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

Form CB

TENDER OFFER/RIGHTS OFFERING NOTIFICATION FORM

Please place an X in the box(es) to designate the appropriate rule provision(s) relied upon to file this Form:

        Securities Act Rule 801 (Rights Offering) o

        Securities Act Rule 802 (Exchange Offer) ý

        Exchange Act Rule 13e-4(h)(8) (Issuer Tender Offer) o

        Exchange Act Rule 14d-1(c) (Third Party Tender Offer) o

        Exchange Act Rule 14e-2(d) (Subject Company Response) o

Filed or submitted in paper if permitted by Regulation S-T Rule 101(b)(8):

Lorus Therapeutics Inc.
(Name of Subject Company)

N/A
(Translation of Subject Company's Name into English (if applicable))

Canada
(Jurisdiction of Subject Company's Incorporation or Organization)

Lorus Therapeutics Inc.
6650309 Canada Inc.
(Name of Person(s) Furnishing Form)

Common Shares
(Title of Class of Subject Securities)

544191109
(CUSIP Number of Class of Securities (if applicable))

DL Services Inc.
1420 Fifth Avenue
Suite 3400
Seattle, Washington 98101
Telephone: (206) 903-5448
(Name, Address (including zip code) and Telephone Number (including area code)
of Person(s) Authorized to Receive Notices and Communications
on Behalf of Subject Company)

June 1, 2007
(Date Tender Offer/Rights Offering Commenced)

PART I

INFORMATION SENT TO SECURITY HOLDERS

Item 1. Home Jurisdiction Documents

•

Notice of Special Meeting of Holders of Common Shares, Options, Warrants and Convertible Debentures to be held on June 25, 2007 and Management Proxy Circular (the "Circular")



•

Letter of Transmittal



•

Form of Proxy for Shareholders



•

Form of Proxy for Optionholders



•

Form of Proxy for Warrantholders



•

Form of Proxy for Debentureholders



•

Voting Instruction Form

Item 2. Informational Legends

        See pages 1 and 2 of the Circular.

LORUS THERAPEUTICS INC.

NOTICE OF SPECIAL MEETING OF HOLDERS OF
COMMON SHARES, OPTIONS, WARRANTS
AND CONVERTIBLE DEBENTURES
TO BE HELD ON JUNE 25, 2007

- AND -

MANAGEMENT PROXY CIRCULAR

MAY 25, 2007

May 25, 2007

Dear Lorus Securityholder:

        You are invited to attend a special meeting (the "Meeting") of holders of common shares (the "Shareholders") and of the holders of options to purchase common shares, warrants to purchase common shares and debentures convertible into common shares (collectively, the "Convertible Securities") (the Shareholders and the holders of Convertible Securities being collectively referred to herein as the "Securityholders") of Lorus Therapeutics Inc. ("Lorus") to be held on June 25, 2007, at 10:00 a.m. (Toronto time), at Le Royal Meridien King Edward, 37 King Street East, Toronto, Ontario, in the Kensington Room.

        The purpose of the Meeting is to seek the approval of the Securityholders for an arrangement of Lorus (the "Arrangement"), pursuant to which Lorus will transfer its business to a new corporate entity ("New Lorus"), which entity will possess the same net assets, name, board of directors and management as Lorus, but will also have approximately an additional $8.5 million in cash, subject to a $600,000 holdback and a maximum post closing adjustment of $270,000, not including the costs of the transaction. The existing Lorus entity, of which current Shareholders who are not resident in the United States will continue to own a part following the Arrangement, will pursue opportunities as a real estate development company ("RealCo") under a new name, with a new board of directors and new management.

        Lorus is undertaking the Arrangement because Lorus believes the Arrangement provides the following advantages to Lorus and its Securityholders:

•

provides approximately $8.5 million in additional cash, subject to a $600,000 holdback and a maximum post closing adjustment of $270,000, not including the costs of the transaction, without diluting the equity interests of existing Securityholders;



•

allows Lorus to continue executing its current business plan, albeit in a new company;



•

permits Lorus to retain its current name and trading symbol;



•

does not result in any change to the management or board of directors of Lorus;



•

does not result in any change to the business of Lorus;



•

other than the repurchase of certain warrants from The Erin Mills Investment Corporation, the holdings and economic position of Securityholders in New Lorus will be equivalent to their current holdings and positions in Lorus;



•

will result in Shareholders (other than certain Shareholders of Lorus and those that are resident in the United States) holding, at the effective time of the Arrangement, in the aggregate, approximately a 0.5% economic equity interest in RealCo; and



•

provides Shareholders that are resident in the United States and certain other Shareholders of Lorus with, subject to certain limitations, a nominal cash payment in lieu of receiving an economic interest in RealCo.

        The Arrangement will only take effect if it is approved by (i) at least two-thirds of the votes cast by Securityholders voting together as a single class, in person or by proxy, at the Meeting, (ii) a simple majority of the votes cast by Shareholders who are "minority" Shareholders, in person or by proxy, at the Meeting, and (iii) a final order of the Ontario Superior Court of Justice.

        Deloitte & Touche LLP has provided the board of directors of Lorus (the "Board") with a fairness opinion to the effect that the Arrangement is fair, from a financial point of view, to the Securityholders. Those members of the Board entitled to approve the Arrangement unanimously recommend that Securityholders vote FOR the Arrangement.

        As part of the Arrangement, Securityholders will be asked to consider and, if thought advisable, approve (i) various amendments to the articles of RealCo, and (ii) certain transactions between RealCo and related parties of RealCo including, among other things, the purchase of certain limited partnership interests in two residential and mixed-use condominium projects in Toronto, Ontario, the entering into by RealCo of one or more agreements to provide certain services to affiliates of RealCo and the engagement by RealCo of certain agents and contractors as required for the business of RealCo.

        The accompanying management proxy circular contains a detailed description of the Arrangement, as well as detailed information regarding Lorus, New Lorus and RealCo. Lorus recognizes the environmental impact of producing the management proxy circular and in an effort to minimize this impact, Lorus intends to donate $2,500 to an environmental organization focused on reforestation and nature conservation issues. In this way Lorus believes that it can help replenish those resources used to meet our corporate requirements.

        This is an important matter affecting the future of Lorus, and it is important that your common shares and Convertible Securities be represented at the Meeting. Regardless of whether you plan to attend the Meeting, please complete the appropriate enclosed proxy forms and return them in the manner set out in the accompanying management proxy circular to ensure that your intentions are represented at the Meeting.

        On behalf of Lorus, I would like to thank you for your past and ongoing support.

Yours very truly,

	LORUS THERAPEUTICS INC.
	(Signed) Graham Strachan Chair of the Board of Directors

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LORUS THERAPEUTICS INC.

NOTICE OF SPECIAL MEETING OF HOLDERS OF
COMMON SHARES, OPTIONS, WARRANTS AND CONVERTIBLE DEBENTURES OF
LORUS THERAPEUTICS INC.

to be held on June 25, 2007

        NOTICE IS HEREBY GIVEN that a special meeting (the "Meeting") of the holders of common shares ("Shareholders") of Lorus Therapeutics Inc. ("Lorus") and of the holders of options to purchase common shares, warrants to purchase common shares and debentures convertible into common shares (collectively with the Shareholders, the "Securityholders") will be held on June 25, 2007, at 10:00 a.m. (Toronto time), at the Le Royal Meridien King Edward, 37 King Street East, Toronto, Ontario, in the Kensington Room for the following purposes:

(a)

to consider, pursuant to an interim order of the Ontario Superior Court of Justice dated May 16, 2007, and, if deemed advisable, pass, with or without variation, a special resolution of the Securityholders (the "Arrangement Resolution"), the full text of which is set forth in Appendix A to the accompanying management proxy circular (the "Circular"), approving an arrangement involving, inter alia, Lorus, its Securityholders, NuChem Pharmaceuticals Inc., GeneSense Technologies Inc., 6650309 Canada Inc., Pinnacle International Lands, Inc. and 6707157 Canada Inc. (the "Arrangement") under Section 192 of the Canada Business Corporations Act, all as more particularly set forth and described in the accompanying Circular; and



(b)

to transact such other business as may properly come before the Meeting.

        The details of the matters proposed to be put before the Meeting are set forth in the Circular, including the appendices attached thereto.

        Only Securityholders of record at the close of business on May 24, 2007 will be entitled to vote at the Meeting.

        DATED at the City of Toronto, in the Province of Ontario, this 25^th day of May, 2007.

BY ORDER OF THE BOARD OF DIRECTORS OF LORUS THERAPEUTICS INC.



(Signed) Graham Strachan
Chair of the Board of Directors

IMPORTANT

        A Securityholder may attend the Meeting in person or may be represented by proxy. Registered Securityholders who are unable to attend the Meeting in person are requested to complete, date, sign and return the applicable accompanying proxy forms for use at the Meeting. To be valid, proxies must be deposited with Computershare Investor Services Inc., 100 University Avenue, 8th Floor, Toronto, Canada M5J 2Y1, so as to arrive not later than 5:00 p.m. (Toronto time) on June 21, 2007 or, if the Meeting is adjourned, 48 hours (excluding Saturdays, Sundays and holidays) before the time set for the adjourned Meeting. Securities held by Securityholders will be voted in accordance with the instructions indicated in the applicable proxy forms.

i

TABLE OF CONTENTS

ii

APPENDICES

iii

LORUS THERAPEUTICS INC.

        MANAGEMENT PROXY CIRCULAR

Special Meeting of Securityholders
to be held on June 25, 2007

INTRODUCTION

        This Circular is furnished in connection with the solicitation of proxies by and on behalf of the management of Lorus Therapeutics Inc. ("Lorus") for use at the Meeting. No Person has been authorized to give any information or make any representation in connection with the Arrangement or other matters to be considered at the Meeting other than those contained in this Circular and, if given or made, any such information or representation must not be relied upon as having been authorized. This Circular does not constitute an offer to sell securities, a solicitation of an offer to purchase securities, or the solicitation of a proxy by any Person in any jurisdiction in which such an offer or solicitation is not authorized or in which the Person making such offer or solicitation is not qualified to do so or to any Person to whom it is unlawful to make such an offer or solicitation. Neither delivery of this Circular nor any distribution of the securities referred to in this Circular will, under any circumstance, create an implication that there has been no change in the information set forth herein since the date of this Circular.

        The Meeting has been called for the purposes of considering and, if deemed advisable, passing the Arrangement Resolution and to transact such other business as may properly come before the Meeting.

        All summaries of, and references to, the Arrangement in this Circular are qualified in their entirety by reference to the complete text of the Arrangement Agreement available on SEDAR at www.sedar.com, the Arrangement Resolution attached as Appendix A to this Circular, and the Plan of Arrangement attached as Appendix C to this Circular. You are urged to carefully read this Circular, the full text of the Arrangement Resolution, the Arrangement Agreement (including the schedules thereto), and the Plan of Arrangement.

        All capitalized terms used in this Circular but not otherwise defined herein have the meanings set forth under "Glossary of Terms". In this Circular, unless otherwise specified, all dollar amounts and financial information are expressed in Canadian dollars. Information contained in this Circular is given as of May 24, 2007 unless otherwise specifically stated.

INFORMATION FOR UNITED STATES SECURITYHOLDERS

        The solicitation and transactions contemplated in this Circular are made in the United States for securities of a Canadian issuer in accordance with Canadian corporate and securities laws and, accordingly, this Circular has been prepared in accordance with disclosure requirements applicable in Canada. Securityholders in the United States should be aware that such requirements are different from those of the United States applicable to registration statements under the 1933 Act and proxy statements under the 1934 Act. The solicitation of proxies is not subject to the requirements of Section 14(a) of the 1934 Act. The pro forma and historical financial statements and other financial information of RealCo and the Pinnacle Partnerships included in this Circular have been prepared in accordance with Canadian generally accepted accounting principles, which differ from United States generally accepted accounting principles in certain material respects, and are subject to Canadian auditing and auditor independence standards, and thus are not comparable in all respects to pro forma and historical financial statements and other financial information of United States companies. Likewise, information concerning the operations of Lorus and New Lorus contained herein, including the information incorporated by reference herein, has been prepared in accordance with Canadian standards and is not comparable in all respects to similar information for United States companies.

        Securityholders should be aware that the Arrangement and the ownership of Securities of New Lorus may have tax consequences in both Canada and the United States. See "Certain Canadian Federal Income Tax Consequences for Shareholders", "Certain Canadian Federal Income Tax Consequences for Holders of Options" and "Certain United States Federal Income Tax Consequences for Shareholders".

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        The New Lorus Common Shares, New Lorus Options, New Lorus Warrants and RealCo Voting Shares to be issued under the Arrangement have not been and will not be registered under the 1933 Act and will be issued in reliance on the exemption from registration set forth in Section 3(a)(10) thereof. The AMEX has conditionally approved the listing of the New Lorus Common Shares and the New Lorus Common Shares issuable upon the exercise of the New Lorus Options and the New Lorus Warrants. The New Lorus Options, New Lorus Warrants and RealCo Voting Shares will not be listed for trading on any United States stock exchange.

        The 1933 Act imposes restrictions on the resale of securities received pursuant to the Arrangement by Persons who were "affiliates" of Lorus, New Lorus, RealCo, Pinnacle or Investor immediately prior to the Arrangement or are "affiliates" of New Lorus, RealCo, Pinnacle or Investor after completion of the Arrangement. The New Lorus Options will be non-transferable. See "Resale of Securities".

        The New Lorus Options and the New Lorus Warrants may only be exercised pursuant to an exemption or exclusion from the registration requirements of the 1933 Act. Therefore, such securities may be exercised only by a holder who represents that at the time of exercise the holder is not then located in the United States, is not a U.S. Person as defined in Rule 902 of Regulation S under the 1933 Act ("Regulation S"), and is not exercising the New Lorus Options or New Lorus Warrants for the account or benefit of a U.S. Person or a Person in the United States, unless the holder provides a legal opinion or other evidence reasonably satisfactory to New Lorus to the effect that the exercise of the New Lorus Options or New Lorus Warrants does not require registration under the 1933 Act or applicable state securities laws. In addition, any New Lorus Common Shares issuable upon the exercise of the New Lorus Options or New Lorus Warrants in the United States or for the account or benefit of a U.S. Person or a Person in the United States will be "restricted securities" within the meaning of Rule 144 under the 1933 Act, certificates representing such New Lorus Common Shares will bear a legend to that effect, and such New Lorus Common Shares may be resold only pursuant to an exemption or exclusion from the registration requirements of the 1933 Act and applicable state securities laws. Subject to certain limitations, the New Lorus Warrants may be resold outside the United States without registration under the 1933 Act pursuant to Regulation S. See "Resale of Securities".

        The enforcement by Securityholders in the United States of civil liabilities under United States securities laws may be affected adversely by the fact that Lorus, New Lorus, RealCo, Pinnacle and Investor are organized under the laws of a jurisdiction other than the United States, that all or a majority of their executive officers and directors are residents of countries other than the United States, that the experts named in this Circular are residents of countries other than the United States, and that substantially all of the assets of Lorus, New Lorus, RealCo, Pinnacle and Investor and such Persons are located outside the United States.

        THE NEW LORUS COMMON SHARES, THE NEW LORUS OPTIONS, THE NEW LORUS WARRANTS, THE NEW LORUS COMMON SHARES ISSUABLE UPON EXERCISE OF THE NEW LORUS OPTIONS AND THE NEW LORUS WARRANTS AND THE REALCO VOTING SHARES TO BE ISSUED IN CONNECTION WITH THE ARRANGEMENT HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES REGULATORY AUTHORITY OF ANY STATE OF THE UNITED STATES, NOR HAS THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES REGULATORY AUTHORITY OF ANY STATE OF THE UNITED STATES PASSED ON THE ADEQUACY OR ACCURACY OF THIS CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.

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EXCHANGE RATE INFORMATION

        In this Circular, unless otherwise specified, all dollar amounts and financial information are expressed in Canadian dollars. The Bank of Canada noon spot exchange rate on May 24, 2007 was U.S.$1.0841 = $1.00. The average exchange rate for the years ended 2006, 2005 and 2004 and for the nine-month periods ended February 28, 2007 and 2006 and the exchange rate at the end of such periods for the conversion of U.S. dollars into Canadian dollars based on the Bank of Canada closing rate of exchange for United States dollars were as follows:

3

GLOSSARY OF TERMS

        For the assistance of Securityholders, the following is a glossary of terms used throughout this Circular.

"1933 Act" means the United States Securities Act of 1933, as amended;

"1934 Act" means the United States Securities Exchange Act of 1934, as amended;

"Acquisition Proposal" has the meaning set forth in the section hereof entitled "The Arrangement — Arrangement Agreement — Non Solicitation and Right to Match";

"affiliate" or "associate" when used to indicate a relationship with a Person, has the meaning ascribed to it in the Securities Act (Ontario);

"AMEX" means the American Stock Exchange;

"AMEX Rules" means collectively, all rules, requirements and policies of the AMEX applicable to Lorus, including such as are contained in the Rules of the AMEX and the AMEX Company Guide;

"Antisense Patent Assets" means those assets set out in the Antisense Patent Assets Transfer Agreement;

"Antisense Patent Assets Transfer Agreement" means the asset purchase agreement to be entered into between GeneSense and New Lorus pursuant to which GeneSense will transfer its Antisense Patent Assets to New Lorus, as contemplated in the Plan of Arrangement;

"Applicable Laws" means, in relation to any Person, Property, transaction or event, all applicable provisions in effect at the relevant time (or mandatory applicable provisions) of federal, provincial, territorial, state, local or foreign laws, statutes, rules, regulations, directives and orders of all Governmental Authorities, and all judgments, orders, decrees, decisions, rulings or awards of all Governmental Authorities to which the Person in question is a party or by which it is bound or having application to the Person, Property, transaction or event, including the Securities Laws;

"Appropriate Number" means that number of RealCo Voting Shares which, if combined with the aggregate number of RealCo Voting Shares purchased pursuant to Section 3.01(24) of the Plan of Arrangement, would result in Investor holding a total number of RealCo Voting Shares representing approximately 41% of the issued and outstanding RealCo Voting Shares at the conclusion of the Arrangement;

"Arrangement" means the arrangement of Lorus under Section 192 of the CBCA on the terms and subject to the conditions set out in the Arrangement Agreement, subject to any amendments or variations thereto made in accordance with the terms hereof and/or of the Plan of Arrangement or made at the direction of the Court in the Final Order;

"Arrangement Agreement" means the arrangement agreement dated as of May 1, 2007 between Lorus, NuChem, GeneSense, New Lorus, Pinnacle and Investor pursuant to which such parties have proposed to implement the Arrangement, including any amendments thereto;

"Arrangement Dissent Rights" means the right of dissent provided for in the Interim Order and in the Plan of Arrangement and available to Registered Shareholders in connection with the Arrangement;

"Arrangement Resolution" means the special resolution of Securityholders approving the Plan of Arrangement to be considered at the Meeting and attached as Appendix A to this Circular;

"Articles of Arrangement" means the articles of arrangement of Lorus giving effect to the Arrangement which, pursuant to the CBCA, will be filed with the Director after the Final Order has been issued;

4

"Asset Transfer Agreements" means, collectively, the Tangible Business Assets Transfer Agreement, the Antisense Patent Assets Transfer Agreement, the Virulizin and Small Molecule Patent Assets Transfer Agreement and the Prepaid Expenses and Receivables Transfer Agreement;

"Assets" means, collectively, the Tangible Business Assets, the Antisense Patent Assets, the Virulizin and Small Molecule Patent Assets, the Prepaid Expenses and Receivables and all other assets of Lorus;

"BCBCA" means the Business Corporations Act (British Columbia);

"BCBCA Articles" means the notice of articles filed with the Registrar of Companies (British Columbia) to effect the Continuation;

"Board of Directors" or "Board" means the board of directors of Lorus;

"business day" means a day other than a Saturday, Sunday or other day when banks in Toronto, Ontario or Vancouver, British Columbia are not generally open for business;

"Canadian Securities Legislation" has the meaning attributed to such term in NI 14-101 and includes published policies promulgated thereunder from time to time by any of the Canadian Securities Regulatory Authorities and the TSX Company Manual;

"Canadian Securities Regulatory Authorities" has the meaning ascribed to such term in NI 14-101;

"CBCA" means the Canada Business Corporations Act;

"CDS" means CDS Clearing and Depository Services Inc.;

"Certificate of Arrangement" means the certificate of arrangement giving effect to the Arrangement, issued pursuant to subsection 192(7) of the CBCA;

"Circular" means this management proxy circular dated May 25, 2007, together with all appendices attached hereto and including the summary hereof, distributed by Lorus in connection with the Meeting;

"Closing" means the closing of the Arrangement and the other transactions contemplated by the Arrangement Agreement;

"Closing Date" means the date of the Closing;

"Common Shares" means the common shares in the share capital of Lorus;

"Continuation" means the continuance of RealCo from the Canadian federal jurisdiction to the Province of British Columbia;

"Continuous Disclosure Reports" means reports, financial statements, schedules, forms, statements and other documents required to be filed or submitted by Lorus under the Securities Laws, for the three years preceding the date of the Arrangement Agreement (or such shorter period as Lorus may have been required by the Securities Laws to file or submit such material), including the exhibits thereto and documents incorporated by reference therein;

"Convertible Debentures" means the prime plus 1% secured convertible debentures of Lorus due on October 6, 2009 in the aggregate principal amount of $15,000,000, issued to TEMIC in equal principal amounts of $5,000,000 each on each of October 6, 2004, January 14, 2005 and April 15, 2005;

"Convertible Securities" means, collectively, the Options, Warrants and Convertible Debentures;

"Convertible Securityholders" means the holders of Convertible Securities and "Convertible Securityholder" means any one of them;

5

"Court" means the Ontario Superior Court of Justice;

"Debenture Assumption Agreement" means the assignment, novation and amendment agreement dated May 1, 2007 between Lorus and New Lorus pursuant to which, among other things, New Lorus will assume Lorus' obligation to pay TEMIC the aggregate principal amount of $15,000,000 plus accrued interest owing under the Convertible Debentures;

"Director" means the Director appointed under section 260 of the CBCA;

"Dissent Procedures" means the dissent procedures, as described under the heading "Arrangement Dissent Rights";

"Dissent Rights" has the meaning set forth in the section hereof entitled "Arrangement Dissent Rights";

"Dissenting Shareholder" has the meaning set forth in the section hereof entitled "Arrangement Dissent Rights";

"Dissenting Shares" means the Common Shares in respect of which a Dissenting Shareholder dissents;

"Effective Date" means the effective date set out in the Articles of Arrangement that are filed with the Director;

"Effective Time" means 12:01 a.m. (Toronto time) on the Effective Date;

"Escrow Agreement" means the escrow agreement to be entered into on the Effective Date between Investor, New Lorus and the escrow agent appointed thereunder, as contemplated by the Pinnacle Share Purchase Agreement;

"Fairness Opinion" means the opinion of Deloitte & Touche LLP dated April 30, 2007 to the effect that the Arrangement is fair, from a financial point of view, to the Securityholders, a copy of which is attached as Appendix E to this Circular;

"Final Order" means the final order of the Court issued in connection with the approval of the Arrangement, providing, among other matters, for the Arrangement to be sanctioned and to take effect, as such order may be affirmed, amended or modified by any court of competent jurisdiction;

"GeneSense" means GeneSense Technologies Inc., a corporation existing under the laws of Canada;

"GeneSense Share Purchase Agreement" means the share purchase agreement to be entered into between Lorus and New Lorus pursuant to which Lorus will transfer all of the GeneSense Shares to New Lorus;

"GeneSense Shares" means common shares in the capital of GeneSense;

"Governmental Authority" means any federal, provincial, territorial, state, local or foreign government or any department, agency, board, tribunal (judicial, quasi-judicial, administrative, quasi-administrative or arbitral) or authority thereof or other political subdivision thereof and any Person exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining thereto or the operation thereof, including the Canadian Securities Regulatory Authorities, SEC, TSX and AMEX;

"High Tech" means High Tech Beteilingungen GmbH & Co. KG;

"Holder" has the meaning set forth in the section hereof entitled "Certain Canadian Federal Income Tax Consequences for Shareholders";

"Indemnification Agreement" means the indemnification agreement to be entered into on the Effective Date between Lorus, New Lorus, GeneSense and NuChem;

"Intellectual Property Rights" means all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights necessary or material for use in connection with

6

Lorus' and its subsidiaries' respective businesses as currently conducted and anticipated to be conducted, as described in the Continuous Disclosure Reports;

"Interim Order" means the interim order of the Court dated May 16, 2007 under Section 192 of the CBCA, containing declarations and directions with respect to the Arrangement and the holding of the Meeting, a copy of which order is attached as Appendix D to this Circular, including any amendments or modifications thereto;

"Investor" means 6707157 Canada Inc., a corporation incorporated under the CBCA on January 23, 2007;

"Letter of Intent" means the non-binding letter of intent entered into on April 4, 2006, as amended, between Lorus and Pinnacle in respect of the Arrangement;

"Letter of Transmittal" means the letter of transmittal enclosed with this Circular pursuant to which a Shareholder is required to surrender certificates representing Common Shares in order to receive, upon completion of the Arrangement, New Lorus Common Shares and RealCo Voting Shares (if a Non-U.S. Person) or New Lorus Common Shares and a cash payment in lieu of RealCo Voting Shares (if a U.S. Person) issued pursuant to the Arrangement;

"Lorus" means Lorus Therapeutics Inc. prior to the reorganization of its share capital pursuant to the Arrangement, a company existing under the laws of Canada;

"Lorus Note" means the non-interest bearing promissory note to be issued by Lorus to New Lorus as consideration for New Lorus assuming Lorus' obligation to pay TEMIC, pursuant to the Debenture Assumption Agreement, the amount owing under the Convertible Debentures;

"Lorus Stock Option Plans" means Lorus' 1993 Stock Option Plan and 2003 Stock Option Plan;

"Material Adverse Change" or "Material Adverse Effect" means, when used in connection with Lorus, any change, effect, event, occurrence or change in a state of facts that is, or would reasonably be expected to be, material and adverse to the business, operations, assets, capitalization, liabilities or condition (financial or otherwise) of Lorus or any of its subsidiaries other than (i) any change in the trading price or trading volume of the Common Shares, (ii) any change affecting economic or financial conditions generally (global, national or regional, as applicable) that does not have a disproportionate effect on such party, (iii) any failure by Lorus to meet analysts' or internal earnings estimates, milestones or business plans, (iv) any action contemplated by the Convertible Debentures or taken by Lorus, at Investor's request, (v) any action required by Applicable Laws, or (vi) the results of any of Lorus' clinical trials for any product candidates;

"Meeting" means the special meeting of the Securityholders to be held on June 25, 2007, and any adjournment(s) thereof, to consider and, if deemed advisable, approve the Arrangement Resolution;

"Minority Shareholders" means all Shareholders other than High Tech, any related party of High Tech within the meaning of Rule 61-501 and Regulation Q-27 subject to the exceptions set out therein, and any Person acting jointly or in concert with High Tech;

"New Lorus" means 6650309 Canada Inc., a corporation incorporated under the CBCA on November 1, 2006 and a wholly-owned subsidiary of Lorus which, following completion of the Arrangement, will carry on the business and operations of Lorus as they existed immediately prior to the completion of the Arrangement;

"New Lorus Common Shares" means common shares in the share capital of New Lorus;

"New Lorus Note 1" means the demand non-interest bearing promissory note to be issued by New Lorus to GeneSense as consideration for the transfer by GeneSense to New Lorus of the Antisense Patent Assets, as contemplated by the Plan of Arrangement;

7

"New Lorus Note 2" means the demand non-interest bearing promissory note to be issued by New Lorus to Lorus as partial consideration for the transfer by Lorus to New Lorus of its GeneSense Shares pursuant to the GeneSense Share Purchase Agreement, as contemplated by the Plan of Arrangement;

"New Lorus Note 3" means the demand non-interest bearing promissory note to be issued by New Lorus to Lorus as consideration for the transfer by Lorus to New Lorus of its NuChem Shares pursuant to the NuChem Share Purchase Agreement, as contemplated by the Plan of Arrangement;

"New Lorus Options" means stock options to acquire New Lorus Common Shares to be issued to directors, officers, employees and consultants of New Lorus pursuant to the New Lorus Stock Option Plan;

"New Lorus Replacement Note" means the replacement non-interest bearing demand promissory note to be issued by New Lorus to Lorus to repay the remaining amount owing by New Lorus to Lorus under the New Lorus Note 2 and New Lorus Note 3 following the setoff of such notes by New Lorus against the Lorus Note, as contemplated by the Plan of Arrangement;

"New Lorus Stock Option Plan" means the stock option plans of New Lorus as contemplated by the Plan of Arrangement;

"New Lorus Warrants" means warrants to acquire New Lorus Common Shares to be issued by New Lorus in replacement of the Warrants;

"Non-U.S. Persons" means Shareholders that are not Resident in the United States and "Non-U.S. Person" means any one of them;

"Notice of Meeting" means the notice of the Meeting that accompanies this Circular;

"NI 14-101" means National Instrument 14-101 — Definitions, of the Canadian Securities Administrators, as such instrument may be amended or supplemented from time to time, or any similar instrument, rule or regulation hereafter adopted by any of the Canadian Securities Regulatory Authorities having substantially the same effect as such instrument;

"NuChem" means NuChem Pharmaceuticals Inc., a corporation existing under the laws of the Province of Ontario;

"NuChem Share Purchase Agreement" means the share purchase agreement to be entered into between Lorus and New Lorus pursuant to which Lorus will transfer all of the NuChem Shares held by it to New Lorus;

"NuChem Shares" means common shares in the capital of NuChem;

"Optionholder" has the meaning set forth in the section hereof entitled "Certain Canadian Federal Income Tax Consequences for Holders of Options";

"Options" means the issued and outstanding stock options to acquire Common Shares issued to directors, senior officers, employees and consultants of Lorus, governed by the terms of the Lorus Stock Option Plans and permitting the holders thereof to purchase an aggregate of a rolling rate of 15% of the issued Common Shares, as such number may be amended from time to time;

"Person" means any individual, partnership, association, body corporate, trust, joint venture, unincorporated organization, union, trustee, heir, executor, administrator, legal representative, government, regulatory authority or other entity;

"Pinnacle" means Pinnacle International Lands, Inc., a corporation existing under the laws of the Province of British Columbia;

"Pinnacle Partnerships" means, collectively, Pinnacle Centre Three Limited Partnership and Pinnacle Centre Four Limited Partnership;

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"Pinnacle Share Purchase Agreement" means the share purchase agreement to be entered into between Investor and New Lorus pursuant to which Investor will purchase from New Lorus the Appropriate Number of RealCo Voting Shares and all of the RealCo Non-Voting Shares, as contemplated by the Plan of Arrangement;

"Plan" or "Plan of Arrangement" means the plan of arrangement attached as Appendix C to this Circular, as amended or varied from time to time in accordance with the terms thereof;

"Prepaid Expenses and Receivables" means those assets set out in the Prepaid Expenses and Receivables Transfer Agreement;

"Prepaid Expenses and Receivables Transfer Agreement" means the asset purchase agreement to be entered into between Lorus and GeneSense pursuant to which Lorus will transfer the Prepaid Expenses and Receivables to GeneSense;

"Property" means property, real or personal, tangible or intangible, other than Intellectual Property Rights;

"Purchaser Indemnified Parties" means Investor, its directors, officers, employees, successors and assigns;

"RealCo" means Lorus following the completion of the transactions contemplated by the Arrangement and prior to the Continuation;

"RealCo (BC)" means RealCo following the Continuation;

"RealCo Non-Voting Shares" means non-voting common shares of RealCo issued and outstanding following the reorganization of Lorus' share capital pursuant to the Arrangement;

"RealCo Voting Shares" means voting common shares of RealCo issued and outstanding following the reorganization of Lorus' share capital pursuant to the Arrangement;

"Record Date" means the close of business on May 24, 2007;

"Registered Shareholder" means a registered holder of Common Shares as recorded in the Shareholders' register maintained by the Transfer Agent and Registrar;

"Regulation Q-27" means Regulation Q-27 — Respecting Protection of Minority Securityholders in the Course of Certain Transactions, as it may be amended from time to time;

"Resident in the United States" shall be determined as provided in Rule 12g-4(a)(2) under the 1934 Act;

"Rule 61-501" means Rule 61-501 — Insider Bids, Issuer Bids, Going Private Transactions and Related Party Transactions of the Ontario Securities Commission, as it may be amended from time to time;

"Sarbanes Oxley Act" means the United States Sarbanes-Oxley Act of 2002, and any successor thereto, and any rules and regulations promulgated thereunder, all as the same will be in effect from time to time;

"SEC" means the United States Securities and Exchange Commission, or any other federal agency at the time administering the 1933 Act or the 1934 Act;

"Securities" means, collectively, the Common Shares, Options, Warrants and Convertible Debentures;

"Securities Laws" means the Canadian Securities Legislation and the United States Securities Laws;

"Securityholders" means the holders of Securities and "Securityholder" means any one of them;

"SEDAR" means The Canadian Securities Administrators' System for Electronic Document Analysis and Retrieval;

"Shareholders" means the holders of Common Shares and "Shareholder" means any one of them;

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"Subsidiary Share Purchase Agreements" means, collectively, the GeneSense Share Purchase Agreement and the NuChem Share Purchase Agreement;

"Superior Proposal" has the meaning set forth in the section hereof entitled "The Arrangement — The Arrangement Agreement — Non-Solicitation and Right to Match";

"Tangible Business Assets" means Lorus' depreciable property set out in the Tangible Business Assets Transfer Agreement;

"Tangible Business Assets Transfer Agreement" means the asset purchase agreement to be entered into by Lorus and GeneSense pursuant to which Lorus will transfer the Tangible Business Assets to GeneSense, as contemplated in the Plan of Arrangement;

"Tax Act" means the Income Tax Act (Canada), R.S.C. 1985, C.1, 5^th Supplement, as amended, including the tax regulations enacted thereunder;

"Technifund Entities" means collectively, Technifund Inc. and Herbert Abramson;

"TEMIC" means The Erin Mills Investment Corporation;

"Trading Day" means a day when the TSX is open for trading;

"Transfer Agent and Registrar" means Computershare Investor Services Inc. at its offices at 100 University Avenue, 11^th Floor, Toronto, Ontario M5J 2Y1;

"TSX" means the Toronto Stock Exchange;

"United States" means the United States of America, its territories and possessions, any state of the United States, and the District of Columbia;

"United States Securities Laws" means the 1933 Act, the 1934 Act, the Sarbanes Oxley Act, all applicable state or "blue sky" laws and all rules and regulations promulgated thereunder or otherwise adopted from time to time by the applicable authority having jurisdiction in respect thereof, and the AMEX Rules, as applicable;

"U.S. Holder" has the meaning set forth in the section hereof entitled "Certain Canadian Federal Income Tax Consequences for Shareholders — Holders who are Residents of the United States";

"U.S. Persons" means Shareholders that are Resident in the United States;

"U.S. Shareholders" has the meaning set forth in the section hereof entitled "Certain United States Federal Consequences for Shareholders — U.S. Shareholders";

"Virulizin and Small Molecule Patent Assets" means those assets set out in the Virulizin and Small Molecule Patent Assets Transfer Agreement;

"Virulizin and Small Molecule Patent Assets Transfer Agreement" means the asset purchase agreement to be entered into between Lorus and GeneSense pursuant to which Lorus will transfer the Virulizin and Small Molecule Patent Assets to GeneSense, as contemplated in the Plan of Arrangement;

"Warrant Repurchase Agreement" means the warrant repurchase agreement dated May 1, 2007 between New Lorus and TEMIC pursuant to which New Lorus will repurchase the New Lorus Warrants; and

"Warrants" means the issued and outstanding 3,000,000 common share purchase warrants of Lorus issued to TEMIC, each of which entitles TEMIC to acquire, subject to adjustment, one Common Share at a price per share of $1.00.

Words importing the singular number only include the plural and vice versa and words importing any gender include all genders and the word "including" means "including without limiting the generality of the foregoing".

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SUMMARY

        The following is a summary of certain information contained elsewhere in this Circular, including the appendices hereto and the documents incorporated by reference herein. This Summary is qualified in its entirety by the more detailed information and financial data and statements contained, referred to or incorporated elsewhere in this Circular, the appendices hereto and the documents incorporated by reference herein. You are urged to read carefully this entire document, the various documents that are referred to herein and the appendices attached hereto. Terms with initial capital letters used in this Summary but not otherwise defined are defined in the "Glossary of Terms".

        Unless otherwise specified, all dollar amounts and financial information are expressed in Canadian dollars.

The Meeting

        The Meeting will be held at Le Royal Meridien King Edward, 37 King Street East, Toronto, Ontario, in the Kensington Room, on June 25, 2007, at 10:00 a.m. (Toronto time) for the purpose of considering and, if deemed advisable, passing, with or without variation, the Arrangement Resolution. See "The Arrangement".

Background to the Arrangement

        Since its inception, Lorus has financed its operations and technology acquisitions primarily from equity and debt financings, the exercise of warrants and stock options, and interest income on funds held for future investments.

        To date, none of Lorus' product candidates has been approved by regulatory agencies for sale and Lorus has accumulated losses in the development of its products in excess of $100 million. The amount to be received by New Lorus pursuant to the Arrangement will be approximately $8.5 million, subject to a $600,000 holdback and a maximum post closing adjustment of $270,000, not including the costs of the transaction. In addition, Non-U.S. Persons will hold, at the Effective Time, in the aggregate, approximately a 0.5% economic equity interest in a new real estate development venture to be carried on by RealCo and U.S. Persons will, subject to certain limitations, receive a cash payment in lieu of such economic equity interest.

        Beginning in January, 2006, Pinnacle and Lorus began preliminary discussions with a view to pursuing an arrangement that would restructure Lorus and provide non-dilutive financing for Lorus' biotechnology business. Following negotiations, on April 4, 2006, Lorus and Pinnacle entered into the Letter of Intent in respect of the Arrangement.

        In October 2006, the Board of Directors engaged Deloitte & Touche LLP to consider whether the Arrangement is fair, from a financial point of view, to the Securityholders. In connection with this mandate, Deloitte & Touche LLP has prepared the Fairness Opinion that states that, as of the date of the opinion, the Arrangement is fair, from a financial point of view, to the Securityholders. The Fairness Opinion is subject to the restrictions, limitations and assumptions contained therein and should be read in its entirety. See Appendix E (Fairness Opinion) attached hereto.

Benefits of the Arrangement

        There are a number of benefits that Lorus anticipates will result from the Arrangement, including the following:

•

Shareholders will hold 100% of the New Lorus Common Shares and New Lorus will carry on the same business that Lorus carried on prior to the completion of the Arrangement, but with the injection of approximately $8.5 million, subject to a $600,000 holdback and a maximum post closing adjustment of $270,000, not including the costs of the transaction, without any dilution of the Shareholders. New Lorus will continue to execute Lorus' current business plan going forward, with the board of directors and management team of New Lorus being comprised of the same individuals who are currently the directors and management team members of Lorus;

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•

Non-U.S. Persons will hold, at the Effective Time, in the aggregate, approximately 59% of the RealCo Voting Shares then outstanding, representing approximately a 0.5% economic equity interest in RealCo in the form of RealCo Voting Shares; and



•

U.S. Persons and certain Shareholders of Lorus will, subject to certain limitations, receive a cash payment in an amount equal to the value of the RealCo Voting Shares otherwise distributable to them, such amount determined based on the price per RealCo Voting Share paid at the Effective Time by Investor to New Lorus pursuant to the Pinnacle Share Purchase Agreement.

        See "— Shareholder Entitlements".

Intention of Certain Securityholders

        High Tech, the Technifund Entities and TEMIC have entered into agreements pursuant to which they will vote their Securities in favour of the Arrangement Resolution. In addition, the directors and officers of Lorus who are Securityholders have expressed their intention to vote their Securities in favour of the Arrangement Resolution. High Tech, the Technifund Entities, TEMIC and the directors and officers of Lorus held in aggregate, as of the Record Date, Securities representing approximately 37% of the votes attached to all of the Securities. The votes attaching to the Common Shares of High Tech will not be included in the votes cast by Shareholders who are "minority" Shareholders. See "— Procedure for the Arrangement to Become Effective".

The Arrangement

        The Arrangement will be implemented in a series of transactions pursuant to, or in connection with, the Plan of Arrangement attached as Appendix C to this Circular. See "The Arrangement — Arrangement Agreement".

Asset Transfer Agreements

        As part of the Arrangement, Lorus will transfer the Tangible Business Assets to GeneSense pursuant to the terms and conditions of the Tangible Business Assets Transfer Agreement in consideration for the issuance by GeneSense of one GeneSense Share to Lorus.

        In addition, GeneSense will transfer the Antisense Patent Assets to New Lorus pursuant to the terms and conditions of the Antisense Patent Assets Transfer Agreement in consideration for the issuance by New Lorus of the New Lorus Note 1.

        Pursuant to the Virulizin and Small Molecule Patent Assets Transfer Agreement, Lorus will transfer the Virulizin and Small Molecule Patent Assets to GeneSense in consideration for the issuance by GeneSense of one GeneSense Share to Lorus and pursuant to the Prepaid Expenses and Receivables Transfer Agreement, Lorus will transfer the Prepaid Expenses and Receivables to GeneSense in consideration for the issuance by GeneSense of one GeneSense Share to Lorus.

        New Lorus will, as of the Effective Time, continue to employ each of the employees employed by Lorus as of the Closing Date on terms and conditions of employment that are the same as those applicable to such employees as of the Closing Date.

Indemnification Agreement

        Pursuant to the Indemnification Agreement, New Lorus will fully indemnify and save harmless Lorus and its directors, officers and employees from and against all damages, losses, expenses (including fines and penalties), other third party costs and legal expenses, to which any of them may be subject arising out of any matter occurring: (i) prior to, at or after the Effective Time and directly or indirectly relating to the Assets (including losses for income, sales, excise and other taxes arising in connection with the transfer of any Assets) or the conduct of the business of Lorus prior to the Effective Time; (ii) prior to, at or after the Effective Time as

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a result of any and all interests, rights, liabilities and other matters relating to the Assets; and (iii) prior to or at the Effective Time and directly or indirectly relating to, with certain exceptions, any of the activities of Lorus or the Arrangement.

Subsidiary Share Purchase Agreements

        Pursuant to the GeneSense Share Purchase Agreement, Lorus will transfer all of the GeneSense Shares to New Lorus at a price equal to their fair market value in exchange for the assumption by New Lorus of Lorus' remaining liabilities (other than the Lorus Note) and the issuance by New Lorus to Lorus of the New Lorus Note 2.

        Pursuant to the NuChem Share Purchase Agreement, Lorus will transfer all of the NuChem Shares held by it to New Lorus at a price equal to their fair market value in consideration for the issuance by New Lorus to Lorus of the New Lorus Note 3.

Purchase of RealCo Voting Shares from Certain Shareholders

        As part of the Arrangement and at the request of the Investor, Investor will purchase all of the RealCo Voting Shares that will be received by High Tech and each of the Technifund Entities pursuant to the Arrangement, at the same price per RealCo Voting Share as paid at the Effective Time by Investor to New Lorus for each RealCo Voting Share pursuant to the Pinnacle Share Purchase Agreement, upon and subject to the terms and conditions of share purchase agreements between Investor and each of High Tech and the Technifund Entities.

Shareholder Entitlements

New Lorus Common Shares

        As part of the Arrangement, each Shareholder will receive one New Lorus Common Share for each Common Share held.

RealCo Voting Shares

        As part of the Arrangement, in addition to receiving New Lorus Common Shares as indicated above, each Shareholder (other than U.S. Persons, High Tech and the Technifund Entities) will receive approximately 0.08 RealCo Voting Shares for each Common Share held, disregarding fractions. Any entitlement that would otherwise include a fractional interest in RealCo Voting Shares will be rounded down to the next lowest whole number of RealCo Voting Shares. No cash payment or other compensation will be made with respect to any such fractional interest.

        The actual number of RealCo Voting Shares that will be distributed to Shareholders (other than U.S. Persons, High Tech and the Technifund Entities) depends on a number of variables that will be determined as of the Effective Date, including, among other things, the actual number of Common Shares held by U.S. Persons and the actual number of RealCo Voting Shares that Investor will purchase from New Lorus pursuant to the Pinnacle Share Purchase Agreement. The entitlement to RealCo Voting Shares described above is an estimate based on current information available to Lorus, however, such entitlement is subject to change and will not be determined until the Effective Date.

Cash Payments

        As part of the Arrangement, in addition to receiving New Lorus Common Shares as indicated above, each U.S. Person, High Tech and the Technifund Entities will receive a cash payment equal to $0.0040775156 for each RealCo Voting Share that they would otherwise have received, rounded to the nearest $0.01. Based on current

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information available to Lorus with respect to the number of Common Shares held by U.S. Persons, High Tech and the Technifund Entities, the estimated cash payments are expected to be approximately as follows:

        The cash payments described above are estimates based on current information available to Lorus, however, such payments are subject to change based on the actual number of Common Shares held by U.S. Persons, High Tech and the Technifund Entities as of the Effective Date.

Treatment of Options, Convertible Debentures and Warrants

        The Plan of Arrangement provides that the Options and Warrants will be exchanged for New Lorus Options and New Lorus Warrants and will thereafter be cancelled and will cease to represent any right or claim whatsoever in RealCo. The New Lorus Options will entitle the holder thereof to receive, upon the exercise of the New Lorus Options, a number of New Lorus Common Shares equivalent to the number of Common Shares such holder would have been entitled to receive pursuant to the Options.

        Pursuant to the Debenture Assumption Agreement, New Lorus will assume Lorus' obligation to pay TEMIC the $15,000,000 aggregate principal amount plus accrued interest owing under the Convertible Debentures in consideration for Lorus issuing the Lorus Note. The right of TEMIC under the Convertible Debentures to convert such debentures into Common Shares will be exchanged for the right to convert such debentures into an equal number of New Lorus Common Shares. TEMIC has requested that New Lorus repurchase the New Lorus Warrants from TEMIC effective the Effective Date for cash consideration of $252,000 pursuant to the terms and conditions of the Warrant Repurchase Agreement.

Effect of the Arrangement

        Upon completion of the Arrangement, the Shareholders will be the holders of all of the issued and outstanding New Lorus Common Shares and New Lorus will be the holder of the Antisense Patent Assets, and will carry on the business previously carried on by Lorus with an additional working capital of approximately $8.5 million, subject to a $600,000 holdback and a maximum post closing adjustment of $270,000, not including the costs of the transaction. GeneSense will be a wholly-owned subsidiary of New Lorus and New Lorus will hold all of the NuChem Shares previously held by Lorus. GeneSense will be the holder of the Tangible Business Assets, the Virulizin and Small Molecule Patent Assets and the Prepaid Expenses and Receivables, which assets, together with the Antisense Patent Assets and NuChem Shares, constitute all of the assets of Lorus prior to the Arrangement.

        In addition, Non-U.S. Persons will hold, at the Effective Time, in the aggregate, approximately 59% of the RealCo Voting Shares then outstanding, representing approximately a 0.5% economic equity interest in RealCo. Following Closing, RealCo will hold limited partnership interests in two residential and mixed-use condominium projects in Toronto, Ontario and may raise additional capital on a dilutive basis to focus on pursuing opportunities as a real estate development company. High Tech, the Technifund Entities and U.S. Persons will, subject to certain limitations, receive a cash payment in an amount equal to the value of the RealCo Voting Shares otherwise distributable to them. Neither the RealCo Voting Shares nor the RealCo Non-Voting Shares will be listed on any stock exchange.

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        Provided that the transactions described in this Circular are approved, immediately upon completion of the transactions contemplated by the Arrangement, Investor will own approximately 41% of the RealCo Voting Shares and 100% of the RealCo Non-Voting Shares, representing, in the aggregate at the Effective Time, approximately 99.5% of the economic equity interest in RealCo.

        Lorus will also assign all of its contractual obligations to New Lorus and New Lorus will assume such obligations, including employment obligations.

        In connection with the Arrangement, New Lorus will cause the New Lorus Common Shares to be listed on the TSX subject to the fulfillment of the conditions set by the TSX. Lorus has made an application to the AMEX to have the New Lorus Common Shares listed on the AMEX, but cannot assure Shareholders that the New Lorus Common Shares will be listed and posted for trading on the AMEX. The New Lorus Common shares will be registered under section 12(b) of the 1934 Act. Upon the completion of the Arrangement, the Common Shares will be delisted from both the TSX and the AMEX and Lorus will cease reporting under the 1934 Act.

        As a result of the Arrangement, Investor, an affiliate of Pinnacle, will obtain an economic interest in a company having certain non-transferable corporate attributes, including, among other things, a wide shareholder base and status as a "reporting issuer" under applicable Canadian Securities Legislation, all of which Investor believes may be of benefit to RealCo's business following completion of the Arrangement.

Corporate Structure

        Presented below are simplified corporate structures of Lorus both before and immediately after completion of the Arrangement:

CURRENT STRUCTURE

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STRUCTURE IMMEDIATELY AFTER THE ARRANGEMENT

Procedure for the Arrangement to Become Effective

Securityholder Approval

        The Interim Order provides that the Arrangement Resolution must be approved by (i) at least two-thirds of the votes cast by the Securityholders present in person or represented by proxy at the Meeting voting as a single class, each Shareholder entitled to vote thereon being entitled to one vote for each Common Share held and each Convertible Securityholder entitled to vote thereon being entitled to one vote for each Common Share such holder would have been entitled to receive upon the valid exercise or conversion of his, her or its Convertible Securities, as applicable and (ii) at least a simple majority of the votes cast by Minority Shareholders. See "Canadian Securities Matters".

        Notwithstanding the foregoing, the Arrangement Agreement authorizes Lorus, GeneSense, NuChem, New Lorus and Pinnacle, subject to the terms and conditions of the Arrangement Agreement, without further notice to or approval of the Securityholders, to amend or terminate the Plan of Arrangement, to decide not to proceed with the Arrangement and to revoke the Plan of Arrangement at any time prior to the Effective Time.

Court Approval

        The CBCA provides that the Arrangement requires Court approval. On May 16, 2007, Lorus obtained the Interim Order providing for the calling and holding of the Meeting and other procedural matters. See the Interim Order included as Appendix D (Interim Order and Notice of Application for the Final Order) attached hereto.

        Subject to the terms of the Arrangement Agreement and the adoption of the Arrangement Resolution at the Meeting in the manner required by the Interim Order, Lorus will make application to the Court for the Final Order at the Ontario Superior Court of Justice, Toronto, Ontario, on June 27, 2007 at 10:00 a.m. (Toronto time) or as soon thereafter as counsel may be heard. See "The Arrangement — Procedure for the Arrangement Becoming Effective".

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Conditions Precedent

        All conditions precedent to the Arrangement, as set forth in the Arrangement Agreement, including receipt of the requisite regulatory approvals prior to the Effective Date, must be satisfied or waived by the appropriate party. See "The Arrangement — Arrangement Agreement".

Fairness Opinion

        The Board of Directors engaged Deloitte & Touche LLP to consider whether the Arrangement is fair, from a financial point of view, to the Securityholders. In connection with this mandate, Deloitte & Touche LLP has prepared the Fairness Opinion that states that, as of the date of the opinion, the Arrangement is fair, from a financial point of view, to the Securityholders. The Fairness Opinion is subject to the restrictions, limitations and assumptions contained therein and should be read in its entirety. A copy of the Fairness Opinion is attached hereto as Appendix E (Fairness Opinion).

Recommendation of the Board of Directors

        The Board of Directors has determined that the terms of the Arrangement are in the best interests of Lorus and the Securityholders, as a whole, and are fair, from a financial point of view, to the Securityholders. As such, those members of the Board of Directors entitled to vote on the approval of the Arrangement have unanimously approved the Arrangement and authorized the submission of the Arrangement to the Securityholders for approval.

        Those members of the Board of Directors entitled to approve the Arrangement unanimously recommend that Securityholders vote FOR the Arrangement Resolution.

Timing

        If the Meeting is held as scheduled and is not adjourned and the other necessary conditions of the Arrangement are satisfied or waived, Lorus will apply to the Court for the Final Order. If the Final Order is obtained on or about June 27, 2007, in form and substance satisfactory to Lorus, NuChem, GeneSense, New Lorus, Pinnacle and Investor and all other conditions specified are satisfied or waived, Lorus expects the Effective Date of the Arrangement to be on or about June 29, 2007.

Stock Exchange Listings

        The Common Shares are currently listed and posted for trading on the TSX under the symbol "LOR" and on the AMEX under the symbol "LRP". On April 30, 2007, being the last Trading Day prior to the date of the announcement of the Arrangement, the closing price of the Common Shares on the TSX and the AMEX was $0.26 and U.S. $0.25, respectively, per Common Share.

        Lorus has made an application for a substitutional listing of the New Lorus Common Shares (and the New Lorus Common Shares issuable upon the exercise or conversion of the New Lorus Options and New Lorus Warrants) on the TSX and on the AMEX in substitution for the Common Shares.

        As of the date of this Circular, Lorus has not received approval from the AMEX in respect of the substitutional listing of the New Lorus Common Shares. Lorus cannot assure Shareholders that the AMEX will approve a substitutional listing or whether the New Lorus Common Shares will continue to be listed on the AMEX.

        The TSX has conditionally approved the listing of the New Lorus Common Shares on the TSX under the symbol "LOR", which approval is subject to the satisfaction of certain conditions on or before June 28, 2007, including (i) the Securityholders of Lorus approving the Arrangement at the Meeting, (ii) the Minority Shareholders approving the Arrangement Resolution at the Meeting, (iii) the Closing of the Arrangement,

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(iv) the filing of all documents required by the TSX and the payment of the fees required pursuant to the policies of the TSX, and (v) New Lorus meeting the TSX's continued listing requirements.

        New Lorus expects that it will be able to satisfy all of the conditions of the TSX relating to the listing of the New Lorus Common Shares upon completion of the Arrangement.

        Upon any substitutional listing of the New Lorus Common Shares, the Common Shares will cease to be listed on the TSX and the AMEX. Neither the RealCo Voting Shares nor the RealCo Non-Voting Shares will be listed on the TSX, the AMEX or any other stock exchange.

Certain Canadian Federal Income Tax Consequences

        SHAREHOLDERS SHOULD CAREFULLY READ THE INFORMATION UNDER THE HEADING "CERTAIN CANADIAN FEDERAL INCOME TAX CONSEQUENCES FOR SHAREHOLDERS".

Canadian Resident Shareholders

        Subject to the qualifications under the heading "Certain Canadian Federal Income Tax Consequences for Shareholders", generally, (i) the exchange of Common Shares for New Lorus Common Shares, and (ii) the distribution of the RealCo Voting Shares as a return of stated capital of New Lorus Common Shares, will not be taxable events under the Tax Act for a Holder.

U.S. Resident Shareholders

        Subject to the qualifications under the heading "Certain Canadian Federal Income Tax Consequences for Shareholders", generally, (i) the exchange of Common Shares for New Lorus Common Shares, and (ii) the cash distribution as a reduction of stated capital of New Lorus will not be a taxable event under the Tax Act for a U.S. Holder.

        If the Common Shares constitute "taxable Canadian property" (as defined by the Tax Act) to a U.S. Holder, at the Effective Time, the U.S. Holder will be required to file a Canadian tax return reporting the disposition of such shares even though the exchange of such shares is not subject to Canadian tax or section 116 certificate compliance requirements under the Tax Act.

Holders of Options

        Holders of Options who exercise their Options to acquire Common Shares prior to the Effective Time may be subject to income tax consequences arising on such exercise. Holders of Options who are considering the exercise of their Options should consult their own tax advisors to determine the tax consequences to them of such exercise.

        Subject to the qualifications under the heading "Certain Canadian Federal Income Tax Consequences for Holders of Options", an Optionholder who exchanges an Option for a New Lorus Option will not be considered to have disposed of the Option and the New Lorus Option will be deemed to be the same as, and a continuation of, the Option.

Eligibility for Investments

        Subject to the qualifications under "Eligibility for Investment", the New Lorus Common Shares will be "qualified investments" under the Tax Act at the Effective Time for trusts governed by registered retirement savings plans (RRSPs), registered retirement income funds (RRIFs), deferred profit sharing plans (DPSPs) or registered education savings plans (RESPs), as defined in the Tax Act.

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Certain U.S. Federal Income Tax Consequences

        SHAREHOLDERS SHOULD CAREFULLY READ THE INFORMATION UNDER THE HEADING "CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES FOR SHAREHOLDERS".

        The Arrangement sets forth a series of complex steps that should result in taxation for U.S. Shareholders. The Arrangement should be taxable to the U.S. Shareholders, and should be characterized as a disposition of Common Shares.

        If the Arrangement is treated as a disposition of Common Shares, a gain or loss, if any, realized by a U.S. Shareholder on the exchange of his, her or its Common Shares generally would be subject to United States federal income taxation as capital gain (or capital loss) in an amount equal to the difference between the U.S. Shareholder's adjusted tax basis in the Common Shares and the amount realized on the disposition. Net capital gains (i.e., capital gains in excess of capital losses) recognized by a non-corporate U.S. Shareholder upon a sale or other disposition of Common Shares that have been held for more than one year is generally subject to a maximum United States federal income tax rate of 15%, under present law. Deductions for capital losses are subject to limitations.

        If Lorus was a "controlled foreign corporation", or a "passive foreign investment company" for a U.S. Shareholder, the United States federal tax consequences summarized herein could be materially and adversely different.

New Lorus

        New Lorus was incorporated under the CBCA as 6650309 Canada Inc. on November 1, 2006. New Lorus has not carried on any active business since its incorporation. As of the date hereof, the sole shareholder of New Lorus is Lorus.

        Following the completion of the Arrangement, New Lorus will use (i) the Anti-Sense Patent Assets it holds directly, (ii) the Tangible Business Assets, Prepaid Expenses and Receivables and Virulizin and Small Molecule Patent Assets it holds indirectly through GeneSense, and (iii) the additional working capital of approximately $8.5 million, subject to a $600,000 holdback and a maximum post closing adjustment of $270,000, not including the costs of the transaction, to carry out the business as carried on by Lorus prior to the completion of the Arrangement.

        New Lorus' head office will be located at 2 Meridian Road, Toronto, Ontario, Canada M9W 4Z7. See Appendix G (Information Respecting New Lorus) attached hereto.

        Immediately prior to the completion of the Arrangement, the board of directors of New Lorus will consist of those same individuals who are currently the directors of Lorus, namely Kevin Buchi, Donald Paterson, Georg Ludwig, Michael Moore, Alan Steigrod, Graham Strachan, Jim Wright and Aiping Young. In addition, the management team of New Lorus is and will continue to be comprised of those same individuals who are currently the management team of Lorus, namely Aiping Young (President and Chief Executive Officer), Elizabeth Williams (Director of Finance, Acting Chief Financial Officer), Dr. Yoon Lee (Director of Research) and Peter Murray (Director of Clinical Development).

Pinnacle

        Pinnacle was incorporated on July 26, 2001 under the BCBCA. Pinnacle and its affiliates have been involved in the development, design, construction and management of real estate for over thirty years. Pinnacle's track record includes exclusive urban residences from Toronto high-rise penthouses to waterview landmarks in Vancouver. Pinnacle's head office is located at Suite 300, 911 Homer Street, Vancouver, British Columbia V6B 2W6. Mr. Michael De Cotiis is the Chair and Chief Executive Officer of Pinnacle.

19

Investor

        Investor was incorporated on January 23, 2007 under the CBCA as 6707157 Canada Inc. Investor has not carried on any active business since its incorporation. As of the date hereof, Investor is an affiliate of Pinnacle and Mr. Michael De Cotiis is the President and sole shareholder of Investor. As of the date hereof, Investor's registered office is located at 66 Wellington Street West, Suite 4700, Toronto, Ontario M5K 1E6.

RealCo

        Following the Effective Date, RealCo will hold limited partnership interests in two residential and mixed-use condominium projects in Toronto, Ontario and may raise additional capital on a dilutive basis in order to focus on pursuing opportunities as a real estate development company. Following the completion of the Arrangement, RealCo's head office will be located at Suite 300, 911 Homer Street, Vancouver, British Columbia V6B 2W6. There is currently no intention to list the RealCo Voting Shares or the RealCo Non-Voting Shares on any stock exchange or other public securities market. Detailed information regarding RealCo can be found at Appendix H (Information Respecting RealCo and Financial Statements of the Pinnacle Partnerships) attached hereto.

        As soon as practicable following completion of the Arrangement, it is expected that RealCo will be continued from the Canadian federal jurisdiction to the Province of British Columbia. Following such continuance, RealCo will be governed by the BCBCA. Please see Appendix K (Comparison of CBCA to BCBCA) attached hereto for a summary comparison of certain provisions of the CBCA and the BCBCA.

Selected Unaudited Pro Forma Financial Information Relating to RealCo and the Pinnacle Partnerships

        Pro forma information relating to Lorus after giving effect to the Arrangement (i.e., RealCo) and the Pinnacle Partnerships can be found at Appendix I (Unaudited Pro Forma Balance Sheet of RealCo) and Appendix H (Information Respecting RealCo and Financial Statements of the Pinnacle Partnerships) attached hereto. Furthermore, the audited balance sheet of New Lorus as at November 1, 2006 can be found at Appendix J (Balance Sheet of New Lorus) attached hereto.

Risk Factors

        In connection with the Arrangement, Securityholders should be aware that there are various risks, including those described in this Circular under the heading "Risk Factors" and those described in Appendix F (Information Respecting Lorus), Appendix G (Information Respecting New Lorus) and Appendix H (Information Respecting RealCo and Financial Statements of the Pinnacle Partnerships) attached hereto. Securityholders should carefully consider these risk factors, together with other information included in this Circular, before deciding whether or not to approve the Arrangement Resolution.

Dissent Rights

        The Interim Order and the Plan of Arrangement provide Registered Shareholders with dissent and appraisal rights (the "Arrangement Dissent Rights") in connection with the transactions that will be authorized in the event that the Arrangement Resolution is approved by Securityholders. The Arrangement Dissent Rights are similar to the dissent and appraisal rights provided by section 190 of the CBCA. Shareholders who are considering exercising their Arrangement Dissent Rights should carefully review the description of such rights set forth in this Circular. See "Arrangement Dissent Rights".

20

FORWARD-LOOKING STATEMENTS

        This Circular and the documents incorporated by reference herein may contain forward-looking statements within the meaning of Canadian and U.S. securities laws. Such statements include, but are not limited to, statements relating to future financial position, business strategy, budgets, project costs and plans and objectives of management for future operations. You can identify many of these statements by looking for words such as "anticipate", "contemplate", "continue", "believe", "plan", "estimate", "expect", "intend", "will", "should", "may", and other similar expressions.

        These forward-looking statements include statements with respect to:

•

the anticipated benefits and enhanced Securityholder value resulting from the Arrangement;



•

the timing and success of applications to obtain approvals required with respect to the Arrangement;



•

sources of capital; and



•

the nature of Lorus', New Lorus' and RealCo's business and operations following the Arrangement.

        We cannot assure you that any of the plans, objectives, intentions or expectations upon which these forward-looking statements are based will occur.

        Such statements reflect our current views with respect to future events and are subject to risks and uncertainties and are necessarily based upon a number of estimates and assumptions that, while considered reasonable by us, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause our actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others:

•

the need to obtain required approvals from regulatory authorities, including the Canadian Securities Regulatory Authorities, the TSX, and the AMEX;



•

difficulties associated with the nature of the business and operations of New Lorus and RealCo, respectively, following the Arrangement, including liabilities associated with the Arrangement;



•

the impact of general economic conditions in Canada and internationally;



•

industry conditions including fluctuations in foreign exchange or interest rates;



•

stock market volatility;



•

the impact of competition; and



•

the uncertainty inherent in attracting capital.

        Should one or more of these risks or uncertainties materialize, or should the assumptions set out in the section entitled "Risk Factors" underlying those forward-looking statements prove incorrect, actual results may vary materially from those described herein. These forward-looking statements are made as of the date of this Circular or, in the case of documents incorporated by reference herein, as of the date of such documents, and we do not intend, and do not assume any obligation, to update these forward-looking statements, except as required by law. We cannot assure you that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Securityholders are cautioned that forward-looking statements are not guarantees of future performance and accordingly are cautioned not to put undue reliance on forward-looking statements due to the inherent uncertainty therein.

21

SOLICITATION OF PROXIES AND VOTING AT THE MEETING

Solicitation of Proxies

        The enclosed proxy forms are being solicited by the management of Lorus.    The solicitation is being made primarily by mail, but proxies may also be solicited by telephone, by telecopier, by the Internet, by advertisement or by other personal contact by directors, officers or other employees of Lorus. The entire cost of the solicitation will be borne by Lorus.

        The Meeting is being called pursuant to the Interim Order to seek the requisite approval of the Securityholders to the Arrangement. See "The Arrangement".

        This Circular is being mailed to Securityholders of Lorus. Each Securityholder has been assigned a different colour of proxy form for completion and return.

•

GREEN proxies are to be completed by Shareholders



•

WHITE proxies are to be completed by Optionholders



•

BLUE proxies are to be completed by holders of Warrants



•

YELLOW proxies are to be completed by holders of Convertible Debentures

        In order for your vote to be counted, Securityholders are reminded to complete and return the appropriate colour of proxy. If you are a non-registered holder of Lorus securities, please see "— Non-Registered Holders".

Appointment of Proxies

        The individuals named in the enclosed form of proxy are representatives of the management of Lorus and are directors or officers of Lorus. A Securityholder who wishes to appoint some other individual to represent the Securityholder at the Meeting may do so by inserting such individual's name in the blank space provided in the enclosed form of proxy. Such other individual need not be a Securityholder of Lorus.

        To be valid, proxies must be deposited with Computershare Investor Services Inc., 100 University Avenue, 8^th Floor, Toronto, Canada M5J 2Y1, so as to arrive not later than 5:00 p.m. (Toronto time) on June 21, 2007 or, if the Meeting is adjourned, 48 hours (excluding Saturdays, Sundays and holidays) before the time set for the adjourned Meeting.

Non-Registered Holders

        These Meeting materials are being sent to both registered and non-registered holders of Securities. If you are a non-registered holder and we or our agent have sent these materials directly to you, your name and address and information about your holdings of Securities have been obtained in accordance with applicable securities regulatory requirements from the intermediary holding on your behalf.

        By choosing to send these materials to you directly, we (and not the intermediary holding on your behalf) have assumed responsibility for (i) delivering these materials to you, and (ii) executing your proper voting instructions. Please return your voting instructions as specified in the request for voting instructions.

        Only registered holders of the Securities, or the individuals they appoint as their proxies, are permitted to attend and vote at the Meeting. However, in many cases, Securities beneficially owned by a non-registered holder are registered either:

•

in the name of an intermediary that the non-registered holder deals with in respect of the Securities, such as, among others, banks, trust companies, securities dealers or brokers and trustees or administrators of self-administered RRSPs, RRIFs, RESPs and similar plans; or



•

in the name of a depository (such as CDS) of which the intermediary is a participant.

22

        In accordance with Canadian securities law, we have distributed copies of the Notice of Meeting, this Circular, and the forms of proxy to CDS and intermediaries for onward distribution to those non-registered holders to whom we have not sent the Meeting materials directly.

        In such cases, intermediaries are required to forward Meeting materials to non-registered holders unless a non-registered holder has waived the right to receive them. Very often, intermediaries will use a service company (such as ADP Investor Communications (now Broadridge Financial Solutions, Inc.)) to forward the Meeting materials to non-registered holders.

        Non-registered holders who have not waived the right to receive Meeting materials will receive either a voting instruction form or, less frequently, a form of proxy. The purpose of these forms is to permit non-registered holders to direct the voting of the Securities they beneficially own. Non-registered holders should follow the procedures set out below, depending on what type of form they receive.

A.

Voting Instruction Form.    In most cases, a non-registered holder will receive, as part of the Meeting materials, a voting instruction form. If the non-registered holder does not wish to attend and vote at the Meeting in person (or have another individual attend and vote on the non-registered holder's behalf), the voting instruction form must be completed, signed and returned in accordance with the directions on the form. If a non-registered holder wishes to attend and vote at the Meeting in person (or have another individual attend and vote on the non-registered holder's behalf), the non-registered holder must complete, sign and return the voting instruction form in accordance with the directions provided and a form of proxy giving the right to attend and vote will be forwarded to the non-registered holder.

or

B.

Form of Proxy.    Less frequently, a non-registered holder will receive, as part of the Meeting materials, a form of proxy that has already been signed by the intermediary (typically by a facsimile or stamped signature), which is restricted as to the number of Securities beneficially owned by the non-registered holder but which is otherwise uncompleted. If the non-registered holder does not wish to attend and vote at the Meeting in person (or have another individual attend and vote on the non-registered holder's behalf), the non-registered holder must complete the form of proxy and deposit it with Computershare Investor Services Inc., 100 University Avenue, 8^th Floor Toronto, Canada, M5J 2Y1 as described above. If a non-registered holder wishes to attend and vote at the Meeting in person (or have another individual attend and vote on the non-registered holder's behalf), the non-registered holder must strike out the names of the individuals named in the proxy and insert the non-registered holder's (or such other individual's) name in the blank space provided.

        Non-registered holders should follow the instructions on the forms they receive and contact their intermediaries promptly if they need assistance.

Revocation

        A registered Securityholder who has given a proxy may revoke the proxy by:

•

completing and signing a proxy bearing a later date and depositing it with the Transfer Agent and Registrar as described above; or



•

depositing an instrument in writing executed by the Securityholder or by the Securityholder's attorney authorized in writing: (i) at our registered office at any time up to and including the last business day preceding the day of the Meeting, or the time set for any adjourned Meeting, at which the proxy is to be used, or (ii) with the chair of the Meeting prior to the commencement of the Meeting on the day of the Meeting or the day of any adjourned Meeting; or



•

in any other manner permitted by law.

23

        A non-registered Securityholder may revoke a voting instruction form or a waiver of the right to receive Meeting materials and to vote given to an intermediary or to Lorus, as the case may be, at any time by written notice to the intermediary or Lorus, except that neither an intermediary nor Lorus is required to act on a revocation of a voting instruction form or of a waiver of the right to receive Meeting materials and to vote that is not received by such intermediary or Lorus, at least seven days prior to the Meeting.

Exercise of Voting Rights by Proxy

        The individuals named as proxies will vote for or against any particular question, in accordance with the instructions of the Securityholders appointing them. In the absence of such instructions, such Securities will be voted in favour of all the matters identified in the attached Notice of the Meeting. The enclosed proxy forms confer discretionary authority upon the individuals named therein with respect to amendments or variations to matters identified in the Notice of Meeting, and with respect to other business which may properly come before the Meeting or any adjournment thereof. As of the date hereof, management of Lorus knows of no such amendment, variation or other business to come before the Meeting. If any such amendment or other business properly comes before the Meeting, or any adjournment thereof, the individuals named in the enclosed proxy forms will vote on such matters in accordance with their best judgement.

Voting Securities

        The Board of Directors has fixed the Record Date for the Meeting to be the close of business on May 24, 2007. Each Common Share entitles the holder thereof to one vote on a ballot at the Meeting. Each Option, Warrant and Convertible Debenture entitles the holder thereof to one vote per Common Share on a ballot at the Meeting that such holder would have been entitled to receive, on the Record Date, upon the valid exercise of his, her or its Options or Warrants or the valid conversion of his, her or its Convertible Debentures.

        The Transfer Agent and Registrar will prepare, as at the Record Date, a list of Securityholders entitled to receive the Notice of Meeting and showing the number of Securities held by each such holder. Each Shareholder named in the list of Securityholders will be entitled to notice of the Meeting and to attend and to vote the Common Shares shown opposite such Shareholder's name at the Meeting in respect of all matters before the Meeting on the basis of one vote for each Common Share held. Each holder of Options, Warrants and Convertible Debentures named in the list of Securityholders will be entitled to notice of the Meeting and to attend and to vote the Options, Warrants and Convertible Debentures shown opposite such Securityholder's name at the Meeting in respect of the Arrangement Resolution only, on the basis of one vote per Common Share that such Securityholder would have been entitled to receive, as at the Record Date, upon the valid exercise of such Options or Warrants or the valid conversion of such Convertible Debentures, provided that if such Options, Warrants or Convertible Debentures have been exercised, expired or have otherwise terminated or been repaid before the Meeting, such Securityholder may not attend or vote in such capacity at the Meeting.

        To the extent that a Securityholder transfers the ownership of its Securities after the Record Date and the transferee of those Securities establishes that the transferee owns the Securities and demands, no later than ten days before the Meeting, to be included in the list of Securityholders eligible to vote at the Meeting, such transferee will be entitled to vote such Securities at the Meeting.

        Pursuant to the by-laws of Lorus and the Interim Order, business may be transacted at the Meeting if at least two individuals present in person and each being entitled to vote at the Meeting are present at the Meeting.

        The Interim Order provides that the Arrangement Resolution must be approved by (i) at least two-thirds of the aggregate votes cast by Securityholders present in person or by proxy at the Meeting, voting as a single class, and (ii) at least a simple majority of the votes cast by Minority Shareholders.

24

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

        The authorized share capital of Lorus consists of an unlimited number of Common Shares without par value, of which 211,922,548 Common Shares are issued and outstanding as at May 24, 2007. Each Common Share entitles the holder thereof to one vote at the Meeting. Each Option, Warrant and Convertible Debenture entitles the holder thereof to one vote per Common Share that such holder would have been entitled to receive, as at the Record Date, upon the valid exercise of such Options or Warrants or the valid conversion of such Convertible Debentures, provided that if such Options, Warrants or Convertible Debentures have been exercised, expired or have otherwise terminated or been repaid before the Meeting, such holder may not attend or vote in such capacity at the Meeting. As at May 24, 2007, there are outstanding 13,556,958 Options, 3,000,000 Warrants and $15 million aggregate principal amount of Convertible Debentures, which are convertible into 15 million Common Shares at $1.00 per Common Share.

        To the knowledge of Lorus' directors and executive officers, no single Person beneficially owns, directly or indirectly, or exercises control or direction over more than 10% of the votes attached to all the outstanding Common Shares or Convertible Securities, other than High Tech that held, as of the Record Date (i) 13.7% of the votes attached to the Common Shares, and (ii) 12% of the votes attached to the Common Shares and Convertible Securities combined.

INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE ACTED ON

        As of the Record Date, the directors and officers of Lorus beneficially owned or exercised control or direction over, directly or indirectly, an aggregate of 4,659,454 Common Shares representing 2% of the votes attached to the issued and outstanding Common Shares, and Convertible Securities representing 9,222,604 votes or 4% of the votes attached to the issued and outstanding Convertible Securities. See "Voting Securities and Principal Holders Thereof".

        Certain directors and officers of Lorus who hold Common Shares or Options will be entitled to participate in the Arrangement, in their capacity as Shareholders and holders of Options. In addition, Georg Ludwig, a director of Lorus, is affiliated with High Tech. High Tech is receiving a "collateral benefit" pursuant to the Arrangement. Mr. Ludwig owns options to acquire Common Shares and abstained from the vote of the Board of Directors to approve the Arrangement. See "Canadian Securities Matters — Majority of Minority Approval".

        To the knowledge of the management of Lorus, there is no material interest of any director or officer of Lorus, or their nominees, or anyone who has held office as such since the beginning of Lorus' last completed financial year or of any associate or affiliate of any of the foregoing, in any matter to be acted upon at the Meeting, other than the foregoing and as described elsewhere in this Circular or the appendices attached hereto.

25

THE ARRANGEMENT

Background to the Arrangement

        Since its inception, Lorus has financed its operations and technology acquisitions primarily from equity and debt financings, the exercise of warrants and stock options, and interest income on funds held for future investments.

        To date, none of Lorus' products has been approved by regulatory agencies for sale and Lorus has accumulated losses in the development of its products in excess of $100 million. The amount to be received by New Lorus pursuant to the Arrangement will be approximately $8.5 million, subject to a $600,000 holdback and a maximum post closing adjustment of $270,000, not including the costs of the transaction. In addition, Non-U.S Persons will hold, at the Effective Time, in the aggregate, approximately a 0.5% economic equity interest in a new real estate development venture to be carried on by RealCo and U.S. Persons will, subject to certain limitations, receive a cash payment in lieu of such economic equity interest.

        Beginning in January, 2006, Pinnacle and Lorus began discussions with a view to pursuing an arrangement that would restructure Lorus and provide non-dilutive financing for Lorus' business. Following negotiations, on April 4, 2006, Lorus and Pinnacle entered into the Letter of Intent in respect of the Arrangement.

        Following the entering into of the Letter of Intent, management of Lorus provided a summary of the proposed transaction to the Board. At each subsequent regularly scheduled quarterly board meeting thereafter, management provided the Board with an update as to the progress of negotiations and the members of the Board discussed issues, if any, related to the Arrangement.

        On May 1, 2007, the Board being satisfied that there were no significant outstanding issues and that all parties to the Arrangement were satisfied with the terms of the Arrangement, those members of the Board entitled to vote thereon (High Tech's representative declaring a conflict of interest) approved the agreements relating to the Arrangement and the Arrangement, subject to regulatory and Securityholder approval.

        The Board of Directors engaged Deloitte & Touche LLP to consider whether the Arrangement is fair, from a financial point of view, to the Securityholders. In connection with this mandate, Deloitte & Touche LLP has prepared the Fairness Opinion that states that, as of the date of the opinion, the Arrangement is fair, from a financial point of view, to the Securityholders. The Fairness Opinion is subject to the restrictions, limitations and assumptions contained therein and should be read in its entirety. See Appendix E (Fairness Opinion) attached hereto.

Benefits of the Arrangement

        There are a number of benefits that are anticipated to result from the Arrangement and therefore enhance overall Securityholder value, including the following:

•

Shareholders will hold 100% of the New Lorus Common Shares and New Lorus will carry on the same business that Lorus carried on prior to the completion of the Arrangement, but with the injection of approximately $8.5 million, subject to a $600,000 holdback and a maximum post closing adjustment of $270,000, not including the costs of the transaction, without any dilution of the Shareholders. New Lorus will continue to execute Lorus' current business plan going forward, with the board of directors and management team of New Lorus being comprised of the same individuals who are currently the directors and management team members of Lorus;



•

Non-U.S. Persons will hold, at the Effective Time, in the aggregate, approximately 59% of the RealCo Voting Shares then outstanding, representing approximately a 0.5% economic equity interest in RealCo in the form of RealCo Voting Shares; and



•

U.S. Persons will, subject to certain limitations, receive a cash payment in an amount equal to the value of the RealCo Voting Shares otherwise distributable to them, such amount determined based on the price per RealCo Voting Share paid at the Effective Time by Investor to New Lorus pursuant to the Pinnacle Share Purchase Agreement.

        See "— Shareholder Entitlements".

26

        As a result of the Arrangement, Investor, an affiliate of Pinnacle, will obtain an economic interest in a company having certain non-transferable corporate attributes, including, among other things, a wide shareholder base and status as a "reporting issuer" under applicable Canadian Securities Legislation, all of which Investor believes may be of benefit to RealCo's business following completion of the Arrangement.

Intention of Certain Securityholders

        High Tech, the Technifund Entities and TEMIC have entered into agreements pursuant to which they will vote their Securities in favour of the Arrangement Resolution. In addition, the directors and officers of Lorus who are Securityholders have expressed their intention to vote their Securities in favour of the Arrangement Resolution. High Tech, the Technifund Entities, TEMIC and the directors and officers of Lorus held in aggregate, as of the Record Date, Securities representing approximately 37% of the votes attached to all of the Securities.

The Arrangement

        If the Arrangement is approved at the Meeting, the Final Order issued and the other conditions to completion of the Arrangement have been satisfied, the Articles of Arrangement will be filed and, at the Effective Time, the following will occur and will be deemed to occur in the following order without further act or formality:

(a)

The Shareholders and holders of Options and Warrants will transfer their Common Shares, Options and Warrants, as applicable, to New Lorus in exchange for the issuance by New Lorus of New Lorus Common Shares, New Lorus Options and New Lorus Warrants, respectively, having the same value, terms and conditions as the Common Shares, Options and Warrants;



(b)

New Lorus will repurchase the New Lorus Warrants from TEMIC pursuant to the Warrant Repurchase Agreement;



(c)

Pursuant to the Debenture Assumption Agreement, New Lorus will assume Lorus' obligation to pay TEMIC the $15 million aggregate principal amount of the Convertible Debentures plus accrued and unpaid interest thereon in consideration for Lorus issuing the Lorus Note. The right of TEMIC to convert the Convertible Debentures into Common Shares will be exchanged for the right to convert such debentures into an equal number of New Lorus Common Shares;



(d)

Lorus will surrender to New Lorus for cancellation the initial New Lorus Common Share that was issued to Lorus upon the incorporation of New Lorus;



(e)

The articles of Lorus will be amended to change its name to 4325231 Canada Inc. or a name to be used for real estate development purposes;



(f)

The articles of New Lorus will be amended to change its name to "Lorus Therapeutics Inc.";



(g)

The articles of Lorus will be amended to conform with the form of the amended articles attached as Appendix B hereto, such amendments to effect, among other things, a reorganization of the share capital of Lorus to create an unlimited number of RealCo Voting Shares and an unlimited number of RealCo Non-Voting Shares. The RealCo Voting Shares and the RealCo Non-Voting Shares will rank equally with respect to participation in dividends and the liquidation of Lorus;



(h)

As part of the reorganization of the share capital of Lorus, the Common Shares held by New Lorus will be exchanged for 21,127,828 RealCo Voting Shares and 2,078,872,172 RealCo Non-Voting Shares and the Options and Warrants will be cancelled and a right to acquire Common Shares under the Lorus Stock Option Plans will become the right to acquire the equivalent number of New Lorus Common Shares;

27

(i)

Pursuant to the Tangible Business Assets Transfer Agreement, Lorus will transfer the Tangible Business Assets to GeneSense in consideration for the issuance by GeneSense of one GeneSense Share to Lorus;



(j)

Pursuant to the Antisense Patent Transfer Agreement, GeneSense will transfer the Antisense Patent Assets to New Lorus in consideration for the issuance by New Lorus of the New Lorus Note 1;



(k)

Pursuant to the Virulizin and Small Molecule Patent Transfer Agreement, Lorus will transfer the Virulizin and Small Molecule Patent Assets to GeneSense in consideration for the issuance by GeneSense of one GeneSense Share to Lorus;



(l)

GeneSense will repay its debt owing to Lorus in exchange for the issuance by GeneSense of one GeneSense Share to Lorus;



(m)

Pursuant to the Prepaid Expenses and Receivables Transfer Agreement, Lorus will transfer the Prepaid Expenses and Receivables to GeneSense in exchange for the issuance by GeneSense of one GeneSense Share to Lorus;



(n)

Pursuant to the GeneSense Share Purchase Agreement, Lorus will transfer all of the GeneSense Shares to New Lorus at a price equal to their fair market value in exchange for the assumption by New Lorus of Lorus' remaining liabilities and transaction costs (other than the Lorus Note) and the issuance by New Lorus of the New Lorus Note 2;



(o)

Pursuant to the NuChem Share Purchase Agreement, Lorus will transfer all of the NuChem Shares held by it to New Lorus at a price equal to their fair market value in consideration for the issuance by New Lorus of the New Lorus Note 3;



(p)

Lorus will assign all of its contractual obligations to New Lorus or its assignee and New Lorus or its assignee will assume such obligations;



(q)

New Lorus will offer employment to all of the employees of Lorus and will assume all employment obligations related thereto;



(r)

New Lorus will repay the amount owing by New Lorus to Lorus under the New Lorus Note 2 and New Lorus Note 3 by way of set off against the Lorus Note and the issuance to Lorus of the New Lorus Replacement Note for an amount equal to the amount by which the aggregate amount owing by New Lorus under the New Lorus Note 2 and New Lorus Note 3 exceeds the amount of the Lorus Note;



(s)

Lorus will reduce its stated capital by an amount equal to its remaining cash, cash equivalents, and short term and long term investments less the amount required to fund the repurchase of RealCo Voting Shares described in paragraph (v) below, plus an amount equal to the amount of the New Lorus Replacement Note and will distribute such property to New Lorus in satisfaction of the capital reduction amount;



(t)

Pursuant to the Pinnacle Share Purchase Agreement, Investor will purchase the Appropriate Number of the RealCo Voting Shares and all of the RealCo Non-Voting Shares from New Lorus in consideration of a cash payment equal to $0.0040775156 per RealCo Voting Share and $0.0040775156 per RealCo Non-Voting Share, subject to payment and an adjustment of up to $270,000, in accordance with the Pinnacle Share Purchase Agreement and a holdback of $600,000 pursuant to the Escrow Agreement;



(u)

The New Lorus Common Shares will be conditionally listed on the TSX and the AMEX subject to the fulfillment of the conditions set out in the applicable conditional approval letter;



(v)

New Lorus will reduce its stated capital by an amount equal to the fair market value of its RealCo Voting Shares, determined based on the price per RealCo Voting Share paid by Investor in

28

paragraph (t) above. In satisfaction of the capital reduction, New Lorus will: (i) in the case of Non-U.S. Persons, distribute RealCo Voting Shares on a pro rata basis, disregarding fractions (provided such distribution effects a distribution of not less than 90% of the RealCo Voting Shares then owned by New Lorus); and (ii) in the case of U.S. Persons, sell to Lorus for cash consideration New Lorus' remaining RealCo Voting Shares (not to exceed 10% of the RealCo Voting Shares then owned by New Lorus) at the price per RealCo Voting Share paid by Investor at the Effective Time in paragraph (t) above and distribute the proceeds of such sale to U.S. Persons on a pro rata basis, disregarding fractions, as the cash equivalent to the value of the RealCo Voting Shares otherwise distributable to them;

(w)

Investor will purchase all of the RealCo Voting Shares held by High Tech and the Technifund Entities at a fair market price determined based on the price per RealCo Voting Share paid by Investor in paragraph (t) above;



(x)

Investor will subscribe for 294,296,851 additional RealCo Non-Voting Shares for an aggregate cash payment of $1.2 million; and



(y)

Pinnacle or an affiliate thereof will transfer interests in certain real estate development projects to Lorus in return for a cash payment and a promissory note of Lorus and Lorus will enter into certain development, management and marketing agreements with Pinnacle and/or one or more affiliates thereof (see Appendix H, "Information Respecting RealCo and Financial Statements of the Pinnacle Partnerships — Summary of the Follow-On Real Estate Transactions").

        The respective obligations of Lorus, NuChem, GeneSense, New Lorus, Pinnacle and Investor to complete the transactions contemplated by the Arrangement are subject to a number of conditions which must be satisfied or waived in order for the Arrangement to become effective. See "The Arrangement — Arrangement Agreement".

Pinnacle Share Purchase Agreement

        Under the Pinnacle Share Purchase Agreement, Investor will purchase the Appropriate Number of RealCo Voting Shares and all of the RealCo Non-Voting Shares. The purchase price payable by Investor to New Lorus for each of such shares will be equal to $0.0040775156 per share; provided that, in no event will the aggregate amount payable by Investor under the Pinnacle Share Purchase Agreement and to certain Shareholders pursuant to Section 3.01(24) of the Plan of Arrangement exceed $8,510,000.

        The amount of $600,000 will be withheld from the purchase price payable by Investor on the Effective Date and will be dealt with in accordance with the Escrow Agreement. See "The Arrangement — Escrow Agreement".

        The aggregate purchase price payable at Closing pursuant to the Pinnacle Share Purchase Agreement has been determined based on certain information available to the parties as at January 31, 2007 (the "Pre-Closing Buyout Amount"). On or before the date that is 90 days after the Effective Date, New Lorus will prepare and deliver to Investor an unaudited balance sheet setting out the calculation of the purchase price based on certain information available as at the Closing Date (the "Closing Buyout Amount"). The Closing Buyout Amount (including the documents used in connection with the calculation thereof) is subject to Investor's review and comment. If the parties cannot agree on the Closing Buyout Amount, the issue will be referred to an arbitrator.

        If the Closing Buyout Amount (as determined by the parties or an arbitrator, as the case may be) exceeds the Pre-Closing Buyout Amount, Investor will pay the amount of such difference, up to a maximum of $270,000, to New Lorus. If the Closing Buyout Amount (as so determined) is less than the Pre-Closing Buyout Amount, New Lorus will pay the amount of such difference to Investor. In both cases, the purchase price will be deemed to be adjusted accordingly.

29

Asset Transfer Agreements and Subsidiary Share Purchase Agreements

        As part of the Arrangement and in order to transfer to New Lorus the business currently carried on by Lorus:

•

Lorus will transfer the Tangible Business Assets to GeneSense pursuant to the terms and conditions of the Tangible Business Assets Transfer Agreement in consideration for the issuance by GeneSense of one GeneSense Share to Lorus;



•

Pursuant to the Virulizin and Small Molecule Patent Assets Transfer Agreement, Lorus will transfer the Virulizin and Small Molecule Patent Assets to GeneSense in consideration for the issuance by GeneSense of one GeneSense Share to Lorus and pursuant to the Prepaid Expenses and Receivables Transfer Agreement, Lorus will transfer the Prepaid Expenses and Receivables to GeneSense in consideration for the issuance by GeneSense of one GeneSense Share to Lorus;



•

GeneSense will transfer the Antisense Patent Transfer Assets to New Lorus pursuant to the Antisense Patent Assets Transfer Agreement in consideration for the issuance by New Lorus to GeneSense of the New Lorus Note 1 in an amount equal to the fair market value of the Antisense Patent Assets;



•

Pursuant to the GeneSense Share Purchase Agreement, Lorus will transfer all of the GeneSense Shares to New Lorus at a price equal to their fair market value in exchange for the assumption by New Lorus of Lorus' remaining liabilities (other than the Lorus Note) and the issuance by New Lorus to Lorus of the New Lorus Note 2; and



•

Pursuant to the NuChem Share Purchase Agreement, Lorus will transfer all of the NuChem Shares held by it to New Lorus at a price equal to their fair market value in consideration for the issuance by New Lorus to Lorus of the New Lorus Note 3.

        New Lorus will, as of the Effective Time, continue to employ each of the employees employed by Lorus as of the Closing Date on terms and conditions of employment that are the same as those applicable to such employees as of the Closing Date.

Indemnification Agreement

        Pursuant to the Indemnification Agreement, New Lorus will fully indemnify and save harmless Lorus and its directors, officers and employees from and against all damages, losses, expenses (including fines and penalties), other third party costs and legal expenses, to which any of them may be subject arising out of any matter occurring: (i) prior to, at or after the Effective Time and directly or indirectly relating to the Assets (including losses for income, sales, excise and other taxes arising in connection with the transfer of any Asset) or the conduct of the business of Lorus prior to the Effective Time; (ii) prior to, at or after the Effective Time as a result of any and all interests, rights, liabilities and other matters relating to the Assets; and (iii) prior to or at the Effective Time and directly or indirectly relating to, with certain exceptions, any of the activities of Lorus or the Arrangement.

Escrow Agreement

        Pursuant to the Escrow Agreement, $600,000 of the purchase price payable by Investor to New Lorus under the Pinnacle Share Purchase Agreement will be withheld by Investor and placed into escrow with Equity Transfer & Trust Company, as escrow agent. The monies placed into escrow will be held as security for and a partial, but not exclusive, source of satisfaction of New Lorus' indemnification obligations to the Purchaser Indemnified Parties under the Pinnacle Share Purchase Agreement until the first anniversary of the Closing Date.

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Purchase of RealCo Voting Shares from Certain Shareholders

        As part of the Arrangement and at the request of Investor, Investor will purchase all of the RealCo Voting Shares to be received by High Tech and the Technifund Entities pursuant to the Arrangement, at the same price per RealCo Voting Share as paid at the Effective Time by Investor to New Lorus for each RealCo Voting Share pursuant to the Pinnacle Share Purchase Agreement, upon and subject to the terms and conditions of share purchase agreements between Investor and each of High Tech and the Technifund Entities. Lorus has agreed to pay all third party and out of pocket costs of High Tech in respect of this purchase, estimated to be $10,000.

Shareholder Entitlements

New Lorus Common Shares

        As part of the Arrangement, each Shareholder will receive one New Lorus Common Share for each Common Share held.

RealCo Voting Shares

        As part of the Arrangement, in addition to receiving New Lorus Common Shares as indicated above, each Shareholder (other than U.S. Persons, High Tech and the Technifund Entities) will receive approximately 0.08 RealCo Voting Shares for each Common Share held, disregarding fractions. Any entitlement that would otherwise include a fractional interest in RealCo Voting Shares will be rounded down to the next lowest whole number of RealCo Voting Shares. No cash payment or other compensation will be made with respect to any such fractional interest.

        The actual number of RealCo Voting Shares that will be distributed to Shareholders (other than U.S. Persons, High Tech and the Technifund Entities) depends on a number of variables that will be determined as of the Effective Date, including, among other things, the actual number of Common Shares held by U.S. Persons and the actual number of RealCo Voting Shares that Investor will purchase from New Lorus pursuant to the Pinnacle Share Purchase Agreement. The entitlement to RealCo Voting Shares described above is an estimate based on current information available to Lorus, however, such entitlement is subject to change and will not be determined until the Effective Date.

Cash Payments

        As part of the Arrangement, in addition to receiving New Lorus Common Shares as indicated above, each U.S. Person, High Tech and the Technifund Entities will receive a cash payment equal to $0.0040775156 for each RealCo Voting Share that they would otherwise have received, rounded to the nearest $0.01. Based on current information available to Lorus with respect to the number of Common Shares held by U.S. Persons, High Tech and the Technifund Entities, the estimated cash payments are expected to be approximately as follows:

        The cash payments described above are estimates based on current information available to Lorus, however, such payments are subject to change based on the actual number of Common Shares held by U.S. Persons, High Tech and the Technifund Entities as of the Effective Date.

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Treatment of Options, Convertible Debentures and Warrants

        The Plan of Arrangement provides that the Options and Warrants will be exchanged for New Lorus Options and New Lorus Warrants and will thereafter be cancelled and will cease to represent any right or claim whatsoever to shares of Lorus. The New Lorus Options will entitle the holder thereof to receive, upon the exercise of the New Lorus Options, a number of New Lorus Common Shares equivalent to the number of Common Shares such holder would have been entitled to receive pursuant to the Options.

        Pursuant to the Debenture Assumption Agreement, New Lorus will assume Lorus' obligation to pay TEMIC the $15 million aggregate principal amount plus accrued interest owing under the Convertible Debentures in consideration for Lorus issuing the Lorus Note). The right of TEMIC under the Convertible Debentures to convert such debentures into Common Shares will be exchanged for the right to convert such debentures into an equal number of New Lorus Common Shares. In consideration of TEMIC's agreement to permit Lorus to assign, and New Lorus to assume, the obligations of Lorus under the Convertible Debentures, TEMIC has requested that New Lorus repurchase the New Lorus Warrants held by it. Accordingly, pursuant to the terms and conditions of the Warrant Repurchase Agreement, New Lorus will repurchase the New Lorus Warrants from TEMIC effective the Effective Date for a purchase price of $252,000, representing the Black-Scholes value of the New Lorus Warrants. The Warrant repurchase is subject to the approval of the TSX. Lorus has agreed to pay all third party and out of pocket costs of TEMIC in respect of these matters, estimated to be $5,000.

Effect of the Arrangement

        Upon completion of the Arrangement, the Shareholders will be the holders of all of the issued and outstanding New Lorus Common Shares and New Lorus will be the holder of the Antisense Patent Assets, and will carry on the business previously carried on by Lorus with an additional working capital of approximately $8.5 million, subject to a $600,000 holdback and a maximum post closing adjustment of $270,000, not including the costs of the transaction. GeneSense will be a wholly-owned subsidiary of New Lorus and New Lorus will hold all of the NuChem Shares previously held by Lorus. GeneSense will be the holder of the Tangible Business Assets, the Virulizin and Small Molecule Patent Assets and the Prepaid Expenses and Receivables, which assets, together with the Antisense Patent Assets and NuChem Shares, constitute all of the assets of Lorus prior to the Arrangement.

        In addition, Non-U.S. Persons will hold, at the Effective Time, in the aggregate, approximately 59% of the RealCo Voting Shares then outstanding, representing approximately a 0.5% economic equity interest in RealCo. Following Closing, RealCo will hold limited partnership interests in two residential and mixed-use condominium projects in Toronto, Ontario and may raise additional capital on a dilutive basis to focus on pursuing opportunities as a real estate development company. HighTech, the Technifund Entities and U.S. Persons will, subject to certain limitations, receive a cash payment in an amount equal to the value of the RealCo Voting Shares otherwise distributable to them. See "Exchange of Common Shares and "— Cash Payments". Neither the RealCo Voting Shares nor the RealCo Non-Voting Shares will be listed on any stock exchange.

        Provided that the transactions described in this Circular are approved, immediately upon completion of the transactions contemplated by the Arrangement, Investor will own approximately 41% of the RealCo Voting Shares and 100% of the RealCo Non-Voting Shares, representing, in the aggregate at the Effective Time, approximately 99.5% of the economic equity interest in RealCo.

        Lorus will also assign all of its contractual obligations to New Lorus and New Lorus will assume such obligations, including employment obligations.

        In connection with the Arrangement, New Lorus will cause the New Lorus Common Shares to be listed on the TSX subject to the fulfillment of the conditions set by the TSX. Lorus has made an application to have the New Lorus Common Shares listed on the AMEX, but cannot assure Shareholders that the New Lorus Common Shares will be listed and posted for trading on the AMEX. The New Lorus Common Shares will be registered under section 12(b) of the 1934 Act. In addition, the Common Shares will be delisted from both the TSX and the AMEX and Lorus will cease reporting under the 1934 Act.

        As a result of the Arrangement, Investor, an affiliate of Pinnacle, will obtain an economic interest in a company having certain non-transferable corporate attributes, including, among other things, a wide shareholder base and status as a "reporting issuer" under applicable Canadian Securities Legislation, all of which Investor believes may be of benefit to RealCo's business following completion of the Arrangement.

32

Corporate Structure

        Presented below is a simplified corporate structure of Lorus before and immediately after completion of the Arrangement:

CURRENT STRUCTURE

STRUCTURE IMMEDIATELY AFTER THE ARRANGEMENT

Arrangement Agreement

        The following is a description of the material terms and conditions of the Arrangement Agreement and is qualified in its entirety by the specific terms and conditions of the Arrangement Agreement, a copy of which is available under Lorus' profile on SEDAR at www.sedar.com. Securityholders are encouraged to read the Arrangement Agreement and the Plan of Arrangement in their entirety.

33

General

        Lorus, NuChem, GeneSense, New Lorus, Pinnacle and Investor have entered into the Arrangement Agreement, which contains certain covenants, representations and warranties of, and from, each of Lorus, New Lorus, Investor and Pinnacle and various conditions precedent, both mutual and with respect to each of Lorus, NuChem, GeneSense, New Lorus, Pinnacle and Investor, to the implementation of the Arrangement.

Mutual Conditions Precedent

        The respective obligations of Lorus, NuChem, GeneSense, New Lorus, Pinnacle and Investor to consummate the transactions contemplated in the Arrangement Agreement, and in particular the Arrangement, are subject to the satisfaction, on or before the Effective Date or such other time as is specified below, of the following conditions, any of which may be waived by the mutual consent of such parties without prejudice to their right to rely on any other of such conditions:

(a)

the Interim Order will have been granted in form and substance satisfactory to each of Lorus and Investor, acting reasonably, and will not have been set aside or modified in a manner unacceptable to such parties, acting reasonably, on appeal or otherwise;



(b)

on or before June 30, 2007 the Arrangement Resolution will have been passed by the Securityholders in form and substance satisfactory to each of Lorus and Investor, acting reasonably, duly approving the Arrangement in accordance with the Interim Order and the requirements of applicable Securities Laws, as applicable;



(c)

on or before July 15, 2007 the Final Order will have been granted in form and substance satisfactory to each of Lorus and Investor, each acting reasonably;



(d)

each of High Tech and the Technifund Entities will have (i) voted all Common Shares held by, or under the control or direction of, them in favour of the Arrangement, and (ii) agreed, subject to certain terms and conditions, to sell to Investor at the Effective Time all of the RealCo Voting Shares held by each of High Tech and the Technifund Entities pursuant to written documentation (which remains in full force and effect) in form and substance satisfactory to each of Lorus and Investor, each acting reasonably, and Investor, acting reasonably, will be satisfied that no condition exists that has resulted in, or could result in, any of High Tech and the Technifund Entities failing to sell all of its RealCo Voting Shares to Investor pursuant to the Arrangement;



(e)

the Articles of Arrangement, together with the Final Order, to be filed with the Director in accordance with the Arrangement Agreement and Section 192(6) of the CBCA, shall be in form and substance satisfactory to each of Lorus and Investor, each acting reasonably;



(f)

the TSX will have accepted notice of the Arrangement and the transactions contemplated thereby and will have approved the listing of the New Lorus Common Shares, subject only to the conditions that may be imposed by the TSX;



(g)

the AMEX will have accepted notice of the Arrangement and the transactions contemplated and will have approved the listing of the New Lorus Common Shares, subject only to the conditions that may be imposed by the AMEX;



(h)

subject to Section 11.4(c) of the Arrangement Agreement, the Arrangement will have become effective on or before July 31, 2007;



(i)

there will be no action taken under any Applicable Law that:



(i)

makes illegal or otherwise directly or indirectly restrains, enjoins or prohibits the Arrangement or any other transactions contemplated by the Arrangement Agreement;



(ii)

results in a judgment or assessment of material damages directly or indirectly relating to the transactions contemplated by the Arrangement Agreement; or



(iii)

has had or, if the Arrangement was consummated, would reasonably be expected to result in, a Material Adverse Effect on Lorus, NuChem, GeneSense, New Lorus, Pinnacle or Investor;

34

(j)

the Pinnacle Share Purchase Agreement will have been executed on terms satisfactory to New Lorus and Investor, acting reasonably, in accordance with the Arrangement Agreement;



(k)

the Escrow Agreement will have been executed on terms satisfactory to Investor and New Lorus, acting reasonably;



(l)

each of the Asset Transfer Agreements and the Subsidiary Share Purchase Agreements will have been executed by each of the parties thereto and each of the transactions contemplated by such agreements will have been completed in accordance with the terms thereof;



(m)

the Indemnification Agreement will have been executed on terms satisfactory to Investor, New Lorus and Lorus, each acting reasonably, in accordance with the Arrangement Agreement;



(n)

no material action or proceeding will be pending or threatened by any Person or Governmental Authority to enjoin or prohibit the Arrangement from being completed, or result in a judgment in material damages relating to the transaction as contemplated in the Arrangement Agreement;



(o)

other than High Tech and the Technifund Entities (except to the extent that any such Person has terminated any agreement contemplated by subsection (d) above), no Person, whether alone or jointly or in concert with others, will, immediately prior to the Effective Date, beneficially own, or exercise control or direction over, more than 10% of the then issued and outstanding Common Shares; and



(p)

immediately prior to the Effective Date, High Tech and the Technifund Entities (together with any Person acting jointly or in concert with High Tech and the Technifund Entities) will not beneficially own, or exercise control or direction over, in the aggregate, more than 25% of the then issued and outstanding Common Shares; and



(q)

Pinnacle, in its reasonable judgment, will be satisfied that, immediately prior to the Effective Time, Shareholders Resident in the United States do not hold, in the aggregate, more than 10% of the outstanding Common Shares.

        The foregoing conditions are provided in the Arrangement Agreement for the mutual benefit of each of Lorus and Investor and may be asserted by each of Lorus and Investor regardless of the circumstances and may be waived by each of Lorus and Investor, at any time.

Conditions to Obligations of Lorus

        The obligations of Lorus to consummate the transactions contemplated in the Arrangement Agreement, and in particular the Arrangement, are subject to the satisfaction, on or before the Effective Date or such other time as is specified below, of the following conditions:

(a)

each of the acts and undertakings of Pinnacle and Investor to be performed on or before the Effective Date pursuant to the terms of the Arrangement Agreement will have been duly performed by Pinnacle and Investor in accordance with the terms of the Arrangement Agreement and the Plan of Arrangement;



(b)

except as affected by the transactions contemplated by the Arrangement Agreement, the representations and warranties of Investor contained in the Arrangement Agreement and the representations and warranties of Pinnacle contained in the Arrangement Agreement will be true and correct in all material respects on the Effective Date with the same force and effect as though such representations and warranties had been made at and as of such time (except to the extent that such representations and warranties speak as of a particular date) except where the failure of such representations and warranties to be true and correct would not have a Material Adverse Effect on Pinnacle or Investor, and both Pinnacle and Investor will have complied in all material respects with their respective covenants in the Arrangement Agreement and Lorus shall have received certificates to that effect, dated the Effective Date, from a senior officer of each of Pinnacle and Investor, respectively, acting solely on behalf of the company in question and not in his personal capacity, to the best of his information and belief having made reasonable inquiry and Lorus shall have no actual knowledge to the contrary;

35

(c)

there shall not have occurred a Material Adverse Change in respect of Pinnacle or Investor;



(d)

all requisite consents, orders, approvals and authorizations, including, without limitation, regulatory and judicial approvals and orders, required or necessary for the completion of the Arrangement will have been completed or obtained on terms and conditions satisfactory to Lorus, acting reasonably, and all applicable statutory or regulatory waiting periods to the transactions contemplated under the Arrangement, will have been expired or been terminated, and no objection or opposition will have been filed, initiated or made by any regulatory authority during any applicable statutory or regulatory period;



(e)

Shareholders will not have exercised the Dissent Rights or similar rights, and will not have instituted proceedings to exercise the Dissent Rights or similar rights in connection with the Arrangement (other than Shareholders representing, in the aggregate, not more than 2.5% of the outstanding Common Shares);



(f)

Lorus will have received a written fairness opinion from Deloitte & Touche LLP confirming its preliminary opinion that the Arrangement is fair, from a financial point of view, to the Securityholders, which opinion will have been included in this Circular; and



(g)

there being no change in law (including a proposal by the Minister of Finance of Canada to amend the Tax Act or any announcement, governmental or regulatory initiative, condition, event or development involving a change or a prospective change) that in the judgment of Lorus, acting reasonably, directly or indirectly, has or may have a Material Adverse Effect on or with respect to Lorus, GeneSense, NuChem or New Lorus, with respect to the regulatory regime applicable to their respective businesses and operations, or with respect to consummating the transactions contemplated by the Plan of Arrangement.

        The foregoing conditions provided in the Arrangement Agreement are for the exclusive benefit of Lorus and may be asserted by Lorus regardless of the circumstances or may be waived by Lorus in its sole discretion, in whole or in part, at any time.

Conditions to Obligations of Pinnacle and Investor

        The obligations of Pinnacle and Investor to consummate the transactions contemplated in the Arrangement Agreement, and in particular the Arrangement, are subject to the satisfaction, on or before the Effective Date or such other time as is specified below, of the following conditions:

(a)

each of the acts and undertakings of each of Lorus, NuChem, GeneSense and New Lorus to be performed on or before the Effective Date pursuant to the terms of the Arrangement Agreement will have been duly performed by each of Lorus, NuChem, GeneSense and New Lorus in accordance with the terms of the Arrangement Agreement and the Plan of Arrangement;



(b)

except as affected by the transactions contemplated by the Arrangement Agreement, the representations and warranties of Lorus contained in the Arrangement Agreement and of New Lorus contained in the Arrangement Agreement will be true in all material respects on the Effective Date with the same force and effect as though such representations and warranties had been made at and as of such time (except to the extent such representations and warranties speak as of a particular date) except where the failure of such representations and warranties to be true and correct would not have a Material Adverse Effect on Lorus, and Lorus will have complied in all material respects with its covenants in the Arrangement Agreement and Investor will have received certificates to that effect, dated the Effective Date, from a senior officer of each of Lorus, NuChem, GeneSense and New Lorus respectively, acting solely on behalf of the company in question and not in his personal capacity, to the best of his information and belief having made reasonable inquiry and Investor shall have no actual knowledge to the contrary, provided that, Lorus will have the ability in such certificate to update the representation and warranty of Lorus contained in Section 4.1(g) of the Arrangement Agreement;



(c)

there will not have occurred any Material Adverse Change in respect of Lorus or any of its subsidiaries;

36

(d)

the directors and officers of Lorus identified by Investor will have provided their resignations, together with mutual releases in favour of Lorus and Investor, effective on the Effective Date, each in a form and substance and on such terms as are satisfactory to Investor, acting reasonably;



(e)

Lorus will not have declared or paid any dividends or made any other distributions of any of its securities or granted any further options or warrants or any right or privilege capable of becoming an option or agreement in respect of its securities;



(f)

Investor will be satisfied that all steps have been taken to ensure that all liabilities and obligations of Lorus will have been paid or otherwise extinguished or assumed and Investor will have received such releases or other evidence of the satisfaction or assumption of such liabilities, as Investor, in its sole discretion, considers appropriate or necessary;



(g)

all security registrations against Lorus will have been discharged; and



(h)

there being no change in law (including a proposal by the Minister of Finance of Canada to amend the Tax Act or any announcement, governmental or regulatory initiative, condition, event or development involving a change or a prospective change) that in the judgement of Investor or Pinnacle, acting reasonably, directly or indirectly, has or may have a Material Adverse Effect on or with respect to Lorus, GeneSense or NuChem, with respect to the regulatory regime applicable to their respective businesses and operations, or with respect to consummating the transactions contemplated by the Plan of Arrangement.

        The foregoing conditions are provided in the Arrangement Agreement for the exclusive benefit of Investor and may be asserted by Investor regardless of the circumstances or may be waived by Investor in its sole discretion, in whole or in part, at any time.

        If the Arrangement is approved by the Securityholders, the Final Order is obtained from the Court and all of the conditions set forth in the Arrangement Agreement are satisfied or waived, Lorus intends to cause a copy of the Articles of Arrangement to be filed with the Director, together with such other materials as may be required by the Director.

        Notwithstanding the foregoing, the Arrangement Resolution proposed for consideration by the Securityholders authorizes the Board of Directors, without further notice to or approval of Securityholders, to amend the Arrangement Agreement, to decide not to proceed with the Arrangement and to revoke the Arrangement Resolution at any time prior to the Effective Date. See Appendix A attached hereto for the text of the Arrangement Resolution.

Non-Solicitation and Right to Match

        The Arrangement Agreement provides that Lorus will immediately terminate and cause to be terminated all solicitations, initiations, encouragements, discussions or negotiations with any parties conducted before the date of the Arrangement Agreement with respect to any Acquisition Proposal and that it should not directly or indirectly, through any of its officers, directors, employees or any other Person acting on its behalf:

(a)

solicit, initiate, invite or knowingly encourage (including, by way of furnishing confidential information or entering into any form of agreement, arrangement or understanding) any proposal by a third party or third parties that may reasonably be expected to lead to a transaction substantially similar to that contemplated by the Arrangement Agreement or with respect to any asset purchase, merger, amalgamation, arrangement, share exchange, take-over bid, tender offer, recapitalization, consolidation or business combination involving Lorus existing prior to the Effective Date, excluding the transactions contemplated by the Arrangement Agreement and the Plan of Arrangement (any such inquiry or proposal in respect of any of the foregoing being an "Acquisition Proposal"); and



(b)

release any third party from any confidentiality agreement in respect of an Acquisition Proposal to which such third party is a party or, release any third party from any standstill agreement to which such third party is a party, unless such third party has made a Superior Proposal (as hereinafter defined).

37

        Lorus will promptly notify Investor of any current or future Acquisition Proposal of which Lorus' directors or senior officers became aware or any request for non-public information relating to Lorus in connection with an Acquisition Proposal or for access to the properties, books or records of Lorus for a list of the Securityholders by any Person considering making an Acquisition Proposal.

        However, the Arrangement Agreement provides that Lorus (and its directors and officers) may engage in discussions or negotiations with a third party who (without any solicitation, initiation or encouragement, directly or indirectly, by Lorus or any of the officers, directors, employees or agents acting on its behalf) seeks to initiate such discussions or negotiations and, subject to execution of a confidentiality agreement, may furnish such third party information concerning Lorus and its business, if:

(a)

the third party has first made a written bona fide Acquisition Proposal: (i) in respect of which any required financing has been demonstrated to the satisfaction of the Board of Directors of Lorus, acting in good faith, to be reasonably likely obtained; (ii) in respect of which the Board of Directors determines (having consulted outside counsel) that in the exercise of its fiduciary duties it would be necessary for the Board of Directors to take such action in order to avoid breaching its fiduciary duties; and (iii) in respect of which the Board of Directors of Lorus determines in good faith, after consulting with financial advisors, if consummated in accordance with its terms, would result in a transaction more favourable financially to its Securityholders than the Arrangement (a "Superior Proposal"); and



(b)

prior to furnishing such information to such Person, Lorus provides prompt notice to Investor to the effect that it is furnishing information to such Person together with a copy of the confidentiality agreement referenced above and provides Investor with a list of the information provided to the Person making the Superior Proposal.

        Lorus will not accept, approve or recommend or enter into any agreement (except for a confidentiality agreement as described above) in respect of an Acquisition Proposal on the basis that it constitutes a Superior Proposal unless: (i) it has complied with its non-solicitation obligations under the Arrangement Agreement; (ii) it has provided Investor with a complete copy of the Acquisition Proposal document which has been determined to be a Superior Proposal with such deletions as are necessary to protect certain confidential portions; (iii) four Business Days (the "Notice Period") will have elapsed from the later of the date Investor received notice of the determination to accept, approve or recommend an agreement in respect of such Acquisition Proposal, and the date Investor received a copy of the Acquisition Proposal document; and (iv) it concurrently terminates the Arrangement Agreement and pays to Investor the non-completion fee described below under the heading "Arrangement Agreement — Lorus Non-Completion Fee". During the Notice Period, Lorus will provide a reasonable opportunity to Investor to consider, discuss and offer such adjustments in the terms and conditions of the Arrangement Agreement as would enable Lorus to proceed with its recommendation to the Securityholders with respect to the Arrangement; provided however that any such adjustment will be at the discretion of Lorus and Investor at the time. The Board of Directors will review in good faith any offer made by Investor to amend the terms of the Arrangement Agreement in order to determine, in its discretion, as part of its exercising of its fiduciary duties, whether the proposed amendments would, upon acceptance, result in such Superior Proposal ceasing to be a Superior Proposal. If the Board of Directors determines that the Superior Proposal would cease to be a Superior Proposal, it will so advise Investor and will accept the offer by Investor to amend the terms of the Arrangement Agreement and Lorus and Investor agree to take such actions and execute such documents as are necessary to give effect to the foregoing. If the Board of Directors continues to believe, in good faith and after consultation with financial advisors and outside counsel, that such Superior Proposal remains a Superior Proposal and therefore rejects the amendments offered by Investor, Lorus may, subject to the terms of the Arrangement Agreement, including the payment of the Lorus non-completion fee, accept, approve, recommend or enter into an agreement, understanding or arrangement in respect of such Superior Proposal. Each successive material modification of any Acquisition Proposal or a Superior Proposal will constitute a new Acquisition Proposal and will require a four business day Notice Period from the date such amendment is communicated to Investor.

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Lorus Non-Completion Fee

        If at any time after the execution of, and prior to the termination of, the Arrangement Agreement:

(a)

the Board of Directors withdraws, qualifies or changes any of its recommendations or determinations as to the fairness from a financial point of view of the Arrangement in a manner adverse to Investor or resolves to do so prior to the Effective Date; provided that if the Board of Directors determines in good faith that Pinnacle or Investor is in material breach of any of its representations, warranties or covenants under the Arrangement Agreement and communicates such determination to the Securityholders, such communication will not constitute a withdrawal or qualification of the Board of Directors; or



(b)

Lorus accepts, approves, recommends or enters into any contractual agreement with any Person with respect to an Acquisition Proposal prior to the Meeting, excluding a confidentiality agreement entered into in compliance with the Arrangement Agreement; or



(c)

except as contemplated by the Arrangement Agreement with respect to Investor's right to respond to any Superior Proposal, Lorus publicly announces its intention to do any of the foregoing; or



(d)

the Meeting is cancelled, adjourned or postponed except with the prior written consent of Investor,

(each of the above being a "Lorus Payment Event"), then Lorus shall pay to Investor the amount of $600,000 as a non-completion fee in immediately available funds within two Business Days after the occurrence of any one of the Lorus Payment Events. Notwithstanding anything to the contrary, if a payment has been made under any of paragraphs (a), (b), (c) and (d) above, no further payment will be required for the events provided therein.

Pinnacle Non-Completion Fee

        If at any time after the execution of, and prior to the termination of the Arrangement Agreement, except in the event that the board of directors of Pinnacle or Investor determines in good faith that Lorus is in material breach of any of its representations, warranties or covenants under the Arrangement Agreement, the board of directors of Pinnacle or Investor withdraws its approval to enter into the Arrangement Agreement or, resolves to do so prior to the Effective Date (a "Pinnacle Payment Event"), then Pinnacle and Investor will be liable to pay to Lorus, on a joint and several basis, the amount of $600,000 as a non-completion fee in immediately available funds to an account designated by Lorus within two Business Days after the occurrence of any one of the Pinnacle Payment Events.

Representations and Warranties

        The Arrangement Agreement contains various representations and warranties of Lorus with respect to itself and its subsidiaries and New Lorus with respect to itself. These representations and warranties relate to, among other things: (a) corporate organization, existence and similar corporate matters; (b) capitalization; (c) the authorization, execution, delivery and enforceability of the Arrangement Agreement; (d) that the execution and delivery of the Arrangement Agreement and the completion of the Arrangement do not result in violation or breach of any of their respective constating documents; (e) their respective financial statements having been prepared in accordance with GAAP; (f) the absence of litigation; (g) completeness and accuracy of financial and corporate books and records; (h) the filing of tax returns and tax matters; (i) consents required (including those required by the TSX and the AMEX); (j) labour matters; and (k) director approvals.

        The Arrangement Agreement contains various representations and warranties of Pinnacle and Investor with respect to Pinnacle and Investor. These representations and warranties relate to, among other things: (a) corporate organization, existence and similar corporate matters; (b) capitalization; (c) the authorization, execution, delivery and enforceability of the Arrangement Agreement; (d) that the execution and delivery of the Arrangement Agreement and the completion of the Arrangement do not result in violation or breach of any of their respective constating documents; (e) consents required; and (f) director approvals.

39

Termination of the Arrangement Agreement

        The Arrangement Agreement may be terminated at any time prior to the Effective Time, whether before or after approval of the Arrangement by the Securityholders, by the mutual agreement of Lorus and Investor or by written notice based on the following:

(a)

by either Lorus or Investor, with respect to termination rights described above under the subheadings "Mutual Conditions Precedent", "Conditions to Obligations of Lorus" and "Conditions to Obligations of Investor", other than as a result of a breach of the Arrangement Agreement by the terminating party which has not been cured in accordance with the Arrangement Agreement; or



(b)

by Investor upon the occurrence of a Lorus Payment Event as described above under the subheading "Non-Completion Fee"; or



(c)

by Lorus upon the acceptance of a Superior Proposal pursuant to the Arrangement Agreement, as described above under the subheading "'Non-Solicitation and Right to Match", but only so long as the Arrangement has not been approved by the requisite majority of Securityholders; or



(d)

by Lorus upon the occurrence of a Pinnacle Payment Event.

        The Arrangement Agreement will be automatically terminated if the Securityholders do not approve the Arrangement at the Meeting.

Expenses of the Arrangement

        The expenses incurred by Lorus and New Lorus for the purposes of the Arrangement, including the professional fees (legal, financing, advisory and accounting), the expenses related to the preparation, printing and mailing of this Circular and the holding of the Meeting, transfer agent and depositary costs, audit costs, listing fees and the provision of the Fairness Opinion, which costs, in the aggregate, are estimated at $1.1 million, will be borne by New Lorus. Readers are cautioned that these expenses are estimates only and may not reflect the actual expenses incurred by Lorus and New Lorus.

        The estimated fees, costs and expenses in connection with the Arrangement are set forth in the table below:

        Pursuant to the Arrangement Agreement, all costs and expenses of the parties in connection with the Arrangement are to be paid by the party incurring such expenses.

Procedure for the Arrangement Becoming Effective

Procedural Steps

        The Arrangement is proposed to be carried out pursuant to Section 192 of the CBCA. The following procedural steps must be taken for the Arrangement to become effective:

•

the Arrangement Resolution must be approved by at least two-thirds of the votes cast by the Securityholders voting as a single class, present in person or represented by proxy, and entitled to vote at the Meeting;



•

the Arrangement Resolution must be approved by at least a simple majority of the votes cast by the Minority Shareholders, present in person or represented by proxy, and entitled to vote at the Meeting;



•

all conditions set forth in the Arrangement Agreement must be satisfied or waived by the appropriate parties;



•

the Arrangement must be approved by the Court pursuant to the Final Order; and



•

the Articles of Arrangement must be filed with the Director in the form prescribed by the CBCA.

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Securityholder Approval

        The Interim Order provides that the Arrangement Resolution must be approved by at least two-thirds of the votes cast by the Securityholders present in person or represented by proxy at the Meeting voting as a single class, each Shareholder entitled to vote thereon being entitled to one vote for each Common Share held and each Convertible Securityholder entitled to vote thereon being entitled to one vote for each Common Share such holder would have been entitled to receive upon the valid exercise or conversion of his, her or its Convertible Security, as applicable. In addition, the Arrangement Resolution requires the approval by at least a simple majority of the votes cast by Minority Shareholders. See "Canadian Securities Matters".

        Notwithstanding the foregoing, the Arrangement Agreement authorizes Lorus, GeneSense, NuChem, New Lorus and Pinnacle, subject to the terms of the Arrangement Agreement, without further notice to or approval of the Securityholders, to amend or terminate the Plan of Arrangement, to decide not to proceed with the Plan of Arrangement and to revoke the Plan of Arrangement at any time prior to the Effective Time. See Appendix C (Plan of Arrangement) attached hereto for the full text of the Plan of Arrangement.

Court Approval

        The CBCA provides that the Arrangement requires Court approval. On May 16, 2007, Lorus obtained the Interim Order providing for the calling and holding of the Meeting and other procedural matters. See the Interim Order and Notice of Application for the Final Order included as Appendix D (Interim Order and Notice of Application for the Final Order) attached hereto.

        Subject to the terms of the Arrangement Agreement and the adoption of the Arrangement Resolution at the Meeting in the manner required by the Interim Order, Lorus will make application to the Court for the Final Order at the Ontario Superior Court of Justice, Toronto, Ontario, on June 27, 2007 at 10:00 a.m. (Toronto time) or as soon thereafter as counsel may be heard. Any Securityholder who wishes to appear, or to be represented, and to present evidence or arguments must serve and file a notice of appearance as set out in the Notice of Application for the Final Order and satisfy any other requirements of the Court.

        Lorus has been advised by its counsel, McCarthy Tétrault LLP, that the Court has broad discretion under the CBCA when making orders with respect to the Arrangement, and that the Court, in hearing the application for the Final Order, will consider, among other things, the fairness of the Arrangement to the Securityholders and any other interested party that the Court determines appropriate. The Court may approve the Arrangement, either as proposed or as amended, in any manner the Court may direct, subject to compliance with the terms and conditions of such approval, if any, as the Court may determine appropriate. Depending on the nature of any required amendments, Lorus, New Lorus, Pinnacle or Investor may determine not to proceed with the Arrangement in the event that any amendment ordered by the Court is not satisfactory to any of Lorus, New Lorus, Pinnacle or Investor, acting reasonably.

        The issuance of the New Lorus Common Shares, New Lorus Options, New Lorus Warrants and RealCo Voting Shares pursuant to the Arrangement will not be registered under the provisions of the 1933 Act and are being issued in reliance upon the exemption from registration provided by Section 3(a)(10) of the 1933 Act. The Court will be advised at the hearing of the application for the Final Order that if the terms and conditions of the Arrangement are approved by the Court, the issuance of the New Lorus Common Shares, New Lorus Options, New Lorus Warrants and RealCo Voting Shares issued pursuant to the Arrangement will not require registration under the 1933 Act.

FAIRNESS OPINION

        Deloitte & Touche LLP was retained by the Board of Directors to provide an opinion in respect of the fairness, from a financial point of view, of the Arrangement to the Securityholders. In consideration for its services in this respect, Lorus agreed to pay Deloitte & Touche LLP certain fees and indemnify Deloitte & Touche LLP in respect of certain liabilities. Deloitte & Touche LLP has advised the Board of Directors that neither Deloitte & Touche LLP nor any of its affiliates or associates is an insider, associate or affiliate of Lorus, Investor, New Lorus or any of their respective associates or affiliates. Deloitte & Touche LLP has further advised the Board of Directors that it has not been engaged to provide any other financial advisory services nor

41

has it participated in any financing involving Lorus, Investor, New Lorus or any of their respective associates or affiliates, within the past two years, other than (i) the services provided in connection with the provision of the Fairness Opinion to the Board of Directors and as hereinafter described; and (ii) property tax services, including property tax assessment appeals filed for calendar years 2003 to 2005. There are no understandings, agreements or commitments between Deloitte & Touche LLP and Lorus, Investor, New Lorus or any of their respective associates or affiliates with respect to any future business dealings. The compensation of Deloitte & Touche LLP in connection with the provision of the Fairness Opinion is not contingent in any way on the conclusions reached in the Fairness Opinion or the successful consummation of the Arrangement.

        As indicated in its Fairness Opinion, Deloitte & Touche LLP is of the opinion, based on its scope of review and subject to the restrictions, limitations and assumptions contained therein, that the proposed Arrangement is fair, from a financial point of view, to the Securityholders.

        A copy of the Fairness Opinion is attached hereto as Appendix E. The Fairness Opinion is subject to the restrictions, limitations and assumptions contained therein. Securityholders are urged to, and should, read the Fairness Opinion in its entirety.

RECOMMENDATION OF THE BOARD OF DIRECTORS

        Those members of the Board of Directors entitled to vote thereon have determined that the terms of the Arrangement are in the best interests of Lorus and the Securityholders, as a whole, and are fair from a financial point of view to the Securityholders. As such, those members of the Board of Directors entitled to vote thereon have unanimously approved the Arrangement and authorized the submission of the Arrangement to the Securityholders for approval.

        In coming to its conclusions and recommendations, the Board considered, among other things, the following factors:

•

following the Arrangement, the Shareholders will hold 100% of the New Lorus Common Shares, which will carry on the same business that Lorus carried on prior to completion of the Arrangement, but with the injection of additional working capital of approximately $8.5 million, subject to a $600,000 holdback and a maximum post closing adjustment of $270,000, not including the costs of the transaction, without any dilution to current Shareholders;



•

the Arrangement will also result in the Non-U.S. Persons holding at the Effective Time, in the aggregate, approximately 59% of the RealCo Voting Shares then outstanding, representing an approximate 0.5% economic equity interest in RealCo;



•

U.S. Persons will, subject to certain limitations, receive a cash payment in an amount equal to the value of the RealCo Voting Shares otherwise distributable to them;



•

the Fairness Opinion concluded that the Arrangement is fair, from a financial point of view, to the Securityholders;



•

the Arrangement will not proceed unless the Arrangement Resolution receives a favourable vote of: (i) at least two-thirds of the votes cast at the Meeting by the Securityholders, voting as a single class; and (ii) at least a simple majority of the votes cast by Shareholders who are Minority Shareholders;



•

the Arrangement will only become effective if, after hearing from all interested parties who choose to appear before it, the Court determines that the Arrangement is equitable and reasonable;



•

the purpose and benefits of the Arrangement as outlined herein;



•

information concerning the financial condition, results of operations, business plans and prospects of New Lorus and RealCo; and



•

the Arrangement should generally not result in tax liability for the Shareholders, as described under "Certain Canadian Federal Income Tax Consequences for Shareholders".

Those members of the Board of Directors entitled to approve the Arrangement unanimously recommend that Securityholders vote FOR the Arrangement Resolution.

42

CANADIAN SECURITIES MATTERS

Exemptive Relief

        Discretionary exemptions must be obtained from certain provincial and territorial securities authorities in respect of financial statement disclosure by certain of the entities participating in the Arrangement and in respect of the repurchase of Warrants from TEMIC. Lorus has filed an application with the applicable Canadian Securities Regulatory Authorities for such exemptions prior to the mailing of this Circular. However, there can be no assurance that the necessary exemptions from such authorities will be obtained on a timely basis, on terms and conditions satisfactory to Lorus, or at all.

Majority of Minority Approval

        The Arrangement is a "business combination" under Rule 61-501 and a "going private transaction" within the meaning of Regulation Q-27 because by virtue of Investor having entered into a share purchase agreement with High Tech pursuant to which Investor will purchase the RealCo Voting Shares to be received by High Tech as part of the Arrangement, it involves a transaction whereby High Tech, a "related party" of Lorus, is receiving a "collateral benefit" (as defined in Rule 61-501), and consideration that is not identical in amount and type to that paid to all other Shareholders in Canada as provided under Regulation Q-27 that is, cash consideration in lieu of RealCo Voting Shares. The purchase price to be paid by Investor to High Tech for the RealCo Voting Shares will be the same price per RealCo Voting Share as paid at the Effective Time by Investor to New Lorus pursuant to the Pinnacle Share Purchase Agreement. The purchase of RealCo Voting Shares from High Tech is not being offered by Investor to all Shareholders.

        Rule 61-501 and Regulation Q-27 require that, in addition to any other required securityholder approval, in order to complete a business combination or a going private transaction, the approval of at least a simple majority of the votes cast by "minority" holders of each class of affected equity securities, voting separately as a class, must be obtained. In relation to the Arrangement Resolution, the "minority" shareholders of Lorus are all Shareholders other than High Tech, any related party of High Tech within the meaning of Rule 61-501 and Regulation Q-27, subject to the exceptions set out therein, and any person acting jointly or in concert with High Tech or with a related party of High Tech. As of the date of this Circular, High Tech (together with any related parties of High Tech and any person acting jointly or in concert with High Tech or with a related party of High Tech) owns 29,090,000 Common Shares (representing approximately 14% of the outstanding Common Shares). To the knowledge of Lorus after reasonable inquiry, the aforementioned 29,090,000 Common Shares are the only Common Shares that will be excluded in determining whether minority approval of the Arrangement has been obtained.

        No formal valuation is required for the Arrangement under Rule 61-501 as no "interested party" (as defined in Rule 61-501), whether alone or with joint actors, would, as a consequence of the Arrangement, directly or indirectly, acquire Lorus and no interested party is a party to any connected transaction to the Arrangement for which Lorus is required to obtain a formal valuation. As a formal valuation would be required for the Arrangement under Regulation Q-27, Lorus has applied for exemptive relief from the Autorité des marchés financiers confirming that Lorus will not have to obtain a formal valuation on the basis that one is not required under Rule 61-501. However, there can be no assurance that the necessary exemption from the Autorité des marchés financiers will be obtained on a timely basis, on terms and conditions satisfactory to Lorus, or at all.

Prior Valuation Disclosure

        Lorus engaged an independent third party, C/A Valuations Inc. (the "Valuator"), to provide an opinion as to the fair market value of Lorus' intellectual property associated with its leading drug candidates (the "Subject Property"). Lorus commissioned the valuation to satisfy its tax reporting obligations as they relate to the transfer of property between non-arm's length parties as proposed under the Arrangement. C/A Valuations Inc. completed its valuation of the Subject Property and reported its opinion to Lorus on December 11, 2006 (the "Prior Valuation").

43

        The Prior Valuation ascribed a fair market value of US$33.1 million to the Subject Property as of November 30, 2006 (the "Valuation Date"). This opinion is based on the scope of review described in the Prior Valuation and is subject to the restrictions, qualifications and assumptions contained therein.

        The scope of the review undertaken by the Valuator included, among other things:

•

a review of Lorus' consolidated financial statements for the fiscal year ended May 31, 2006 and the three-month period ended August 31, 2006;



•

Lorus' 2006 annual report, annual information form dated August 11, 2006 and management information circular dated August 11, 2006;



•

Lorus' 2007 annual budget for research and development expenditures;



•

Lorus' critical path for the commercialization of its leading drug candidates, including decision tree analyses and projected milestone dates (the "Management Business Case Assumptions");



•

a summary description of Lorus' intellectual property portfolio, issued and pending, as of the Valuation Date;



•

certain analysts' reports;



•

selected information on guideline companies and precedent transactions;



•

selected economic, market and industry information relevant to the biotechnology sector; and



•

meetings and correspondence with members of Lorus' senior management team to discuss, among other things, Lorus' drug development programs and opportunities and possible risks associated with each of the strategies Lorus may pursue in commercializing its leading drug candidates.

        Some of the assumptions used by the Valuator in ascribing the fair market value to the Subject Property included:

•

the annual financial statements of Lorus properly disclose all contingent liabilities, unusual contractual obligations and commitments or litigation pending or threatened as at the Valuation Date;



•

all material transactions reflected in the Financial Accounts were consummated at normal commercial terms and conditions;



•

Lorus was the beneficial owner of the Subject Property at the Valuation Date, its ownership being free and clear of any liens or encumbrances unless otherwise stated;



•

following the Valuation Date, the Subject Property will continue to be subject to responsible ownership and competent management;



•

with the exception of those agreements governing the Arrangement, there are no agreements or contracts currently being considered that would have a material effect on the future operations and financial position of Lorus;



•

the legal description of the Subject Property, provided by management of Lorus, is accurate and complete in all material respects and unless otherwise stated, there are no hidden or unapparent conditions regarding the Subject Property that would restrict is marketability; and



•

Lorus is in full compliance with all federal, provincial and local laws and regulations.

        The basis used by the Valuator in computing the fair market value of the Subject Property included: (i) an assessment of a stream of economic earnings or cash flows that can be properly attributed to the Subject Property during a finite future period; (ii) an assessment of an appropriate discount factor to be used to convert

44

the future cash flow stream into a capital sum; and (iii) an assessment of the continuing or terminal value of the Subject Property, if any, at the end of the finite future period. This latter assessment is dependent on, among other things, the remaining useful life of the Subject Property and the extent to which the holder of the intellectual property can extend the economic life of the Subject Property through re-investment.

        In completing the Prior Valuation, the Valuator relied upon the Management Business Case Assumptions, which, among other things, established Lorus' expectations regarding the expected level of economic earnings anticipated from each of Lorus' leading drug candidates. In determining the appropriate discount factor to be used, the Valuator relied on two asset pricing models and determined that a discount rate of 12% was appropriate. In assessing the terminal value of the Subject Property, the Valuator assumed that the Subject Property would have no residual value 12 years after commercial launch. As a test of reasonableness, the Valuator compared its value assessment to the corresponding value the public markets have ascribed to Lorus' technology assets at the Valuation Date.

        Securityholders are advised that the foregoing is intended to be a summary only and is qualified in its entirety by the statements, restrictions, qualifications and assumptions contained in the Prior Valuation.

        Securityholders can obtain a copy of the Prior Valuation upon request without charge by contacting the Corporate Secretary of Lorus at 2 Meridian Road, Toronto, Ontario, M9W 4Z7, Telephone: (416) 798-1200. Lorus has made an application to the relevant Canadian Securities Regulatory Authorities to have certain commercially sensitive information redacted from the Prior Valuation. Lorus cannot assure Securityholders that such application will be approved.

Prior Offers

        In the twenty-four month period preceding the date of this Circular, the only bona fide written offer Lorus has received that is relevant to this transaction is a term sheet regarding a potential financing that did not proceed as certain conditions precedent were not met. The potential financing was announced by Lorus by way of press release on January 17, 2006 and a press release announcing that the transaction would not proceed was issued by Lorus on February 16, 2006.

Judicial Developments

        Prior to the adoption of Rule 61-501 and Regulation Q-27, Canadian courts had, in few instances, granted preliminary injunctions to prohibit transactions that constituted business combinations within the meaning of Rule 61-501 and Regulation Q-27. The trend both in legislation, including the CBCA, and in Canadian judicial decisions has been towards permitting business combinations to proceed, subject to compliance with requirements designed to ensure procedural and substantive fairness to the minority shareholders. Shareholders should consult their legal advisors for a determination of their legal rights.

TIMING

        If the Meeting is held as scheduled and is not adjourned, the Arrangement Resolution is passed and the other necessary conditions are satisfied or waived by the appropriate parties, Lorus will apply to the Court for the Final Order approving the Arrangement. If the Final Order is obtained on or about June 27, 2007 in form and substance satisfactory to Lorus, New Lorus and Investor, and all other conditions to the Arrangement are satisfied or waived, Lorus expects that the Effective Date will be on or about June 29, 2007. It is not possible, however, to specify when the Effective Date will occur. Lorus or Investor may terminate the Arrangement Agreement in certain circumstances, in which case the Arrangement will not be completed. See "The Arrangement — Arrangement Agreement".

        The Arrangement will become effective upon the filing with, and acceptance by, the Director of the Articles of Arrangement.

45

        The Effective Date could be delayed, however, for a number of reasons, including an objection before the Court at the hearing of the motion for the Final Order. As soon as the Effective Date is determined, Lorus will issue a press release confirming the same.

CERTAIN CANADIAN FEDERAL INCOME TAX CONSEQUENCES FOR SHAREHOLDERS

        In the opinion of McCarthy Tétrault LLP, counsel to Lorus and New Lorus, the following is a fair summary of the principal Canadian federal income tax consequences under the Tax Act generally applicable to a Shareholder who, for purposes of the Tax Act, and at all relevant times, holds Common Shares and will hold the New Lorus Common Shares and RealCo Voting Shares as capital property and deals at arm's length with, and is not and will not be affiliated with, any of Lorus, New Lorus, RealCo or Investor (a "Holder").

        Common Shares will generally be considered to be capital property to a Shareholder unless the shares are held in the course of carrying on a business of trading or dealing in securities, or were acquired in one or more transactions considered to be an adventure in the nature of trade. Certain Shareholders who are resident of Canada for the purposes of the Tax Act, and whose Common Shares might not otherwise qualify as capital property, may be entitled to make an irrevocable election in accordance with subsection 39(4) of the Tax Act to have the Common Shares and every "Canadian security" (as defined in the Tax Act) owned by such Shareholder in the taxation year of the election and in all subsequent taxation years deemed to be capital property. Shareholders who do not hold their Common Shares as capital property should consult their own tax advisors regarding their particular circumstances.

        This summary is based on the facts as set out in this Circular, the Tax Act and counsel's understanding of the administrative policies and assessing practices published in writing by the Canada Revenue Agency (the "CRA"), all in effect as of the date of this document. This summary takes into account all proposed amendments to the Tax Act that have been publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof and assumes that such proposed amendments will be enacted substantially as proposed. However, no assurance can be given that such proposed amendments will be enacted in the form proposed, or at all. This summary does not take into account or anticipate any other changes in law or any changes in CRA administrative policies and assessing practices, whether by judicial, regulatory or legislative action or decision, nor does it take into account other federal or any provincial, territorial or foreign income tax legislation or considerations, which may differ significantly from the Canadian federal income tax consequences described herein.

        This summary assumes that the Common Shares and New Lorus Common Shares will be listed on a prescribed stock exchange for purposes of the Tax Act at all relevant times.

        This summary is of a general nature only and is not exhaustive of all possible Canadian federal income tax considerations applicable to Shareholders in all circumstances. This summary is not intended to be, and should not be construed to be, legal, business or tax advice to any particular Shareholder and does not take into account the particular circumstances of any particular Shareholder. Shareholders should consult their own tax advisors with respect to consequences of the transactions under the Arrangement that are applicable to their own particular circumstances.

        This summary does not apply to a Shareholder that is a financial institution (as defined in the Tax Act for purposes of the mark-to-market rules) or a specified financial institution (as defined in the Tax Act), that is an insurer carrying on business in Canada and elsewhere that is not a Canadian resident for the purpose of the Tax Act, or to a Shareholder, an interest in which would be a "tax shelter investment" (as defined in the Tax Act).

Holders who are Residents of Canada

        The following portion of this summary is applicable to a Holder who, for the purpose of the Tax Act and any applicable income tax treaty, is or is deemed to be a resident of Canada at all relevant times.

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Exchange of Common Shares

        A Holder who exchanges Common Shares for New Lorus Common Shares will be deemed to have disposed of such Common Shares for proceeds of disposition equal to their adjusted cost base to such Holder immediately before the exchange, and to have acquired the New Lorus Common Shares received on the exchange at a cost equal to the Holder's adjusted cost base of the exchanged Common Shares. The Holder will not realize a capital gain (or capital loss) on the exchange for purposes of the Tax Act.

        Generally, the aggregate paid-up capital of all the New Lorus Common Shares immediately after the time of the exchange should be equal to the paid-up capital of all the Common Shares immediately prior to the exchange.

        A Holder will not receive a dividend or deemed dividend for the purpose of the Tax Act as a result of the exchange of Common Shares for New Lorus Common Shares.

Reduction of Stated Capital of New Lorus

        The fair market value of the RealCo Voting Shares distributed to a Holder as a reduction of stated capital of New Lorus Common Shares will not be included in the income of such Holder, but will reduce the Holder's adjusted cost base by such fair market value. The amount, if any, by which the fair market value of such distributed RealCo Voting Shares exceeds the paid-up capital of New Lorus Common Shares will be deemed to be a dividend received by such Holder. New Lorus expects no such dividend to arise, given the amount of the paid-up capital of the New Lorus Common Shares.

Dissenting Shareholders

        A Dissenting Shareholder may be entitled to receive the fair value of Lorus Common Shares held by the Dissenting Shareholder. The Dissenting Shareholder will be considered to have disposed of the Lorus Common Shares for proceeds of disposition equal to the amount received by the Dissenting Shareholder, less the amount of any deemed dividend referred to below and any interest awarded by the Court. Where the amount is received from Lorus, the Lorus Shareholder will be deemed to receive a taxable dividend equal to the amount by which the amount received (other than in respect of interest awarded by the Court) exceeds the paid-up capital of such Shareholder's Lorus Common Shares. In the case of a Lorus Common Shareholder that is a corporation, in some circumstances, the amount of any such deemed dividend may be treated as proceeds of disposition and not as a dividend. Any interest awarded to a Dissenting Shareholder by the Court will be included in the Dissenting Shareholder's income for purposes of the Tax Act.

Holders who are Residents of the United States

        The following portion of this summary is applicable to a Holder who, for the purposes of the Tax Act and the Canada-US Income Tax Convention ("Tax Treaty"), at all relevant times, (i) is a resident of the United States, (ii) is not, and is not deemed to be, a resident of Canada, (iii) does not, and is not deemed to, use or hold Common Shares and New Lorus Common Shares in, or in the course of, carrying on a business in Canada, and (iv) is not a foreign affiliate of a taxpayer resident in Canada for the purpose of the Tax Act and any applicable income tax treaty ("U.S. Holder").

        A U.S. Holder will not realize a capital gain (or capital loss) on the exchange of Common Shares for New Lorus Common Shares.

Exchange of Common Shares

        If the Common Shares constitute "taxable Canadian property" (as defined by the Tax Act) to a U.S. Holder, at the Effective Time, the U.S. Holder will be required to file a Canadian tax return reporting the disposition of such shares. Generally, Common Shares will not be "taxable Canadian property" to a U.S. Holder at the time of the exchange, provided that (i) the shares are listed on a "prescribed stock exchange" (which includes the TSX)

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at that time, (ii) the U.S. Holder, persons not dealing at arm's length with the U.S. Holder, or the U.S. Holder together with such persons, have not owned 25% or more of the shares of any class of shares of Lorus at any time during the 60-month period ending at the particular time, and (iii) the shares are not deemed to be taxable Canadian property to the U.S. Holder under the provisions of the Tax Act.

Reduction of Stated Capital of New Lorus

        A U.S. Holder will be considered to receive a dividend equal to the amount by which the cash distributed exceeds the paid-up capital reduction of New Lorus. New Lorus expects no dividend to arise on such distribution, given the amount of the paid-up capital of the New Lorus Common Shares. The amount of cash distributed to a U.S. Holder will not be included in the income of such U.S. Holder, but will reduce the U.S. Holder's adjusted cost base of New Lorus Common Shares.

Dissenting Shareholders

        A Dissenting Shareholder who receives a cash payment from Lorus in respect of the U.S. Holder's Common Shares in respect of which the U.S. Holder dissents will be deemed to receive a dividend to the extent the amount received exceeds the paid-up capital of such shares. Such dividend will be subject Canadian withholding tax imposed at the rate generally of 15%, under the Tax Treaty. A U.S. Holder will be considered to have disposed of such Lorus Common Shares for proceeds of disposition equal to the amount of the cash payment, less the portion thereof that is deemed to be a dividend and the portion that is interest awarded by a court. A U.S. Holder will not be subject to tax under the Tax Act on any capital gain, or entitled to deduct any capital loss, realized on such disposition of Lorus Common Shares (assuming such Common Shares are not taxable Canadian property to such U.S. Holder). A Dissenting Shareholder who receives interest will subject to withholding tax thereon at a rate of 10%, under the Tax Treaty.

        For a description of the U.S. Federal income tax consideration, see "Certain U.S. Federal Income Tax Consequences for Shareholders".

CERTAIN CANADIAN FEDERAL INCOME TAX CONSEQUENCES FOR HOLDERS OF OPTIONS

Exercise of Options to Acquire Common Shares

        Holders of Options who exercise their Options to acquire Common Shares prior to the Effective Time may be subject to income tax consequences arising on such exercise which are not addressed in this summary and which may be relevant to their decision as to whether to exercise their Options to acquire Common Shares prior to such time. Holders of Options who are considering the exercise of their Options should consult their own tax advisors to determine the tax consequences to them of such exercise.

Exchange of Options for New Lorus Options

        The following portion of this summary is applicable to a holder of Options who at all relevant times (i) is resident or deemed to be resident in Canada for the purpose of the Tax Act and any applicable income tax treaty, (ii) deals at arm's length with, and is not and will not be affiliated with, any of Lorus, New Lorus, RealCo or Investor, (iii) is a current or former employee or director of Lorus (or any subsidiary), (iv) received Options in respect of, in the course of, or by virtue of, such employment or in consideration for the services performed as a director, as the case may be ("Optionholder").

        An Optionholder who exchanges an Option for a New Lorus Option will not be considered to have disposed of the Option and the New Lorus Option will be deemed to be the same as, and a continuation of, the Option, provided that the only consideration received by the Optionholder on the exchange is a New Lorus Option, and that (i) the total value of the New Lorus Common Shares that the Optionholder is entitled to acquire under the New Lorus Stock Option Plan immediately after the exchange (in excess of the total amount payable by the Optionholder to acquire the New Lorus Common Shares thereunder) is not greater than (ii) the total value of the Common Shares that the Optionholder was entitled to acquire under the Lorus Stock Option Plan immediately before the exchange (in excess of the amount payable by the holder to acquire the Common Shares thereunder).

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ELIGIBILITY FOR INVESTMENT

        In the opinion of McCarthy Tétrault LLP, counsel to Lorus and New Lorus, the New Lorus Common Shares, at the Effective Time, will be "qualified investments" under the Tax Act for trusts governed by registered retirement savings plans (RRSPs), registered retirement income funds (RRIFs), deferred profit sharing plans (DPSPs) or registered education savings plans (RESPs), as defined in the Tax Act, provided that the New Lorus Common Shares are listed on a "prescribed stock exchange" (which includes the TSX), or that New Lorus is a "public corporation" (as defined in the Tax Act) at the Effective Time. If the New Lorus Common Shares are not listed on a "prescribed stock exchange" (which includes the TSX) at the Effective Time, New Lorus has indicated that it intends to duly make an election under the Tax Act to be a "public corporation" as of the Effective Time.

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES FOR SHAREHOLDERS

        The following is a general summary of certain United States federal income tax consequences, under current law, generally applicable to a U.S. Shareholder (as defined below). This summary does not address all potentially relevant United States federal income tax matters and it does not address consequences to certain Persons subject to special provisions of United States federal income tax law, such as those described below as excluded from the definition of a U.S. Shareholder. United States alternative minimum tax considerations are not addressed in this summary. In addition, this summary does not cover any state, local or foreign tax consequences. (See "Certain Canadian Federal Income Tax Consequences" above).

        The following summary is based upon the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations, published Internal Revenue Service ("IRS") rulings, published administrative positions of the IRS, and court decisions that are currently applicable, any of which could be materially and adversely changed, possibly on a retroactive basis, at any time. This summary does not consider the potential effects, both adverse and beneficial, of any recently proposed legislation which, if enacted, could be applied (possibly on a retroactive basis) at any time (including changes in applicable tax rates). No ruling from the IRS has been or will be sought on any of the issues discussed below, and as a result, there can be no assurance that the IRS will not successfully challenge the tax treatment described herein. No legal opinion will be obtained with respect to the issues discussed below.

        This summary is for general information only and it is not intended to be, nor should it be construed to be, legal or tax advice to any Shareholder, and no opinion or representation with respect to the United States federal income tax consequences to any Shareholder is made. Accordingly, Shareholders should consult their own tax advisors about the federal, state, local, and foreign tax consequences of the transactions under the Arrangement and the purchasing, owning and disposing of Common Shares, New Lorus Common Shares and RealCo Voting Shares (for the purposes of this section, any one class of such shares, as applicable, or collectively is referred to as the "Shares").

Circular 230 Disclosure

        Any tax statement made herein regarding any U.S. federal tax is not intended or written to be used, and cannot be used, by any taxpayer for purposes of avoiding any penalties. Any such statement herein is written in connection with the marketing or promotion of the transaction to which the statement relates. Each taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor.

U.S. Shareholders

        As used herein, a "U.S. Shareholder" means an owner of Shares who is a citizen or individual resident (as defined under United States tax laws) of the United States; a corporation or other entity taxable as a corporation created or organized in or under the laws of the United States or of any political subdivision thereof; an estate the income of which is taxable in the United States irrespective of source; or a trust if (a) a court within the United States is able to exercise primary supervision over the trust's administration and one or more United States Persons have the authority to control all of the substantial decisions or (b) the trust was in existence on August 20, 1996 and has properly elected to continue to be treated as a United States Person. This summary does not address the tax consequences to, and "U.S. Shareholder" does not include, tax-exempt

49

Persons or organizations; qualified retirement plans, individual retirement accounts, and other tax-deferred accounts; broker-dealers; non-resident alien individuals or entities not created or organized in or under the laws of the United States; Persons or entities that have a "functional currency" other than the U.S. dollar; Persons who hold Shares as part of a straddle, hedging or conversion transaction; Persons or entities that own, directly or constructively, 10% or more, by voting power or value, of the outstanding shares of Lorus, and Persons who acquire their Shares as compensation for services. This summary is limited to U.S. Shareholders who own Shares as capital assets and who hold the Shares directly (e.g., not through an intermediary entity such as a corporation, partnership, LLC or trust). This summary does not address the consequences to a Person or entity of the ownership, exercise or disposition of any options, warrants or other rights to acquire Shares.

U.S. Tax Characterization of the Arrangement

        The Arrangement sets forth a series of complex steps that should result in taxation for U.S. Shareholders. Generally, in order for the Arrangement to qualify as a tax-deferred transaction to U.S. Shareholders, each step of the Arrangement would have to qualify for non-recognition treatment under U.S. law, which does not appear to be the case here. Moreover, even if each step, considered individually, qualified for tax-deferred treatment to the U.S. Shareholders, application of general U.S. "substance over form" principles could cause the Arrangement as a whole to be taxable to the U.S. Shareholders. It appears that the Arrangement (or one or more of its parts) should be viewed as a taxable disposition of Shares.

        Generally, neither a distribution on Shares nor a disposition of Shares is tax-deferred under U.S. law, unless an exception to taxable characterization applies. There is no authority addressing the U.S. federal income tax treatment of a transaction like the Arrangement and therefore, there is uncertainty as to the U.S. federal income tax consequences of the Arrangement. Section 351 of the Code treats transfers of property (including securities in other corporations) to a "controlled" corporation solely in exchange for shares of the controlled corporation as tax-deferred in certain circumstances. It is unlikely that the Arrangement, taking into account all of its steps, would constitute a tax-deferred transfer of securities to a controlled corporation. Section 368 of the Code describes certain corporate transactions which qualify as a "reorganization" under the U.S. income tax laws, and thus are tax-deferred to the corporation and its shareholders. Taken as a whole, it appears unlikely that the Arrangement would be considered a tax-deferred reorganization to the U.S. Shareholders. Even if the tax-deferred incorporation or reorganization provisions of Sections 351 or 368 were to apply to the Arrangement, tax-deferred treatment to the U.S. Shareholders may nonetheless be unavailable if Lorus is a "passive foreign investment company" ("PFIC"), discussed below.

If the Arrangement is Treated as a Disposition of Lorus' Stock

        Subject to the discussion below regarding PFICs, gain or loss, if any, realized by a U.S. Shareholder on the exchange of his, her or its Shares generally would be subject to United States federal income taxation as capital gain (or capital loss) in an amount equal to the difference between the U.S. Shareholder's adjusted tax basis in the Shares and the amount realized on the disposition. Net capital gain (i.e., capital gain in excess of capital loss) recognized by a non-corporate U.S. Shareholder upon a sale or other disposition of Shares that have been held for more than one year is generally subject to a maximum United States federal income tax rate of 15%, under present law. Deductions for capital losses are subject to limitations.

U.S. Shareholders Exercising Dissent Rights

        A U.S. Shareholder that exercises Dissent Rights and is paid cash in exchange for all of such Shareholder's Common Shares generally would recognize gain or loss in an amount equal to the difference, if any, between (a) the amount of cash received by such U.S. Shareholder in exchange for the Common Shares surrendered (other than amounts, if any, that are or are deemed to be interest for U.S. federal income tax purposes, which amounts will be taxed as ordinary income) and (b) the tax basis of such U.S. Shareholder in such Common Shares surrendered. Subject to the discussion below regarding PFICs, such gain or loss generally should be capital gain or loss, which will be long-term capital gain or loss if such Common Shares are held for more than one year. Preferential tax rates apply to long-term capital gains of a U.S. Shareholder that is an individual, estate, or trust. There are currently no preferential tax rates for long-term capital gains of a U.S. Shareholder that is a corporation. Deductions for capital losses are subject to complex limitations under the Code.

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Passive Foreign Investment Company

        Lorus would be considered a PFIC if during any taxable year, 75% or more of its gross income consists of certain types of "passive" income, or if the average fair market value during a taxable year of its "passive assets" (generally, assets that generate passive income) is 50% or more of the average fair market value of all assets held by it. Passive income generally includes items such as dividends, interest, rents and royalties. Companies that have operating losses, but investment income, may be PFICs, according to certain IRS rulings and other relevant authority.

        Lorus believes it was a PFIC for one or more prior taxable years and Lorus expects to be a PFIC for its current taxable year. However, the determination of whether Lorus was, or will be, a PFIC for a taxable year depends, in part, on the application of complex U.S. federal income tax rules, which are subject to various interpretations. In addition, whether Lorus will be a PFIC for the current taxable year and each subsequent taxable year depends on the assets and income of Lorus over the course of each such taxable year and, as a result, cannot be predicted with certainty as of the date of this Circular. Accordingly, there can be no assurance that the IRS will not challenge the determination made by Lorus concerning its PFIC status or that Lorus was not, or will not be, a PFIC for any taxable year.

        If Lorus is classified as a PFIC for any taxable year in which a U.S. shareholder held Shares, the U.S. federal income tax consequences of the Arrangement could be materially different than as described above with respect to such U.S. Shareholder. In general, a U.S. Shareholder of stock in a PFIC is subject to increased United States federal income tax liability (generally, in the form of ordinary income treatment at the highest applicable U.S. tax rate plus an interest charge) in respect of gain recognized on the disposition of his, her or its Shares or upon the receipt of certain distributions. An exception to PFIC taxation is available if the U.S. Shareholder makes a "qualified electing fund" election within a certain time period to be taxed currently on his, or her or its pro rata portion of Lorus' income and gain (whether or not such income or gain is distributed in the form of dividends or otherwise), and Lorus provides certain annual statements which include the information necessary to determine inclusions and assure compliance with the PFIC rules. As an alternative to the foregoing rules, a U.S. Shareholder may make a "mark-to-market" election to include in income each year as ordinary income an amount equal to the increase in value of his, her or its Shares for that year or to claim a deduction for any decrease in value (but only to the extent of previous mark-to-market gains).

        The PFIC rules are very complex, and their application to a corporation like Lorus is very unclear. Lorus can give no assurance as to its status as a PFIC for the current or any future year. U.S. Shareholders should consult their own tax advisors with respect to the PFIC issue and its applicability to their particular situation.

Foreign Tax Credit

        A U.S. Shareholder who pays (or has withheld from distributions) Canadian income tax with respect to the Shares may be entitled to either a deduction or a tax credit for such foreign tax paid or withheld, at the option of the U.S. Shareholder. Generally, it is more advantageous to claim a credit because a credit reduces United States federal income tax on a dollar-for-dollar basis, while a deduction merely reduces the taxpayer's income subject to tax. This election is made on a year-by-year basis and generally applies to all foreign taxes paid by (or withheld from) the U.S. Shareholder during that year.

        There are significant and complex limitations which apply to the foreign tax credit, among which is the general limitation that the credit cannot exceed the proportionate share of the U.S. Shareholder's United States income tax liability that the U.S. Shareholder's foreign source income bears to worldwide taxable income. This limitation is designed to prevent foreign tax credits from offsetting United States source income. In determining this limitation, the various items of income and deduction must be classified into foreign and domestic sources. Complex rules govern this classification process.

        In addition, this limitation is calculated separately with respect to specific "baskets" of income. Foreign taxes assigned to a particular class of income generally cannot offset United States tax on income assigned to another class. The types of "baskets", and thus how this limitation operates, will change significantly after 2006, due to recent United States tax legislation.

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        U.S. Shareholders should consult their own tax advisors concerning their ability to utilize foreign tax credits, especially in light of the changes made by recent legislation.

Currency Fluctuations

        For United States federal income tax purposes, the amount received by a U.S. Shareholder as payment with respect to a distribution on, or disposition of Shares, if paid in Canadian dollars, is the U.S. dollar value at the date of the payment, regardless of whether the payment is later converted into U.S. dollars. In such case, the U.S. Shareholder may recognize additional ordinary income or loss as a result of currency fluctuations between the date on which the payment is made and the date the payment is converted into U.S. dollars.

AMENDMENT OF LORUS' ARTICLES AND CONTINUANCE OF LORUS INTO BRITISH COLUMBIA

        New Lorus will, at the time during the steps of the Plan of Arrangement at which New Lorus is the sole shareholder of Lorus, resolve to continue Lorus, which is currently incorporated under the CBCA, to the provincial jurisdiction of British Columbia under the BCBCA (the "Continuation") and to approve the filing of the articles ("BCBCA Articles") in order to effect the Continuation (Lorus, following the completion of the Arrangement, is referred to in this Circular as "RealCo" and RealCo as continued under the BCBCA is referred to in this section as "RealCo (BC)"). The Continuation will not be effected until after the completion of the Arrangement and does not form part of the Plan of Arrangement. In the opinion of management of RealCo, there are a number of advantages to the Continuation, including: (i) no residency requirement for directors; (ii) flexibility for corporate reorganizations; and (iii) flexibility for shareholder approvals.

        The BCBCA Articles will reflect changes from the current articles of Lorus. The BCBCA Articles will include a statement of the rights and restrictions attaching to the shares of RealCo (BC). The rights and restrictions attaching to the shares of RealCo (BC) will be substantially the same as the form of the articles of amendment of RealCo described in Appendix B (Form of Articles of Amendment of RealCo) attached hereto. The BCBCA Articles will contain many of the same provisions as are contained in Lorus' current articles and by-laws. Upon the Continuation becoming effective, the proposed BCBCA Articles will become the new charter documents of RealCo (BC), replacing the existing articles and by-laws. See also Appendix H (Information Respecting RealCo and Financial Statements of the Pinnacle Partnerships) attached hereto.

        The CBCA permits a corporation to continue to another jurisdiction so long as two thirds of the votes cast by the shareholders are in favor of the continuance and the Director under the CBCA is satisfied that the continuance will not adversely affect the corporation's creditors or shareholders. A foreign corporation which seeks to continue under the BCBCA must file an application and certain other required forms with the Registrar of Companies (British Columbia). The Registrar may also require an authorization for continuation from the corporation's jurisdiction of incorporation.

        The Continuation will not affect the application of securities laws, regulations, rules and policies that presently apply to RealCo. In addition, the provisions of the CBCA and the BCBCA in relation to shareholder protections in the nature of derivative actions, oppression, dissent and appraisal rights are substantially similar under the CBCA and BCBCA, however, there are certain differences of which Shareholders should be aware. For a summary comparison of certain provisions of the CBCA and BCBCA, see Appendix K (Comparison of CBCA to BCBCA) attached hereto. The summary provided is not intended to be exhaustive and Shareholders should consult their own legal advisors regarding implications of the Continuation which may be of particular importance to them.

DISTRIBUTION OF CERTIFICATES AND CASH PAYMENTS

Distribution of Share Certificates Representing the New Lorus Common Shares and RealCo Voting Shares

        Included with this Circular is a Letter of Transmittal containing, among other things, instructions for obtaining delivery of (i) New Lorus Common Shares that each Shareholder is entitled to receive, (ii) RealCo Voting Shares that each Non-U.S. Person is entitled to receive, and (iii) the cash payment that each U.S. Person is, subject to certain limitations, entitled to receive pursuant to the Arrangement. Lorus will, as soon as practicable following the later of the Effective Date and the delivery to the Transfer Agent and Registrar for

52

cancellation of certificates representing such Shareholder's Common Shares and the Letter of Transmittal, duly completed in accordance with the instructions contained therein, and such other documents as the Transfer Agent and Registrar may reasonably require, cause the Transfer Agent and Registrar to deliver to such holder certificates representing the number of New Lorus Common Shares and RealCo Voting Shares that such holder is entitled to receive and the certificates so surrendered will forthwith be cancelled. Until surrendered as contemplated by the Arrangement, each certificate which immediately prior to the Effective Date represented one or more outstanding Common Share(s) will be deemed at all times after the Effective Date to represent only the right to receive, upon such surrender, the certificates representing the New Lorus Common Shares and RealCo Voting Shares and the dividends and distributions accruing to the holder of such shares, if any (less any applicable withholding tax).

        Holders of Common Shares are reminded that, where a share certificate formerly representing the Common Shares is not deposited with the Letter of Transmittal on or prior to the sixth anniversary date of the Effective Time, such share certificate will cease to represent a right or claim of any kind or nature. Thereafter, the New Lorus Common Shares to be exchanged with the former holder of such certificate will be deemed to be surrendered to New Lorus together with all distributions and sale proceeds thereon held for such holder.

        In addition, Lorus will, as soon as practicable following the later of the Effective Date and the delivery to the Transfer Agent and Registrar for cancellation of certificates representing Common Shares held by a U.S. Person and the Letter of Transmittal, duly completed in accordance with the instructions contained therein, and such other documents as the Transfer Agent and Registrar may reasonably require, cause the Transfer Agent and Registrar to deliver to such U.S. Person a cash payment in an amount equal to the value of the RealCo Voting Shares otherwise distributable to them.

Failure to Forward Letters of Transmittal and to Deposit Certificates

        Pursuant to the terms of the Plan of Arrangement, any certificates which immediately prior to the Effective Time represented Common Shares that are not deposited with the Transfer Agent and Registrar together with a duly completed Letter of Transmittal and any other document the Transfer Agent and Registrar may reasonably require on or before the sixth anniversary of the Effective Date, will cease to represent a right or claim of any kind or nature and the right of the holder of certificates of Common Shares to receive New Lorus Common Shares and RealCo Voting Shares or a cash payment in lieu thereof, as applicable, will cease and such Common Shares will be deemed to be surrendered to New Lorus, together with all dividends and distributions thereon held by such holder, if any.

Distribution of Certificates Representing New Lorus Options and New Lorus Warrants

        Also, at the Effective Time, the certificates representing the Options and Warrants will be cancelled and, as soon as practicable thereafter, certificates representing the New Lorus Options and New Lorus Warrants (upon presentation of the original certificates representing the Warrants) will be issued by New Lorus.

STOCK EXCHANGE LISTINGS

        The Common Shares are currently listed and posted for trading on the TSX under the symbol "LOR" and on the AMEX under the symbol "LRP". On April 30, 2007, being the last Trading Day prior to the date of announcement of the Arrangement, the closing price of the Common Shares on the TSX and the AMEX was $0.26 and U.S. $0.25, respectively, per Common Share.

        Lorus has made an application for a substitutional listing of the New Lorus Common Shares (and the New Lorus Common Shares issuable upon the exercise or conversion of the New Lorus Options and New Lorus Warrants) on the TSX and on the AMEX in substitution for the Common Shares.

        As of the date of this Circular, Lorus has not received approval from the AMEX in respect of the substitutional listing of the New Lorus Common Shares. Lorus cannot assure Shareholders that the AMEX will approve a substitutional listing or whether the New Lorus Common Shares will continue to be listed on the AMEX.

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        The TSX has conditionally approved the listing of the New Lorus Common Shares on the TSX under the symbol "LOR", which approval is subject to the satisfaction of certain conditions on or before June 28, 2007, including (i) the Securityholders of Lorus approving the Arrangement at the Meeting, (ii) the Minority Shareholders approving the Arrangement Resolution at the Meeting, (iii) the Closing of the Arrangement, (iv) the filing of all documents required by the TSX and the payment of the fees required pursuant to the policies of the TSX, and (v) New Lorus meeting the TSX's continued listing requirements.

        New Lorus expects that it will be able to satisfy any conditions of the TSX and any imposed by the AMEX relating to the listing of the New Lorus Common Shares upon completion of the Arrangement. If New Lorus is not able to meet the continued listing requirements of the TSX and the AMEX, then New Lorus intends to seek to list the New Lorus Common Shares on another North American stock exchange. There can be no assurance that the New Lorus Common Shares will be listed on the TSX, AMEX or any other stock exchange.

        Upon the substitutional listing of the New Lorus Common Shares, the Common Shares will cease to be listed on the TSX and the AMEX. Neither the RealCo Voting Shares nor the RealCo Non-Voting Shares will be listed on the TSX, AMEX or any other stock exchange or other public securities market.

Trading in Securities

        The Common Shares are currently listed and posted for trading on both the TSX under the symbol "LOR" and the AMEX under the symbol "LRP". After the Arrangement is completed, it is expected that the New Lorus Common Shares will be listed and posted for trading on the TSX, subject to New Lorus fulfilling the requirements of the TSX. An application has been made to the AMEX to list the New Lorus Common Shares on the AMEX. See "Stock Exchange Listings". The following trading information has been rounded to the nearest $0.01, and has been obtained by Lorus from public sources.

RESALE OF SECURITIES

        It is anticipated that the New Lorus Common Shares, the New Lorus Options, the New Lorus Warrants and the RealCo Voting Shares to be issued to Securityholders pursuant to the Arrangement (including the New Lorus Common Shares issuable upon the exercise or conversion of the New Lorus Options and New Lorus Warrants), will be issued in reliance on exemptions from the prospectus and registration requirements of applicable Canadian securities laws. The first trade of New Lorus Common Shares (including New Lorus

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Common Shares issuable upon the exercise or conversion of the New Lorus Options and New Lorus Warrants), will not be subject to any restricted or hold period in Canada if:

•

at the time of such first trade, New Lorus is a reporting issuer or the equivalent under the legislation of a jurisdiction of Canada (it is intended that New Lorus will be a reporting issuer after Closing or the equivalent in certain of such jurisdictions);



•

the first trade is not from the holdings of an individual or company or a combination of individuals or companies holding a sufficient number of any securities of New Lorus so as to affect materially the control of New Lorus (a holding by any individual, company or combination of individuals and/or companies of more than 20% of the outstanding voting securities of New Lorus is deemed, in the absence of evidence to the contrary, to affect materially the control of New Lorus);



•

no unusual effort is made to prepare the market or to create a demand for the New Lorus Common Shares that are the subject of the trade;



•

no extraordinary commission or consideration is paid to an individual or company in respect of the trade; and



•

if the seller of the securities is an insider or officer of New Lorus, the seller has no reasonable grounds to believe that New Lorus is in default of any requirement of the applicable securities legislation.

        The New Lorus Common Shares, New Lorus Options, New Lorus Warrants and RealCo Voting Shares have not been and will not be registered under the 1933 Act, and will be issued in reliance upon the exemption from registration provided by Section 3(a)(10) of the 1933 Act. Section 3(a)(10) exempts securities issued in exchange for one or more outstanding securities, claims or property interests from the general requirement of registration where the terms and conditions of the issuance and exchange of such securities have been approved by any court of competent jurisdiction, after a hearing upon the fairness of the terms and conditions of the issuance and exchange at which all Persons to whom the securities will be issued have the right to appear. The Court is authorized to conduct a hearing at which the fairness of the terms and conditions of the Arrangement will be considered. The Court granted the Interim Order on May 16, 2007 and, subject to the approval of the Arrangement by Securityholders, a hearing on the Arrangement will be held on June 27, 2007 by the Court. See "The Arrangement — Procedure for the Arrangement Becoming Effective — Court Approval".

        The New Lorus Common Shares, New Lorus Options, New Lorus Warrants and RealCo Voting Shares to be issued pursuant to the Arrangement will be freely tradable under U.S. federal securities laws, except by Persons who are "affiliates" of Lorus, New Lorus, RealCo, Pinnacle or Investor immediately prior to the Arrangement or "affiliates" of New Lorus, RealCo, Pinnacle or Investor after the Arrangement. Persons who may be deemed to be "affiliates" of an issuer include individuals or entities that control, are controlled by, or are under common control with, the issuer, and generally include executive officers and directors of the issuer as well as principal shareholders of the issuer.

        Subject to certain limitations, such affiliates may immediately resell New Lorus Common Shares, New Lorus Warrants and RealCo Voting Shares received pursuant to the Arrangement outside the United States without registration under the 1933 Act pursuant to Regulation S. Such securities held by such affiliates may also be resold in compliance with the resale provisions of Rule 145(d)(1), (2), or (3) under the 1933 Act or as otherwise permitted under the 1933 Act. Rule 145(d)(1) generally provides that such affiliates may not sell such securities received pursuant to the Arrangement unless pursuant to an effective registration statement or in accordance with the volume, current public information and manner of sale limitations of Rule 144 under the 1933 Act. These limitations generally require that any sales made by an affiliate in any three-month period not exceed the greater of 1% of the outstanding applicable securities of New Lorus or RealCo, if such securities are listed on a United States securities exchange, the average weekly trading volume over the four calendar weeks preceding the placement of the sell order, and that sales be made in unsolicited, open market "broker transactions" at times when certain information specified by Rule 144 is publicly available with respect to New Lorus or RealCo, as applicable. Rules 145(d)(2) and (3) generally provide that these limitations lapse for non-affiliates of New Lorus or RealCo after a period of one or two years, depending upon whether information continues to be publicly available with respect to such entity.

55

        Section 3(a)(10) of the 1933 Act does not exempt the issuance of securities upon the exercise or conversion of securities that were issued pursuant to Section 3(a)(10). Therefore, the New Lorus Common Shares issuable upon the exercise of the New Lorus Options or New Lorus Warrants may not be issued in reliance upon Section 3(a)(10) and such securities may be exercised only pursuant to an exemption or exclusion from the registration requirements of the 1933 Act and applicable state securities laws. As a result, the New Lorus Options and the New Lorus Warrants may be exercised only by a holder who represents that at the time of exercise the holder is not then located in the United States, is not a U.S. Person as defined in Rule 902 of Regulation S, and is not exercising the New Lorus Options or New Lorus Warrants for the account or benefit of a U.S. Person or a Person located in the United States, unless the holder provides a legal opinion or other evidence reasonably satisfactory to New Lorus to the effect that the exercise of the New Lorus Options or New Lorus Warrants does not require registration under the 1933 Act or applicable state securities laws. In addition, any New Lorus Common Shares issuable upon the exercise of the New Lorus Options or New Lorus Warrants in the United States or for the account or benefit of a U.S. Person or a Person located in the United States will be "restricted securities" within the meaning of Rule 144 under the 1933 Act, certificates representing such New Lorus Common Shares will bear a legend to that effect, and such New Lorus Common Shares may be resold only pursuant to an exemption or exclusion from the registration requirements of the 1933 Act and applicable state securities laws. Subject to certain limitations, the New Lorus Warrants may be resold outside the United States without registration under the 1933 Act pursuant to Regulation S.

        The foregoing discussion is only a general overview of certain requirements of Canadian and United States securities laws applicable to the New Lorus Common Shares, New Lorus Options, New Lorus Warrants, if applicable, and RealCo Voting Shares to be received by Securityholders upon completion of the Arrangement. All holders of such securities are urged to consult with counsel to ensure that the resale of their securities complies with applicable securities legislation.

        The New Lorus Options are not transferable.

        No market will exist for the trading of the RealCo Voting Shares or the RealCo Non-Voting Shares after the completion of the Arrangement and none is expected to develop.

INDEBTEDNESS OF DIRECTORS AND OFFICERS

        There is not as of the date hereof, and has not been since the beginning of Lorus' last completed financial year, any indebtedness, other than routine indebtedness, owing to Lorus by the current directors and officers of Lorus, or any of their associates or affiliates.

INFORMATION RESPECTING LORUS

        Lorus is a life sciences company that was incorporated under the Business Corporations Act (Ontario) on September 5, 1986 under the name RML Medical Laboratories Inc. On October 28, 1991, RML Medical Laboratories Inc. amalgamated with Mint Gold Resources Ltd., resulting in the company becoming a reporting issuer (as defined under applicable securities law) in Ontario on such date. On August 25, 1992, the company changed its name to IMUTEC Corporation. On November 27, 1996, the company changed its name to Imutec Pharma Inc., and on November 19, 1998, the company changed its name to Lorus Therapeutics Inc. On October 1, 2005, Lorus continued under the CBCA. Lorus' Common Shares have been listed on the TSX under the symbol "LOR" since June 4, 1993 and have been listed on the AMEX under the symbol "LRP" since February 23, 2004. For more information regarding Lorus, see Appendix F (Information Respecting Lorus) attached hereto.

INFORMATION RESPECTING NEW LORUS

        New Lorus is currently a wholly-owned subsidiary of Lorus and was incorporated under the CBCA on November 1, 2006 under the name 6650309 Canada Inc. and will change its name to Lorus Therapeutics Inc. on the Effective Date. Following completion of the Arrangement, New Lorus will perform the business as carried on by Lorus prior to completion of the Arrangement. For more information regarding New Lorus, see Appendix G (Information Respecting New Lorus) and Appendix J (Balance Sheet of New Lorus) attached hereto.

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INFORMATION RESPECTING REALCO

        Following the Effective Date, RealCo will hold limited partnership interests in two residential and mixed-use condominium projects in Toronto, Ontario and may raise additional capital on a dilutive basis to focus on pursuing opportunities as a real estate development company. Following the completion of the Arrangement, RealCo's head office will be located at Suite 300, 911 Homer Street, Vancouver, British Columbia V6B 2W6. Neither the RealCo Voting Shares nor the RealCo Non-Voting Shares will be listed on any stock exchange or other public securities market. Detailed information regarding RealCo can be found at Appendix H (Information Respecting RealCo and Financial Statements of the Pinnacle Partnerships) attached hereto.

        As soon as practicable following completion of the Arrangement, it is expected that RealCo will be continued from the Canadian federal jurisdiction to the Province of British Columbia. Following such continuance, RealCo will be governed by the BCBCA. See "Amendment of Lorus' Articles and Continuance of Lorus into British Columbia". Please see Appendix K (Comparison of CBCA to BCBCA) attached hereto for a summary comparison of certain provisions of the CBCA and the BCBCA.

RISK FACTORS

        Securityholders should carefully consider the following risk factors relating to the Arrangement before deciding to vote or instruct their vote to be cast to approve the matters relating to the Arrangement. In addition to the risk factors relating to the Arrangement set out below, Securityholders should also carefully consider the risk factors incorporated by reference in Appendix F (Information Respecting Lorus) and those described in Appendix G (Information Respecting New Lorus) and Appendix H (Information Respecting RealCo and Financial Statements of the Pinnacle Partnerships) attached hereto. All of the risks below should be considered by the Securityholders in conjunction with other information included in this Circular, including the appendices attached hereto.

Exchange Listings

        Although the TSX has conditionally approved the listing of the New Lorus Common Shares and an application has been made to the Amex to list the New Lorus Common Shares, there can be no assurance that, or when, the New Lorus Common Shares will be listed on those stock exchanges, or that if listed New Lorus will continue to meet the continued listing requirements of the TSX and the AMEX.

Going Concern of New Lorus

        To date, Lorus has financed its operations and technology acquisitions primarily from equity and debt financings, the exercise of warrants and stock options, and interest income on funds held for future investments. Lorus has incurred significant operating losses and cash outflows from operations. The ability of New Lorus, following completion of the Arrangement, to continue as a going concern is dependent upon raising additional funds through borrowings or equity financings, collaborative research contracts or product licensing agreements and ultimately achieving future profitable operations. The outcome of these matters is dependent on a number of factors outside of New Lorus' control. As a result, there is significant uncertainty as to whether New Lorus will have the ability to continue as a going concern.

RealCo Business

        RealCo has not carried on any business and may not be successful in carrying on business as a real estate development company. For additional risk factors relating to RealCo, please see Appendix H (Information Respecting RealCo and Financial Statements of the Pinnacle Partnerships) attached hereto.

Absence of Trading Market for RealCo Shares

        Upon the completion of the Arrangement, neither the RealCo Voting Shares nor the RealCo Non-Voting Shares will be listed on any stock exchange. As a result, an active market for the RealCo Voting Shares and RealCo Non-Voting Shares may not develop following the completion of the Arrangement. A holder of RealCo Voting Shares and/or RealCo Non-Voting Shares may not be able to sell such shares at a particular time or at all

57

and the prices that a holder receives when it sells the shares may not be favourable. For additional risk factors relating to RealCo, please see Appendix H (Information Respecting RealCo and Financial Statements of the Pinnacle Partnerships) attached hereto.

The Arrangement May Be Taxable for U.S. Shareholders

        Implementation of the Arrangement may give rise to significant adverse income tax consequences to U.S. Shareholders. See "Certain Canadian Federal Income Tax Consequences for Shareholders" and "Certain United States Federal Income Tax Consequences for Shareholders". In addition to the Arrangement being taxable to U.S. Shareholders under general U.S. tax rules, the "passive foreign investment company" ("PFIC") rules may also apply. The PFIC rules generally apply in a manner that increase a U.S. Shareholder's U.S. tax liabilities by imposing taxation at the highest rate with an interest charge as well.

ARRANGEMENT DISSENT RIGHTS

        Section 190 of the CBCA provides registered shareholders of a corporation with the right to dissent from certain resolutions that effect extraordinary corporate transactions or fundamental corporate changes. The Interim Order expressly provides Registered Shareholders with the right to dissent from the Arrangement Resolution pursuant to section 190 of the CBCA, with modifications to the provisions of section 190 as provided in the Plan of Arrangement and the Interim Order. Any Registered Shareholder who dissents from the Arrangement Resolution (any such Shareholder referred to herein as a "Dissenting Shareholder") in compliance with section 190 of the CBCA, as modified by the Plan of Arrangement and the Interim Order, will be entitled, in the event the Arrangement becomes effective, to be paid the fair value of Common Shares held by such Dissenting Shareholder determined as of the close of business on the day before the Arrangement Resolution is adopted. Shareholders are cautioned that fair value may be the same as, more than, or less than the consideration offered under the Arrangement. If a Dissenting Shareholder fails to strictly comply with the requirements of the Dissent Rights set out in the Interim Order, it will lose its Dissent Rights, Lorus will return to the Dissenting Shareholder the certificates representing the Common Shares that were delivered to Lorus, if any, and, if the Arrangement is completed, that Dissenting Shareholder shall be deemed to have participated in the Arrangement on the same terms as a Shareholder who is deemed to have not made a valid election.

        Section 190 of the CBCA provides that a shareholder may only make a claim under that section with respect to all of the shares of a class held by the shareholder on behalf of any one beneficial owner and registered in the shareholder's name. One consequence of this provision is that only a Registered Shareholder may exercise the Dissent Rights in respect of Common Shares that are registered in that Shareholder's name.

        In many cases, shares beneficially owned by a non-Registered Shareholder are registered either (a) in the name of an intermediary (such as a broker, trust or bank) (the "Intermediary") or (b) in the name of a clearing agency (such as CDS) of which the Intermediary is a participant. Accordingly, a non-Registered Shareholder will not be entitled to exercise its Dissent Rights directly (unless the shares are re-registered in the non-Registered Shareholder's name). A non-Registered Shareholder who wishes to exercise Dissent Rights should immediately contact the Intermediary with whom the non-Registered Shareholder deals in respect of its shares and either (i) instruct the Intermediary to exercise the Dissent Rights on the non-Registered Shareholder's behalf (which, if the Common Shares are registered in the name of CDS or other clearing agency, may require that such Common Shares first be re-registered in the name of the Intermediary), or (ii) instruct the Intermediary to re-register such Common Shares in the name of the non-Registered Shareholder, in which case the non-Registered Shareholder would be able to exercise the Dissent Rights directly.

        A Registered Shareholder who wishes to dissent must provide a Dissent Notice to Lorus at 2 Meridian Road, Toronto, ON M9W 4Z7 (Attention: Corporate Secretary) at or before 5:00 p.m. (Toronto time) on June 21, 2007 (or 5:00 p.m. (Toronto time) on the day that is one Business Day immediately preceding any adjourned or postponed Meeting).

        The filing of a Dissent Notice does not deprive a Registered Shareholder of the right to vote at the Meeting. However, the CBCA provides, in effect, that a Registered Shareholder who has submitted a Dissent Notice and who votes in favour of the Arrangement Resolution will no longer be considered a Dissenting Shareholder with respect to that class of shares voted in favour of the Arrangement Resolution, being the Common Shares. The

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CBCA does not provide, and Lorus will not assume, that a proxy submitted to Lorus instructing the proxyholder to vote against the Arrangement Resolution, a vote against the Arrangement Resolution or an abstention constitutes a Dissent Notice, but a Registered Shareholder need not vote its Common Shares against the Arrangement Resolution in order to dissent. Similarly, the revocation of a proxy conferring authority on the proxyholder to vote in favour of the Arrangement Resolution does not constitute a Dissent Notice. However, any proxy granted by a Registered Shareholder who intends to dissent, other than a proxy that instructs the proxyholder to vote against the Arrangement Resolution, should be validly revoked in order to prevent the proxyholder from voting such Common Shares in favour of the Arrangement Resolution and thereby causing the Registered Shareholder to forfeit its Dissent Rights.

        A Dissenting Shareholder who has not withdrawn its Dissent Notice prior to the Meeting must, within 20 days after receipt of notice that the Arrangement Resolution has been adopted, or if the Dissenting Shareholder does not receive such notice, within 20 days after learning that the Arrangement Resolution has been adopted, send to Lorus c/o the Transfer Agent a written notice (a "Demand for Payment") containing its name and address, the number of Common Shares in respect of which he or she dissents (the "Dissenting Common Shares"), and a demand for payment of the fair value of such Dissenting Common Shares. Within thirty (30) days after sending the Demand for Payment, the Dissenting Shareholder must send to Lorus or the Transfer Agent certificates representing Dissenting Shares. The Transfer Agent will endorse on the share certificates received from a Dissenting Shareholder a notice that the holder is a Dissenting Shareholder and will forthwith return the share certificates to the Dissenting Shareholder. A Dissenting Shareholder who fails to make a Demand for Payment or to send certificates representing Dissenting Shares in the time required has no right to make a claim under section 190 of the CBCA.

        Under section 190 of the CBCA, after sending a Demand for Payment, a Dissenting Shareholder ceases to have any rights as a Shareholder in respect of its Dissenting Shares other than the right to be paid the fair value of the Dissenting Shares as determined pursuant to the Interim Order, unless (i) the Dissenting Shareholder withdraws its Dissent Notice before Lorus makes an "Offer to Pay", in accordance with subsection 190(12) of the CBCA or (ii) Lorus fails to make an Offer to Pay in accordance with subsection 190(12) of the CBCA and the Dissenting Shareholder withdraws the Demand for Payment, in which case the Dissenting Shareholder's rights as a Shareholder will be reinstated. Pursuant to the Plan of Arrangement, in no case shall Lorus or any other Person be required to recognize any Dissenting Shareholder as a Shareholder after the Closing Date, and the names of such Shareholders shall be deleted from the list of Registered Shareholders at the Closing Date.

        Pursuant to the Plan of Arrangement, Dissenting Shareholders who are ultimately determined to be entitled to be paid fair value for their Dissenting Shares shall be deemed to have transferred such Dissenting Shares to Lorus at the Effective Time.

        Pursuant to the Plan of Arrangement, Dissenting Shareholders who are ultimately determined not to be entitled, for any reason whatsoever, to be paid fair value for their Dissenting Shares, shall be deemed to have participated in the Arrangement on the same basis as any non-Dissenting Shareholder who did not make an election as at and from the Closing Date.

        Lorus is required, not later than seven days after the later of the Closing Date and the date on which a Demand for Payment is received from a Dissenting Shareholder, to send to each such Dissenting Shareholder who has sent a Demand for Payment an Offer to Pay for its Dissenting Shares in an amount considered by the Board to be the fair value of such Dissenting Shareholders Common Shares, accompanied by a statement showing the manner in which the fair value was determined. Every Offer to Pay must be on the same terms. Lorus must pay for the Dissenting Shares of a Dissenting Shareholder within ten days after an Offer to Pay has been accepted by a such Dissenting Shareholder, but any such offer will lapse if Lorus does not receive an acceptance within 30 days after the Offer to Pay has been made.

        If Lorus fails to make an Offer to Pay for a Dissenting Shareholder's Common Shares, or if a Dissenting Shareholder fails to accept an Offer to Pay that has been made, Lorus may, within 50 days after the Closing Date or within such further period as a court may allow, apply to a court to fix a fair value for the Common Shares of Dissenting Shareholders. If Lorus fails to apply to a court, a Dissenting Shareholder may apply to a court for the same purpose within a further period of 20 days or within such further period as a court may allow. A Dissenting Shareholder is not required to give security for costs in such an application.

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        Before making any such application to a court itself after receiving a notice that a Dissenting Shareholder has made an application to a court, Lorus will be required to notify each affected Dissenting Shareholder of the date, place and consequences of the application and of its right to appear and be heard in person or through counsel. Upon an application to a court, all Dissenting Shareholders who have not accepted an Offer to Pay will be joined as parties and be bound by the decision of the court. Upon any such application to a court, the court may determine whether any Person is a Dissenting Shareholder who should be joined as a party, and the court will then fix a fair value for the Dissenting Shares of all Dissenting Shareholders. The final order of a court will be rendered against Lorus in favour of each Dissenting Shareholder for the amount of the fair value of its Dissenting Shares as fixed by the court. The court may, in its discretion, allow a reasonable rate of interest on the amount payable to each Dissenting Shareholder from the Closing Date until the date of payment. Registered Shareholders who are considering exercising Dissent Rights should be aware that there can be no assurance that the fair value of their Common Shares as determined under the applicable provisions of the CBCA (as modified by the Plan of Arrangement and the Interim Order) will be more than or equal to the consideration under the Arrangement. In addition, any judicial determination of fair value will result in delay of receipt by a Dissenting Shareholder of consideration for such Dissenting Shareholder's Dissenting Shares.

        The foregoing is only a summary of the dissenting shareholder provisions of the CBCA (as modified by the Plan of Arrangement and the Interim Order), which are technical and complex. A complete copy of section 190 of the CBCA is attached as Appendix L to this Circular. It is recommended that any Registered Shareholder wishing to avail itself of its Dissent Rights under those provisions seek legal advice, as failure to comply strictly with the provisions of the CBCA (as modified by the Plan of Arrangement and the Interim Order) may prejudice its Dissent Rights.

        For a general summary of certain income tax implications for Dissenting Shareholders, see "Certain Canadian Federal Income Tax Consequences for Shareholders" and "Certain United States Federal Income Tax Consequences for Shareholders".

OTHER BUSINESS

        Management of Lorus is not aware of any matter to come before the Meeting other than the matters referred to in the Notice of Meeting. However, if any other matter properly comes before the Meeting, the accompanying forms of proxy confer discretionary authority to vote with respect to amendments or variations to matters identified in the Notice of Meeting and with respect to other matters that may properly come before the Meeting.

AUDITORS

        KPMG LLP is the auditor of Lorus.

LEGAL MATTERS

        Certain legal matters relating to the Arrangement are to be passed upon at the Closing by McCarthy Tétrault LLP, on behalf of Lorus and New Lorus and on behalf of Pinnacle and Investor. As at May 24, 2007, the partners and associates of McCarthy Tétrault LLP beneficially owned, directly or indirectly, less than 1% of the Common Shares on a fully diluted basis.

APPROVAL OF DIRECTORS

        The contents of this Circular have been approved by the Board of Directors.

ADDITIONAL INFORMATION

        Additional information relating to Lorus can be found on SEDAR at www.sedar.com. Financial information is provided in Lorus' audited annual financial statements and management discussion and analysis, as refiled for the financial year ended May 31, 2006.

        Copies are also available by contacting the Director of Finance of Lorus at 2 Meridian Road, Toronto, Ontario, M9W 4Z7, Canada.

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AUDITORS' CONSENT

The Board of Directors of Lorus Therapeutics Inc.

        We have read the Management Proxy Circular dated May 24, 2007 for a special meeting of holders of common shares, options, warrants and convertible debentures of Lorus Therapeutics Inc. (the "Company") to seek approval for an arrangement. We have complied with Canadian generally accepted standards for an auditor's involvement with offering documents.

        We consent to the incorporation by reference in the above-mentioned Management Proxy Circular of our report to the shareholders of the Company on the consolidated balance sheets of the Company as at May 31, 2006 and 2005 and the consolidated statements of loss and deficit and cash flows for each of the years in the three-year period ended May 31, 2006 and for the period from inception on September 5, 1986 to May 31, 2006. Our report is dated August 9, 2006.

        We also consent to the use in the above mentioned Management Proxy Circular of our report to the Directors of 6650309 Canada Inc. ("New Lorus") on the balance sheet of New Lorus as at November 1, 2006. Our report is dated May 24, 2007.

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AUDITORS' CONSENT

        We have read the Management Proxy Circular dated May 25, 2007 for a special meeting of holders of common shares, options, warrants and convertible debentures of Lorus Therapeutics Inc. to seek approval for an arrangement. We have complied with Canadian generally accepted standards for an auditor's involvement with offering documents.

        We consent to the use in the above mentioned Management Proxy Circular of our report to the Shareholders of Pinnacle International (Bay Street III) Plaza Inc. on the balance sheet of the Company as at October 31, 2006 and the statement of cash flows for the period from February 13, 2006 (date of formation) to October 31, 2006. Our report is dated April 11, 2007.

        We consent to the use in the above mentioned Management Proxy Circular of our report to the Shareholders of Pinnacle International (Bay Street IV) Plaza Inc. on the balance sheet of the Company as at October 31, 2006 and the statement of cash flows for the period from February 13, 2006 (date of formation) to October 31, 2006. Our report is dated April 11, 2007.

        We consent to the use in the above mentioned Management Proxy Circular of our report to the General Partners of Pinnacle Centre Three Limited Partnership on the balance sheet of the Partnership as at October 31, 2006 and the statement of partners' equity and cash flows for the period from February 15, 2006 (date of formation) to October 31, 2006. Our report is dated April 11, 2007.

        We consent to the use in the above mentioned Management Proxy Circular of our report to the General Partners of Pinnacle Centre Four Limited Partnership on the balance sheet of the Partnership as at October 31, 2006 and the statement of partners' equity and cash flows for the period from February 15, 2006 (date of formation) to October 31, 2006. Our report is dated April 11, 2007.

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APPENDIX "A"

ARRANGEMENT RESOLUTION

BE IT RESOLVED THAT:

1.

The arrangement (the "Arrangement") under Section 192 of the Canada Business Corporations Act (the "CBCA") involving Lorus Therapeutics Inc. ("Lorus"), all as more particularly described and set forth in the Management Proxy Circular (the "Circular") of Lorus dated May 25, 2007, accompanying the notice of this meeting (as the Arrangement may be modified or amended), is hereby authorized, approved and adopted;

2.

The plan of arrangement, as it may be or has been amended (the "Plan of Arrangement"), involving Lorus and implementing the Arrangement, the full text of which is set out in Appendix C to the Circular (as the Plan of Arrangement may be, or may have been, modified or amended), is hereby approved and adopted;

3.

The arrangement agreement (the "Arrangement Agreement") between Lorus, NuChem Pharmaceuticals Inc., GeneSense Technologies Inc., 6650309 Canada Inc., Pinnacle International Lands, Inc. and 6707157 Canada Inc., made as of May 1, 2007, the actions of the directors of Lorus in approving the Arrangement and the actions of the officers of Lorus in executing and delivering the Arrangement Agreement and any amendments thereto are hereby ratified and approved;

4.

Notwithstanding that this resolution has been passed (and the Arrangement adopted) by the securityholders of Lorus or that the Arrangement has been approved by the Superior Court of Justice (Ontario), the directors of Lorus are hereby authorized and empowered without further notice to, or approval of, the securityholders of Lorus (i) to amend the Arrangement Agreement or the Plan of Arrangement to the extent permitted by the Arrangement Agreement or the Plan of Arrangement, or (ii) subject to the terms of the Arrangement Agreement, not to proceed with the Arrangement.

5.

Any officer or director of Lorus is hereby authorized and directed for and on behalf of Lorus to execute and deliver articles of arrangement and such other documents as are necessary or desirable to the Director under the CBCA in accordance with the Arrangement Agreement; and

6.

Any officer or director of Lorus is hereby authorized and directed for and on behalf of Lorus to execute or cause to be executed and to deliver or cause to be delivered, all such other documents, agreements and instruments and to perform or cause to be performed all such other acts and things as in such person's opinion may be necessary or desirable to give full effect to the foregoing resolutions and the matters authorized thereby, such determination to be conclusively evidenced by the execution and delivery of such document, agreement or instrument or the doing of any such act or thing.

A-1

APPENDIX "B"

FORM OF ARTICLES OF AMENDMENT OF REALCO

The articles of the Corporation are amended as follows:

1.

To change the name of the Corporation from "Lorus Therapeutics Inc." to "4325231 Canada Inc.".

2.

To change the address of the registered office of the Corporation to Suite 300, 911 Homer Street, Vancouver, British Columbia, V6B 2W6.

3.

To provide that the number of directors of the Corporation is fixed at five.

4.

To add the following "other provisions":

Subject to applicable law and Corporation's contractual obligations then in effect, the directors may fill any vacancies among the directors, whether arising due to an increase in the number of directors set forth in the articles of the Corporation or otherwise.

The directors will be divided into three groups, with the first group ("Group I") being comprised of one director to be elected for an initial term of one year, the second group ("Group II") being comprised of two directors to be elected for an initial term of two years, and the third group ("Group III") being comprised of two directors to be elected for an initial term of three years. At each election of directors after the effective date hereof to elect directors whose terms have expired, directors will be elected for a term of three years. In any election or appointment of a director to fill a vacancy created by any director ceasing to hold office, the election or appointment will be for the unexpired term of the director who has ceased to hold office. If the number of directors is changed, any increase or decrease will be apportioned among the classes of directors in such a manner as will maintain or attain, to the extent possible, an equal number of directors in each class of directors. If such equality is not possible, the increase or decrease will be apportioned among the classes of directors in such a manner that the difference in the number of directors in any two classes will not exceed one.

5.

To remove the objects of the Corporation and to provide the restrictions on the business that the Corporation may carry on and the powers the Corporation may exercise as set forth on Exhibit A hereto.

6.

To change the designation of the common shares to voting common shares and to restate the rights, privileges, restrictions and conditions attaching to the voting common shares as set forth on Exhibit B hereto.

7.

To create an unlimited number of non-voting common shares.

8.

To provide the rights, privileges, restrictions and conditions attaching to the non-voting common shares as set forth on Exhibit B hereto.

9.

To declare that the capital of the Corporation after giving effect to the foregoing consists of an unlimited number of voting common shares and an unlimited number of non-voting common shares.

10.

To provide that any matter that, by the terms of these articles or the Corporation's governing statute, requires approval by a special resolution will require approval by a resolution that is passed by a majority of not less than 75% of the votes cast by the shareholders who voted in respect of that resolution or signed by all the shareholders entitled to vote on that resolution.

11.

To provide that the articles and by-laws of the Corporation may be amended only if approved by a special resolution.

12.

To provide that, if the Corporation's governing statute so permits, a director of the Corporation may be removed before the expiration of the director's term of office only if approved by a special resolution.

13.

To provide that no share in the capital of the Corporation may be issued at a subscription price of less than $1.00 per share and no security may be issued that is exercisable for, convertible into or that otherwise entitles the holder to acquire shares of the Corporation at an exercise, conversion or acquisition price of less than $1.00 per share, except that the Corporation may issue shares by way of a distribution to holders of shares of the Corporation that affects all holdings of such shares the same way on a per share basis.

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EXHIBIT A
(to Appendix B — Form of Articles of Amendment of RealCo)

Restrictions on the Business of the Corporation

(1)   Restrictions on Business.

(a)

The objective of the Corporation will be to maximize Distributable Cash Flow and to distribute all Distributable Cash Flow to holders of the voting common shares and non-voting common shares and, in connection therewith, the Corporation will, at the end of each Distribution Period, distribute all Distributable Cash Flow to holders of its voting common shares and non-voting common shares by way of dividends and/or other distributions, subject to the other provisions of these articles and to applicable law.



(b)

The business of the Corporation will be restricted to:



(i)

real estate development, investment in real estate and real estate development projects, and the provision of services related to real estate development and/or real estate development projects including, without limitation, management, marketing, financial and administrative services related to real estate development and/or real estate development projects;



(ii)

borrowing money upon the credit of the Corporation, and granting security therefor, in the ordinary course of the Corporation's business;



(iii)

satisfying the obligations, liabilities or indebtedness of the Corporation; and



(iv)

engaging in any acts or exercising any powers necessary or desirable to carry out the ordinary course of the Corporation's business, including, without limitation, as provided in the articles and by-laws of the Corporation.

(2)   Defined Terms.

        As used herein, the following terms will have the following meanings:

(a)

"Arrangement" means the arrangement under Section 192 of the Canada Business Corporations Act on the terms and subject to the conditions set out in the plan of arrangement pursuant to which these articles became effective.



(b)

"Cash Flow", for any Distribution Period, will equal the following:



(i)

all cash and cash equivalents which are received by the Corporation in such Distribution Period, including, without limitation, all income, interest, dividends, proceeds from the disposition of securities, returns of capital and repayments of indebtedness (except to the extent such repayments of indebtedness are reinvested);

plus:

(ii)

all cash and cash equivalents received by the Corporation in any prior Distribution Period to the extent not previously distributed unless such amounts have been set aside by the Board of Directors in a prior Distribution Period for distribution to the holders of the voting common shares and/or the non-voting common shares in a subsequent Distribution Period, in which case such amounts set aside will not be included in Cash Flow;

less the following amounts (referred to collectively as the "Cash Flow Deductions"):

(iii)

all costs, expenses, reserves, allowances and debts of the Corporation which, in the opinion of the Board of Directors, may reasonably be considered to have accrued or become owing in respect of, or which relate to, such Distribution Period or a prior Distribution Period if not deducted in the calculation of Cash Flow for such prior period;



(iv)

stated capital of the voting common shares and the non-voting common shares;

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(v)

any tax liability of the Corporation in respect of, or which relates to, such Distribution Period; and



(vi)

all cash and cash equivalents which are received by the Corporation in the Distribution Period which the Board of Directors has determined to set aside for distribution to the holders of the voting common shares and/or the non-voting common shares in a subsequent Distribution Period.



(c)

"Distributable Cash Flow" for, or in respect of, a Distribution Period will be the Cash Flow of the Corporation for such Distribution Period, together with any Cash Flow set aside in a prior Distribution Period for distribution to the holders of the voting common shares and/or the non-voting common shares in a subsequent Distribution Period which the Board of Directors has determined to distribute in respect of the current Distribution Period, less any amount which the Board of Directors may reasonably consider to be necessary to provide for the payment of any costs or expenses and repayments of debts which have been or are reasonably expected to be incurred in the activities and operations of the Corporation in addition to the Cash Flow Deductions.



(d)

"Distribution Period" means such period or periods, as determined by the Board of Directors, occurring at least once each fiscal year of the Corporation, provided that the first Distribution Period will begin on (and include) the Effective Date and will end on (and include) the last day of the fiscal year in which the Effective Date occurs.



(e)

"Effective Date" means the effective date set out in the articles of arrangement which were filed with the Director in connection with the Arrangement.

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EXHIBIT B
(to Appendix B — Form of Articles of Amendment of RealCo)

Provisions Attaching to the Voting Common Shares
and the Non-Voting Common Shares

1.01     Voting Common Shares

            The voting common shares will have attached thereto the following rights, privileges, restrictions and conditions:

(1)

Dividends

        Subject to the prior rights of the holders of any other shares ranking senior to the voting common shares with respect to priority in the payment of dividends, the holders of voting common shares will be entitled to receive dividends and the Corporation will pay dividends thereon, as and when declared by the Board of Directors (provided that no dividends will be declared on or prior to the Effective Date) out of Distributable Cash Flow, in such amount and in such form as the Board of Directors may from time to time determine. However, all dividends which the Board of Directors may determine to declare and pay in any financial year of the Corporation must be declared and paid in equal or equivalent amounts per share on all of the voting common shares and non-voting common shares at the time outstanding without preference or distinction. Unless otherwise agreed to by the holders of the voting common shares, such dividends will be paid by cheques of the Corporation payable at par at any branch of the Corporation's bankers for the time being in Canada issued in respect of such dividends or in such other manner as is required by the Corporation's bankers or as required by law (less any tax required to be withheld by the Corporation) and payment thereof will satisfy such dividends. Dividends which are represented by a cheque which has not been presented to the Corporation's bankers for payment or that otherwise remain unclaimed for a period of six years from the date on which they were declared to be payable will be forfeited to the Corporation.

(2)

Participation upon Liquidation, Dissolution or Winding Up

        In the event of the dissolution, liquidation or winding-up of the Corporation, whether voluntary or involuntary, or any other distribution of assets of the Corporation among its shareholders for the purpose of winding-up its affairs, the voting common shares and non-voting common shares will rank equally as to priority of distribution and the holders of the voting common shares will, subject to the rights of the holders of any other shares of the Corporation entitled to receive assets of the Corporation upon such a distribution in priority to or concurrently with the holders of the voting common shares, participate concurrently with the holders of the non-voting common shares in the distribution. Such distribution will be made in equal amounts per share on all the voting common shares and non-voting common shares at the time outstanding without preference or distinction.

(3)

Voting Rights

        Subject to Section 1.02(6), the holders of the voting common shares will be entitled to receive notice of and to attend all meetings of the shareholders of the Corporation and will have one vote for each voting common share held at all meetings of the shareholders of the Corporation, except meetings at which only holders of another specified class or series of shares of the Corporation are entitled to vote separately as a class or series.

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1.02     Non-Voting Common Shares

            The non-voting common shares will have attached thereto the following rights, privileges, restrictions and conditions:

(1)

Defined Terms

        As used herein, the following terms will have the following meanings:

(a)

"Bid Price" means the consideration for each voting common share and each non-voting common share offered to holders of voting common shares and holders of non-voting common shares, respectively, under the Required Bids, which consideration will have a fair market value of not less than the average of the fair market value of a voting common share on the date that the Required Bids are made as determined in writing by two nationally recognized investment banking firms retained by the Offeror for the purpose of providing such valuation in connection with the Required Bids.



(b)

"Designated Number" means the number of voting common shares that are subject to a Specified Offer, together with the Offeror's Voting Common Shares.



(c)

"Group" means one or more persons acting jointly or in concert (within the meaning of section 91 of the Securities Act (Ontario)).



(d)

"Offeror Date" means the date on which a Specified Offer is made.



(e)

"Offer to Acquire" includes:



(i)

an offer to purchase, a public announcement of an intention to make an offer to purchase, or a solicitation of an offer to sell, securities;



(ii)

the receipt of an offer to sell securities, whether or not such offer to sell has been solicited,

or any combination thereof, and the Person receiving an offer to sell will be deemed to be making an Offer to Acquire to the Person that made the offer to sell.

(f)

"Offeror" means a Person that makes an Offer to Acquire voting common shares, and includes any Person related to such Person for purposes of the Tax Act or any other Person that is acting jointly or in concert with such Person or who would, together with such Person (and other Persons), constitute a Group.



(g)

"Offeror's Voting Common Shares", on any date, means the number of voting common shares beneficially owned, directly or indirectly, or over which control or direction is exercised (including any combination of the foregoing), on the relevant date by the Offeror either alone or together with a Group.



(h)

"Required Bids" means the concurrent offers required to be made to all holders of voting common shares and to all holders of non-voting common shares in the circumstances provided in Section 1.02(5).



(i)

"Specified Offer" means an Offer to Acquire voting common shares made by an Offeror where the number of voting common shares subject to the Offer to Acquire (the "Specified Offer Shares"), together with the Offeror's Voting Common Shares on the Offer Date, would constitute in the aggregate more than 50% of the total issued and outstanding voting common shares on the Offer Date.



(j)

"Specified Offer Shares" has the meaning set out in Section 1.02(1)(i).



(k)

"Tax Act" means the Income Tax Act (Canada) R.S.C. 1985, C.1, 5^th Supplement, as amended, including the tax regulations made thereunder.

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(2)

Dividends

        Subject to the prior rights of the holders of any other shares ranking senior to the non-voting common shares with respect to priority in the payment of dividends, the holders of non-voting common shares will be entitled to receive dividends and the Corporation will pay dividends thereon, as and when declared by the Board of Directors (provided that no dividends will be declared on or prior to Effective Date) out of Distributable Cash Flow, in such amount and in such form as the Board of Directors may from time to time determine. However, all dividends which the Board of Directors may determine to declare and pay in any financial year of the Corporation must be declared and paid in equal or equivalent amounts per share on all of the voting common shares and non-voting common shares at the time outstanding without preference or distinction. Unless otherwise agreed to by the holders of the non-voting common shares, such dividends will be paid by cheques of the Corporation payable at par at any branch of the Corporation's bankers for the time being in Canada issued in respect of such dividends or in such other manner as is required by the Corporation's bankers or as required by law (less any tax required to be withheld by the Corporation) and payment thereof will satisfy such dividends. Dividends which are represented by a cheque which has not been presented to the Corporation's bankers for payment or that otherwise remain unclaimed for a period of six years from the date on which they were declared to be payable will be forfeited to the Corporation.

(3)

Participation upon Liquidation, Dissolution or Winding Up

        In the event of the dissolution, liquidation or winding-up of the Corporation, whether voluntary or involuntary, or any other distribution of assets of the Corporation among its shareholders for the purpose of winding-up its affairs, the voting common shares and non-voting common shares will rank equally as to priority of distribution and the holders of the non-voting common shares will, subject to the rights of the holders of any other shares of the Corporation entitled to receive assets of the Corporation upon such a distribution in priority to or concurrently with the holders of the voting common shares, participate concurrently with the holders of the voting common shares in the distribution. Such distribution will be made in equal amounts per share on all the voting common shares and non-voting common shares at the time outstanding without preference or distinction.

(4)

Voting Rights

        Subject to applicable law and any other provisions of the articles of the Corporation, the holders of the non-voting common shares will not be entitled to receive notice of, nor to attend nor vote at any meetings of the shareholders of the Corporation; provided that in the event that holders of the non-voting common shares are entitled by law or the articles of the Corporation to vote at a meeting of holders of non-voting common shares, the holders of non-voting common shares will have one vote for each non-voting common share held.

(5)

Specified Offer

        An Offeror will not acquire any voting common shares under a Specified Offer without first complying with the provisions of this Section 1.02(5). Prior to, and as a condition precedent to, the acquisition by an Offeror of any voting common shares under a Specified Offer, the Offeror will make concurrent offers to acquire voting common shares and non-voting common shares for consideration for each voting common share and each non-voting common share equal to the Bid Price, on the same terms, except as to the number of shares subject to the offers, which offers will comply with the provisions of applicable securities legislation relating to a formal takeover bid (whether or not such offers are required by law to so comply) (the "Required Bids"):

(a)

to all holders of voting common shares for such number of voting common shares as is equal to the number of Specified Offer Shares; and

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(b)

to all holders of non-voting common shares for such number of non-voting common shares that is equal to the lesser of:



(i)

A × B, where A equals the Designated Number of voting common shares divided by the total number of issued and outstanding voting common shares on the Offer Date and B equals the total number of issued and outstanding non-voting common shares on the date that the Required Bids are made; and



(ii)

the number of issued and outstanding non-voting common shares excluding those that are beneficially owned, or over which control or direction is exercised, on the date that the Required Bids are made (including any combination of the foregoing) by the Offeror;

provided that:

(c)

no shares may be taken-up or paid for under either of the Required Bids, unless all shares tendered to each of the Required Bids are taken-up and paid for concurrently; and



(d)

the Offeror will issue a press release following the expiry of the Required Bids and one Business Day prior to the take-up of any shares tendered to the Required Bids, which press release will disclose:



(i)

the approximate number of voting common shares and non-voting common shares tendered to the Required Bids; and



(ii)

whether a sufficient number of voting common shares has been tendered to the Required Bids such that the Offeror would acquire, on take-up and payment for such shares, when added to the Offeror's Voting Common Shares on the date of take-up, more than 50% of the total issued and outstanding voting common shares on the date of take-up.



(6)

Failure to Comply

        In the event that an Offeror acquires, directly or indirectly, more than 50% of the total issued and outstanding voting common shares in violation of Section 1.02(5), then, effective on the completion of such acquisition and during such time that the Offeror's Voting Common Shares constitute more than 50% of the total issued and outstanding voting common shares, the total number of votes attaching to the Offeror's Voting Common Shares will equal the difference between: (a) the total number of issued and outstanding voting common shares; and (b) the number of the Offeror's Voting Common Shares, and, for greater certainty, the voting common shares other than the Offeror's Voting Common Shares will continue to have one vote per share.

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APPENDIX "C"

PLAN OF ARRANGEMENT

PLAN OF ARRANGEMENT

made pursuant to

Section 192 of the Canada Business Corporations Act

ARTICLE 1

DEFINITIONS

1.01     Definitions

            In this Plan, unless the context otherwise requires:

(1)

"Act" means the Canada Business Corporations Act, R.S.C. 1985, c. C-44, as from time to time amended or re-enacted, including all regulations promulgated thereunder;



(2)

"Antisense Patent Assets" means those assets set out in the Antisense Patent Assets Transfer Agreement;



(3)

"Antisense Patent Assets Transfer Agreement" means the asset purchase agreement to be entered into between GeneSense and New Lorus pursuant to which GeneSense will transfer the Antisense Patent Assets to New Lorus and substantially in the form attached as Schedule C to the Arrangement Agreement;



(4)

"Appropriate Number" means that number of Old Lorus Voting Shares which, if combined with the aggregate number of Old Lorus Voting Shares purchased pursuant to Section 3.01(24), would result in Investor holding a total number of Old Lorus Voting Shares representing approximately 41% of the issued and outstanding Old Lorus Voting Shares at the conclusion of the Arrangement;



(5)

"Arrangement" means the business reorganization pursuant to which, among other things, Investor will acquire approximately 41% of the issued and outstanding voting shares and all of the issued and outstanding non-voting shares of Old Lorus as contemplated by this Plan pursuant to section 192 of the Act;



(6)

"Arrangement Agreement" means the arrangement agreement between Old Lorus, NuChem, GeneSense, New Lorus, Pinnacle and Investor dated as of May 1, 2007 which sets out the terms and conditions pursuant to which the parties thereto will effect the Arrangement;



(7)

"Articles of Arrangement" means the articles of arrangement of Old Lorus in respect of the Arrangement required under subsection 193(6) of the Act to be filed with the Director after the Final Order has been made in order to give effect to the Arrangement;



(8)

"Business Day" means a day, other than a Saturday, Sunday or other day, when banks in Toronto, Ontario or Vancouver, British Columbia are not generally open for business;



(9)

"Court" means the Ontario Superior Court of Justice;



(10)

"Debenture Assumption Agreement" means the agreement to be entered into between Old Lorus and New Lorus pursuant to which New Lorus will assume Old Lorus' obligation to pay TEMIC the aggregate principal amount of $15,000,000 plus accrued interest owing under the Old Lorus Debentures, as contemplated by Section 3.01(3);



(11)

"Depositary" means Computershare Investor Services Inc., the appointed depositary in respect of the Arrangement at its principal transfer office in Toronto, Ontario;



(12)

"Director" means the Director appointed under the Act;



(13)

"Dissent Rights" has the meaning ascribed thereto in Section 5.01;



(14)

"Effective Date" means the effective date set out in the Articles of Arrangement which are filed with the Director;

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(15)

"Effective Time" means 12:01 a.m. (Toronto time) on the Effective Date;



(16)

"Escrow Agreement" has the meaning ascribed thereto in the Arrangement Agreement;



(17)

"Final Order" means the final order of the Court issued in connection with the approval of the Arrangement, providing, among other matters, for the Arrangement to be sanctioned and to take effect, as such order may be affirmed, amended or modified by any court of competent jurisdiction;



(18)

"GeneSense" means GeneSense Technologies Inc., a corporation existing under the laws of Canada;



(19)

"GeneSense Share Purchase Agreement" means the share purchase agreement to be entered into between Old Lorus and New Lorus pursuant to which Old Lorus will transfer all of the GeneSense Shares to New Lorus and substantially in the form attached as Schedule G to the Arrangement Agreement;



(20)

"GeneSense Shares" means common shares in the capital of GeneSense;



(21)

"Information Circular" means the management proxy circular relating to the Old Lorus Securityholders' Meeting and forwarded to Old Lorus Securityholders in connection with, among other things, the transactions contemplated in this Plan;



(22)

"Interim Order" means an interim order of the Court concerning the Arrangement under subsection 192(4) of the Act, containing declarations and directions with respect to the Arrangement and the holding of the Old Lorus Securityholders' Meeting, as such order may be affirmed, amended or modified by any court of competent jurisdiction;



(23)

"Investor" means 6707157 Canada Inc., a corporation existing under the laws of Canada;



(24)

"Letter of Transmittal" means the letter of transmittal enclosed with the Information Circular pursuant to which an Old Lorus Securityholder is required to surrender certificates representing Old Lorus Securities in order to receive, upon completion of the Arrangement, New Lorus Securities issued pursuant to the Arrangement and, as applicable, Old Lorus Voting Shares or a cash payment in lieu thereof;



(25)

"Lock-Up Holders" has the meaning ascribed thereto in Section 3.01(24);



(26)

"New Lorus" means 6650309 Canada Inc., a corporation existing under the laws of Canada;



(27)

"New Lorus Note 1" has the meaning ascribed thereto in Section 3.01(10);



(28)

"New Lorus Note 2" has the meaning ascribed thereto in Section 3.01(14);



(29)

"New Lorus Note 3" has the meaning ascribed thereto in Section 3.01(15);



(30)

"New Lorus Replacement Note" has the meaning ascribed thereto in Section 3.01(18);



(31)

"New Lorus Options" has the meaning ascribed thereto in Section 3.01(1);



(32)

"New Lorus Securities" has the meaning ascribed thereto in Section 3.01(1);



(33)

"New Lorus Shares" has the meaning ascribed thereto in Section 3.01(1);



(34)

"New Lorus Warrants" has the meaning ascribed thereto in Section 3.01(1);



(35)

"NuChem" means NuChem Pharmaceuticals Inc., a corporation existing under the laws of Ontario;



(36)

"NuChem Share Purchase Agreement" means the share purchase agreement to be entered into between Old Lorus and New Lorus pursuant to which Old Lorus will transfer all of the NuChem Shares held by it to New Lorus and substantially in the form attached as Schedule H to the Arrangement Agreement;



(37)

"NuChem Shares" means common shares in the capital of NuChem;



(38)

"Old Lorus" means Lorus Therapeutics Inc., a corporation existing under the laws of Canada;



(39)

"Old Lorus Debentures" means the prime plus 1% secured convertible debentures of Old Lorus due on October 6, 2009 in the aggregate principal amount of $15,000,000, issued to TEMIC in equal amounts of $5,000,000 each on each of October 6, 2004, January 15, 2005 and April 15, 2005;

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(40)

"Old Lorus Non-Voting Shares" means the non-voting common shares of Old Lorus issued and outstanding following the reorganization of Old Lorus' share capital pursuant to the Arrangement;



(41)

"Old Lorus Note" has the meaning ascribed thereto in Section 3.01(3);



(42)

"Old Lorus Options" means the issued and outstanding stock options issued to directors, senior officers, employees and consultants of Old Lorus, governed by the terms of the Old Lorus Stock Option Plans and permitting the holders thereof to purchase an aggregate of up to 25,921,000 Old Lorus Shares, as such number may be amended from time to time;



(43)

"Old Lorus Securities" means, collectively, the Old Lorus Debentures, the Old Lorus Options, the Old Lorus Shares and the Old Lorus Warrants;



(44)

"Old Lorus Securityholders" means, collectively, the holders of Old Lorus Shares, Old Lorus Options, Old Lorus Warrants and Old Lorus Debentures;



(45)

"Old Lorus Securityholders' Meeting" means the special meeting of Old Lorus Securityholders, and any adjournments thereof, called to consider and authorize, approve and adopt, among other things, the Arrangement in accordance with the Interim Order;



(46)

"Old Lorus Shareholders" means the holders of Old Lorus Shares;



(47)

"Old Lorus Share Purchase Plan" means the Old Lorus employee share purchase plan;



(48)

"Old Lorus Shares" means the common shares of Old Lorus issued and outstanding immediately prior to the reorganization of Old Lorus' share capital pursuant to the Arrangement;



(49)

"Old Lorus Stock Option Plans" means, collectively, Old Lorus' 2003 Stock Option Plan and the 1993 Stock Option Plan;



(50)

"Old Lorus Voting Shares" means the voting common shares of Old Lorus issued and outstanding following the reorganization of Old Lorus' share capital pursuant to the Arrangement;



(51)

"Old Lorus Warrants" means the 3,000,000 issued and outstanding common share purchase warrants of Old Lorus issued to TEMIC, each of which entitles TEMIC to acquire, subject to adjustment, one Old Lorus Share at a price per share of $1.00;



(52)

"Pinnacle" means Pinnacle International Lands, Inc., a corporation existing under the laws of British Columbia;



(53)

"Pinnacle Share Purchase Agreement" means the share purchase agreement to be entered into between Investor and New Lorus pursuant to which Investor will purchase from New Lorus the Appropriate Number of Old Lorus Voting Shares and all of the Old Lorus Non-Voting Shares and substantially in the form attached as Schedule I to the Arrangement Agreement;



(54)

"Plan" means this plan of arrangement as amended or supplemented from time to time, and "hereby", "hereof', "herein", "hereunder", "herewith" and similar terms refer to this Plan and not to any particular provision of this Plan;



(55)

"Prepaid Expenses and Receivables" means those assets set out in the Prepaid Expenses and Receivables Transfer Agreement;



(56)

"Prepaid Expenses and Receivables Transfer Agreement" means the asset purchase agreement to be entered into between Old Lorus and GeneSense pursuant to which Old Lorus will transfer the Prepaid Expenses and Receivables to GeneSense and substantially in the form attached as Schedule F to the Arrangement Agreement;



(57)

"resident in the United States" shall be determined as provided in Rule 12g-4(a)(2) under the United States Securities Exchange Act of 1934, as amended;



(58)

"Tangible Business Assets" means Old Lorus' depreciable property set out in the Tangible Business Assets Transfer Agreement;



(59)

"Tangible Business Assets Transfer Agreement" means the asset purchase agreement to be entered into between Old Lorus and GeneSense pursuant to which Old Lorus will transfer the Tangible

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Business Assets to GeneSense and substantially in the form attached as Schedule E to the Arrangement Agreement;

(60)

"TEMIC" means The Erin Mills Investment Corporation;



(61)

"Transfer Agent and Registrar" means Computershare Investor Services Inc.;



(62)

"United States" means the United States of America, its territories and possessions, any state of the United States and the District of Columbia;



(63)

"Virulizin and Small Molecule Patent Assets" means those assets set out in the Virulizin and Small Molecule Patent Assets Transfer Agreement;



(64)

"Virulizin and Small Molecule Patent Assets Transfer Agreement" means the asset purchase agreement to be entered into by Old Lorus and GeneSense pursuant to which Old Lorus will transfer the Virulizin and Small Molecule Patent Assets to GeneSense and substantially in the form attached as Schedule D to the Arrangement Agreement; and



(65)

"Warrant Purchase Agreement" means the warrant purchase agreement between New Lorus and TEMIC pursuant to which New Lorus has agreed to purchase the New Lorus Warrants from TEMIC dated May 1, 2007.

1.02     Headings

            The headings contained in this Plan are for reference purposes only and will not affect in any way the meaning or interpretation of this Plan.

1.03     Interpretation

            Unless the contrary intention appears, references in this Plan to an article, section, paragraph, subparagraph or schedule by number or letter or both refer to the article, section, paragraph, subparagraph or schedule bearing that designation in this Plan.

1.04     Extended Meanings

            In this Plan, unless the contrary intention appears, words importing the singular include the plural and vice versa; words importing gender will include all genders; "person" includes any individual, partnership, firm, trust, body corporate, government, governmental body, agency or instrumentality, unincorporated body of persons or association; and the term "including" means "including without limiting the generality of the foregoing".

1.05     Date for any Action

            In the event that the date on which any action is required to be taken hereunder by any of the parties is not a Business Day in the place where the action is required to be taken, such action will be required to be taken on the next succeeding day which is a Business Day in such place.

1.06     Statutory References

            References in this Plan to any statute or sections thereof will include such statute as amended or substituted and any regulations promulgated thereunder from time to time in effect.

1.07     Deemed Currency

            Unless otherwise stated, all references in this Plan to sums of money are expressed in lawful money of Canada.

ARTICLE 2

PURPOSE AND EFFECT OF THE PLAN

2.01     Purpose and Effect of the Plan

            The purpose of this Plan is to carry out a reorganization of the business, assets, liabilities and share capital of Old Lorus, GeneSense, NuChem and New Lorus as described in Section 3.01.

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ARTICLE 3

ARRANGEMENT

3.01     Arrangement

            At the Effective Time, each of the events set out below will occur and be deemed to occur in the sequence set out without further act or formality:

(1)

The Old Lorus Shareholders, holders of Old Lorus Options and holders of Old Lorus Warrants will transfer their Old Lorus Shares, Old Lorus Options and Old Lorus Warrants, as applicable, to New Lorus in exchange for the issuance by New Lorus of shares (the "New Lorus Shares"), options (the "New Lorus Options") and warrants (the "New Lorus Warrants" and, together with the New Lorus Shares and the New Lorus Options, the "New Lorus Securities"), respectively, having the same value, terms and conditions as the Old Lorus Shares, Old Lorus Options and Old Lorus Warrants;



(2)

New Lorus will repurchase the New Lorus Warrants from TEMIC pursuant to the Warrant Purchase Agreement;



(3)

Pursuant to the Debenture Assumption Agreement, New Lorus will assume Old Lorus' obligation to pay TEMIC the $15,000,000 aggregate principal amount of the Old Lorus Debentures plus accrued and unpaid interest thereon in consideration for Old Lorus issuing a non-interest bearing promissory note to New Lorus for an amount equal to the amount owing under the Old Lorus Debentures (the "Old Lorus Note"). The right of TEMIC under the Old Lorus Debentures to convert such debentures into Old Lorus Shares will be exchanged for the right to convert such debentures into an equal number of New Lorus Shares;



(4)

Old Lorus will surrender to New Lorus for cancellation the initial New Lorus Share that was issued to Old Lorus upon the incorporation of New Lorus;



(5)

The articles of Old Lorus will be amended to change its name to "4325231 Canada Inc." or a name to be used for real estate development purposes;



(6)

The articles of New Lorus will be amended to change its name to "Lorus Therapeutics Inc.";



(7)

The articles of Old Lorus will be amended to conform with the form of the amended articles agreed upon in writing by the parties to the Arrangement Agreement on or prior to the date of the Interim Order, such amendments to effect, among other things, a reorganization of the share capital of Old Lorus to create an unlimited number of Old Lorus Voting Shares and an unlimited number of Old Lorus Non-Voting Shares. The Old Lorus Voting Shares and the Old Lorus Non-Voting Shares will rank equally with respect to participation in dividends and the liquidation of Old Lorus;



(8)

As part of the reorganization of the share capital of Old Lorus, the Old Lorus Shares held by New Lorus will be exchanged for 21,127,828 Old Lorus Voting Shares and 2,078,872,172 Old Lorus Non-Voting Shares, the Old Lorus Options and the Old Lorus Warrants will be cancelled and a right to acquire Old Lorus Shares under the Old Lorus Share Purchase Plan will become a right to acquire an equivalent number of New Lorus Shares under such plan;



(9)

Pursuant to the Tangible Business Assets Transfer Agreement, Old Lorus will transfer the Tangible Business Assets to GeneSense in consideration for the issuance by GeneSense of one GeneSense Share to Old Lorus;



(10)

Pursuant to the Antisense Patent Assets Transfer Agreement, GeneSense will transfer the Antisense Patent Assets to New Lorus in consideration for the issuance by New Lorus to GeneSense of a demand non-interest bearing promissory note in an amount equal to the fair market value of the Antisense Patent Assets ("New Lorus Note 1");



(11)

Pursuant to the Virulizin and Small Molecule Patent Assets Transfer Agreement, Old Lorus will transfer the Virulizin and Small Molecule Patent Assets to GeneSense in consideration for the issuance by GeneSense of one GeneSense Share to Old Lorus;



(12)

GeneSense will repay its debt owing to Old Lorus in exchange for the issuance by GeneSense of one GeneSense Share to Old Lorus;

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(13)

Pursuant to the Prepaid Expenses and Receivables Transfer Agreement, Old Lorus will transfer the Prepaid Expenses and Receivables to GeneSense in exchange for the issuance by GeneSense of one GeneSense Share to Old Lorus;



(14)

Pursuant to the GeneSense Share Purchase Agreement, Old Lorus will transfer all of the GeneSense Shares to New Lorus at a price equal to their fair market value in exchange for the assumption by New Lorus of Old Lorus' remaining liabilities and transaction costs (other than the Old Lorus Note) and the issuance by New Lorus of a demand non-interest bearing promissory note to Old Lorus for an amount equal to the amount by which the purchase price for the GeneSense Shares exceeds the amount of Old Lorus' liabilities assumed by New Lorus ("New Lorus Note 2");



(15)

Pursuant to the NuChem Share Purchase Agreement, Old Lorus will transfer all of the NuChem Shares held by it to New Lorus at a price equal to their fair market value in consideration for the issuance by New Lorus to Old Lorus of a demand, non-interest bearing promissory note in an amount equal to the purchase price for the NuChem Shares ("New Lorus Note 3");



(16)

Old Lorus will assign all of its contractual obligations to New Lorus or its assignee and New Lorus or its assignee will assume such obligations;



(17)

New Lorus will offer employment to all of the employees of Old Lorus and will assume all employment obligations related thereto;



(18)

New Lorus will repay the amount owing by New Lorus to Old Lorus under the New Lorus Note 2 and the New Lorus Note 3 by way of set off against the Old Lorus Note and the issuance to Old Lorus of a replacement non-interest bearing demand promissory note (the "New Lorus Replacement Note") for an amount equal to the amount by which the aggregate amount owing by New Lorus under the New Lorus Note 2 and the New Lorus Note 3 exceeds the amount of the Old Lorus Note;



(19)

Old Lorus will reduce its stated capital by an amount equal to its remaining cash, cash equivalents, and short term and long term investments, less the amount required to fund the repurchase of Old Lorus Voting Shares described in Section 3.01(24), plus an amount equal to the amount of the New Lorus Replacement Note and will distribute such property to New Lorus in satisfaction of the capital reduction amount;



(20)

[intentionally deleted]



(21)

Pursuant to the Pinnacle Share Purchase Agreement, Investor will purchase the Appropriate Number of the Old Lorus Voting Shares and all of the Old Lorus Non-Voting Shares from New Lorus in consideration of a cash payment equal to $0.0040775156 per Old Lorus Voting Share and $0.0040775156 per Old Lorus Non-Voting Share, subject to payment and adjustment in accordance with the Pinnacle Share Purchase Agreement and a holdback pursuant to the Escrow Agreement;



(22)

The New Lorus Shares will be conditionally approved for listing on the Toronto Stock Exchange and the American Stock Exchange subject to the fulfillment of the conditions set out in the applicable conditional approval letter;



(23)

New Lorus will reduce its stated capital by an amount equal to the fair market value of its Old Lorus Voting Shares, determined based on the price per Old Lorus Voting Share paid by Investor in Section 3.01(21) above. In satisfaction of the capital reduction, New Lorus will: (i) in the case of shareholders of New Lorus who are not resident in the United States, distribute Old Lorus Voting Shares on a pro rata basis, disregarding fractions (provided such distribution effects a distribution of not less than 90% of the Old Lorus Voting Shares then owned by New Lorus); and (ii) in the case of shareholders of New Lorus who are resident in the United States, sell to Old Lorus for cash consideration New Lorus' remaining Old Lorus Voting Shares (not to exceed 10% of the Old Lorus Voting Shares then owned by New Lorus) at the price per Old Lorus Voting Share paid by Investor at the Effective Time in Section 3.01(21) and distribute the proceeds of such sale to such shareholders who are resident in the United States on a pro rata basis, disregarding fractions, as the cash equivalent to the value of the Old Lorus Voting Shares otherwise distributable to them;

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(24)

Investor will purchase all of the Old Lorus Voting Shares held by High Tech Beteilingungen GmbH & Co. KG, Technifund Inc. and Herbert Abramson (collectively, the "Lock-Up Holders") at a fair market price determined based on the price per Old Lorus Voting Share paid at the Effective Time by the Investor in Section 3.01(21);



(25)

Investor will subscribe for 294,296,851 additional Old Lorus Non-Voting Shares for a cash payment of $1,200,000; and



(26)

Pinnacle or an affiliate thereof will transfer interests in certain real estate development projects to Old Lorus in return for a cash payment and a promissory note of Old Lorus and Old Lorus will enter into certain development, management and marketing agreements with Pinnacle and/or one or more affiliates thereof.

ARTICLE 4

OUTSTANDING SECURITIES

4.01     Outstanding Certificates

            From and after the Effective Date, certificates representing the Old Lorus Securities prior to the Arrangement will, thereafter represent only the right to receive the certificates representing the New Lorus Securities which such holder is entitled to receive pursuant to Section 3.01(1) and any distributions accruing to the holder of such securities, upon the holder depositing with the Depositary the certificates duly endorsed for transfer and accompanied by such other documents as such Depositary may reasonably require, subject to compliance with the requirements set forth in this Article 4.

4.02     Old Lorus Shares

(1)

As soon as practicable following the Effective Time, New Lorus shall cause to be delivered for the benefit of the Old Lorus Shareholders, certificates representing, in the aggregate, the New Lorus Shares to which such holders are entitled pursuant to Section 3.01(1). New Lorus will, as soon as practicable following the later of the Effective Date and the date of deposit (by a former holder of Old Lorus Shares exchanged under the Arrangement) of a duly completed Letter of Transmittal and the certificates representing such Old Lorus Shares, either:



(a)

forward or cause to be forwarded by first class mail (postage prepaid) (or, in the case of postal disruption, by such other means as the Depositary may deem prudent) to such former holder at the address specified in the Letter of Transmittal; or



(b)

if requested by such holder in the Letter of Transmittal, make available or cause to be made available at the Depositary for pickup by such holder;

certificates representing the number of New Lorus Shares issued to such holder under the Arrangement.

(2)

All distributions made with respect to any New Lorus Shares allotted and issued pursuant to this Arrangement but for which a certificate has not been issued will be paid or delivered to the Depositary to be held by the Depositary in trust for the registered holder thereof. All monies received by the Depositary will be invested by it in trust accounts upon such terms as the Depositary may reasonably deem appropriate. The Depositary will pay and deliver to any such registered holder, as soon as reasonably practicable after application therefore is made by the registered holder to the Depositary in such form as the Depositary may reasonably require, such distributions to which such holder is entitled, net of applicable withholding and other taxes.



(3)

Where a certificate formerly representing Old Lorus Shares is not deposited with all other documents as provided for in Section 4.02(1) on or prior to the sixth anniversary date of the Effective Time, it will cease to represent a right or claim of any kind or nature. Thereafter, the New Lorus Shares to be exchanged with the former holder of such certificate will be deemed to be surrendered to New Lorus together with all distributions and sale proceeds thereon held for such holder.

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(4)

New Lorus will be entitled to deduct and withhold from any consideration otherwise payable to any holder of Old Lorus Securities such amounts as New Lorus is required to deduct and withhold with respect to such payment under the Income Tax Act (Canada), the United States Internal Revenue Code of 1986 or any provision of federal, provincial, state, local or foreign tax law, in each case, as amended. To the extent that amounts are so withheld, such withheld amounts will be treated for all purposes hereof as having been paid to the holder of the Old Lorus Securities in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing authority.



(5)

If any certificate which immediately prior to the Effective Time represented an interest in outstanding Old Lorus Shares that were exchanged pursuant to Section 3.01(1) has been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such certificate to have been lost, stolen or destroyed, the Transfer Agent and Registrar will issue and the Depositary will deliver in exchange for such lost, stolen or destroyed certificate the consideration to which the holder is entitled pursuant to the Arrangement (and any distributions with respect thereto) as determined in accordance with the Arrangement. The person who is entitled to receive such consideration will, as a condition precedent to the receipt thereof, give a bond to each of New Lorus and its Depositary, which bond is in form and substance satisfactory to each of New Lorus and the Depositary, or will otherwise indemnify New Lorus and its Depositary against any claim that may be made against any of them with respect to the certificate alleged to have been lost, stolen or destroyed.

4.03     Old Lorus Options and Old Lorus Warrants

            Each Old Lorus Option and each Old Lorus Warrant will be cancelled without further act or formality. Each New Lorus Option will represent a right to purchase that number of New Lorus Shares equal to the number of Old Lorus Shares underlying the Old Lorus Option. The term to expiry, conditions to and manner of exercising, vesting schedule and all other terms and conditions of each New Lorus Option will otherwise be the same as the terms and conditions of the corresponding Old Lorus Option. Except as specified in this Plan, any document or agreement previously evidencing such Old Lorus Option will thereafter evidence and be deemed to evidence such New Lorus Option, with any adjustments deemed to be made thereto as are necessary to ensure consistency with the provisions of this Section 4.03.

4.04     Old Lorus Share Purchase Plan

            From and after the Effective Date, the entitlement of any participant to receive Old Lorus Shares prior to the Arrangement under the Old Lorus Share Purchase Plan will thereafter represent only the right to receive an equivalent number of New Lorus Shares. Except as specified in this Plan, the terms and conditions of the Old Lorus Share Purchase Plan will otherwise be the same. Except as specified in this Plan, any document or agreement previously evidencing a right to acquire an Old Lorus Share pursuant to the Old Lorus Share Purchase Plan will thereafter evidence and be deemed to evidence a right to require a New Lorus Share, with any adjustments deemed to be made thereto as are necessary to ensure consistency with the provisions of this Section 4.04.

4.05     Old Lorus Voting Shares

(1)

As soon as practicable following the Effective Time, New Lorus shall cause to be delivered for the benefit of the shareholders of New Lorus who are not resident in the United States, certificates representing, in the aggregate, the Old Lorus Voting Shares to which such holders are entitled pursuant to Section 3.01(23). New Lorus will, as soon as practicable following the Effective Date, either:



(a)

forward or cause to be forwarded by first class mail (postage prepaid) (or, in the case of postal disruption, by such other means as the Depositary may deem prudent) to such holder at the address specified in the Letter of Transmittal; or



(b)

if requested by such holder in the Letter of Transmittal, make available or cause to be made available at the Depositary for pickup by such holder,

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certificates representing the number of Old Lorus Voting Shares issued to such holder under the Arrangement.

(2)

New Lorus will be entitled to deduct and withhold from any consideration otherwise payable to any holder of New Lorus Shares such amounts as New Lorus is required to deduct and withhold with respect to such payment under the Income Tax Act (Canada), the United States Internal Revenue Code of 1986 or any provision of federal, provincial, state, local or foreign tax law, in each case, as amended. To the extent that amounts are so withheld, such withheld amounts will be treated for all purposes hereof as having been paid to the holder of the New Lorus Shares in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing authority.

4.06     Cash Payments Pursuant to Section 3.01(23)(ii)

(1)

As soon as practicable following the Effective Time, New Lorus shall cause to be delivered to the Transfer Agent and Registrar, for the benefit of each shareholder of New Lorus who is resident in the United States, an amount equal to the aggregate of the payments representing each holder's pro rata portion of the cash equivalent of the value of the Old Lorus Voting Shares otherwise distributable to New Lorus shareholders who are resident in the United States pursuant to Section 3.01(23).



(2)

Such payment shall be made by cheque payable at par at any branch of New Lorus' bankers for the time being in Canada (or, with the consent of the holder, by any other means of immediately available funds).



(3)

New Lorus will be entitled to deduct and withhold from any consideration otherwise payable to any holder of New Lorus Shares such amounts as New Lorus is required to deduct and withhold with respect to such payment under the Income Tax Act (Canada), the United States Internal Revenue Code of 1986 or any provision of federal, provincial, state, local or foreign tax law, in each case, as amended. To the extent that amounts are so withheld, such withheld amounts will be treated for all purposes hereof as having been paid to the holder of the New Lorus Shares in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing authority.

ARTICLE 5

RIGHTS OF DISSENT

5.01     Rights of Dissent

            Old Lorus Shareholders (other than the Lock-Up Holders) may exercise rights of dissent in connection with the Arrangement with respect to their Shares pursuant to and in the manner set forth in the Interim Order, section 190 of the Act and this Section 5.01 (the "Dissent Rights") as the same may be modified by the Interim Order or the Final Order. Old Lorus Shareholders who duly exercise such Dissent Rights and who:

(a)

are ultimately entitled to be paid fair value for their Old Lorus Shares shall be deemed to have transferred such Old Lorus Shares to New Lorus on the Effective Date simultaneously with the transactions described in Section 3.01(1) without any further act or formality and free and clear of all liens, claims and encumbrances, with New Lorus being obligated to pay such Old Lorus Shareholders in consideration therefor the fair value of such Old Lorus Shares, which fair value, notwithstanding anything to the contrary in the Act, if permitted by the Court, shall be determined as of the close of business on the day before the special resolution of Securityholders approving this Plan is adopted, and the name of each such Old Lorus Shareholder will be removed from the register of holders of Old Lorus Shares and New Lorus will be recorded as the registered holder of the Old Lorus Shares so transferred and will be deemed to be the legal and beneficial owner of such Old Lorus Shares free and clear of any liens, claims or encumbrances; or



(b)

for any reason are ultimately not entitled to be paid fair value for their Old Lorus Shares shall be deemed to have participated in the Arrangement on the same basis as any non-dissenting Old Lorus Shareholder who is not a Lock-Up Holder as at and from the Effective Time, and shall be deemed to

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have transferred their Old Lorus Shares to New Lorus in exchange for New Lorus Shares under Section 3.01(1), but in no case shall Old Lorus, New Lorus or any other person be required to recognize such Old Lorus Shareholders as holders of Old Lorus Shares after the time set out in Section 3.01(1), and the names of such Old Lorus Shareholders shall be deleted from the register of Old Lorus Shareholders at the time set out in Section 3.01(1).

ARTICLE 6

AMENDMENTS

6.01     Amendments

(1)

Old Lorus, GeneSense, NuChem, New Lorus, Investor and Pinnacle reserve the right to amend, modify and/or supplement this Plan from time to time at any time prior to the Effective Time provided that any such amendment, modification or supplement must be contained in a written document that is:



(a)

agreed to by all such parties;



(b)

filed with the Court and approved by the Court; and



(c)

communicated to Old Lorus Securityholders in the manner required by the Court (if so required).



(2)

Any amendment, modification or supplement to this Plan which is approved by the Court will be effective only:



(a)

if it is consented to by Old Lorus and Pinnacle; and



(b)

if required by the Court or Applicable Law, it is consented to by the Old Lorus Securityholders.



(3)

Notwithstanding that the transactions and events set out herein will occur and be deemed to occur in the order set out in this Plan without any further act or formality, each of the parties to the Arrangement Agreement shall make, do and execute, or cause to be made, done and executed, all such further acts, deeds, agreements, transfers, assurances, instruments or documents as may reasonably be required by any of them in order further to document or evidence any of the transactions or events set out herein.

ARTICLE 7

GENERAL

7.01     General

(1)

Any director or officer of Old Lorus is hereby authorized to execute and file the Articles of Arrangement and to execute and deliver all other documents and do all such other acts and things necessary or desirable to give effect to this Arrangement.



(2)

The directors of Old Lorus are hereby authorized, if they deem appropriate in their sole discretion, to revoke this Plan of Arrangement and to not proceed with the Arrangement without further approval of the Old Lorus Securityholders.

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APPENDIX "D"

INTERIM ORDER

Court File No. 07-CL-7015

ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST

Applicants

APPLICATION UNDER the Canada Business Corporations Act, R.S.C. 1985, c. C-44, C. 192 and Rule 14.05 of the Rules of Civil Procedure.

INTERIM ORDER

        THIS APPLICATION, made by the Applicants Lorus Therapeutics Inc. ("Lorus") and 6650309 Canada Inc. ("New Lorus") for an interim order pursuant to section 192 of the Canada Business Corporations Act (the "CBCA") for advice and directions in connection with the within application (the "Interim Order"), was heard this day at 330 University Avenue, Toronto, Ontario.

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        ON READING the notice of application, the notice of motion and the affidavit of Aiping H. Young sworn May 11, 2007 (the "Young Affidavit"), and on hearing the submissions of counsel for Lorus:

1.      THIS COURT ORDERS that Lorus may call and conduct a special meeting (the "Securityholders' Meeting") of the holders of common shares, options, warrants and convertible debentures (collectively the "Securities") of Lorus in accordance with the notice of a special meeting to be provided to the Securityholders for the following purposes:

(a)

to consider, and if deemed advisable, pass a special resolution (the "Arrangement Resolution") authorizing and approving an arrangement under section 192 of the CBCA (the "Arrangement") as described in the draft management proxy circular (the "Circular") attached as Exhibit "A" to the affidavit of Aiping H. Young; and



(b)

to transact such further or other business as may properly come before the Securityholders' Meeting and any and all adjournments thereof.

2.      THIS COURT ORDERS that Lorus is authorized to make such amendments, revisions or supplements to the Arrangement as it may determine without any additional notice to the Securityholders, and the Arrangement, as so amended, revised or supplemented, shall be the Arrangement to be submitted to the Securityholders' Meeting and to be the subject of the Arrangement Resolution.

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3.      THIS COURT ORDERS that the Securityholders' Meeting shall be called, held and conducted in Toronto, Ontario on June 25, 2007 at the time set out in the Notice of Securityholders' Meeting and as described in the Circular.

4.      THIS COURT ORDERS that notwithstanding the provisions of the CBCA, Lorus is entitled to adjourn or postpone the Securityholders' Meeting on one or more occasions without the necessity of first convening the Securityholders' Meeting or first obtaining any vote of the Securityholders respecting the adjournment or postponement.

5.      THIS COURT ORDERS that Lorus is hereby authorized and directed to send to the Securityholders of record as at the close of business on May 24, 2007 (the "Record Date"), together with other documentation required to be sent to the Securityholders under applicable laws, the Circular, subject to such amendments or supplements as Lorus may deem appropriate, which Circular will include the Notice of Application in this proceeding and this Interim Order. The Circular shall be distributed and made available in accordance with paragraph 6 of this Interim Order and shall be deemed to have been received in accordance with paragraph 7 of this Interim Order, and such delivery will constitute good and valid service of the Notice of Application under the Rules of Civil Procedure.

6.      THIS COURT ORDERS that the Notice of Securityholders' Meeting, the Circular and form of proxy (the "Form of Proxy"), subject to such amendments or supplements as Lorus may deem appropriate, shall be distributed by Lorus to:

(a)

registered Securityholders as at the Record Date, the auditors of Lorus and the directors of Lorus at least 21 days prior to the date of the Securityholders'

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Meeting, excluding the date of the mailing and including the date of the Securityholders' Meeting, by:

(i)

prepaid ordinary mail, addressed to each registered Securityholder at the address as shown on the books of Lorus as at the Record Date, the auditors of Lorus and to the directors of Lorus; or



(ii)

by delivery, in person, by courier service, or by electronic transmission (provided that the recipient has provided an e-mail address and has consented to receiving such materials electronically), to the address specified in (i) above.



(b)

non-registered Securityholders by providing copies of the Circular and related materials in accordance with applicable securities laws for delivery to beneficial holders of securities.

Substantial compliance with this paragraph shall constitute good and sufficient notice of the Securityholders' Meeting.

7.      THIS COURT ORDERS that the Notice of Securityholders' Meeting, the Circular and the Form of Proxy shall be deemed for the purposes of this Interim Order to have been received by the Securityholders:

(a)

in the case of mailing, 3 days after the delivery thereof to the post office; and



(b)

in the case of delivery, upon receipt thereof by the intended addressee or by the courier.

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8.      THIS COURT ORDERS that accidental failure of or omission by Lorus to give notice to any one or more Securityholders or any other person entitled to notice of the Securityholders' Meeting, or any failure or omission to give such notice as a result of events beyond the reasonable control of Lorus (including without limitation any inability to utilize postal services), shall not constitute a breach of this Interim Order or a defect in the calling or giving of notice of the Securityholders' Meeting, but if any such failure or omission is brought to the attention of Lorus, they shall use their best efforts to rectify it by the method and in the time most reasonably practicable in the circumstances. Such rectified notice shall be deemed to have been received in accordance with paragraph 7 of this Interim Order.

9.      THIS COURT ORDERS that any officer, director or trustee of Lorus shall act as chairperson of, and may appoint a secretary and scrutineer or scrutineers for, the Securityholders' Meeting.

10.    THIS COURT ORDERS that a sufficient quorum for the holding of the Securityholders' Meeting to consider the Arrangement Resolution shall be at least two persons present in person, each being a Securityholder or duly appointed proxy holder together holding not less than 10% of the Securities entitled to vote (either present in person or represented by proxy), with provision for an adjourned meeting to proceed whether or not the quorum is present at the adjourned meeting.

11.    THIS COURT ORDERS that the vote required to pass the Arrangement Resolution shall be not less than (i) 66 2/3 per cent of the votes cast at the Securityholders' Meeting in person or by proxy by the Securityholders of record as of the Record Date; and (ii) a simple majority of the votes cast at the Securityholders' Meeting in person or by proxy by

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Securityholders of record as of the Record Date other than High Tech Beteilingungen GmbH & Co. KG ("High Tech"), any related party of High Tech within the meaning of Rule 61-501 of the Ontario Securities Commission subject to the exceptions set out therein, and any person acting jointly or in concert with High Tech. The Securityholders shall vote as a single class, with each holder of common shares (a "Shareholder") being entitled to one vote for each common share held and, with each holder of options, warrants and convertible debentures being entitled to one vote for each common share such holder would have been entitled to receive upon the valid exercise or conversion of his, her or its options, warrants or convertible debenture, as applicable. Such vote shall be sufficient to authorize and direct Lorus to do all such acts and things as may be necessary and desirable to give effect to the Arrangement on a basis consistent with what is provided for in the Circular without the necessity of any further approval by the Securityholders, subject only to the final approval of the Arrangement by this Honourable Court.

12.    THIS COURT ORDERS that Shareholders shall have the right to dissent (the "Arrangement Dissent Rights") from the Arrangement Resolution ("Dissenting Shareholders"). A registered Shareholder who wishes to dissent must deliver a written objection (a "Dissent Notice") to Lorus c/o Computershare Investor Services Inc. (the "Transfer Agent"), 100 University Avenue, 8^th Floor, Toronto, ON M5J 2Y1, by personal delivery, courier, mail or by facsimile transmission to Computershare Investor Services Inc., with a copy to the Secretary of Lorus at 2 Meridian Road Toronto, Ontario M9W 4Z7, on or before 10:00 a.m. (Eastern Standard Time) on June 21, 2007, or otherwise at least 48 hours (excluding Saturdays, Sundays and statutory holidays in the City of Toronto) prior to the time of the Securityholders' Meeting or any adjournment or postponement thereof. A non-registered Shareholder who wishes to exercise the Arrangement Dissent Rights must

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immediately contact the intermediary with whom the non-registered Shareholder deals in respect of its shares and instruct the intermediary to instruct the Canadian Depository for Securities Limited to take the necessary steps required to validly exercise the Arrangement Dissent Rights on behalf of the non-registered Shareholder in its capacity as the registered Shareholder.

13.    THIS COURT ORDERS that any registered Shareholder who sends a Dissent Notice as provided above and does not subsequently vote in favour of the Arrangement Resolution:

(a)

will be deemed to have concurrently sent a demand for payment of the fair value of all of the shares registered in their name;



(b)

must deliver the certificates representing their shares to the Transfer Agent at the address noted above within 30 days after receiving written notice from Lorus that the Arrangement Resolution has been adopted by the Shareholders and in the absence of such delivery such registered Shareholders will be deemed to have so delivered his, her or its certificates representing shares; and



(c)

will cease to have any rights as a Shareholder in respect of the shares registered in the name of the Shareholder other than the right to be paid the fair value of the shares as determined pursuant to the Interim Order, unless:



(i)

Lorus consents to the withdrawal or abandonment of the Dissent Notice of the Shareholder;



(ii)

Lorus fails to make an offer to pay as outlined in the Circular;



(iii)

the directors elect not to proceed with the Arrangement; or

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(iv)

the application by Lorus to the court for an order approving the Arrangement is refused and all appeal rights in respect of such refusal have been exhausted without success;

in which case the registered Shareholders' rights as a Shareholder will be reinstated.

14.    THIS COURT ORDERS that a dissenting Shareholder will be entitled, in the event that the Arrangement Resolution is approved and the Arrangement becomes effective, to be paid the fair value of the shares registered in the name of such Dissenting Shareholder. The valuation date utilized for this purpose will be the close of business on the last day occurring immediately prior to the date of the Shareholders' Meeting. Lorus may, in its sole discretion, pay or cause to be paid such fair value amount in cash or shares, or a combination of cash and shares as described in the Circular.

15.    THIS COURT ORDERS that registered Shareholders who duly exercise their Arrangement Dissent Rights and who:

(a)

are ultimately entitled to be paid fair value for their shares will be deemed to have their shares cancelled immediately prior to the effective date of the Arrangement (the "Effective Date") in consideration for the fair value paid to them by Lorus and will not be entitled to any other payment or consideration including any payment that would be payable under the Arrangement had such Dissenting Shareholders not exercised their Arrangement Dissent Rights; or



(b)

are ultimately not entitled, for any reason, to be paid fair value for their Units,

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will be deemed to have participated in the Arrangement on the same basis as a non-dissenting Shareholder in accordance with the Arrangement.

16.    THIS COURT ORDERS that in no case shall Lorus or any other person be required to recognize such Dissenting Shareholders as Shareholders after the Effective Date, and the names of such Shareholders shall be deleted from the register of Shareholders on the Effective Date.

17.    THIS COURT ORDERS that notice to Shareholders of the right to dissent with respect to the Arrangement Resolution and to receive, subject to the provisions of this Interim Order, the fair value of Lorus' units shall be good and sufficiently given by including information with respect thereto in the Circular to be sent to the Securityholders in accordance with paragraph 6 above.

18.    THIS COURT ORDERS that the only persons entitled to be represented and to vote at the Securityholders' Meeting, either in person or by proxy, shall be the Securityholders of record at the close of business on the Record Date.

19.    THIS COURT ORDERS that Lorus is authorized, at its own expense, to solicit proxies, directly and through their officers, directors and employees, and through such agents or representatives as they may retain for that purpose, and by mail or such other forms of personal or electronic communication as they may determine, and may use the proxies at the Securityholders' Meeting.

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20.    THIS COURT ORDERS that the proxies to be used at the Securityholders' Meeting must be received by Computershare, 100 University Avenue, 8^th Floor, Toronto, ON M5J 2Y1, no later than 5:00 p.m. (Eastern Standard Time) on June 21, 2007 or, if the Securityholders' Meeting is adjourned, not less than 48 hours (excluding Saturdays, Sundays and statutory holidays in the City of Toronto) before the time set for the adjourned Securityholders' Meeting.

21.    THIS COURT ORDERS that, unless a Securityholder who has granted a proxy has agreed that it shall be irrevocable, a Securityholder shall be entitled to revoke a proxy given at any time prior to the exercise thereof at the Securityholders' Meeting by:

(a)

completing and signing a proxy bearing a later date and depositing it with Computershare, 100 University Avenue, 8^thFloor, Toronto, ON M5J 2Y1; or



(b)

depositing an instrument in writing executed by him or her or by his or her attorney authorized in writing:



(i)

at the registered office of Lorus at any time up to and including the second last business day preceding the day of the Securityholders' Meeting or any adjournment thereof; or



(ii)

with the Chairperson of the Securityholders' Meeting prior to the commencement of the Securityholders' Meeting on the day of the Securityholders' Meeting or any adjournment thereof.

22.    THIS COURT ORDERS that persons desiring to appear at the hearing for final approval of the Arrangement, scheduled for June 27, 2007 (the "Sanction Hearing"), are

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required to serve on Lorus and file with the court on or before June 25, 2007, a notice of appearance in the form prescribed by the Rules of Civil Procedure, together with any evidence or material which is to be presented to the court. Service on Lorus is to be effected by delivery in a manner authorized by the Rules of Civil Procedure to the solicitors for Lorus at: McCarthy Tétrault LLP, Suite 4700, Toronto Dominion Bank Tower, Toronto-Dominion Centre, Toronto, Ontario M5K 1E6, Attention: Geoff R. Hall.

23.    THIS COURT ORDERS that if the Sanction Hearing is adjourned, then, subject to a further order of this court, only those persons having previously served a notice of appearance in accordance with paragraph 22 shall have to be given notice of the adjournment date.

24.    THIS COURT ORDERS that service of the Circular in accordance with paragraphs 6 and 7 shall constitute good and sufficient service of notice of the Sanction Hearing.

25.    THIS COURT ORDERS that the Circular (Exhibit "A" to the Young Affidavit) shall be segregated from other documents or information filed in connection with this motion and shall be provided to the court in a sealed envelope identifying the action and prominently marked with the following legend:

"CONFIDENTIAL INFORMATION

Pursuant to an order dated May 16, 2007 (the "Order"), this envelope shall remain sealed in the court file and shall not be opened until the filing with the court of a certificate signed by McCarthy Tétrault LLP in accordance with paragraph 25 of the Order, or upon further order of the court."

and the sealed envelope shall not be opened until the filing with the court of a certificate

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signed by McCarthy Tétrault LLP confirming that the Circular, as finalized, has been made public, or upon further order of the court.

26.    THIS COURT ORDERS that to the extent of any inconsistency or discrepancy with respect to the matters provided for in this Interim Order between this Interim Order and the terms of any instrument creating, governing or collateral to the Securities or to which such Securities are collateral, this Interim Order shall govern.

27.    THIS COURT ORDERS that this application is amended to add New Lorus as an applicant along with Lorus, and that the title of proceedings is amended to read as follows:

"IN THE MATTER OF AN APPLICATION under section 192 of the Canada Business Corporations Act, being R.S.C. 1985, c. C-44;

AND AN APPLICATION under Rule 14.05(2) and Rule 14.05(3)(f) of the Rules of Civil Procedure;

AND IN THE MATTER OF a proposed plan of arrangement involving Lorus Therapeutics Inc.

LORUS THERAPEUTICS INC. and 6650309 CANADA INC.