FORM
51-102F3
Material
Change Report
Item
1 Name
and Address of Company
Lorus
Therapeutics Inc.
2
Meridian Road
Toronto,
Ontario M9W 4Z7
Item
2 Date
of Material Change
January
14, 2005
Item
3 News
Release
A
news release was issued through Canada NewsWire on January 17,
2005.
Item
4 Summary of Material
Change
Lorus
Therapeutics Inc. (the “Company”) completed the second tranche of a $15 million
private placement of convertible secured debentures with The Erin Mills
Investment Corporation (“TEMIC”).
Item
5 Full
Description of Material Change
Pursuant
to the terms of the private placement, Lorus issued to TEMIC a convertible
debenture in the principal amount of $5 million maturing October 6, 2009.
The
debenture is convertible at the option of the holder at any time prior to
maturity into common shares at a conversion price of $1.00 per share. The
conversion price represents a 56 per cent premium to the January 13, 2005
closing price on the Toronto Stock Exchange.
Pursuant
to the terms of the original subscription agreement, TEMIC agreed to purchase
three secured convertible debentures, each in the principal amount of $5
million, on each of October 6, 2004, January 14, 2005 and April 15, 2005,
provided that an event of default has not occurred under any debentures issued
by Lorus and held by TEMIC or a material adverse change has not occurred
in the
business and affairs of Lorus. The conversion price to convert the April
15,
2005 debenture into common shares will be equal to the greater of: (i) $1.00
and
(ii) the 20-day weighted average trading price of the common shares of Lorus
on
the Toronto Stock Exchange, less the discount permitted by the TSX.
The
principal amount of the debentures is secured by a first charge over all
of the
assets of Lorus and bears interest at the rate of prime plus 1 per cent per
annum, compounded monthly. Interest is payable monthly on the debentures
in
common shares until the price of Lorus' common shares on the Toronto Stock
Exchange is equal to a 60-day weighted average trading price of $1.00 at
which
point, the interest is payable on a monthly basis in cash or in common shares,
at the option of the holder. No further interest is payable on the debentures
after the market price of Lorus' common shares on the TSX is equal to or
exceeds
a 60-day weighted average trading price of $1.75 per share.
Of
the 2,000,000 warrants that were placed in escrow upon the closing of the
first
tranche, Lorus released from escrow 1,000,000 warrants to TEMIC in consideration
for the closing of the second tranche of the financing. The remaining 1,000,000
warrants will be released from escrow upon completion of the third
tranche.
Item
6 Reliance on
subsection 7.1(2) or (3) of National Instrument 51-102
Not
applicable.
Item
7 Omitted
Information
No
significant facts remain confidential in, and no information has been omitted
from, this report.
Item
8 Executive
Officer
For
further information please contact Shane Ellis, Vice President Legal Affairs
and
Corporate Secretary, at (416) 798-1200 Ext. 300.
Item
9 Date
of Report
January
21, 2005