BOSTON PIZZA ROYALTIES INCOME FUND ANNUAL INFORMATION FORM For the year ended December 31, 2002 April 30, 2003 TABLE OF CONTENTS Page GLOSSARY...................................................................................................................................................................................... 1 GENERAL........................................................................................................................................................................................ 6 CORPORATE INFORMATION.................................................................................................................................................. 6 Boston Pizza Royalties Income Fund...................................................................................................................................... 6 Boston Pizza Holdings Trust.................................................................................................................................................... 6 Boston Pizza GP Inc................................................................................................................................................................... 6 Boston Pizza Royalties Limited Partnership .......................................................................................................................... 6 Boston Pizza International Inc.................................................................................................................................................. 7 Structure of the Fund.................................................................................................................................................................. 8 DESCRIPTION OF THE BUSINESS......................................................................................................................................... 8 The Fund ...................................................................................................................................................................................... 8 The Partnership ........................................................................................................................................................................... 8 Boston Pizza International Inc.................................................................................................................................................. 9 Industry Overview.................................................................................................................................................................. 9 Trends in the Foodservice Industry .................................................................................................................................... 9 Overview of the Business of BPI....................................................................................................................................... 10 The Boston Pizza Concept.................................................................................................................................................. 10 Franchise Support Systems ................................................................................................................................................ 11 Competitive Strengths......................................................................................................................................................... 12 Growth Strategy ................................................................................................................................................................... 13 Government Regulation ...................................................................................................................................................... 14 Competition........................................................................................................................................................................... 15 LICENSE AND ROYALTY........................................................................................................................................................ 15 The License................................................................................................................................................................................ 15 The Royalty................................................................................................................................................................................ 15 Operating Covenants of BPI in the License and Royalty Agreement.............................................................................. 15 Adjustment of the Royalty ...................................................................................................................................................... 16 Security for the Royalty........................................................................................................................................................... 17 DESCRIPTION OF THE PARTNERSHIP............................................................................................................................... 18 General........................................................................................................................................................................................ 18 Partners ....................................................................................................................................................................................... 18 Partnership Units....................................................................................................................................................................... 18 Allocation of Net Income and Losses ................................................................................................................................... 19 Liquidation Entitlement ........................................................................................................................................................... 20 Voting ......................................................................................................................................................................................... 20 Functions and Powers of Boston Pizza GP Inc. and BPI ................................................................................................... 20 Limited Liability ....................................................................................................................................................................... 20 Transfer of Partnership Units.................................................................................................................................................. 21 Term and Operating Loans ..................................................................................................................................................... 21 Governance Agreement ........................................................................................................................................................... 22 DESCRIPTION OF THE FUND................................................................................................................................................ 22 Declaration of Trust................................................................................................................................................................. 22 Activities of the Fund............................................................................................................................................................... 22 Units and Special Voting Units .............................................................................................................................................. 23 Issuance of Units and Special Voting Units......................................................................................................................... 23 Trustees ...................................................................................................................................................................................... 24 Cash Distributions .................................................................................................................................................................... 25 Redemption Right..................................................................................................................................................................... 25 Meetings of Voting Unitholders............................................................................................................................................. 26 Limitation on Non-Resident Ownership ............................................................................................................................... 27 Amendments to the Declaration of Trust.............................................................................................................................. 28 - i - Term of the Fund ...................................................................................................................................................................... 28 Takeover Bids...........................................................................................................................................................................