Securities Law & Instruments


Headnote

Prompt Offering Qualification System - Waiver granted pursuant to section 4.5 ofNational Policy Statement No. 47 to enable issuer to participate in the POP Systemwhen it did not meet the "public float" test in the last calendar month of its most recentfinancial year-end in respect of which its Initial Annual Information Form will be filedprovided that it does meet the "public float" test at a date within 60 days before thefiling of its preliminary short form prospectus - Float amounting to $19.4 million in May1999 and in excess of $200 million in January 2000- waiver reflecting revised eligibilitycriteria set out in proposed National Instrument 44 -101.

Statutes Cited

Securities Act, R.S.O. 1990, as am.

Policies Cited

National Policy Statement No. 47 -Prompt Offering Qualification System, ss. 4.1 and 4.5.

Proposed National Instrument 44 - 101 - Short Form Prospectus Distributions


IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA,ALBERTA, ONTARIO AND QUEBEC

AND

IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF
LORUS THERAPEUTICS INC.

MRRS DECISION DOCUMENT


WHEREAS the Canadian securities regulatory authority or regulator (the "DecisionMaker") in each of the Provinces of British Columbia, Alberta, Ontario and Quebec(collectively, the "Jurisdictions") has received an application (the "Application") from LorusTherapeutics Inc. (the "Applicant") for a decision pursuant to Section 4.5 of National Policy47 ("NP 47") and the legislation of each of the jurisdictions for a waiver from the provisionsof Section 4.1(2)(b) of NP 47 and Section 169 of the Regulation Respecting Securities(Quebec) ("QRRS") to permit the Applicant to be eligible to participate in the promptoffering qualification system (the "POP System");

AND WHEREAS pursuant to the Mutual Reliance Review System for ExemptiveRelief Applications (the "System"), the Ontario Securities Commission is the principalregulator for the Application;

AND WHEREAS the Applicant has represented to the Decision Makers that:

1. The Applicant was incorporated under the Business Corporations Act (Ontario) byarticles of incorporation dated September 5, 1986.

2. The registered and principal office of the Applicant is located at 7100 WoodbineAvenue, Suite 215, Markham, Ontario, Canada, L3R 5J2.

3. The Applicant has been a reporting issuer in Quebec since October 1, 1997, inOntario for more than 12 months, in Alberta since May 1999 and in British Columbiasince January 25, 2000. The Applicant is not in default under any requirements ofthe Securities Act (Ontario), the Securities Act (Alberta), the Securities Act (BritishColumbia) and the Securities Act (Quebec) or the respective regulations or rulesmade thereunder.

4. The Applicant's financial year-end is May 31.

5. The Applicant's authorized capital consists of an unlimited number of commonshares (the "Equity Securities").

6. The Equity Securities are listed and posted for trading on The Toronto StockExchange (the "TSE") under the symbol "LOR".

7. As of May 31, 1999, the Applicant's most recent financial year end, the Applicanthad 42,746,667 Equity Securities issued and outstanding.

8. Pursuant to its acquisition of GeneSense Technologies Inc., the Applicant issued36,050,000 Equity Securities on October 29, 1999.

9. Pursuant to a special warrant offering which closed on October 27, 1999, theApplicant has issued 30,303,031 Equity Securities.

10. The transactions referred to in paragraphs 8 and 9 above significantly altered theaggregate market value of the Equity Securities such that as at January 31, 2000the Applicant had 107,694,793 Equity Securities issued and outstanding.

11. Of the Equity Securities outstanding as at January 31, 2000, 12,112,800 arebeneficially owned, directly or indirectly, or subject to the control or direction ofpersons that, alone or together with their respective affiliates and Associates (asdefined in NP 47 and the QRRS) beneficially own or exercise control or directionover more than 10% of the issued and outstanding Equity Securities (the"Insiders").

12. The arithmetic average of the closing price of the Equity Securities on the TSE foreach of the trading days during May 1999 was $0.48.

13. The aggregate market value of the Equity Securities (the "Float") as calculated inaccordance with NP 47 (which excludes the value of the Equity Securitiesbeneficially owned, directly or indirectly, or subject to the control or direction of theInsiders) and the QRRS was $19,449,733 as of May 31, 1999.

14. The Float was $210,280,385 as at January 31, 2000 based on the closing price ofthe Equity Securities on the TSE on January 31, 2000, which closing price was$2.20

15. The average Float for the month of January 2000 was $205,501,285 based on thearithmetic average closing price of the Equity Securities on the TSE for each of thetrading days during January 2000, which arithmetic average closing price was$2.15.

16. The Applicant would be eligible to participate in the POP System, but for the factthat the Float for the month of May 1999 was less than $75,000,000, and would beeligible to participate in the POP System if the Float were calculated as at January31, 2000.

17. The Applicant may wish to avail itself of the POP System prior to the end of itscurrent financial year and considers that a short form prospectus would be anappropriate vehicle for an offering of its securities in the circumstances.

18. Proposed National Instrument 44-101 would replace the current calculations of theFloat under NP 47 and the QRRS by a calculation as of a date within 60 daysbefore the filing of the issuer's preliminary short form prospectus, as a result ofwhich the Applicant would be qualified to file a prospectus in the form of a shortform prospectus upon the filing and acceptance of an initial annual information form(an "Initial AIF").

19. The Applicant proposes to file an Initial AIF pursuant to the provisions of NP 47 andthe QRRS in respect of its financial year ended May 31, 1999 as soon as the waiverrequested herein is granted.

AND WHEREAS pursuant to the System this MRRS Decision Document evidencesthe decision of each of the Decision Makers (collectively, the "Decision");

AND WHEREAS each of the Decision Makers is satisfied that the test contained inthe applicable securities legislation of the applicable Jurisdiction that provides theDecision Maker with the jurisdiction to make the Decision has been met and is of theopinion that it would not be prejudicial to the public interest to grant this decision;

THE DECISION of the Decision Makers in the Jurisdictions pursuant to NP 47 andpursuant to the applicable securities legislation of Quebec, including, but not limited tothose set forth in Title II and Title III of the Securities Act (Quebec) and the SecuritiesRegulation (Quebec) (collectively the "POP Requirements") is that the Decision Makerswaive the requirement of Section 4.1(2)(b) of NP 47 and Section 169 of the QRRS (as thecase may be) in respect of the Applicant so that the Applicant is eligible to participate inthe POP System provided that:

(a) the Applicant complies in all other respects with the requirements of NP 47 and theQRRS;

(b) the aggregate market value of the Equity Securities of the Applicant, calculated inaccordance with Section 4.1(2) of NP 47 and Section 169 of the QRRS is$75,000,000 or more on a date within sixty (60) days before the date of the filing ofthe Applicant's preliminary short form prospectus;

(c) the eligibility certificate to be filed in respect of the Applicant's Initial AIF shall statethat the Applicant satisfies the eligibility criteria set out in Sections 4.1(1)(a) and4.1(1)(b) of NP 47, and shall make reference to this waiver; and

(d) this waiver shall terminate on the earlier of: (i) 140 days after the end of theApplicant's financial year ended May 31, 2000; and (ii) the date of filing a RenewalAIF (as defined in NP 47) by the Applicant in respect of its financial year ended May31, 2000.

February 22nd, 2000.

"Margo Paul"