Exhibit 10.2


 


BEHRINGER HARVARD REIT I, INC.


 


- and -


 


EVERCLEAR ACQUISITION CORPORATION


 


- and -


 


IPC US REAL ESTATE INVESTMENT TRUST


 


- and -


 


PRF HOLDINGS INC.


 


- and -


 


BARRY REICHMANN


 




 





PURCHASE AGREEMENT


 


August 14, 2007




 





 

















 


TABLE OF CONTENTS


 


	
  ARTICLE 1

  
	
  INTERPRETATION

  
	
   

  	
   

  
	
  1.1

  	
  Definitions

  	
  2

  
	
  1.2

  	
  Currency

  	
  13

  
	
  1.3

  	
  Interpretation Not Affected by Headings

  	
  13

  
	
  1.4

  	
  Statutory References

  	
  13

  
	
  1.5

  	
  Subsidiaries of IPC REIT

  	
  13

  
	
  1.6

  	
  Number and Gender

  	
  14

  
	
  1.7

  	
  Date for Any Action

  	
  14

  
	
  1.8

  	
  Accounting Matters

  	
  14

  
	
  1.9

  	
  Knowledge

  	
  14

  
	
  1.10

  	
  Entire Agreement

  	
  14

  
	
  1.11

  	
  Disclosure Letter

  	
  14

  
	
   

  	
   

  
	
  ARTICLE 2

  
	
  PURCHASE AND SALE

  
	
   

  	
   

  
	
  2.1

  	
  Purchase and Sale

  	
  15

  
	
  2.2

  	
  Closing Deliveries

  	
  15

  
	
  2.3

  	
  Location and Timing of Closing

  	
  16

  
	
  2.4

  	
  Unitholder Meeting

  	
  16

  
	
  2.5

  	
  Confidentiality Agreement

  	
  18

  
	
   

  	
   

  
	
  ARTICLE 3

  
	
  CONDITIONS TO
  CLOSING

  
	
   

  	
   

  
	
  3.1

  	
  Mutual Conditions Precedent

  	
  18

  
	
  3.2

  	
  Additional Conditions Precedent to the Obligations of Buyer and
  Parent

  	
  19

  
	
  3.3

  	
  Additional Conditions Precedent to the Obligations of the Sellers

  	
  20

  
	
   

  	
   

  
	
  ARTICLE 4

  
	
  REPRESENTATIONS AND
  WARRANTIES

  
	
   

  	
   

  
	
  4.1

  	
  Representations and Warranties of the Sellers

  	
  21

  
	
  4.2

  	
  Representations and Warranties of Parent and Buyer

  	
  40

  
	
  4.3

  	
  Survival of Representations and Warranties

  	
  41

  
	
   

  	
   

  
	
  ARTICLE 5

  
	
  COVENANTS OF IPC
  REIT

  
	
   

  	
   

  
	
  5.1

  	
  Conduct of Business

  	
  41

  
	
  5.2

  	
  Covenants Relating to the Transactions

  	
  46

  
	
  5.3

  	
  Plans

  	
  48

  
	
  5.4

  	
  Defeasance of Convertible Debentures

  	
  48

  
	
  5.5

  	
  Dissolution of IPC REIT

  	
  49

  



 


i

















 


	
  5.6

  	
  Treatment of Cash

  	
  50

  
	
  5.7

  	
  Financial Statements

  	
  50

  
	
  5.8

  	
  Covenants Relating to IPC US.

  	
  50

  
	
   

  	
   

  
	
  ARTICLE 6

  
	
  ACQUISITION
  PROPOSALS AND SUPERIOR PROPOSALS

  
	
   

  	
   

  
	
  6.1

  	
  No solicitation, etc.

  	
  50

  
	
  6.2

  	
  Go Shop Period

  	
  52

  
	
  6.3

  	
  Acquisition Proposals

  	
  52

  
	
  6.4

  	
  Access to Information

  	
  53

  
	
  6.5

  	
  Approval of Superior Proposal

  	
  53

  
	
  6.6

  	
  Right to Match

  	
  54

  
	
  6.7

  	
  Reaffirmation of Recommendation

  	
  54

  
	
  6.8

  	
  Amendments to Acquisition Proposals

  	
  54

  
	
  6.9

  	
  Compliance

  	
  55

  
	
   

  	
   

  
	
  ARTICLE 7

  
	
  COVENANTS OF
  BUYER

  
	
   

  	
   

  
	
  7.1

  	
  Covenants Relating to the Transactions

  	
  55

  
	
  7.2

  	
  Insurance and Indemnities

  	
  55

  
	
   

  	
   

  
	
  ARTICLE 8

  
	
  COVENANTS OF
  PRF AND BR

  
	
   

  	
   

  
	
  8.1

  	
  Covenants Relating to the Transactions

  	
  56

  
	
   

  	
   

  
	
  ARTICLE 9

  
	
  FURTHER
  ASSURANCES AND CONDITIONS

  
	
   

  	
   

  
	
  9.1

  	
  Satisfaction of Closing Conditions

  	
  56

  
	
   

  	
   

  
	
  ARTICLE 10

  
	
  TERM AND
  TERMINATION

  
	
   

  	
   

  
	
  10.1

  	
  Term

  	
  57

  
	
  10.2

  	
  Termination by Mutual Agreement

  	
  57

  
	
  10.3

  	
  Termination by IPC REIT

  	
  57

  
	
  10.4

  	
  Termination by Buyer

  	
  58

  
	
  10.5

  	
  Effect of Termination

  	
  59

  
	
   

  	
   

  
	
  ARTICLE 11

  
	
  TERMINATION
  FEE EVENT

  
	
   

  	
   

  
	
  11.1

  	
  Termination Fee Event

  	
  60

  
	
  11.2

  	
  Payment of Termination Fee and Termination Expenses

  	
  60

  
	
  11.3

  	
  Liquidated Damages

  	
  61

  
	
  11.4

  	
  Other Fees and Expenses

  	
  61

  



 


ii

















 


	
  ARTICLE 12

  
	
  GENERAL

  
	
   

  	
   

  
	
  12.1

  	
  Disclosure

  	
  62

  
	
  12.2

  	
  Guarantee

  	
  62

  
	
  12.3

  	
  Assignment

  	
  62

  
	
  12.4

  	
  Governing Law

  	
  62

  
	
  12.5

  	
  Amendments

  	
  63

  
	
  12.6

  	
  Waiver and Modification

  	
  63

  
	
  12.7

  	
  Severability

  	
  63

  
	
  12.8

  	
  Specific Performance and Other Relief

  	
  63

  
	
  12.9

  	
  Actions of IPC REIT on Behalf of Sellers

  	
  63

  
	
  12.10

  	
  Counterparts

  	
  64

  
	
  12.11

  	
  Time

  	
  64

  
	
  12.12

  	
  Notices

  	
  64

  
	
  12.13

  	
  Language

  	
  65

  
	
  12.14

  	
  Limited Liability

  	
  65

  



 


iii

















 


PURCHASE AGREEMENT


 


THIS AGREEMENT
made as of the 14th day of August,
2007,


 


BETWEEN:


 


BEHRINGER HARVARD REIT I, INC.,


a corporation organized under the laws of Maryland,


 


(hereinafter referred to as “Parent”),


 


- and -


 


EVERCLEAR ACQUISITION CORPORATION,


a corporation
organized under the laws of the Province of Ontario,


 


(hereinafter referred to as “Buyer”),


 


- and -


 


IPC US REAL ESTATE INVESTMENT TRUST,


a trust formed under the laws of the Province of Ontario,


 


(hereinafter referred to as “IPC REIT”),


 


- and -


 


PRF HOLDINGS INC.,


a corporation organized under the laws of the Province of Ontario,


 


(hereinafter referred to as “PRF”),


 


- and -


 


BARRY REICHMANN,


an individual resident in Toronto, Ontario,


 


(hereinafter referred to as “BR”).


 


WHEREAS IPC REIT, PRF and BR (collectively, the “Sellers”) wish to
sell, and Buyer wishes to acquire, the Purchased Shares, on and subject to the
terms and conditions set out in this Agreement;


 

















 


AND WHEREAS the board of trustees of IPC REIT (the “Board”) has
determined, after receiving financial and legal advice, that it would be
advisable and in the best interest of IPC REIT and the Unitholders for the
Board to support the Transactions and to recommend that the Unitholders vote
for the Unitholder Resolution at the Unitholder Meeting, all on and subject to
the terms and conditions set out in this Agreement;


 


NOW THEREFORE THIS AGREEMENT WITNESSES THAT, in consideration of the
premises and the respective covenants and agreements herein contained, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by each of the parties, the parties covenant and agree as
follows:


 


ARTICLE 1


INTERPRETATION


 


1.1                               Definitions.


 


In this
Agreement, unless there is something in the subject matter or context
inconsistent therewith, the following capitalized words and terms shall have
the following meanings:


 


“1716351” means 1716351 Ontario Inc., a corporation organized under the laws of the
Province of Ontario;


 


“2004  Debentures”
means the $40,000,000 initial aggregate principal amount of convertible
unsecured subordinated debentures of IPC REIT due November 30, 2014,  issued pursuant to the Indenture;


 


“2005  Debentures”
means the $60,000,000 initial aggregate principal amount of convertible unsecured
subordinated debentures of IPC REIT  due
September 30, 2012,  issued pursuant to the Indenture;


 


“Acquisition Proposal” means (a) any proposal or offer,
whether or not in writing, made after the date hereof by any Person other than
Buyer (or any Affiliate of or Person acting jointly or in concert with Buyer or
any Affiliate of Buyer) with respect to the acquisition, directly or
indirectly, of assets, securities or ownership interests of or in IPC REIT or
any of its Subsidiaries representing 20% or more of the consolidated assets of
IPC REIT and its Subsidiaries taken as a whole, in a single transaction or a
series of transactions, or of equity interests representing a 20% or greater
economic interest in IPC REIT or such Subsidiaries taken as a whole, in a single
transaction or a series of transactions, pursuant to any merger, amalgamation,
tender offer, share exchange, business combination, liquidation, dissolution,
recapitalization, take-over or non-exempt issuer bid, amendment to the
Declaration of Trust, redemption of units, extraordinary distribution, sale,
lease, exchange, mortgage, pledge, transfer, purchase or issuance as
consideration or similar transaction or series of transactions involving IPC
REIT or any of such Subsidiaries or any other transaction the consummation of
which would reasonably be expected to impede, interfere with, prevent or
materially delay the Transactions or (b) any public announcement after the date
hereof of an intention to do any of the foregoing from any


 


2

















 


Person other
than Buyer (or an Affiliate of a Person acting jointly or in concert with Buyer
or any Affiliate of Buyer);


 


“Affiliate” has the meaning ascribed thereto in National
Instrument 45-106 – Prospectus and Registration Exemptions;


 


“Agreement” means this purchase agreement, as the same may be
supplemented, amended or modified from time to time;


 


“Authorizations” means, with respect to any Person, any
order, permit, approval, consent, waiver, licence or similar authorization of
any Governmental Entity having jurisdiction over the Person or its business;


 


“Board” has the meaning ascribed thereto in the recitals to
this Agreement;


 


“Books and Records” means all books and records of IPC REIT
and its Subsidiaries, including financial, personnel, corporate, operations,
books of account, sales and purchase records, formulae, business reports, plans
and projections and all other documents, surveys, plans, files, records,
correspondence and other data and information, financial or otherwise including
all data stored on computer-related or other electronic media;


 


“BR Option Agreement” means the second amended and restated
option agreement dated September 30, 2005 between BR, IPC Realty, IPC US and
IPC (US) II, Inc.;


 


“Business Day” means any day other than a Saturday, Sunday, a
statutory or civic holiday observed in the Province of Ontario or New York
State or day that is observed as a religious holiday in accordance with the
practices of Orthodox Judaism;


 


“Canadian GAAP” means Canadian generally accepted accounting
principles as defined from time to time by the Accounting Standards Board of
the Canadian Institute of Chartered Accounts in the Handbook of the Canadian
Institute of Chartered Accountants;


 


“CFS” means the audited consolidated financial statements of
IPC REIT, including the notes thereto and the auditors report thereon, as at
and for the twelve month period ended December 31, 2006;


 


“Circular” means the notice of meeting and the accompanying
management information circular of IPC REIT to be sent to Unitholders in
connection with the Unitholder Meeting, as the same may be amended,
supplemented or otherwise modified subject to this Agreement;


 


“Closing” means the closing of the Transactions;


 


“Closing Date” has the meaning ascribed thereto in section
2.3;


 


“Code” means the United States Internal
Revenue Code of 1986, as amended;


 


3

















 


“Collective  Bargaining  Agreements” has the meaning ascribed thereto in section
4.1(r)(ii);


 


“Confidentiality Agreement” means the confidentiality
agreement dated February 5, 2007 between IPC REIT and Parent;


 


“Contract” means any agreement, contract, licence,
undertaking, engagement or commitment of any nature, written or oral;


 


“Data Room Information” means the documents and other
information concerning IPC REIT and its Subsidiaries made available to Buyer,
its Affiliates or their legal counsel or other advisors or consultants on or
before the date two Business Days prior to the date of this Agreement
consisting of: (a) documents available in a data room at the offices of, and on
an electronic data site maintained by, IPC REIT and IPC REIT’s legal counsel
and documents provided to Buyer and its advisors on compact discs (the indices
to such documents are annexed to a separate letter dated the date of this
Agreement and delivered by IPC REIT to Buyer); and (b) all Filed CSA Documents;


 


“Debentureholders” means the holders of outstanding
Debentures;


 


“Debentures” means, collectively, the 2004 Debentures and the
2005 Debentures;


 


“Declaration of Trust” means the amended and restated
declaration of trust of IPC REIT dated as of May 20, 2005, as the same may be
amended, supplemented or otherwise modified subject to this Agreement;


 


“Defeasance Amount” means the aggregate amount necessary to
defease the Debentures outstanding on the Closing Date in accordance with the
terms of the Indenture;


 


“Defeasance Loan” meaning ascribed thereto in section 5.4(c);


 


“Disclosure Letter” means the disclosure letter of IPC REIT
dated the date of this Agreement and delivered by IPC REIT to Buyer
concurrently herewith;


 


“Distribution Reinvestment Plan” means the Unitholder
distribution reinvestment plan established by IPC REIT;


 


“Employee Benefit Plan” means any “employee benefit plan” (as
such term is defined in ERISA section 3(3)) and any other similar material
employee benefit plan, program, policy, agreement or arrangement;


 


“Employee Pension Benefit Plan” has the meaning set forth in
ERISA section 3(2);


 


“Employee Plans” has the meaning ascribed thereto in section
4.1(s)(i);


 


“Employee Welfare Benefit Plan” has the meaning set forth in
ERISA section 3(1);


 


4

















 


“Environmental Laws” means all Laws relating to the
protection of the environment, including the soil, subsurface strata, sediment,
surface water or groundwater, relating to air, water or noise pollution or
relating to the protection of human health from exposure to Hazardous
Substances;


 


“Environmental Liabilities” means, with respect to any
Person, all liabilities, obligations, responsibilities, response, remedial and
removal costs, investigation costs, capital costs, operation and maintenance
costs, losses, damages, punitive damages, property damages, consequential damages,
treble damages, costs and expenses, fines, penalties and sanctions incurred as
a result of or related to any claim, suit, action, administrative order,
investigation, proceeding or demand by any Person, whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil statute
or common law, relating to any matter arising under or related to any
Environmental Laws or Environmental Permits, or in connection with any Release
or threatened Release or presence of a Hazardous Substance whether on, at, in,
under, from or about or in the vicinity of any real or personal property;


 


“Environmental Permits” means all permits, licenses, written
authorizations, certificates, approvals, program participation requirements or
registrations required by or available with or from any Governmental Entity
under any Environmental Laws;


 


“ERISA” means the Employee Retirement Income
Security Act of 1974, as amended;


 


“ERISA Affiliate” means, with respect to any Person, any
corporation, trade or business which, together with such person, is a member of
a controlled group of corporations or a group of trades or businesses under
common control within the meaning of Code Section 414;


 


“Excess Distribution Amount” means the amount of any
distribution or dividend declared on a Unit or IPC Realty Preferred Share, as
applicable, in excess of the Monthly Distribution;


 


“Filed CSA Documents” means any documents filed with the
Canadian Securities Administrators on or after January 1, 2007 to the date two
Business Days prior to the date hereof that are disclosed in full, without
redaction, under IPC REIT’s name on the System for Electronic Document Analysis
and Retrieval (SEDAR) website;


 


“Financial Statements” has the meaning ascribed thereto in
section 5.7;


 


“Foreclosure Property” means real property acquired directly
by foreclosure or deed in lieu thereof;


 


“Go Shop Period” has the meaning ascribed thereto in section
6.3;


 


“Governmental Entity” means any: (a) multinational, federal,
provincial, state, county, municipal, local or other governmental or public
department, central bank, court, commission, commissioner, tribunal, board,
bureau, agency, executive agency, ministry, department or instrumentality; (b)
any subdivision or authority of any of the foregoing; or


 


5

















 


(c) any
quasi-governmental, self-regulatory agency or organization or private body
exercising any regulatory, expropriation or taxing authority under or for the
account of the foregoing, including the Toronto Stock Exchange;


 


“Hazardous Substances” means: (a) regardless of whether
subject to the jurisdiction of a Governmental Entity, those substances defined
in or regulated under the following United States federal statutes and their
state counterparts and all regulations thereunder, including the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation
and Liability Act, the Clean Water Act,
the Safe Drinking Water Act, the Atomic Energy Act, the Clean Air Act,
the Oil Pollution Act and the Toxic Substances Control Act; (b) natural gas, petroleum and
petroleum products, including crude oil and any fractions thereof and waste
oil; (c) polychlorinated biphenyls, asbestos, asbestos-containing materials and
radon; (d) lead-based paints; and (e) any other pollutant, contaminant,
substance, material, waste or condition regulated by any Governmental Entity
pursuant to any Environmental Law;


 


“including”, “includes” and
similar expressions are not intended to be limiting and are deemed to be
followed by the expression “without limitation”;


 


“Income Tax” means any United States or Canadian federal,
state, provincial, county, municipal, local or foreign tax on income, net
income, profits or capital gains, including any interest, penalty or addition
thereto, whether disputed or not;


 


“Income Tax Return” means any return, declaration, report,
estimate, claim for refund, or information return or statement relating to
Income Taxes, including any schedule or attachment thereto, and including any
amendment thereof, filed or to be filed with any taxing authority;


 


“Indenture” means the trust indenture dated as of November
26, 2004 between IPC REIT and CIBC Mellon Trust Company, as amended by the
First Supplemental Indenture dated as of September 23, 2005, and as it may be
further amended, supplemented or otherwise modified subject to this Agreement;


 


“Investment Canada Act”  means the Investment Canada Act (Canada), as amended;


 


“IPC Realty” means IPC Realty Limited, a corporation organized under
the laws of the Province of Ontario;


 


“IPC Realty Preferred Shares” has the meaning ascribed
thereto in section 4.1(e);


 


“IPC Realty Purchase Price”
means an amount equal to the product of (i) 6,682,505 and (ii) the sum of (A)
$9.75 plus (B) any declared and unpaid cumulative dividends on an IPC Realty
Preferred Share (calculated in accordance with the Shareholders Agreement),
calculated in United States dollars, up to the Closing Date plus (C) $0.0667,
pro rated on the basis of the number of days (excluding the Closing Date) that
have passed in the month in which the Closing Date occurs;


 


6

















 


“IPC REIT Deferred Unit Plan” means the deferred unit
compensation plan of IPC REIT, implemented by IPC REIT as of November 30, 2003
and as amended and restated as of June 26, 2007, providing for the grant of
deferred units, as amended, supplemented or otherwise modified subject to this
Agreement;


 


“IPC REIT Option Plan” means the unit option plan of IPC
REIT, implemented by IPC REIT as of December 12, 2001 and as amended and
restated as of June 26, 2007, providing for the grant of options to acquire
Units, as amended, supplemented or otherwise modified subject to this
Agreement;


 


“IPC US” means IPC (US), Inc., a corporation organized under the laws of the State of
Delaware;


 


“IPC US Purchase Price” means an amount equal to (i) the sum
of (A) $187,500 plus (B) any declared and unpaid cumulative dividends on the
IPC US Special Shares, calculated in United States dollars, up to the Closing
Date, less (ii) any Taxes required to be withheld by Buyer on its purchase of
the IPC US Special Shares;


 


“IPC US Special Shares” has the meaning ascribed thereto in
section 4.1(e);


 


“KeyBank Facility” has the meaning ascribed thereto in the
Disclosure Letter;


 


“Laws” means all laws, including statutes, by-laws, rules,
regulations, orders, ordinances, directives and the terms and conditions of any
approvals, permits, licences, certificates, notices, decrees, directions,
requirements, or judgments, orders, awards or other Authorizations, of any
Governmental Entity, together with any enforceable published treaties,
protocols, guidelines or policies;


 


“Leased Properties” has the meaning ascribed thereto in the
Disclosure Letter;


 


“Leases” has the meaning ascribed thereto in the Disclosure
Letter;


 


“Liens” means any hypothecs, mortgages, liens, charges,
security interests, encumbrances and adverse claims;


 


“Matching Period” has the meaning ascribed thereto in section
6.5(e);


 


“Material Adverse Effect” means any change, effect, event,
development, occurrence or set of circumstances, individually or in the
aggregate, that: (a) is materially adverse or is reasonably likely to be
materially adverse to the business, affairs, results of operations, condition
(financial or otherwise) or assets of IPC REIT and its Subsidiaries, taken as a
whole; (b) would reasonably be expected to prevent or materially impair the
ability of IPC REIT from qualifying as a mutual fund trust for purposes of the
Tax Act or as a unit trust under paragraph 108(2)(a) of the Tax Act; or (c)
would reasonably be expected to cause IPC REIT or its Subsidiaries to become
subject to Tax under Part X11.2 of the Tax Act; provided, however, that any
change, effect, event, development, occurrence or set of circumstances relating
to:


 


7

















 


(i)       the U.S.
or Canadian economy, general political conditions or securities markets in
general, but only to the extent that the effects do not have a materially
disproportionate impact on IPC REIT and its Subsidiaries, taken as a whole, as
compared to other Persons who operate in the U.S. commercial real estate
industry in the relevant geographic areas;


 


(ii)      foreign
exchange (Canadian dollar relative to U.S. dollar) or interest rates;


 


(iii)     the U.S.
commercial real estate industry in general, but only to the extent that the
effects do not have a materially disproportionate impact on IPC REIT and its
Subsidiaries, taken as a whole, as compared to other Persons who operate in the
U.S. commercial real estate industry in the relevant geographic areas;


 


(iv)     the
announcement of the execution of this Agreement or the Transactions, the
performance of any obligation hereunder and the consummation of the Transactions;


 


(v)       a decrease
in the market price or any decline in the trading volume of Units on the
Toronto Stock Exchange (other than as a result of or in connection with any
event otherwise constituting a Material Adverse Effect);


 


(vi)     the
commencement, occurrence or continuation of any war, armed hostilities or acts
of terrorism, or any natural disaster, but only to the extent that the effects
do not have a materially disproportionate impact on IPC REIT and its
Subsidiaries, taken as a whole, as compared to other Persons who operate in the
U.S. commercial real estate industry in the relevant geographic areas; and


 


(vii)    any generally
applicable changes in (A) applicable Laws (other than Tax Laws or regulations
or the interpretation thereof, Buyer acknowledging the SIFT Proposals, and
other than decrees, judgments, orders or awards against IPC REIT or any of its
Subsidiaries), or (B) in Canadian GAAP or U.S. generally accepted accounting
principles,


 


shall be
deemed not to constitute a “Material Adverse Effect” and shall not be
considered in determining whether a “Material Adverse Effect” has occurred;


 


“Maximum Transaction Costs” means $20 million;


 


“Misrepresentation” has the meaning ascribed thereto in the
Securities Act;


 


“Monthly Distribution” means the regular monthly distribution
or dividend to Unitholders or PRF, as the case may be, of up to $0.0667 per
Unit or IPC Realty Preferred Share, as applicable, declared payable to holders
of Units of record on the last day of each month or PRF, as applicable, to be
paid on or about the 15th day following each month end;


 


8

















 


“NSULC” means IPC Realty Holdings Company, an unlimited liability company organized under
the laws of the Province of Nova Scotia;


 


“NSULC Common Shares” has the meaning ascribed thereto in
section 4.1(e);


 


“NSULC Preferred Shares” has the meaning ascribed thereto in
section 4.1(e);


 


“NSULC Purchase Price”
means an amount equal to (i) the sum of the Defeasance Amount plus (ii) the
“cashless” exercise price for all of the outstanding Options under the IPC REIT
Option Plan plus (iii) the product of (A) the number of Units and Options under
the IPC REIT Deferred Unit Plan outstanding on the Closing Date and (B) the sum
of (I) $9.75 plus (II) any declared and unpaid regular distributions on a Unit,
calculated in United States dollars, up to the Closing Date plus (III) $0.0667,
pro rated on the basis of the number of days (excluding the Closing Date) that
have passed in the month in which the Closing Date occurs;


 


“Options” means any existing rights or options to purchase or
receive Units outstanding under the IPC REIT Option Plan or the IPC REIT
Deferred Unit Plan;


 


“Outside Date” means December 31, 2007 or such later date as
may be agreed by the parties in writing;


 


“Owned Properties” has the meaning ascribed thereto in the
Disclosure Letter;


 


“Permitted Encumbrances” has the meaning ascribed thereto in
the Disclosure Letter except that, when used with respect to the securities of
any Subsidiary, shall mean only the security granted with respect to the
KeyBank Facility;


 


“Person” includes any individual, partnership, limited
partnership, joint venture, venture capital fund, limited liability company,
unlimited liability company, association, trust, trustee, executor,
administrator, legal personal representative, estate, group, body corporate,
corporation, unincorporated association or organization, Governmental Entity,
syndicate or other entity, whether or not having legal status;


 


“Prohibited Income” has the meaning ascribed thereto in
section 4.1(t)(xxvi);


 


“Purchased Shares” means: (a) the NSULC Common Shares owned
by IPC REIT; (b) the IPC Realty Preferred Shares owned by PRF; and (c) the IPC
US Special Shares owned by BR;


 


“Real Estate Assets” means real property (including fee
ownership, co-ownership, leaseholds and options to acquire such interests),
mortgages on such property and shares in another REIT;


 


“Regulatory Approvals” means, in relation to the consummation
of the Transactions, the approval, deemed approval, consent, clearance, ruling,
order or exemption (including the lapse, without objection, of a prescribed
time under any applicable law that states that a transaction may be implemented
if a prescribed time lapses following the giving of notice


 


9

















 


without
objection being made), by the applicable Minister on terms satisfactory to
Buyer, acting reasonably, pursuant to the Investment Canada Act or as otherwise
required by any other Governmental Entity, including but not limited to the
Ontario Securities Commission and the Toronto Stock Exchange;


 


“REIT” means a real estate investment trust;


 


“Release” means any release, spill, emission, leaking,
pumping, pouring, emitting, emptying, escape, injection, deposit, disposal,
discharge, dispersal, dumping, leaching or migration of Hazardous Substance in
the indoor or outdoor environment, including the movement of Hazardous
Substance through or in the air, soil, surface water, ground water or property;


 


“REMIC” has the meaning ascribed thereto in section
4.1(t)(xxvii);


 


“Rents From Real Property” means income from the rental of
real property, including for this purpose both amounts paid with respect to a
lease of personal property under or in connection with a lease of real property
and charges for services customarily furnished or rendered in connection with
the rental of real property (whether or not such charges are separately
stated), but excluding for such purposes any income derived from the provision of
services, any amounts that depend in whole or in part on income or profits
derived by any tenant (or sub-tenant) from such property (except that such
amounts may be based on a fixed percentage or percentages of receipts or
sales), and any rent received or accrued directly or indirectly from any
Related Party Tenant;


 


“Related Party Tenant”
means a Person in which IPC US owns or owned (with such ownership determined by
taking into account the applicable attribution rules) at any time during a
particular taxable year with respect to which the representation is made (a) in
the case of a corporation, ten percent or more of the total combined voting
power of all classes of shares entitled to vote, or ten percent or more of the
total value of shares of all classes of shares or (b) in the case of an entity
other than a corporation, an interest of ten percent or more in the capital or
profits of such entity;


 


“Required Contractual
Consents” means (a) all consents, waivers, approvals or
authorizations from, or declarations, filings or notices to, other parties
(other than IPC REIT or any of its Subsidiaries) to material Contracts to which
IPC REIT or any of its Subsidiaries is a party or by which any of them is
obligated or bound (including any option rights, rights of first refusal or
rights of first opportunity which would result in any Person, other than Buyer
or any Affiliate thereof, acquiring an interest in any of the Owned Properties
or Leased Properties, or any Subsidiary of IPC REIT) which consents, waivers, etcetera by the terms of any such material Contract are
necessary for the consummation of the Transactions or which, if not obtained,
would result in a material breach of, or constitute a material default by IPC
REIT or any of its Subsidiaries under, or result in any termination,
cancellation or acceleration of contractual commitments or obligations under,
such material Contract and (b) all consents, waivers, approvals or
authorizations of, or declarations, filings or notices to, any Person (other
than IPC REIT or any of its Subsidiaries) to which IPC REIT or any of its
Subsidiaries is indebted


 


10

















 


(excluding the KeyBank Facility and any
existing mortgages that Buyer has expressed in writing to IPC REIT in accordance
with section 7.1(c) that Buyer intends to prepay or defease at or prior to
Closing) which by the terms and conditions of such indebtedness or security
therefor are necessary for the consummation of the Transactions or the failure
of which to obtain would result in any right to material payment, make whole or
yield maintenance payment or any right of termination, cancellation or
acceleration of such indebtedness;


 


“Securities Act”
means the Securities Act (Ontario), as amended;


 


“Securities Laws”
means the Securities Act and all other applicable Canadian securities Laws and
the rules and published policies of the Toronto Stock Exchange;


 


“Sellers” has
the meaning ascribed thereto in the recitals to this Agreement;


 


“Service” means
the U.S. Internal Revenue Service;


 


“Shareholders Agreement”
means the amended and restated shareholders agreement dated July 7, 2005
between IPC REIT, NSULC, PRF and IPC Realty, as it may be further amended,
supplemented or otherwise modified subject to this Agreement;


 


“SIFT Proposals”
means the changes to the taxation of publicly traded trusts announced on
October 31, 2006 by the Minister of Finance (Canada) and incorporated in the
draft legislation dated December 21, 2006 and Notice of Ways and Means Motion
dated March 27, 2007;


 


“Subsidiary”
means a “subsidiary” as defined in National Instrument 45-106 – Prospectus and
Registration Exemptions and, with respect to IPC REIT and/or NSULC, also means
IPC Realty, IPC US and any member of IPC US’s “affiliated group” (as defined in
section 1504 of the Code);


 


“Superior Proposal”
means any unsolicited written Acquisition Proposal (including an Unsolicited
Acquisition Proposal) made by any Person after the date hereof that in the good
faith determination of the Board, after consultation with its financial
advisors and with its outside legal counsel:


 


(a)                                  is
reasonably capable of being completed without undue delay having regard to
financial, legal, regulatory and other matters;


 


(b)                                 in
respect of which adequate arrangements have been made to ensure that the
required funds will be available to effect payment in full of the
consideration;


 


(c)                                  is
not subject to any due diligence conditions or any conditions regarding
shareholder, board or other corporate approval or authority; and


 


(d)                                 would,
if consummated in accordance with its terms, result in a transaction more
favourable to Unitholders, taken as a whole after consideration of financial
and other terms, than the Transactions,


 


11

















 


provided, however, that for purposes of this
definition the references in the definition of Acquisition Proposal to “20% or
more” or “20% or greater” shall be deemed to be references to “100%”;


 


“Tax” or “Taxes” means any United States or Canadian, federal, provincial,
state, county, municipal, local or other income, gross receipts, license,
payroll, employer health tax, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar) unemployment, disability, real property, personal
property, sales, use, ad valorem, withholding, transfer, registration, value
added, goods and services, alternative or add-on minimum, estimated, or other
taxes, fees, assessments or similar charges in the nature of a tax including
Canada Pension Plan, federal, provincial, or state pension plan contributions,
employment insurance premiums or other taxes, of any kind whatsoever, including
any interest, fine, penalty, or addition thereto, whether disputed or not, and
all amounts payable pursuant to any agreement or arrangement with respect to
Taxes;


 


“Tax Act” means
the Income Tax Act (Canada), as amended;


 


“Tax Return”
means any return, declaration, report, estimate, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof, filed with any taxing
authority;


 


“Tenant Leases”
means all leases, agreements to lease and licences in respect of the Owned
Properties and Leased Properties, including all offers to lease and monthly
tenancies and all other agreements in any way relating to the occupation of the
Owned Properties and Leased Properties by tenants thereof;


 


“Termination Expenses”
has the meaning ascribed thereto in section 11.2(b);


 


“Termination Fee”
means a fee equal to (i) from the date hereof to and including September 30,
2007, $6 million and (ii) from October 1, 2007 onwards, $12 million;


 


“Termination Fee Event”
has the meaning ascribed thereto in section 11.1;


 


“Transaction Costs”
means the following costs, expenses and fees of IPC REIT or its Subsidiaries to
be incurred or paid in connection with, or incidental to, the Transactions: (i)
all legal fees, accounting fees, financial advisory fees, regulatory filing
fees, stock exchange fees and disbursements of advisors to IPC REIT or its
Subsidiaries; (ii) all fees, costs or other expenses incurred (A) as a result
of compliance with section 5.5 and the wind-up and dissolution of IPC REIT and
section 7.2(a) and the liability insurance for the trustees, directors and
officers of IPC REIT and its Subsidiaries, and (B) in connection with
preparing, printing and mailing the Circular and convening and holding the
Unitholder Meeting; (iii) all change of control, severance or retention
payments as set forth in section 4.1(z) of the Disclosure Letter; and (iv) all
other fees, costs and expenses set forth in section 4.1(z) of the Disclosure Letter;


 


12

















 


“Transactions”
means the purchase and sale of the Purchased Shares and all other transactions
contemplated herein;


 


“Trust Amendment”
means the amendment to the Declaration of Trust pursuant to the terms of the
Unitholder Resolution;


 


“Units” means
the trust units of IPC REIT;


 


“Unitholder Approval”
has the meaning ascribed thereto in section 3.1(a);


 


“Unitholder Meeting”
means the special meeting of Unitholders (including any adjournments or
postponements thereof) to be called and held to consider and, if deemed
advisable, approve the Unitholder Resolution;


 


“Unitholder Resolution”
means a Special Resolution (as defined in the Declaration of Trust) of the
Unitholders approving the Transactions and amendments to the Declaration of
Trust, such resolution to be in form and substance satisfactory to IPC REIT and
Buyer, acting reasonably;


 


“Unitholders”
means the holders of Units; and


 


“Unsolicited Acquisition
Proposal” has the meaning ascribed thereto in section 6.1(c).


 


1.2                               Currency.


 


Unless
otherwise indicated, all sums of money referred to in this Agreement shall mean
United States dollars.


 


1.3                               Interpretation
Not Affected by Headings.


 


The division
of this Agreement into Articles, sections and clauses and the insertion of
headings are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement. Unless otherwise indicated,
all references to an “Article”, “section” or “clause” followed by a number and
or letter refer to the specified Article, section or clause of this Agreement.
The terms, this “Agreement”, “hereof”, “herein” and “hereunder” and similar
expressions refer to this Agreement (including any particular Article, section
or clause).


 


1.4                               Statutory
References.


 


A reference to
a statute includes all rules and regulations made pursuant to such statute and,
unless otherwise specified, the provisions of any statute or regulation or rule
which amends, supplements or supersedes any such statute or any such regulation
or rule.


 


1.5                               Subsidiaries
of IPC REIT.


 


To the extent
any covenants or agreements contained herein relate, directly or indirectly, to
a Subsidiary of IPC REIT, each such provision shall be construed as a covenant
by


 


13

















 


IPC REIT to cause (to the
fullest extent to which it is legally capable) such Subsidiary to perform the
required action.


 


1.6                               Number
and Gender.


 


In this
Agreement, unless the contrary intention appears, words importing the singular
include the plural and vice versa, and
words importing gender include all genders.


 


1.7                               Date
for Any Action.


 


Unless
otherwise specified, time periods within or following which any payment is to
be made or any act is to be done shall be calculated by excluding the day on
which the period commences and including the day on which the period ends and
by extending the period to the next Business Day following if the last day of
the period is not a Business Day.


 


1.8                               Accounting
Matters.


 


Unless
otherwise stated, all accounting terms used in this Agreement shall have the
meanings attributable thereto under Canadian GAAP and all determinations of an
accounting nature in respect of IPC REIT required to be made shall be made in a
manner consistent with Canadian GAAP, consistently applied.


 


1.9                               Knowledge.


 


Where any
representation or warranty contained in this Agreement is expressly qualified
by reference to the knowledge of IPC REIT, it shall be deemed to refer to the
actual knowledge, after reasonable enquiry, as applicable, of Gary Goodman, President and Chief Executive Officer of IPC
REIT, David Dinniwell, Chief Financial Officer of IPC REIT, Elisabeth Wigmore,
Chief Operating Officer of IPC REIT, Y. Dov Meyer, Chief Investment Officer of
IPC REIT and Bruce Wibbels, President of IPC US.


 


1.10                        Entire
Agreement.


 


This
Agreement, the agreements and other documents referred to herein and the
Confidentiality Agreement which, subject to section 2.5, shall remain in full
force and effect, constitute the entire agreement between the parties hereto
pertaining to the Transactions and ancillary arrangements and supersede all
other prior agreements, understandings, negotiations and discussions, whether
oral or written, between the parties hereto with respect to the terms of the
Transactions and the other transactions contemplated herein. Except as
expressly represented and warranted herein, no party shall be considered to
have given any other express or implied representations or warranties,
including without limitation as a result of oral or written statements.


 


1.11                        Disclosure
Letter.


 


Contemporaneously
with the execution and delivery of this Agreement, IPC REIT is delivering to
Buyer the Disclosure Letter required to be delivered pursuant to this Agreement
in order to qualify certain representations, warranties and covenants of IPC
REIT contained in


 


14

















 


this Agreement. For greater
clarity, each reference in a section of this Agreement to the Disclosure Letter
should be deemed to refer to the corresponding schedule of the Disclosure
Letter and any disclosure in the Disclosure Letter that is disclosed in such a
way as to make its relevance or applicability to information called for by
another section of this Agreement reasonably apparent shall be deemed to be
disclosed with respect to such other representation, warranty or covenant
whether or not the particular disclosure references a particular
representation, warranty or covenant.


 


ARTICLE 2


PURCHASE AND SALE


 


2.1                               Purchase
and Sale.


 


(a)           Subject
to the terms and conditions of this Agreement, including for certainty section
11.4, on the Closing Date, and provided that the transactions referred to in
this section 2.1 shall occur substantially simultaneously:


 


(i)            Buyer
shall purchase from IPC REIT and IPC REIT shall sell, transfer and assign to
Buyer the NSULC Common Shares free and clear of Liens for the NSULC Purchase
Price;


 


(ii)           Buyer
shall purchase from PRF and PRF shall sell, transfer and assign to Buyer the
IPC Realty Preferred Shares free and clear of Liens for the IPC Realty Purchase
Price; and


 


(iii)          Buyer
shall purchase from BR and BR shall sell, transfer and assign to Buyer the IPC
US Special Shares free and clear of Liens for the IPC US Purchase Price.


 


Buyer shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement in respect of the Purchased Shares
such amounts as it is required to deduct and withhold with respect to the
making of such payment under any Tax Law, and the rules and regulations
promulgated thereunder. To the extent that amounts are so withheld by Buyer,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder in respect of which such deduction and withholding
was made by Buyer.


 


(b)           On the
Closing Date, IPC REIT shall, as expressly permitted by sections 5.4 and 11.4,
pay for and/or reserve against any unpaid Transaction Costs as of the Closing
Date and provide to Buyer evidence of any such payments or reserves.


 


2.2                               Closing
Deliveries.


 


At the
Closing:


 


(a)           (i)
IPC REIT shall deliver to Buyer (A) certificates with executed blank transfer
powers representing the NSULC Common Shares, (B) the officers’ certificates
referred to in sections 3.2(a)(i) and (ii) and (C) documents contemplated in


 


15

















 


section
2.1(b); and (ii) Buyer shall deliver to IPC REIT (A) the NSULC Purchase Price
in immediately available funds by wire transfer to one or more accounts
designated by IPC REIT and (B) the officers’ certificates referred to in
sections 3.3(a)(i) and (ii);


 


(b)           (i)
PRF shall deliver to Buyer (A) certificates with executed blank transfer powers
representing the IPC Realty Preferred Shares and (B) the officers’ certificates
referred to in sections 3.2(a)(i) and (ii); and (ii) Buyer shall deliver to PRF
(A) the IPC Realty Purchase Price in immediately available funds by wire transfer to one or more accounts designated by PRF
and (B) the officers’ certificates referred to in sections 3.3(a)(i) and (ii);
and


 


(c)           (i)
BR shall deliver to Buyer (A) certificates with executed blank transfer powers
representing the IPC US Special Shares and (B) the certificate referred to in
sections 3.2(a)(i) and (ii); and (ii) Buyer shall deliver to BR (A) the IPC US
Purchase Price in immediately available funds
by wire transfer to one or more accounts designated by BR and (B) the officers’
certificates referred to in sections 3.3(a)(i) and (ii).


 


2.3                               Location
and Timing of Closing.


 


The Closing will
be held as soon as practicable and in any event no later than the fifth
Business Day after the satisfaction or waiver (subject to applicable Laws) of
the conditions (excluding conditions that, by their terms, are to be satisfied
on the Closing Date, but subject to the satisfaction or, where permitted, the
waiver of those conditions as of the Closing Date) set forth in Article 3,
and, subject to obtaining the Required Contractual Consents and the Regulatory
Approvals, is expected to be held on or before 10:00 a.m. (Toronto time) on October 31, 2007 or such other time or date
as is agreed to in writing by the parties (the “Closing Date”). The Closing
will take place at the offices of Davies Ward Phillips & Vineberg LLP, 1
First Canadian Place, 100 King Street West, Suite 4400, Toronto, Ontario, M5X
1B1, on the Closing Date unless another place is agreed to in writing by the
parties.


 


2.4                               Unitholder
Meeting.


 


(a)           IPC
REIT hereby represents that its Board: 
(i) has validly approved this Agreement and the Transactions; (ii) has,
following consultation with its financial and outside advisors, determined that
the consideration per Unit to be received by Unitholders upon the redemption of
the Units as a result of the Transactions is fair to, and in the best interests
of, IPC REIT and its Unitholders; and (iii) has resolved to recommend that
Unitholders vote for the Unitholder Resolution at the Unitholder Meeting. As at
the date hereof, the resolutions of the Board taking the foregoing actions have
not been modified, supplemented or rescinded and remain in full force and
effect.


 


(b)           As
promptly as reasonably practicable after the execution and delivery of this
Agreement, IPC REIT shall, in consultation with Buyer, (i) establish a record
date for voting and notice, duly call, give notice of, convene and hold the
Unitholder Meeting on or before October 19, 2007, and (ii) prepare the Circular,
together with any other documents required by


 


16

















 


the Declaration of Trust and applicable Laws
in connection with the Unitholder Meeting, and provide Buyer with an
opportunity to review and comment on drafts of such documents, which comments
IPC REIT will reasonably consider (provided that whether any such comments are
included in such documents will be at the sole discretion of IPC REIT). The
Circular shall include (among other things) the recommendation of the Board as
described in section 2.4(a) and the opinions described in section 2.4(h), and
shall otherwise be in form and substance satisfactory to Buyer and its
advisors, acting reasonably. As promptly as practicable after the execution and
delivery of this Agreement, and in any event by September 11, 2007,
IPC REIT will file the Circular and any other documentation required to be
filed under applicable Laws in all jurisdictions where the Circular is required
to be filed by IPC REIT and mail or cause to be mailed the Circular and any
other documentation required to be mailed under the Declaration of Trust or
applicable Laws in connection with the Unitholder Meeting to each Unitholder,
Debentureholder, holder of Options and each other Person to whom such documents
are required to be sent under applicable Laws and the Declaration of Trust.
Buyer will provide such assistance as IPC REIT may reasonably request in such
regard.


 


(c)           Each
of Buyer and IPC REIT shall proceed diligently, in a coordinated fashion, and
shall use commercially reasonable efforts to cooperate in the preparation of
the Circular as described in section 2.4(b), and of any exemptive relief
applications or orders and any other documents deemed reasonably necessary by
any of them to discharge their respective obligations under applicable Laws.


 


(d)           Each
of Buyer and IPC REIT shall furnish to each other, on a timely basis, all
information as may be reasonably required to effectuate the foregoing actions,
and each covenants that no information so furnished by it in writing in
connection with those actions will contain any Misrepresentation. Each of the
parties shall ensure that the information relating to it and its Subsidiaries
which is provided in the Circular does not contain any Misrepresentation. If a
party becomes aware that the Circular contains a Misrepresentation or otherwise
requires an amendment or supplement, such party shall promptly notify the other
parties and each of Buyer and IPC REIT shall cooperate in the preparation and
distribution of an amendment or supplement to the Circular that corrects the
Misrepresentation.


 


(e)           IPC
REIT shall ensure that the Circular complies with all applicable Laws and,
without limiting the generality of the foregoing, that the Circular does not
contain a Misrepresentation (except that this covenant does not speak with
respect to any information relating to and provided by Parent and Buyer in
writing) and provides the Unitholders with information in sufficient detail to
permit them to form a reasoned judgement concerning the matters to be placed
before them at the Unitholder Meeting.


 


(f)            IPC
REIT shall deliver to, or cause to be delivered to, Buyer: (i) promptly upon
written request being made in proper form, and in any event within five
Business Days following the receipt of such request, (A) a current list of all
registered holders of Options showing the name of each holder and the number of
Options held by each such holder, the weighted average exercise price of such
holder’s Options and the weighted average exercise price of all outstanding
Options and (B) a current list of participants in book-based clearing systems,
nominee registered Unitholders or Debentureholders, as the case may be, such as
CDS&Co., and non-registered beneficial owners lists, and securities
positions and other information and assistance as Buyer


 


17

















 


may reasonably request in connection with the
consummation of the Transactions; and (ii) from time to time, at the request of
Buyer, acting reasonably, updated or supplemental lists setting out any changes
from the lists referred to in clause (i) above.


 


(g)           Subject
to section 6.4, IPC REIT shall not adjourn, postpone or cancel (or propose for
adjournment, postponement or cancellation) the Unitholder Meeting without
Buyer’s prior written consent except as required by applicable Laws (other than
applicable Laws governing fiduciary duties which the parties agree are
otherwise addressed in this Agreement). IPC REIT shall keep Buyer updated with
respect to proxy solicitation results as reasonably requested by Buyer.


 


(h)           IPC
REIT represents that it has obtained opinions from its financial advisors, RBC
Dominion Securities Inc. and Banc of America Securities Canada Co. that, as of
the date hereof, the consideration to be received by Unitholders upon the
redemption of the Units as a result of the Transactions is fair from a
financial point of view, which opinions will be included in the Circular. The
foregoing opinions have not been modified, supplemented or rescinded prior to
the date of this Agreement.


 


(i)            IPC
REIT represents that the Board has been advised and believe that each of the
trustees and senior officers of IPC REIT intends to vote, or cause to be voted,
all Units of which he or she is the beneficial owner in favour of the
Unitholder Resolution.


 


2.5                               Confidentiality
Agreement.


 


Each of Parent
and Buyer acknowledges and agrees that it is bound by the terms of the
Confidentiality Agreement as is if it was an original party thereto. IPC REIT
hereby waives the provisions contained in the Confidentiality Agreement with
respect to the Parent and its Affiliates solely for the purpose of the
Transactions (and for no other purpose) and to permit Parent and Buyer to
comply with their obligations or enforce their rights under this Agreement, and
each of Parent and Buyer hereby confirms that it will be bound by the terms of the
Confidentiality Agreement in accordance with the terms thereof, except to the
extent modified by this Agreement. Each of Parent and Buyer will remain bound
by the terms of the Confidentiality Agreement in accordance with the terms
thereof should this Agreement be terminated for any reason whatsoever.
Notwithstanding the foregoing, (i) all of the obligations of Parent and Buyer
under the Confidentiality Agreement will terminate on Closing; and (ii) all of
the obligations of IPC REIT under the Confidentiality Agreement will survive
Closing. The provision of this section 2.5 shall survive the termination of
this Agreement.


 


ARTICLE 3


CONDITIONS TO CLOSING


 


3.1                               Mutual
Conditions Precedent.


 


The respective
obligations of the parties to complete the Transactions shall be subject to the
satisfaction of the following conditions precedent (any of which may only be
waived in writing by the mutual consent of Buyer and IPC REIT, for itself and
on behalf of the other Sellers):


 


18
















 


(a)           the Unitholder
Resolution shall have been approved at the Unitholder Meeting by at least 662/3
of the votes cast by the Unitholders who are represented in person or by proxy
at the Unitholder Meeting (the “Unitholder Approval”);


 


(b)           there shall not exist
any prohibition at Law, including a cease trade order, injunction or other
prohibition or order at Law, against Buyer or the Sellers which shall restrain,
enjoin or otherwise prevent the consummation of the Transactions, or which
shall cause any of the Transactions to be rescinded following consummation, and
no Governmental Entity shall have proposed, enacted, promulgated or entered
into any Law, or amended any existing Law, which has the effect of making the
Transactions illegal or otherwise preventing their completion;


 


(c)           the Regulatory
Approvals shall have been obtained on terms and conditions that do not
adversely affect Buyer and its Affiliates, taken as a whole, in any material
respect; and


 


(d)           this Agreement shall
not have been terminated pursuant to Article 10.


 


3.2                               Additional
Conditions Precedent to the Obligations of Buyer and Parent.


 


(a)                                  The obligations of Buyer and Parent to complete the Transactions
shall also be subject to the fulfilment of each of the following conditions
precedent (each of which is for Buyer’s and Parent’s exclusive benefit and may
only be waived in writing by Buyer):


 


(i)        all covenants and agreements
of the Sellers under this Agreement to be performed or complied with on or
before the Closing Date shall have been duly performed or complied with all
material respects, and Buyer shall have received a certificate of each of the
Sellers addressed to Buyer and dated the Closing Date, signed on behalf of IPC
REIT and PRF respectively by two senior executive officers of IPC REIT or PRF,
as the case may be (on IPC REIT’s or PRF’s behalf and without personal
liability), confirming the same as at the Closing Date;


 


(ii)       (A) the representations and
warranties of IPC REIT that are qualified by references to materiality or
Material Adverse Effect and the representations and warranties of PRF and BR in
sections 4.1(b), (c), (e) and (f) shall be true and correct; and (B) the
representations and warranties of the Sellers not so qualified shall be true
and correct in all material respects, in each case, as of the Closing Date as
if made on and as of such time (except to the extent such representations and
warranties speak solely as of an earlier date, in which event such
representations and warranties shall be true and correct to such extent as of
such earlier date); and Buyer shall have received a certificate of each of the
Sellers addressed to Buyer and dated the Closing Date, signed on behalf of IPC
REIT and PRF respectively by two senior executive officers of IPC REIT or PRF,
as the


 


19

















 


case may be,
(on IPC REIT’s or PRF’s behalf and without personal liability), confirming the
foregoing as at the Closing Date;


 


(iii)      following the date hereof, there
shall not have occurred any Material Adverse Effect and Buyer shall have
received a certificate of IPC REIT addressed to Buyer and dated the Closing
Date, signed on behalf of IPC REIT by two senior executive officers of IPC REIT
(on IPC REIT’s behalf and without personal liability), confirming the foregoing
as at the Closing Date;


 


(iv)      the Required Contractual
Consents (which, for greater certainty, shall exclude consents required under
existing mortgages that Buyer has expressed in writing to IPC REIT pursuant to
section 7.1(c) that Buyer intends to prepay or defease) shall have been
obtained on or before the Closing Date on terms acceptable to Buyer acting
reasonably;


 


(v)       the BR Option Agreement and
Shareholders’ Agreement shall have been terminated without cost to any party to
such agreements beyond amounts accrued to the date of the termination in the
ordinary course and consistent with past practice;


 


(vi)      the NSULC Preferred Shares shall
have been cancelled, redeemed or otherwise dealt with on the terms set out in
the Disclosure Letter; and


 


(vii)     the Financial Statements shall
have been delivered to Buyer.


 


(b)                                 Buyer may not rely on the failure to satisfy any of the conditions
precedent in sections 3.1 or 3.2 if the condition precedent was not satisfied
solely as a result of a default by Buyer in complying with its obligations
under this Agreement.


 


3.3                               Additional
Conditions Precedent to the Obligations of the Sellers.


 


(a)                                  The obligations of each of the Sellers to complete the Transactions
shall also be subject to the following conditions precedent (each of which is
for the exclusive benefit of the Sellers and may only be waived in writing by
IPC REIT, for itself and on behalf of PRF and BR):


 


(i)                         all covenants and agreements of Buyer under this Agreement to be
performed or complied with on or before the Closing Date shall have been duly
performed or complied with by Buyer in all material respects, and the Sellers
shall have received a certificate of Buyer addressed to the Sellers and dated
the Closing Date, signed on behalf of Buyer by two senior executive officers of
Buyer (on Buyer’s behalf and without personal liability), confirming the same
as at the Closing Date; and


 


(ii)                      (A) the representations and warranties of Buyer that are qualified
by references to materiality or Material Adverse Effect shall be true and
correct; and (B) the representations and warranties of Buyer not so


 


20

















 


qualified
shall be true and correct in all material respects, in each case as of the
Closing Date as if made on and as of such time (except to the extent such
representations and warranties speak solely as of an earlier date, in which
event such representations and warranties shall be true and correct to such
extent as of such earlier date); and the Sellers shall have received a
certificate of Buyer addressed to the Sellers and dated the Closing Date,
signed on behalf of Buyer by two senior executive officers of Buyer (on Buyer’s
behalf and without personal liability), confirming the same as at the Closing Date.


 


(b)                                 the Sellers may not rely on the failure to satisfy any of the
conditions precedents in sections 3.1 or 3.3 if the condition precedent was not
satisfied solely as a result of a default by IPC REIT, PRF or BR in complying
with its obligations in this Agreement.


 


ARTICLE 4


REPRESENTATIONS AND WARRANTIES


 


4.1                               Representations
and Warranties of the Sellers.


 


The Sellers
(but as to PRF and BR only to the limited extent that they respectively give
representations and warranties in sections 4.1(b), (c), (e) and (f)) hereby
represent and warrant that, except as disclosed in the Disclosure Letter and
the Filed CSA Documents:


 


(a)           Organization,
Standing and Corporate Power. IPC REIT and each of its Subsidiaries has
been duly formed or incorporated, as the case may be, under applicable Law, is
validly existing and in good standing under the laws of the jurisdiction of its
organization and has the requisite power or similar power and authority to own,
lease and operate its properties and assets and conduct its business as
currently owned and conducted. IPC REIT and each of its Subsidiaries are duly
qualified or licensed to do business and are in good standing in each
jurisdiction in which the nature of their business or the ownership or leasing
of their properties makes such qualification or licensing necessary, except in
such jurisdictions where the failure to be so duly qualified or licensed and in
good standing would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect. IPC REIT has made available to
Buyer complete and correct copies of its Declaration of Trust and the
organizational documents of each of IPC REIT’s Subsidiaries. The Declaration of
Trust and the organizational documents of each of IPC REIT’s Subsidiaries are
in full force and effect and no dissolution, revocation or forfeiture
proceeding regarding IPC REIT or any of its Subsidiaries has been commenced.
Neither IPC REIT nor any of its Subsidiaries is in material violation of any of
the provisions of its Declaration of Trust or organizational documents, as the
case may be.


 


(b)           Authority; No
Conflict. Each of IPC REIT and PRF has the requisite trust or corporate
power and authority to enter into this Agreement and to perform its obligations
hereunder. BR has the capacity to enter into this Agreement and to perform his
obligations hereunder. The execution, delivery and performance of


 


21

















 


this Agreement
by each of IPC REIT and PRF and the consummation by each of IPC REIT and PRF of
the Transactions have been duly authorized by the Board and by the board of
directors of PRF, respectively, and no other proceedings on the part of IPC
REIT or PRF are necessary to authorize this Agreement or the Transactions,
other than: (i) with respect to the Circular and other documents relating
thereto, the approval of the Board; and (ii) Unitholder Approval. This
Agreement has been duly executed and delivered by each of the Sellers and
constitutes a valid and binding obligation of, and enforceable against, each of
them in accordance with its terms subject to the usual exceptions as to
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium and
other laws relating to or affecting creditors’ rights and the availability of
equitable remedies. The execution and delivery by each of the Sellers of this
Agreement, the performance by each of them of their respective obligations
hereunder and the completion of the Transactions will not result directly or
indirectly (with or without notice, the passage of time or both) in a
violation, default or breach by any of them of, require any consent to be
obtained or filing to be made by any of the Sellers under, or constitute a
default under any provision of, conflict with, or give rise to any termination,
cancellation or acceleration rights or other materially adverse consequence
under any provision of, or result in the creation of a material Lien upon any
of the properties or assets of IPC REIT or any of its Subsidiaries, under:


 


(i)        the Declaration of Trust, on
the assumption however that the Unitholder Approval is obtained, or constating
documents of PRF or the organizational documents of any Subsidiary of IPC REIT;


 


(ii)       any Law applicable to any of
IPC REIT or its Subsidiaries, PRF or BR, on the assumption however that the
Regulatory Approvals disclosed in the Disclosure Letter are obtained; or


 


(iii)      any material Contract,
agreement, license, franchise or permit by which IPC REIT or its Subsidiaries,
PRF or BR is bound or is subject or is the beneficiary, on the assumption
however that the Required Contractual Consents disclosed in the Disclosure
Letter are obtained.


 


Insofar as the representation and warranty
in this section 4.1(b) relates to the authority of PRF, the approval and execution
of this Agreement by, and enforceability hereof against, PRF and the absence of
conflict with agreements binding upon or Laws applicable to PRF, PRF joins in
making this representation and warranty. Insofar as the representation and
warranty in this section 4.1(b) relates to the legal capacity of BR, the
approval and execution of this Agreement by, and enforceability hereof against,
BR and the absence of conflict with agreements binding upon or Laws applicable
to BR, BR joins in making this representation and warranty.


 


22

















 


(c)           Authorizations.
All Authorizations that IPC REIT or any of its Subsidiaries are required to
obtain that are related to the carrying on their respective businesses as
currently operated, or the ownership or operation of their respective
properties and assets, have been obtained and are currently valid, in full
force and effect and in good standing in all respects, except for
Authorizations the failure of which to have or to be valid, in full force and
effect or in good standing would not reasonably be expected to, individually or
in the aggregate, have a Material Adverse Effect. There is no Authorization or
declaration or filing with, or notice to, any Governmental Entity which has not
been received or made that is required to be made or obtained by IPC REIT, PRF
or BR in connection with the execution and delivery of this Agreement by them,
the performance of their respective obligations hereunder or the consummation
of the Transactions, except (i) in connection with the Regulatory Approvals
disclosed in the Disclosure Letter and (ii) the filing with the Canadian
Securities Administrators and the Toronto Stock Exchange of the Circular.


 


Insofar as the representation and warranty
in this section 4.1(c) relates to the Authorizations, declarations, filings or
notices relating to PRF and BR, PRF and BR, respectively, join in making this
representation and warranty.


 


(d)           Required Contractual
Consents. The Disclosure Letter sets forth all Required Contractual
Consents.


 


(e)           Capital Structure.
As of August 13, 2007: (i) the authorized capital of IPC REIT consists of an
unlimited number of Units, of which 44,873,941 Units are issued and outstanding; (ii) $57,100,000 principal
amount of 2005 Debentures (which are convertible into 5,190,909 Units) and
$25,406,000 principal amount of 2004 Debentures (which are convertible into
2,674,316 Units), and no more, are
outstanding; (iii) 859,200 Options (which are exercisable into 859,200 Units) are outstanding
under the IPC REIT Option Plan, with the weighted average exercise price of
each holder’s Options and the weighted average exercise price of all
outstanding Options set out in the Disclosure Letter, and 761,323 Options
(which are exercisable into 761,323 Units) are outstanding under the IPC REIT
Deferred Unit Plan; (iv) the
authorized capital of NSULC consists of 100,000,000
common shares (the “NSULC Common Shares”) and 1,000,000 preferred shares (the “NSULC Preferred
Shares”), of which 40,071,998
NSULC Common Shares and 100,000
NSULC Preferred Shares, and no more, are issued and outstanding; (v) the
authorized capital of IPC Realty consists of an unlimited number of common shares and an unlimited number of voting
preferred shares (the “IPC Realty Preferred Shares”), of which 3,668,686 common shares and 3,818,429 IPC Realty Preferred
Shares, and no more, are issued and outstanding; and (vi) the authorized
capital of IPC US consists of 5,000
common shares and 5,000  special voting shares (the “IPC US
Special Shares”), of which 1,201 common
shares and 1,200 IPC US
Special Shares, and no more, are issued and outstanding. All of the outstanding
NSULC Common Shares are owned beneficially and of record by IPC REIT free of
Liens and all of the outstanding NSULC Preferred Shares are owned beneficially
and of record by 1716351 free of Liens. All of the


 


23

















 


outstanding
common shares of IPC Realty are owned beneficially and of record by NSULC free
of Liens and all of the outstanding IPC Realty Preferred Shares are owned
beneficially and of record by PRF free of Liens. All of the outstanding common
shares of IPC US are owned beneficially and of record by IPC Realty free of
Liens and all of the outstanding IPC US Special Shares are owned beneficially
and of record by BR free of Liens. Except for the Options, the Debentures, the
Shareholders Agreement, the BR Option Agreement and this Agreement, there are
no options, warrants, conversion privileges share appreciation rights, phantom
shares, profit participations or interests or other rights, agreements,
arrangements or commitments (pre-emptive, contractual or otherwise) obligating
IPC REIT, NSULC, IPC Realty or IPC US to issue or sell any Units, shares or
other ownership, voting or economic interests or securities or obligations of
any kind convertible into or exchangeable for Units, shares or other ownership,
voting or economic interests of any of those entities. All outstanding shares
or other ownership, voting or economic interests of IPC REIT, NSULC, IPC Realty
and IPC US have been duly authorized and issued and are validly outstanding as
fully paid and non-assessable securities and were not issued in violation of
any pre-emptive rights. Except for the Shareholders Agreement and the BR Option
Agreement, none of the Sellers nor any Subsidiary of IPC REIT is a party to
any: (a) option, warrant, purchase right or other commitment or Contract  (other than this Agreement) that would
require any of the Sellers to sell, transfer or otherwise dispose of the
Purchased Shares other than to Buyer; or (b) unitholder agreement, voting
trust, proxy or other agreement or understanding relating to the voting of any
Units or any ownership interest in any Subsidiary of IPC REIT. Other than the Debentures,
there are no bonds, debentures or other evidences of indebtedness of IPC REIT,
NSULC, IPC Realty or IPC US outstanding having the right to vote (or that are
convertible or exercisable for securities having the right to vote) with
Unitholders on any matter. All Units issuable upon the exercise of Options or
the conversion of Debentures, in each case in accordance with their terms, will
be duly authorized and validly issued and fully paid and non-assessable. There
are no outstanding contractual obligations of IPC REIT or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any Units or any shares
of any such Subsidiary or to provide funds to, or make any investment (in the
form of a loan, capital contribution or otherwise) in, any other Person (other
than NSULC or any of its Subsidiaries).


 


Insofar as the representation and warranty
in this section 4.1(e) relates to the ownership of, and freedom to dispose, the
outstanding IPC Realty Preferred Shares, PRF joins in making this representation
and warranty. Insofar as the representation and warranty in this section 4.1(e)
relates to the ownership of, and freedom to dispose, the outstanding IPC US
Special Shares, BR joins in making this representation and warranty.


 


(f)            IPC REIT Securities.
Neither PRF nor BR owns any Units or other securities of IPC REIT. PRF and BR
join in making this representation and warranty.


 


24

















 


(g)           Subsidiaries.
The Disclosure Letter sets out a complete and accurate corporate chart showing
all of IPC REIT’s Subsidiaries and, except for such Subsidiaries, neither IPC
REIT nor any of its Subsidiaries owns, directly or indirectly, any interest or
investment (whether equity or debt) in any other Person. All shares, units or
other ownership interests outstanding in each Subsidiary of NSULC (excluding
IPC Realty and IPC US, which for greater certainty are excluded here because
they are described in section 4.1(e)) have been duly authorized and issued and
are validly outstanding as fully paid and are non-assessable and were not
issued in violation of any pre-emptive rights. All of the issued and
outstanding shares, units or other ownership, voting or economic interests that
are owned by NSULC, directly or indirectly, in each of NSULC’s Subsidiaries are
owned free and clear of Liens, other than Permitted Encumbrances and the pledge
of securities of NSULC’s property-owning Subsidiaries pursuant to the KeyBank
Facility. Other than the operational agreements governing the relationships
with co-owners of the Owned Properties and Leased Properties as listed in the
Disclosure Letter, there are no options, warrants, conversion privileges share
appreciation rights, phantom shares, profit participations or interests or
other rights, agreements, arrangements or commitments (pre-emptive, contractual
or otherwise) obligating any Subsidiary of NSULC (excluding IPC Realty and IPC
US, which for greater certainty are excluded here because they are described in
section 4.1(e)): (i) to issue or sell any of its shares, units or other
ownership interests or securities or obligations of any kind convertible into
or exchangeable for any shares, units or other ownership interests of such
Subsidiary; or (ii) sell any shares, units or other ownership interests or
securities or obligations of any kind convertible into or exchangeable for any
shares, units or other ownership interests of any other Subsidiary of IPC REIT.
There are no bonds, debentures or other evidences of indebtedness of any
Subsidiary of NSULC (excluding IPC Realty and IPC US, which for greater
certainty are excluded here because they are described in section 4.1(e)))
outstanding having the right to vote (or that are convertible or exercisable
for securities having the right to vote) with such Subsidiary’s shareholders,
unitholders or other owners on any matter. 1716351 is a single purpose
corporation and owns or holds no property or assets or any interests therein of
any nature or kind whatsoever other than the NSULC Preferred Shares.


 


(h)           Canadian Securities
Legislation. IPC REIT is a “reporting issuer” (or the equivalent) under
applicable Canadian securities legislation and is not in default of any
material requirements of any applicable securities Laws; no delisting,
suspension of trading in or cease trading order with respect to the Units is
pending or, to the knowledge IPC REIT, threatened. The Filed CSA Documents did
not contain a Misrepresentation as at the respective dates of such Filed CSA
Documents and constitute all filings required to be made under applicable
securities Laws. IPC REIT has not filed any confidential material change report
or similar disclosure document with the Canadian Securities Administrators or
the Toronto Stock Exchange which remains confidential as of the date of this
Agreement. IPC REIT has delivered to Buyer complete and correct copies of any


 


25

















 


proposed or
contemplated amendments or modifications to the Filed CSA Documents that have
not been filed with the Canadian Securities Administration.


 


(i)            Financial
Statements. Each of the audited annual consolidated financial statements of
IPC REIT for the fiscal years ending December 31, 2004, 2005 and 2006,
including the CFS, and the unaudited consolidated financial statements of IPC
REIT for the six months ending June 30, 2007, has been prepared (and all
financial statements of IPC REIT which are publicly disseminated in respect of
any subsequent periods prior to the Closing Date shall be prepared) in
accordance with Canadian GAAP applied on a consistent basis during the periods
involved (except as may otherwise be indicated in the notes thereto) and fairly
present in all material respects the consolidated financial position of IPC
REIT as of the dates thereof and the consolidated results of its operations,
cash flows and changes in Unitholders’ equity for the periods then ended.


 


(j)            Absence of Certain
Changes or Events; No Undisclosed Material Liabilities. Since December 31,
2006, except (i) as stated in any Filed CSA Documents, (ii) as stated in the
Disclosure Letter and (iii) for actions taken reasonably in good faith
accordance with their agreement to facilitate the consummation of the
Transactions: (A) each of IPC REIT and its Subsidiaries has conducted its
business in the ordinary course consistent with past practice and there would
be no violation of sections 5.1(a) or 5.1(b) had such covenants been in effect
as of such date except as which would not, individually or in the aggregate, or
would not reasonably be expected to, have a Material Adverse Effect; (B) no
liability or obligation of any nature (whether absolute, accrued, contingent or
otherwise) has been incurred other than in the ordinary course consistent with
past practice and none of such liabilities and obligations would, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect;
and (C) there has not occurred any Material Adverse Effect. Neither NSULC nor
any of its Subsidiaries is responsible for or guarantor of any indebtedness of
any other Person (other than a Subsidiary of NSULC).


 


(k)           Assets. Each of IPC REIT and its
Subsidiaries has good and valid title to their respective assets which are
consolidated in the material assets reflected in the latest consolidated
balance sheet of IPC REIT included in the Filed CSA Documents (other than any
such asset disposed of in the ordinary course of business), free and clear of
any and all Liens except (i) those reflected or reserved against in the latest
balance sheet of IPC REIT included in the Filed CSA Documents and listed in the
Disclosure Letter, (ii) Liens registered in any public registry system that
would not be expected to, individually or in the aggregate, have a Material
Adverse Effect and (iii) Permitted Encumbrances. Upon the consummation of the
Transactions, Buyer will own all of the assets, rights and interests of NSULC
and its Subsidiaries, which shall be sufficient to enable Buyer to operate the
business of NSULC and its Subsidiaries in substantially the same manner as it
was operated by IPC REIT prior to the date of this Agreement.


 


26

















 


(l)            Litigation, etc. The Disclosure Letter
sets forth a complete and accurate list as of the date of this Agreement of all
suits, claims, actions or proceedings pending and, to the knowledge of IPC
REIT, threatened against or relating to IPC REIT or any of its Subsidiaries or
affecting any of their properties, assets or operations at law or equity or
before any Governmental Entity. There is no suit, claim, action or proceeding
pending or, to the knowledge of IPC REIT, threatened against or relating to IPC
REIT or any of its Subsidiaries or affecting any of their properties, assets or
operations at law or equity or before any Governmental Entity that, if
adversely determined, would reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect. Neither IPC REIT nor any of its
Subsidiaries is subject to any outstanding material order, writ, judgment,
injunction, decree or arbitration order or award.


 


(m)          Compliance with Applicable Law. Each of
IPC REIT and its Subsidiaries have complied for at least the past two years
with all applicable Laws, except for any non-compliance which would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect. Neither IPC REIT nor any of its Subsidiaries has received any
notice of any violation of any applicable Laws, except for any violations which
would not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.


 


(n)           Brokers. No broker, investment banker,
financial advisor or other Person (assuming no soliciting dealers are engaged
with respect to the Unitholder Meeting or the defeasance of the Debentures) is entitled
to any broker’s, finder’s, financial advisor’s or other similar fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of IPC REIT or any of its Subsidiaries, other than RBC Dominion
Securities Inc., Banc of America Securities LLC and T.F. August Associates,
Inc., the fees and expenses of which will be paid by IPC REIT in accordance
with the terms of the engagement letters entered into with such parties, copies
of which have been provided to Buyer.


 


(o)           Insurance. IPC REIT or its Subsidiaries,
as applicable, is a named insured under all insurance policies maintained for
the properties of IPC REIT and its Subsidiaries, as applicable. IPC REIT and
its Subsidiaries maintains insurance coverage with reputable insurers in such
amounts and covering such risks which in the good faith judgment of IPC REIT
are reasonable for the business of IPC REIT and its Subsidiaries. Neither IPC
REIT nor any of its Subsidiaries is in default as to payment of premiums under
the terms of any such insurance policy. Except as set out in the Disclosure
Letter or the Filed CSA Documents, no material claims have been made under such
insurance policies in the last three years. Seller has made available to Buyer
copies of all certificates of insurance, binders and insurance policies
maintained by IPC REIT or any of its Subsidiaries, or under which IPC REIT or
any of its Subsidiaries has been a beneficiary of coverage, at any time during
the past three years, together with a summary of any claims thereunder. NSULC
and its Subsidiaries are the owners of all insurance policies maintained for
the properties of NSULC and its Subsidiaries, as applicable, and NSULC and its
Subsidiaries will be entitled to maintain such


 


27

















 


insurance policies immediately following the
Closing upon the same terms and conditions as currently in effect.


 


(p)           Real Property.


 


(i)                       The Disclosure Letter sets forth a complete and accurate list of the
Owned Properties and Leased Properties, and the August 8, 2007 rent rolls
pertaining thereto. Accurate copies of all Tenant Leases covering more than
25,000 square feet and of any and all material amendments, extensions and/or
additions thereto have been included in the Data Room Information. Except as
disclosed in the Disclosure Letter, there are no agreements, options, contracts
or commitments to sell, transfer or otherwise dispose of the Owned Properties
or Leased Properties or to acquire or lease any other real property which would
restrict the ability of NSULC or the relevant Subsidiary of IPC REIT to
transfer its legal and/or beneficial interest in and to the whole or any part
of the Owned Properties or Leased Properties.


 


(ii)                    NSULC, through one of its Subsidiaries, (A) is the registered and
beneficial owner of the Owned Properties with good and marketable title thereto
in fee simple free and clear of all Liens, other than Permitted Encumbrances,
and (B) is the tenant of the Leased Properties, subject to the terms of the Leases.
NSULC’s Subsidiaries have the exclusive right to possess, use, occupy and
dispose of the Owned Properties and Leased Properties, subject only to the
rights of the other parties to the Leases, the Tenant Leases and the Permitted
Encumbrances.


 


(iii)                 The
Owned Properties and Leased Properties and all buildings and structures located
thereon and the conduct of NSULC’s business and its Subsidiaries’ businesses as
presently conducted does not violate, and the use thereof in the manner in
which presently used is not adversely affected by, any zoning or building Laws
which, individually or in the aggregate have, or could reasonably be expected
to have a Material Adverse Effect. Neither IPC REIT nor any of its Subsidiaries
has received any notification alleging any such violation.


 


(iv)                No
Person (other than co-owners of the Owned Properties) has any right of first
refusal, right of first opportunity, option to purchase or any other right of
increased participation in any of the Owned Properties, or any part thereof.


 


(q)           No Default. Except as would not,
individually or in the aggregate, cause a Material Adverse Effect, none of IPC
REIT nor any of its Subsidiaries nor, to the knowledge of IPC REIT, any of the
other parties thereto, is in default under or in breach of any Lease, any
Tenant Lease (which, for purposes of this section 4.1(q), means a lease of
premises comprising at least 25,000 square feet), or any agreement in respect
of any debt obligation or any other material Contract (which,


 


28

















 


for purposes of this section 4.1(q), means a
Contract providing for per annum payments of more than $500,000). To the
knowledge of IPC REIT, there exists no state of facts which after notice or
lapse of time or both would constitute a default or breach of any material
Contract. IPC REIT has delivered or made available accurate copies of all such
material Contracts.


 


(r)            Labour Matters.


 


(i)        IPC REIT has no employees
other than those employed by NSULC or any of its Subsidiaries. Neither IPC REIT
nor any of its Subsidiaries is party to or bound by any Contract which provides
for change in control, retention or similar payments, or any accelerated or
enhanced payment or benefit upon or in connection with the completion of the
Transactions or upon the execution and delivery of this Agreement (in either
case, either alone or in conjunction with any other event).


 


(ii)       Neither NSULC nor any of its
Subsidiaries is a party to or currently negotiating any collective bargaining
agreement other than the collective bargaining agreements listed in the
Disclosure Letter (the “Collective Bargaining Agreements”), true, correct and
complete copies of which have been made available to Buyer. Except in respect
of the Collective Bargaining Agreements, no trade union, council of trade
unions, employee bargaining agency or affiliated bargaining agent holds
bargaining rights with respect to any of the employees of NSULC or any of its
Subsidiaries by way of certification, interim certification, voluntary recognition,
or succession rights or, to the knowledge of IPC REIT, has applied or
threatened to apply to be certified as the bargaining agent of any employees of
NSULC or any of its Subsidiaries. To the knowledge of IPC REIT, there are not
currently (A) any union organization activities involving any employees of
NSULC or any of its Subsidiaries, or any threats of such activities, (B) any
strikes or lockouts or work stoppages or other material labour disputes
affecting NSULC or any of its Subsidiaries or any threats of such labour
disputes, or (C) any charges of unfair labour practice (other than routine
individual grievances, that, individually or in the aggregate, would not be
expected to have a Material Adverse Effect.)


 


(iii)      There are no unfair labour practice
charges, grievances or complaints filed or, to the knowledge of IPC REIT,
threatened in writing by or on behalf of any employee or group of employees of
NSULC or any of its Subsidiaries that have not been settled or remedied that
would reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.


 


(iv)      There are no complaints, charges
or claims against NSULC or any of its Subsidiaries filed or, to the knowledge
of IPC REIT, threatened in writing to be brought or filed, with any
Governmental Entity or arbitrator based on, arising out of, in connection with,
or otherwise relating to the employment or termination of employment of any
individual by NSULC


 


29

















 


or any of its
Subsidiaries that have not been settled or remedied that if adversely decided
would reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.


 


(v)       With respect to employees of
NSULC and its Subsidiaries, (A) NSULC and each of its Subsidiaries are in
compliance with all laws relating to the employment of labour, including all
such laws relating to wages, hours, the Worker Adjustment and
Retraining Notification Act (as amended, “WARN”) and any similar
state or local “mass layoff” or “plant closing” Law, collective bargaining,
discrimination, civil rights, safety and health, workers’ compensation and the
collection and payment of withholding and/or social security Taxes and any
similar Tax, except for any non-compliance that would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect
and (B) there has been no “mass layoff” or “plant closing” as defined by WARN
with respect to NSULC or any of its Subsidiaries within the last six (6) months.


 


(vi)      All of the existing employees of
IPC US and its Subsidiaries are, to the knowledge of IPC REIT, legally
employable in the United States.


 


(s)           ERISA and Employee Plans.


 


(i)        The Data Room Information
lists all the employee benefit, health, welfare, pension, bonus, profit
sharing, deferred compensation, change of control arrangements, incentive
compensation, stock compensation, stock option or purchase, severance, change
of control, retirement plans or arrangements, life or accidental insurance, hospitalization,
health, medical or dental treatment or expenses, disability, unemployment,
insurance benefits, employee loans, vacation pay, fringe benefit arrangements,
severance or termination pay or other benefit plan policy, agreement or
arrangement applicable to present or former employees, directors or trustees
(or any of their respective dependants or beneficiaries) of IPC REIT or any of
its Subsidiaries which are currently maintained or participated in by IPC REIT
or any of its Subsidiaries or with respect to which, to the knowledge of IPC
REIT, IPC REIT, any of its Subsidiaries or any of their respective ERISA
Affiliates may have any liability (the “Employee Plans”). None of the Employee
Plans are established and maintained primarily to provide systematically for
the payment of a definitely determinable annuity to participants over a period
of time, after retirement or are otherwise defined benefit plans. None of the
Employee Plans of IPC US or its Subsidiaries provides for the participation of
any employees, directors or trustees (or to the knowledge of IPC REIT any of
their respective dependants or beneficiaries) resident outside of the United
States.


 


(ii)       All of the Employee Plans have
been administered and invested in all material respects in accordance with all
Laws applicable to the Employee


 


30

















 


Plans. Each
Employee Plan which is an Employee Pension Benefit Plan and which is intended
to be qualified under Code section 401(a) is subject to a favourable
determination letter issued by the Internal Revenue Service which covers all
amendments to any such plan for which the remedial amendment period (within the
meaning of Code section 401(b) and applicable regulations) has expired and, to
the knowledge of IPC REIT, no event has occurred which will or could give rise
to disqualification of any such plan under such sections. No “prohibited
transaction,” within the meaning of section 4975 of the Code or sections 406 or
407 of ERISA, and not otherwise exempt under sections 4975 of the Code and
section 408 of ERISA, has occurred with respect to any Employee Benefit Plan.


 


(iii)      Other than routine claims for
benefits and appeals of denied routine claims, there are no material actions,
suits, claims or proceedings, pending or, to the knowledge of IPC REIT,
threatened, relating to the Employee Plans and, to the knowledge of IPC REIT,
no fact or circumstance exists which could reasonably be expected to give rise
to any such action, claim or proceeding. To the knowledge of IPC REIT, there
are no audits, inquiries or proceedings pending or threatened by any
Governmental Entity with respect to any Employee Plan.


 


(iv)      Except for amendments that may
be required to maintain the Employee Plans in compliance with Code section 401(a)
and related sections and provisions of ERISA prior to the Closing Date, no
material amendments to any Employee Plan have been promised and no material
amendments to any Employee Plan will be made or promised prior to the Closing
Date which affect or pertain to the employees of IPC REIT or any of its
Subsidiaries or which, to the knowledge of IPC REIT, could cause liability to
IPC REIT or any of its Subsidiaries.


 


(v)       All contributions (including
all employer contributions and employee salary reduction contributions) that
are due have been made to each Employee Benefit Plan that is an Employee
Pension Benefit Plan. All premiums or other payments that are due have been
paid with respect to each Employee Benefit Plan that is an Employee Welfare
Benefit Plan.


 


(vi)      Except as required by applicable
Laws, none of the Employee Plans, other than Employee Pension Benefit Plans,
provide benefits beyond retirement or other termination of service to employee
or former employees or to the beneficiaries or dependants of such employees.


 


(vii)     Neither IPC REIT nor any of its
Subsidiaries contributes to any “multiemployer plan” as defined in section
3(37) of ERISA.


 


(viii)    No Employee Plan contains any
provision that would prohibit the Transactions, would give rise to any
severance, termination or other payment as a result of the consummation of the
Transactions (alone or in


 


31

















 


connection
with any other event) or would cause any payment, acceleration or increase in
benefits provided under any Employee Plan as a result of the Transactions
(alone or in connection with any other event).


 


(t)            Tax Matters.


 


(i)            Each of IPC REIT and its
Subsidiaries has filed or caused to be filed all Tax Returns required to be
filed by the Tax Act or the Code or by other applicable Tax Laws, other than
Income Tax Returns and Tax Returns in each case for which extensions have been
granted by the relevant taxing authorities. All Taxes due and owing by IPC REIT
or any of its Subsidiaries (whether or not shown on any Tax Return) have been
paid in full or will be paid in full by the due date thereof. There are no
Liens for Taxes (other than Taxes not yet due and payable) upon any of the
assets or properties of IPC REIT or any of its Subsidiaries.


 


(ii)           Except as disclosed in the
Disclosure Letter, there is no material dispute or claim, including any audit,
investigation or examination by any taxing authority, actual, pending or, to
the knowledge of IPC REIT, threatened, concerning any Tax liability of IPC REIT
or any of its Subsidiaries, no written notice of such an audit, investigation,
examination, material dispute or claim has been received by IPC REIT or any of
its Subsidiaries, nor does IPC REIT have knowledge of any such audit,
investigation, examination, material dispute or claim based upon personal
contact with any agent of such taxing authority.


 


(iii)          Except as disclosed in the
Disclosure Letter, neither IPC REIT nor any of its Subsidiaries has requested,
or entered into any agreement or other arrangement, or executed any waiver
providing for, any extension of time within which:


 


(A)      to file any Tax Return (which
has not since been filed) in respect of any Taxes for which any of IPC REIT or
its Subsidiaries is or may be liable;


 


(B)       to file any elections,
designations or similar filings relating to Taxes (which have not since been
filed) for which any of IPC REIT or its Subsidiaries is or may liable;


 


(C)       any of IPC REIT or its
Subsidiaries is required to pay or remit any Taxes or amounts on account of
Taxes (which have not since been paid or remitted); or


 


(D)      any Governmental Entity may
assess or collect Taxes for which any of the IPC REIT or its Subsidiaries is
liable.


 


(iv)          The unpaid Taxes of IPC REIT
and its Subsidiaries (A) did not, as of the most recently published
consolidated financial statement of IPC REIT,


 


32

















 


exceed the
reserve for Tax liability (other than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) in that
financial statement and (B) will not exceed that reserve as adjusted for
operations and transactions through the Closing Date in accordance with the
past custom and practice of IPC REIT and its Subsidiaries in reporting their income
in their Tax Returns.


 


(v)           Each of IPC REIT and its
Subsidiaries has duly and timely withheld from any amount paid or credited by
it to or for the account or benefit of any Person the amount of all Taxes and
other deductions required by any Laws to be withheld from any such amount and
has duly and timely remitted the same (or is properly holding for such
remittance) to the appropriate Governmental Entity.


 


(vi)          IPC REIT is a “mutual fund
trust” as defined in the Tax Act.


 


(vii)         Each of the Sellers is not a non-resident of Canada within the
meaning of the Tax Act.


 


(viii)        Neither IPC REIT nor any Subsidiary is a party to any Tax sharing or
similar agreement or arrangement other than any agreement or arrangement solely
between the IPC REIT and any Subsidiary, pursuant to which it will have any
obligation to make any payments after the Closing.


 


(ix)          Neither IPC REIT or any Subsidiary has requested a private letter
ruling from the US Internal Revenue Service or comparable rulings from other
taxing authorities.


 


(x)           Neither IPC REIT nor any Subsidiary has any liability for Taxes of
any Person other than IPC REIT and its Subsidiaries under Treasury Regulation
section 1.1502-6 (or any similar provision of state, local or foreign Law), as
a successor or transferee or otherwise.


 


(xi)          Neither IPC REIT or any Subsidiary has participated in a “reportable
transaction” within the meaning of Treasury Regulation section 1.6011-4(b)(1).


 


(xii)         Neither IPC REIT or any Subsidiary is a party to any agreement,
arrangement, understanding or plan that has resulted, or would result in
connection with contemplated transactions or any change in control, in the
payment of any amount that would, by operation of section 280G of the Code, not
be deductible by the entity making such payment.


 


(xiii)        Neither IPC REIT or any Subsidiary has made or is obligated to make
any payment that would not be deductible pursuant to section 162(m) of the
Code.


 


33

















 


(xiv)        As of the date hereof, IPC US and its Subsidiaries have no material
earnings and profits attributable to any year of such corporation within the
meaning of section 857 of the Code and the Treasury Regulations thereunder,
excluding for this purpose: (A) any earnings and profits of the following
corporations, for which “taxable REIT subsidiary” elections effective as of
March 31, 2007 have been timely filed: Wanamaker Retail Lease Manager, Inc.,
Wanamaker Office Lease GP, Inc., IPC United Plaza Management, Inc., IPC
Commercial Properties Management Inc., IPC Office Properties Management Inc.,
IPC XPark Properties Management Inc., IPC White Plains Properties Management
Inc., IPC NOI Management Inc., IPC Wanamaker GP, Inc., IPC Lexington Properties
Management Inc., IPC McDonald Properties Management Inc., and IPC Dallas GP
Inc.; (B) any earnings and profits of corporations that were included in the
consolidated return of IPC US for the year ending December 31, 2006, which
would be eliminated pursuant to the rule contained in the last sentence of
Treasury Regulation §1.1502-33(a)(2) in the event such corporations were to
transfer, or be deemed to transfer, their assets to IPC US in a liquidation to
which Code section 332 applies; and (C) earnings and profits of the following
corporations not in excess of $50,000 in the aggregate: IPC Florida II
Management Inc., IPC United Plaza Fee Manager Inc. and IPC Loop Central GP Inc.


 


(xv)         Each Subsidiary of IPC REIT that is a partnership, joint venture,
limited liability company or “foreign eligible entity” within the meaning of
Treasury Regulation section 301.7701-3(b)(2) has been since its formation
treated for U.S. federal income tax purposes as a partnership or disregarded
entity, as the case may be, and not as a corporation or an association taxable
as a corporation or as a “publicly traded partnership” within the meaning of
section 7704(b) of the Code.


 


(xvi)        Each arrangement or plan relating to any employee or service
provider of IPC REIT or any of its Subsidiaries that is subject to section 409A
of the Code has been operated in good faith compliance, in all respects, with
section 409A of the Code.


 


(xvii)      None of IPC REIT or any of its Subsidiaries has agreed, or is
required to make, any adjustment under section 481(a) of the Code (whether as a
result of the transactions set forth herein or otherwise) and there has been no
transaction or event (including but not limited to any receipt of a prepaid
amount or an instalment sale) which would result in income attributable to such
transaction or event being recognized for Tax purposes in a period following Closing.


 


(xviii)     For all taxable periods (and portions thereof) (A) none of the
Subsidiaries of IPC REIT has a “dual consolidated loss” within the meaning of
section 1503(d)(2) of the Code and applicable Treasury Regulations that is
subject to disallowance pursuant to section 1503(d) of the Code, (B) each of
the


 


34

















 


Subsidiaries
of IPC REIT has been and continues to be in compliance with all applicable
Treasury Regulations that are required to be satisfied in order to prevent any “dual consolidated
loss” from being disallowed pursuant to section 1503(d) and applicable Treasury
Regulations, and (C) there has been no event or other occurrence that would
require the recapture of any “dual consolidated loss” pursuant to section
1503(d) of the Code and applicable Treasury Regulations.


 


(xix)        None of IPC REIT or any of the Subsidiaries has taken a reporting
position on a Tax Return, which reporting position (A) if not sustained would
be reasonably likely to give rise to a penalty for substantial understatement
of U.S. federal income Tax under section 6662 of the Code (or any similar
provision of state, provincial, local or foreign Tax Law), and (ii) has not
adequately been disclosed on such Tax Return in accordance with section
6662(d)(2)(B) of the Code (or any similar provision of state, provincial, local
or foreign Tax law).


 


(xx)         NSULC is and at all times  has
been a “disregarded entity” for U.S. federal income tax purposes.


 


(xxi)        IPC Realty has never engaged in a “trade or business” in the United
States as that term is defined in section 864 of the Code, and has not
conducted any activity in a state or local taxing jurisdiction in the United
States that would result in the imposition of any state or local Tax on IPC
Realty.


 


(xxii)       IPC US is taxable as a domestic corporation for U.S. federal income
tax purposes, but for any current or subsequent election to be treated as a
REIT. IPC US maintains its books and records on the calendar year for U.S.
federal income tax purposes. IPC US has not previously made an election to be
taxed as a REIT within the five years preceding the Closing Date and had such
election revoked or terminated by the US Internal Revenue Service. IPC US has
not been operated as a bank, a financial institution, a small business
investment company operating under the United States Small Business Act of
1958, as amended, a business development corporation or an insurance company.
IPC US was not created by or pursuant to an act of a state legislature for the
purpose of promoting, maintaining or assisting the economy within the state by
making loans that generally would not be made by banks. IPC US at all times has
been managed by a board of directors. The beneficial ownership of IPC US has
been evidenced by common shares and IPC US Special Shares, which shares,
subject to applicable U.S. federal and state securities laws, have not been
subject to any restrictions on transfer imposed by IPC US, except as set forth
in the charter of IPC US and except for restrictions imposed by the
Shareholders Agreement and the KeyBank Facility.


 


(xxiii)     At the end of each quarter of the current taxable year, at least 75%
of the value of IPC US’s total assets has consisted of real estate assets, cash
and


 


35

















 


cash items (i.e., receivables arising in the ordinary course of IPC US’s
operations, certificates of deposit), government securities, and, only during
the one-year period commencing on the date new capital is received, stock or
debt instruments attributable to the temporary investment of new capital. For
purposes of this section, shares in a money market fund (i.e.,
a regulated investment company) are considered an investment in “securities”
and not cash or a “cash item.”


 


(xxiv)      At the end of each quarter of the current taxable year, IPC US’s
total assets have not consisted of securities (other than obligations secured
by mortgages on real property, shares in other REITs, government securities) of
any one issuer (including debt securities of an issuer that is treated as a
partnership for U.S. federal tax purposes) that represent either (A) more than
five percent of the value of IPC US’s total assets or (B) more than ten percent
of the voting power or value of the outstanding securities of such issuer,
other than in the case of the following issuers, for which taxable REIT
subsidiary elections have been filed: IPC Commercial Properties Management
Inc., IPC Office Properties Management Inc., IPC XPark Properties Management
Inc., IPC White Plains Properties Management Inc., IPC NOI Management Inc., IPC
Wanamaker GP, Inc., IPC Lexington Properties Management Inc., IPC McDonald
Properties Management Inc., IPC Dallas GP Inc., Wanamaker Retail Lease Manager,
Inc., Wanamaker Office Lease GP, Inc. and IPC United Plaza Management, Inc.


 


(xxv)       IPC US (A) holds all of its real property (other than that property
that constitutes Foreclosure Property), for the purpose of obtaining rental income
and long term appreciation and (B) does not hold any of its properties as
inventory or primarily for sale to customers in the ordinary course of a trade
or business.


 


(xxvi)     At least 75% of IPC US’s gross income for the current taxable year
has been derived from (A) Rents From Real Property, (B) interest on obligations
secured by mortgages on real property or interests in real property, (C) gain
from the sale or other disposition of real property held neither as inventory
nor primarily for sale to customers in the ordinary course of a trade or
business (such income derived from the sale or other disposition of real
property held as inventory or primarily for sale to customers in the ordinary
course of a trade of business constituting “Prohibited Income”), (D) dividends
or other distributions on, and gain from the sale or other disposition of,
transferable shares of stock of other REITs, (E) abatements and refunds of
taxes on real property, (F) income from Foreclosure Property, (G) amounts
received or accrued as consideration for entering into agreements to make loans
secured by mortgages on real property or on interests in real property or to
purchase or lease real property (including interests in real property and
interests in mortgages on real property), (H) gain from the sale or disposition
of a Real Estate Asset which is not Prohibited Income and (I) any income


 


36

















 


which is (i)
attributable to stock or a debt instrument, (ii) attributable to the temporary
investment of new capital derived from an issuance of stock or a public
offering of debt obligations with maturity dates of at least five years, and
(iii) received or accrued during the one-year period beginning on the date IPC
US received the capital. For the purposes of computing interest on obligations
secured by mortgages on real property or interests in real property, the amount
shall not include any interest dependent in whole or in part upon the income or
profits of any person.


 


(xxvii)    At least 95% of IPC US’s gross income for the current taxable year
has been derived from sources described in section 4.1(t)(xxvi), plus (A)
dividends, (B) interest on obligations other than mortgages, (C) gain from the
sale or other disposition of stock and securities held neither as inventory nor
primarily for sale to customers in the ordinary course of a hade or business,
(D) abatements and refunds of taxes on real property, (E) income and gain
derived from Foreclosure Property that is not Prohibited Income, (F) amounts
received or accrued as consideration for entering into agreements (i) to make
loans secured by mortgages on real property or on interests in real property or
(ii) to purchase or lease real property (including interests in real property
and interests in mortgages on real property), (G) gain from the sale or other
disposition of real estate assets (including an interest in an entity that
qualifies as a REIT for federal income tax purposes and regular and residual
interests in real estate mortgage investment conduits (“REMICs”)), that is not
Prohibited Income and (H) income from any transaction, including gain from the
sale or disposition of such a transaction, entered into in the normal course of
the trade or business of IPC US or any other direct or indirect corporate or
noncorporate entity in which IPC US holds a direct or indirect equity interest
to manage interest rate risk or price changes or currency fluctuations with
respect to borrowings made, or ordinary obligations incurred, by IPC US or any
other direct or indirect corporate or noncorporate entity in which IPC US holds
a direct or indirect equity interest to acquire or carry real estate assets, if
the transaction is clearly identified as a hedging transaction before the close
of the day on which it was acquired, originated or entered into.


 


(xxviii)   Less than 15% of the fair market value of any of IPC US’s properties
which are subject to leases have been attributable to personal property and all
personal property leased by IPC US have been under or in connection with a
lease of real property.


 


(xxix)      Except as provided below, IPC US does not render, furnish or provide
any services to tenants, except (A) such services which are customarily
furnished or rendered in connection with the rental of real property (as
determined by the geographic market in which the property is located and by
services customarily provided to tenants in properties of a similar class), (B)
such services which are not rendered primarily for the


 


37

















 


convenience of
the tenant and are usually or customarily rendered in connection with the
rental of space for occupancy only or (C) income derived from services not
described in clause (B) hereof with respect to a property does not exceed one
percent of all amounts received or accrued during a taxable year with respect
to such property. For purposes of the one percent threshold, the amount derived
by IPC US for any service is deemed to be not less than 150% of the direct cost
incurred by IPC US in furnishing or rendering the service. Notwithstanding the
foregoing, Buyer acknowledge that IPC REIT currently has in place certain
existing parking arrangements and is providing certain special services to
tenants that may cause IPC REIT not to be in compliance with the foregoing. IPC
REIT will cooperate with Buyer to ensure that such parking arrangements and
other services are restructured as necessary to bring them into compliance with
the foregoing.


 


(xxx)       Neither IPC US nor any other direct or indirect corporate or
noncorporate entity in which IPC US holds a direct or indirect equity interest,
owns or operates any hotel or health care facility, or provides to any other
person (under a franchise, license, or otherwise) rights to any brand name under
which any lodging facility or health care facility is operated.


 


(u)                                 Environmental Matters.


 


(i)                                     Except
as would not reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect:


 


(A)      each of IPC REIT and its
Subsidiaries has complied for at least the past two years with applicable
Environmental Laws, except for any non-compliance which has been remedied and,
to the knowledge of IPC REIT, neither IPC REIT nor any of its Subsidiaries is
subject to any Environmental Liability;


 


(B)       each of IPC REIT and its
Subsidiaries has obtained and currently possesses and maintains in good
standing all permits required by Environmental Laws in connection with their
ownership or operation of the Owned Properties or the development by IPC REIT
or its Subsidiaries of the Owned Properties; provided, that with respect to any
permit required to be obtained by any lessee of an Owned Property or any Person
other than IPC REIT or its Subsidiaries with respect to the conduct of business
on the Owned Properties, the representation contained in this subsection (ii)
is limited to the knowledge of IPC REIT;


 


(C)       all asbestos or
asbestos-containing materials and lead-based paint at any of the Owned
Properties have been and are managed in accordance with Environmental Laws
pursuant to an operations and maintenance program;


 


38

















 


(D)      neither IPC REIT nor any of its
Subsidiaries has released, stored, treated or disposed or transported, and to
the knowledge of IPC REIT, no other Person has released, stored, treated or
disposed or transported, Hazardous Substances on or from any of the Owned
Properties in a manner that would reasonably be expected to result in any
Environmental Liabilities; and


 


(E)       neither IPC REIT nor any of its
Subsidiaries (A) has entered into or agreed to any consent, decree or order or
is a party to any judgment, decree or judicial or administrative order relating
to compliance with Environmental Laws, permits or the investigation, sampling, monitoring,
treatment, remediation, removal or cleanup of Hazardous Substances and no
investigation, litigation or other proceeding is pending or threatened in
writing with respect thereto or (B) has assumed, by contract or operation of
Law, any Environmental Liabilities or is an indemnitor in connection with any
threatened or asserted claim by any third-party indemnitee for any
Environmental Liabilities.


 


(ii)           No material Liens have been
imposed or are in effect on any of the Owned Properties pursuant to any
Environmental Law.


 


(iii)          IPC REIT has made available
to Buyer true and complete copies of all environmental reports, investigations,
assessments, audits and permits relating to compliance under or liability
pursuant to Environmental Laws in the possession or within the control of IPC
REIT or any of its Subsidiaries.


 


(iv)          To the knowledge of IPC
REIT, there are no aboveground or underground storage tanks on the Owned
Properties or the Leased Properties and any storage tanks formerly on the Owned
Properties or the Leased Properties, to the knowledge of IPC REIT, have been
removed and any effected soil, surface, water or ground water has been
remediated in all material respects in compliance with all Environmental Laws.


 


(v)           Books and Records. All Books and Records
fairly disclose in all material respects the financial position of IPC REIT and
its Subsidiaries and all material financial transactions relating to the
business carried on by IPC REIT and its Subsidiaries have been accurately
recorded in all material respects in such Books and Records.


 


(w)          Related Party Transactions. There are no
material contracts, agreements, arrangements, understandings, commitments or
other transactions currently in place between IPC REIT or any of its
Subsidiaries, on the one hand, and (i) any officer, director or trustee of IPC
REIT or any of its Subsidiaries, (ii) any holder of record or, to the knowledge
of IPC REIT, beneficial owner of 5% or more of the Units, the IPC Realty
Preferred Shares or any other class of securities of IPC REIT or any of its
Subsidiaries, or (iii) to the knowledge of IPC REIT, any


 


39

















 


affiliate or associate of any such, officer,
director, trustee, holder of record or beneficial owner, on the other hand.


 


(x)            Rights Plan. IPC REIT has no Unitholder
rights plan or similar plan and, as of the date hereof, no Unitholder rights
plan or similar plan is contemplated to be put in place by IPC REIT.


 


(y)           Distribution Reinvestment Plan. IPC REIT
suspended the Distribution Reinvestment Plan effective immediately after the
payment on May 15, 2007 to Unitholders in respect of the distributions declared
by IPC REIT to Unitholders of record on April 30, 2007. No Units have been
acquired or issued under the Distribution Reinvestment Plan since May 15, 2007.


 


(z)            Transaction Costs. The Disclosure Letter
sets out IPC REIT’s good faith estimate of Transaction Costs itemized by
applicable category.


 


(aa)         Data Room Information. All Data Room
Information is complete and accurate in all material respects as at the
respective dates stated therein, or if any Data Room Information is undated, as
at the date of delivery into the data room for purposes of the Transactions,
except to the extent modified, amended or superseded by later dated or
delivered Data Room Information.


 


(bb)         Derivative Contracts. Other than
fixed-priced gas, electricity or other utility contracts, IPC REIT and its
Subsidiaries are not parties to and have no liabilities under or in connection
with any current or active derivative contracts.


 


4.2                               Representations
and Warranties of Parent and Buyer.


 


Each of Parent
and Buyer hereby jointly and severally represent and warrant that:


 


(a)           Organization, Standing and Corporate Power. Each of Parent and Buyer has been duly formed or incorporated
under applicable Law, is validly existing and has the corporate power and
authority to own its properties and conduct its businesses as currently owned
and conducted. Buyer is an Affiliate of Parent.


 


(b)           Authority; No conflict. Each of Parent
and Buyer has the requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder. The execution and delivery
of this Agreement by each of Parent and Buyer and the consummation by them of
the Transactions have been duly authorized by the board of directors or similar
authority of each of Parent and Buyer, respectively, and no other internal
proceedings on the part of either Parent or Buyer are necessary to authorize
this Agreement or the Transactions. This Agreement has been duly executed and
delivered by each of Parent and Buyer and constitutes a valid and binding
obligation of each of Parent and Buyer, enforceable against each of them
respectively in accordance with its terms subject to the usual exceptions as to
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium and
other laws relating to or affecting creditors’ rights and the availability of
equitable remedies. The execution and delivery by each of


 


40
















 


Parent and Buyer of this Agreement, the
performance of their respective obligations hereunder and the completion of the
Transactions will not result directly or indirectly (with or without notice or
the passage of time) in a violation, default or breach by either Parent or
Buyer of, require any consent to be obtained or filing to be made by either of
them under, or constitute a default under any provision of, conflict with or
give rise to any termination, cancellation or acceleration rights or other materially
adverse consequence under any provision of:


 


(i)        its
constating documents; or


 


(ii)       any Law
applicable to Parent or Buyer, on the assumption however that the Regulatory
Approvals disclosed in the Disclosure Letter are obtained.


 


(c)           Consents
and Approvals. Other than pursuant to the
Investment Canada Act, no consent, approval or Authorization of, or declaration
or filing with, or notice to, any Governmental Entity which has not been
received or made is required by either Parent or Buyer in connection with the
execution and delivery of this Agreement by them respectively, except where the
absence or failure thereof would not be material.


 


(d)           Financial
Resources. Buyer has sufficient funds, or adequate
arrangements as such term is understood for purposes of Section 96 of the
Securities Act for financing in place to ensure that it will have sufficient
funds, to pay all payments under this Agreement (including the NSULC Purchase
Price, the IPC Realty Purchase Price and the IPC US Purchase Price).


 


(e)           Ownership
of Units. None of Parent, Buyer or their respective
Subsidiaries beneficially own any Units, Debentures or other securities of IPC
REIT.


 


4.3          Survival of
Representations and Warranties.


 


The
representations and warranties made by the parties shall remain in effect
during the term of this Agreement and shall expire simultaneously with the
earlier of (i) Closing and (ii) the termination of this Agreement in accordance
with its terms. No investigations made by or on behalf of Buyer or any of its
authorized agents at any time shall have the effect of waiving, diminishing the
scope of or otherwise affecting any representation, warranty or covenant made
by the Sellers herein or pursuant thereto.


 


ARTICLE 5


COVENANTS OF IPC REIT


 


5.1          Conduct of Business.


 


IPC REIT
hereby agrees that between the date of this Agreement and the Closing Date or
the date on which this Agreement has been terminated pursuant to
Article 10, unless Buyer shall otherwise consent in writing (such consent
not to be unreasonably withheld or


 


41

















 


delayed), or as is otherwise
(i) expressly contemplated by this Agreement, including in connection with
section 7.2, or (ii) set forth in the Disclosure Letter:


 


(a)       it shall
conduct its business and cause its Subsidiaries to conduct their respective
businesses in the ordinary course consistent with past practice and it shall
use commercially reasonable efforts to maintain and preserve its and its
Subsidiaries business organization, goodwill and business relationships;


 


(b)       it shall
use commercially reasonable efforts to comply promptly with all material
requirements which applicable Law may impose on it and its Subsidiaries;


 


(c)       it will
use commercially reasonable efforts to consult on an ongoing basis with Buyer
in order that the representatives of Buyer will become more familiar with IPC
REIT and its Subsidiaries as well as with their respective financial affairs,
including in relation to any commitments, arrangements or transactions proposed
to be entered into that would be out of the ordinary course of business or
outside the current operating plan that could reasonably be expected to give
rise to a material liability or commitment of any kind and will use
commercially reasonable efforts so that such consultations be effected on a
basis that will allow sufficient time for Buyer to give reasonable
consideration to the same including without limiting the generality of the
foregoing, to maintain Buyer’s access to the Data Room Information;


 


(d)       it will
use commercially reasonable efforts to retain the services of the current
employees of NSULC and its Subsidiaries, and subject to compliance with
applicable Laws regarding privacy, it shall provide reasonable access to
employment and benefit information relating to the employees of NSULC and its
Subsidiaries;


 


(e)       subject to
compliance with applicable competition Laws, it shall not and shall not permit
any of its Subsidiaries to:


 


(i)            issue
or commit to issue any securities or other ownership interest in IPC REIT or
any of its Subsidiaries, except as a result of the exercise of Options
outstanding at the date hereof or the conversion of Debentures outstanding at
the date hereof;


 


(ii)           declare,
set aside or pay any Excess Distribution Amount, or change the current record
or payment date of the Monthly Distribution;


 


(iii)          declare,
set aside or pay any dividend or other distribution or payment whether in cash,
securities or property (other than to the extent to fund (A) a Monthly
Distribution, (B) monthly dividends in the amount of $1,250 on the IPC US
Special Shares, (C) interest payments and other amounts due and payable on the
Debentures, (D) regular distributions owing to co-owners of the Owned
Properties or Leased Properties in accordance with the terms of the operational
agreements governing such co-ownership relationships listed in the Disclosure
Letter and (E) consistent with past


 


42

















 


practice, for
working capital requirements of IPC REIT and its Canadian operations), in each
case on or in respect of (x) the outstanding Units; (y) other securities of IPC
REIT; or (z) any securities of any Subsidiary of IPC REIT that is not directly
or indirectly wholly-owned by IPC REIT;


 


(iv)          grant
or commit to grant any Options, warrants, convertible securities share
appreciation rights, phantom shares, profit participations or interests or
rights to subscribe for, purchase or otherwise acquire or exchange into any
securities or other ownership interest in IPC REIT or any of its Subsidiaries,
except as expressly permitted in section 5.3(b);


 


(v)           directly
or indirectly redeem, purchase or otherwise acquire or commit or offer to
acquire any securities or other ownership interest in IPC REIT or any of its
Subsidiaries, except pursuant to the terms of the Declaration of Trust or as
otherwise expressly contemplated hereunder;


 


(vi)          effect
any subdivision, consolidation or reclassification of any of its Units;


 


(vii)         amend,
vary or modify (A) the Declaration of Trust, including the investment
guidelines and operating policies thereunder, or (B) the organizational
documents of any Subsidiary, other than the Trust Amendment or as expressly
permitted hereunder;


 


(viii)        amend the
Indenture other than as expressly contemplated in section 5.4(b);


 


(ix)           reorganize,
merge, consolidate or amalgamate with any other Person whatsoever;


 


(x)            make
a capital expenditure other than (A) capital expenditures of the type (and in
the specific amount) as set forth in the Disclosure Letter and (B) other
capital expenditures in an aggregate amount not to exceed $3 million, or permit
any Subsidiary to do so;


 


(xi)           (A)
incur any indebtedness for borrowed money, excluding normal working capital
financing in the ordinary course of business consistent with past practice and
amounts incurred to fund Transaction Costs and the defeasance of the Debentures
as contemplated in section 5.4(c), (B) issue or sell debt securities or (C)
guarantee the payment of any third party indebtedness;


 


(xii)          adopt
or enter into a plan of complete or partial liquidation, dissolution,
restructuring or recapitalization of NSULC or any of its Subsidiaries;


 


(xiii)         satisfy
or settle any material claim prior to the same being due, relinquish any
material contractual rights, commence any material claim out of the ordinary
course of business or amend or otherwise vary any existing claim


 


43

















 


out of the
ordinary course of business except as disclosed in the Disclosure Letter;


 


(xiv)        pre-pay
any mortgage indebtedness or, except in the ordinary course of business
consistent with past practice, pay, discharge or satisfy any material claims,
liabilities or obligations (absolute, accrued, contingent or otherwise);


 


(xv)         transfer,
sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel,
abandon or allow to lapse or expire or otherwise dispose of (by merger,
consolidation, sale of stock or assets or otherwise), or agree to transfer,
sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel,
abandon, or allow to lapse or expire or otherwise dispose of, any material
entity, material business or material assets;


 


(xvi)        waive,
release, settle or compromise any pending or threatened suit, action, claim,
arbitration, mediation, inquiry, proceeding or investigation against IPC REIT
or any of its Subsidiaries, other than where the amounts paid or to be paid
either (A) do not exceed $1,000,000 in the aggregate for all such waivers,
releases, settlements or compromises or (B) are fully covered by insurance
coverage maintained by IPC REIT, provided that in each case any such waiver,
release, settlement or compromise includes a full release of IPC REIT and its
applicable Subsidiaries with respect to the matters covered by the subject
litigation;


 


(xvii)       sell or
otherwise dispose of the securities of any of its Subsidiaries or any Owned
Properties or Leased Properties, or grant additional security or create a Lien
(other than as required under the KeyBank Facility or other Permitted Encumbrances)
encumbering such assets;


 


(xviii)      except for
entering into derivatives in respect of natural gas, electricity or other
utilities for hedging purposes only, consistent with past practice, and for a
period of no more than one year, enter into any forward, swap, hedge or other
similar financial obligations;


 


(xix)         acquire
(by merger, amalgamation, consolidation or acquisition of shares or assets) any
Person or make any investment either by the purchase of securities,
contributions or capital, property transfer, or purchase of any property or
assets of any other Person, if any of the foregoing would be material;


 


(xx)          modify,
amend, terminate or enter into any Contract, or enter into any other
transaction with (A) any trustee, director or officer of IPC REIT or any of its
Subsidiaries, (B) any holder of record or, to the knowledge of IPC REIT,
beneficial owner of 5% or more of the Units, the IPC Realty Preferred Shares or
any other class of securities of IPC REIT or any of its Subsidiaries or (C) to
the knowledge of IPC REIT, any Affiliate or


 


44

















 


associate of
any such officer, trustee, director, holder of record or beneficial owner;


 


(xxi)         (A)
grant to any trustee, director, officer or employee of IPC REIT or any of its
Subsidiaries any increase in compensation or benefits in any form (except for
routine annual salary or wage increases, all in the ordinary course of business
consistent with past practice), (B) commit to or make a loan to any such trustee,
director, officer or employee, or (C) except as required by applicable Laws,
enter into or otherwise modify any employment or change of control arrangements
or contract with any such Person (whether with an existing employee or a new
employee);


 


(xxii)        (A) make
any payments in respect of any existing retention, change in control or bonus
plan adopted by IPC REIT or any of its Subsidiaries, (B) adopt any new
retention, bonus, severance, change in control or retirement plan for the
benefit of trustees, directors, officers or employees of IPC REIT or any of its
Subsidiaries or (C) make any payments to such trustees, directors, officers or
employees not consistent with past practice, without Buyer’s prior written
consent;


 


(xxiii)       establish,
adopt or amend any Employee Plan except as required by applicable Law;


 


(xxiv)       except (A)
with the consent of Buyer, such consent not to be unreasonably withheld, or (B)
with respect to the entering into of a Tenant Lease in accordance with the
terms of an offer to lease entered into prior to the date hereof and contained
in the Data Room Information, enter into any lease or agreement to lease, or
terminate or accept a surrender of a lease, with respect to an area of 25,000
square feet or more without prior notification to Buyer sufficiently in advance
of concluding the lease as to permit a meaningful opportunity for consultation.
For purposes of this section 5.1(e)(xxiv), consent of Buyer shall be deemed to
have been given if no response is received from Buyer within three Business
Days following a written request therefor, which request shall be accompanied
by all material details regarding the proposed Tenant Lease;


 


(xxv)        except in
the ordinary course consistent with past practice or as required by applicable
Law, enter into, modify or amend in any material respect or terminate any
Contract, agreement, commitment or arrangement that provides for per annum
payments by IPC REIT or any Subsidiary of more than $500,000. For purposes of
this section 5.1(e)(xxv), consent of Buyer shall be deemed to have been given
if no response is received from Buyer within three Business Days following a
request therefor, which request shall be accompanied by a completed copy of
such proposed Contract, agreement, commitment or arrangement;


 


45

















 


(xxvi)       make any
material Tax election or settle or compromise any material federal, state,
local or foreign income Tax liability, unless such election or compromise is
required by law or necessary to qualify or preserve the status of any
Subsidiary as a partnership for federal income tax purposes or to preserve the
ability of IPC US to elect to be treated as a real estate investment trust for
federal income tax purposes; or take or fail to take any material action that
could affect the ability of IPC US to elect to be treated as a real estate
investment trust for US federal income tax purposes for the taxable year of IPC
US that includes the Closing Date; or


 


(xxvii)      authorize
or enter into any agreement to do any of the foregoing prohibited matters;


 


(f)            without
limiting the provisions of section 7.2, it shall use commercially
reasonable efforts to maintain and to cause each Subsidiary to maintain its
existing insurance except where replaced by insurance from insurers with at
least as favourable credit ratings where such replacement insurance offers
similar coverage;


 


(g)           it
shall use commercially reasonable efforts to defend all lawsuits or other
legal, regulatory or other proceedings challenging or affecting the property or
assets of IPC REIT or any of its Subsidiaries;


 


(h)           it
shall advise Buyer in writing promptly after it acquires knowledge of:


 


(i)        any event
or state of fact that would render any representation or warranty of the
Sellers contained in this Agreement, untrue, inaccurate or incomplete in any
material respect or, where already qualified by references to materiality or
Material Adverse Effect, in any respect (and for any representation or warranty
which expressly speaks solely of a specific date, if it would have been untrue,
inaccurate or incomplete in respect of such date);


 


(ii)       the
occurrence of any Material Adverse Effect;


 


(iii)      any breach
by the Sellers of any covenant contained herein; and


 


(iv)      any death,
disability, resignation, termination of employment or other departure of any
executive officer of IPC REIT or of any of its Subsidiaries.


 


5.2          Covenants Relating to
the Transactions.


 


IPC REIT
hereby agrees that between the date of this Agreement and the Closing Date or
the date on which this Agreement has been terminated pursuant to
Article 10:


 


(a)           it
shall cause the BR Option Agreement and Shareholders Agreement to be terminated
prior to or on the Closing Date without cost to any party to such


 


46

















 


agreements beyond amounts accrued to the date
of termination in the ordinary course and consistent with past practice;


 


(b)           subject
to confirmation that insurance coverage is maintained as contemplated in
section 7.2 and provided the conditions precedents in Article 3 in favour
of the Sellers shall have been satisfied or waived, it shall use commercially
reasonable efforts to  obtain and
deliver to Buyer on the Closing Date evidence reasonably satisfactory to Buyer
of the resignations, effective as of the Closing Date, of the trustees of IPC
REIT and, to the extent designated by Buyer to IPC REIT in writing at least
five Business Days prior to the Closing Date, the directors of IPC REIT’s
Subsidiaries;


 


(c)           it
shall, and shall cause each of its Subsidiaries to, take such actions as are
necessary to reorganize their respective capital, assets and structure as Buyer
may reasonably require; provided, however, that (i) no such reorganization will
be undertaken unless Buyer has agreed to pay the reasonable implementation
costs and any direct or indirect costs and liabilities including tax costs and
liabilities that may be incurred to unwind any such reorganization if Buyer
does not complete the Transactions, including actual out-of-pocket costs and
expenses for filing fees and legal counsel and auditors which may be incurred,
(ii) to the extent reasonably practicable, the parties shall seek to have any
such reorganization made effective on the day ending immediately prior to the
Closing Date; and (iii) no such reorganization shall be considered to
constitute a breach of the covenants, representations or warranties hereunder;


 


(d)           upon
the request of Buyer, IPC REIT shall, and shall cause each of its Subsidiaries
to, take such actions as are necessary to effect the Transactions in such
manner that Buyer or one or more of its Affiliates makes a loan to IPC US
simultaneously with or immediately prior to the Closing, in an aggregate
principal amount which does not exceed the existing intercompany indebtedness of
IPC US owing to IPC Realty and to other Subsidiaries of NSULC at the date of
the making of the loan. Subject to section 5.4(c), the proceeds of such loan,
if made, shall be used to repay the existing intercompany indebtedness owing by
IPC US to IPC Realty Limited and to other Subsidiaries of NSULC and shall then
be distributed to IPC REIT and to PRF (in such manner as may be determined by
IPC REIT) simultaneously with the Closing. To the extent Buyer or its
Affiliates make such loan to IPC US, the portion of the proceeds of such loan
which is ultimately distributed by NSULC to IPC REIT (other than the portion
used to repay the Defeasance Loan) shall reduce the NSULC Purchase Price
payable by Buyer in accordance with section 2.1(a)(i) and the portion of the proceeds
which is ultimately distributed by IPC Realty to PRF shall reduce the IPC
Realty Purchase Price payable by Buyer in accordance with section 2.1 (a)(ii);


 


(e)           it
shall reasonably cooperate with Buyer and its Affiliates in connection with the
arrangement of the financing or syndication thereof for the Transactions, and
in connection with the repayment, conversion, discharge, refinancing,
redemption, defeasance or retirement of any indebtedness of IPC REIT or any of
its


 


47

















 


Subsidiaries, including, without limitation,
obtaining a payoff letter in a form reasonably satisfactory to Buyer for the
KeyBank Facility and undertaking or causing its applicable Subsidiaries to
undertake such debt or equity financings (including upwards financing of
existing mortgages), lend and borrow such intercompany loans, make such
distributions, and engage in such other transactions as Buyer directs in
connection with the Closing, provided that IPC REIT will not be obligated to
assume any obligations or liabilities or do anything that would be prejudicial
to IPC REIT or any of its Subsidiaries;


 


(f)            it
shall use its best efforts to obtain Unitholder Approval, except to the extent
that the Board has effected a change in its recommendation in accordance with
section 6.5 hereof; and


 


(g)           it
shall cooperate with Buyer and its Affiliates and shall use reasonably
commercial efforts to obtain tenant estoppel certificates for any of the Owned
Properties or Leased Properties, as Buyer may reasonably deem appropriate.


 


5.3          Plans.


 


(a)           No
further Units shall be acquired or issued in connection with the Distribution
Reinvestment Plan after the date hereof.


 


(b)           IPC
shall suspend the IPC REIT Deferred Unit Plan such that no Options or other entitlements
shall be issued under the IPC REIT Deferred Unit Plan after the date hereof,
except for the issuance of additional Options (on a monthly basis) in
accordance with section 7.3 of the Deferred Unit Plan in lieu of cash
distributions. Subject to the completion of the Transactions, all amounts due
to holders of Options under the IPC REIT Deferred Unit Plan on account of the
additional Options issued as contemplated in the previous sentence shall be
paid prior to, or concurrent with, the Closing. All amounts due to holders of
Options under the IPC REIT Deferred Unit Plan as of the date hereof are set out
in the Disclosure Letter.


 


(c)           IPC
shall suspend the IPC REIT Option Plan such that no Options or other
entitlements shall be issued under the IPC REIT Option Plan after the date
hereof. All amounts due to holders of Options under the IPC REIT Option Plan
are set out in the Disclosure Letter.


 


5.4          Defeasance of
Convertible Debentures.


 


(a)           Subject
to section 5.4(d), IPC REIT shall defease all of its obligations under the
Indenture prior to Closing in accordance with the provisions of section 10.5 of
the Indenture and by paying the Defeasance Amount on terms satisfactory to
Buyer, acting reasonably, including without limiting the foregoing, paying or making
provisions to the satisfaction of the trustee under the Indenture for the
payment of all other sums payable with respect to the Debentures (including all
applicable expenses of the trustees in connection therewith).


 


(b)           Each
of IPC REIT and Buyer shall proceed as diligently as reasonably practicable
following the execution and delivery of this Agreement, in a coordinated
fashion, and use reasonable best efforts to cooperate in the preparation and
negotiation of any documentation required in connection with the defeasance and
IPC REIT will provide Buyer with a reasonable


 


48

















 


opportunity to engage in all discussions with
the trustee under the Indenture with respect to such defeasance and review and
comment on such documentation.


 


(c)           Notwithstanding
anything to the contrary herein, IPC Realty II, LLC shall be entitled to loan
the Defeasance Amount (the “Defeasance Loan”) to NSULC to permit NSULC to make
a distribution to IPC REIT so that IPC REIT is able to carry out its
obligations under section 5.4(a), and NSULC shall pay a market rate of interest
for such loan. If Buyer elects in accordance with section 5.2(d) to partially
effect the Transactions through a loan to IPC US simultaneously with or
immediately prior to Closing and IPC Realty II, LLC has made the Defeasance
Loan to NSULC, then the Sellers shall cause NSULC to use a portion of the
proceeds ultimately received by NSULC from IPC US pursuant to the transactions
contemplated by section 5.2(d) to pay off the Defeasance Loan to IPC Realty II,
LLC. Following Closing, IPC REIT shall have no further obligation with respect
to the Defeasance Loan as contemplated in this section 5.4(c).


 


(d)           If
requested by Buyer, the parties shall cooperate, at Buyer’s expense, to
encourage the conversion of Debentures that are “in-the-money” and to otherwise
seek to retire or redeem the Debentures through purchase, redemption pursuant
to consent solicitation or otherwise as may be directed by Buyer at Buyer’s
expense, all in accordance with the terms of the Indenture and applicable Laws.


 


(e)           At
Closing, all of IPC REIT’s liabilities and benefits under the Indenture in
respect of any Debentures which at the time of Closing have not been converted
into Units or purchased by Buyer or otherwise redeemed by IPC REIT shall be
assumed by Buyer (or such other Affiliate of the Parent as may be designated by
the Parent).


 


5.5          Dissolution of IPC
REIT.


 


On the Closing
Date following the purchase of the Purchased Shares by Buyer (or as soon as
practicable thereafter), the board of
trustees of IPC REIT (or any replacement trustee instituted pursuant to the
Unitholder Resolution) shall promptly:


 


(a)           pay
for and/or reserve against all Transaction Costs, provided that any Transaction
Costs in excess of the Maximum Transaction Costs shall be subject to Section
11.4(a);


 


(b)           distribute
pro rata the NSULC Purchase Price and the amounts, if any, received by IPC REIT
in accordance with section 5.6(b) (less the payment referred to in section
5.4(c)(i) to (i) the holders of Options in accordance with the terms of the IPC
REIT Option Plan and IPC REIT Deferred Unit Plan and (ii) the Unitholders upon
redemption of the Units, and allocate all taxable income to the Unitholders and
holders of Options, as applicable; and


 


(c)           thereafter,
proceed to dissolve IPC REIT.


 


49

















 


5.6          Treatment of Cash.


 


NSULC and its
Subsidiaries at Closing will be entitled to all of the cash and assets held by
IPC REIT, other than cash necessary to pay the NSULC Purchase Price and any
Transaction Costs not paid on or prior to the Closing Date. On the Closing
Date, IPC REIT shall contribute all of the cash and assets held by IPC REIT,
other than the foregoing excluded amounts, to NSULC.


 


5.7          Financial Statements


 


On or prior to
the Closing Date, IPC REIT shall provide Parent with audited annual and
unaudited interim financial statements for IPC REIT and its consolidated
Subsidiaries for the periods required under, and otherwise complying with, the
requirements of, Regulation S-X promulgated by the United States Securities and
Exchange Commission, including with respect to the reconciliation of such
financial statements to United States generally accepted accounting principles
(collectively, the “Financial Statements”). Seller shall use commercially
reasonable efforts to cause Deloitte & Touche LLP, IPC REIT’s independent
public accountants, to agree to perform the following acts: (a) consent to the
inclusion, or incorporation by reference, of the Financial Statements in the
current registration statement and related prospectus for the best efforts
public offering of the common stock of Parent, in Parent’s Form 8-K or Form
8-K/A in respect of the completion of the Transactions, in Parent’s Form 10-K
for the year ending December 31, 2007, and in such other filings by Parent with
the United States Securities and Exchange Commission in which it may be
required to include such Financial Statements (such as proxy statements or
registration statements) and (b) promptly cooperate in any underwriter or
selected dealer due diligence process in respect of any offering where the
registration statement includes such Financial Statements, including without
limitation, by providing customary comfort letters. Any costs incurred in the
preparation and delivery of the Financial Statements shall be for the account
of Buyer, regardless whether or not the Transactions are completed.


 


5.8          Covenants Relating to
IPC US.


 


The Sellers
covenant that they will not take any actions, or fail to take any actions,
between the date of this Agreement and the Closing Date or the date on which
this Agreement has been terminated pursuant hereto, that will result in any of
the statements set forth in sections 4.1(t)(xxii) through 4.1(t)(xxx) to no
longer be true and correct. The Sellers will, following consultation with
Buyer’s counsel, immediately suspend or cause to be suspended any such
activities which cause IPC US to fail to be in compliance with the statements
set forth in sections 4.1(t)(xxii) through 4.1(t)(xxx), inclusive, and take all such other actions as required to maintain
the compliance in all material respects of IPC US with such statements.


 


ARTICLE 6


ACQUISITION PROPOSALS AND
SUPERIOR PROPOSALS


 


6.1          No solicitation, etc.


 


Following the
date hereof until the date upon which this Agreement is terminated, the Sellers
agree, except as otherwise expressly provided in this Article 6:


 


50

















 


(a)           not,
directly or indirectly, through any officer, trustee, director, employee,
investment banker, financial advisor, accountant or other representative or
agent of the Sellers or any Subsidiary of IPC REIT or otherwise to: (i)
solicit, initiate or knowingly encourage or facilitate (including by way of
furnishing information or entering into any form of agreement or understanding
or providing any other form of assistance) the initiation of any inquiries,
proposals or offers that constitute or that may reasonably be expected to lead
to an actual or potential Acquisition Proposal; (ii) participate in any
discussions or negotiations regarding or furnish any information or access to
any Person with respect to any actual or potential Acquisition Proposal; (iii)
withdraw, qualify or modify, or publicly propose to withdraw, modify or
qualify, in a manner adverse to Buyer the approval and recommendation to
Unitholders by the Board of the Transactions; (iv) approve, recommend or remain
neutral with respect to, or propose publicly to approve, recommend or remain
neutral with respect to, any Acquisition Proposal; or (v) cause or permit IPC
REIT or any of its Subsidiaries to enter into any agreement related to any
Acquisition Proposal (other than a confidentiality agreement contemplated in
section 6.4(a)). For greater certainty, IPC REIT shall not be deemed in breach
of this section 6.1(a) solely by virtue of referring any third party who may
communicate with IPC REIT or its agent to the provisions of this Agreement;


 


(b)           immediately
to cease and cause to be terminated any existing solicitations, encouragements,
activities, discussions or negotiations with any Person (other than Buyer, any
of its Affiliates or any of their representatives or agents) with respect to
any actual or potential Acquisition Proposal whether or not initiated by any of
the Sellers;


 


(c)           not to
release or permit the release of any Person from or waive or forbear in the
enforcement of any confidentiality or standstill agreement to which such Person
is a party, except to allow such Person confidentially to propose to the Board
an Acquisition Proposal not procured in contravention of the Sellers’
obligations under subsections (a) or (b) of this section 6.1 (an “Unsolicited
Acquisition Proposal”) that the Board determines in good faith, after receipt
of advice from its financial advisors and outside legal counsel, constitutes or
is reasonably likely to result in a Superior Proposal; and


 


(d)           immediately
to cease to provide and cause not to be provided to any other party with access
to information concerning IPC REIT and its Subsidiaries (including through
access to IPC REIT’s electronic data site) and, to the extent it is entitled to
do so under the applicable confidentiality agreements, request the return or
destruction of all confidential information provided to any third party that
has entered into a confidentiality agreement with IPC REIT relating to any
potential Acquisition Proposal.


 


51

















 


6.2          Go Shop Period.


 


Notwithstanding
anything to the contrary herein, including for certainty sections 6.1, 6.3 and
6.4, but subject to complying with sections 6.5 through 6.9 and 11.2, IPC REIT
shall be entitled during period from the date of this Agreement to and
including September 30, 2007 (the “Go Shop Period”) to (a) take or carry-out
any actions otherwise restricted by section 6.1 and otherwise continue any
existing activities, discussions or negotiations with any Person with respect
to any actual or potential Acquisition Proposal, (b) make available to any
Person non-public information relating to IPC REIT and/or its Subsidiaries
and/or (c) receive any Acquisition Proposal (including, for greater certainty,
any Unsolicited Acquisition Proposal) from any Person whatsoever; provided
however, that, during Go Shop Period, IPC REIT shall (i) promptly and fully
keep Buyer informed of the number of Persons with whom IPC REIT is in current
activities, discussions or negotiations with in respect of any actual or
potential Acquisition Proposal, (ii) provide on a weekly basis Buyer with a
list or copies of the information and access to similar information as that
provided to a Person (except that IPC REIT shall not be required to provides
copies of or access to such information to the extent that such information was
already provided or made available to Buyer); and (iii) provide Buyer with a
copy of any Acquisition Proposal (including, for greater certainty, any
Unsolicited Acquisition Proposal) forthwith after it is received by IPC REIT or
its Subsidiaries. Buyer and Parent acknowledge and agree that the provisions of
6.3 and 6.4 shall not apply with respect to discussions or negotiations with
any Persons during the Go Shop Period; provided, however, that IPC REIT shall
be required to obtain an executed confidentiality agreement in accordance with
section 6.4(a) prior to providing any Person with access to any non-public
information regarding IPC REIT or any of its Subsidiaries. From and after the
expiration of the Go Shop Period, IPC REIT shall be obligated to comply with
all of the provisions of this Article 6, including sections 6.1, 6.2 and
6.4, with respect to all Acquisition Proposals, including any Acquisition
Proposal received prior to the expiration of the Go Shop Period.


 


6.3          Acquisition
Proposals.


 


IPC REIT
shall, as promptly as practicable and in any event within 24 hours after the
time of receipt, notify Buyer of all future Acquisition Proposals of which any
Seller or any Subsidiary of IPC REIT or any of their respective trustees,
officers, investment bankers, financial advisors, accountants or other
representatives are or become aware, or any amendments to the foregoing, or any
request for non-public information relating to IPC REIT or any of its
Subsidiaries in connection with any potential Acquisition Proposal or for
access to the trustees, directors, employees, 
properties, Books and Records of IPC REIT or any other non-public
information relating to IPC REIT and/or any Subsidiary in connection with a
potential Acquisition Proposal, and shall provide Buyer with a copy of or, in
the case of any non-written Acquisition Proposal, a summary in reasonable
detail of (i) any notice from any Person informing it that such Person is
considering making, or has made, an Acquisition Proposal, and (ii) any Acquisition
Proposal (or any amendment thereto), in each case forthwith after it is
received by IPC REIT or its Subsidiaries. Such notice to Buyer shall be made
orally and in writing and shall indicate such details, to the extent known, of
the proposal, inquiry or contact as Buyer may reasonably request, including the
identity of the Person making such proposal, inquiry or contact and the
material terms and conditions of such Acquisition Proposal, inquiry, proposal,
discussion, negotiation or request. IPC REIT shall promptly and fully keep
Buyer


 


52

















 


informed
of the status and general progress (including amendments or proposed
amendments) of any such request or Acquisition Proposal.


 


6.4          Access to
Information.


 


IPC REIT will
not make available, after the date hereof, any non-public information to any
Person (other than Buyer) except to any Governmental Entity as required by Law.
If IPC REIT receives a written request (after the date hereof and prior to the
Unitholder Approval) for non-public information relating to IPC REIT and/or its
Subsidiaries or for access to the Books and Records of IPC REIT and/or its
Subsidiaries or any of them in connection with an Unsolicited Acquisition
Proposal that the Board determines in good faith, after consultation with
financial advisors and outside legal counsel, constitutes or is reasonably
likely to result in a Superior Proposal, then IPC REIT:


 


(a)           may,
notwithstanding section 6.1(a) or section 6.1(d) but subject to compliance with
section 6.3 and provided IPC REIT has entered into (and provided Buyer with a
copy of, identifying the Person granted access) a confidentiality agreement
with such Person on terms no more favourable to such Person (including with
respect to standstill restrictions) than those in the Confidentiality Agreement
as of the date it was executed, provide such Person with access to such
information and engage in discussions or negotiations with such Person; and


 


(b)           will
provide Buyer with a list of or copies of the information and access to similar
information as that provided to such Person (except that IPC REIT shall not be
required to provide copies of or access to such information) to the extent such
information was already provided or made available to Buyer).


 


6.5          Approval of Superior
Proposal.


 


Notwithstanding
sections 2.4(g) and 6.1, if IPC REIT receives an Unsolicited Acquisition
Proposal, IPC REIT may accept, approve, recommend or enter into any agreement
in respect of such Acquisition Proposal if:


 


(a)           the Unitholder
Approval shall not have been obtained;


 


(b)           such
Acquisition Proposal constitutes a Superior Proposal;


 


(c)           IPC
REIT has given written notice to Buyer that there is a Superior Proposal
together with all documentation related to and detailing the Superior Proposal
and its intention to withdraw, withhold, qualify or modify in a manner adverse
to Buyer its approval or recommendation of the Unitholder Resolution;


 


(d)           IPC
REIT has complied with this Article 6 including, for greater certainty,
section 6.6;


 


(e)           five
Business Days (the “Matching Period”) shall have elapsed from the later of (i)
the date Buyer received the notice and documentation referred to in section
6.5(c) and (ii) the date Buyer was provided with a copy of such Acquisition


 


53

















 


Proposal (including any agreements evidencing
the terms thereof). If the date of the Unitholder Meeting would occur before
the expiry of such Matching Period, IPC REIT may postpone the date of the
Unitholder Meeting by the shortest practicable number of days to avoid such
result; and


 


(f)            IPC
REIT complies with the provisions of sections 10.3(e) and 11.2(a) with respect
to the termination of this Agreement and the payment of the Termination Fee.


 


6.6          Right to Match.


 


(a)           Buyer
may, but is not required to, during the Matching Period, offer in writing to
amend the terms of the Transactions and, if it does so, then the Board shall
review any such offer in good faith, in consultation with its financial and
outside legal advisors and, if the Board determines that the Acquisition
Proposal would thereby cease to be a Superior Proposal, it will cause the
Sellers to enter into an amendment to this Agreement reflecting the offer by
Buyer to amend the terms of the Transactions.


 


(b)           If
Buyer does not offer to amend the terms of the Transactions or if Buyer does so
offer but the Board determines in good faith, after receipt of advice from its
financial advisors and outside legal counsel, that the Acquisition Proposal
continues to constitute a Superior Proposal (after taking into account any
amendments to this Agreement proposed by Buyer) and therefore rejects Buyer’s
offer to amend, IPC REIT may terminate this Agreement; provided, however, that
IPC REIT must comply with the provisions of sections 10.3(e) and 11.2(a) with
respect to the termination of this Agreement and the payment of the Termination
Fee.


 


6.7          Reaffirmation of
Recommendation.


 


The Board
shall promptly reaffirm its recommendation of the Transactions by press release
after: (a) any Acquisition Proposal that the Board determines not to be a
Superior Proposal is publicly announced or made; or (b) the Board makes the
determination referred to in section 6.6(a). Buyer and its counsel shall be
given a reasonable opportunity to review and comment on the form and content of
any such press release, recognizing that whether or not such comments are
appropriate will be determined by IPC REIT, acting reasonably. Such press
release shall state that the Board has determined that the Acquisition Proposal
is not a Superior Proposal.


 


6.8          Amendments to
Acquisition Proposals.


 


Any material
amendment of an Acquisition Proposal (other than such an amendment as
constitutes an improvement to the Unitholders and is made after the expiry of a
Matching Period (as such period may be extended) within which Buyer had an
unexercised right to match pursuant to section 6.6) shall constitute a new
Acquisition Proposal for the purposes of this Article 6.


 


54

















 


6.9          Compliance.


 


The Sellers
shall ensure that the Subsidiaries of IPC REIT and their respective trustees,
directors, officers, representatives and agents and any financial advisors or
other advisors or representatives retained by them are aware of the provisions
of this Article 6 and shall be responsible for any breach of this
Article 6 by all such parties.


 


ARTICLE 7


COVENANTS OF BUYER


 


7.1          Covenants Relating to
the Transactions.


 


Buyer hereby
agrees that between the date of this Agreement and the Closing Date or the date
on which this Agreement is terminated pursuant to Article 10:


 


(a)           except
as permitted by this Agreement or as required by applicable law, it shall not
knowingly take any action that would interfere with or be inconsistent with the
Transactions or which would render, or that reasonably may be expected to
render, any representation or warranty made by it in this Agreement untrue in
any material respect or, where already qualified by materiality, in any
respect, at any time prior to the Closing Date; and


 


(b)           it
shall advise IPC REIT in writing promptly after it acquires knowledge of:


 


(i)        any event
or state of fact that would render any representation or warranty of Parent and
Buyer contained in this Agreement, untrue, inaccurate or incomplete in any
material respect or, where already qualified by materiality, in any other
respect (and for any representation or warranty which expressly speaks solely
of a specific date, if it would have been untrue, inaccurate or incomplete in
respect of such date); and


 


(ii)       any breach
by Parent or Buyer of any covenant contained herein; and


 


(c)           it
shall advise IPC REIT in writing promptly after the date of this Agreement, and
in any event within 15 days after the date hereof, of the existing mortgages that
Buyer intends to defease or prepay at Closing and shall take such actions as
are necessary to defease or prepay such mortgages at Closing.


 


7.2          Insurance and
Indemnities.


 


(a)           Notwithstanding
any other term of this Agreement, IPC REIT shall be permitted to secure
pre-paid non-cancellable trustees’ and officers’ liability insurance coverage
for the current and former trustees, directors and officers of IPC REIT and its
Subsidiaries on a six year “trailing” (or “runoff”) basis, provided that, in
satisfying such obligation, IPC REIT shall not pay any premium in excess of
$450,000, plus GST.


 


(b)           For a
period of six years from the Closing Date, Buyer shall cause the Subsidiaries
of IPC REIT to assume and indemnify or hold harmless and, if applicable,
provide


 


55

















 


advancement of expenses to, all current and
former trustees, directors and officers of IPC REIT and its Subsidiaries to the
extent such Persons are currently indemnified by and lawfully entitled to indemnity
from IPC REIT or any of its Subsidiaries or have the right to advancement of
expenses pursuant to IPC REIT’s or any of its Subsidiaries’ existing indemnity
agreements dated January 29, 2007 and constating documents in existence as of
the date hereof, including the indemnities set out in the Declaration of Trust,
for liabilities and obligations of IPC REIT or any of its Subsidiaries for acts
or omissions occurring on or prior to the Closing Date (including acts or
omissions occurring in connection with the approval and completion of the
Transactions).


 


(c)           The
provisions of this section 7.2 are intended to be for the benefit of, and will
be enforceable by, each insured or indemnified party, his or her heirs and his
or her legal representatives and, for such purpose, IPC REIT hereby confirms
that it is acting as agent and trustee on their behalf. Furthermore, the
provisions of such sections shall survive the termination of this Agreement as
a result of the occurrence of the Closing Date.


 


ARTICLE 8


COVENANTS OF PRF AND BR


 


8.1          Covenants Relating to
the Transactions.


 


Until the
Closing Date or the date on which this Agreement has been terminated pursuant
to Article 10, each of PRF and BR agrees to use commercially reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable to perform their obligations
under Article 2 and Article 3 as promptly as is practicable so as to
give effect to the Transactions, including the execution and delivery of such
documents as the other parties hereto may reasonably require.


 


ARTICLE 9


FURTHER ASSURANCES AND CONDITIONS


 


9.1          Satisfaction of
Closing Conditions.


 


Subject to the
conditions herein provided, each of IPC REIT and Buyer agrees to use
commercially reasonable efforts to take, or cause to be taken, all action and
to do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective as promptly as is practicable the Transactions,
including the execution and delivery of such documents as the other parties
hereto may reasonably require, and, without limiting the generality of the
foregoing, shall use commercially reasonable efforts:


 


(a)           to
obtain all necessary government or Regulatory Approvals and Required
Contractual Consents, waivers, permits, consents, reviews, orders, rulings,
decisions, and exemptions (including, among others, those of the Toronto Stock
Exchange or securities or regulatory authorities) and waiver or expiration of
all waiting or suspensory periods, in each case required to be obtained by it;


 


(b)           to
satisfy (or cause the satisfaction of) the conditions precedent to Closing set
forth in Article 3, the satisfaction of which are under its control;


 


56

















 


(c)           to
defend all lawsuits or other legal, regulatory or other proceedings challenging
or affecting this Agreement or the consummation of the Transactions;


 


(d)           to
oppose, lift or rescind any cease trade order, injunction or other prohibition
or other order which adversely affects any party’s ability to consummate the
Transactions; and


 


(e)           to
effect all necessary registrations, filings and applications under all
applicable Laws.


 


Each of IPC REIT and Buyer, where appropriate, shall reasonably
cooperate with the other in taking such actions. Notwithstanding the foregoing,
the provisions of section 9.1 shall not be deemed to require Parent or Buyer,
in connection with obtaining any Regulatory Approval, to enter into any
agreement, consent decree or other commitment requiring Parent or any of its
Affiliates (including for this purpose NSULC or any of its Subsidiaries) to
divest or hold separate any assets or to take any action that would have a
material adverse effect on the business, affairs, results of operations,
condition (financial or otherwise) or results of Parent and its Affiliates
(including for this purpose NSULC and its Subsidiaries), taken as whole.


 


ARTICLE 10


TERM AND TERMINATION


 


10.1        Term.


 


Except as
expressly provided herein, this Agreement shall be effective from the date
hereof until the earlier of (a) the completion of the Transactions on the
Closing Date and (b) the termination of this Agreement in accordance with its
terms.


 


10.2        Termination by Mutual
Agreement.


 


This Agreement
may be terminated by agreement in writing at any time prior to the Closing Date
by mutual consent of IPC REIT, on behalf of the Sellers, and Buyer.


 


10.3        Termination by IPC
REIT.


 


IPC REIT, on
behalf of the Sellers, may, without prejudice to any other rights, terminate its
obligations (and the obligations of PRF and BR) under this Agreement by written
notice to Buyer in the following circumstances when not in default in any
material respect in the performance of its covenants and obligations under this
Agreement or in breach of its representations and warranties contained herein:


 


(a)           the
Closing Date has not occurred by the Outside Date provided that IPC REIT, on
behalf of the Sellers, may not terminate this Agreement pursuant to this
section 10.3(a) if at the proposed time of such termination, any condition in
section 3.2(a)(i) or section 3.2(a)(ii) has not been satisfied as a result of
the action or inaction of any of the Sellers, and provided further however that
if the completion of the Transactions is delayed by (x) an injunction or order
made by a


 


57

















 


Governmental Entity of competent jurisdiction
or (y) the parties not having obtained the Regulatory Approvals or Required
Contractual Consents then, provided that such injunction or order is being
contested or appealed or such Regulatory Approvals or Required Contractual
Consents are actively being sought, and there is a reasonable prospect that
they will be obtained, as applicable, the Outside Date shall be extended to and
the termination rights pursuant to this section 10.3(a) shall not be available
until March 31, 2008;


 


(b)           Buyer
shall have breached any of its representations, warranties, covenants or other
agreements contained in this Agreement (for representations, warranties,
covenants or other agreements qualified as to materiality, in any respect, and
for all other representations, warranties, covenants or other agreements, in
any material respect) and such breach is not curable or, if curable, is not
cured by the earlier of 15th day after written notice of the breach
has been given to Buyer by IPC REIT and the Outside Date;


 


(c)           any
Law makes, or any Governmental Entity shall have issued an order, decree or
injunction making, the consummation of the Transactions illegal or otherwise
permanently prohibited, and such order, decree or injunction shall have become
final and non-appealable;


 


(d)           Unitholder
Approval is not obtained at the Unitholder Meeting; or


 


(e)           immediately
prior to it entering into a definitive agreement with respect to a Superior
Proposal provided that (i) the Sellers have not materially violated the
provisions of Article 6 with respect to such Superior Proposal, (ii) the
Board has determined to terminate this Agreement in accordance with section 6.5
and has authorized the Sellers and/or IPC REIT to enter into a definitive
agreement with respect to such Superior Proposal, (iii) concurrently with
termination of this Agreement, IPC REIT pays to Buyer the Termination Fee in
accordance with section 11.2 and (iv) immediately after the termination of this
Agreement, IPC REIT (and the Sellers, if applicable) enters into a definitive
agreement with respect to such Superior Proposal.


 


provided that if a Termination Fee Event shall have occurred, no
termination under this section 10.3 shall be effective unless and until
IPC REIT shall have paid to Buyer the Termination Fee in accordance with the
terms of section 11.2.


 


10.4        Termination by Buyer.


 


Buyer may,
without prejudice to any other rights other than as are provided in section
11.3, terminate its covenants and obligations under this Agreement by written
notice to IPC REIT in the following circumstances when not in default in any
material respect in the performance of its obligations under this Agreement or
in breach of its representations and warranties contained herein:


 


(a)           the
Closing Date has not occurred by the Outside Date, provided that Buyer may not
terminate this Agreement pursuant to this section 10.4(a) if at the proposed


 


58

















 


time of such termination, any condition in
section 3.3(a)(i) or section 3.3(a)(ii) has not been satisfied as a result of
the action or inaction of any of Parent or Buyer, and provided further however
that if the completion of the Transactions is delayed by (x) an injunction or
order made by a Governmental Entity of competent jurisdiction or (y) the
parties not having obtained the Regulatory Approvals or Required Contractual
Consents then, provided that such injunction or order is being contested or
appealed or such Regulatory Approvals or Required Contractual Consents are
actively being sought, and there is a reasonable prospect that they will be
obtained, as applicable, the Outside Date shall be extended to and the
termination rights pursuant to this section 10.4(a) shall not be available
until March 31, 2008;


 


(b)           the
Sellers shall have breached their representations, warranties, covenants or
other agreements contained in this Agreement (for representations, warranties,
covenants or other agreements qualified as to materiality or to Material
Adverse Effect, in any respect, and for all other representations, warranties,
covenants or other agreements, in any material respect) and such breach is not
curable or, if curable, is not cured by the earlier of the 15th day
after written notice of the breach has been given to IPC REIT (on behalf of the
Sellers) by Buyer and the Outside Date;


 


(c)           any
Law makes, or any Governmental Entity shall have issued an order, decree or
injunction making, the consummation of the Transactions illegal or otherwise
permanently prohibited, and such order, decree or injunction shall have become
final and non-appealable;


 


(d)           Unitholder
Approval is not obtained at the Unitholder Meeting;


 


(e)           there
shall have occurred or be disclosed to the public or Buyer (if not previously
disclosed to the public or Buyer) any Material Adverse Effect since the date of
this Agreement; or


 


(f)            a
Termination Fee Event shall have occurred.


 


10.5        Effect of Termination.


 


In the event
of the termination of this Agreement pursuant to sections 10.2, 10.3 or 10.4,
this Agreement (except for sections 2.5, 11.1, 11.2, 11.3, 11.4, 12.1 and 12.4) shall forthwith
become void and cease to have any force or effect without any liability on the
part of either party hereto or any of its Affiliates; provided that nothing in
this section 10.5 shall relieve any party to this Agreement of liability for
any breach of any covenant or agreement in this Agreement occurring prior to
the termination thereof.


 


59

















 


ARTICLE 11


TERMINATION FEE EVENT


 


11.1        Termination Fee Event.


 


A “Termination Fee Event” shall occur if:


 


(a)           the
Board withholds, withdraws, qualifies or modifies in a manner materially
adverse to Buyer its approval or recommendation of the Transactions (including
the recommendation of the Board in favour of the Unitholder Resolution);


 


(b)           the
Board accepts, approves or recommends, or enters into any agreement or
arrangement with respect to any Superior Proposal; or


 


(c)           the
Board fails to reaffirm its recommendation of the Transactions by press release
as required under section 6.7,


 


provided, in each case, such an event shall not constitute a
Termination Fee Event where Buyer is in material default in the performance of
its obligations under this Agreement. This section 11.1 shall survive the
termination of this Agreement.


 


11.2        Payment of Termination
Fee and Termination Expenses.


 


(a)           If
this Agreement is terminated by Buyer upon the occurrence of a Termination Fee
Event, IPC REIT shall pay the Termination Fee to Buyer by bank draft or wire
transfer no later than the third Business Day following the termination of this
Agreement. If IPC REIT wishes to terminate this Agreement pursuant to
section 10.3 at a time when a Termination Fee Event has previously
occurred, it shall pay the Termination Fee to Buyer by bank draft or wire
transfer prior to the termination of this Agreement.


 


(b)           If
this Agreement is terminated in accordance with section 10.3(d), section 10.4(b)
or section 10.4(d), IPC REIT and its Subsidiaries shall reimburse Buyer for the
reasonable, actual out-of-pocket costs and expenses incurred by or on behalf of
Buyer in connection with the entering into of the Agreement and Transactions up
to $2,500,000 (the “Termination Expenses”); such expenses to be paid to Buyer
(or as it may direct) within three Business Days of such termination by bank
draft or wire transfer of immediately available funds to account designated by
Buyer.


 


(c)           If
this Agreement is terminated in accordance with section 10.3(d) or section
10.4(d), and if (i) after the date hereof and prior to such termination, a
Person (or any representative of a Person) has made an Acquisition Proposal or
publicly announced any intention to make an Acquisition Proposal that has not
been withdrawn, and (ii) within 12 months of any such termination, IPC REIT or
any of IPC REIT’s Subsidiaries enters into an agreement with respect to such
Acquisition Proposal or such Acquisition Proposal shall have been completed,
then IPC REIT shall pay to Buyer (or as it may direct) an amount equal to the
Termination Fee less the Termination Expenses by bank draft or wire transfer of
immediately available funds to an account designated by Buyer, on the earlier
of the date that an agreement


 


60

















 


with respect to the Acquisition Proposal is
entered into or the consummation of the Acquisition Proposal.


 


(d)           This
section 11.2 shall survive the termination of this Agreement.


 


11.3        Liquidated Damages.


 


In the event
the Termination Fee and/or Termination Expenses are paid to Buyer on account of
a termination of this Agreement by Buyer in accordance with Article 10 and
section 11.2, no other amounts will be due and payable as damages or otherwise
by the Sellers and Buyer hereby accepts that the Termination Fee and/or
Termination Expenses are in lieu of any damages or any other payment or remedy
to which Buyer could otherwise be entitled. Buyer agrees that the Termination
Fee and the Termination Expenses constitute payment of liquidated damages which
are a genuine anticipated assessment or estimate of the damages which it will
suffer or incur as a result of the event giving rise to such damages and
resulting in the termination of this Agreement and does not and will not
constitute payment of a penalty. Each of the Sellers irrevocably waives any
right it may have to raise as a defence that any such liquidated damages are
excessive or punitive. The foregoing shall not be construed to impair the right
of Parent or Buyer to seek or obtain specific performance or other equitable
remedies to enforce the performance by the Sellers of their obligations under
this Agreement. This section 11.3 shall survive the termination of this
Agreement


 


11.4        Other Fees and
Expenses.


 


(a)           Except
as otherwise expressly provided in this Agreement, IPC REIT and its
Subsidiaries shall be responsible for and bear all of the Transaction Costs. No
later than five Business Days prior to the scheduled Closing Date, IPC REIT
shall provide Buyer with a list of all Transaction Costs (whether paid or not).
Nothing in this Agreement shall prevent or limit IPC REIT from paying prior to
Closing any Transaction Costs (up to the Maximum Transaction Costs) incurred in
connection with pursuing or consummating this Agreement and the Transactions.
To the extent that the Transaction Costs exceed the Maximum Transaction Costs,
such excess amount shall reduce, on a pro rata basis, the NSULC Purchase Price
and IPC Realty Purchase Price.


 


(b)           Notwithstanding
anything to the contrary herein, if the Closing occurs, Buyer shall be solely
responsible for all other costs, expenses and fees other than Transaction Costs
incurred by any of the parties to this Agreement in connection with, or incidental
to, the Transactions, including, without limitation, (A) all fees, costs or
other expenses incurred as a result of compliance with section 5.4 (other than
the repayment of the portion of the loan from IPC Realty II, LLC to NSULC for
the Defeasance Amount as contemplated in section 5.4(c)) and the defeasance of
the Debentures, (B) all land transfer taxes, transfer taxes and all other
taxes, duties, registration charges or other like changes properly payable, if
any, in connection with the consummation of the Transactions and (C) all fees,
costs and other expenses incurred in dealing with lenders, including mortgage
assumption processing, refinancing, defeasance or similar fees.


 


(c)           This
section 11.4 shall survive the termination of this Agreement.


 


61

















 


ARTICLE 12


GENERAL


 


12.1        Disclosure.


 


Except as
required by applicable Laws or the rules of any securities exchange upon which
such party’s securities are listed, no party shall make any public announcement
or statement with respect to the Transactions or this Agreement without the
approval of the others which shall not be unreasonably withheld or delayed.
Moreover, the parties agree to provide to the others copies of any public
announcement for the other’s approval and otherwise to consult with each other
prior to issuing each public announcement or statement with respect to the
Transactions or this Agreement, subject to the overriding obligations of
applicable Laws and applicable securities exchange rules. Each of IPC REIT and
Buyer agrees that, promptly after entering into this Agreement, IPC REIT shall
issue a press release announcing the entering into of this Agreement. This
section 12.1 shall survive the termination of this Agreement


 


12.2        Guarantee.


 


Parent
unconditionally and irrevocably guarantees to and in favour of the Sellers the
full and complete performance by Buyer of each and every one of Buyer’s
obligations hereunder. The Sellers shall not be obligated to exhaust their
remedies against Buyer as a condition precedent to being entitled to demand
performance of this guarantee.


 


12.3        Assignment.


 


Each of Parent
and Buyer may assign all or any portion of its rights and/or obligations under
this Agreement, in whole or in part, to one or more Affiliates of Parent, but,
if such assignment takes place Parent and the applicable Buyer shall continue
to be liable jointly and severally with the assignee for any obligations
hereunder. This Agreement shall not otherwise be assignable by any party hereto
without the prior written consent of the other parties hereto, which consent
may be unreasonably withheld.


 


12.4        Governing Law.


 


This Agreement
shall be governed by and construed in accordance with the Laws of the Province
of Ontario and of Canada applicable therein (without regard to conflict of Laws
principles) and each of the parties attorns to the non-exclusive jurisdiction
of the competent courts of the Province of Ontario for any action, suitor
proceeding arising out of or relating to this Agreement or the matters
contemplated hereby (and agree not to commence any such action, suit or
proceeding relating thereto except in such courts). The parties to this
Agreement hereby irrevocably and unconditionally waive any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or the matters contemplated hereby in the courts of the Province of Ontario and
hereby further irrevocably and unconditionally waive and agree not to plead or
claim in any such court that any such action, suit or proceeding so brought has
been brought in an inconvenient forum. This section 12.4 shall survive the
termination of this Agreement


 


62

















 


12.5        Amendments.


 


This Agreement
may not be amended except by written agreement signed by all of the parties to
this Agreement. For greater certainty, the written agreement of those Persons
referred to in section 7.2(c) shall not be required, except that no
amendment to section 7.2 or relating to a Person’s rights thereunder may
be effected on or after the Closing Date without such Person’s written
agreement.


 


12.6        Waiver and
Modification.


 


IPC REIT on
behalf of IPC REIT, PRF and BR on the one hand, and Buyer on behalf of Buyer
and Parent, on the other hand, may waive or consent to the modification of, in
whole or in part, any inaccuracy of any representation or warranty made to them
hereunder or in any document to be delivered pursuant hereto and may waive or
consent to the modification of any of the covenants herein contained for their
respective benefit or waive or consent to the modification of any of the
obligations of the other parties hereto. For any such waiver or consent to be
effective, it must be in writing executed by: (a) IPC REIT on behalf IPC REIT,
PRF and/or BR if any of such parties is granting such waiver or consent; or by
(b) Buyer on behalf Buyer and/or Parent if any of such parties is granting such
waiver or consent. No waiver shall operate as an ongoing waiver or as a waiver
of any other matter whatsoever.


 


12.7        Severability.


 


If, in any
jurisdiction, any provision of this Agreement or its application to any party
or circumstance is restricted, prohibited or unenforceable, such provision
shall, as to such jurisdiction, be ineffective only to the extent of such
restriction, prohibition or unenforceability without invalidating the remaining
provisions of this Agreement and without affecting the validity or
enforceability of such provision in any other jurisdiction or without affecting
its application to other parties or circumstances.


 


12.8        Specific Performance
and Other Relief.


 


Subject to
section 11.3 but notwithstanding any other section of this Agreement, it is
recognized and acknowledged that a breach by any party of any material
obligations contained in this Agreement will cause the other party to sustain
injury for which it would not have an adequate remedy at Law for money damages.
Accordingly, in the event of any such breach, any aggrieved party shall be
entitled to the remedy of specific performance of such obligations and
interlocutory, preliminary and permanent injunctive and other equitable relief
in addition to any other remedy to which it may be entitled, at Law or in
equity.


 


12.9        Actions of IPC REIT on
Behalf of Sellers.


 


Each Seller
irrevocably appoints IPC REIT to act on its behalf to take all such actions
which this Agreement contemplates may be taken by IPC REIT on its behalf, as
IPC REIT may deem appropriate in its sole discretion, and agrees that Buyer
shall be entitled to rely upon such actions of IPC REIT for all purposes
hereunder.


 


63

















 


12.10      Counterparts.


 


This Agreement
may be executed in one or more counterparts which together shall be deemed to
constitute one valid and binding agreement, and delivery of the counterparts
may be effected by means of telecopier transmission.


 


12.11      Time.


 


Time shall be
of the essence in this Agreement.


 


12.12      Notices.


 


Any notice,
request, consent, agreement or approval which may or is required to be given
pursuant to this Agreement shall be in writing and shall be sufficiently given
or made if delivered, or sent by telecopier, in the case of:


 


(a)           Buyer
and Parent, addressed as follows:


 


Behringer Harvard REIT I, Inc.


15601 Dallas Parkway, Suite 600


Addison, Texas 75001


 


Attention:             Gerald J. Reihsen, III


Executive Vice President


Corporate Development & Legal


 


Fax No.:                (214) 655-1610


 


with a copy (which shall not constitute notice) to:


 


Baker & McKenzie LLP


One Prudential Plaza


130 East Randolph Drive


Chicago, Illinois 60601


 


Attention:             Craig A. Roeder


 


Fax No.:                (312) 698-2365


 


(b)        the
Sellers, addressed as follows:


 


c/o IPC US
Real Estate Investment Trust


175 Bloor
Street East, Suite 705


Toronto,
Ontario  M4W 3R8


 


Attention:             Chief Executive Officer


 


Fax No.:                (416) 929-5314


 


and a copy (which shall not constitute notice) to:


 


64

















 


Davies Ward Phillips & Vineberg LLP


Suite 4400, 1 First Canadian Place


100 King Street West


Toronto, Ontario  M5X 1B1


 


Attention:             Mitchell Finkelstein


 


Fax No.:                (416) 863-0871


 


or to such other address as the relevant Person may from time to time
advise by notice in writing given pursuant to this section. The date of receipt
of any such notice, request, consent, agreement or approval shall be deemed to
be the date of delivery or sending thereof if sent or delivered during normal
business hours on a Business Day at the place of receipt and, otherwise, on the
next following Business Day.


 


12.13      Language.


 


The parties
have required that this Agreement and all deeds, documents and notices relating
to this Agreement be drawn up in the English language. Les parties aux présentes ont exigé
que le présent contrat et tous autres contrats, documents ou avis afférents aux
présentes soient rédigés en langue anglaise.


 


12.14      Limited Liability.


 


The
obligations of IPC REIT hereunder are not personally binding upon, and resort
shall not be had to, nor shall recourse or satisfaction be sought from, the
private property of the trustees of IPC REIT, any of the holders of Units or
any annuitant, but only the property of IPC REIT shall be bound. Any obligation
of IPC REIT in this Agreement shall, to the extent necessary to give effect to
such obligation, be deemed to constitute, subject to the provisions of the
previous sentence, an obligation of the trustees of IPC REIT in their capacity
as trustees of IPC REIT and to the extent of the assets of IPC REIT only.


 


[The
remainder of this page intentionally left blank.]


 


65

















 


IN
WITNESS WHEREOF the parties have executed this agreement.


 


 


	
   

  	
  BEHRINGER
  HARVARD REIT I,

  
	
   

  	
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  by

  	
    (signed)
  Gerald J. Reihsen III

  
	
   

  	
   

  	
    Name: Gerald J. Reihsen, III

  
	
   

  	
   

  	
    Title:   Executive
  Vice President

  



 


 


	
   

  	
  EVERCLEAR ACQUISITION

  
	
   

  	
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  by

  	
    (signed)
  Gerald J. Reihsen III

  
	
   

  	
   

  	
    Name: Gerald J. Reihsen, III

  
	
   

  	
   

  	
    Title:   Executive
  Vice President

  



 


 


	
   

  	
  THE TRUSTEES OF

  
	
   

  	
  IPC US REAL ESTATE

  
	
   

  	
  INVESTMENT TRUST

  
	
   

  	
  BY THEIR AUTHORIZED

  
	
   

  	
  SIGNATORY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  by

  	
    (signed)
  Gary Goodman

  
	
   

  	
   

  	
    Name: Gary Goodman

  
	
   

  	
   

  	
    Title:   President & Chief Executive

  
	
   

  	
   

  	
               Officer

  



 


 


	
   

  	
  PRF HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  by

  	
    (signed)
  Barry Reichmann

  
	
   

  	
   

  	
    Name: Barry
  Reichmann

  
	
   

  	
   

  	
    Title:   President

  



 


 


	
  SIGNED, SEALED & DELIVERED

  	
   

  	
   

  
	
  in the presence of:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (signed) Barry Reichmann

  
	
  (signed) Dora Penk

  	
   

  	
   

  
	
  Witness

  	
   

  	
  Barry Reichmann

  



 


66
















 


IPC US REAL ESTATE INVESTMENT TRUST DISCLOSURE LETTER


 


This document is the Disclosure Letter delivered by IPC US Real Estate
Investment Trust (“IPC REIT”) to Behringer Harvard REIT I, Inc. (“Parent”) and
Everclear Acquisition Corporation (“Buyer”) pursuant to the Purchase Agreement
dated August 14, 2007 (the “Agreement”) between IPC REIT, PRF Holdings Inc.,
Barry Reichmann, Parent and Buyer. Terms and expressions defined in the
Agreement and not otherwise defined herein bear the same meanings in this letter
as in the Agreement. Unless otherwise indicated, all dollar amounts are
expressed in U.S. dollars.


 


Each reference in this Disclosure Letter to a section in the Agreement
should be deemed to refer to that particular section of the Agreement and any
disclosure in this Disclosure Letter that is disclosed in such a way as to make
its relevance or applicability to information called for by another section of
the Agreement reasonably apparent shall be deemed to be disclosed with respect
to such other representation, warranty or covenant in the Agreement whether or
not the particular disclosure in this Disclosure Letter references a particular
representation, warranty or covenant.


 


The fact that any information
is contained herein shall not be construed to mean that such information is
required to be disclosed by the Agreement. Such information shall not be used
as a basis for interpreting the terms “material”, “materiality”, “Material
Adverse Effect”, or comparable qualifying terms in the Agreement.


 

















 


SECTION 1.1 OF THE AGREEMENT


 


DEFINITIONS


 


The defined terms referenced in Section 1.1 of the Agreement shall have
the following meanings:


 


“KeyBank Facility” means the
$200,000,000 credit facility extended to IPC Realty, LLC, IPC Realty II, LLC
and IPC Realty III, LLC by KeyBank National Association, as administrative
agent, and a syndicate of other lending institutions pursuant to the credit
agreement dated December 19, 2004, as amended on December 21, 2004, May 25,
2005 and August 14, 2007;


 


“Leased Properties” means, collectively,
One Oxmoor Place in Louisville, Kentucky, Executive Park in Louisville,
Kentucky, 222 Bloomingdale Road in White Plains, New York, and 500 East Pratt
in Baltimore, Maryland, each as more particularly described in “Section 4.1(p) –
Real Property” of this Disclosure Letter;


 


“Leases” means, collectively, the land
leases to which the Leased Properties are subject to, each as more particularly
described in the footnotes to the property chart in “Section 4.1(p) – Real
Property” of this Disclosure Letter;


 


“OID Note” means the discount note dated
June 26, 2007 issued by IPC (US), Inc. to IPC Realty Limited at the original
issue price of US$97,700,000 and with value at maturity (November 30, 2007) of
US$99,823,830.31;


 


“Owned  Properties”
means, collectively, the office buildings listed in “Section 4.1(p) – Real
Property” of this Disclosure Letter, other than the Leased Properties;


 


“Permitted Encumbrances” means the
following, without duplication:


 


(a)                                 any Lien in respect of any indebtedness or liability disclosed in
the Filed CSA Documents, the Data Room Information or as otherwise disclosed to
the Buyer;


 


(b)                                any Lien in respect of any Contract to which IPC REIT and/or its
Subsidiaries is a party as at the Closing Date, including, but not limited to,
the Shareholders’ Agreement and the Leases;


 


(c)                                 any Lien referred to in any title insurance policies in effect with
respect to the Leased Properties and Owned Properties (and any real property
acquired after the date hereof as permitted under the Agreement) and as
disclosed in the Data Room Information or as otherwise disclosed to the Buyer;


 


(d)                                any Lien for taxes, rates, assessments or other governmental charges
not yet due or for which instalments have been paid based on reasonable
estimates pending final assessments, or any Lien for taxes being contested in
good faith by appropriate proceedings for which adequate reserves determined in
accordance with Canadian generally accepted accounting principles have been
established


 


2

















 


(and as to which the property subject to any
such Lien is not yet subject to foreclosure, sale or loss on account thereof);


 


(e)                                 any Lien in respect of property imposed by law arising in the
ordinary course of business such as materialmen’s, mechanics’, warehousemen’s,
carrier’s and landlord’s Liens and any other non-consensual statutory Lien the
obligation secured by which is not yet due and payable or is being contested in
good faith by appropriate proceedings and for which adequate reserves
determined in accordance with Canadian generally accepted accounting principles
have been established (and as to which the property subject to any such Lien is
not yet subject to seizure, execution, distress, foreclosure, sale or loss on
account thereof);


 


(f)                                   any Lien for work done for or for the benefit of a tenant of a
property;


 


(g)                                any pledge or deposit made in the ordinary course of business to
secure payment of any workers’ compensation insurance, unemployment insurance,
pension or other social security program imposed by any Governmental Entity;


 


(h)                                any Lien arising from or constituted by a good faith deposit in
connection with or to secure the performance of any tender, bid, lease,
government contract or any performance and return of money bond or other
similar obligation incurred in the ordinary course of business (other than any
such obligation in respect of the payment of borrowed money);


 


(i)                                    any Lien arising
from or constituted by any good faith deposit in connection with or to secure
the performance of any statutory obligation, and any surety or appeal bond;


 


(j)                                    any easement,
right-of-way, restrictive covenant, restriction (including zoning and land use
restriction), matter of plat, minor defect or irregularity in title and other
similar claims, charges or encumbrances which do not, in any material respect,
individually or in the aggregate, impair the use or value of the encumbered
property for its intended purposes;


 


(k)                                 encroachments by a property or any facilities
of or used in connection with a property over adjacent lands and permitted
under agreements with the owner of such adjacent lands;


 


(l)                                    undetermined or
inchoate Liens, rights of distress and charges incidental to current operations
of IPC REIT and/or its Subsidiaries which have not at such time been filed or
exercised and of which Buyer has been given notice, or which related to
obligations not due or payable;


 


(m)                              reservations,
limitations, provisos and conditions expressed in any original grants from any
Governmental Entity or other grants of real property, or interests therein,
which do not materially affect the use of the affected land for the purpose for
which it is used by that Person;


 


3

















 


(n)                                the right reserved to
or vested in any Governmental Entity by the terms of any lease, licence,
franchise, grant or permit acquired by that Person or by any statutory
provision to terminate any such lease, licence, franchise, grant or permit, or
to require annual or other payments as a condition to the continuance thereof;


 


(o)                                Liens resulting from
the deposit of cash or securities in connection with surety and appeal bonds
and costs of litigation when required by law, or in connection with contracts,
tenders or expropriation proceedings;


 


(p)                                security given to a
public utility or any Governmental Entity when required by such utility or
authority in connection with the operations of that Person in the ordinary
course of its business;


 


(q)                                any Lien arising by
virtue of any statutory or common law provision relating to banker’s liens,
rights of set-off, recoupment, combination of accounts or similar rights as to
deposit accounts or other funds maintained with a creditor depository
institution;


 


(r)                                   subdivision agreements, site plan control
agreements, development agreements, servicing agreements and cost sharing,
reciprocal and other similar agreements with municipal and other Governmental
Entity affecting the development, servicing or use of a property;


 


(s)                                 facility cost sharing, servicing, reciprocal or
other similar agreements related to the use and/or operation of a property;


 


(t)                                   in respect of any Leased Property, the rights
of the landlord under the ground leases thereof and in the case of any property
having a co-ownership interest, the rights of the other co-owner in the
co-ownership documentation therefor;


 


(u)                                zoning, land use and building restrictions,
by-laws, regulations and ordinances of federal, provincial, municipal or other
governmental bodies or regulatory authorities, including municipal by-laws and
regulations, airport zoning regulations, restrictive covenants and other land
use limitations, public or private, by-laws and regulations and other
restrictions as to the use of a property which do not materially and adversely
interfere with the use of the property affected for the purposes for which such
property is held;


 


(v)                                Liens under capital
leases or operating leases or to secure payment of any indebtedness in respect
of a capital expenditure (a “Purchase Money Obligation”) purchase money
obligations existing on the Closing Date or entered into thereafter, provided
that no such Lien shall extend to any property other than that which is subject
to such capital lease, operating lease or in respect of which such Purchase
Money Obligation arose;


 


4

















 


(w)                              any renewals or
replacements of the Liens referred to above (subject to the restrictions
contained in any such paragraphs); and


 


(x)                                  any other Liens
consented to in writing by the Buyer.


 


5

















 


SECTIONS 4.1(a) AND (c) OF THE AGREEMENT


 


ORGANIZATION, STANDING AND CORPORATE POWER


 


The following Subsidiary of IPC REIT is not in good standing:


 


	
  Entity

  	
   

  	
  State

  	
   

  	
  Status

  
	
  Wanamaker LLC

  	
   

  	
  Delaware

  	
   

  	
  This entity was in the Wanamaker structure prior to IPC REIT’s
  ownership and has not yet been legally dissolved. It has no assets or
  liabilities and does not carry on any business activities. IPC REIT is in the
  process of dissolving this entity.

  



 


6

















 


SECTIONS 4.1(b)(ii), 4.1(c) AND 4.2(b)(ii) OF THE AGREEMENT


 


REGULATORY APPROVALS


 


The following is an exception to the representations in Sections
4.1(b)(ii), 4.1(c) and 4.2(b)(ii) of the Agreement:


 


•                                          Receipt of the approval or deemed approval by the Minister of
Industry Canada under the Investment Canada Act.


 


7

















 


SECTIONS 4.1(b)(iii) AND 4.1(d) OF THE AGREEMENT


 


REQUIRED CONTRACTUAL CONSENTS


 


The following sets forth a list of Required Contractual Consents:


 


•                                          Loan Agreement between IPC Louisville Properties, LLC and Barclays
Capital Real Estate Inc. dated May 31, 2005.


 


•                                          Loan Agreement between IPC New York Properties, LLC and Barclays
Capital Real Estate Inc. dated May 31, 2005.


 


•                                          Loan Agreement between IPC Wichita Properties, LLC and Barclays
Capital Real Estate Inc. dated May 31, 2005.


 


•                                          Loan Agreement between IPC United Plaza Lease, LP and Barclays
Capital Real Estate Inc. with joinder by 17th Ludlow Property,
L.L.C. dated March 3, 2005.


 


•                                          Loan Agreement between Wanamaker Retail Lease, LLC and Column
Financial, Inc. with joinder by Philadelphia Center Realty Associates, L.P.
dated October 7, 2005.


 


•                                          Loan Agreement between IPC New Orleans I, LLC and Column Financial,
Inc. dated November 24, 2003.


 


•                                          Loan
Agreement between Wanamaker Office Lease, LP and Column Financial, Inc. with
joinder by Philadelphia Center Realty Associates, L.P. dated May 30, 2003.


 


•                                          Loan
Agreement between IPC McDonald Properties, LLC and Column Financial, Inc. dated
July 26, 2002.


 


•                                          Loan
Agreement between Arch 1650 Partners, L.P. and Column Financial, Inc. dated
July 22, 2002.


 


•                                          Consolidated,
Amended and Restated Leasehold Mortgage, Assignment of Leases and Rents and
Security Agreement between IPC White Plains Properties, LLC and Credit Suisse
First Boston Mortgage Capital LLC dated April 11, 2001.


 


•                                          Leasehold
Mortgage, Assignment of Leases and Rents and Security Agreement between IPC
XPark Properties, LLC and Credit Suisse First Boston Mortgage Capital LLC dated
October 10, 2000.


 


•                                          Loan
Agreement between IPC Loop Central, LP and Bank of America, N.A. dated November
10, 2005.


 


•                                          Loan
Agreement between IPC Crescent Center, LLC and Bank of America, N.A. dated
October 28, 2005.


 


8

















 


•                                          Loan
Agreement between BofA Plaza LP and Bank of America, N.A. dated March 23, 2005.


 


•                                          Loan
Agreement between IPC MetroCenter, LLC and Bank of America, N.A. dated June 8,
2006.


 


•                                          Loan
Agreement between 21 ESS, LLC and Bank of America, N.A. dated June 5, 2006.


 


•                                          Open-end
Mortgage, Security Agreement, Fixture Filing, Financing Statement and
Assignment of Leases and Rents between Stanwix Street Associates, L.P. and
SunAmerica Life Insurance Company dated December 21, 2000.


 


•                                          Open-end
Construction Mortgage and Security Agreement between Philadelphia Center Realty
Associates, L.P. and PIDC Local Development Corporation dated May 8, 2003, as
amended by Amended and Modification of Loan Agreement, Note and Mortgage,
Assumption and Partial Release Agreement between Philadelphia Center Realty
Associates, L.P. and PIDC Local Development Corporation and Wanamaker, LLC and
Wanamaker Office Lease, LP dated May 28, 2003.


 


•                                          Deed
of Trust, Security Agreement, Assignment of Leases and Rents and Fixture Filing
between IPC Maryland I, LP, Dorothea S. Coy, Dorothea W. Dickerman, and General
Electric Capital Business Asset Funding Corporation dated October 5, 2004.


 


•                                          Consolidated,
Amended and Restated Mortgage, Security Agreement and Fixture Filing between
IPC Florida I, LLC and Transamerica Financial Life Insurance Company dated
November 21, 2003.


 


•                                          Amended
and Restated Mortgage, Assignment of Rents and Security Agreement between City
Center Associates, Ltd. and Greenwich Capital Financial Products, Inc. dated
November 26, 2003 as amended by Loan Assumption and Substitution Agreement
between IPC Florida II, LLC, IPC (US), Inc., City Center Associates, Ltd.,
Delma Real Estate Fund II, LP, Delma Properties, Inc. in favour of LaSalle Bank
National Association, as trustee for the registered holders of Greenwich
Capital Commercial Funding Corp., Commercial Mortgage Trust 2003-C2 dated
September 2004.


 


•                                          Mortgage,
Security Agreement and Fixture Filing between IPC Florida III, LLC and
Metropolitan Life Insurance Company and Metlife Bank, N.A. dated June 1, 2004.


 


•                                          Shareholders’
Agreement among IPC Wanamaker GP, Inc., IPC Wanamaker Holdings, LLC, Century
Philadelphia Wanamaker Associates, LLC and AE-Wanamaker Inc. dated May 30,
2003.


 


•                                          Amended
and Restated Limited Liability Company Agreement of 17th Ludlow
Property, L.L.C. between IPC United Plaza Fee Manager, Inc., IPC United Plaza,
L.P. and OCM Real Estate Opportunities Fund II, L.P. dated March 3, 2005.


 


9

















 


•                                          Amended
and Restated Agreement and Ground Lease by and between the State of Maryland to
the use of Baltimore City Community College and Lockwood Associate, LLC dated
May 29, 2002.


 


•                                          Sublease
between Lockwood Associates, LLC and Riggs & Company dated December 20,
2002.


 


•                                          Workers
Compensation and Employers Liability Policy from New Hampshire Insurance
Company entered into by IPC Real Estate Management, LLC effective March 1,
2007.


 


•                                          Trust
Indenture between IPC REIT and CIBC Mellon Trust Company dated November 26,
2004, as amended by the First Supplemental Indenture dated September 23, 2005.


 


•                                          Application
hosting and software license agreement between IPC Realty Holdings Company and
Yardi Systems, Inc. dated October 8, 2002.


 


To the extent that Buyer
provides notice to IPC REIT pursuant to section 7.1(c) of the Agreement of
Buyer’s intent to defease or prepay any of the existing mortgages set out
above, any such mortgages shall not constitute Required Contractual Consents
for purposes of the Agreement and this Disclosure Letter.


 


10

















 


SECTIONS 4.1(e) AND 5.3(c) OF THE AGREEMENT


 


OPTION PLAN


 


The following table sets forth the weighted average exercise price of
each holder’s Options and the weighted average exercise price of all
outstanding Options, as well as the amounts due to holders of Options (on an
individual and aggregated basis), as at August 14, 2007:


 


	
  Optionees

  	
   

  	
  Unexercised

  Options

  Outstanding

  	
   

  	
  Weighted

  Average

  Exercise Price

  	
   

  	
  Cashless

  Exercise

  Amount

  	
   

  
	
   

  	
   

  	
  (#)

  	
   

  	
  (US$ )(1)

  	
   

  	
  (US$ )(2)

  	
   

  
	
  Donald S. Macdonald

  	
   

  	
  73,000

  	
   

  	
  7.41

  	
   

  	
  171,150

  	
   

  
	
  Jack Bistricer

  	
   

  	
  51,250

  	
   

  	
  7.35

  	
   

  	
  122,813

  	
   

  
	
  Aladin Mawani

  	
   

  	
  51,250

  	
   

  	
  7.35

  	
   

  	
  122,813

  	
   

  
	
  Michael Young

  	
   

  	
  51,250

  	
   

  	
  7.35

  	
   

  	
  122,813

  	
   

  
	
  Derek Watchorn

  	
   

  	
  51,250

  	
   

  	
  7.35

  	
   

  	
  122,813

  	
   

  
	
  Janet Graham

  	
   

  	
  45,000

  	
   

  	
  8.47

  	
   

  	
  57,750

  	
   

  
	
  Gary M. Goodman

  	
   

  	
  168,750

  	
   

  	
  6.44

  	
   

  	
  559,188

  	
   

  
	
  Y. Dov Meyer

  	
   

  	
  146,250

  	
   

  	
  6.43

  	
   

  	
  485,563

  	
   

  
	
  David Dinniwell

  	
   

  	
  10,000

  	
   

  	
  9.38

  	
   

  	
  3,700

  	
   

  
	
  Bruce Wibbels

  	
   

  	
  28,750

  	
   

  	
  7.46

  	
   

  	
  65,988

  	
   

  
	
  Lynn Allen

  	
   

  	
  23,750

  	
   

  	
  7.05

  	
   

  	
  64,138

  	
   

  
	
  Jim Anderson

  	
   

  	
  9,500

  	
   

  	
  7.99

  	
   

  	
  16,715

  	
   

  
	
  Eileen Weyler

  	
   

  	
  10,250

  	
   

  	
  7.35

  	
   

  	
  24,563

  	
   

  
	
  Susan Boroughs

  	
   

  	
  10,250

  	
   

  	
  7.35

  	
   

  	
  24,563

  	
   

  
	
  Debbie McNeal

  	
   

  	
  5,950

  	
   

  	
  6.86

  	
   

  	
  17,180

  	
   

  
	
  Brent Boland

  	
   

  	
  32,000

  	
   

  	
  7.93

  	
   

  	
  58,220

  	
   

  
	
  Holly Belter-Chesser

  	
   

  	
  8,000

  	
   

  	
  8.95

  	
   

  	
  6,440

  	
   

  
	
  Barb Bennett

  	
   

  	
  3,000

  	
   

  	
  9.38

  	
   

  	
  1,110

  	
   

  
	
  Kim Ritchie

  	
   

  	
  3,000

  	
   

  	
  9.38

  	
   

  	
  1,110

  	
   

  
	
  Dora Penk

  	
   

  	
  10,900

  	
   

  	
  7.91

  	
   

  	
  20,017

  	
   

  
	
  Hymie Mida

  	
   

  	
  33,000

  	
   

  	
  7.77

  	
   

  	
  65,490

  	
   

  
	
  Marilou Macandog

  	
   

  	
  4,600

  	
   

  	
  7.24

  	
   

  	
  11,570

  	
   

  
	
  Art Medina

  	
   

  	
  9,000

  	
   

  	
  8.86

  	
   

  	
  7,970

  	
   

  
	
  Peter Eng

  	
   

  	
  19,250

  	
   

  	
  7.96

  	
   

  	
  34,433

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (US$)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Unexercised Options Outstanding

  	
   

  	
  859,200

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sales Price

  	
   

  	
  $

  	
  9.75

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Weighted Average Exercise Price

  	
   

  	
  $

  	
  7.20

  	
  (1)

  	
   

  	
   

  	
   

  	
   

  
	
  Cashless Exercise Amount

  	
   

  	
  $

  	
  2,188,382

  	
   

  	
   

  	
   

  	
   

  	
   

  



 






(1)                                  Weighted average exercise prices have been
rounded to two decimal places.


(2)                                  The cashless exercise amounts are based on a
US$9.75 price per Unit.


 


11

















 


SECTION 4.1(g) OF THE AGREEMENT


 


SUBSIDIARIES


 


A complete and accurate corporate chart showing all of IPC REIT’s
Subsidiaries is attached hereto.


 


12

















 


SECTION 4.1(j) OF THE AGREEMENT


 


ABSENCE OF CERTAIN CHANGES OR EVENTS


 


The
following are exceptions to the representations given by IPC REIT in Section
4.1(j) of the Agreement:


 


Hurricane Katrina


 


Operations
at the Energy Centre in New Orleans were impacted as a result of Hurricane
Katrina in August 2005 and the subsequent flooding to the city. The visible
physical damage to this building consists primarily of damage to the
curtainwall and window systems. A complete evaluation was performed and
forwarded to Chubb Insurance (“Chubb”). The cost of full repair will not be
known until the drawings are completed and the scope is competitively bid. The
costs of full repair are expected to be significant; however, costs in excess
of the deductible are expected to be covered by insurance.


 


Chubb
and IPC REIT have agreed to the repair/replacement scope for all window glasses
and frames. IPC REIT has selected, and the carrier has approved, Faithful Gould
as the project management firm and Verges Rome as the architect for the entire
repair scope. The repairs are estimated to take between 12 to 18 months after a
contractor has been selected to perform the repair works. Construction is
projected to begin in December, 2007.


 


Temporary window repairs, the repairs to the main roof and assorted
balcony roofs and the replacement of the balcony access doors have been
completed. The replacement of the roof top louvers, the lobby granite and the
guard desk are currently underway and are scheduled to be completed in
September, 2007.


 


IPC
REIT has mitigated the business interruption costs by allowing tenants to
re-occupy their leased premises as of November 1, 2005 at reduced rental rates
of 90% of their contractual base rents. Rents will return to contracted amounts
once the building is fully restored. IPC REIT is not aware of any issues
related to its tenants that would be considered material.


 


IPC REIT
continues to negotiate with Chubb regarding the possibility that only the $2.7
million deductible applies against IPC REIT’s claim. IPC REIT awaits Chubb’s
reply to its position. This would be a cost savings of approximately $330,000.


 


IPC REIT’s
insurance claim adjustment process is still ongoing due to the complexity of
the issues involved. However, IPC REIT anticipates recovery of all material
amounts related to the restoration and business interruption costs of Energy
Centre in excess of its deductible noted above.


 


13

















 


222 Bloomingdale Road


 


On November 14, 2006, IPC REIT discovered an oil leak at 222
Bloomingdale Road. IPC REIT engaged consultants to assist with the initial
containment to prevent further infiltration into the garage drainage system and
to collect test samples in accordance with the United States Environmental
Protection Agency. IPC REIT has completed the initial containment, obtained
approval and removed the underground tank. Soil testing was performed and
backfill was authorized for the excavated area. Soil testing for the area of
the tank lines has been completed and a report recommending a specific clean up
scope was submitted for approval by governmental authorities. Costs for the
remaining clean up are not expected to be significant based upon current
information. A new aboveground storage tank has been installed for the
emergency generator and all necessary permits and approvals have been obtained
accordingly.


 


Edgewater, Staten Island, NY


 


On April 11, 2007, IPC New York Properties, LLC received a Summons from
the State of New York Fire Department to appear in court on June 6, 2007. The
action is due to the failure by IPC New York Properties, LLC to have its fire
panel certified and as such it is in violation of the Fire Commissioner’s
Order.


 


IPC New York Properties, LLC was represented by its legal counsel at
the June 6, 2007 hearing. The case has been continued to allow IPC New York
Properties, LLC to make the necessary repairs such that the fire panel can be
certified.


 


Prior to the hearing, three bids were obtained to replace the fire panel
in order to comply with the Fire Commissioner’s Order. Simplex Grinnell was
selected to perform the replacement work at a cost of $672,530. The replacement
is expected to be completed in the fourth quarter. This amount is included in
the schedule of capital expenditures projects in process as set forth under
Section 5.1(e)(x) of this Disclosure Letter.


 


Although currently unknown, it is anticipated that a fine, if any, for
the non-compliance will be immaterial because IPC New York Properties, LLC has
been proactive and diligent in the approach to resolve the matter.


 


Sale of Normandie Village


 


On April 4, 2007, a lawsuit was filed by seven of the twelve Existing
Regular Limited Partners (as defined in the third amendment partnership
agreement dated September 1, 1998 (the “Agreement”) of Normandie Village
Associates, L.P. (the “Partnership”)) against IPC Retail Properties Management,
Inc. (the “General Partner”) and the Partnership, and a summon was served on
April 10, 2007. The Existing Regular Limited Partners comprise 1% of the total
limited partnership interests, IPC Retail Holdings, LLC holds a 48% limited
partnership interest, IPC Realty, LLC holds a 50% limited partnership interest
and the General Partner holds a 1% general partnership interest.


 


The plaintiffs allege breach of contract, claiming that the General
Partner failed to offer Normandie Village to the limited partners for purchase
under the limited partners’ right of first refusal. Normandie Village was sold
by IPC REIT in December 2005 for $9.5 million. The 


 


14

















 


plaintiffs have stated that the amount of damages is unknown and have
placed an upper limit of their damage claim at $10 million.


 


IPC has retained legal representation in Kansas with a law firm that
has experience in the creation and operation of business entities, including
partnership, as well as litigation between members (including partners) of such
entities. IPC REIT and its legal counsel believe that in connection with the
sale of Normandie Village, all necessary consents and authorizations were
obtained by the General Partner and the General Partner complied with the right
of first refusal under the Agreement.


 


15

















 


SECTION 4.1(k) OF THE AGREEMENT


 


ASSETS


 


Nil


 


16

















 


SECTION 4.1(l) OF THE AGREEMENT


 


LITIGATION


 


The following is a list of all suits, claims, actions or proceedings
pending and, to the knowledge of IPC REIT, threatened against or relating to
IPC or any of its Subsidiaries or affecting any of their properties, assets or
operations at law or equity or before any Governmental Entity:


 


Normandie Village Associates, L.P.


 


•                                          See
“Sale of Normandie Village” under Section 4.1(j) of this Agreement.


 


Bank of America Plaza


 


•                                          Mexican
Consulate:  Disturbance of quite
enjoyment. No lawsuit but negotiations ongoing with tenant.


 


222 Bloomingdale Road


 


•                                          See
“222 Bloomingdale Road” under Section 4.1(j) of this Disclosure Letter.


 


•                                          M
Technologies:  Delinquency of $120,073,
eviction filed and served. Expect control of the space within 30 days.


 


•                                          153
Grand:  Former tenant collection of
outstanding rents, approximately $47,000. Tenant business dissolved with no
assets. Settlement of $20,000 reached payable in two instalments (first cheque
forwarded for receipt on August 13, 2007).


 


City Center


 


•                                          Sheila
Turner:  Eviction, space recovered
October 2006. Judgment received and repayment of approximately $6100 being
finalized.


 


City Hall Plaza


 


•                                          Global
Financial:  Continued delinquency,
eviction proceedings filed, tenant has paid delinquent rents, but continues to
owe approximately $13,000 in late and miscellaneous charges. Although IPC is
currently working with tenant to collect, eviction may still be the outcome.


 


Edgewater


 


•                                          See
“Edgewater, Staten Island, NY” under Section 4.1(j) of this Agreement.


 


•                                          MTA
Easement:  No lawsuit. Agreement approved
by lender the week of January 8, 2007. Executed copy and $95,000 settlement
cheque received.


 


17

















 


•                                          Key
Span:


 


•                                          A parcel next to the building was the location of a former gas
relief plant used to store manufactured gas. Demolition of the gas plant
occurred in the spring of 1959. Key Span (“Key Span”), a division of Key Span
Energy, is the current owner of the property. Key Span is a public gas utility
and supplies gas to four of New York’s boroughs, including Staten Island. The
site has been used in recent years as storage for new cars.


 


•                                          IPC was contacted in March 2004 by Key Span, working in conjunction
with the New York State Department of Environmental Conservation (“NYSDEC”) and
Department of Health (“NYDOH”) requesting access to the property, primarily the
parking lot, to conduct testing to determine if the property had been
environmentally impacted by the operation of the former gas plant.


 


•                                          A site-access agreement to place monitoring wells necessary to test
in specific areas six months in duration was signed and testing was performed. The
Edgewater soil boring and ground water samples were collected and analyzed. Preliminary
test results have been received and it appears as if the soil and ground water
has been contaminated with coal and tar and coal/tar byproducts.


 


•                                          A subsequent site-access agreement was executed September 12, 2006
to test other areas closer to the building to further identify the extent of
the contamination. The wells were installed the week of November 20, 2006 and
testing is ongoing.


 


•                                          NYSDEC and NYSDOH have proposed a remedial action plan to address
hazardous waste contamination at the site, which includes the construction of a
barrier containment wall to a depth of approximately 125 feet below ground
surface. At present, this plan has not been approved.


 


•                                          In May 2005, an agreement with Key Span, IPC and Barclays
memorialized Key Span’s commitment to address contamination emanating from the
former site. Key Span agreed to be responsible for payment to the extent
required by the NYSDEC, the NYSDOH and any other administrative agency having
jurisdiction over the site and to perform all investigations and remedial
activities at the Edgewater property required to address the contamination.


 


•                                          IPC has retained an environmental attorney to assist in this matter.


 


•                                          New
York City Economic Development Corporation: 
As a part of the New Stapleton Waterfront development project (former
Home Port development), Front Street is being widened and improved. Although
the City has the right to take the property through condemnation, IPC has been
approached to negotiate a sale of approximately 10,453 square feet of the
property. A land use attorney, specializing in condemnation cases, has been
hired to assist with this negotiation. IPC is currently interviewing appraisers
and will need to secure a surveyor.


 


18

















 


Epic Center


 


•                                          Kenneth
Abel Jr.:  Individual harassment of
building occupants, physical permanent injunction September 2005.


 


•                                          Allen
Gibbs & Houlik:  Legal action and
temporary restraining order issued by court to prevent landlord from
restricting the number of parking spaces made available to the tenant in the
building’s parking garage. IPC has hired local counsel and is in the process of
responding to this complaint. Prior to depositions, a meeting was held with the
tenant on July 19, 2007 in an effort to settle this matter, but no settlement
was reached. Although depositions are scheduled for the last couple of weeks in
August, on August 2, 2007, the attorney for the tenant inquired about settlement.
IPC is waiting for the proposed settlement offer from the tenant.


 


Fifth Third Center


 


•                                          Juice
Time Plus:  Eviction, lawsuit filed to
collect on personal guarantee.


 


Hurstbourne Forum II


 


•                                          Fidelity
Mortgage:  Tenant rental
collection/bankruptcy proof of claim October 2005


 


Hurstbourne Place


 


•                                          Netsysco:  Lease breach. Repayment agreement of $55,200
($1,050 for 48 months).


 


•                                          Strategic
Title:  Eviction, space was left full of
furnishing and equipment currently in control of the landlord. Lawsuit filed to
collect.


 


Hurstbourne Plaza


 


•                                          Gabriels:  Tenant vacated just prior to lease expiration.
Working with attorney to collect $4500 outstanding balance.


 


Hunnington


 


•                                          Marvin
Lawson:  Eviction, collection efforts
ongoing through attorney.


 


IPC Florida I, LLC – Devry


 


•                                          Plantiff filed a claim against IPC Florida I, LLC and Devry
University alleging violations against certain ADA and Florida statutes. Plaintiff
is seeking correction of said violations and that IPC and Devry evaluate their
policies and procedures towards persons with disabilities, and award damages,
reasonable attorney fees and other expenses and other relief as the Court deems
just and proper. Legal counsel has been retained and is evaluating the claim.


 


19

















 


All Properties – Insurance Loss Run Reports


 


•                                          See
also the claims set forth in the insurance loss run reports posted on the
Davies data site under “Property Level – General – Insurance”.


 


20
















 


SECTION 4.1(m) OF THE AGREEMENT


 


COMPLIANCE WITH APPLICABLE LAW


 


See
“222 Bloomingdale Road”, “Edgewater, Staten Island, NY” and “Sale of Normandie
Village” under Section 4.1(j) of this Disclosure Letter.


 


21

















 


SECTION 4.1(o) OF THE AGREEMENT


 


INSURANCE


 


Hurricane
Katrina and the subsequent flooding to New Orleans have impacted on the
operations at the Energy Centre as well as causing physical damage to the
building. As a result, IPC REIT has made a material insurance claim under its
insurance policy with Chubb Insurance. The Energy Centre is insured up to $100
million in respect of wind damage and up to the full replacement cost for other
insurable events. IPC REIT used all commercially reasonable efforts in
obtaining such insurance coverage, and such coverage is standard for commercial
properties in the New Orleans area post-Hurricane Katrina.


 


See
Section 4.1(j) of this Disclosure Letter for further details of this insurance
claim.


 


22

















 


SECTION 4.1(p) OF THE AGREEMENT


 


REAL PROPERTY


 


The
following table lists the Owned Properties and Leased Properties. Footnotes
reference ownership interests in Properties not wholly-owned, directly or
indirectly, by the NSULC.


 


	
  Property

  	
   

  	
  Net Rentable

  Square Feet

  (as at July 31, 2007)

  
	
  Pennsylvania

  	
   

  	
   

  
	
  1650
  Arch Street,  Philadelphia, PA 19103(1)

  	
   

  	
  553,349

  
	
  Wanamaker
  Building,  100 Penn Square East, Philadelphia, PA 19107(2)

  	
   

  	
  1,389,838

  
	
  United
  Plaza,  30 South 17th Street, Philadelphia, PA 19103

  	
   

  	
  617,476

  
	
  11
  Stanwix Street,  Pittsburgh, PA 15222

  	
   

  	
  427,682

  
	
   

  	
   

  	
   

  
	
  Kentucky

  	
   

  	
   

  
	
  Hurstbourne
  Forum Office Park, 150-300 North Hurstbourne Parkway, Louisville, KY 40223

  	
   

  	
  327,811

  
	
  Hurstbourne
  Place, 9300 Shelbyville Road, Louisville, KY 40222

  	
   

  	
  234,896

  
	
  Hurstbourne
  Park, 9200 Shelbyville Road, Louisville, KY 40222

  	
   

  	
  104,237

  
	
  Hurstbourne
  Plaza, 101-315 Whittington Parkway, Louisville, KY 40222

  	
   

  	
  94,265

  
	
  One
  Oxmoor Place, 101 Bullitt Lane, Louisville, KY 40222(3)

  	
   

  	
  134,926

  
	
  Executive
  Park, 100-700 Executive Park, Louisville, KY 40207(4)

  	
   

  	
  109,496

  
	
  Lakeview,
  100 Mallard Creek Road, Louisville, KY 40207

  	
   

  	
  76,438

  
	
  Steeplechase
  Place, 9410 Bunsen Parkway, Louisville, KY 40229

  	
   

  	
  76,666

  
	
  Hunnington
  I, 9420 Bunsen Parkway, Louisville, KY 40220

  	
   

  	
  61,862

  
	
   

  	
   

  	
   

  
	
  Texas

  	
   

  	
   

  
	
  Loop
  Central Office Complex, 4888, 4848, 4828 Loop Central Drive, Houston, TX
  77081

  	
   

  	
  574,944

  
	
   

  	
   

  	
   

  
	
  Florida

  	
   

  	
   

  
	
  2200-2300
  SW 145th Avenue (2 buildings), Miramar FL 33027(5)

  	
   

  	
  222,600

  
	
  5104
  Eisenhower Blvd., Tampa, FL 33634

  	
   

  	
  130,091

  
	
  City
  Center, 100 2nd Avenue South, St. Petersburg, FL 33701

  	
   

  	
  242,115

  
	
   

  	
   

  	
   

  
	
  Louisiana

  	
   

  	
   

  
	
  Energy
  Centre, 1100 Poydras Street, New Orleans LA 70163(6)

  	
   

  	
  757,275

  
	
   

  	
   

  	
   

  
	
  New York / New Jersey

  	
   

  	
   

  
	
  Edgewater
  Plaza, One Edgewater Street, Staten
  Island, NY 10305

  	
   

  	
  251,543

  
	
  222
  Bloomingdale Road, White Plains, NY
  10605(7)

  	
   

  	
  139,678

  



 


23

















 


	
  Property

  	
   

  	
  Net Rentable

  Square Feet

  (as at July 31, 2007)

  
	
  123
  Tice Boulevard, Woodcliffe Lake, NJ

  	
   

  	
  119,772

  
	
   

  	
   

  	
   

  
	
  Ohio

  	
   

  	
   

  
	
  McDonald
  Investment Center, 800 Superior Avenue, Cleveland, OH 44114

  	
   

  	
  477,787

  
	
  Fifth Third Center, 21 East State Street,
  Columbus, OH 43215

  	
   

  	
  330,840

  
	
   

  	
   

  	
   

  
	
  Nevada

  	
   

  	
   

  
	
  Bank
  of America Plaza, 300 South Fourth Street, Las Vegas, NV 89101

  	
   

  	
  255,543

  
	
   

  	
   

  	
   

  
	
  Tennessee

  	
   

  	
   

  
	
  Crescent
  Center, 6075 Poplar Avenue, Memphis, TN 38119

  	
   

  	
  335,811

  
	
  Plaza at MetroCenter, 200, 210 and 220
  Athens Way, Nashville, TN 37228

  	
   

  	
  361,200

  
	
   

  	
   

  	
   

  
	
  Kansas

  	
   

  	
   

  
	
  Epic
  Center, 301 North Main Street, Wichita, KS 76202

  	
   

  	
  289,154

  
	
  One
  Brittany Place, 2024 North Woodlawn, Wichita, KS 76208

  	
   

  	
  57,670

  
	
  Two
  Brittany Place, 1938 North Woodlawn, Wichita, KS 76208

  	
   

  	
  57,559

  
	
   

  	
   

  	
   

  
	
  New Hampshire

  	
   

  	
   

  
	
  City
  Hall Plaza, 900 Elm Street, Manchester, NH 03101

  	
   

  	
  209,684

  
	
   

  	
   

  	
   

  
	
  Massachusetts

  	
   

  	
   

  
	
  One
  Chestnut Place, 10 Chestnut Street, Worcester

  	
   

  	
  183,254

  
	
  Two
  Chestnut Place, 22 Elm Street, Worcester, MA 01608

  	
   

  	
  34,844

  
	
   

  	
   

  	
   

  
	
  Maryland

  	
   

  	
   

  
	
  801
  Thompson Ave., Rockville, MD 20852

  	
   

  	
  50,918

  
	
  500
  East Pratt Street, Baltimore, MD 21202(8)

  	
   

  	
  279,712

  



 


24

















 










(1)                                NSULC indirectly owns a 90% equity interest in 1650 Arch Street.


(2)                                NSULC indirectly owns a 60% equity interest in The Wanamaker
Building.


(3)                                One Oxmoor Place is on land leased from the Bullitt Trust until
December 2063. The ground lease contains renewal options every five years until
expiration. Rent payable in the first renewal period of January 1, 2004 to
December 31, 2009 is $319,954 per annum. Rent for each subsequent renewal
period is the greater of (a) 115% of the previous renewal period’s rent and (b)
the then fair market value, which is to be agreed upon by the landlord and
tenant or, if they cannot agree, ultimately determined by three appraisers. On
August 29, 2003, IPC Commercial Properties, LLC entered into a contract of sale
with the landlord to purchase One Oxmoor Place for $5,376,250, with closing set
to occur on or about December 30, 2008.


(4)                                Executive Park is on land leased from the Arterburn Trust until 2067.
The rent is $18,192 per annum for the entire term of the lease.


(5)                                NSULC indirectly owns an 86% equity interest in the Miramar
buildings.


(6)                                NSULC indirectly owns an 88% equity interest in the Energy Centre.


(7)                                222 Bloomingdale Road is on land leased from Yale University until
December 31, 2083. Rent for the years 2004 to 2023 will be the base rent of $173,980
(2007) per annum adjusted annually based on the change in the consumer price
index (“CPI”).


(8)                                500 East Pratt Street is on land leased from Baltimore City
Community College until January 31, 2050, which term may be renewed by the
tenant upon one year’s notice for a further two 20 year terms (i.e. until
January 31, 2090). Rent for the years 2002 to 2050 will be the base rent of
$450,050.72 (2007) per annum adjusted annually based on the lesser of (a) the
preceding year’s base rent multiplied by the percentage change in the CPI over
the preceding year, or (b) 103% of the preceding year’s base rent, provided
that the base rent for a year shall not be less than the base rent for the
immediately preceding year. The lease also contains a percentage rent clause
equal to 2% of annual gross income.


 


4.1(p)(i):


 


The
August 8, 2007 rent rolls pertaining to the Owned Properties and Leased
Properties are attached hereto.


 


4.1(p)(iv):


 


The
following is an exception to the representations in Section 4.1(p)(iv) of the
Agreement:


 


Pursuant to Section 3(D) of the purchase and
sale agreement for ownership interests dated April 28, 2006 between 21 East
State Street Limited Partnership (the “Seller”) and IPC Fifth Third Holdings,
LLC (the “Buyer”) in respect of the purchase and sale of Fifth Third Center in
Columbus, Ohio, the Seller is entitled to receive a deferred purchase price
amount from 21 ESS, LLC (the “Owner”) in the event that (i) the Owner sells the
land and the improvements thereon to a third party after May 28, 2006 (the “Fee
Transfer”); or (ii) the sale of at least 90% of the direct ownership interests
in the Owner or in the Buyer to a third party purchaser (the “Interests
Transfer”). The deferred purchase price on a Fee Transfer or an Interests
Transfer of 100% of the interests in the Owner or the Buyer is calculated as
follows: with respect to any net proceeds in excess of $73,000,000 received:


 


•                                          the first $1,000,000 shall be paid to the Seller;


 


•                                          the next $1,000,000 shall be paid to the Owner or the Buyer, as
applicable; and


 


•                                          15% of any net proceeds in excess of $75,000,000 shall be paid to
the Seller.


 


25





















 


However, no deferred purchase price is
payable with respect to any Fee Transfer or Interests Transfer in connection
with a takeover bid or similar change in control action involving IPC REIT. In
these circumstances, payment of the deferred purchase price shall remain an
obligation of the Owner of the Buyer, as the case may be.


 


26





















 


SECTION 4.1(r) OF THE AGREEMENT


 


LABOUR MATTERS


 


4.1(r)(i):


 


The
following are exceptions to the representations given by IPC REIT in Section
4.1(r)(i) of the Agreement:


 


•                                          Pro Rata Annual Bonus:  IPC REIT has committed to
providing each officer and other employees of its Subsidiaries with a pro rata annual bonus payable as at the Closing Date. The pro rata bonuses are discretionary and represent the bonuses
to which such officers and employees would otherwise be entitled to in December
of each year for services rendered during the respective year consistent with
past practice. A similar approach will be taken with all of the employees of
IPC REIT and its Subsidiaries located in IPC REIT’s Toronto office. The
aggregate amount payable in respect of such discretionary bonuses is not
expected to exceed $1,500,000.


 


•                                          Mid-Level Executive Retention:  Employees of IPC REIT and
its Subsidiaries, other than senior executives with change of control
agreements, are entitled to retention bonuses ranging from 10% to 40% of their
2007 salaries. The payment of each retention bonus is conditional upon the
employee remaining with IPC REIT following the sale. The aggregate amount
payable in respect of such retention bonuses is approximately US$550,000.


 


•                                          Change of Control for Senior Executives:  On May 15, 2006, three of
the senior executives of IPC REIT, Gary Goodman, Elisabeth Wigmore and Y. Dov
Meyer, entered into change of control agreements with IPC Realty Services Inc. Subsequently,
on November 29, 2006, the change of control agreements of Gary Goodman and
Elisabeth Wigmore were amended and restated and David Dinniwell entered into a
change of control agreement with IPC Realty Services Inc. in connection with
his appointment as Chief Financial Officer of IPC REIT. The aggregate amount
payable under such agreements is approximately US$3.3 million. Elisabeth
Wigmore, as a result of tendering her resignation, will not be entitled to any payments
under her change of control agreement, but is entitled to a Cdn. $250,000 payment
in the event that the Transactions are completed (in addition to her
entitlements to salary and a bonus payable until the completion of the
Transactions).


 


27





















 


4.1(r)(ii):


 


The
following is a list of collective bargaining agreements in which IPC REIT or
its Subsidiaries is a party to:


 


•                                  Agreement effective October 1, 2005 between International Union of
Operating Engineers and Stanwix Street Associates, LP;


 


•                                  Agreement dated October 16, 2000 and memorandum of agreement dated
May 16, 2003 between Building Operators Labor Relations, Inc. and Service
Employees International Union, Local #36, AFL-CIO; and


 


•                                  Agreement between IPC Real Estate Management, LLC and International
Union of Operating Engineers Local 18S effective July 16, 2004.


 


28





















 


SECTION 4.1(s) OF THE AGREEMENT


 


ERISA AND EMPLOYEE PLANS


 


The following are exceptions to the
representations in Section 4.1(s)(viii) of the Agreement:


 


•                                          the consummation of the Transactions will accelerate the vesting of
any unvested Options under the IPC REIT Option Plan and will result in the
payments to optionees as set forth in Sections 4.1(e) and 5.3(c) of this
Disclosure Letter;


 


•                                          the consummation of the Transactions will accelerate the vesting of
any unvested Options under the IPC REIT Deferred Unit Plan and will result in
the payments to participants as set forth in Section 5.3 of this Disclosure
Letter.


 


See also the
discussion under Section 4.1(r)(i) of this Disclosure Letter.


 


29





















 


SECTION 4.1(t)
OF THE AGREEMENT


 


TAX MATTERS


 


The
following are exceptions to the representations of IPC REIT in Section 4.1(t) of
the Agreement:


 


4.1(t)(ii):


 


Philadelphia Tax Audit


 


On
March 2, 2006, IPC (US) Realty Holdings, Inc. (“Holdings”) received a letter
from the Commonwealth of Pennsylvania, Department of Revenue (the “Revenue
Department”) providing that the Bureau of Audits would be conducting a “routine
field audit” of the tax return that was filed by Holdings in Pennsylvania for
the year ended December 31, 2004.


 


On
November 29, 2006, Holdings was provided with the auditor’s preliminary
adjustments, which included a minor adjustment to apportionment and a complete
reduction of the non-business income previously deducted from Pennsylvania
taxable income in the amount of $8,144,596. As a result of these two audit
adjustments, the 2004 Pennsylvania tax liability is expected to increase from
$28,934 to $375,350, resulting in a net increase of $346,416. IPC REIT had
already established a reserve for 2004 Pennsylvania income tax liabilities
amounting to $290,000 above the original liability of $28,934. There is a
sufficient general income tax reserve available to absorb the remaining difference.
IPC REIT has not decided whether to challenge these adjustments.


 


On
March 28, 2007, Holdings was provided with an updated preliminary audit
summary. The updated summary disclosed the expected 2004 tax liability as
$400,650, as opposed to $375,350 listed on the original preliminary report. The
$25,300 increase in tax is a result of an adjustment to the Pennsylvania
apportionment percentage.


 


On
July 11, 2007, Holdings was provided with an official settlement statement. IPC
REIT has decided not to challenge the tax liability of $375,350 set out in the
original preliminary report, but plans to file a petition to challenge the
additional $25,300 increase in tax. IPC REIT has contacted the Revenue
Department and is aiming to conclude the tax audit during the third quarter of
2007.


 


Louisville Tax Audit


 


On
October 3, 2006, IPC Realty LLC (“Realty”) received notices from the Louisville
Metro Revenue Commission requesting amended returns for the years 2002, 2003
and 2004 reflecting adjustments set out in the notices as well as supporting
documentation for certain amounts listed on the original returns. Realty
subsequently filed amended returns for the years 2002 through 2005 and paid an
additional $96,308 in income taxes.


 


30





















 


On
May 30, 2007 and August 9, 2007, Realty received additional requests for
information regarding the amended returns. The amount of tax due to the City of
Louisville could increase up to an additional $160,000 above the amounts
previously paid.


 


4.1(t)(i) and (iii):


 


Real Estate Tax Assessment Appeals


 


The
following real estate tax assessment appeals have been (or may be) filed on
behalf of IPC REIT or its Subsidiaries:


 


	
  Year under Appeal

  	
   

  	
  Property

  
	
  Calendar
  2006-2007

  	
   

  	
  Loop
  Central Office Complex

  
	
  Calendar
  2006

  	
   

  	
  2200-2300
  SW 145th Avenue

  
	
  Fiscal
  2006-2007

  	
   

  	
  222
  Bloomingdale Road

  
	
  Calendar
  2007

  	
   

  	
  Wanamaker
  Building

  
	
  Calendar
  2007

  	
   

  	
  Tice
  Boulevard

  
	
  Calendar
  2007

  	
   

  	
  Hurstbourne
  Forum 2

  
	
  Calendar
  2007

  	
   

  	
  Hurstbourne
  Forum 4

  
	
  Calendar
  2007

  	
   

  	
  Hurstbourne
  Business Center

  
	
  Calendar
  2007

  	
   

  	
  Lakeview

  
	
  Calendar
  2007

  	
   

  	
  Steeplechase

  



 


IPC
REIT is in the process of reviewing 2007 tax assessments as they are received
for possible appeals on other Owned Properties.


 


31





















 


Extensions of Time with Respect to the Filing of Tax Returns


 


The
following Subsidiaries of IPC REIT have filed for an extension of time with
respect to the filing of Tax Returns either singularly or on a consolidated
basis:


 


IPC
(US), Inc.; IPC (US) Realty Holdings Inc.; IPC (US) Realty, Inc.; IPC Equity,
Inc.; IPC Real Estate Management LLC; IPC (US) II, Inc.; IPC California
Holdings, Inc.; IPC Equity II, Inc.; IPC (US) Management Holdings Inc.; IPC
Realty, LLC; IPC Realty II, LLC; IPC Realty III, LLC; IPC NOI Holdings
Management, Inc.; IPC NOI Holdings Management, LLC; IPC NOI Holdings, Inc.; IPC
NOI Holdings, LLC; IPC NOI Management, Inc.; IPC NOI Management, LLC; IPC New
Orleans I, LLC; IPC Maryland I GP, Inc.; IPC Maryland I, LP; IPC Florida I
Holdings, LLC; IPC Florida II Management, Inc.; IPC Florida II, LLC; IPC (US)
Realty Holdings III, Inc.; IPC Florida III Management, Inc.; IPC Florida III,
LLC; IPC Office Holdings Management LLC; IPC Office Holdings Management, Inc.;
IPC Office Holdings, LLC; IPC Office Properties Management, Inc.; IPC Office
Properties Management, LLC; IPC Commercial Holdings Management, Inc.; IPC
Commercial Holdings Management LLC; IPC Commercial Holdings, LLC; IPC
Commercial Properties Management, Inc.; IPC Commercial Properties Management,
LLC; IPC Commercial Properties, LLC; IPC LP/WP Holdings, LLC; IPC Retail
Holdings Management, Inc.; IPC Retail Holdings Management, LLC; IPC Retail
Holdings, LLC; IPC Retail Properties Management, LLC; IPC Retail Properties
Management, Inc.; IPC Retail Properties, LLC; IPC White Plains Holdings
Management, Inc.; IPC White Plains Holdings Management, LLC; IPC White Plains
Holdings, LLC; IPC White Plains Properties Management, Inc.; IPC White Plains
Properties Management, LLC; IPC White Plains Properties, LLC; IPC XPark Holding
Management Inc.; IPC XPark Holdings Management LLC; IPC XPark Holdings, LLC;
IPC XPark Properties Management, Inc.; IPC XPark Properties Management, LLC;
IPC XPark Properties, LLC; IPC McDonald Holdings Management, Inc.; IPC McDonald
Holdings Management, LLC; IPC McDonald Holdings, LLC; IPC McDonald Properties,
LLC; IPC McDonald Properties Management, LLC; IPC McDonald Properties
Management, Inc.; IPC United Plaza Lease, LP; 17th Ludlow Property, L.L.C.; IPC
United Plaza GP, LLC; IPC United Plaza Management, Inc.; IPC United Plaza Fee
Manager, Inc.; IPC United Plaza, LP; IPC Loop Central, LP; IPC Loop Central GP,
Inc.; IPC Crescent Center, LLC; IPC MetroCenter, LLC; IPC Fifth Third Holdings,
LLC; IPC Office Properties, LLC; IPC Retail Holdings Management Inc.; and IPC
(US) Realty Holdings II, Inc.


 


32





















 


SECTION 4.1(u)
OF THE AGREEMENT


 


ENVIRONMENTAL MATTERS


 


The
following are exceptions to the representations in Section 4.1(u)(iv) of the
Agreement:


 


Underground Storage Tanks:


 


1.                    Epic Center – Wichita, KS


 


One 15,000
gallon diesel tank installed in 1985.


 


2.                    Crescent Center – Memphis, TN


 


One
550 gallon diesel tank installed in 1993.


 


3.                    Wanamaker Building, Philadelphia, PA


 


One 2,000 gallon fuel oil tank (single wall steel
tank) installed in 1990.


 


Aboveground
Storage Tanks:


 


1.                    One and Two Chestnut Place, Worcester, NY


 


One 300 gallon diesel tank (cast iron) installed in
1989.


 


2.                    McDonald Investment Center, Cleveland, OH


 


One 10,000 gallon diesel tank (steel construction)
installed in 1992.


 


3.                    222 Bloomingdale, NY


 


One 125 gallon diesel tank installed in
2007.


 


4.                    1650 Arch Street, Philadelphia, PA


 


Two 250 gallon diesel tanks (cast iron)
installed in 1998.


One 500 gallon diesel tank (cast iron)
installed in 2006.


 


5.                    United Plaza, Philadelphia, PA


 


Two 125 gallon diesel tanks (cast iron)
installed in 1995.


One 100 gallon diesel tank (steel)
installed in 1995.


 


6.                    City Hall Plaza, Manchester, NH


 


One 125 gallon diesel tank (steel double
walled) installed in 1992.


 


7.                    Stanwix, Pittsburgh, PA


 


Three 250 gallon diesel tanks (steel double
walled) installed in 2005.


 


33





















 


8.                    500 East Pratt, Baltimore, MD


 


One 350 gallon diesel tank (steel double
walled) installed in 2004.


 


9.                    Hurstbourne Place, Louisville, KY


 


One 1,000 gallon diesel tank (steel double
walled) installed in 1998.


 


10.              Loop
Central Office Complex, Houston, TX


 


Two 100 gallon diesel tanks (steel double
walled) installed in 2001.


One 100 gallon diesel tank installed in
1982.


 


34





















 


SECTION 4.1(z)
OF THE AGREEMENT


 


TRANSACTION COSTS


 


The
following sets forth IPC REIT’s good faith estimate of the Transaction Costs
itemized by applicable category:


 


	
  Estimated Transaction Costs

  	
   

  	
  Dollar Value

  
	
   

  	
   

  	
  (US$)

  
	
  Seller
  Investment Banking Advisory Fees

  	
   

  	
  8,300,000

  
	
  Seller Legal, Tax, Consulting Fees

  	
   

  	
  3,200,000

  
	
  Information
  Circular / Accountants / Other Miscellaneous Costs

  	
   

  	
  800,000

  
	
  Mid-Level
  Employee Retention Bonuses

  	
   

  	
  550,000

  
	
  Directors & Officers Insurance Runoff
  (6-years)

  	
   

  	
  450,000

  
	
  Change of Control and Canadian Employee
  Severance

  	
   

  	
  3,800,000

  
	
  Accrued
  Employee Long-Term Incentive Plan *

  	
   

  	
  1,500,000

  
	
  Canadian
  Office Lease – Remaining Term

  	
   

  	
  250,000

  
	
  Other
  Contingencies (IPC REIT Wind-up Costs)

  	
   

  	
  300,000

  
	
   

  	
   

  	
   

  
	
  Total Estimated Transaction Costs

  	
   

  	
  US$19,150,000

  



 






* Accrued
Employee Long-Term Incentive Plan bonus for 2007 is estimated to be $1,800,000.
The $1,500,000 reflected above assumes an October 31, 2007 closing date.


 


35

















 


SECTION 5.1(e) OF THE AGREEMENT


 


CONDUCT OF BUSINESS


 


The
following items are exceptions to IPC REIT’s covenants contained in Section
5.1(e) of the Agreement:


 


5.1(e)(i) and (iv):


 


•                                          The issuance of additional Deferred Units (on a monthly basis) to
plan participants in accordance with section 7.3 of the Deferred Unit Plan.


 


4.1(e), 4.1(g) and 5.1(e)(iii):


 


•                                          IPC and its Subsidiaries shall be permitted to declare, set aside or
pay any dividend or other distribution or payment of amounts owing under the
OID Note and pursuant to the following documents:


 


•                                          Amended and Restated Limited Liability Company Agreement of 17th
Ludlow Property, L.L.C. between IPC United Plaza Fee Manager, Inc., IPC United
Plaza, L.P. and OCM Real Estate Opportunities Fund II, L.P. dated March 3,
2005.


 


•                                          Shareholders’ Agreement between IPC Wanamaker GP, Inc., IPC
Wanamaker Holdings, LLC, Century Philadelphia Wanamaker Associates, LLC and
AE-Wanamaker Inc. dated May 30, 2003.


 


•                                          Limited Liability Company Agreement of IPC Philadelphia Holdings LLC
between IPC Realty II, LLC and FBE Holdings LLC dated July 22, 2002.


 


•                                          Amended and Restated Limited Liability Company Agreement of IPC NOI
Holdings, LLC between IPC NOI Holdings, LLC, IPC NOI Holdings Management, LLC,
IPC NOI Holdings Inc. and Century New Orleans Holdings LLC dated March 31,
2004.


 


•                                          Amended and Restated Limited Liability Company Agreement of IPC
Florida I Holdings, LLC between IPC Florida I Holdings, LLC, IPC Realty III,
LLC, Shirado LLC and Miramar Associates LLC dated June 1, 2004.


 


•                                          Second Amended and Restated Limited Partnership Agreement of 1301
Chestnut Associates, L.P. between IPC Wanamaker GP, Inc., IPC Wanamaker
Holdings, LLC, Century Philadelphia Wanamaker Assoc., LLC, AE-PENN Square,
Inc., AE-PENN Square Associates, L.P., AE-Wanamaker Associates, LP and
Crosstown Asset Corp. I dated May 30, 2003.


 


•                                          Limited Liability Company Agreement of IPC Dallas I Holdings, LLC
between IPC Dallas I Holdings, LLC, IPC Realty II, LLC and PNL Dallas, L.P.
dated December 8, 2004.


 


36

















 


•                                          Second Amended and Restated Agreement of Limited Partnership of Arch
1650 Partners, L.P. between IPC Philadelphia Management LLC, IPC Philadelphia
Holdings LLC and Walton Street Real Estate Fund I, L.P. dated July 22, 2002.


 


•                                          Promissory Note in the amount of $47,000,000 from Arch 1650
Partners, L.P. in favour of Column Financial, Inc. dated July 22, 2002.


 


•                                          Management Agreement between Wanamaker Office Lease, LP and
IPC/Amerimar Wanamaker Management Co., LLC dated May 30, 2003.


 


•                                          Management Agreement between Wanamaker Retail Lease, LLC and
IPC/Amerimar Wanamaker Management Co., LLC dated May 30, 2003.


 


•                                          Amended Limited Liability Company Agreement of IPC New Orleans I,
LLC between IPC NOI Management, LLC and IPC NOI Holdings, LLC dated November
20, 2003.


 


3.2(a)(vi) and 5.1(e)(iii),(v), (xiv) and (xvii):


 


IPC REIT and its Subsidiaries shall be
permitted to implement the following actions prior to Closing:


 


•                                          In accordance with the share terms, IPC Realty will exercise its
option to cause 1716351 to redeem the 100,000 preferred shares of 1716351
beneficially owned by IPC Realty for a redemption price equal to Cdn. $1,000
per share together with all accrued and unpaid preferential cumulative cash
dividends thereon (calculated at a rate of 10.05%);


 


•                                          IPC Realty will direct 1716351 to (i) pay substantially all of the
redemption proceeds to NSULC in full satisfaction of the aggregate amount of principal
and interest (calculated at a rate of 10% per annum) payable under the terms of
a loan agreement in the principal amount of Cdn. $100,000,000 dated November
17, 2006 between NSULC, as lender, and IPC Realty as borrower (the “Loan
Agreement”); and (ii) pay the balance of the redemption proceeds remaining to
IPC Realty;


 


•                                          In accordance with the share terms, 1716351 will exercise its option
to cause NSULC to redeem the 100,000 preferred shares of NSULC beneficially
owned by 1716351 for a redemption price equal to $1,000 per share together with
all accrued and unpaid preferential cumulative cash dividends thereon
(calculated at a rate of 10.05%);


 


•                                          In fulfilment of IPC Realty’s direction above, 1716351will direct
NSULC to (i) retain and apply substantially all of the redemption proceeds in
full satisfaction of the aggregate amount of principal and interest payable by
IPC Realty under the Loan Agreement; and (ii) pay the balance of the redemption
proceeds remaining to IPC Realty; and


 


•                                          IPC REIT will then acquire the 40 common shares of 1716351 currently
held by IPC Realty for nominal consideration.


 


37

















 


5.1(e)(x):


 


•                                          All capital expenditures incurred to date and to be incurred by IPC
REIT and its Subsidiaries on a going-forward basis in connection with repairing
the damage to the Energy Centre caused by Hurricane Katrina.


 


•                                          All capital expenditures set forth in the table below: 


 


	
  Property

  	
   

  	
  Recorded in Financial

  Statements

  (as of August 14, 2007)

  	
   

  	
  Planned for

  Remainder of 2007

  (as of August 14, 2007)

  	
   

  
	
  Hurstbourne Forum Buildings

  	
   

  	
  $

  	
  51,250

  	
   

  	
  $

  	
  184,750

  	
   

  
	
  One Chestnut Place

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  118,000

  	
   

  
	
  Hurstbourne Park

  	
   

  	
  $

  	
  422,446

  	
   

  	
  $

  	
  0

  	
   

  
	
  Two Brittany Place

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  140,000

  	
   

  
	
  One Oxmoor Place

  	
   

  	
  $

  	
  77,133

  	
   

  	
  $

  	
  0

  	
   

  
	
  Edgewater Plaza

  	
   

  	
  $

  	
  672,530

  	
   

  	
  $

  	
  860,000

  	
   

  
	
  222 Bloomingdale Road

  	
   

  	
  $

  	
  52,688

  	
   

  	
  $

  	
  0

  	
   

  
	
  Wanamaker Building

  	
   

  	
  $

  	
  582,232

  	
   

  	
  $

  	
  0

  	
   

  
	
  City Center

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  100,000

  	
   

  
	
  Crescent Center

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  88,000

  	
   

  
	
  Loop Central Office Complex

  	
   

  	
  $

  	
  1,431,324

  	
   

  	
  $

  	
  1,186,000

  	
   

  
	
  801 Thompson

  	
   

  	
  $

  	
  12,284

  	
   

  	
  $

  	
  75,000

  	
   

  
	
  Others

  	
   

  	
  $

  	
  66,770

  	
   

  	
  $

  	
  0

  	
   

  
	
  Total

  	
   

  	
  $

  	
  3,368,657

  	
   

  	
  $

  	
  2,751,750

  	
   

  



 


38

















 


•                                          All costs associated with the tenant improvements set forth in the
table below:


 


	
  Property

  	
   

  	
  Recorded in Financial

  Statements

  (as of August 14, 2007)

  	
   

  	
  Committed

  (as of

  August 14, 2007)

  	
   

  
	
  One Chestnut Place

  	
   

  	
  $

  	
  1,309,583

  	
   

  	
  $

  	
  9,219

  	
   

  
	
  Epic Center

  	
   

  	
  $

  	
  123,355

  	
   

  	
  $

  	
  740,563

  	
   

  
	
  MetroCenter Buildings

  	
   

  	
  $

  	
  291,299

  	
   

  	
  $

  	
  176,926

  	
   

  
	
  Two Brittany Place

  	
   

  	
  $

  	
  125,190

  	
   

  	
  $

  	
  1,000

  	
   

  
	
  One Oxmoor Place

  	
   

  	
  $

  	
  1,507,784

  	
   

  	
  $

  	
  0

  	
   

  
	
  Edgewater Plaza

  	
   

  	
  $

  	
  115,810

  	
   

  	
  $

  	
  7,200

  	
   

  
	
  123 Tice Boulevard

  	
   

  	
  $

  	
  1,469,216

  	
   

  	
  $

  	
  0

  	
   

  
	
  1650 Arch Street

  	
   

  	
  $

  	
  112,324

  	
   

  	
  $

  	
  0

  	
   

  
	
  11 Stanwix Street

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  250,000

  	
   

  
	
  Energy Centre

  	
   

  	
  $

  	
  1,344,522

  	
   

  	
  $

  	
  451,099

  	
   

  
	
  Wanamaker Office

  	
   

  	
  $

  	
  3,837,942

  	
   

  	
  $

  	
  57,488

  	
   

  
	
  Bank Of America Plaza

  	
   

  	
  $

  	
  204,948

  	
   

  	
  $

  	
  0

  	
   

  
	
  Crescent Center

  	
   

  	
  $

  	
  262,912

  	
   

  	
  $

  	
  401,526

  	
   

  
	
  500 East Pratt Street

  	
   

  	
  $

  	
  547,637

  	
   

  	
  $

  	
  630,765

  	
   

  
	
  Loop Central Office Complex

  	
   

  	
  $

  	
  665,455

  	
   

  	
  $

  	
  665,649

  	
   

  
	
  Royal Caribbean

  	
   

  	
  $

  	
  516,745

  	
   

  	
  $

  	
  0

  	
   

  
	
  Others

  	
   

  	
  $

  	
  238,382

  	
   

  	
  $

  	
  375,490

  	
   

  
	
  Total

  	
   

  	
  $

  	
  12,673,101

  	
   

  	
  $

  	
  3,766,925

  	
   

  



 


39

















 


5.1(e)(xi):


 


•                                          Incurring indebtedness for borrowed money to fund the payment of
amounts owing under the OID Note, which may include the issuance of a new
discount note in replacement of the existing OID Note.


 


5.1(e)(xiv):


 


•                                          Satisfying the repayment of (i) the OID Note on or before November
30, 2007 (which may include the issuance of a new discount note in replacement
of the existing OID Note), (ii) indebtedness incurred for the purpose of
funding the payment of amounts owing under the OID Note, and (iii) any amount
owing by IPC Realty to NSULC under the terms of a loan agreement dated November
13, 2006 between NSULC, as lender, and IPC Realty, as borrower.


 


5.1(e)(xx), (xxi), (xxii) and (xxiii):


 


•                                          See disclosure of “Pro Rata Annual Bonus”, “Mid-Level Executive
Retention” and “Change of Control for Senior Executives”  under Section 4.1(r) of this Disclosure
Letter.


 


40

















 


SECTION 5.3 OF THE AGREEMENT


 


PLANS


 


5.3(b):


 


•                  The following table sets forth the aggregate outstanding Options
under the IPC REIT Deferred Unit Plan held by plan participants, together with
all amounts due to such participants (assuming the Closing occurred on the date
hereof). The actual number of Options held by the plan participants and,
therefore, the actual amounts payable to such participants at Closing, will
continue to increase on a monthly basis in accordance with section 7.3 of the
IPC REIT Deferred Unit Plan.


 


	
  Participants

  	
   

  	
  Deferred Units

  	
   

  	
  Dollar Value

  	
   

  
	
   

  	
   

  	
  (#)(1)

  	
   

  	
  (US$ )(2)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Trustees

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Donald
  Macdonald

  	
   

  	
  4,587.44

  	
   

  	
  44,727.58

  	
   

  
	
  Al Mawani

  	
   

  	
  6,892.36

  	
   

  	
  67,200.51

  	
   

  
	
  Derek
  Watchorn

  	
   

  	
  14,364.08

  	
   

  	
  140,049.76

  	
   

  
	
  Jack
  Bistricer

  	
   

  	
  13,237.70

  	
   

  	
  129,067.57

  	
   

  
	
  Michael
  Young

  	
   

  	
  18,768.33

  	
   

  	
  182,991.20

  	
   

  
	
  Janet Graham

  	
   

  	
  16,581.88

  	
   

  	
  161,673.33

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Officers and Employees

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Gary Goodman

  	
   

  	
  169,915.70

  	
   

  	
  1,656,678.05

  	
   

  
	
  Dov Meyer

  	
   

  	
  171,438.77

  	
   

  	
  1,671,528.04

  	
   

  
	
  Lis Wigmore

  	
   

  	
  161,026.33

  	
   

  	
  1,570,006.74

  	
   

  
	
  David
  Dinniwell

  	
   

  	
  20,227.72

  	
   

  	
  197,220.32

  	
   

  
	
  Zach Vaughan

  	
   

  	
  67.49

  	
   

  	
  657.99

  	
   

  
	
  Peter Eng

  	
   

  	
  15,320.40

  	
   

  	
  149,373.87

  	
   

  
	
  Art Medina

  	
   

  	
  8,584.61

  	
   

  	
  83,699.91

  	
   

  
	
  Alice Chen

  	
   

  	
  2,301.60

  	
   

  	
  22,440.58

  	
   

  
	
  Rommell
  Agustin

  	
   

  	
  1,132.23

  	
   

  	
  11,039.25

  	
   

  
	
  Hymie Mida

  	
   

  	
  7,600.97

  	
   

  	
  74,109.42

  	
   

  
	
  Marilou
  Macandog

  	
   

  	
  1,169.37

  	
   

  	
  11,401.34

  	
   

  
	
  Dora Penk

  	
   

  	
  2,479.95

  	
   

  	
  24,179.53

  	
   

  
	
  Bruce
  Wibbels

  	
   

  	
  34,960.43

  	
   

  	
  340,864.23

  	
   

  
	
  Lynn Allen

  	
   

  	
  20,331.23

  	
   

  	
  198,229.51

  	
   

  
	
  Jim Anderson

  	
   

  	
  18,939.47

  	
   

  	
  184,659.83

  	
   

  
	
  Holly
  Belter-Chesser

  	
   

  	
  9,956.60

  	
   

  	
  97,076.82

  	
   

  
	
  Barb Bennett

  	
   

  	
  2,849.14

  	
   

  	
  27,779.11

  	
   

  
	
  Kim Ritchie

  	
   

  	
  2,849.14

  	
   

  	
  27,779.11

  	
   

  
	
  Noel
  Dauterive

  	
   

  	
  1,150.81

  	
   

  	
  11,220.39

  	
   

  
	
  Angi Billiot

  	
   

  	
  584.68

  	
   

  	
  5,700.62

  	
   

  



 


41

















 


	
  Participants

  	
   

  	
  Deferred Units

  	
   

  	
  Dollar Value

  	
   

  
	
   

  	
   

  	
  (#)(1)

  	
   

  	
  (US$ )(2)

  	
   

  
	
  Nancy Rome

  	
   

  	
  584.68

  	
   

  	
  5,700.62

  	
   

  
	
  Dave Norman

  	
   

  	
  1,150.81

  	
   

  	
  11,220.39

  	
   

  
	
  Brent Boland

  	
   

  	
  5,661.16

  	
   

  	
  55,196.32

  	
   

  
	
  Susan
  Burroughs

  	
   

  	
  2,264.46

  	
   

  	
  22,078.49

  	
   

  
	
  Eileen
  Weyler

  	
   

  	
  2,264.46

  	
   

  	
  22,078.49

  	
   

  
	
  Patrice
  Eubanks

  	
   

  	
  2,264.46

  	
   

  	
  22,078.49

  	
   

  
	
  Janet Chase

  	
   

  	
  2,264.46

  	
   

  	
  22,078.49

  	
   

  
	
  Doug Brewer

  	
   

  	
  2,264.46

  	
   

  	
  22,078.49

  	
   

  
	
  Scott Dant

  	
   

  	
  2,264.46

  	
   

  	
  22,078.49

  	
   

  
	
  Eric Oakley

  	
   

  	
  2,264.46

  	
   

  	
  22,078.49

  	
   

  
	
  John Wright

  	
   

  	
  1,132.23

  	
   

  	
  11,039.25

  	
   

  
	
  Tracy Adams

  	
   

  	
  1,132.23

  	
   

  	
  11,039.25

  	
   

  
	
  Eric Guetig

  	
   

  	
  566.13

  	
   

  	
  5,519.74

  	
   

  
	
  David Seay

  	
   

  	
  566.13

  	
   

  	
  5,519.74

  	
   

  
	
  Michele
  Micciche

  	
   

  	
  566.13

  	
   

  	
  5,519.74

  	
   

  
	
  Katherine
  Panageotes

  	
   

  	
  566.13

  	
   

  	
  5,519.74

  	
   

  
	
  Marita
  Osborne

  	
   

  	
  566.13

  	
   

  	
  5,519.74

  	
   

  
	
  Clete Graham

  	
   

  	
  566.13

  	
   

  	
  5,519.74

  	
   

  
	
  Mike
  Zwolinski

  	
   

  	
  566.13

  	
   

  	
  5,519.74

  	
   

  
	
  David Lawson

  	
   

  	
  566.13

  	
   

  	
  5,519.74

  	
   

  
	
  Brian Parks

  	
   

  	
  566.13

  	
   

  	
  5,519.74

  	
   

  
	
  Cheryl Esper

  	
   

  	
  566.13

  	
   

  	
  5,519.74

  	
   

  
	
  Mike Beard

  	
   

  	
  566.13

  	
   

  	
  5,519.74

  	
   

  
	
  Marian Pusey

  	
   

  	
  566.13

  	
   

  	
  5,519.74

  	
   

  
	
  Bill
  McCarthy

  	
   

  	
  566.13

  	
   

  	
  5,519.74

  	
   

  
	
  Jane Lappi

  	
   

  	
  566.13

  	
   

  	
  5,519.74

  	
   

  
	
  Sandy
  Colburn

  	
   

  	
  566.13

  	
   

  	
  5,519.74

  	
   

  
	
  Total

  	
   

  	
  761,322.67

  	
   

  	
  US$7,422,895.93

  	
   

  



 










(1)                                  Number of outstanding deferred units are as of August 14, 2007 and
have been rounded to two decimal places.


(2)                                  The dollar value for the deferred units is based on a US$9.75  price per Unit.


 


42