short form prospectus

8/12/2019 Short Form Prospectus

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21JUL200423185183

No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise.The securities offered hereby have not been

and will not be registered under the United States Securities Act of 1933, as amended (the U.S. Securities Act), and, subject to certain exemptions, may not be

offered or sold within the United States of America or to U.S. persons. See Plan of Distribution.

Information has been incorporated by reference in this short form prospectus from documents filed with securities commissions or similar authorities in Canada.

Copies of the documents incorporated herein by reference may be obtained on request without charge from the Chief Financial Officer of IBI Group Inc.,

230 Richmond Street West, 5th Floor, Toronto, Ontario, M5V 1V6, telephone (416) 596-1930, and are also available electronically at www.sedar.com. For the

purposes of the Province of Quebec, this simplified prospectus contains information to be completed by consulting the permanent information record. A copy of

the permanent information record may be obtained from the Chief Financial Officer of IBI Group Inc. at the above-mentioned address and telephone number

and is also available electronically at www.sedar.com.

SHORT FORM PROSPECTUS

New Issue January 24, 2011

IBI GROUP INC.

$50,000,000

6.00% Convertible Unsecured Subordinated Debentures(Convertible into Common Shares that Have Limited Voting Rights)

This short form prospectus qualifies the distribution (the Offering) of $50,000,000 aggregate principal amount of 6.00%convertible unsecured subordinated debentures (the Debentures) of IBI Group Inc. (the Corporation) due June 30,2018 (the Maturity Date) at a price of $1,000 per Debenture.

The Debentures will bear interest from the date of issue at 6.00% per annum payable semi-annually in arrears on June 30and December 31 in each year, commencing June 30, 2011. The Debentures will be redeemable by the Corporation at aprice of $1,000 per Debenture, plus accrued and unpaid interest, on or after June 30, 2014 and prior to June 30, 2016(provided that the weighted average trading price of the common shares of the Corporation (the Common Shares) on theToronto Stock Exchange (the TSX) for the 20 consecutive trading days ending five trading days preceding the date onwhich notice of redemption is given is not less than 125% of the Conversion Price (as hereinafter defined)). On or after

June 30, 2016 and prior to the Maturity Date, the Debentures will be redeemable by the Corporation at a price of $1,000per Debenture, plus accrued and unpaid interest. See Description of Debentures.

Debenture Conversion Privilege

Each Debenture will be convertible into Common Shares at the option of the holder at any time prior to the close ofbusiness on the earlier of the Maturity Date and the business day immediately preceding the date specified by theCorporation for redemption of the Debentures at a conversion price of $21.00 per Common Share (the ConversionPrice), subject to adjustment in accordance with the terms of the trust indenture (the Trust Indenture) governingthe terms of the Debentures. Holders converting their Debentures will be entitled to receive accrued and unpaidinterest for the period from but excluding the latest interest payment date up to and including the date of conversion.See Description of Debentures Conversion Privilege.

The Common Shares are restricted securities as defined in National Instrument 41-101 because IBI Group ManagementPartnership (the Management Partnership), as holder of Non-Participating Voting Shares, Series 1, has the right to electthree out of the seven directors of the Corporation, provided the Management Partnership and its affiliates hold at least20% of the Common Shares (calculated on the basis that all of the exchangeable securities held by the ManagementPartnership have been exchanged for Common Shares) and because the Non-Participating Voting Shares have a nominalpreference right ($0.000001 per share) in the event of the wind-up of the Corporation. The Management Partnership

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previously had the right to elect three of the seven trustees of IBI Income Fund (the Fund), and had such right from theinitial public offering of the Fund in 2004. There was no change in the nature of this right upon the conversion of the Fundto a corporate structure effective January 1, 2011. As was the case with respect to the election of trustees of the Fund, theManagement Partnership may not vote its Non-Participating Voting Shares, Series 1 for the election of the fourindependent directors. The Corporation has requested and obtained an exemption from the requirement under Canadiansecurities legislation that the Common Shares be referred to in this prospectus using a term or a defined term that includesa restricted security term, and will make an application to permit the Common Shares in future prospectuses, offeringdocuments and continuous disclosure documents to be referred to as Limited Voting Shares. All Common Shares will bereferred to as Limited Voting Shares and the Debentures will be convertible into such Limited Voting Shares. There will beno change in the rights of the Common Shares as a result of referring to them as Limited Voting Shares. See Exemptionfrom National Instruments 44-101 and 41-101.

The Corporation was incorporated pursuant to the provisions of the Canada Business Corporations Act(the CBCA) onJune 30, 2010. The business of the Corporation, which is conducted indirectly through IBI Group and its subsidiary entities,is the provision of professional services, including planning, design, implementation, analysis of operations and otherconsulting services in relation to four main areas of development, being urban land, building facilities, transportationnetworks and systems technology. IBI Group also provides certain administrative services to the Corporation and itssubsidiary entities pursuant to the Administration Agreement. The Corporation indirectly holds 72% of the outstandingPartnership Units of IBI Group, a partnership existing under the laws of the Province of Ontario. The remaining 28% of IBIGroup, represented by Class B Units, is owned by the Management Partnership.

In addition to the Class B Units, the Management Partnership and IBI Group Investment Partnership, the partners ofwhich are also partners of the Management Partnership or are controlled by a person who controls a partner of theManagement Partnership, together hold 3,227,050 Common Shares. These interests represent an interest of approximately46% in the Corporation on a partially diluted basis, assuming the exchange of the Class B Units for Common Shares(or 35% after giving effect to the Offering and assuming the issuance of all Common Shares issuable on conversion,redemption or maturity of the Debentures). See IBI Group Inc..

The proceeds of the Offering, after deducting expenses of the Offering and the Underwriters fee, will be used for generalpurposes of the Corporation, including debt repayment and working capital. See Use of Proceeds.

Price $1,000 per Debenture

Price to the Underwriters Net Proceeds toPublic(1)(2)(3) Fee(3) the Corporation(2)(3)

Per Debenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,000 $ 40.00 $ 960.00

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $50,000,000 $2,000,000 $48,000,000

Notes:

(1) The offering price of the Debentures has been determined by negotiation between the Corporation and the Underwriters.

(2) Before deducting expenses of the Offering estimated to be $350,000 which, together with the Underwriters fee, will be paid by IBI Group.

(3) The Corporation has also granted to the Underwriters an option (the Over-allotment Option) to purchase up to an additional $7,500,000aggregate principal amount of Debentures at a price of $1,000 per Debenture on the same terms and conditions as the Offering, exercisable fromtime to time, in whole or in part, for a period of up to 30 days following closing of the Offering, to cover over-allotments, if any, and for marketstabilization purposes. A purchaser who acquires Debentures forming part of the Over-allotment Option acquires those Debentures under this shortform prospectus, regardless of whether the over-allocation position is ultimately filled through the exercise of the Over-allotment Option orsecondary market purchases. If the Over-allotment Option is exercised in full, the total Offering, Underwriters fee and net proceeds to theCorporation (before deducting expenses of the Offering) will be $57,500,000, $2,300,000 and $55,200,000, respectively. This prospectus also qualifies

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for distribution the grant of the Over-allotment Option and the issuance of Debentures pursuant to the exercise of the Over-allotment Option. SeePlan of Distribution.

Maximum size or numberUnderwriters Position of securities available Exercise period Exercise price

Over-allotment $7,500,000 30 days $1,000 peroption aggregate principal amount following Debenture

of Debentures closing of the Offering

There is currently no market through which the Debentures may be sold and purchasers may not be able to resell theDebentures purchased under the short form prospectus. This may affect the pricing of the Debentures in the secondarymarket, the transparency and availability of trading prices, the liquidity of the Debentures and the extent of issuerregulation. See Risk Factors.

The TSX has conditionally approved the listing of the Debentures distributed pursuant to this Offering and the CommonShares issuable upon conversion, redemption or maturity of the Debentures on the TSX. Listing is subject to theCorporation fulfilling all of the requirements of the TSX on or before April 11, 2011. The Corporations outstandingCommon Shares are listed on the TSX under the symbol IBG. On January 5, 2011, the last trading day prior to theannouncement of the Offering, the closing price of the Common Shares on the TSX was $13.67 per Common Share.

An investment in Common Shares is subject to a number of risks that should be considered by a prospective purchaserDividends to Shareholders are not guaranteed and may be reduced or suspended and depend on IBI Groups ability to paycash dividends which is dependent on the business operated by IBI Group and its subsidiaries and such business is

susceptible to a number of risks, including the ability of IBI Group to maintain profitability and manage its growth, IBIGroups reliance on its key professionals and competition in the industry in which IBI Group operates. For a description ofthese and other risk factors, see Risk Factors. It is important for an investor to consider the risk factors that may affect theindustry in which it is investing and, therefore, the stability of the dividends paid by the Corporation. The market value of theCommon Shares may decline if the Corporation is unable to meet its cash dividend targets in the future and any such declinemay be material.

Debentures are not deposits within the meaning of the Canada Deposit Insurance Corporation Act(Canada) and are notinsured under the provisions of that act or any other legislation.

The underwriters of the Offering are CIBC World Markets Inc., TD Securities Inc., National Bank Financial Inc., BMOCapital Markets Inc., Scotia Capital Inc., Canaccord Genuity Corp., Raymond James Ltd., Desjardins Securities Inc.,Laurentian Bank Securities Inc., Macquarie Capital Markets Canada Ltd., NCP Northland Capital Partners Inc., DundeeSecurities Corporation, Northern Securities Inc. and Stonecap Securities Inc. (collectively, the Underwriters). In

connection with the Offering, the Underwriters may effect transactions which stabilize or maintain the market price of theDebentures at levels other than those which otherwise might prevail on the open market. Such transactions, if commenced,may be discontinued at any time. See Plan of Distribution.

The Underwriters, as principals, conditionally offer the Debentures, subject to prior sale, if, as and when issued, sold anddelivered by the Corporation and accepted by the Underwriters in accordance with the conditions contained in theUnderwriting Agreement referred to under Plan of Distribution and subject to the approval of certain legal matters onbehalf of the Corporation by Fraser Milner Casgrain LLP and on behalf of the Underwriters by Goodmans LLP.

Subscriptions will be received subject to rejection or allotment in whole or in part and the Underwriters reserve the right toclose the subscription books at any time without notice. A book-entry only certificate representing the Debentures will beissued in registered form to CDS Clearing and Depository Services Inc. (CDS) or its nominee and will be deposited withCDS on the date of the closing of the Offering, which is expected to occur on or about January 28, 2011, or such later dateas the Corporation and the Underwriters may agree, but in any event not later than February 4, 2011 (the Closing Date).

A purchaser of Debentures will receive only a customer confirmation from the registered dealer which is a CDS participantand from or through which the Debentures are purchased.

Each of CIBC World Markets Inc., TD Securities Inc., National Bank Financial Inc. and BMO Capital Markets Inc. is asubsidiary of a Canadian chartered bank which is a lender to IBI Group. Accordingly, the Corporation may be considered tobe a connected issuer of each of these Underwriters under applicable securities laws. See Credit Facilities and Plan ofDistribution.

The head and registered office of the Corporation is located at 230 Richmond Street West, 5th Floor, Toronto, OntarioM5V 1V6.


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TABLE OF CONTENTS

Page Page

FORWARD-LOOKING STATEMENTS . . . 5 PLAN OF DISTRIBUTION . . . . . . . . . . . . 25

DOCUMENTS INCORPORATED BY CERTAIN CANADIAN FEDERALREFERENCE . . . . . . . . . . . . . . . . . . . . . 5 INCOME TAX CONSIDERATIONS . . . . 27

ELIGIBILITY FOR INVESTMENT . . . . . . 6 PROMOTER AND INTERESTS OF

MANAGEMENT AND OTHERS INSUMMARY OF THE OFFERING . . . . . . . 7 MATERIAL TRANSACTIONS . . . . . . . . 30IBI GROUP INC. . . . . . . . . . . . . . . . . . . . . 9RISK FACTORS . . . . . . . . . . . . . . . . . . . . . 30BUSINESS OF THE CORPORATION . . . . 11

LEGAL MATTERS . . . . . . . . . . . . . . . . . . 30CONSOLIDATED CAPITALIZATION . . . . 13

AUDITORS, TRANSFER AGENT ANDEARNINGS COVERAGE RATIOS . . . . . . . 14REGISTRAR . . . . . . . . . . . . . . . . . . . . . 31USE OF PROCEEDS . . . . . . . . . . . . . . . . . 15

EXEMPTION FROM NATIONALDESCRIPTION OF DEBENTURES . . . . . . 15INSTRUMENTS 44-101 AND 41-101 . . . . 31

CREDIT FACILITIES . . . . . . . . . . . . . . . . 20PURCHASERS STATUTORY RIGHTS . . . 32

DESCRIPTION OF THE COMMONGLOSSARY OF TERMS . . . . . . . . . . . . . . 33SHARES AND NON-PARTICIPATING

VOTING SHARES . . . . . . . . . . . . . . . . . 21 AUDITORS CONSENT . . . . . . . . . . . . . . . 35PRICE RANGE AND TRADING

CERTIFICATE OF THE CORPORATION . C-1VOLUME OF FUND UNITS, COMMONSHARES AND EXISTING CERTIFICATE OF THEDEBENTURES . . . . . . . . . . . . . . . . . . . . 24 UNDERWRITERS . . . . . . . . . . . . . . . . . C-2

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FORWARD-LOOKING STATEMENTS

Certain statements in this short form prospectus and the documents incorporated by reference mayconstitute forward-looking statements which involve known and unknown risks, uncertainties and otherfactors which may cause the actual results, performance or achievements of the Corporation, IBI LP, IBI or theindustry in which they operate, to be materially different from any future results, performance or achievementsexpressed or implied by such forward-looking statements. When used in this short form prospectus, suchstatements use words such as may, will, expect, believe, plan and other similar terminology. Thesestatements reflect managements current expectations regarding future events and operating performance andspeak only as of the date of this short form prospectus. These forward-looking statements involve a number ofrisks and uncertainties, including those related to: (i) IBIs ability to maintain profitability and manage itsgrowth; (ii) IBIs reliance on its key professionals; (iii) competition in the industry in which IBI operates;(iv) timely completion by IBI of projects and performance by IBI of its obligations; (v) reliance on fixed-pricecontracts; (vi) the general state of the economy; (vii) acquisitions by IBI; (viii) risk of future legal proceedingsagainst IBI; (ix) the international operations of IBI; (x) reduction in IBIs backlog; (xi) fluctuations in interestrates; (xii) fluctuations in currency exchange rates; (xiii) potential undisclosed liabilities associated withacquisitions; (xiv) increased assumption of risk by IBI; (xv) limits under IBIs insurance policies; (xvi) theCorporations reliance on distributions from IBI LP and IBI Group and, as a result, its susceptibility tofluctuations in IBIs performance; (xvii) unpredictability and volatility of the price of Common Shares; (xviii) thedegree to which IBI is leveraged; (xix) dividends not being guaranteed and fluctuating with IBIs performance;(xx) the nature of the Common Shares; (xxi) the possibility of the distribution of securities on redemption or

termination of the Corporation; (xxii) the possibility that the Corporation may issue additional Common Sharesdiluting existing Shareholders interests; (xxiii) the continued investment eligibility of the Common Shares; and(xxiv) income tax matters. See Risk Factors. New risk factors may arise from time to time and it is not possiblefor management of the Corporation to predict all of those risk factors or the extent to which any factor orcombination of factors may cause actual results, performance or achievements of the Corporation to bematerially different from those contained in forward-looking statements. Given these risks and uncertainties,investors should not place undue reliance on forward-looking statements as a prediction of actual results.

Although the forward-looking statements contained in this short form prospectus are based upon whatmanagement believes to be reasonable assumptions, the Corporation cannot assure investors that actual resultswill be consistent with these forward-looking statements.

The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary

statement. The Corporation assumes no obligation to update or revise any forward-looking statements to reflectnew events or circumstances.

DOCUMENTS INCORPORATED BY REFERENCE

The following documents of the Fund and the Corporation, which have been filed with the securitiescommissions or similar regulatory authorities in each of the provinces and territories of Canada, are specificallyincorporated by reference into, and form an integral part of, this short form prospectus:

1. the Funds audited consolidated financial statements and the notes thereto for the years endedDecember 31, 2009 and 2008, together with the report of the auditors thereon;

2. the Funds managements discussion and analysis of financial condition and results of operations for theyear ended December 31, 2009;

3. the Funds unaudited interim financial statements and the notes thereto for the three months and ninemonths ended September 30, 2010;

4. the Funds managements discussion and analysis of financial condition and results of operations datedNovember 10, 2010 for the three months and nine months ended September 30, 2010;

5. the Funds management information circular dated April 7, 2010 in connection with the Funds annualmeeting of holders of trust units (the Fund Units) held on May 7, 2010;

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6. the Funds management information circular dated July 13, 2010 in connection with the Plan ofArrangement (the Arrangement) involving the Fund and the Corporation held on August 5, 2010(the Arrangement Circular);

7. the Funds annual information form dated March 31, 2010;

8. the material change report of the Fund dated May 7, 2010 regarding the completion of an offering ofconvertible unsecured subordinated debentures on a bought deal basis for total gross proceedsof $20,000,000;

9. the material change report of the Fund dated June 30, 2010 regarding the proposal to convert the Fundfrom an income trust to a corporate structure; and

10. the material change report of the Corporation dated January 11, 2011 regarding completion of the Plan ofArrangement whereby the Fund converted from an income trust to a corporate structure.

All documents of the type referred to in the preceding paragraph as well as any business acquisition reportsand any material change reports (excluding confidential material change reports) which are filed by theCorporation with a securities commission or similar regulatory authority in any of the provinces and territoriesof Canada after the date of this short form prospectus and prior to the termination of the Offering shall bedeemed to be incorporated by reference into this short form prospectus.

Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall

be deemed to be modified or superseded, for purposes of this short form prospectus, to the extent that a statementcontained herein or in any other subsequently filed document that also is or is deemed to be incorporated byreference herein modifies or supersedes such statement. The modifying or superseding statement need not statethat it has modified or superseded a prior statement or include any other information set forth in the documentthat it modifies or supersedes. The making of a modifying or superseding statement shall not be deemed anadmission for any purposes that the modified or superseded statement, when made, constituted amisrepresentation, an untrue statement of a material fact or an omission to state a material fact that is requiredto be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was

made. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, toconstitute part of this short form prospectus.

ELIGIBILITY FOR INVESTMENT

In the opinion of Fraser Milner Casgrain LLP, counsel to the Corporation, and Goodmans LLP, counsel tothe Underwriters, provided the Debentures and the Common Shares issuable on conversion, redemption ormaturity of the Debentures are listed on a designated stock exchange as defined in the Tax Act (whichcurrently includes the TSX), the Debentures and the Common Shares issuable on conversion, redemption ormaturity of the Debentures will be qualified investments under the Tax Act and the regulations thereunder(the Regulations) for trusts governed by registered retirement savings plans, registered retirement incomefunds, deferred profit sharing plans (except, in the case of the Debentures, a deferred profit sharing plan towhich the Corporation, or an employer that does not deal at arms length with the Corporation, has made acontribution), registered education savings plans, registered disability savings plans and tax-free savings accounts(TFSA) as defined in the Tax Act.

Notwithstanding the foregoing, a holder of the Debentures or Common Shares issuable on conversion,redemption or maturity of the Debentures will be subject to a penalty tax if the Debentures or Common Shares

issuable on conversion, redemption or maturity of the Debentures held in a TFSA are a prohibited investmentunder the Tax Act. The Debentures and Common Shares issuable on conversion, redemption or maturity of theDebentures generally will not be a prohibited investment unless either (i) the holder of the TFSA does notdeal at arms length with the Corporation within the meaning of the Tax Act, or (ii) the holder has a significantinterest in the Corporation within the meaning of the Tax Act, which includes, but is not limited to, theownership of 10% or more of any class of Common Shares of the Corporation. Holders should consult their owntax advisors as to whether the Debentures or Common Shares issuable on conversion, redemption or maturity ofthe Debentures will be a prohibited investment in their particular circumstances.

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SUMMARY OF THE OFFERING

Debentures Offered: $50,000,000 aggregate principal amount of 6.00% convertible unsecuredsubordinated debentures (prior to the exercise of the Over-allotmentOption).

Issue Price: $1,000 per Debenture.

Maturity Date: June 30, 2018.

Over-Allotment Option: The Corporation has also granted to the Underwriters an Over-allotmentOption to purchase up to an additional $7,500,000 aggregate principalamount of Debentures at a price of $1,000 per Debenture on the same termsand conditions as the Offering, exercisable from time to time, in whole or inpart, for a period of up to 30 days following closing of the Offering.

Use of Proceeds: The net proceeds of the Offering will be used for general purposes of theCorporation including debt repayment and working capital.

Interest: 6.00% per annum payable semi-annually in arrears on June 30 andDecember 31 in each year, commencing June 30, 2011. The first interestpayment will include interest accrued from the closing of this Offering toJune 30, 2011.

Conversion: Each Debenture will be convertible into Common Shares at the option of theholder at any time prior to the close of business on the earlier of the MaturityDate and the business day immediately preceding the date specified by theCorporation for redemption of the Debentures at a conversion price of$21.00 per Common Share, being a conversion rate of approximately47.6190 Common Shares for each $1,000 principal amount of Debentures.The conversion price shall be subject to the standard anti-dilutiveadjustment. Holders converting their Debentures will be entitled to receiveaccrued and unpaid interest for the period from but excluding the latestInterest Payment Date (as hereinafter defined) up to and including the dateof conversion.

Redemption: The Debentures will not be redeemable before June 30, 2014. TheDebentures may be redeemed by the Corporation at a price of $1,000 perDebenture, plus accrued and unpaid interest, on not more than 60 days and

not less than 30 days prior notice, on or after June 30, 2014 and prior toJune 30, 2016 (provided that the Current Market Price (as hereinafterdefined) of the Common Shares on the date on which notice of redemption isgiven is not less than 125% of the Conversion Price (as hereinafter defined)).On or after June 30, 2016 and prior to the Maturity Date, the Debentureswill be redeemable by the Corporation at a price of $1,000 per Debenture,plus accrued and unpaid interest on not more than 60 days and not less than30 days prior notice.

Payment upon Redemption or Unless an event of default has occurred and is continuing, the CorporationMaturity: may, at its option, on not more than 60 days and not less than 30 days prior

notice and subject to any required regulatory approvals, elect to satisfy itsobligation to repay the principal amount of Debentures due on redemption

or maturity by issuing freely tradeable Common Shares to the holders of suchDebentures. Any accrued and unpaid interest thereon will be paid in cash.The number of Common Shares to be issued will be determined by dividingthe principal amount of the Debentures by 95% of the Current Market Priceof the Common Shares on the date fixed for redemption or the maturity date,as the case may be.

Current Market Price: Current Market Price is defined as the volume weighted average tradingprice of the Common Shares on the TSX for the 20 consecutive trading daysending on the fifth trading day preceding the date of the applicable event.

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Interest Payment Election: Unless an event of default has occurred and is continuing, the Corporationmay elect, subject to regulatory approval, from time to time to satisfy itsobligation to pay all or any part of the interest on the Debentures(the Interest Obligation), on the date it is payable under the TrustIndenture (an Interest Payment Date), by issuing and soliciting bids to sellsufficient Common Shares to satisfy all or the part, as the case may be, of theInterest Obligation (the Common Share Interest Payment Election). The

Trust Indenture will provide that, upon such election, the Debenture Trusteeshall (a) accept the proceeds with respect to the sales of Common Shares bythe Corporation; (b) invest the proceeds of such sales in short-termpermitted government securities (as defined in the Trust Indenture) whichmature prior to the applicable Interest Payment Date; (c) deliver proceeds toholders of Debentures sufficient to satisfy the Interest Obligation; and(d) perform any other action necessarily incidental thereto. The amountreceived by a holder in respect of interest and the timing of payment thereofwill not be affected by whether or not the Corporation elects to utilize theCommon Share Interest Payment Election.

Change of Control: Upon the occurrence of a change of control of the Corporation involving theacquisition of voting control or direction over 6623% or more of the then

outstanding Common Shares (and convertible and exchangeable securities ofthe Corporation) by any person or group of persons acting jointly or inconcert, the Corporation will be required to make an offer in writing topurchase all of the Debentures then outstanding, at a purchase price equal to101% of the principal amount thereof plus accrued and unpaid interest.

Cash Change of Control Upon a change of control resulting from a transaction in respect of which10% or more of the consideration for the Common Shares consists of (i) cashor (ii) equity securities or other property that is not traded or intended to betraded immediately following such transaction on a recognized stockexchange (a Cash Change of Control), if a holder of Debentures elects toconvert their Debentures prior to the completion of the offer to purchase,the Conversion Price will be adjusted to the Change of Control Conversion

Price as set forth in the Trust Indenture.The Change of Control Conversion Price will be calculated as follows:

COCCP = ECP / (1+ (CP (c/t)) where:COCCP is the Change of Control Conversion Price; andECP = is the Conversion Price in effect at the time of the change ofcontrolCP = 50%c = the number of days from and including the effective date of the changeof control to but excluding June 30, 2014;t = the number of days from and including the Closing Date to butexcluding June 30, 2014.

Priority: The payment of the principal of, and interest on, the Debentures will havepriority over the payment of any dividends on the Common Shares, but be

subordinated in right of payment, as set forth in the Trust Indenture, to theprior payment in full of any Senior Indebtedness of the Corporation.

Listing: The TSX has conditionally approved the listing of the Debentures distributedpursuant to this Offering and the Common Shares issuable upon conversion,redemption or maturity of the Debentures on the TSX on or before April 11,2011. Listing is subject to the Corporation fulfilling all of the requirements ofthe TSX. The Common Shares are listed on the TSX under the symbolIBG.

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IBI GROUP INC.

The Corporation

The Corporation is the successor to IBI Income Fund, following the completion of the conversion of theFund from an income trust to a corporate structure by way of a court-approved Plan of Arrangement under theCanada Business Corporations Act (the CBCA) on January 1, 2011 (the Arrangement). Pursuant to theArrangement, on January 1, 2011, holders of Fund Units received one Common Share for each Fund Unit held.Holders of a right to receive Fund Units or securities exchangeable into Fund Units received the right to acquire

the same number of Common Shares as the number of Fund Units they were entitled to receive prior to theArrangement. In conjunction with the Arrangement, the Fund and IBI Holding Trust were wound-up effectiveJanuary 1, 2011. As a result of the Arrangement, the Corporation now owns, directly or indirectly, the limitedpartnership units of IBI LP and the Class A Units of IBI Group as well as the common shares of GeneralPartner Co. and General Partner Trustee. Unless stated otherwise or the context otherwise requires, referencesin this short form prospectus to IBI mean the Corporation and each of its subsidiaries.

The Corporation was incorporated pursuant to the provisions of the CBCA and did not carry on any activebusiness prior to the Arrangement, other than executing the arrangement agreement pursuant to which theArrangement was implemented. The Corporations board of directors and senior management are comprised ofthe individuals who were members of the board of trustees of the Fund and senior management of the Fundssubsidiaries immediately prior to completion of the Arrangement.

The business of the Corporation, which is conducted indirectly through IBI Group and its subsidiaryentities, is the provision of professional services, including planning, design, implementation, analysis ofoperations and other consulting services in relation to four main areas of development, being urban land,building facilities, transportation networks and systems technology. IBI Group also provides certainadministrative services to the Corporation and its subsidiary entities pursuant to the Administration Agreement.The head and registered office of the Corporation is located at 230 Richmond Street West, 5th Floor, Toronto,Ontario M5V 1V6.

IBI LP

IBI LP is a limited partnership formed under the laws of the Province of Manitoba pursuant to the IBI LPPartnership Agreement to own the Class A Units of IBI Group and carry out all activities ancillary andincidental thereto. All of the LP Units of IBI LP are owned by the Corporation. The general partner of IBI LP is

the General Partner, an unincorporated, limited purpose trust established under the laws of the Province ofOntario, the sole beneficiary of which is General Partner Co, a wholly-owned subsidiary of the Corporation. Theprincipal and head office of IBI LP is located at 230 Richmond Street West, 5th Floor, Toronto, OntarioM5V 1V6.

IBI Group

IBI Group is a general partnership formed under the laws of the Province of Ontario pursuant to the IBIGroup Partnership Agreement to carry on the business of IBI. All of the Class A Units of IBI Group,representing approximately 72% of the outstanding Partnership Units, are held by IBI LP, and all of the Class BUnits of IBI Group, representing the remaining 28% of the Partnership Units, are held by the ManagementPartnership. In addition to the Class B Units, the Management Partnership and IBI Group InvestmentPartnership, the partners of which are also partners of the Management Partnership or are controlled by a

person who controls a partner of the Management Partnership, together hold 3,227,050 Common Shares. Theseinterests represent an interest of approximately 46% in the Corporation (on a partially diluted basis, assumingthe exchange of the Class B Units for Common Shares) (or approximately 35% after giving effect to the Offeringand assuming the issuance of all Common Shares issuable on conversion, redemption or maturity of theDebentures). The principal and head office of IBI Group is located at 230 Richmond Street West, 5th Floor,Toronto, Ontario M5V 1V6.

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12JAN201108555120

Structure of the Corporation

The structure of the Corporation and its principal subsidiaries and other affiliates is set out below.

100%

100% Limited

Partnership Interest

Management

Partnership(2)(5)

5,025,778 Class B Units

representing approximately 28%

of the outstanding (Class A and

Class B) Partnership Units

and 874 Class D Units (1) (6)

US Notes

GP Interest

Class A Units

95,495 Class

B Units(8)100%

100%

100% 100%

82.5%

17.5%

1%

99% Partnership Interest

12,924,473 Class A Units representing

approximately 72% of the outstanding (Class

A and Class B) Partnership Units and Class E

and Class F Units(7)

DAA SENC General Partnership

Sole Beneficiary

Interest

9,697,423

common shares3,227,050

common shares

Management

Partnership(1)

Partners of the

Management

Partnership

IBI GroupArchitects(3)(4)

IBI LP(2)

IBI Group(2)

Ontario SubcoIBI (US) GP Inc.

(Delaware)

IBI (US) LP

(Delaware)

Tetra Design, Inc.

(California)

Tetra

Vendors

Public

Unitholders

IBI General

Partner Trust(2)

IBI GP Limited

(General Partner

Trustee)(2)

IBI GP Holdings

Limited (General

Partner Co)(2)

IBI Group Inc.(2)

SGA

Vendors(5)

IBI Subco Inc.

(Delaware)

IBI

Group

USIBI Group

(US) Inc.

(Delaware)

BFGC

ArchitectsPlanners, Inc.

(California)

IBI Group Inc.(Florida)

US

Subsidiaries(9)

Non-Canadian

and non-US

Subsidiaries(9)

Canadian

Subsidiaries(9)

100%

Trustee

Notes:(1) 3,227,050 Common Shares are held by the Management Partnership and its affiliated partnerships, IBI Group Management

Partnership II and IBI Group Investment Partnership, the partners of which are also partners of the Management Partnership or arecontrolled by a person who controls a partner of the Management Partnership. The Management Partnership also holds5,025,778 Non-Participating Voting Shares, Series 1.

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(2) The Corporation, General Partner Co, the General Partner Trustee, the General Partner, IBI LP, IBI Group and the ManagementPartnership are parties to the Administration Agreement pursuant to which, among other things, IBI Group provides all administrativeand support services required by the Corporation, General Partner Co, the General Partner Trustee, the General Partner, IBI LP andthe Management Partnership.

(3) Represents the affiliated firms, IBI Group Architects (Ontario), IBI Group Architects (Alberta), IBI-HB Architects (BritishColumbia), Martin & Marcotte Beinhaker Inc. (Quebec), Beinhaker Architecte (Quebec), Young & Wright/IBI Group Architects,Page & Steele/IBI Group Architects, SGA-IBI Group Architects, IBI Group of North Carolina P.C., Gruzen-Samton-IBI GroupPartnership (NY), IBI Group Architects, Engineers and Landscape Architects (NY) and BCK-IBI Group Partnership (NY).

(4) In order to comply with regulations governing professional practice, IBI Group does not have any interest, direct or indirect, in thesefirms. However, the amount of income and distributions allocated to the Class B Units is adjusted to reflect the income and cashallocated by these firms to their partners or shareholders, as applicable.

(5) The vendors of Stevens Group Architects Inc. hold 874 Class 2 Units of the Management Partnership which are exchangeable for122,078 Common Shares, subject to adjustment. The Stevens Group vendors also hold 874 Non-Participating Voting Shares, Series 2.

(6) 874 Class D Units of IBI Group are held by the Management Partnership and relate to the Class 2 Units of the ManagementPartnership held by the former shareholders of Stevens Group Architects Inc. Distributions equivalent to the dividends on122,078 Common Shares are paid by IBI Group to the Management Partnership on the Class D Units, and these distributions are inturn paid by the Management Partnership to the holders of the Class 2 Units of the Management Partnership. Upon the exercise bythe holders of the Class 2 Units of their exchange rights, the Management Partnership will exercise the exchange rights under theClass D Units it holds and will transfer the Common Shares received to the holders of the Class 2 Units.

(7) The Class E Units and Class F Units of IBI Group are used to fund interest payments on debentures assumed by the Corporation andto fund the repayment of the principal amount of such debentures (out of the capital account of the Class E Units and Class F Units),to the extent that the holders of such debentures do not receive Common Shares upon conversion or maturity.

(8) The Class B Units of IBI (US) Limited Partnership are held by the former shareholders of Tetra Design, Inc. and are exchangeable forCommon Shares on a one for one basis.

(9) See the Funds annual information form dated March 31, 2010 under Structure of the Fund.

BUSINESS OF THE CORPORATION

IBI is a leading, international, multi-disciplinary provider of a broad range of professional services focusedon the physical development of cities. IBIs business is concentrated in four main areas of development, beingurban land, building facilities, transportation networks and systems technology. The professional servicesprovided by IBI include planning, design, implementation, analysis of operations and other consulting servicesrelated to these four main areas of development. IBIs professionals have a broad range of academicbackgrounds and experience in urban design and planning, architecture, civil engineering, transportation

engineering, traffic engineering, systems engineering, urban geography, real estate analysis, landscapearchitecture, communications engineering, software development and many other areas of expertise, allcontributing to the four areas in which IBI practices.

The firms clients include national, provincial, state and local government agencies and public institutions,as well as leading companies in the real estate building, land and infrastructure development, transportation andcommunications industries and in other business areas. IBI provides these services from 71 offices in major citiesacross Canada, the United States and western Europe, as well as in other international centres.

The business of IBI was established in 1974 and, since inception, has focused on growing throughgeographic expansion and through increasing its scope to provide a broader range of services. Historically, thegrowth of IBIs business has been primarily the result of internal growth. However, since 2000, the business ofthe IBI Group of firms, including the architectural practices, has also grown through a program of strategic

acquisitions, with one acquisition completed in each of 2000 and 2002, three acquisitions completed in 2004, twoacquisitions completed in 2005, four acquisitions completed in each of 2006 and 2007, seven acquisitionscompleted in 2008, four acquisitions completed in 2009 and two acquisitions completed in 2010. For the periodcommencing with the fiscal year ended January 31, 1999 through the period ended September 30, 2010, therevenue of IBI Groups business has grown at a compound annual rate of 20.1%. For the period from the initialpublic offering of Fund Units by the Fund on August 31, 2004 through to September 30, 2010, IBI Groupsrevenue has grown at a compound annual rate of 25.8%.

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The growth of the IBI practice is founded on its broadly-based functional diversification and on thespreading geographic representation of the firm, which provide strategic synergies, enhanced stability andbroadened client relationship opportunities and have facilitated the spread of the full range of IBIs professionalservices through the platform of its expanding geographic scope. This has enhanced the stability of IBI byenabling the firm to focus on areas of higher growth, greater profitability and stronger economic sustainability.IBIs broad-based clientele, which includes leading companies in the private sector as well as governments at thenational, state/provincial and regional/municipal levels, provides for further stability in operating and financialperformance. Additionally, the attributes of functional diversification and geographic representation enable IBI

to provide more comprehensive services to more markets, enhancing IBIs ability to compete and succeed in thecontext of expanding trade between world geographic regions and increased competitiveness.

The vision of establishing a world scale professional firm was the inspiration for the transformation of theprivately held professional practice of IBI to a public entity through the Fund and now the Corporation. This hasprovided access to the necessary capital to enable IBI to grow through strategic acquisitions while alsocontinuing to grow organically. The firms acquired concurrently with and since the completion of the Fundsinitial public offering of Fund Units along with the firms acquired earlier, have been successfully integratedwithin the IBI framework. The acquisitions have served to expand the geographical reach of IBI in Canada, theUnited States and the UK, and have also added professional experience and skills in the design of health carefacilities, primary and secondary educational facilities, transportation planning and design, and in the design ofhigh-density residential condominium environments. IBI regularly reviews its business and in addition tostrategic acquisitions may when appropriate dispose of any business that it comes to recognize as non-core.

RECENT DEVELOPMENTS

The only significant developments in the operations and affairs of the Corporation and the Fund which haveoccurred since September 30, 2010 and which have not been described elsewhere in this short form prospectusor in the documents incorporated by reference herein are described below.

Strategic Alliance for Joint Venture with Karlsberger Architects

On December 16, 2010, IBI announced the establishment of a strategic alliance for joint venture withKarlsberger Architects based in Columbus, Ohio, USA, to provide for the undertaking of the planning anddesign of major health care projects throughout the United States and Canada. Karlsberger Architects has beena leading architectural practice, specializing in the planning and design of health care facilities for over eight

decades and has undertaken a vast range of projects throughout the United States and Canada. Karlsberger andIBI Group have collaborated on Health Care projects previously and will now tighten the relationship to be ableto effectively offer services in joint venture with Karlsberger for major projects in the USA.

Acquisition and Merger of CSM Engineering Ltd.

On December 31, 2010, IBI Group acquired the assets of CSM Engineering Ltd. CSM Engineering Ltd.had established and specialized in the practice of civil engineering for land development and infrastructure inFort McMurray and Northern Alberta. CSM Engineering Ltd. has been leading the civil engineering practice inthe development of land and infrastructure in Fort McMurray for over a decade. The professional engineeringteam at CSM, integrated within the IBI Group, will constitute an experienced and broadly based professionalteam to serve the continuing community and infrastructure needs in Fort McMurray, arising from the continuingdevelopments of the oil sands. It also opens broader horizons for the growth of the CSM professional team over

the longer term within IBI.

Conversion of the Fund to a Corporation

On June 21, 2010, the Fund announced its intention to convert from an income trust structure to acorporate structure, effective on or about January 1, 2011.

On July 4, 2010, the Arrangement Agreement was entered into by the Fund and the Corporation.

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On January 3, 2011, the Corporation announced that the Plan of Arrangement resulting in the conversionof the Fund from an income trust to a corporate entity, IBI Group Inc. has been completed. Pursuant to theArrangement, on January 1, 2011, holders of Fund Units received one Common Share for each Fund Unit held.Holders of a right to receive Fund Units or securities exchangeable into Fund Units received the right to acquirethe same number of Common Shares as the number of Fund Units they were entitled to receive prior to theArrangement. In conjunction with the Arrangement, the Fund and IBI Holding Trust were wound-up effectiveJanuary 1, 2011 (the Post-Arrangement Reorganization). For a full description of the Arrangement, see theArrangement Circular which is incorporated by reference in this short form prospectus.

In conjunction with the Arrangement, IBI Group entered into a Second Amended and Restated CreditAgreement dated as of January 1, 2011, to amend certain terms of IBI Groups previous credit agreement,including, among other things, to reflect the post-Arrangement structure of IBI Group.

Acquisition of Groupe Cardinal Hardy Inc.

On January 24, 2011, IBI Group, through a subsidiary entity, has, indirectly, acquired all of the shares ofGroupe Cardinal Hardy Inc. and contemporaneously completed a related merger of Beinhaker Architecte(affiliated with IBI) with the professional architectural practice of Cardinal Hardy Architectes of Montreal,Quebec. Groupe Cardinal Hardy Inc. is a full services architectural practice which has since 1976 undertakendesign and technical work including institutional projects in transportation, social infrastructure includingbuilding facilities in education and health, and private development projects by leading developers in the

Greater Montreal Region. The firm also has an outstanding portfolio of work in urban design and landscapearchitecture.

CONSOLIDATED CAPITALIZATION

The following table sets forth the unaudited consolidated capitalization of the Corporation as atSeptember 30, 2010, both before and after giving effect to the completion of the Arrangement and thepost-Arrangement Reorganization and after giving effect to the Offering.

As at September 30, 2010(after giving effect to the

As at September 30, 2010 Arrangement and the As at September 30, 2010(before giving effect to the Post-Arrangement (after giving effect to the

Arrangement and the Post- Reorganization) Offering)Designation (Authorization) Arrangement Reorganization) ($000) ($000)

Cash . . . . . . . . . . . . . . . . . . . . . . . . $1.00 $9,912 $9,912Term debt . . . . . . . . . . . . . . . . . . . . $33,035 Long-term debt . . . . . . . . . . . . . . . . $49,725 $35,110Convertible Debentures . . . . . . . . . . $58,546 $104,746Share Capital . . . . . . . . . . . . . . . . . . $1.00 $169,932 $173,732Common Shares (unlimited) . . . . . . . 1 common share(1) 12,906,873 common 12,906,873 common

shares(2) shares(3)

Non-Participating Voting Shares,Series 1 (unlimited) . . . . . . . . . . . . 5,025,778 5,025,778

Non-Participating Voting Shares,Series 2 (unlimited) . . . . . . . . . . . . 1,000 1,000

Notes:

(1) The one Common Share held by the Fund was purchased for cancellation by the Corporation under the Arrangement.

(2) Following the purchase for cancellation by the Corporation of the one Common Share held by the Fund.

(3) 17,600 Fund Units were issued on December 15, 2010 in connection with the exercise of the exchange rights granted to the vendors ofStevens Group Architects Inc.

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There have been no material changes in the loan capital of the Corporation, taking into account that theCorporation is a successor of the Fund, on a consolidated basis since September 30, 2010, other than as follows:

(1) On December 31, 2010, IBI Group completed the acquisition of assets of CSM Engineering Ltd. No FundUnits were issued on closing. A promissory note was issued which is to be repaid in two annual installmentsin the aggregate amount of $1,339,976.50, with $669,988.25 payable on the first anniversary of the note and$669,988.25 payable on the second anniversary of the note, subject to adjustments. All payments in respectof this promissory note will be satisfied, at the sole discretion of IBI Group, by either (a) delivery of

Common Shares equal to the dollar amount of the principal payment divided by the volume weightedaverage trading value of the Common Shares for the five trading days prior to the issuance of the CommonShares, or (b) wire transfer of immediately available funds.

(2) As described above under the heading IBI Group Inc., the Fund and the Corporation completed theArrangement on January 1, 2011. For a full description of the Arrangement, see the Arrangement Circularwhich is incorporated in this short form prospectus by reference.

(3) On January 24, 2011, IBI Group, thorough a subsidiary entity, has, indirectly, acquired all of the shares ofGroupe Cardinal Hardy Inc., and contemporaneously completed a related merger of Beinhaker Architecte(affiliated with IBI) with the professional architectural practice of Cardinal Hardy Architectes of Montreal,Quebec. No Common Shares were issued on closing. A promissory note was issued which is to be repaid intwo annual instalments in the aggregate amount of $3,614,600, with $1,807,300 payable on the firstanniversary of the note and $1,807,300 payable on the second anniversary of the note, subject toadjustments. All payments in respect of this promissory note will be satisfied, at the sole discretion of IBIGroup, by either (a) delivery of Common Shares equal to the dollar amount of the principal paymentdivided by the volume weighted average trading value of the Common Shares for the five trading days priorto the issuance of the Common Shares, or (b) wire transfer of immediately available funds.

After giving effect to the Offering, the Shareholders equity of the Corporation will increase by the amountof the equity component of the net proceeds attributable to the Debentures of approximately $3.8 million.

After giving effect to the Offering, the total long term indebtedness of the Corporation will be increased byapproximately $46.2 million by virtue of the allocation as long term indebtedness of the Debentures.

EARNINGS COVERAGE RATIOS

The following earnings coverage ratios are calculated on a consolidated basis for the twelve-month periodended December 31, 2009, based on audited financial information, and for the twelve-month period endedSeptember 30, 2010, based on unaudited financial information of the Fund based on Canadian generallyaccepted accounting principles. Pursuant to GAAP in effect as of the date hereof, the Debentures are classifiedas long term debt.

Net earnings before interest and income tax for the twelve-month period ended December 31, 2009 was$23.6 million, and for twelve month period ended September 30, 2010 was $22.3 million. The interest expensefor the twelve-month period ended December 31, 2009 was $7.1 million, for an earnings coverage ratio of 3.3:1.The interest expense for the twelve-month period ended September 30, 2010 was $10.1 million, for an earningscoverage ratio of 2.2:1.

Assuming the Debentures are included in long-term debt and their carrying charges are included in interest

expense consistent with current GAAP, the pro forma net earnings (before interest and income tax expense) forthe twelve-month period ended December 31, 2009 would have been $23.6 million. The interest expense for suchperiod would have been $8.1 million, for an earnings coverage ratio of 2.9:1. The pro forma net earnings (beforeinterest and income tax expense) for the twelve-month period ended September 30, 2010 would have been$22.3 million. The interest expense for such period would have been $11.1 million, for an earnings coverage ratioof 2.0:1.

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USE OF PROCEEDS

The proceeds of the Offering are estimated to be approximately $47,650,000 after deduction of theUnderwriters fee of $2,000,000 and the estimated expenses of the Offering of $350,000. If the Over-allotmentOption is exercised in full, the Underwriters fee will be $2,300,000 and the net proceeds from the Offering willbe $54,850,000.

The Corporation will use the net proceeds of the Offering to reduce outstanding bank indebtedness of IBIGroup, which may be redrawn and applied to support the Corporations acquisitions and working capital, and

for general purposes of the Corporation, including working capital. Such indebtedness was incurred to supportthe Corporations acquisitions and working capital.

DESCRIPTION OF DEBENTURES

The following is a summary of the material attributes and characteristics of the Debentures, and is subjectto, and qualified in its entirety by, reference to the terms of a trust indenture dated September 30, 2009, assupplemented by the first supplemental trust indenture dated April 28, 2010, as supplemented by the secondsupplemental trust indenture dated January 1, 2011, as supplemented by the third supplemental trust indentureto be dated as of the Closing Date (collectively, the Trust Indenture) between the Corporation andCIBC Mellon Trust Company (the Debenture Trustee), as trustee. The following summary uses words andterms that will be defined in such Trust Indenture. For full particulars, reference is made to the Trust Indenture.

General

The Debentures will be issued under and pursuant to the provisions of the Trust Indenture. The Debenturesauthorized for issue immediately will be limited in the aggregate principal amount to $50,000,000 ($57,500,000 ifthe Over-allotment Option is exercised in full). The Corporation may, however, from time to time, without theconsent of the holders of the Debentures, issue additional debentures of the same series or of a different seriesunder the Trust Indenture, in addition to the Debentures offered hereby. The Debentures will be issuable only indenominations of $1,000 and integral multiples thereof. The Debentures will be dated the Closing Date andhave a maturity date of June 30, 2018.

The Debentures will bear interest from the date of issue at 6.00% per annum. Interest on the Debentureswill be payable semi-annually in arrears on June 30 and December 31 in each year, commencing June 30, 2011.The first interest payment will include interest accrued from the closing of this Offering to June 30, 2011.

The principal amount of the Debentures will be payable in lawful money of Canada or, at the option of the

Corporation and subject to applicable regulatory approval, by payment of Common Shares as further describedunder Payment upon Redemption or at Maturity and Redemption and Purchase. The interest on theDebentures will be payable in lawful money of Canada, including, at the option of the Corporation and subjectto applicable regulatory approval, in accordance with the Common Share Interest Payment Election as definedand described under Description of Debentures Common Share Interest Payment Election.

The Debentures will be direct obligations of the Corporation and will not be secured by any mortgage,pledge, hypothec or other charge and will be subordinated to other liabilities of the Corporation as describedunder Subordination below. The Trust Indenture will not restrict the Corporation from incurring additionalindebtedness for borrowed money or from mortgaging, pledging or charging its properties to secure anyindebtedness.

Conversion Privilege

The Debentures will be convertible at the holders option into fully paid and non assessable CommonShares at any time prior to 5:00 p.m. (Toronto time) on the earlier of the Maturity Date and the business dayimmediately preceding the date fixed for redemption at a Conversion Price of $21.00 per Common Share(the Conversion Price), being a conversion rate of approximately 47.6190 Common Shares for each $1,000principal amount of Debentures. The Conversion Price will be subject to the standard anti-dilutive adjustment.No adjustment will be made for dividends on Common Shares issuable upon conversion or for interest accruedon Debentures surrendered for conversion; however, holders converting their Debentures will receive accruedand unpaid interest thereon for the period from but excluding the latest interest payment date up to andincluding the date of conversion.

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Subject to the provisions thereof, the Trust Indenture will provide for the adjustment of the ConversionPrice in certain events including: (a) the subdivision or consolidation of the outstanding Common Shares; (b) thedistribution of Common Shares to all or substantially all holders of Common Shares by way of dividends orotherwise other than an issue of securities to holders of Common Shares who have elected to receive dividendsin securities of the Corporation in lieu of receiving cash dividends paid in the ordinary course; (c) the issuance ofoptions, rights or warrants to holders of Common Shares entitling them to acquire Common Shares or othersecurities convertible or exchangeable into Common Shares at less than 95% of the then Current Market Priceof the Common Shares; and (d) the distribution to all or substantially all holders of Common Shares of any

securities or assets (other than cash dividends and equivalent distributions in securities paid in lieu of cashdividends in the ordinary course). There will be no adjustment of the Conversion Price in respect of any eventdescribed in (b), (c) or (d) above if the holders of the Debentures are allowed to participate as though they hadconverted their Debentures prior to the applicable record date or effective date. The Corporation will not berequired to make adjustments in the Conversion Price unless the cumulative effect of such adjustments wouldchange the conversion price by at least 1%.

In the case of any reclassification or capital reorganization (other than a change resulting fromconsolidation or subdivision) of the Common Shares or in the case of any amalgamation, consolidation,arrangement or merger of the Corporation with or into any other entity, or in the case of any sale, transfer orother disposition of the properties and assets of the Corporation as, or substantially as, an entirety to any otherperson, or a liquidation, dissolution, winding-up of the Corporation or other similar transaction, the terms of theconversion privilege shall be adjusted so that each Debenture shall, after such reclassification, capital

reorganization, amalgamation, consolidation, arrangement, merger, sale, transfer, disposition, liquidation,dissolution, winding-up or other similar transaction, be entitled to receive the number of Common Shares orother securities or property such holder would be entitled to receive if on the effective date thereof, it had beenthe holder of the number of Common Shares into which the Debenture was convertible prior to the effectivedate of such reclassification, capital reorganization, consolidation, amalgamation, merger, sale, conveyance,liquidation, dissolution or winding-up.

No fractional Common Shares will be issued on any conversion of the Debentures but in lieu thereof theCorporation shall satisfy fractional interests by a cash payment equal to the Current Market Price of anyfractional interest.

Redemption and Purchase

The Debentures will not be redeemable before June 30, 2014. The Debentures may be redeemed by theCorporation at a price of $1,000 per Debenture, plus accrued and unpaid interest, on not more than 60 days andnot less than 30 days prior notice, on or after June 30, 2014 and prior to June 30, 2016 (provided that theCurrent Market Price (as hereinafter defined) of the Common Shares on the date on which notice ofredemption is given is not less than 125% of the Conversion Price). On or after June 30, 2016 and prior to theMaturity Date, the Debentures will be redeemable by the Corporation at a price of $1,000 per Debenture, plusaccrued and unpaid interest on not more than 60 days and not less than 30 days prior notice.

The term Current Market Price will be defined in the Trust Indenture to mean the volume weightedaverage trading price of the Common Shares on the TSX for the 20 consecutive trading days ending on the fifthtrading day preceding the date of the applicable event. The weighted average trading price will be determined bydividing the aggregate sale price of all Common Shares sold on the TSX during the 20 consecutive trading daysby the total number of Common Shares so sold.

In the case of redemption of less than all of the Debentures, the Debentures to be redeemed will beselected by the Debenture Trustee on apro ratabasis or in such other manner as the Debenture Trustee deemsequitable, subject to the consent of the TSX, if applicable.

The Corporation will have the right to purchase Debentures in the market, by tender or by private contract.

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Payment upon Redemption or at Maturity

On redemption or at maturity, the Corporation will repay the indebtedness represented by the Debenturesby paying to the Debenture Trustee in lawful money of Canada an amount equal to the principal amount of theoutstanding Debentures which are to be redeemed or which have matured, together with accrued and unpaidinterest thereon. Unless an event of default has occurred and is continuing, the Corporation may, at its option,on not more than 60 days and not less than 30 days prior notice and subject to any required regulatoryapprovals, elect to satisfy its obligation to repay the principal amount of Debentures due on redemption ormaturity by issuing freely tradeable Common Shares to the holders of such Debentures. Any accrued and unpaidinterest thereon will be paid in cash. The number of Common Shares to be issued will be determined by dividingthe principal amount of the Debentures by 95% of the Current Market Price of the Common Shares on the datefixed for redemption or the maturity date, as the case may be. No fractional Common Shares will be issued toholders of Debentures but in lieu thereof the Corporation shall satisfy fractional interests by a cash paymentequal to the Current Market Price of any fractional interest.

Subordination

The payment of the principal of, and interest on, the Debentures will be subordinated in right of payment,as set forth in the Trust Indenture, to the prior payment in full of all Senior Indebtedness of the Corporation.Senior Indebtedness of the Corporation is defined in the Trust Indenture. Such Senior Indebtedness includesthe principal of and premium, if any, and interest on and other amounts in respect of all indebtedness of the

Corporation (whether outstanding as at the date of the Trust Indenture or thereafter incurred), other thanindebtedness evidenced by the Debentures and all other existing and future debentures or other instruments ofthe Corporation which, by the terms of the instrument creating or evidencing the indebtedness, is expressed tobe pari passuwith, or subordinate in right of payment to, the Debentures.

The Trust Indenture will provide that in the event of any insolvency or bankruptcy proceedings, or anyreceivership, liquidation, reorganization or other similar proceedings relative to the Corporation, or to itsproperty or assets, or in the event of any proceedings for voluntary liquidation, dissolution or other winding upof the Corporation, whether or not involving insolvency or bankruptcy, or any marshalling of the assets andliabilities of the Corporation, then those holders of Senior Indebtedness, including trade creditors, will receivepayment in full before the holders of Debentures will be entitled to receive any payment or distribution of anykind or character, whether in cash, property or securities, which may be payable or deliverable in any such eventin respect of any of the Debentures or any unpaid interest accrued thereon. The Trust Indenture will also

provide that the Corporation will not make any payment, and the holders of the Debentures will not be entitledto demand, institute proceedings for the collection of, or receive any payment or benefit (including, withoutlimitation, by set off, combination of accounts or realization of security or otherwise in any manner whatsoever)on account of indebtedness represented by the Debentures at any time when a default has occurred under theSenior Indebtedness and is continuing and the notice of such default has been given by or on behalf of theholders of Senior Indebtedness to the Corporation, unless such Senior Indebtedness has been repaid in full.

The Debentures will also be effectively subordinated to claims of all creditors of the Corporationssubsidiaries except to the extent the Corporation is a creditor of such subsidiaries ranking at leastpari passuwithsuch other creditors. The Debentures will be subordinated in right of payment to the prior payment in full of allindebtedness of the Corporation under any credit facilities and other debt obligations of IBI Group and othersubsidiaries of the Corporation.

Change of Control of the Corporation

Upon the occurrence of a change of control of the Corporation involving the acquisition of voting control ordirection over 6623% or more of the then outstanding Common Shares (and convertible and exchangeablesecurities of the Corporation) by any person or group of persons acting jointly or in concert, the Corporation willbe required to make an offer within 30 days in writing to purchase all of the Debentures then outstanding(the Debenture Offer), at a purchase price equal to 101% of the principal amount thereof plus accrued andunpaid interest (the Debenture Offer Price).

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The Trust Indenture contains notification and repurchase provisions requiring the Corporation to givewritten notice to the Debenture Trustee of the occurrence of a Change of Control within 30 days of such eventtogether with the Debenture Offer. The Debenture Trustee will thereafter promptly mail to each holder ofDebentures a notice of the Change of Control together with a copy of the Debenture Offer to repurchase all theoutstanding Debentures.

If 90% or more of the aggregate principal amount of the Debentures outstanding on the date of the givingof notice of the Change of Control have been tendered to the Corporation pursuant to the Debenture Offer, theCorporation will have the right and obligation to redeem all the remaining Debentures at the Debenture OfferPrice. Notice of such redemption must be given by the Corporation to the Debenture Trustee within 10 daysfollowing the expiry of the Debenture Offer, and as soon as possible thereafter, by the Debenture Trustee to theholders of the Debentures not tendered pursuant to the Debenture Offer.

Cash Change of Control

Upon a change of control resulting from a transaction in respect of which 10% or more of the considerationfor the Common Shares consists of (i) cash or (ii) equity securities or other property that is not traded orintended to be traded immediately following such transaction on a recognized stock exchange (a Cash Changeof Control), if a holder of Debentures elects to convert their Debentures prior to the completion of theDebenture Offer, the Conversion Price will be adjusted to the Change of Control Conversion Price as set forthin the Trust Indenture.

The Change of Control Conversion Price will be calculated as follows:

COCCP = ECP / (1+ (CP (c/t)) where:COCCP is the Change of Control Conversion Price; andECP = is the Conversion Price in effect at the time of the change of controlCP = 50%c = the number of days from and including the effective date of the change of control to but excludingJune 30, 2014;t = the number of days from and including the Closing Date to but excluding June 30, 2014.

Common Share Interest Payment Election

Unless an event of default has occurred and is continuing, the Corporation may elect, subject to regulatory

approval, from time to time to satisfy its obligation to pay all or any part of the interest on the Debentures(the Interest Obligation), on the date it is payable under the Trust Indenture (an Interest Payment Date), byissuing and soliciting bids to sell sufficient Common Shares to satisfy all or the part, as the case may be, of theInterest Obligation (the Common Share Interest Payment Election). The Trust Indenture will provide that,upon such election, the Debenture Trustee shall (a) accept the proceeds with respect to the sales of CommonShares by the Corporation, (b) invest the proceeds of such sales in short-term permitted government securities(as defined in the Trust Indenture) which mature prior to the applicable Interest Payment Date, (c) deliver theproceeds to holders of Debentures sufficient to satisfy the Interest Obligation, and (d) perform any other actionnecessarily incidental thereto.

The Trust Indenture will set forth the procedures to be followed by the Corporation and the DebentureTrustee in order to effect the Common Share Interest Payment Election. If a Common Share Interest PaymentElection is made, the sole right of a holder of Debentures in respect of interest will be to receive cash from the

Debenture Trustee out of the proceeds of the sale of Common Shares (plus any amount received by theDebenture Trustee from the Corporation attributable to any fractional Common Shares) in full satisfaction ofthe Interest Obligation, and the holder of such Debentures will have no further recourse to the Corporation inrespect of the Interest Obligation.

Neither the Corporations making of the Common Share Interest Payment Election nor the consummationof sales of Common Shares will (a) result in the holders of the Debentures not being entitled to receive on theapplicable Interest Payment Date cash in an aggregate amount equal to the interest payable on such Interest

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Payment Date, or (b) entitle such holders to receive any Common Shares in satisfaction of the InterestObligation.

Events of Default

The Trust Indenture will provide that an event of default (Event of Default) in respect of the Debentureswill occur if any one or more of certain events described in the Trust Indenture occur, including if any one ormore of the following described events has occurred and is continuing with respect to the Debentures: (a) failureto pay interest on the Debentures when due; (b) failure to pay principal or premium, if any, on the Debentureswhen due, whether at Maturity, upon redemption by declaration or otherwise; (c) certain events of bankruptcy,insolvency or reorganization of the Corporation under bankruptcy or insolvency laws; or (d) default in theobservance or performance of any material covenant or condition of the Trust Indenture and continuance ofsuch default for a period of 30 days after notice in writing has been given by the Debenture Trustee to theCorporation specifying such default and requiring the Corporation to rectify the same. If an Event of Defaulthas occurred and is continuing, the Debenture Trustee may, in its discretion, and shall, upon the request ofholders of not less than 25% of the principal amount of the Debentures then outstanding, declare the principalof and interest on all outstanding Debentures to be immediately due and payable. In certain cases, the holders ofmore than 50% of the principal amount of the Debentures then outstanding may, on behalf of the holders of allDebentures, waive any Event of Default and/or cancel any such declaration upon such terms and conditions asthe holders shall prescribe.

Offers for Debentures

The Trust Indenture will contain provisions to the effect that if an offer is made for the Debentures which isa take-over bid for Debentures within the meaning of the Securities Act(Ontario) and not less than 90% of theDebentures (other than Debentures held at the date of the take over bid by or on behalf of the offeror orassociates or affiliates of the offeror) are taken up and paid for by the offeror, the offeror will be entitled toacquire the Debentures held by holders of Debentures who did not accept the offer on the terms offered bythe offeror.

Modification

The rights of the holders of Debentures as well as any other series of debentures that may be issued underthe Trust Indenture may be modified in accordance with the terms of the Trust Indenture. For that purpose,

among others, the Trust Indenture will contain certain provisions which will make binding on all holders ofDebentures resolutions passed at meetings of the holders of Debentures by votes cast thereat by holders of notless than 6623% of the principal amount of the then outstanding Debentures present at the meeting orrepresented by proxy, or rendered by instruments in writing signed by the holders of not less than 66 23% of theprincipal amount of the then outstanding Debentures. In certain cases, the modification will, instead of or inaddition to such approval, require assent by the holders of the required percentage of Debentures of eachparticularly affected series.

Book Entry System for Debentures

The Debentures will be issued in book-entry only form and must be purchased or transferred through aparticipant in the depository service of CDS (a Participant). On the Closing Date, the Debenture Trustee willcause the Debentures to be delivered to CDS and registered in the name of its nominee. The Debentures will be

evidenced by a single book-entry only certificate. Registration of interests in and transfers of the Debentures willbe made only through the depository service of CDS.

Except as described below, a purchaser acquiring a beneficial interest in the Debentures (a BeneficialOwner) will not be entitled to a certificate or other instrument from the Debenture Trustee or CDS evidencingthat purchasers interest therein, and such purchaser will not be shown on the records maintained by CDS,except through a Participant. Such purchaser will receive a confirmation of purchase from the Underwriter orother registered dealer from whom Debentures are purchased.

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Neither the Corporation nor the Underwriters will assume any liability for: (a) any aspect of the recordsrelating to the beneficial ownership of the Debentures held by CDS or the payments relating thereto;(b) maintaining, supervising or reviewing any records relating to the Debentures; or (c) any advice orrepresentation made by or with respect to CDS and contained in this short form prospectus and relating to therules governing CDS or any action to be taken by CDS or at the direction of the CDS Participants. The rulesgoverning CDS provide that it acts as the agent and depositary for the CDS Participants. As a result, CDSParticipants must look solely to CDS, and Beneficial Owners must look solely to CDS Participants, for thepayment of the principal and interest on the Debentures paid by or on behalf of the Corporation to CDS.

As indirect holders of Debentures, investors should be aware that they (subject to the situations describedbelow): (a) may not have Debentures registered in their name; (b) may not have physical certificatesrepresenting their interest in the Debentures; (c) may not be able to sell the Debentures to institutions requiredby law to hold physical certificates for securities they own; and (d) may be unable to pledge Debenturesas security.

The Debentures will be issued to Beneficial Owners in fully registered and certificated form(the Debenture Certificates) only if: (a) required to do so by applicable law; (b) the book-entry only systemceases to exist; (c) the Corporation or CDS advises the Debenture Trustee that CDS is no longer willing or ableto properly discharge its responsibilities as depositary with respect to the Debentures and the Corporation isunable to locate a qualified successor; (d) the Corporation, at its option, decides to terminate the book-entryonly system through CDS; or (e) after the occurrence of an Event of Default, provided the Debenture Trustee

has not waived the Event of Default in accordance with the terms of the Trust Indenture, CDS Participantsacting on behalf of Beneficial Owners representing, in the aggregate, more than 25% of the aggregate principalamount of the Debentures then outstanding advise CDS in writing that the continuation of a book-entry onlysystem through CDS is no longer in their best interest, and provided further that the Debenture Trustee has notwaived the Event of Default in accordance with the terms of the Trust Indenture.

Upon the occurrence of any of the events described in the immediately preceding paragraph, the DebentureTrustee must notify CDS, for and on behalf of CDS Participants and Beneficial Owners, of the availabilitythrough CDS of Debenture Certificates. Upon surrender by CDS of the single certificate representing theDebentures and receipt of instructions from CDS for the new registrations, the Debenture Trustee will deliverthe Debentures in the form of Debenture Certificates and thereafter the Corporation will recognize the holdersof such Debenture Certificates as holders of Debentures under the Trust Indenture.

Interest on the Debentures will be paid directly to CDS while the book-entry only system is in effect. If

Debenture Certificates are issued, interest will be paid by cheque drawn on the Corporation and sent by prepaidmail to the registered holder or by such other means as may become customary for the payment of interest.Payment of principal, including payment in the form of Common Shares if applicable, and the interest due, atmaturity or on a redemption date, will be made directly to CDS while the book-entry only system is in effect. IfDebenture Certificates are issued, payment of principal, including payment in the form of Common Shares ifapplicable, and interest due, at maturity or on a redemption date, will be paid upon surrender thereof at anyoffice of the Debenture Trustee or as otherwise specified in the Trust Indenture.

CREDIT FACILITIES

IBI Group has credit facilities (Credit Facilities) totaling $150 million with a syndicate of Canadianfinancial institutions, as lenders, consisting of a $10 million swing facility (the Swing Facility), a $80 millionterm facility (the Term Facility) and a $60 million revolver facility (the Revolver Facility). The availability ofeach of the Credit Facilities is subject to compliance with certain financial and other covenants.

The Swing Facility and the Revolver Facility are revolving facilities to be used by IBI Group (a) to repayexisting bank debt, (b) for general corporate purposes including (i) working capital, (ii) to normalizedistributions to holders of Class A Units and Class B Units, (iii) to finance the payment from time to time ofpayments required pursuant to acquisitions, and (iv) to finance permitted acquisitions.

The Term Facility is a term credit facility used by IBI Group to finance permitted acquisitions.

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In addition, an uncommitted bid bond facility of up to US$20 million (the Bid Bond Facility) wasestablished for the purpose of issuing standby letters of credit to IBI Groups international customers.

Each of the Swing Facility, the Revolver Facility, the Bid Bond Facility and the Term Facility matures onAugust 31, 2012.

As part of the Arrangement, IBI Group entered a Second Amended and Restated Credit Agreement datedas of January 1, 2011 (the Credit Agreement), to amend certain terms of IBI Groups previous creditagreement, including, among other things, to reflect the post-Arrangement structure of IBI Group (the Credit

Agreement).Borrowings (other than borrowings by way of bankers acceptances) under the Credit Facilities may be

prepaid without any prepayment penalties. Mandatory prepayments of the Credit Facilities are required in theevent, and to the extent, of certain dispositions of assets and debt issuances by IBI Group or its subsidiaries.

Advances under Credit Facilities bear interest at a rate based on the Canadian dollar or US dollar primerate (as the case may be), LIBOR (London Interbank Offered Rate, an interest rate charged among banks inLondon for short-term loans denominated in a specified currency, which, unless otherwise specified, is assumedto be United States dollars) or bankers acceptance rates plus, in each case, an applicable margin. Letters ofcredit and letters of guarantee on customary terms for credit facilities of this nature are also available under theRevolver Facility and the Swing Facility. The Bid Bond Facility is available only by way of such instruments.Commitment and administration fees usual for borrowings of this nature are payable. The Corporation hasentered into an interest-rate swap agreement in order to fix the interest rate at 4.84% per annum plus a fee of

1.5% for the duration of the Term Facility.

Guarantees from certain subsidiaries of IBI Group as well as IBI Group Architects (Ontario), and a firstranking security interest in all of the assets of IBI Group and the guarantors, subject to certain permittedencumbrances have been pledged as security for the indebtedness and obligations of IBI Group under the CreditFacilities. The indebtedness secured by these security interests will rank senior to all other security over theassets of IBI Group and the guarantors, subject to certain permitted encumbrances.

The Credit Facilities are subject to customary terms and conditions for credit facilities of this nature,including maintenance tests and limits on incurring additional indebtedness, granting liens, selling assets, makingnew investments, entering into mergers, changing the nature of its business and paying distributions onPartnership Units except out of Distributable Cash (as defined in the Credit Agreement), or when in default. IBIGroup is required to maintain (i) a maximum ratio of funded debt to EBITDA, (ii) a minimum fixed charge

coverage ratio, and (iii) a minimum current ratio, all as described in the Credit Agreement. The Credit Facilitiesare also subject to events of default usual for credit facilities of this nature.

The failure by the lenders to extend the term of the Credit Facilities and by IBI Group to adequatelyreplace such Credit Facilities will have a negative effect on IBI Groups ability to distribute cash. See RiskFactors Risk Factors related to the Structure of the Fund Leverage, Restrictive Covenants in the Fundsannual information form dated March 31, 2010.

DESCRIPTION OF THE COMMON SHARES AND NON-PARTICIPATING VOTING SHARES

The following is a summary of the material attributes and characteristics of the Common Shares andNon-Participating Voting Shares, Series 1 and 2 and certain provisions of the Articles of Incorporation of theCorporation dated June 30, 2010, as amended by the Certificate and Articles of Arrangement dated effectiveJanuary 1, 2011, (collectively, the Articles), which does not purport to be complete. Reference is made to the

Articles and the full text of its provisions for a complete description of the Common Shares andNon-Participating Voting Shares, Series 1 and 2.

Common Shares

An unlimited number of Common Shares are issuable pursuant to the Articles. Holders of the CommonShares are entitled to receive dividends in such amounts and on such date or dates as may from time to time bedetermined by the directors of the Corporation. In the event of the liquidation, dissolution or winding-up of theCorporation or other distribution of assets of the Corporation among shareholders for the purpose of

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winding-up its affairs, subject to the prior rights of the holders of the Non-Participating Voting Shares of anyseries, the holders of the Common Sh

short form prospectus

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