exercise thereof, or the exercise thereof, or the exercise of
      any other power or right hereunder or otherwise; and no waiver whatsoever
      or modification of the terms hereof shall be valid unless set forth in
      writing by the Holder and then only to the extent set forth
  therein.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|12.  | Amendments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|12.1 | Subject to the provisions of the Subscription Agreement,
      this Debenture may not be amended without the express written consent of
      both the Company and the Holder.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|13.  | Severability                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|13.1 | If any provision of this Debenture is invalid, illegal or
      unenforceable, the balance of this Debenture shall remain in effect, and
      if any provision is inapplicable to any Person or circumstance, it shall
      nevertheless remain applicable to all other Persons and
    circumstances.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

---

|14.  | Next Business Day                                                                                                                                                              
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                
|14.1 | Whenever any payment or other obligation hereunder shall
      be due on a day other than a Business Day, such payment shall be made on
      the next succeeding Business Day.
|     |                                                                                                                                                                                
|15.  | Time of the Essence                                                                                                                                                            
|     |                                                                                                                                                                                
|15.1 | Time will be of the essence of this
  Debenture.                                                                                                                               

IN WITNESS WHEREOF, the Company has caused this Debenture to be
duly executed by a duly authorized officer as of the date first above indicated.

MERUS LABS INTERNATIONAL INC.



|Per: |                      | 
|---- | -------------------- | 
|     | Authorized Signatory | 

---

APPENDIX A

NOTICE OF CONVERSION

The undersigned hereby irrevocably elects to convert principal
and, if applicable, any accrued but unpaid interest due under the Debenture of
MERUS LABS INTERNATIONAL INC., a company incorporated pursuant to the
laws of the province of British Columbia (the Company), into Conversion
Shares according to the terms and conditions of the Debenture, as of the date
written below. If Conversion Shares are to be issued in the name of a Person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto and is delivering herewith such certificates and opinions
as reasonably requested by the Company in accordance therewith. No fee will be
charged to the Holder for any conversion, except for such transfer taxes, if
any. Capitalized terms used herein and not otherwise defined shall have the
meanings set out in the Debenture.

The undersigned agrees to comply with applicable securities
laws in connection with any transfer of the aforesaid Conversion Shares.

|Conversion Date:                                                        |      
|----------------------------------------------------------------------- | -----
|                                                                        |      
|Applicable Conversion Price:                                            | $1.50
|                                                                        |      
|Principal Amount to be converted:                                       | $    
|                                                                        |      
|Accrued but unpaid interest to be converted:                            | $    
|                                                                        |      
|Principal Amount of Debenture unconverted:                              | $    
|                                                                        |      
|Register the Conversion Shares in the following name
      and address: |      
|                                                                        |      
|                                                                        |      
|                                                                        |      
|                                                                        |      
|                                                                        |      
|Signature of the Holder:                                                |      
|                                                                        |      
|Name:                                                                   |      
|                                                                        |      
|Address:                                                                |      
|                                                                        |      
|                                                                        |      
|                                                                        |      
|                                                                        |      
|                                                                        |      
|Phone Number:                                                           |      
|                                                                        |      
|Email Address:                                                          |      

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