10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x 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

¨ 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	51-0370507
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)

874 Sinclair Road, Oakville, ON, Canada	L6K 2Y1
(Address of principal executive offices)	(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 x    No ¨

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  x	Accelerated filer  ¨
Non-accelerated filer  ¨	Smaller reporting company  ¨
(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 ¨    No x

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	181,129,672 shares

Exhibit Index on page 49.

TIM HORTONS INC. AND SUBSIDIARIES

INDEX

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

2

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, 2008			September 30, 2007
Revenues
Sales	$	333,581		$	327,020
Franchise revenues
Rents and royalties		155,214			143,449
Franchise fees		20,200			20,072
		175,414			163,521
Total revenues		508,995			490,541
Costs and expenses
Cost of sales		293,056			288,168
Operating expenses		53,596			51,617
Franchise fee costs		19,840			20,432
General and administrative expense		29,986			30,758
Equity (income)		(9,429	)		(9,861	)
Other (income) expense, net		(126	)		1,090
Total costs and expenses, net		386,923			382,204
Operating income		122,072			108,337
Interest (expense)		(6,288	)		(6,118	)
Interest income		957			1,823
Income before income taxes		116,741			104,042
Income taxes (note 2)		37,984			36,661
Net income	$	78,757		$	67,381
Basic and diluted earnings per share of common stock (note 3)	$	0.43		$	0.36
Weighted average number of shares of common stock outstanding — Basic (in thousands) (note 3)		182,431			187,684
Weighted average number of shares of common stock outstanding — Diluted (in thousands) (note 3)		182,662			187,879
Dividend per share of common stock	$	0.09		$	0.07

See accompanying Notes to the Condensed Consolidated Financial Statements.

3

TIM HORTONS INC. AND SUBSIDIARIES

PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)

(Canadian dollars in thousands, except share and per share data)

	Year-to-date period ended
	September 28, 2008			September 30, 2007
Revenues
Sales	$	975,960		$	913,364
Franchise revenues
Rents and royalties		444,640			410,803
Franchise fees		59,404			56,239
		504,044			467,042
Total revenues		1,480,004			1,380,406
Costs and expenses
Cost of sales		858,440			805,419
Operating expenses		158,227			148,881
Franchise fee costs		58,028			53,909
General and administrative expense		96,996			90,318
Equity (income)		(26,792	)		(28,873	)
Other (income) expense, net		(596	)		1,870
Total costs and expenses, net		1,144,303			1,071,524
Operating income		335,701			308,882
Interest (expense)		(18,608	)		(17,882	)
Interest income		4,020			5,143
Income before income taxes		321,113			296,143
Income taxes (note 2)		105,562			102,262
Net income	$	215,551		$	193,881
Basic earnings per share of common stock (note 3)	$	1.17		$	1.03
Diluted earnings per share of common stock (note 3)	$	1.17		$	1.02
Weighted average number of shares of common stock outstanding — Basic (in thousands) (note 3)		184,735			189,049
Weighted average number of shares of common stock outstanding — Diluted (in thousands) (note 3)		185,013			189,319
Dividend per share of common stock	$	0.27		$	0.21

See accompanying Notes to the Condensed Consolidated Financial Statements.

4

TIM HORTONS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)

(in thousands of Canadian dollars)

	As at
	September 28, 2008			December 30, 2007
ASSETS
Current assets
Cash and cash equivalents	$	67,614		$	157,602
Restricted cash and cash equivalents (note 1)		7,712			37,790
Restricted investments (note 1)		11,959			—
Accounts receivable, net		118,091			104,889
Notes receivable, net		15,879			10,824
Deferred income taxes		10,680			11,176
Inventories and other, net (note 4)		60,293			60,281
Advertising funds restricted assets (note 5)		24,714			20,256
Total current assets		316,942			402,818
Property and equipment, net		1,260,679			1,203,259
Notes receivable, net		16,862			17,415
Deferred income taxes		26,026			23,501
Intangible assets, net		2,740			3,145
Equity investments		132,929			137,177
Other assets		12,745			9,816
Total assets	$	1,768,923		$	1,797,131
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable (note 6)	$	109,291		$	133,412
Accrued liabilities:
Salaries and wages		13,673			17,975
Taxes		17,206			34,522
Other (note 6)		64,982			95,777
Advertising funds restricted liabilities (note 5)		43,602			39,475
Current portion of long-term obligations		6,768			6,137
Total current liabilities		255,522			327,298
Long-term liabilities
Term debt		330,737			327,956
Advertising fund restricted debt (note 5)		8,471			14,351
Capital leases		57,858			52,524
Deferred income taxes		14,716			16,295
Other long-term liabilities		66,050			56,624
Total long-term liabilities		477,832			467,750
Commitments and contingencies (note 7)
Stockholders’ equity
Common stock (U.S. $0.001 par value per share): Authorized: 1,000,000,000 shares; Issued: 193,302,977 shares		289			289
Capital in excess of par value		930,932			931,084
Treasury stock, at cost: 11,246,722 and 6,750,052 shares, respectively (note 8)		(384,405	)		(235,155	)
Common stock held in trust, at cost: 439,864 and 421,344 shares, respectively (note 9)		(15,089	)		(14,628	)
Retained earnings		624,761			458,958
Accumulated other comprehensive (loss)		(120,919	)		(138,465	)
Total stockholders’ equity		1,035,569			1,002,083
Total liabilities and stockholders’ equity	$	1,768,923		$	1,797,131

See accompanying Notes to the Condensed Consolidated Financial Statements.

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TIM HORTONS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

(in thousands of Canadian dollars)

	Year-to-date period ended
	September 28, 2008			September 30, 2007
Net cash provided from operating activities	$	244,826		$	236,049
Cash flows (used in) provided from investing activities
Capital expenditures		(112,060	)		(114,611	)
Purchase of restricted investments		(11,959	)		—
Principal payments on notes receivable		2,563			5,285
Other investing activities		(8,979	)		(2,715	)
Net cash used in investing activities		(130,435	)		(112,041	)
Cash flows (used in) provided from financing activities
Purchase of treasury stock		(149,770	)		(135,039	)
Purchase of common stock held in trust		(3,842	)		(7,202	)
Dividend payments		(49,748	)		(39,744	)
Purchase of common stock for settlement of restricted stock units		(226	)		(110	)
Proceeds from issuance of debt, net of issuance costs		2,068			2,588
Principal payments on other long-term debt obligations		(4,897	)		(3,433	)
Net cash used in financing activities		(206,415	)		(182,940	)
Effect of exchange rate changes on cash		2,036			(7,191	)
Decrease in cash and cash equivalents		(89,988	)		(66,123	)
Cash and cash equivalents at beginning of period		157,602			176,083
Cash and cash equivalents at end of period	$	67,614		$	109,960
Supplemental disclosures of cash flow information:
Interest paid	$	17,630		$	18,821
Income taxes paid	$	117,567		$	103,444
Non-cash investing and financing activities:
Capital lease obligations incurred	$	10,518		$	9,875

See accompanying Notes to the Condensed Consolidated Financial Statements.

6

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	$	289		$	289
Common stock in excess of par value
Balance at beginning of period	$	931,084		$	918,043
Stock-based compensation		(152	)		3,925
Tax sharing payment from Wendy’s		—			9,116
Balance at end of period	$	930,932		$	931,084
Treasury stock
Balance at beginning of period	$	(235,155	)	$	(64,971	)
Purchased during the period (note 8)		(149,770	)		(170,604	)
Reissued during the period (note 9)		520			420
Balance at end of period	$	(384,405	)	$	(235,155	)
Common stock held in trust
Balance at beginning of period	$	(14,628	)	$	(9,171	)
Purchased during the period (note 9)		(3,842	)		(7,202	)
Disbursed from Trust during the period (note 9)		3,381			1,745
Balance at end of period	$	(15,089	)	$	(14,628	)
Retained earnings
Balance at beginning of period	$	458,958		$	248,980
Opening adjustment – adoption of FIN 48		—			(6,708	)
Adjusted opening retained earnings		458,958			242,272
Net income		215,551			269,551
Dividends		(49,748	)		(52,865	)
Balance at end of period	$	624,761		$	458,958
Accumulated other comprehensive income (loss)
Balance at beginning of period		(138,465	)		(74,766	)
Other comprehensive income (loss) (note 10)		17,546			(63,699	)
Balance at end of period		(120,919	)		(138,465	)
	$	1,035,569		$	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	193,303		193,303
Treasury stock
Balance at beginning of period	(6,750	)	(1,930	)
Purchased during the period (note 8)	(4,512	)	(4,832	)
Reissued during the period (note 9)	15		12
Balance at end of period	(11,247	)	(6,750	)
Common stock held in trust
Balance at beginning of period	(421	)	(266	)
Purchased during the period (note 9)	(116	)	(207	)
Disbursed from Trust during the period (note 9)	97		52
Balance at end of period	(440	)	(421	)
Common stock issued and outstanding	181,616		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

TIM HORTONS INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited) – (Continued)

(in thousands of Canadian dollars, except share and per share data)

Accounting for fair value measurements

Effective December 31, 2007, the Company adopted SFAS No. 157 – Fair Value Measurements (“SFAS 157”). In February 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position No. FAS 157-2 – Effective Date of FASB Statement No. 157, which provides a one year deferral of the effective date of SFAS 157 for non-financial assets and non-financial liabilities, except those that are recognized or disclosed in the financial statements at fair value at least annually. Therefore, the Company has adopted the provisions of SFAS 157 with respect to its financial assets and liabilities only (see note 13).

Effective December 31, 2007, the Company also adopted SFAS No. 159 – The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS 159”). 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-by-contract basis with changes in value reported in earnings. The Company did not elect to report any assets or liabilities at fair value under this standard.

NOTE 2 INCOME TAXES

The effective tax rate was 32.5% and 35.2 % for the third quarters ended September 28, 2008 and September 30, 2007, respectively. The variance between the quarters is primarily explained by the reduction in Canadian federal statutory tax rates in 2008, which represented a $2.7 million reduction in income tax expense for the quarter ended September 28, 2008. In addition there were certain items that affected the third quarter of 2007 effective tax rate that did not recur in 2008.

The effective tax rate was 32.9% and 34.5% for the year-to-date periods ended September 28, 2008 and September 30, 2007, respectively. The variance between periods is primarily explained by the reduction in Canadian federal statutory tax rates in 2008, which represented a $7.3 million reduction in income tax expense for the year-to-date period ended September 28, 2008.

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. 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”), as prescribed in SFAS No. 128 – Earnings Per Share, as the sum of: (i) the amount, if any, the employee must pay upon exercise; (ii) the amount of compensation cost attributed to future services and not yet recognized; and (iii) the amount of tax benefits (both current and deferred), if any, that would be credited to additional paid-in capital assuming exercise of the options; net of shares assumed to be repurchased from the assumed proceeds, when dilutive. During the third quarter and year-to-date period ended September 28, 2008, stock options were anti-dilutive and, therefore, excluded from the calculation of earnings per share of common stock.

The computations of basic and diluted earnings per share of common stock are shown below:

	Third quarter ended				Year-to-date period ended
	September 28, 2008		September 30, 2007		September 28, 2008		September 30, 2007
Net income for computation of basic and diluted earnings per share of common stock	$	78,757	$	67,381	$	215,551	$	193,881
Weighted average shares outstanding for computation of basic earnings per share of common stock (in thousands)		182,431		187,684		184,735		189,049
Dilutive restricted stock units (in thousands)		231		195		278		270
Weighted average shares outstanding for computation of diluted earnings per share of common stock (in thousands)		182,662		187,879		185,013		189,319
Basic earnings per share of common stock	$	0.43	$	0.36	$	1.17	$	1.03
Diluted earnings per share of common stock	$	0.43	$	0.36	$	1.17	$	1.02

10

TIM HORTONS INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited) – (Continued)

(in thousands of Canadian dollars, except share and per share data)

NOTE 4 INVENTORIES AND OTHER, NET

Inventories and other include the following as of September 28, 2008 and December 30, 2007:

	September 28, 2008			December 30, 2007
Inventories – finished goods	$	48,011		$	48,872
Inventory obsolescence provision		(747	)		(1,228	)
Inventories, net		47,264			47,644
Prepaids and other		13,029			12,637
Total inventories and other, net	$	60,293		$	60,281

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. Separate advertising funds are administered for Canada and the U.S. In accordance with SFAS No. 45 – Accounting for Franchisee Fee Revenue, the revenue, 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, and the Company acts as, in substance, an agent with regard to these contributions. The assets held by these advertising funds are considered restricted. The restricted current assets, restricted current liabilities and advertising fund restricted collateralized long-term debt are included in the Company’s Condensed Consolidated Balance Sheet. In addition, at September 28, 2008 and December 30, 2007, Property and equipment, net, included $27.4 million and $33.6 million, respectively, of advertising fund property and equipment.

NOTE 6 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES – OTHER

Included within Accounts payable are construction holdbacks and construction accruals of $26.6 million and $24.6 million as at September 28, 2008 and December 30, 2007, respectively.

Included within Accrued liabilities, Other are the following obligations as at September 28, 2008 and December 30, 2007:

	September 28, 2008		December 30, 2007
Gift certificate obligations	$	11,946	$	25,147
Cash card obligations		19,475		37,784
Other accrued liabilities		33,561		32,846
	$	64,982	$	95,777

Other accrued liabilities includes accrued rent expense, deposits, and various equipment and other accruals.

11

TIM HORTONS INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited) – (Continued)

(in thousands of Canadian dollars, except share and per share data

NOTE 7 COMMITMENTS AND CONTINGENCIES

The Company has guaranteed certain lease and debt payments, primarily related to franchisees, amounting to $0.7 million as at both September 28, 2008 and December 30, 2007. In the event of default by a franchise owner, the Company generally retains the right to acquire possession of the related restaurants. The Company is also the guarantor on $8.3 million as at September 28, 2008 and $8.1 million as at December 30, 2007 in letters of credit and surety bonds with various parties; however, management does not expect any material loss to result from these guarantees because management does not believe performance will be required. The length of the lease, loan and other arrangements guaranteed by the Company or for which the Company is contingently liable varies, but generally does not exceed seven years.

The Company has entered into purchase arrangements with some of its suppliers having terms which generally do not exceed one year. 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. These agreements help the Company secure pricing and product availability. The Company does not believe these agreements expose the Company to significant risk.

Third parties may seek to hold the Company responsible for retained liabilities of Wendy’s. Under the separation agreements dictating the terms of the Company’s separation from Wendy’s, Wendy’s has agreed to indemnify the Company for claims and losses relating to these retained liabilities. However, if those liabilities are significant, 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, there can be no assurance that the Company will be able to recover the full amount of its losses from Wendy’s.

In addition to the guarantees described above, the Company is party to many agreements executed in the ordinary course of business that provide for indemnification of third parties under specified circumstances, including agreements with lessors of real property leased by the Company, distributors, service providers for various types of services (including commercial banking, investment banking, tax, actuarial and other services), software licensors, marketing and advertising firms, securities underwriters and others. Generally, these agreements obligate the Company to indemnify the third parties only if certain events occur or claims are made, as these contingent events or claims are defined in each of these agreements. The Company believes that the resolution of any claims that might arise in the future in connection with these arrangements, either individually or in the aggregate, would not materially affect the earnings or financial condition of the Company.

On June 12, 2008, 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, Fairview Donut Inc. and Brule Foods Ltd., alleging, generally, that the Company’s Always Fresh baking system and expansion of lunch offerings has led to lower franchisee profitability. The claim, which seeks class action certification on behalf of Canadian franchisees, asserts damages of approximately $1.95 billion. The Company believes the claim is frivolous and completely without merit, and the Company intends to vigorously defend the action. However, 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. The result and value of this claim is not determinable at this time, and coupled with the Company’s position that this claim is without merit, the Company has not recorded any provisions in the Condensed Consolidated Financial Statements.

In addition, the Company and its subsidiaries are parties to various other legal actions and complaints arising in the ordinary course of business. Reserves related to the resolution of legal proceedings are included in Accounts payable on the Condensed Consolidated Balance Sheet. 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.

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TIM HORTONS INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited) – (Continued)

(in thousands of Canadian dollars, except share and per share data)

NOTE 8 CAPITAL STOCK

In October 2007, the Company’s Board of Directors approved a stock repurchase program authorizing the Company to purchase up to $200 million of common stock, not to exceed 9,354,264 of the Company’s outstanding shares (“share repurchase limit”). The Company authorized the commencement of the program only after receipt of all regulatory approvals, which were subsequently received. The Company was authorized to make repurchases under this program on the New York Stock Exchange (“NYSE”) and the Toronto Stock Exchange (“TSX”). For a significant portion of the repurchase program, the Company entered into a Rule 10b5-1 repurchase plan, 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. Purchases were based on the parameters of the Rule 10b5-1 plan. The Company also made repurchases at management’s discretion under this program from time-to-time, subject to market conditions, share price, cash position, and compliance with regulatory requirements. This program ended on October 30, 2008 in accordance with the original authorization of $200 million.

In the year-to-date period ended September 28, 2008, the Company purchased 4.5 million shares of its common stock for a total cost of $149.8 million under this repurchase program. The total accumulated purchases under this program as at September 28, 2008 are $185.3 million.

In the year-to-date period ended September 30, 2007, the Company purchased 3.9 million shares of its common stock for a total cost of $135.0 million under the Company’s first repurchase program, which was completed in September 2007.

NOTE 9 STOCK-BASED COMPENSATION

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				Year-to-date period ended
	September 28, 2008		September 30, 2007		September 28, 2008		September 30, 2007
Restricted stock units	$	1,871	$	1,440	$	6,863	$	6,279
Stock options and tandem SARs		154		—		538		—
Deferred stock units		334		245		514		535
Total stock-based compensation expense	$	2,359	$	1,685	$	7,915	$	6,814

In addition, a gain of $0.3 million was recorded during the third quarter of 2008 (loss of $0.1 million year-to-date 2008) relating to the total return swap (see note 12), more than offsetting the change from the fair value adjustment, discussed below, related to the stock options and tandem SARs.

Details of stock-based compensation grants and settlements during 2008 year-to-date are set forth below.

Restricted Stock Units

The Company’s Human Resource and Compensation Committee (“HRCC”) approved awards of 232,496 restricted stock units (“RSUs”) with dividend equivalent rights, which were granted on May 15, 2008. 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, 2008 was $33.02. This grant is scheduled to vest over a 30-month period. In accordance with SFAS No. 123R – Share-Based Payment (revised 2004) (“SFAS 123R”), RSUs granted to retirement-eligible employees are expensed immediately.

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TIM HORTONS INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited) – (Continued)

(in thousands of Canadian dollars, except share and per share data)

In the year-to-date period ended September 28, 2008, the Company funded its employee benefit plan trust, which, in turn, purchased approximately 0.1 million shares of common stock for approximately $3.8 million (0.2 million shares for $7.2 million in 2007). For accounting purposes, the cost of the purchase of shares held in trust has been accounted for as a reduction in outstanding shares of common stock, and the trust has been consolidated in accordance with FASB Interpretation No. 46R – Consolidation of Variable Interest Entities – an interpretation of ARB 51 (revised December 2003) (“FIN 46R”), since the Company is the primary beneficiary, as that term is defined by FIN 46R. The trust is used to fix the Company’s cash requirements in connection with the settlement, after vesting, 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, as amended and restated most recently in May 2008 (the “2006 Plan”).

In the year-to-date period ended September 28, 2008, approximately 217,000 (118,000 in year-to-date 2007) RSUs vested as part of the normal vesting schedule for previously granted awards (or otherwise). The Company’s settlement obligations, after provision for the payment of statutory withholding tax requirements, were satisfied by the disbursement of approximately 97,000 (52,000 in year-to-date 2007) shares held in the employee benefit plan trust, approximately 15,000 (12,000 in year-to-date 2007) shares issued from treasury, and the purchase of approximately 7,000 (3,000 on May 8, 2007) shares by an agent of the Company on behalf of the respective eligible employees on the open market on May 15, 2008, at an average purchase price of $33.34 ($34.89 in year-to-date 2007).

Stock options and tandem stock appreciation rights

The 2006 Plan is an omnibus plan, designed to allow for a broad range of equity-based compensation awards in the form of stock options, restricted stock, RSUs, SARs, dividend equivalent rights, performance awards and share awards to eligible employees and directors of the Company or its subsidiaries.

Stock options – In accordance with SFAS 123R, the Company uses the Black-Scholes-Merton option pricing model which requires the use of subjective assumptions. These assumptions include: estimating the length of time employees will retain their stock options before exercising them (the “expected term”); the expected volatility of the Company’s common stock price over the expected term; and, the number of options that will ultimately not complete their vesting requirements (“forfeitures”). Changes in subjective assumptions, as well as changes in the share price from period to period, can materially affect the estimate of fair value of stock-based compensation and, consequently, the related amount of compensation expense recognized in the Condensed Consolidated Statement of Operations (see below).

Stock appreciation rights – SARs may be granted alone or in conjunction with a stock option. A SAR related to a stock option terminates upon the expiration, forfeiture or exercise of the related stock option, and is exercisable only to the extent that the related stock option is exercisable. Similarly, a stock option expires upon the expiration, forfeiture or exercise of the related SAR.

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. The awards are accounted for using the liability method, which results in a revaluation of the liability to fair value each period, and are expensed over the vesting period. Stock options with tandem SARs granted to retirement-eligible employees are expensed immediately.

The HRCC approved awards of 167,411 stock options with tandem SARs, which were granted on May 15, 2008 (nil in 2007) at a fair value grant day price of $33.02, to its named executive officers. The fair value of these awards was determined, in accordance with SFAS 123R, at the grant date by applying the Black-Scholes-Merton option-pricing model using the following assumptions:

Grant date/remeasurement date	May 15, 2008
Expected volatility	20% - 21%
Risk-free interest rate	3.0% - 3.1%
Expected life	3 – 5 years
Expected dividend yield	1.1%

The awards were revalued to fair value at September 28, 2008 using the share price, which was $31.76 at the end of the third quarter of 2008 resulting in a small loss during the third quarter (a small gain year-to-date 2008). No other significant changes were made in the assumptions.

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TIM HORTONS INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited) – (Continued)

(in thousands of Canadian dollars, 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						Year-to-date period ended
	September 28, 2008			September 30, 2007			September 28, 2008			September 30, 2007
Net income	$	78,757		$	67,381		$	215,551		$	193,881
Other comprehensive income (loss)
Translation adjustments		7,869			(23,400	)		18,191			(56,148	)
Cash flow hedges:
Net change in fair value of derivatives		(1,755	)		(4,756	)		(2,778	)		(7,696	)
Amounts realized in earnings during the quarter		754			2,864			2,133			2,116
Total cash flow hedges		(1,001	)		(1,892	)		(645	)		(5,580	)
Total other comprehensive (loss) income		6,868			(25,292	)		17,546			(61,728	)
Total comprehensive income	$	85,625		$	42,089		$	233,097		$	132,153

Income tax (expense)/recovery components netted in the above table are detailed as follows:

	Third quarter ended						Year-to-date period ended
	September 28, 2008			September 30, 2007			September 28, 2008			September 30, 2007
Cash flow hedges:
Net change in fair value of derivatives	$	511		$	(486	)	$	1,217		$	(1,359	)
Amounts realized in earnings during the quarter	$	(151	)	$	(3	)	$	(198	)	$	(18	)

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TIM HORTONS INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited) – (Continued)

(in thousands of Canadian dollars, except share and per share data)

NOTE 11 SEGMENT REPORTING

The Company franchises, and to a lesser extent, operates Tim Hortons restaurants that are part of the quick-service-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. The Company’s reportable segments are the geographic locations of Canada and the U.S. As set forth in the table below, there are no amounts of revenues shown between reportable segments.

The table below presents information about reportable segments:

	Third quarter ended										Year-to-date period ended
	September 28, 2008			% of Total		September 30, 2007			% of Total		September 28, 2008			% of Total		September 30, 2007			% of Total
Revenues
Canada	$	472,430		92.8	%	$	453,408		92.4	%	$	1,369,012		92.5	%	$	1,267,151		91.8	%
U.S.		36,565		7.2	%		37,133		7.6	%		110,992		7.5	%		113,255		8.2	%
	$	508,995		100.0	%	$	490,541		100.0	%	$	1,480,004		100.0	%	$	1,380,406		100.0	%
Segment Operating Income (Loss)
Canada	$	132,892		101.6	%	$	119,066		100.2	%	$	369,860		101.4	%	$	341,719		101.3	%
U.S.		(2,119	)	(1.6	)%		(288	)	(0.2	)%		(5,188	)	(1.4	)%		(4,327	)	(1.3	)%
Reported Segment Operating Income		130,773		100.0	%		118,788		100.0	%		364,672		100.0	%		337,392		100.0	%
Corporate Charges(1)		(8,701	)				(10,441	)				(28,971	)				(28,510	)
Consolidated Operating Income		122,072					108,337					335,701					308,882
Interest, net		(5,331	)				(4,295	)				(14,588	)				(12,739	)
Income Taxes		(37,984	)				(36,661	)				(105,562	)				(102,262	)
Net Income	$	78,757				$	67,381				$	215,551				$	193,881
Capital Expenditures
Canada	$	30,704		66.8	%	$	29,855		67.5	%	$	79,095		70.6	%	$	77,517		67.6	%
U.S.		15,282		33.2	%		14,397		32.5	%		32,965		29.4	%		37,094		32.4	%
	$	45,986		100.0	%	$	44,252		100.0	%	$	112,060		100.0	%	$	114,611		100.0	%

⁽¹⁾ Corporate charges include certain overhead costs that are not allocated to individual business segments, the impact of certain foreign currency exchange gains and losses, and a nominal amount of income from international operations. Corporate charges also include a $3.1 million restructuring charge in the year-to-date period ended September 28, 2008 (see note 14).

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TIM HORTONS INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited) – (Continued)

(in thousands of Canadian dollars, except share and per share data)

Revenues consisted of the following:

	Third quarter ended				Year-to-date period ended
	September 28, 2008		September 30, 2007		September 28, 2008		September 30, 2007
Sales
Warehouse sales	$	289,174	$	280,015	$	841,968	$	776,808
Company-operated restaurant sales		8,869		12,741		31,610		43,683
Sales from restaurants consolidated under FIN 46R		35,538		34,264		102,382		92,873
	$	333,581	$	327,020	$	975,960	$	913,364
Franchise revenues
Rents and royalties	$	155,214	$	143,449	$	444,640	$	410,803
Franchise fees		20,200		20,072		59,404		56,239
		175,414		163,521		504,044		467,042
Total revenues	$	508,995	$	490,541	$	1,480,004	$	1,380,406

Cost of sales related to Company-operated restaurants were $10.3 million and $14.8 million for the third quarters ended September 28, 2008 and September 30, 2007, respectively, and $36.4 million and $50.2 million for the year-to-date periods ended September 28, 2008 and September 30, 2007, respectively.

The following table sets forth the number of franchised restaurants and related system activity for the third quarters and year-to-date periods ended September 28, 2008 and September 30, 2007:

	Third quarter ended				Year-to-date period ended
	September 28, 2008		September 30, 2007		September 28, 2008		September 30, 2007
Franchise Restaurant Progression
Franchise restaurants in operation – beginning of period	3,203		3,002		3,149		2,952
Franchises opened	49		38		104		75
Franchises closed	(11	)	(5	)	(28	)	(11	)
Net transfers within the system	10		5		26		24
Franchise restaurants in operation – end of period	3,251		3,040		3,251		3,040
Company-operated restaurants, net	43		70		43		70
Total systemwide restaurants	3,294		3,110		3,294		3,110

Excluded from the above franchise restaurant progression table are 261 primarily self-serve licensed locations in the Republic of Ireland and the United Kingdom as of September 28, 2008.

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TIM HORTONS INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited) – (Continued)

(in thousands of Canadian dollars, except share and per share data)

NOTE 12 FINANCIAL INSTRUMENTS – TOTAL RETURN SWAP

In May 2008, the Company entered into a total return swap (“TRS”) to help manage the variability in cash flows and, to a lesser extent, earnings associated with stock-based compensation awards that will settle in cash, namely the tandem SARs that are associated with stock options (see note 9). A TRS is a contract that involves the exchange of payments between the Company and a financial institution. The payments under the TRS are (i) those based on changes in the value of a reference asset, which, in this case, is the Company’s common stock, (ii) related dividends, and (iii) a variable interest rate specified in the contract. The number of underlying shares of the Company’s common stock covered under this contract is 107,000. The TRS did not qualify as an accounting hedge under SFAS No. 133 – Accounting for Derivative Instruments and Hedging Activities (“SFAS 133”); however, it is adjusted to fair value each period in accordance with SFAS 133. Gains and losses on the fair value adjustment of the TRS are included in General and administrative expense. The revaluation resulted in a gain of approximately $0.3 million during the third quarter of 2008 ($0.1 million loss year-to-date 2008). The TRS has a seven-year term but the contract allows for partial settlements over the term, without penalty.

NOTE 13 FAIR VALUE MEASUREMENTS

SFAS 157 defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. 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. Valuation techniques used to measure fair value under SFAS 157 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs. The first two levels are considered observable and the last unobservable. 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.

• Level 2 – Inputs, other than Level 1 inputs, that are observable for the assets or liabilities, either directly or indirectly. Level 2 inputs include quoted market prices for similar assets or liabilities; quoted prices in markets that are not active; or, other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• 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.

In accordance with SFAS 157, 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, 2008:

	Fair value measurements as of September 28, 2008
	Level 1		Level 2		Level 3		Total
Derivative Assets: Forward currency contracts	$	—	$	228	$	—	$	228
Derivative Liabilities: Interest rate swaps	$	—	$	3,904	$	—	$	3,904
Derivative Liabilities: Total return swap (note 12)	$	—	$	126	$	—	$	126

The Company values derivatives using valuations that are calibrated to the initial trade prices. Subsequent valuations are based on observable inputs to the valuation model, including exchange rates, interest rates, credit spreads, volatilities, and the Company’s share price.

NOTE 14 RESTRUCTURING COSTS

During the second quarter of 2008, as previously reported, changes were made to our management structure. As a result, certain employees left the organization under various retirement and other arrangements. A restructuring charge of $3.1 million was recorded in General and administrative expense in the second quarter of 2008 relating to these retirement and other arrangements.

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TIM HORTONS INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited) – (Continued)

(in thousands of Canadian dollars, except share and per share data)

NOTE 15 RECENT ACCOUNTING PRONOUNCEMENTS

In December 2007, the FASB issued SFAS No. 141R – Business Combinations (“SFAS 141R”). This Statement replaces FASB SFAS No. 141. SFAS 141R establishes principles and requirements for how an acquirer of a business recognizes and measures, in its financial statements, the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity. 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. 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, 2008. The Company is currently evaluating the potential impact, if any, of the adoption of SFAS 141R on the Company’s Consolidated Financial Statements.

On February 12, 2008, the FASB issued FASB Staff Position No. FAS 157-2 – Effective Date of FASB Statement No. 157 (“SFAS 157-2”), which amends SFAS 157 by delaying its effective date by one year for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Therefore, beginning on December 31, 2007, this standard applies prospectively to new fair value measurements of financial instruments and recurring fair value measurements of non-financial assets and non-financial liabilities. On December 29, 2008, the standard will also apply to all other fair value measurements (see note 13). The Company is currently evaluating the potential impact, if any, of the adoption of SFAS 157-2 on the Company’s Consolidated Financial Statements.

In December 2007, the FASB issued SFAS No. 160 – Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51. This Statement amends Accounting Research Bulletin 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. 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. In addition to the amendments to ARB 51, this Statement amends FASB Statement No. 128 – Earnings per Share, with the result that earnings-per-share data will continue to be calculated the same way as it was calculated before this Statement was issued. This Statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The Company is currently evaluating the impact of adoption of this pronouncement on its Consolidated Financial Statements.

In March 2008, the FASB issued SFAS No. 161 – Disclosures about Derivative Instruments and Hedging Activities (“SFAS 161”). 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, (ii) how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations, and (iii) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS 161 is to be applied prospectively for the first annual and interim reporting periods beginning on or after November 15, 2008, with early application encouraged. The Company is currently evaluating the impact of adoption of this pronouncement on its Consolidated Financial Statements.

In May 2008, the FASB issued SFAS No. 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. SFAS 162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. The Company is currently evaluating the impact of adoption of this pronouncement on its Consolidated Financial Statements.

NOTE 16 SUBSEQUENT EVENTS

The Company’s Board of Directors has approved a 2009 share repurchase program for up to $200 million, planned to commence during the first quarter of 2009. Implementation of the 2009 share repurchase program, and the extent of respective purchases under the program, are subject to regulatory compliance and will be at management’s discretion given prevailing market conditions and cost considerations.

Subsequent to the third quarter ended September 28, 2008, the Company announced its intention to rationalize some underperforming Company-operated restaurants in southern New England between the end of 2008 and early next year. The details of the rationalization plan are being finalized, and it is expected to result in an asset impairment charge for the affected restaurants. Management will also undertake a further impairment analysis related to the affected operating markets.

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TIM HORTONS INC. AND SUBSIDIARIES

ITEM 2. 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-K filed with the Securities and Exchange Commission (“SEC”) on February 26, 2008. We prepare our financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). All amounts are expressed in Canadian dollars unless otherwise noted. The following discussion includes forward-looking statements that are not historical facts but reflect our current expectation regarding future results. Actual results may differ materially from the results discussed in the forward-looking statements because of a number of risks and uncertainties, including the matters discussed below. Please refer to “Risk Factors” included in our Annual Report on Form 10-K and the risk factors set forth in our Safe Harbor statement attached hereto as Exhibit 99, as well as our other descriptions of risks set forth herein, for a further description of risks and uncertainties affecting our business and financial results. Historical trends should not be taken as indicative of future operations and financial results.

Our financial results are driven largely by changes in systemwide sales, which include restaurant-level sales at both franchise and Company-operated restaurants. As of September 28, 2008, 3,251 or 98.7% of our restaurants were franchised, representing 99.5% in Canada and 92.9% in the U.S. The amount of systemwide sales affects our franchisee royalties and rental income, as well as our distribution sales. We believe systemwide sales and average same-store sales provide meaningful information to investors concerning the size and health of our system, the overall health and financial performance of our brand and franchisee base, and ultimately, our financial performance on a consolidated and segmented basis. Changes in systemwide sales are driven by changes in average same-store sales and changes in the number of restaurants. Average same-store sales, one of the key metrics we use to assess our performance, provides information on total retail sales at restaurants operating systemwide throughout the relevant period and provides a useful comparison between periods. 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. (“FIN”) 46R – Consolidation of Variable Interest Entities – an interpretation of ARB No. 51 (revised December 2003) (“FIN 46R”); however, franchise restaurant sales result in royalties and rental income, which are included in our franchise revenues, and also impact distribution revenues.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations may contain certain non-GAAP financial measures to assist readers in understanding our performance. Non-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.S. GAAP. Where non-GAAP financial measures are used, we have provided the most directly comparable measures calculated and presented in accordance with U.S. GAAP and a reconciliation to U.S. GAAP measures.

References herein to “Tim Hortons,” the “Company,” “we,” “our,” or “us” refer to Tim Hortons Inc. and its subsidiaries, unless specifically noted otherwise.

Executive Overview

We franchise, and to a lesser extent, operate Tim Hortons restaurants in Canada and the U.S. As the franchisor, we collect royalty income on our franchised restaurant sales. Our business model also includes controlling the real estate for most of our franchised restaurants. As of September 28, 2008, we leased or owned the real estate for approximately 82% of our system restaurants, which generates a recurring stream of rental income. Real estate that is not controlled by us is generally for non-standard restaurants, including, for example, kiosks in offices, hospitals, colleges, and airports, as well as self-serve kiosks located in gas and convenience locations and grocery stores. We distribute coffee and other beverages, non-perishable food, supplies, packaging and equipment to system restaurants in Canada through our five distribution centres. In the third quarter of 2007, we completed the roll-out of distribution of frozen and refrigerated products from our Guelph facility, which services approximately 85% of our Ontario restaurants. In the U.S., we supply similar products to system restaurants through third-party distributors. In addition to our Canadian and U.S. franchising business, we have 261 licensed locations in the Republic of Ireland and the United Kingdom, which are primarily self-serve kiosks operating under the name “Tim Hortons.”

Systemwide sales grew by 7.8% in the third quarter of 2008 and 8.3% on a year-to-date basis in 2008, as a result of new restaurant expansion in both Canada and the U.S. and continued same-store sales growth in Canada. Systemwide sales include restaurant-level sales at both franchised and Company-operated restaurants.

In the third quarter of 2008, Canadian same-store sales growth was 3.8% (7.7% in the third quarter of 2007). Pricing impacted the third quarter of 2008 Canadian growth rates by approximately 3.4%. While the frequency of visits moderated in Canada, our loyal customers are still coming to us. While pricing contributed the majority of our growth in the quarter, 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. Consumer cost pressures, including volatile gasoline prices, could have also been contributing factors to the overall sales results for the quarter. On a year-to-date basis, Canadian same-store sales growth was 4.4% (6.9% in 2007 year-to-date) of which pricing accounted for approximately 3.4% of the increase. As a result of pricing implemented earlier this year, we currently expect that there will be approximately 3.0% of a pricing impact in the fourth quarter of 2008 in Canada versus the comparable period in 2007.

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Our U.S. same-store sales declined by 0.6% in the third quarter of 2008 (4.5% growth in the third quarter of 2007) and grew on a year-to-date basis by 1.2% (4.1% in 2007). We had approximately 3.2% of pricing in the third quarter of 2008 and approximately 1.9% on a year-to-date basis, all of which did not translate into sales growth. Offsetting the pricing impact was lower transactions in our U.S. restaurants. As a result of pricing implemented earlier this year, we currently expect that there will be approximately 3.2% pricing impact in same-store sales results in the fourth quarter of 2008 in the U.S. versus the comparable period in 2007. Price increases do not necessarily translate into an equivalent level of sales growth, which largely depends on customer response to new pricing.

In the third quarter of 2008, the U.S. economy further deteriorated, showing significant financial market and economic weakness. The Canadian economy also experienced some weakness, but to a much lesser extent. Historically, 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, but the state of the macro-economic environment and resulting sales climate continues to be challenging, particularly in the U.S. Our third quarter 2008 earnings performance and positive same-store sales growth in Canada demonstrates our brand strength in the face of unprecedented economic and consumer challenges. Although our brand in the U.S. is less developed and we faced sales and earnings challenges in our U.S. segment due to the current economic conditions and intensive competitive discounting activity, we delivered a strong consolidated performance in the third quarter of 2008. We are not immune to recessionary impacts and we expect, overall, to see continued volatility quarter-to-quarter in the restaurant sector and continued challenges in the macro-economic environment. This challenging environment may result in reductions in customer visits.

On a year-to-date basis, Canadian same-store sales growth rates are within the same-store sales growth targets established in February 2008 of 4%-6%, but our U.S. same-store sales are below the U.S. targets of 2%-4%. Based on sales performance year-to-date and the current economic weakness in the U.S., we do not expect to meet our 2008 same-store sales target in the U.S. of 2%-4% growth. We do expect to exceed the store expansion target of 90-110 locations in the U.S., with a stronger orientation toward non-standard restaurants and self-serve kiosks.

In the third quarter of 2008, our revenues increased $18.5 million, or 3.8%, over the third quarter of 2007 and increased $99.6 million, or 7.2%, in the year-to date period ended September 28, 2008 over the prior year-to-date period ended September 30, 2007. Rents and royalties revenues increased 8.2% in both the third quarter and year-to-date periods of 2008 compared to the same periods last year, which was consistent with systemwide sales growth. Higher relief, substantially all of which was in our U.S. segment, partially offset rents and royalties revenue growth. In addition, sales, consisting primarily of distribution sales, increased 2.0% to $333.6 million in the third quarter of 2008 compared to $327.0 million during the same period last year. Total sales and year-over-year growth were both affected by our continued effort to convert Company-operated restaurants to an owner-operator model, reducing revenues from Company-operated restaurants. There were 27 net fewer Company-operated restaurants in the quarter versus the prior year, bringing the total number of Company-operated restaurants in the system to 43. Sales from Company-operated restaurants were down 30.4%, or $3.9 million, compared to last year, offset in part by sales increases related to restaurants consolidated in accordance with FIN 46R. A total of 98.7% of the systemwide restaurants are now franchised. The transition of the Guelph facility to three-channel delivery (dry, frozen and refrigerated) was fully completed in the third quarter of 2007, contributing to the higher comparable year-to-date warehouse sales growth.

Over the last several quarters, we have been actively converting many of our U.S. Company-operated restaurants to operator agreements. Initially, after conversion, we may provide additional relief to the operator and, we may be required to consolidate these restaurants in accordance with FIN 46R. We believe that generally in the long-term, the franchising strategy provides better overall profitability to the Company.

Operating income increased $13.7 million, or 12.7%, 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, net of operating expenses, higher other income, higher franchise license renewals, and lower General and administrative expenses, partially offset by lower equity income. In the third quarter of 2007, General and administrative expenses included costs which did not recur in 2008, contributing to the lower expenses in the third quarter of 2008.

Operating income increased $26.8 million, or 8.7%, in the year-to-date period ended September 28, 2008 over the comparable year-to-date period in 2007. This increase was primarily due to the higher revenues, as discussed above, partially offset by higher General and administrative expense, lower equity income, and lower franchise fee income. In the year-to-date period of 2007, equity income included a non-cash tax benefit of approximately $1 million recognized by our bakery joint venture. This tax benefit did not recur in 2008. In addition, franchise fee costs were higher in 2008 as a result of a higher number of new units sold, and higher renovation and other support costs. Franchise fee income was also impacted by the timing of revenue recognition relating to U.S. equipment sales under our franchisee incentive program. General and administrative expense was $6.7 million higher in 2008 on a year-to-date basis compared to the year-to-date period in 2007 of which $3.1 million related to a restructuring charge incurred in the second quarter of 2008. Adjusted operating income growth, excluding the $3.1 million restructuring charge, was 9.7% for the year-to-date period ended September 28, 2008, as compared to the year-to-date period ended September 30, 2007 (see “Selected Operating and Financial Highlights” for a reconciliation to the most directly comparable U.S. GAAP measure). General and administrative expenses for the year-to-date period of 2007 included costs related to our franchisee convention, as mentioned above.

Our operating performance to the end of the third quarter was generally consistent with our annualized expectations for operating income growth of 10%, excluding the impact of the previously mentioned restructuring charge. We also plan to rationalize some underperforming Company-operated restaurants in southern New England (see Segment Operating Income (Loss) below for additional details). While the rationalization of underperforming restaurants will contribute to future earnings, the 2008 operating income target did not contemplate an impairment charge that will likely occur in the fourth quarter.

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Net income increased $11.4 million, or 16.9%, during the third quarter of 2008 as compared to the third quarter of 2007. The higher growth was the result primarily of higher operating income and a lower effective tax rate during the quarter of 32.5% versus 35.2% in the comparable period of 2007. The decrease in effective tax rate was primarily due to a lower Canadian statutory rate. Diluted earnings per share increased to $0.43 in the third quarter of 2008 from $0.36 in the third quarter of 2007. The diluted weighted average number of shares outstanding in the third quarter of 2008 was 182.7 million, which was 2.8% lower than the diluted weighted average share count in the third quarter of 2007, due to the Company’s share repurchase program.

On a year-to-date basis, 2008 net income increased $21.7 million, or 11.2%, as compared to the year-to-date period ended September 30, 2007. The increase in year-to-date net income was the result of the higher operating income and a lower effective tax rate, partially offset by higher net interest expense. Diluted earnings per share increased to $1.17 in the year-to-date period ended September 28, 2008 as compared to $1.02 in the year-to-date period ended September 30, 2007. The diluted weighted average number of shares outstanding was 185.0 million, or 2.3%, lower than the diluted weighted average share count in the year-to-date period in 2007, due to the Company’s share repurchase program.

On April 30, 2008, we announced changes to our executive management structure to both strengthen and streamline executive oversight of key business operations. In addition, certain employees have left the organization under various retirement and other arrangements. A restructuring charge of $3.1 million was recorded in the second quarter of 2008 in General and administrative expense relating to these retirement and other arrangements. The restructuring is expected to result in future annualized savings of approximately $1 million. Our 2008 operating income target of 10% growth excludes this one-time charge.

As part of our vertical integration strategy, we plan to construct a new coffee roasting facility, which will be located in southern Ontario. We will invest approximately $30 million in this facility, primarily in 2009. Consistent with our vertical integration investment strategy, the new roasting facility will provide system benefits important to our franchisees and the Company. When fully operational, this facility, coupled with our existing coffee roasting operation in Rochester, New York, will provide about three-quarters of our system needs. Equally important, our green coffee blending capability will help us protect the quality, integrity and supply of our proprietary coffee blend from tree to cup, at a very competitive rate for our franchisees and provide for a reasonable return on our investment. We continue to selectively invest in growth opportunities for our business and believe our financial position is a key enabler of our future growth.

In the third quarter of 2008, we repurchased approximately 1.6 million shares of our common stock at an average cost of $31.59 per share for a total cost of $49.5 million. On a year-to-date basis, we have repurchased 4.5 million shares of our common stock, for a total cost of $149.8 million. As of October 30, 2008, we have completed our second consecutive $200 million share repurchase program. A total of 6.0 million shares were repurchased under the 2007–2008 program, which commenced in November 2007. Under both repurchase programs, we have repurchased a combined total of 11.8 million shares, representing approximately 6.1% of shares outstanding at the time the initial share repurchase program was approved in November 2006.

Our Board of Directors has approved a 2009 share repurchase program for up to $200 million, planned to commence during the first quarter of 2009. For future years, commencement of the program at the beginning of the year will allow us to fully align our annual budgeting and capital allocation process, including capital expenditures, dividends, and share repurchases. Implementation of the 2009 share repurchase program, and the extent of respective purchases under the program, are subject to regulatory compliance and will be at management’s discretion given prevailing market conditions and cost considerations.

Consistent with our current dividend policy of paying a total of between 20%-25% of prior year, normalized annual net earnings in dividends each year, our Board of Directors approved a 28.6% increase in the quarterly dividend to $0.09 per share in February 2008. We declared and paid our March, May and September 2008 dividends at this rate. Our Board of Directors declared a quarterly dividend payable on December 4, 2008 to shareholders of record as of November 20, 2008, also at the $0.09 rate per share. The payment of future dividends remains subject to the discretion of our Board of Directors.

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Selected Operating and Financial Highlights

	Third quarter ended						Year-to-date period ended
	September 28, 2008			September 30, 2007			September 28, 2008			September 30, 2007
Systemwide sales growth(1)		7.8	%		11.7	%		8.3	%		11.0	%
Average same-store sales growth(2)
Canada		3.8	%		7.7	%		4.4	%		6.9	%
U.S.		(0.6	)%		4.5	%		1.2	%		4.1	%
Systemwide restaurants		3,294			3,110			3,294			3,110
Revenues (in millions)	$	509.0		$	490.5		$	1,480.0		$	1,380.4
Operating income (in millions)	$	122.1		$	108.3		$	335.7		$	308.9
Adjusted operating income (in millions)(3)	$	122.1		$	108.3		$	338.8		$	308.9
Net income (in millions)	$	78.8		$	67.4		$	215.6		$	193.9
Diluted earnings per share	$	0.43		$	0.36		$	1.17		$	1.02
Weighted average number of shares of common stock outstanding – Diluted (in millions)		182.7			187.9			185.0			189.3

⁽¹⁾ Total systemwide sales growth and U.S. average same-store sales growth is determined using a constant exchange rate to exclude the effects of foreign currency translation. U.S. dollar sales are converted to Canadian dollar amounts using the average exchange rate of the base quarter for the period covered. Systemwide sales growth excludes sales from our Republic of Ireland and United Kingdom licensed locations.

⁽²⁾ Historically, in our U.S. business, a restaurant was included in our average same-store sales calculation beginning the 13^th month after the restaurant’s opening. Commencing in the first quarter of 2008, we began calculating our Canadian average same-store sales growth on this basis as well. This change aligns same-store calculation methodologies between Canada and the U.S., and with current industry practices. This adjustment did not have a significant impact on reported Canadian same-store sales for the third quarter and year-to-date period ended September 28, 2008. The comparative third quarter and year-to-date period ended September 30, 2007 Canadian same-store sales growth rates, set forth above, have been recalculated using the 2008 methodology.

⁽³⁾ Adjusted operating income is a non-GAAP measure. The presentation of this non-GAAP measure is made with operating income, the most directly comparable U.S. GAAP measure. Management believes that pro-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, which excludes restructuring charges. The Company evaluates its business performance and trends excluding amounts related to the restructuring. Therefore, this measure provides a more consistent view of management’s perspectives on performance than the closest equivalent U.S. GAAP measure.

	Year-to-date period ended				Change from prior year
	September 28, 2008		September 30, 2007		$		%
	(in millions, except where noted)
Reported operating income	$	335.7	$	308.9	$	26.8	8.7	%
Restructuring charge		3.1		—		3.1	n/m
Adjusted operating income	$	338.8	$	308.9	$	29.9	9.7	%

n/m The comparison is not meaningful.

Systemwide Sales Growth

Our financial results are driven largely by changes in systemwide sales, which include restaurant-level sales at both franchised and Company-operated restaurants, although approximately 98.7% of our system is franchised. The amount of systemwide sales impacts our franchisee royalties and rental income, as well as our distribution sales. Changes in systemwide sales are driven by changes in average same-store sales and changes in the number of restaurants. Systemwide sales growth excludes sales from our Republic of Ireland and United Kingdom licensed locations.

Average Same-Store Sales Growth

Average same-store sales, one of the key metrics we use to assess our performance, provides information on total retail sales at restaurants operating systemwide (i.e. includes both franchised and Company-operated restaurants) throughout the relevant period and provides a useful comparison between periods. Our average same-store sales growth is attributable to several key factors, including new product introductions, improvements in restaurant speed of service and other operational efficiencies, more frequent customer visits, expansion into broader menu offerings and pricing. Restaurant-level price increases are primarily used to offset higher restaurant-level costs on key items such as coffee, labour, supplies, and other utility costs.

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Product innovation continues to be one of our focused strategies to drive same-store sales growth, including innovation at breakfast as well as other day parts. During the third quarter of 2008, our promotional programs included Chocolate Brownie and Hazelnut Iced Capp Supremes, Gourmet Cookies and the Bagel B.E.L.T. Various baked goods were featured during the quarter including the Strawberry Blossom Donut, and European Style Pastries. In the U.S., promotional activities also included Iced Coffee and a new “combo” program called “Fresh Choice Sides,” which included “combos” of apples, hashbrowns, muffins and donuts as part of a hot breakfast sandwich “combo” program. We also featured Hearty Potato Bacon Soup and Italian Wedding Soup during the quarter in the U.S. market. We began introducing targeted “combo” food programs at a variety of value points in response to the challenging economic environment, and we believe these programs help reinforce our value proposition with U.S. consumers. In addition, we believe this approach will help position us well to build transactions.

We have rolled out our specialty coffee program in British Columbia, adding to locations in all of Manitoba and other locations where we have been testing. We expect to have most installations completed by the end of November 2008. In addition, we have launched an e-commerce platform which will service Canadian residents. Customers have access to order a range of items such as gift baskets, coffee brewers and travel mugs and our full canned beverage line-up of coffee, teas, cappuccinos and hot chocolate.

As mentioned above, Canadian and U.S. average same-store sales growth are calculated on a consistent basis, with restaurants being included beginning in the 13^th month following the restaurant’s opening. This change is also consistent with current industry practices. We have adjusted our historical quarterly average same-store sales growth data for 2006 and 2007 and on an annual basis for the prior 10 years to align with the new methodology, which is presented along with the original (as reported) growth data in our first quarter 2008 Form 10-Q, filed with the SEC on May 7, 2008.

Our historical average same-store sales trends are not necessarily indicative of future results.

New Restaurant Development

Opening restaurants in new and existing markets in Canada and the U.S. has been a significant contributor to our growth. Below is a summary of store openings and closures for the third quarter and year-to-date periods ended September 28, 2008 and September 30, 2007, respectively:

	Third quarter ended				Year-to-date period ended
	September 28, 2008		September 30, 2007		September 28, 2008		September 30, 2007
Canada
Restaurants opened	30		31		75		59
Restaurants closed	(11	)	(6	)	(28	)	(12	)
Net change	19		25		47		47
U.S.
Restaurants opened	19		9		30		20
Restaurants closed	(1	)	(2	)	(4	)	(4	)
Net change	18		7		26		16
Total Company
Restaurants opened	49		40		105		79
Restaurants closed	(12	)	(8	)	(32	)	(16	)
Net change	37		32		73		63

In our U.S. segment, 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-serve non-standard units in order to continue to seed our brand, creating greater market penetration while being less capital intensive. We believe that this approach ultimately will allow us to broaden brand awareness and convenience in a cost-efficient manner.

From the end of the third quarter of 2007 to the end of the third quarter of 2008, we opened 224 system restaurants, including both franchised and Company-operated restaurants, and we had 40 restaurant closures for a net increase of 184 restaurants. Typically, 20 to 40 system restaurants are closed annually, primarily in Canada. 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-thru. We have also closed, and may continue to close restaurants for which the restaurant location has performed below our expectations for an extended period of time, or we believe that sales from the restaurant can be absorbed by surrounding restaurants.

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Systemwide Restaurant Count

The following table shows our restaurant count as of September 28, 2008, December 30, 2007 and September 30, 2007:

	As of September 28, 2008		As of December 30, 2007		As of September 30, 2007
Canada
Company-operated	13		30		23
Franchised	2,857		2,793		2,735
Total	2,870		2,823		2,758
% Franchised	99.5	%	98.9	%	99.2	%
U.S.
Company-operated	30		42		47
Franchised	394		356		305
Total	424		398		352
% Franchised	92.9	%	89.4	%	86.6	%
Total system
Company-operated	43		72		70
Franchised	3,251		3,149		3,040
Total	3,294		3,221		3,110
% Franchised	98.7	%	97.8	%	97.7	%

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Segment Operating Income (Loss)

Systemwide sales and average same-store sales growth are affected by the business and economic environments in Canada and the U.S. We manage and review financial results from Canadian and U.S. operations separately. We, therefore, have determined the reportable segments for our business to be the geographic locations of Canada and the U.S. Each segment includes all manufacturing and distribution operations that are located in their respective geographic locations. We have started to develop international operations in the Republic of Ireland and the United Kingdom, primarily in the form of branded licensed self-serve kiosk locations. At this time, this business contributes nominal amounts to distribution sales and royalties revenues as well as to consolidated operating income, and as a result, 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:

	Third quarter ended										Change from prior year
	September 28, 2008			% of Revenues		September 30, 2007			% of Revenues		$			Percentage
	(in thousands, except where noted)
Operating Income (Loss)
Canada	$	132,892		26.1	%	$	119,066		24.3	%	$	13,826		11.6	%
U.S.		(2,119	)	(0.4	)%		(288	)	(0.1	)%		(1,831	)	n/m
Total Segment operating income		130,773		25.7	%		118,778		24.2	%		11,995		10.1	%
Corporate(1)		(8,701	)	(1.7	)%		(10,441	)	(2.1	)%		1,740		16.7	%
Total operating income	$	122,072		24.0	%	$	108,337		22.1	%	$	13,735		12.7	%
	Year-to-date period ended										Change from prior year
	September 28, 2008			% of Revenues		September 30, 2007			% of Revenues		$			Percentage
	(in thousands, except where noted)
Operating Income (Loss)
Canada	$	369,860		25.0	%	$	341,719		24.8	%	$	28,141		8.2	%
U.S.		(5,188	)	(0.4	)%		(4,327	)	(0.3	)%		(861	)	(19.9	)%
Total Segment operating income		364,672		24.6	%		337,392		24.5	%		27,280		8.1	%
Corporate(1)		(28,971	)	(1.9	)%		(28,510	)	(2.1	)%		(461	)	(1.6	)%
Total operating income	$	335,701		22.7	%	$	308,882		22.4	%	$	26,819		8.7	%

n/m The comparison is not meaningful.

⁽¹⁾ Corporate charges include certain overhead costs that are not allocated to individual business segments, the impact of certain foreign currency exchange gains and losses, and a nominal amount of operating income from international operations (discussed below).

Segment operating income increased $12.0 million, or 10.1%, in the third quarter of 2008 compared to the third quarter of 2007. This increase related to higher operating income from our Canadian segment, offset, in part, by a larger operating loss from our U.S. segment. On a year-to-date basis, 2008 segment operating income was $27.3 million higher, an increase of 8.1% compared to the year-to-date period in 2007 driven by higher operating income in Canada offset by higher U.S. segment losses.

In the third quarter of 2008, our Canadian segment operating income was $132.9 million, an increase of 11.6% over the third quarter of 2007. This increase was driven by a higher number of Canadian systemwide restaurants, which contributes to higher income from rents and royalties, as well as additional income from distribution. 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-standard restaurants sold in the 2007 comparable period. In addition, franchise fee income was higher in the third quarter of 2008 as a result of higher franchise license renewal fees. In the third quarter of 2008, we opened 30 restaurants in Canada and closed 11 compared to opening 31 restaurants and closing six in the third quarter of 2007. These increases were offset in part by higher General and administrative expense in the Canadian segment and lower equity income. On a consolidated basis, general and administrative expense was lower year-over-year. Canadian average same-store sales growth was 3.8% in the third quarter of 2008. Pricing accounted for approximately 3.4% of this growth.

Our Canadian segment operating income increased $28.1 million, or 8.2%, from $341.7 million in the year-to-date period ended September 30, 2007 to $369.9 million in the year-to-date period ended September 28, 2008. Canadian segment operating income and margins benefited from higher systemwide sales, which drove increased rents and royalties revenues and revenue growth from our distribution business, including better leveraging of our cost structure and operational efficiency gains at our fully operational Guelph distribution centre. Operating income gains were, in part, offset by lower equity income, and higher general and administrative expense, consistent with the growth in our business. Canadian average same-store sales growth was 4.4% in the year-to-date period ended September 28, 2008. Pricing accounted for approximately 3.4% of this growth. We currently expect that our fourth quarter 2008 same-store sales numbers will include approximately 3.0% of previously introduced pricing. Price increases are market driven, generally as a result of rising restaurant-level costs, particularly labour costs and changes in commodity costs. We typically expect price increases in one or more markets throughout a given year; however, there can be no assurance that price increases will result in an equivalent level of sales growth, which depends upon customer response to the new pricing. Our year-to-date same-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-store sales growth. In the year-to-date period ended September 28, 2008, we opened 75 restaurants in Canada and closed 28, compared to opening 59 restaurants and closing 12 in the year-to-date period ended September 30, 2007.

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The U.S. operating segment loss was $2.1 million in the third quarter of 2008 compared to operating loss of $0.3 million in the third quarter of 2007. The U.S. operating segment loss was $5.2 million in the year-to-date period ended September 28, 2008 compared to operating segment loss of $4.3 million in the year-to-date period ended September 30, 2007. The U.S. operating results were primarily impacted in both the quarterly and year-to-date 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-to-date, lower same-store sales growth, and the shift from Company-operated restaurants to operator agreements, partially offset by reduced losses from Company-operated restaurants. In addition, the lower-than-expected sales performance resulted in higher relief and, therefore, impacted rents and royalty revenues as well as distribution sales. The U.S. segment results in the third quarter and year-to date period ended September 28, 2008 also reflect lower franchise fee income as a result of the timing of revenue recognition from our franchise incentive program. See “The Application of Critical Accounting Policies – Revenue Recognition, Franchise Operations.”

U.S. average same-store sales declined by 0.6% in the third quarter of 2008. We had approximately 3.2% of pricing in the third quarter of 2008. On a year-to-date basis, same-store sales growth was 1.2%, and pricing on a year-to-date basis represented approximately 1.9%. Pricing did not fully translate into sales growth for the third quarter or 2008 year-to-date. We believe that the current economic environment and competitive activity has resulted in a decline in transactions in our U.S. operating segment. Our fourth quarter 2008 same-store sales numbers will include approximately 3.2% of previously introduced pricing. We typically expect price increases in one or more regions during the course of the year. There can be no assurance that price increases will result in an equivalent level of sales growth, which depends upon customer response to the new pricing and potentially other macro-economic challenges. During the third quarter of 2008, we opened 19 new restaurants and closed one, as compared to opening nine new restaurants and closing two in the third quarter of 2007. On a year-to-date basis, we have opened 30 new restaurants and closed four, as compared to opening 20 restaurants in the comparable period of 2007 and closing four restaurants.

We continue to make progress in the development and growth in most of our U.S. markets and have traditionally expanded into adjacent markets once our core markets are established. In 2008, we continued this approach by developing a presence in Lansing, Michigan, and we have opened 3 restaurants in Syracuse, New York in 2008. We plan to continue to expand these new markets in the fourth quarter of 2008. In October 2008, we announced an agreement with Tops Friendly Markets to open Tim Hortons sites, primarily self-serve kiosks, in approximately 80 Tops stores in western and central New York, and northern Pennsylvania. We expect these locations to be operating prior to the end of 2008 and, therefore, expect to exceed the store expansion target of 90-110 locations in the U.S., with a stronger orientation toward non-standard restaurants and self-serve kiosks. Despite the current economic and credit conditions, our franchisees continue to have access to lending programs with third-party lenders, although processing may take longer and costs may be higher, consistent with prevailing market conditions.

Notwithstanding this growth, we anticipate that U.S. segment operating income will continue to show volatility, quarter-to-quarter and year-to-year, as we continue our new unit growth. When we enter new markets, average unit sales volumes for our franchisees may be lower than sales levels in our more established markets. In addition, based on past experience, 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. In certain situations, we provide relief of rents and royalties, and in some cases, relief for other operating costs, for a period of time to support these franchisees. Such relief offsets our rent and royalty revenues. In developing markets, when we transition a restaurant from a Company-operated restaurant to either a full franchised restaurant or a restaurant governed by an operator agreement, we also generally provide relief to the franchisee for an initial period. We are typically able to identify franchisees for new restaurants, but in certain developing markets, it may be more challenging; however, it has not historically been a major impediment to our growth.

In response to some of the economic challenges, we may, from time to time, adjust certain factors in our restaurant development plan, including such items as size or type of restaurant or timing and number of openings, and we will maintain a disciplined approach to new restaurant development. As the state of the U.S. economy has deteriorated fairly rapidly, we have made some refinements to our U.S. business approach in the third quarter in our evolving response to the current economic climate. We leveraged our self-serve kiosk platform and expanded our use of full-serve non-standard units to continue to seed our brand, creating greater market penetration while being less capital intensive. We also continue to look generally at other strategic development opportunities. This approach ultimately allows us to broaden brand awareness and convenience in a cost-efficient manner. We have seen a high amount of competitive discounting and, as a result, we have introduced targeted “combo” food programs at a variety of value points, with the intent to strengthen and build on our price/value position and enhance this message with U.S. consumers in a tangible way. While we do not intend to stray from our core everyday positioning of quality food at reasonable prices, we are working with our franchisees to communicate and interact with customers in ways that responds to their current situation and the economic environment. We believe that both of these business refinements will help, over time, to position our U.S. business to defend aggressive competitive discounting activity, while also helping us to create sales momentum.

In addition to the above, subsequent to the third quarter ended September 28, 2008, the Company announced its intention to rationalize some underperforming Company-operated restaurants in southern New England between the end of 2008 and early next year. The details of the rationalization plan are being finalized, and it is expected to result in an asset impairment charge for the affected restaurants. This rationalization is expected to affect less than half of our 30 Company-operated restaurants in the U.S. Management will also undertake a further impairment analysis related to the affected operating markets. The plan to close underperforming restaurants is consistent with management’s efforts to improve profitability of the U.S. segment. We expect rationalization of underperforming restaurants will ultimately contribute to improved profitability, and improve sales performance at our remaining restaurants nearby. If required, an asset impairment charge taken in the fourth quarter relative to these closures would impact the Company’s 2008 operating income. The Company’s 2008 operating income target did not contemplate a charge for closed restaurants.

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Corporate charges were $8.7 million in the third quarter of 2008 compared to $10.4 million in the third quarter of 2007, a decrease of $1.7 million. 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. On a year-to-date basis, corporate charges were $29.0 million compared to $28.5 million in the 2007 year-to-date period, an increase of $0.5 million. The year-to-date 2008 corporate charges include the $3.1 million restructuring charge. Offsetting the 2008 restructuring charges were lower year-to-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-line, as opposed to required printing and mailing of all materials to all of our shareholders. In addition, the costs associated with the 2007 franchisee convention did not recur in 2008, and we had certain foreign exchange gains in the year-to-date period ended September 28, 2008 versus foreign exchange losses in the comparable period of 2007.

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-to-date periods of 2008. This income is included in Corporate charges because this venture was being managed corporately during these periods. As of September 28, 2008, we had 261 licensed locations in the Republic of Ireland and the United Kingdom, which are excluded from our restaurant counts. These licensed locations primarily operate using our self-serve kiosk model. At this time, this business contributes nominal amounts to distribution sales and royalties revenues as well as to consolidated operating income.

In April 2008, we announced changes to our executive management structure, including the dedication of one of the most senior members of our executive team to continue emphasis on the successful development of our U.S. business and to undertake a focused evaluation and potential growth of international opportunities. The restructuring charge is included in corporate charges.

Overall, our total segment operating margins from our reportable segments were 25.7% and 24.2% for the quarters ended September 28, 2008 and September 30, 2007, respectively. On a year-to-date basis, our total segment operating margins from our reportable segments were 24.6% and 24.5% for 2008 and 2007, respectively.

Our Relationship with Wendy’s

In March 2006, 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, 2006, as well as with respect to various post-separation matters. 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”).

28

Results of Operations

Below is a summary of operations and a more detailed discussion of results for the third quarter and year-to-date periods of 2008 compared to the same periods of 2007.

	Third quarter ended										Change from prior year
	September 28, 2008			% of Revenues		September 30, 2007			% of Revenues		$			%
	(in thousands, except where noted)
Revenues
Sales	$	333,581		65.5	%	$	327,020		66.7	%	$	6,561		2.0	%
Franchise revenues:
Rents and royalties(1)		155,214		30.5	%		143,449		29.2	%		11,765		8.2	%
Franchise fees		20,200		4.0	%		20,072		4.1	%		128		0.6	%
		175,414		34.5	%		163,521		33.3	%		11,893		7.3	%
Total revenues		508,995		100.0	%		490,541		100.0	%		18,454		3.8	%
Costs and expenses
Cost of sales		293,056		57.6	%		288,168		58.7	%		4,888		1.7	%
Operating expenses		53,596		10.5	%		51,617		10.5	%		1,979		3.8	%
Franchise fee costs		19,840		3.9	%		20,432		4.2	%		(592	)	(2.9	)%
General and administrative expense		29,986		5.9	%		30,758		6.3	%		(772	)	(2.5	)%
Equity (income)		(9,429	)	(1.9	)%		(9,861	)	(2.0	)%		432		(4.4	)%
Other (income) expense, net		(126	)	—			1,090		0.2	%		(1,216	)	n/m
Total costs and expenses, net		386,923		76.0	%		382,204		77.9	%		4,719		1.2	%
Operating income		122,072		24.0	%		108,337		22.1	%		13,735		12.7	%
Interest (expense)		(6,288	)	(1.2	)%		(6,118	)	(1.2	)%		(170	)	2.8	%
Interest income		957		0.2	%		1,823		0.4	%		(866	)	(47.5	)%
Income before income taxes		116,741		22.9	%		104,042		21.2	%		12,699		12.2	%
Income taxes		37,984		7.5	%		36,661		7.5	%		1,323		3.6	%
Net income	$	78,757		15.5	%	$	67,381		13.7	%	$	11,376		16.9	%

n/m The comparison is not meaningful.

⁽¹⁾ See Note ⁽¹⁾ in the following table.

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	Year-to-date period ended										Change from prior year
	September 28, 2008			% of Revenues		September 30, 2007			% of Revenues		$			%
	(in thousands, except where noted)
Revenues
Sales	$	975,960		65.9	%	$	913,364		66.2	%	$	62,596		6.9	%
Franchise revenues:
Rents and royalties(1)		444,640		30.0	%		410,803		29.7	%		33,837		8.2	%
Franchise fees		59,404		4.0	%		56,239		4.1	%		3,165		5.6	%
		504,044		34.1	%		467,042		33.8	%		37,002		7.9	%
Total revenues		1,480,004		100.0	%		1,380,406		100.0	%		99,598		7.2	%
Costs and expenses
Cost of sales		858,440		58.0	%		805,419		58.3	%		53,021		6.6	%
Operating expenses		158,227		10.7	%		148,881		10.8	%		9,346		6.3	%
Franchise fee costs		58,028		3.9	%		53,909		3.9	%		4,119		7.6	%
General and administrative expense		96,996		6.6	%		90,318		6.5	%		6,678		7.4	%
Equity income		(26,792	)	(1.8	)%		(28,873	)	(2.1	)%		2,081		(7.2	)%
Other (income) expense, net		(596	)	—			1,870		0.1	%		(2,466	)	n/m
Total costs and expenses, net		1,144,303		77.3	%		1,071,524		77.6	%		72,779		6.8	%
Operating income		335,701		22.7	%		308,882		22.4	%		26,819		8.7	%
Interest (expense)		(18,608	)	(1.3	)%		(17,882	)	(1.3	)%		(726	)	4.1	%
Interest income		4,020		0.3	%		5,143		0.4	%		(1,123	)	(21.8	)%
Income before income taxes		321,113		21.7	%		296,143		21.5	%		24,970		8.4	%
Income taxes		105,562		7.1	%		102,262		7.4	%		3,300		3.2	%
Net income	$	215,551		14.6	%	$	193,881		14.1	%	$	21,670		11.2	%

n/m – The comparison is not meaningful.

⁽¹⁾ Rents and royalties revenues consist of (i) royalties, which typically range from 3.0% to 4.5% of gross franchise restaurant sales and (ii) rents, which consist of base and percentage rent in Canada and percentage rent only in the U.S., and typically range from 8.5% to 10.0% of gross franchise restaurant sales. Franchise restaurant sales are reported to us by our franchisees. Franchise restaurant sales are not included in our Condensed Consolidated Financial Statements, other than approximately 118 and 107 restaurants on average in the third quarters of 2008 and 2007, respectively, and 118 and 101 franchises on average in the year-to-date periods of 2008 and 2007, respectively, whose results of operations are consolidated with ours pursuant to FIN 46R. Franchise restaurant sales do, however, result in royalties and rental income, which are included in our franchise revenues. The reported franchise restaurant sales (including those consolidated pursuant to FIN 46R) were:

	Third quarter ended				Year-to-date period ended
	September 28, 2008		September 30, 2007		September 28, 2008		September 30, 2007
Franchise restaurant sales:
Canada (in thousands of Canadian dollars)	$	1,173,911	$	1,088,308	$	3,371,484	$	3,114,492
U.S. (in thousands of U.S. dollars)	$	87,433	$	75,503	$	252,585	$	217,779

Revenues

Sales

Sales grew by 2.0% to $333.6 million during the third quarter of 2008 over the third quarter of 2007 sales of $327.0 million. Warehouse sales were the primary growth driver during the quarter, increasing $9.2 million, or 3.3%. Offsetting the warehouse sales growth was lower sales from Company-operated restaurants due to fewer number of restaurants, partially offset by higher sales from restaurants consolidated under FIN 46R.

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-store sales in Canada. Systemwide sales growth, excluding pricing impacts, represented approximately $7.6 million of total warehouse sales growth. Partially offsetting this growth were certain items included in warehouse sales in 2007 that did not recur in 2008, such as the uniform rollout. On an aggregate basis, these prior-year items reduced warehouse sales year-over-year growth by approximately 2.0% during the quarter. Frozen and refrigerated products did not have a significant impact on sales growth in the third quarter of 2008, as we completed the rollout of these products at our Guelph distribution centre in the third quarter of 2007. The remainder of sales growth is attributable to a combination of changes in product mix and pricing. Warehouse sales represented approximately 56.8% of total revenues during the third quarter of 2008, as compared to 57.1% of total revenues during the third quarter of 2007.

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Sales for the year-to-date periods ended September 28, 2008 and September 30, 2007 were $976.0 million and $913.4 million, respectively, representing growth of 6.9% year-over-year. Warehouse sales growth of 8.4% during this year-to-date period was the primary contributor. Lower sales from fewer Company-operated restaurants was partially offset by higher sales from restaurants consolidated under FIN 46R, resulting in a net sales decline of $2.6 million.

Warehouse sales growth during the year-to-date period ended September 28, 2008 benefited by approximately $32.1 million from the rollout of frozen and refrigerated products from our Guelph distribution centre. This rollout commenced in the second quarter of 2006 and was completed in the third quarter of 2007. In addition, systemwide sales growth represented approximately $25.2 million of warehouse sales growth. Partially offsetting these factors were some sales related to specific 2007 programs, such as the uniform rollout, that did not recur in 2008. The remainder of year-to-date sales growth was the result of a combination of product pricing and product mix.

Company-operated restaurant sales were $8.9 million in the third quarter of 2008 or $3.9 million lower than sales in the third quarter of 2007. We operated on average 46 Company-operated restaurants during the third quarter of 2008 as compared to 73 in the third quarter of 2007. For the year-to-date periods ended September 28, 2008 and September 30, 2007, sales were $31.6 million and $43.7 million, representing an average of 58 and 82 Company-operated restaurants, respectively.

Sales due to the consolidation of 118 and 107 restaurants on average under FIN 46R during the third quarter of 2008 and 2007 were $35.5 million and $34.3 million, respectively. For the year-to-date periods ended September 28, 2008 and September 30, 2007, sales were $102.4 million and $92.9 million, representing an average of 118 and 101 FIN 46R franchise restaurants, respectively.

Sales from our U.S. segment are denominated in U.S. dollars and translated into Canadian dollars for reporting of our consolidated results. The U.S. dollar exchange rate was not significantly different during the third quarters of 2007 and 2008 therefore, fluctuations in foreign exchange did not have a significant impact on reported sales during the third quarter of 2008. Foreign exchange impacted sales negatively by approximately 1.2% for the 2008 year-to-date period.

Franchise Revenues

Rents and Royalties. Revenue from rents and royalties was $155.2 million in the third quarter of 2008 versus $143.4 million in the comparable period of 2007, representing growth of 8.2%, which was consistent with systemwide sales growth. Our net growth in rents and royalties revenue was derived primarily from our Canadian market with $6.2 million related to the net addition of 112 new restaurants in the system year-over-year and approximately $5.4 million related to positive same-stores sales growth. Higher revenue from systemwide sales growth in the U.S. market was essentially offset with additional relief provided to certain of our U.S. franchisees.

Rents and royalties grew by $33.8 million to $444.6 million for the year-to-date period ended September 28, 2008 as compared to $410.8 million in the comparable period of 2007. Rents and royalties growth of 8.2% year-over-year is consistent with systemwide sales growth of 8.3%. The Canadian segment contributed substantially all of this growth with $17.7 million of the growth related to positive same-store sales growth and $16.8 million related to the net addition of 112 new restaurants year-over-year. The U.S. segment was slightly lower year-over-year as the benefit of higher systemwide sales growth was more than offset by higher relief provided to certain of our U.S. franchisees and the weakening U.S. dollar relative to the Canadian dollar (see below).

Franchise Fees. Franchise fees include the sales revenue from initial equipment packages, as well as fees to cover costs and expenses related to establishing a franchisee’s business. Franchise fee revenues for the third quarter were $20.2 million as compared to $20.1 million in the third quarter of 2007. 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.S. franchise incentive program (see below). We opened 49 new restaurants in the third quarter of 2008 as compared to 40 new restaurants in the third quarter of 2007.

Franchise fee revenues for the year-to-date period ended September 28, 2008 were $59.4 million as compared to $56.2 million in the comparable period of 2007. Franchise fees increased year-over-year as higher new restaurant openings and higher renovation fees were partially offset by lower resale and replacement fees, lower revenues recognized in 2008 from our U.S. franchise incentive program and the weakening of the U.S. dollar as compared to the Canadian dollar (see below). We opened 105 new restaurants year-to-date 2008 as compared to 79 new restaurants year-to-date 2007.

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In the U.S., 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. This incentive program impacts the timing of revenue recognition of these proceeds (See Application of Critical Accounting Policies – Revenue Recognition).

Franchise revenues from our U.S. segment are denominated in U.S. dollars and translated into Canadian dollars for reporting of our results. The U.S. dollar exchange rate was not significantly different during the third quarters of 2007 and 2008 and, therefore, did not have a significant impact on reported rents and royalties and franchise fee revenues during the third quarter of 2008. On a year-to-date basis, foreign exchange reduced the value of reported rents and royalties and franchise fee revenues by approximately 0.5% and 0.8%, respectively, compared to the value that would have been reported had there been no exchange rate movement.

Total Costs and Expenses

Cost of Sales

Cost of sales for the third quarter of 2008 was $293.1 million compared to $288.2 million for the third quarter of 2007, increasing $4.9 million or 1.7%. Warehouse cost of sales was the primary driver during the quarter with an increase of 2.4%, or $6.0 million. 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-operated restaurants, net of higher cost of sales from a higher number of restaurants consolidated under FIN 46R.

Warehouse cost of sales during the third quarter of 2008 increased primarily from higher product demand associated with systemwide sales growth, excluding pricing impact. This underlying demand represented approximately $6.8 million of warehouse cost of sales growth. 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. Frozen and refrigerated products did not impact cost of sales growth to the extent it had in previous quarters in 2008, as the rollout of these products at our Guelph distribution centre was completed in the third quarter of 2007. The remainder of cost of sales growth during the quarter was attributable to a combination of changes in product mix and pricing.

Cost of sales were $858.4 million and $805.4 million for the year-to-date periods ended September 28, 2008 and September 30, 2007, respectively. Cost of sales grew by $53.0 million, or 6.6%, during the year. Warehouse cost of sales growth was $53.2 million, or 7.8%, accounting for the majority of higher costs of sales growth. Lower cost of sales from fewer Company-operated restaurants was essentially offset by higher cost of sales from additional restaurants consolidated under FIN 46R.

One of the primary sources of warehouse cost of sales growth during the year-to-date period ended September 28, 2008 was the rollout of frozen and refrigerated products from our Guelph distribution centre. The rollout commenced in the second quarter of 2006. Warehouse cost of sales increased approximately $28.7 million during the year-to-date period as a result of the rollout. Product demand from systemwide sales growth represented approximately $22.4 million of warehouse cost of sales growth. Partially offsetting this 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. The remainder of cost of sales growth was the result of a combination of product pricing and product mix.

Distribution cost of sales represented 65.3% and 64.6% of our total costs and expenses, net, in the third quarter of 2008 and 2007, respectively, and 64.3% and 63.7% for year-to-date periods in 2008 and 2007, respectively. Our distribution business will continue to be subject to changes related to the underlying costs of key commodities, such as coffee and sugar. These cost changes can impact warehouse revenues, costs and margins, and can create volatility quarter-over-quarter and year-over-year. Increases and decreases in commodity costs are largely passed through to franchisees, resulting in higher or lower revenues and higher or lower costs of sales from our distribution business. These changes may impact margins as most of these products are typically priced based on a fixed-dollar mark-up. See “Commodity Risks” below.

Company-operated restaurant cost of sales, which includes food, paper, labour and occupancy costs, varies with the average number and mix of Company-operated restaurants. During the third quarter of 2008 and 2007, we operated on average 46 restaurants and 73 restaurants, respectively, resulting in cost of sales of $10.3 million and $14.8 million. We operated 24 fewer restaurants year-to-date 2008 as compared to an average of 73 restaurants operated year-to-date in 2007. As a result, cost of sales during the year-to-date period ended September 28, 2008 decreased by $13.8 million to $36.4 million from $50.2 million from the year-to-date period ended September 30, 2007. We continue to focus on transitioning these restaurants to franchise or operator agreements. These transitioned restaurants may then result in us initially having to consolidate them in accordance with FIN 46R (see below).

FIN 46R restaurant cost of sales was $30.0 million and $26.6 million during the third quarter of 2008 and 2007, respectively, representing on average the consolidation of 118 and 107 restaurants during these periods. For the year-to-date periods ended September 28, 2008 and September 30, 2007, FIN 46R restaurant cost of sales were $86.5 million and $72.9 million, respectively, representing on average 118 and 101 franchise restaurants consolidated during these periods, respectively.

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Cost of sales from our U.S. segment are denominated in U.S. dollars and translated into Canadian dollars for reporting of our consolidated results. The U.S. dollar exchange rate was not significantly different during the third quarters of 2007 and 2008 and, therefore, did not have a significant impact on reported cost of sales during the third quarter of 2008. The strengthening of the Canadian dollar relative to the U.S. dollar year-to-date reduced the value of reported cost of sales by approximately 1.3%.

Operating Expenses

Total operating expenses, representing primarily rent expense and property costs, were $53.6 million for the third quarter of 2008, an increase of $2.0 million, or 3.8%, from the third quarter of 2007. 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, offset by the timing of certain expenses incurred in the prior year. For the year-to-date period ended September 28, 2008, total operating expenses were $158.2 million as compared to $148.9 million in the comparable period of 2007. Our Canadian operations contributed to the majority of the year-to-date increase. Our U.S. operating expenses, although higher, were partially offset by the weakening of the U.S. dollar (see below).

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, 2007. Rent expense also increased due to higher percentage rent costs on certain properties resulting from increased restaurant sales. In addition, depreciation expense was higher as the total number of properties owned or leased by us in Canada and the U.S., and then subleased to franchisees, increased by 158 properties from September 30, 2007 to September 28, 2008.

Operating expenses from our U.S. segment are denominated in U.S. dollars and translated into Canadian dollars for reporting of our consolidated results. The U.S. dollar exchange rate was not significantly different during the third quarters of 2007 and 2008 and, therefore, did not have a significant impact on reported operating costs during the third quarter of 2008. The strengthening of the Canadian dollar relative to the U.S. dollar year-to-date 2008 reduced the overall value of operating expenses by approximately 1.0% compared to the value that would have been reported had there been no exchange rate movement.

Franchise Fee Costs

Franchise fee costs include costs of equipment sold to franchisees as part of the commencement of their restaurant business, as well as training and other costs necessary to ensure a successful restaurant opening.

Franchise fee costs decreased $0.6 million, or 2.9%, from the third quarter of 2007. Costs were lower primarily due to a lower number of resales and replacements and lower associated costs per unit, and lower equipment costs recognized in 2008 from our U.S. franchise incentive program. Equipment sales and costs are deferred until a sustained period of sales levels are achieved, or 104 weeks, whichever is earlier. 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, partially offsetting the lower equipment costs.

For the year-to-date period ended September 28, 2008, franchise fee costs were $58.0 million compared to $53.9 million in the year-to-date period ended September 30, 2007. This year-over-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. Partially offsetting these higher costs were a lower number of resales and replacements and lower associated costs per unit, and lower equipment costs recognized in 2008 from our U.S. franchise incentive program. Support costs and expenses associated with establishing a franchisee’s business were also higher in the year-to-date period ended September 28, 2008 compared to the corresponding period of 2007.

Franchise fee costs from our U.S. segment are denominated in U.S. dollars and translated into Canadian dollars for reporting our consolidated results. The U.S. dollar exchange rate was not significantly different during the third quarters of 2007 and 2008 and, therefore, did not have a significant impact on reported franchise fee costs during the third quarter of 2008. The strengthening of the Canadian dollar relative to the U.S. dollar reduced the value of franchise fee costs by approximately 0.9% compared to the value that would have been reported had there been no exchange rate movement.

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.

General and administrative expense was $30.0 million in the third quarter of 2008, which was lower compared to $30.8 million in the third quarter of 2007. In the third quarter of 2007, we incurred costs related to our franchisee convention, which did not recur in 2008. Partially offsetting these lower costs were higher salaries, stock-based compensation and benefits in the third quarter of 2008 due to additional employees required to support the growth of the business.

33

General and administrative expense was $97.0 million for year-to-date 2008 compared to $90.3 million for year-to-date 2007. 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 $3.1 million reflecting the previously announced management organizational changes that occurred in the second quarter of 2008. 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.

Our U.S. segment general and administrative expense is denominated in U.S. dollars and translated into Canadian dollars for reporting our consolidated results. The U.S. dollar exchange rate was not significantly different during the third quarters of 2007 and 2008 and, therefore, did not have a significant impact on reported general and administrative expense during the third quarter of 2008. The strengthening of the Canadian dollar relative to the U.S. dollar reduced the value of general and administrative expense on a year-to-date basis by approximately 1.3% compared to the value that would have been reported had there been no exchange rate movement.

Equity Income

Equity income relates to income from equity investments in joint ventures and other investments over which we exercise significant influence. Our two most significant equity investments are our 50-50 joint venture with IAWS Group which provides our system with par-baked donuts, Timbits™, bread products and, most recently, pastries, and our TIMWEN Partnership, which leases Canadian Tim Hortons/Wendy’s combination restaurants.

Equity income in the third quarter of 2008 was $9.4 million, decreasing $0.4 million, or 4.4%, from the third quarter of 2007. We had slightly higher earnings contributions from both of our largest joint ventures in the third quarter of 2008, but was more than offset by the impact of an asset disposition in the third quarter of 2007 at one of our joint-ventures that did not recur which reduced the rate of growth of equity income on a year-over-year basis.

On a year-to-date basis in 2008, equity income was $26.8 million, which was $2.1 million lower than the comparable 2007 year-to-date period. The year-to-date decrease is primarily a result of a non-cash tax benefit of approximately $1 million recognized by our bakery joint venture in the first quarter of 2007, as well as lower operating income at our bakery joint venture resulting from higher commodity costs, and commissioning costs for a new pastry line that was put into operation during the first quarter of 2008. As anticipated, the 2007 tax benefit did not recur in 2008. The new pastry line began servicing system restaurants in a phased approach during the second quarter of 2008. 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 and Expense, net

Other income and expense, net, includes amounts that are not directly derived from our primary businesses. This includes expenses related to restaurant closures, other asset write-offs, foreign exchange gains and losses and minority interest.

Other income, net in the third quarter of 2008 was $0.1 million and other expense, net in the third quarter of 2007 was $1.1 million. Other income, net was $0.6 million in the year-to-date period ended September 28, 2008 and other expense, net was $1.9 million in the year-to-date period ended September 30, 2007. The changes quarter-to-quarter and year-over-year were primarily a result of foreign exchange. In 2007, our foreign-denominated net asset base was higher than in 2008 and the U.S. dollar weakened substantially more in 2007 causing foreign exchange losses in that year.

Interest Expense

Total interest expense, including interest on our credit facilities, was $6.3 million in the third quarter of 2008 and $6.1 million in the third quarter of 2007. For the year-to-date period ended September 28, 2008, total interest expense was $18.6 million compared to $17.9 million in the year-to-date period ended September 30, 2007. During both comparative periods, the increase was primarily a result of higher interest on additional capital leases, partially offset by lower effective interest rates on our external debt.

Interest Income

Interest income was $1.0 million in the third quarter of 2008 and $1.8 million in the third quarter of 2007. Interest income was $4.0 million for the year-to-date period ended September 28, 2008 compared to interest income of $5.1 million earned in the year-to-date period ended September 30, 2007. During both comparative periods, the decrease was primarily a result of lower overall rates on investments and lower overall non-restricted cash balances, which were partially offset by interest earned on restricted cash and cash equivalents and restricted investments relating to our TimCard^®. Interest earned on restricted cash and cash equivalents and restricted investments of $0.2 million in the third quarter of 2008 ($0.5 million year-to-date 2008) was contributed back to our advertising and promotion fund. The contribution is recorded in general and administrative expense.

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Income Taxes

The effective tax rates were 32.5% and 35.2% for the third quarters ended September 28, 2008 and September 30, 2007, respectively. The variance between the quarters is primarily explained by the reduction in Canadian federal statutory tax rates in 2008, which represented a $2.7 million reduction in income tax expense for the quarter ended September 28, 2008. In addition, there were certain items that affected the third quarter of 2007 effective tax rate that did not recur in 2008.

The effective tax rates for the year-to-date periods ended September 28, 2008 and September 30, 2007 were 32.9% and 34.5% respectively. The variance between periods is primarily explained by the reduction in Canadian federal statutory rates in 2008, which represented a $7.3 million reduction in income tax expense for the year-to-date period ended September 28, 2008.

We are party to a tax sharing agreement with Wendy’s, as subsequently amended, which sets forth the principles and responsibilities of Wendy’s and us regarding the allocation of taxes, audits and other tax matters relating to periods when we were part of the same U.S. federal consolidated or state and local combined tax filing group. The agreement is applicable for all taxation periods up to September 29, 2006. Commencing September 30, 2006, we became a standalone public company and, as a result, we file all U.S. tax returns independently from Wendy’s from that date forward. Either we or Wendy’s may be required to reimburse the other party for the use of tax attributes while we filed U.S. consolidated or state and local combined returns, as a result of audits or similar proceedings giving rise to “adjustments” to previously filed returns, in accordance with the terms of the agreement. As several years remain open to review and adjustment by taxation authorities, payments may be made by one party to the other for the use of the other party’s tax attributes. No payments have been made by either party to the other under this agreement during the year-to-date period ended September 28, 2008.

Comprehensive Income

In the third quarter of 2008, comprehensive income was $85.6 million compared to $42.1 million in the third quarter of 2007. Net income increased $11.4 million from the third quarter of 2007 as compared to the third quarter of 2008, as discussed above. Other comprehensive income included a translation adjustment gain of $7.9 million in the third quarter of 2008 compared to a translation adjustment loss of $23.4 million in the third quarter of 2007. Translation adjustment income (loss) arises primarily from the translation of our U.S. net assets into our reporting currency, Canadian dollars, at the period-end rates. The remainder of the change quarter-to-quarter in other comprehensive income is attributable to a lower loss related to cash flow hedges, net of taxes.

For the year-to-date periods ended September 28, 2008 and September 30, 2007, comprehensive income was $233.1 million and $132.2 million, respectively. Net income increased $21.7 million year-over-year, as discussed above. Other comprehensive income for the year-to-date period ended September 28, 2008 included a translation adjustment gain of $18.2 million as compared to a translation adjustment loss of $56.1 million in the year-to-date period ended September 30, 2007. The remainder of the change year-over-year in other comprehensive income relates to a lower loss related to cash flow hedges, net of taxes.

The 2008 exchange rates were C$1.0328, C$1.0106, and C$0.9805 for U.S. $1.00 on September 28, 2008, June 29, 2008 and December 30, 2007, respectively. The 2007 exchange rates were on C$0.9948, C$1.0654, and C$1.1654 for U.S. $1.00 on September 30, 2007, July 1, 2007 and December 31, 2006, respectively.

Liquidity and Capital Resources

Overview

Our primary source of liquidity has historically been, and continues to be, cash generated from Canadian operations which has, for the most part, self-funded our operations, growth in new restaurants, capital expenditures, dividends, share repurchases, acquisitions and investments during the last five years. Our U.S. operations, now funded by our Canadian operations, have historically been a net user of cash given its investment plans and stage of growth, and we expect this trend to continue through 2009. Our Canadian and U.S. revolving credit facilities provide additional sources of liquidity, if needed.

Our senior bank facility, which consists of a $300 million term loan and the two revolving credit facilities (U.S. $100 million and $200 million), matures on February 28, 2011. These facilities are at variable interest rates that are based upon either bankers’ acceptances or LIBOR plus a margin, or a fixed base rate. If certain market conditions caused LIBOR to be unascertainable or not reflective of the cost of funding, the Administration Agent can cause the borrowing to be at the base rate which is historically higher than LIBOR. This facility does not carry a market disruption clause and is supported by a syndicate lending group of 13 financial institutions, of which Canadian financial institutions hold approximately 58% of the total funding commitment. We carefully monitor our bank group and currently believe our access to liquidity is substantially unchanged despite current market conditions.

Our primary liquidity and capital requirements are for new store construction, renovations of existing restaurants, expansion of our business through vertical integration and general corporate needs. In addition, we utilize cash to fund our dividends and share repurchase programs. Historically, our annual working capital needs have not been significant because of our focused management of accounts receivable and inventory. In each of the last five fiscal years, operating cash flows have fully funded our capital expenditure requirements for new restaurant development, remodeling, technology initiatives and other capital needs. As we stated in February 2008, our targets are to open 120 to 140 new restaurants in Canada and 90 to 110 new restaurants in the U.S., potentially including self-serve kiosks. The cost and availability of real estate and construction costs, including the cost and availability of labour required for construction of our restaurants in certain areas where we seek to develop restaurants, such as Alberta and other areas of Western Canada, and in some areas of the U.S., have historically been, and may continue to be, limiting factors to our growth in these regions. In the year-to-date period ended September 28, 2008, we generated $244.8 million of cash from operations, as compared to cash generated from operations of $236.0 million in the year-to-date period ended September 30, 2007, for a net increase of $8.8 million (see “Comparative Cash Flows” below). 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.

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If additional funds are needed for strategic initiatives or other corporate purposes, we believe, given current market conditions, access would be limited at times, but that the strength of our balance sheet would allow us to borrow additional funds if we maintain a strong capital structure. 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. Any such borrowings may result in an increase in our borrowing costs. If such additional borrowings are significant, our capital structure could be weakened, and it is possible that we would not be able to borrow on terms which are favourable to us. Additionally, our ability to attract funds through the issuance of additional equity was, 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-off transaction under Section 355 of the Internal Revenue Code and, under the tax sharing agreement, we would be required to indemnify Wendy’s against the taxes payable if our issuance of shares resulted in a gain being recognized. This period of time for which this restriction applied has now expired.

When evaluating our leverage position, we look at metrics that consider the impact of long-term operating and capital leases as well as other long-term debt obligations. We believe this provides a more meaningful measure of our leverage position given our significant investments in real estate. At September 28, 2008, we had approximately $388.6 million in term debt and capital leases, included in long-term obligations, on our balance sheet. We continue to believe that the strength of our balance sheet, including our cash position, 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. Given the recent credit concerns in the market, when investing our cash, we are currently even more focused on capital preservation over yield.

In the third quarter of 2008, we continued to repurchase shares under our previously announced stock repurchase program, which authorized the Company to purchase up to $200 million of common stock, not to exceed 5% of outstanding shares of common stock at the time of the approval in October 2007. In the year-to-date period ended September 28, 2008, we spent $149.8 million to repurchase approximately 4.5 million shares under this program. As at September 28, 2008, we have purchased an aggregate of approximately 5.5 million shares for a total cost of $185.3 million of the $200 million repurchase program. As of October 30, 2008, we completed this repurchase program of up to $200 million.

As previously mentioned, our Board of Directors has approved a 2009 share repurchase program for up to $200 million, planned to commence during the first quarter of 2009.

Comparative Cash Flows

Operating Activities. Net cash generated from operating activities was $244.8 million in the year-to-date period ended September 28, 2008 as compared to $236.0 million generated from operating activities in the year-to-date period ended September 30, 2007. Operating cash flows increased by $8.8 million in the year-to-date period ended September 28, 2008, driven primarily from the increased earnings and higher depreciation and amortization expense, partially offset by timing of working capital movements. Depreciation and amortization expense for the third quarter of 2008 was $22.7 million as compared to $21.5 million in the third quarter of 2007, and on a year-to-date basis, it was $66.8 million in 2008 and $62.5 million in 2007.

Investing Activities. Net cash used in investing activities was $130.4 million and $112.0 million for the year-to-date periods ended September 28, 2008 and September 30, 2007, respectively. Capital expenditures were $112.1 million and $114.6 million in the year-to-date periods ended September 28, 2008 and September 30, 2007, respectively. Capital expenditures are typically the largest ongoing component of our investing activities and include expenditures for new restaurants, improvements to existing restaurants and other corporate capital needs. Capital expenditures during these periods are summarized as follows:

	Year-to-date period ended
	September 28, 2008		September 30, 2007
	(in millions)
Capital expenditures
New restaurants	$	77.1	$	69.8
Store replacements and renovations		23.4		22.9
Other capital needs		11.6		21.9
Total capital expenditures	$	112.1	$	114.6

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In the year-to-date period ended September 28, 2008, we opened 75 new restaurants in Canada and 30 in the U.S. compared to 59 in Canada and 20 in the U.S. in the year-to-date period of 2007. We continue to expect future capital needs related to our normal business activities to be funded through ongoing operations, including the capital expenditures for the coffee roasting facility in 2009, discussed earlier. Expenditures for other capital needs include amounts for software implementations, other equipment purchases required for ongoing business needs and, in 2007, included the conversion of our Oakville warehouse to office space. Capital expenditures for new restaurants by operating segment were as follows:

	Year-to-date period ended
	September 28, 2008		September 30, 2007
	(in millions)
Capital expenditures – new restaurants
Canada	$	47.2	$	38.9
U.S.		29.9		30.9
Total	$	77.1	$	69.8

Due primarily to a higher mix of leased restaurants and non-standard restaurants, including self-serve kiosks, which are less capital intensive, versus owned restaurants as part of our restaurant expansion program, we do not expect to spend the full amount of the targeted 2008 capital expenditure range of $200 million to $250 million.

Financing Activities. Financing activities used cash of $206.4 million and $182.9 million in the year-to-date periods ended September 28, 2008 and September 30, 2007, respectively. On a year-to-date basis in 2008, we repurchased $149.8 million of shares of our common stock and paid $49.7 million in dividends to our stockholders. In the year-to-date period ended September 30, 2007, we repurchased $135.0 million of shares of our common stock and paid $39.7 million in dividends to our stockholders.

Off-Balance Sheet Arrangements

We do not have “off-balance sheet” arrangements as of September 28, 2008 and September 30, 2007 as that term is described by the SEC.

Basis of Presentation

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 our operating subsidiaries and legal entities is the local currency in which each subsidiary operates, which is the Canadian or U.S. dollar or the Euro. The majority of our operations, restaurants and cash flows are based in Canada, and we are primarily managed in Canadian dollars. As a result, we have selected the Canadian dollar as our reporting currency.

Application of Critical Accounting Policies

We describe our significant accounting policies, including our critical accounting policies, in our 2007 Consolidated Financial Statements and accompanying notes included in our Annual Report on Form 10-K filed with the SEC on February 26, 2008. 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. To determine appropriate carrying values of assets and liabilities that are not readily available from other sources, management uses assumptions based on historical results and other factors that they believe are reasonable. Actual results could differ from those estimates. Also, materially different amounts may result under materially different conditions or from using materially different assumptions. However, management currently believes that any materially different amounts resulting from materially different conditions or material changes in facts or circumstances are unlikely.

Critical accounting policies are those that we believe are both significant and may require us to make difficult, subjective or complex judgments, often because we need to estimate the effect of inherently uncertain matters. The Company evaluates and updates its assumptions and estimates based on new events occurring, additional information being obtained or more experience being acquired.

Other than the adoption of SFAS 157, as noted below, there have been no significant changes in critical accounting policies or management estimates since the year ended December 30, 2007. 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-K for the year ended December 30, 2007, filed with the SEC on February 26, 2008, which is incorporated herein by reference.

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Effective December 31, 2007, we adopted SFAS No. 157 – Fair Value Measurements (“SFAS 157”). In February 2008, the FASB issued FASB Staff Position No. FAS 157-2 – Effective Date of FASB Statement No. 157, which provides a one year deferral of the effective date of SFAS 157 for non-financial assets and non-financial liabilities, except those that are recognized or disclosed in the financial statements at fair value at least annually. Therefore, we have adopted the provisions of SFAS 157 with respect to our financial assets and liabilities only. SFAS 157 defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements.

Effective December 31, 2007, we also adopted SFAS No. 159 – The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS 159”). 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-by-contract basis with changes in value reported in earnings. We did not elect to report any assets or liabilities at fair value under this standard.

Described below are critical accounting policies that have either had a significant impact on operating results in 2008, as is the case with revenue recognition for our U.S. franchise operations, or require judgment, as is the case of asset impairment assessments.

Revenue Recognition

Revenue at Company-operated restaurants is recognized upon tender of payment at the time of sale. We operate warehouses in Canada to distribute coffee and other dry goods and refrigerated and frozen products to an extensive franchise system. Revenues from these sales are recorded when the product is delivered to the franchisee.

Royalties revenues are generally based upon a percentage of monthly sales and recognized in the month earned on a straight-line basis. We generally control, either through ownership or by leasing, a significant majority of the real estate on which the Company’s restaurants are located, and we lease the real estate to our franchisees. Rental income is recorded on the straight-line basis. Most leases provide for fixed payments with contingent rent when sales exceed certain levels, while others provide for monthly rentals based on a percentage of sales. Fixed, or base, rental revenue is recorded on a straight-line basis and contingent rental revenue is recognized when sales exceed certain levels.

Franchise operations

Our restaurants are predominantly franchised. We grant franchise licenses or operator agreements to independent operators who in turn pay franchise fees and other payments, which may include payments for equipment, royalties and, in most cases, rents for each restaurant opened. Franchise fees are collected at the time of sale or resale of the franchise. Franchise fees and equipment sales are generally recognized as income when each restaurant commences operations and payment is received from the franchisee, unless the franchisee is participating in our franchise incentive program (see below). Royalties, based on a percent of monthly sales, are recognized as income on the accrual basis.

We have developed a franchise incentive program for some of our U.S. franchisees, which provides financing for both the initial franchise fee and the purchase of certain restaurant equipment, furniture, trade fixtures, and interior signs. The payment for those assets is deferred for a period of 104 weeks from the date of opening. 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, or 104 weeks, whichever is earlier. In 2008, the franchise incentive program was modified by shortening the payment period from 130 weeks to 104 weeks. 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. During the initial 104 weeks, the royalty payments are typically reduced from 4.5% to 2.5% and rent is typically reduced from 8.5% to 8.0% of gross sales, respectively. After the initial 104 weeks, the royalty rate and rental rate return to the standard rates of 4.5% and 8.5%, respectively.

Franchisees may receive other financial assistance such as lower rents and royalties and certain other operating costs for restaurants in new and developing markets, and the amount of this assistance is an offset from our rents and royalties revenues.

The timing of revenue recognition for sales, and franchise revenues (rents and royalties and franchise fees), does not involve significant estimates and assumptions.

We provide for estimated losses for revenues that are not likely to be collected. Although we generally enjoy a positive relationship with our franchisees, and collection rates have historically been high, if average sales or the financial health of our franchisees were to deteriorate, we might have to increase reserves against collection of franchise revenues. In some cases in the U.S., we have seen a slight increase in the number of days taken to collect receivables from franchisees, and we are monitoring the outstanding accounts receivables.

Impairment of Long-lived Assets

Long-lived assets are grouped into operating markets and tested for impairment whenever an event or circumstance occurs that indicates impairment may exist, including a current expectation, that more likely than not, a long-lived asset will be sold or otherwise disposed of prior to its estimated useful life. We test for impairment using the cash flows of the operating markets. In developed markets, one of our key indicators for the overall health of an operating market is same-store sales growth. We also consider the length of time we have been in the market as it takes time to fully establish a market. Generally, if same-store sales decline for two or more consecutive years, further evaluation may be required, including review of operating market cash flows. A significant deterioration in the cash flows of an operating market or other circumstances may trigger further impairment analysis.

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In developing markets, we assess a number of factors, including systemwide sales growth, which encompasses new restaurants and same-store sales growth, as well as the stage of growth of the operating market and the average unit sales volume trends. Given the market conditions present for the majority of the period under review, management also makes assessments as to whether any declines may be viewed as short-term in nature.

If impairment is indicated, the fair value of the property and equipment is estimated using the discounted cash flows of the market or third party appraisals. The interest rate used in preparing discounted cash flows is management’s estimate of the weighted average cost of capital. Long-lived assets are reviewed and monitored for impairment, where applicable, when an event occurs to trigger an evaluation, or at a minimum, at least once annually.

Recently Issued Accounting Standards

In December 2007, the FASB issued SFAS No. 141R – Business Combinations (“SFAS 141R”). This Statement replaces FASB SFAS No. 141. SFAS 141R establishes principles and requirements for how an acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. 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. 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, 2008. We are currently evaluating the potential impact, if any, of the adoption of SFAS 141R on our Consolidated Financial Statements.

On February 12, 2008, the FASB issued FASB Staff Position No. FAS 157-2 – Effective Date of FASB Statement No. 157 (“SFAS 157-2”), which amends SFAS 157 by delaying its effective date by one year for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Therefore, beginning on December 31, 2007, this standard applies prospectively to new fair value measurements of financial instruments and recurring fair value measurements of non-financial assets and non-financial liabilities. On December 29, 2008, the standard will also apply to all other fair value measurements. We are currently evaluating the potential impact of the adoption of SFAS 157-2 on our Consolidated Financial Statements.

In December 2007, the FASB issued SFAS No. 160 – Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51. This Statement amends Accounting Research Bulletin 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. 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. In addition to the amendments to ARB 51, this Statement amends FASB Statement No. 128 – Earnings per Share, with the result that earnings-per-share data will continue to be calculated the same as it was calculated before this Statement was issued. This Statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. We are currently evaluating the impact of adoption of this pronouncement on our Consolidated Financial Statements.

In March 2008, the FASB issued SFAS No. 161 – Disclosures about Derivative Instruments and Hedging Activities (“SFAS 161”). 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, (ii) how derivative instruments and related hedged items are accounted for under Financial Accounting Standards No. 133 – Accounting for Derivative Instruments and Hedging Activities and its related interpretations, and (iii) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS 161 is to be applied prospectively for the first annual and interim reporting periods beginning on or after November 15, 2008, with early application encouraged. We are currently evaluating the impact of this pronouncement on our Consolidated Financial Statements.

In May 2008, the FASB issued SFAS No. 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. SFAS 162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. We are currently evaluating the impact of adoption of this pronouncement on our Consolidated Financial Statements.

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, 2007, as supplemented herein below with respect to “Commodity Risk.” As such, our disclosures about market risk are incorporated herein by reference from our 2007 Annual Report on Form 10-K filed with the SEC on February 26, 2008 under “Item 7A. Quantitative and Qualitative Disclosure About Market Risk” on pages 75 through 77.

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In addition, counterparty credit risk may exist related to our derivative positions. We minimize this risk by limiting our notional amount by counterparty to $100 million, requiring certain minimum credit ratings, and utilizing our syndicate lending group. The current fair value of our derivative positions at September 28, 2008 is a net liability of $3.7 million. Subsequent to the third quarter end, there has been significant foreign currency volatility impacting out net derivative position.

Foreign Exchange Risk

Our exposure to various foreign exchange risks remains substantially the same as reported as of December 30, 2007. As such, our disclosures about foreign exchange risk are incorporated herein by reference from our 2007 Annual Report on Form 10-K filed with the SEC on February 26, 2008 under “Item 7A. Quantitative and Qualitative Disclosure About Market Risk – Foreign Exchange Risk” on pages 75 and 76.

Commodity Risk

Our exposure to various commodity risks remains substantially the same as reported as of December 30, 2007. As such, our disclosures about commodity risk are incorporated herein by reference from our 2007 Annual Report on Form 10-K filed with the SEC on February 26, 2008 under “Item 7A. Quantitative and Qualitative Disclosure About Market Risk – Commodity Risk” on page 76.

In addition, we currently have purchase contracts in place for the remainder of 2008 and first half of 2009 covering key commodities such as coffee, wheat, sugar, and cooking oils. As we have stated previously, 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. Higher commodity costs could also impact earnings from our joint-venture operations.

Interest Rate Risk

Our exposure to various interest rate risks remains substantially the same as reported as of December 30, 2007. As such, our disclosures about interest rate risk are incorporated herein by reference from our 2007 Annual Report on Form 10-K filed with the SEC on February 26, 2008 under “Item 7A. Quantitative and Qualitative Disclosure About Market Risk – Interest Rate Risk” on pages 76 and 77.

Inflation

Our exposure to various inflationary risks remains substantially the same as reported as of December 30, 2007. As such, our disclosures about inflationary risks are incorporated herein by reference from our 2007 Annual Report on Form 10-K filed with the SEC on February 26, 2008 under “Item 7A. Quantitative and Qualitative Disclosure About Market Risk – Inflation” on page 77.

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SAFE HARBOR STATEMENT

Certain information contained in this Form 10-Q, particularly information regarding future economic performance and finances, plans and objectives of management, is forward looking. In some cases, information regarding certain important factors that could cause actual results to differ materially from any such forward-looking statement appears together with such statement. In addition, the following factors, and those set forth in the Company’s most recent Form 10-K, filed February 26, 2008, in addition to other possible factors not listed, could affect the Company’s actual results and cause such results to differ materially from those expressed in forward-looking statements. These factors include: competition within the quick-service-restaurant industry, which remains extremely intense, particularly with respect to price, service, location, personnel, qualified franchisees, real estate sites and type and quality of food; changes in international, national, regional and local economic and political conditions; consumer preferences and perceptions (including food safety, health and dietary preferences and perceptions); spending patterns, consumer confidence; demographic trends; seasonality, weather events and other calamities; the type, number and location of competing restaurants; enhanced or changes in existing governmental regulation (including nutritional and franchise regulations); changes in capital market conditions that affect valuations of restaurant companies in general or the value of Company’s stock in particular; litigation relating to food quality, handling or nutritional content or other legal claims; the effects of war or terrorist activities and any governmental responses thereto; higher energy and/or fuel costs; food costs; the cost and/or availability of a qualified work force and other labour issues; benefit costs; legal and regulatory compliance; new or additional sales tax on the Company’s products; disruptions in supply chain or changes in the price, availability and shipping costs of supplies (including changes in international commodity markets, especially for coffee); utility and other operating costs; the ability of the Company and/or its franchisees to finance new restaurant development, improvements and additions to existing restaurants, and acquire and sell restaurants; the maintenance of our brand reputation and the Company’s relationship with its franchisees; any substantial or sustained decline in the Company’s Canadian business; changes in applicable accounting rules; increased competition experienced by the Company’s manufacturing and distribution operations; possibility of termination of the Maidstone Bakeries joint venture; risks associated with foreign exchange fluctuations; risks associated with the Company’s investigation of and/or completion of acquisitions, mergers, joint ventures or other targeted growth opportunities; and risks associated with a variety of factors or events that could negatively affect our brand and/or reputation; and, other factors set forth in Exhibit 99 attached hereto. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date made. Except as required by federal or provincial securities laws, the Company undertakes no obligation to publicly announce any revisions to the forward-looking statements contained in this Form 10-Q, or to update them to reflect events or circumstances occurring after the date of filing of this Form 10-Q, or to reflect the occurrence of unanticipated events, even if new information, future events or other circumstances have made the forward-looking statements incorrect or misleading.

ITEM 3. 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-Q.

ITEM 4. CONTROLS AND PROCEDURES

(a) The Company, under the supervision, and with the participation, of its management, including its Chief Executive Officer and Chief Financial Officer, performed an evaluation of the Company’s disclosure controls and procedures, as contemplated by Securities Exchange Act Rule 13a-15. 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. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded, as of the end of the period covered by this report, that such disclosure controls and procedures were effective.

(b) 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, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On June 16, 2008, we filed a report on Form 8-K describing a claim that was filed against us and certain of our affiliates on June 12, 2008 in the Ontario Superior Court of Justice (“Court”) by two of our franchisees, Fairview Donut Inc. and Brule Foods Ltd., alleging, generally, that our Always Fresh baking system and expansion of lunch offerings has led to lower franchisee profitability. The claim, which seeks class action certification on behalf of Canadian franchisees, asserts damages of approximately $1.95 billion. We believe the claim is frivolous and completely without merit. We intend to vigorously defend the action; however, 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. The result and value of this claim is not determinable at this time and, coupled with the Company’s position that this claim is without merit, the Company has not recorded any provisions in the Condensed Consolidated Financial Statements.

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ITEM 1A.   RISK FACTORS

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

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ISSUER PURCHASES OF EQUITY SECURITIES

Period	(a) Total Number of Shares Purchased(1)	(b) Average Price Paid per Share (Cdn.)(2)		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (Cdn.)(3)(4)
Monthly Period #7 (June 30, 2008 — August 3, 2008)	497,520	$	28.50	497,520	$	50,005,207
Monthly Period #8 (August 4, 2008 — August 31, 2008)	696,000	$	33.03	696,000	$	27,024,139
Monthly Period #9 (September 1, 2008 — September 28, 2008)	372,878	$	33.01	372,878	$	14,719,678
Total	1,566,398	$	31.59	1,566,398	$	14,719,678

⁽¹⁾ Based on settlement date.

⁽²⁾ Inclusive of commissions paid to the broker to repurchase the shares.

⁽³⁾ Exclusive of commissions paid to the broker to repurchase the shares.

⁽⁴⁾ In October 2007, our Board of Directors approved, and we publicly announced, a stock repurchase program authorizing us to purchase up to $200 million of common stock, not to exceed 9,354,264, or 5%, of our outstanding shares as at the time of regulatory approval, prior to October 30, 2008, the termination date of the program. We were authorized to make repurchases under this program on the NYSE and/or the TSX. For a significant portion of the repurchase program, we entered into a Rule 10b5-1 repurchase plan, 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. Purchases were based on the parameters of the Rule 10b5-1 plan. We also made repurchases at management’s discretion under this program from time-to-time, subject to market conditions, share price, cash position, and compliance with regulatory requirements. No repurchase plan or program established by us expired or was terminated by us during the third quarter of 2008; however, the 2007–2008 program described above subsequently ended on October 30, 2008 in accordance with the original authorization of $200 million.

Dividend Restrictions with Respect to Part II, Item 2 Matters

The terms of our senior credit facilities contain limitations on the payment of dividends by us. We may not make any dividend distribution unless, at the time of, and after giving effect to the aggregate dividend payment, we are in compliance with the financial covenants contained in the senior credit facilities, and there is no default outstanding under the senior credit facilities.

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ITEM 5. OTHER INFORMATION

Appointment of Director

On November 5, 2008, our Board of Directors increased the size of the Board from 10 to 11 directors and appointed Mr. Ronald W. Osborne, age 62, as a director of the Company to fill the vacancy created thereby.

Mr. Osborne has been the Chairman of the Board of Directors of Sun Life Financial Inc., a company listed on the Toronto, New York and Philippines stock exchanges, and Sun Life Assurance since May 2005. Mr. Osborne served as the President and Chief Executive Officer and a director of Ontario Power Generation Inc. from 1998 until December 2003. He was formerly President and Chief Executive Officer of Ontario Hydro, the predecessor company of Ontario Power Generation Inc. He was appointed to this position in March 1998. Mr. Osborne joined BCE Inc. as the Executive Vice President and Chief Financial Officer and was subsequently appointed President of BCE Inc. in 1996 and served in that position until 1997. From 1997 until he joined Ontario Hydro, he was President and Chief Executive Officer of Bell Canada, a subsidiary of BCE Inc. From 1981 to 1994, Mr. Osborne held various positions at Maclean Hunter, including the position of Chief Executive Officer from 1986 until 1994. Mr. Osborne was also a partner of Clarkson Gordon, Chartered Accountants in Toronto from 1979 until 1981. He also served on the International Trade Advisory Committee, a private sector committee to advise the federal government on international trade issues, from January 1986 to 1994. In addition, he was Chairman of a Sectoral Advisory Group on International Trade from 1988 to 1994, responsible for advising the government on current trade issues relating specifically to the arts and cultural industries.

Mr. Osborne is a director of RioCan Real Estate Investment Trust, a Toronto Stock Exchange listed issuer, and Torstar Corporation, also a Toronto Stock Exchange listed issuer. He is also a member of the board of governors of the Corporation of Massey Hall and Roy Thomson Hall, a member of the advisory board of Brookfield Power, a director of St. Lawrence Cement Group Inc., and a fellow of the Institute of Chartered Accountants of Ontario.

The Board has not determined which committee or committees of the Board on which Mr. Osborne will serve, but expects that it will do so at its regularly scheduled meeting in May 2009. Mr. Osborne will receive the same compensation as the Company’s other non-employee directors, as disclosed in the Company’s proxy statement. Mr. Osborne will be included in the slate of directors for election at the Company’s annual meeting of stockholders in 2009, for a term expiring in 2012.

Amendments to By-Laws

On November 5, 2008, our Board of Directors approved amendments to the Second Amended and Restated By-Laws of Tim Hortons Inc. 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, which are no longer applicable.

The amendments to the advance notice provisions of the By-Laws have the following effects and purposes:

• To clarify that the procedures and requirements set forth in the By-Laws are the exclusive means for a stockholder to propose business, including nomination of candidates to be elected to our Board, at a meeting of stockholders, except for proposals submitted for inclusion in the Company’s proxy statement in accordance with Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended.

• 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 150^th 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 120^th day before the first anniversary of the Company’s immediately preceding annual meeting of stockholders, or if the first public announcement of the date of such meeting is less than 100 days prior to the date of such meeting, the close of business on the 10^th day following the day on which public announcement of the date of the annual meeting is first made by the Company.

• 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, 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 100^th day (amended from the 90^th day) prior to the anniversary date of the immediately preceding annual meeting of stockholders, 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.

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• 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, 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, or with respect to performance fees relating to our capital stock or derivative instruments relating to such stock. And,

• To require additional information about nominees proposed by a stockholder for election to our Board, 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-Laws.

This summary of the By-laws is qualified in its entirety by reference to the full text of the By-Laws, which are filed as Exhibit 3(ii) to this Quarterly Report on Form 10-Q.

As a result of the amendments described above, 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. 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-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, 2009, and not later than February 1, 2009; provided, however, 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, 2009, notice by the stockholder to be timely must be so received not earlier than the opening of business on the 120^th day before the meeting and not later than the 90^th day before the meeting or, if the first public announcement of the date of such meeting is less than 100 days prior to the annual meeting, the close of business on the 10^th day following the day on which public announcement of the date of the annual meeting is first made by the Company. Such notices must comply with the applicable requirements of the Second Amended and Restated By-Laws, as amended on November 5, 2008, which are filed as Exhibit 3(ii) to this Quarterly Report on Form 10-Q.

As provided in the Company’s proxy statement for the 2008 annual meeting of stockholders, 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-8, the proposal must be delivered to the Company’s Secretary on or before November 20, 2008. Such a proposal must comply with the applicable requirements of Rule 14a-8.

Stock Repurchase

Our Board of Directors has approved a 2009 share repurchase program for up to $200 million, planned to commence during the first quarter of 2009. For future years, commencement of the program at the beginning of the year will allow the Company to fully align its annual budgeting and capital allocation process, including capital expenditures, dividends and share repurchases. Implementation of the 2009 share repurchase program, and the extent of respective purchases under the program, are subject to regulatory compliance and will be at management’s discretion given prevailing market conditions and cost considerations.

Amendment and Restatement of Donald B. Schroeder’s Employment Agreement

On November 5, 2008, upon the recommendation of the Human Resource and Compensation Committee, our Board of Directors approved the amended and restated employment agreement by and among The TDL Group Corp. (“TDL”), a subsidiary of the Company and the employer of the Company’s Canadian executives, the Company, and Donald B. Schroeder, the Chief Executive Officer and President of the Company. The Company’s employment agreements provide for certain payments and benefits to the named executive officers, including Mr. Schroeder, in the event of a change in control of the Company. Mr. Schroeder’s original employment agreement was entered into at a time when Mr. Schroeder was an executive vice president of the Company. As a result of Mr. Schroeder assuming the position of President and Chief Executive Officer in early 2008, the Board has determined that it would be appropriate for the Company to amend the employment agreement to give effect to Mr. Schroeder’s new roles and responsibilities. As such, the Board has approved amendments to Mr. Schroeder’s agreement to reflect the same terms as were provided to Mr. House when he was the Company’s President and Chief Executive Officer. Set forth below is a description of the amended terms.

         Upon the occurrence of a change in control, Mr. Schroeder is entitled to continued employment by TDL for a period of three years following the change in control (the “Employment Term”). If, during the Employment Term, TDL terminates Mr. Schroeder “without cause,” or Mr. Schroeder terminates his employment with TDL for “good reason,” both of which are defined in the agreement, then Mr. Schroeder is entitled to the following: (i) accrued base salary, pro-rata bonus, and benefits earned up to the termination date; (ii) severance payments of the greater of (A) three times Mr. Schroeder’s salary for the year in which the termination occurs and target bonus, or (B) three times Mr. Schroeder’s average base salary and target bonus for the year in which termination occurs and the two prior years; (iii) defined contribution and supplemental executive retirement contributions of three times Mr. Schroeder’s estimated contributions for the year in which termination occurs; (iv) continuation of benefits (life insurance, disability, medical, dental, etc.) for three years for Mr. Schroeder following the termination date; and (v) a monthly car allowance for three years for Mr. Schroeder following the termination date. In addition to the foregoing, Mr. Schroeder’s position description was updated to reflect his new responsibilities as the Chief Executive Officer and President of the Company and TDL.

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The foregoing summary is qualified in its entirety by reference to the full text of Mr. Schroeder’s Employment Agreement, which is filed as Exhibit 10(d) to this Quarterly Report on Form 10-Q.

Amendment and Restatement of David Clanachan’s Employment Agreement and Restricted Stock Unit Award Agreements

Effective December 31, 2008, upon the recommendation of the Human Resource and Compensation Committee, our Board of Directors approved the amended and restated employment agreement by and among TDL, the Company, and David F. Clanachan, the Chief Operations Officer, U.S. and International and named executive officer. The amendments to Mr. Clanachan’s employment (change in control) agreement were made solely for compliance with Section 409A of the Internal Revenue Code of 1986, as amended, and provides that the Section 409A provisions set forth in the agreement shall apply to Mr. Clanachan only if, at such times, and only to the extent as he may be subject to U.S. taxation laws.

In addition to the foregoing, 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. Clanachan. The amendment and restatement of these award agreements was made solely for compliance with Section 409A.

The foregoing summary is qualified in its entirety by reference to the full text of Mr. Clanachan’s Amended and Restated Employment Agreement and 2007 and 2008 Amended and Restated Restricted Stock Unit Award Agreements, which are filed as Exhibits 10(e), 10(f) and 10(h), respectively, to this Quarterly Report on Form 10-Q.

Termination of Supplemental Executive Retirement Plan

On November 5, 2008, the Board of Directors approved the termination of The TDL Group Corp. Amended and Restated Supplemental Retirement Plan (the “SERP”). The termination of the SERP will take effect as of December 31, 2008, provided that the liquidation of the assets in the SERP and the distribution of such assets to participants will be completed after December 31, 2008 by such means and methods and in accordance with such timelines as management shall consider appropriate.

A copy of the SERP is attached as Exhibit 99.2 to the Form 8-K of the Company filed with the SEC on October 26, 2006 and the foregoing summary is qualified in its entirety by reference to the full text of the Termination Agreement for the SERP, which is filed as Exhibit 10(c) to this Quarterly Report on Form 10-Q.

Approval of Personal Supplemental Executive Retirement Savings Plan

On November 5, 2008, the Board of Directors approved The Personal Supplemental Executive Retirement Savings Plan (the “Savings Plan”) which becomes effective January 1, 2009. The purpose of the Savings Plan is to provide executive officers and certain other employees and officers of the Company’s Canadian subsidiaries (collectively, the “participants”) with additional compensation, which the participants will direct to be held and invested in accordance with the terms of the Savings Plan. Only individuals who are below 69 years of age are eligible to receive additional compensation under the Savings Plan.

Participants who have more than three years of service with the Company are considered vested participants. As mentioned above, vested participants are entitled to receive additional compensation from the Company under the Savings Plan, 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 146.2(1) of the Income Tax Act (Canada). The vested accounts and tax free savings accounts will be administered by a third party financial institution, and the amounts held in such accounts will be invested in permitted investments at the direction of the respective participant. 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, including termination, disability or death of a participant, or in certain other circumstances.

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, “Earnings”). 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, 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. 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, less the Pension Plan Contribution. In all other cases, the annual payment will be equal to 12% of the vested participant’s Earnings in respect of that year, less the Pension Plan Contribution. All annual payments made to participants under the Savings Plan will be subject to applicable tax withholdings. These payments represent a reduction in the maximum benefit from contributions under the SERP.

         Participants with less than three years of service with the Company will be considered non-vested participants. The Company will not make an annual payment to non-vested participants, but will declare an annual bonus of an approximately equivalent amount to each non-vested participant. These bonuses will be paid in cash (after applicable withholdings) to the participants’ vested accounts and/or tax free savings accounts upon vesting, which occurs once a participant has completed three years of service, or upon a change of control. A non-vested participant is also entitled to receive the bonus amounts, less applicable withholdings, if he or she is terminated after the age of 65, becomes disabled, is terminated in advance of a change of control of the Company or dies, or in certain other circumstances. Otherwise, the bonuses will be forfeited on a non-vested participant’s termination of employment.

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The foregoing summary is qualified in its entirety by reference to the full text of the Savings Plan, which is filed as Exhibit 10(b) to this Quarterly Report on Form 10-Q.

Executive Annual Performance Plan

On November 5, 2008, 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, with 10 years of service with the Company to align the EAPP retirement age with the Company’s other plans and programs. Employees who were retirement eligible under the EAPP prior to the recent amendment (i.e., who were between 55 years and 60 years with 10 years of continuous service) will be grandfathered and, as such, will continue to be considered as having met the retirement age under the EAPP following the amendments.

The foregoing summary is qualified in its entirety by reference to the full text of the EAPP, which is filed as Exhibit 10(a) to this Quarterly Report on Form 10-Q.

Other Information relative to the U.S. Business

Subsequent to the third quarter ended September 28, 2008, we announced our intention to rationalize some underperforming Company-operated restaurants in southern New England between the end of 2008 and early next year. The details of the rationalization plan are being finalized, and it is expected to result in an asset impairment charge for the affected restaurants. This rationalization is expected to affect less than half of our 30 Company-operated restaurants in the U.S. Management will also undertake a further impairment analysis related to the affected operating markets. The plan to close underperforming restaurants is consistent with management’s efforts to improve profitability of the U.S. segment. We expect rationalization of underperforming restaurants will ultimately contribute to improved profitability, and improve sales performance at our remaining restaurants nearby. While the rationalization of underperforming restaurants will contribute to future earnings, the 2008 operating income target did not contemplate an impairment charge that will likely occur in the fourth quarter.

ITEM 6. EXHIBITS

(a) Index to Exhibits on Page 49.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	TIM HORTONS INC. (Registrant)
Date: November 7, 2008	/s/ Cynthia J. Devine
	Cynthia J. Devine
	Chief Financial Officer and Principal Accounting Officer

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TIM HORTONS INC. AND SUBSIDIARIES

INDEX TO EXHIBITS

Exhibit Number	Description
3(ii)	Second Amended and Restated By-Laws of Tim Hortons Inc., Most Recently Amended on November 5, 2008
10(a)	Executive Annual Performance Plan, As Amended and Restated on November 5, 2008
10(b)	Personal Supplemental Executive Retirement Savings Plan, Effective January 1, 2009
10(c)	Amendment and Termination of The TDL Group Corp. Amended and Restated Supplementary Retirement Plan, effective December 31, 2008
10(d)	Amended and Restated Employment Agreement with Donald B. Schroeder, Restated November 5, 2008
10(e)	Amended and Restated Employment Agreement with David F. Clanachan (Compliance with Section 409A of the Internal Revenue Code), effective December 31, 2008
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)
10(g)	Form of 2007 Amended and Restated Restricted Stock Unit Award Agreement (U.S. Version) (Compliance with Section 409A of the Internal Revenue Code)
10(h)	2008 Amended and Restated Restricted Stock Unit Award Agreement of David Clanachan (Compliance with Section 409A of the Internal Revenue Code)
10(i)	Form of 2008 Amended and Restated Restricted Stock Unit Award Agreement for U.S. Employees and U.S. Taxpayers (including Stephen Johnston) (Compliance with Section 409A of the Internal Revenue Code)
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)
10(k)	Form of Amended and Restated Deferred Stock Unit Award Agreement (U.S. Version) (Compliance with Section 409A of the Internal Revenue Service)
10(l)	Information regarding Quantitative and Qualitative 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)
31(a)	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31(b)	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32(a)	Section 1350 Certification of Chief Executive Officer
32(b)	Section 1350 Certification of Chief Financial Officer
99	Safe Harbor Under the Private Securities Litigation Reform Act of 1995

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EX-3.(II)

Exhibit 3(ii)

Second Amended and Restated By-Laws of Tim Hortons Inc.,

Most Recently Amended on November 5, 2008

SECOND AMENDED AND RESTATED

BY-LAWS

OF

TIM HORTONS INC.,

a Delaware corporation

(the “Corporation”)

(Adopted as of February 23, 2006)

(Revised August 31, 2006, October 25, 2007 and November 5, 2008)

SECOND AMENDED AND RESTATED

BY-LAWS

OF

TIM HORTONS INC.

ARTICLE I

OFFICES

Section 1.1 Registered Office. 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.

Section 1.2 Additional Offices. The Corporation may, in addition to its registered office in the State of Delaware, have such other offices and places of business, both within and outside the State of Delaware, 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.

ARTICLE II

STOCKHOLDERS MEETINGS

Section 2.1 Annual Meetings. 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, provided that the Board may in its sole discretion determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication pursuant to Section 9.5(a). At each annual meeting, the stockholders shall elect directors of the Corporation and may transact any other business as may properly be brought before the meeting.

Section 2.2 Special Meetings. Except as otherwise required by applicable law or provided in the Corporation’s Amended and Restated Certificate of Incorporation, as the same may be amended or restated from time to time (the “Certificate of Incorporation”), special meetings of stockholders, for any purpose or purposes, may be called only by the Chairman of the Board, the Chief Executive Officer, the President or the Board pursuant to a resolution adopted by a majority of the Whole Board (as defined below). 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, provided that the Board may in its sole discretion determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication pursuant to Section 9.5(a). “Whole Board” shall mean the total number of directors the Corporation would have if there were no vacancies.

Section 2.3 Notices. Notice of each stockholders meeting stating the place, if any, date, and time of the meeting, and the means of remote communication, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, shall be given in the manner permitted by Section 9.3 to each stockholder entitled to vote thereat

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by the Corporation not less than 10 nor more than 60 days before the date of the meeting. If said notice is for a stockholders meeting other than an annual meeting, it shall in addition state the purpose or purposes for which the meeting is called, 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). Any meeting of stockholders as to which notice has been given may be postponed, and any special meeting of stockholders as to which notice has been given may be cancelled, by the Board upon public announcement (as defined in Section 2.7(c)) given before the date previously scheduled for such meeting.

Section 2.4 Quorum. Except as otherwise provided by applicable law, the Certificate of Incorporation or these By-Laws, the presence, in person or by proxy, 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, except that when specified business is to be voted on by a class or series of stock voting as a class, 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 a quorum shall not be present or represented by proxy at any meeting of the stockholders, the holders of a majority of the voting shares represented at the meeting, whether or not a quorum is present, the Chairman of the Board, the Chief Executive Officer, 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 2.6 until a quorum shall attend. The stockholders present at a duly convened meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Shares of its own stock belonging to the Corporation or to another corporation, if a majority of the voting power of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes; provided, however, 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.

Section 2.5 Voting of Shares.

(a) Voting Lists. The Secretary shall prepare, or shall cause the officer or agent who has charge of the stock ledger of the Corporation to prepare, at least 10 days before every meeting of stockholders, 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. Nothing contained in this Section 2.5(a) shall require the Corporation to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours for a period of at least 10 days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the Corporation’s principal office. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting

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during the whole time thereof, and may be inspected by any stockholder who is present. If a meeting of stockholders is to be held solely by means of remote communication as permitted by Section 9.5(a), the list shall be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of meeting. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the list required by this Section 2.5(a) or to vote in person or by proxy at any meeting of stockholders.

(b) Manner of Voting. At any stockholders meeting, every stockholder entitled to vote may vote in person or by proxy. If authorized by the Board, 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 9.3), 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. The Board, in its discretion, or the chairman of the meeting of stockholders, in such person’s discretion, may require that any votes cast at such meeting shall be cast by written ballot.

(c) Proxies. 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, but no such proxy shall be voted or acted upon after 11 months from its date, unless the proxy provides for a longer period. Proxies need not be filed with the Secretary of the Corporation until the meeting is called to order, but shall be filed with the Secretary before being voted. Without limiting the manner in which a stockholder may authorize another person or persons to act for such stockholder as proxy, either of the following shall constitute a valid means by which a stockholder may grant such authority.

(i) A stockholder may execute a writing authorizing another person or persons to act for such stockholder as proxy. Execution may be accomplished by the stockholder or such stockholder’s authorized officer, director, employee or agent signing such writing or causing such person’s signature to be affixed to such writing by any reasonable means, including, but not limited to, by facsimile signature.

(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, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, 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.

Any copy, 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; provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.

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(d) Required Vote. Subject to the rights of the holders of one or more series of preferred stock of the Corporation (“Preferred Stock”), voting separately by class or series, to elect directors pursuant to the terms of one or more series of Preferred Stock, 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. 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, unless the matter is one upon which, by applicable law, the Certificate of Incorporation, these By-Laws or applicable stock exchange rules, a different vote is required, in which case such provision shall govern and control the decision of such matter.

(e) Inspectors of Election. The Board may appoint one or more persons as inspectors of election, who may be employees of the Corporation or otherwise serve the Corporation in other capacities, to act at any meeting of stockholders or any adjournment thereof and to make a written report thereof. 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, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before discharging his or her duties, 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. The inspectors shall ascertain and report the number of outstanding shares and the voting power of each, determine the number of shares present in person or represented by proxy at the meeting and the validity of proxies and ballots, count all votes and ballots and report the results, determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors, and certify their determination of the number of shares represented at the meeting and their count of all votes and ballots. No person who is a candidate for an office at an election may serve as an inspector at such election. 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. If there is more than one inspector, the report of a majority shall be the report of the inspectors.

Section 2.6 Adjournments. Any meeting of stockholders, annual or special, may be adjourned by the chairman of the meeting, from time to time, whether or not there is a quorum, to reconvene at the same or some other place. Notice need not be given of any such adjourned meeting if the date, time, place, if any, thereof, and the means of remote communication, if any, 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. At the adjourned meeting the stockholders, or the holders of any class or series of stock entitled to vote separately as a class, as the case may be, may transact any business that might have been transacted at the original meeting. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

Section 2.7 Advance Notice for Business.

(a) Annual Meetings of Stockholders. No business may be transacted at an annual meeting of stockholders, 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,

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(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 2.7(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 2.7(a); provided that, the nomination of a person for election as a director at an annual meeting shall be governed by Section 3.2 of these By-Laws. Section 2.7(a)(iii) shall be the exclusive means for a stockholder to submit business (other than (1) nominations for directors pursuant to Section 3.2 or (2) matters properly brought under Rule 14a-8 (or any successor thereof) of the Securities Exchange Act of 1934, 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, for business (other than nominations) to be properly brought before an annual meeting by a stockholder, 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. Subject to Section 2.7(a)(iii), to be timely, 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; provided, however, 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, 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, if the first public announcement of the date of such meeting is less than 100 days prior to the annual meeting, 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. 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 2.7(a).

(ii) To be in proper written form, 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, 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-Laws, the language of the proposed amendment) and the reasons for conducting such business at the annual meeting, (B) the name and record address of such stockholder and the name and address of the Stockholder Associated Person (as defined below), if any, on whose behalf the proposal is made, (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, if any, on whose behalf the proposal is made and (2) any derivative positions held or beneficially held by such stockholder and the Stockholder Associated Person, if any, 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

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stock of the Corporation, 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, 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, or any other agreement, arrangement or understanding has been made, the effect or intent of which is to increase or decrease the voting power of, such stockholder or the Stockholder Associated Person, if any, with respect to the shares of capital stock of the Corporation, (D) any proxy, contract, arrangement, understanding or relationship pursuant to which such stockholder or Stockholder Associated Person, if any, has a right to vote any shares of any capital stock of the Corporation, (E) a description of all arrangements or understandings between such stockholder and the Stockholder Associated Person, if any, 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, (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, that are separated or separable from the underlying shares of capital stock of the Corporation, (G) any performance-related fees (other than an asset-based fee) that such stockholder or the Stockholder Associated Person, 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, (H) any material interest of such stockholder and the Stockholder Associated Person, if any, on whose behalf the proposal is made in such business, (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, and (J) any other information relating to such stockholder and Stockholder Associated Person, if any, 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.

A “Stockholder Associated Person” of any stockholder means (A) any person controlling, directly or indirectly, or acting in concert with, such stockholder, (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, controlled by or under common control with such Stockholder Associated Person.

(iii) If the chairman of the annual meeting determines that any stockholder proposal was not made in accordance with the provisions of this Section 2.7(a) or that the information provided in a stockholder’s notice does not satisfy the information requirements of this Section 2.7(a), such proposal shall not be presented for action at the annual meeting. Notwithstanding the foregoing provisions of this Section 2.7(a), 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, such proposed business shall not be transacted, notwithstanding that proxies in respect of such matter may have been received by the Corporation.

(iv) In addition to the provisions of this Section 2.7(a), 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; provided, however,

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that any references in these By-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 3.2 of these By-Laws or any other business to be considered pursuant to Section 2.7 of these By-Laws. Nothing in this Section 2.7(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-8 under the Exchange Act.

(b) Special Meetings of Stockholders. At a special meeting of stockholders, only such business shall be conducted as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. 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 3.2.

(c) Public Announcement. For purposes of these By-Laws, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, 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, 14 or 15(d) of the Exchange Act.

Section 2.8 Conduct of Meetings. The chairman of each annual and special meeting of stockholders shall be the Chairman of the Board or, in the absence (or inability or refusal to act) of the Chairman of the Board, the Chief Executive Officer (if he or she shall be a director) or, in the absence (or inability or refusal to act of the Chief Executive Officer or if the Chief Executive Officer is not a director, 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, such other person as shall be appointed by the Board. 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. The Board may adopt such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with these By-Laws or such rules and regulations as adopted by the Board, the chairman of any meeting of stockholders shall have the right and authority to convene and to adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board or prescribed by the chairman of the meeting, may include, without limitation, the following: (a) the establishment of an agenda or order of business for the meeting; (b) rules and procedures for maintaining order at the meeting and the safety of those present; (c) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (d) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (e) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the Board or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure. The secretary of each annual and special meeting of stockholders shall be the Secretary or, in the absence (or inability or refusal to act) of the Secretary, an Assistant Secretary so appointed to act by the chairman of the meeting.

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In the absence (or inability or refusal to act) of the Secretary and all Assistant Secretaries, the chairman of the meeting may appoint any person to act as secretary of the meeting.

Section 2.9 No Action Without Meeting. 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, 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 3.1 Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board, 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-Laws required to be exercised or done by the stockholders. Directors need not be stockholders or residents of the State of Delaware.

Section 3.2 Advance Notice for Nomination of Directors.

(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. Nominations of persons for election to the Board at any annual meeting of stockholders, 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, 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 3.2 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 3.2. 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 3.2, 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.

(b) In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation. 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, 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; provided, however, 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, 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, if the first public announcement of the date of such

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meeting is less than 100 days prior to the annual meeting, 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 (ii) in the case of a special meeting of stockholders called for the purpose of electing directors, 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. 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 3.2.

(c) Notwithstanding anything in paragraph (b) above to the contrary, 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, a stockholder’s notice required by this Section 3.2 shall also be considered timely, but only regarding nominees for the additional directorships created by such increase that are to be filled by election at such annual meeting, 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.

(d) To be in proper written form, 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, age, business address and residence address of the person, (B) the principal occupation or employment of the person, (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 (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, if any, on whose behalf the nomination is made, (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, on whose behalf the nomination is made, and (2) any derivative positions held or beneficially held by the stockholder and the Stockholder Associated Person, if any, 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, 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, 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, or any other agreement, arrangement or understanding has been made, the effect or intent of which is to increase or decrease the voting power of, such stockholder or the Stockholder Associated Person, if any, with respect to the shares of capital stock of the Corporation, (D) any proxy, contract, arrangement, understanding or relationship pursuant to which such stockholder or Stockholder Associated Person, if any, has a right to vote any shares of any capital stock of the Corporation, (E) a description of all arrangements or understandings relating to the nomination to be made by such stockholder between such stockholder and the

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Stockholder Associated Person, if any, on whose behalf the nomination is made, each proposed nominee and any other person or persons (including their names), (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, that are separated or separable from the underlying shares of capital stock of the Corporation, (G) any performance-related fees (other than an asset-based fee) that such stockholder or the Stockholder Associated Person, 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, (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, if any, 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. Such notice must be accompanied by a completed and signed questionnaire, representation and agreement required by Section 3.2(g) of these By-Laws and a written consent of each proposed nominee to being named as a nominee and to serve as a director, if elected.

(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, 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. 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 3.2, then such nomination shall not be considered at the meeting in question. Notwithstanding the foregoing provisions of this Section 3.2, 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, or (ii) the nominee fails to meet with the Nominating and Corporate Governance Committee, as required by Section 3.2(d), such nomination shall be disregarded, notwithstanding that proxies in respect of such nomination may have been received by the Corporation.

(f) In addition to the provisions of this Section 3.2, 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. Nothing in this Section 3.2 shall be deemed to affect any rights of the holders of Preferred Stock to elect directors pursuant to the Certificate of Incorporation.

(g) To be eligible to be a nominee for election as a director of the Corporation, a person must deliver (in accordance with the time periods prescribed for delivery of notice under Section 3.2(b) of these By-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, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or (2) any

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Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law, (B) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein, and (C) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the Corporation, and will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation.

Section 3.3 Compensation. Unless otherwise restricted by the Certificate of Incorporation or these By-Laws, the Board shall have the authority to fix the compensation of directors. The directors may be reimbursed their expenses, if any, 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. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of committees of the Board may be allowed like compensation and reimbursement of expenses for service on the committee.

ARTICLE IV

BOARD MEETINGS

Section 4.1 Annual Meetings. The Board shall meet at least annually and may meet more frequently as needed.

Section 4.2 Regular Meetings. Regularly scheduled, periodic meetings of the Board may be held without notice at such times, dates and places as shall from time to time be determined by the Board.

Section 4.3 Special Meetings. Special meetings of the Board (a) may be called by the Chairman of the Board, the Chief Executive Officer, the President, or any three directors, or the sole director, as the case may be, and shall be held at such time, date and place as may be determined by the person calling the meeting or, if called upon the request of such directors or the sole director, as specified in such written request. Notice of each special meeting of the Board shall be given, as provided in Section 9.3, 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; (y) at least two days before the meeting if such notice is sent by a nationally recognized overnight delivery service; and (z) at least five days before the meeting if such notice is sent through the United States mail. If the Secretary shall fail or refuse to give such notice, then the notice may be given by the officer who called the meeting or the directors who requested the meeting. Any and all business that may be transacted at a regular meeting of the Board may be transacted at a special meeting. Except as may be otherwise expressly provided by applicable law, the Certificate of Incorporation, or these By-Laws, neither the business to be transacted at, nor the purpose of, any special meeting need be specified in the notice or waiver of notice of such meeting. A special

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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 9.4.

Section 4.4 Quorum; Required Vote. A majority of the Whole Board shall constitute a quorum for the transaction of business at any meeting of the Board, 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, except as may be otherwise specifically provided by applicable law, the Certificate of Incorporation or these By-Laws. If a quorum shall not be present at any meeting, a majority of the directors present may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.

Section 4.5 Consent In Lieu of Meeting. Unless otherwise restricted by the Certificate of Incorporation or these By-Laws, 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, as the case may be, consent thereto in writing or by electronic transmission, 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. 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.

Section 4.6 Organization. The chairman of each meeting of the board shall be the Chairman of the Board or, in the absence (or inability or refusal to act) of the Chairman of the Board, the Chief Executive Officer (if he or she shall be a director) or, in the absence (or inability or refusal to act) of the Chief Executive Officer or if the Chief Executive Officer is not a director, 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, a chairman elected from the directors present. The Secretary shall act as secretary of all meeting of the Board. In the absence (or inability or refusal to act) of the Secretary, and Assistant Secretary shall perform the duties of the Secretary at such meeting. In the absence (or inability or refusal to act) of the Secretary and all Assistant Secretaries, the chairman of the meeting may appoint any person to act as secretary of the meeting.

ARTICLE V

COMMITTEES OF DIRECTORS

Section 5.1 Establishment. The Board may designate one or more committees, each committee to consist of one or more of the directors. Each committee shall keep regular minutes of its meetings and report the same to the Board when required. The Board shall have the power at any time to fill vacancies in, change the membership of, or dissolve any such committee.

Section 5.2 Available Powers. Any committee established pursuant to Section 5.1 hereof, to the extent permitted by applicable law and by resolution of the Board, 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, and may authorize the seal of the Corporation to be affixed to all papers that may require it.

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Section 5.3 Alternate Members. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of such committee.

Section 5.4 Procedures. Unless the Board otherwise provides, the time, date, place, if any, and notice of meetings of a committee shall be determined by such committee. 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), at meetings of a committee, a majority of the number of members of the committee (but not including any alternate member, unless such alternate member has replaced any absent or disqualified member at the time of, or in connection with, such meeting) shall constitute a quorum for the transaction of business. 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, except as otherwise specifically provided by applicable law, the Certificate of Incorporation, these By-Laws or the Board. If a quorum is not present at a meeting of a committee, the members present may adjourn the meeting from time to time, without notice other than an announcement at the meeting, until a quorum is present. Unless the Board otherwise provides and except as provided in these By-Laws, each committee designated by the Board may make, alter, amend and repeal rules for the conduct of its business. 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-Laws.

ARTICLE VI

OFFICERS

Section 6.1 Officers. The officers of the Corporation elected by the Board shall be a Chairman of the Board, a Chief Executive Officer, a President, a Chief Financial Officer, a Treasurer, a Secretary and such other officers (including without limitation Vice Presidents, Assistant Secretaries and Assistant Treasurers) as the Board from time to time may determine. Officers elected by the Board shall each have such powers and duties as generally pertain to their respective offices, subject to the specific provisions of this Article VI. Such officers shall also have such powers and duties as from time to time may be conferred by the Board. 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. Such other officers shall have such powers and duties and shall hold their offices for such terms as may be provided in these By-Laws or as may be prescribed by the Board or, if such officer has been appointed by the Chairman of the Board or President, as may be prescribed by the appointing officer.

Section 6.2 Duties of Officers. All officers of the Corporation, as between themselves and the Corporation, shall, respectively, have such duties as are determined by the directors.

Section 6.3 Term of Office. The officers of the Corporation shall hold office at the pleasure of the directors. Any officer of the Corporation may be removed, either with or without cause, at any time, by the affirmative vote of a majority of all of the directors then in office; such removal, however, shall be without prejudice to any contract rights of the person so removed.

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Section 6.4 Multiple Officeholders; Stockholder and Director Officers. Any number of offices may be held by the same person, unless the Certificate of Incorporation or these By-Laws otherwise provide. Officers need not be stockholders or residents of the State of Delaware.

ARTICLE VII

SHARES

Section 7.1 Uncertificated Shares. The shares of the Corporation shall be uncertificated, 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. The Corporation shall not have power to issue a certificate representing shares in bearer form.

Section 7.2 Multiple Classes of Stock. If the Corporation shall be authorized to issue more than one class of stock or more than one series of any class, the Corporation shall (a) cause the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, 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, within a reasonable time after the issuance or transfer of such shares, 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; provided, however, that, except as otherwise provided by applicable law, in lieu of the foregoing requirements, there may be set forth on the face or back of such certificate or, in the case of uncertificated shares, on such written notice a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences or rights.

Section 7.3 Signatures. 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, the Chief Executive Officer, the President or a Vice President and (b) the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Corporation. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar on the date of issue.

Section 7.4 Consideration and Payment for Shares. (a) Subject to applicable law and the Certificate of Incorporation, shares of stock may be issued for such consideration, having in the case of shares with par value a value not less than the par value thereof, and to such persons, as determined from time to time by the Board. The consideration may consist of any

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tangible or intangible property or benefit to the Corporation including cash, promissory notes, services performed, contracts for services to be performed or other securities.

(b) Subject to applicable law and the Certificate of Incorporation, 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, 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.

Section 7.5 Lost, Destroyed or Wrongfully Taken Certificates. (a) If an owner of a certificate representing shares claims that such certificate has been lost, destroyed or wrongfully taken, 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; (ii) if requested by the Corporation, 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, wrongful taking or destruction of such certificate or the issuance of such new certificate or uncertificated shares; and (iii) satisfies other reasonable requirements imposed by the Corporation.

(b) If a certificate representing shares has been lost, apparently destroyed or wrongfully taken, and the owner fails to notify the Corporation of that fact within a reasonable time after the owner has notice of such loss, apparent destruction or wrongful taking and the Corporation registers a transfer of such shares before receiving notification, 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.

Section 7.6 Transfer of Stock. (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, the Corporation shall register the transfer as requested if:

(i) in the case of certificated shares, the certificate representing such shares has been surrendered;

(ii) (A) with respect to certificated shares, the endorsement is made by the person specified by the certificate as entitled to such shares; (B) with respect to uncertificated shares, an instruction is made by the registered owner of such uncertificated shares; or (C) with respect to certificated shares or uncertificated shares, 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;

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(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;

(iv) the transfer does not violate any restriction on transfer imposed by the Corporation that is enforceable in accordance with Section 7.8(a); and

(v) such other conditions for such transfer as shall be provided for under applicable law have been satisfied.

(b) Whenever any transfer of shares shall be made for collateral security and not absolutely, the Corporation shall so record such fact in the entry of transfer if, when the certificate for such shares is presented to the Corporation for transfer or, if such shares are uncertificated, when the instruction for registration of transfer thereof is presented to the Corporation, both the transferor and transferee request the Corporation to do so.

Section 7.7 Registered Stockholders. 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 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, vote such shares, receive dividends or notifications with respect to such shares and otherwise exercise all the rights and powers of the owner of such shares, 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, upon providing documentary evidence of beneficial ownership of such shares and satisfying such other conditions as are provided under applicable law, may also so inspect the books and records of the Corporation.

Section 7.8 Effect of Corporation’s Restriction on Transfer. (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, if permitted by the Delaware General Corporation Law (the “DGCL”) and noted conspicuously on the certificate representing such shares or, in the case of uncertificated shares, 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, may be enforced against the holder of such shares or any successor or transferee of the holder including an executor, administrator, trustee, guardian or other fiduciary entrusted with like responsibility for the person or estate of the holder.

(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, even if otherwise lawful, 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; 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.

Section 7.9 Regulations. The Board shall have power and authority to make such additional rules and regulations, subject to any applicable requirement of law, as the Board may

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deem necessary and appropriate with respect to the issue, transfer or registration of transfer of shares of stock or certificates representing shares. 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.

ARTICLE VIII

INDEMNIFICATION

Section 8.1 Right to Indemnification. 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, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (hereinafter a “Covered Person”), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent, or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized or permitted by applicable law, as the same exists or may hereafter be amended, against all expense, liability and loss (including, without limitation, attorneys’ fees, judgments, fines, ERISA excise taxes and penalties and amounts paid in settlement) reasonably incurred or suffered by such Covered Person in connection with such proceeding; provided, however, that, except as provided in Section 8.3 with respect to proceedings to enforce rights to indemnification, 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.

Section 8.2 Right to Advancement of Expenses. In addition to the right to indemnification conferred in Section 8.1, a Covered Person also shall have the right to be paid by the Corporation the expenses (including, without limitation, attorneys’ fees) incurred in defending, testifying, or otherwise participating in any such proceeding in advance of its final disposition (hereinafter an “advancement of expenses”); provided, however, that, if the DGCL requires, 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, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter an “undertaking”), by or on behalf of such Covered Person, 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.

Section 8.3 Right of Indemnitee to Bring Suit. If a claim under Section 8.1 or Section 8.2 is not paid in full by the Corporation within 60 days after a written claim therefor has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be 20 days, the Covered Person may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If

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successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Covered Person shall also be entitled to be paid the expense of prosecuting or defending such suit. (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, and (b) in any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that, the Covered Person has not met any applicable standard for indemnification set forth in the DGCL. Neither the failure of the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel, 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, nor an actual determination by the Corporation (including a determination by its directors who are not parties to such action, a committee of such directors, independent legal counsel, or its stockholders) that the Covered Person has not met such applicable standard of conduct, shall create a presumption that the Covered Person has not met the applicable standard of conduct or, in the case of such a suit brought by the Covered Person, shall be a defense to such suit. In any suit brought by the Covered Person to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the Covered Person is not entitled to be indemnified, or to such advancement of expenses, under this Article VIII or otherwise shall be on the Corporation.

Section 8.4 Non-Exclusivity of Rights. 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, the Certificate of Incorporation, these By-Laws, an agreement, a vote of stockholders or disinterested directors, or otherwise.

Section 8.5 Insurance. The Corporation may maintain insurance, at its expense, to protect itself and/or any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the DGCL.

Section 8.6 Indemnification of Other Persons. 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. Without limiting the foregoing, the Corporation may, to the extent authorized from time to time by the Board, 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, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan, 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.

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Section 8.7 Amendments. Any repeal or amendment of this Article VIII by the Board or the stockholders of the Corporation or by changes in applicable law, or the adoption of any other provision of these By-Laws inconsistent with this Article VIII, will, to the extent permitted by applicable law, 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), 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.

Section 8.8 Certain Definitions. For purposes of this Article VIII, (a) references to “other enterprise” shall include any employee benefit plan; (b) references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; (c) references to “serving at the request of the Corporation” shall include any service that imposes duties on, or involves services by, a person with respect to any employee benefit plan, its participants, or beneficiaries; 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.

Section 8.9 Contract Rights. 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, officer, agent or employee and shall inure to the benefit of the Covered Person’s heirs, executors and administrators.

Section 8.10 Severability. If any provision or provisions of this Article VIII shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Article VIII shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Article VIII (including, without limitation, each such portion of this Article VIII containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

ARTICLE IX

MISCELLANEOUS

Section 9.1 Place of Meetings. If the place of any meeting of stockholders, the Board or committee of the Board for which notice is required under these By-Laws is not designated in the notice of such meeting, such meeting shall be held at the U.S. principal business office of the Corporation; provided, however, if the Board has, in its sole discretion, determined that a meeting shall not be held at any place, but instead shall be held by means of remote communication pursuant to Section 9.5 hereof, then such meeting shall not be held at any place.

Section 9.2 Fixing Record Dates. (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, the Board may fix a record date, which shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall

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not be more than 60 nor less than 10 days before the date of such meeting. If no record date is fixed by the Board, 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, or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held. 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; provided, however, that the Board may fix a new record date for the adjourned meeting.

(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, conversion or exchange of stock, or for the purpose of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than 60 days prior to such action. If no record date is fixed, 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.

Section 9.3 Means of Giving Notice.

(a) Notice to Directors. Whenever under applicable law, the Certificate of Incorporation or these By-Laws notice is required to be given to any director, such notice shall be given either (i) in writing and sent by hand delivery, through the United States mail, or by a nationally recognized overnight delivery service for next day delivery, (ii) by means of facsimile telecommunication or other form of electronic transmission, or (iii) by oral notice given personally or by telephone. A notice to a director will be deemed given as follows: (i) if given by hand delivery, orally, or by telephone, when actually received by the director; (ii) if sent through the United States mail, when deposited in the United States mail, with postage and fees thereon prepaid, addressed to the director at the director’s address appearing on the records of the Corporation; (iii) if sent for next day delivery by a nationally recognized overnight delivery service, when deposited with such service, with fees thereon prepaid, addressed to the director at the director’s address appearing on the records of the Corporation; (iv) if sent by facsimile telecommunication, when sent to the facsimile transmission number for such director appearing on the records of the Corporation; (v) if sent by electronic mail, when sent to the electronic mail address for such director appearing on the records of the Corporation; or (vi) if sent by any other form of electronic transmission, when sent to the address, location or number (as applicable) for such director appearing on the records of the Corporation.

(b) Notice to Stockholders. Whenever under applicable law, the Certificate of Incorporation or these By-Laws notice is required to be given to any stockholder, such notice may be given (i) in writing and sent either by hand delivery, through the United States mail, or by a nationally recognized overnight delivery service for next day delivery, or (ii) by means of a form of electronic transmission consented to by the stockholder, to the extent permitted by, and subject to the conditions set forth in Section 232 of the DGCL. A notice to a stockholder shall be deemed given as follows: (i) if given by hand delivery, when actually received by the stockholder; (ii) if sent through the United States mail, when deposited in the United States mail, with postage and fees thereon prepaid, addressed to the stockholder at the stockholder’s address appearing on the stock ledger of the Corporation; (iii) if sent for next day delivery by a nationally

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recognized overnight delivery service, when deposited with such service, with fees thereon prepaid, addressed to the stockholder at the stockholder’s address appearing on the stock ledger of the Corporation; 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, (A) if by facsimile transmission, when directed to a number at which the stockholder has consented to receive notice, (B) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice, (C) if by a posting on an electronic network together with separate notice to the stockholder of such specified posting, upon the later of (1) such posting and (2) the giving of such separate notice, and (D) if by any other form of electronic transmission, when directed to the stockholder. 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. 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, or other person responsible for the giving of notice; provided, however, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.

(c) Electronic Transmission. “Electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process, including but not limited to transmission by telex, facsimile telecommunication, electronic mail, telegram and cablegram.

(d) Notice to Stockholders Sharing Same Address. Without limiting the manner by which notice otherwise may be given effectively by the Corporation to stockholders, any notice to stockholders given by the Corporation under any provision of the DGCL, 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. A stockholder may revoke such stockholder’s consent by delivering written notice of such revocation to the Corporation. 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.

(e) Exceptions to Notice Requirements. Whenever notice is required to be given, under the DGCL, the Certificate of Incorporation or these Bylaws, to any person with whom communication is unlawful, 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 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. 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 shall state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful.

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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

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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

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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 By-Laws. 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.

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EX-10.(A)

Exhibit 10(a)

Executive Annual Performance Plan, As Amended and Restated on November 5, 2008

TIM HORTONS INC.

EXECUTIVE ANNUAL PERFORMANCE PLAN

(as amended and restated effective November 5, 2008)

1. Purpose. The purpose of the Executive Annual Performance Plan (the “Plan”) is to enhance the ability of Tim Hortons Inc. (the “Company”) and its subsidiaries to attract, motivate, reward, and retain key employees, 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. To this end, the Plan provides a means of rewarding participants based on the performance of the Company and/or its Operating Units.

2. Administration. The Plan shall be administered by the Committee and the CEO as provided herein. The Committee shall have full authority to establish the rules and regulations relating to the Plan, to interpret the Plan and those rules and regulations, to determine the Performance Objectives of the Company and/or Operating Units, 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, including the delegation of such authority or power, where appropriate. The Committee’s administration of the Plan, including all such rules and regulations, interpretations, selections, determinations, approvals, decisions, delegations, amendments, terminations and other actions, shall be final and binding on the Company, its stockholders and the Participants and their beneficiaries. Subject to the authority and discretion of the Committee, the CEO shall have the full authority to determine the Participants in the Plan, the Award opportunities for such Participants, 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.

3. Eligible Employees. Generally, all Employees are eligible to participate in the Plan for any fiscal year. However, participation shall be limited to those Employees selected by the CEO, subject to the authority and discretion of the Committee, to participate in the Plan for each fiscal year in accordance with Section 4.

4. Determination of Awards. For each fiscal year, the Committee shall establish the Performance Objectives of the Company and/or Operating Units. Subject to the authority and discretion of the Committee, the CEO shall determine (i) the Employees who shall be Participants during each fiscal year, (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, and (iii) the Award opportunities for each Participant, including the extent to which Awards will be payable for actual performance between each level of the Performance Objectives. The CEO shall provide to the Committee, for consideration in accordance with its

delegated authority from the Board, a schedule that indicates the Participants selected, their Award opportunities, 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. 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.

5. Payment of Awards. As soon as practicable after the determination of the Company’s and, if applicable, the Operating Units’ financial performance for a fiscal year, but no later than the 15^th day of the third month following the end of such fiscal year, each Award to the extent earned shall be paid in a single lump sum cash payment, less applicable withholding taxes. Notwithstanding the foregoing, a Participant may elect to defer all or a portion of any Award that will otherwise become payable in accordance with this Section, if permitted pursuant to (and in accordance with) a deferred compensation plan adopted by, or an agreement entered into with, the Company or any of its subsidiaries.

6. Discretionary Bonuses. In addition to any Awards payable under Section 4, the CEO, after consultation with the Committee and subject to the authority and discretion of the Committee, shall have the authority to make additional cash incentive awards to any Employees selected by the CEO in amounts determined by the CEO. Any such award shall be paid to the applicable employee no later than the 15^th day of the third month following the end of the fiscal year in which the award is determined.

7. Termination of Employment. 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, unless the Participant’s employment was terminated because of his or her (i) death, (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, in which event the Participant will be entitled to a pro-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, subject to the Committee’s discretion as set forth in Section 2 hereof. Provided, however, 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, 2008, the applicable age in (iii) above shall be “55,” as opposed to age “60.” The foregoing proviso shall expire by its terms and be void and of no further force and effect on and as of November 5, 2013.

8. Change in Control. Notwithstanding any provision in the Plan to the contrary, upon the occurrence of a Change in Control of the Company, 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;

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(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; 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.

(ii) Notwithstanding anything to the contrary contained herein, 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, 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.

(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, or in anticipation of, a Change in Control which has been threatened or proposed, 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.

9. Adjustments. The Committee may, at the time Performance Objectives are determined for a fiscal year, or at any time prior to the final determination of Awards in respect of such fiscal year, 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), special charges, accounting or tax law changes and other extraordinary or nonrecurring events.

10. Designation of Beneficiary. In the event of a Participant’s death prior to full payment of any Award hereunder, unless such Participant shall have designated a beneficiary or beneficiaries in accordance with this Section 10, 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, or if no beneficiary has been designated under the basic life insurance program, 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, Awards payable under the Plan shall be paid to the Participant’s estate. A beneficiary designation under this Plan, or revocation of a prior beneficiary designation, will be effective only if it is made in writing on a form provided by the Company, signed by the Participant and received by the Benefits Department of the Company. 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, Awards payable under the Plan shall be paid to the Participant’s estate.

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11. Amendment or Termination. The Board may amend or terminate the Plan at any time in its discretion; provided, however, that no amendment or termination of the Plan may affect any Award made under the Plan prior to that time; and provided further, however, 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, or in anticipation of, a Change in Control which has been threatened or proposed, in either case provided that a Change in Control shall actually have occurred.

12. Miscellaneous Provisions

(a) Neither the establishment of this Plan, nor any action taken hereunder, 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.

(b) A Participant’s rights and interests under the Plan may not be assigned or transferred, except as provided in Section 10, and any attempted assignment or transfer shall be null and void and shall extinguish, in the Company’s sole discretion, the Company’s obligation under the Plan to pay Awards with respect to the Participant.

(c) The Plan shall be unfunded. The Company shall not be required to establish any special or separate fund, or to make any other segregation of assets, to assure payment of Awards.

(d) The Company shall have the right to deduct from Awards paid any taxes or other amounts required by law to be withheld.

(e) Nothing contained in the Plan shall limit or affect in any manner or degree the normal and usual powers of management, exercised by the officers and the Board or committees thereof, 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, all of which rights and powers are expressly reserved.

13. Definitions.

(a) “Award” shall mean the cash incentive award earned by a Participant under the Plan for any fiscal year.

(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. Annual base salary does not include (i) Awards under the Plan, (ii) long-term incentive awards, (iii) signing bonuses or any similar bonuses, (iv) imputed income from such programs as executive life insurance, or (v) nonrecurring earnings such as moving expenses, 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.

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(c) “Board” shall mean the Board of Directors of the Company.

(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, or (b) has willfully engaged in conduct which demonstrably and materially injurious to the Company, monetarily or otherwise, or (c) has otherwise materially breached the terms of his or her employment agreement with the Company, if applicable (each, an “Employment Agreement”) (including, without limitation, a voluntary termination of the Participant’s employment by the Participant during the term of such Employment Agreement). No act, nor failure to act, on the Participant’s part, shall be considered “willful” unless he or she has acted, or failed to act, 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. 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), (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).

(e) “CEO” shall mean the Chief Executive Officer of the Company.

(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, as amended (the “Exchange Act”)), immediately after which such Person has “Beneficial Ownership” (within the meaning of Rule 13d-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; provided, however, in determining whether a Change in Control has occurred, Voting Securities which are acquired in a “Non-Control Acquisition” (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. A “Non-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, directly or indirectly, by the Company (for purposes of this definition, a “Subsidiary”), (B) the Company or its Subsidiaries, or (C) any Person in connection with a “Non-Control Transaction” (as hereinafter defined);

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(ii) The individuals who, as of the date the Board adopted the Plan, are members of the Board (the “Incumbent Board”), cease for any reason to constitute at least seventy percent (70%) of the members of the Board; provided, however, that if the election, or nomination for election by the Company’s common stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Plan, be considered as a member of the Incumbent Board; provided further, however, 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; or

(iii) The consummation of:

(A) A merger, consolidation or reorganization with or into the Company or in which securities of the Company are issued (a “Merger”), unless such Merger is a “Non-Control Transaction.” A “Non-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;

(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-thirds of the members of the board of directors of the Surviving Corporation, or a corporation beneficially directly or indirectly owning a majority of the Voting Securities of the Surviving Corporation; and

(3) no Person other than (i) the Company, (ii) any Subsidiary, (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, or (iv) any Person who, 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, 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.

(B) A complete liquidation or dissolution of the Company; 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).

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Notwithstanding the foregoing, 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, by reducing the number of shares of common stock or Voting Securities then outstanding, increases the proportional number of shares Beneficially Owned by the Subject Persons, 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, and after such share acquisition by the Company, 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, then a Change in Control shall occur.

(g) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(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.

(i) “Employee” shall mean any employee of the Company or any of its subsidiaries.

(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, title, position or responsibilities (including reporting responsibilities) which, in the Participant’s reasonable judgment, does not represent a promotion from his or her status, title, position or responsibilities as in effect immediately prior thereto; the assignment to the Participant of any duties or responsibilities which, in the Participant’s reasonable judgment, are inconsistent with such status, title, position or responsibilities; or any removal of the Participant from or failure to reappoint or reelect him or her to any of such positions, except in connection with the termination of his or her employment for disability, for Cause, as a result of his or her death or by the Participant other than for Good Reason;

(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, 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;

(iii) the Company’s requiring the Participant to be based at any place outside a 50-kilometer radius from the Participant’s business office location immediately prior to the Change in Control, except for reasonably required travel on Company business which is not materially greater than such travel requirements prior to the Change in Control;

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(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, if applicable, and those provided to him or her under any of the employee benefit plans in which the Participant becomes a participant, 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;

(v) any material breach by the Company of any provision of the Participant’s Employment Agreement with the Company, if applicable; and

(vi) the failure of the Company to notify the Participant within the 30-day period following any transfer of business and assets to any other person by merger, consolidation, sale of assets or otherwise, 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, if any.

(k) “Operating Unit”, for any fiscal year, shall mean a division, Company subsidiary, group, product line or product line grouping for which an income statement reflecting sales and operating income is produced.

(l) “Participant”, for any fiscal year, shall mean an Employee selected by the CEO, subject to the authority and discretion of the Committee, to participate in the Plan for such fiscal year.

(m) “Performance Objectives”, for any fiscal year, 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, which may include threshold Performance Objectives, target Performance Objectives and maximum Award Performance Objectives. Performance Objectives may be expressed in terms of earnings per share, earnings (which may be expressed as earnings before specified items), return on assets, return on invested capital, revenue, operating income, cash flow, total shareholder return or any combination thereof. 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.

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EX-10.(B)

Exhibit 10(b)

Personal Supplemental Executive Retirement Savings Plan, Effective January 1, 2009

THE TDL GROUP CORP.

PERSONAL SUPPLEMENTAL EXECUTIVE RETIREMENT SAVINGS PLAN

EFFECTIVE JANUARY 1, 2009

Table of Contents

Section 1 - Establishment and Purpose	1
Section 2 - Definitions	1
Section 3 - Participation	6
Section 4 - Payments To Vested Accounts	7
Section 5 - Vested Accounts and Tax Free Savings Accounts	8
Section 6 - Bonuses to Non-Vested Participants; Notional Accounts	10
Section 7 - Termination and Retirement	13
Section 8 - Total Disability	15
Section 9 - Administration of the Savings Plan	16
Section 10 - General Provisions	17
Section 11 - Amendment To or Termination of the Savings Plan	18
Appendix “A” - List of Participants as of the Effective Date	19
Appendix “B” - List of Permitted Investments	20
Schedule “A” - Acknowledgment and Direction	21
Schedule “B” - Tax Free Savings Account – Acknowledgment and Direction	22

Section 1 - Establishment and Purpose

1.01 Effective January 1, 2009, The TDL Group Corp. establishes The TDL Group Corp. Personal Supplemental Executive Retirement Savings Plan (the “Savings Plan”), the terms and conditions of which are contained in this document.

1.02 The purpose of the Savings Plan is to provide designated employees of The TDL Group Corp. 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.

Section 2 - Definitions

2.01 “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.

2.02 “Administrative Agent” means                      or another financial institution selected by the Company to act as Administrative Agent for this Savings Plan.

2.03 “Affiliate” means any Person which is subsidiary to, or associated or affiliated with, THI where:

(a) in the case of a Person that is a corporation, THI and/or its Affiliates beneficially own, directly or indirectly, shares representing 50% or more of the votes that may be cast to elect directors of such corporation;

(b) in the case of a Person that is a limited partnership, the general partner of such limited partnership is an Affiliate of THI;

(c) in the case of a Person that is a trust where the trustees have discretionary powers in respect of the trust assets, THI and/or its Affiliates have the right to elect or appoint a majority of the trustees of such trust; and

(d) in the case of a Person other than a corporation, limited partnership or trust, THI and/or its Affiliates possess, directly or indirectly, at least a majority ownership

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interest in such Person and have the power to determine the policies and conduct of the management of such Person;

2.04 “Acknowledgment and Direction” means an irrevocable Acknowledgment and Direction executed by a Participant in the form attached hereto as Schedule A.

2.05 “Board” means the Board of Directors of THI, a committee thereof, including the HRCC, or any person authorized by the Board to act on its behalf.

2.06 “Business Day” means a day on which banks are open for business in the City of Toronto.

2.07 “CEO” means the Chief Executive Officer of the Company.

2.08 “Change in Control” means:

(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;

(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, directly or indirectly, by any unaffiliated entity after the Effective Date;

(c) the acquisition of all or substantially all of the assets of TDL or THI by any unaffiliated entity after the Effective Date; or

(d) with respect to any Participant who is and continues to be employed by a Person other than THI or TDL, such employer ceasing to be an Affiliate of THI for any reason whatsoever;

provided that the following events shall be deemed not to constitute a Change in Control:

(e) the amalgamation or merger of TDL, THI or an Affiliate with TDL, THI or an Affiliate;

(f) the dissolution of TDL, THI or an Affiliate into TDL, THI or an Affiliate; or

(g) the acquisition of all or substantially all of the assets or voting shares of TDL, THI or an Affiliate by an Affiliate.

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2.09 “Company” means THI, TDL and any Affiliate, and their successors and assigns so long as such entities remain Affiliates; provided that, where any action is to be taken or decision to be made, “Company” shall mean only TDL.

2.10 “Earnings” means the aggregate of each Participant’s base salary and short-term incentive compensation (i.e., annual bonus) received during the Plan Year from the Company, excluding special bonuses and allowances, 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, Tax Free Savings Account or Notional Account pursuant to this Savings Plan during the Plan Year. For sake of greater clarity, “Earnings” does not include stock-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.

2.11 “Effective Date” means January 1, 2009.

2.12 “Employee” means an employee of the Company or a Participating Affiliate who is a Canadian resident for purposes of the Tax Act.

2.13 “HRCC” means the Human Resources Compensation Committee.

2.14 “Non-Vested Participant” means an Employee who has satisfied the eligibility conditions in Section 3.02 but has not yet completed three years of Service.

2.15 “Notional Account” means the notional account established by the Company or the Administrative Agent for a Non-Vested Participant pursuant to Section 6.01.

2.16 “Participant” means both a Vested Participant and a Non-Vested Participant.

2.17 “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.

2.18 “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 5.02.

2.19 “Person” means an individual, partnership, limited partnership, general partnership, joint stock company, joint venture, association, company, trust, pension fund, bank, trust company, loan company, insurance company, land trust, business trust or other

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organization, whether or not legal entities, and government and agency and any political subdivision thereof.

2.20 “Plan Year” means the calendar year.

2.21 “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.

2.22 “Savings Plan” has the meaning set forth in Section 1.01.

2.23 “Service” means a Participant’s period of employment with the Company commencing on the Participant’s date of hire. Service will not be considered to be broken by periods of absence (with or without pay), 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. For any Participant for whom a prior period of employment would be disregarded following a prior termination of such employment, the Company may, in its sole discretion, treat such prior and current periods of employment as Service.

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

2.25 “Tax Free Savings Account” means the account established for a Vested Participant pursuant to Section 5.01 on terms acceptable to the Company that is a “qualifying arrangement” for purposes of subsection 146.2(1) of the Tax Act.

2.26 “TDL” means The TDL Group Corp., a Nova Scotia unlimited liability company and its successors and assigns.

2.27 “TDL Group Benefit Program” means the TDL group benefits program G001 16072 issued by Manulife Financial, or such replacement policy or policies that the Company may arrange.

2.28 “TDL Supplemental Plan” means The TDL Group Corp. Amended and Restated Supplementary Retirement Plan, established effective November 1, 2006.

2.29 “THI” means Tim Hortons Inc., a Delaware corporation, and its successors and assigns.

2.30 “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.

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2.31 “Vested Account” means the account established for a Vested Participant pursuant to Section 5.01 on terms acceptable to the Company.

2.32 “Vested Participant” means an Employee who has satisfied:

(a) the eligibility requirements of Section 3.01; or

(b) the eligibility requirements of Section 3.03.

2.33 “Withholding Tax” means all taxes, charges, fees, levies and other amounts (whether federal, provincial, local or foreign), including Canada Pension Plan and Employment Insurance premiums or similar amounts, required to be deducted and withheld and remitted to the Canada Revenue Agency, any federal, provincial, local or foreign governmental authority in respect of any payment paid to a Participant or his or her estate.

2.34 “Yearly Amount” means:

(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 either 6% or 8% of Earnings, an amount equal to 10% of the Participant’s Earnings, 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 4.02(a) thereof) was at 22% of Earnings, an amount equal to 18% of the Participant’s Earnings, less the amount of the Company’s contribution on the Participant’s behalf to the Registered Plan in the 2009 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 4.02(a) thereof) was at 22% of Earnings, an amount equal to 15% of the Participant’s Earnings, less the amount of the Company’s contribution on the Participant’s behalf to the Registered Plan in the 2010 Plan Year; and

(d) in all other cases, an amount equal to 12% of the Participant’s Earnings, less the amount of the Company’s contribution on the Participant’s behalf to the Registered Plan in the applicable Plan Year.

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In this Savings Plan, words importing the singular number include the plural and vice versa; and references to a Section or Sections means a Section or Sections in this instrument.

Section 3 - Participation

3.01 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, provided that such Employee has completed three years of Service; or

(b) shall become a Non-Vested Participant in the Savings Plan on the Effective Date, where such Employee has not completed three years of Service.

Appendix A to the Savings Plan lists the Participants as of the Effective Date.

3.02 Participants After the Effective Date

Each Employee of the Company who after the Effective Date:

(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, or who is otherwise designated as a Participant by the HRCC as eligible for participation in the Savings Plan;

(b) is a member of the Registered Plan; and

(c) has delivered an Acknowledgment and Direction to the Company,

shall become a Non-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 3.02.

3.03 Becoming a Vested Participant

Each Non-Vested Participant shall become a Vested Participant on the earlier of:

(a) the day that the Non-Vested Participant has completed three years of Service; or

(b) a Change of Control,

provided that, in each case, the Participant has delivered a signed Acknowledgement and Direction to the Company.

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3.04 Other Employee Plans

Notwithstanding anything to the contrary herein, 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, wages or retirement benefits, which the Company designates as a plan or arrangement that precludes its participants from participating in the Savings Plan.

Section 4 - Payments To Vested Accounts

4.01 Participant Contributions

Subject to Section 4.04, 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, 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.

4.02 Company Payments to Vested Participants

Not later than 30 days after the end of each Plan Year, the Company shall, in accordance with the Vested Participant’s Acknowledgment and Direction and subject to Section 4.03, pay the Yearly Amount, less applicable Withholding Taxes, 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).

4.03 Tax Free Savings Account

In any Plan Year, a Participant may direct the Company, as agent for the Participant, to pay all or a portion of any amount that would otherwise be paid to the Participant’s Vested Account pursuant to Sections 4.02 or Section 6.03 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; 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

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established by the Participant in a Plan Year may not exceed the “TFSA dollar limit” in subsection 207.01(1) of the Tax Act for that Plan Year. For greater certainty, 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.

4.04 Contribution of TDL Supplemental Plan Balances

Any Participant who was a Participant under the TDL Supplemental Plan and who received a cash distribution, net of any applicable Withholding Tax, on the liquidation and wind-up of the TDL Supplemental Plan (the “Wind-up Funds”) may deposit all or a portion of the Wind-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, 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. Any funds so deposited to the Vested Account or the Tax Free Savings Account will be subject to the provisions of this Savings Plan.

Section 5 - Vested Accounts and Tax Free Savings Accounts

5.01 Vested Participant’s Account

Each Vested Participant shall establish a Vested Account and, if desired, a Tax Free Savings Account with the Administrative Agent, into which payments under Sections 4.02 and 6.03 of this Savings Plan shall be made, Permitted Investments acquired pursuant to Section 5.02 shall be held, and that shall otherwise be subject to the terms of this Savings Plan.

5.02 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”);

(b) at any time and from time to time, the Company and the Administrative Agent may, in accordance with the Administration Agreement, designate one or more additional Permitted Investments; and

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(c) the Company and the Administrative Agent may cause an investment to cease to be a Permitted Investment; however, unless otherwise required by the Administrative Agent, 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 5.02(c).

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;

(b) a Vested Participant may change the designation made under Section 5.03(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;

(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, the Vested Participant shall be deemed to have elected a short-term interest fund or the Permitted Investment that is designated under Section 5.02 which, in the opinion of the Company, is most similar to a short-term interest fund; and

(d) the Company may establish rules, regulations and procedures regarding the Permitted Investments as it deems appropriate in its sole discretion, provided that no such rule, 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 146.2(1) of the Tax Act or would cause this Savings Plan to be a “salary deferral arrangement”, “employee benefit plan” or “retirement compensation arrangement” as defined in subsection 248(1) of the Tax Act.

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5.04 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, and any taxes payable in respect of the Participant’s Vested Account or Tax Free Savings Account, provided that Withholding Taxes shall be withheld out of amounts payable to the Participants hereunder, and the Person making such Withholding Taxes will make any reporting in respect of such Withholding Taxes.

(b) Account Expenses:

Each Participant shall be responsible for the costs and expenses relating to the establishment, maintenance and operation of the Participant’s Vested Accounts and Tax Free Savings Accounts.

(c) Company Expenses:

Subject to the foregoing, the Company shall pay all other costs and expenses related to the establishment, maintenance and operation of the Savings Plan.

Section 6 - Bonuses to Non-Vested Participants; Notional Accounts

6.01 Timing of Bonus

(a) Not later than 30 days after the end of each Plan Year, the Company shall, in accordance with and subject to this Section 6, 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. Any such bonus will be in respect of the services rendered by such Participant during such Plan Year, provided that such bonus shall be subject to the provisions and limitations of this Savings Plan and, as such, shall be recorded in the Notional Account of the Non-Vested Participant.

(b) The CEO or the Board, in the case of the CEO, if applicable, has the sole and absolute discretion whether any bonus will be declared to a Non-Vested Participant pursuant to this Savings Plan during any Plan Year and may further

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reduce the amount that would otherwise be credited to a Non-Vested Participant’s Notional Account if the Non-Vested Participant does not report for his or her employment for any reason or does not perform to the Company’s expectations.

6.02 Notional Accounts

Either the Company or the Administrative Agent shall establish and maintain in its records a Notional Account for each Non-Vested Participant that records the aggregate of all amounts recorded to the Notional Account pursuant to Section 6.01 or Section 8.01.

6.03 Payments at Vesting

(a) In addition to any payments made in accordance with Section 4.02, the Company shall, in accordance with the Participant’s Acknowledgment and Direction and subject to Section 4.03, pay to the Vested Account of a Participant the total balance in that Participant’s Notional Account, less applicable Withholding Taxes, on or before the earlier of: (i) the last Business Day of the Plan Year in which the Participant becomes a Vested Participant; 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; and

(b) upon making the payment contemplated by Section 6.03(a), the Company shall notify the Administrative Agent, if applicable, and the balance in the Participant’s Notional Account shall be reduced to nil and such Notional Account shall thereupon be terminated.

6.04 Payments Prior to Vesting

(a) Triggering Event Payments

Notwithstanding any other provision herein to the contrary, if any of the following events occur during any Plan Year (each a “Triggering Event”):

(i) the Non-Vested Participant’s employment is terminated for any reason, including retirement, after the Participant attains age 65;

(ii) the Non-Vested Participant’s employment is terminated following a period of Total Disability;

(iii) the Non-Vested Participant’s employment is terminated by the Company without cause prior to the date of a Change in Control, a Change of

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Control occurs after the termination, and the Non-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; or (B) otherwise arose in connection with, or in anticipation of, a Change in Control which was threatened or proposed;

(iv) the Non-Vested Participant dies; or

(v) in such other circumstances as the HRCC may, in its sole discretion, determine; then,

the Company shall, on the last day of the first full month following the occurrence of the Triggering Event, notify the Administrative Agent, if applicable, and pay to the Non-Vested Participant, or, in the case of the Triggering Event in Section 6.04(a)(iv), his or her estate, the total balance in that Participant’s Notional Account, less applicable Withholding Taxes. In addition to the foregoing, in the case of a Triggering Events other than the Triggering Event in Section 6.04(a)(ii), the Company shall also, on the last day of the first full month following the occurrence of the Triggering Event, pay to the Non-Vested Participant, or, in the case of the Triggering Event in Section 6.04(a)(iv), his or her estate, an amount calculated in accordance with Subsection 4.02 as though the Participant was a Vested Participant who was actively employed by the Company at such time, 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, less applicable Withholding Taxes. For greater certainty, in the case of a Triggering Event in Section 6.04(a)(ii), the Company shall also make the payment to the Participant in accordance with Section 8.01(a)(i) (based on the Participant’s Earnings for periods of active employment), as though the Participant was a Vested Participant at that time, provided that in the case of termination of employment due to Total Disability as described in Section 6.04(a)(ii), no return to active employment shall be required.

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(b) Termination

Except as otherwise provided in this Section 6.04, a Non-Vested Participant whose employment is terminated for any reason is not entitled to any payment under the Savings Plan, and the balance in the Non-Vested Participant’s Notional Account as at the date of such termination shall be reduced to nil without any payment.

Section 7 - Termination and Retirement

7.01 Vested Participant’s Accounts

(a) In accordance with the Acknowledgment and Direction of the Participant, 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;

(ii) the Participant’s employment is terminated following a period of Total Disability;

(iii) the Savings Plan is terminated;

(iv) the Participant dies; or

(v) in such other circumstances as the HRCC may, in its sole discretion, determine.

(b) At any time and from time to time following the delivery of the notice described in Section 7.01(a) in respect of a Vested Participant, 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;

(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;

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(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

(iv) transfer the Permitted Investments in the Tax Free Savings Account to another tax free savings account designated by the Vested Participant.

7.02 Additional Payments During a Plan Year

Notwithstanding any other provision herein to the contrary, 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;

(b) retires from employment after the Vested Participant has attained age 65;

(c) is terminated following a Change in Control;

(d) is terminated by the Company without cause prior to the date of a Change in Control, a Change of Control occurs after the termination, 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; or (B) otherwise arose in connection with, or in anticipation of, a Change in Control which was threatened or proposed; or

(e) dies; then,

the Company shall, on the last day of the first full month following the occurrence of an event described in paragraphs 7.02(a) to (e), pay to the Vested Participant, or his or her estate, as applicable, an amount that is equal to the payment calculated in accordance with Subsection 4.02, 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, less Withholding Tax.

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Section 8 - Total Disability

8.01 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, then the Company shall:

(i) in the case of a Vested Participant, pay an amount to the Vested Participant’s Vested Account and/or Tax Free Savings Account in accordance with Section 4.02 or Section 4.03, as applicable, 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, as applicable, in which the Vested Participant became or continued to be Totally Disabled, but nonetheless performed services for at least part of such Plan Year or Plan Years; and

(ii) in the case of a Non-Vested Participant, declare a bonus to the Non-Vested Participant in accordance with Section 6.01 based on the Non-Vested Participant’s Earnings for the periods of his or her active employment with the Company during the Plan Year or Plan Years, as applicable, in which the Non-Vested Participant became or continued to be Totally Disabled, but nonetheless performed services for at least part of such Plan Year or Plan Years, which shall be recorded in the Non-Vested Participant’s Notional Account.

(b) If a Vested Participant becomes Totally Disabled and their employment is terminated as a result of becoming Totally Disabled, then the Company shall notify the Administrative Agent in accordance with Section 7.01, and the Company will pay an amount to the Participant in accordance with Section 8.01(a)(i) for periods of active employment with return to active service not required. If a Non-Vested Participant becomes Totally Disabled and their employment is terminated as a result of becoming Totally Disabled, then the Company shall notify the Administrative Agent in accordance with Section 6.04, and the Company will pay an amount to the Participant in accordance with

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Section 8.01(a)(i) for periods of active employment (as if the Participant were a Vested Participant) with return to active service not required.

Section 9 - Administration of the Savings Plan

9.01 Responsibility for Administration

(a) The HRCC shall be responsible for the overall administration, interpretation and application of 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. 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, provided that any such rules and regulations and amendments thereto will not: (A) be inconsistent with the terms of this Savings Plan; (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 146.2 of the Tax Act; or (C) cause this Savings Plan to be a “salary deferral arrangement”, “employee benefit plan” or “retirement compensation arrangement” as defined in subsection 248(1) of the Tax Act.

(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. The Company has the right to modify, amend, suspend or terminate this Savings Plan with respect to any Participant who becomes a non-resident of Canada for purposes of the Tax Act or who, in its opinion, 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.

9.02 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, whether or not the

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member of the committee or the person or persons are employees, officers or directors of the Company. The Company may authorize the committee, person or persons so determined by it to act on its behalf and to execute instruments on its behalf.

Section 10 - General Provisions

10.01 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, except to such benefits as have specifically accrued to the Participant under the terms of the Savings Plan. 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.

10.02 Non-Alienation

Except as otherwise provided in this Savings Plan, all payments made under the terms of the Savings Plan are for the Participant’s own use and benefit, are not capable of assignment or alienation, and do not confer upon the Participant, the Participant’s personal representative or dependent, or any other person, any right or interest in the benefit or deferred benefit that is capable of being assigned or otherwise alienated.

10.03 Records

Whenever used for the purposes of the Savings Plan, the records of the Company will be deemed to be conclusive as to the facts with which they are concerned.

10.04 Applications, Notices and Elections

Any application, notice, or election under the Savings Plan shall be made, given, or communicated, as the case may be, in such manner as the Company may determine.

10.05 Construction

The Savings Plan and all rights thereunder will be governed, construed, and administered in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

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Section 11 - Amendment To or Termination of the Savings Plan

11.01 Amendment or Termination of the Savings Plan

Subject to the approval of THI, the Company intends to maintain the Savings Plan in force indefinitely, but, nevertheless, reserves the sole right to amend or terminate the Savings Plan in whole or in part at any time, provided, however, 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. For greater certainty, the Vested Account and the Tax Free Savings Account of each Vested Participant are the Participant’s accounts and, except as provided by Section 7.01, will not otherwise affected by such termination.

11.02 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 7.01.

11.03 Wind-Up or Bankruptcy of the Company

In the event that THI or the Company at any time files an assignment in bankruptcy, has a petition into bankruptcy filed on its behalf, is in receivership or is wound-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), 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. For greater certainty, 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.

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Appendix “A” – List of Participants as of the Effective Date

Participant Name

•

- 19 -

Appendix “B” – List of Permitted Investments

Permitted Investments

•

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Schedule “A” – Acknowledgment and Direction

TO:	THE TDL GROUP CORP. (the “Company”)
AND TO:	•   (the “Administrative Agent”)

WHEREAS, as of the date hereof, the undersigned qualifies under the Company’s Personal Supplemental Executive Retirement Savings Plan (the “Plan”) as a Participant (as defined in the Plan);

AND WHEREAS the undersigned has received and reviewed a copy of the Plan and desires to participate in the Plan as a 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;

NOW THEREFORE,

(a) The undersigned acknowledges that he or she will be receiving amounts under the Plan after he or she becomes Vested 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.

(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.

(c) Subject to Section 4.03 of the Plan, the undersigned hereby directs the Company to pay any amounts payable to the undersigned under Sections 4.02 and 6.03 of the Plan to the undersigned’s Vested Account.

(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.

(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.

(f) This Acknowledgment and Direction is irrevocable.

Dated as of the      day of             ,         .

SIGNED, SEALED & DELIVERED in the presence of:	}
			(seal)
Witness		Name

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Schedule “B” – Tax Free Savings Account – Acknowledgment and Direction

TO:	THE TDL GROUP CORP. (THE “COMPANY”)
AND TO:	•   (THE “ADMINISTRATIVE AGENT”)

WHEREAS, 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”);

AND WHEREAS, in accordance with Section 4.04 of the Plan, the undersigned wishes to contribute $                     of the Payment to the Tax Free Savings Account established for the undersigned in accordance with the Plan;

AND WHEREAS capitalized terms used and not otherwise defined in this Acknowledgment and Direction have the meanings given to such terms in the Plan;

NOW THEREFORE:

(a) The undersigned directs the Company to pay $                     from the Payment to the undersigned’s Tax Free Savings Account.

(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 207.01(1) of the Tax Act for the Plan Year.

(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.

(d) This Acknowledgment and Direction is irrevocable.

Dated as of      day of             ,         .

SIGNED, SEALED & DELIVERED in the presence of:	}
			(seal)
Witness		Name

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EX-10.(C)

Exhibit 10(c)

Amendment and Termination of The TDL Group Corp.

Amended and Restated Supplementary Retirement Plan,

effective December 31, 2008

AMENDMENT AND TERMINATION OF

THE TDL GROUP CORP. AMENDED AND RESTATED

SUPPLEMENTARY RETIREMENT PLAN

This Amendment and Termination (“Amendment”) of The TDL Group Corp. Amended and Restated Supplementary Retirement Plan (the “Plan”) is effective as of the 31^st day of December, 2008.

WHEREAS The TDL Group Corp. (the “Company”) desires to terminate the Plan and has determined to make the following amendments to the Plan to facilitate this termination;

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, 2006 is to be terminated, that, when deemed appropriate by the Company, the investments held in the trust are to be sold by the investment manager for the Plan, and that the assets held in the trust are to be distributed to the Participants;

AND WHEREAS capitalized terms used but not defined herein shall have the meanings given to them under the Plan.

NOW THEREFORE THIS AMENDMENT WITNESSES THAT:

ARTICLE 1

AMENDMENT

1.1 Amendment to Section 12.02 of the Plan

Section 12.02 of the Plan is hereby amended and restated as follows:

“Notwithstanding anything to the contrary in this Supplementary Plan, all Participants shall be deemed to be 100% vested as of December 31, 2008, and the Company shall, upon the completion of the liquidation of the securities in the Trust Fund by the investment manager for the Plan, instruct the Trustee to distribute the Trust Fund to the Participants (including Participants who became vested prior to December 31, 2008), at any time or times following December 31, 2008, in full satisfaction of the Participants’ entitlements to receive benefits under the Supplementary Plan. For greater certainty, 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, 2008) to receive annual instalments under Section 7.04, at any time or times following December 31, 2008, in full satisfaction of the Participant’s entitlement to receive benefits under this Supplementary Plan, notwithstanding anything to the contrary in Section 7.04 or an election made by a Participant pursuant to Section 7.04 prior to December 31, 2008.”

ARTICLE 2

TERMINATION

2.1 Liquidation of the Trust Fund

The Company shall, when deemed appropriate by the Company, 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 12.02 of the Plan, as amended.

2.2 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 in accordance with the provisions of Section 4.02 thereof.

(b) Notwithstanding anything to the contrary in the Plan and except as contemplated in this Amendment, the Company will not make any contributions or other payments in respect of the Plan following December 31, 2008.

2.3 Termination

The Plan, as amended by this Amendment, will be terminated immediately following December 31, 2008, except to the extent that it is otherwise necessary to give effect to this Amendment and to complete the liquidation of the Trust Fund.

ARTICLE 3

MISCELLANEOUS

3.1 Amendment to Govern

In the event of any inconsistency between the terms of the Plan and this Amendment, the terms of this Amendment shall govern.

3.2 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.

THE TDL GROUP CORP.

by

Name:

Title:

Name:

Title:

EX-10.(D)

Exhibit 10(d)

Amended and Restated Employment Agreement with Donald B. Schroeder, Restated November 5, 2008

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

Between

THE TDL GROUP CORP.

And

TIM HORTONS INC.

And

DONALD B. SCHROEDER

This Amended and Restated Employment Agreement (“Agreement”) is made and entered into as of November 5, 2008, by and between The TDL Group Corp., a Nova Scotia unlimited liability company (the “EMPLOYER”), TIM HORTONS INC., a Delaware corporation (“THI”) and Donald B. Schroeder, an individual (the “EXECUTIVE”), who are the parties to this Agreement.

RECITALS

(1) Certain subsidiaries of THI, including the EMPLOYER, are engaged in the business of owning, operating and franchising Tim Hortons retail outlets and carrying on ancillary activities incident thereto (the “Business”).

(2) The EXECUTIVE possesses unique skills, knowledge and experience relating to the Business.

(3) The EXECUTIVE is currently employed by the EMPLOYER, an indirect, wholly-owned subsidiary of THI, and desires to continue to be employed by the EMPLOYER.

(4) Effective December 5, 2006, the EMPLOYER, THI, and the EXECUTIVE entered into an Employment Agreement (the “Original Agreement”), that set forth certain rights and benefits for EXECUTIVE upon a change in control of EMPLOYER.

(5) At the time of the Original Agreement, the EXECUTIVE occupied the role of Executive Vice President, Administration, and the terms of the Original Agreement reflected the EXECUTIVE’S responsibilities and duties in such position.

(6) Effective March 1, 2008, the Board of Directors of each of THI and the EMPLOYER appointed the EXECUTIVE as President and Chief Executive Officer to

replace Mr. Paul House who resigned from those positions effective as of such date, but has remained involved with THI and the EMPLOYER through his role as Executive Chairman.

(7) The EXECUTIVE, 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, while otherwise substantially maintaining the underlying intent and purpose of the Original Agreement.

(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, however, increasing the compensation he would otherwise obtain were it not for the occurrence of events foreseen by this Agreement, and the EXECUTIVE desires to be assured that, in the event of a substantial change in the control of THI, the terms, conditions and environment of his employment will not be unreasonably affected.

(9) Except as described in Section 18 to the contrary, this Agreement is intended to be in addition to any other agreements the parties may have entered into prior to the date hereof, or may enter into prior to a CHANGE IN CONTROL as defined herein, regarding the EXECUTIVE’S employment.

(10) THI and EMPLOYER desire to be assured of the objectivity of the EXECUTIVE in evaluating a potential offer, the effect of which would be a change of control of THI, and advising whether or not he believes a potential change of control is in the best interests of THI and its shareholders. 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, 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.

(11) THI is a party to this Agreement for purposes of the provisions of Sections 3, 4, 5, 6, 8 and 10 through 18 hereof.

In consideration of their mutual covenants expressed herein and for other consideration described herein and as otherwise given by the parties, the parties, intending to be legally bound hereby, agree as follows:

Section 1. EXECUTIVE’S Rights to Continued Employment in the event of a CHANGE IN CONTROL of THI.

For purposes of this Agreement a “CHANGE IN CONTROL” shall mean the occurrence of:

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(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, as amended (the “Exchange Act”)), immediately after which such Person has “Beneficial Ownership” (within the meaning of Rule 13d-3 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; provided, however, in determining whether a CHANGE IN CONTROL has occurred, Voting Securities which are acquired in a “Non-Control Acquisition” (as hereinafter defined) shall not constitute an acquisition which would cause a CHANGE IN CONTROL. A “Non-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, directly or indirectly, by THI (for purposes of this definition, a “Subsidiary”), (ii) THI or its Subsidiaries, or (iii) any Person in connection with a “Non-Control Transaction” (as hereinafter defined);

(b) The individuals who, as of December 5, 2006, are members of the Board of THI (the “Incumbent Board”), cease for any reason to constitute at least seventy percent (70%) of the members of the Board; provided, however, that if the election, or nomination for election by THI common stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Plan, be considered as a member of the Incumbent Board; provided further, however, 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; or

(c) The consummation of:

(i) A merger, consolidation or reorganization with or into THI or in which securities of THI are issued, unless such merger, consolidation or reorganization is a “Non-Control Transaction.” A “Non-Control Transaction” shall mean a merger, consolidation or reorganization with or into THI or in which securities of THI are issued where:

(A) the stockholders of THI, immediately before such merger, consolidation or reorganization, own directly or indirectly immediately following such merger, consolidation or reorganization, 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

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proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization,

(B) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least two-thirds of the members of the board of directors of the Surviving THI, or a corporation beneficially directly or indirectly owning a majority of the Voting Securities of the Surviving THI, and

(C) no Person other than (i) THI, (ii) any Subsidiary, (iii) any employee benefit plan (or any trust forming a part thereof) that, immediately prior to such merger, consolidation or reorganization, was for the benefit of employees of THI or any Subsidiary, or (iv) any Person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of thirty percent (30%) or more of the then outstanding Voting Securities or common stock of THI, 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;

(ii) A complete liquidation or dissolution of THI; 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).

Notwithstanding the foregoing, 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, by reducing the number of shares of common stock or Voting Securities then outstanding, increases the proportional number of shares Beneficially Owned by the Subject Persons, 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 after such share acquisition by THI, 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, then a CHANGE IN CONTROL shall occur.

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 in anticipation of, a CHANGE IN CONTROL which has been threatened or proposed, such termination shall be deemed to have

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occurred after a CHANGE IN CONTROL for purposes of this Agreement provided a CHANGE IN CONTROL shall actually have occurred.

1.1 From and after the date of occurrence of a CHANGE IN CONTROL, the EMPLOYER shall cause the EXECUTIVE to be employed, and the EXECUTIVE shall accept employment, with the duties, nature and place of such employment as described in Section 2 of this Agreement. Solely for purposes of this Agreement, the term of such employment, referred to hereinafter as the “EMPLOYMENT TERM,” 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, filed with the Securities and Exchange Commission of Washington, D.C. or the Ontario Securities Commission in Toronto, Ontario, Canada, and the duplicate of which is actually received by THI, or

(ii) the date on which a transaction described in subparagraph (c) of Section 1 of this Agreement (other than a Non-Control Transaction) shall be consummated, 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

(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); or

(c) the death of the EXECUTIVE.

Section 2. Duties, Nature and Place of Employment. During the EMPLOYMENT TERM, the EXECUTIVE shall provide the EMPLOYER with such executive, financial, administrative, and consulting services in managing and directing the EMPLOYER’S business, which includes the provision of services on behalf of the EMPLOYER to other THI subsidiaries in respect of the Business, as may be required by the EXECUTIVE’S job description, as attached hereto, or as amended by the agreement of the parties hereafter, or reasonably requested and directed from time to time by action of the EMPLOYER’S Board of Directors. The EXECUTIVE shall at all times faithfully,

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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. Such duties shall be performed in Oakville, Ontario and, on a periodic basis, at such other place or places as the interests, needs, business and opportunities of EMPLOYER, or THI’S other subsidiaries, shall reasonably require.

Section 3. Remuneration during the EMPLOYMENT TERM. During the EMPLOYMENT TERM, the EXECUTIVE shall receive from the EMPLOYER, the salary, benefits and perquisites being paid to or afforded him immediately prior to the date of occurrence of the CHANGE IN CONTROL, subject to annual review in the normal course of business as described in subsections 3.1 herein. Such salary shall be paid to the EXECUTIVE on the same days of each month as the EMPLOYER pays its other employees. The EXECUTIVE shall also be eligible to participate in an annual bonus plan, not less favourable than such plan that EXECUTIVE was eligible for immediately prior to the date of occurrence of the CHANGE IN CONTROL. 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, or successors to such programs.

3.1 During the EMPLOYMENT TERM, the THI Board of Directors, or a duly authorized committee thereof, with input from the Executive Chairman, to the extent this role remains occupied, shall review annually the performance of the EXECUTIVE, which shall be reported to THI by the EMPLOYER, the results of operations and financial condition of THI, together with prevailing economic conditions and other factors, and consider and determine whether to accept or vary a recommendation of the EMPLOYER:

(a) whether the EMPLOYER should increase EXECUTIVE’S salary, and

(b) whether the EXECUTIVE should be paid a bonus pursuant to the applicable bonus plan.

3.2 During the EMPLOYMENT TERM, the EMPLOYER shall cause the EXECUTIVE, his spouse and dependent children (in each case, if applicable) to be enrolled in and covered by group life, hospitalization, 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.

3.3 During the EMPLOYMENT TERM, the EMPLOYER shall cause the EXECUTIVE to be a participant in one or more retirement income (pension)

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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 in connection with performing his 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 he had received a full year of service (for vesting and benefit purposes) for each of his years of service with EMPLOYER, or any other affiliate or subsidiary or THI, including any years for which he is entitled to payment under Section 3 during the EMPLOYMENT TERM.

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 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 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, 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 he has acted, or failed to act, 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. Notwithstanding the foregoing, the EXECUTIVE’S employment shall not be

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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 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 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 employment for DISABILITY, CAUSE, as a result of his 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 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 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

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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; or

(5) any material breach by THI or the EMPLOYER of any provision of this Agreement.

(b) The EXECUTIVE’S right to terminate his employment pursuant to this Section 4.2 shall not be affected by his 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, if the EXECUTIVE’S employment is terminated for any reason other than due to death, the date specified in the Notice of Termination.

Section 5. Compensation Upon Termination. Upon termination of the EXECUTIVE’S employment during the EMPLOYMENT TERM, the EXECUTIVE shall be entitled to the following benefits:

5.1 If the EXECUTIVE’S employment shall be terminated by the EMPLOYER for CAUSE or by the EXECUTIVE other than for GOOD REASON, the EMPLOYER shall pay the EXECUTIVE his full base salary and accrued vacation pay through the TERMINATION DATE, plus any benefits or awards which pursuant to the terms of any compensation or benefit plan have been earned or become payable, 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. 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.

5.2 If the EXECUTIVE’S employment terminates by reason of the EXECUTIVE’S death, the EMPLOYER shall pay the EXECUTIVE’S

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beneficiaries his full base salary and accrued vacation pay through the TERMINATION DATE, plus any benefits or awards which pursuant to the terms of any compensation or benefit plan have been earned or become payable, 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, payable at the same time that such bonuses or awards are payable to other employees of the EMPLOYER. In the case of the EXECUTIVE’S death, 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.

5.3 If the EXECUTIVE’S employment by the EMPLOYER shall be terminated (i) by the EMPLOYER other than for CAUSE or death, or (ii) by the EXECUTIVE for GOOD REASON, 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, 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, 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, calculated as if all performance targets under the applicable plan had been fully met at the target level by THI, by the EMPLOYER and/or by the EXECUTIVE, as applicable; provided, however, that the bonus payment provided for in this Section 5.3(a) shall be reduced (but not below zero) by the amount, if any, 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, as applicable.

(b) as severance pay and in lieu of any further salary for periods subsequent to the TERMINATION DATE, 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, 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; and (B) the average of the annual target

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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.

(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 any, if he had remained an employee for three years following the TERMINATION DATE. For purposes of this determination, the base salary of the EXECUTIVE over this period shall be equal to his base salary in effect at the TERMINATION DATE, 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. 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.

(d) for the 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, disability, medical, dental and hospitalization benefits which were being provided to the EXECUTIVE at the time NOTICE OF TERMINATION is given. The benefits provided in this Section 5.3(d) shall be no less favorable to the EXECUTIVE, in terms of amounts and deductibles and costs to him, than the coverage provided the EXECUTIVE under the EMPLOYER’S plans providing such benefits at the time NOTICE OF TERMINATION is given. 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, than the coverage which would be provided hereunder by the EMPLOYER to the EXECUTIVE at the time the NOTICE OF TERMINATION is given. Except as expressly set forth above, 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, programs or practices following the EXECUTIVE’S termination of employment. Where such benefits as contemplated in this section 5.3(d) are not available to EXECUTIVE as a result of EXECUTIVE not being employed by the EMPLOYER, the EMPLOYER shall pay, in a lump sum, the present value of the cost of such benefits, had they been available under the same terms and conditions and the EMPLOYER benefit plans, and net of any required contribution by the EXECUTIVE.

(e) for the three years following the TERMINATION DATE, the EMPLOYER shall pay to the EXECUTIVE a monthly allowance equal to a pre-determined

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monthly amount for the car payment, gas, maintenance and insurance for the grade level of the EXECUTIVE, established by the EMPLOYER from time to time, to replace the benefit of the car being used by the EXECUTIVE prior to the TERMINATION DATE. The EXECUTIVE shall return the car being used by such EXECUTIVE to the EMPLOYER upon the TERMINATION DATE.

5.4 The amounts provided for in Sections 5.1, 5.2 and 5.3(a), (b) and (c) shall be paid within ten days after the EXECUTIVE’S TERMINATION DATE.

5.5 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 5.3(d) hereof, shall be offset or reduced by the amount of any compensation or benefits provided to the EXECUTIVE in any subsequent employment.

Section 6. Effect of a CHANGE IN CONTROL. Upon the occurrence of any CHANGE IN CONTROL, (a) any options to purchase shares of common stock of THI and any stock appreciation rights or restricted stock units, or other equity award granted by THI to the EXECUTIVE, which are not yet fully vested and exercisable, shall become fully vested and exercisable, and (b) any restrictions remaining at that time on any stock awarded to the EXECUTIVE by THI shall lapse.

Section 7. Fees and Expenses. The EMPLOYER shall pay all reasonable legal fees and related expenses (including the costs of experts, 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, if any, incurred in contesting, defending or disputing the basis for any such termination of employment), 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; provided, however, 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, by non-appealable order of a court of competent jurisdiction or through a properly conducted arbitration proceeding, to be the prevailing party in any claim, dispute or action relating to matters described in items (a) or (b) above.

Section 8. Protection of Business. Notwithstanding anything to the contrary in this Agreement:

8.1 At all times during the EMPLOYMENT TERM while the EXECUTIVE is employed by the EMPLOYER, the EXECUTIVE will not participate as a partner, joint venturer, officer, director, employee, or representative, or have any direct financial interest in, any business or enterprise conducting a quick service restaurant business in the United States or Canada, other than a business or

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enterprise engaged in operating restaurants under a franchise granted by the EMPLOYER, or any affiliated person; provided, 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, directly or indirectly, more than five percent (5%) of any class of the securities of such corporation, 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.

8.2 The EXECUTIVE will not at any time (during or after the expiration of the EMPLOYMENT TERM) divulge, disclose, reveal or communicate to any person, firm, corporation, partnership, joint venture or other entity, directly or indirectly, 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, in particular, the businesses of the EMPLOYER and any affiliated person, including, without limitation, any of their plans, policies, business practices, finances, recipes, methods of operation, franchises or other information known to the EXECUTIVE to be considered by the EMPLOYER, or any affiliated person to be confidential information.

8.3 Notwithstanding anything to the contrary contained in this Agreement, the EXECUTIVE shall be required to pre-clear with the senior attorney in THI’s securities practice group (“Senior Attorney”), or his/her designee, any trades in the securities of THI of which the EXECUTIVE is the legal or beneficial owner, or any securities of any successor of THI following a CHANGE IN CONTROL, for a period of 12 months following the TERMINATION DATE. The EXECUTIVE may not effectuate trades where the Senior Attorney or his/her designee has not provided a permissive trading recommendation. It is the EXECUTIVE’S obligation and responsibility to comply with all applicable securities laws, including but not limited to the reporting requirements of Section 16 of the U.S. Securities Exchange Act of 1934 for so long as, and to the extent, applicable.

8.4 The restrictions on competition and other restrictions imposed upon the EXECUTIVE by this Section 8 may be enforced by the EMPLOYER, THI or any of its subsidiaries by an action for an injunction, it being agreed (in view of the general practical impossibility of determining by computation or legal proof of the exact amount of damages, if any, resulting to the EMPLOYER, 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.

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Section 9. Notices and Payments. All payments required or permitted to be made under the provisions of this Agreement, and all notices and other communications required or permitted to be given or delivered under this Agreement to the EMPLOYER or to the EXECUTIVE, which notices or communications must be in writing, shall be deemed to have been given if delivered by hand, or mailed by first class mail, addressed as follows:

9.1 if to the EMPLOYER, to:

Executive Chairman, if applicable; or, if not:

Chief Financial Officer

The TDL Group Corp.

874 Sinclair Road

Oakville, ON L6K 2Y1

With a copy to:

Secretary

The TDL Group Corp.

874 Sinclair Road

Oakville, ON L6K 2Y1

9.2 if to EXECUTIVE, to:

____________________

____________________

____________________

The EMPLOYER or the EXECUTIVE may, by notice given to the others from time to time, designate a different address for making payments required to be made, and for the giving of notices or other communications required or permitted to be given, to the party designating such new address. Any payment, 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.S. or Canadian Mail (as applicable), addressed and mailed as provided above.

Section 10. Payroll Taxes. 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, and to the deduction requirements of any benefit plan maintained by the EMPLOYER in which the EXECUTIVE is a participant, and to all reporting, filing and other requirements in respect of such payments, and the EMPLOYER or THI, as applicable, shall promptly satisfy all such requirements.

Section 11. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario.

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Section 12. Duplicate Originals. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be a duplicate original, but all of which, taken together, shall constitute a single instrument.

Section 13. Captions. The captions contained in this Agreement are included only for convenience of reference and do not define, limit, explain or modify this Agreement or its interpretation, construction or meaning.

Section 14. Severability. 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 such determination shall not affect any other provision of this Agreement or the application of said provision to any other person or circumstance, all of which other provisions shall remain in full force and effect. It is the intention of THI, the EMPLOYER and the EXECUTIVE that if any provision of this Agreement is susceptible of two or more constructions, one of which would render the provision enforceable and other or others of which would render the provision unenforceable, then the provision shall have the meaning which renders it enforceable.

Section 15. Number and Gender. When used in this Agreement, the number and gender of each pronoun shall be construed to be such number and gender as the context, circumstances or its antecedent may require.

Section 16. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns (including successive, as well as immediate, successors and assigns) of THI and the EMPLOYER; provided, however, that the obligations of this Agreement may not be transferred by THI or the EMPLOYER, except in accordance with the following proviso: provided further, however, that if THI or the EMPLOYER transfers to any other person substantially all of its assets and/or business by merger, consolidation, sale of assets or otherwise, THI or the EMPLOYER, as applicable, must transfer its obligations hereunder to such other person and such other person must accept such transfer and assume the obligations of the EMPLOYER, and of THI, if applicable, imposed hereby, resulting in a permissible assignment and transfer of this Agreement by THI and/or the EMPLOYER, as applicable. 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, and of THI, if applicable, obligations under this Agreement. This Agreement shall inure to the benefit of and be binding upon the heirs and assigns (including successive, as well as immediate, assigns) of the EXECUTIVE; provided, however, 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.

Section 17. Arbitration. 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.

agree upon one, otherwise to three arbitrators, 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. Such arbitration shall take place in the City of Toronto, or as the parties may otherwise agree in writing. 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, executors, administrators and assigns. During the pendency of such arbitration proceedings, the EXECUTIVE shall be entitled to the full benefits provided by the Agreement.

Section 18. Termination of Original Agreement and Wendy’s Prior Agreement. EXECUTIVE, THI, and the EMPLOYER hereby acknowledge, understand, and agree that (i) this Agreement replaces and supersedes, in its entirety, the Original Agreement; (ii) in accordance with the terms of the Original Agreement, the Original Agreement replaced, superseded and terminated the EXECUTIVE’s prior Employment Agreement with Wendy’s International, Inc. that provided for rights and benefits to EXECUTIVE upon a change in control (“Wendy’s Prior Agreement”); (iii) the Wendy’s Prior Agreement terminated and was of no further force and effect as of the date of the spin-off of THI from Wendy’s on September 29, 2006; and (iv) none of the EXECUTIVE, THI, or the EMPLOYER shall have any further rights, obligations, responsibilities or duties under the Original Agreement or Wendy’s Prior Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed to be effective as of the date first above written.

EMPLOYER: THE TDL GROUP CORP.
By:	/s/ BRIGID PELINO
	Name:	Brigid Pelino
	Title:	Senior Vice President, Human Resources
EXECUTIVE:
/s/ DONALD B. SCHROEDER
Donald B. Schroeder, an individual
THI: TIM HORTONS INC.
By:	/s/ JILL E. AEBKER
	Name:	Jill E. Aebker
	Title:	Secretary and Associate General Counsel

16.

EX-10.(E)

Exhibit 10(e)

Amended and Restated Employment Agreement with David F. Clanachan

(Compliance with Section 409A of the Internal Revenue Code),

effective December 31, 2008

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

Between

THE TDL GROUP CORP.

And

TIM HORTONS INC.

And

DAVID F. CLANACHAN

This Agreement was originally made and entered into as of December 5, 2006, by and between The TDL Group Corp., an Ontario corporation (the “EMPLOYER”), TIM HORTONS INC., a Delaware corporation (“THI”) and David F. Clanachan, an individual (the “EXECUTIVE”), who are the parties to this Agreement, and is hereby amended and restated in its entirety, effective as of December 31, 2008.

RECITALS

(1) Certain subsidiaries of THI, including the EMPLOYER, are engaged in the business of owning, operating and franchising Tim Hortons retail outlets and carrying on ancillary activities incident thereto (the “Business”).

(2) The EXECUTIVE possesses unique skills, knowledge and experience relating to the Business.

(3) The EXECUTIVE is currently employed by the EMPLOYER, an indirect, wholly-owned subsidiary of THI, and desires to continue to be employed by the EMPLOYER.

(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, however, increasing the compensation s/he would otherwise obtain were it not for the occurrence of events foreseen by this Agreement, and the EXECUTIVE desires to be assured that, in the event of a substantial change in the control of THI, the terms, conditions and environment of his/her employment will not be unreasonably affected.

(5) Except as described below, this Agreement is intended to be in addition to any other agreements the parties may have entered into prior to the date hereof, or may enter

into prior to a CHANGE IN CONTROL as defined herein, regarding the EXECUTIVE’S employment.

(6) THI and EMPLOYER desire to be assured of the objectivity of the EXECUTIVE in evaluating a potential offer, the effect of which would be a change of control of THI, and advising whether or not s/he believes a potential change of control is in the best interests of THI and its shareholders. 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, 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.

(7) The EXECUTIVE entered into an Employment Agreement with Wendy’s International, Inc. (“Wendy’s”) providing for certain rights and benefits upon a change in control of Wendy’s (“Prior Agreement”). EXECUTIVE understands, acknowledges, and agrees that this Agreement is made and entered into by THI and EMPLOYER as a replacement of and to supersede the Prior Agreement, in its entirety, as further described in Section 18 hereof.

(8) THI is a party to this Agreement for purposes of the provisions of Sections 3, 4, 5, 6, 8 and 10 through 18 hereof.

(9) Effective as of December 31, 2008, this Agreement is amended and restated to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

In consideration of their mutual covenants expressed herein and for other consideration described herein and as otherwise given by the parties, the parties, intending to be legally bound hereby, agree as follows:

Section 1. EXECUTIVE’S Rights to Continued Employment in the event of a CHANGE IN CONTROL of THI.

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, as amended (the “Exchange Act”)), immediately after which such Person has “Beneficial Ownership” (within the meaning of Rule 13d-3 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; provided, however, in

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determining whether a CHANGE IN CONTROL has occurred, Voting Securities which are acquired in a “Non-Control Acquisition” (as hereinafter defined) shall not constitute an acquisition which would cause a CHANGE IN CONTROL. A “Non-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, directly or indirectly, by THI (for purposes of this definition, a “Subsidiary”), (ii) THI or its Subsidiaries, or (iii) any Person in connection with a “Non-Control Transaction” (as hereinafter defined);

(b) The individuals who, as of December 5, 2006, are members of the Board of THI (the “Incumbent Board”), cease for any reason to constitute at least seventy percent (70%) of the members of the Board; provided, however, that if the election, or nomination for election by THI common stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Plan, be considered as a member of the Incumbent Board; provided further, however, 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; or

(c) The consummation of:

(i) A merger, consolidation or reorganization with or into THI or in which securities of THI are issued, unless such merger, consolidation or reorganization is a “Non-Control Transaction.” A “Non-Control Transaction” shall mean a merger, consolidation or reorganization with or into THI or in which securities of THI are issued where:

(A) the stockholders of THI, immediately before such merger, consolidation or reorganization, own directly or indirectly immediately following such merger, consolidation or reorganization, 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, consolidation or reorganization,

(B) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least two-thirds of the members of the board of directors of the Surviving THI, or a corporation beneficially directly or indirectly owning a majority of the Voting Securities of the Surviving THI, and

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(C) no Person other than (i) THI, (ii) any Subsidiary, (iii) any employee benefit plan (or any trust forming a part thereof) that, immediately prior to such merger, consolidation or reorganization, was for the benefit of employees of THI or any Subsidiary, or (iv) any Person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of thirty percent (30%) or more of the then outstanding Voting Securities or common stock of THI, 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;

(ii) A complete liquidation or dissolution of THI; 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).

Notwithstanding the foregoing, 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, by reducing the number of shares of common stock or Voting Securities then outstanding, increases the proportional number of shares Beneficially Owned by the Subject Persons, 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 after such share acquisition by THI, 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, then a CHANGE IN CONTROL shall occur.

1.1 From and after the date of occurrence of a CHANGE IN CONTROL, the EMPLOYER shall cause the EXECUTIVE to be employed, and the EXECUTIVE shall accept employment, with the duties, nature and place of such employment as described in Section 2 of this Agreement. Solely for purposes of this Agreement, the term of such employment, referred to hereinafter as the “EMPLOYMENT TERM,” 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

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or Ontario Securities Commission, filed with the Securities and Exchange Commission of Washington, D.C. or the Ontario Securities Commission in Toronto, Ontario, Canada, and the duplicate of which is actually received by THI, or

(ii) the date on which a transaction described in subparagraph (c) of Section 1 of this Agreement (other than a Non-Control Transaction) shall be consummated, 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

(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); or

(c) the death of the EXECUTIVE.

1.2 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 in anticipation of, a CHANGE IN CONTROL which has been threatened or proposed, then:

(a) if the EXECUTIVE is not subject to the tax laws of the United States on the date of a CHANGE IN CONTROL, 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

(b) if, and only to the extent, 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”), the EXECUTIVE shall be entitled to the benefits provided in Exhibit A, attached hereto and made a part hereof, and, except as provided in Exhibit A, shall not be entitled to any other payments or benefits described in Section 5 of this Agreement.

Section 2. Duties, Nature and Place of Employment. During the EMPLOYMENT TERM, the EXECUTIVE shall provide the EMPLOYER with such executive, financial, administrative, and consulting services in managing and directing the

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EMPLOYER’S business, which includes the provision of services on behalf of the EMPLOYER to other THI subsidiaries in respect of the Business, as may be required by the EXECUTIVE’S job description, as attached hereto, or as amended by the agreement of the parties hereafter, or reasonably requested and directed from time to time by action of the EMPLOYER’S Board of Directors. The EXECUTIVE shall at all times faithfully, 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. Such duties shall be performed in Oakville, Ontario and, on a periodic basis, at such other place or places as the interests, needs, business and opportunities of EMPLOYER, or THI’s other subsidiaries, shall reasonably require.

Section 3. Remuneration during the EMPLOYMENT TERM. During the EMPLOYMENT TERM, the EXECUTIVE shall receive from the EMPLOYER, the salary, benefits and perquisites being paid to or afforded him immediately prior to the date of occurrence of the CHANGE IN CONTROL, subject to annual review in the normal course of business as described in subsections 3.1 herein. Such salary shall be paid to the EXECUTIVE on the same days of each month as the EMPLOYER pays its other employees. The EXECUTIVE shall also be eligible to participate in an annual bonus plan, not less favourable than such plan that EXECUTIVE was eligible for immediately prior to the date of occurrence of the CHANGE IN CONTROL. 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, or successors to such programs.

3.1 During the EMPLOYMENT TERM, the THI Board of Directors, or a duly authorized committee thereof, with input from the Chief Executive Officer, shall review annually the performance of the EXECUTIVE, which shall be reported to THI by the EMPLOYER, the results of operations and financial condition of THI, together with prevailing economic conditions and other factors, and consider and determine whether to accept or vary a recommendation of the EMPLOYER:

(a) whether the EMPLOYER should increase EXECUTIVE’s salary, and

(b) whether the EXECUTIVE should be paid a bonus pursuant to the applicable bonus plan.

3.2 During the EMPLOYMENT TERM, the EMPLOYER shall cause the EXECUTIVE, his/her spouse and dependent children to be enrolled in and covered by group life, hospitalization, 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

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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

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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

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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:

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5.1 If the EXECUTIVE’S employment shall be terminated by the EMPLOYER for CAUSE or by the EXECUTIVE other than for GOOD REASON, the EMPLOYER shall pay the EXECUTIVE his/her full base salary and accrued vacation pay through the TERMINATION DATE, plus any benefits or awards which pursuant to the terms of any compensation or benefit plan have been earned or become payable, 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. 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.

5.2 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, plus any benefits or awards which pursuant to the terms of any compensation or benefit plan have been earned or become payable, 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, payable at the same time that such bonuses or awards are payable to other employees of the EMPLOYER. In the case of the EXECUTIVE’S death, 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.

5.3 If the EXECUTIVE’S employment by the EMPLOYER shall be terminated (i) by the EMPLOYER other than for CAUSE or death, or (ii) by the EXECUTIVE for GOOD REASON, 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, 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, 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, calculated as if all performance targets under the applicable plan had been fully met at the target level by THI, by the EMPLOYER and/or by the EXECUTIVE, as applicable; provided, however, that the bonus payment provided for in this Section 5.3(a) shall be reduced (but not below zero) by the amount, if any, payable

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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, as applicable.

(b) as severance pay and in lieu of any further salary for periods subsequent to the TERMINATION DATE, 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, 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; 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.

(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 any, if s/he had remained an employee for two years following the TERMINATION DATE. For purposes of this determination, the base salary of the EXECUTIVE over this period shall be equal to his/her base salary in effect at the TERMINATION DATE, 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. 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.

(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, disability, medical, dental and hospitalization benefits which were being provided to the EXECUTIVE at the time NOTICE OF TERMINATION is given. The benefits provided in this Section 5.3(d) shall be no less favorable to the EXECUTIVE, in terms of amounts and deductibles and costs to him/her, than the coverage provided the EXECUTIVE under the EMPLOYER’S plans providing such benefits at the time NOTICE OF TERMINATION is given. Notwithstanding the foregoing, if, and only to the extent, the EXECUTIVE is subject to the tax laws of the United States on the TERMINATION DATE, (I) any amounts or benefits that will be paid or provided under this Section 5.3(d) with respect to health or dental coverage after completion of the time period described in Treasury Regulation Section 1.409A-1(b)(9)(v)(B) and (II) any other amounts or benefits that will be paid or provided under this Section 5.3(d) shall be subject to the following requirements: (A) the amount of expenses eligible for reimbursement or benefits provided during any

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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; (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; and (C) the right to such reimbursement or benefit may not be subject to liquidation or exchange for another benefit. 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, than the coverage which would be provided hereunder by the EMPLOYER to the EXECUTIVE at the time the NOTICE OF TERMINATION is given. Except as expressly set forth above, 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, programs or practices following the EXECUTIVE’S termination of employment. Where such benefits as contemplated in this section 5.3(d) are not available to EXECUTIVE as a result of EXECUTIVE not being employed by the EMPLOYER, the EMPLOYER shall pay, in a lump sum within sixty (60) days following the EXECUTIVE’S TERMINATION DATE, the present value of the cost of such benefits, had they been available under the same terms and conditions and the EMPLOYER benefit plans, and net of any required contribution by the EXECUTIVE.

(e) for the two years following the TERMINATION DATE, the EMPLOYER shall pay to the EXECUTIVE in accordance with the regular payroll policies of the EMPLOYER a monthly allowance equal to a pre-determined monthly amount for the car payment, gas, maintenance and insurance for the grade level of the EXECUTIVE, established by the EMPLOYER from time to time, to replace the benefit of the car being used by the EXECUTIVE prior to the TERMINATION DATE. The EXECUTIVE shall return the car being used by such EXECUTIVE to the EMPLOYER upon the TERMINATION DATE.

5.4 The amounts provided for in Sections 5.1, 5.2 and 5.3(a), (b) and (c) shall be paid within ten days after the EXECUTIVE’S TERMINATION DATE. Notwithstanding anything in this Agreement to the contrary, if, and only to the extent, 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), on 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, then such payment or benefit,

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as the case may be, 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, if earlier, the date of the EXECUTIVE’S death). 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.

5.5 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 5.3(d) hereof, shall be offset or reduced by the amount of any compensation or benefits provided to the EXECUTIVE in any subsequent employment.

Section 6. Effect of a CHANGE IN CONTROL. Upon the occurrence of any CHANGE IN CONTROL, (a) any options to purchase shares of common stock of THI and any stock appreciation rights or restricted stock units, or other equity award granted by THI to the EXECUTIVE, which are not yet fully vested and exercisable, shall become fully vested and exercisable, and (b) any restrictions remaining at that time on any stock awarded to the EXECUTIVE by THI shall lapse.

Section 7. Fees and Expenses. The EMPLOYER shall pay all reasonable legal fees and related expenses (including the costs of experts, 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, if any, incurred in contesting, defending or disputing the basis for any such termination of employment), 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; provided, however, 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, by non-appealable order of a court of competent jurisdiction or through a properly conducted arbitration proceeding, to be the prevailing party in any claim, dispute or action relating to matters described in items (a) or (b) above. Notwithstanding anything in this Section 7 to the contrary, if, and only to the extent, the EXECUTIVE is subject to the tax laws of the United States on the TERMINATION DATE, 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; (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; (III) any reimbursement of legal fees and related expenses shall be made

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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; and (IV) the right to such reimbursement or benefit may not be subject to liquidation or exchange for another benefit.

Section 8. Protection of Business. Notwithstanding anything to the contrary in this Agreement:

8.1 At all times during the EMPLOYMENT TERM while the EXECUTIVE is employed by the EMPLOYER, the EXECUTIVE will not participate as a partner, joint venturer, officer, director, employee, or representative, or have any direct financial interest in, any business or enterprise conducting a quick service restaurant business in the United States or Canada, other than a business or enterprise engaged in operating restaurants under a franchise granted by the EMPLOYER, or any affiliated person; provided, 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, directly or indirectly, more than five percent (5%) of any class of the securities of such corporation, 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.

8.2 The EXECUTIVE will not at any time (during or after the expiration of the EMPLOYMENT TERM) divulge, disclose, reveal or communicate to any person, firm, corporation, partnership, joint venture or other entity, directly or indirectly, 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, in particular, the businesses of the EMPLOYER and any affiliated person, including, without limitation, any of their plans, policies, business practices, finances, recipes, methods of operation, franchises or other information known to the EXECUTIVE to be considered by the EMPLOYER, or any affiliated person to be confidential information.

8.3 Notwithstanding anything to the contrary contained in this Agreement, the EXECUTIVE shall be required to pre-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, or any securities of any successor of THI following a CHANGE IN CONTROL, for a period of 12 months following the TERMINATION DATE. The EXECUTIVE may not effectuate trades where the General Counsel or his/her designee has not provided a permissive trading recommendation. It is the EXECUTIVE’S obligation and responsibility to comply with all applicable securities laws, including but not limited to the

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reporting requirements of Section 16 of the U.S. Securities Exchange Act of 1934 for so long as, and to the extent, applicable.

8.4 The restrictions on competition and other restrictions imposed upon the EXECUTIVE by this Section 8 may be enforced by the EMPLOYER, THI or any of its subsidiaries by an action for an injunction, it being agreed (in view of the general practical impossibility of determining by computation or legal proof of the exact amount of damages, if any, resulting to the EMPLOYER, 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.

Section 9. Notices and Payments. All payments required or permitted to be made under the provisions of this Agreement, and all notices and other communications required or permitted to be given or delivered under this Agreement to the EMPLOYER or to the EXECUTIVE, which notices or communications must be in writing, shall be deemed to have been given if delivered by hand, or mailed by first class mail, addressed as follows:

9.1 if to the EMPLOYER, to:

Chief Executive Officer

The TDL Group Corp.

874 Sinclair Road

Oakville, ON L6K 2Y1

With a copy to:

General Counsel

The TDL Group Corp.

874 Sinclair Road

Oakville, ON L6K 2Y1

9.2 if to EXECUTIVE, to:

David F. Clanachan

3085 Woodland Park Drive

Burlington, ON L7N 1K8

The EMPLOYER or the EXECUTIVE may, by notice given to the others from time to time, designate a different address for making payments required to be made, and for the giving of notices or other communications required or permitted to be given, to the party designating such new address. Any payment, notice or other communication required or permitted to be given in accordance with this Agreement shall be deemed to

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have been given if and when placed in the U.S. or Canadian Mail (as applicable), addressed and mailed as provided above.

Section 10. Payroll Taxes. 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, and to the deduction requirements of any benefit plan maintained by the EMPLOYER in which the EXECUTIVE is a participant, and to all reporting, filing and other requirements in respect of such payments, and the EMPLOYER or THI, as applicable, shall promptly satisfy all such requirements.

Section 11. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario.

Section 12. Duplicate Originals. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be a duplicate original, but all of which, taken together, shall constitute a single instrument.

Section 13. Captions. The captions contained in this Agreement are included only for convenience of reference and do not define, limit, explain or modify this Agreement or its interpretation, construction or meaning.

Section 14. Severability. 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 such determination shall not affect any other provision of this Agreement or the application of said provision to any other person or circumstance, all of which other provisions shall remain in full force and effect. It is the intention of THI, the EMPLOYER and the EXECUTIVE that if any provision of this Agreement is susceptible of two or more constructions, one of which would render the provision enforceable and other or others of which would render the provision unenforceable, then the provision shall have the meaning which renders it enforceable.

Section 15. Number and Gender. When used in this Agreement, the number and gender of each pronoun shall be construed to be such number and gender as the context, circumstances or its antecedent may require.

Section 16. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns (including successive, as well as immediate, successors and assigns) of THI and the EMPLOYER; provided, however, that the obligations of this Agreement may not be transferred by THI or the EMPLOYER, except in accordance with the following proviso: provided further, however, that if THI or the EMPLOYER transfers to any other person substantially all of its assets and/or business by merger, consolidation, sale of assets or otherwise, THI or the EMPLOYER, as applicable, must transfer its obligations hereunder to such other person and such other person must accept such transfer and assume the obligations of the EMPLOYER, and of THI, if applicable, imposed hereby, resulting in a permissible assignment and transfer of

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this Agreement by THI and/or the EMPLOYER, as applicable. 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, and of THI, if applicable, obligations under this Agreement. This Agreement shall inure to the benefit of and be binding upon the heirs and assigns (including successive, as well as immediate, assigns) of the EXECUTIVE; provided, however, 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.

Section 17. Arbitration. 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, otherwise to three arbitrators, 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. Such arbitration shall take place in the City of Toronto, or as the parties may otherwise agree in writing. 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, executors, administrators and assigns. During the pendency of such arbitration proceedings, the EXECUTIVE shall be entitled to the full benefits provided by the Agreement.

Section 18. Termination of Prior Agreement. EXECUTIVE hereby acknowledges, understands, and agrees that: (i) this Agreement replaces and supersedes, in its entirety, the Prior Agreement; (ii) the Prior Agreement terminated and is of no further force and effect as a result of the spin-off of THI from Wendy’s, which occurred on September 29, 2006; and (iii) neither the EXECUTIVE nor Wendy’s shall have any further rights, obligations, responsibilities or duties under the Prior Agreement.

Section 19. Section 409A of the Code. 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, 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, to the extent applicable, and this Agreement will be interpreted, administered and operated accordingly. None of THI, the EMPLOYER, 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.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed to be effective as of the date first above written.

EMPLOYER:

The TDL Group Corp.

By:

Print Name:

Title:

EXECUTIVE:

David F. Clanachan, an individual

THI:

TIM HORTONS INC.

By:

Print Name:

Title:

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EXHIBIT A

If the terms and conditions of this Exhibit A apply pursuant to Section 1.2(b) of Amended and Restated Employment Agreement with David F. Clanachan (the “Agreement”), of which this Exhibit A is a part, then David F. Clanachan (the “EXECUTIVE”) shall be entitled to the benefits provided below and, except as provided below, shall not be entitled to any other payments or benefits described in Section 5 of the Agreement:

(a) the amounts described in Sections 5.3(a), (b) and (c) of the Agreement shall be payable within ten days after the SECTION 409A CHANGE IN CONTROL.

(b) for the two years following the SECTION 409A CHANGE IN CONTROL, the EMPLOYER shall at its expense continue on behalf of the EXECUTIVE and his/her dependents and beneficiaries the life insurance, disability, medical, dental and hospitalization benefits which were being provided to the EXECUTIVE at the time NOTICE OF TERMINATION is given. The benefits provided in this subsection (b) shall be no less favorable to the EXECUTIVE, in terms of amounts and deductibles and costs to him/her, than the coverage provided the EXECUTIVE under the EMPLOYER’S plans providing such benefits at the time NOTICE OF TERMINATION is given. Notwithstanding the foregoing, (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 1.409A-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; (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; and (C) the right to such reimbursement or benefit may not be subject to liquidation or exchange for another benefit. 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, than the coverage which would be provided hereunder by the EMPLOYER to the EXECUTIVE at the time the NOTICE OF TERMINATION is given. Except as expressly set forth above, 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, programs or practices following the EXECUTIVE’S termination of employment. Where such benefits as

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contemplated in this subsection (b) are not available to EXECUTIVE as a result of EXECUTIVE not being employed by the EMPLOYER, the EMPLOYER shall pay, in a lump sum within sixty (60) days following the Section 409A Change in Control, the present value of the cost of such benefits, had they been available under the same terms and conditions and the EMPLOYER benefit plans, and net of any required contribution by the EXECUTIVE.

(c) for the two years following the SECTION 409A CHANGE IN CONTROL, the EMPLOYER shall pay to the EXECUTIVE in accordance with the regular payroll policies of the EMPLOYER a monthly allowance equal to a pre-determined monthly amount for the car payment, gas, maintenance and insurance for the grade level of the EXECUTIVE, established by the EMPLOYER from time to time, to replace the benefit of the car being used by the EXECUTIVE prior to the TERMINATION DATE. The EXECUTIVE shall return the car being used by such EXECUTIVE to the EMPLOYER upon the TERMINATION DATE.

Capitalized terms not otherwise defined in this Exhibit A shall have the meanings set forth in the Agreement.

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EX-10.(F)

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.

            , 2007

THIS AGREEMENT was originally made effective as of the     day of             , 2007 (the “Date of Grant”) among Tim Hortons Inc., a Delaware corporation (the “Company”), The TDL Group Corp., a Nova Scotia Company (the “Employer”) and              (the “Grantee”) (collectively, the “Parties”) and is hereby amended and restated in its entirety effective as of             , 2008.

WHEREAS, the Company has adopted the Tim Hortons Inc. 2006 Stock Incentive Plan (the “Plan”) in order to provide additional incentive to certain employees and directors of the Company and its Subsidiaries; and

WHEREAS, pursuant to Section 4.2 of the Plan, 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;

WHEREAS, the Award is evidenced by this Agreement, which (together with the Plan), describes all the terms and conditions of the Award;

WHEREAS, the Company has determined that the Grantee is subject to the tax laws of the United States; and

WHEREAS, pursuant to Section 12 of the 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, as amended (the “Code”).

NOW, THEREFORE, the Parties agree as follows:

1. Award.

1.1 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. 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, if applicable) to the Company as provided in Section 8 hereof. Subject to Section 6 hereof, each Restricted Stock Unit represents the right to receive, at the option of the

Company, (i) one (1) Share from the Company or (ii) cash delivered to a broker to acquire one (1) share on Grantee’s behalf, in any case at the time and in the manner set forth in Section 7 hereof.

1.2 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. With respect to each Dividend Equivalent Right, 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. 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, without limitation, the restrictions on transfer, forfeiture, vesting and payment provisions contained in Sections 2 through 8, inclusive, of this Agreement. In the event that a Restricted Stock Unit is forfeited pursuant to Section 6 hereof, the related Dividend Equivalent Right shall also be forfeited. 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). 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, subject to adjustment upon the vesting of a portion of the underlying Restricted Stock Unit award (See Section 3). The Human Resource and Compensation Committee (“Committee”) shall determine appropriate administration for the tracking and settlement of Dividend Equivalent Rights, including with respect to fractional interests, and the Committee’s determination in this regard shall be final and binding upon all Parties.

1.3 This Agreement shall be construed in accordance and consistent with, and is subject to, the provisions of the Plan (the provisions of which are hereby incorporated by reference), as well as any and all determinations, policies, instructions, interpretations, rules, etc. of the Committee in connection with the Plan. Except as otherwise expressly set forth herein, the capitalized terms used in this Agreement shall have the same definitions as set forth in the Plan.

2. Restrictions on Transfer.

The Restricted Stock Units and Dividend Equivalent Rights granted pursuant to this Agreement may not be sold, transferred or otherwise disposed of and may not be pledged or otherwise hypothecated.

3. Vesting.

Except as otherwise provided in this Agreement, one-third ( ¹/3) of the number of Restricted Stock Units granted hereunder vested on             , 20     and one-third ( ¹/3 ) of the number of Restricted Stock Units granted hereunder shall vest on each of             , 20     and             , 20    . Fractional Restricted Stock Units may be generated and/or adjusted upon the

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vesting of one-third of the Restricted Stock Units awarded under this Agreement. See Section 7 regarding settlement of fractional Restricted Stock Units.

4. Effect of Certain Terminations of Employment.

If the Grantee’s employment terminates as a result of the Grantee’s death, 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, in each case if such termination occurs on or after the Date of Grant, 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. For purposes of this Agreement, (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, 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” within the meaning of Section 409A of the Code and Treasury Regulation Section 1.409A-1(h).

5. Effect of Change in Control.

In the event of a Change in Control, 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, in each case within the meaning of Section 409A of the Code, at any time on or after the Date of Grant, all Restricted Stock Units which have not become vested in accordance with Section 3 or 4 hereof shall vest immediately.

6. Forfeiture of Stock Units.

Except as otherwise provided in this Agreement, 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; or

(b) the commission by the Grantee of an Act of Misconduct prior to such vesting.

For purposes of this Agreement, 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, confidential information or trade secrets of 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, 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, or status as a director to, the Company or any of its Subsidiaries.

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7. Satisfaction of Stock Units.

In order to satisfy Restricted Stock Units after vesting pursuant to this Agreement, the Company shall, at its option either (i) issue treasury Shares to the Grantee (or, if applicable, the Grantee’s estate); (ii) deliver cash to a broker designated by the Company who, as agent for the Grantee, shall purchase the appropriate number of Shares on the open market; or (iii) any combination of the above.

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 common Share, subject to any withholding as may be required under Section 10 of this Agreement, notwithstanding any delay between a vesting date and the settlement date. Fractional Shares may be issued or delivered upon settlement of vested Restricted Stock Units. All parties understand, acknowledge and agree that fractional Shares cannot be traded in the public markets, and therefore, any fractional Share issued or delivered to Grantee upon settlement of a vested Restricted Stock Unit, after taking into account the reduction to the number of Shares as required under Section 10 of this Agreement, if applicable, 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 Committee shall determine appropriate administration for the settling of vested Restricted Stock Units, including with respect to fractional interests, and the Committee’s determination in this regard shall be final and binding upon all Parties. As used herein, “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.

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. Notwithstanding the foregoing, with respect to Restricted Stock Units that become vested pursuant to Section 4 (other than as a result of the Grantee’s death), 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, 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.

Any of the Company’s obligations in this Section may be satisfied by the Company or the Employer.

8. Execution of the Award.

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 so provided) no later than             , 20     (the “Grantee Return Date”); provided that if the Grantee’s Restricted Stock Units that would otherwise vest pursuant to Section 4 or 5 before the Grantee

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Return Date, this requirement shall be deemed to have been satisfied immediately before such vesting.

9. No Right to Continued Employment.

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, 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.

10. Withholding of Taxes.

Prior to (i) the delivery to the Grantee (or the Grantee’s estate, if applicable) of treasury Shares or (ii) the delivery of cash to a broker to purchase and deliver Shares, in each case pursuant to Sections 1 and 7 hereof, the Company or the Employer, as the case may be, shall be entitled to withhold from such Shares or cash, as the case may be, 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, if it so determines, relevant governmental administrative practice, to be withheld by the Company or the Employer, as the case may be, 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. Fractional Shares may be issued or delivered and/or adjusted upon the withholding of taxes in accordance with this Section 10, and the settlement of the Restricted Stock Units into Shares will be adjusted by the amount of the withholding, including by the fractional Shares generated and/or adjusted upon the withholding transaction. Any fractional Shares will ultimately be paid or settled in cash in accordance with Section 7 of this Agreement. 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.

11. Grantee Bound by the Plan.

The Grantee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof. Capitalized terms used in this Agreement that are not otherwise defined herein shall have the meanings attributed to such terms in the Plan.

12. Modification of Agreement.

This Agreement may be modified, amended, suspended or terminated, and any terms or conditions may be waived, but only by a written instrument executed by the Parties hereto.

13. Severability.

Should any provision of this Agreement be held by a court of competent jurisdiction to be unenforceable or invalid for any reason, the remaining provisions of this Agreement shall not be affected by such holding and shall continue in full force in accordance with their terms.

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14. Governing Law.

The validity, interpretation, 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.

15. Successors in Interest.

This Agreement shall inure to the benefit of and be binding upon any successor to the Company. This Agreement shall inure to the benefit of the Grantee’s legal representatives. All obligations imposed upon the Grantee and all rights granted to the Company under this Agreement shall be binding upon the Grantee’s heirs, executors, administrators and successors.

16. Language

The Parties hereto acknowledge that they have requested that this Agreement and all documents ancillary thereto, including all the documentation provided to the Grantee in respect of the Award, be drafted in the English language only. Les Parties aux présentes reconnaissent qu’elles ont exigé que la présente convention et tous les documents y afférents, y compris toute la documentation transmise au bénéficiaire relativement à l’octroi des droits prévu aux présentes,soient rédigés en langue anglaise seulement.

17. Resolution of Disputes.

Any dispute or disagreement which may arise under, or as a result of, or in any way relate to, the interpretation, construction or application of this Agreement shall be determined by the Committee. Any determination made hereunder shall be final, binding and conclusive on the Grantee, the Grantee’s heirs, executors, administrators and successors, and the Company and its Subsidiaries for all purposes.

18. Entire Agreement.

This Agreement and the terms and conditions of the Plan constitute the entire understanding between the Grantee and the Company and its Subsidiaries, and supersede all other agreements, whether written or oral, with respect to the Award.

19. Headings.

The headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

20. Counterparts.

This Agreement may be executed simultaneously in two or more counterparts, each of which shall constitute an original, but all of which taken together shall constitute one and the same agreement.

<EXECUTION PAGE FOLLOWS>

6

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

EX-10.(G)

Exhibit 10(g)

Form of 2007 Amended and Restated Restricted Stock Unit Award Agreement

(U.S Version) (Compliance with Section 409A of the Internal Revenue Code)

FORM OF

AMENDED AND RESTATED

RESTRICTED STOCK UNIT AWARD AGREEMENT

(2007 U.S. Version)

(with related Dividend Equivalent Rights)

Tim Hortons Inc.

[Date]

THIS AGREEMENT, made effective as of the      day of                     , 20     (the “Date of Grant”), is between Tim Hortons Inc., a Delaware corporation (the “Company”),                     , a                              (the “Employer”) and                      (the “Grantee”) (collectively, the “Parties”).

WHEREAS, the Company has adopted the Tim Hortons Inc. 2006 Stock Incentive Plan (the “Plan”) in order to provide additional incentive to certain employees and directors of the Company and its Subsidiaries; and

WHEREAS, pursuant to Section 4.2 of the Plan, 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; and

WHEREAS, the Award is evidenced by this Agreement, which (together with the Plan), describes all the terms and conditions of the Award.

NOW, THEREFORE, the Parties agree as follows:

1. Award.

1.1 The Company hereby grants to the Grantee in respect of employment services provided by the Grantee to the Employer in 20    , an award (the “Award”) of                      Restricted Stock Units with an equal number of related Dividend Equivalent Rights. 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, if applicable) to the Company as provided in Section 8 hereof. Subject to Section 6 hereof, each Restricted Stock Unit represents the right to receive, at the option of the Company,

(i) one (1) Share from the Company, or (ii) cash delivered to a broker to acquire one (1) share on the Grantee’s behalf, in either case at the time and in the manner set forth in Section 7 hereof.

1.2 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. With respect to each Dividend Equivalent Right, 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. 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, without limitation, the restrictions on transfer, forfeiture, vesting and payment provisions contained in Sections 2 through 8, inclusive, of this Agreement. In the event that a Restricted Stock Unit is forfeited pursuant to Section 6 hereof, the related Dividend Equivalent Right shall also be forfeited. 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). 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, subject to adjustment upon the vesting of a portion of the underlying Restricted Stock Unit award (See Section 3). The Human Resource and Compensation Committee (“Committee”) shall determine appropriate administration for the tracking and settlement of Dividend Equivalent Rights, including with respect to fractional interests, and the Committee’s determination in this regard shall be final and binding upon all Parties.

1.3 This Agreement shall be construed in accordance and consistent with, and is subject to, the provisions of the Plan (the provisions of which are hereby incorporated by reference), as well as any and all determinations, policies, instructions, interpretations, rules, etc. of the Committee in connection with the Plan. Except as otherwise expressly set forth herein, the capitalized terms used in this Agreement shall have the same definitions as set forth in the Plan.

2. Restrictions on Transfer.

The Restricted Stock Units and Dividend Equivalent Rights granted pursuant to this Agreement may not be sold, transferred or otherwise disposed of and may not be pledged or otherwise hypothecated.

3. Vesting.

Except as otherwise provided in this Agreement, one-third (1/3) of the number of Restricted Stock Units granted hereunder shall vest on each of May 15, 20    , May 15, 20     and November 15, 20    . Fractional Restricted Stock Units may be generated and/or adjusted upon the vesting of one-third of the Restricted Stock Units awarded under this Agreement. See Section 7 regarding settlement of fractional Restricted Stock Units.

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4. Effect of Certain Terminations of Employment.

If the Grantee’s employment terminates as a result of the Grantee’s death, 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, in each case if such termination occurs on or after the Date of Grant, 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. For purposes of this Agreement, (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, 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 services,” within the meaning of Section 409A of the Code and Treasury Regulation Section 1.409A-1(h).

5. Effect of Change in Control.

In the event of a Change in Control, 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, in each case within the meaning of Section 409A of the Code, at any time on or after the Date of Grant, all Restricted Stock Units which have not become vested in accordance with Section 3 or 4 hereof shall vest immediately.

6. Forfeiture of Stock Units.

Except as otherwise provided in this Agreement, 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; or

(b) the commission by the Grantee of an Act of Misconduct prior to such vesting.

For purposes of this Agreement, 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, confidential information or trade secrets of 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, 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, or status as a director to, the Company or any of its Subsidiaries.

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7. Satisfaction of Stock Units.

In order to satisfy Restricted Stock Units after vesting pursuant to this Agreement, the Company shall, at its option either (i) issue treasury Shares to the Grantee (or, if applicable, the Grantee’s estate); or (ii) deliver cash to a broker designated by the Company who, as agent for the Grantee, shall purchase the appropriate number of Shares on the open market. 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, subject to any withholding as may be required under Section 10 of this Agreement, notwithstanding any delay between a vesting date and the settlement date. Fractional Shares may be issued or delivered upon settlement of vested Restricted Stock Units. All parties understand, acknowledge and agree that fractional Shares cannot be traded in the public markets, and therefore, any fractional Share issued or delivered to Grantee upon settlement of a vested Restricted Stock Unit, after taking into account the reduction to the number of Shares as required under Section 10 of this Agreement, if applicable, 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 Committee shall determine appropriate administration for the settling of vested Restricted Stock Units, including with respect to fractional interests, and the Committee’s determination in this regard shall be final and binding upon all Parties. As used herein, “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.

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. Notwithstanding the forgoing, with respect to Restricted Stock Units that become vested pursuant to Section 4 (other than as a result of the Grantee’s death), 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, 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.

Any of the Company’s obligations in this Section 7 may be satisfied by the Company or Employer.

8. Execution of the Award.

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, if so provided) no later than April     , 20     (the “Grantee Return Date”); provided that if the Grantee’s Restricted

4

Stock Units that would otherwise vest pursuant to Section 4 or 5 before the Grantee Return Date, this requirement shall be deemed to have been satisfied immediately before such vesting.

9. No Right to Continued Employment.

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, 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.

10. Withholding of Taxes.

Prior to (i) the delivery to the Grantee (or the Grantee’s estate, if applicable) of treasury Shares; or (ii) the delivery of cash to a broker to purchase and deliver shares, pursuant to Sections 1 and 7 hereof, the Company or the Employer shall be entitled to withhold from such Shares or cash, as the case may be, 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, if it so determines, relevant governmental administrative practice, 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. Fractional Shares may be issued or delivered and/or adjusted upon the withholding of taxes in accordance with this Section 10, and the settlement of the Restricted Stock Units into Shares will be adjusted by the amount of the withholding, including by the fractional Shares generated and/or adjusted upon the withholding transaction. Any fractional Shares will ultimately be paid or settled in cash in accordance with Section 7 of this Agreement. 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.

11. Grantee Bound by the Plan.

The Grantee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof.

12. Modification of Agreement.

This Agreement may be modified, amended, suspended or terminated, and any terms or conditions may be waived, but only by a written instrument executed by the Parties hereto.

13. Severability.

Should any provision of this Agreement be held by a court of competent jurisdiction to be unenforceable or invalid for any reason, the remaining provisions of this

5

Agreement shall not be affected by such holding and shall continue in full force in accordance with their terms.

14. Governing Law.

The validity, interpretation, 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.

15. Successors in Interest.

This Agreement shall inure to the benefit of and be binding upon any successor to the Company. This Agreement shall inure to the benefit of the Grantee’s legal representatives. All obligations imposed upon the Grantee and all rights granted to the Company under this Agreement shall be binding upon the Grantee’s heirs, executors, administrators and successors.

16. Resolution of Disputes.

Any dispute or disagreement which may arise under, or as a result of, or in any way relate to, the interpretation, construction or application of this Agreement shall be determined by the Committee. Any determination made hereunder shall be final, binding and conclusive on the Grantee, the Grantee’s heirs, executors, administrators and successors, and the Company and its Subsidiaries for all purposes.

17. Entire Agreement.

This Agreement and the terms and conditions of the Plan constitute the entire understanding between the Grantee and the Company and its Subsidiaries, and supersede all other agreements, whether written or oral, with respect to the Award.

18. Headings.

The headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

19. Counterparts.

This Agreement may be executed simultaneously in two or more counterparts, each of which shall constitute an original, but all of which taken together shall constitute one and the same agreement.

<EXECUTION PAGE FOLLOWS>

6

TIM HORTONS INC. (“Company”)
By:
Name:
Title:
	(“Employer”)
By:
Name:
Title:
GRANTEE

7

EX-10.(H)

2008 Amended and Restated Restricted Stock Unit Award Agreement of David Clanachan (Compliance with Section 409A of the Internal Revenue Code) Exhibit 10(h)

AMENDED AND RESTATED

RESTRICTED STOCK UNIT AWARD AGREEMENT

(with related Dividend Equivalent Rights)

Tim Hortons Inc.

Grant Year: 2008

May 15, 2008

THIS AGREEMENT was originally made effective as of the 15^th day of May, 2008 (the “Date of Grant”), among Tim Hortons Inc., a Delaware corporation (the “Company”), The TDL Group Corp., a Nova Scotia unlimited liability company (the “Employer”) and David Clanachan (the “Grantee”) (collectively, the “Parties”) and is hereby amended and restated in its entirety effective as of December 31, 2008.

WHEREAS, the Company has adopted the Tim Hortons Inc. 2006 Stock Incentive Plan, as amended from time to time (the “Plan”), in order to provide additional incentive to certain employees and directors of the Company and its Subsidiaries; and

WHEREAS, pursuant to Section 4.2 of the 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;

WHEREAS, the Award is evidenced by this Agreement, which (together with the Plan), describes all the terms and conditions of the Award;

WHEREAS, the Company has determined that the Grantee is subject to the tax laws of the United States; and

WHEREAS, pursuant to Section 12 of 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, as amended (the “Code”).

NOW, THEREFORE, the Parties agree as follows:

1. Award.

1.1 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 6,254 Restricted Stock Units with an equal number of related Dividend

Equivalent Rights. 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, if applicable) to the Company as provided in Section 8 hereof. Subject to Section 6 hereof, each Restricted Stock Unit represents the right to receive, at the absolute discretion of the Company, (i) one (1) Share from the Company, or (ii) cash delivered to a broker to acquire one (1) share on the Grantee’s behalf, in any case at the time and in the manner set forth in Section 7 hereof.

1.2 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. With respect to each Dividend Equivalent Right, 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. 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, without limitation, the restrictions on transfer, forfeiture, vesting and payment provisions contained in Sections 2 through 8, inclusive, of this Agreement. In the event that a Restricted Stock Unit is forfeited pursuant to Section 6 hereof, the related Dividend Equivalent Right shall also be forfeited. 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). 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, subject to adjustment upon the vesting of a portion of the underlying Restricted Stock Unit award (see Section 3). The Human Resource and Compensation Committee (“Committee”) shall determine appropriate administration for the tracking and settlement of Dividend Equivalent Rights, including with respect to fractional interests, and the Committee’s determination in this regard shall be final and binding upon all Parties.

1.3 This Agreement shall be construed in accordance and consistent with, and is subject to, the provisions of the Plan (the provisions of which are hereby incorporated by reference), as well as any and all determinations, policies, instructions, interpretations, rules, etc. of the Committee in connection with the Plan. Except as otherwise expressly set forth herein, the capitalized terms used in this Agreement shall have the same definitions as set forth in the Plan.

2. Restrictions on Transfer.

The Restricted Stock Units and Dividend Equivalent Rights granted pursuant to this Agreement may not be sold, transferred or otherwise disposed of and may not be pledged or otherwise hypothecated.

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3. Vesting.

Except as otherwise provided in this Agreement, the Restricted Stock Units granted hereunder shall vest in their entirety on November 15, 2010. Fractional Restricted Stock Units may be generated and/or adjusted upon the vesting of the Restricted Stock Units awarded under this Agreement. See Section 7 regarding settlement of fractional Restricted Stock Units.

4. Effect of Certain Terminations of Employment.

4.1 Death or Disability. If Grantee’s employment terminates as a result of Grantee’s death or becoming Disabled, or if the Grantee is terminated without Cause in connection with the sale or disposition of a Subsidiary, in each case if such termination occurs on or after the date of grant, 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.

4.2 Retirement. If Grantee’s employment terminates as a result of the Grantee’s Retirement, and if such termination occurs on or after the date of grant, 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.

4.3 Definitions. For purposes of this Agreement, (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, 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,” within the meaning of Section 409A of the Code and Treasury Regulation Section 1.409A-1(h).

4.4 Trading Policies and Transfer of Shares. For a period of six (6) months following a termination of employment, whether under Section 4, 5, or 6 of this Agreement, Grantee shall continue to be subject to the Company’s insider trading and window trading policies and must follow all pre-clearance procedures, and all other requirements, included in those policies. In the case of Retirement, a termination due to Disability, or death, Grantee or Grantee’s estate or legal representative, as the case may be, 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. For terminations arising for any reason other than death, Disability, or Retirement, 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.

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5. Effect of Change in Control.

In the event of a Change in Control, 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, in each case within the meaning of Section 409A of the Code and Treasury Regulation Section 1.409A-3(i)(5), at any time on or after the Date of Grant, all Restricted Stock Units which have not become vested in accordance with Section 3 or 4 hereof shall vest immediately.

6. Forfeiture of Award.

Except as otherwise provided in this Agreement, any and all Restricted Stock Units which have not become vested in accordance with Section 3, 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; or

(b) the commission by the Grantee of an Act of Misconduct prior to such vesting.

For purposes of this Agreement, 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, confidential information or trade secrets of 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, 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, or status as a director to, the Company or any of its Subsidiaries.

7. Satisfaction of Award.

In order to satisfy Restricted Stock Units after vesting pursuant to this Agreement, the Company shall, at its election either (i) issue treasury Shares to the Grantee (or, if applicable, the Grantee’s estate); (ii) deliver cash to a broker designated by the Company who, as agent for the Grantee, shall purchase the appropriate number of Shares on the open market; or, (iii) any combination of the above.

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, subject to any withholding as may be required under Section 10 of this Agreement, notwithstanding any delay between a vesting date and the settlement date. Fractional Shares may be issued or delivered upon settlement of vested Restricted Stock Units. All parties understand, acknowledge and agree that fractional Shares cannot be traded in the

4

public markets, and therefore, any fractional Share issued or delivered to Grantee upon settlement of a vested Restricted Stock Unit, after taking into account the reduction to the number of Shares as required under Section 10 of this Agreement, if applicable, 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 Committee shall determine appropriate administration for the settling of vested Restricted Stock Units, including with respect to fractional interests, and the Committee’s determination in this regard shall be final and binding upon all Parties. As used herein, “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.

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, or (b) sixty (60) days after such vesting date. Notwithstanding the foregoing, with respect to Restricted Stock Units that become vested pursuant to Section 4 (other than as a result of the Grantee’s death), 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, 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.

Any of the Company’s obligations in this Section 7 may be satisfied by the Company or the Employer.

8. Execution of the Award.

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 so provided) no later than                          (the “Grantee Return Date”); provided that if the Grantee’s Restricted Stock Units that would otherwise vest pursuant to Section 4 or 5 before the Grantee Return Date, this requirement shall be deemed to have been satisfied immediately before such vesting.

9. No Right to Continued Employment.

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, 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.

10. Withholding of Taxes.

Upon (i) the delivery to the Grantee (or the Grantee’s estate, if applicable) of treasury Shares or (ii) the delivery of cash to a broker to purchase and deliver Shares, in

5

each case pursuant to Sections 1 and 7 hereof, the Company or the Employer, as the case may be, shall be entitled to withhold from such Shares or cash, as the case may be, 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, if it so determines, relevant governmental administrative practice, to be withheld by the Company or the Employer, as the case may be, 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. Fractional Shares may be issued or delivered and/or adjusted upon the withholding of taxes in accordance with this Section 10, and the settlement of the Restricted Stock Units into Shares will be adjusted by the amount of the withholding, including by the fractional Shares generated and/or adjusted upon the withholding transaction. Any fractional Shares will ultimately be paid or settled in cash in accordance with Section 7 of this Agreement. 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.

11. Grantee Bound by the Plan.

The Grantee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof.

12. Modification of Agreement.

This Agreement may be modified, amended, suspended or terminated, and any terms or conditions may be waived, but only by a written instrument executed by the Parties hereto.

13. Severability.

Should any provision of this Agreement be held by a court of competent jurisdiction to be unenforceable or invalid for any reason, the remaining provisions of this Agreement shall not be affected by such holding and shall continue in full force in accordance with their terms.

14. Governing Law.

The validity, interpretation, 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. Successors in Interest and Assigns.

The Company and the Employer may assign any of their respective rights and obligations under this Agreement without the consent of the Grantee. This Agreement shall inure to the benefit of and be binding upon any successors and assigns of the Company and the Employer. This Agreement shall inure to the benefit of the Grantee’s legal representatives. All obligations imposed upon the Grantee and all rights granted to

6

the Company and the Employer under this Agreement shall be binding upon the Grantee’s heirs, executors, administrators and successors.

16. Language

The Parties hereto acknowledge that they have requested that this Agreement and all documents ancillary thereto, including all the documentation provided to the Grantee in respect of the Award, be drafted in the English language only. Les Parties aux présentes reconnaissent qu’elles ont exigé que la présente convention et tous les documents y afférents, y compris toute la documentation transmise au bénéficiaire relativement à l’octroi des droits prévu aux présentes,soient rédigés en langue anglaise seulement.

17. Resolution of Disputes.

Any dispute or disagreement which may arise under, or as a result of, or in any way relate to, the interpretation, construction or application of this Agreement shall be determined by the Committee. Any determination made hereunder shall be final, binding and conclusive on the Grantee, the Grantee’s heirs, executors, administrators and successors, and the Company and its Subsidiaries for all purposes.

18. Entire Agreement.

This Agreement and the terms and conditions of the Plan constitute the entire understanding between the Grantee and the Company and its Subsidiaries, and supersede all other agreements, whether written or oral, with respect to the Award.

19. Headings.

The headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

20. Counterparts.

This Agreement may be executed simultaneously in two or more counterparts, each of which shall constitute an original, but all of which taken together shall constitute one and the same agreement.

21. Compliance with Section 409A.

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”), and shall be interpreted and administered consistent with such intent. 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, then for any Grantee who is subject to the Canadian Tax Act and not subject to Section 409A of the Code, the Agreement shall be interpreted and administered with respect to such Grantee so that the

7

arrangements are not SDAs. For Grantees subject to both Section 409A of the Code and the Canadian Tax Act, the terms of this Award shall be interpreted, construed, and given effect to achieve compliance with both Section 409A of the Code and the Canadian Tax Act, to the extent practicable. 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 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.

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8

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

9

EX-10.(I)

Exhibit 10(i)

Form of 2008 Amended and Restated Restricted Stock Unit Award Agreement for U.S.

Employees and U.S. Taxpayers (including Stephen Johnston)

(Compliance with Section 409A of the Internal Revenue Code)

AMENDED AND RESTATED

RESTRICTED STOCK UNIT AWARD AGREEMENT

FOR U.S. EMPLOYEES AND U.S. TAXPAYERS

(with related Dividend Equivalent Rights)

Tim Hortons Inc.

Grant Year: 2008

May 15, 2008

THIS AGREEMENT was originally made effective as of the 15^th day of May, 2008 (the “Date of Grant”), among Tim Hortons Inc., a Delaware corporation (the “Company”),                                  (the “Employer”) and                                  (the “Grantee”) (collectively, the “Parties”) and is hereby amended and restated in its entirety effective as of December 31, 2008.

WHEREAS, the Company has adopted the Tim Hortons Inc. 2006 Stock Incentive Plan, as amended from time to time (the “Plan”), in order to provide additional incentive to certain employees and directors of the Company and its Subsidiaries; and

WHEREAS, pursuant to Section 4.2 of the 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;

WHEREAS, the Award is evidenced by this Agreement, which (together with the Plan), describes all the terms and conditions of the Award; and

WHEREAS, pursuant to Section 12 of 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, as amended (the “Code”).

NOW, THEREFORE, the Parties agree as follows:

1. Award.

1.1 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. 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, if applicable) to the Company as provided in Section 8 hereof. Subject to Section 6 hereof, each Restricted Stock Unit represents the right to receive, at the absolute discretion of the Company, (i) one (1) Share from the Company or (ii) cash delivered to a broker to acquire one (1) share on the Grantee’s behalf, in any case at the time and in the manner set forth in Section 7 hereof.

1.2 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. With respect to each Dividend Equivalent Right, 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. 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, without limitation, the restrictions on transfer, forfeiture, vesting and payment provisions contained in Sections 2 through 8, inclusive, of this Agreement. In the event that a Restricted Stock Unit is forfeited pursuant to Section 6 hereof, the related Dividend Equivalent Right shall also be forfeited. 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). 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, subject to adjustment upon the vesting of a portion of the underlying Restricted Stock Unit award (see Section 3). The Human Resource and Compensation Committee (“Committee”) shall determine appropriate administration for the tracking and settlement of Dividend Equivalent Rights, including with respect to fractional interests, and the Committee’s determination in this regard shall be final and binding upon all Parties.

1.3 This Agreement shall be construed in accordance and consistent with, and is subject to, the provisions of the Plan (the provisions of which are hereby incorporated by reference), as well as any and all determinations, policies, instructions, interpretations, rules, etc. of the Committee in connection with the Plan. Except as otherwise expressly set forth herein, the capitalized terms used in this Agreement shall have the same definitions as set forth in the Plan.

2. Restrictions on Transfer.

The Restricted Stock Units and Dividend Equivalent Rights granted pursuant to this Agreement may not be sold, transferred or otherwise disposed of and may not be pledged or otherwise hypothecated.

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3. Vesting.

Except as otherwise provided in this Agreement, one-third ( ¹/3) of the number of Restricted Stock Units granted hereunder shall vest on each of May 15, 2009, May 15, 2010 and November 15, 2010. Fractional Restricted Stock Units may be generated and/or adjusted upon the vesting of one-third of the Restricted Stock Units awarded under this Agreement. See Section 7 regarding settlement of fractional Restricted Stock Units.

4. Effect of Certain Terminations of Employment.

4.1 Death or Disability. If Grantee’s employment terminates as a result of Grantee’s death or becoming Disabled, or if the Grantee is terminated without Cause in connection with the sale or disposition of a Subsidiary, in each case if such termination occurs on or after the date of grant, 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.

4.2 Retirement. If Grantee’s employment terminates as a result of the Grantee’s Retirement, and if such termination occurs on or after the date of grant, 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.

4.3 Definitions. For purposes of this Agreement, (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, 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,” within the meaning of Section 409A of the Code and Treasury Regulation Section 1.409A-1(h).

4.4 Trading Policies and Transfer of Shares. For a period of six (6) months following a termination of employment, whether under Section 4, 5, or 6 of this Agreement, Grantee shall continue to be subject to the Company’s insider trading and window trading policies and must follow all pre-clearance procedures, and all other requirements, included in those policies. In the case of Retirement, a termination due to Disability, or death, Grantee or Grantee’s estate or legal representative, as the case may be, 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. For terminations arising for any reason other than death, Disability, or Retirement, 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.

5. Effect of Change in Control.

In the event of a Change in Control, 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

assets, in each case within the meaning of Section 409A of the Code and Treasury Regulation Section 1.409A-3(i)(5), at any time on or after the Date of Grant, all Restricted Stock Units which have not become vested in accordance with Section 3 or 4 hereof shall vest immediately.

6. Forfeiture of Award.

Except as otherwise provided in this Agreement, any and all Restricted Stock Units which have not become vested in accordance with Section 3, 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; or

(b) the commission by the Grantee of an Act of Misconduct prior to such vesting.

For purposes of this Agreement, 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, confidential information or trade secrets of 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, 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, or status as a director to, the Company or any of its Subsidiaries.

7. Satisfaction of Award.

In order to satisfy Restricted Stock Units after vesting pursuant to this Agreement, the Company shall, at its election either (i) issue treasury Shares to the Grantee (or, if applicable, the Grantee’s estate); (ii) deliver cash to a broker designated by the Company who, as agent for the Grantee, shall purchase the appropriate number of Shares on the open market; or, (iii) any combination of the above.

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, subject to any withholding as may be required under Section 10 of this Agreement, notwithstanding any delay between a vesting date and the settlement date. Fractional Shares may be issued or delivered upon settlement of vested Restricted Stock Units. All parties understand, acknowledge and agree that fractional Shares cannot be traded in the public markets, and therefore, any fractional Share issued or delivered to Grantee upon settlement of a vested Restricted Stock Unit, after taking into account the reduction to the number of Shares as required under Section 10 of this Agreement, if applicable, 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 Committee shall determine appropriate administration for the settling of vested Restricted Stock Units, including with respect to fractional interests, and the Committee’s determination in this regard shall be final and binding upon all Parties. As used herein, “Plan Administrator” shall mean the party engaged by

4

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.

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, or (b) sixty (60) days after such vesting date. Notwithstanding the foregoing, with respect to Restricted Stock Units that become vested pursuant to Section 4 (other than as a result of the Grantee’s death), 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, 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.

Any of the Company’s obligations in this Section 7 may be satisfied by the Company or the Employer.

8. Execution of the Award.

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 so provided) no later than                     , 20     (the “Grantee Return Date”); provided that if the Grantee’s Restricted Stock Units that would otherwise vest pursuant to Section 4 or 5 before the Grantee Return Date, this requirement shall be deemed to have been satisfied immediately before such vesting.

9. No Right to Continued Employment.

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, 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.

10. Withholding of Taxes.

Upon (i) the delivery to the Grantee (or the Grantee’s estate, if applicable) of treasury Shares, or (ii) the delivery of cash to a broker to purchase and deliver Shares, in each case pursuant to Sections 1 and 7 hereof, the Company or the Employer, as the case may be, shall be entitled to withhold from such Shares or cash, as the case may be, 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, if it so determines, relevant governmental administrative practice, to be withheld by the Company or the Employer, as the case may be, 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. Fractional Shares may be issued or delivered and/or adjusted upon the withholding of taxes in accordance with this Section 10, and the settlement of the Restricted Stock Units into Shares will be adjusted by the amount of the withholding,

5

including by the fractional Shares generated and/or adjusted upon the withholding transaction. Any fractional Shares will ultimately be paid or settled in cash in accordance with Section 7 of this Agreement. 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.

11. Grantee Bound by the Plan.

The Grantee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof.

12. Modification of Agreement.

This Agreement may be modified, amended, suspended or terminated, and any terms or conditions may be waived, but only by a written instrument executed by the Parties hereto.

13. Severability.

Should any provision of this Agreement be held by a court of competent jurisdiction to be unenforceable or invalid for any reason, the remaining provisions of this Agreement shall not be affected by such holding and shall continue in full force in accordance with their terms.

14. Governing Law.

The validity, interpretation, 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. Successors in Interest and Assigns.

The Company and the Employer may assign any of their respective rights and obligations under this Agreement without the consent of the Grantee. This Agreement shall inure to the benefit of and be binding upon any successors and assigns of the Company and the Employer. This Agreement shall inure to the benefit of the Grantee’s legal representatives. 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, executors, administrators and successors.

16. Language

The Parties hereto acknowledge that they have requested that this Agreement and all documents ancillary thereto, including all the documentation provided to the Grantee in respect of the Award, be drafted in the English language only. Les Parties aux présentes reconnaissent qu’elles ont exigé que la présente convention et tous les documents y afférents, y compris toute la documentation transmise au bénéficiaire relativement à l’octroi des droits prévu aux présentes,soient rédigés en langue anglaise seulement.

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17. Resolution of Disputes.

Any dispute or disagreement which may arise under, or as a result of, or in any way relate to, the interpretation, construction or application of this Agreement shall be determined by the Committee. Any determination made hereunder shall be final, binding and conclusive on the Grantee, the Grantee’s heirs, executors, administrators and successors, and the Company and its Subsidiaries for all purposes.

18. Entire Agreement.

This Agreement and the terms and conditions of the Plan constitute the entire understanding between the Grantee and the Company and its Subsidiaries, and supersede all other agreements, whether written or oral, with respect to the Award.

19. Headings.

The headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

20. Counterparts.

This Agreement may be executed simultaneously in two or more counterparts, each of which shall constitute an original, but all of which taken together shall constitute one and the same agreement.

21. Compliance with Section 409A.

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”), and shall be interpreted and administered consistent with such intent. 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, then for any Grantee who is subject to the Canadian Tax Act and not subject to Section 409A of the Code, the Agreement shall be interpreted and administered with respect to such Grantee so that the arrangements are not SDAs. For Grantees subject to both Section 409A of the Code and the Canadian Tax Act, the terms of this Award shall be interpreted, construed, and given effect to achieve compliance with both Section 409A of the Code and the Canadian Tax Act, to the extent practicable. 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 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.

<EXECUTION PAGE FOLLOWS>

7

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

8

EX-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) Exhibit 10(j)

AMENDED AND RESTATED

DEFERRED STOCK UNIT AWARD AGREEMENT

(with related Dividend Equivalent Rights)

(Canadian Directors)

Tim Hortons Inc.

Date              , 2007

THIS AGREEMENT was originally made effective as of the      day of             , 20     (the “Effective Date”) between Tim Hortons Inc., a Delaware corporation (the “Company”), and                      (the “Grantee”) (collectively, the “Parties”) and is hereby amended and restated in its entirety effective as of December 31, 2008.

WHEREAS, the Company has adopted the Tim Hortons Inc. Non-Employee Director Deferred Stock Unit Plan (the “Plan”) in order to provide an additional incentive to non-employee directors of the Company; and

WHEREAS, pursuant to Section 4 of the Plan, the Company may grant, from time-to-time, to the Grantee Elective DSUs, Formula DSUs, Voluntary Formula DSUs and Discretionary DSUs (all as defined in the Plan and collectively referred to herein as “DSUs” or, individually, a “DSU”) with related Dividend Equivalent Rights;

WHEREAS, each grant of DSUs shall be evidenced by this Agreement, which (together with the Plan), describes all the terms and conditions of the respective DSU grant;

WHEREAS, 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;

WHEREAS, subject to the terms of the Plan and this Agreement, 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;

WHEREAS, the Company has determined that the Grantee is subject to the tax laws of the United States; and

WHEREAS, pursuant to Section 11 of the 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, as amended (the “Code”).

NOW, THEREFORE, the Parties agree as follows:

1 Award.

1.1 The Company hereby grants to the Grantee awards (the “Awards”) of the number of Formula DSUs, Voluntary Formula DSUs, 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, a “Grant Date”) set forth on Schedule A. 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-to-time, which are described on Schedule A and which, unless otherwise specified on Schedule A, shall apply in respect of all existing and future Awards; provided that no such administrative determination will impair the rights of the Grantee without the consent of the Grantee, except as may be permitted pursuant to Section 11 of this Agreement. Each DSU shall have the value of one share of Company’s common stock, par value U.S. $0.001 per share and any other securities into which such share is changed or for which such share is exchanged (“Share”). Distributions and payments for DSUs and Dividend Equivalent Rights shall be made in accordance with the terms of Section 5 and 6 hereof, respectively. 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. On a quarterly basis, 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. 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, unless Grantee notifies the Company within 15 business days after receipt of the respective quarterly Schedule A.

1.2 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 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. “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, as designated by the Committee on or prior to such date and set out on Schedule A hereto. 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, including, without limitation, the restrictions on transfer, forfeiture, vesting and payment provisions contained in Sections 2 through 5, inclusive, of this Agreement. In the event that a DSU is forfeited pursuant to Section 5 hereof, the related Dividend Equivalent Right shall also be forfeited.

1.3 This Agreement shall be construed in accordance and consistent with, and subject to, the provisions of the Plan (the provisions of which are hereby incorporated by reference) and, except as otherwise expressly set forth herein, the capitalized terms used in this Agreement shall have the same definitions as set forth in the Plan.

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2 Restrictions on Transfer.

The DSUs and Dividend Equivalent Rights granted pursuant to this Agreement may not be sold, transferred or otherwise disposed of and may not be pledged or otherwise hypothecated.

3 Vesting.

All DSUs and accompanying Dividend Equivalents Rights granted hereunder shall vest upon the Grantee’s separation from service. For purposes of this Agreement, “separation from service” shall mean a “separation from service” within the meaning of Section 409A of the Code and Treasury Regulation Section 1.409A-1(h).

4 Effect of Change of Shares Subject to the Plan.

In the event of a Change in Capitalization (as defined in the Tim Hortons Inc. 2006 Stock Incentive Plan (the “2006 Stock Plan”)), the Committee shall conclusively determine the appropriate adjustments, if any, to the Grantee’s outstanding DSUs. If adjustments are to be made, they shall be made in the same manner as adjustments are made to awards that are outstanding under the 2006 Stock Plan. Adjusted DSUs shall remain subject to the same conditions that were applicable to the DSUs prior to the adjustments, provided that, notwithstanding the foregoing, 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, or a corporation related thereto, 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.

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, but no later than 30 days after separation from service, 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, to have such payment made at the end of the first calendar year commencing after the Grantee’s separation from service, in accordance with the Plan. Notwithstanding the foregoing, and for greater certainty, Formula DSUs (not including Voluntary Formula DSUs or Elective DSUs) and, unless otherwise set out on Schedule A hereto with respect to a specific Award, Discretionary DSUs, 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, misappropriation or conversion of assets or opportunities of the Company or any of its Subsidiaries.

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6 Payment.

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-to-time regarding the payments of DSUs upon settlement, which shall be noted on Schedule A from time-to-time, as applicable. Notwithstanding the foregoing, 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.

7 Execution of the Award.

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, if so provided) no later than                     .

8 No Right to Continued Service.

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.

9 Residency of Grantee.

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.S. income tax purposes.

10 Grantee Bound by the Plan.

The Grantee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof. In the event of a conflict between the terms of the Plan and the terms of this Agreement, the terms of the Plan will govern. 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 separation of service as a result of the death or disability of the Grantee, the payment in respect of the DSUs held by the Grantee shall be made to the Grantee’s estate or legal representatives, as applicable.

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11 Modification of Agreement.

This Agreement may be modified, amended, suspended or terminated, and any terms or conditions may be waived, but only by a written instrument executed by the Parties hereto; provided, however, that (a) Grantee shall be deemed to have accepted, without signature required, the terms and conditions of this Agreement applicable to future grants, unless notice of objection is made, 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, or to comply with the requirements of Regulation 6801(d) under the Income Tax Act (Canada) (the “ITA”), even if those amendments reduce, restrict or eliminate rights granted under this Agreement before those amendments are adopted.

12 Notice.

All notices and other communications hereunder shall be in writing. Any notice, request, demand, 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, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below:

If to the Company:

Tim Hortons Inc.

874 Sinclair Road

Oakville, Ontario L6K 2Y1

Attn: General Counsel

Fax: (905) 845-1458

If to Grantee:

Name:	______________________________________
Address:	______________________________________
Tel:	______________________________________
Fax:	______________________________________
Email:	______________________________________

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Either party may send any notice or other communication hereunder to the intended recipient at the address, facsimile number or electronic mail address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail or electronic mail), but no such notice, request, demand, claim or other communication will be deemed to have been duly given unless and until it actually is received by the intended recipient. Either party may change the address, 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.

13 Severability.

Should any provision of this Agreement be held by a court of competent jurisdiction to be unenforceable or invalid for any reason, the remaining provisions of this Agreement shall not be affected by such holding and shall continue in full force in accordance with their terms.

14 Governing Law.

The validity, interpretation, 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, to the extent applicable, the Code and ITA.

15 Successors in Interest.

This Agreement shall inure to the benefit of and be binding upon any successor to the Company. This Agreement shall inure to the benefit of the Grantee’s legal representatives. All obligations imposed upon the Grantee and all rights granted to the Company under this Agreement shall be binding upon the Grantee’s heirs, executors, administrators and successors.

16 Resolution of Disputes.

Any dispute or disagreement which may arise under, or as a result of, or in any way relate to, the interpretation, construction or application of this Agreement shall be determined by the Committee. Any determination made hereunder shall be final, binding and conclusive on the Grantee, the Grantee’s heirs, executors, administrators and successors, and the Company and its Subsidiaries for all purposes.

17 Entire Agreement.

This Agreement and the terms and conditions of the Plan, including the provisions of the 2006 Stock Plan to the extent specifically referred to herein or directly applicable to the terms hereof, constitute the entire understanding between the Grantee and the Company and its Subsidiaries, and supersede all other agreements, whether written or oral, with respect to the Award.

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18 Headings.

The headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

19 Counterparts.

This Agreement may be executed simultaneously in two or more counterparts, each of which shall constitute an original, but all of which taken together shall constitute one and the same agreement.

20 Compliance with Section 409A.

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, and shall be interpreted and administered consistent with such intent. 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, then for any Grantee who is subject to the ITA and not subject to Section 409A of the Code, the Agreement shall be interpreted and administered with respect to such Grantee so that the arrangements are not SDAs. For Grantees subject to both Section 409A of the Code and the ITA, the terms of the Awards shall be interpreted, construed, and given effect to achieve compliance with both Section 409A of the Code and the ITA, to the extent practicable. If compliance with both Section 409A of the Code and the ITA is not practicable in connection with the Awards covered by this Agreement, 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.

TIM HORTONS INC.
By:	______________________________________
Name:	______________________________________
Title:	______________________________________
GRANTEE
By:	______________________________________
Print Name:	______________________________________

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SCHEDULE A

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

EX-10.(K)

Exhibit 10(k)

Form of Amended and Restated Deferred Stock Unit Award Agreement (U.S. Version)

(Compliance with Section 409A of the Internal Revenue Code)

AMENDED AND RESTATED

DEFERRED STOCK UNIT AWARD AGREEMENT

(with related Dividend Equivalent Rights)

(U.S. Directors)

Tim Hortons Inc.

[Date]

THIS AGREEMENT, made effective as of the      day of                     , 20     (the “Effective Date”), is between Tim Hortons Inc., a Delaware corporation (the “Company”), and                              (the “Grantee”) (collectively, the “Parties”).

WHEREAS, the Company has adopted the Tim Hortons Inc. Non-Employee Director Deferred Stock Unit Plan, as amended from time to time (the “Plan”), in order to provide an additional incentive to non-employee directors of the Company; and

WHEREAS, pursuant to Section 4 of the Plan, the Company may grant, from time-to-time, to the Grantee Elective DSUs, Formula DSUs, Voluntary Formula DSUs and Discretionary DSUs (all as defined in the Plan and collectively referred to herein as “DSUs” or, individually, a “DSU”) with related Dividend Equivalent Rights; and

WHEREAS, each grant of DSUs shall be evidenced by this Agreement, which (together with the Plan), describes all the terms and conditions of the respective DSU grant.

NOW, THEREFORE, the Parties agree as follows:

1 Awards.

1.1 The Company hereby grants to the Grantee awards (the “Awards”) of the number of Formula DSUs, Voluntary Formula DSUs, 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 a “Grant Date”) set forth on Schedule A. 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-to-time, which are described on Schedule A and which, unless otherwise specified on Schedule A, shall apply in respect of all existing and future Awards; provided that no such administrative determination will impair the rights of the Grantee without the consent of the Grantee, except as may be permitted pursuant to Sections 5 and 11 of this Agreement. Each DSU shall have the value of one share of Company’s common stock, par value U.S.$0.001 per share and any other securities into which such share is changed or for which such share is exchanged (“Share”). Distributions and payments for DSUs and Dividend Equivalent Rights shall be made in accordance with the terms of Section 5 and 6 hereof, respectively. 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. On a quarterly basis, 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. 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, unless Grantee notifies the Company within 15 business days after receipt of the respective quarterly Schedule A.

1.2 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 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. “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, as designated by the Committee on or prior to such date and set out on Schedule A hereto. 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, including, without limitation, the restrictions on transfer, forfeiture, vesting and payment provisions contained in Sections 2 through 5, inclusive, of this Agreement. In the event that a DSU is forfeited pursuant to Section 5 hereof, the related Dividend Equivalent Right shall also be forfeited.

1.3 This Agreement shall be construed in accordance and consistent with, and subject to, the provisions of the Plan (the provisions of which are hereby incorporated by reference) and, except as otherwise expressly set forth herein, the capitalized terms used in this Agreement shall have the same definitions as set forth in the Plan.

2 Restrictions on Transfer.

The DSUs and Dividend Equivalent Rights granted pursuant to this Agreement may not be sold, transferred or otherwise disposed of and may not be pledged or otherwise hypothecated.

3 Vesting.

All DSUs and accompanying Dividend Equivalents Rights granted hereunder shall vest upon the Grantee’s separation from service. For purposes of this Agreement, “separation from service” shall mean a “separation from service,” within the meaning of Section 409A of the Code and Treasury Regulation Section 1.409A-1(h).

4 Effect of Change of Shares Subject to the Plan.

In the event of a Change in Capitalization (as defined in the Tim Hortons Inc. 2006 Stock Incentive Plan (the “2006 Stock Plan”)), the Committee shall conclusively determine the appropriate adjustments, if any, to the Grantee’s outstanding DSUs. If adjustments are to be made, they shall be made in the same manner as adjustments are made to awards that are outstanding under the 2006 Stock Plan. Adjusted DSUs shall remain subject to the same conditions that were applicable to the DSUs prior to the adjustments, provided that,

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notwithstanding the foregoing, 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, or a corporation related thereto, 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.

5 Distributions.

Unless the Grantee has made a valid election under the Company’s U.S. Non-Employee Directors’ Deferred Compensation Plan (the “NQDC Plan”) no later than the date permitted under the NQDC Plan, all DSUs granted to the Grantee shall be paid out in a lump sum, as soon as administratively possible, but no later than 30 days after separation from service. 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, the DSUs shall be paid in accordance with the terms of the NQDC Plan. Notwithstanding the foregoing, all Formula DSUs (not including Voluntary Formula DSUs or Elective DSUs), and, unless otherwise set out on Schedule A hereto with respect to a specific Award, Discretionary DSUs, 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, misappropriation or conversion of assets or opportunities of the Company or any of its Subsidiaries. The Committee reserves the right to limit the length of time that DSUs may be deferred beyond separation from service under the NQDC Plan.

6 Payment.

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-to-time regarding the payments of DSUs upon settlement, which shall be noted on Schedule A from time-to-time, as applicable. Notwithstanding the foregoing, 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.

7 Execution of the Awards.

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, if so provided) no later than                     .

8 No Right to Continued Service.

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.

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9 Residency of Grantee.

The Grantee represents and warrants to the Company that the Grantee is a resident of the United States for U.S. 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. In addition, the Grantee covenants that he or she will not be present in Canada for a period or periods exceeding, in the aggregate, 183 days during any twelve (12) month period commencing January 1 of any given year and ending December 31 of such year.

10 Grantee Bound by the Plan.

The Grantee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof. In the event of any conflict between the terms of the Plan and the terms of this Agreement, the terms of the Plan will govern.

In the event of a separation of service as a result of the death or disability of the Grantee, the payment in respect of the DSUs held by the Grantee shall be made to the Grantee’s estate or legal representatives, as applicable.

11 Modification of Agreement.

This Agreement may be modified, amended, suspended or terminated, and any terms or conditions may be waived, but only by a written instrument executed by the Parties hereto; provided, however, that (a) Grantee shall be deemed to have accepted, without signature required, the terms and conditions of this Agreement applicable to future grants, unless notice of objection is made, 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 Internal Revenue Code of 1986, as amended (the “Code”), or to comply with the requirements of Regulation 6801(d) under the ITA, even if those amendments reduce, restrict or eliminate rights granted under this Agreement before those amendments are adopted.

12 Notice.

All notices and other communications hereunder shall be in writing. Any notice, request, demand, 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, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below:

If to the Company:

Tim Hortons Inc.

c/o The TDL Group Corp.

874 Sinclair Road

Oakville, Ontario L6K 2Y1

Attn: General Counsel

Fax: (905) 845-1458

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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, facsimile number or electronic mail address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail or electronic mail), but no such notice, request, demand, claim or other communication will be deemed to have been duly given unless and until it actually is received by the intended recipient. Either party may change the address, 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.

13 Severability.

Should any provision of this Agreement be held by a court of competent jurisdiction to be unenforceable or invalid for any reason, the remaining provisions of this Agreement shall not be affected by such holding and shall continue in full force in accordance with their terms.

14 Governing Law.

The validity, interpretation, 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, to the extent applicable, the Code and the ITA.

15 Successors in Interest.

This Agreement shall inure to the benefit of and be binding upon any successor to the Company. This Agreement shall inure to the benefit of the Grantee’s legal representatives. All obligations imposed upon the Grantee and all rights granted to the Company under this Agreement shall be binding upon the Grantee’s heirs, executors, administrators and successors.

16 Resolution of Disputes.

Any dispute or disagreement which may arise under, or as a result of, or in any way relate to, the interpretation, construction or application of this Agreement shall be determined by the Committee. Any determination made hereunder shall be final, binding and conclusive on the Grantee, the Grantee’s heirs, executors, administrators and successors, and the Company and its Subsidiaries for all purposes.

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17 Entire Agreement.

This Agreement and the terms and conditions of the Plan, 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, constitute the entire understanding between the Grantee and the Company, and supersede all other agreements, whether written or oral, with respect to the Awards.

18 Headings.

The headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

19 Counterparts.

This Agreement may be executed simultaneously in two or more counterparts, each of which shall constitute an original, but all of which taken together shall constitute one and the same agreement.

20 Compliance with Section 409A.

This Agreement is intended to satisfy the requirements of Section 409A of the Code with respect to amounts subject thereto, and shall be interpreted and administered consistent with such intent.

TIM HORTONS INC.
By:	______________________________________
Name:	______________________________________
Title:	______________________________________

GRANTEE
_____________________________________________
Print Name:	__________________________________

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SCHEDULE A

Grant Date	Cash Value (Cdn.$) on 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.

EX-10.(L)

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 cross-border 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.

Inflation

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

EX-31.(A)

Exhibit 31(a)

CERTIFICATIONS

I, Donald B. Schroeder, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Tim Hortons Inc.;

2. Based on my knowledge, 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, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. 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-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

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, as of the end of the period covered by this report based on such evaluation; 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, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, 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, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2008

/s/ Donald B. Schroeder
Name:	Donald B. Schroeder
Title:	Chief Executive Officer

EX-31.(B)

Exhibit 31(b)

CERTIFICATIONS

I, Cynthia J. Devine, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Tim Hortons Inc.;

2. Based on my knowledge, 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, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. 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-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

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, as of the end of the period covered by this report based on such evaluation; 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, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, 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, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2008

/s/ Cynthia J. Devine
Name:	Cynthia J. Devine
Title:	Chief Financial Officer

EX-32.(A)

Exhibit 32(a)

Certification of CEO Pursuant to

18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002 *

This certification is provided pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and accompanies the quarterly report on Form 10-Q (the “Form 10-Q”) for the quarter ended June 29, 2008 of Tim Hortons Inc. (the “Issuer”).

I, Donald B. Schroeder, the Chief Executive Officer of Issuer certify that, to the best of my knowledge:

(i) 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.S.C. 78m(a) or 78o(d)); and

(ii) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Issuer.

Dated: November 7, 2008

/s/ Donald B. Schroeder

Name: Donald B. Schroeder

* This certification is being furnished as required by Rule 13a-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, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the Company specifically incorporates this certification therein by reference.

EX-32.(B)

Exhibit 32(b)

Certification of CFO Pursuant to

18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002 *

This certification is provided pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and accompanies the quarterly report on Form 10-Q (the “Form 10-Q”) for the quarter ended June 29, 2008 of Tim Hortons Inc. (the “Issuer”).

I, Cynthia J. Devine, the Chief Financial Officer of Issuer certify that, to the best of my knowledge:

(i) 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.S.C. 78m(a) or 78o(d)); and

(ii) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Issuer.

Dated: November 7, 2008

/s/ Cynthia J. Devine

Name: Cynthia J. Devine

* This certification is being furnished as required by Rule 13a-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, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the Company specifically incorporates this certification therein by reference.

EX-99

Exhibit 99

TIM HORTONS INC.

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-looking statements to encourage companies to provide prospective information, 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. Tim Hortons Inc. (the “Company”) desires to take advantage of the “safe harbor” provisions of the Act.

Certain information provided or stated, including statements regarding future financial performance and the expectations and objectives of management, is forward-looking. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “seeks” or words of similar meaning, or future or conditional verbs, such as “will,” “should,” “could” or “may.” The following factors, in addition to other factors set forth in our Form 10-K filed on February 26, 2008 with the U.S. Securities and Exchange Commission (“SEC”) and the Canadian securities regulators, and in other press releases, communications, or filings made with the SEC or the Canadian securities regulators, and other possible factors we have not identified, could affect our actual results and cause such results to differ materially from those anticipated in forward-looking statements.

Competition. The quick-service-restaurant industry is intensely competitive with respect to price, service, location, personnel, qualified franchisees, real estate sites and type and quality of food. The Company and its franchisees compete with international, regional and local organizations, primarily through the quality, variety, and value perception of food products offered. The number and location of units, quality and speed of service, attractiveness of facilities, effectiveness of advertising/marketing and operational programs, price and new product development by the Company and its competitors are also important factors. Certain of the Company’s competitors, most notably in the U.S., have substantially larger marketing budgets.

Economic, Market and Other Conditions. The quick-service-restaurant industry is affected by changes in international, national, regional, and local economic and political conditions, consumer preferences and perceptions (including food safety, health or dietary preferences and perceptions), spending patterns, consumer confidence, demographic trends, seasonality, weather events and other calamities, traffic patterns, the type, number and location of competing restaurants, enhanced governmental regulation (including nutritional and franchise regulations), changes in capital market conditions that affect valuations of restaurant companies in general or the value of the Company’s stock in particular, litigation relating to food quality, handling or nutritional content, and the effects of war or terrorist activities and any governmental responses thereto. Factors such as inflation, higher energy and/or fuel costs, food costs, the cost and/or availability of a qualified workforce and other labour issues, benefit costs, legal claims, legal and regulatory compliance, new or additional sales tax on the Company’s products, disruptions in its supply chain or changes in the price, availability and shipping costs of supplies, and utility and other operating costs, also affect restaurant operations and expenses and impact same-store sales and growth opportunities. The ability of the Company and its franchisees to finance new restaurant development, improvements and additions to existing restaurants, acquire and sell restaurants, and pursue other strategic initiatives (such as acquisitions and joint ventures), are affected by economic conditions, including interest rates and other government policies impacting land and construction costs and the cost and availability of borrowed funds. In addition, 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, would affect its ability to maintain and/or increase sales and build new restaurants.

The Importance of Canadian Segment Performance and Brand Reputation. The Company’s financial performance is highly dependent upon its Canadian operating segment, which accounted for approximately 92% of its consolidated revenues, and all of its profit, in 2007. Any substantial or sustained decline in the Company’s Canadian business would materially and adversely affect its financial performance. The Company’s success is also dependent on its ability to maintain and enhance the value of its brand, its customers’ connection to its brand, and a positive relationship with its franchisees. Brand value can be severely damaged, even by isolated incidents, including those beyond the Company’s control such as actions taken or not taken by its franchisees relating to health or safety, litigation and claims, security breaches or other fraudulent activities associated with its electronic payment systems, and incidents occurring at or affecting its strategic business partners, affiliates, or corporate social responsibility programs.

Factors Affecting Growth. There can be no assurance that the Company will be able to achieve new restaurant growth objectives or same-store sales growth in Canada or the U.S. The Company’s success depends on various factors, including many of the factors set forth in this cautionary statement, as well as sales levels at existing restaurants and factors affecting construction costs generally. In addition, the U.S. markets in which the Company seeks to expand may have competitive conditions (including higher construction, occupancy, or operating costs), consumer tastes, or discretionary spending patterns that may differ from its existing markets, and its brand is largely unknown in many U.S. markets. There can be no assurance that the Company will be able to successfully adapt its brand, development efforts, and restaurants to these differing market conditions. In addition, early in the development of new markets, the opening of new restaurants may have a negative effect on the same-store sales of existing restaurants in the market. In some of the Company’s U.S. markets, the Company has not yet achieved the level of penetration needed in order to drive brand recognition, convenience, increased leverage to marketing dollars, and other benefits the Company believes penetration yields. When the Company franchise locations in certain U.S. markets, this can result in increased franchisee relief and support costs, which lowers its earnings. The Company may also continue to selectively close restaurants in the U.S. that are not achieving acceptable levels of profitability or change its growth strategies over time, where appropriate.

Manufacturing and Distribution Operations. 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; shortages or changes in the cost or availability of qualified workforce and other labour issues; equipment failures; disruptions (including shortages or interruptions) in its supply chain; price fluctuations; climate conditions; inflation; decreased consumer discretionary spending and other changes in general economic and political conditions driving down demand; physical, environmental or technological disruptions in the Company or its suppliers’ manufacturing and/or warehouse facilities or equipment; changes in international commodity markets (especially for coffee, which is highly volatile in price and supply, palm oil and wheat); and, the adoption of additional environmental or health and safety laws and regulations. The Company’s manufacturing and distribution operations in the U.S. are also subject to competition from other qualified distributors, which could reduce the price the Company can charge for supplies sold to U.S. franchisees. Additionally, there can be no assurance that the Company and its joint venture partner will continue with the Maidstone Bakeries joint venture. If the joint venture terminates, it may be necessary, under certain circumstances, for the Company to build its own par-baking facility or find alternate products or production methods.

Government Regulation. The Company and its franchisees are subject to various federal, state, provincial, and local (“governmental”) laws and regulations. The development and operation of restaurants depend to a significant extent on the selection, acquisition, and development of suitable sites, which are subject to laws and regulations regarding zoning, land use, environmental matters (including drive thrus), traffic, franchise, design and other matters. Additional governmental laws and regulations affecting the Company and its franchisees include: business licensing; franchise laws and regulations; health, food preparation, sanitation and safety; labour (including applicable minimum wage requirements, overtime, working and safety conditions, family leave and other employment matters, and citizenship requirements); nutritional disclosure and advertising; tax; employee benefits; accounting; and anti-discrimination. Changes in these laws and regulations, or the implementation of additional regulatory requirements, particularly increases in applicable minimum wages, taxes or franchise requirements, may adversely affect the Company’s financial results.

Foreign Exchange Fluctuations. The Company’s Canadian restaurants are vulnerable to increases in the value of the U.S. dollar as certain commodities, such as coffee, are priced in U.S. dollars in international markets. Conversely, the Company’s U.S. restaurants are impacted when the U.S. dollar falls in value relative to the Canadian dollar, as U.S. operations would be less profitable because of the increase in U.S. operating costs resulting from the purchase of supplies from Canadian sources, and U.S. operations will contribute less to the Company’s consolidated results. Increases in these costs could make it harder to expand into the U.S. and increase relief and support costs to U.S. franchisees, affecting the Company’s earnings. In addition, fluctuations in the values of Canadian and U.S. dollars can affect the value of the Company’s common stock and any dividends the Company pays.

Mergers, Acquisitions and Other Strategic Transactions. The Company intends to evaluate potential mergers, acquisitions, joint venture investments, alliances, vertical integration opportunities and divestitures, which are subject to many of the same risks that also affect new store development. In addition, these transactions involve various other risks, including accurately assessing the value, future growth potential, strengths, weaknesses, contingent and other liabilities and potential profitability of acquisition candidates; the potential loss of key personnel of an acquired business; the Company’s ability to achieve projected economic and operating synergies; difficulties successfully integrating, operating, maintaining and managing newly-acquired operations or employees; difficulties maintaining uniform standards, controls, procedures and policies; the possibility the Company could incur impairment charges if an acquired business performs below expectations; unanticipated changes in business and economic conditions affecting an acquired business; ramp-up costs, whether anticipated or not; and diversion of management’s attention from the demands of the existing business. In addition, there can be no assurance that the Company will be able to complete desirable transactions, for reasons including a failure to secure financing, as a result of limitations of the IRS ruling under Section 355 in connection with the Company’s separation from Wendy’s, or restrictive covenants in debt instruments or other agreements with third parties, including the Maidstone Bakeries joint venture arrangements.

Privacy Protection. If the Company fails to comply with new and/or increasingly demanding laws and regulations regarding the protection of customer, employee and/or business data, or if the Company experiences a significant breach of customer, employee or company data, the Company’s reputation could be damaged and result in lost sales, fines, lawsuits and diversion of management attention. 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, particularly with respect to an external security breach of customer information that the Company, or third parties under arrangement(s) with it, control.

Other Factors. 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; 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); operational or financial shortcomings of franchised restaurants and franchisees; liabilities and losses associated with owning and leasing significant amounts of real estate; failures of or inadequacies in computer systems at restaurants, the distribution facilities, the Company’s manufacturing facilities, the Maidstone Bakeries facility, or at the Company’s office locations, including those that support, secure, track and/or record electronic payment transactions; the transition to an integrated financial system, which could present risks of maintaining and designing internal controls and SOX 404 compliance; litigation matters, including obesity litigation; health and safety risks or conditions of the Company’s restaurants associated with design, construction, site location and development and/or certain equipment utilized in operations; employee claims for employment or labour matters, including wage and hour claims; falsified claims; implementation of new or changes in interpretation of U.S. GAAP policies or practices; and potential unfavorable variance between estimated and actual liabilities and volatility of actuarially-determined losses and loss estimates.

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Except as required by federal or provincial securities laws, the Company undertakes no obligation to publicly release any revisions to the forward-looking statements contained in this release, or to update them to reflect events or circumstances occurring after the date of this release, or to reflect the occurrence of unanticipated events.