UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10- Q

(Mark One) 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 2008 OR

u

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to Commission File Number 001- 32843

TIM HORTONS INC.
(Exact name of Registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)

51- 0370507
(IRS Employer Identification Number)

874 Sinclair Road, Oakville, ON, Canada
(Address of principal executive offices)

L6K 2Y1
(Zip code)

905- 845- 6511
(Registrant's phone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes  No u Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non- accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b- 2 of the Exchange Act.

Large accelerated filer 

Accelerated filer u

Non- accelerated filer u Smaller reporting company u (Do not check if a smaller reporting company) Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b- 2 of the Exchange Act). Yes u No  Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Class Outstanding at November 5, 2008

Common shares, US$0.001 par value per share Exhibit Index on page 49.

181,129,672 shares

TIM HORTONS INC. AND SUBSIDIARIES INDEX
Pages

PART I: Financial Information Item 1. Financial Statements (Unaudited): Condensed Consolidated Statement of Operations for the quarters and year- to- date periods ended September 28, 2008 and September 30, 2007 Condensed Consolidated Balance Sheet as of September 28, 2008 and December 30, 2007 Condensed Consolidated Statement of Cash Flows for the year- to- date periods ended September 28, 2008 and September 30, 2007 Consolidated Statement of Stockholders' Equity for the year- to- date period ended September 28, 2008 and year ended December 30, 2007 Notes to the Condensed Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures PART II: Other Information Item 1. Legal Proceedings Item 1A. Risk Factors Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Item 5. Other Information Item 6. Exhibits Signature Index to Exhibits 2 3 3 5 6 7 9 20 41 41 41 41 42 43 44 47 48 49

TIM HORTONS INC. AND SUBSIDIARIES PART I: FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (in thousands of Canadian dollars, except share and per share data)
Third quarter ended September 28, September 30, 2008 2007

Revenues Sales Franchise revenues Rents and royalties Franchise fees

$

333,581 $

327,020

155,214 20,200 175,414

143,449 20,072 163,521 490,541

Total revenues Costs and expenses Cost of sales Operating expenses Franchise fee costs General and administrative expense Equity (income) Other (income) expense, net Total costs and expenses, net Operating income Interest (expense) Interest income Income before income taxes Income taxes (note 2) Net income Basic and diluted earnings per share of common stock (note 3) Weighted average number of shares of common stock outstanding - Basic (in thousands) (note 3) Weighted average number of shares of common stock outstanding - Diluted (in thousands) (note 3) Dividend per share of common stock $ $ $

508,995

293,056 53,596 19,840 29,986 (9,429) (126) 386,923 122,072 (6,288) 957 116,741 37,984 78,757 $ 0.43 $ 182,431

288,168 51,617 20,432 30,758 (9,861) 1,090 382,204 108,337 (6,118) 1,823 104,042 36,661 67,381 0.36 187,684

182,662 0.09 $

187,879 0.07

See accompanying Notes to the Condensed Consolidated Financial Statements. 3

AND SUBSIDIARIES PART I: FINANCIAL INFORMATION ITEM 1.881 53.608) 4.882 (17.319 $ 0.996 (26. net Operating income Interest (expense) Interest income Income before income taxes Income taxes (note 2) Net income Basic earnings per share of common stock (note 3) Diluted earnings per share of common stock (note 3) Weighted average number of shares of common stock outstanding .792) (596) 1. 2008 September 30.Basic (in thousands) (note 3) Weighted average number of shares of common stock outstanding .02 184.27 $ 0.701 (18.071.004 858.013 189.143 102.406 Total revenues Costs and expenses Cost of sales Operating expenses Franchise fee costs General and administrative expense Equity (income) Other (income) expense.960 $ 913. net Total costs and expenses.881 $ 1.419 148. except share and per share data) Year. 4 .049 185.042 1.044 410.640 59.318 (28.17 $ 1.020 321.803 56.909 90.380.113 105.239 467. 2007 Revenues Sales Franchise revenues Rents and royalties Franchise fees $ 975.524 308.143 296.227 58.873) 1.562 215.Diluted (in thousands) (note 3) Dividend per share of common stock $ 1.551 $ 805.870 1.17 $ 1.882) 5.TIM HORTONS INC.03 $ 1.date period ended September 28.303 335.144.480.404 504. FINANCIAL STATEMENTS CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (Canadian dollars in thousands.to.21 See accompanying Notes to the Condensed Consolidated Financial Statements.735 189.028 96.364 444.440 158.262 193.

net Equity investments Other assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable (note 6) Accrued liabilities: Salaries and wages Taxes Other (note 6) Advertising funds restricted liabilities (note 5) Current portion of long.281 20. 2008 December 30.673 17.624 467.501 3.524 16.259 17.614 7. respectively (note 9) Retained earnings Accumulated other comprehensive (loss) Total stockholders' equity Total liabilities and stockholders' equity $ 67.302.001 par value per share): Authorized: 1.465) 1.797.471 57.737 8. net Notes receivable.745 $ 157.569 $ 1.002.351 52.052 shares.S.816 $ 1.923 $ 289 931.203.680 60. $0.522 95.000 shares.975 34.879 10.405) (15.131 .790 104.740 132.818 1.176 60.295 56.824 11. at cost: 439.089) 624.term liabilities Commitments and contingencies (note 7) Stockholders' equity Common stock (U.602 6.858 14.768.750 289 930. at cost: 11.768.797.293 24.919) 1.712 11. net Notes receivable. 2007 ASSETS Current assets Cash and cash equivalents Restricted cash and cash equivalents (note 1) Restricted investments (note 1) Accounts receivable.256 402.091 15.932 (384.832 327.260.959 118.137 327.862 26.TIM HORTONS INC. Issued: 193.177 9. net (note 4) Advertising funds restricted assets (note 5) Total current assets Property and equipment.084 (235.026 2.291 13.522 $ 133.000.864 and 421.206 64.958 (138.942 1.929 12.977 shares Capital in excess of par value Treasury stock.term liabilities Term debt Advertising fund restricted debt (note 5) Capital leases Deferred income taxes Other long.term obligations Total current liabilities Long.750.889 10.415 23.722 and 6.344 shares. net Deferred income taxes Inventories and other.246. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands of Canadian dollars) As at September 28.714 316.050 477.679 16.602 37.155) (14. net Deferred income taxes Intangible assets.768 255.298 330.923 $ 1.956 14.761 (120.628) 458. respectively (note 8) Common stock held in trust.777 39.131 $ 109.term liabilities Total long.000.412 17.035.145 137.083 1.982 43.716 66.475 6.

049 (112.to.435) (112. 6 9.068 (4.614 $ 109.567 $ $ 18.748) (135.630 117. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (in thousands of Canadian dollars) Year.518 $ See accompanying Notes to the Condensed Consolidated Financial Statements.842) (49.611) 5.term debt obligations Net cash used in financing activities Effect of exchange rate changes on cash Decrease in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Supplemental disclosures of cash flow information: Interest paid Income taxes paid Non. net of issuance costs Principal payments on other long.826 $ 236.988) 157.715) (130.875 .979) (114.563 (8.cash investing and financing activities: Capital lease obligations incurred $ 244.039) (7. 2008 September 30.744) (226) 2.770) (3.036 (7.202) (39.602 (66.821 103.959) 2.960 $ $ 17.940) 2.123) 176. 5 TIM HORTONS INC.060) (11.date period ended September 28.285 (2. 2007 Net cash provided from operating activities Cash flows (used in) provided from investing activities Capital expenditures Purchase of restricted investments Principal payments on notes receivable Other investing activities Net cash used in investing activities Cash flows (used in) provided from financing activities Purchase of treasury stock Purchase of common stock held in trust Dividend payments Purchase of common stock for settlement of restricted stock units Proceeds from issuance of debt.083 $ 67.588 (3.433) (206.897) (110) 2.041) (149.See accompanying Notes to the Condensed Consolidated Financial Statements.415) (182.191) (89.444 $ 10.

TIM HORTONS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited) (in thousands of Canadian dollars)
Year- to- date period ended September 28, 2008

Year ended December 30, 2007

Common stock Balance at beginning and end of period Common stock in excess of par value Balance at beginning of period Stock- based compensation Tax sharing payment from Wendy's Balance at end of period Treasury stock Balance at beginning of period Purchased during the period (note 8) Reissued during the period (note 9) Balance at end of period Common stock held in trust Balance at beginning of period Purchased during the period (note 9) Disbursed from Trust during the period (note 9) Balance at end of period Retained earnings Balance at beginning of period Opening adjustment adoption of FIN 48 Adjusted opening retained earnings Net income Dividends Balance at end of period Accumulated other comprehensive income (loss) Balance at beginning of period Other comprehensive income (loss) (note 10) Balance at end of period

$

289

$

289

$

931,084 (152) 930,932

$

918,043 3,925 9,116 931,084

$

$

$

(235,155) (149,770) 520 (384,405)

$

(64,971) (170,604) 420 (235,155)

$

$

$

(14,628) (3,842) 3,381

$

(9,171) (7,202) 1,745

$

(15,089)

$

(14,628)

$

458,958 458,958 215,551 (49,748)

$

248,980 (6,708) 242,272 269,551 (52,865)

$

624,761

$

458,958

(138,465) 17,546 (120,919) $ 1,035,569 $

(74,766) (63,699) (138,465) 1,002,083

See accompanying Notes to the Condensed Consolidated Financial Statements. 7

TIM HORTONS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY NUMBER OF SHARES OF COMMON STOCK (Unaudited) (in thousands of shares of common stock)
Year- to- date period ended September 28, 2008

Year ended December 30, 2007

Common stock Balance at beginning and end of period Treasury stock Balance at beginning of period Purchased during the period (note 8) Reissued during the period (note 9) Balance at end of period Common stock held in trust Balance at beginning of period Purchased during the period (note 9) Disbursed from Trust during the period (note 9) Balance at end of period Common stock issued and outstanding

193,303

193,303

(6,750) (4,512) 15 (11,247)

(1,930) (4,832) 12 (6,750)

(421) (116) 97 (440) 181,616

(266) (207) 52 (421) 186,132

See accompanying Notes to the Condensed Consolidated Financial Statements. 8

TIM HORTONS INC. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited) (in thousands of Canadian dollars, except share and per share data) NOTE 1 MANAGEMENT STATEMENT AND BASIS OF PRESENTATION Tim Hortons Inc. (together with its subsidiaries, collectively referred to herein as the "Company") is a Delaware corporation and, prior to March 29, 2006, was a wholly- owned subsidiary of Wendy's International, Inc. (together with its subsidiaries, collectively referred to herein as "Wendy's"). The Company's principal business is the development and franchising of quick- service restaurants that serve coffee and other hot and cold beverages, baked goods, sandwiches and soups and other food products. In addition, the Company has vertically- integrated manufacturing, warehouse and distribution operations which supply a significant portion of the system restaurants with paper and equipment, as well as food products, including shelf- stable and, from one distribution centre, refrigerated and frozen food products. The Company also controls the real estate underlying a substantial majority of the system restaurants, which generates another source of revenue. As of September 28, 2008, the Company and its franchisees operated 2,870 restaurants in Canada (99.5% franchised) and 424 restaurants in the United States ("U.S.") (92.9% franchised) under the name "Tim Hortons." There are 261 primarily self- serve licensed locations in the Republic of Ireland and the United Kingdom as of September 28, 2008. The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). In the opinion of management, the accompanying Condensed Consolidated Financial Statements contain all adjustments (all of which are normal and recurring in nature) necessary to state fairly the Company's financial position as of September 28, 2008 and December 30, 2007, and the condensed results of operations, comprehensive income (see note 10) and cash flows for the quarter and year- to- date period ended September 28, 2008 and September 30, 2007. All of these financial statements are unaudited. These Condensed Consolidated Financial Statements should be read in conjunction with the 2007 Consolidated Financial Statements which are contained in the Company's Annual Report on Form 10- K filed with the Securities and Exchange Commission ("SEC") on February 26, 2008. The December 30, 2007 Condensed Consolidated Balance Sheet included herein was derived from the same audited 2007 Consolidated Financial Statements, but does not include all disclosures required by U.S. GAAP for annual reporting. The functional currency of Tim Hortons Inc. is the Canadian dollar, as the majority of the Company's cash flows are in Canadian dollars. The functional currency of each of the Company's subsidiaries and legal entities is the local currency in which each subsidiary operates, which is the Canadian dollar, the U.S. dollar or the Euro. The majority of the Company's operations, restaurants and cash flows are based in Canada and the Company is primarily managed in Canadian dollars. As a result, the Company has selected the Canadian dollar as its reporting currency. Restricted cash and cash equivalents and restricted investments Amounts presented as restricted cash and cash equivalents and restricted investments on the Company's Condensed Consolidated Balance Sheet relate to the Company's TimCard® cash card program, which was established in late 2007. The combined balances as of September 28, 2008 and December 30, 2007 represent the amount of cash loaded on the cards by customers, less redemptions. The balances are restricted, and cannot be used for any purpose other than to settle obligations under the cash card program. Since the inception of the cash card program, the interest on the restricted cash and cash equivalents and restricted investments has been contributed by the Company to the advertising funds to help offset costs associated with this program. Obligations under the cash card program are included in Accrued liabilities, Other and are disclosed in note 6. From time to time, the Company invests some of these funds, for periods in excess of three months, but less than one year. Only restricted cash and cash equivalents balances in excess of expected net redemptions over the investment time horizon are used for such investments, and the Company does not intend to redeem these investments prior to maturity. As a result, these investments are deemed to be held- to- maturity and are recorded at amortized cost on the Condensed Consolidated Balance Sheet. The carrying amount of the restricted investments approximates fair value due to the short- term nature of the investments. All restricted investments mature in November 2008. Restricted cash and cash equivalents increases or decreases are reflected in net cash provided from operating activities on the Condensed Consolidated Statement of Cash Flows since the funds will be used to fulfill current obligations to customers recorded in Accrued liabilities, Other on the Condensed Consolidated Balance Sheet. Changes in the customer obligations are included in net cash from operating activities as the offset to changes in restricted cash and cash equivalents. Purchases of and proceeds upon the maturity of restricted investments are included in net cash used in investment activities on the Condensed Consolidated Statement of Cash Flows. Funding for these investments are drawn from restricted cash and cash equivalents balances. 9

respectively.049 231 195 278 270 182. the Company also adopted SFAS No. 2008 2007 Net income for computation of basic and diluted earnings per share of common stock $ Weighted average shares outstanding for computation of basic earnings per share of common stock (in thousands) Dilutive restricted stock units (in thousands) Weighted average shares outstanding for computation of diluted earnings per share of common stock (in thousands) Basic earnings per share of common stock $ Diluted earnings per share of common stock 78.662 187.17 $ 1. NOTE 2 INCOME TAXES The effective tax rate was 32.43 $ 0.03 $ 0. September 30.3 million reduction in income tax expense for the year. therefore. 2007. In addition there were certain items that affected the third quarter of 2007 effective tax rate that did not recur in 2008.7 million reduction in income tax expense for the quarter ended September 28.date period ended September 28. 2008 and September 30. 2008. if any.735 189. 157 Fair Value Measurements ("SFAS 157"). 128 Earnings Per Share. FAS 157. which provides a one year deferral of the effective date of SFAS 157 for non.551 $ 193. Diluted computations are based on the treasury stock method and include assumed issuances of shares relating to outstanding restricted stock units and stock options with tandem stock appreciation rights ("SARs").TIM HORTONS INC. 2007. In February 2008.date period ended September 28. The effective tax rate was 32. NOTE 3 NET INCOME PER SHARE OF COMMON STOCK Basic earnings per share of common stock are computed by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding. The variance between the quarters is primarily explained by the reduction in Canadian federal statutory tax rates in 2008. as the sum of: (i) the amount. Therefore. 2008.in capital assuming exercise of the options. and (iii) the amount of tax benefits (both current and deferred).9% and 34. net of shares assumed to be repurchased from the assumed proceeds. September 30. the Financial Accounting Standards Board ("FASB") issued FASB Staff Position No. The computations of basic and diluted earnings per share of common stock are shown below: Third quarter ended September 28.5% and 35.by. 2008 2007 Year.319 0. the employee must pay upon exercise. stock options were anti.17 $ 1. that would be credited to additional paid.date periods ended September 28. the Company has adopted the provisions of SFAS 157 with respect to its financial assets and liabilities only (see note 13).5% for the year. which represented a $2.financial liabilities. when dilutive. as prescribed in SFAS No. if any.431 187.879 185.contract basis with changes in value reported in earnings.2 Effective Date of FASB Statement No. 2007. 159 The Fair Value Option for Financial Assets and Financial Liabilities ("SFAS 159"). which represented a $7.43 $ 0. 2007.881 182. The variance between periods is primarily explained by the reduction in Canadian federal statutory tax rates in 2008.757 $ 67.2 % for the third quarters ended September 28. excluded from the calculation of earnings per share of common stock. the Company adopted SFAS No. respectively.36 $ 1.to. except share and per share data) Accounting for fair value measurements Effective December 31.381 $ 215. 2008 and September 30.684 184. During the third quarter and year. SFAS 159 allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement for specified financial assets and liabilities on a contract.to. (ii) the amount of compensation cost attributed to future services and not yet recognized.02 . AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited) (Continued) (in thousands of Canadian dollars.dilutive and. 157.to.date period ended September 28.36 $ 1.to.013 189. Effective December 31. The Company did not elect to report any assets or liabilities at fair value under this standard.financial assets and non. 2008. except those that are recognized or disclosed in the financial statements at fair value at least annually.

2007: September 28. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited) (Continued) (in thousands of Canadian dollars. Property and equipment. 2007.S. NET Inventories and other include the following as of September 28.946 19. at September 28. 2008 and December 30. In accordance with SFAS No.10 TIM HORTONS INC.011 (747) 47. 2008 December 30. 11 . and the Company acts as.281 NOTE 5 RESTRICTED ASSETS AND LIABILITIES ADVERTISING FUNDS The Company participates in two advertising funds established to collect and administer funds for use in advertising and promotional programs designed to increase sales and enhance the reputation of the Company and its franchise owners.293 $ 60. In addition.784 32.846 95. net Prepaids and other Total inventories and other. 2008 and December 30.029 $ 48. Included within Accrued liabilities.4 million and $33. of advertising fund property and equipment. expenses and cash flows of the advertising funds are not included in the Company's Condensed Consolidated Statements of Operations or Cash Flows because the contributions to these advertising funds are designated for specific purposes.6 million as at September 28. The assets held by these advertising funds are considered restricted. 2008 and December 30. 2008 December 30. and various equipment and other accruals.147 37. restricted current liabilities and advertising fund restricted collateralized long.872 (1. in substance. deposits. 2007.228) 47.475 33.6 million and $24.982 $ 25. The restricted current assets. the revenue. 2007 Inventories finished goods Inventory obsolescence provision Inventories.637 $ 60. 45 Accounting for Franchisee Fee Revenue. included $27. net $ 48. Other are the following obligations as at September 28.6 million. 2007: September 28. respectively.561 64. an agent with regard to these contributions. 2008 and December 30.644 12.264 13. respectively. NOTE 6 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES OTHER Included within Accounts payable are construction holdbacks and construction accruals of $26.777 $ $ Other accrued liabilities includes accrued rent expense. net. except share and per share data) NOTE 4 INVENTORIES AND OTHER. Separate advertising funds are administered for Canada and the U.term debt are included in the Company's Condensed Consolidated Balance Sheet. 2007 Gift certificate obligations Cash card obligations Other accrued liabilities $ 11.

which seeks class action certification on behalf of Canadian franchisees. as these contingent events or claims are defined in each of these agreements.7 million as at both September 28. that the Company's Always Fresh baking system and expansion of lunch offerings has led to lower franchisee profitability. except share and per share data NOTE 7 COMMITMENTS AND CONTINGENCIES The Company has guaranteed certain lease and debt payments. The length of the lease. The Company believes that the resolution of any claims that might arise in the future in connection with these arrangements.1 million as at December 30. either individually or in the aggregate. 2008 and December 30. alleging. software licensors. and coupled with the Company's position that this claim is without merit. and Brule Foods Ltd. the Company has not recorded any provisions in the Condensed Consolidated Financial Statements. The result and value of this claim is not determinable at this time. there can be no assurance that the outcome of the claim will be favourable to the Company or that it will not have a material adverse impact on the Company's financial position or liquidity in the event that the determinations by the Court and/or appellate court are not in accordance with the Company's evaluation of this claim. and the Company intends to vigorously defend the action. 2007. securities underwriters and others. However. would not materially affect the earnings or financial condition of the Company. including agreements with lessors of real property leased by the Company. actuarial and other services). but generally does not exceed seven years. there can be no assurance that the Company will be able to recover the full amount of its losses from Wendy's. It is the opinion of the Company that the ultimate resolution of such matters will not materially affect the Company's financial condition or earnings. The Company has entered into purchase arrangements with some of its suppliers having terms which generally do not exceed one year. On June 12. The range of prices and volume of purchases under the agreements may vary according to the Company's demand for the products and fluctuations in market rates. Generally. investment banking. In the event of default by a franchise owner. However. These agreements help the Company secure pricing and product availability.3 million as at September 28. these agreements obligate the Company to indemnify the third parties only if certain events occur or claims are made. the Company and its subsidiaries are parties to various other legal actions and complaints arising in the ordinary course of business. 12 . if those liabilities are significant. Third parties may seek to hold the Company responsible for retained liabilities of Wendy's. Reserves related to the resolution of legal proceedings are included in Accounts payable on the Condensed Consolidated Balance Sheet. tax. loan and other arrangements guaranteed by the Company or for which the Company is contingently liable varies. amounting to $0. a claim was filed against the Company and certain of its affiliates in the Ontario Superior Court of Justice ("Court") by two of its franchisees. service providers for various types of services (including commercial banking. 2007 in letters of credit and surety bonds with various parties. distributors. The claim. asserts damages of approximately $1. generally.95 billion. In addition to the guarantees described above. 2008. and Wendy's is not able to fully pay or will not make payment. and the Company is ultimately held liable for these claims and losses. however. The Company is also the guarantor on $8. primarily related to franchisees. The Company believes the claim is frivolous and completely without merit. In addition. Under the separation agreements dictating the terms of the Company's separation from Wendy's. the Company is party to many agreements executed in the ordinary course of business that provide for indemnification of third parties under specified circumstances. 2008 and $8. The Company does not believe these agreements expose the Company to significant risk.. Fairview Donut Inc. management does not expect any material loss to result from these guarantees because management does not believe performance will be required. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited) (Continued) (in thousands of Canadian dollars. marketing and advertising firms.TIM HORTONS INC. the Company generally retains the right to acquire possession of the related restaurants. Wendy's has agreed to indemnify the Company for claims and losses relating to these retained liabilities.

The fair market value of each RSU awarded as part of this grant (the mean of the high and low prices for the Company's shares of common stock traded on the TSX) on May 15. The Company also made repurchases at management's discretion under this program from time. more than offsetting the change from the fair value adjustment.TIM HORTONS INC.month period.to.863 $ 538 514 6. the Company's Board of Directors approved a stock repurchase program authorizing the Company to purchase up to $200 million of common stock.359 $ 1.1 plan. a gain of $0. The Company was authorized to make repurchases under this program on the New York Stock Exchange ("NYSE") and the Toronto Stock Exchange ("TSX"). 2007.1 million year. NOTE 9 STOCK. Purchases were based on the parameters of the Rule 10b5.3 million was recorded during the third quarter of 2008 (loss of $0. September 30. share price. This grant is scheduled to vest over a 30.871 $ 154 334 1.915 $ 6.to.to. RSUs granted to retirement.based compensation grants and settlements during 2008 year.date 2008) relating to the total return swap (see note 12). In accordance with SFAS No. In the year. The total accumulated purchases under this program as at September 28. This program ended on October 30.279 535 $ 2.eligible employees are expensed immediately.685 $ 7. 2008. discussed below. 2008 are $185.9 million shares of its common stock for a total cost of $135.date period ended September 30. 13 . September 30. In the year. except share and per share data) NOTE 8 CAPITAL STOCK In October 2007.date are set forth below. 2008 was $33. cash position. 2008.496 restricted stock units ("RSUs") with dividend equivalent rights.to.814 In addition.based compensation expense $ 1.5 million shares of its common stock for a total cost of $149. 2008 in accordance with the original authorization of $200 million. which was completed in September 2007. Details of stock.0 million under the Company's first repurchase program. The Company authorized the commencement of the program only after receipt of all regulatory approvals.1 repurchase plan.BASED COMPENSATION Total stock. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited) (Continued) (in thousands of Canadian dollars.date period ended September 28. For a significant portion of the repurchase program. the Company purchased 3.to. the Company entered into a Rule 10b5. which were granted on May 15. subject to market conditions.440 $ 245 6.3 million. and compliance with regulatory requirements. Restricted Stock Units The Company's Human Resource and Compensation Committee ("HRCC") approved awards of 232. the Company purchased 4. not to exceed 9. 123R Share.totime.Based Payment (revised 2004) ("SFAS 123R"). which were subsequently received. related to the stock options and tandem SARs. 2008 2007 Restricted stock units Stock options and tandem SARs Deferred stock units Total stock.based compensation expense included in General and administrative expense on the Condensed Consolidated Statement of Operations is detailed as follows: Third quarter ended September 28. 2008 2007 Year.date period ended September 28.354.8 million under this repurchase program.02.264 of the Company's outstanding shares ("share repurchase limit"). which allowed the Company to purchase its stock through a broker at times when the Company may not have otherwise been able to do so due to regulatory or Company restrictions.

In the year. The trust is used to fix the Company's cash requirements in connection with the settlement.000 (12.date 2007) shares held in the employee benefit plan trust.21% Risk. The Company's settlement obligations. the expected volatility of the Company's common stock price over the expected term. Stock options with tandem SARs enable the employee to exercise the stock option to receive shares of common stock or to exercise the SAR and receive a cash payment equal to the difference between the market price of the share on the exercise date and the exercise price of the stock option. approximately 15. performance awards and share awards to eligible employees and directors of the Company or its subsidiaries. 2008 Expected volatility 20% .000 in year.000 (52.based compensation awards in the form of stock options. 2008 using the share price.eligible employees are expensed immediately. after vesting. Stock options In accordance with SFAS 123R.2 million shares for $7.1 million shares of common stock for approximately $3.to.to.Merton option. to its named executive officers. A SAR related to a stock option terminates upon the expiration.date 2007).2 million in 2007). the Company uses the Black. since the Company is the primary beneficiary. dividend equivalent rights.Scholes.to. and the trust has been consolidated in accordance with FASB Interpretation No. except share and per share data) In the year. and is exercisable only to the extent that the related stock option is exercisable.free interest rate 3. designed to allow for a broad range of equity. 14 .TIM HORTONS INC.pricing model using the following assumptions: Grant date/remeasurement date May 15.date period ended September 28. as that term is defined by FIN 46R.date 2008). as amended and restated most recently in May 2008 (the "2006 Plan").000 on May 8.to. in turn. The fair value of these awards was determined. and.1% The awards were revalued to fair value at September 28. the number of options that will ultimately not complete their vesting requirements ("forfeitures"). of outstanding RSUs by delivery of shares of common stock held in the trust to most of the Canadian officers and employees that participate in the 2006 Stock Incentive Plan. which. 2008. the Company funded its employee benefit plan trust. SARs. can materially affect the estimate of fair value of stock. 2008.000 in year. 46R Consolidation of Variable Interest Entities an interpretation of ARB 51 (revised December 2003) ("FIN 46R"). Stock appreciation rights SARs may be granted alone or in conjunction with a stock option. approximately 217.02. forfeiture or exercise of the related SAR. forfeiture or exercise of the related stock option.Scholes. Similarly. and are expensed over the vesting period. consequently. as well as changes in the share price from period to period. RSUs. restricted stock.76 at the end of the third quarter of 2008 resulting in a small loss during the third quarter (a small gain year.date 2007) RSUs vested as part of the normal vesting schedule for previously granted awards (or otherwise).to.8 million (0. after provision for the payment of statutory withholding tax requirements. No other significant changes were made in the assumptions. at an average purchase price of $33.000 in year.000 (118.3. 2007) shares by an agent of the Company on behalf of the respective eligible employees on the open market on May 15.to. at the grant date by applying the Black.89 in year. These assumptions include: estimating the length of time employees will retain their stock options before exercising them (the "expected term").to. a stock option expires upon the expiration.based compensation and.000 (3. 2008 (nil in 2007) at a fair value grant day price of $33. the related amount of compensation expense recognized in the Condensed Consolidated Statement of Operations (see below). Changes in subjective assumptions. which were granted on May 15.date period ended September 28. which was $31. purchased approximately 0. which results in a revaluation of the liability to fair value each period. 2008. Stock options with tandem SARs granted to retirement.1% Expected life 3 5 years Expected dividend yield 1.Merton option pricing model which requires the use of subjective assumptions. the cost of the purchase of shares held in trust has been accounted for as a reduction in outstanding shares of common stock.411 stock options with tandem SARs. The awards are accounted for using the liability method. in accordance with SFAS 123R.34 ($34.0% . Stock options and tandem stock appreciation rights The 2006 Plan is an omnibus plan. and the purchase of approximately 7. were satisfied by the disbursement of approximately 97.date 2007) shares issued from treasury. The HRCC approved awards of 167. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited) (Continued) (in thousands of Canadian dollars. For accounting purposes.

400) 18.892) (645) (5. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited) (Continued) (in thousands of Canadian dollars. 2008 2007 Year.864 2.696) 754 2. except share and per share data) NOTE 10 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME The components of Other comprehensive income (loss) and Total comprehensive income are shown below: Third quarter ended September 28.381 $ 215.755) (4. September 30.date period ended September 28.148) (1.217 $ (1.728) $ 85. September 30. 2008 2007 Cash flow hedges: Net change in fair value of derivatives Amounts realized in earnings during the quarter $ 511 $ (486) $ 1.116 (1.to.580) 6.292) 17.TIM HORTONS INC. 2008 2007 Year.757 $ 67.625 $ 42. September 30. 2008 2007 Net income Other comprehensive income (loss) Translation adjustments Cash flow hedges: Net change in fair value of derivatives Amounts realized in earnings during the quarter Total cash flow hedges Total other comprehensive (loss) income Total comprehensive income $ 78.to.097 $ 132.089 $ 233.868 (25.869 (23.778) (7.546 (61. September 30.359) $ (151) $ (3) $ 15 (198) $ (18) .551 $ 193.191 (56.756) (2.date period ended September 28.153 Income tax (expense)/recovery components netted in the above table are detailed as follows: Third quarter ended September 28.133 2.001) (1.881 7.

072 (5.2% 45.0% $ 29.441) 364.4% $ 37.701) 118.739) (102.service.095 70.5% 44.4)% 341. $ $ 132.551 $ 308.6% $ (2.380. % of September 30.2% 1.892 101.392 100.397 32. Total 2007 Year. except share and per share data) NOTE 11 SEGMENT REPORTING The Company franchises.151 91.282 33.date period ended September 28.255 8.to.to. As set forth in the table below. net Income Taxes Net Income Capital Expenditures Canada U.0% $ Segment Operating Income (Loss) Canada U.2% $ (288) (0.984) 78. Corporate charges also include a $3.369.4% 112.8% $ 36.773 100.2% 508.133 7.337 (4.719 101.510) 122.066 100.295) (36. Reported Segment Operating Income Corporate Charges(1) Consolidated Operating Income Interest.565 7.704 66.1 million restructuring charge in the year.S.0% $ 79.855 67.8% $ 15.0% (28.881 $ 30. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited) (Continued) (in thousands of Canadian dollars.262) 193.986 100.6% 37.701 (14.3% (4.094 32.restaurant industry and has determined that its reportable segments are those that are based on the Company's methods of internal reporting and management structure.S.541 100.8% 113.331) (37.965 29. $ 472.6)% 119.date period ended September 28.0% $ 77.611 100.S.672 100.4% $ (5.860 101.971) 337.119) (1.252 100.408 92.0% (8.188) (1.6% $ 32.480.3)% 130. 2008 Total 2007 September 28.517 67.882 (12.430 92.0% $ (1) Corporate charges include certain overhead costs that are not allocated to individual business segments. 2008 (see note 14).TIM HORTONS INC.267.0% (28.562) 215.788 100. 2008 % of Total % of Total Revenues Canada U.406 100.6% 490. and to a lesser extent. there are no amounts of revenues shown between reportable segments.0% $ 453.381 $ 335.757 $ 108.0% $ 1. operates Tim Hortons restaurants that are part of the quick.2)% 369. The table below presents information about reportable segments: Third quarter ended % of September 30.327) (1. 16 .012 92. The Company's reportable segments are the geographic locations of Canada and the U.0% (10.0% $ 1.5% 1.4% 114.992 7. the impact of certain foreign currency exchange gains and losses.5% $ 110.588) (105.661) 67.995 100. and a nominal amount of income from international operations.060 100.S.5% $ 14.004 100.

serve licensed locations in the Republic of Ireland and the United Kingdom as of September 28.541 $ 444.072 163.110 Excluded from the above franchise restaurant progression table are 261 primarily self.174 $ 280.521 490.8 million for the third quarters ended September 28.251 43 3.042 1. 2008 2007 Year. except share and per share data) Revenues consisted of the following: Third quarter ended September 28.741 31.538 $ 333. net Total systemwide restaurants 3. 2008 and September 30.960 $ 92. respectively.015 $ 841.date periods ended September 28.380.040 70 3.869 12.294 3.449 $ 20.968 $ 776.200 175. September 30. 2008 and September 30.operated restaurants.404 504.803 56.995 $ Cost of sales related to Company.operated restaurants were $10.581 $ 34.to.020 $ 102.294 3.264 327. 2008 and September 30.414 143. 2008 2007 Sales Warehouse sales Companyoperated restaurant sales Sales from restaurants consolidated under FIN 46R $ 289.149 104 (28) 26 2.to. 2008 2007 Year.203 49 (11) 10 3.3 million and $14. 2008 2007 Franchise Restaurant Progression Franchise restaurants in operation beginning of period Franchises opened Franchises closed Net transfers within the system Franchise restaurants in operation end of period Company.date periods ended September 28. September 30. September 30. 2008.044 1.640 $ 59. 17 .480.214 $ 20.4 million and $50.to. 2007: Third quarter ended September 28. 2007.952 75 (11) 24 3.040 70 3. The following table sets forth the number of franchised restaurants and related system activity for the third quarters and year.002 38 (5) 5 3.TIM HORTONS INC.406 Total revenues $ 508. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited) (Continued) (in thousands of Canadian dollars.to.683 35.382 975.808 8.251 43 3.239 467.610 43. September 30. and $36.110 3.date period ended September 28. 2007.date period ended September 28.364 Franchise revenues Rents and royalties Franchise fees $ 155.873 913.2 million for the year. respectively.004 $ 410.

either directly or indirectly. The payments under the TRS are (i) those based on changes in the value of a reference asset. including exchange rates. The standard describes a fair value hierarchy based on three levels of inputs. the following table represents the Company's fair value hierarchy for its financial assets and/or liabilities measured at fair value on a recurring basis as of September 28. and (iii) a variable interest rate specified in the contract. Level 2 inputs include quoted market prices for similar assets or liabilities. or. volatilities. the Company entered into a total return swap ("TRS") to help manage the variability in cash flows and. In accordance with SFAS 157.1 million was recorded in General and administrative expense in the second quarter of 2008 relating to these retirement and other arrangements. The TRS has a seven. changes were made to our management structure.3 million during the third quarter of 2008 ($0. interest rates. Fair value is defined under SFAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.904 $ $ 3. Subsequent valuations are based on observable inputs to the valuation model. As a result. that are observable for the assets or liabilities.TIM HORTONS INC. 2008 Level 2 Level 3 Level 1 Total Derivative Assets: Forward currency contracts $ $ 228 $ $ 228 Derivative Liabilities: Interest rate swaps $ $ 3. credit spreads. except share and per share data) NOTE 12 FINANCIAL INSTRUMENTS TOTAL RETURN SWAP In May 2008. 133 Accounting for Derivative Instruments and Hedging Activities ("SFAS 133").1 million loss year. earnings associated with stock.based compensation awards that will settle in cash. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Gains and losses on the fair value adjustment of the TRS are included in General and administrative expense. Valuation techniques used to measure fair value under SFAS 157 must maximize the use of observable inputs and minimize the use of unobservable inputs. is the Company's common stock. A restructuring charge of $3. These are used to measure fair value as follows: Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. NOTE 13 FAIR VALUE MEASUREMENTS SFAS 157 defines fair value. other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. it is adjusted to fair value each period in accordance with SFAS 133. Level 2 Inputs. without penalty. The first two levels are considered observable and the last unobservable.904 Derivative Liabilities: Total return swap (note 12) $ $ 126 $ $ 126 The Company values derivatives using valuations that are calibrated to the initial trade prices. which. certain employees left the organization under various retirement and other arrangements. 2008: Fair value measurements as of September 28. as previously reported.date 2008). and the Company's share price. 18 . establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. to a lesser extent. The number of underlying shares of the Company's common stock covered under this contract is 107.year term but the contract allows for partial settlements over the term. NOTE 14 RESTRUCTURING COSTS During the second quarter of 2008.000. however. other than Level 1 inputs. The TRS did not qualify as an accounting hedge under SFAS No. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited) (Continued) (in thousands of Canadian dollars. namely the tandem SARs that are associated with stock options (see note 9). quoted prices in markets that are not active. (ii) related dividends.to. The revaluation resulted in a gain of approximately $0. A TRS is a contract that involves the exchange of payments between the Company and a financial institution. in this case.

2"). the Company announced its intention to rationalize some underperforming Companyoperated restaurants in southern New England between the end of 2008 and early next year. except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis. and cash flows. financial performance. and (iii) how derivative instruments and related hedged items affect an entity's financial position. In addition to the amendments to ARB 51.financial assets and non. SFAS 141R establishes principles and requirements for how an acquirer of a business recognizes and measures. 2008. The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.financial liabilities. and any noncontrolling interest in the acquired entity.share data will continue to be calculated the same way as it was calculated before this Statement was issued. (ii) how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations. Subsequent to the third quarter ended September 28. 19 . which amends SFAS 157 by delaying its effective date by one year for non. SFAS 161 is to be applied prospectively for the first annual and interim reporting periods beginning on or after November 15. the FASB issued SFAS No. 51 Consolidated Financial Statements ("ARB 51") to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This Statement replaces FASB SFAS No. 141R Business Combinations ("SFAS 141R"). except share and per share data) NOTE 15 RECENT ACCOUNTING PRONOUNCEMENTS In December 2007. with the result that earnings. The Company is currently evaluating the potential impact.financial assets and nonfinancial liabilities. 128 Earnings per Share. and the extent of respective purchases under the program. 141.2 on the Company's Consolidated Financial Statements. 162 The Hierarchy of Generally Accepted Accounting Principles ("SFAS 162"). This Statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States. 51. This Statement amends Accounting Research Bulletin No. this standard applies prospectively to new fair value measurements of financial instruments and recurring fair value measurements of non. 2008. On February 12. if any. are subject to regulatory compliance and will be at management's discretion given prevailing market conditions and cost considerations. planned to commence during the first quarter of 2009. in its financial statements. Implementation of the 2009 share repurchase program. 161 Disclosures about Derivative Instruments and Hedging Activities ("SFAS 161"). the FASB issued FASB Staff Position No. Therefore. This new standard enhances disclosure requirements for derivative instruments in order to provide users of financial statements with an enhanced understanding of (i) how and why an entity uses derivative instruments. FAS 157. 2008. 2008. the FASB issued SFAS No. NOTE 16 SUBSEQUENT EVENTS The Company's Board of Directors has approved a 2009 share repurchase program for up to $200 million.TIM HORTONS INC. beginning on or after December 15. The Company is currently evaluating the impact of adoption of this pronouncement on its Consolidated Financial Statements. the liabilities assumed. 2007. 160 Noncontrolling Interests in Consolidated Financial Statements an amendment of ARB No. This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15. the standard will also apply to all other fair value measurements (see note 13). In December 2007. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. and interim periods within those fiscal years. and it is expected to result in an asset impairment charge for the affected restaurants. The Company is currently evaluating the potential impact. the identifiable assets acquired. of the adoption of SFAS 157. In May 2008. the FASB issued SFAS No. The Company is currently evaluating the impact of adoption of this pronouncement on its Consolidated Financial Statements. In March 2008. Management will also undertake a further impairment analysis related to the affected operating markets. The Company is currently evaluating the impact of adoption of this pronouncement on its Consolidated Financial Statements. On December 29. 2008. 157 ("SFAS 157. of the adoption of SFAS 141R on the Company's Consolidated Financial Statements.2 Effective Date of FASB Statement No.per. This Statement is effective for fiscal years. the FASB issued SFAS No. this Statement amends FASB Statement No. beginning on December 31. The details of the rationalization plan are being finalized. SFAS 141R also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. if any. SFAS 162 is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to AU Section 411. with early application encouraged. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited) (Continued) (in thousands of Canadian dollars. 2008.

which are primarily self.date basis in 2008. Consumer cost pressures. Changes in systemwide sales are driven by changes in average same.date) of which pricing accounted for approximately 3.8% (7.S.level sales at both franchised and Company. Canadian same. non. as well as our other descriptions of risks set forth herein.date basis." Systemwide sales grew by 7. hospitals.S. could have also been contributing factors to the overall sales results for the quarter. the overall health and financial performance of our brand and franchisee base. GAAP. GAAP").9% in the U.operated restaurants. As a result of pricing implemented earlier this year. Our financial results are driven largely by changes in systemwide sales.looking statements that are not historical facts but reflect our current expectation regarding future results. for example. supplies. All amounts are expressed in Canadian dollars unless otherwise noted. In the third quarter of 2007. operate Tim Hortons restaurants in Canada and the U. including the matters discussed below. we have provided the most directly comparable measures calculated and presented in accordance with U. provides information on total retail sales at restaurants operating systemwide throughout the relevant period and provides a useful comparison between periods. our loyal customers are still coming to us.3% on a year. Our business model also includes controlling the real estate for most of our franchised restaurants. including.S. 51 (revised December 2003) ("FIN 46R"). we collect royalty income on our franchised restaurant sales. including volatile gasoline prices.store sales growth was 3. and its subsidiaries. Systemwide sales include restaurant. Historical trends should not be taken as indicative of future operations and financial results. as a result of new restaurant expansion in both Canada and the U.TIM HORTONS INC. which are included in our franchise revenues. we currently expect that there will be approximately 3. On a year. As of September 28.GAAP financial measures to assist readers in understanding our performance.K and the risk factors set forth in our Safe Harbor statement attached hereto as Exhibit 99. which services approximately 85% of our Ontario restaurants. unless specifically noted otherwise. however.4% of the increase.looking statements because of a number of risks and uncertainties.S.251 or 98.to. the fact we did experience organic growth continues to lend credence to our price/value position given the sales climate in which we operated and strong prior year sales comparatives. As of September 28. We believe systemwide sales and average same. and ultimately.K filed with the Securities and Exchange Commission ("SEC") on February 26.9% in 2007 year. our financial performance on a consolidated and segmented basis. and continued same. We distribute coffee and other beverages.S. The following discussion includes forward.serve kiosks operating under the name "Tim Hortons. and to a lesser extent.party distributors. we have 261 licensed locations in the Republic of Ireland and the United Kingdom. GAAP measures. 20 .store sales..to. for a further description of risks and uncertainties affecting our business and financial results. franchising business. In addition to our Canadian and U. References herein to "Tim Hortons.5% in Canada and 92.out of distribution of frozen and refrigerated products from our Guelph facility. and airports.perishable food.standard restaurants. kiosks in offices.7% of our restaurants were franchised.S. We prepare our financial statements in accordance with accounting principles generally accepted in the United States ("U. Executive Overview We franchise.4%. we completed the roll." or "us" refer to Tim Hortons Inc. Actual results may differ materially from the results discussed in the forward. Non.store sales growth in Canada. Pricing impacted the third quarter of 2008 Canadian growth rates by approximately 3. Canadian samestore sales growth was 4.GAAP financial measures are used. we leased or owned the real estate for approximately 82% of our system restaurants. Please refer to "Risk Factors" included in our Annual Report on Form 10." the "Company. 2008." "we. we supply similar products to system restaurants through third.S. 2008. Where non.serve kiosks located in gas and convenience locations and grocery stores. In the U. which generates a recurring stream of rental income.S. franchise restaurant sales result in royalties and rental income. AND SUBSIDIARIES ITEM 2.4% (6.S. The amount of systemwide sales affects our franchisee royalties and rental income. 2008." "our. Average same. As the franchisor. as well as self. This Management's Discussion and Analysis of Financial Condition and Results of Operations may contain certain non. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of our financial condition and results of operations should be read in conjunction with the 2007 Consolidated Financial Statements and accompanying notes included in our Annual Report on Form 10. While the frequency of visits moderated in Canada. as well as our distribution sales. While pricing contributed the majority of our growth in the quarter. colleges. Franchise restaurant sales generally are not included in our Consolidated Financial Statements (except for restaurants consolidated in accordance with Financial Accounting Standards Board ("FASB") Interpretation No.store sales and changes in the number of restaurants.GAAP financial measures are measures that either exclude or include amounts that are not excluded or included in the most directly comparable measure calculated and presented in accordance with U. packaging and equipment to system restaurants in Canada through our five distribution centres. representing 99.store sales provide meaningful information to investors concerning the size and health of our system. In the third quarter of 2008.8% in the third quarter of 2008 and 8. and also impact distribution revenues. which include restaurant.7% in the third quarter of 2007).to. Real estate that is not controlled by us is generally for non.level sales at both franchise and Companyoperated restaurants. one of the key metrics we use to assess our performance. GAAP and a reconciliation to U. ("FIN") 46R Consolidation of Variable Interest Entities an interpretation of ARB No. 3.0% of a pricing impact in the fourth quarter of 2008 in Canada versus the comparable period in 2007.

This tax benefit did not recur in 2008. Based on sales performance year.operated restaurants in the quarter versus the prior year.to. In addition. or 8.6 million. lower equity income. or 7. GAAP measure).operated restaurants. the franchising strategy provides better overall profitability to the Company.to date period ended September 28. 2008 over the prior year.operated restaurants in southern New England (see Segment Operating Income (Loss) below for additional details). the 2008 operating income target did not contemplate an impairment charge that will likely occur in the fourth quarter.date periods of 2008 compared to the same periods last year.year growth were both affected by our continued effort to convert Company. Adjusted operating income growth. This challenging environment may result in reductions in customer visits. 2007 (see "Selected Operating and Financial Highlights" for a reconciliation to the most directly comparable U. segment due to the current economic conditions and intensive competitive discounting activity. Company. or 3.S. Our operating performance to the end of the third quarter was generally consistent with our annualized expectations for operating income growth of 10%. The Canadian economy also experienced some weakness.7% of the systemwide restaurants are now franchised.store sales growth targets established in February 2008 of 4%6%.cash tax benefit of approximately $1 million recognized by our bakery joint venture.7 million. which was consistent with systemwide sales growth. We do expect to exceed the store expansion target of 90.quarter in the restaurant sector and continued challenges in the macro. our revenues increased $18.to.economic environment.S.S. and higher renovation and other support costs. and lower General and administrative expenses.store sales are below the U. compared to last year. 2008. as discussed above. as compared to the year. Our third quarter 2008 earnings performance and positive same.term.S. In the third quarter of 2007.operated restaurants in the system to 43.to.store sales declined by 0.S.over.serve kiosks.date period ended September 30. particularly in the U. or 12. or $3. Historically. all of which did not translate into sales growth. frozen and refrigerated) was fully completed in the third quarter of 2007. restaurants. 2007.to. Operating income increased $26.Our U. contributing to the higher comparable year. same. excluding the impact of the previously mentioned restructuring charge.to.operated restaurants were down 30.S.date and the current economic weakness in the U.. partially offset by higher General and administrative expense. We are not immune to recessionary impacts and we expect.8 million. This increase was primarily due to the higher revenues.date period in 2007 of which $3.date period ended September 28. net of operating expenses.to. we do not expect to meet our 2008 same.1 million restructuring charge. Although our brand in the U. In addition. In the year.to.date warehouse sales growth.4%. On a year. same. Canadian same. General and administrative expenses for the year.economic environment and resulting sales climate continues to be challenging. Offsetting the pricing impact was lower transactions in our U.S.S. Higher relief.operator model.date basis. of 2%. after conversion.to.S.9 million.2% (4.to.6 million in the third quarter of 2008 compared to $327. There were 27 net fewer Company. we may provide additional relief to the operator and. A total of 98. but our U. is less developed and we faced sales and earnings challenges in our U. General and administrative expense was $6. In the third quarter of 2008. versus the comparable period in 2007.S. we have proven to be fairly resilient in Canada during challenging economic times due in part to our quality product offering at a reasonable price.channel delivery (dry.2% of pricing in the third quarter of 2008 and approximately 1. we may be required to consolidate these restaurants in accordance with FIN 46R.date basis.4% growth. partially offset by lower equity income. equity income included a non. the U. overall.S. consisting primarily of distribution sales.5% growth in the third quarter of 2007) and grew on a year. We had approximately 3. and lower franchise fee income. excluding the $3. Rents and royalties revenues increased 8.date period ended September 28. we delivered a strong consolidated performance in the third quarter of 2008.store sales target in the U. While the rationalization of underperforming restaurants will contribute to future earnings.to. 21 . Initially. As a result of pricing implemented earlier this year.S. In the third quarter of 2008. we currently expect that there will be approximately 3. which largely depends on customer response to new pricing. was 9. franchise fee costs were higher in 2008 as a result of a higher number of new units sold.110 locations in the U. reducing revenues from Company.2% in both the third quarter and year.7 million higher in 2008 on a year.date period ended September 30. sales.5 million.store sales growth in Canada demonstrates our brand strength in the face of unprecedented economic and consumer challenges.9% on a year.date basis compared to the year.to. segment. Total sales and year.1% in 2007). in the year.0 million during the same period last year.0% to $333.. to see continued volatility quarter. but to a much lesser extent.S.date basis by 1. Price increases do not necessarily translate into an equivalent level of sales growth.date period in 2007.7% for the year. partially offset rents and royalties revenue growth.S. higher other income.date period of 2007. offset in part by sales increases related to restaurants consolidated in accordance with FIN 46R. General and administrative expenses included costs which did not recur in 2008. Operating income increased $13. Sales from Company. higher franchise license renewals. as mentioned above.8%. targets of 2%. in the year. showing significant financial market and economic weakness.to. We also plan to rationalize some underperforming Company. over the third quarter of 2007 and increased $99.todate period of 2007 included costs related to our franchisee convention. in the third quarter of 2008 compared to the third quarter of 2007 primarily as a result of higher rents and royalties revenues. as discussed above. Franchise fee income was also impacted by the timing of revenue recognition relating to U. We believe that generally in the long.to.store sales growth rates are within the same.6% in the third quarter of 2008 (4.S.to.operated restaurants to operator agreements.2% pricing impact in same.2%.7%.4%. substantially all of which was in our U. equipment sales under our franchisee incentive program. Over the last several quarters.7%. economy further deteriorated. contributing to the lower expenses in the third quarter of 2008. but the state of the macro.1 million related to a restructuring charge incurred in the second quarter of 2008. we have been actively converting many of our U.operated restaurants to an owner. 2008 over the comparable year.to. with a stronger orientation toward non. The transition of the Guelph facility to three. bringing the total number of Company. increased 2.standard restaurants and self.S.store sales results in the fourth quarter of 2008 in the U.

A restructuring charge of $3. As part of our vertical integration strategy. commencement of the program at the beginning of the year will allow us to fully align our annual budgeting and capital allocation process. this facility.36 in the third quarter of 2007. In the third quarter of 2008.to.to. as compared to the year. 2008.Net income increased $11.time charge.to. which commenced in November 2007.7 million. our green coffee blending capability will help us protect the quality. during the third quarter of 2008 as compared to the third quarter of 2007. dividends. due to the Company's share repurchase program. planned to commence during the first quarter of 2009. the new roasting facility will provide system benefits important to our franchisees and the Company. normalized annual net earnings in dividends each year. Under both repurchase programs. 2008 to shareholders of record as of November 20. certain employees have left the organization under various retirement and other arrangements. 22 . primarily in 2009.7 million.9%.3%.6 million shares of our common stock at an average cost of $31. As of October 30.5 million shares of our common stock.date period ended September 30. 2007.to.8 million.1% of shares outstanding at the time the initial share repurchase program was approved in November 2006. or 11. we have completed our second consecutive $200 million share repurchase program.date basis. are subject to regulatory compliance and will be at management's discretion given prevailing market conditions and cost considerations. Diluted earnings per share increased to $0. and share repurchases. New York. When fully operational. Equally important. lower than the diluted weighted average share count in the year. The restructuring is expected to result in future annualized savings of approximately $1 million. We continue to selectively invest in growth opportunities for our business and believe our financial position is a key enabler of our future growth. which was 2. On April 30.4 million.0 million. The decrease in effective tax rate was primarily due to a lower Canadian statutory rate.2% in the comparable period of 2007. due to the Company's share repurchase program. 2008 net income increased $21. or 2. we have repurchased 4. The higher growth was the result primarily of higher operating income and a lower effective tax rate during the quarter of 32.02 in the year. The payment of future dividends remains subject to the discretion of our Board of Directors. May and September 2008 dividends at this rate. For future years. and the extent of respective purchases under the program. 2008 as compared to $1. we repurchased approximately 1.to. 2008.date basis.quarters of our system needs. In addition. The increase in year. We declared and paid our March. Our Board of Directors has approved a 2009 share repurchase program for up to $200 million.date period in 2007. On a year.17 in the year. 2007.1 million was recorded in the second quarter of 2008 in General and administrative expense relating to these retirement and other arrangements.8% lower than the diluted weighted average share count in the third quarter of 2007.8 million shares. which will be located in southern Ontario.25% of prior year. Our 2008 operating income target of 10% growth excludes this one. Diluted earnings per share increased to $1. The diluted weighted average number of shares outstanding was 185. will provide about three. A total of 6.date period ended September 28.5% versus 35. also at the $0.to. we announced changes to our executive management structure to both strengthen and streamline executive oversight of key business operations. our Board of Directors approved a 28.5 million. we have repurchased a combined total of 11. Consistent with our current dividend policy of paying a total of between 20%.2%. We will invest approximately $30 million in this facility. representing approximately 6.09 rate per share.to. Our Board of Directors declared a quarterly dividend payable on December 4.date period ended September 30.43 in the third quarter of 2008 from $0.date net income was the result of the higher operating income and a lower effective tax rate. for a total cost of $149.59 per share for a total cost of $49. we plan to construct a new coffee roasting facility. 2008. at a very competitive rate for our franchisees and provide for a reasonable return on our investment. partially offset by higher net interest expense.09 per share in February 2008. integrity and supply of our proprietary coffee blend from tree to cup.0 million shares were repurchased under the 20072008 program. or 16.6% increase in the quarterly dividend to $0. coupled with our existing coffee roasting operation in Rochester. On a year. The diluted weighted average number of shares outstanding in the third quarter of 2008 was 182. including capital expenditures. Implementation of the 2009 share repurchase program. Consistent with our vertical integration investment strategy.

43 $ $ $ 108.7% n/m $ 338. Commencing in the first quarter of 2008. the most directly comparable U.to.0 $ 7.9 $ $ $ 122.9% 4.0 189. 2008 2007 Year.8 3.8 $ 308. September 30.to. 2008 2007 (in millions.1 $ 308.36 $ $ $ 338.date period ended September 28. set forth above.S. Year.7 3. 2008.9 - $ 26.9 1.store sales calculation beginning the 13th month after the restaurant's opening.Selected Operating and Financial Highlights Third quarter ended September 28. which excludes restructuring charges. This change aligns same.294 $ 509.7 $ 308. in our U.4 0. 2008 2007 Systemwide sales growth(1) Average samestore sales growth(2) Canada U.480.3 $ 335. The presentation of this non.7% 4. This adjustment did not have a significant impact on reported Canadian same.. dollar sales are converted to Canadian dollar amounts using the average exchange rate of the base quarter for the period covered.380.6)% 3. Systemwide Sales Growth .S. Systemwide sales growth excludes sales from our Republic of Ireland and United Kingdom licensed locations.forma adjusted operating income information is important for comparison purposes to prior periods and for purposes of evaluating management's operating income target for 2008.S.3% 11.02 182.5% 3. this measure provides a more consistent view of management's perspectives on performance than the closest equivalent U.S.9 $ 29.store calculation methodologies between Canada and the U.store sales growth rates.1 8. September 30.0% 3.8% (0.6 1.7% 8. except where noted) Change from prior year $ % Reported operating income Restructuring charge Adjusted operating income $ 335.date period ended September 30. Historically.9 185. GAAP measure.4% 1. a restaurant was included in our average same.8 0.3 (1) (2) (3) Total systemwide sales growth and U.8 215.date period ended September 28. Therefore.3 67. Management believes that pro.2% 3.store sales growth is determined using a constant exchange rate to exclude the effects of foreign currency translation.GAAP measure.S. The Company evaluates its business performance and trends excluding amounts related to the restructuring. GAAP measure. 2007 Canadian same. September 30.17 $ $ $ 308.1 78.9 193. The comparative third quarter and year.8% 11. Systemwide restaurants Revenues (in millions) Operating income (in millions) Adjusted operating income (in millions)(3) Net income (in millions) Diluted earnings per share Weighted average number of shares of common stock outstanding Diluted (in millions) 7.110 490.0 $ 6.7% n/m The comparison is not meaningful. average same. business. and with current industry practices.5 $ 4.todate period ended September 28.294 1.7 187.4 $ 122.110 1.1 $ 108.store sales for the third quarter and year. U.S.1% 3. Adjusted operating income is a non. have been recalculated using the 2008 methodology. we began calculating our Canadian average same.9 9.to.GAAP measure is made with operating income.store sales growth on this basis as well.S.

supplies. and other utility costs. including new product introductions. although approximately 98. Systemwide sales growth excludes sales from our Republic of Ireland and United Kingdom licensed locations.store sales and changes in the number of restaurants. provides information on total retail sales at restaurants operating systemwide (i. Our average same.7% of our system is franchised. labour. one of the key metrics we use to assess our performance. expansion into broader menu offerings and pricing.operated restaurants) throughout the relevant period and provides a useful comparison between periods.level sales at both franchised and Companyoperated restaurants. Average Same. improvements in restaurant speed of service and other operational efficiencies. Restaurant.level costs on key items such as coffee.Store Sales Growth Average same.store sales.e. The amount of systemwide sales impacts our franchisee royalties and rental income. 23 . includes both franchised and Company.store sales growth is attributable to several key factors. as well as our distribution sales.level price increases are primarily used to offset higher restaurant.Our financial results are driven largely by changes in systemwide sales. more frequent customer visits. Changes in systemwide sales are driven by changes in average same. which include restaurant.

As mentioned above. 2008. has been a significant contributor to our growth. and we had 40 restaurant closures for a net increase of 184 restaurants.S.Q.S.S. We began introducing targeted "combo" food programs at a variety of value points in response to the challenging economic environment. Restaurants opened Restaurants closed Net change Total Company Restaurants opened Restaurants closed Net change 30 (11) 19 31 (6) 25 75 (28) 47 59 (12) 47 19 (1) 18 9 (2) 7 30 (4) 26 20 (4) 16 49 (12) 37 40 (8) 32 105 (32) 73 79 (16) 63 In our U.S. We have adjusted our historical quarterly average same. In addition. This change is also consistent with current industry practices. teas. including innovation at breakfast as well as other day parts. we believe this approach will help position us well to build transactions. 2008 2007 Canada Restaurants opened Restaurants closed Net change U. 24 .E.store sales trends are not necessarily indicative of future results. September 30.L. market. our promotional programs included Chocolate Brownie and Hazelnut Iced Capp Supremes. We have also closed.commerce platform which will service Canadian residents. During the third quarter of 2008. Below is a summary of store openings and closures for the third quarter and year.S. we have launched an e.store sales growth are calculated on a consistent basis.efficient manner.to. Customers have access to order a range of items such as gift baskets.date periods ended September 28. average same. which is presented along with the original (as reported) growth data in our first quarter 2008 Form 10.up of coffee. Typically. or we believe that sales from the restaurant can be absorbed by surrounding restaurants.operated restaurants. 2007. From the end of the third quarter of 2007 to the end of the third quarter of 2008." which included "combos" of apples. respectively: Third quarter ended September 28. including both franchised and Company. September 30.serve non. cappuccinos and hot chocolate. 20 to 40 system restaurants are closed annually. We believe that this approach ultimately will allow us to broaden brand awareness and convenience in a cost. Restaurant closures typically result from an opportunity to acquire a better location which will permit us to upgrade size and layout or add a drive. In addition. hashbrowns. We also featured Hearty Potato Bacon Soup and Italian Wedding Soup during the quarter in the U.thru. We have rolled out our specialty coffee program in British Columbia.date period ended September 28. 2008 and September 30.. primarily in Canada. In the U. creating greater market penetration while being less capital intensive. promotional activities also included Iced Coffee and a new "combo" program called "Fresh Choice Sides. and we believe these programs help reinforce our value proposition with U. filed with the SEC on May 7.to.Product innovation continues to be one of our focused strategies to drive same. adding to locations in all of Manitoba and other locations where we have been testing. New Restaurant Development Opening restaurants in new and existing markets in Canada and the U. muffins and donuts as part of a hot breakfast sandwich "combo" program.standard units in order to continue to seed our brand. consumers. and European Style Pastries.S. Our historical average same. Canadian and U. We expect to have most installations completed by the end of November 2008. coffee brewers and travel mugs and our full canned beverage line.T. Various baked goods were featured during the quarter including the Strawberry Blossom Donut. Gourmet Cookies and the Bagel B.S. we have recently modified our restaurant development plan to include a higher proportion of our self.serve kiosk platform and expand our use of full. with restaurants being included beginning in the 13th month following the restaurant's opening. and may continue to close restaurants for which the restaurant location has performed below our expectations for an extended period of time. 2008 2007 Year.store sales growth data for 2006 and 2007 and on an annual basis for the prior 10 years to align with the new methodology. segment.store sales growth. we opened 224 system restaurants.

2007: As of September 28.9% 42 356 398 89.8% 23 2.6% 70 3.735 2. 2008 As of December 30.149 3.870 99.7% 25 30 2. 2007 and September 30.operated Franchised Total % Franchised 13 2.operated Franchised Total % Franchised Total system Company.823 98. 2007 Canada Company.operated Franchised Total % Franchised U. 2008.4% 72 3.S.5% 30 394 424 92.793 2.040 3.Systemwide Restaurant Count The following table shows our restaurant count as of September 28.110 97.294 98.7% .857 2.758 99.9% 43 3. 2007 As of September 30.221 97. Company.2% 47 305 352 86. December 30.251 3.

year.S.S. We manage and review financial results from Canadian and U. 2008 Third quarter ended % of September 30. % of Revenues 2007 Revenues (in thousands.S. We have started to develop international operations in the Republic of Ireland and the United Kingdom.to. and a nominal amount of operating income from international operations (discussed below). and higher general and administrative expense. Segment operating income increased $12.store sales growth are affected by the business and economic environments in Canada and the U.to.1)% 13. On a consolidated basis.store sales growth was 4.serve kiosk locations. which drove increased rents and royalties revenues and revenue growth from our distribution business.2%.Segment Operating Income (Loss) Systemwide sales and average same.to.date period ended September 28.S.7 million in the year. These increases were offset in part by higher General and administrative expense in the Canadian segment and lower equity income.826 (1. in part.7)% 118.1)% 27. On a year. consistent with the growth in our business. In the third quarter of 2008. In the third quarter of 2008.778 (10.0 million. We currently . This increase was driven by a higher number of Canadian systemwide restaurants.141 (861) 8. the impact of certain foreign currency exchange gains and losses. This increase related to higher operating income from our Canadian segment. which contributes to higher income from rents and royalties.5% (2.831) 11.store sales growth was 3.860 (5. an increase of 11. in the third quarter of 2008 compared to the third quarter of 2007.to.735 Change from prior year $ 12.S. or 8. from $341. Canadian average same.date basis.2% (2. except where noted) Percentage Operating Income (Loss) Canada $ U. therefore.701) 25.2% (19.4)% 119. Franchise fee income was also higher due to a higher number of standard restaurant unit sales in the third quarter of 2008 versus a higher number of non.to.066 (288) 24.280 (461) 8. 2007 to $369.1% $ (0.S.392 (28.971) 24.3 million higher.standard restaurants sold in the 2007 comparable period.337 22. franchise fee income was higher in the third quarter of 2008 as a result of higher franchise license renewal fees.510) 24.to.4% $ 26. In addition. segment.672 (28. as well as additional income from distribution.7% September 28.4% of this growth. these operations are included in Corporate in our segmented operating results. The following tables contain information about the operating income (loss) of our reportable segments: Change from prior year $ Percentage September 28.9)% 364.3)% 28.719 (4.3% $ (0.7% $ 308.9 million in the year.7% 122.4)% 341.1% (1.8% in the third quarter of 2008.995 1.882 22.1% $ 13. in part. primarily in the form of branded licensed self. our Canadian segment operating income was $132. Each segment includes all manufacturing and distribution operations that are located in their respective geographic locations.4% of this growth.327) 24.date period ended September 28.119) 26. operations separately.7% (1. this business contributes nominal amounts to distribution sales and royalties revenues as well as to consolidated operating income. Pricing accounted for approximately 3.S. and as a result. Canadian segment operating income and margins benefited from higher systemwide sales.over. 2008 Year. or 10. an increase of 8. we opened 30 restaurants in Canada and closed 11 compared to opening 31 restaurants and closing six in the third quarter of 2007.9)% 337. Canadian average same. general and administrative expense was lower year.6% n/m 130.9 million.1%.1% compared to the year.1 million. Our Canadian segment operating income increased $28.date period in 2007 driven by higher operating income in Canada offset by higher U.819 8.0% $ 108.773 (8.0% $ (0.892 (2. segment losses. offset. Total Segment operating income Corporate(1) Total operating income $ 369.7% n/m The comparison is not meaningful.072 24.1)% 11.188) 25. except where noted) Operating Income (Loss) Canada $ U.441) 24. Total Segment operating income Corporate(1) Total operating income $ 132. We.6)% 335. Pricing accounted for approximately 3.date period ended % of September 30.740 10.8% $ (0. have determined the reportable segments for our business to be the geographic locations of Canada and the U. 2008.6% over the third quarter of 2007. 2008. including better leveraging of our cost structure and operational efficiency gains at our fully operational Guelph distribution centre.date period ended September 30. Operating income gains were. (1) Corporate charges include certain overhead costs that are not allocated to individual business segments.1% 16. At this time.701 22. by a larger operating loss from our U.6% (1.4% in the year. offset by lower equity income. 2008 segment operating income was $27. % of Revenues 2007 Revenues (in thousands.

We typically expect price increases in one or more markets throughout a given year. there can be no assurance that price increases will result in an equivalent level of sales growth.level costs.store sales growth was impacted by significant snowfall and new statutory holidays in Ontario and Manitoba. which reduced customer visits on those days and negatively impacted our first quarter 2008 same.to. generally as a result of rising restaurant. 2007.expect that our fourth quarter 2008 same. we opened 75 restaurants in Canada and closed 28. In the year.store sales growth. 2008. which depends upon customer response to the new pricing.0% of previously introduced pricing.to. Our year.date same.to. particularly labour costs and changes in commodity costs.date period ended September 30. however. compared to opening 59 restaurants and closing 12 in the year.date period ended September 28. Price increases are market driven.store sales numbers will include approximately 3. 26 .

to position our U. it has not historically been a major impediment to our growth. the Company announced its intention to rationalize some underperforming Company.110 locations in the U.party lenders.1 million in the third quarter of 2008 compared to operating loss of $0.store sales growth. subsequent to the third quarter ended September 28. impacted rents and royalty revenues as well as distribution sales. consistent with prevailing market conditions.3 million in the year.2% of previously introduced pricing. Franchise Operations. and in some cases.S. operating segment loss was $5. operating results were primarily impacted in both the quarterly and year. Pricing did not fully translate into sales growth for the third quarter or 2008 year.store sales growth was 1.S.S. 2008 compared to operating segment loss of $4. economy has deteriorated fairly rapidly. expect to exceed the store expansion target of 90.S. When we enter new markets.to. Despite the current economic and credit conditions.date period ended September 28.serve non. the lower. In addition.store sales declined by 0. and northern Pennsylvania. We plan to continue to expand these new markets in the fourth quarter of 2008. as compared to opening nine new restaurants and closing two in the third quarter of 2007. The details of the rationalization plan are being finalized.expected sales performance resulted in higher relief and. but in certain developing markets. We expect these locations to be operating prior to the end of 2008 and.S.2% of pricing in the third quarter of 2008. for a period of time to support these franchisees.to.than. over time. as compared to opening 20 restaurants in the comparable period of 2007 and closing four restaurants. including such items as size or type of restaurant or timing and number of openings. with the intent to strengthen and build on our price/value position and enhance this message with U.operated restaurants in the U. This rationalization is expected to affect less than half of our 30 Company. If required.date period ended September 30.S.toyear.efficient manner. In 2008.operated restaurants.The U.S. We are typically able to identify franchisees for new restaurants. although processing may take longer and costs may be higher.2%.to. segment operating income will continue to show volatility. We believe that both of these business refinements will help. it may be more challenging. Our fourth quarter 2008 same. In October 2008.S. business to defend aggressive competitive discounting activity. while also helping us to create sales momentum.S. which depends upon customer response to the new pricing and potentially other macro. we provide relief of rents and royalties.to. Such relief offsets our rent and royalty revenues. Michigan. 2008.. Management will also undertake a further impairment analysis related to the affected operating markets. with a stronger orientation toward non. therefore. In certain situations. business approach in the third quarter in our evolving response to the current economic climate. we may.todate periods by increased relief given to our franchisees primarily as a result of the increased number of new restaurant openings late in 2007 and 2008 year.S. We also continue to look generally at other strategic development opportunities.date. our franchisees continue to have access to lending programs with third.2 million in the year. There can be no assurance that price increases will result in an equivalent level of sales growth. adjust certain factors in our restaurant development plan. The U. we have opened 30 new restaurants and closed four. we announced an agreement with Tops Friendly Markets to open Tim Hortons sites.S. and the shift from Company.S.9%.3 million in the third quarter of 2007. we anticipate that U. In addition. we are working with our franchisees to communicate and interact with customers in ways that responds to their current situation and the economic environment. average same. from time to time.to.quarter and year. as we continue our new unit growth. we also generally provide relief to the franchisee for an initial period.to. The U.to. markets and have traditionally expanded into adjacent markets once our core markets are established. The Company's 2008 operating income target did not contemplate a charge for closed restaurants. 2008 also reflect lower franchise fee income as a result of the timing of revenue recognition from our franchise incentive program. We expect rationalization of underperforming restaurants will ultimately contribute to improved profitability. On a year. an asset impairment charge taken in the fourth quarter relative to these closures would impact the Company's 2008 operating income. relief for other operating costs. While we do not intend to stray from our core everyday positioning of quality food at reasonable prices. quarter.S. and improve sales performance at our remaining restaurants nearby. Notwithstanding this growth.operated restaurants in southern New England between the end of 2008 and early next year. We have seen a high amount of competitive discounting and. The U.serve kiosks. we have introduced targeted "combo" food programs at a variety of value points. we have made some refinements to our U.6% in the third quarter of 2008. and we will maintain a disciplined approach to new restaurant development. primarily self.date basis. operating segment loss was $2.standard restaurants and self. based on past experience. In response to some of the economic challenges. we opened 19 new restaurants and closed one.serve kiosk platform and expanded our use of full. consumers in a tangible way. The plan to close underperforming restaurants is consistent with management's efforts to improve profitability of the U. We believe that the current economic environment and competitive activity has resulted in a decline in transactions in our U. We continue to make progress in the development and growth in most of our U. we continued this approach by developing a presence in Lansing. as we add new restaurants in developing markets. average unit sales growth for existing restaurants may be affected for a period of time until awareness of the brand improves and the market adjusts to the added convenience that new locations provide. segment results in the third quarter and year.to.operated restaurants to operator agreements. See "The Application of Critical Accounting Policies Revenue Recognition. therefore. when we transition a restaurant from a Company. average unit sales volumes for our franchisees may be lower than sales levels in our more established markets. and it is expected to result in an asset impairment charge for the affected restaurants.S.operated restaurant to either a full franchised restaurant or a restaurant governed by an operator agreement. This approach ultimately allows us to broaden brand awareness and convenience in a cost.S.date basis. In addition to the above. as a result. same. 27 .date. lower same. however. segment. On a year. and we have opened 3 restaurants in Syracuse. New York in 2008. in approximately 80 Tops stores in western and central New York.economic challenges. operating segment.date basis represented approximately 1.store sales numbers will include approximately 3." U.to date period ended September 28. creating greater market penetration while being less capital intensive. As the state of the U. and pricing on a year. During the third quarter of 2008. We had approximately 3. 2007. partially offset by reduced losses from Company. We typically expect price increases in one or more regions during the course of the year.serve kiosks. In developing markets. We leveraged our self.standard units to continue to seed our brand.

2008 and September 30. which are excluded from our restaurant counts. Overall. the costs associated with the 2007 franchisee convention did not recur in 2008.separation matters. Offsetting the 2008 restructuring charges were lower year. as well as with respect to various post. including the dedication of one of the most senior members of our executive team to continue emphasis on the successful development of our U. 2008.6% and 24. On a year. respectively.to. respectively. 28 .to.1 million restructuring charge.date period ended September 28.0 million compared to $28. our total segment operating margins from our reportable segments were 24.to.date basis.2% for the quarters ended September 28.7 million in the third quarter of 2008 compared to $10.date printing and mailing costs due to our adoption of the SEC's new "Notice and Access" model for the provision of proxy materials to shareholders through posting at a dedicated website where shareholders can view the information and vote on.to.5% for 2008 and 2007. 2007.Corporate charges were $8.S. our total segment operating margins from our reportable segments were 25. These licensed locations primarily operate using our self. 2006. Included in corporate charges is a nominal amount of operating income from our international operations in the Republic of Ireland and the United Kingdom for the third quarter and year.serve kiosk model. we entered into various agreements with Wendy's that defined our relationship in the interim period between our IPO and our separation from Wendy's on September 29. an increase of $0. this business contributes nominal amounts to distribution sales and royalties revenues as well as to consolidated operating income. Our only continuing contractual relationship with Wendy's is the tax sharing agreement governing certain tax matters between us and Wendy's (see "Income Taxes").date 2008 corporate charges include the $3.date period.4 million in the third quarter of 2007. as opposed to required printing and mailing of all materials to all of our shareholders. 2008 versus foreign exchange losses in the comparable period of 2007. At this time.to. The year.line. a decrease of $1.to. Our Relationship with Wendy's In March 2006. we announced changes to our executive management structure. we had 261 licensed locations in the Republic of Ireland and the United Kingdom. business and to undertake a focused evaluation and potential growth of international opportunities. As of September 28. This income is included in Corporate charges because this venture was being managed corporately during these periods. On a year.date periods of 2008.7 million. In April 2008. The decrease in corporate charges is primarily attributable to the franchisee convention costs incurred in the third quarter of 2007 that did not recur in 2008. and we had certain foreign exchange gains in the year.5 million. corporate charges were $29. In addition. The restructuring charge is included in corporate charges.5 million in the 2007 year.to.date basis.7% and 24.

5)% (4.9% 22.072 (6.323 11.414 30.861) 1.date periods of 2008 compared to the same periods of 2007.2% 382.3% 100. net Total costs and expenses.765 128 11.699 1.5% 100.986 (9.337 (6.757 22.214 20.2)% 0.020 66.4)% n/m 386.454 8.288) 957 76.6% 16. 29 .5% 4.893 18.9% n/m The comparison is not meaningful.8% (47.741 37.7% 2.3% (2.376 12.5)% 116.5% 3.2% 4.0% 143.521 490.9)% - 30.6% 10. (1) (1) See Note in the following table.042 36.541 29.381 21.823 77.5% 4.5% $ 327.0% (1. except where noted) Revenues Sales Franchise revenues: Rents and royalties(1) Franchise fees $ 333.7% $ 6.6% 7.0% 155. Change from prior year $ % September 28.888 1.200 175.2% (772) 432 (1.596 19.2% 7.2% 3.0% 11.9)% 29.719 13.to.7% 10.617 20.661 67. net Operating income Interest (expense) Interest income Income before income taxes Income taxes Net income $ 508.979 (592) 1.2% 0.8% Total revenues Costs and expenses Cost of sales Operating expenses Franchise fee costs General and administrative expense Equity (income) Other (income) expense.3% 3.056 53.995 293.0% 24.581 65.9% 288.0)% 0.984 78.2)% 0.758 (9.2% 12.072 163. % of Revenues 2007 Revenues (in thousands.204 108.1% 33.9% 7.449 20.1% (1.7% $ 12.5% $ 104.923 122.090 6.8% (2.432 58.2% 4.216) (2. 2008 Third quarter ended % of September 30.5% 15.840 57.7% 3.9% (1.0% 34.735 (170) (866) 1.118) 1.5% 13.168 51.429) (126) 5.4% 4.Results of Operations Below is a summary of operations and a more detailed discussion of results for the third quarter and year.561 2.

996 (26.9% 7.3% 10.119 6.S.1% 100.S.911 $ 1.6% $ 296. September 30.1% 14.8% 335. net Operating income Interest (expense) Interest income Income before income taxes Income taxes Net income $ 1.406 29.0% to 4. Franchise restaurant sales are not included in our Condensed Consolidated Financial Statements.909 58.to.503 $ 252.044 30.6% 96.308 $ 3.date period ended % of September 30..819 (726) (1.7% (1.4% 3.364 66.598 8. dollars) $ 1. September 30.2)% n/m 1.803 56.419 148.8)% - 90.165 37.870 6.6% 6.8% 100.0% 33.960 65.380. however.0% 410.020 22.5% to 10.2% 11.0% 10.701 (18.7% 4. except where noted) Change from prior year % of Revenues $ % Revenues Sales Franchise revenues: Rents and royalties(1) Franchise fees $ 975.081 (2.346 4.143 22.882 (17.9% 53. Rents and royalties revenues consist of (i) royalties. net Total costs and expenses.881 21. and typically range from 8.484 $ 3.678 2.779 .8% 3.585 $ 217.3% 308.227 58.004 858.303 77.088.S.492 87.596 6.5% of gross franchise restaurant sales and (ii) rents.970 3.002 99.to.2% Total revenues Costs and expenses Cost of sales Operating expenses Franchise fee costs General and administrative expense Equity income Other (income) expense.562 215.9% 444. 2008 2007 Year.837 3.1% 6. Revenues 2007 (in thousands.3)% 0.113 105. other than approximately 118 and 107 restaurants on average in the third quarters of 2008 and 2007.318 (28. Franchise restaurant sales are reported to us by our franchisees.779 6. (in thousands of U. whose results of operations are consolidated with ours pursuant to FIN 46R.670 8. which consist of base and percentage rent in Canada and percentage rent only in the U.7% 3. respectively.5% (2. 2008 Year.300 21.2% n/m (1) The comparison is not meaningful.0% of gross franchise restaurant sales.7% 7.480.2% 5.873) 1.8)% 321.1% 33.433 $ 75.to.1)% 0. which typically range from 3. The reported franchise restaurant sales (including those consolidated pursuant to FIN 46R) were: Third quarter ended September 28.114.4% (1. 2008 2007 Franchise restaurant sales: Canada (in thousands of Canadian dollars) $ U.021 9.882) 5. and 118 and 101 franchises on average in the year.881 53.9% $ 913.date period ended September 28.371.7% 4.6% (1.144.143 102.173. result in royalties and rental income.September 28.028 58.date periods of 2008 and 2007.123) 8.404 504.4% (7.440 158.792) (596) 6.262 193.524 77.0% 4. which are included in our franchise revenues.0% 34.608) 4.4% 26.239 467.551 21.1% (21.1% $ 24.4% 14.3% 1.042 1.5% 7.6% 7.6% 72. respectively.9% 805.071.466) 7.640 59. Franchise restaurant sales do.2% $ 62.3)% 0.3% 7.

3%. Systemwide sales growth.8% of total revenues during the third quarter of 2008. excluding pricing impacts.6 million during the third quarter of 2008 over the third quarter of 2007 sales of $327.0% to $333.0 million. Offsetting the warehouse sales growth was lower sales from Company.1% of total revenues during the third quarter of 2007. The remainder of sales growth is attributable to a combination of changes in product mix and pricing. as we completed the rollout of these products at our Guelph distribution centre in the third quarter of 2007. such as the uniform rollout.year growth by approximately 2. represented approximately $7. Frozen and refrigerated products did not have a significant impact on sales growth in the third quarter of 2008.2 million. Warehouse sales represented approximately 56. these prior. increasing $9. On an aggregate basis. Warehouse sales were the primary growth driver during the quarter. as compared to 57.Revenues Sales Sales grew by 2.0% during the quarter.operated restaurants due to fewer number of restaurants. 30 . partially offset by higher sales from restaurants consolidated under FIN 46R.over.year items reduced warehouse sales year. Partially offsetting this growth were certain items included in warehouse sales in 2007 that did not recur in 2008.store sales in Canada.6 million of total warehouse sales growth. Warehouse sales growth during the third quarter of 2008 was driven primarily by the underlying product demand associated with systemwide sales growth which reflects sales from a higher number of restaurants in the system and higher same. or 3.

Sales due to the consolidation of 118 and 107 restaurants on average under FIN 46R during the third quarter of 2008 and 2007 were $35.S. We opened 49 new restaurants in the third quarter of 2008 as compared to 40 new restaurants in the third quarter of 2007.1 million in the third quarter of 2007. Sales from our U. Franchise Fees.4 million. 2008 as compared to $410.S.2 million related to the net addition of 112 new restaurants in the system year.over. Franchise Revenues Rents and Royalties. dollar relative to the Canadian dollar (see below).3 million. 2008 and September 30. resulting in a net sales decline of $2. systemwide sales growth represented approximately $25.date periods ended September 28. representing an average of 58 and 82 Company.to.to.4 million related to positive same.over.7 million of the growth related to positive same. For the year.over.over. respectively. Rents and royalties growth of 8.2 million of warehouse sales growth. Foreign exchange impacted sales negatively by approximately 1.8 million to $444.over.date periods ended September 28. The remainder of year. 2008 and September 30.2 million in the comparable period of 2007. franchise incentive program (see below). This rollout commenced in the second quarter of 2006 and was completed in the third quarter of 2007.3%. Third quarter fees were essentially flat compared to 2007 due primarily to higher new restaurant openings and license renewal fees being essentially offset by lower resale and replacement fees and lower revenues recognized in 2008 from our U. 2008 were $59. Rents and royalties grew by $33. For the yearto.year and approximately $5.6 million and $43.date period was the primary contributor. dollars and translated into Canadian dollars for reporting of our consolidated results. which was consistent with systemwide sales growth.date period ended September 28. market was essentially offset with additional relief provided to certain of our U.S.to. as well as fees to cover costs and expenses related to establishing a franchisee's business.4 million as compared to $56. that did not recur in 2008. dollar exchange rate was not significantly different during the third quarters of 2007 and 2008 therefore.S. representing growth of 6.S. such as the uniform rollout. franchise incentive program and the weakening of the U. respectively.6 million. Warehouse sales growth of 8. Lower sales from fewer Company. Partially offsetting these factors were some sales related to specific 2007 programs. Our net growth in rents and royalties revenue was derived primarily from our Canadian market with $6. 2007.date 2007. 31 .9% year. sales were $31.date periods ended September 28.S. representing an average of 118 and 101 FIN 46R franchise restaurants.date 2008 as compared to 79 new restaurants year. Franchise fees include the sales revenue from initial equipment packages.8 million in the comparable period of 2007.2%.stores sales growth. fluctuations in foreign exchange did not have a significant impact on reported sales during the third quarter of 2008.over.7 million. Franchise fees increased year. 2008 and September 30.9 million.to. Higher revenue from systemwide sales growth in the U.S.2% for the 2008 year. Franchise fee revenues for the third quarter were $20.to. respectively.to. segment was slightly lower year. franchisees and the weakening U. 2007 were $976. segment are denominated in U.date period.to. lower revenues recognized in 2008 from our U. We opened 105 new restaurants year. Revenue from rents and royalties was $155. Warehouse sales growth during the year.4 million in the comparable period of 2007.store sales growth and $16. franchisees. We operated on average 46 Company.9 million in the third quarter of 2008 or $3. dollar as compared to the Canadian dollar (see below).2 million as compared to $20. respectively.to. sales were $102. Company.1 million from the rollout of frozen and refrigerated products from our Guelph distribution centre.date period ended September 28.S.4% during this year.operated restaurants was partially offset by higher sales from restaurants consolidated under FIN 46R. Franchise fee revenues for the year.year as higher new restaurant openings and higher renovation fees were partially offset by lower resale and replacement fees. 2007.2 million in the third quarter of 2008 versus $143.S.todate sales growth was the result of a combination of product pricing and product mix.0 million and $913.6 million for the year.year as the benefit of higher systemwide sales growth was more than offset by higher relief provided to certain of our U.4 million and $92. In addition. The U.2% year.operated restaurant sales were $8.to.S.operated restaurants.operated restaurants during the third quarter of 2008 as compared to 73 in the third quarter of 2007.year. 2008 benefited by approximately $32.date period ended September 28. The U.5 million and $34.S. The Canadian segment contributed substantially all of this growth with $17.year.8 million related to the net addition of 112 new restaurants year. representing growth of 8.year is consistent with systemwide sales growth of 8.Sales for the year.9 million lower than sales in the third quarter of 2007.

9 million or 1. This incentive program impacts the timing of revenue recognition of these proceeds (See Application of Critical Accounting Policies Revenue Recognition). compared to the value that would have been reported had there been no exchange rate movement.date period ended September 30.S. accounting for the majority of higher costs of sales growth.quarter and year. we operated on average 46 restaurants and 73 restaurants.operated restaurants was essentially offset by higher cost of sales from additional restaurants consolidated under FIN 46R.3% and 64.7% for year.up. resulting in higher or lower revenues and higher or lower costs of sales from our distribution business. 2008 was the rollout of frozen and refrigerated products from our Guelph distribution centre. in the third quarter of 2008 and 2007. dollar exchange rate was not significantly different during the third quarters of 2007 and 2008 and. Our distribution business will continue to be subject to changes related to the underlying costs of key commodities. The remainder of cost of sales growth during the quarter was attributable to a combination of changes in product mix and pricing.6% of our total costs and expenses. For the year. Frozen and refrigerated products did not impact cost of sales growth to the extent it had in previous quarters in 2008. These cost changes can impact warehouse revenues.operated restaurants. We operated 24 fewer restaurants year. respectively. Cost of sales grew by $53.to. varies with the average number and mix of Company. Warehouse cost of sales increased approximately $28. dollars and translated into Canadian dollars for reporting of our results. respectively. net of higher cost of sales from a higher number of restaurants consolidated under FIN 46R. Third quarter 2008 warehouse cost of sales growth was offset in part as a result of lower cost of sales from a fewer number of Company. The U.0 million and $26.0 million. Total Costs and Expenses Cost of Sales Cost of sales for the third quarter of 2008 was $293. and can create volatility quarter.date period ended September 28. These transitioned restaurants may then result in us initially having to consolidate them in accordance with FIN 46R (see below). we have a franchise incentive program whereby revenue from the sale of equipment is deferred until the franchise restaurant has exceeded and maintained certain sales volume levels and other recognition criteria. segment are denominated in U. respectively.4 million of warehouse cost of sales growth.2 million from the year. Warehouse cost of sales during the third quarter of 2008 increased primarily from higher product demand associated with systemwide sales growth.3 million and $14. Increases and decreases in commodity costs are largely passed through to franchisees. Cost of sales were $858. representing on average the consolidation of 118 and 107 restaurants during these periods. FIN 46R restaurant cost of sales was $30.S. 32 .date 2008 as compared to an average of 73 restaurants operated year.date periods ended September 28.to. labour and occupancy costs. respectively.7%. cost of sales during the year. or 6.date periods ended September 28. 2007. costs and margins. as the rollout of these products at our Guelph distribution centre was completed in the third quarter of 2007. during the year.8%.5 million and $72. resulting in cost of sales of $10. Franchise revenues from our U.2 million for the third quarter of 2007. The rollout commenced in the second quarter of 2006.over. net.to.to.operated restaurants. One of the primary sources of warehouse cost of sales growth during the year. 2007.8%.operated restaurant cost of sales.date in 2007.date periods in 2008 and 2007.date period as a result of the rollout.4%.to. These changes may impact margins as most of these products are typically priced based on a fixed.date basis.over. The remainder of cost of sales growth was the result of a combination of product pricing and product mix. did not have a significant impact on reported rents and royalties and franchise fee revenues during the third quarter of 2008.. Distribution cost of sales represented 65.6%.1 million compared to $288. or 7.9 million.to. respectively. representing on average 118 and 101 franchise restaurants consolidated during these periods.8 million.4 million and $805. Warehouse cost of sales growth was $53.0 million. excluding pricing impact.dollar mark. such as the uniform rollout.4 million for the year. Partially offsetting this demand growth were certain items included in warehouse cost of sales in 2007 that did not recur in 2008. such as the uniform rollout and better leveraging of our cost structure and operational efficiency gains at our fully operational Guelph distribution centre. Company. which includes food. See "Commodity Risks" below.to. respectively.year. and 64. We continue to focus on transitioning these restaurants to franchise or operator agreements. Product demand from systemwide sales growth represented approximately $22. increasing $4. or $6. Partially offsetting this growth were certain items included in warehouse cost of sales in 2007 that did not recur in 2008.6 million during the third quarter of 2008 and 2007. 2008 decreased by $13. 2008 and September 30.In the U. such as coffee and sugar.date period ended September 28. FIN 46R restaurant cost of sales were $86. On a year. This underlying demand represented approximately $6. During the third quarter of 2008 and 2007. Warehouse cost of sales was the primary driver during the quarter with an increase of 2. respectively.to. As a result.2 million.S.3% and 63.7 million during the year.to.4 million from $50.5% and 0. Lower cost of sales from fewer Company.S.8 million of warehouse cost of sales growth. foreign exchange reduced the value of reported rents and royalties and franchise fee revenues by approximately 0. respectively.8 million to $36. 2007. therefore. 2008 and September 30. paper.to.

2007.date period ended September 28. Franchise Fee Costs Franchise fee costs include costs of equipment sold to franchisees as part of the commencement of their restaurant business. Partially offsetting these higher costs were a lower number of resales and replacements and lower associated costs per unit. although higher. dollar reduced the value of franchise fee costs by approximately 0. and lower equipment costs recognized in 2008 from our U. total operating expenses were $158. franchise incentive program. Support costs and expenses associated with establishing a franchisee's business were also higher in the year.S. franchise incentive program. 2008.S. dollars and translated into Canadian dollars for reporting of our consolidated results. dollars and translated into Canadian dollars for reporting of our consolidated results. In the third quarter of 2007. Operating expenses from our U. Our Canadian operations contributed to the majority of the year.S. The strengthening of the Canadian dollar relative to the U.6 million for the third quarter of 2008.S.S.date 2008 reduced the overall value of operating expenses by approximately 1.S. The U. 33 .S.8 million in the third quarter of 2007. 2008 compared to the corresponding period of 2007. or 104 weeks.to. dollar year.S. therefore. therefore. In addition. segment are denominated in U. The U. dollar exchange rate was not significantly different during the third quarters of 2007 and 2008 and. For the year. General and Administrative Expense General and administrative expense is comprised of expenses associated with corporate and administrative functions that support current operations and provide the infrastructure to support future growth. therefore. dollars and translated into Canadian dollars for reporting our consolidated results.over. were $53. For the year.. Rent expense and other property and support costs increased during these periods as a result of 137 additional properties being leased and then subleased to franchisees since September 30. Partially offsetting these lower costs were higher salaries. dollar (see below).0% compared to the value that would have been reported had there been no exchange rate movement. partially offsetting the lower equipment costs. This year.S.S. from the third quarter of 2007.based compensation and benefits in the third quarter of 2008 due to additional employees required to support the growth of the business. The strengthening of the Canadian dollar relative to the U.to.S.6 million. dollar exchange rate was not significantly different during the third quarters of 2007 and 2008 and. or 3. The increase was mainly due to the increased number of restaurant openings and higher variable rent on existing properties due to growth primarily in the Canadian business. The strengthening of the Canadian dollar relative to the U. segment are denominated in U.S. whichever is earlier. Operating Expenses Total operating expenses.9 million in the year. and lower equipment costs recognized in 2008 from our U. Franchise fee costs from our U.S. dollar exchange rate was not significantly different during the third quarters of 2007 and 2008 and.Cost of sales from our U.S.date period ended September 30. we incurred costs related to our franchisee convention.S.to. 2008. and then subleased to franchisees.S. Rent expense also increased due to higher percentage rent costs on certain properties resulting from increased restaurant sales. an increase of $2. General and administrative expense was $30. operating expenses. segment are denominated in U. did not have a significant impact on reported cost of sales during the third quarter of 2008. dollar year. franchise fee costs were $58. increased by 158 properties from September 30.date reduced the value of reported cost of sales by approximately 1.year increase was primarily related to a higher number of units sold and an increase in equipment costs relating to both restaurants sold and renovated.date period ended September 28. which was lower compared to $30. 2008.S.0 million in the third quarter of 2008. were partially offset by the weakening of the U. depreciation expense was higher as the total number of properties owned or leased by us in Canada and the U. did not have a significant impact on reported operating costs during the third quarter of 2008.9 million in the comparable period of 2007. stock. Our U.to. Support costs and expenses associated with establishing a franchisee's business were higher in the third quarter of 2008 compared to the third quarter of 2007.0 million compared to $53. Costs were lower primarily due to a lower number of resales and replacements and lower associated costs per unit.9% compared to the value that would have been reported had there been no exchange rate movement.9%. did not have a significant impact on reported franchise fee costs during the third quarter of 2008. Equipment sales and costs are deferred until a sustained period of sales levels are achieved.3%.to. representing primarily rent expense and property costs.to. or 2. offset by the timing of certain expenses incurred in the prior year. 2007.2 million as compared to $148. Franchise fee costs decreased $0.8%. 2007 to September 28.date increase.0 million.to. as well as training and other costs necessary to ensure a successful restaurant opening. which did not recur in 2008. from the third quarter of 2007.date period ended September 28. The U.

and commissioning costs for a new pastry line that was put into operation during the first quarter of 2008. dollar reduced the value of general and administrative expense on a year.8 million. which were partially offset by interest earned on restricted cash and cash equivalents and restricted investments relating to our TimCard®. 2007. did not have a significant impact on reported general and administrative expense during the third quarter of 2008. most recently.4 million. pastries. equity income was $26.over.0 million for the year.to. segment general and administrative expense is denominated in U. decreasing $0.6 million in the year. Equity Income Equity income relates to income from equity investments in joint ventures and other investments over which we exercise significant influence. Other income.8 million in the third quarter of 2007.S.to. from the third quarter of 2007. as well as lower operating income at our bakery joint venture resulting from higher commodity costs.date period ended September 30.to. and our TIMWEN Partnership.1 million reflecting the previously announced management organizational changes that occurred in the second quarter of 2008.3 million for year.to.to. bread products and.date 2008) was contributed back to our advertising and promotion fund.General and administrative expense was $97. The changes quarter.to.to. During both comparative periods.date 2007.year basis. includes amounts that are not directly derived from our primary businesses.4 million.1 million earned in the year. the decrease was primarily a result of lower overall rates on investments and lower overall non. the 2007 tax benefit did not recur in 2008.to.3 million in the third quarter of 2008 and $6.9 million in the year. Our U. total interest expense was $18. net was $0. net.4%.9 million in the year. The U. We had slightly higher earnings contributions from both of our largest joint ventures in the third quarter of 2008. The strengthening of the Canadian dollar relative to the U.0 million in the third quarter of 2008 and $1. 34 . 2008. dollars and translated into Canadian dollars for reporting our consolidated results. Timbits.3% compared to the value that would have been reported had there been no exchange rate movement.1 million in the third quarter of 2007.date basis by approximately 1. The new pastry line began servicing system restaurants in a phased approach during the second quarter of 2008.S.to. As anticipated.date period ended September 28.restricted cash balances.to. the increase was primarily a result of higher interest on additional capital leases.50 joint venture with IAWS Group which provides our system with par. The higher expense was the result of increased salaries and benefit expenses due to additional employees required to support the growth of the business and a restructuring charge of $3. In 2007.2 million in the third quarter of 2008 ($0. The contribution is recorded in general and administrative expense.1 million and other expense.1 million lower than the comparable 2007 year.S. Interest Expense Total interest expense.date period ended September 28. Interest income was $4. net in the third quarter of 2007 was $1. net was $1. which leases Canadian Tim Hortons/Wendy's combination restaurants. Other Income and Expense.1 million.S.year were primarily a result of foreign exchange. dollar exchange rate was not significantly different during the third quarters of 2007 and 2008 and.0 million for year.date period.to.6 million compared to $17.date basis in 2008.5 million year. 2007.date 2008 compared to $90. Interest earned on restricted cash and cash equivalents and restricted investments of $0. Partially offsetting these higher expenses was the 2007 convention costs that were included in the third quarter of 2007 and that did not recur in 2008.to.date period ended September 30. Equity income in the third quarter of 2008 was $9. dollar weakened substantially more in 2007 causing foreign exchange losses in that year.date decrease is primarily a result of a non.date period ended September 28. The year. This includes expenses related to restaurant closures. 2008 compared to interest income of $5. For the year. which was $2. partially offset by lower effective interest rates on our external debt. Interest Income Interest income was $1.date period ended September 30. 2007.to. our foreigndenominated net asset base was higher than in 2008 and the U.S. foreign exchange gains and losses and minority interest. net in the third quarter of 2008 was $0.cash tax benefit of approximately $1 million recognized by our bakery joint venture in the first quarter of 2007. was $6.quarter and year. 2008 and other expense. Our equity income does not necessarily grow at the same rate as our systemwide sales as it is not representative of all of the components of our business. Other income. other asset write. or 4. but was more than offset by the impact of an asset disposition in the third quarter of 2007 at one of our joint. therefore.offs.to.ventures that did not recur which reduced the rate of growth of equity income on a yearover.baked donuts. net Other income and expense. including interest on our credit facilities. Our two most significant equity investments are our 50. On a year. During both comparative periods.

over. As we stated in February 2008. acquisitions and investments during the last five years. In addition. As several years remain open to review and adjustment by taxation authorities. now funded by our Canadian operations. which represented a $2. Liquidity and Capital Resources Overview Our primary source of liquidity has historically been. 2007. as discussed above. we generated $244. we utilize cash to fund our dividends and share repurchase programs.year in other comprehensive income relates to a lower loss related to cash flow hedges. Other comprehensive income for the year. 2008.. Historically.1654 for U. the Administration Agent can cause the borrowing to be at the base rate which is historically higher than LIBOR.to.7 million reduction in income tax expense for the quarter ended September 28. The variance between periods is primarily explained by the reduction in Canadian federal statutory rates in 2008. and may continue to be. No payments have been made by either party to the other under this agreement during the year.year.7 million year.S.0654. 2007 and December 31. The effective tax rates for the year. For the year. respectively.S.date periods ended September 28. The variance between the quarters is primarily explained by the reduction in Canadian federal statutory tax rates in 2008. Net income increased $21.date period ended September 30. 2008. 35 . as a result of audits or similar proceedings giving rise to "adjustments" to previously filed returns. or a fixed base rate.. and continues to be. We are party to a tax sharing agreement with Wendy's. Comprehensive Income In the third quarter of 2008. 2008 and September 30. respectively. renovations of existing restaurants.00 on September 28. federal consolidated or state and local combined tax filing group. cash generated from Canadian operations which has. This facility does not carry a market disruption clause and is supported by a syndicate lending group of 13 financial institutions. $100 million and $200 million). 2008. We believe that we will continue to generate adequate operating cash flows to fund both our capital expenditures and expected debt service requirements over the next twelve months. 2008 and December 30. 2011. such as Alberta and other areas of Western Canada. In the year. and C$0. Our U. 2006.4 million in the third quarter of 2007. and we expect this trend to continue through 2009. 2007.to. there were certain items that affected the third quarter of 2007 effective tax rate that did not recur in 2008. which represented a $7.date period ended September 30. Translation adjustment income (loss) arises primarily from the translation of our U.1 million in the third quarter of 2007.date period ended September 28. as compared to cash generated from operations of $236. revolving credit facilities provide additional sources of liquidity. capital expenditures.00 on September 30.to. dividends. matures on February 28.3 million reduction in income tax expense for the year.to. 2007. These facilities are at variable interest rates that are based upon either bankers' acceptances or LIBOR plus a margin. remodeling.6 million compared to $42. net assets into our reporting currency. we became a standalone public company and. The 2008 exchange rates were C$1. potentially including self. which consists of a $300 million term loan and the two revolving credit facilities (U. 2006. tax returns independently from Wendy's from that date forward. for the most part.S. 2007. The remainder of the change year.9% and 34. Our senior bank facility. We carefully monitor our bank group and currently believe our access to liquidity is substantially unchanged despite current market conditions.2% for the third quarters ended September 28.S. our annual working capital needs have not been significant because of our focused management of accounts receivable and inventory. Canadian dollars. 2008 and September 30.9805 for U.9 million in the third quarter of 2008 compared to a translation adjustment loss of $23. $1.1 million and $132. $1. C$1.2 million as compared to a translation adjustment loss of $56. for a net increase of $8.to. comprehensive income was $233. share repurchases. Our Canadian and U. The remainder of the change quarter.5% and 35. and C$1.S. have historically been a net user of cash given its investment plans and stage of growth.S.Income Taxes The effective tax rates were 32.9948. Either we or Wendy's may be required to reimburse the other party for the use of tax attributes while we filed U. C$1. The cost and availability of real estate and construction costs. June 29.S.serve kiosks. respectively. have historically been. If certain market conditions caused LIBOR to be unascertainable or not reflective of the cost of funding. net of taxes. Commencing September 30. which sets forth the principles and responsibilities of Wendy's and us regarding the allocation of taxes. payments may be made by one party to the other for the use of the other party's tax attributes.date period ended September 28. respectively.4 million from the third quarter of 2007 as compared to the third quarter of 2008. comprehensive income was $85. in accordance with the terms of the agreement.0328.date periods ended September 28. July 1.quarter in other comprehensive income is attributable to a lower loss related to cash flow hedges. operating cash flows have fully funded our capital expenditure requirements for new restaurant development. we file all U. including the cost and availability of labour required for construction of our restaurants in certain areas where we seek to develop restaurants. operations.2 million. and in some areas of the U. 2008. audits and other tax matters relating to periods when we were part of the same U. limiting factors to our growth in these regions.5% respectively.S.over.to. consolidated or state and local combined returns. if needed.8 million (see "Comparative Cash Flows" below). net of taxes.0106. Our primary liquidity and capital requirements are for new store construction. our targets are to open 120 to 140 new restaurants in Canada and 90 to 110 new restaurants in the U.date period ended September 28.S.end rates.8 million of cash from operations. The 2007 exchange rates were on C$0. 2008 and September 30.0 million in the year. In each of the last five fiscal years. In addition.to. as subsequently amended. 2007. of which Canadian financial institutions hold approximately 58% of the total funding commitment. selffunded our operations.S. 2008.S.1 million in the year. 2007 were 32. Other comprehensive income included a translation adjustment gain of $7. at the period. 2008 included a translation adjustment gain of $18. technology initiatives and other capital needs. as a result. growth in new restaurants. 2007. 2006.date period ended September 28. expansion of our business through vertical integration and general corporate needs.to. as discussed above. Net income increased $11.to. The agreement is applicable for all taxation periods up to September 29.

This period of time for which this restriction applied has now expired. when investing our cash.date periods ended September 28. In the year. 2008.9 114.to. it was $66.date period ended September 28. 2008. given current market conditions. 2008 and September 30.date period ended September 28. 2008. respectively. 2007. Net cash generated from operating activities was $244. 2007 Capital expenditures New restaurants Store replacements and renovations Other capital needs Total capital expenditures $ 77. we continued to repurchase shares under our previously announced stock repurchase program. 2008 as compared to $236. we believe. Capital expenditures during these periods are summarized as follows: Year.5 million in 2007. provides us with opportunity and flexibility for future growth while still enabling us to return excess cash to our stockholders through a combination of our share repurchase program and dividends.0 million generated from operating activities in the year. As of October 30. 2007.5 million in the third quarter of 2007. we had approximately $388. access would be limited at times. Any such borrowings may result in an increase in our borrowing costs.to.term obligations. but that the strength of our balance sheet would allow us to borrow additional funds if we maintain a strong capital structure.8 million in the year. respectively.4 11.off transaction under Section 355 of the Internal Revenue Code and.date period ended September 28.8 million to repurchase approximately 4.to.1 million and $114. planned to commence during the first quarter of 2009.date period ended September 30. As at September 28.5 million shares for a total cost of $185. but is no longer constrained because such an issuance was a factor that could have been considered relevant to a determination related to the Wendy's spin.date periods ended September 28. including our cash position.to.to. Operating cash flows increased by $8. Additionally. Our ability to incur additional indebtedness will be limited by our financial and other covenants under our existing credit facilities and may take longer to fund in the current environment.3 million of the $200 million repurchase program. 2008 and September 30. 2008 (in millions) September 30. improvements to existing restaurants and other corporate capital needs.1 23.8 million in the year. As previously mentioned.If additional funds are needed for strategic initiatives or other corporate purposes. partially offset by timing of working capital movements. driven primarily from the increased earnings and higher depreciation and amortization expense.6 million in term debt and capital leases. Net cash used in investing activities was $130. on our balance sheet. not to exceed 5% of outstanding shares of common stock at the time of the approval in October 2007. 2007. At September 28. In the third quarter of 2008.8 22. 2008.6 $ $ . Given the recent credit concerns in the market. Capital expenditures were $112. Comparative Cash Flows Operating Activities.1 36 $ 69. which authorized the Company to purchase up to $200 million of common stock.term operating and capital leases as well as other longterm debt obligations. included in long.to. our ability to attract funds through the issuance of additional equity was. Capital expenditures are typically the largest ongoing component of our investing activities and include expenditures for new restaurants.5 million shares under this program.6 million in the year. we are currently even more focused on capital preservation over yield.to. We continue to believe that the strength of our balance sheet. we have purchased an aggregate of approximately 5. we spent $149.8 million in 2008 and $62. 2008. Investing Activities.date period ended September 28.7 million as compared to $21.0 million for the year.6 112.to. and it is possible that we would not be able to borrow on terms which are favourable to us.4 million and $112. our capital structure could be weakened. under the tax sharing agreement. we look at metrics that consider the impact of long.9 21.date basis. When evaluating our leverage position. If such additional borrowings are significant. We believe this provides a more meaningful measure of our leverage position given our significant investments in real estate. and on a year. we would be required to indemnify Wendy's against the taxes payable if our issuance of shares resulted in a gain being recognized. our Board of Directors has approved a 2009 share repurchase program for up to $200 million. we completed this repurchase program of up to $200 million. Depreciation and amortization expense for the third quarter of 2008 was $22.

Expenditures for other capital needs include amounts for software implementations. In the year. The functional currency of each of our operating subsidiaries and legal entities is the local currency in which each subsidiary operates. Financing activities used cash of $206. A comprehensive discussion of our critical accounting policies and management estimates is included in the Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10.to.to. Also. including the capital expenditures for the coffee roasting facility in 2009.date period ended September 30.0 million of shares of our common stock and paid $39. we do not expect to spend the full amount of the targeted 2008 capital expenditure range of $200 million to $250 million. as noted below. restaurants and cash flows are based in Canada. we repurchased $149. 2007 as that term is described by the SEC. 2008 and September 30.S. 2008.2 29. subjective or complex judgments.9 77. 2008. respectively. including self. often because we need to estimate the effect of inherently uncertain matters.date basis in 2008. 2007.serve kiosks.S. materially different amounts may result under materially different conditions or from using materially different assumptions. 37 . included the conversion of our Oakville warehouse to office space. which are less capital intensive. Capital expenditures for new restaurants by operating segment were as follows: Year.S.K filed with the SEC on February 26. 2008 and September 30. 2007 Capital expenditures new restaurants Canada U. in our 2007 Consolidated Financial Statements and accompanying notes included in our Annual Report on Form 10.4 million and $182. 2007. management uses assumptions based on historical results and other factors that they believe are reasonable. other equipment purchases required for ongoing business needs and. However. we have selected the Canadian dollar as our reporting currency. 2008 (in millions) September 30.S.date periods ended September 28.standard restaurants. we opened 75 new restaurants in Canada and 30 in the U. we repurchased $135. Other than the adoption of SFAS 157.to.date period of 2007. Basis of Presentation The functional currency of Tim Hortons Inc. management currently believes that any materially different amounts resulting from materially different conditions or material changes in facts or circumstances are unlikely.date period ended September 28. 2007. including our critical accounting policies.date period ended September 28. additional information being obtained or more experience being acquired.to. 2007.Balance Sheet Arrangements We do not have "off.7 million in dividends to our stockholders.9 30.7 million in dividends to our stockholders. Actual results could differ from those estimates. in 2007. We continue to expect future capital needs related to our normal business activities to be funded through ongoing operations. Off.K for the year ended December 30.8 $ $ Due primarily to a higher mix of leased restaurants and non.In the year.9 million in the year. The Company evaluates and updates its assumptions and estimates based on new events occurring. dollar or the Euro.8 million of shares of our common stock and paid $49. filed with the SEC on February 26. Application of Critical Accounting Policies We describe our significant accounting policies. in the year. Total $ 47. As a result. 2008. discussed earlier. versus owned restaurants as part of our restaurant expansion program.1 $ 38.to. To determine appropriate carrying values of assets and liabilities that are not readily available from other sources. there have been no significant changes in critical accounting policies or management estimates since the year ended December 30. On a year.9 69. which is incorporated herein by reference. and we are primarily managed in Canadian dollars. Financing Activities. The Condensed Consolidated Financial Statements and accompanying notes included in this report have been prepared in accordance with accounting principles generally accepted in the United States with certain amounts based on management's best estimates and judgments. is the Canadian dollar as the majority of the Company's cash flows are in Canadian dollars. which is the Canadian or U. The majority of our operations. compared to 59 in Canada and 20 in the U.to.balance sheet" arrangements as of September 28. Critical accounting policies are those that we believe are both significant and may require us to make difficult.

S. Generally. we have seen a slight increase in the number of days taken to collect receivables from franchisees. Franchise fees are collected at the time of sale or resale of the franchise.store sales decline for two or more consecutive years.lived Assets Long.. We generally control. We have developed a franchise incentive program for some of our U. either through ownership or by leasing.5% to 8.2 Effective Date of FASB Statement No. Franchisees may receive other financial assistance such as lower rents and royalties and certain other operating costs for restaurants in new and developing markets.5% and rent is typically reduced from 8. does not involve significant estimates and assumptions. Royalties. that more likely than not. A significant deterioration in the cash flows of an operating market or other circumstances may trigger further impairment analysis. the royalty payments are typically reduced from 4. The payment for those assets is deferred for a period of 104 weeks from the date of opening. After the initial 104 weeks.lived asset will be sold or otherwise disposed of prior to its estimated useful life.lived assets are grouped into operating markets and tested for impairment whenever an event or circumstance occurs that indicates impairment may exist.store sales growth. and the amount of this assistance is an offset from our rents and royalties revenues. The initial franchise fee revenue is recognized at the time of sale and the equipment revenue is recognized after a sustained period of sales levels are achieved. we might have to increase reserves against collection of franchise revenues. or 104 weeks. we have adopted the provisions of SFAS 157 with respect to our financial assets and liabilities only. 157 Fair Value Measurements ("SFAS 157"). We did not elect to report any assets or liabilities at fair value under this standard. whichever is earlier. unless the franchisee is participating in our franchise incentive program (see below). we adopted SFAS No.Effective December 31. furniture. royalties and.operated restaurants is recognized upon tender of payment at the time of sale. which may include payments for equipment. and franchise revenues (rents and royalties and franchise fees).financial liabilities. In 2008. 159 The Fair Value Option for Financial Assets and Financial Liabilities ("SFAS 159"). as is the case of asset impairment assessments. including a current expectation. which provides financing for both the initial franchise fee and the purchase of certain restaurant equipment. a long. In developed markets.line basis and contingent rental revenue is recognized when sales exceed certain levels. a significant majority of the real estate on which the Company's restaurants are located. We provide for estimated losses for revenues that are not likely to be collected. trade fixtures. and collection rates have historically been high. establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements.S. or require judgment. Therefore.5% to 2.line basis. we also adopted SFAS No. the FASB issued FASB Staff Position No. as is the case with revenue recognition for our U. Revenue Recognition Revenue at Company. or base. Franchise operations Our restaurants are predominantly franchised. Fixed. Royalties revenues are generally based upon a percentage of monthly sales and recognized in the month earned on a straight. Revenues from these sales are recorded when the product is delivered to the franchisee. including review of operating market cash flows. 2007. We also consider the length of time we have been in the market as it takes time to fully establish a market.5% and 8. The timing of revenue recognition for sales. Most leases provide for fixed payments with contingent rent when sales exceed certain levels. 2007.contract basis with changes in value reported in earnings. Impairment of Long. are recognized as income on the accrual basis. while others provide for monthly rentals based on a percentage of sales. franchise operations. and interior signs.5%. respectively.line basis. SFAS 157 defines fair value. franchisees.S. The franchisee has the right to finance the initial franchise fee over a period of up to 104 weeks from the opening of the restaurant. and we are monitoring the outstanding accounts receivables. and we lease the real estate to our franchisees.0% of gross sales. Franchise fees and equipment sales are generally recognized as income when each restaurant commences operations and payment is received from the franchisee. In February 2008. We operate warehouses in Canada to distribute coffee and other dry goods and refrigerated and frozen products to an extensive franchise system. respectively. the franchise incentive program was modified by shortening the payment period from 130 weeks to 104 weeks. based on a percent of monthly sales. FAS 157. one of our key indicators for the overall health of an operating market is same. Described below are critical accounting policies that have either had a significant impact on operating results in 2008.by. We grant franchise licenses or operator agreements to independent operators who in turn pay franchise fees and other payments. 157. which provides a one year deferral of the effective date of SFAS 157 for nonfinancial assets and non. further evaluation may be required. Rental income is recorded on the straight. rental revenue is recorded on a straight. if average sales or the financial health of our franchisees were to deteriorate. Effective December 31. In some cases in the U. 38 . the royalty rate and rental rate return to the standard rates of 4. During the initial 104 weeks. except those that are recognized or disclosed in the financial statements at fair value at least annually. rents for each restaurant opened. in most cases. We test for impairment using the cash flows of the operating markets. Although we generally enjoy a positive relationship with our franchisees. if same. SFAS 159 allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement for specified financial assets and liabilities on a contract.

It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the Consolidated Financial Statements. We are currently evaluating the potential impact of the adoption of SFAS 157.per. 51. 2008. In addition to the amendments to ARB 51. beginning on December 31.2 on our Consolidated Financial Statements. If impairment is indicated. 133 Accounting for Derivative Instruments and Hedging Activities and its related interpretations. beginning on or after December 15. 157 ("SFAS 157. Long. 161 Disclosures about Derivative Instruments and Hedging Activities ("SFAS 161"). when an event occurs to trigger an evaluation. The interest rate used in preparing discounted cash flows is management's estimate of the weighted average cost of capital. this Statement amends FASB Statement No. and interim periods within those fiscal years. we assess a number of factors. This Statement amends Accounting Research Bulletin No. 2007.K filed with the SEC on February 26. this standard applies prospectively to new fair value measurements of financial instruments and recurring fair value measurements of non. which encompasses new restaurants and same. We are currently evaluating the impact of adoption of this pronouncement on our Consolidated Financial Statements. which amends SFAS 157 by delaying its effective date by one year for non. In March 2008. 141. In December 2007. the liabilities assumed. if any. We are currently evaluating the impact of adoption of this pronouncement on our Consolidated Financial Statements. 162 The Hierarchy of Generally Accepted Accounting Principles ("SFAS 162"). of the adoption of SFAS 141R on our Consolidated Financial Statements. The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. 128 Earnings per Share. Given the market conditions present for the majority of the period under review. On December 29. 2008. We are currently evaluating the potential impact.store sales growth. SFAS 141R establishes principles and requirements for how an acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired. and any noncontrolling interest in the acquiree. as supplemented herein below with respect to "Commodity Risk.financial assets and non. Therefore. 2008. This new standard enhances disclosure requirements for derivative instruments in order to provide users of financial statements with an enhanced understanding of (i) how and why an entity uses derivative instruments.financial assets and nonfinancial liabilities.financial liabilities. 51 Consolidated Financial Statements ("ARB 51") to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary.lived assets are reviewed and monitored for impairment. 2008. at least once annually. management also makes assessments as to whether any declines may be viewed as short. FAS 157. Quantitative and Qualitative Disclosures about Market Risk Market Risk Our exposure to various market risks remains substantially the same as reported as of December 30. 2008. 2008 under "Item 7A. On February 12. the FASB issued SFAS No.2"). with the result that earnings. including systemwide sales growth. financial performance.2 Effective Date of FASB Statement No. and (iii) how derivative instruments and related hedged items affect an entity's financial position. Quantitative and Qualitative Disclosure About Market Risk" on pages 75 through 77. Recently Issued Accounting Standards In December 2007. (ii) how derivative instruments and related hedged items are accounted for under Financial Accounting Standards No.share data will continue to be calculated the same as it was calculated before this Statement was issued. the FASB issued SFAS No. as well as the stage of growth of the operating market and the average unit sales volume trends. This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15. or at a minimum. our disclosures about market risk are incorporated herein by reference from our 2007 Annual Report on Form 10. We are currently evaluating the impact of this pronouncement on our Consolidated Financial Statements. the FASB issued SFAS No. with early application encouraged. except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis.In developing markets.term in nature. 141R Business Combinations ("SFAS 141R"). the FASB issued FASB Staff Position No. the standard will also apply to all other fair value measurements. the fair value of the property and equipment is estimated using the discounted cash flows of the market or third party appraisals. where applicable. SFAS 162 is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to AU Section 411. This Statement replaces FASB SFAS No. 160 Noncontrolling Interests in Consolidated Financial Statements an amendment of ARB No. SFAS 141R also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 161 is to be applied prospectively for the first annual and interim reporting periods beginning on or after November 15. This Statement is effective for fiscal years. 2007." As such. the FASB issued SFAS No. This Statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States. and cash flows. In May 2008. 39 .

2007. In addition. our disclosures about inflationary risks are incorporated herein by reference from our 2007 Annual Report on Form 10. As we have stated previously. Quantitative and Qualitative Disclosure About Market Risk Commodity Risk" on page 76. 2007. 2008 under "Item 7A. and cooking oils.K filed with the SEC on February 26. wheat. our disclosures about interest rate risk are incorporated herein by reference from our 2007 Annual Report on Form 10. Foreign Exchange Risk Our exposure to various foreign exchange risks remains substantially the same as reported as of December 30. As such. Subsequent to the third quarter end. 2008 is a net liability of $3. we may be subject to higher commodity prices depending upon prevailing market conditions and foreign exchange rate at the time we make purchases beyond our current commitments. requiring certain minimum credit ratings.In addition. Higher commodity costs could also impact earnings from our joint. 40 . Commodity Risk Our exposure to various commodity risks remains substantially the same as reported as of December 30. Quantitative and Qualitative Disclosure About Market Risk Foreign Exchange Risk" on pages 75 and 76.7 million. our disclosures about commodity risk are incorporated herein by reference from our 2007 Annual Report on Form 10. we currently have purchase contracts in place for the remainder of 2008 and first half of 2009 covering key commodities such as coffee.K filed with the SEC on February 26. 2007. Inflation Our exposure to various inflationary risks remains substantially the same as reported as of December 30. and utilizing our syndicate lending group. 2008 under "Item 7A.K filed with the SEC on February 26. Interest Rate Risk Our exposure to various interest rate risks remains substantially the same as reported as of December 30. As such.K filed with the SEC on February 26. 2008 under "Item 7A.venture operations. Quantitative and Qualitative Disclosure About Market Risk Inflation" on page 77. 2008 under "Item 7A. sugar. As such. there has been significant foreign currency volatility impacting out net derivative position. The current fair value of our derivative positions at September 28. We minimize this risk by limiting our notional amount by counterparty to $100 million. counterparty credit risk may exist related to our derivative positions. As such. our disclosures about foreign exchange risk are incorporated herein by reference from our 2007 Annual Report on Form 10. Quantitative and Qualitative Disclosure About Market Risk Interest Rate Risk" on pages 76 and 77. 2007.

mergers. Fairview Donut Inc. possibility of termination of the Maidstone Bakeries joint venture. spending patterns. performed an evaluation of the Company's disclosure controls and procedures. CONTROLS AND PROCEDURES (a) The Company. we filed a report on Form 8. The result and value of this claim is not determinable at this time and. utility and other operating costs. under the supervision. any substantial or sustained decline in the Company's Canadian business. the effects of war or terrorist activities and any governmental responses thereto. however. which speak only as of the date made. and with the participation.Q. asserts damages of approximately $1. consumer confidence. food costs. joint ventures or other targeted growth opportunities. regional and local economic and political conditions.looking statements. information regarding certain important factors that could cause actual results to differ materially from any such forward. 2008. even if new information. the Company undertakes no obligation to publicly announce any revisions to the forward. risks associated with the Company's investigation of and/or completion of acquisitions. risks associated with foreign exchange fluctuations.. could affect the Company's actual results and cause such results to differ materially from those expressed in forward. ITEM 3. demographic trends.Q. PART II: OTHER INFORMATION (b) ITEM 1. 2008. real estate sites and type and quality of food. plans and objectives of management. We intend to vigorously defend the action. health and dietary preferences and perceptions). number and location of competing restaurants. enhanced or changes in existing governmental regulation (including nutritional and franchise regulations). In addition. alleging. ITEM 4. the Company has not recorded any provisions in the Condensed Consolidated Financial Statements. the ability of the Company and/or its franchisees to finance new restaurant development. benefit costs. Readers are cautioned not to place undue reliance on forward. the Company's Chief Executive Officer and Chief Financial Officer concluded. particularly information regarding future economic performance and finances. filed February 26.Q. and acquire and sell restaurants. Based on that evaluation.K. and risks associated with a variety of factors or events that could negatively affect our brand and/or reputation. improvements and additions to existing restaurants. 2008 in the Ontario Superior Court of Justice ("Court") by two of our franchisees. the Company's internal control over financial reporting. and Brule Foods Ltd. changes in applicable accounting rules.restaurant industry. increased competition experienced by the Company's manufacturing and distribution operations. there can be no assurance that the outcome of the claim will be favourable to us or that it will not have a material adverse impact on our financial position or liquidity in the event that the determinations by the Court and/or appellate court are not in accordance with our evaluation of this claim. and those set forth in the Company's most recent Form 10.K describing a claim that was filed against us and certain of our affiliates on June 12. new or additional sales tax on the Company's products. Except as required by federal or provincial securities laws. These factors include: competition within the quickservice. of its management. coupled with the Company's position that this claim is without merit. service. which remains extremely intense. availability and shipping costs of supplies (including changes in international commodity markets. seasonality. and. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This information is incorporated by reference from the section titled "Market Risk" on page 40 of this Form 10. disruptions in supply chain or changes in the price. weather events and other calamities. litigation relating to food quality. the maintenance of our brand reputation and the Company's relationship with its franchisees.15. which seeks class action certification on behalf of Canadian franchisees.looking statement appears together with such statement. especially for coffee).95 billion. or to reflect the occurrence of unanticipated events. that our Always Fresh baking system and expansion of lunch offerings has led to lower franchisee profitability. the type. the cost and/or availability of a qualified work force and other labour issues. as contemplated by Securities Exchange Act Rule 13a. 41 . changes in capital market conditions that affect valuations of restaurant companies in general or the value of Company's stock in particular. location. or is reasonably likely to materially affect. higher energy and/or fuel costs. The claim. national. legal and regulatory compliance. the following factors. There was no change in the Company's internal control over financial reporting during the Company's most recent fiscal quarter that has materially affected. LEGAL PROCEEDINGS On June 16. We believe the claim is frivolous and completely without merit. handling or nutritional content or other legal claims.SAFE HARBOR STATEMENT Certain information contained in this Form 10. qualified franchisees. personnel. including its Chief Executive Officer and Chief Financial Officer. particularly with respect to price. changes in international.Q. In some cases. generally. future events or other circumstances have made the forward. consumer preferences and perceptions (including food safety.looking statements.looking statements contained in this Form 10. or to update them to reflect events or circumstances occurring after the date of filing of this Form 10. Disclosure controls and procedures include those designed to ensure that information required to be disclosed is accumulated and communicated to the Company's management as appropriate to allow timely decisions regarding disclosure.looking statements incorrect or misleading. in addition to other possible factors not listed. other factors set forth in Exhibit 99 attached hereto. as of the end of the period covered by this report. is forward looking. that such disclosure controls and procedures were effective.

and in our Safe Harbor statement. financial condition or future results. 42 . as described above.ITEM 1A. as well as information in our other public filings. and the additional information provided in this Form 10. 2008.K filed with the SEC on February 26. RISK FACTORS In addition to the other information set forth in this Form 10.K. press releases. financial condition and/or operating results. The risks described in the Annual Report on Form 10.Q and elsewhere. Any of these "risk factors" could materially affect our business. may not describe every risk facing our Company. you should carefully consider the factors discussed under the heading "Risk Factors" in our Annual Report on Form 10.Q. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business.

the 20072008 program described above subsequently ended on October 30. we are in compliance with the financial covenants contained in the senior credit facilities.ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS ISSUER PURCHASES OF EQUITY SECURITIES (d) Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (Cdn. 2008) Monthly Period #9 (September 1.000 $ 27. prior to October 30. Dividend Restrictions with Respect to Part II. not to exceed 9.000 $ 33. (3) Exclusive of commissions paid to the broker to repurchase the shares.50 497.August 3. and we publicly announced. For a significant portion of the repurchase program. the termination date of the program. We may not make any dividend distribution unless. 2008 .264.1 repurchase plan.207 696. 2008 in accordance with the original authorization of $200 million. however.01 31.139 372.August 31.878 $ 1. share price. We were authorized to make repurchases under this program on the NYSE and/or the TSX.)(3)(4) Period (a) Total Number of Shares Purchased(1) (b) Average Price Paid per Share (Cdn. subject to market conditions.59 372. 2008 .)(2) (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Monthly Period #7 (June 30.520 $ 28. 2008) Total (1) (2) 497. Inclusive of commissions paid to the broker to repurchase the shares. and compliance with regulatory requirements. at the time of. 43 . or 5%.1 plan. our Board of Directors approved. Purchases were based on the parameters of the Rule 10b5. which allowed us to purchase our stock at times when we may have not otherwise been able to do so due to regulatory or our restrictions.719. and after giving effect to the aggregate dividend payment. of our outstanding shares as at the time of regulatory approval. cash position.719.566. Item 2 Matters The terms of our senior credit facilities contain limitations on the payment of dividends by us.678 Based on settlement date.005. a stock repurchase program authorizing us to purchase up to $200 million of common stock.to. 2008 September 28.678 14.03 696. 2008) Monthly Period #8 (August 4. We also made repurchases at management's discretion under this program from time.878 $ 1. No repurchase plan or program established by us expired or was terminated by us during the third quarter of 2008. and there is no default outstanding under the senior credit facilities.398 $ 33.354.time. 2008.566. we entered into a Rule 10b5.520 $ 50. (4) In October 2007.024.398 $ 14.

He is also a member of the board of governors of the Corporation of Massey Hall and Roy Thomson Hall. but expects that it will do so at its regularly scheduled meeting in May 2009. our Board of Directors approved amendments to the Second Amended and Restated By. from 1998 until December 2003. New York and Philippines stock exchanges. He was appointed to this position in March 1998. except for proposals submitted for inclusion in the Company's proxy statement in accordance with Rule 14a. a private sector committee to advise the federal government on international trade issues.Laws have the following effects and purposes: To clarify that the procedures and requirements set forth in the By. as amended. the predecessor company of Ontario Power Generation Inc. he was President and Chief Executive Officer of Bell Canada. the close of business on the 10th day following the day on which public announcement of the date of the annual meeting is first made by the Company. Mr. or if the first public announcement of the date of such meeting is less than 100 days prior to the date of such meeting.Laws are the exclusive means for a stockholder to propose business. as a director of the Company to fill the vacancy created thereby. in 1996 and served in that position until 1997. In addition. Osborne has been the Chairman of the Board of Directors of Sun Life Financial Inc. for a term expiring in 2012. and there is no announcement by the Company naming all of the nominees for the additional directors to be elected or specifying the size of the increased Board before the close of business on the 100th day (amended from the 90th day) prior to the anniversary date of the immediately preceding annual meeting of stockholders. To amend the advance notice period for business (including director nominations) that a stockholder intends to bring at an annual meeting (assuming the annual meeting is held no earlier than 30 days prior to and no later than 60 days following the date of the prior year's annual meeting) from not later than the close of business on the 120 th day nor earlier than the opening of business on the 150th day of the first anniversary of the date that the Company's proxy statement was released to stockholders in connection with the immediately preceding annual meeting of stockholders to not later than the close of business on the 90 th day nor earlier than the opening of business on the 120th day before the first anniversary of the Company's immediately preceding annual meeting of stockholders. including nomination of candidates to be elected to our Board. to revise and clarify the provisions requiring advance notice of business which a stockholder wishes to propose at an annual or special meeting of stockholders and to remove certain advance notice time periods that applied in connection with the Company's 2007 annual meeting of stockholders.. Osborne will be included in the slate of directors for election at the Company's annual meeting of stockholders in 2009.. Lawrence Cement Group Inc. our Board of Directors increased the size of the Board from 10 to 11 directors and appointed Mr. then stockholder proposals for director nominees must be received by the Company no later than 10 days following the day on which public announcement of the annual meeting is first made by the Company.8 promulgated under the Securities Exchange Act of 1934. Osborne was also a partner of Clarkson Gordon.ITEM 5. responsible for advising the government on current trade issues relating specifically to the arts and cultural industries. 2008. He also served on the International Trade Advisory Committee. including the position of Chief Executive Officer from 1986 until 1994. From 1981 to 1994. Amendments to By. as the Executive Vice President and Chief Financial Officer and was subsequently appointed President of BCE Inc. From 1997 until he joined Ontario Hydro. Mr. and a fellow of the Institute of Chartered Accountants of Ontario. Mr. age 62. Osborne is a director of RioCan Real Estate Investment Trust. a subsidiary of BCE Inc. as disclosed in the Company's proxy statement. Mr. a director of St. and Sun Life Assurance since May 2005. Osborne. Osborne joined BCE Inc. Chartered Accountants in Toronto from 1979 until 1981. Ronald W. He was formerly President and Chief Executive Officer of Ontario Hydro. a Toronto Stock Exchange listed issuer. Osborne will receive the same compensation as the Company's other non. which are no longer applicable.employee directors. also a Toronto Stock Exchange listed issuer. 2008. Osborne served as the President and Chief Executive Officer and a director of Ontario Power Generation Inc. at a meeting of stockholders. The amendments to the advance notice provisions of the By. he was Chairman of a Sectoral Advisory Group on International Trade from 1988 to 1994.Laws of Tim Hortons Inc. 44 . Mr. a member of the advisory board of Brookfield Power. Mr. Osborne will serve. from January 1986 to 1994. and Torstar Corporation.Laws On November 5. To require that if the number of directors to be elected to the Board at an annual meeting is greater than the number of directors whose terms expire at the annual meeting. OTHER INFORMATION Appointment of Director On November 5. Osborne held various positions at Maclean Hunter. Mr. a company listed on the Toronto. The Board has not determined which committee or committees of the Board on which Mr. Mr.

the Board has determined that it would be appropriate for the Company to amend the employment agreement to give effect to Mr. in the event of a change in control of the Company. or (B) three times Mr.Laws.8. This summary of the By. 2008. Schroeder's position description was updated to reflect his new responsibilities as the Chief Executive Officer and President of the Company and TDL. and benefits earned up to the termination date. Upon the occurrence of a change in control. and require such nominees to complete a questionnaire to provide additional information to the Company and to provide certain written representations and agreements as required under the amended By. and the extent of respective purchases under the program. upon the recommendation of the Human Resource and Compensation Committee. Stock Repurchase Our Board of Directors has approved a 2009 share repurchase program for up to $200 million. commencement of the program at the beginning of the year will allow the Company to fully align its annual budgeting and capital allocation process. then Mr. 45 .8) at the 2009 annual meeting of stockholders must deliver a notice of the proposal or nominee to the Company's Secretary not earlier than January 2. Amendment and Restatement of Donald B.rata bonus. The Company's employment agreements provide for certain payments and benefits to the named executive officers. if the first public announcement of the date of such meeting is less than 100 days prior to the annual meeting. dental. If. As provided in the Company's proxy statement for the 2008 annual meeting of stockholders." both of which are defined in the agreement. etc. as well as certain agreements any such person may be a party to with respect to the ownership and voting rights associated with our capital stock. provided. the close of business on the 10th day following the day on which public announcement of the date of the annual meeting is first made by the Company. and (v) a monthly car allowance for three years for Mr. or with respect to performance fees relating to our capital stock or derivative instruments relating to such stock. including Mr. (ii) severance payments of the greater of (A) three times Mr.) for three years for Mr. As a result of the amendments described above. Schroeder. (iii) defined contribution and supplemental executive retirement contributions of three times Mr. Schroeder is entitled to continued employment by TDL for a period of three years following the change in control (the "Employment Term"). pro. 2009.Q. Schroeder "without cause. planned to commence during the first quarter of 2009. medical. Mr. Schroeder's original employment agreement was entered into at a time when Mr. ("TDL"). Schroeder assuming the position of President and Chief Executive Officer in early 2008.To require additional information about the ownership interests of a proposing stockholder and certain related persons in shares of our capital stock and derivative instruments relating to such stock. the proposal must be delivered to the Company's Secretary on or before November 20. Schroeder was an executive vice president of the Company. 2008. In addition to the foregoing. Schroeder's salary for the year in which the termination occurs and target bonus. the Chief Executive Officer and President of the Company. 2009. Such a proposal must comply with the applicable requirements of Rule 14a. House when he was the Company's President and Chief Executive Officer. For future years.laws is qualified in its entirety by reference to the full text of the By. Schroeder. disability. Schroeder's agreement to reflect the same terms as were provided to Mr. The revised deadlines are as follows: Any stockholder who intends to nominate a candidate for election to our Board or present a proposal (other than a proposal submitted for inclusion in the Company's proxy materials pursuant to Rule 14a. Schroeder following the termination date. Schroeder terminates his employment with TDL for "good reason. and not later than February 1. our Board of Directors approved the amended and restated employment agreement by and among The TDL Group Corp. Such notices must comply with the applicable requirements of the Second Amended and Restated By. are subject to regulatory compliance and will be at management's discretion given prevailing market conditions and cost considerations. Schroeder's average base salary and target bonus for the year in which termination occurs and the two prior years. dividends and share repurchases.Laws. a subsidiary of the Company and the employer of the Company's Canadian executives. during the Employment Term. Schroeder's estimated contributions for the year in which termination occurs. Set forth below is a description of the amended terms. To require additional information about nominees proposed by a stockholder for election to our Board. Schroeder's Employment Agreement On November 5.Q. if a stockholder wishes to submit a proposal for inclusion in the Company's proxy materials for the 2009 annual meeting of the stockholders pursuant to Rule 14a. Schroeder is entitled to the following: (i) accrued base salary." or Mr.8. Implementation of the 2009 share repurchase program. TDL terminates Mr. that if the annual meeting of stockholders is called for a date that is not within 30 days before or 60 days after May 2. the Board has approved amendments to Mr. however. Mr. And. including capital expenditures. which are filed as Exhibit 3(ii) to this Quarterly Report on Form 10.Laws. as amended on November 5. the deadlines for submissions of notice of nominations for director election and for certain stockholder proposals for the Company's 2009 annual meeting of stockholders have changed. which are filed as Exhibit 3(ii) to this Quarterly Report on Form 10. 2009. As a result of Mr. (iv) continuation of benefits (life insurance. Mr. and Donald B. Schroeder following the termination date. Schroeder's new roles and responsibilities. As such. the Company. 2008. notice by the stockholder to be timely must be so received not earlier than the opening of business on the 120th day before the meeting and not later than the 90 th day before the meeting or.

Clanachan.Q. becomes disabled.vested participant's termination of employment. if he or she is terminated after the age of 65. In addition to the foregoing. but will declare an annual bonus of an approximately equivalent amount to each non. Otherwise. These bonuses will be paid in cash (after applicable withholdings) to the participants' vested accounts and/or tax free savings accounts upon vesting. The vested accounts and tax free savings accounts will be administered by a third party financial institution. 2006 and the foregoing summary is qualified in its entirety by reference to the full text of the Termination Agreement for the SERP. which occurs once a participant has completed three years of service. which are filed as Exhibits 10(e). including termination. Amendment and Restatement of David Clanachan's Employment Agreement and Restricted Stock Unit Award Agreements Effective December 31. Vested participants whose contribution rates under the SERP in 2008 were less than 12% of Earnings will be entitled to a payment under the Savings Plan of 10% of Earnings in 2009. Clanachan's employment (change in control) agreement were made solely for compliance with Section 409A of the Internal Revenue Code of 1986. The amendments to Mr. the bonuses will be forfeited on a non. to this Quarterly Report on Form 10. less the Pension Plan Contribution. 2008. 2008 by such means and methods and in accordance with such timelines as management shall consider appropriate.K of the Company filed with the SEC on October 26.Q. As mentioned above. and the amounts held in such accounts will be invested in permitted investments at the direction of the respective participant.vested participant. which they will direct the Company to pay to (i) a vested account or (ii) a tax free savings account that is considered a "qualifying arrangement" for purposes of subsection 146. the Board of Directors approved The Personal Supplemental Executive Retirement Savings Plan (the "Savings Plan") which becomes effective January 1. Clanachan's Amended and Restated Employment Agreement and 2007 and 2008 Amended and Restated Restricted Stock Unit Award Agreements. 10(f) and 10(h). disability or death of a participant.2 to the Form 8. 46 . The Company will not make an annual payment to non. which the participants will direct to be held and invested in accordance with the terms of the Savings Plan. less the contributions made by the employer in respect of the vested participant under its defined contribution pension plan (the "Pension Plan Contribution") in the respective years. A copy of the SERP is attached as Exhibit 99.2(1) of the Income Tax Act (Canada). The foregoing summary is qualified in its entirety by reference to the full text of Mr. These payments represent a reduction in the maximum benefit from contributions under the SERP. vested participants are entitled to receive additional compensation from the Company under the Savings Plan. and David F. "Earnings"). 2008. The annual payments to vested participants are based on a percentage of the vested participant's base salary and the cash incentive received by the vested participant for the current year (collectively. Only individuals who are below 69 years of age are eligible to receive additional compensation under the Savings Plan.S. Approval of Personal Supplemental Executive Retirement Savings Plan On November 5. or in certain other circumstances. Termination of Supplemental Executive Retirement Plan On November 5. The administrator and participants will agree to pay or transfer amounts out of the vested and/or tax free savings accounts upon the occurrence of specified events. the Company. upon the recommendation of the Human Resource and Compensation Committee. which is filed as Exhibit 10(d) to this Quarterly Report on Form 10. The termination of the SERP will take effect as of December 31. the Chief Operations Officer. or in certain other circumstances. 2008. U. Participants with less than three years of service with the Company will be considered non. and International and named executive officer. The amendment and restatement of these award agreements was made solely for compliance with Section 409A.vested participant is also entitled to receive the bonus amounts. A non. less the Pension Plan Contribution. The purpose of the Savings Plan is to provide executive officers and certain other employees and officers of the Company's Canadian subsidiaries (collectively. respectively.S. Amended and Restated Supplemental Retirement Plan (the "SERP"). and provides that the Section 409A provisions set forth in the agreement shall apply to Mr. our Board of Directors approved the amended and restated employment agreement by and among TDL. provided that the liquidation of the assets in the SERP and the distribution of such assets to participants will be completed after December 31. Vested participants who were entitled to contributions equal to 22% of Earnings under the SERP will be entitled to a payment under the Savings Plan equal to 18% of Earnings in 2009 and 15% of Earnings in 2010.The foregoing summary is qualified in its entirety by reference to the full text of Mr. 2009.vested participants. the Board of Directors approved the termination of The TDL Group Corp. less applicable withholdings. taxation laws. Clanachan only if. 2008. In all other cases. which is filed as Exhibit 10(c) to this Quarterly Report on Form 10. Clanachan. is terminated in advance of a change of control of the Company or dies. Schroeder's Employment Agreement. as amended. the annual payment will be equal to 12% of the vested participant's Earnings in respect of that year. All annual payments made to participants under the Savings Plan will be subject to applicable tax withholdings. or upon a change of control.vested participants. the "participants") with additional compensation.Q. and only to the extent as he may be subject to U. Participants who have more than three years of service with the Company are considered vested participants. the Company and TDL will enter into amended and restated Restricted Stock Unit Award Agreements (with related Dividend Equivalent Rights) for the 2007 and 2008 restricted stock unit awards with Mr. at such times.

Q. The plan to close underperforming restaurants is consistent with management's efforts to improve profitability of the U. While the rationalization of underperforming restaurants will contribute to future earnings. and it is expected to result in an asset impairment charge for the affected restaurants. 2008.S. 2008. the 2008 operating income target did not contemplate an impairment charge that will likely occur in the fourth quarter. segment..S. We expect rationalization of underperforming restaurants will ultimately contribute to improved profitability. Other Information relative to the U. the Board of Directors approved amendments to the Company's Executive Annual Retirement Plan ("EAPP") to change the retirement age from 55 years to 60 years. which is filed as Exhibit 10(a) to this Quarterly Report on Form 10. This rationalization is expected to affect less than half of our 30 Company. with 10 years of service with the Company to align the EAPP retirement age with the Company's other plans and programs. and improve sales performance at our remaining restaurants nearby. ITEM 6. which is filed as Exhibit 10(b) to this Quarterly Report on Form 10.operated restaurants in southern New England between the end of 2008 and early next year.operated restaurants in the U.S. will continue to be considered as having met the retirement age under the EAPP following the amendments. who were between 55 years and 60 years with 10 years of continuous service) will be grandfathered and.e.The foregoing summary is qualified in its entirety by reference to the full text of the Savings Plan. EXHIBITS (a) Index to Exhibits on Page 49. The foregoing summary is qualified in its entirety by reference to the full text of the EAPP. as such.Q. Executive Annual Performance Plan On November 5. Business Subsequent to the third quarter ended September 28. Management will also undertake a further impairment analysis related to the affected operating markets. Employees who were retirement eligible under the EAPP prior to the recent amendment (i. 47 . The details of the rationalization plan are being finalized. we announced our intention to rationalize some underperforming Company.

the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934. Devine Chief Financial Officer and Principal Accounting Officer 48 . (Registrant) Date: November 7. TIM HORTONS INC. 2008 /s/ Cynthia J. Devine Cynthia J.

effective December 31.S. Clanachan (Compliance with Section 409A of the Internal Revenue Code). 2008 (file no.14(a)/15d. 2008 Form of 2007 Amended and Restated Restricted Stock Unit Award Agreement (Canadian Version) of David Clanachan and Stephen Johnston (Compliance with Section 409A of the Internal Revenue Code) Form of 2007 Amended and Restated Restricted Stock Unit Award Agreement (U.14(a) Certification of Chief Executive Officer Rule 13a. Restated November 5. Effective January 1. AND SUBSIDIARIES INDEX TO EXHIBITS Exhibit Number Description 3(ii) 10(a) 10(b) 10(c) 10(d) 10(e) 10(f) Second Amended and Restated By.32843) Rule 13a. 2008 Amended and Restated Employment Agreement with David F. 001.TIM HORTONS INC. effective December 31.. As Amended and Restated on November 5. 2008 Executive Annual Performance Plan.'s 2007 Annual Report on Form 10.S. Employees and U. Amended and Restated Supplementary Retirement Plan.14(a) Certification of Chief Financial Officer Section 1350 Certification of Chief Executive Officer Section 1350 Certification of Chief Financial Officer Safe Harbor Under the Private Securities Litigation Reform Act of 1995 49 10(g) 10(h) 10(i) 10(j) 10(k) 10(l) 31(a) 31(b) 32(a) 32(b) 99 . 2008 Amended and Restated Employment Agreement with Donald B.K filed with the Securities and Exchange Commission on February 26.S.Laws of Tim Hortons Inc. Taxpayers (including Stephen Johnston) (Compliance with Section 409A of the Internal Revenue Code) Form of Amended and Restated Deferred Stock Unit Award Agreement (Canadian) of John Lederer and Wayne Sales (Compliance with Section 409A of the Internal Revenue Code) Form of Amended and Restated Deferred Stock Unit Award Agreement (U.14(a)/15d. Most Recently Amended on November 5.S. Version) (Compliance with Section 409A of the Internal Revenue Service) Information regarding Quantitative and Qualitative Disclosures About Market Risk on pages 75 to 77 of Tim Hortons Inc. 2009 Amendment and Termination of The TDL Group Corp. Version) (Compliance with Section 409A of the Internal Revenue Code) 2008 Amended and Restated Restricted Stock Unit Award Agreement of David Clanachan (Compliance with Section 409A of the Internal Revenue Code) Form of 2008 Amended and Restated Restricted Stock Unit Award Agreement for U. Schroeder. 2008 Personal Supplemental Executive Retirement Savings Plan.

2006) (Revised August 31. ARTICLE I OFFICES Section 1. both within and outside the State of Delaware.3 to each stockholder entitled to vote thereat 1 .3 Notices. have such other offices and places of business. but may instead be held solely by means of remote communication pursuant to Section 9. but may instead be held solely by means of remote communication pursuant to Section 9. provided that the Board may in its sole discretion determine that the meeting shall not be held at any place. and the means of remote communication.2 Special Meetings. At each annual meeting.Exhibit 3(ii) Second Amended and Restated By. if any.. The registered office of the Corporation within the State of Delaware shall be located at either (a) the principal place of business of the Corporation in the State of Delaware or (b) the office of the corporation or individual acting as the Corporation's registered agent in Delaware. Except as otherwise required by applicable law or provided in the Corporation's Amended and Restated Certificate of Incorporation. Section 2. if any. An annual meeting of stockholders shall be held at such place and time and on such date as shall be determined by the Board and stated in the notice of the meeting.. in addition to its registered office in the State of Delaware. may be called only by the Chairman of the Board.1 Annual Meetings. 2007 and November 5. the stockholders shall elect directors of the Corporation and may transact any other business as may properly be brought before the meeting. Section 1. a Delaware corporation (the "Corporation") (Adopted as of February 23. by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting. and time of the meeting. Special meetings of stockholders shall be held at such place and time and on such date as shall be determined by the Board and stated in the Corporation's notice of the meeting. date. "Whole Board" shall mean the total number of directors the Corporation would have if there were no vacancies. 2006. ARTICLE II STOCKHOLDERS MEETINGS Section 2. Most Recently Amended on November 5. 2008) SECOND AMENDED AND RESTATED BY. 2008 SECOND AMENDED AND RESTATED BY. the President or the Board pursuant to a resolution adopted by a majority of the Whole Board (as defined below).5(a). for any purpose or purposes. Section 2.1 Registered Office.Laws of Tim Hortons Inc.5(a). as the same may be amended or restated from time to time (the "Certificate of Incorporation").2 Additional Offices. October 25.LAWS OF TIM HORTONS INC. as the Board of Directors of the Corporation (the "Board") may from time to time determine or as the business and affairs of the Corporation may require.LAWS OF TIM HORTONS INC. special meetings of stockholders. Notice of each stockholders meeting stating the place. shall be given in the manner permitted by Section 9. the Chief Executive Officer. The Corporation may. provided that the Board may in its sole discretion determine that the meeting shall not be held at any place.

the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. provided. or shall cause the officer or agent who has charge of the stock ledger of the Corporation to prepare. that the foregoing shall not limit the right of the Corporation or any such other corporation to vote shares held by it in a fiduciary capacity.5(a) shall require the Corporation to include electronic mail addresses or other electronic contact information on such list. in person or by proxy. Nothing contained in this Section 2. (a) Voting Lists. or (ii) during ordinary business hours. Section 2. whether or not a quorum is present. the Chief Executive Officer. by the Corporation.6 until a quorum shall attend. the Certificate of Incorporation or these By. for any purpose germane to the meeting. by the Board upon public announcement (as defined in Section 2. if a majority of the voting power of the shares entitled to vote in the election of directors of such other corporation is held. the President or the officer of the Corporation acting as the chairman of the meeting may adjourn the meeting from time to time in the manner provided in Section 2. Section 2.7(c)) given before the date previously scheduled for such meeting. it shall in addition state the purpose or purposes for which the meeting is called. the presence. directly or indirectly. shall neither be entitled to vote nor be counted for quorum purposes. and the business transacted at such meeting shall be limited to the matters so stated in the Corporation's notice of meeting (or any supplement thereto). the holders of a majority of the voting shares represented at the meeting. at least 10 days before every meeting of stockholders. provided that the information required to gain access to such list is provided with the notice of the meeting. Any meeting of stockholders as to which notice has been given may be postponed. at the Corporation's principal office. at a stockholders meeting of the holders of shares of outstanding capital stock of the Corporation representing a majority of the voting power of all outstanding shares of capital stock of the Corporation entitled to vote at such meeting shall constitute a quorum for the transaction of business at such meeting.by the Corporation not less than 10 nor more than 60 days before the date of the meeting. then the list shall be produced and kept at the time and place of the meeting 2 . Except as otherwise provided by applicable law. If a quorum shall not be present or represented by proxy at any meeting of the stockholders. The Secretary shall prepare. except that when specified business is to be voted on by a class or series of stock voting as a class. The stockholders present at a duly convened meeting may continue to transact business until adjournment. Shares of its own stock belonging to the Corporation or to another corporation. In the event that the Corporation determines to make the list available on an electronic network. Such list shall be open to the examination of any stockholder. and any special meeting of stockholders as to which notice has been given may be cancelled. during ordinary business hours for a period of at least 10 days prior to the meeting: (i) on a reasonably accessible electronic network. however.Laws. the holders of shares representing a majority of the voting power of the outstanding shares of such class or series shall constitute a quorum of such class or series for the transaction of such business. If the meeting is to be held at a place.4 Quorum. the Chairman of the Board. notwithstanding the withdrawal of enough stockholders to leave less than a quorum. If said notice is for a stockholders meeting other than an annual meeting. a complete list of the stockholders of record entitled to vote thereat arranged in alphabetical order and showing the address and the number of shares registered in the name of each stockholder.5 Voting of Shares.

but shall be filed with the Secretary before being voted.5(a) or to vote in person or by proxy at any meeting of stockholders. proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission. every stockholder entitled to vote may vote in person or by proxy. facsimile telecommunication or other reliable reproduction of the writing or transmission authorizing another person or persons to act as proxy for a stockholder may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used. (b) Manner of Voting. or the chairman of the meeting of stockholders. facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission. in its discretion. unless the proxy provides for a longer period. The Board. in such person's discretion. provided that any such electronic transmission must either set forth or be submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder. provided that such copy. but not limited to. At any stockholders meeting. Any copy.during the whole time thereof. (ii) A stockholder may authorize another person or persons to act for such stockholder as proxy by transmitting or authorizing the transmission of an electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm. either of the following shall constitute a valid means by which a stockholder may grant such authority. but no such proxy shall be voted or acted upon after 11 months from its date.3). Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy. provided that any such electronic transmission must either set forth or be submitted with information from which the Corporation can determine that the electronic transmission was authorized by the stockholder or proxyholder. by facsimile signature. Execution may be accomplished by the stockholder or such stockholder's authorized officer. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the list required by this Section 2. the voting by stockholders or proxyholders at any meeting conducted by remote communication may be effected by a ballot submitted by electronic transmission (as defined in Section 9. may require that any votes cast at such meeting shall be cast by written ballot.5(a). (c) Proxies. Proxies need not be filed with the Secretary of the Corporation until the meeting is called to order. the list shall be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network. If authorized by the Board. (i) A stockholder may execute a writing authorizing another person or persons to act for such stockholder as proxy. and may be inspected by any stockholder who is present. 3 . including. If a meeting of stockholders is to be held solely by means of remote communication as permitted by Section 9. Without limiting the manner in which a stockholder may authorize another person or persons to act for such stockholder as proxy. director. employee or agent signing such writing or causing such person's signature to be affixed to such writing by any reasonable means. and the information required to access such list shall be provided with the notice of meeting.

count all votes and ballots and report the results. determine the number of shares present in person or represented by proxy at the meeting and the validity of proxies and ballots. Section 2. a different vote is required. may transact any business that might have been transacted at the original meeting. from time to time. The inspectors shall ascertain and report the number of outstanding shares and the voting power of each. 4 . to reconvene at the same or some other place. Subject to the rights of the holders of one or more series of preferred stock of the Corporation ("Preferred Stock"). (e) Inspectors of Election.7 Advance Notice for Business. thereof. to act at any meeting of stockholders or any adjournment thereof and to make a written report thereof. shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. other than business that is either (i) specified in the Corporation's notice of meeting (or any supplement thereto) given by or at the direction of the Board. if any.Laws or applicable stock exchange rules. If the adjournment is for more than 30 days. All other matters shall be determined by the vote of a majority of the votes cast by the stockholders present in person or represented by proxy at the meeting and entitled to vote thereon. voting separately by class or series. to elect directors pursuant to the terms of one or more series of Preferred Stock. time. At the adjourned meeting the stockholders. the report of a majority shall be the report of the inspectors. If there is more than one inspector. or the holders of any class or series of stock entitled to vote separately as a class. Any meeting of stockholders. the Certificate of Incorporation. may be adjourned by the chairman of the meeting. No business may be transacted at an annual meeting of stockholders. The Board may appoint one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspectors of election or alternates are appointed by the Board. in which case such provision shall govern and control the decision of such matter. notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. whether or not there is a quorum. these By. and certify their determination of the number of shares represented at the meeting and their count of all votes and ballots. determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors. before discharging his or her duties.(d) Required Vote. The Board may appoint one or more persons as inspectors of election. annual or special. Notice need not be given of any such adjourned meeting if the date. who may be employees of the Corporation or otherwise serve the Corporation in other capacities. Each report of an inspector shall be in writing and signed by the inspector or by a majority of them if there is more than one inspector acting at such meeting. (a) Annual Meetings of Stockholders. the election of directors shall be determined by a plurality of the votes cast by the stockholders present in person or represented by proxy at the meeting and entitled to vote thereon. Each inspector. if any. place. unless the matter is one upon which. and the means of remote communication. by applicable law. No person who is a candidate for an office at an election may serve as an inspector at such election. as the case may be.6 Adjournments. Section 2. or if after the adjournment a new record date is fixed for the adjourned meeting. the chairman of the meeting shall appoint one or more inspectors to act at the meeting.

2 or (2) matters properly brought under Rule 14a. a stockholder's notice to the Secretary with respect to such business must be received by the Secretary at the principal executive offices of the Corporation not later than the close of business on the 90th day nor earlier than the opening of business on the 120th day before the first anniversary of the Corporation's immediately preceding annual meeting of stockholders. (ii) To be in proper written form. the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event such business includes a proposal to amend these By. as amended (the "Exchange Act") and included in the Corporation's notice of meeting) before an annual meeting of stockholders. (i) In addition to any other applicable requirements. on whose behalf the proposal is made.7(a)(iii).7(a). Section 2. provided that. if any.7(a) and on the record date for the determination of stockholders entitled to vote at such annual meeting and (y) who complies with the notice procedures set forth in this Section 2. such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation and such business must otherwise be a proper matter for stockholder action. to be timely. on whose behalf the proposal is made and (2) any derivative positions held or beneficially held by such stockholder and the Stockholder Associated Person.Laws. if any. for business (other than nominations) to be properly brought before an annual meeting by a stockholder. the close of business on the 10th day following the day on which public announcement of the date of the annual meeting is first made by the Corporation. if any. if the first public announcement of the date of such meeting is less than 100 days prior to the annual meeting. the nomination of a person for election as a director at an annual meeting shall be governed by Section 3.Laws. (B) the name and record address of such stockholder and the name and address of the Stockholder Associated Person (as defined below). provided. notice by the stockholder to be timely must be so received not earlier than the opening of business on the 120th day before the meeting and not later than the close of business on the 90th day before the meeting or. Subject to Section 2. the language of the proposed amendment) and the reasons for conducting such business at the annual meeting.7(a)(iii) shall be the exclusive means for a stockholder to submit business (other than (1) nominations for directors pursuant to Section 3. (C)(1) the class or series and number of shares of capital stock of the Corporation that are owned beneficially and of record by such stockholder and by the Stockholder Associated Person.(ii) otherwise properly brought before the annual meeting by or at the direction of the Board or (iii) otherwise properly brought before the annual meeting by any stockholder of the Corporation (x) who is a stockholder of record on the date of the giving of the notice provided for in this Section 2. however.7(a).2 of these By.8 (or any successor thereof) of the Securities Exchange Act of 1934. related to any class or series of capital stock of the Corporation with a value derived in whole or in part from the value of any class or series of capital 5 . In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a stockholder's notice as described in this Section 2. that for any annual meeting that is called for a date that is not within 30 days before or 60 days after such anniversary date. a stockholder's notice to the Secretary regarding any business (other than nominations) must set forth as to each such matter such stockholder proposes to bring before the annual meeting (A) a brief description of the business desired to be brought before the annual meeting.

and (J) any other information relating to such stockholder and Stockholder Associated Person. understanding or relationship pursuant to which such stockholder or Stockholder Associated Person. (H) any material interest of such stockholder and the Stockholder Associated Person. (G) any performance. if any. however. A "Stockholder Associated Person" of any stockholder means (A) any person controlling. if any. is entitled to based on any increase or decrease in the value of shares of capital stock of the Corporation as of the date of such notice. if any. arrangement or understanding has been made. on whose behalf the proposal is made in such business. (B) any beneficial owner of shares of capital stock of the Corporation owned of record or beneficially by such stockholder and (c) any person controlling. and whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of.7(a).7(a). if any. directly or indirectly.7(a) or that the information provided in a stockholder's notice does not satisfy the information requirements of this Section 2. if any. if any. controlled by or under common control with such Stockholder Associated Person. contract. that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies for the proposal pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder.stock of the Corporation. that are separated or separable from the underlying shares of capital stock of the Corporation. on whose behalf the proposal is made and any other person or persons (including their names) in connection with the proposal of such business by such stockholder.7(a). the effect or intent of which is to increase or decrease the voting power of. whether or not such instrument or right shall be subject to settlement in the underlying class or series of capital stock of the Corporation or otherwise. Notwithstanding the foregoing provisions of this Section 2. with respect to the shares of capital stock of the Corporation. or any other agreement. (iv) In addition to the provisions of this Section 2. has a right to vote any shares of any capital stock of the Corporation. provided. (F) any rights to dividends on the shares of capital stock of the Corporation owned beneficially by such stockholder and the Stockholder Associated Person. if any. such proposal shall not be presented for action at the annual meeting. notwithstanding that proxies in respect of such matter may have been received by the Corporation. (I) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting. a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth herein.related fees (other than an asset. (E) a description of all arrangements or understandings between such stockholder and the Stockholder Associated Person. (D) any proxy. such proposed business shall not be transacted. such stockholder. if the stockholder (or a qualified representative of the stockholder) does not appear at the annual meeting of stockholders of the Corporation to present the proposed business.based fee) that such stockholder or the Stockholder Associated Person. such stockholder or the Stockholder Associated Person. 6 . or acting in concert with. (iii) If the chairman of the annual meeting determines that any stockholder proposal was not made in accordance with the provisions of this Section 2. arrangement.

Laws to the Exchange Act or the rules and regulations promulgated thereunder are not intended to and shall not limit the requirements applicable to director nominations pursuant to Section 3. Nominations of persons for election to the Board may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation's notice of meeting only pursuant to and in compliance with Section 3. in the absence (or inability or refusal to act) of the President or if the President is not a director. (d) restrictions on entry to the meeting after the time fixed for the commencement thereof. in the judgment of such chairman.8 Conduct of Meetings. may include. (c) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation. Nothing in this Section 2. (b) Special Meetings of Stockholders. Such rules. regulations or procedures. to prescribe such rules. their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine. (b) rules and procedures for maintaining order at the meeting and the safety of those present.2. (c) Public Announcement. the President (if he or she shall be a director) or. only such business shall be conducted as shall have been brought before the meeting pursuant to the Corporation's notice of meeting.8 under the Exchange Act. meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure. such other person as shall be appointed by the Board.Laws or such rules and regulations as adopted by the Board. the Chief Executive Officer (if he or she shall be a director) or. The chairman of each annual and special meeting of stockholders shall be the Chairman of the Board or. are appropriate for the proper conduct of the meeting.Laws.2 of these By. in the absence (or inability or refusal to act) of the Secretary. Except to the extent inconsistent with these By. For purposes of these By. and (e) limitations on the time allotted to questions or comments by participants. without limitation.Laws. Unless and to the extent determined by the Board or the chairman of the meeting. The secretary of each annual and special meeting of stockholders shall be the Secretary or. 7 . The Board may adopt such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. the chairman of any meeting of stockholders shall have the right and authority to convene and to adjourn the meeting. in the absence (or inability or refusal to act of the Chief Executive Officer or if the Chief Executive Officer is not a director. regulations and procedures and to do all such acts as. the following: (a) the establishment of an agenda or order of business for the meeting. an Assistant Secretary so appointed to act by the chairman of the meeting.7(a) shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation's proxy statement pursuant to Rule 14a. whether adopted by the Board or prescribed by the chairman of the meeting. The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the chairman of the meeting. in the absence (or inability or refusal to act) of the Chairman of the Board. "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service. 14 or 15(d) of the Exchange Act.that any references in these By. Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13. Section 2.7 of these By.Laws or any other business to be considered pursuant to Section 2. At a special meeting of stockholders.

The business and affairs of the Corporation shall be managed by or under the direction of the Board.2. To be timely. a stockholder's notice to the Secretary must be received by the Secretary at the principal executive offices of the Corporation (i) in the case of an annual meeting. Section 3. Except as otherwise expressly provided by the terms of any series of Preferred Stock permitting the holders of such series of Preferred Stock to act by written consent. such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.2 and on the record date for the determination of stockholders entitled to vote at such meeting and (y) who complies with the notice procedures set forth in this Section 3. or at any special meeting of stockholders called for the purpose of electing directors as set forth in the Corporation's notice of such special meeting. that for any annual meeting that is called for a date that is not within 30 days before or 60 days after such anniversary date.9 No Action Without Meeting. (b) In addition to any other applicable requirements. however. (a) Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation. except as may be otherwise provided by the terms of one or more series of Preferred Stock regarding the rights of holders of one or more series of Preferred Stock to elect directors. any action required or permitted to be taken by stockholders of the Corporation must be effected at a duly called annual or special meeting of the stockholders and may not be effected by written consent in lieu of a meeting. ARTICLE III DIRECTORS Section 3.Laws required to be exercised or done by the stockholders. Nominations of persons for election to the Board at any annual meeting of stockholders. Directors need not be stockholders or residents of the State of Delaware. provided. Section 2. may be made (i) by or at the direction of the Board or (ii) by any stockholder of the Corporation (x) who is a stockholder of record on the date of the giving of the notice provided for in this Section 3. If the chairman of the meeting determines that a nomination for person(s) for election to the Board was not made in accordance with the provisions of this Section 3. if the first public announcement of the date of such 8 .In the absence (or inability or refusal to act) of the Secretary and all Assistant Secretaries.2. not later than the close of business on the 90th day nor earlier than the opening of business on the 120th day before the first anniversary of the Corporation's immediately preceding annual meeting of stockholders. which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By. the chairman of the meeting may appoint any person to act as secretary of the meeting.2 Advance Notice for Nomination of Directors. notice by the stockholder to be timely must be so received not earlier than the opening of business on the 120th day before the meeting and not later than the close of business on the 90th day before the meeting or.1 Powers. for a nomination to be made by a stockholder. such nomination will be disregarded and not be presented for action at any annual meeting of stockholders or at any special meeting of stockholders called for the purpose of electing directors.

arrangement. if it shall be received by the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the date on which such public announcement was first made by the Corporation. the close of business on the 10th day following the day on which public announcement of the date of the annual meeting was first made by the Corporation. and whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of. age. business address and residence address of the person.2 shall also be considered timely. (B) the principal occupation or employment of the person. with respect to the shares of capital stock of the Corporation.2. if any. contract. such stockholder or the Stockholder Associated Person. whether or not such instrument or right shall be subject to settlement in the underlying class or series of capital stock of the Corporation or otherwise. a stockholder's notice to the Secretary must set forth: (i) as to each person whom the stockholder proposes to nominate for election as a director (A) the name. (d) To be in proper written form. (D) any proxy. and (ii) as to the stockholder giving the notice (A) the name and record address of such stockholder and the name and address of the Stockholder Associated Person. (E) a description of all arrangements or understandings relating to the nomination to be made by such stockholder between such stockholder and the 9 . not later than the close of business on the 10th day following the day on which public announcement of the date of the special meeting is first made by the Corporation. related to any class or series of capital stock of the Corporation with a value derived in whole or in part from the value of any class or series of capital stock of the Corporation. (B)(1) the class or series and number of shares of capital stock of the Corporation that are owned beneficially and of record by such stockholder and the Stockholder Associated Person. if any. a stockholder's notice required by this Section 3. if any. or any other agreement. the effect or intent of which is to increase or decrease the voting power of. if any. but only regarding nominees for the additional directorships created by such increase that are to be filled by election at such annual meeting. and (ii) in the case of a special meeting of stockholders called for the purpose of electing directors. on whose behalf the nomination is made. if the number of directors to be elected to the Board at an annual meeting is greater than the number of directors whose terms expire on the date of the annual meeting and there is no public announcement by the Corporation naming all of the nominees for the additional directors to be elected or specifying the size of the increased Board before the close of business on the 100th day prior to the anniversary date of the immediately preceding annual meeting of stockholders. understanding or relationship pursuant to which such stockholder or Stockholder Associated Person. has a right to vote any shares of any capital stock of the Corporation. (C) the class or series and number of shares of capital stock of the Corporation that are owned beneficially or of record by the person and (D) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. and (2) any derivative positions held or beneficially held by the stockholder and the Stockholder Associated Person.meeting is less than 100 days prior to the annual meeting. In no event shall the public announcement of an adjournment of an annual meeting or special meeting commence a new time period for the giving of a stockholder's notice as described in this Section 3. on whose behalf the nomination is made. if any. arrangement or understanding has been made. (c) Notwithstanding anything in paragraph (b) above to the contrary.

2 shall be deemed to affect any rights of the holders of Preferred Stock to elect directors pursuant to the Certificate of Incorporation. as required by Section 3. (e) Except as otherwise provided by the terms of one or more series of Preferred Stock regarding the rights of one or more series of Preferred Stock to nominate and elect directors.related fees (other than an asset. (H) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (I) any other information relating to such stockholder and the Stockholder Associated Person.Laws and a written consent of each proposed nominee to being named as a nominee and to serve as a director. if (i) the stockholder (or a qualified representative of the stockholder) does not appear at the meeting of stockholders of the Corporation to present the nomination. (G) any performance. on whose behalf the nomination is made. if elected. if any. arrangement or understanding with. if any. (g) To be eligible to be a nominee for election as a director of the Corporation. each proposed nominee and any other person or persons (including their names).2. that are separated or separable from the underlying shares of capital stock of the Corporation. Notwithstanding the foregoing provisions of this Section 3. if any. (F) any rights to dividends on the shares of capital stock of the Corporation owned beneficially by such stockholder and the Stockholder Associated Person.based fee) that such stockholder or the Stockholder Associated Person. Nothing in this Section 3.2.2. notwithstanding that proxies in respect of such nomination may have been received by the Corporation. (f) In addition to the provisions of this Section 3. such nomination shall be disregarded.2. or (ii) the nominee fails to meet with the Nominating and Corporate Governance Committee. no person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 3.2(b) of these By. Such notice must be accompanied by a completed and signed questionnaire. is entitled to based on any increase or decrease in the value of shares of capital stock of the Corporation as of the date of such notice.Laws) to the Secretary at the principal executive offices of the Corporation a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the Secretary upon written request) and a written representation and agreement (in the form provided by the Secretary upon written request) that such person (A) is not and will not become a party to (1) any agreement.Stockholder Associated Person. if elected as a director of the Corporation. then such nomination shall not be considered at the meeting in question.2(g) of these By. will act or vote on any issue or question (a "Voting Commitment") that has not been disclosed to the Corporation or (2) any 10 . a person must deliver (in accordance with the time periods prescribed for delivery of notice under Section 3. If the Board or the chairman of the meeting of stockholders determines that any nomination was not made in accordance with the provisions of this Section 3. representation and agreement required by Section 3. on whose behalf the nomination is made that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder.2(d). any person or entity as to how such person. a stockholder shall also comply with all of the applicable requirements of the Exchange Act and the rules and regulations thereunder regarding the matters set forth herein. and has not given any commitment or assurance to. if any.

Special meetings of the Board (a) may be called by the Chairman of the Board. Section 4. periodic meetings of the Board may be held without notice at such times. and shall be held at such time. as specified in such written request. dates and places as shall from time to time be determined by the Board. Regularly scheduled. to each director (x) not later than the day before the meeting if such notice is oral notice given personally or by telephone or written notice given by hand delivery or by means of a form of electronic transmission and delivery. or the sole director. or any three directors. if elected as a director of the Corporation. any special meeting need be specified in the notice or waiver of notice of such meeting. Notice of each special meeting of the Board shall be given. with such person's fiduciary duties under applicable law. confidentiality and stock ownership and trading policies and guidelines of the Corporation. the Chief Executive Officer. the Certificate of Incorporation. arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation.3 Compensation.2 Regular Meetings. Section 4. as provided in Section 9. and (C) in such person's individual capacity and on behalf of any person or entity on whose behalf the nomination is being made. Section 3. if elected as a director of the Corporation. reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein. and will comply with all applicable publicly disclosed corporate governance. of attendance at each meeting of the Board and may be paid either a fixed sum for attendance at each meeting of the Board or other compensation as director.Laws. as the case may be. and (z) at least five days before the meeting if such notice is sent through the United States mail. (B) is not and will not become a party to any agreement.3 Special Meetings. if called upon the request of such directors or the sole director. (y) at least two days before the meeting if such notice is sent by a nationally recognized overnight delivery service. neither the business to be transacted at. The directors may be reimbursed their expenses. Members of committees of the Board may be allowed like compensation and reimbursement of expenses for service on the committee.1 Annual Meetings.3. date and place as may be determined by the person calling the meeting or. A special 11 . then the notice may be given by the officer who called the meeting or the directors who requested the meeting. Unless otherwise restricted by the Certificate of Incorporation or these By.Voting Commitment that could limit or interfere with such person's ability to comply. the Board shall have the authority to fix the compensation of directors. Except as may be otherwise expressly provided by applicable law. or these By. the President. If the Secretary shall fail or refuse to give such notice. ARTICLE IV BOARD MEETINGS Section 4. would be in compliance. nor the purpose of.Laws. if any. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. The Board shall meet at least annually and may meet more frequently as needed. conflict of interest. Any and all business that may be transacted at a regular meeting of the Board may be transacted at a special meeting.

the Chief Executive Officer (if he or she shall be a director) or. and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board. Each committee shall keep regular minutes of its meetings and report the same to the Board when required.6 Organization. The Board shall have the power at any time to fill vacancies in. The Board may designate one or more committees. a chairman elected from the directors present. to the extent permitted by applicable law and by resolution of the Board. Required Vote. as the case may be. ARTICLE V COMMITTEES OF DIRECTORS Section 5. In the absence (or inability or refusal to act) of the Secretary and all Assistant Secretaries. 12 .Laws. Section 4. Section 4. and the writing or writings or electronic transmission or transmissions (or paper reproductions thereof) are filed with the minutes of proceedings of the Board or committee. If a quorum shall not be present at any meeting. Section 4. until a quorum is present.5 Consent In Lieu of Meeting. Any committee established pursuant to Section 5.4 Quorum. In the absence (or inability or refusal to act) of the Secretary. Unless otherwise restricted by the Certificate of Incorporation or these By. and may authorize the seal of the Corporation to be affixed to all papers that may require it. the chairman of the meeting may appoint any person to act as secretary of the meeting. without notice other than announcement at the meeting. except as may be otherwise specifically provided by applicable law. the President (if he or she shall be a director) or in the absence (or inability or refusal to act) of the President or if the President is not a director. The Secretary shall act as secretary of all meeting of the Board. each committee to consist of one or more of the directors.1 Establishment. consent thereto in writing or by electronic transmission. in the absence (or inability or refusal to act) of the Chief Executive Officer or if the Chief Executive Officer is not a director.meeting may be held at any time without notice if all of the directors are present or if those not present waive notice of the meeting in accordance with Section 9.2 Available Powers. The chairman of each meeting of the board shall be the Chairman of the Board or. a majority of the directors present may adjourn the meeting from time to time. Section 5. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. in the absence (or inability or refusal to act) of the Chairman of the Board. or dissolve any such committee. the Certificate of Incorporation or these By. A majority of the Whole Board shall constitute a quorum for the transaction of business at any meeting of the Board.1 hereof.4. and Assistant Secretary shall perform the duties of the Secretary at such meeting. shall have and may exercise all of the powers and authority of the Board in the management of the business and affairs of the Corporation. change the membership of. any action required or permitted to be taken at any meeting of the Board or any committee thereof may be taken without a meeting if all members of the Board or committee.Laws.

a Chief Executive Officer. either with or without cause. however.Laws. Officers elected by the Board shall each have such powers and duties as generally pertain to their respective offices. In the absence of such rules each committee shall conduct its business in the same manner as the Board is authorized to conduct its business pursuant to Article III and Article IV of these By. Section 6. 13 . If a quorum is not present at a meeting of a committee. Such officers shall also have such powers and duties as from time to time may be conferred by the Board. date. Any officer of the Corporation may be removed.2 Duties of Officers. place. and notice of meetings of a committee shall be determined by such committee. alter. as may be prescribed by the appointing officer. shall. such removal. The act of a majority of the members present at any meeting at which a quorum is present shall be the act of the committee. have such duties as are determined by the directors. at any time. each committee designated by the Board may make. unless such alternate member has replaced any absent or disqualified member at the time of.Laws or as may be prescribed by the Board or. at meetings of a committee. if such officer has been appointed by the Chairman of the Board or President. or in connection with.3 Term of Office. Unless the Board otherwise provides. All officers of the Corporation. the Certificate of Incorporation. The Chairman of the Board or President may also appoint such other officers (including without limitation one or more Vice Presidents and Controllers) as may be necessary or desirable for the conduct of the business of the Corporation. Assistant Secretaries and Assistant Treasurers) as the Board from time to time may determine. a Treasurer. without notice other than an announcement at the meeting. ARTICLE VI OFFICERS Section 6. Section 6. by the affirmative vote of a majority of all of the directors then in office. amend and repeal rules for the conduct of its business. subject to the specific provisions of this Article VI. such meeting) shall constitute a quorum for the transaction of business.1 Officers.Section 5. respectively. the members present may adjourn the meeting from time to time. if any. Unless the Board otherwise provides and except as provided in these By. except as otherwise specifically provided by applicable law. Section 5. shall be without prejudice to any contract rights of the person so removed. who may replace any absent or disqualified member at any meeting of such committee. The officers of the Corporation elected by the Board shall be a Chairman of the Board.3 Alternate Members.Laws.4 Procedures. until a quorum is present. a Chief Financial Officer. a majority of the number of members of the committee (but not including any alternate member. The Board may designate one or more directors as alternate members of any committee. as between themselves and the Corporation. Such other officers shall have such powers and duties and shall hold their offices for such terms as may be provided in these By. the time. The officers of the Corporation shall hold office at the pleasure of the directors. a President. Unless the Board otherwise provides with respect to specific delegations of authority relating to a specific committee (or the Board otherwise directs with respect to a specific committee). a Secretary and such other officers (including without limitation Vice Presidents. these By.Laws or the Board.

Officers need not be stockholders or residents of the State of Delaware.Laws otherwise provide. optional or other special rights of each class of stock or series thereof and the qualifications. ARTICLE VII SHARES Section 7. the President or a Vice President and (b) the Chief Financial Officer. limitations or restrictions of such preferences or rights to be set forth in full or summarized on the face or back of any certificate that the Corporation issues to represent shares of such class or series of stock or (b) in the case of uncertificated shares. except as otherwise provided by applicable law.3 Signatures. and to such persons. however. designations. participating.4 Multiple Officeholders. the Treasurer.2 Multiple Classes of Stock. provided that the Corporation shall be permitted to issue such nominal number of certificates to securities depositories and further provided that the Board may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be represented by certificates. an Assistant Treasurer. there may be set forth on the face or back of such certificate or.Section 6. unless the Certificate of Incorporation or these By. optional or other special rights of each class of stock or series thereof and the qualifications. such certificate may be issued by the Corporation with the same effect as if such person were such officer. Any or all of the signatures on the certificate may be a facsimile. the Secretary or an Assistant Secretary of the Corporation. provided. preferences and relative. The Corporation shall not have power to issue a certificate representing shares in bearer form. If the Corporation shall be authorized to issue more than one class of stock or more than one series of any class. The consideration may consist of any 14 . In case any officer. send to the registered owner thereof a written notice containing the information required to be set forth on certificates as specified in clause (a) above. Section 7. as determined from time to time by the Board. transfer agent or registrar before such certificate is issued.1 Uncertificated Shares. preferences and relative. (a) Subject to applicable law and the Certificate of Incorporation. designations. in lieu of the foregoing requirements.4 Consideration and Payment for Shares. Each certificate representing capital stock of the Corporation shall be signed by or in the name of the Corporation by (a) the Chairman of the Board. shares of stock may be issued for such consideration. Stockholder and Director Officers. the Corporation shall (a) cause the powers. limitations or restrictions of such preferences or rights. that. the Chief Executive Officer. within a reasonable time after the issuance or transfer of such shares. in the case of uncertificated shares. Section 7. Any number of offices may be held by the same person. on such written notice a statement that the Corporation will furnish without charge to each stockholder who so requests the powers. having in the case of shares with par value a value not less than the par value thereof. transfer agent or registrar on the date of issue. transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer. participating. Section 7. The shares of the Corporation shall be uncertificated.

Destroyed or Wrongfully Taken Certificates. destroyed or wrongfully taken.6 Transfer of Stock. (ii) (A) with respect to certificated shares. the certificate representing such shares has been surrendered. Section 7. the owner shall be precluded from asserting against the Corporation any claim for registering such transfer or a claim to a new certificate representing such shares or such shares in uncertificated form. the endorsement is made by the person specified by the certificate as entitled to such shares. contracts for services to be performed or other securities. the endorsement or instruction is made by any other appropriate person or by an agent who has actual authority to act on behalf of the appropriate person. (a) If a certificate representing shares of the Corporation is presented to the Corporation with an endorsement requesting the registration of transfer of such shares or an instruction is presented to the Corporation requesting the registration of transfer of uncertificated shares. (ii) if requested by the Corporation. there shall have been set forth the total amount of the consideration to be paid therefor and the amount paid thereon up to and including the time said certificate representing certificated shares or said uncertificated shares are issued. 15 . the Corporation shall register the transfer as requested if: (i) in the case of certificated shares. shares may not be issued until the full amount of the consideration has been paid. unless upon the face or back of each certificate issued to represent any partly paid shares of capital stock or upon the books and records of the Corporation in the case of partly paid uncertificated shares.tangible or intangible property or benefit to the Corporation including cash. the Corporation shall issue a new certificate representing such shares or such shares in uncertificated form if the owner: (i) requests such a new certificate before the Corporation has notice that the certificate representing such shares has been acquired by a protected purchaser. services performed. delivers to the Corporation a bond sufficient to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss. and the owner fails to notify the Corporation of that fact within a reasonable time after the owner has notice of such loss. (B) with respect to uncertificated shares.5 Lost. promissory notes. (b) If a certificate representing shares has been lost. an instruction is made by the registered owner of such uncertificated shares. or (C) with respect to certificated shares or uncertificated shares. (b) Subject to applicable law and the Certificate of Incorporation. wrongful taking or destruction of such certificate or the issuance of such new certificate or uncertificated shares. Section 7. apparently destroyed or wrongfully taken. and (iii) satisfies other reasonable requirements imposed by the Corporation. (a) If an owner of a certificate representing shares claims that such certificate has been lost. apparent destruction or wrongful taking and the Corporation registers a transfer of such shares before receiving notification.

trustee. or (ii) the shares are uncertificated and such restriction was contained in a notice sent by the Corporation to the registered owner of such shares within a reasonable time after the issuance or transfer of such shares. if permitted by the Delaware General Corporation Law (the "DGCL") and noted conspicuously on the certificate representing such shares or. Section 7. except that a person who is the beneficial owner of such shares (if held in a voting trust or by a nominee on behalf of such person) may.8 Effect of Corporation's Restriction on Transfer. vote such shares. when the instruction for registration of transfer thereof is presented to the Corporation. Section 7. when the certificate for such shares is presented to the Corporation for transfer or. if such shares are uncertificated. (a) A written restriction on the transfer or registration of transfer of shares of the Corporation or on the amount of shares of the Corporation that may be owned by any person or group of persons. in the case of uncertificated shares. may also so inspect the books and records of the Corporation. is ineffective against a person without actual knowledge of such restriction unless: (i) the shares are certificated and such restriction is noted conspicuously on the certificate. may be enforced against the holder of such shares or any successor or transferee of the holder including an executor. (iv) the transfer does not violate any restriction on transfer imposed by the Corporation that is enforceable in accordance with Section 7.9 Regulations.7 Registered Stockholders. the Corporation shall so record such fact in the entry of transfer if. upon providing documentary evidence of beneficial ownership of such shares and satisfying such other conditions as are provided under applicable law. contained in a notice sent by the Corporation to the registered owner of such shares within a reasonable time after the issuance or transfer of such shares. and (v) such other conditions for such transfer as shall be provided for under applicable law have been satisfied. both the transferor and transferee request the Corporation to do so. (b) A restriction imposed by the Corporation on the transfer or the registration of shares of the Corporation or on the amount of shares of the Corporation that may be owned by any person or group of persons. (b) Whenever any transfer of shares shall be made for collateral security and not absolutely. subject to any applicable requirement of law. as the Board may 16 . Before due presentment for registration of transfer of a certificate representing shares of the Corporation or of an instruction requesting registration of transfer of uncertificated shares. The Board shall have power and authority to make such additional rules and regulations. receive dividends or notifications with respect to such shares and otherwise exercise all the rights and powers of the owner of such shares. even if otherwise lawful. guardian or other fiduciary entrusted with like responsibility for the person or estate of the holder.8(a).(iii) the Corporation has received a guarantee of signature of the person signing such endorsement or instruction or such other reasonable assurance that the endorsement or instruction is genuine and authorized as the Corporation may request. Section 7. administrator. the Corporation may treat the registered owner as the person exclusively entitled to inspect for any proper purpose the stock ledger and the other books and records of the Corporation.

judgments. attorneys' fees. if the DGCL requires. or in any other capacity while serving as a director.1.3 Right of Indemnitee to Bring Suit. provided.3 with respect to proceedings to enforce rights to indemnification. fines. without limitation. to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a "final adjudication") that such Covered Person is not entitled to be indemnified for such expenses under this Article VIII or otherwise. officer. ARTICLE VIII INDEMNIFICATION Section 8. employee or agent of another corporation or of a partnership. If 17 . testifying. Section 8. trust or other enterprise. an advancement of expenses incurred by a Covered Person in his or her capacity as a director or officer of the Corporation (and not in any other capacity in which service was or is rendered by such Covered Person.deem necessary and appropriate with respect to the issue. the Corporation shall indemnify a Covered Person in connection with a proceeding (or part thereof) initiated by such Covered Person only if such proceeding (or part thereof) was authorized by the Board. however. while a director or officer of the Corporation. including. employee or agent. without limitation. that. The Board may appoint one or more transfer agents or registrars and may require for the validity thereof that certificates representing shares bear the signature of any transfer agent or registrar so appointed. Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any threatened. whether the basis of such proceeding is alleged action in an official capacity as a director. by or on behalf of such Covered Person. suit or proceeding. attorneys' fees) incurred in defending. service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter an "undertaking"). is or was serving at the request of the Corporation as a director. a Covered Person also shall have the right to be paid by the Corporation the expenses (including. in which case the applicable period shall be 20 days. except as provided in Section 8. joint venture. shall be indemnified and held harmless by the Corporation to the fullest extent authorized or permitted by applicable law. that. or otherwise participating in any such proceeding in advance of its final disposition (hereinafter an "advancement of expenses"). including service with respect to an employee benefit plan (hereinafter a "Covered Person").2 Right to Advancement of Expenses. employee or agent. officer. liability and loss (including. administrative or investigative (hereinafter a "proceeding"). against all expense.2 is not paid in full by the Corporation within 60 days after a written claim therefor has been received by the Corporation. however. the Covered Person may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim.1 Right to Indemnification. by reason of the fact that he or she is or was a director or officer of the Corporation or. provided. criminal. ERISA excise taxes and penalties and amounts paid in settlement) reasonably incurred or suffered by such Covered Person in connection with such proceeding. except in the case of a claim for an advancement of expenses. Section 8. officer.1 or Section 8. In addition to the right to indemnification conferred in Section 8. whether civil. as the same exists or may hereafter be amended. transfer or registration of transfer of shares of stock or certificates representing shares. without limitation. pending or completed action. If a claim under Section 8.

officer. or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking. shall be a defense to such suit. joint venture. partnership. an agreement. Without limiting the foregoing. at its expense. to the extent authorized from time to time by the Board. independent legal counsel. the Covered Person shall also be entitled to be paid the expense of prosecuting or defending such suit. or its stockholders) that the Covered Person has not met such applicable standard of conduct. grant rights to indemnification and to the advancement of expenses to any employee or agent of the Corporation and to any other person who is or was serving at the request of the Corporation as a director. This Article VIII shall not limit the right of the Corporation to the extent and in the manner authorized or permitted by law to indemnify and to advance expenses to persons other than Covered Persons. The Corporation may maintain insurance.5 Insurance. the burden of proving that the Covered Person is not entitled to be indemnified. under this Article VIII or otherwise shall be on the Corporation. shall create a presumption that the Covered Person has not met the applicable standard of conduct or. or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the Covered Person is proper in the circumstances because the Covered Person has met the applicable standard of conduct set forth in the DGCL. officer. trust or other enterprise against any expense. Section 8. (a) In any suit brought by the Covered Person to enforce a right to indemnification hereunder (but not in a suit brought by a Covered Person to enforce a right to an advancement of expenses) it shall be a defense that.successful in whole or in part in any such suit.Laws. a committee of such directors. these By. to protect itself and/or any director. joint venture. independent legal counsel. trust or other enterprise. liability or loss. the Covered Person has not met any applicable standard for indemnification set forth in the DGCL. employee or agent of the Corporation or another corporation. employee or agent of another corporation or of a partnership. liability or loss under the DGCL. or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking. In any suit brought by the Covered Person to enforce a right to indemnification or to an advancement of expenses hereunder. the Corporation shall be entitled to recover such expenses upon a final adjudication that. a committee of such directors.4 Non. or otherwise. in the case of such a suit brought by the Covered Person. including service with respect to an employee benefit plan. and (b) in any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking.Exclusivity of Rights. a vote of stockholders or disinterested directors. Section 8. the Certificate of Incorporation. The rights provided to Covered Persons pursuant to this Article VIII shall not be exclusive of any other right that any Covered Person may have or hereafter acquire under applicable law. 18 . or to such advancement of expenses.6 Indemnification of Other Persons. Neither the failure of the Corporation (including its directors who are not parties to such action. Section 8. nor an actual determination by the Corporation (including a determination by its directors who are not parties to such action. whether or not the Corporation would have the power to indemnify such person against such expense. to the fullest extent of the provisions of this Article VIII with respect to the indemnification and advancement of expenses of Covered Persons under this Article VIII. the Corporation may.

which shall not precede the date upon which the resolution fixing the record date is adopted by the Board. Section 9. illegal or unenforceable for any reason whatsoever: (a) the validity. The rights provided to Covered Persons pursuant to this Article VIII shall be contract rights and such rights shall continue as to a Covered Person who has ceased to be a director. or beneficiaries. in its sole discretion. officer. If any provision or provisions of this Article VIII shall be held to be invalid. or involves services by. (a) In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof. legality and enforceability of the remaining provisions of this Article VIII shall not in any way be affected or impaired thereby. executors and administrators. to the extent permitted by applicable law. illegal or unenforceable. illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid. and (b) to the fullest extent possible. the provisions of this Article VIII (including. or the adoption of any other provision of these By. be prospective only (except to the extent such amendment or change in applicable law permits the Corporation to provide broader indemnification rights to Covered Persons on a retroactive basis than permitted prior thereto). but instead shall be held by means of remote communication pursuant to Section 9. determined that a meeting shall not be held at any place.Section 8. (b) references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan. its participants. without limitation. principal business office of the Corporation.Laws is not designated in the notice of such meeting. the Board or committee of the Board for which notice is required under these By.10 Severability. if the Board has. Section 8. Any repeal or amendment of this Article VIII by the Board or the stockholders of the Corporation or by changes in applicable law. a person with respect to any employee benefit plan. If the place of any meeting of stockholders.9 Contract Rights. and (d) a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interest of the Corporation" for purposes of Section 145 of the DGCL.2 Fixing Record Dates. each such portion of this Article VIII containing any such provision held to be invalid.Laws inconsistent with this Article VIII. will. Section 8. (c) references to "serving at the request of the Corporation" shall include any service that imposes duties on. such meeting shall be held at the U.S. and which record date shall 19 .7 Amendments. then such meeting shall not be held at any place. For purposes of this Article VIII.5 hereof. agent or employee and shall inure to the benefit of the Covered Person's heirs. ARTICLE IX MISCELLANEOUS Section 9. Section 8. and will not in any way diminish or adversely affect any right or protection existing hereunder in respect of any act or omission occurring prior to such repeal or amendment or adoption of such inconsistent provision. the Board may fix a record date.1 Place of Meetings. provided.8 Certain Definitions. however. (a) references to "other enterprise" shall include any employee benefit plan.

and subject to the conditions set forth in Section 232 of the DGCL. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting. (a) Notice to Directors. addressed to the director at the director's address appearing on the records of the Corporation. If no record date is fixed. (ii) if sent through the United States mail. or (ii) by means of a form of electronic transmission consented to by the stockholder. or (iii) by oral notice given personally or by telephone.3 Means of Giving Notice. or by a nationally recognized overnight delivery service for next day delivery. the Certificate of Incorporation or these By. when deposited with such service. however. the Board may fix a record date. (ii) by means of facsimile telecommunication or other form of electronic transmission.not be more than 60 nor less than 10 days before the date of such meeting.Laws notice is required to be given to any director. addressed to the director at the director's address appearing on the records of the Corporation. (b) Notice to Stockholders. A notice to a director will be deemed given as follows: (i) if given by hand delivery. which record date shall not precede the date upon which the resolution fixing the record date is adopted. addressed to the stockholder at the stockholder's address appearing on the stock ledger of the Corporation. or (vi) if sent by any other form of electronic transmission. location or number (as applicable) for such director appearing on the records of the Corporation. the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the business day next preceding the day on which notice is given. when actually received by the director. to the extent permitted by. if notice is waived. conversion or exchange of stock. the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto. at the close of business on the business day next preceding the day on which the meeting is held. such notice shall be given either (i) in writing and sent by hand delivery. Section 9. (iii) if sent for next day delivery by a nationally 20 . when actually received by the stockholder. and which record date shall be not more than 60 days prior to such action. orally. or. when deposited in the United States mail. with postage and fees thereon prepaid. such notice may be given (i) in writing and sent either by hand delivery. when deposited in the United States mail. the Certificate of Incorporation or these By.Laws notice is required to be given to any stockholder. or by a nationally recognized overnight delivery service for next day delivery. (b) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change. or for the purpose of any other lawful action. provided. with postage and fees thereon prepaid. (v) if sent by electronic mail. that the Board may fix a new record date for the adjourned meeting. (ii) if sent through the United States mail. Whenever under applicable law. (iii) if sent for next day delivery by a nationally recognized overnight delivery service. when sent to the facsimile transmission number for such director appearing on the records of the Corporation. with fees thereon prepaid. when sent to the address. Whenever under applicable law. A notice to a stockholder shall be deemed given as follows: (i) if given by hand delivery. when sent to the electronic mail address for such director appearing on the records of the Corporation. If no record date is fixed by the Board. through the United States mail. (iv) if sent by facsimile telecommunication. or by telephone. through the United States mail.

A stockholder may revoke such stockholder's consent to receiving notice by means of electronic communication by giving written notice of such revocation to the Corporation. that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful. however. (B) if by electronic mail. "Electronic transmission" means any form of communication. and (D) if by any other form of electronic transmission. upon the later of (1) such posting and (2) the giving of such separate notice. when directed to an electronic mail address at which the stockholder has consented to receive notice. retrieved and reviewed by a recipient thereof. and (iv) if given by a form of electronic transmission consented to by the stockholder to whom the notice is given and otherwise meeting the requirements set forth above. 21 . any notice to stockholders given by the Corporation under any provision of the DGCL. (A) if by facsimile transmission. telegram and cablegram. (e) Exceptions to Notice Requirements. the certificate shall state. (c) Electronic Transmission. if such is the fact and if notice is required. the Certificate of Incorporation or these Bylaws. electronic mail. addressed to the stockholder at the stockholder's address appearing on the stock ledger of the Corporation. the Certificate of Incorporation or these Bylaws shall be effective if given by a single written notice to stockholders who share an address if consented to by the stockholders at that address to whom such notice is given. Any stockholder who fails to object in writing to the Corporation within 60 days of having been given written notice by the Corporation of its intention to send such a single written notice shall be deemed to have consented to receiving such single written notice. when directed to a number at which the stockholder has consented to receive notice. and that may be directly reproduced in paper form by such a recipient through an automated process. or other person responsible for the giving of notice. Any action or meeting that shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force and effect as if such notice had been duly given. the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action. (C) if by a posting on an electronic network together with separate notice to the stockholder of such specified posting.recognized overnight delivery service. with fees thereon prepaid. If the action taken by the Corporation is such as to require the filing of a certificate with the Secretary of State of Delaware. including but not limited to transmission by telex. facsimile telecommunication. not directly involving the physical transmission of paper. Without limiting the manner by which notice otherwise may be given effectively by the Corporation to stockholders. A stockholder may revoke such stockholder's consent by delivering written notice of such revocation to the Corporation. when deposited with such service. the giving of such notice to such person shall not be required and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person. Any such consent shall be deemed revoked if (1) the Corporation is unable to deliver by electronic transmission two consecutive notices given by the Corporation in accordance with such consent and (2) such inability becomes known to the Secretary or an Assistant Secretary or to the Corporation's transfer agent. provided. Whenever notice is required to be given. to any person with whom communication is unlawful. that creates a record that may be retained. (d) Notice to Stockholders Sharing Same Address. under the DGCL. when directed to the stockholder.

Whenever notice is required to be given by the Corporation, under any provision of the DGCL, the Certificate of Incorporation or these Bylaws, to any stockholder to whom (1) notice of two consecutive annual meetings of stockholders and all notices of stockholder meetings or of the taking of action by written consent of stockholders without a meeting to such stockholder during the period between such two consecutive annual meetings, or (2) all, and at least two payments (if sent by first- class mail) of dividends or interest on securities during a 12- month period, have been mailed addressed to such stockholder at such stockholder's address as shown on the records of the Corporation and have been returned undeliverable, the giving of such notice to such stockholder shall not be required. Any action or meeting that shall be taken or held without notice to such stockholder shall have the same force and effect as if such notice had been duly given. If any such stockholder shall deliver to the Corporation a written notice setting forth such stockholder's then current address, the requirement that notice be given to such stockholder shall be reinstated. If the action taken by the Corporation is such as to require the filing of a certificate with the Secretary of State of Delaware, the certificate need not state that notice was not given to persons to whom notice was not required to be given pursuant to Section 230(b) of the DGCL. The exception in subsection (1) of the first sentence of this paragraph to the requirement that notice be given shall not be applicable to any notice returned as undeliverable if the notice was given by electronic transmission. Section 9.4 Waiver of Notice. Whenever any notice is required to be given under applicable law, the Certificate of Incorporation, or these By- Laws, a written waiver of such notice, signed before or after the date of such meeting by the person or persons entitled to the notice, or a waiver by electronic transmission by the person entitled to the notice, shall be deemed equivalent to such required notice. All such waivers shall be kept with the books of the Corporation. Attendance at a meeting shall constitute a waiver of notice of such meeting, except where a person attends for the express purpose of objecting to the transaction of any business on the ground that the meeting was not lawfully called or convened. Section 9.5 Meeting Attendance via Remote Communication Equipment. (a) Stockholder Meetings. If authorized by the Board in its sole discretion, and subject to such guidelines and procedures as the Board may adopt, stockholders and proxyholders not physically present at a meeting of stockholders may, by means of remote communication: (i) participate in a meeting of stockholders; and (ii) be deemed present in person and vote at a meeting of stockholders, whether such meeting is to be held at a designated place or solely by means of remote communication, provided that (A) the Corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder, (B) the Corporation shall implement reasonable measures to provide such stockholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings, and (C) if any stockholder or proxyholder votes or takes other action at the meeting by means of remote 22

communication, a record of such votes or other action shall be maintained by the Corporation. (b) Board Meetings. Unless otherwise restricted by applicable law, the Certificate of Incorporation, or these By- Laws, members of the Board or any committee thereof may participate in a meeting of the Board or any committee thereof by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other. Such participation in a meeting shall constitute presence in person at the meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting was not lawfully called or convened. Section 9.6 Dividends. The Board may from time to time declare, and the Corporation may pay, dividends (payable in cash, property or shares of the Corporation's capital stock) on the Corporation's outstanding shares of capital stock, subject to applicable law and the Certificate of Incorporation. Section 9.7 Reserves. The Board may set apart out of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Section 9.8 Fiscal Year. The fiscal year of the Corporation shall be fixed by the Board. Until changed by the Board, the fiscal year of the Corporation shall end on the Sunday closest to December 31 of each year. Section 9.9 Seal. The seal of the Corporation shall be in such form as shall from time to time be adopted by the Board. The seal may be used by causing it or a facsimile thereof to be impressed, affixed or otherwise reproduced. Section 9.10 Books and Records. The books and records of the Corporation may be kept within or outside the State of Delaware at such place or places as may from time to time be designated by the Board. Section 9.11 Resignation. Any director, committee member or officer may resign by giving notice thereof in writing or by electronic transmission to the Chairman of the Board, the Chief Executive Officer, the President or the Secretary. The resignation shall take effect at the time specified therein, or at the time of receipt of such notice if no time is specified or the specified time is earlier than the time of such receipt. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 9.12 Surety Bonds. Such officers, employees and agents of the Corporation (if any) as the Chairman of the Board, the President or the Board may direct, from time to time, shall be bonded for the faithful performance of their duties and for the restoration to the Corporation, in case of their death, resignation, retirement, disqualification or removal from office, of all books, papers, vouchers, money and other property of whatever kind in their possession or under their control belonging to the Corporation, in such amounts and by such surety companies as the Chairman of the Board, the Chief Executive Officer, the President or the 23

Board may determine. The premiums on such bonds shall be paid by the Corporation and the bonds so furnished shall be in the custody of the Secretary. Section 9.13 Securities of Other Corporations. Powers of attorney, proxies, waivers of notice of meeting, consents in writing and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the Chairman of the Board, the Chief Executive Officer, President or any Vice President. Any such officer, may, in the name of and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities, or to consent in writing, in the name of the Corporation as such holder, to any action by such corporation, and at any such meeting or with respect to any such consent shall possess and may exercise any and all rights and power incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed. The Board may from time to time confer like powers upon any other person or persons. Section 9.14 Amendments. In furtherance and not in limitation of the powers conferred upon it by law, the Board shall have the power to adopt, amend, alter or repeal the By- Laws. The affirmative vote of a majority of the Whole Board shall be required to adopt, amend, alter or repeal the ByLaws. The By- Laws also may be adopted, amended, altered or repealed by the holders of a majority of the voting power of all then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting as a single class; provided, however, that in addition to any vote of the holders of any class or series of capital stock of the Corporation required by law or by the Certificate of Incorporation (including any Preferred Stock Designation), unless two- thirds of the Whole Board shall recommend approval, the affirmative vote of the holders of at least 75% of the voting power of all then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required for the stockholders to adopt, amend, alter or repeal the By- Laws. 24

unless the Participant's employment was terminated because of his or her (i) death. Termination of Employment. selections. Provided. The purpose of the Executive Annual Performance Plan (the "Plan") is to enhance the ability of Tim Hortons Inc. less applicable withholding taxes. if permitted pursuant to (and in accordance with) a deferred compensation plan adopted by." as opposed to age "60. 5. Generally. shall be final and binding on the Company. 2008. decisions. 2008) 1. In addition to any Awards payable under Section 4." The foregoing proviso shall expire by its terms and be void and of no further force and effect on and as of November 5. 7. including the extent to which Awards will be payable for actual performance between each level of the Performance Objectives. Notwithstanding the foregoing. delegations. -2- . the Company or any of its subsidiaries. motivate. Purpose. and (iii) the Award opportunities for each Participant. The Company shall notify each Participant of the applicable Performance Objectives for such Participant and his or her corresponding Award opportunities for each fiscal year. a schedule that indicates the Participants selected. the CEO shall determine (i) the Employees who shall be Participants during each fiscal year. However. amendments. The Committee's administration of the Plan. upon the occurrence of a Change in Control of the Company. in which event the Participant will be entitled to a pro. to decide the facts in any case arising under the Plan and to make all other determinations and to take all other actions necessary or appropriate for the proper administration of the Plan. terminations and other actions. or an agreement entered into with. and retain key employees. The CEO shall provide to the Committee. 2013. subject to the authority and discretion of the Committee. Any such award shall be paid to the applicable employee no later than the 15th day of the third month following the end of the fiscal year in which the award is determined. the CEO. participation shall be limited to those Employees selected by the CEO. and whether such Awards will be based on the Performance Objectives of the Company or a combination of the Company and one or more Operating Units. 6. where appropriate. 8. all Employees are eligible to participate in the Plan for any fiscal year. to participate in the Plan for each fiscal year in accordance with Section 4. To this end. including the delegation of such authority or power. 2. No Award for a fiscal year shall be payable to any Participant unless he or she is employed by the Company or one of its subsidiaries on the payment date for Awards payable in respect of the fiscal year. (ii) disability or (iii) retirement after attaining age 60 and the completion of 10 years of continuous service with the Company and/or its subsidiaries. a Participant may elect to defer all or a portion of any Award that will otherwise become payable in accordance with this Section. reward. As Amended and Restated on November 5. For each fiscal year. after consultation with the Committee and subject to the authority and discretion of the Committee. however. Discretionary Bonuses. if applicable. Determination of Awards. Subject to the authority and discretion of the Committee.rata portion (which shall be 100% if such termination occurs after the end of the fiscal year and prior to the payment date) of the Award otherwise payable in respect of that fiscal year. to determine the Performance Objectives of the Company and/or Operating Units. the following provisions shall apply: (i) The minimum Award payable to each Participant under Section 5 in respect of the fiscal year in which the Change in Control occurs shall be the greatest of: (A) the Award or other annual bonus paid or payable to the Participant in respect of the fiscal year prior to the year in which the Change in Control occurs. the Operating Units' financial performance for a fiscal year. approvals. The Committee shall have full authority to establish the rules and regulations relating to the Plan. (ii) whether Awards for each Participant shall be based solely upon the achievement of Performance Objectives of the Company or on a combination of the achievement of Performance Objectives for the Company and for one or more Operating Units. but no later than the 15th day of the third month following the end of such fiscal year. interpretations. and whether such Award opportunities shall be based on the Performance Objectives of the Company or based on a combination of Performance Objectives of the Company and one or more Operating Units. its stockholders and the Participants and their beneficiaries. Payment of Awards. (the "Company") and its subsidiaries to attract. the Award opportunities for such Participants. including all such rules and regulations. Change in Control. Eligible Employees. 2008 TIM HORTONS INC. for consideration in accordance with its delegated authority from the Board.Exhibit 10(a) Executive Annual Performance Plan. determinations. the Plan provides a means of rewarding participants based on the performance of the Company and/or its Operating Units. to interpret the Plan and those rules and regulations. EXECUTIVE ANNUAL PERFORMANCE PLAN (as amended and restated effective November 5. The Plan shall be administered by the Committee and the CEO as provided herein. their Award opportunities. 4. each Award to the extent earned shall be paid in a single lump sum cash payment. that for any Participant who has reached the age of 55 and the completion of 10 years of continuous service with the Company and/or its subsidiaries as of November 5. subject to the Committee's discretion as set forth in Section 2 hereof. the applicable age in (iii) above shall be "55. shall have the authority to make additional cash incentive awards to any Employees selected by the CEO in amounts determined by the CEO. to strengthen their commitment to the success of the Company and to align their interests with those of the Company's shareholders by providing additional compensation to designated key employees of the Company based on the achievement of performance objectives. Notwithstanding any provision in the Plan to the contrary. 3. Subject to the authority and discretion of the Committee. the Committee shall establish the Performance Objectives of the Company and/or Operating Units. As soon as practicable after the determination of the Company's and. Administration. the CEO shall have the full authority to determine the Participants in the Plan.

or if no beneficiary has been designated under the basic life insurance program. provide for the manner in which performance will be measured against the Performance Objectives or may adjust the Performance Objectives to reflect the impact of specified corporate transactions (such as a stock split or stock dividend). such Participant shall be entitled to receive the Award otherwise payable pursuant to the terms of the Plan in respect of that fiscal year as if he or she had remained in the employ of the Company through the payment date for Awards payable in respect of such fiscal year. Adjustments. The Committee may. A beneficiary designation under this Plan. and (C) the Award amount that would be payable to the Participant based on the Company's actual performance and achievement of applicable Performance Objectives for such fiscal year through the date of the Change in Control. If a beneficiary has been designated under this Plan and such beneficiary dies prior to receiving any payment of an Award or if such designation shall for any reason be illegal or ineffective. payment of any Award due under the Plan shall be made to the beneficiary or beneficiaries designated by the Participant under the Company's basic life insurance program. 9. (iii) If a Participant's employment is terminated by the Company and its subsidiaries without Cause prior to the date of a Change in Control but the Participant reasonably demonstrates that the termination (A) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control or (B) otherwise arose in connection with. Designation of Beneficiary. -3- . unless such Participant shall have designated a beneficiary or beneficiaries in accordance with this Section 10. Awards payable under the Plan shall be paid to the Participant's estate. accounting or tax law changes and other extraordinary or nonrecurring events. or in anticipation of. 10. signed by the Participant and received by the Benefits Department of the Company. will be effective only if it is made in writing on a form provided by the Company. at the time Performance Objectives are determined for a fiscal year. the Participant's designated beneficiary dies prior to receiving any payment of an Award or if such designation shall for any reason be illegal or ineffective. special charges. (ii) Notwithstanding anything to the contrary contained herein. or revocation of a prior beneficiary designation. such termination shall be deemed to have occurred after a Change in Control for purposes of this Plan provided a Change in Control shall actually have occurred. a Change in Control which has been threatened or proposed.(B) the Award amount that would be payable to the Participant assuming that the Company achieved the target level of the Performance Objectives for such fiscal year. in the event that following the date of a Change in Control and prior to the payment date for Awards payable in respect of the fiscal year in which the Change in Control occurs a Participant's employment is terminated by the Company and its subsidiaries without Cause or by the Participant for Good Reason. In the event of a Participant's death prior to full payment of any Award hereunder. or at any time prior to the final determination of Awards in respect of such fiscal year. Awards payable under the Plan shall be paid to the Participant's estate.

-4- . (b) A Participant's rights and interests under the Plan may not be assigned or transferred. (d) The Company shall have the right to deduct from Awards paid any taxes or other amounts required by law to be withheld. exercised by the officers and the Board or committees thereof.11. (e) Nothing contained in the Plan shall limit or affect in any manner or degree the normal and usual powers of management. to assure payment of Awards. or (v) nonrecurring earnings such as moving expenses. the Company's obligation under the Plan to pay Awards with respect to the Participant. all of which rights and powers are expressly reserved. (iii) signing bonuses or any similar bonuses. and any attempted assignment or transfer shall be null and void and shall extinguish. Amendment or Termination. and is based on salary earnings before reductions for such items as contributions under Sections 125 or 401(k) of the Code or pursuant to any nonqualified deferred compensation plan or agreement or any retirement savings plans. except as provided in Section 10. The Board may amend or terminate the Plan at any time in its discretion. to change the duties or the character of employment of any employee of the Company or any of its subsidiaries or to remove the individual from the employment of the Company or any of its subsidiaries at any time. (b) "Base Salary" shall mean the Participant's annual base salary actually paid by the Company and/or any of its subsidiaries and received by the Participant during the applicable fiscal year. however. (ii) long. 13. (a) "Award" shall mean the cash incentive award earned by a Participant under the Plan for any fiscal year. (iv) imputed income from such programs as executive life insurance. a Change in Control which has been threatened or proposed. nor any action taken hereunder. Miscellaneous Provisions (a) Neither the establishment of this Plan. however. or to make any other segregation of assets. Annual base salary does not include (i) Awards under the Plan. in the Company's sole discretion. Definitions. provided. 12. shall be construed as giving any Employee or any Participant any right to be retained in the employ of the Company or any of its subsidiaries. that the Plan may not be amended or terminated through and including the fiscal year in which a Change in Control occurs (i) at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control or (ii) otherwise in connection with. The Company shall not be required to establish any special or separate fund. that no amendment or termination of the Plan may affect any Award made under the Plan prior to that time. and provided further.term incentive awards. (c) The Plan shall be unfunded. in either case provided that a Change in Control shall actually have occurred. or in anticipation of.

(d) "Cause" shall mean the termination of a Participant's employment by reason of the Board's good faith determination that the Participant (a) willfully and continually failed to substantially perform his or her duties with the Company (other than a failure resulting from the Participant's incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to the Participant by the Board which specifically identifies the manner in which the Board believes that the Participant has not substantially performed his or her duties and such failure substantially to perform continues for at least fourteen (14) days. Notwithstanding the foregoing. the Participant's employment shall not be deemed to have been terminated for Cause unless and until (1) there shall have been delivered to the Participant a copy of a written notice setting forth that the Participant was guilty of conduct set forth above in clause (a).Control Transaction" (as hereinafter defined). Voting Securities which are acquired in a "Non. an "Employment Agreement") (including. on the Participant's part. directly or indirectly. monetarily or otherwise.Control Acquisition" shall mean an acquisition by (A) an employee benefit plan (or a trust forming a part thereof) maintained by (1) the Company or (2) any corporation or other Person of which a majority of its voting power or its voting equity securities or equity interest is owned. or (c) has otherwise materially breached the terms of his or her employment agreement with the Company. or failed to act. immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d. a voluntary termination of the Participant's employment by the Participant during the term of such Employment Agreement). (e) "CEO" shall mean the Chief Executive Officer of the Company. or (C) any Person in connection with a "Non. a "Subsidiary"). (f) "Change in Control" shall mean the occurrence during the term of the Plan of: (i) An acquisition (other than directly from the Company) of any common stock or other voting securities of the Company entitled to vote generally for the election of directors (the "Voting Securities") by any "Person" (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934. (b) or (c) of the first sentence of this definition and specifying the particulars thereof in detail. and (2) the Participant shall have been provided an opportunity to be heard by the Board (with the assistance of Participant's counsel). if applicable (each.Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. or (b) has willfully engaged in conduct which demonstrably and materially injurious to the Company. however.(c) "Board" shall mean the Board of Directors of the Company. -5- . shall be considered "willful" unless he or she has acted. with an absence of good faith and without a reasonable belief that his or her action or failure to act was in the best interest of the Company. nor failure to act. by the Company (for purposes of this definition.3 promulgated under the Exchange Act) of thirty percent (30%) or more of the then outstanding shares of the Company's common stock or the combined voting power of the Company's then outstanding Voting Securities. without limitation. as amended (the "Exchange Act")). A "Non. in determining whether a Change in Control has occurred. provided. (B) the Company or its Subsidiaries. No act.

(ii) any Subsidiary. or (C) The sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary). provided.thirds of the Incumbent Board. (2) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such Merger constitute at least two. -6- . or (iii) The consummation of: (A) A merger. such new director shall. as of the date the Board adopted the Plan. for purposes of this Plan. that if the election. provided further. cease for any reason to constitute at least seventy percent (70%) of the members of the Board. or (iv) any Person who.Control Transaction" shall mean a Merger where: (1) the stockholders of the Company immediately before such Merger own directly or indirectly immediately following such Merger at least seventy percent (70%) of the combined voting power of the outstanding voting securities of the corporation resulting from such Merger (the "Surviving Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before such Merger. of any new director was approved by a vote of at least two.Control Transaction.(ii) The individuals who. and (3) no Person other than (i) the Company. unless such Merger is a "Non. or nomination for election by the Company's common stockholders. be considered as a member of the Incumbent Board. that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of an actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Proxy Contest.thirds of the members of the board of directors of the Surviving Corporation. has Beneficial Ownership of thirty percent (30%) or more of the combined voting power of the Surviving Corporation's then outstanding voting securities or its common stock. immediately prior to such Merger had Beneficial Ownership of thirty percent (30%) or more of the then outstanding Voting Securities or common stock of the Company. consolidation or reorganization with or into the Company or in which securities of the Company are issued (a "Merger")." A "Non. (B) A complete liquidation or dissolution of the Company. however. or a corporation beneficially directly or indirectly owning a majority of the Voting Securities of the Surviving Corporation. (iii) any employee benefit plan (or any trust forming a part thereof) that immediately prior to such Merger was maintained by the Company or any Subsidiary. however. are members of the Board (the "Incumbent Board").

or a failure to increase Participant's Base Salary as of his or her established annual salary review date in any calendar year by a percentage at least as great as the annual increase in the Consumer Price Index for All Items most recently published by Statistics Canada prior to such salary review date. for Cause. or any removal of the Participant from or failure to reappoint or reelect him or her to any of such positions. -7- . (j) "Good Reason" shall mean the occurrence after a Change in Control of any of the following events or conditions without the Participant's express written consent: (i) a change in the Participant's status. position or responsibilities (including reporting responsibilities) which. by reducing the number of shares of common stock or Voting Securities then outstanding. position or responsibilities as in effect immediately prior thereto. the assignment to the Participant of any duties or responsibilities which. title. title. increases the proportional number of shares Beneficially Owned by the Subject Persons. as amended. in the Participant's reasonable judgment.kilometer radius from the Participant's business office location immediately prior to the Change in Control. the Subject Person becomes the Beneficial Owner of any additional common stock or Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person. as a result of his or her death or by the Participant other than for Good Reason. and after such share acquisition by the Company. (ii) a reduction by the Company in the Participant's Base Salary as in effect immediately prior to the Change in Control or as the same may be increased from time to time.Notwithstanding the foregoing. (i) "Employee" shall mean any employee of the Company or any of its subsidiaries. in the Participant's reasonable judgment. provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of common stock or Voting Securities by the Company. (iii) the Company's requiring the Participant to be based at any place outside a 50. a Change in Control shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the then outstanding common stock or Voting Securities as a result of the acquisition of common stock or Voting Securities by the Company which. does not represent a promotion from his or her status. position or responsibilities. then a Change in Control shall occur. are inconsistent with such status. except for reasonably required travel on Company business which is not materially greater than such travel requirements prior to the Change in Control. (h) "Committee" shall mean the Board or such other committee of the Board appointed by the Board from time to time to administer the Plan and to perform the functions set forth herein. (g) "Code" shall mean the Internal Revenue Code of 1986. title. except in connection with the termination of his or her employment for disability.

total shareholder return or any combination thereof. for any fiscal year. sale of assets or otherwise. consolidation. (l) "Participant". Performance Objectives may be expressed as a combination of Company and/or Operating Unit(s) Performance Objectives and may be absolute or relative (to prior performance or to the performance of one or more other entities or external indices) and may be expressed in terms of a progression within a specified range. or the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits or deprive the Participant of any material fringe benefit enjoyed by him or her at the time of the Change in Control. cash flow. (v) any material breach by the Company of any provision of the Participant's Employment Agreement with the Company. Company subsidiary. operating income. and (vi) the failure of the Company to notify the Participant within the 30. that the Company has obtained a satisfactory agreement from a successor or assign of the Company to assume and agree to perform the Participant's Employment Agreement with the Company. and those provided to him or her under any of the employee benefit plans in which the Participant becomes a participant. if applicable. return on invested capital. group. if any. return on assets. which may include threshold Performance Objectives. shall mean one or more financial performance objectives of the Company and/or Operating Unit(s) established by the Committee in accordance with Section 4.(iv) the failure by the Company to continue to provide the Participant with compensation and benefits substantially similar (in terms of benefit levels and/or reward opportunities) to those provided for under the Participant's Employment Agreement. (m) "Performance Objectives". -8- . target Performance Objectives and maximum Award Performance Objectives.day period following any transfer of business and assets to any other person by merger. if applicable. Performance Objectives may be expressed in terms of earnings per share. (k) "Operating Unit". subject to the authority and discretion of the Committee. for any fiscal year. product line or product line grouping for which an income statement reflecting sales and operating income is produced. revenue. shall mean a division. for any fiscal year. shall mean an Employee selected by the CEO. to participate in the Plan for such fiscal year. earnings (which may be expressed as earnings before specified items).

Vested Participants. 2009 Table of Contents Section 1 . PERSONAL SUPPLEMENTAL EXECUTIVE RETIREMENT SAVINGS PLAN EFFECTIVE JANUARY 1.Definitions Section 3 .List of Participants as of the Effective Date Appendix "B" .Establishment and Purpose Section 2 .General Provisions Section 11 . 2009 THE TDL GROUP CORP. Notional Accounts Section 7 .Acknowledgment and Direction Schedule "B" .Exhibit 10(b) Personal Supplemental Executive Retirement Savings Plan. Effective January 1.Participation Section 4 .Vested Accounts and Tax Free Savings Accounts Section 6 .Payments To Vested Accounts Section 5 .Termination and Retirement Section 8 .Total Disability Section 9 .List of Permitted Investments Schedule "A" .Tax Free Savings Account Acknowledgment and Direction 1 1 6 7 8 10 13 15 16 17 18 19 20 21 22 .Administration of the Savings Plan Section 10 .Amendment To or Termination of the Savings Plan Appendix "A" .Bonuses to Non.

01 Effective January 1. (b) in the case of a Person that is a limited partnership. "Administrative Agent" means Savings Plan.Section 1 .01 "Administration Agreement" means the agreement between the Company and the Administrative Agent to be entered into on or prior to the Effective Date relating to the Administrative Agent's responsibilities in connection with this Savings Plan. establishes The TDL Group Corp.02 2. Personal Supplemental Executive Retirement Savings Plan (the "Savings Plan"). THI and/or its Affiliates have the right to elect or appoint a majority of the trustees of such trust. the terms and conditions of which are contained in this document. THI and/or its Affiliates beneficially own. (c) in the case of a Person that is a trust where the trustees have discretionary powers in respect of the trust assets. or another financial institution selected by the Company to act as Administrative Agent for this 2. 2009. shares representing 50% or more of the votes that may be cast to elect directors of such corporation. limited partnership or trust. or associated or affiliated with.03 "Affiliate" means any Person which is subsidiary to. THI where: (a) in the case of a Person that is a corporation. directly or indirectly.Establishment and Purpose 1. directly or indirectly.02 2. THI and/or its Affiliates possess.Definitions 1. and Participating Affiliates (as defined below) with additional compensation to be saved for their retirements in accordance with and subject to the provisions and limitations of this Savings Plan. The TDL Group Corp. and (d) in the case of a Person other than a corporation. at least a majority ownership -1- . Section 2 . The purpose of the Savings Plan is to provide designated employees of The TDL Group Corp. the general partner of such limited partnership is an Affiliate of THI.

a committee thereof. directly or indirectly. THI or an Affiliate into TDL. (b) the merger or amalgamation of TDL or THI into an unaffiliated entity the effect of which is that a majority of the voting shares of TDL or THI are acquired.06 2. THI or an Affiliate.04 "Acknowledgment and Direction" means an irrevocable Acknowledgment and Direction executed by a Participant in the form attached hereto as Schedule A. "Change in Control" means: 2.interest in such Person and have the power to determine the policies and conduct of the management of such Person. or any person authorized by the Board to act on its behalf. "CEO" means the Chief Executive Officer of the Company. or (g) the acquisition of all or substantially all of the assets or voting shares of TDL.08 (a) the direct or indirect acquisition of a majority of the voting shares of TDL or THI by any unaffiliated entity after the Effective Date. by any unaffiliated entity after the Effective Date. such employer ceasing to be an Affiliate of THI for any reason whatsoever. THI or an Affiliate. 2. provided that the following events shall be deemed not to constitute a Change in Control: (d) (e) the amalgamation or merger of TDL. including the HRCC. "Business Day" means a day on which banks are open for business in the City of Toronto. "Board" means the Board of Directors of THI. THI or an Affiliate by an Affiliate. (c) the acquisition of all or substantially all of the assets of TDL or THI by any unaffiliated entity after the Effective Date. -2- . or with respect to any Participant who is and continues to be employed by a Person other than THI or TDL.07 2.05 2. (f) the dissolution of TDL. THI or an Affiliate with TDL.

2009. "Notional Account" means the notional account established by the Company or the Administrative Agent for a Non.17 2. "Person" means an individual.e. partnership. limited partnership. "Earnings" does not include stock. and their successors and assigns so long as such entities remain Affiliates.Vested Participant.11 2. For sake of greater clarity. annual bonus) received during the Plan Year from the Company. company. business trust or other -3- 2. loan company..16 2.Vested Participant pursuant to Section 6.02 but has not yet completed three years of Service.12 2. bank. "Non. joint venture.19 . "Employee" means an employee of the Company or a Participating Affiliate who is a Canadian resident for purposes of the Tax Act. "Participating Affiliate" means an Affiliate established or continued under Canadian law that has employees meeting the eligibility requirements to be able to participate in this Savings Plan.based incentives granted to Participants or disability benefits paid to a Participant under the TDL Group Benefit Program or a similar program maintained for the benefit of employees of one or more Participating Affiliates.Vested Participant" means an Employee who has satisfied the eligibility conditions in Section 3. Tax Free Savings Account or Notional Account pursuant to this Savings Plan during the Plan Year. trust company. "Effective Date" means January 1. general partnership. "Permitted Investment" means one of the investments or portfolios that is listed in Appendix B or designated by the Company and the Administrative Agent pursuant to Section 5. TDL and any Affiliate. where any action is to be taken or decision to be made. provided that.18 2. "Company" shall mean only TDL. insurance company.2. excluding special bonuses and allowances. association. "HRCC" means the Human Resources Compensation Committee. "Earnings" means the aggregate of each Participant's base salary and short.10 2.02.15 2.term incentive compensation (i. as these terms are used by the Company in the ordinary course of its business and also excluding any amount paid or credited to the Participant's Vested Account.13 2. "Participant" means both a Vested Participant and a Non.14 2. land trust.01. trust. pension fund. joint stock company.09 "Company" means THI.

28 2. the Company may. "TDL Supplemental Plan" means The TDL Group Corp. "Total Disability" (or "Totally Disabled") means a disability that qualifies a Participant for disability benefits under the TDL Group Benefit Program or a similar program maintained for the benefit of employees of one or more Participating Affiliates. or such replacement policy or policies that the Company may arrange.01. a Delaware corporation. 2.2(1) of the Tax Act. "Service" means a Participant's period of employment with the Company commencing on the Participant's date of hire.25 2.26 2. "TDL Group Benefit Program" means the TDL group benefits program G001 16072 issued by Manulife Financial. 2006. Service will not be considered to be broken by periods of absence (with or without pay).. -4- 2. "Registered Plan" means the defined contribution pension plan for the employees of TDL and certain other Canadian Affiliates registered under the Pension Benefits Act of Ontario and the Tax Act.23 2. "Savings Plan" has the meaning set forth in Section 1.22 2.29 2. established effective November 1.21 "Plan Year" means the calendar year. "TDL" means The TDL Group Corp.24 2. whether or not legal entities.. "Tax Act" means the Income Tax Act (Canada). in its sole discretion. granted by the Company in accordance with its regular and established practices or by periods of absence while benefits are being paid to the Participant under the Company's salary continuance or long term disability plan.20 2. treat such prior and current periods of employment as Service.27 2.30 . "Tax Free Savings Account" means the account established for a Vested Participant pursuant to Section 5. and its successors and assigns. For any Participant for whom a prior period of employment would be disregarded following a prior termination of such employment.organization.01 on terms acceptable to the Company that is a "qualifying arrangement" for purposes of subsection 146. a Nova Scotia unlimited liability company and its successors and assigns. as amended. and government and agency and any political subdivision thereof. Amended and Restated Supplementary Retirement Plan. "THI" means Tim Hortons Inc.

01.31 2. -5- . levies and other amounts (whether federal.02(a) thereof) was at either 6% or 8% of Earnings. any federal. local or foreign). required to be deducted and withheld and remitted to the Canada Revenue Agency. an amount equal to 10% of the Participant's Earnings. "Vested Participant" means an Employee who has satisfied: (a) the eligibility requirements of Section 3.02(a) thereof) was at 22% of Earnings. "Withholding Tax" means all taxes.03. provincial. or (b) 2. "Yearly Amount" means: 2. local or foreign governmental authority in respect of any payment paid to a Participant or his or her estate. charges. less the amount of the Company's contribution on the Participant's behalf to the Registered Plan in the 2010 Plan Year. (c) for the 2010 Plan Year of a Participant whose contribution rate for 2008 under the TDL Supplemental Plan (as determined pursuant to Section 4. less the amount of the Company's contribution on the Participant's behalf to the Registered Plan in the 2009 Plan Year. an amount equal to 15% of the Participant's Earnings.34 (a) for the 2009 Plan Year of a Participant whose contribution rate for 2008 under the TDL Supplemental Plan (as determined pursuant to Section 4.02(a) thereof) was at 22% of Earnings. and (d) in all other cases. fees.33 the eligibility requirements of Section 3. less the amount of the Company's contribution on the Participant's behalf to the Registered Plan in the applicable Plan Year. an amount equal to 18% of the Participant's Earnings. an amount equal to 12% of the Participant's Earnings. including Canada Pension Plan and Employment Insurance premiums or similar amounts.2. provincial.32 "Vested Account" means the account established for a Vested Participant pursuant to Section 5.01 on terms acceptable to the Company. less the amount of the Company's contribution on the Participant's behalf to the Registered Plan in the 2009 Plan Year. (b) for the 2009 Plan Year of a Participant whose contribution rate for 2008 under the TDL Supplemental Plan (as determined pursuant to Section 4.

provided that such Employee has completed three years of Service. or shall become a Non.Vested Participant shall become a Vested Participant on the earlier of: (a) the day that the Non. -6- . 3. in each case.Participation 3. Section 3 .02 Participants After the Effective Date Each Employee of the Company who after the Effective Date: (b) (a) is an individual who is promoted to or hired at the Vice President officer level or above for the Company or a Participating Affiliate.Vested Participant in the Savings Plan on the Effective Date.03 Becoming a Vested Participant Each Non.Vested Participant has completed three years of Service. and references to a Section or Sections means a Section or Sections in this instrument.Vested Participant in the Savings Plan on the first day of the month coincident with or next following the month in which the Employee becomes eligible for participation in the Savings Plan in accordance with this Section 3. shall become a Non. provided that. words importing the singular number include the plural and vice versa. and (c) has delivered an Acknowledgment and Direction to the Company. or who is otherwise designated as a Participant by the HRCC as eligible for participation in the Savings Plan.In this Savings Plan. the Participant has delivered a signed Acknowledgement and Direction to the Company. (b) is a member of the Registered Plan. where such Employee has not completed three years of Service. or (b) a Change of Control. Appendix A to the Savings Plan lists the Participants as of the Effective Date.01 Participants on the Effective Date Each Employee of the Company who was an active member of the TDL Supplemental Plan immediately before the Effective Date and who has delivered an Acknowledgment and Direction to the Company with effect from the Effective Date: (a) shall become a Vested Participant in the Savings Plan on the Effective Date.02. 3.

Section 4 . a Participant may direct the Company.01 Participant Contributions Subject to Section 4.03 Tax Free Savings Account In any Plan Year.03. which the Company designates as a plan or arrangement that precludes its participants from participating in the Savings Plan.Payments To Vested Accounts 4. a Participant may only make contributions to the Savings Plan out of the additional compensation paid to the Participant by the Company pursuant to this Savings Plan. the Company shall. which the Participant directs to the Participant's Vested Account or Tax Free Savings Account in accordance with the Participant's Acknowledgment and Direction and the provisions of this Savings Plan.04. in accordance with the Vested Participant's Acknowledgment and Direction and subject to Section 4.04 Other Employee Plans Notwithstanding anything to the contrary herein. to pay all or a portion of any amount that would otherwise be paid to the Participant's Vested Account pursuant to Sections 4. provided that the aggregate of all amounts paid to the Participant's Tax Free Savings Account together with any other contributions by the Participant to the Tax Free Savings Account or any other tax free savings account -7- . 4. pay the Yearly Amount.3. to the Vested Account of each Vested Participant who was actively employed as an Employee and who had not attained age 69 at the end of such Plan Year (including a Vested Participant who became a Vested Participant in that Plan Year). as agent for the Participant.03 in a Plan Year to the Participant's Tax Free Savings Account. by providing direction to the Company on the form attached hereto as Schedule B.02 Company Payments to Vested Participants Not later than 30 days after the end of each Plan Year.02 or Section 6. less applicable Withholding Taxes. wages or retirement benefits. an Employee is not eligible to participate in the Savings Plan during any period of employment in which the Employee is a participant of a plan or arrangement maintained by the Company or an Affiliate that provides additional salary. 4.

Section 5 . in accordance with the Administration Agreement.02 and 6. into which payments under Sections 4.established by the Participant in a Plan Year may not exceed the "TFSA dollar limit" in subsection 207.up of the TDL Supplemental Plan (the "Wind.03 of this Savings Plan shall be made. if desired. and that shall otherwise be subject to the terms of this Savings Plan. Any funds so deposited to the Vested Account or the Tax Free Savings Account will be subject to the provisions of this Savings Plan. the Company and the Administrative Agent may. 4.up Funds into his or her Vested Account and/or his or her Tax Free Savings Account within 30 days of the Effective Date in the manner determined by the Company.02 shall be held.02 Permitted Investments Subject to the Administration Agreement: (a) Appendix B sets forth the investments in which the Participants may invest the funds held in their Vested Accounts and Tax Free Savings Accounts ("Permitted Investments"). 5.01 Vested Participant's Account Each Vested Participant shall establish a Vested Account and. Permitted Investments acquired pursuant to Section 5.04 Contribution of TDL Supplemental Plan Balances Any Participant who was a Participant under the TDL Supplemental Plan and who received a cash distribution. on the liquidation and wind. provided that the Participant has given written notice to the Company of his or her intention to make such a deposit no later than 45 days after the Effective Date.Vested Accounts and Tax Free Savings Accounts 5. all amounts paid under this Savings Plan to a Participant's Tax Free Savings Account are contributions of the Participant and not the Company to such Tax Free Savings Account.up Funds") may deposit all or a portion of the Wind. a Tax Free Savings Account with the Administrative Agent. (b) at any time and from time to time. net of any applicable Withholding Tax. and -8- . designate one or more additional Permitted Investments.01(1) of the Tax Act for that Plan Year. For greater certainty.

(c) if a Vested Participant does not make an election with respect to the investment of the funds in his or her Vested Account and Tax Free Savings Account.02(c). unless otherwise required by the Administrative Agent.(c) the Company and the Administrative Agent may cause an investment to cease to be a Permitted Investment. any Vested Participant who holds such a Permitted Investment in his or her Vested Account and/or Tax Free Savings Account shall not be required to sell the investment because it ceases to be a Permitted Investment in accordance with this Section 5. and (d) the Company may establish rules. the Vested Participant shall be deemed to have elected a short.term interest fund.02 which.03(a) or transfer an amount invested in one Permitted Investment to another Permitted Investment by filing an election with the Administrative Agent in a manner prescribed by the Administration Agreement or which is otherwise acceptable to the Administrative Agent. 5.03 Investment Elections Subject to the Administration Agreement: (a) each Vested Participant shall have the right and obligation to designate the Permitted Investments in which the funds in his or her Vested Account and Tax Free Savings Account will be invested. provided that no such rule. is most similar to a short. however. in the opinion of the Company. regulations and procedures regarding the Permitted Investments as it deems appropriate in its sole discretion. (b) a Vested Participant may change the designation made under Section 5. regulation or procedure may be enacted if it would cause a Tax Free Savings Account to cease to be a "qualifying arrangement" within the meaning of subsection 146. "employee benefit plan" or "retirement compensation arrangement" as defined in subsection 248(1) of the Tax Act.term interest fund or the Permitted Investment that is designated under Section 5. -9- .2(1) of the Tax Act or would cause this Savings Plan to be a "salary deferral arrangement".

(c) Company Expenses: Subject to the foregoing. the Company shall. as such. in the case of the CEO. maintenance and operation of the Participant's Vested Accounts and Tax Free Savings Accounts. (b) Account Expenses: Each Participant shall be responsible for the costs and expenses relating to the establishment. maintenance and operation of the Savings Plan. and any taxes payable in respect of the Participant's Vested Account or Tax Free Savings Account. if applicable.10 - . Any such bonus will be in respect of the services rendered by such Participant during such Plan Year. provided that Withholding Taxes shall be withheld out of amounts payable to the Participants hereunder. the Company shall pay all other costs and expenses related to the establishment. and the Person making such Withholding Taxes will make any reporting in respect of such Withholding Taxes. Notional Accounts 6.Bonuses to Non.Vested Participant pursuant to this Savings Plan during any Plan Year and may further . declare a bonus effective as of the last Business Day of such Plan Year equal to the Yearly Amount to each Non.Vested Participant who was actively employed as an Employee and who had not attained age 69 at the end of such Plan Year.Vested Participant. in accordance with and subject to this Section 6. has the sole and absolute discretion whether any bonus will be declared to a Non.01 Timing of Bonus (a) Not later than 30 days after the end of each Plan Year.Vested Participants. Section 6 .5. (b) The CEO or the Board. provided that such bonus shall be subject to the provisions and limitations of this Savings Plan and. shall be recorded in the Notional Account of the Non.04 Expenses (a) Participant Taxes: Each Participant is responsible for the payment and reporting of all taxes payable in respect of amounts paid or credited to the Participant under this Savings Plan.

6.Vested Participant's employment is terminated following a period of Total Disability.04 Payments Prior to Vesting (a) Triggering Event Payments Notwithstanding any other provision herein to the contrary.Vested Participant does not report for his or her employment for any reason or does not perform to the Company's expectations. on or before the earlier of: (i) the last Business Day of the Plan Year in which the Participant becomes a Vested Participant.Vested Participant's Notional Account if the Non. less applicable Withholding Taxes.reduce the amount that would otherwise be credited to a Non. and (b) upon making the payment contemplated by Section 6.11 - .Vested Participant's employment is terminated by the Company without cause prior to the date of a Change in Control.01. if any of the following events occur during any Plan Year (each a "Triggering Event"): (i) the Non.01 or Section 8. pay to the Vested Account of a Participant the total balance in that Participant's Notional Account. (ii) the Non.Vested Participant's employment is terminated for any reason. the Company shall. after the Participant attains age 65.03(a). 6. in accordance with the Participant's Acknowledgment and Direction and subject to Section 4.02. (iii) the Non.03 Payments at Vesting (a) In addition to any payments made in accordance with Section 4. a Change of . if applicable.03. the Company shall notify the Administrative Agent. and (ii) the last Business Day of the Plan Year that is three years after the Plan Year in respect of which an amount was first recorded in the Participant's Notional Account.Vested Participant that records the aggregate of all amounts recorded to the Notional Account pursuant to Section 6.02 Notional Accounts Either the Company or the Administrative Agent shall establish and maintain in its records a Notional Account for each Non. 6. and the balance in the Participant's Notional Account shall be reduced to nil and such Notional Account shall thereupon be terminated. including retirement.

in the case of a Triggering Events other than the Triggering Event in Section 6. (iv) the Non. in the case of a Triggering Event in Section 6. no return to active employment shall be required.Vested Participant reasonably demonstrates that the termination: (A) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control.04(a)(iv). in the case of the Triggering Event in Section 6. the total balance in that Participant's Notional Account. his or her estate. notify the Administrative Agent.Vested Participant. For greater certainty. then. or in anticipation of. pay to the Non. a Change in Control which was threatened or proposed. and the Non.04(a)(ii). determine. on the last day of the first full month following the occurrence of the Triggering Event. the Company shall. less applicable Withholding Taxes.04(a)(ii). in the case of the Triggering Event in Section 6. the Company shall also. or.Vested Participant.01(a)(i) (based on the Participant's Earnings for periods of active employment). In addition to the foregoing. the Company shall also make the payment to the Participant in accordance with Section 8. as though the Participant was a Vested Participant at that time. if applicable. his or her estate.Control occurs after the termination.02 as though the Participant was a Vested Participant who was actively employed by the Company at such time. . and pay to the Non. an amount calculated in accordance with Subsection 4. or. less applicable Withholding Taxes.04(a)(iv).Vested Participant dies. on the last day of the first full month following the occurrence of the Triggering Event. provided that in the case of termination of employment due to Total Disability as described in Section 6. or (v) in such other circumstances as the HRCC may.04(a)(ii). or (B) otherwise arose in connection with. in its sole discretion. based on the Participant's Earnings for the period from the commencement of the Plan Year in which the Triggering Event occurred to the date of the Triggering Event.12 - .

(iv) the Participant dies. each Vested Participant will direct the Administrative Agent to hold the Permitted Investments in the Vested Participant's Vested Account or Tax Free Savings Account until such time as the Administrative Agent is notified by the Company that: (i) the Participant's employment was terminated for any reason. the Vested Participant may: (i) direct the Administrative Agent to sell any of the Permitted Investments held in the Vested Participant's Vested Account and/or Tax Free Savings Account.Termination and Retirement 7. . or (v) in such other circumstances as the HRCC may. (b) At any time and from time to time following the delivery of the notice described in Section 7.Vested Participant whose employment is terminated for any reason is not entitled to any payment under the Savings Plan. a Non.13 - . (ii) the Participant's employment is terminated following a period of Total Disability. determine. Section 7 . (iii) the Savings Plan is terminated.Vested Participant's Notional Account as at the date of such termination shall be reduced to nil without any payment.(b) Termination Except as otherwise provided in this Section 6. (ii) pay any or all of the money in the Vested Participant's Vested Account and/or Tax Free Savings Account to the Vested Participant or such other person as the Vested Participant may direct. in its sole discretion.01(a) in respect of a Vested Participant.04.01 Vested Participant's Accounts (a) In accordance with the Acknowledgment and Direction of the Participant. and the balance in the Non.

the Company shall. or (iv) transfer the Permitted Investments in the Tax Free Savings Account to another tax free savings account designated by the Vested Participant. as applicable. if a Vested Participant: (a) retires from employment after the Vested Participant has attained age 60 and has completed at least 10 years of Service with the Company or a Participating Affiliate. based on the Vested Participant's Earnings for the period from the commencement of the Plan Year in which such event occurred to the date of such event. or (e) dies.(iii) transfer the Permitted Investments in the Vested Participant's Vested Account to the Vested Participant or such other person as the Vested Participant may direct. or his or her estate. then. . or in anticipation of. (d) is terminated by the Company without cause prior to the date of a Change in Control. and the Vested Participant reasonably demonstrates that the termination: (A) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control.02 Additional Payments During a Plan Year Notwithstanding any other provision herein to the contrary. 7. (b) retires from employment after the Vested Participant has attained age 65. an amount that is equal to the payment calculated in accordance with Subsection 4. on the last day of the first full month following the occurrence of an event described in paragraphs 7. pay to the Vested Participant.02(a) to (e).14 - .02. or (B) otherwise arose in connection with. a Change in Control which was threatened or proposed. less Withholding Tax. (c) is terminated following a Change in Control. a Change of Control occurs after the termination.

(b) If a Vested Participant becomes Totally Disabled and their employment is terminated as a result of becoming Totally Disabled.Total Disability 8.02 or Section 4.Vested Participant's Earnings for the periods of his or her active employment with the Company during the Plan Year or Plan Years.01 based on the Non. declare a bonus to the Non.03.Vested Participant in accordance with Section 6. and the Company will pay an amount to the Participant in accordance with . based on the Vested Participant's Earnings for the periods of his or her active employment with the Company during the Plan Year or Plan Years. which shall be recorded in the Non.Vested Participant. but nonetheless performed services for at least part of such Plan Year or Plan Years. but nonetheless performed services for at least part of such Plan Year or Plan Years. and the Company will pay an amount to the Participant in accordance with Section 8.Section 8 .15 - . If a Non. pay an amount to the Vested Participant's Vested Account and/or Tax Free Savings Account in accordance with Section 4. in which the Vested Participant became or continued to be Totally Disabled. as applicable.04. then the Company shall notify the Administrative Agent in accordance with Section 6.Vested Participant became or continued to be Totally Disabled. as applicable. and (ii) in the case of a Non.01(a)(i) for periods of active employment with return to active service not required. as applicable. then the Company shall: (i) in the case of a Vested Participant.Vested Participant's Notional Account.Vested Participant becomes Totally Disabled and their employment is terminated as a result of becoming Totally Disabled.01 Total Disability (a) If a Participant becomes Totally Disabled during a Plan Year and returns to active employment with the Company during that Plan Year or a subsequent Plan Year. in which the Non.01. then the Company shall notify the Administrative Agent in accordance with Section 7.

Administration of the Savings Plan 9. amend.02 Delegation of Duties The HRCC may delegate certain duties with respect to the administration of the Savings Plan to such committee or person or persons as it may determine. The HRCC may enact such rules and regulations relating to the operation of the Savings Plan as it considers necessary for the carrying out of its provisions and may amend or revoke such rules and regulations from time to time.Section 8. in its opinion.01(a)(i) for periods of active employment (as if the Participant were a Vested Participant) with return to active service not required. suspend or terminate this Savings Plan with respect to any Participant who becomes a nonresident of Canada for purposes of the Tax Act or who. is subject to the taxation laws of a country other than Canada. including without limitation Section 409A of the Internal Revenue Code of 1986. on amounts paid or credited in accordance with this Savings Plan. and all decisions of the HRCC in connection with the administration of the Savings Plan shall be final and binding upon each Participant. (b) This Savings Plan is intended for Participants who are residents of Canada for purposes of the Tax Act and are not subject to the taxation laws of any other country on amounts paid or credited in accordance with this Savings Plan.01 Responsibility for Administration (a) The HRCC shall be responsible for the overall administration.2 of the Tax Act. Section 9 . (B) cause a Tax Free Savings Account established in connection with this Savings Plan to cease to be a "qualifying arrangement" within the meaning of subsection 146. whether or not the . The Company has the right to modify.16 - . 9. provided that any such rules and regulations and amendments thereto will not: (A) be inconsistent with the terms of this Savings Plan. or (C) cause this Savings Plan to be a "salary deferral arrangement". interpretation and application of this Savings Plan. "employee benefit plan" or "retirement compensation arrangement" as defined in subsection 248(1) of the Tax Act.

and do not confer upon the Participant.Alienation Except as otherwise provided in this Savings Plan. any right or interest in the benefit or deferred benefit that is capable of being assigned or otherwise alienated. are not capable of assignment or alienation. . 10. person or persons so determined by it to act on its behalf and to execute instruments on its behalf.04 Applications.General Provisions 10. 10. and administered in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.01 Rights of Employee Participation in this Savings Plan does not confer on the Participant any rights that the Participant did not otherwise possess as an Employee. or election under the Savings Plan shall be made. in such manner as the Company may determine. given. except to such benefits as have specifically accrued to the Participant under the terms of the Savings Plan. as the case may be. or communicated. construed. Nothing contained in the Savings Plan shall be deemed to give the Participant the right to be retained in the employ of the Company or to interfere with the right of the Company to discharge the Participant at any time without regard to the effect that such discharge might have upon the Participant under the Savings Plan.02 Non. or any other person. 10. 10. the Participant's personal representative or dependent.member of the committee or the person or persons are employees. The Company may authorize the committee. officers or directors of the Company. Notices and Elections Any application. the records of the Company will be deemed to be conclusive as to the facts with which they are concerned.17 - .03 Records Whenever used for the purposes of the Savings Plan. notice.05 Construction The Savings Plan and all rights thereunder will be governed. all payments made under the terms of the Savings Plan are for the Participant's own use and benefit. Section 10 .

Amendment To or Termination of the Savings Plan 11. that any amount that is payable to a Participant under the Savings Plan immediately prior to the date of the amendment or termination shall not be reduced by such amendment or termination.18 - . . reserves the sole right to amend or terminate the Savings Plan in whole or in part at any time.02 Notice of Termination Should the Savings Plan be terminated at any time. the Company shall immediately notify the Administrative Agent of such termination for purposes of Section 7.03 Wind. the Vested Account and the Tax Free Savings Account of each Vested Participant are the Participant's accounts and are not to be subject to the claims of creditors of THI or the Company. For greater certainty.01 Amendment or Termination of the Savings Plan Subject to the approval of THI. For greater certainty.up (other than in a reorganization with or involving an Affiliate where all or substantially all of its assets are transferred to an Affiliate or otherwise is effected for restructuring the group of companies of which THI is a part). 11. however. but.01. the Savings Plan shall be deemed to be fully terminated and the Company shall be deemed to have been given notice of the Savings Plan's termination immediately prior to such time to the Administrative Agent. has a petition into bankruptcy filed on its behalf. 11.01.Up or Bankruptcy of the Company In the event that THI or the Company at any time files an assignment in bankruptcy. the Vested Account and the Tax Free Savings Account of each Vested Participant are the Participant's accounts and. the Company intends to maintain the Savings Plan in force indefinitely. will not otherwise affected by such termination. except as provided by Section 7. nevertheless.Section 11 . provided. is in receivership or is wound.

19 - .Appendix "A" List of Participants as of the Effective Date Participant Name .

Appendix "B" List of Permitted Investments Permitted Investments .20 - .

Dated as of the day of . the undersigned hereby directs the Company to pay any amounts payable to the undersigned under Sections 4. (the "Company") AND TO: (the "Administrative Agent") WHEREAS. . (f) This Acknowledgment and Direction is irrevocable. (a) The undersigned acknowledges that he or she will be receiving amounts under the Plan after he or she becomes Vested Participant. AND WHEREAS capitalized terms used and not otherwise defined in this Acknowledgment and Direction have the meanings given to such terms in the Plan.Schedule "A" Acknowledgment and Direction TO: THE TDL GROUP CORP.03 of the Plan.03 of the Plan to the undersigned's Vested Account. the undersigned qualifies under the Company's Personal Supplemental Executive Retirement Savings Plan (the "Plan") as a Participant (as defined in the Plan).21 - (seal) Witness . (d) The undersigned acknowledges that he or she will cause all funds held in the undersigned's Vested Account and/or Tax Free Savings Account to be invested exclusively in Permitted Investments. (c) Subject to Section 4.02 and 6. NOW THEREFORE. SIGNED. (e) The undersigned directs the Administrative Agent not to disburse any amount from his or her Vested Account and/or Tax Free Savings Account until such time as the Company gives notice to Administrative Agent in accordance with the Plan. as of the date hereof. (b) The undersigned acknowledges that the Company will deduct and withhold all applicable Withholding Taxes from amounts directed to the undersigned's Vested Account and/or Tax Free Savings Account. AND WHEREAS the undersigned has received and reviewed a copy of the Plan and desires to participate in the Plan as a Participant. and that he or she will direct such amounts be paid to the undersigned's Vested Account and/or Tax Free Savings Account in accordance with the terms of this Acknowledgment and Direction and the Plan. SEALED & DELIVERED in the presence of: } Name .

SEALED & DELIVERED in the presence of: } Name . NOW THEREFORE: (a) The undersigned directs the Company to pay $ from the Payment to the undersigned's Tax Free Savings Account. SIGNED. in accordance with Section 4.22 - (seal) Witness .04 of the Plan.Schedule "B" Tax Free Savings Account Acknowledgment and Direction TO: THE TDL GROUP CORP. . AND WHEREAS capitalized terms used and not otherwise defined in this Acknowledgment and Direction have the meanings given to such terms in the Plan. (c) The undersigned acknowledges that any taxes or other penalties that are assessed in the event that the amount paid to the undersigned's Tax Free Savings Account exceeds the "TFSA dollar limit" for such Plan Year are the sole responsibility of the undersigned and not those of the Company. the undersigned wishes to contribute $ of the Payment to the Tax Free Savings Account established for the undersigned in accordance with the Plan. the undersigned is entitled to receive $ (the "Payment") on or before December 31 of (the "Plan Year") in accordance with the Personal Supplemental Executive Retirement Savings Plan (the "Plan"). (d) This Acknowledgment and Direction is irrevocable. AND WHEREAS. Dated as of day of .01(1) of the Tax Act for the Plan Year. (b) The undersigned certifies that the amount it directs the Company to pay to the undersigned's Tax Free Savings Account together with any other contributions from any source that have been or will be made by the undersigned to the Tax Free Savings Account or any other tax free savings account established by the undersigned during the Plan Year does not and will not exceed the TFSA dollar limit as defined in subsection 207. (THE "COMPANY") AND TO: (THE "ADMINISTRATIVE AGENT") WHEREAS.

NOW THEREFORE THIS AMENDMENT WITNESSES THAT: ARTICLE 1 AMENDMENT 1. AND WHEREAS the Company has notified the BMO Trust Company (the "Trustee") that the Plan and the Retirement Compensation Trust Agreement between the Company and the Trustee dated as of September 22.1 Amendment to Section 12.02 thereof. effective December 31. ARTICLE 3 MISCELLANEOUS 3. 2008 AMENDMENT AND TERMINATION OF THE TDL GROUP CORP. AND WHEREAS capitalized terms used but not defined herein shall have the meanings given to them under the Plan. Amended and Restated Supplementary Retirement Plan (the "Plan") is effective as of the 31 st day of December.02 of the Plan. Amended and Restated Supplementary Retirement Plan. at any time or times following December 31. 2. AMENDED AND RESTATED SUPPLEMENTARY RETIREMENT PLAN This Amendment and Termination ("Amendment") of The TDL Group Corp.04 prior to December 31. will be terminated immediately following December 31.1 Amendment to Govern In the event of any inconsistency between the terms of the Plan and this Amendment. as amended by this Amendment. upon the completion of the liquidation of the securities in the Trust Fund by the investment manager for the Plan. instruct the investment manager and the Trustee to liquidate the investments held in the Trust Fund and distribute the proceeds and other cash held in the Trust Fund to the Participants in accordance with Section 12.1 Liquidation of the Trust Fund The Company shall.04. when deemed appropriate by the Company. 2008.04 or an election made by a Participant pursuant to Section 7. the terms of this Amendment shall govern. . and that the assets held in the trust are to be distributed to the Participants.3 Termination The Plan. except to the extent that it is otherwise necessary to give effect to this Amendment and to complete the liquidation of the Trust Fund.02 of the Plan is hereby amended and restated as follows: "Notwithstanding anything to the contrary in this Supplementary Plan. 2006 is to be terminated. (the "Company") desires to terminate the Plan and has determined to make the following amendments to the Plan to facilitate this termination.Exhibit 10(c) Amendment and Termination of The TDL Group Corp. For greater certainty. in full satisfaction of the Participant's entitlement to receive benefits under this Supplementary Plan. THE TDL GROUP CORP. all Participants shall be deemed to be 100% vested as of December 31. the investments held in the trust are to be sold by the investment manager for the Plan. that. and the Company shall.02 of the Plan Section 12. 2008) to receive annual instalments under Section 7. 2008. the Company will not make any contributions or other payments in respect of the Plan following December 31. the Company has the sole and absolute discretion to instruct the Trustee to distribute the Trust Fund to a Participant who may have otherwise been entitled (prior to December 31. WHEREAS The TDL Group Corp. (b) Notwithstanding anything to the contrary in the Plan and except as contemplated in this Amendment. instruct the Trustee to distribute the Trust Fund to the Participants (including Participants who became vested prior to December 31.2 Governing Law This Amendment shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. 2008 in accordance with the provisions of Section 4. 2008). 2008.2 No Further Payments or Contributions (a) The Company intends to make the contributions to the Plan for the 2008 Plan Year on or prior to December 31. 2008. when deemed appropriate by the Company. 2008. in full satisfaction of the Participants' entitlements to receive benefits under the Supplementary Plan." ARTICLE 2 TERMINATION 2. as amended. at any time or times following December 31. 2. 2008. notwithstanding anything to the contrary in Section 7. 2008. 3.

In consideration of their mutual covenants expressed herein and for other consideration described herein and as otherwise given by the parties. 2008 AMENDED AND RESTATED EMPLOYMENT AGREEMENT Between THE TDL GROUP CORP. THI. (4) Effective December 5. however. Schroeder. and the EXECUTIVE entered into an Employment Agreement (the "Original Agreement"). (9) Except as described in Section 18 to the contrary. 2006. (11) THI is a party to this Agreement for purposes of the provisions of Sections 3. that set forth certain rights and benefits for EXECUTIVE upon a change in control of EMPLOYER. 2008. (3) The EXECUTIVE is currently employed by the EMPLOYER. an indirect. and to be assured of the continuity of services of the EXECUTIVE during such time as a proposed change of control is under negotiation or otherwise pending. Restated November 5. EXECUTIVE'S Rights to Continued Employment in the event of a CHANGE IN CONTROL of THI. the effect of which would be a change of control of THI. increasing the compensation he would otherwise obtain were it not for the occurrence of events foreseen by this Agreement. a Nova Scotia unlimited liability company (the "EMPLOYER"). SCHROEDER This Amended and Restated Employment Agreement ("Agreement") is made and entered into as of November 5. including the EMPLOYER.owned subsidiary of THI. the Board of Directors of each of THI and the EMPLOYER appointed the EXECUTIVE as President and Chief Executive Officer to replace Mr. TIM HORTONS INC.by Name: Title: Name: Title: Exhibit 10(d) Amended and Restated Employment Agreement with Donald B. Administration. an individual (the "EXECUTIVE"). while otherwise substantially maintaining the underlying intent and purpose of the Original Agreement. . knowledge and experience relating to the Business. Paul House who resigned from those positions effective as of such date. 6. conditions and environment of his employment will not be unreasonably affected. (7) The EXECUTIVE. Schroeder. wholly. the EXECUTIVE occupied the role of Executive Vice President. For purposes of this Agreement a "CHANGE IN CONTROL" shall mean the occurrence of: 2. and desires to continue to be employed by the EMPLOYER. and advising whether or not he believes a potential change of control is in the best interests of THI and its shareholders. who are the parties to this Agreement. and the terms of the Original Agreement reflected the EXECUTIVE'S responsibilities and duties in such position. this Agreement is intended to be in addition to any other agreements the parties may have entered into prior to the date hereof. 4. (8) EMPLOYER desires to be assured of the continued services of the EXECUTIVE in his new roles and to afford him the job security this Agreement provides without... but has remained involved with THI and the EMPLOYER through his role as Executive Chairman. regarding the EXECUTIVE'S employment. by and between The TDL Group Corp. or may enter into prior to a CHANGE IN CONTROL as defined herein. the EMPLOYER. and the EXECUTIVE desires to be assured that. operating and franchising Tim Hortons retail outlets and carrying on ancillary activities incident thereto (the "Business"). And DONALD B. THI and the EMPLOYER desire to amend and restate the Original Agreement in its entirety to provide for certain increased benefits (described hereinbelow) in consideration of the EXECUTIVE'S new roles and responsibilities for EMPLOYER. THI and EMPLOYER further desire to be assured of the dedication of the EXECUTIVE to maximizing the value to be received by the shareholders of THI in the circumstances of negotiating or otherwise responding to a proposed change of control. the terms. (2) The EXECUTIVE possesses unique skills. a Delaware corporation ("THI") and Donald B. (10) THI and EMPLOYER desire to be assured of the objectivity of the EXECUTIVE in evaluating a potential offer. 8 and 10 through 18 hereof. are engaged in the business of owning. (6) Effective March 1. intending to be legally bound hereby. 2008. (5) At the time of the Original Agreement. 5. the parties. in the event of a substantial change in the control of THI. And TIM HORTONS INC. agree as follows: Section 1. RECITALS (1) Certain subsidiaries of THI.

however. (ii) THI or its Subsidiaries. that if the election. be considered as a member of the Incumbent Board. such new director shall. (b) The individuals who. provided.thirds of the Incumbent Board. consolidation or reorganization with or into THI or in which securities of THI are issued. provided.Control Transaction. directly or indirectly. that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Proxy Contest. immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d3 promulgated under the Exchange Act) of thirty percent (30%) or more of the then outstanding shares of THI common stock or the combined voting power of THI'S then outstanding Voting Securities.Control Transaction" (as hereinafter defined). or (c) The consummation of: (i) A merger.(a) An acquisition (other than directly from THI) of any common stock or other voting securities of THI entitled to vote generally for the election of directors (the "Voting Securities") by any "Person" (as the term "person" is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934. in determining whether a CHANGE IN CONTROL has occurred. at least seventy percent (70%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation or reorganization (the "Surviving THI") in substantially the same 3. . 2006. as of December 5. or nomination for election by THI common stockholders. of any new director was approved by a vote of at least two. a "Subsidiary"). are members of the Board of THI (the "Incumbent Board").Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a CHANGE IN CONTROL.Control Acquisition" shall mean an acquisition by (i) an employee benefit plan (or a trust forming a part thereof) for the benefit of employees of (A) THI or (B) any corporation or other Person of which a majority of its voting power or its voting equity securities or equity interest is owned. consolidation or reorganization with or into THI or in which securities of THI are issued where: (A) the stockholders of THI. as amended (the "Exchange Act")). however. Voting Securities which are acquired in a "Non. or (iii) any Person in connection with a "Non. consolidation or reorganization. however. by THI (for purposes of this definition. cease for any reason to constitute at least seventy percent (70%) of the members of the Board. own directly or indirectly immediately following such merger. A "Non. for purposes of this Plan. consolidation or reorganization is a "Non. provided further. immediately before such merger.Control Transaction" shall mean a merger. unless such merger." A "Non. consolidation or reorganization.

a CHANGE IN CONTROL shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the then outstanding common stock or Voting Securities as a result of the acquisition of common stock or Voting Securities by THI which.proportion as their ownership of the Voting Securities immediately before such merger. by reducing the number of shares of common stock or Voting Securities then outstanding. has Beneficial Ownership of thirty percent (30%) or more of the combined voting power of the Surviving THI then outstanding voting securities or its common stock. consolidation or reorganization. provided that if a CHANGE IN CONTROL would occur (but for the operation of this sentence) as a result of the acquisition of common stock or Voting Securities by THI. or (iv) any Person who. (B) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger. such termination shall be deemed to have 4. . and after such share acquisition by THI. and (C) no Person other than (i) THI. was for the benefit of employees of THI or any Subsidiary.thirds of the members of the board of directors of the Surviving THI. a CHANGE IN CONTROL which has been threatened or proposed. If the EXECUTIVE'S employment is terminated by the EMPLOYER without CAUSE prior to the date of a CHANGE IN CONTROL but the EXECUTIVE reasonably demonstrates that the termination (A) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a CHANGE IN CONTROL or (B) otherwise arose in connection with. Notwithstanding the foregoing. then a CHANGE IN CONTROL shall occur. increases the proportional number of shares Beneficially Owned by the Subject Persons. consolidation or reorganization. or (iii) The sale or other disposition of all or substantially all of the assets of THI to any Person (other than a transfer to a Subsidiary). the Subject Person becomes the Beneficial Owner of any additional common stock or Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person. (ii) A complete liquidation or dissolution of THI. consolidation or reorganization had Beneficial Ownership of thirty percent (30%) or more of the then outstanding Voting Securities or common stock of THI. consolidation or reorganization constitute at least two. (iii) any employee benefit plan (or any trust forming a part thereof) that. or a corporation beneficially directly or indirectly owning a majority of the Voting Securities of the Surviving THI. immediately prior to such merger. (ii) any Subsidiary. or in anticipation of. immediately prior to such merger.

occurred after a CHANGE IN CONTROL for purposes of this Agreement provided a CHANGE IN CONTROL shall actually have occurred. During the EMPLOYMENT TERM. the term of such employment. nature and place of such employment as described in Section 2 of this Agreement. as attached hereto. or as amended by the agreement of the parties hereafter. and consulting services in managing and directing the EMPLOYER'S business. Duties. or reasonably requested and directed from time to time by action of the EMPLOYER'S Board of Directors. or the Ontario Securities Commission in Toronto. which includes the provision of services on behalf of the EMPLOYER to other THI subsidiaries in respect of the Business. filed with the Securities and Exchange Commission of Washington. Ontario." shall commence on the date when the CHANGE IN CONTROL shall have occurred and shall end on the earlier of: (a) the second anniversary of the first to occur of: (i) the date when the occurrence of an event described in subparagraph (a) of Section 1 hereof shall be disclosed in a Schedule 13D or other such similar or successor form promulgated by the Securities and Exchange Commission or Ontario Securities Commission. administrative. Solely for purposes of this Agreement. and the EXECUTIVE shall accept employment.1 From and after the date of occurrence of a CHANGE IN CONTROL. or (c) the death of the EXECUTIVE. as may be required by the EXECUTIVE'S job description. the EMPLOYER shall cause the EXECUTIVE to be employed. and the duplicate of which is actually received by THI. or (iii) the first date on which at least thirty percent (30%) of the members of the Board of Directors of THI are not INCUMBENT DIRECTORS. referred to hereinafter as the "EMPLOYMENT TERM. Nature and Place of Employment. or (b) the date when the EMPLOYMENT TERM shall be terminated by the EMPLOYER for CAUSE or by the EXECUTIVE without GOOD REASON (as such terms are defined in Section 4 of this Agreement). 1. 5. or (ii) the date on which a transaction described in subparagraph (c) of Section 1 of this Agreement (other than a Non. financial. Section 2. with the duties. the EXECUTIVE shall provide the EMPLOYER with such executive. Canada.C. .Control Transaction) shall be consummated. D. The EXECUTIVE shall at all times faithfully.

not less favourable than such plan that EXECUTIVE was eligible for immediately prior to the date of occurrence of the CHANGE IN CONTROL. 3. the EXECUTIVE shall receive from the EMPLOYER.1 herein. his spouse and dependent children (in each case. or successors to such programs. Such duties shall be performed in Oakville. or a duly authorized committee thereof. shall review annually the performance of the EXECUTIVE. 3. the results of operations and financial condition of THI. on a periodic basis. major medical and disability income insurance coverages under insurance plans and executive physical examination plans not less favorable to the EXECUTIVE than the plans of such description in effect immediately prior to the date of occurrence of the CHANGE IN CONTROL. and consider and determine whether to accept or vary a recommendation of the EMPLOYER: (a) whether the EMPLOYER should increase EXECUTIVE'S salary. the THI Board of Directors. The EXECUTIVE shall also be eligible to participate in an annual bonus plan.industriously and to the best of his ability and talent perform all of the duties that may be required or requested of him pursuant to the express terms and conditions of this Agreement. at such other place or places as the interests. the EMPLOYER shall cause the EXECUTIVE.3 During the EMPLOYMENT TERM. and (b) whether the EXECUTIVE should be paid a bonus pursuant to the applicable bonus plan. or THI'S other subsidiaries. business and opportunities of EMPLOYER. the salary.1 During the EMPLOYMENT TERM. the EMPLOYER shall cause the EXECUTIVE to be a participant in one or more retirement income (pension) 6. if applicable) to be enrolled in and covered by group life. The EXECUTIVE shall also be entitled to all rights afforded him under the terms of any outstanding stock options granted him by THI and all incentive compensation and deferred compensation programs maintained by the EMPLOYER in which the EXECUTIVE was entitled to participate immediately preceding the CHANGE IN CONTROL. subject to annual review in the normal course of business as described in subsections 3. with input from the Executive Chairman. together with prevailing economic conditions and other factors. Ontario and. . 3. hospitalization. Remuneration during the EMPLOYMENT TERM. to the extent this role remains occupied.2 During the EMPLOYMENT TERM. shall reasonably require. Section 3. Such salary shall be paid to the EXECUTIVE on the same days of each month as the EMPLOYER pays its other employees. benefits and perquisites being paid to or afforded him immediately prior to the date of occurrence of the CHANGE IN CONTROL. During the EMPLOYMENT TERM. needs. which shall be reported to THI by the EMPLOYER.

The EMPLOYER may terminate the EXECUTIVE'S employment under this Agreement for "CAUSE. above. or an amount of cash consideration sufficient to fund or purchase an equivalent benefit. subject to the approval of the THI Board of Directors. including any years for which he is entitled to payment under Section 3 during the EMPLOYMENT TERM. the EMPLOYER shall cause reimbursement to be paid promptly to the EXECUTIVE for all expenses reasonably incurred by him in connection with performing his duties pursuant hereto. or any other affiliate or subsidiary or THI. The EXECUTIVE'S employment hereunder may be terminated during the EMPLOYMENT TERM under the following circumstances: 4. with an absence of good faith and without a reasonable belief that his action or failure to act was in the best interest of the EMPLOYER and THI. that the EXECUTIVE (a) willfully and continually failed to substantially perform his duties with the EMPLOYER (other than a failure resulting from the EXECUTIVE'S incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to the EXECUTIVE by the EMPLOYER. with the prior approval of the THI Board of Directors. 3. Termination of Employment of the EXECUTIVE during the EMPLOYMENT TERM.4 During the EMPLOYMENT TERM. Notwithstanding the foregoing. 3. shall be considered "willful" unless he has acted.5 During the EMPLOYMENT TERM.3. the EXECUTIVE'S employment shall not be 7. a voluntary termination of the EXECUTIVE'S employment by the EXECUTIVE during the EMPLOYMENT TERM).1 Cause. Section 4. or failed to act. nor failure to act. above. monetarily or otherwise.plans which afford participation and benefits to the EXECUTIVE on a basis not less favorable to the EXECUTIVE than the plans of such description in effect immediately prior to the date of occurrence of the CHANGE IN CONTROL. then the EMPLOYER shall make available to the EXECUTIVE an equivalent benefit. or (c) has otherwise materially breached this Agreement (including. No act. in the event that the insurance and physical examination plan benefits required by paragraph 3. on the EXECUTIVE'S part. computed as if he had received a full year of service (for vesting and benefit purposes) for each of his years of service with EMPLOYER. are not actually available to the EXECUTIVE under the terms of the plan(s) or applicable law. which specifically identifies the manner in which the EMPLOYER believes that the EXECUTIVE has not substantially performed his duties and such failure substantially to perform continues for at least fourteen (14) days. or (b) has willfully engaged in conduct which is demonstrably and materially injurious to the EMPLOYER or THI. without limitation." A termination for CAUSE is a termination by reason of the good faith determination by the EMPLOYER.2. . or the retirement income (pension) plan benefits required by paragraph 3.

except in connection with the termination of his employment for DISABILITY. title. and (2) the EXECUTIVE shall have been provided an opportunity to be heard by the Board of Directors of THI (with the assistance of EXECUTIVE'S counsel). position or responsibilities. GOOD REASON shall mean the occurrence after a CHANGE IN CONTROL of any of the events or conditions described in Subsections (1) through (5) hereof without the EXECUTIVE'S express written consent: (1) a change in the EXECUTIVE'S status. or on behalf of another subsidiary of THI (or its successor's) business (or the business of any successor to THI as the controlling voting shareholder (whether direct or indirect) of the EMPLOYER) which is not materially greater than such travel requirements prior to the CHANGE IN CONTROL. position or responsibilities as in effect immediately prior thereto." For purposes of this Agreement. title. except for reasonably required travel on the EMPLOYER'S behalf. in the EXECUTIVE'S reasonable judgment. CAUSE. or by the EXECUTIVE other than for GOOD REASON. or any removal of the EXECUTIVE from or failure to reappoint or reelect him to any of such positions. in the EXECUTIVE'S reasonable judgment. the assignment to the EXECUTIVE of any duties or responsibilities which. does not represent a promotion from his status. (2) a reduction by the EMPLOYER in the EXECUTIVE'S base salary as in effect immediately prior to the CHANGE IN CONTROL or as the same may be increased from time to time thereafter.2 (a) Good Reason.deemed to have been terminated for CAUSE unless and until (1) there shall have been delivered to the EXECUTIVE a copy of a written notice setting forth that the EXECUTIVE was guilty of conduct set forth above in clause (a). (b) or (c) of the first sentence of this Section 4. or the taking of any action by the EMPLOYER which would directly or 8. as a result of his death. The EXECUTIVE may terminate his employment for "GOOD REASON. 4. are inconsistent with such status. (3) the EMPLOYER requiring the EXECUTIVE to be based at any place outside a 50 kilometer radius from the EXECUTIVE'S business office location immediately prior to the CHANGE IN CONTROL. title. (4) the failure by the EMPLOYER to continue to provide the EXECUTIVE with the compensation and benefits substantially similar (in terms of benefit levels and/or reward opportunities) to those provided for under this Agreement and those provided to him under any of the employee benefit plans in which the EXECUTIVE becomes a participant.1 and specifying the particulars thereof in detail. . position or responsibilities (including reporting responsibilities) which.

the EMPLOYER shall pay the EXECUTIVE his full base salary and accrued vacation pay through the TERMINATION DATE.2 shall not be affected by his incapacity due to physical or mental illness. 4. Compensation Upon Termination. . the EXECUTIVE shall be entitled to the following benefits: 5. but which have not yet been paid to the EXECUTIVE and THI and the EMPLOYER shall have no further obligations to the EXECUTIVE under this Agreement. 4. 5. Any purported termination by the EMPLOYER or by the EXECUTIVE shall be communicated by written NOTICE OF TERMINATION to the other.3 Notice of Termination. (b) The EXECUTIVE'S right to terminate his employment pursuant to this Section 4. the EMPLOYER shall pay the EXECUTIVE'S 9. Upon termination of the EXECUTIVE'S employment during the EMPLOYMENT TERM. or (5) any material breach by THI or the EMPLOYER of any provision of this Agreement. For purposes of this Agreement. For purposes of this Agreement. a "NOTICE OF TERMINATION" shall mean a notice which indicates the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the EXECUTIVE'S employment under the provision so indicated. no such purported termination shall be effective without such NOTICE OF TERMINATION.indirectly materially reduce any of such benefits or deprive the EXECUTIVE of any material fringe benefit enjoyed by him at the time of the CHANGE IN CONTROL. if the EXECUTIVE'S employment is terminated for any reason other than due to death. plus any benefits or awards which pursuant to the terms of any compensation or benefit plan have been earned or become payable.2 If the EXECUTIVE'S employment terminates by reason of the EXECUTIVE'S death.1 If the EXECUTIVE'S employment shall be terminated by the EMPLOYER for CAUSE or by the EXECUTIVE other than for GOOD REASON. the date specified in the Notice of Termination. The EXECUTIVE'S benefits thereafter shall be determined in accordance with the EMPLOYER'S employee benefit plans and other applicable programs and practices then in effect.4 Termination Date. NOTICE OF TERMINATION must be given at least 30 days prior to the EXECUTIVE'S TERMINATION DATE (as defined below). Etc. If the EXECUTIVE'S employment is terminated by the EMPLOYER for any reason. Section 5. "TERMINATION DATE" shall mean.

In the case of the EXECUTIVE'S death. payable to the EXECUTIVE in respect of the year in which the EXECUTIVE'S TERMINATION DATE occurs under the provisions of any other bonus or incentive plan. by the EMPLOYER and/or by the EXECUTIVE.3 If the EXECUTIVE'S employment by the EMPLOYER shall be terminated (i) by the EMPLOYER other than for CAUSE or death. . or (II) the sum of (A) the average of the EXECUTIVE'S annual base salary at the rate in effect at the time NOTICE OF TERMINATION is given and the EXECUTIVE'S annual base salary for the two years prior thereto. or (ii) by the EXECUTIVE for GOOD REASON. if any. as applicable. but which have not yet been paid to the EXECUTIVE. as applicable.beneficiaries his full base salary and accrued vacation pay through the TERMINATION DATE. however. provided. that the bonus payment provided for in this Section 5. payable at the same time that such bonuses or awards are payable to other employees of the EMPLOYER. 5. and a pro rata portion of any bonus or incentive award that the EXECUTIVE would have been entitled to receive in respect of the calendar year in which the EXECUTIVE'S TERMINATION DATE occurs had he continued in employment until the end of such calendar year.3(a) shall be reduced (but not below zero) by the amount. calculated as if all performance targets under the applicable plan had been fully met at the target level by THI. the EMPLOYER shall pay to the EXECUTIVE in a single payment an amount in cash equal to three times the greater of (I) the sum of (A) the EXECUTIVE'S annual base salary at the rate in effect at the time NOTICE OF TERMINATION is given and (B) annual target bonus amount in effect at the time NOTICE OF TERMINATION is given. plus the benefits or awards which pursuant to the terms of any of the EMPLOYER'S compensation or benefit plans have been earned or become payable as if all objectives including the completion of the award cycle thereunder had been met. (b) as severance pay and in lieu of any further salary for periods subsequent to the TERMINATION DATE. but which have not yet been paid to the EXECUTIVE and a pro rata portion of any bonus or incentive award that the EXECUTIVE would have been entitled to receive in respect of the calendar year in which the EXECUTIVE'S TERMINATION DATE occurs had he continued in employment until the end of such calendar year. and (B) the average of the annual target 10. plus any benefits or awards which pursuant to the terms of any compensation or benefit plan have been earned or become payable. the EXECUTIVE'S beneficiaries' benefits shall be determined in accordance with the EMPLOYER'S employee benefit plans and other applicable programs and practices then in effect. then the EXECUTIVE shall be entitled to the benefits provided below: (a) the EMPLOYER shall pay the EXECUTIVE his full base salary and accrued vacation pay through the TERMINATION DATE.

dental and hospitalization benefits which were being provided to the EXECUTIVE at the time NOTICE OF TERMINATION is given. in terms of amounts and deductibles and costs to him. the base salary of the EXECUTIVE over this period shall be equal to his base salary in effect at the TERMINATION DATE. if any. and the employee contribution rate of the EXECUTIVE under the registered pension plan shall be equal to the contribution rate in effect at the TERMINATION DATE. (c) as additional severance. had they been available under the same terms and conditions and the EMPLOYER benefit plans. . programs or practices following the EXECUTIVE'S termination of employment. the EMPLOYER shall pay to the EXECUTIVE in a single payment an amount equal to the present value of the employer contributions the EXECUTIVE would have accrued under the EMPLOYER'S registered pension plan and supplemental plan. than the coverage provided the EXECUTIVE under the EMPLOYER'S plans providing such benefits at the time NOTICE OF TERMINATION is given. in which case the EMPLOYER may reduce the coverage of any benefits it is required to provide the EXECUTIVE hereunder as long as the aggregate coverage of the combined benefit plans is no less favorable to the EXECUTIVE in terms of amounts and deductibles and costs to him. this paragraph (d) shall not be interpreted so as to limit any benefits to which the EXECUTIVE or his dependents may be entitled under any of the EMPLOYER'S employee benefit plans. The benefits provided in this Section 5.3(d) shall be no less favorable to the EXECUTIVE. the present value of the cost of such benefits. the EMPLOYER shall pay to the EXECUTIVE a monthly allowance equal to a predetermined 11. and net of any required contribution by the EXECUTIVE. Present values shall be determined using a discount rate equal to the interest rate recommended by the Canadian Institute of Actuaries for the computation of transfer values from a registered pension plan. medical.bonus amount in effect at the time NOTICE OF TERMINATION is given and the EXECUTIVE'S annual target bonus amount for the two years prior thereto. (d) for the three years following the TERMINATION DATE. in a lump sum. if he had remained an employee for three years following the TERMINATION DATE. the EMPLOYER shall at its expense continue on behalf of the EXECUTIVE and his dependents and beneficiaries the life insurance.3(d) are not available to EXECUTIVE as a result of EXECUTIVE not being employed by the EMPLOYER. For purposes of this determination. the EMPLOYER shall pay. Except as expressly set forth above. The EMPLOYER'S obligation hereunder with respect to the foregoing benefits shall be limited to the extent that the EXECUTIVE obtains any such benefits pursuant to a subsequent employer's benefit plans. (e) for the three years following the TERMINATION DATE. Where such benefits as contemplated in this section 5. disability. than the coverage which would be provided hereunder by the EMPLOYER to the EXECUTIVE at the time the NOTICE OF TERMINATION is given.

or representative. Effect of a CHANGE IN CONTROL. director. or other equity award granted by THI to the EXECUTIVE. shall become fully vested and exercisable. any business or enterprise conducting a quick service restaurant business in the United States or Canada. The EXECUTIVE shall return the car being used by such EXECUTIVE to the EMPLOYER upon the TERMINATION DATE. and (b) any restrictions remaining at that time on any stock awarded to the EXECUTIVE by THI shall lapse. defending or disputing the basis for any such termination of employment). gas. (b) and (c) shall be paid within ten days after the EXECUTIVE'S TERMINATION DATE. officer. employee.5 The EXECUTIVE shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise and no such payment. except as otherwise set forth in Section 5. shall be offset or reduced by the amount of any compensation or benefits provided to the EXECUTIVE in any subsequent employment. maintenance and insurance for the grade level of the EXECUTIVE.appealable order of a court of competent jurisdiction or through a properly conducted arbitration proceeding.1 At all times during the EMPLOYMENT TERM while the EXECUTIVE is employed by the EMPLOYER. 5. the EXECUTIVE will not participate as a partner. to be the prevailing party in any claim. other than a business or 12. if any. evidence and counsel) incurred in good faith by the EXECUTIVE as a result of (a) the termination of the EXECUTIVE'S employment by the EMPLOYER or by the EXECUTIVE for GOOD REASON (including all such fees and expenses. Section 8.1. Section 7. joint venturer. or have any direct financial interest in.4 The amounts provided for in Sections 5. (a) any options to purchase shares of common stock of THI and any stock appreciation rights or restricted stock units. that such payments by EMPLOYER of reasonable legal fees and related expenses of EXECUTIVE shall be required only to the extent that the EXECUTIVE is determined.2 and 5. Upon the occurrence of any CHANGE IN CONTROL. established by the EMPLOYER from time to time. dispute or action relating to matters described in items (a) or (b) above.monthly amount for the car payment. Fees and Expenses. to replace the benefit of the car being used by the EXECUTIVE prior to the TERMINATION DATE. or (b) the EXECUTIVE seeking to obtain or enforce any right or benefit provided by this Agreement or by any other plan or arrangement maintained by the EMPLOYER under which the EXECUTIVE is or may be entitled to receive benefits in accordance with the terms hereof. which are not yet fully vested and exercisable. 5. . The EMPLOYER shall pay all reasonable legal fees and related expenses (including the costs of experts.3(d) hereof. Notwithstanding anything to the contrary in this Agreement: 8. incurred in contesting. 5. Section 6. by non. Protection of Business. however.3(a). provided.

disclose. recipes. THI or any of its subsidiaries from a violation by the EXECUTIVE of the provisions of this Section 8) that there would be no adequate remedy at law for any breach by the EXECUTIVE of any such restriction. or any affiliated person. 8. resulting to the EMPLOYER. that the ownership by EXECUTIVE of securities of a public corporation shall not be a violation of this subparagraph so long as (a) the EXECUTIVE does not own. business practices. and to the extent. or his/her designee. 8. directly or indirectly. any trades in the securities of THI of which the EXECUTIVE is the legal or beneficial owner. franchises or other information known to the EXECUTIVE to be considered by the EMPLOYER. methods of operation. policies. or any securities of any successor of THI following a CHANGE IN CONTROL. The EXECUTIVE may not effectuate trades where the Senior Attorney or his/her designee has not provided a permissive trading recommendation. directly or indirectly. the businesses of the EMPLOYER and any affiliated person. provided. It is the EXECUTIVE'S obligation and responsibility to comply with all applicable securities laws. finances. without limitation. including. corporation. more than five percent (5%) of any class of the securities of such corporation. firm. it being agreed (in view of the general practical impossibility of determining by computation or legal proof of the exact amount of damages. any trade secrets or other information which the EXECUTIVE may have obtained during the course of his employment by the EMPLOYER in respect of any matters affecting or relating to the quick service restaurant business and/or. . or any affiliated person to be confidential information. applicable. if any. any of their plans.enterprise engaged in operating restaurants under a franchise granted by the EMPLOYER. THI or any of its subsidiaries by an action for an injunction. Securities Exchange Act of 1934 for so long as.4 The restrictions on competition and other restrictions imposed upon the EXECUTIVE by this Section 8 may be enforced by the EMPLOYER. partnership.S. and (b) the value of such securities does not exceed ten percent (10%) of the net worth of the EXECUTIVE. including but not limited to the reporting requirements of Section 16 of the U.2 The EXECUTIVE will not at any time (during or after the expiration of the EMPLOYMENT TERM) divulge. 8. 13.3 Notwithstanding anything to the contrary contained in this Agreement. in particular. the EXECUTIVE shall be required to pre.clear with the senior attorney in THI's securities practice group ("Senior Attorney"). and provided further that ownership by EXECUTIVE of securities of THI or any successor to THI by merger or other form of transaction contemplated by subparagraph (a) or (c) of Section 1 hereof shall not be a violation of this subparagraph. for a period of 12 months following the TERMINATION DATE. reveal or communicate to any person. joint venture or other entity.

if not: Chief Financial Officer The TDL Group Corp. or Canadian Mail (as applicable). filing and other requirements in respect of such payments. 14. which notices or communications must be in writing. addressed as follows: 9. This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario. Notices and Payments.Section 9. . ON L6K 2Y1 With a copy to: Secretary The TDL Group Corp. Governing Law. or mailed by first class mail. Any payment required or permitted to be made or given to the EXECUTIVE pursuant to this Agreement shall be subject to the withholding and other requirements of applicable laws. to the party designating such new address. addressed and mailed as provided above.S. All payments required or permitted to be made under the provisions of this Agreement. Any payment. Payroll Taxes. and for the giving of notices or other communications required or permitted to be given. shall be deemed to have been given if delivered by hand. shall promptly satisfy all such requirements. if applicable. Section 11. 874 Sinclair Road Oakville.1 if to the EMPLOYER. and all notices and other communications required or permitted to be given or delivered under this Agreement to the EMPLOYER or to the EXECUTIVE. notice or other communication required or permitted to be given in accordance with this Agreement shall be deemed to have been given if and when placed in the U. to: Executive Chairman. ON L6K 2Y1 9. 874 Sinclair Road Oakville. Section 10. to: ____________________ ____________________ ____________________ The EMPLOYER or the EXECUTIVE may. and to the deduction requirements of any benefit plan maintained by the EMPLOYER in which the EXECUTIVE is a participant. and the EMPLOYER or THI. designate a different address for making payments required to be made. and to all reporting. as applicable. by notice given to the others from time to time. or.2 if to EXECUTIVE.

all of which other provisions shall remain in full force and effect. one of which would render the provision enforceable and other or others of which would render the provision unenforceable. that the rights of the EXECUTIVE under this Agreement may be assigned only to his personal representative or by will or pursuant to applicable laws of descent and distribution. consolidation. Duplicate Originals. the EMPLOYER and the EXECUTIVE that if any provision of this Agreement is susceptible of two or more constructions. if applicable. taken together. must transfer its obligations hereunder to such other person and such other person must accept such transfer and assume the obligations of the EMPLOYER. Section 14. and of THI. limit. THI or the EMPLOYER shall notify the EXECUTIVE in writing within thirty (30) days following any transfer of business and assets that the transferee has accepted the transfer and assumption of the EMPLOYER'S. imposed hereby. All matters in difference between the parties in relation to this Agreement shall be referred to the arbitration of a single arbitrator if the parties 15. however. Section 15. as well as immediate. provided. if applicable. resulting in a permissible assignment and transfer of this Agreement by THI and/or the EMPLOYER. It is the intention of THI. each of which shall be deemed to be a duplicate original. obligations under this Agreement. circumstances or its antecedent may require. Arbitration. assigns) of the EXECUTIVE. explain or modify this Agreement or its interpretation. sale of assets or otherwise. as well as immediate. Section 13. but all of which.Section 12. Successors and Assigns. however. This Agreement shall inure to the benefit of and be binding upon the heirs and assigns (including successive. except in accordance with the following proviso: provided further. Severability. THI or the EMPLOYER. however. The captions contained in this Agreement are included only for convenience of reference and do not define. then such determination shall not affect any other provision of this Agreement or the application of said provision to any other person or circumstance. . shall constitute a single instrument. and of THI. Captions. If any provision of this Agreement or the application of any provision to any person or any circumstances shall be determined to be invalid or unenforceable. then the provision shall have the meaning which renders it enforceable. that the obligations of this Agreement may not be transferred by THI or the EMPLOYER. construction or meaning. successors and assigns) of THI and the EMPLOYER. When used in this Agreement. Number and Gender. as applicable. This Agreement shall inure to the benefit of and be binding upon the successors and assigns (including successive. provided. as applicable. Section 17. Section 16. that if THI or the EMPLOYER transfers to any other person substantially all of its assets and/or business by merger. This Agreement may be executed in one or more counterparts. the number and gender of each pronoun shall be construed to be such number and gender as the context.

IN WITNESS WHEREOF. The award and determination of the arbitrator or arbitrators or any two of the three arbitrators shall be binding upon the parties and their respective heirs. obligations. Schroeder. or as the parties may otherwise agree in writing. and agree that (i) this Agreement replaces and supersedes. . superseded and terminated the EXECUTIVE's prior Employment Agreement with Wendy's International. Human Resources EXECUTIVE: /s/ DONALD B.agree upon one. executors. 2006. the EXECUTIVE shall be entitled to the full benefits provided by the Agreement. Termination of Original Agreement and Wendy's Prior Agreement.off of THI from Wendy's on September 29. EMPLOYER: THE TDL GROUP CORP. THI. AEBKER Name: Jill E. the Original Agreement. understand. SCHROEDER Donald B. Such arbitration shall take place in the City of Toronto. THI. and the EMPLOYER hereby acknowledge. or the EMPLOYER shall have any further rights. By: /s/ BRIGID PELINO Name: Brigid Pelino Title: Senior Vice President. By: /s/ JILL E. the parties hereto have caused this Agreement to be executed to be effective as of the date first above written. During the pendency of such arbitration proceedings. responsibilities or duties under the Original Agreement or Wendy's Prior Agreement. otherwise to three arbitrators. the Original Agreement replaced. Aebker Title: Secretary and Associate General Counsel 16. and (iv) none of the EXECUTIVE. EXECUTIVE. that provided for rights and benefits to EXECUTIVE upon a change in control ("Wendy's Prior Agreement"). Inc. (iii) the Wendy's Prior Agreement terminated and was of no further force and effect as of the date of the spin. Section 18. in its entirety. one to be appointed by each party and a third to be chosen by the first two named before they enter upon the business of arbitration. administrators and assigns. (ii) in accordance with the terms of the Original Agreement. an individual THI: TIM HORTONS INC.

however. And TIM HORTONS INC. Inc. in the event of a substantial change in the control of THI. RECITALS (1) Certain subsidiaries of THI. 2008 AMENDED AND RESTATED EMPLOYMENT AGREEMENT Between THE TDL GROUP CORP. including the EMPLOYER. 6. acknowledges. as amended (the "Code"). 2008. this Agreement is intended to be in addition to any other agreements the parties may have entered into prior to the date hereof. a Delaware corporation ("THI") and David F. an indirect. 2008. who are the parties to this Agreement. (2) The EXECUTIVE possesses unique skills. conditions and environment of his/her employment will not be unreasonably affected. operating and franchising Tim Hortons retail outlets and carrying on ancillary activities incident thereto (the "Business"). are engaged in the business of owning. (8) THI is a party to this Agreement for purposes of the provisions of Sections 3. THI and EMPLOYER further desire to be assured of the dedication of the EXECUTIVE to maximizing the value to be received by the shareholders of THI in the circumstances of negotiating or otherwise responding to a proposed change of control. (9) Effective as of December 31. and to be assured of the continuity of services of the EXECUTIVE during such time as a proposed change of control is under negotiation or otherwise pending. (3) The EXECUTIVE is currently employed by the EMPLOYER. CLANACHAN This Agreement was originally made and entered into as of December 5. 5. effective as of December 31. in its entirety. and desires to continue to be employed by the EMPLOYER. (5) Except as described below. and advising whether or not s/he believes a potential change of control is in the best interests of THI and its shareholders. immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d3 promulgated under the Exchange Act) of thirty percent (30%) or more of the then outstanding shares of THI common stock or the combined voting power of THI's then outstanding Voting Securities. ("Wendy's") providing for certain rights and benefits upon a change in control of Wendy's ("Prior Agreement"). (6) THI and EMPLOYER desire to be assured of the objectivity of the EXECUTIVE in evaluating a potential offer. and agrees that this Agreement is made and entered into by THI and EMPLOYER as a replacement of and to supersede the Prior Agreement. (4) EMPLOYER desires to be assured of the continued services of the EXECUTIVE and to afford him/her the job security this Agreement provides without. an Ontario corporation (the "EMPLOYER"). Clanachan (Compliance with Section 409A of the Internal Revenue Code). the parties. wholly. (7) The EXECUTIVE entered into an Employment Agreement with Wendy's International. by and between The TDL Group Corp. EXECUTIVE understands. 2006. increasing the compensation s/he would otherwise obtain were it not for the occurrence of events foreseen by this Agreement. this Agreement is amended and restated to comply with the requirements of Section 409A of the Internal Revenue Code of 1986... and the EXECUTIVE desires to be assured that. regarding the EXECUTIVE'S employment.Exhibit 10(e) Amended and Restated Employment Agreement with David F. intending to be legally bound hereby. provided. an individual (the "EXECUTIVE"). EXECUTIVE'S Rights to Continued Employment in the event of a CHANGE IN CONTROL of THI. as further described in Section 18 hereof. In consideration of their mutual covenants expressed herein and for other consideration described herein and as otherwise given by the parties. Clanachan. For purposes of this Agreement a "CHANGE IN CONTROL" shall mean the occurrence of: (a) An acquisition (other than directly from THI) of any common stock or other voting securities of THI entitled to vote generally for the election of directors (the "Voting Securities") by any "Person" (as the term "person" is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934. effective December 31. knowledge and experience relating to the Business. however. 4. agree as follows: Section 1. in 2 . and is hereby amended and restated in its entirety. as amended (the "Exchange Act")). 8 and 10 through 18 hereof. TIM HORTONS INC. or may enter into prior to a CHANGE IN CONTROL as defined herein.owned subsidiary of THI. the terms. the effect of which would be a change of control of THI. And DAVID F.

Control Transaction" shall mean a merger. consolidation or reorganization with or into THI or in which securities of THI are issued." A "Non. by THI (for purposes of this definition. or (c) The consummation of: (i) A merger. unless such merger. provided further. or (iii) any Person in connection with a "Non. such new director shall. cease for any reason to constitute at least seventy percent (70%) of the members of the Board. as of December 5. of any new director was approved by a vote of at least two. however.Control Acquisition" shall mean an acquisition by (i) an employee benefit plan (or a trust forming a part thereof) for the benefit of employees of (A) THI or (B) any corporation or other Person of which a majority of its voting power or its voting equity securities or equity interest is owned. Voting Securities which are acquired in a "Non. (ii) THI or its Subsidiaries.Control Transaction. be considered as a member of the Incumbent Board. or nomination for election by THI common stockholders. a "Subsidiary").determining whether a CHANGE IN CONTROL has occurred. or a corporation beneficially directly or indirectly owning a majority of the Voting Securities of the Surviving THI.Control Transaction" (as hereinafter defined). directly or indirectly. immediately before such merger.thirds of the Incumbent Board. A "Non. provided. consolidation or reorganization. consolidation or reorganization. for purposes of this Plan.Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a CHANGE IN CONTROL. own directly or indirectly immediately following such merger. 2006. that if the election. at least seventy percent (70%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation or reorganization (the "Surviving THI") in substantially the same proportion as their ownership of the Voting Securities immediately before such merger. (B) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger. (b) The individuals who.thirds of the members of the board of directors of the Surviving THI. consolidation or reorganization. consolidation or reorganization constitute at least two. consolidation or reorganization is a "Non. that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Proxy Contest. however. consolidation or reorganization with or into THI or in which securities of THI are issued where: (A) the stockholders of THI. are members of the Board of THI (the "Incumbent Board"). and 3 .

by reducing the number of shares of common stock or Voting Securities then outstanding. consolidation or reorganization had Beneficial Ownership of thirty percent (30%) or more of the then outstanding Voting Securities or common stock of THI. nature and place of such employment as described in Section 2 of this Agreement. Notwithstanding the foregoing. the EMPLOYER shall cause the EXECUTIVE to be employed. was for the benefit of employees of THI or any Subsidiary.1 From and after the date of occurrence of a CHANGE IN CONTROL. immediately prior to such merger. increases the proportional number of shares Beneficially Owned by the Subject Persons. (ii) any Subsidiary. the term of such employment. referred to hereinafter as the "EMPLOYMENT TERM. consolidation or reorganization. (ii) A complete liquidation or dissolution of THI.(C) no Person other than (i) THI. with the duties. 1. and after such share acquisition by THI. then a CHANGE IN CONTROL shall occur. or (iii) The sale or other disposition of all or substantially all of the assets of THI to any Person (other than a transfer to a Subsidiary). immediately prior to such merger. provided that if a CHANGE IN CONTROL would occur (but for the operation of this sentence) as a result of the acquisition of common stock or Voting Securities by THI. and the EXECUTIVE shall accept employment. the Subject Person becomes the Beneficial Owner of any additional common stock or Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person. Solely for purposes of this Agreement. has Beneficial Ownership of thirty percent (30%) or more of the combined voting power of the Surviving THI then outstanding voting securities or its common stock. a CHANGE IN CONTROL shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the then outstanding common stock or Voting Securities as a result of the acquisition of common stock or Voting Securities by THI which. or (iv) any Person who. (iii) any employee benefit plan (or any trust forming a part thereof) that." shall commence on the date when the CHANGE IN CONTROL shall have occurred and shall end on the earlier of: (a) the second anniversary of the first to occur of: (i) the date when the occurrence of an event described in subparagraph (a) of Section 1 hereof shall be disclosed in a Schedule 13D or other such similar or successor form promulgated by the Securities and Exchange Commission 4 .

and the duplicate of which is actually received by THI. the EXECUTIVE is subject to the tax laws of the United States on the date of a CHANGE IN CONTROL and such CHANGE IN CONTROL also constitutes a "change in control event" under Section 409A of the Code and the Treasury Regulations promulgated thereunder (a "SECTION 409A CHANGE IN CONTROL"). Nature and Place of Employment. Ontario. and only to the extent.C. During the EMPLOYMENT TERM. D. filed with the Securities and Exchange Commission of Washington. attached hereto and made a part hereof. the EXECUTIVE shall provide the EMPLOYER with such executive. the EXECUTIVE shall be entitled to the benefits provided in Exhibit A. a CHANGE IN CONTROL which has been threatened or proposed. 1. administrative. or (ii) the date on which a transaction described in subparagraph (c) of Section 1 of this Agreement (other than a Non. and. shall not be entitled to any other payments or benefits described in Section 5 of this Agreement. financial. such termination shall be deemed to have occurred after a CHANGE IN CONTROL for purposes of this Agreement provided a CHANGE IN CONTROL shall actually have occurred. and consulting services in managing and directing the 5 .or Ontario Securities Commission. or (c) the death of the EXECUTIVE. Section 2. Canada. Duties.2 Termination Prior to a CHANGE IN CONTROL. If the EXECUTIVE'S employment is terminated by the EMPLOYER without CAUSE prior to the date of a CHANGE IN CONTROL but the EXECUTIVE reasonably demonstrates that the termination (A) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a CHANGE IN CONTROL or (B) otherwise arose in connection with. or the Ontario Securities Commission in Toronto. or (b) the date when the EMPLOYMENT TERM shall be terminated by the EMPLOYER for CAUSE or by the EXECUTIVE without GOOD REASON (as such terms are defined in Section 4 of this Agreement). then: (a) if the EXECUTIVE is not subject to the tax laws of the United States on the date of a CHANGE IN CONTROL. or in anticipation of.Control Transaction) shall be consummated. except as provided in Exhibit A. and (b) if. or (iii) the first date on which at least thirty percent (30%) of the members of the Board of Directors of THI are not INCUMBENT DIRECTORS.

or as amended by the agreement of the parties hereafter. and (b) whether the EXECUTIVE should be paid a bonus pursuant to the applicable bonus plan. at such other place or places as the interests. Such salary shall be paid to the EXECUTIVE on the same days of each month as the EMPLOYER pays its other employees. as may be required by the EXECUTIVE'S job description. or a duly authorized committee thereof. needs.EMPLOYER'S business. shall reasonably require. the salary. the THI Board of Directors. with input from the Chief Executive Officer. The EXECUTIVE shall also be entitled to all rights afforded him/her under the terms of any outstanding stock options granted him/her by THI and all incentive compensation and deferred compensation programs maintained by the EMPLOYER in which the EXECUTIVE was entitled to participate immediately preceding the CHANGE IN CONTROL. and consider and determine whether to accept or vary a recommendation of the EMPLOYER: (a) whether the EMPLOYER should increase EXECUTIVE's salary. the EXECUTIVE shall receive from the EMPLOYER. Section 3. the EMPLOYER shall cause the EXECUTIVE. 3.1 herein. shall review annually the performance of the EXECUTIVE. During the EMPLOYMENT TERM. hospitalization. industriously and to the best of his/her ability and talent perform all of the duties that may be required or requested of him/her pursuant to the express terms and conditions of this Agreement. his/her spouse and dependent children to be enrolled in and covered by group life.1 During the EMPLOYMENT TERM. together with prevailing economic conditions and other factors. or reasonably requested and directed from time to time by action of the EMPLOYER'S Board of Directors.2 During the EMPLOYMENT TERM. subject to annual review in the normal course of business as described in subsections 3. The EXECUTIVE shall at all times faithfully. as attached hereto. which includes the provision of services on behalf of the EMPLOYER to other THI subsidiaries in respect of the Business. The EXECUTIVE shall also be eligible to participate in an annual bonus plan. which shall be reported to THI by the EMPLOYER. not less favourable than such plan that EXECUTIVE was eligible for immediately prior to the date of occurrence of the CHANGE IN CONTROL. or successors to such programs. business and opportunities of EMPLOYER. Ontario and. or THI's other subsidiaries. the results of operations and financial condition of THI. Remuneration during the EMPLOYMENT TERM. Such duties shall be performed in Oakville. major medical and disability income insurance coverages under insurance plans and executive physical examination plans not less favorable to the EXECUTIVE than the plans of such description in 6 . 3. benefits and perquisites being paid to or afforded him immediately prior to the date of occurrence of the CHANGE IN CONTROL. on a periodic basis.

effect immediately prior to the date of occurrence of the CHANGE IN CONTROL. 3.3 During the EMPLOYMENT TERM, the EMPLOYER shall cause the EXECUTIVE to be a participant in one or more retirement income (pension) plans which afford participation and benefits to the EXECUTIVE on a basis not less favorable to the EXECUTIVE than the plans of such description in effect immediately prior to the date of occurrence of the CHANGE IN CONTROL. 3.4 During the EMPLOYMENT TERM, the EMPLOYER shall cause reimbursement to be paid promptly to the EXECUTIVE for all expenses reasonably incurred by him/her in connection with performing his/her duties pursuant hereto. 3.5 During the EMPLOYMENT TERM, in the event that the insurance and physical examination plan benefits required by paragraph 3.2, above, or the retirement income (pension) plan benefits required by paragraph 3.3, above, are not actually available to the EXECUTIVE under the terms of the plan(s) or applicable law, then the EMPLOYER shall make available to the EXECUTIVE an equivalent benefit, or an amount of cash consideration sufficient to fund or purchase an equivalent benefit, computed as if s/he had received a full year of service (for vesting and benefit purposes) for each of his/her years of service with EMPLOYER, or any other affiliate or subsidiary or THI, including any years for which s/he is entitled to payment under Section 3 during the EMPLOYMENT TERM. If, and only to the extent, the EXECUTIVE is subject to the tax laws of the United States at the time payments or benefits are claimed under this Agreement, any cash payment pursuant to this paragraph 3.5 shall be made in accordance with the regular payroll policies of the EMPLOYER. Section 4. Termination of Employment of the EXECUTIVE during the EMPLOYMENT TERM. The EXECUTIVE'S employment hereunder may be terminated during the EMPLOYMENT TERM under the following circumstances: 4.1 Cause. The EMPLOYER may terminate the EXECUTIVE'S employment under this Agreement for "CAUSE." A termination for CAUSE is a termination by reason of the good faith determination by the EMPLOYER, subject to the approval of the THI Board of Directors, that the EXECUTIVE (a) willfully and continually failed to substantially perform his/her duties with the EMPLOYER (other than a failure resulting from the EXECUTIVE'S incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to the EXECUTIVE by the EMPLOYER, with the prior approval of the THI Board of Directors, which specifically identifies the manner in which the EMPLOYER believes that the EXECUTIVE has not substantially performed his/her duties and such failure substantially to perform continues for at least fourteen (14) days, or (b) has willfully engaged in conduct which is demonstrably 7

and materially injurious to the EMPLOYER or THI, monetarily or otherwise, or (c) has otherwise materially breached this Agreement (including, without limitation, a voluntary termination of the EXECUTIVE'S employment by the EXECUTIVE during the EMPLOYMENT TERM). No act, nor failure to act, on the EXECUTIVE'S part, shall be considered "willful" unless s/he has acted, or failed to act, with an absence of good faith and without a reasonable belief that his/her action or failure to act was in the best interest of the EMPLOYER and THI. Notwithstanding the foregoing, the EXECUTIVE'S employment shall not be deemed to have been terminated for CAUSE unless and until (1) there shall have been delivered to the EXECUTIVE a copy of a written notice setting forth that the EXECUTIVE was guilty of conduct set forth above in clause (a), (b) or (c) of the first sentence of this Section 4.1 and specifying the particulars thereof in detail, and (2) the EXECUTIVE shall have been provided an opportunity to be heard by the Board of Directors of THI (with the assistance of EXECUTIVE'S counsel). 4.2 (a) Good Reason. The EXECUTIVE may terminate his/her employment for "GOOD REASON." For purposes of this Agreement, GOOD REASON shall mean the occurrence after a CHANGE IN CONTROL of any of the events or conditions described in Subsections (1) through (5) hereof without the EXECUTIVE'S express written consent: (1) a change in the EXECUTIVE'S status, title, position or responsibilities (including reporting responsibilities) which, in the EXECUTIVE'S reasonable judgment, does not represent a promotion from his/her status, title, position or responsibilities as in effect immediately prior thereto; the assignment to the EXECUTIVE of any duties or responsibilities which, in the EXECUTIVE'S reasonable judgment, are inconsistent with such status, title, position or responsibilities; or any removal of the EXECUTIVE from or failure to reappoint or reelect him to any of such positions, except in connection with the termination of his/her employment for DISABILITY, CAUSE, as a result of his/her death, or by the EXECUTIVE other than for GOOD REASON; (2) a reduction by the EMPLOYER in the EXECUTIVE'S base salary as in effect immediately prior to the CHANGE IN CONTROL or as the same may be increased from time to time thereafter; (3) the EMPLOYER requiring the EXECUTIVE to be based at any place outside a 50 kilometer radius from the EXECUTIVE'S business office location immediately prior to the CHANGE IN CONTROL, except for reasonably required travel on the EMPLOYER'S behalf, or on behalf of another subsidiary of THI (or its successor's) business (or the business of any successor to THI as the controlling voting shareholder (whether direct 8

or indirect) of the EMPLOYER) which is not materially greater than such travel requirements prior to the CHANGE IN CONTROL; (4) the failure by the EMPLOYER to continue to provide the EXECUTIVE with the compensation and benefits substantially similar (in terms of benefit levels and/or reward opportunities) to those provided for under this Agreement and those provided to him/her under any of the employee benefit plans in which the EXECUTIVE becomes a participant, or the taking of any action by the EMPLOYER which would directly or indirectly materially reduce any of such benefits or deprive the EXECUTIVE of any material fringe benefit enjoyed by him/her at the time of the CHANGE IN CONTROL; or (5) any material breach by THI or the EMPLOYER of any provision of this Agreement. (b) The EXECUTIVE'S right to terminate his/her employment pursuant to this Section 4.2 shall not be affected by his/her incapacity due to physical or mental illness. 4.3 Notice of Termination. Any purported termination by the EMPLOYER or by the EXECUTIVE shall be communicated by written NOTICE OF TERMINATION to the other. For purposes of this Agreement, a "NOTICE OF TERMINATION" shall mean a notice which indicates the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the EXECUTIVE'S employment under the provision so indicated. If the EXECUTIVE'S employment is terminated by the EMPLOYER for any reason, NOTICE OF TERMINATION must be given at least 30 days prior to the EXECUTIVE'S TERMINATION DATE (as defined below). For purposes of this Agreement, no such purported termination shall be effective without such NOTICE OF TERMINATION. 4.4 Termination Date, Etc. "TERMINATION DATE" shall mean the date the EXECUTIVE'S employment is terminated for any reason. Section 5. Compensation Upon Termination. For purposes of this Agreement, if, and only to the extent, the EXECUTIVE is subject to the tax laws of the United States on the TERMINATION DATE, any reference to termination of the EXECUTIVE'S employment or any form thereof shall mean a "separation from service" within the meaning of Section 409A of the Code and Treasury Regulation Section 1.409A- 1(h) with the EMPLOYER and all persons with whom the EMPLOYER would be considered a single employer under Sections 414(b) and (c) of the Code. Upon termination of the EXECUTIVE'S employment during the EMPLOYMENT TERM, the EXECUTIVE shall be entitled to the following benefits: 9

plus the benefits or awards which pursuant to the terms of any of the EMPLOYER'S compensation or benefit plans have been earned or become payable as if all objectives including the completion of the award cycle thereunder had been met.5. The EXECUTIVE'S benefits thereafter shall be determined in accordance with the EMPLOYER'S employee benefit plans and other applicable programs and practices then in effect. 5. payable 10 . as applicable.2 If the EXECUTIVE'S employment terminates by reason of the EXECUTIVE'S death. the EMPLOYER shall pay the EXECUTIVE'S beneficiaries his/her full base salary and accrued vacation pay through the TERMINATION DATE. or (ii) by the EXECUTIVE for GOOD REASON. the EMPLOYER shall pay the EXECUTIVE his/her full base salary and accrued vacation pay through the TERMINATION DATE. payable at the same time that such bonuses or awards are payable to other employees of the EMPLOYER. but which have not yet been paid to the EXECUTIVE. calculated as if all performance targets under the applicable plan had been fully met at the target level by THI. but which have not yet been paid to the EXECUTIVE and a pro rata portion of any bonus or incentive award that the EXECUTIVE would have been entitled to receive in respect of the calendar year in which the EXECUTIVE'S TERMINATION DATE occurs had s/he continued in employment until the end of such calendar year. however. and a pro rata portion of any bonus or incentive award that the EXECUTIVE would have been entitled to receive in respect of the calendar year in which the EXECUTIVE'S TERMINATION DATE occurs had s/he continued in employment until the end of such calendar year. plus any benefits or awards which pursuant to the terms of any compensation or benefit plan have been earned or become payable. if any. then the EXECUTIVE shall be entitled to the benefits provided below: (a) the EMPLOYER shall pay the EXECUTIVE his/her full base salary and accrued vacation pay through the TERMINATION DATE.3(a) shall be reduced (but not below zero) by the amount. by the EMPLOYER and/or by the EXECUTIVE. provided. that the bonus payment provided for in this Section 5. but which have not yet been paid to the EXECUTIVE and THI and the EMPLOYER shall have no further obligations to the EXECUTIVE under this Agreement. plus any benefits or awards which pursuant to the terms of any compensation or benefit plan have been earned or become payable. the EXECUTIVE'S beneficiaries' benefits shall be determined in accordance with the EMPLOYER'S employee benefit plans and other applicable programs and practices then in effect.1 If the EXECUTIVE'S employment shall be terminated by the EMPLOYER for CAUSE or by the EXECUTIVE other than for GOOD REASON. In the case of the EXECUTIVE'S death. 5.3 If the EXECUTIVE'S employment by the EMPLOYER shall be terminated (i) by the EMPLOYER other than for CAUSE or death.

if. and the employee contribution rate of the EXECUTIVE under the registered pension plan shall be equal to the contribution rate in effect at the TERMINATION DATE.1(b)(9)(v)(B) and (II) any other amounts or benefits that will be paid or provided under this Section 5. Notwithstanding the foregoing. medical. or (II) the sum of (A) the average of the EXECUTIVE'S annual base salary at the rate in effect at the time NOTICE OF TERMINATION is given and the EXECUTIVE'S annual base salary for the two years prior thereto. as applicable. disability. the EXECUTIVE is subject to the tax laws of the United States on the TERMINATION DATE. and only to the extent. the base salary of the EXECUTIVE over this period shall be equal to his/her base salary in effect at the TERMINATION DATE.3(d) with respect to health or dental coverage after completion of the time period described in Treasury Regulation Section 1. (I) any amounts or benefits that will be paid or provided under this Section 5. For purposes of this determination. The benefits provided in this Section 5. dental and hospitalization benefits which were being provided to the EXECUTIVE at the time NOTICE OF TERMINATION is given. and (B) the average of the annual target bonus amount in effect at the time NOTICE OF TERMINATION is given and the EXECUTIVE'S annual target bonus amount for the two years prior thereto. (b) as severance pay and in lieu of any further salary for periods subsequent to the TERMINATION DATE. Present values shall be determined using a discount rate equal to the interest rate recommended by the Canadian Institute of Actuaries for the computation of transfer values from a registered pension plan.3(d) shall be no less favorable to the EXECUTIVE. (d) for the two years following the TERMINATION DATE. the EMPLOYER shall at its expense continue on behalf of the EXECUTIVE and his/her dependents and beneficiaries the life insurance.3(d) shall be subject to the following requirements: (A) the amount of expenses eligible for reimbursement or benefits provided during any 11 .to the EXECUTIVE in respect of the year in which the EXECUTIVE'S TERMINATION DATE occurs under the provisions of any other bonus or incentive plan. than the coverage provided the EXECUTIVE under the EMPLOYER'S plans providing such benefits at the time NOTICE OF TERMINATION is given.409A. if any. (c) as additional severance. the EMPLOYER shall pay to the EXECUTIVE in a single payment an amount equal to the present value of the employer contributions the EXECUTIVE would have accrued under the EMPLOYER'S registered pension plan and supplemental plan. if s/he had remained an employee for two years following the TERMINATION DATE. in terms of amounts and deductibles and costs to him/her. the EMPLOYER shall pay to the EXECUTIVE in a single payment an amount in cash equal to two times the greater of (I) the sum of (A) the EXECUTIVE'S annual base salary at the rate in effect at the time NOTICE OF TERMINATION is given and (B) annual target bonus amount in effect at the time NOTICE OF TERMINATION is given.

if. and only to the extent.4 The amounts provided for in Sections 5. then such payment or benefit. established by the EMPLOYER from time to time. (B) any reimbursement of an eligible expense shall be made on or before the last day of the taxable year of the EXECUTIVE following the taxable year of the EXECUTIVE in which the expense was incurred. in a lump sum within sixty (60) days following the EXECUTIVE'S TERMINATION DATE. and the EXECUTIVE is entitled to a payment and/or a benefit under this Agreement that is required to be delayed pursuant to Section 409A(a)(2)(B)(i) of the Code.1. Where such benefits as contemplated in this section 5.taxable year of the EXECUTIVE may not affect the expenses eligible for reimbursement or benefits to be provided in any other taxable year of the EXECUTIVE. than the coverage which would be provided hereunder by the EMPLOYER to the EXECUTIVE at the time the NOTICE OF TERMINATION is given. to replace the benefit of the car being used by the EXECUTIVE prior to the TERMINATION DATE. and (C) the right to such reimbursement or benefit may not be subject to liquidation or exchange for another benefit. maintenance and insurance for the grade level of the EXECUTIVE.determined monthly amount for the car payment. Notwithstanding anything in this Agreement to the contrary. (e) for the two years following the TERMINATION DATE. and net of any required contribution by the EXECUTIVE. the present value of the cost of such benefits. the EXECUTIVE is subject to the tax laws of the United States on the TERMINATION DATE and is a "specified employee" (within the meaning of Section 409A of the Code and the Treasury Regulations promulgated thereunder and as determined under the THI'S policy for determining specified employees). had they been available under the same terms and conditions and the EMPLOYER benefit plans. in which case the EMPLOYER may reduce the coverage of any benefits it is required to provide the EXECUTIVE hereunder as long as the aggregate coverage of the combined benefit plans is no less favorable to the EXECUTIVE in terms of amounts and deductibles and costs to him/her. 5. the EMPLOYER shall pay to the EXECUTIVE in accordance with the regular payroll policies of the EMPLOYER a monthly allowance equal to a pre. (b) and (c) shall be paid within ten days after the EXECUTIVE'S TERMINATION DATE. the EMPLOYER shall pay. programs or practices following the EXECUTIVE'S termination of employment. gas.3(a). Except as expressly set forth above. on the EXECUTIVE'S TERMINATION DATE. 5.3(d) are not available to EXECUTIVE as a result of EXECUTIVE not being employed by the EMPLOYER. this paragraph (d) shall not be interpreted so as to limit any benefits to which the EXECUTIVE or his/her dependents may be entitled under any of the EMPLOYER'S employee benefit plans. The EMPLOYER'S obligation hereunder with respect to the foregoing benefits shall be limited to the extent that the EXECUTIVE obtains any such benefits pursuant to a subsequent employer's benefit plans.2 and 5. 12 . The EXECUTIVE shall return the car being used by such EXECUTIVE to the EMPLOYER upon the TERMINATION DATE.

Effect of a CHANGE IN CONTROL. or (b) the EXECUTIVE seeking to obtain or enforce any right or benefit provided by this Agreement or by any other plan or arrangement maintained by the EMPLOYER under which the EXECUTIVE is or may be entitled to receive benefits in accordance with the terms hereof. shall not be paid or provided (or begin to be paid or provided) until the first business day of the seventh month following the EXECUTIVE'S TERMINATION DATE (or. the date of the EXECUTIVE'S death). that such payments by EMPLOYER of reasonable legal fees and related expenses of EXECUTIVE shall be required only to the extent that the EXECUTIVE is determined. Upon the occurrence of any CHANGE IN CONTROL. 5. if. The EMPLOYER shall pay all reasonable legal fees and related expenses (including the costs of experts. (a) any options to purchase shares of common stock of THI and any stock appreciation rights or restricted stock units. by non. or other equity award granted by THI to the EXECUTIVE.as the case may be.3(d) hereof. defending or disputing the basis for any such termination of employment). incurred in contesting. The first payment that can be made to the EXECUTIVE following such postponement period shall include the cumulative amount of any payments or benefits that could not be paid or provided during such postponement period due to the application of Section 409A(a)(2)(B)(i) of the Code. which are not yet fully vested and exercisable. Notwithstanding anything in this Section 7 to the contrary. (II) the amount of legal fees and related expenses provided or eligible for reimbursement during any taxable year of the EXECUTIVE may not affect the expenses eligible for reimbursement or benefits to be provided in any other taxable year of the EXECUTIVE. shall become fully vested and exercisable. and only to the extent. if any. however. dispute or action relating to matters described in items (a) or (b) above. and (b) any restrictions remaining at that time on any stock awarded to the EXECUTIVE by THI shall lapse. evidence and counsel) incurred in good faith by the EXECUTIVE as a result of (a) the termination of the EXECUTIVE'S employment by the EMPLOYER or by the EXECUTIVE for GOOD REASON (including all such fees and expenses. the EXECUTIVE is subject to the tax laws of the United States on the TERMINATION DATE. (III) any reimbursement of legal fees and related expenses shall be made 13 . any legal fees and related expenses that will be provided to the EXECUTIVE under this Section 7 shall be subject to the following requirements: (I) the legal fees and related expenses eligible for reimbursement or other benefits provided must relate to a claim or controversy arising under or in connection with this Agreement within the applicable statute of limitations period. Section 6. provided. Fees and Expenses. except as otherwise set forth in Section 5. shall be offset or reduced by the amount of any compensation or benefits provided to the EXECUTIVE in any subsequent employment.5 The EXECUTIVE shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise and no such payment. if earlier.appealable order of a court of competent jurisdiction or through a properly conducted arbitration proceeding. Section 7. to be the prevailing party in any claim.

Section 8. or any securities of any successor of THI following a CHANGE IN CONTROL. and (b) the value of such securities does not exceed ten percent (10%) of the net worth of the EXECUTIVE. and provided further that ownership by EXECUTIVE of securities of THI or any successor to THI by merger or other form of transaction contemplated by subparagraph (a) or (c) of Section 1 hereof shall not be a violation of this subparagraph. 8. It is the EXECUTIVE'S obligation and responsibility to comply with all applicable securities laws.2 The EXECUTIVE will not at any time (during or after the expiration of the EMPLOYMENT TERM) divulge. 8. directly or indirectly. employee. franchises or other information known to the EXECUTIVE to be considered by the EMPLOYER. business practices. or any affiliated person to be confidential information. in particular. finances. joint venture or other entity. reveal or communicate to any person. corporation. for a period of 12 months following the TERMINATION DATE. the EXECUTIVE shall be required to pre. provided. policies. Notwithstanding anything to the contrary in this Agreement: 8. any business or enterprise conducting a quick service restaurant business in the United States or Canada. directly or indirectly. or representative. recipes. officer. more than five percent (5%) of any class of the securities of such corporation. any trade secrets or other information which the EXECUTIVE may have obtained during the course of his/her employment by the EMPLOYER in respect of any matters affecting or relating to the quick service restaurant business and/or. joint venturer. the businesses of the EMPLOYER and any affiliated person.on or before the last day of the taxable year of the EXECUTIVE following the taxable year of the EXECUTIVE in which the legal fees and related expenses were incurred. Protection of Business.1 At all times during the EMPLOYMENT TERM while the EXECUTIVE is employed by the EMPLOYER.3 Notwithstanding anything to the contrary contained in this Agreement.clear with the General Counsel of THI or his/her designee any trades in the securities of THI of which the EXECUTIVE is the legal or beneficial owner. partnership. without limitation. the EXECUTIVE will not participate as a partner. and (IV) the right to such reimbursement or benefit may not be subject to liquidation or exchange for another benefit. any of their plans. director. The EXECUTIVE may not effectuate trades where the General Counsel or his/her designee has not provided a permissive trading recommendation. that the ownership by EXECUTIVE of securities of a public corporation shall not be a violation of this subparagraph so long as (a) the EXECUTIVE does not own. or have any direct financial interest in. methods of operation. firm. disclose. including but not limited to the 14 . including. or any affiliated person. other than a business or enterprise engaged in operating restaurants under a franchise granted by the EMPLOYER.

874 Sinclair Road Oakville. and all notices and other communications required or permitted to be given or delivered under this Agreement to the EMPLOYER or to the EXECUTIVE. All payments required or permitted to be made under the provisions of this Agreement. to: David F.4 The restrictions on competition and other restrictions imposed upon the EXECUTIVE by this Section 8 may be enforced by the EMPLOYER. resulting to the EMPLOYER. or mailed by first class mail. shall be deemed to have been given if delivered by hand. which notices or communications must be in writing. 8. designate a different address for making payments required to be made.1 if to the EMPLOYER. ON L6K 2Y1 9. it being agreed (in view of the general practical impossibility of determining by computation or legal proof of the exact amount of damages. addressed as follows: 9. to the party designating such new address. THI or any of its subsidiaries by an action for an injunction. if any. Section 9. Clanachan 3085 Woodland Park Drive Burlington. Any payment.S. Securities Exchange Act of 1934 for so long as. and for the giving of notices or other communications required or permitted to be given. to: Chief Executive Officer The TDL Group Corp. Notices and Payments. applicable.reporting requirements of Section 16 of the U. ON L7N 1K8 The EMPLOYER or the EXECUTIVE may.2 if to EXECUTIVE. THI or any of its subsidiaries from a violation by the EXECUTIVE of the provisions of this Section 8) that there would be no adequate remedy at law for any breach by the EXECUTIVE of any such restriction. by notice given to the others from time to time. ON L6K 2Y1 With a copy to: General Counsel The TDL Group Corp. 874 Sinclair Road Oakville. notice or other communication required or permitted to be given in accordance with this Agreement shall be deemed to 15 . and to the extent.

and to the deduction requirements of any benefit plan maintained by the EMPLOYER in which the EXECUTIVE is a participant. the number and gender of each pronoun shall be construed to be such number and gender as the context. filing and other requirements in respect of such payments. all of which other provisions shall remain in full force and effect. This Agreement may be executed in one or more counterparts.S. that the obligations of this Agreement may not be transferred by THI or the EMPLOYER. limit. the EMPLOYER and the EXECUTIVE that if any provision of this Agreement is susceptible of two or more constructions. except in accordance with the following proviso: provided further. The captions contained in this Agreement are included only for convenience of reference and do not define. circumstances or its antecedent may require. or Canadian Mail (as applicable). addressed and mailed as provided above. Section 16. Captions. successors and assigns) of THI and the EMPLOYER. Section 13. taken together. Number and Gender. This Agreement shall inure to the benefit of and be binding upon the successors and assigns (including successive. Section 10. one of which would render the provision enforceable and other or others of which would render the provision unenforceable. each of which shall be deemed to be a duplicate original. resulting in a permissible assignment and transfer of 16 . then such determination shall not affect any other provision of this Agreement or the application of said provision to any other person or circumstance. imposed hereby. THI or the EMPLOYER. then the provision shall have the meaning which renders it enforceable. Any payment required or permitted to be made or given to the EXECUTIVE pursuant to this Agreement shall be subject to the withholding and other requirements of applicable laws. This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario. and to all reporting. Duplicate Originals. When used in this Agreement. Section 15. sale of assets or otherwise. provided. shall constitute a single instrument. as well as immediate. but all of which. construction or meaning. as applicable. however. that if THI or the EMPLOYER transfers to any other person substantially all of its assets and/or business by merger. Successors and Assigns. must transfer its obligations hereunder to such other person and such other person must accept such transfer and assume the obligations of the EMPLOYER. however. Governing Law.have been given if and when placed in the U. as applicable. Section 12. Section 14. Severability. It is the intention of THI. explain or modify this Agreement or its interpretation. Payroll Taxes. If any provision of this Agreement or the application of any provision to any person or any circumstances shall be determined to be invalid or unenforceable. shall promptly satisfy all such requirements. and the EMPLOYER or THI. consolidation. and of THI. Section 11. if applicable.

responsibilities or duties under the Prior Agreement. and agrees that: (i) this Agreement replaces and supersedes. Arbitration. which occurred on September 29. 17 . in its entirety. it is intended that any amounts payable or benefits provided under this Agreement shall comply with the provisions of Section 409A of the Code and the Treasury Regulations promulgated thereunder. and of THI. Section 19. provided. administered and operated accordingly. The award and determination of the arbitrator or arbitrators or any two of the three arbitrators shall be binding upon the parties and their respective heirs. Such arbitration shall take place in the City of Toronto. however. if applicable. assigns) of the EXECUTIVE. and this Agreement will be interpreted. otherwise to three arbitrators. This Agreement shall inure to the benefit of and be binding upon the heirs and assigns (including successive. as well as immediate. EXECUTIVE hereby acknowledges. In the event the EXECUTIVE is subject to the tax laws of the United States at the time payments or benefits are claimed under this Agreement. the EMPLOYER. as applicable. the Prior Agreement.off of THI from Wendy's. one to be appointed by each party and a third to be chosen by the first two named before they enter upon the business of arbitration. During the pendency of such arbitration proceedings.this Agreement by THI and/or the EMPLOYER. executors. or the Boards of Directors of THI and the EMPLOYER shall have any liability to the EXECUTIVE with respect to any failure to comply with the requirements of Section 409A of the Code. THI or the EMPLOYER shall notify the EXECUTIVE in writing within thirty (30) days following any transfer of business and assets that the transferee has accepted the transfer and assumption of the EMPLOYER'S. (ii) the Prior Agreement terminated and is of no further force and effect as a result of the spin. the EXECUTIVE shall be entitled to the full benefits provided by the Agreement. obligations under this Agreement. and (iii) neither the EXECUTIVE nor Wendy's shall have any further rights. understands. obligations. that the rights of the EXECUTIVE under this Agreement may be assigned only to his personal representative or by will or pursuant to applicable laws of descent and distribution. 2006. Termination of Prior Agreement. All matters in difference between the parties in relation to this Agreement shall be referred to the arbitration of a single arbitrator if the parties agree upon one. Section 409A of the Code. to the extent applicable. None of THI. or as the parties may otherwise agree in writing. Section 17. administrators and assigns. Section 18.

Clanachan. an individual THI: TIM HORTONS INC. the parties hereto have caused this Agreement to be executed to be effective as of the date first above written. By: Print Name: Title: 18 . EMPLOYER: The TDL Group Corp. By: Print Name: Title: EXECUTIVE: David F.IN WITNESS WHEREOF.

and (C) the right to such reimbursement or benefit may not be subject to liquidation or exchange for another benefit.3(a). (B) any reimbursement of an eligible expense shall be made on or before the last day of the taxable year of the EXECUTIVE following the taxable year of the EXECUTIVE in which the expense was incurred. Except as expressly set forth above. Where such benefits as 19 . The benefits provided in this subsection (b) shall be no less favorable to the EXECUTIVE. The EMPLOYER'S obligation hereunder with respect to the foregoing benefits shall be limited to the extent that the EXECUTIVE obtains any such benefits pursuant to a subsequent employer's benefit plans. in which case the EMPLOYER may reduce the coverage of any benefits it is required to provide the EXECUTIVE hereunder as long as the aggregate coverage of the combined benefit plans is no less favorable to the EXECUTIVE in terms of amounts and deductibles and costs to him/her. (b) for the two years following the SECTION 409A CHANGE IN CONTROL. then David F. dental and hospitalization benefits which were being provided to the EXECUTIVE at the time NOTICE OF TERMINATION is given. Clanachan (the "Agreement"). Clanachan (the "EXECUTIVE") shall be entitled to the benefits provided below and. than the coverage provided the EXECUTIVE under the EMPLOYER'S plans providing such benefits at the time NOTICE OF TERMINATION is given. this subsection (b) shall not be interpreted so as to limit any benefits to which the EXECUTIVE or his/her dependents may be entitled under any of the EMPLOYER'S employee benefit plans. disability. programs or practices following the EXECUTIVE'S termination of employment. Notwithstanding the foregoing. medical.2(b) of Amended and Restated Employment Agreement with David F.EXHIBIT A If the terms and conditions of this Exhibit A apply pursuant to Section 1.409A. except as provided below. (I) any amounts or benefits that will be paid or provided under this subsection (b) with respect to health or dental coverage after completion of the time period described in Treasury Regulation Section 1. of which this Exhibit A is a part. shall not be entitled to any other payments or benefits described in Section 5 of the Agreement: (a) the amounts described in Sections 5. the EMPLOYER shall at its expense continue on behalf of the EXECUTIVE and his/her dependents and beneficiaries the life insurance.1(b)(9)(v)(B) and (II) any other amounts or benefits that will be paid or provided under this subsection (b) shall be subject to the following requirements: (A) the amount of expenses eligible for reimbursement or benefits provided during any taxable year of the EXECUTIVE may not affect the expenses eligible for reimbursement or benefits to be provided in any other taxable year of the EXECUTIVE. than the coverage which would be provided hereunder by the EMPLOYER to the EXECUTIVE at the time the NOTICE OF TERMINATION is given. (b) and (c) of the Agreement shall be payable within ten days after the SECTION 409A CHANGE IN CONTROL. in terms of amounts and deductibles and costs to him/her.

Capitalized terms not otherwise defined in this Exhibit A shall have the meanings set forth in the Agreement. the EMPLOYER shall pay. The EXECUTIVE shall return the car being used by such EXECUTIVE to the EMPLOYER upon the TERMINATION DATE. the present value of the cost of such benefits. (c) for the two years following the SECTION 409A CHANGE IN CONTROL.determined monthly amount for the car payment. 20 . had they been available under the same terms and conditions and the EMPLOYER benefit plans. gas. established by the EMPLOYER from time to time. maintenance and insurance for the grade level of the EXECUTIVE.contemplated in this subsection (b) are not available to EXECUTIVE as a result of EXECUTIVE not being employed by the EMPLOYER. and net of any required contribution by the EXECUTIVE. the EMPLOYER shall pay to the EXECUTIVE in accordance with the regular payroll policies of the EMPLOYER a monthly allowance equal to a pre. to replace the benefit of the car being used by the EXECUTIVE prior to the TERMINATION DATE. in a lump sum within sixty (60) days following the Section 409A Change in Control.

. a Delaware corporation (the "Company"). the Company has adopted the Tim Hortons Inc. as amended (the "Code"). 1. The Restricted Stock Units and Dividend Equivalent Rights granted pursuant to this Agreement may not be sold. Restrictions on Transfer. Subject to Section 6 hereof. the capitalized terms used in this Agreement shall have the same definitions as set forth in the Plan. WHEREAS. a Nova Scotia Company (the "Employer") and (the "Grantee") (collectively. The Restricted Stock Units and related Dividend Equivalent Rights granted pursuant to the Award were subject to the execution and return of this Agreement by the Grantee (or the Grantee's estate. transferred or otherwise disposed of and may not be pledged or otherwise hypothecated. the Award is evidenced by this Agreement. the Parties desire to amend and restate this Agreement to comply with the requirements of Section 409A of the Internal Revenue Code of 1986. Vesting.2 of the Plan.. 2007 THIS AGREEMENT was originally made effective as of the day of . WHEREAS.. NOW. 2008. if applicable) to the Company as provided in Section 8 hereof. the Parties agree as follows: 1. The TDL Group Corp. pursuant to Section 4. 1. including. subject to adjustment upon the vesting of a portion of the underlying Restricted Stock Unit award (See Section 3). WHEREAS. inclusive. instructions. and the Committee's determination in this regard shall be final and binding upon all Parties. describes all the terms and conditions of the Award.Exhibit 10(f) Form of 2007 Amended and Restated Restricted Stock Unit Award Agreement (Canadian Version) of David Clanachan and Stephen Johnston (Compliance with Section 409A of the Internal Revenue Code) AMENDED AND RESTATED RESTRICTED STOCK UNIT AWARD AGREEMENT (Canadian Version) (with related Dividend Equivalent Rights) Tim Hortons Inc. THEREFORE. in any case at the time and in the manner set forth in Section 7 hereof. Award. the provisions of the Plan (the provisions of which are hereby incorporated by reference). 2007 (the "Date of Grant") among Tim Hortons Inc. interpretations. and WHEREAS. 3. at the option of the Company. Except as otherwise expressly set forth herein. and is subject to. Fractional Restricted Stock Units may be generated upon the automatic settlement of Dividend Equivalent Rights into additional Restricted Stock Units and upon the vesting of a portion of a Restricted Stock Unit award (see Section 3). and WHEREAS. the related Dividend Equivalent Right shall also be forfeited. 1. the restrictions on transfer. 2. the Committee has determined to grant to the Grantee on the Date of Grant an Award of Restricted Stock Units with related Dividend Equivalent Rights as provided herein to encourage the Grantee's efforts toward the continuing success of the Company and its Subsidiaries. In the event that a Restricted Stock Unit is forfeited pursuant to Section 6 hereof.1 The Company hereby grants to the Grantee in respect of employment services provided by the Grantee to the Employer in 2007 an award (the "Award") of Restricted Stock Units with an equal number of related Dividend Equivalent Rights. of this Agreement. etc. rules. Any additional Restricted Stock Units granted pursuant to this Section shall be subject to the same terms and conditions applicable to the Restricted Stock Unit to which the Dividend Equivalent Right relates. which (together with the Plan). without limitation. forfeiture. With respect to each Dividend Equivalent Right. the Company has determined that the Grantee is subject to the tax laws of the United States. including with respect to fractional interests.3 This Agreement shall be construed in accordance and consistent with. 2006 Stock Incentive Plan (the "Plan") in order to provide additional incentive to certain employees and directors of the Company and its Subsidiaries.2 Each Dividend Equivalent Right represents the right to receive the equivalent of all of the cash dividends that would be payable with respect to the Share represented by the Restricted Stock Unit to which the Dividend Equivalent Right relates. vesting and payment provisions contained in Sections 2 through 8. as well as any and all determinations. pursuant to Section 12 of the Agreement. The Human Resource and Compensation Committee ("Committee") shall determine appropriate administration for the tracking and settlement of Dividend Equivalent Rights. any amount related to cash dividends shall be converted into additional Restricted Stock Units based on the Fair Market Value of a Share on the date such dividend is made. These fractional Restricted Stock Units continue to accrue additional Dividend Equivalent Rights and accumulate until the fractional interest is of sufficient value to acquire an additional Restricted Stock Unit as a result of the settlement of future Dividend Equivalent Rights. each Restricted Stock Unit represents the right to receive. (i) one (1) Share from the Company or (ii) cash delivered to a broker to acquire one (1) share on Grantee's behalf. the "Parties") and is hereby amended and restated in its entirety effective as of . policies. of the Committee in connection with the Plan. .

Fractional Restricted Stock Units may be generated and/or adjusted upon the 2 vesting of one. 20 and . in each case within the meaning of Section 409A of the Code. For purposes of this Agreement. or (b) the commission by the Grantee of an Act of Misconduct prior to such vesting. in each case if such termination occurs on or after the Date of Grant.1(h).Except as otherwise provided in this Agreement.third ( 1/3) of the number of Restricted Stock Units granted hereunder vested on . Effect of Certain Terminations of Employment. or status as a director to. confidential information or trade secrets of the Company or any of its Subsidiaries. 20 and one. or (z) the Grantee engages in unlawful trading in the securities of the Company or any of its Subsidiaries or of another company based on information gained as a result of the Grantee's employment with. If the Grantee's employment terminates as a result of the Grantee's death. 6. In the event of a Change in Control. Effect of Change in Control.third ( 1/3 ) of the number of Restricted Stock Units granted hereunder shall vest on each of .409A. 5. See Section 7 regarding settlement of fractional Restricted Stock Units. all Restricted Stock Units which have not become vested in accordance with Section 3 or 5 hereof shall vest as of the date of such termination. at any time on or after the Date of Grant. (a) Retirement shall mean termination of employment after attaining age 60 with at least 10 years of service (as defined in the Company's qualified retirement plans) other than by death. Forfeiture of Stock Units. and (b) the word "terminate" or "termination" in connection with the Grantee's employment shall mean the Grantee's "separation from service" within the meaning of Section 409A of the Code and Treasury Regulation Section 1. one. which also constitutes a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of its assets. an "Act of Misconduct" shall mean the occurrence of one or more of the following events: (x) the Grantee uses for profit or discloses to unauthorized persons. Except as otherwise provided in this Agreement.third of the Restricted Stock Units awarded under this Agreement. 4. Retirement or becoming Disabled or if the Grantee is terminated without Cause in connection with the disposition of one or more restaurants or other assets of the Company or its Subsidiaries or the sale or disposition of a Subsidiary. For purposes of this Agreement. (y) the Grantee breaches any contract with or violates any fiduciary obligation to the Company or any of its Subsidiaries. 3 . 20 . any and all Restricted Stock Units which have not become vested in accordance with Section 3. 4 or 5 hereof shall be forfeited and shall revert to the Company upon: (a) the termination of the Grantee's employment with the Company or any Subsidiary for any reason other than those set forth in Section 4 hereof prior to such vesting. all Restricted Stock Units which have not become vested in accordance with Section 3 or 4 hereof shall vest immediately. Disability or for Cause. the Company or any of its Subsidiaries.

and the Committee's determination in this regard shall be final and binding upon all Parties. provided that if the Grantee's Restricted Stock Units that would otherwise vest pursuant to Section 4 or 5 before the Grantee 4 . and therefore. as agent for the Grantee. if applicable. notwithstanding any delay between a vesting date and the settlement date. Any of the Company's obligations in this Section may be satisfied by the Company or the Employer. The grant of the Restricted Stock Units and Dividend Equivalent Rights to the Grantee pursuant to the Award was conditional upon the Grantee's execution and return of this Agreement to the Company or its designee (including by electronic means. will ultimately be settled in cash when the Grantee sells shares through the Plan Administrator or transfers Shares out of the Plan Administrator's system. any fractional Share issued or delivered to Grantee upon settlement of a vested Restricted Stock Unit. with respect to Restricted Stock Units that become vested pursuant to Section 4 (other than as a result of the Grantee's death). if so provided) no later than . (ii) deliver cash to a broker designated by the Company who. Satisfaction of Stock Units. at its option either (i) issue treasury Shares to the Grantee (or. if the Grantee is a "specified employee" within the meaning of Section 409A of the Code as of the date the Grantee's employment terminates and settlement of such Restricted Stock Units is required to be delayed pursuant to Section 409A(a)(2)(B)(i) of the Code. the Grantee's estate). if applicable. 20 (the "Grantee Return Date"). as well as handle the process of vesting and settlement of such awards. the Company shall. 8. acknowledge and agree that fractional Shares cannot be traded in the public markets. shall purchase the appropriate number of Shares on the open market.7. "Plan Administrator" shall mean the party engaged by the Company to administratively track awards and accompanying Dividend Equivalent Rights granted under the Plan. after taking into account the reduction to the number of Shares as required under Section 10 of this Agreement. Execution of the Award. In order to satisfy Restricted Stock Units after vesting pursuant to this Agreement. As used herein. including with respect to fractional interests. Fractional Shares may be issued or delivered upon settlement of vested Restricted Stock Units. The aggregate number of Shares issued by the Company or purchased by a broker for delivery to the Grantee at any particular time pursuant to this Section 7 shall correspond to the number of Restricted Stock Units that become vested on the vesting date. or (iii) any combination of the above. Notwithstanding the foregoing. The Company will satisfy its obligations in this Section 7 on each vesting date or as soon as administratively practicable but no later than the later of (a) December 31 of the year in which the vesting date occurs or (b) sixty (60) days after such vesting date. subject to any withholding as may be required under Section 10 of this Agreement. The Committee shall determine appropriate administration for the settling of vested Restricted Stock Units. with one (1) Restricted Stock Unit corresponding to one common Share. All parties understand. then the Company shall satisfy its obligations in this Section 7 by the later of (i) the date otherwise required by this Section 7 or (ii) the first business day of the calendar month following the date which is six (6) months after the date the Grantee's employment terminates.

as the case may be. Modification of Agreement. as the case may be. This Agreement may be modified. if applicable) of treasury Shares or (ii) the delivery of cash to a broker to purchase and deliver Shares. amended. if it so determines. to be withheld by the Company or the Employer. Severability. Grantee Bound by the Plan. this requirement shall be deemed to have been satisfied immediately before such vesting. Any fractional Shares will ultimately be paid or settled in cash in accordance with Section 7 of this Agreement. Prior to (i) the delivery to the Grantee (or the Grantee's estate. and any terms or conditions may be waived. the remaining provisions of this Agreement shall not be affected by such holding and shall continue in full force in accordance with their terms. Withholding of Taxes. nor confer upon the Grantee any right to continuance of employment by the Company or any of its Subsidiaries or continuance of service as a Board member. 5 . shall be entitled to withhold from such Shares or cash. 10. suspended or terminated. with respect to the delivery of such Shares or cash and shall be entitled to make other appropriate arrangements in connection with the required withholding obligations. an amount of Shares or cash having an aggregate equivalent value equal to the applicable income taxes and other amounts as may be required by law or. Additional fractional Shares may continue to accrue and be added to existing fractional Shares upon future vesting and settlement of Restricted Stock Units (in accordance with the terms of this Agreement) if vested Shares remain in the Plan Administrator's system.Return Date. Capitalized terms used in this Agreement that are not otherwise defined herein shall have the meanings attributed to such terms in the Plan. 9. 12. the Company or the Employer. including by the fractional Shares generated and/or adjusted upon the withholding transaction. 13. relevant governmental administrative practice. No Right to Continued Employment. as the case may be. Should any provision of this Agreement be held by a court of competent jurisdiction to be unenforceable or invalid for any reason. and the settlement of the Restricted Stock Units into Shares will be adjusted by the amount of the withholding. but only by a written instrument executed by the Parties hereto. 11. in each case pursuant to Sections 1 and 7 hereof. The Grantee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof. Nothing in this Agreement or the Plan shall interfere with or limit in any way the right of the Company or its Subsidiaries to terminate the Grantee's employment. Fractional Shares may be issued or delivered and/or adjusted upon the withholding of taxes in accordance with this Section 10.

Successors in Interest. and supersede all other agreements. the interpretation. This Agreement and the terms and conditions of the Plan constitute the entire understanding between the Grantee and the Company and its Subsidiaries. Entire Agreement. This Agreement may be executed simultaneously in two or more counterparts. This Agreement shall inure to the benefit of and be binding upon any successor to the Company. construction or application of this Agreement shall be determined by the Committee. Headings. and the Company and its Subsidiaries for all purposes. <EXECUTION PAGE FOLLOWS> 6 . each of which shall constitute an original. y compris toute la documentation transmise au bénéficiaire relativement à l'octroi des droits prévu aux présentes. be drafted in the English language only. the Grantee's heirs. All obligations imposed upon the Grantee and all rights granted to the Company under this Agreement shall be binding upon the Grantee's heirs. Language The Parties hereto acknowledge that they have requested that this Agreement and all documents ancillary thereto.14. including all the documentation provided to the Grantee in respect of the Award. Any dispute or disagreement which may arise under. This Agreement shall inure to the benefit of the Grantee's legal representatives. binding and conclusive on the Grantee. construction and performance of this Agreement shall be governed by the laws of the State of Ohio without giving effect to the conflicts of laws principles thereof. Any determination made hereunder shall be final. with respect to the Award. The headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 19.soient rédigés en langue anglaise seulement. whether written or oral. 16. The validity. 15. 18. administrators and successors. Les Parties aux présentes reconnaissent qu'elles ont exigé que la présente convention et tous les documents y afférents. 20. Governing Law. or as a result of. Resolution of Disputes. 17. executors. but all of which taken together shall constitute one and the same agreement. Counterparts. or in any way relate to. interpretation. executors. administrators and successors.

TIM HORTONS INC. by Name: Title: The TDL Group Corp. by Name: Title: GRANTEE by .

in either case at the time and in the manner set forth in Section 7 hereof. 1. In the event that a Restricted Stock Unit is forfeited pursuant to Section 6 hereof. Version) (with related Dividend Equivalent Rights) Tim Hortons Inc.S Version) (Compliance with Section 409A of the Internal Revenue Code) FORM OF AMENDED AND RESTATED RESTRICTED STOCK UNIT AWARD AGREEMENT (2007 U. rules. 20 and November 15. 2.S. 20 . if applicable) to the Company as provided in Section 8 hereof. the restrictions on transfer.3 This Agreement shall be construed in accordance and consistent with.Exhibit 10(g) Form of 2007 Amended and Restated Restricted Stock Unit Award Agreement (U. NOW. 20 (the "Date of Grant"). is between Tim Hortons Inc. Subject to Section 6 hereof. or (ii) cash delivered to a broker to acquire one (1) share on the Grantee's behalf. The Restricted Stock Units and related Dividend Equivalent Rights granted pursuant to the Award shall be subject to the execution and return of this Agreement by the Grantee (or the Grantee's estate. without limitation. one. pursuant to Section 4. 2006 Stock Incentive Plan (the "Plan") in order to provide additional incentive to certain employees and directors of the Company and its Subsidiaries. May 15. . the "Parties"). THEREFORE. transferred or otherwise disposed of and may not be pledged or otherwise hypothecated. WHEREAS. describes all the terms and conditions of the Award. 1. the Award is evidenced by this Agreement. and is subject to. of this Agreement. 2 . Restrictions on Transfer. which (together with the Plan).2 of the Plan. The Restricted Stock Units and Dividend Equivalent Rights granted pursuant to this Agreement may not be sold. forfeiture. 3. as well as any and all determinations. an award (the "Award") of Restricted Stock Units with an equal number of related Dividend Equivalent Rights. a Delaware corporation (the "Company"). the Company has adopted the Tim Hortons Inc. including. the Parties agree as follows: 1. the related Dividend Equivalent Right shall also be forfeited. any amount related to cash dividends shall be converted into additional Restricted Stock Units based on the Fair Market Value of a Share on the date such dividend is made. The Human Resource and Compensation Committee ("Committee") shall determine appropriate administration for the tracking and settlement of Dividend Equivalent Rights. and WHEREAS. and WHEREAS. subject to adjustment upon the vesting of a portion of the underlying Restricted Stock Unit award (See Section 3). interpretations.2 Each Dividend Equivalent Right represents the right to receive the equivalent of all of the cash dividends that would be payable with respect to the Share represented by the Restricted Stock Unit to which the Dividend Equivalent Right relates. the Committee has determined to grant to the Grantee on the Date of Grant an Award of Stock Units with related Dividend Equivalent Rights as provided herein to encourage the Grantee's efforts toward the continuing success of the Company and its Subsidiaries. With respect to each Dividend Equivalent Right.a (the "Employer") and (the "Grantee") (collectively. at the option of the Company. 1. See Section 7 regarding settlement of fractional Restricted Stock Units. made effective as of the day of . Award. [Date] THIS AGREEMENT. etc. and the Committee's determination in this regard shall be final and binding upon all Parties. the provisions of the Plan (the provisions of which are hereby incorporated by reference). These fractional Restricted Stock Units continue to accrue additional Dividend Equivalent Rights and accumulate until the fractional interest is of sufficient value to acquire an additional Restricted Stock Unit as a result of the settlement of future Dividend Equivalent Rights. vesting and payment provisions contained in Sections 2 through 8.1 The Company hereby grants to the Grantee in respect of employment services provided by the Grantee to the Employer in 20 . the capitalized terms used in this Agreement shall have the same definitions as set forth in the Plan. policies.. each Restricted Stock Unit represents the right to receive. Any additional Restricted Stock Units granted pursuant to this Section shall be subject to the same terms and conditions applicable to the Restricted Stock Unit to which the Dividend Equivalent Right relates. including with respect to fractional interests. instructions. Vesting. Except as otherwise expressly set forth herein. Fractional Restricted Stock Units may be generated and/or adjusted upon the vesting of onethird of the Restricted Stock Units awarded under this Agreement. (i) one (1) Share from the Company.third (1/3) of the number of Restricted Stock Units granted hereunder shall vest on each of May 15. Fractional Restricted Stock Units may be generated upon the automatic settlement of Dividend Equivalent Rights into additional Restricted Stock Units and upon the vesting of a portion of a Restricted Stock Unit award (see Section 3). Except as otherwise provided in this Agreement. 20 . inclusive. of the Committee in connection with the Plan.

For purposes of this Agreement. For purposes of this Agreement. all Restricted Stock Units which have not become vested in accordance with Section 3 or 4 hereof shall vest immediately. 6. (a) "Retirement" shall mean termination of employment after attaining age 60 with at least 10 years of service (as defined in the Company's qualified retirement plans) other than by death. Effect of Change in Control. the Company or any of its Subsidiaries. (y) the Grantee breaches any contract with or violates any fiduciary obligation to the Company or any of its Subsidiaries. 5. in each case if such termination occurs on or after the Date of Grant. Retirement or becoming Disabled or if the Grantee is terminated without Cause in connection with the disposition of one or more restaurants or other assets of the Company or its Subsidiaries or the sale or disposition of a Subsidiary." within the meaning of Section 409A of the Code and Treasury Regulation Section 1. Forfeiture of Stock Units. and (b) the word "terminate" or "termination" in connection with the Grantee's employment shall mean the Grantee's "separation from services. in each case within the meaning of Section 409A of the Code. all Restricted Stock Units which have not become vested in accordance with Section 3 or 5 hereof shall vest as of the date of such termination. confidential information or trade secrets of the Company or any of its Subsidiaries. an "Act of Misconduct" shall mean the occurrence of one or more of the following events: (x) the Grantee uses for profit or discloses to unauthorized persons. 4 or 5 hereof shall be forfeited and shall revert to the Company upon: (a) the termination of the Grantee's employment with the Company or any Subsidiary for any reason other than those set forth in Section 4 hereof prior to such vesting. which also constitutes a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of its assets. Except as otherwise provided in this Agreement.4.1(h). Effect of Certain Terminations of Employment. Disability or for Cause. or status as a director to. at any time on or after the Date of Grant. In the event of a Change in Control.409A. or (b) the commission by the Grantee of an Act of Misconduct prior to such vesting. 3 . If the Grantee's employment terminates as a result of the Grantee's death. any and all Restricted Stock Units which have not become vested in accordance with Section 3. or (z) the Grantee engages in unlawful trading in the securities of the Company or any of its Subsidiaries or of another company based on information gained as a result of the Grantee's employment with.

if applicable.7. the Grantee's estate). and the Committee's determination in this regard shall be final and binding upon all Parties. The Company will satisfy its obligations in this Section 7 on each vesting date or as soon as administratively practicable but no later than the later of (a) December 31 of the year in which the vesting date occurs or (b) sixty (60) days after such vesting date. as well as handle the process of vesting and settlement of such awards. or (ii) deliver cash to a broker designated by the Company who. at its option either (i) issue treasury Shares to the Grantee (or. as agent for the Grantee. Fractional Shares may be issued or delivered upon settlement of vested Restricted Stock Units. 8. if the Grantee is a "specified employee" within the meaning of Section 409A of the Code as of the date the Grantee's employment terminates and settlement of such Restricted Stock Units is required to be delayed pursuant to Section 409A(a)(2)(B)(i) of the Code. notwithstanding any delay between a vesting date and the settlement date. then the Company shall satisfy its obligations in this Section 7 by the later of (i) the date otherwise required by this Section 7 or (ii) the first business day of the calendar month following the date which is six (6) months after the Grantee's employment terminates. Notwithstanding the forgoing. As used herein. Execution of the Award. after taking into account the reduction to the number of Shares as required under Section 10 of this Agreement. the Company shall. or purchased by a broker for delivery to the Grantee. The grant of the Restricted Stock Units and Dividend Equivalent Rights to the Grantee pursuant to the Award shall be conditional upon the Grantee's execution and return of this Agreement to the Company or its designee (including by electronic means. 20 (the "Grantee Return Date"). any fractional Share issued or delivered to Grantee upon settlement of a vested Restricted Stock Unit. acknowledge and agree that fractional Shares cannot be traded in the public markets. The aggregate number of Shares issued by the Company. with respect to Restricted Stock Units that become vested pursuant to Section 4 (other than as a result of the Grantee's death). at any particular time pursuant to this Section 7 shall correspond to the number of Restricted Stock Units that become vested on the vesting date. provided that if the Grantee's Restricted 4 . including with respect to fractional interests. if applicable. and therefore. All parties understand. In order to satisfy Restricted Stock Units after vesting pursuant to this Agreement. subject to any withholding as may be required under Section 10 of this Agreement. Any of the Company's obligations in this Section 7 may be satisfied by the Company or Employer. "Plan Administrator" shall mean the party engaged by the Company to administratively track awards and accompanying Dividend Equivalent Rights granted under the Plan. shall purchase the appropriate number of Shares on the open market. Satisfaction of Stock Units. if so provided) no later than April . The Committee shall determine appropriate administration for the settling of vested Restricted Stock Units. with one (1) Restricted Stock Unit corresponding to one (1) common Share. will ultimately be settled in cash when the Grantee sells shares through the Plan Administrator or transfers Shares out of the Plan Administrator's system.

10. nor confer upon the Grantee any right to continuance of employment by the Company or any of its Subsidiaries or continuance of service as a Board member. 9. suspended or terminated. including by the fractional Shares generated and/or adjusted upon the withholding transaction. if it so determines. an amount of Shares or cash having an aggregate equivalent value equal to the applicable income taxes and other amounts as may be required by law or. Modification of Agreement. but only by a written instrument executed by the Parties hereto. Should any provision of this Agreement be held by a court of competent jurisdiction to be unenforceable or invalid for any reason. and the settlement of the Restricted Stock Units into Shares will be adjusted by the amount of the withholding. This Agreement may be modified. the Company or the Employer shall be entitled to withhold from such Shares or cash. Additional fractional Shares may continue to accrue and be added to existing fractional Shares upon future vesting and settlement of Restricted Stock Units (in accordance with the terms of this Agreement) if vested Shares remain in the Plan Administrator's system. if applicable) of treasury Shares. 12. to be withheld by the Company or the Employer with respect to the delivery of such Shares or cash and shall be entitled to make other appropriate arrangements in connection with the required withholding obligations. as the case may be. No Right to Continued Employment. Withholding of Taxes. Severability. Grantee Bound by the Plan. Prior to (i) the delivery to the Grantee (or the Grantee's estate. 11. relevant governmental administrative practice. this requirement shall be deemed to have been satisfied immediately before such vesting. 13. pursuant to Sections 1 and 7 hereof. Nothing in this Agreement or the Plan shall interfere with or limit in any way the right of the Company or its Subsidiaries to terminate the Grantee's employment. amended. and any terms or conditions may be waived. Fractional Shares may be issued or delivered and/or adjusted upon the withholding of taxes in accordance with this Section 10.Stock Units that would otherwise vest pursuant to Section 4 or 5 before the Grantee Return Date. or (ii) the delivery of cash to a broker to purchase and deliver shares. the remaining provisions of this 5 . Any fractional Shares will ultimately be paid or settled in cash in accordance with Section 7 of this Agreement. The Grantee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof.

binding and conclusive on the Grantee. The headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. This Agreement and the terms and conditions of the Plan constitute the entire understanding between the Grantee and the Company and its Subsidiaries. 15. and supersede all other agreements. Governing Law. but all of which taken together shall constitute one and the same agreement. interpretation. the Grantee's heirs. <EXECUTION PAGE FOLLOWS> 6 . with respect to the Award. or as a result of. 19. the interpretation. construction or application of this Agreement shall be determined by the Committee. administrators and successors. construction and performance of this Agreement shall be governed by the laws of the State of Ohio without giving effect to the conflicts of laws principles thereof. Any dispute or disagreement which may arise under. The validity. This Agreement shall inure to the benefit of the Grantee's legal representatives. Counterparts. 14. Resolution of Disputes. each of which shall constitute an original. Any determination made hereunder shall be final. executors. Successors in Interest. This Agreement shall inure to the benefit of and be binding upon any successor to the Company. administrators and successors. executors. All obligations imposed upon the Grantee and all rights granted to the Company under this Agreement shall be binding upon the Grantee's heirs. 16. Entire Agreement. and the Company and its Subsidiaries for all purposes. Headings. or in any way relate to. 18.Agreement shall not be affected by such holding and shall continue in full force in accordance with their terms. 17. This Agreement may be executed simultaneously in two or more counterparts. whether written or oral.

("Company") By: Name: Title: ("Employer") By: Name: Title: GRANTEE 7 .TIM HORTONS INC.

The Human Resource and Compensation Committee ("Committee") shall determine appropriate administration for the tracking and settlement of Dividend Equivalent Rights. Any additional Restricted Stock Units granted pursuant to this Section shall be subject to the same terms and conditions applicable to the Restricted Stock Unit to which the Dividend Equivalent Right relates. any amount related to cash dividends shall be converted into additional Restricted Stock Units based on the Fair Market Value of a Share on the date such dividend is made. or (ii) cash delivered to a broker to acquire one (1) share on the Grantee's behalf. instructions. and WHEREAS. Fractional Restricted Stock Units may be generated upon the automatic settlement of Dividend Equivalent Rights into additional Restricted Stock Units and upon the vesting of a portion of a Restricted Stock Unit award (see Section 3). vesting and payment provisions contained in Sections 2 through 8. as amended from time to time (the "Plan"). forfeiture. Subject to Section 6 hereof. which (together with the Plan). the "Parties") and is hereby amended and restated in its entirety effective as of December 31. 2.. Grant Year: 2008 May 15.Exhibit 10(h) 2008 Amended and Restated Restricted Stock Unit Award Agreement of David Clanachan (Compliance with Section 409A of the Internal Revenue Code) AMENDED AND RESTATED RESTRICTED STOCK UNIT AWARD AGREEMENT (with related Dividend Equivalent Rights) Tim Hortons Inc. of the Committee in connection with the Plan. the provisions of the Plan (the provisions of which are hereby incorporated by reference). as amended (the "Code"). THEREFORE. transferred or otherwise disposed of and may not be pledged or otherwise hypothecated. describes all the terms and conditions of the Award. the Company has determined that the Grantee is subject to the tax laws of the United States. The TDL Group Corp. the related Dividend Equivalent Right shall also be forfeited. if applicable) to the Company as provided in Section 8 hereof. 1. 1. the Parties desire to amend and restate this Agreement to comply with the requirements of Section 409A of the Internal Revenue Code of 1986.3 This Agreement shall be construed in accordance and consistent with.2 Each Dividend Equivalent Right represents the right to receive the equivalent of all of the cash dividends that would be payable with respect to the Share represented by the Restricted Stock Unit to which the Dividend Equivalent Right relates. among Tim Hortons Inc. inclusive. the Parties agree as follows: 1. 2008. These fractional Restricted Stock Units continue to accrue additional Dividend Equivalent Rights and accumulate until the fractional interest is of sufficient value to acquire an additional Restricted Stock Unit as a result of the settlement of future Dividend Equivalent Rights. In the event that a Restricted Stock Unit is forfeited pursuant to Section 6 hereof. and WHEREAS. the restrictions on transfer. 2008 th THIS AGREEMENT was originally made effective as of the 15 day of May. With respect to each Dividend Equivalent Right. 1. the capitalized terms used in this Agreement shall have the same definitions as set forth in the Plan. rules. WHEREAS. policies.. The Restricted Stock Units and Dividend Equivalent Rights granted pursuant to this Agreement may not be sold. at the absolute discretion of the Company. pursuant to Section 4. including. Restrictions on Transfer. in any case at the time and in the manner set forth in Section 7 hereof. interpretations.1 The Company hereby grants to the Grantee in respect of employment services provided by the Grantee to the Employer in 2008 an award (the "Award") of 6. 2008 (the "Date of Grant"). subject to adjustment upon the vesting of a portion of the underlying Restricted Stock Unit award (see Section 3). each Restricted Stock Unit represents the right to receive. pursuant to Section 12 of this Agreement. The Restricted Stock Units and related Dividend Equivalent Rights granted pursuant to the Award was subject to the execution and return of this Agreement by the Grantee (or the Grantee's estate. Award.254 Restricted Stock Units with an equal number of related Dividend Equivalent Rights. the Award is evidenced by this Agreement. of this Agreement. as well as any and all determinations. (i) one (1) Share from the Company. without limitation. WHEREAS. and the Committee's determination in this regard shall be final and binding upon all Parties. and is subject to. 2 . in order to provide additional incentive to certain employees and directors of the Company and its Subsidiaries. Except as otherwise expressly set forth herein. including with respect to fractional interests. etc. a Delaware corporation (the "Company"). WHEREAS. NOW. the Company has adopted the Tim Hortons Inc. 2006 Stock Incentive Plan. the Committee (as defined below) has determined to grant to the Grantee on the Date of Grant an Award of Restricted Stock Units with related Dividend Equivalent Rights as provided herein to encourage the Grantee's efforts toward the continuing success of the Company and its Subsidiaries. a Nova Scotia unlimited liability company (the "Employer") and David Clanachan (the "Grantee") (collectively.2 of the Plan.

See Section 7 regarding settlement of fractional Restricted Stock Units. Disability. In the case of Retirement.2 Retirement. 4. or if the Grantee is terminated without Cause in connection with the sale or disposition of a Subsidiary. Grantee shall transfer all Shares received under this Agreement (and all other Shares that have vested and are maintained by the Plan Administrator in a brokerage account for the benefit of Grantee) from the Plan Administrator within one year following the Grantee's termination of employment. and if such termination occurs on or after the date of grant. in each case if such termination occurs on or after the date of grant. 3 . Grantee or Grantee's estate or legal representative. If Grantee's employment terminates as a result of Grantee's death or becoming Disabled." within the meaning of Section 409A of the Code and Treasury Regulation Section 1. or 6 of this Agreement. 2010. For terminations arising for any reason other than death.3 Definitions. included in those policies. 5. For a period of six (6) months following a termination of employment. or death. or Retirement. any unvested Restricted Stock Units will remain outstanding and will continue to vest in accordance with the vesting schedule described in Section 3 of this Agreement. all Restricted Stock Units which have not become vested in accordance with Section 3 or 5 hereof shall vest as of the date of such termination.4 Trading Policies and Transfer of Shares. and all other requirements. Fractional Restricted Stock Units may be generated and/or adjusted upon the vesting of the Restricted Stock Units awarded under this Agreement. For purposes of this Agreement. Vesting. shall take all reasonable steps to transfer all Shares received under this Agreement (and all other Shares that have vested and are maintained by the Plan Administrator (as defined in Section 7) in a brokerage account for the benefit of Grantee) from the Plan Administrator within five (5) years following the Grantee's termination of employment.1 Death or Disability. If Grantee's employment terminates as a result of the Grantee's Retirement.1(h). a termination due to Disability. as the case may be. Grantee shall continue to be subject to the Company's insider trading and window trading policies and must follow all preclearance procedures.3. Effect of Certain Terminations of Employment. the Restricted Stock Units granted hereunder shall vest in their entirety on November 15. 4.409A. 4. 4. 4. (a) "Retirement" shall mean termination of employment after attaining age 60 with at least 10 years of service (as defined in the Company's qualified retirement plans) other than by death. whether under Section 4. Except as otherwise provided in this Agreement. Disability or for Cause and (b) the word "terminate" or "termination" in connection with the Grantee's employment shall mean the Grantee's "separation from service.

The aggregate number of Shares issued by the Company or purchased by a broker for delivery to the Grantee at any particular time pursuant to this Section 7 shall correspond to the number of Restricted Stock Units that become vested on the vesting date. at any time on or after the Date of Grant. 4 or 5 hereof shall be forfeited upon: (a) the termination of the Grantee's employment with the Company or any Subsidiary for any reason other than those set forth in Section 4 hereof prior to such vesting. notwithstanding any delay between a vesting date and the settlement date. In the event of a Change in Control. acknowledge and agree that fractional Shares cannot be traded in the 4 . the Company shall. or (b) the commission by the Grantee of an Act of Misconduct prior to such vesting. For purposes of this Agreement. (y) the Grantee breaches any contract with or violates any fiduciary obligation to the Company or any of its Subsidiaries. Effect of Change in Control.5. Forfeiture of Award. (iii) any combination of the above. any and all Restricted Stock Units which have not become vested in accordance with Section 3. if applicable. the Company or any of its Subsidiaries. which also constitutes a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of its assets. subject to any withholding as may be required under Section 10 of this Agreement. with one (1) Restricted Stock Unit corresponding to one (1) common Share. All parties understand. as agent for the Grantee.3(i)(5). Except as otherwise provided in this Agreement. or (z) the Grantee engages in unlawful trading in the securities of the Company or any of its Subsidiaries or of another company based on information gained as a result of the Grantee's employment with. in each case within the meaning of Section 409A of the Code and Treasury Regulation Section 1.409A. Fractional Shares may be issued or delivered upon settlement of vested Restricted Stock Units. 7. or. confidential information or trade secrets of the Company or any of its Subsidiaries. (ii) deliver cash to a broker designated by the Company who. Satisfaction of Award. or status as a director to. an "Act of Misconduct" shall mean the occurrence of one or more of the following events: (x) the Grantee uses for profit or discloses to unauthorized persons. In order to satisfy Restricted Stock Units after vesting pursuant to this Agreement. 6. shall purchase the appropriate number of Shares on the open market. all Restricted Stock Units which have not become vested in accordance with Section 3 or 4 hereof shall vest immediately. at its election either (i) issue treasury Shares to the Grantee (or. the Grantee's estate).

provided that if the Grantee's Restricted Stock Units that would otherwise vest pursuant to Section 4 or 5 before the Grantee Return Date. and therefore. with respect to Restricted Stock Units that become vested pursuant to Section 4 (other than as a result of the Grantee's death). nor confer upon the Grantee any right to continuance of employment by the Company or any of its Subsidiaries or continuance of service as a Board member. 8. and the Committee's determination in this regard shall be final and binding upon all Parties. 9. 10. after taking into account the reduction to the number of Shares as required under Section 10 of this Agreement. any fractional Share issued or delivered to Grantee upon settlement of a vested Restricted Stock Unit.public markets. Upon (i) the delivery to the Grantee (or the Grantee's estate. The Committee shall determine appropriate administration for the settling of vested Restricted Stock Units. if so provided) no later than (the "Grantee Return Date"). The grant of the Restricted Stock Units and Dividend Equivalent Rights to the Grantee pursuant to the Award was conditional upon the Grantee's execution and return of this Agreement to the Company or its designee (including by electronic means. if the Grantee is a "specified employee" within the meaning of Section 409A of the Code as of the date the Grantee's employment terminates and settlement of such Restricted Stock Units is required to be delayed pursuant to Section 409A(a)(2)(B)(i) of the Code. Notwithstanding the foregoing. will ultimately be settled in cash when the Grantee sells Shares through the Plan Administrator or transfers Shares out of the Plan Administrator's system. The Company will satisfy its obligations in this Section 7 on each vesting date or as soon as administratively practicable but no later than the later of (a) December 31 of the year in which such vesting date occurs. Nothing in this Agreement or the Plan shall interfere with or limit in any way the right of the Company or its Subsidiaries to terminate the Grantee's employment. including with respect to fractional interests. Withholding of Taxes. or (b) sixty (60) days after such vesting date. then the Company shall satisfy its obligations in this Section 7 by the later of (i) the date otherwise required by this Section 7 or (ii) the first business day of the calendar month following the date which is six (6) months after the Grantee's employment terminates. "Plan Administrator" shall mean the party engaged by the Company to administratively track awards and accompanying Dividend Equivalent Rights granted under the Plan. as well as handle the process of vesting and settlement of such awards. in 5 . No Right to Continued Employment. this requirement shall be deemed to have been satisfied immediately before such vesting. if applicable) of treasury Shares or (ii) the delivery of cash to a broker to purchase and deliver Shares. As used herein. if applicable. Any of the Company's obligations in this Section 7 may be satisfied by the Company or the Employer. Execution of the Award.

each case pursuant to Sections 1 and 7 hereof. Additional fractional Shares may continue to accrue and be added to existing fractional Shares upon future vesting and settlement of Restricted Stock Units (in accordance with the terms of this Agreement) if vested Shares remain in the Plan Administrator's system. Successors in Interest and Assigns. 11. 14. construction and performance of this Agreement shall be governed by the laws of the State of Delaware without giving effect to the conflicts of laws principles thereof. 15. Severability. the Company or the Employer. and the settlement of the Restricted Stock Units into Shares will be adjusted by the amount of the withholding. Fractional Shares may be issued or delivered and/or adjusted upon the withholding of taxes in accordance with this Section 10. suspended or terminated. as the case may be. interpretation. and any terms or conditions may be waived. This Agreement shall inure to the benefit of and be binding upon any successors and assigns of the Company and the Employer. Any fractional Shares will ultimately be paid or settled in cash in accordance with Section 7 of this Agreement. if it so determines. including by the fractional Shares generated and/or adjusted upon the withholding transaction. All obligations imposed upon the Grantee and all rights granted to 6 . Modification of Agreement. Governing Law. an amount of Shares or cash having an aggregate equivalent value equal to the applicable income taxes and other amounts as may be required by law or. amended. relevant governmental administrative practice. as the case may be. The Company and the Employer may assign any of their respective rights and obligations under this Agreement without the consent of the Grantee. as the case may be. Should any provision of this Agreement be held by a court of competent jurisdiction to be unenforceable or invalid for any reason. but only by a written instrument executed by the Parties hereto. Grantee Bound by the Plan. 12. The validity. the remaining provisions of this Agreement shall not be affected by such holding and shall continue in full force in accordance with their terms. The Grantee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof. shall be entitled to withhold from such Shares or cash. with respect to the delivery of such Shares or cash and shall be entitled to make other appropriate arrangements in connection with the required withholding obligations. to be withheld by the Company or the Employer. This Agreement may be modified. This Agreement shall inure to the benefit of the Grantee's legal representatives. 13.

This Agreement is intended to satisfy the requirements of Section 409A of the Code and is intended not to be a "salary deferral arrangement" (a "SDA") within the meaning of the Income Tax Act (Canada) ("Canadian Tax Act"). Resolution of Disputes. and the Company and its Subsidiaries for all purposes. Language The Parties hereto acknowledge that they have requested that this Agreement and all documents ancillary thereto. executors. then for any Grantee who is subject to the Canadian Tax Act and not subject to Section 409A of the Code. Counterparts.the Company and the Employer under this Agreement shall be binding upon the Grantee's heirs. This Agreement and the terms and conditions of the Plan constitute the entire understanding between the Grantee and the Company and its Subsidiaries. administrators and successors. y compris toute la documentation transmise au bénéficiaire relativement à l'octroi des droits prévu aux présentes. be drafted in the English language only. but all of which taken together shall constitute one and the same agreement. including all the documentation provided to the Grantee in respect of the Award. 18. Any dispute or disagreement which may arise under. the Grantee's heirs. Les Parties aux présentes reconnaissent qu'elles ont exigé que la présente convention et tous les documents y afférents. To the extent that the interpretation and administration of this Agreement in accordance with Section 409A of the Code would cause any of the arrangements contemplated herein to be a SDA. 16.soient rédigés en langue anglaise seulement. 17. and shall be interpreted and administered consistent with such intent. and supersede all other agreements. each of which shall constitute an original. the interpretation. Entire Agreement. administrators and successors. or in any way relate to. 21. whether written or oral. construction or application of this Agreement shall be determined by the Committee. This Agreement may be executed simultaneously in two or more counterparts. executors. the Agreement shall be interpreted and administered with respect to such Grantee so that the 7 . binding and conclusive on the Grantee. 20. with respect to the Award. Any determination made hereunder shall be final. Compliance with Section 409A. The headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 19. or as a result of. Headings.

<EXECUTION PAGE FOLLOWS> 8 . If compliance with both Section 409A of the Code and the Canadian Tax Act is not practicable in connection with the Award covered by this Agreement. the terms of this Award shall be interpreted. the terms of this Award and this Agreement remain subject to amendment at the sole discretion of the Committee to reach a resolution of the conflict as it shall determine in its sole discretion. For Grantees subject to both Section 409A of the Code and the Canadian Tax Act. construed. and given effect to achieve compliance with both Section 409A of the Code and the Canadian Tax Act. to the extent practicable.arrangements are not SDAs.

TIM HORTONS INC. Schroeder President and Chief Executive Officer Brigid Pelino Senior Vice President. by Name: Title: THE TDL GROUP CORP. Human Resources . by Name: Title: GRANTEE by David Clanachan 9 Donald B.

at the absolute discretion of the Company. transferred or otherwise disposed of and may not be pledged or otherwise hypothecated. (the "Employer") and (the "Grantee") (collectively. With respect to each Dividend Equivalent Right. instructions. the provisions of the Plan (the provisions of which are hereby incorporated by reference). including with respect to fractional interests.S. the capitalized terms used in this Agreement shall have the same definitions as set forth in the Plan. the "Parties") and is hereby amended and restated in its entirety effective as of December 31. of this Agreement. NOW. and WHEREAS.1 The Company hereby grants to the Grantee in respect of employment services provided by the Grantee to the Employer in 2008 an award (the "Award") of Restricted Stock Units with an equal number of related Dividend Equivalent Rights. 2008. Employees and U. policies. interpretations. Award. The Restricted Stock Units and Dividend Equivalent Rights granted pursuant to this Agreement may not be sold. subject to adjustment upon the vesting of a portion of the underlying Restricted Stock Unit award (see Section 3). in any case at the time and in the manner set forth in Section 7 hereof. THEREFORE. Any additional Restricted Stock Units granted pursuant to this Section shall be subject to the same terms and conditions applicable to the Restricted Stock Unit to which the Dividend Equivalent Right relates. Except as otherwise expressly set forth herein. pursuant to Section 12 of this Agreement. without limitation. 2. 1. 2006 Stock Incentive Plan.S. in order to provide additional incentive to certain employees and directors of the Company and its Subsidiaries. Subject to Section 6 hereof. These fractional Restricted Stock Units continue to accrue additional Dividend Equivalent Rights and accumulate until the fractional interest is of sufficient value to acquire an additional Restricted Stock Unit as a result of the settlement of future Dividend Equivalent Rights. the Committee (as defined below) has determined to grant to the Grantee on the Date of Grant an Award of Restricted Stock Units with related Dividend Equivalent Rights as provided herein to encourage the Grantee's efforts toward the continuing success of the Company and its Subsidiaries.S. EMPLOYEES AND U. 1. inclusive. the restrictions on transfer. pursuant to Section 4. The Human Resource and Compensation Committee ("Committee") shall determine appropriate administration for the tracking and settlement of Dividend Equivalent Rights. etc. which (together with the Plan). Taxpayers (including Stephen Johnston) (Compliance with Section 409A of the Internal Revenue Code) AMENDED AND RESTATED RESTRICTED STOCK UNIT AWARD AGREEMENT FOR U. 2008 THIS AGREEMENT was originally made effective as of the 15 th day of May. the Parties agree as follows: 1. the Award is evidenced by this Agreement. WHEREAS. as well as any and all determinations.3 This Agreement shall be construed in accordance and consistent with. and the Committee's determination in this regard shall be final and binding upon all Parties. 2 . if applicable) to the Company as provided in Section 8 hereof. (i) one (1) Share from the Company or (ii) cash delivered to a broker to acquire one (1) share on the Grantee's behalf.Exhibit 10(i) Form of 2008 Amended and Restated Restricted Stock Unit Award Agreement for U. the Company has adopted the Tim Hortons Inc. WHEREAS.2 of the Plan. TAXPAYERS (with related Dividend Equivalent Rights) Tim Hortons Inc. the related Dividend Equivalent Right shall also be forfeited. 2008 (the "Date of Grant").2 Each Dividend Equivalent Right represents the right to receive the equivalent of all of the cash dividends that would be payable with respect to the Share represented by the Restricted Stock Unit to which the Dividend Equivalent Right relates. The Restricted Stock Units and related Dividend Equivalent Rights granted pursuant to the Award were subject to the execution and return of this Agreement by the Grantee (or the Grantee's estate. including. 1. rules. Restrictions on Transfer. In the event that a Restricted Stock Unit is forfeited pursuant to Section 6 hereof. a Delaware corporation (the "Company"). any amount related to cash dividends shall be converted into additional Restricted Stock Units based on the Fair Market Value of a Share on the date such dividend is made.S. describes all the terms and conditions of the Award. forfeiture. Fractional Restricted Stock Units may be generated upon the automatic settlement of Dividend Equivalent Rights into additional Restricted Stock Units and upon the vesting of a portion of a Restricted Stock Unit award (see Section 3). and is subject to. as amended from time to time (the "Plan"). the Parties desire to amend and restate this Agreement to comply with the requirements of Section 409A of the Internal Revenue Code of 1986. among Tim Hortons Inc. Grant Year: 2008 May 15. of the Committee in connection with the Plan. each Restricted Stock Unit represents the right to receive.. and WHEREAS. as amended (the "Code"). vesting and payment provisions contained in Sections 2 through 8.

1(h).2 Retirement. all Restricted Stock Units which have not become vested in accordance with Section 3 or 5 hereof shall vest as of the date of such termination. Grantee shall continue to be subject to the Company's insider trading and window trading policies and must follow all preclearance procedures. a termination due to Disability.1 Death or Disability. 4. 4. 2009. For a period of six (6) months following a termination of employment. If Grantee's employment terminates as a result of the Grantee's Retirement. or if the Grantee is terminated without Cause in connection with the sale or disposition of a Subsidiary. Effect of Certain Terminations of Employment. In the case of Retirement. and all other requirements. Disability or for Cause and (b) the word "terminate" or "termination" in connection with the Grantee's employment shall mean the Grantee's "separation from service. 4. 4. Fractional Restricted Stock Units may be generated and/or adjusted upon the vesting of onethird of the Restricted Stock Units awarded under this Agreement.3. and if such termination occurs on or after the date of grant. For purposes of this Agreement.4 Trading Policies and Transfer of Shares. Grantee shall transfer all Shares received under this Agreement (and all other Shares that have vested and are maintained by the Plan Administrator in a brokerage account for the benefit of Grantee) from the Plan Administrator within one year following the Grantee's termination of employment. shall take all reasonable steps to transfer all Shares received under this Agreement (and all other Shares that have vested and are maintained by the Plan Administrator (as defined in Section 7) in a brokerage account for the benefit of Grantee) from the Plan Administrator within five (5) years following the Grantee's termination of employment. Grantee or Grantee's estate or legal representative. which also constitutes a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of its 3 . Vesting. whether under Section 4. or 6 of this Agreement. 5. May 15. 5. (a) "Retirement" shall mean termination of employment after attaining age 60 with at least 10 years of service (as defined in the Company's qualified retirement plans) other than by death. Except as otherwise provided in this Agreement. or death. as the case may be. included in those policies. Disability.409A. one." within the meaning of Section 409A of the Code and Treasury Regulation Section 1. 2010 and November 15. any unvested Restricted Stock Units will remain outstanding and will continue to vest in accordance with the vesting schedule described in Section 3 of this Agreement. If Grantee's employment terminates as a result of Grantee's death or becoming Disabled. For terminations arising for any reason other than death. In the event of a Change in Control. or Retirement. See Section 7 regarding settlement of fractional Restricted Stock Units.3 Definitions. 2010. 4. in each case if such termination occurs on or after the date of grant. Effect of Change in Control.third ( 1/3) of the number of Restricted Stock Units granted hereunder shall vest on each of May 15.

at its election either (i) issue treasury Shares to the Grantee (or.409A. (ii) deliver cash to a broker designated by the Company who. 6. or. the Company or any of its Subsidiaries. if applicable. and the Committee's determination in this regard shall be final and binding upon all Parties. The Committee shall determine appropriate administration for the settling of vested Restricted Stock Units. Except as otherwise provided in this Agreement. in each case within the meaning of Section 409A of the Code and Treasury Regulation Section 1. or status as a director to. or (z) the Grantee engages in unlawful trading in the securities of the Company or any of its Subsidiaries or of another company based on information gained as a result of the Grantee's employment with. Fractional Shares may be issued or delivered upon settlement of vested Restricted Stock Units. if applicable. Forfeiture of Award. The aggregate number of Shares issued by the Company or purchased by a broker for delivery to the Grantee at any particular time pursuant to this Section 7 shall correspond to the number of Restricted Stock Units that become vested on the vesting date. with one (1) Restricted Stock Unit corresponding to one (1) common Share. "Plan Administrator" shall mean the party engaged by 4 . at any time on or after the Date of Grant. notwithstanding any delay between a vesting date and the settlement date. shall purchase the appropriate number of Shares on the open market. (y) the Grantee breaches any contract with or violates any fiduciary obligation to the Company or any of its Subsidiaries. All parties understand. after taking into account the reduction to the number of Shares as required under Section 10 of this Agreement.3(i)(5). 4 or 5 hereof shall be forfeited upon: (a) the termination of the Grantee's employment with the Company or any Subsidiary for any reason other than those set forth in Section 4 hereof prior to such vesting. Satisfaction of Award. the Company shall. confidential information or trade secrets of the Company or any of its Subsidiaries.assets. or (b) the commission by the Grantee of an Act of Misconduct prior to such vesting. subject to any withholding as may be required under Section 10 of this Agreement. any fractional Share issued or delivered to Grantee upon settlement of a vested Restricted Stock Unit. the Grantee's estate). For purposes of this Agreement. all Restricted Stock Units which have not become vested in accordance with Section 3 or 4 hereof shall vest immediately. will ultimately be settled in cash when the Grantee sells Shares through the Plan Administrator or transfers Shares out of the Plan Administrator's system. any and all Restricted Stock Units which have not become vested in accordance with Section 3. In order to satisfy Restricted Stock Units after vesting pursuant to this Agreement. 7. as agent for the Grantee. (iii) any combination of the above. As used herein. and therefore. an "Act of Misconduct" shall mean the occurrence of one or more of the following events: (x) the Grantee uses for profit or discloses to unauthorized persons. including with respect to fractional interests. acknowledge and agree that fractional Shares cannot be traded in the public markets.

The grant of the Restricted Stock Units and Dividend Equivalent Rights to the Grantee pursuant to the Award was conditional upon the Grantee's execution and return of this Agreement to the Company or its designee (including by electronic means. then the Company shall satisfy its obligations in this Section 7 by the later of (i) the date otherwise required by this Section 7 or (ii) the first business day of the calendar month following the date which is six (6) months after the Grantee's employment terminates. 5 . with respect to Restricted Stock Units that become vested pursuant to Section 4 (other than as a result of the Grantee's death). as the case may be. 9. Upon (i) the delivery to the Grantee (or the Grantee's estate. Nothing in this Agreement or the Plan shall interfere with or limit in any way the right of the Company or its Subsidiaries to terminate the Grantee's employment. if so provided) no later than . as the case may be. Fractional Shares may be issued or delivered and/or adjusted upon the withholding of taxes in accordance with this Section 10. with respect to the delivery of such Shares or cash and shall be entitled to make other appropriate arrangements in connection with the required withholding obligations. or (ii) the delivery of cash to a broker to purchase and deliver Shares. to be withheld by the Company or the Employer. or (b) sixty (60) days after such vesting date. as the case may be.the Company to administratively track awards and accompanying Dividend Equivalent Rights granted under the Plan. Any of the Company's obligations in this Section 7 may be satisfied by the Company or the Employer. if it so determines. as well as handle the process of vesting and settlement of such awards. Withholding of Taxes. shall be entitled to withhold from such Shares or cash. 10. provided that if the Grantee's Restricted Stock Units that would otherwise vest pursuant to Section 4 or 5 before the Grantee Return Date. if the Grantee is a "specified employee" within the meaning of Section 409A of the Code as of the date the Grantee's employment terminates and settlement of such Restricted Stock Units is required to be delayed pursuant to Section 409A(a)(2)(B)(i) of the Code. relevant governmental administrative practice. nor confer upon the Grantee any right to continuance of employment by the Company or any of its Subsidiaries or continuance of service as a Board member. an amount of Shares or cash having an aggregate equivalent value equal to the applicable income taxes and other amounts as may be required by law or. 20 (the "Grantee Return Date"). this requirement shall be deemed to have been satisfied immediately before such vesting. in each case pursuant to Sections 1 and 7 hereof. if applicable) of treasury Shares. and the settlement of the Restricted Stock Units into Shares will be adjusted by the amount of the withholding. Notwithstanding the foregoing. 8. the Company or the Employer. The Company will satisfy its obligations in this Section 7 on each vesting date or as soon as administratively practicable but no later than the later of (a) December 31 of the year in which such vesting date occurs. No Right to Continued Employment. Execution of the Award.

All obligations imposed upon the Grantee and all rights granted to the Company and the Employer under this Agreement shall be binding upon the Grantee's heirs. This Agreement shall inure to the benefit of and be binding upon any successors and assigns of the Company and the Employer. construction and performance of this Agreement shall be governed by the laws of the State of Delaware without giving effect to the conflicts of laws principles thereof. the remaining provisions of this Agreement shall not be affected by such holding and shall continue in full force in accordance with their terms.including by the fractional Shares generated and/or adjusted upon the withholding transaction. Modification of Agreement. executors. Governing Law. 11. Successors in Interest and Assigns. This Agreement may be modified. y compris toute la documentation transmise au bénéficiaire relativement à l'octroi des droits prévu aux présentes. including all the documentation provided to the Grantee in respect of the Award.soient rédigés en langue anglaise seulement. but only by a written instrument executed by the Parties hereto. The Grantee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof. The Company and the Employer may assign any of their respective rights and obligations under this Agreement without the consent of the Grantee. Additional fractional Shares may continue to accrue and be added to existing fractional Shares upon future vesting and settlement of Restricted Stock Units (in accordance with the terms of this Agreement) if vested Shares remain in the Plan Administrator's system. The validity. 13. 14. administrators and successors. Any fractional Shares will ultimately be paid or settled in cash in accordance with Section 7 of this Agreement. Grantee Bound by the Plan. be drafted in the English language only. amended. Should any provision of this Agreement be held by a court of competent jurisdiction to be unenforceable or invalid for any reason. This Agreement shall inure to the benefit of the Grantee's legal representatives. and any terms or conditions may be waived. 15. 12. suspended or terminated. Severability. Language The Parties hereto acknowledge that they have requested that this Agreement and all documents ancillary thereto. interpretation. 16. 6 . Les Parties aux présentes reconnaissent qu'elles ont exigé que la présente convention et tous les documents y afférents.

binding and conclusive on the Grantee. Counterparts. the terms of this Award shall be interpreted. This Agreement is intended to satisfy the requirements of Section 409A of the Code and is intended not to be a "salary deferral arrangement" (a "SDA") within the meaning of the Income Tax Act (Canada) ("Canadian Tax Act"). <EXECUTION PAGE FOLLOWS> 7 . Any dispute or disagreement which may arise under. administrators and successors. executors. or as a result of. whether written or oral. If compliance with both Section 409A of the Code and the Canadian Tax Act is not practicable in connection with the Award covered by this Agreement. This Agreement may be executed simultaneously in two or more counterparts. Resolution of Disputes. construed. each of which shall constitute an original.17. but all of which taken together shall constitute one and the same agreement. the interpretation. the Agreement shall be interpreted and administered with respect to such Grantee so that the arrangements are not SDAs. 21. For Grantees subject to both Section 409A of the Code and the Canadian Tax Act. 18. to the extent practicable. Compliance with Section 409A. the Grantee's heirs. the terms of this Award and this Agreement remain subject to amendment at the sole discretion of the Committee to reach a resolution of the conflict as it shall determine in its sole discretion. and shall be interpreted and administered consistent with such intent. The headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. with respect to the Award. 19. and supersede all other agreements. 20. This Agreement and the terms and conditions of the Plan constitute the entire understanding between the Grantee and the Company and its Subsidiaries. Entire Agreement. To the extent that the interpretation and administration of this Agreement in accordance with Section 409A of the Code would cause any of the arrangements contemplated herein to be a SDA. construction or application of this Agreement shall be determined by the Committee. and given effect to achieve compliance with both Section 409A of the Code and the Canadian Tax Act. Any determination made hereunder shall be final. then for any Grantee who is subject to the Canadian Tax Act and not subject to Section 409A of the Code. or in any way relate to. and the Company and its Subsidiaries for all purposes. Headings.

by Name: Title: [EMPLOYER] by Name: Title: GRANTEE by [Name] 8 .TIM HORTONS INC.

the Parties desire to amend and restate this Agreement to comply with the requirements of Section 409A of the Internal Revenue Code of 1986. Grantee shall be deemed to have (i) accepted and agreed to the terms and conditions of the Awards and other information described on the Schedule and (ii) confirmed their agreement and acknowledgment that the terms of this Agreement continue to apply in full force and effect to all such future Awards. the related Dividend Equivalent Right shall also be forfeited. $0. Voluntary Formula DSUs and Discretionary DSUs (all as defined in the Plan and collectively referred to herein as "DSUs" or. inclusive. WHEREAS. the Company has determined that the Grantee is subject to the tax laws of the United States. "Fair Market Value" or "FMV" on any date shall be equal to the mean of the high and low prices at which Shares are traded on the Toronto Stock Exchange on such date or the mean of the high and low prices at which the Shares are traded on the New York Stock Exchange.Employee Director Deferred Stock Unit Plan (the "Plan") in order to provide an additional incentive to non. a "Grant Date") set forth on Schedule A. and subject to.Exhibit 10(j) Form of Amended and Restated Deferred Stock Unit Award Agreement (Canadian) of John Lederer and Wayne Sales (Compliance with Section 409A of the Internal Revenue Code) AMENDED AND RESTATED DEFERRED STOCK UNIT AWARD AGREEMENT (with related Dividend Equivalent Rights) (Canadian Directors) Tim Hortons Inc. individually. except as may be permitted pursuant to Section 11 of this Agreement. Elective DSUs and Discretionary DSUs as set out on Schedule A hereto with an equal number of related Dividend Equivalent Rights on the date(s) of grant (each. WHEREAS. respectively. the restrictions on transfer. from time. without limitation. and WHEREAS. which are described on Schedule A and which. Voluntary Formula DSUs. the DSUs awarded to the Grantee under this Agreement will vest and be paid to the Grantee after the Grantee ceases to serve as a director of the Company.time. NOW. to the Grantee Elective DSUs. and (the "Grantee") (collectively. unless otherwise specified on Schedule A. 20 (the "Effective Date") between Tim Hortons Inc. Non. which (together with the Plan). Any additional DSUs granted pursuant to this Section shall be subject to the same terms and conditions applicable to the DSU to which the Dividend Equivalent Right relates. 2008.time. unless Grantee notifies the Company within 15 business days after receipt of the respective quarterly Schedule A. the Company will deliver to the Grantee an updated Schedule A setting out the total number of DSUs that have been granted to the Grantee under the Plan and pursuant to this Agreement from the Effective Date to the date of such Schedule. the Company may grant. WHEREAS. 2007 THIS AGREEMENT was originally made effective as of the day of . describes all the terms and conditions of the respective DSU grant. par value U. the Parties agree as follows: 1 Award. WHEREAS. 1. the provisions of the Plan (the provisions of which are hereby incorporated by reference) and. of this Agreement. including.1 The Company hereby grants to the Grantee awards (the "Awards") of the number of Formula DSUs. except as otherwise expressly set forth herein. On a quarterly basis. 1. vesting and payment provisions contained in Sections 2 through 5..employee directors of the Company. Formula DSUs. each grant of DSUs shall be evidenced by this Agreement. the Grantee serves as a director of the Company and is not otherwise employed by the Company or its Subsidiaries in any capacity and is therefore eligible to participate in the Plan.to. forfeiture. 1. pursuant to Section 11 of the Agreement. . Distributions and payments for DSUs and Dividend Equivalent Rights shall be made in accordance with the terms of Section 5 and 6 hereof. as designated by the Committee on or prior to such date and set out on Schedule A hereto.to.2- . as amended (the "Code"). subject to the terms of the Plan and this Agreement. THEREFORE. Date . Grants of DSUs are subject to certain administrative determinations to be made by the Human Resource and Compensation Committee of the Company (the "Committee") from time. and WHEREAS.3 This Agreement shall be construed in accordance and consistent with. shall apply in respect of all existing and future Awards. WHEREAS. a "DSU") with related Dividend Equivalent Rights. the capitalized terms used in this Agreement shall have the same definitions as set forth in the Plan.2 Each Dividend Equivalent Right represents the right to receive an amount in respect of all of the cash dividends or other distributions that are or would be payable with respect to the number of DSUs held by the Grantee if the DSUs were Shares. The DSUs and related Dividend Equivalent Rights granted pursuant to the Awards were subject to the execution and return of this Agreement by the Grantee.001 per share and any other securities into which such share is changed or for which such share is exchanged ("Share").S. The cash value attributable to Dividend Equivalent Rights shall be deferred and converted into additional DSUs based on the Fair Market Value of a Share on the date such dividend is paid. the Company has adopted the Tim Hortons Inc. provided that no such administrative determination will impair the rights of the Grantee without the consent of the Grantee. In the event that a DSU is forfeited pursuant to Section 5 hereof. pursuant to Section 4 of the Plan. a Delaware corporation (the "Company"). the "Parties") and is hereby amended and restated in its entirety effective as of December 31. Each DSU shall have the value of one share of Company's common stock.

The DSUs and Dividend Equivalent Rights granted pursuant to this Agreement may not be sold. unless otherwise set out on Schedule A hereto with respect to a specific Award. "separation from service" shall mean a "separation from service" within the meaning of Section 409A of the Code and Treasury Regulation Section 1. . but no later than 30 days after separation from service.1(h). the Committee shall conclusively determine the appropriate adjustments. to have such payment made at the end of the first calendar year commencing after the Grantee's separation from service.3- . in accordance with the Plan. Discretionary DSUs. Formula DSUs (not including Voluntary Formula DSUs or Elective DSUs) and. to the Grantee's outstanding DSUs.409A. 2006 Stock Incentive Plan (the "2006 Stock Plan")). at a time within the period beginning one year before the Grantee's separation from service and ending at the time of receipt of payment. All DSUs and accompanying Dividend Equivalents Rights granted hereunder shall vest upon the Grantee's separation from service. any adjustment to a DSU shall be on the basis that the amounts payable under such DSU shall continue to depend on the FMV of the Shares of the Company. misappropriation or conversion of assets or opportunities of the Company or any of its Subsidiaries. 4 Effect of Change of Shares Subject to the Plan. notwithstanding the foregoing. For purposes of this Agreement. If adjustments are to be made. Notwithstanding the foregoing. In the event of a Change in Capitalization (as defined in the Tim Hortons Inc.2 Restrictions on Transfer. shall be forfeited and no payment shall be made in respect thereof if the Grantee's separation from service is as a result of a termination due to the commission of an act of fraud or intentional misrepresentation or an act of embezzlement. if any. unless the Grantee has filed an election no later than December 31 of the year before the year in which a particular grant is made. and for greater certainty. transferred or otherwise disposed of and may not be pledged or otherwise hypothecated. they shall be made in the same manner as adjustments are made to awards that are outstanding under the 2006 Stock Plan. provided that. 3 Vesting. 5 Distributions. All DSUs granted to Grantee under the Agreement shall be paid out in a lump sum as soon as administratively possible following separation from service. Adjusted DSUs shall remain subject to the same conditions that were applicable to the DSUs prior to the adjustments. or a corporation related thereto.

All DSUs shall be paid in cash based on the Fair Market Value of a Share on the date of the Grantee's separation from service in accordance with the administrative determinations made by the Committee from time.6 Payment. income tax purposes. the Company shall be entitled to withhold and/or deduct any and all amounts required to be withheld from any payment hereunder on account of taxes or other governmental charges. Capitalized terms used in this Agreement that are not otherwise defined herein shall have the meanings attributed to such terms in the Plan. In the event of a conflict between the terms of the Plan and the terms of this Agreement. 8 No Right to Continued Service. The Grantee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof.4- .time. 10 Grantee Bound by the Plan. Notwithstanding the foregoing. 7 Execution of the Award. as applicable. Nothing in this Agreement or the Plan shall confer upon the Grantee any right to continuance of service as a Board member or otherwise as an employee of the Company or any of its Subsidiaries. as applicable.S.to. In the event of a separation of service as a result of the death or disability of the Grantee. . The grant of the DSUs and Dividend Equivalent Rights to the Grantee pursuant to the Awards was conditional upon the Grantee's execution and return of this Agreement to the Company or its designee (including by electronic means. 9 Residency of Grantee. the terms of the Plan will govern. if so provided) no later than . The Grantee hereby agrees to notify the Company within 15 business days of any change in the Grantee's residency for purposes of Canadian and U.time regarding the payments of DSUs upon settlement. which shall be noted on Schedule A from time. the payment in respect of the DSUs held by the Grantee shall be made to the Grantee's estate or legal representatives.to.

return receipt requested. the terms and conditions of this Agreement applicable to future grants. however. or to comply with the requirements of Regulation 6801(d) under the Income Tax Act (Canada) (the "ITA"). that (a) Grantee shall be deemed to have accepted. All notices and other communications hereunder shall be in writing. even if those amendments reduce. but only by a written instrument executed by the Parties hereto. This Agreement may be modified. demand.1458 If to Grantee: ame: ddress: l: x: mail: ______________________________________ ______________________________________ ______________________________________ ______________________________________ ______________________________________ . 12 Notice. and any terms or conditions may be waived.5- . Ontario L6K 2Y1 Attn: General Counsel Fax: (905) 845. without signature required. restrict or eliminate rights granted under this Agreement before those amendments are adopted. claim or other communication hereunder shall be deemed duly given if (and then three business days after) it is sent by registered or certified mail. and addressed to the intended recipient as set forth below: If to the Company: Tim Hortons Inc. 874 Sinclair Road Oakville. Any notice. request.11 Modification of Agreement. amended. postage prepaid. unless notice of objection is made. suspended or terminated. provided. as described in Section 1 hereof and (b) nothing herein shall restrict the Committee's right to amend this Agreement without the Grantee's consent and without additional consideration to the Grantee to the extent necessary to avoid penalties arising under Section 409A of the Code.

but no such notice. administrators and successors. construction and performance of this Agreement shall be governed by the laws of the State of Delaware without giving effect to the conflicts of laws principles thereof and. including the provisions of the 2006 Stock Plan to the extent specifically referred to herein or directly applicable to the terms hereof. facsimile number or electronic mail address set forth above using any other means (including personal delivery. or in any way relate to. request. 13 Severability. All obligations imposed upon the Grantee and all rights granted to the Company under this Agreement shall be binding upon the Grantee's heirs. telecopy. ordinary mail or electronic mail). 17 Entire Agreement. telex. messenger service. the remaining provisions of this Agreement shall not be affected by such holding and shall continue in full force in accordance with their terms. executors. with respect to the Award. and the Company and its Subsidiaries for all purposes. constitute the entire understanding between the Grantee and the Company and its Subsidiaries. Either party may change the address. 15 Successors in Interest. . The validity. binding and conclusive on the Grantee. This Agreement shall inure to the benefit of and be binding upon any successor to the Company. demand. Any dispute or disagreement which may arise under. the Grantee's heirs. or as a result of. Any determination made hereunder shall be final. and supersede all other agreements. This Agreement shall inure to the benefit of the Grantee's legal representatives. executors. 16 Resolution of Disputes. whether written or oral.Either party may send any notice or other communication hereunder to the intended recipient at the address. expedited courier. 14 Governing Law. construction or application of this Agreement shall be determined by the Committee. interpretation. This Agreement and the terms and conditions of the Plan. facsimile number or electronic mail address to which notices and other communications hereunder are to be delivered by giving the other parties notice in the manner herein set forth. claim or other communication will be deemed to have been duly given unless and until it actually is received by the intended recipient. to the extent applicable. the interpretation. administrators and successors. Should any provision of this Agreement be held by a court of competent jurisdiction to be unenforceable or invalid for any reason. the Code and ITA.6- .

18 Headings. and given effect to achieve compliance with both Section 409A of the Code and the ITA. the terms of the Awards shall be interpreted. 19 Counterparts. each of which shall constitute an original. By: Name: Title: GRANTEE By: ______________________________________ Print Name: ______________________________________ . This Agreement may be executed simultaneously in two or more counterparts. to the extent practicable. For Grantees subject to both Section 409A of the Code and the ITA. construed. the Agreement shall be interpreted and administered with respect to such Grantee so that the arrangements are not SDAs. the terms of the Awards and this Agreement remain subject to amendment at the sole discretion of the Committee to reach a resolution of the conflict as it shall determine in its sole discretion. and shall be interpreted and administered consistent with such intent. then for any Grantee who is subject to the ITA and not subject to Section 409A of the Code. 20 Compliance with Section 409A. If compliance with both Section 409A of the Code and the ITA is not practicable in connection with the Awards covered by this Agreement. but all of which taken together shall constitute one and the same agreement. To the extent that the interpretation and administration of this Agreement in accordance with Section 409A of the Code would cause any of the arrangements contemplated herein to be a SDA. This Agreement is intended to satisfy the requirements of Section 409A of the Code and is intended not to be a "salary deferral arrangement" (a "SDA") within the meaning of the ITA.7______________________________________ ______________________________________ ______________________________________ . TIM HORTONS INC. The headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

In other words. provided.S.e. The number of DSUs to be awarded (dollar amount divided by FMV) will be based on the FMV on the first day of the next trading window after the quarterly Board meeting during which directors could trade. Notice Regarding Administrative Decisions made by the Committee The number of DSUs to be awarded will be based on the FMV of the Company's common shares on the Toronto Stock Exchange price (instead of the New York Stock Exchange).S.SCHEDULE A Cash Value (Cdn. the Canadian dollars will be translated into U. that additional deferrals under the U. In addition. even though the cash being deferred would have otherwise been payable at the quarterly Board meetings. Non. Consistent with Section 6 of the Agreement and the FMV determination in bullet #1 above. DSUs are payable and will be settled in Canadian dollars. unless the director provides notice to the Company that he/she would like to receive Canadian dollars. Voluntary Formula DSUs. Elective DSUs or Discretionary DSUs. dollars.$) on Grant Date Grant Date # and Type of DSUs* Director Residency <> * Specify Formula DSUs.S. however. no interest or other compensation will accrue as a result of the delay between the date of the Board meeting and the actual grant date (i. the DSU grant will only occur on the first day of the next trading window after the Company's quarterly earnings release is made public.Employee Director Deferred Compensation Plan can be made only in U. first day of the next succeeding trading window during which directors could trade).S. directors.. For U. . dollars as of the date of separation of service.

which are described on Schedule A and which. unless otherwise specified on Schedule A. "separation from service" shall mean a "separation from service. and WHEREAS. 4 Effect of Change of Shares Subject to the Plan. the Committee shall conclusively determine the appropriate adjustments. the "Parties"). 1. vesting and payment provisions contained in Sections 2 through 5. in order to provide an additional incentive to non. individually. the Company has adopted the Tim Hortons Inc. 20 (the "Effective Date"). forfeiture. as amended from time to time (the "Plan").Employee Director Deferred Stock Unit Plan. the Parties agree as follows: 1 Awards. "Fair Market Value" or "FMV" on any date shall be equal to the mean of the high and low prices at which Shares are traded on the Toronto Stock Exchange on such date or the mean of the high and low prices at which the Shares are traded on the New York Stock Exchange. the Company will deliver to the Grantee an updated Schedule A setting out the total number of DSUs that have been granted to the Grantee under the Plan and pursuant to this Agreement from the Effective Date to the date of such Schedule. Elective DSUs.001 per share and any other securities into which such share is changed or for which such share is exchanged ("Share"). inclusive.S. 2 Restrictions on Transfer. WHEREAS. they shall be made in the same manner as adjustments are made to awards that are outstanding under the 2006 Stock Plan. a Delaware corporation (the "Company"). Directors) Tim Hortons Inc. Voluntary Formula DSUs. if any. the capitalized terms used in this Agreement shall have the same definitions as set forth in the Plan.S.3 This Agreement shall be construed in accordance and consistent with. In the event of a Change in Capitalization (as defined in the Tim Hortons Inc. describes all the terms and conditions of the respective DSU grant. the provisions of the Plan (the provisions of which are hereby incorporated by reference) and. 3 Vesting. [Date] THIS AGREEMENT. the Company may grant. pursuant to Section 4 of the Plan.employee directors of the Company. a "DSU") with related Dividend Equivalent Rights. except as otherwise expressly set forth herein.. including. transferred or otherwise disposed of and may not be pledged or otherwise hypothecated. and subject to. On a quarterly basis. 1. without limitation. Voluntary Formula DSUs and Discretionary DSUs (all as defined in the Plan and collectively referred to herein as "DSUs" or. and Discretionary DSUs as set out on Schedule A hereto with an equal number of related Dividend Equivalent Rights on the date(s) of grant (each a "Grant Date") set forth on Schedule A. provided that. 1.to. The cash value attributable to Dividend Equivalent Rights shall be deferred and converted into additional DSUs based on the Fair Market Value of a Share on the date such dividend is paid. The DSUs and Dividend Equivalent Rights granted pursuant to this Agreement may not be sold. unless Grantee notifies the Company within 15 business days after receipt of the respective quarterly Schedule A. to the Grantee Elective DSUs. Each DSU shall have the value of one share of Company's common stock. NOW. to the Grantee's outstanding DSUs. made effective as of the day of . shall apply in respect of all existing and future Awards. Distributions and payments for DSUs and Dividend Equivalent Rights shall be made in accordance with the terms of Section 5 and 6 hereof.2 Each Dividend Equivalent Right represents the right to receive an amount in respect of all of the cash dividends or other distributions that are or would be payable with respect to the number of DSUs held by the Grantee if the DSUs were Shares. as designated by the Committee on or prior to such date and set out on Schedule A hereto. and WHEREAS.time.$0.S.1 The Company hereby grants to the Grantee awards (the "Awards") of the number of Formula DSUs. and (the "Grantee") (collectively. Non." within the meaning of Section 409A of the Code and Treasury Regulation Section 1. The DSUs and related Dividend Equivalent Rights granted pursuant to the Awards shall be subject to the execution and return of this Agreement by the Grantee. If adjustments are to be made. provided that no such administrative determination will impair the rights of the Grantee without the consent of the Grantee. THEREFORE.409A. -2- . from time. par value U. Adjusted DSUs shall remain subject to the same conditions that were applicable to the DSUs prior to the adjustments.time. the related Dividend Equivalent Right shall also be forfeited. each grant of DSUs shall be evidenced by this Agreement. of this Agreement. the restrictions on transfer. which (together with the Plan). except as may be permitted pursuant to Sections 5 and 11 of this Agreement. Formula DSUs.Exhibit 10(k) Form of Amended and Restated Deferred Stock Unit Award Agreement (U. Grants of DSUs are subject to certain administrative determinations to be made by the Human Resource and Compensation Committee of the Company (the "Committee") from time. respectively. is between Tim Hortons Inc. 2006 Stock Incentive Plan (the "2006 Stock Plan")). Any additional DSUs granted pursuant to this Section shall be subject to the same terms and conditions applicable to the DSU to which the Dividend Equivalent Right relates. Version) (Compliance with Section 409A of the Internal Revenue Code) AMENDED AND RESTATED DEFERRED STOCK UNIT AWARD AGREEMENT (with related Dividend Equivalent Rights) (U. In the event that a DSU is forfeited pursuant to Section 5 hereof. Grantee shall be deemed to have (i) accepted and agreed to the terms and conditions of the Awards and administrative determinations described on the Schedule and (ii) confirmed their agreement and acknowledgment that the terms of this Agreement continue to comply in full force and effect to all such future Awards.1(h). All DSUs and accompanying Dividend Equivalents Rights granted hereunder shall vest upon the Grantee's separation from service.to. For purposes of this Agreement.

unless otherwise set out on Schedule A hereto with respect to a specific Award.Employee Directors' Deferred Compensation Plan (the "NQDC Plan") no later than the date permitted under the NQDC Plan.to. -3- . 5 Distributions. 6 Payment. misappropriation or conversion of assets or opportunities of the Company or any of its Subsidiaries. but no later than 30 days after separation from service. as applicable.notwithstanding the foregoing. Unless the Grantee has made a valid election under the Company's U.to. If the Grantee has made a valid election under the NQDC Plan with respect to some or all of the DSUs granted under this Agreement. and. Nothing in this Agreement or the Plan shall confer upon the Grantee any right to continuance of service as a Board member or otherwise as an employee of the Company or any of its Subsidiaries.time regarding the payments of DSUs upon settlement. if so provided) no later than . Non. 7 Execution of the Awards. the Company shall be entitled to withhold and/or deduct any and all amounts required to be withheld from any payment hereunder on account of taxes or other governmental charges. All DSUs shall be paid in cash based on the Fair Market Value of a Share on the date of the Grantee's separation from service in accordance with the administrative determinations made by the Committee from time. or a corporation related thereto. 8 No Right to Continued Service.time.S. The Committee reserves the right to limit the length of time that DSUs may be deferred beyond separation from service under the NQDC Plan. Notwithstanding the foregoing. the DSUs shall be paid in accordance with the terms of the NQDC Plan. Notwithstanding the foregoing. Discretionary DSUs. any adjustments to a DSU shall be on the basis that the amounts payable under such DSU shall continue to depend on the FMV of the Shares of the Company. shall be forfeited if the Grantee is removed from service due to the commission of an act of fraud or intentional misrepresentation or an act of embezzlement. The grant of the DSUs and Dividend Equivalent Rights to the Grantee pursuant to the Awards shall be conditional upon the Grantee's execution and return of this Agreement to the Company or its designee (including by electronic means. all DSUs granted to the Grantee shall be paid out in a lump sum. which shall be noted on Schedule A from time. all Formula DSUs (not including Voluntary Formula DSUs or Elective DSUs). at a time within the period beginning one year before the Grantee's separation from service and ending at the time of receipt of payment. as soon as administratively possible.

as amended (the "Code"). restrict or eliminate rights granted under this Agreement before those amendments are adopted. demand. unless notice of objection is made. 12 Notice. amended. the payment in respect of the DSUs held by the Grantee shall be made to the Grantee's estate or legal representatives. postage prepaid. as applicable. in the aggregate. All notices and other communications hereunder shall be in writing. that (a) Grantee shall be deemed to have accepted. claim or other communication hereunder shall be deemed duly given if (and then three business days after) it is sent by registered or certified mail. The Grantee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof. and (b) nothing herein shall restrict the Committee's right to amend this Agreement without the Grantee's consent and without additional consideration to the Grantee to the extent necessary to avoid penalties arising under Section 409A of the Internal Revenue Code of 1986. the terms of the Plan will govern. 874 Sinclair Road Oakville. without signature required. even if those amendments reduce. the terms and conditions of this Agreement applicable to future grants. 11 Modification of Agreement. Ontario L6K 2Y1 Attn: General Counsel Fax: (905) 845. In the event of a separation of service as a result of the death or disability of the Grantee. 183 days during any twelve (12) month period commencing January 1 of any given year and ending December 31 of such year. and Canadian income tax purposes and the Grantee hereby agrees to notify the Company within 15 business days of any change in the Grantee's residency for such purposes. and addressed to the intended recipient as set forth below: If to the Company: Tim Hortons Inc. In the event of any conflict between the terms of the Plan and the terms of this Agreement.9 Residency of Grantee. however. request.S. or to comply with the requirements of Regulation 6801(d) under the ITA. This Agreement may be modified. 10 Grantee Bound by the Plan. Any notice. the Grantee covenants that he or she will not be present in Canada for a period or periods exceeding. return receipt requested. In addition. as described in Section 1 hereof. but only by a written instrument executed by the Parties hereto.1458 -4- . The Grantee represents and warrants to the Company that the Grantee is a resident of the United States for U. c/o The TDL Group Corp. provided. and any terms or conditions may be waived. suspended or terminated.

-5- . or as a result of. 13 Severability. This Agreement shall inure to the benefit of the Grantee's legal representatives. or in any way relate to. 16 Resolution of Disputes. the remaining provisions of this Agreement shall not be affected by such holding and shall continue in full force in accordance with their terms. construction and performance of this Agreement shall be governed by the laws of the State of Delaware without giving effect to the conflicts of laws principles thereof and. Any determination made hereunder shall be final. the Grantee's heirs. and the Company and its Subsidiaries for all purposes. executors. the interpretation. 15 Successors in Interest. messenger service. Either party may change the address. binding and conclusive on the Grantee. All obligations imposed upon the Grantee and all rights granted to the Company under this Agreement shall be binding upon the Grantee's heirs. telecopy. request. Should any provision of this Agreement be held by a court of competent jurisdiction to be unenforceable or invalid for any reason. administrators and successors. facsimile number or electronic mail address set forth above using any other means (including personal delivery. to the extent applicable. facsimile number or electronic mail address to which notices and other communications hereunder are to be delivered by giving the other parties notice in the manner herein set forth. ordinary mail or electronic mail). 14 Governing Law. Any dispute or disagreement which may arise under. claim or other communication will be deemed to have been duly given unless and until it actually is received by the intended recipient. the Code and the ITA.If to Grantee: Name: Address: Tel: Fax: Email: Either party may send any notice or other communication hereunder to the intended recipient at the address. executors. expedited courier. telex. interpretation. construction or application of this Agreement shall be determined by the Committee. administrators and successors. The validity. demand. but no such notice. This Agreement shall inure to the benefit of and be binding upon any successor to the Company.

The headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 18 Headings.17 Entire Agreement. This Agreement and the terms and conditions of the Plan. but all of which taken together shall constitute one and the same agreement. 19 Counterparts. whether written or oral. This Agreement is intended to satisfy the requirements of Section 409A of the Code with respect to amounts subject thereto. with respect to the Awards. This Agreement may be executed simultaneously in two or more counterparts. each of which shall constitute an original. TIM HORTONS INC. including the provisions of the 2006 Stock Plan and the NQDC Plan to the extent specifically referred to herein or directly applicable to the terms hereof. 20 Compliance with Section 409A. and supersede all other agreements. and shall be interpreted and administered consistent with such intent. constitute the entire understanding between the Grantee and the Company. By: Name: Title: GRANTEE _____________________________________________ Print Name: __________________________________ -6______________________________________ ______________________________________ ______________________________________ .

SCHEDULE A
Cash Value (Cdn.$) on Grant Date

Grant Date

# and Type of DSUs*

Director Residency

Total DSUs as of

:

* Specify Formula DSUs, Voluntary Formula DSUs, Elective DSUs or Discretionary DSUs. Notice Regarding Administrative Decisions made by the Committee

The number of DSUs to be awarded will be based on the FMV of the Company's common shares on the Toronto Stock Exchange price (instead of the New York Stock Exchange).

The number of DSUs to be awarded (dollar amount divided by FMV) will be based on the FMV of the first day of the next trading window after the quarterly Board meeting during which directors could trade. In other words, even though the cash being deferred would have otherwise been payable at the quarterly board meetings, the DSU grant will only occur on the first day of the next trading window after the Company's quarterly earnings release is made public. In addition, no interest or other compensation will accrue as a result of the delay between the date of the Board meeting and the actual grant date (i.e., first day of the next succeeding trading window during which directors could trade).

Consistent with Section 6 of the Agreement and the FMV determination in bullet #1 above, DSUs are payable and will be settled in Canadian dollars. For U.S. directors, the Canadian dollars will be translated into U.S. dollars as of the date of separation of service, unless the director provides notice to the Company that he/she would like to receive Canadian dollars; provided, however, that additional deferrals under the U.S. Non- Employee Director Deferred Compensation Plan can be made only in U.S. dollars.

Exhibit 10(l) Information regarding Quantitative and Qualified Disclosures About Market Risk on pages 75 to 77 of Tim Hortons Inc.'s 2007 Annual Report on Form 10- K filed with the Securities and Exchange Commission on February 26, 2008 (file no. 001- 32843) Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to financial market risks associated with foreign exchange rates, commodity prices, interest rates and inflation. In accordance with our policies, we manage our exposure to various market- based risks. Foreign Exchange Risk Our exposure to foreign exchange risk is primarily related to fluctuations between the Canadian dollar and the U.S. dollar. Our primary foreign exchange exposure to our cash flows results from purchases by Canadian operations in U.S. dollars and payments from Canadian operations to U.S. operations. Net cash flows between the Canadian and U.S. dollar currencies were in excess of $140 million for fiscal 2007. In addition, we are exposed to foreign exchange fluctuations when we translate our U.S. operating results into Canadian dollars for reporting purposes. While these fluctuations are not significant to the consolidated operating results, the fluctuations in exchange rates do impact our U.S. segment operating results, and can affect the comparability between quarters and year- to- year. Also, from time to time, we hold U.S. dollars and other U.S. dollar net positions in Canadian dollar functional currency entities, to support our business needs and as a result of our cross- border structure. The holding of U.S. dollar net positions in these entities can cause foreign exchange gains and losses which are included in Other (income) expense, net, and can, therefore, affect our earnings. We seek to manage significant cash flows and net income exposures related to exchange rate changes between these two currencies. We may use derivative products to reduce the risk of a significant impact on our cash flows or net income. Forward currency contracts are entered into to reduce some of the risk related to purchases paid for by the Canadian operations in U.S. dollars, such as coffee, including certain intercompany purchases. In addition, historically, we hedged Wendy's investment in its Canadian subsidiaries. We do not hedge foreign currency exposure in a manner that would entirely eliminate the effect of changes in foreign currency exchange rates on net income and cash flows. We have a policy forbidding speculating in foreign currency. By their nature, derivative financial instruments involve risk including the credit risk of non- performance by counterparties, and our maximum potential loss may exceed the amount recognized in our balance sheet. To minimize this risk, except in certain circumstances, we limit the notional amount per counterparty to a maximum of $100.0 million. Forward currency contracts to sell Canadian dollars and buy US$35.6 million and US$28.1 million were outstanding as of December 30, 2007 and December 31, 2006, respectively, primarily to hedge coffee purchases from third parties, including intercompany purchases. The fair value unrealized loss on these forward contracts was $1.2 million as of December 30, 2007 and as of December 31, 2006, there was an unrealized gain of $1.6 million. In 2005, we entered into forward currency contracts that matured in March 2006 to sell $500.0 million and buy US$427.4 million to hedge the repayment of cross- border intercompany notes being marked- to- market beginning in the third quarter of 2005. Previously, the translation of these intercompany notes was recorded in comprehensive income, rather than in the Consolidated Statements of Operations, in accordance with SFAS No. 52 Foreign Currency Translation. The fair value unrealized loss on these contracts as of January 1, 2006 was $2.3 million, net of taxes of $1.4 million. On the maturity date of March 3, 2006, we received US$427.4 million from the counterparties and disbursed to the counterparties $500.0 million, resulting in a net cash flow of US$13.1 million ($14.9 million) to the counterparties (representing the difference from the contract rate to spot rate on settlement). These forward currency contracts remained highly effective cash flow hedges and qualified for hedge accounting treatment through their maturity. As a result, changes in the fair value of the effective portion of these foreign currency contracts offset changes in the crossborder intercompany notes, and a $0.9 million gain was recognized as the ineffective portion of the foreign currency contracts in 2006. In 2005, we entered into forward currency contracts to sell $578.0 million Canadian dollars and buy US$490.5 million in order to hedge certain net investment positions in Canadian subsidiaries. Under SFAS No. 133 Accounting for Derivative Instruments and Hedging Activities these forward currency contracts were designated as highly effective hedges. The fair value unrealized loss on these contracts was $5.8 million, net of taxes of $3.6 million as of January 1, 2006. On the maturity dates in April, 2006, we received US$490.5 million from the counterparties and disbursed to the counterparties $578.0 million, resulting in a net cash flow of US$14.9 million ($17.0 million) to the counterparties (representing the difference from the contract rate to spot rate on settlement). These forward currency contracts remained highly effective cash flow hedges and qualified for hedge accounting treatment through their maturity. The cumulative fair value realized loss on these contracts was $13.3 million, net of taxes of $3.7 million, on maturity in April 2006. Changes in the fair value of these foreign currency net investment hedges are included in the translation adjustments line of other comprehensive income (loss). No amounts related to these net investment hedges impacted earnings. At the current level of annual operating income generated from our U.S. operations and current U.S. dollar cash flow exposures, if the U.S. currency rate changes by 10% the entire year, the annual impact on our net income and annual cash flows would not be material. Commodity Risk We purchase certain products such as coffee, wheat, oil and sugar in the normal course of business, the prices of which are affected by commodity prices. Therefore, we are exposed to some price volatility related to weather and more importantly, various other market conditions outside of our control. However, we do employ various purchasing and pricing contract techniques in an effort to minimize volatility. Generally these techniques include setting fixed prices for periods of up to one year with suppliers, setting in advance the price for products to be delivered in the future and unit pricing based on an average of commodity prices over the corresponding period of time. We purchase a significant amount of green coffee and typically have purchase commitments fixing the price for a minimum of six months, and typically hedge against the risk of foreign exchange at the same time. We do not generally make use of financial instruments to hedge commodity prices, partly because of these contract pricing techniques. As we make purchases beyond our current commitments, we may be subject to higher commodity prices depending upon prevailing market conditions. While price volatility can occur, which would impact profit margins, we have some ability to increase selling prices to offset a rise in commodity prices, subject to consumer acceptance. Interest Rate Risk Prior to February 2006, we had insignificant external borrowings. We are exposed to interest rate risk because our term debt of $300.0 million bears a floating rate of interest, which is partially offset by cash that is primarily invested in floating rate instruments. We seek to manage our net exposure to interest rate risk and our net borrowing costs by managing the mix of fixed and floating rate instruments based on capital markets and business conditions. We will not enter into speculative swaps or other speculative financial contracts.

In February 2006, we entered into an interest rate swap for $100.0 million of our $300.0 million term loan facility to convert a portion of the variable rate debt from floating rate to fixed rate. In the second quarter of 2007, we entered into an additional $30.0 million interest rate swap, resulting in a total of $130.0 million in interest rate swaps outstanding in connection with our term loan. The swaps convert a portion of the variable rate debt from floating rate to fixed rate. The interest rate swaps essentially fix the interest rate on $130.0 million of the $300.0 million term loan at 5.16% and mature on February 28, 2011. The weighted average interest rate on the term debt, including the swapped portion, was 5.17% for fiscal 2007 (2006: 5.01%). The interest rate swaps are considered to be highly effective cash flow hedges according to criteria specified in SFAS No. 133 Accounting for Derivative Instruments and Hedging Activities. The fair value unrealized loss on these contracts as of December 30, 2007 was $0.5 million, net of taxes of $0.3 million. If interest rates change by 100 basis points, the impact on our annual net income which would be reduced due to our variable rate investments, would not be material.

However. we may not be able to adjust prices to sufficiently offset the effect of the various cost increases without negatively impacting consumer demand. and labour costs. property holdings at fixed costs are substantial. Several factors tend to reduce the impact of inflation for our business: inventories approximate current market prices. if several of the various costs in our business experience inflation at the same time. there is some ability to adjust prices.Inflation Consolidated Financial Statements determined on an historical cost basis may not accurately reflect all the effects of changing prices on an enterprise. . and liabilities are repaid with dollars of reduced purchasing power. such as commodity price increases beyond our ability to control.

or is reasonably likely to materially affect. 2. and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected.15(f)) for the registrant and have: a) Designed such disclosure controls and procedures.15(e) and 15d. and 5. based on our most recent evaluation of internal control over financial reporting. to ensure that material information relating to the registrant. Schroeder Chief Executive Officer . the financial statements. whether or not material. the registrant's internal control over financial reporting. c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures. or caused such internal control over financial reporting to be designed under our supervision. this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made. Date: November 7. 3. The registrant's other certifying officer and I have disclosed. to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record. Schroeder. the periods presented in this report. results of operations and cash flows of the registrant as of. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a. to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a.Q of Tim Hortons Inc. Schroeder Name: Title: b) Donald B. Based on my knowledge. particularly during the period in which this report is being prepared. 4. and for. I have reviewed this quarterly report on Form 10. not misleading with respect to the period covered by this report. process. and Any fraud.. certify that: 1. as of the end of the period covered by this report based on such evaluation.15(f) and 15d. 2008 /s/ Donald B.Exhibit 31(a) CERTIFICATIONS I. is made known to us by others within those entities. Donald B. Based on my knowledge. that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. including its consolidated subsidiaries. and other financial information included in this report. summarize and report financial information. b) Designed such internal control over financial reporting. or caused such disclosure controls and procedures to be designed under our supervision. in light of the circumstances under which such statements were made. fairly present in all material respects the financial condition.

and 5. process. The registrant's other certifying officer and I have disclosed. 4.15(e) and 15d. summarize and report financial information.15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a. 2008 b) /s/ Cynthia J. c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures. Based on my knowledge. Devine Name: Title: Cynthia J. whether or not material. not misleading with respect to the period covered by this report. to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record. in light of the circumstances under which such statements were made. and other financial information included in this report. Cynthia J. to ensure that material information relating to the registrant.15(f) and 15d.. or caused such disclosure controls and procedures to be designed under our supervision. that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. as of the end of the period covered by this report based on such evaluation. or is reasonably likely to materially affect. Date: November 7. based on our most recent evaluation of internal control over financial reporting. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a. b) Designed such internal control over financial reporting. or caused such internal control over financial reporting to be designed under our supervision. the registrant's internal control over financial reporting. particularly during the period in which this report is being prepared. the periods presented in this report. the financial statements. this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made. including its consolidated subsidiaries. 3. Based on my knowledge. to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. and Any fraud. fairly present in all material respects the financial condition. Devine. 2. certify that: 1. Devine Chief Financial Officer .Q of Tim Hortons Inc. is made known to us by others within those entities. and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected. and for. I have reviewed this quarterly report on Form 10. results of operations and cash flows of the registrant as of.Exhibit 31(b) CERTIFICATIONS I.15(f)) for the registrant and have: a) Designed such disclosure controls and procedures.

(the "Issuer"). in all material respects. Schroeder. Donald B.Q fairly presents. the financial condition and results of operations of the Issuer. .Q") for the quarter ended June 29.Oxley Act of 2002. I.C. Schroeder * This certification is being furnished as required by Rule 13a. Schroeder Name: Donald B. Section 1350.C. and shall not be deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. Section 1350. 2008 (ii) /s/ Donald B. and the information contained in the Form 10.S. the Chief Executive Officer of Issuer certify that. 78m(a) or 78o(d)).C.S. 2008 of Tim Hortons Inc. Dated: November 7.S. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act. and accompanies the quarterly report on Form 10. to the best of my knowledge: (i) the Form 10.Oxley Act of 2002 * This certification is provided pursuant to 18 U.Q (the "Form 10.Q fully complies with the requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (15 U.14(b) under the Securities Exchange Act of 1934 (the "Exchange Act") and Section 1350 of Chapter 63 of Title 18 of the United States Code. as adopted pursuant to Section 906 of the Sarbanes. except to the extent that the Company specifically incorporates this certification therein by reference.Exhibit 32(a) Certification of CEO Pursuant to 18 U. As Adopted Pursuant to Section 906 of the Sarbanes.

as adopted pursuant to Section 906 of the Sarbanes.Oxley Act of 2002.S. Section 1350. in all material respects. Devine. 78m(a) or 78o(d)). Devine * This certification is being furnished as required by Rule 13a.Q") for the quarter ended June 29. Dated: November 7. and shall not be deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. As Adopted Pursuant to Section 906 of the Sarbanes. and the information contained in the Form 10.14(b) under the Securities Exchange Act of 1934 (the "Exchange Act") and Section 1350 of Chapter 63 of Title 18 of the United States Code. 2008 of Tim Hortons Inc.Q fairly presents.C. except to the extent that the Company specifically incorporates this certification therein by reference. .C.Q (the "Form 10.S. the financial condition and results of operations of the Issuer.S. Cynthia J. Section 1350. and accompanies the quarterly report on Form 10. (the "Issuer"). the Chief Financial Officer of Issuer certify that. I.C.Oxley Act of 2002 * This certification is provided pursuant to 18 U. Devine Name: Cynthia J. 2008 (ii) /s/ Cynthia J.Q fully complies with the requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (15 U. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act. to the best of my knowledge: (i) the Form 10.Exhibit 32(b) Certification of CFO Pursuant to 18 U.

effectiveness of advertising/marketing and operational programs. and other possible factors we have not identified. In addition. consumer confidence. personnel. unforeseen catastrophic or widespread events affecting the health and/or welfare of large numbers of people in the markets in which the Company's restaurants are located and/or which otherwise cause a catastrophic loss or interruption in the Company's ability to conduct its business. convenience.S. When the Company franchise locations in certain U. They often include words such as "believes. There can be no assurance that the Company will be able to successfully adapt its brand. could affect our actual results and cause such results to differ materially from those anticipated in forward. Factors such as inflation. including those beyond the Company's control such as actions taken or not taken by its franchisees relating to health or safety. markets. development efforts. In some of the Company's U. The number and location of units." "expects.baking facility or find alternate products or production methods. . and restaurants to these differing market conditions. (the "Company") desires to take advantage of the "safe harbor" provisions of the Act.looking. and incidents occurring at or affecting its strategic business partners. litigation and claims. 2008 with the U. Tim Hortons Inc. where appropriate. consumer preferences and perceptions (including food safety. in 2007. number and location of competing restaurants. markets." "anticipates. is forward. the U. or corporate social responsibility programs. Factors Affecting Growth. security breaches or other fraudulent activities associated with its electronic payment systems.Exhibit 99 TIM HORTONS INC. health or dietary preferences and perceptions). legal and regulatory compliance. Any substantial or sustained decline in the Company's Canadian business would materially and adversely affect its financial performance. In addition. under certain circumstances. and utility and other operating costs. The Company's manufacturing and distribution operations in the U. Additionally. most notably in the U.S. changes in capital market conditions that affect valuations of restaurant companies in general or the value of the Company's stock in particular. changes in international commodity markets (especially for coffee. The ability of the Company and its franchisees to finance new restaurant development. Forward. legal claims. are also subject to competition from other qualified distributors. The Company's financial performance is highly dependent upon its Canadian operating segment. equipment failures. The quick. the cost and/or availability of a qualified workforce and other labour issues.S. If the joint venture terminates. and other benefits the Company believes penetration yields.S. improvements and additions to existing restaurants." The following factors. Certain information provided or stated. and in other press releases.S. traffic patterns. The Company may also continue to selectively close restaurants in the U. location. national. availability and shipping costs of supplies. and value perception of food products offered. and. so long as those statements are identified as forward.looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those disclosed in the statement. as well as sales levels at existing restaurants and factors affecting construction costs generally. early in the development of new markets. weather events and other calamities. markets in which the Company seeks to expand may have competitive conditions (including higher construction. regional.S. The quick. The Importance of Canadian Segment Performance and Brand Reputation.store sales of existing restaurants in the market. consumer tastes. demographic trends. seasonality. occupancy. and the effects of war or terrorist activities and any governmental responses thereto..restaurant industry is affected by changes in international. higher energy and/or fuel costs. the Company has not yet achieved the level of penetration needed in order to drive brand recognition. Safe Harbor Under the Private Securities Litigation Reform Act of 1995 The Private Securities Litigation Reform Act of 1995 (the "Act") provides a "safe harbor" for forward. physical. even by isolated incidents. or operating costs). its customers' connection to its brand. which lowers its earnings. The occurrence of any of the following factors is likely to result in increased operating costs and depressed profitability of the Company's distribution operations and may also damage its relationship with franchisees: higher transportation costs." "intends. Market and Other Conditions. Manufacturing and Distribution Operations. In addition. or filings made with the SEC or the Canadian securities regulators. The Company's success is also dependent on its ability to maintain and enhance the value of its brand. are affected by economic conditions.service.restaurant industry is intensely competitive with respect to price.S. price and new product development by the Company and its competitors are also important factors.looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Certain of the Company's competitors." "estimates." "seeks" or words of similar meaning. that are not achieving acceptable levels of profitability or change its growth strategies over time. inflation. climate conditions. it may be necessary. palm oil and wheat). There can be no assurance that the Company will be able to achieve new restaurant growth objectives or same. and a positive relationship with its franchisees. litigation relating to food quality. regional and local organizations. franchisees.K filed on February 26. Securities and Exchange Commission ("SEC") and the Canadian securities regulators. which could reduce the price the Company can charge for supplies sold to U. Economic. new or additional sales tax on the Company's products.store sales and growth opportunities. the type. shortages or changes in the cost or availability of qualified workforce and other labour issues. enhanced governmental regulation (including nutritional and franchise regulations). decreased consumer discretionary spending and other changes in general economic and political conditions driving down demand. or discretionary spending patterns that may differ from its existing markets. price fluctuations. qualified franchisees. or future or conditional verbs. and its brand is largely unknown in many U. which is highly volatile in price and supply. increased leverage to marketing dollars. have substantially larger marketing budgets. primarily through the quality. communications. and local economic and political conditions. real estate sites and type and quality of food. the opening of new restaurants may have a negative effect on the same. The Company and its franchisees compete with international." "should. and pursue other strategic initiatives (such as acquisitions and joint ventures).service. Brand value can be severely damaged.S. handling or nutritional content." "plans. for the Company to build its own par. including statements regarding future financial performance and the expectations and objectives of management. and all of its profit.looking statements to encourage companies to provide prospective information. including many of the factors set forth in this cautionary statement. service. attractiveness of facilities. environmental or technological disruptions in the Company or its suppliers' manufacturing and/or warehouse facilities or equipment. in addition to other factors set forth in our Form 10. there can be no assurance that the Company and its joint venture partner will continue with the Maidstone Bakeries joint venture.S.looking statements. such as "will." "could" or "may. also affect restaurant operations and expenses and impact same. which accounted for approximately 92% of its consolidated revenues. this can result in increased franchisee relief and support costs. markets. quality and speed of service. acquire and sell restaurants. would affect its ability to maintain and/or increase sales and build new restaurants.S. disruptions in its supply chain or changes in the price. food costs. spending patterns. affiliates. the adoption of additional environmental or health and safety laws and regulations.store sales growth in Canada or the U. The Company's success depends on various factors. disruptions (including shortages or interruptions) in its supply chain. including interest rates and other government policies impacting land and construction costs and the cost and availability of borrowed funds. variety. Competition. benefit costs.

The Company and its franchisees are subject to various federal. these transactions involve various other risks. contingent and other liabilities and potential profitability of acquisition candidates. franchise. Foreign Exchange Fluctuations. nutritional disclosure and advertising. The Company intends to evaluate potential mergers. which are subject to many of the same risks that also affect new store development. state. sanitation and safety. Mergers. weaknesses. taxes or franchise requirements.Government Regulation. In addition. restaurants are impacted when the U. The development and operation of restaurants depend to a significant extent on the selection. and diversion of management's attention from the demands of the existing business. labour (including applicable minimum wage requirements. or the implementation of additional regulatory requirements. acquisitions. working and safety conditions.S. In addition. land use. the Company's U. and development of suitable sites. or restrictive covenants in debt instruments or other agreements with third parties. difficulties successfully integrating. overtime. accounting. family leave and other employment matters.S. franchisees. Changes in these laws and regulations. alliances. Acquisitions and Other Strategic Transactions.S. operations would be less profitable because of the increase in U.S. franchise laws and regulations.S.S. the potential loss of key personnel of an acquired business. unanticipated changes in business and economic conditions affecting an acquired business. Increases in these costs could make it harder to expand into the U. are priced in U.discrimination. and U. including the Maidstone Bakeries joint venture arrangements. which are subject to laws and regulations regarding zoning. design and other matters. food preparation. the possibility the Company could incur impairment charges if an acquired business performs below expectations. operating. Conversely. the Company's ability to achieve projected economic and operating synergies. vertical integration opportunities and divestitures. fluctuations in the values of Canadian and U.S.acquired operations or employees. dollars in international markets. In addition. may adversely affect the Company's financial results. and citizenship requirements). and increase relief and support costs to U.S.up costs. difficulties maintaining uniform standards. including accurately assessing the value. operating costs resulting from the purchase of supplies from Canadian sources. and local ("governmental") laws and regulations. environmental matters (including drive thrus). traffic. affecting the Company's earnings. The Company's Canadian restaurants are vulnerable to increases in the value of the U. . dollar falls in value relative to the Canadian dollar. provincial. tax. Additional governmental laws and regulations affecting the Company and its franchisees include: business licensing. dollar as certain commodities.S. maintaining and managing newly. there can be no assurance that the Company will be able to complete desirable transactions. operations will contribute less to the Company's consolidated results. and anti. such as coffee. future growth potential. controls. whether anticipated or not. particularly increases in applicable minimum wages. employee benefits. as a result of limitations of the IRS ruling under Section 355 in connection with the Company's separation from Wendy's.S. ramp. acquisition. procedures and policies. dollars can affect the value of the Company's common stock and any dividends the Company pays. as U. strengths. for reasons including a failure to secure financing. health. joint venture investments.

the transition to an integrated financial system. litigation matters. an inability to adequately protect the Company's intellectual property and trade secrets from infringement actions or unauthorized use by others (including in certain international markets that have uncertain or inconsistent laws and/or application with respect to intellectual property and contract rights). lawsuits and diversion of management attention. Other Factors. or third parties under arrangement(s) with it. The following factors could also cause the Company's actual results to differ from its expectations: an inability to retain executive officers and other key personnel or attract additional qualified management personnel to meet business needs. construction. site location and development and/or certain equipment utilized in operations. or at the Company's office locations. including those that support. or if the Company experiences a significant breach of customer. . fines. failures of or inadequacies in computer systems at restaurants.determined losses and loss estimates. operational or financial shortcomings of franchised restaurants and franchisees.Privacy Protection. which could present risks of maintaining and designing internal controls and SOX 404 compliance.looking statements. including wage and hour claims.looking statements contained in this release. liabilities and losses associated with owning and leasing significant amounts of real estate. Readers are cautioned not to place undue reliance on forward. or to reflect the occurrence of unanticipated events. GAAP policies or practices.S. Except as required by federal or provincial securities laws. falsified claims. employee claims for employment or labour matters. control. particularly with respect to an external security breach of customer information that the Company. the Company undertakes no obligation to publicly release any revisions to the forward. secure. including obesity litigation. which speak only as of the date hereof. employee and/or business data. health and safety risks or conditions of the Company's restaurants associated with design. or to update them to reflect events or circumstances occurring after the date of this release. If the Company fails to comply with new and/or increasingly demanding laws and regulations regarding the protection of customer. implementation of new or changes in interpretation of U. track and/or record electronic payment transactions. the Company's reputation could be damaged and result in lost sales. and potential unfavorable variance between estimated and actual liabilities and volatility of actuarially. employee or company data. The introduction of credit payment systems and the Company's reloadable cash card makes us more susceptible to a risk of loss in connection with these issues. the Maidstone Bakeries facility. the Company's manufacturing facilities. the distribution facilities.