CINEPLEX GALAXY INCOME FUND INITIAL ANNUAL INFORMATION FORM April 5, 2004 TABLE OF CONTENTS EXPLANATORY NOTES ......................................................................................................................... 1 CORPORATE STRUCTURE ................................................................................................................... 1 INDUSTRY OVERVIEW.......................................................................................................................... 4 GENERAL DEVELOPMENT OF THE BUSINESS .............................................................................. 5 General............................................................................................................................................. 5 History of the Partnership ................................................................................................................ 5 Recent Developments ...................................................................................................................... 5 Cineplex Odeon Corporation Restructuring .................................................................................... 6 BUSINESS OF THE PARTNERSHIP...................................................................................................... 7 Theatre Circuit ................................................................................................................................. 7 Operations........................................................................................................................................ 7 Business Strategy............................................................................................................................. 9 Services Agreement ....................................................................................................................... 10 Employees...................................................................................................................................... 11 Seasonality..................................................................................................................................... 11 Trademarks .................................................................................................................................... 11 Competition ................................................................................................................................... 11 Relationship with Loews Cineplex Entertainment Inc................................................................... 12 Regulatory Environment................................................................................................................ 12 DESCRIPTION OF THE FUND............................................................................................................. 13 General........................................................................................................................................... 13 Activities of the Fund..................................................................................................................... 13 Units............................................................................................................................................... 14 Issuance of Units............................................................................................................................ 14 Trustees.......................................................................................................................................... 14 Cash Distributions.......................................................................................................................... 16 Redemption at the Option of Unitholders...................................................................................... 16 Repurchase of Units....................................................................................................................... 18 Meetings of Unitholders ................................................................................................................ 18 Limitation on Non-Resident Ownership........................................................................................ 19 Amendments to the Fund Declaration of Trust.............................................................................. 20 Term of the Fund ........................................................................................................................... 20 Take-over Bids............................................................................................................................... 21 Exercise of Certain Voting Rights Attached to Securities of the Trust, Cineplex Galaxy GP and Cineplex Galaxy LP....................................................................................................................... 21 Information and Reports ................................................................................................................ 22 Book-Entry Only System............................................................................................................... 23 Conflicts of Interest Restrictions and Provisions........................................................................... 23 DESCRIPTION OF THE TRUST........................................................................................................... 23 General........................................................................................................................................... 24 Restrictions on Trust’s Trustees’ Powers....................................................................................... 24 Redemption Right .......................................................................................................................... 25 Cash Distributions.......................................................................................................................... 26 Trust Notes..................................................................................................................................... 26 Unit Certificates............................................................................................................................. 28 - ii - Meetings of Unitholders ................................................................................................................ 28 DESCRIPTION OF CINEPLEX GALAXY LP .................................................................................... 28 Capitalization................................................................................................................................. 28 Distributions................................................................................................................................... 28 Support Arrangements ................................................................................................................... 29 Allocation of Net Income and Losses............................................................................................ 30 Exchange Agreement..................................................................................................................... 30 Limited Liability ............................................................................................................................ 31 Transfer of LP Units ...................................................................................................................... 32 Amendment.................................................................................................................................... 32 Meetings......................................................................................................................................... 32 Tag-Along Rights .......................................................................................................................... 33 DESCRIPTION OF CINEPLEX GALAXY GP.................................................................................... 33 Functions and Powers of Cineplex Galaxy GP.............................................................................. 33 Securityholders Agreement............................................................................................................ 33 Withdrawal or Removal of Cineplex Galaxy GP........................................................................... 35 Transfer.......................................................................................................................................... 35 TRUSTEES, DIRECTORS AND OFFICERS ....................................................................................... 35 RISK FACTORS....................................................................................................................................... 38 Risks Related to the Partnership and the Film Exhibition Industry............................................... 38 Risks Related to the Structure of the Fund .................................................................................... 41 SELECTED CONSOLIDATED FINANCIAL INFORMATION OF THE FUND............................ 44 MANAGEMENT’S DISCUSSION AND ANALYSIS........................................................................... 45 SELECTED CONSOLIDATED FINANCIAL INFORMATION OF CINEPLEX GALAXY LP ... 45 DEFINITION OF EBITDA AND ADJUSTED EBITDA.....................................................................