8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 8, 2013

TIM HORTONS INC.

(Exact name of registrant as specified in its charter)

Canada	001-32843	98-0641955
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

874 Sinclair Road, Oakville, ON, Canada	L6K 2Y1
(Address of principal executive offices)	(Zip Code)

(905) 845-6511

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(b) On May 8, 2013, Tim Hortons Inc. (the “Corporation”) announced that Mr. Paul D. House will step down from his positions as Chief Executive Officer (“CEO”) and President of the Corporation, effective July 2, 2013. Mr. House will become the non-Executive Chairman of the Corporation’s Board of Directors at the effective time of Mr. Marc Caira’s assumption of the position of CEO and President, as described below. All dollar amounts set forth below are in Canadian dollars.

(c) On May 8, 2013, the Corporation also announced that Mr. Marc Caira, age 59, will serve as President and CEO of the Corporation, effective July 2, 2013, to succeed Mr. House. There is no arrangement or understanding between Mr. Caira and any other person pursuant to which he was selected as an executive officer of the Corporation, and there is no family relationship between Mr. Caira and any of the Corporation’s directors or other executive officers.

Mr. Caira served as the CEO of Nestlé Professional, a division of Nestlé S.A. and the Deputy Executive Vice President of Nestlé S.A. from 2008 until 2012 and the Head of Food Services and Deputy Executive Vice President of Nestlé S.A. from 2006 to 2008. Prior to his most recent positions, Mr. Caira served in the following roles: the President and CEO of Parmalat North America from 2004 to 2006; the President and CEO of Parmalat North America, Dairy, from 2002 to 2003; and Chief Operating Officer of Parmalat Canada from 2000 to 2001. Prior to joining Parmalat, Mr. Caira served with Nestlé Canada and was promoted to positions of progressive responsibility, including as the President of Nestlé Foodservices and Nescafe Beverages. Mr. Caira was also a member of the Executive Board of Nestlé S.A. Mr. Caira has an Honours Degree in Marketing from Seneca College and is a recipient of the IMD High Performance Boards certificate.

A copy of the Corporation’s press release announcing the transition of the President and CEO position from Mr. House to Mr. Caira was furnished to the Securities and Exchange Commission (the “SEC”) on Form 8-K on May 8, 2013 and is incorporated herein by reference.

The terms of Mr. Caira’s employment with the Corporation are set forth in an employment offer letter (“Offer Letter”), attached hereto as Exhibit 10.1 and which is incorporated by reference herein. The following summary of the Offer Letter does not purport to be complete and is subject to and qualified in its entirety by reference to the attached Offer Letter.

The material compensatory terms of Mr. Caira’s employment, as set forth in the Offer Letter, are as follows:

Base Salary and Short-Term Incentive Compensation

For fiscal 2013, both of the following amounts will be prorated for the period of time during fiscal 2013 that Mr. Caira serves as President and CEO.

• Base Salary: Mr. Caira’s base salary will be $910,000 annually, payable in accordance with the Corporation’s practices and procedures.

• Target Annual Incentive Award Opportunity under the Executive Annual Performance Plan (“EAPP”): Mr. Caira will be eligible to participate in the EAPP with a target amount equal to $1,000,000. Mr. Caira’s performance will be measured by a mix of the Corporation’s corporate earnings before interest and taxes (“EBIT”) (as to 70%), the Canadian Business Unit EBIT (as to 15%) and the U.S. Business Unit EBIT (as to 15%).

Long-Term Incentives under the Corporation’s 2012 Stock Incentive Plan (“2012 SIP”)

Mr. Caira will be granted the following long-term incentive compensation for fiscal 2013:

• Restricted Share Units (“RSUs”): RSUs representing a compensation value of $1,000,000, to be granted in August 2013, that will cliff vest in November 2015.

• Stock Options with tandem Stock Appreciation Rights (“SARs”): Stock options with tandem SARs representing a compensation value of $1,000,000 to be granted in August 2013, that will vest ratably over a three year period beginning in May 2014. These Options/SARs will have a seven year term.

• Welcome (Sign On) Grant: RSUs or stock options with tandem SARs, at Mr. Caira’s election, representing a compensation value of $500,000 to be granted in August 2013. If no election is made by Mr. Caira, the grant will be awarded as $250,000 of RSUs and $250,000 of stock options with tandem SARs. These awards will carry the same vesting parameters as the awards described above, respectively.

The weighting and design of awards granted to Mr. Caira pursuant to the EAPP and the 2012 SIP remain subject to change at the Board’s discretion.

Benefits and Perquisites

Mr. Caira will be eligible for substantially the same retirement and other benefits as the Corporation makes available to its other named executive officers. In 2013, Mr. Caira will also receive relocation assistance in an amount up to $50,000, and financial and tax counseling assistance in an amount up to $15,000.

If Mr. Caira’s employment with the Corporation terminates for a reason other than termination with cause, that termination will be considered a “Retirement” under each of the Corporation’s compensation, benefit and pension plans, on the condition that he has been continuously employed by the Corporation for a minimum of three years prior to such termination.

The Corporation also entered into an Employment and Post-Employment Covenants Agreement (the “Covenants Agreement”) with Mr. Caira, to be effective as of July 2, 2013, pursuant to which he has agreed to comply with certain covenants for the benefit of the Corporation, relating to non-disclosure, confidentiality, non-competition, non-solicitation, non-interference, non-disparagement and others. A copy of the Covenants Agreement is attached hereto as Exhibit 10.2 and is incorporated herein by reference.

In addition, the Corporation entered into a Change in Control Agreement with Mr. Caira, to be effective as of July 2, 2013. The Change in Control Agreement has the following provisions: (i) a “double trigger” provision, requiring both a change in control and termination of employment before any benefits are paid; (ii) severance equal to two times total cash compensation; and (iii) employment protection for no more than two years following a change in control. A copy of the Change in Control Agreement is attached hereto as Exhibit 10.3 and is incorporated herein by reference.

The Corporation also entered into a form of Indemnification Agreement with Mr. Caira, substantially in the form entered into with other executive officers of the Corporation and as previously filed with the SEC. The Corporation filed the form of the Indemnification Agreement on Form 8-K with the SEC on September 28, 2009.

(d) Mr. Caira was also elected a director of the Corporation on May 9, 2013 at the Corporation’s annual meeting of shareholders in substitution for Mr. Ronald A. Osborne, who passed away unexpectedly on April 9, 2013. Mr. Caira will serve as a director for a term expiring at the Corporation’s next annual meeting of shareholders. As described above, Mr. Caira has extensive knowledge and experience of the North American and global foodservices industry. Mr. Caira will not receive any compensation for his service as a director.

(e) On May 8, 2013, the Board determined that Mr. House will receive a retainer equal to $150,000 in cash for the six-month period beginning July 2, 2013, payable in accordance with the Corporation’s policies regarding payments to members of the Board, for Mr. House’s services as Chairman.

For the transition services that Mr. House will provide to the Corporation for an initial period through the end of the 2013 fiscal year, Mr. House will receive compensation equal to $236,000. All such compensation will be payable in accordance with the Corporation’s policies regarding payments to members of the Board. This total amount ($386,000) equates to the amount of Mr. House’s prior base salary over the six-month period, which the Board approved in February 2013 to apply for so long as Mr. House serves as CEO plus any transition period.

Mr. House will also continue to be eligible to receive short- and long-term incentive awards that were previously approved by the Board in February 2013, to apply for the period during 2013 for which Mr. House serves as CEO and during the transition period. This will result in Mr. House receiving the 2013 awards under both the short- and long-term incentive programs for full-year 2013, subject to the achievement of previously-approved performance objectives. He will also be entitled to a cash payment equivalent in value to the amount of contribution to the Corporation’s Executive Retirement Savings Plan to which he would have been entitled if he were a participant in the plan during the 2013 fiscal year, consistent with payments under this program to Mr. House in prior years.

In addition to the foregoing, Mr. House will be entitled to certain health and dental benefits until June 1, 2015 and to retain the use of his company car in accordance with the Corporation’s policies until December 31, 2013.

Effective as of July 2, 2013, the obligations under Mr. House’s Post-Employment Covenants Agreement dated February 24, 2010, as amended, that are triggered upon the cessation of Mr. House’s employment with the Corporation will become effective; and, his Employment (Change in Control) Agreement dated September 28, 2009, as amended, will terminate.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit 10.1	Employment Offer Letter by and between the Corporation and Marc Caira
Exhibit 10.2	Employment and Post-Employment Covenants Agreement by and between the Corporation and Marc Caira
Exhibit 10.3	Change in Control Agreement by and between the Corporation and Marc Caira
Exhibit 99	Safe Harbor Statement

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 hereunto duly authorized.

	TIM HORTONS INC.
Date: May 14, 2013	By:	/s/ JILL E. AEBKER
		Jill E. Aebker
		Executive Vice President, General Counsel and Secretary

EX-10.1

Exhibit 10.1

Marc Caira

Hand-Delivered

Dear Mr. Caira:

Re: Offer of Employment as President and Chief Executive Officer

We are pleased to offer you a permanent, full-time position with Tim Hortons Inc. (the “Company” or “THI”) as President and Chief Executive Officer, reporting to our Board of Directors.

Scope of Employment

As President and Chief Executive Officer, you shall undertake those duties, responsibilities and reporting requirements which are ordinarily expected of a President and Chief Executive Officer of a publicly-listed company, as well as other services as are required from time to time by the Board. You shall perform these services principally from the Head Office of the Company in Oakville, Ontario, although you acknowledge that the performance of these duties and functions may necessitate travel to other places throughout Canada, the United States and Internationally.

As President and Chief Executive Officer, you will have responsibility for managing the overall operations of the Company and its affiliates, subject to the oversight of the Board. It is also anticipated that you will serve as a member of the Board of Directors concurrently with your service as President and Chief Executive Officer. Throughout the term of your employment, you agree to carry out the performance of your duties in compliance with the governing documents of the Company, including all rules, policies and practices now or hereafter established and amended from time to time by the Company.

Employment Conditions

This offer is conditional upon satisfaction of each of the following conditions:

• Approval by the Board of Directors of the Company of your appointment as President and Chief Executive Officer, and your compensation;

• Execution of this Offer Letter and the attached Employment and Post-Employment Covenants Agreement (the “Covenants Agreement”) in forms satisfactory to the Company; and

• Commencement of the provision of full-time employment services to the Company, in accordance with the terms of this Offer Letter and the Covenants Agreement, on or prior to July 2, 2013.

Subject to the satisfaction of the foregoing conditions, your employment with the Company will commence on July 2, 2013, and will be subject to the terms and conditions set forth in the table below. As a result of the Company’s recent reorganization and certain other factors, the Company’s compensation and benefits policies and programs are currently being reviewed and may be substantially amended or revised. Accordingly, the compensation set forth below, including your entitlement to short- and long-term incentives and benefits, apply solely with respect to the 2013 fiscal year, and may be amended, revised and/or cancelled beginning in the 2014 fiscal year. We currently expect that any amendments or revisions to our policies and programs may change the type of compensation offered, but we do not expect them to result in a decrease in the quantum of your overall compensation.

All dollar amounts in this Offer Letter are in Canadian funds. In addition, we have separately provided to you information on the Company’s Group Benefit package and pension plan. The signature below indicates that you have reviewed and read these materials.

Provision	Employment Terms	Commentary
Position	•   President & Chief Executive Officer	•   Reports to the Board of Directors of the Company.
Effective Date	•   No later than July 2, 2013
Term of Agreement	•   Open-ended employment	•   No fixed term.
Base Salary	•   $910,000	•   Prorated to the portion of the fiscal year that you are employed by the Company. •   Base Salary shall be payable in accordance with Company practices and procedures, as they may exist from time to time. •   Base Salary will be reviewed by the Board on an annual basis, and any future adjustments in Base Salary (if any) will be at the sole discretion of the Board.
Target Annual Incentive (EAPP)	•   $1,000,000 at target for 2013 (prorated to start date)	•   Awards under the EAPP are entirely discretionary on the part of the Company, and there is no guarantee of an award in any particular year.

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Provision	Employment Terms	Commentary
		•   Participation in the EAPP shall be subject to the Company’s practices and procedures as they may exist from time to time including, without limitation, the attainment of performance objectives and other grant conditions. •   2013 award shall be prorated to the portion of the fiscal year that you are employed by the Company. •   For the 2013 target, performance objectives shall be a mix of THI corporate EBIT (70%), Canada BU EBIT (15%) and U.S. BU EBIT (15%). •   Weighting and design subject to change at Board’s discretion.
Target Total Cash Compensation	•   $1,910,000 (prorated to start date)	•   Actual compensation may vary depending upon the Company’s performance against EAPP goals.
Restricted Share Units (P+RSUs)	•   $1,000,000 at target •   Full 2013 grant in August at same vesting schedule as annual May 2013 grant.	•   Grant of awards under the Stock Incentive Plan is entirely discretionary on the part of the Company, and there is no guarantee of an award or grant in any particular year. •   Participation in the Stock Incentive Plan shall be subject to the Company’s practices and procedures as they may exist from time to time including the attainment of performance objectives and other grant conditions. •   P+RSU grant size varies based on previous year’s EBIT performance. •   Cliff vest in November 2015. •   Weighting and design subject to change at Board’s discretion.

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Provision	Employment Terms	Commentary
Stock Options/SARs	•   $1,000,000 •   Full 2013 grant in August at same vesting schedule as annual May 2013 grant	•   Grant of awards under the Stock Incentive Plan is entirely discretionary on the part of the Company, and there is no guarantee of an award or grant in any particular year. •   Participation in the Stock Incentive Plan shall be subject to the Company’s practices and procedures as they may exist from time to time including the attainment of performance objectives and other grant conditions. •   Options/SARs vest annually over 3 years with a 7-year term. •   Weighting and design subject to change at Board’s discretion.
Welcome (Sign-On) Grant	•   Welcome Grant of $500,000 of RSUs or Options/SARs, at your election; if no preference, then split 50/50: $250,000 of Options/SARs and $250,000 of RSUs •   Grant to be made in August 2013	•   To be granted during the first trading window after employment commences. •   RSUs would cliff after 3 years. •   Options/SARs would vest annually over 3 years with a 7-year term.
Target Total Direct Compensation	•   $4,410,000	•   Realized value may vary from target, based on performance.
Company Car	•   Approximately $20,000 per annum	•   Lease, gas, maintenance.
Financial/Tax Counseling	•   One-time allowance of $15,000
Executive medical	•   Approximately $2,000 per annum	•   Medcan Assessment.
Pension	•   Eligible to participate in existing THI executive pension plan arrangements (defined contribution and savings plan)	•   The defined contribution plan includes compulsory employee participation and employer contributions at levels determined by the Company. •   The Company regularly reviews these plans, and accordingly, reserves the right to, at any time, amend or terminate these plans.

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Provision	Employment Terms	Commentary
Life Insurance/Other Benefits	•   Eligible to participate in the Company’s benefit plans, including medical, dental, vision, life and long-term disability insurance, which are offered to other employees of the Company at the executive officer level.	•   The Company regularly reviews the benefit plans, as well as its insurance carriers, and accordingly, reserves the right to amend or discontinue the benefit plans and change its insurance carriers where deemed appropriate.
Vacation	•   Entitled to 5 weeks’ vacation
Relocation	•   Maximum of $50,000
Change of Control	•   Change of control provisions as appropriate within existing plan documentation, plus benefits under a Change in Control Agreement	•   Double trigger Change in Control Agreement. •   Severance, as a result of termination following a change in control, is set forth in the Change in Control Agreement (two times total cash)
Restrictive Covenants	•   Confidentiality agreement •   Non-compete clause – 1 year from notice of termination •   Non-solicitation clause – 2 years from notice of termination •   Other covenants as set forth in the Covenants Agreement
Policies	•   Acknowledgement to comply with applicable Company plans and programs	•   Recoupment policy •   Share ownership guidelines (5x base salary) •   Insider trading policy •   Standards of Business Practices •   Governance Guidelines •   All other policies, as applicable to directors and employees

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Notwithstanding anything that may be construed to the contrary in the Company’s compensation, benefit and pension plans, programs and policies (collectively, the “Plans”), if your employment with the Company terminates for a reason other than a termination with cause, that termination of employment shall be considered a “Retirement” under each of the Plans, on the condition that you have been continuously employed by the Company, on a full-time basis, for a minimum period of three years prior to such termination.

Corporate Plans and Policies

By signing this Offer Letter, you acknowledge and agree that:

(a) the Company has provided you with copies of all of the Company’s policies and programs relevant to your employment, including but not limited to those described in the Company’s management information circular dated March 12, 2013 in the sections entitled “Corporate Governance Principles and Practices”, “Compensation Discussion and Analysis” and “Executive and Director Compensation” (collectively, the “Company Policies”);

(b) you have read and understood the Company Policies, and agree that your employment, as well as your entitlement to compensation, benefits and incentives, will be governed by the Company Policies;

(c) the Company may, from time to time, amend, alter, change or delete policies and programs including, without limitation, the Company Policies, to meet the business needs of the enterprise and that, upon receiving notice of such policies or programs (or any amendments, alternations, changes or deletions thereof), your employment, as well as your entitlement to compensation, benefits and incentives, will be governed by such revised policies and programs; and

(d) as noted above, as a result of the Company’s recent reorganization and certain other factors, the Company’s policies and programs including, without limitation, the Company Policies, are currently being reviewed and may be substantially amended or revised in the short- to long-term. Accordingly, your compensation including your entitlement to short- and long-term incentives and benefits, as set forth in this Offer Letter, apply solely to the 2013 fiscal year, and may be amended or revised beginning in the 2014 fiscal year.

In addition, by signing this Offer Letter, you acknowledge and agree that:

(a) as an officer of the Company, you will be held to equity ownership guidelines equal to five times your base salary, from time to time (i.e., at your initial annual base salary, this would be $4,550,000), and you have until the end of 2017 to satisfy the guidelines;

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(b) the Company’s Recoupment Policy Relating to Performance-Based Compensation is binding on you as a “Senior Executive” under such policy, and that all performance-based compensation awarded to you in accordance with the terms and conditions of this Offer Letter or otherwise under any incentive, bonus or other plan of the Company or its affiliates are subject to the Recoupment Policy.

Eligibility to Perform Services

By signing this Offer Letter, you represent, warrant and covenant that:

(a) you are legally eligible to work in Canada and will continue to be legally eligible to work in Canada;

(b) you are not bound by any agreement or subject to any legal obligations to any third party, including but not limited to any person with whom the Company may be in competition, that would prohibit you from negotiating or accepting employment with the Company or would otherwise conflict with any of your obligations to the Company under this Offer Letter or the Covenants Agreement including but not limited to any confidentiality, non-competition, non-solicitation or non-interference agreement with respect to any third party; and

(c) the information provided by you, both verbally and on any resume, application form or questionnaire is complete and accurate in every respect.

You acknowledge that the Company has relied upon the representations outlined above, and you agree to indemnify and hold the Company, its directors, officers, employees, agents and/or consultants harmless against any and all claims, liabilities, losses, damages, costs, fees and/or expenses including reasonable legal fees incurred by the Company, its directors, officers, employees, agents and/or consultants by reason of your violation of any of the representations set forth above.

Privacy Consent

By accepting employment with the Company, you hereby consent to the Company and any affiliate collecting, using and disclosing your personal information to establish, manage, terminate and/or otherwise to administer the employment relationship, including, but not limited to:

(a) ensuring that you are properly remunerated for your services to the Company which may include disclosure to third party payroll providers;

(b) administering and/or facilitating the provision of any benefits to which you are or may become entitled, including benefits coverage, registered retirement savings plan and incentive plans; this shall include the disclosure of your personal information to the Company’s third party service providers and administrators;

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(c) ensuring that the Company is able to comply with any regulatory, reporting and withholding requirements relating to your employment;

(d) performance and promotion;

(e) monitoring your access to and use of the Company’s electronic media services in order to ensure that the use of such services is in compliance with the Company’s policies and procedures and is not in violation of any applicable laws;

(f) complying with the Company’s obligations to report improper or illegal conduct by any director, officer, executive or agent of the Company under any applicable securities, criminal or other law;

(g) acquiring, selling or transferring any or all of the Company’s business; and

(h) complying with all applicable laws relating to public disclosure or otherwise.

You also agree to the terms of the enclosed Covenants Agreement which forms part of this offer of employment, and which expands upon several of the terms and conditions of employment set forth herein. You also agree to the terms of the enclosed Change in Control Agreement, which forms part of this offer of employment. Congratulations on joining the Company. We are confident you will find your new position both challenging and rewarding.

Tim Hortons Inc.
Per:	/S/ PAUL D. HOUSE
	Paul D. House
	Executive Chairman and CEO

The undersigned hereby accepts the above offer of employment upon the terms and conditions set out therein. The undersigned acknowledges that he was given the opportunity to obtain independent legal advice prior to accepting the said offer of employment. The parties hereto shall be entitled to rely on delivery of a facsimile/electronically scanned copy of this executed document and such copy shall be legally effective to create a valid and binding agreement.

	/S/ MARC CAIRA
Signature	Marc Caira

Dated May 7, 2013, to be effective as of the issuance of the press release regarding the CEO appointment.

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EX-10.2

Exhibit 10.2

EMPLOYMENT AND POST-EMPLOYMENT COVENANTS AGREEMENT

THIS AGREEMENT (“Agreement”) made effective as of July 2, 2013 (the “Effective Date”),

BETWEEN:

TIM HORTONS INC.,

a corporation governed by the Canada Business Corporations Act

(hereinafter referred to as the “Corporation”),

- and -

MARC CAIRA (hereinafter referred to as the “Executive”),

of the City of Toronto, in the Province of Ontario.

WHEREAS the Executive has been appointed the President and Chief Executive Officer of the Corporation, effective as of July 2, 2013;

AND WHEREAS the parties wish to set forth terms and conditions upon which the Corporation will employ the Executive after the Effective Date hereof;

NOW THEREFORE, in consideration of the premises and the covenants and agreements contained herein, and for other good and valuable consideration, including the consideration described in Section 3.1 hereof (the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto), the parties hereby agree that the foregoing recitals are incorporated herein by reference and as follows:

ARTICLE 1

INTERPRETATION

1.1 Defined Terms

For the purposes of this Agreement, the following terms shall have the respective meanings set out below and grammatical variations of such terms shall have corresponding meanings:

“Affiliate” means any person under control of the Corporation; any person that controls the Corporation; any person under control of the Corporation jointly (or severally) with any other person; and, any person under common control with the Corporation under the control of another person; in each foregoing case, “control” shall mean the power to direct the voting, management, and/or material determinations of such person, whether by ownership interest, management agreement, voting agreement, or any other means by which control of the person (by commercial standards) is exercised;

“Change in Control” shall have the meaning attributed to such concept under the then-current equity compensation plan in place for Tim Hortons Inc. in which the Executive participates on the Date of Termination (e.g., as of the Effective Date, the definition of Change in Control under the 2012 Tim Hortons Inc. Stock Incentive Plan would apply); or, if applicable, the definition of “Change in Control” under a change in control (employment) agreement to which the Executive is a party with the Corporation (the “Change in Control Agreement”), shall control over any conflicting definition in the 2012 Tim Hortons Inc. Stock Incentive Plan or any amendment, restatement or successor thereof;

“Confidential Information” has the meaning set out in Section 2.1;

“Date of Termination” means the effective date of any notice of termination of the Executive’s employment with the Corporation for any reason whatsoever, whether voluntary or involuntary and whether with or without cause or good reason, and whether or not associated with a Change in Control;

“Non-Disclosure Period” has the meaning set out in Section 2.1;

“Offer Letter” means the Letter dated May 7, 2013 between the Corporation and the Executive;

“person” includes, without limitation, an individual, corporation, partnership, joint venture, association, trust, firm, unincorporated organization or other legal or business entity;

“Prescribed Competitor” means the list of competitors set forth on Exhibit A, attached hereto and incorporated herein by reference, as may be updated from time-to-time hereafter upon the agreement of both the Corporation and the Executive;

“Prohibited Activities” means to directly or indirectly operate, manage, control, participate in, carry on, be employed by, be engaged in, perform services in respect of, be concerned with, advise or consult with, be a director of, be financially interested in, financially assist, or permit one’s name to be used in connection with, a Prescribed Competitor, except as otherwise expressly permitted herein;

“Prohibited Area” means any province, territory or state in Canada or the United States and any other country in which the Corporation or any of its Affiliates conducts business, or to the knowledge of the Executive is reasonably likely to conduct business during the Executive’s employment with the Corporation and for the one-year period thereafter, except for any Prohibited Areas that may be limited in scope with respect to certain Prescribed Competitors, if applicable, as may be set forth on Exhibit A;

- 2 -

“Restricted Period” means, for the covenants set forth in Sections 2.4, 2.5 and 2.6, the period beginning on the Date of Termination and ending on the second anniversary of the Date of Termination; for the covenants set forth in Section 2.2, the period beginning on the Date of Termination and ending on the first anniversary of the Date of Termination; and, for the covenants set forth in Sections 2.1, 2.3, 2.7 and 2.8, during the period of the Executive’s employment extending through the Date of Termination and for an unlimited/indefinite time thereafter. Each of the foregoing Restricted Periods shall be extended by any time during which the Executive is in breach of any applicable covenant in Article 2, as provided in Section 2.9;

ARTICLE 2

EXECUTIVE’S COVENANTS

2.1 Non-Disclosure; Confidentiality

The Executive acknowledges and agrees that:

(a) in the course of performing his duties and responsibilities for the Corporation or any Affiliate, he will have access to, and will be entrusted with, detailed confidential information and trade secrets concerning past, present, future and contemplated plans; products; new product introduction programs, plans, or strategies; services; operations processes or results; technology; intellectual property; financial (including sales) and budgetary information; methodologies, operational procedures and manuals; site development plans or new store development strategies and number of new stores under consideration; models, engineering, architectural plans and designs; analyses; compilations; forecasts; studies and other records relating to the business; know-how; accounting methods and procedures; negotiations; contracts; designs; customers; franchisees; computer records and test data; building and site plans; strategic plans and initiatives; recipes (including but not limited to the coffee blend, roasting time, and other input factors for coffee products) and proprietary business processes and procedures of the Corporation or its Affiliates, whether in written, printed, pictorial, diagrammatic, electronic or any other form or medium, including, without limitation, information relating to names, addresses, contact persons, preferences, needs and requirements of past, present and prospective clients, customers, franchisees, suppliers, goods and service providers, and employees of the Corporation and its Affiliates (collectively, “Confidential Information”), the disclosure of any of which to competitors of the Corporation or of any of its Affiliates, to the general public, or the use of any of which by the Executive (outside of his duties and responsibilities to the Corporation), or by any competitor of the Corporation or of any of its Affiliates, would be highly detrimental to the interests of the Corporation and its Affiliates;

(b) the right to maintain the confidentiality of the Confidential Information, the right to preserve the goodwill of the Corporation and its Affiliates, and the right to the benefit of the contacts and connections developed by the Executive with clients, customers, suppliers, goods and service providers, franchisees and others, and any relationships that will be developed between the Executive and the customers,

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clients, suppliers, goods and service providers and franchisees of the Corporation and its Affiliates by virtue of the Executive’s employment with the Corporation or an Affiliate, constitute proprietary rights of the Corporation and/or its Affiliates, which the Corporation and its Affiliates are entitled to protect; and

(c) while employed by the Corporation and at all times thereafter, the Executive will not, without the prior written consent of the Corporation, install, copy or receive any Confidential Information into his own or any other computer or computer system not owned and controlled by the Corporation. Where an Executive has received permission from the Corporation to so install, copy or receive Confidential Information, the Executive shall be solely responsible to the Corporation for the security of such Confidential Information and shall follow any and all directions given by the Corporation regarding same.

In accordance with the matters acknowledged and agreed to by the Executive above, the Executive hereby covenants and agrees with the Corporation that he will not, except with the specific prior written consent of the Chairman of the Board or, if the Chairman of the Board is the Executive, the Lead Director of the Board, either during the term of his employment or at any time thereafter for an unlimited period (the “Non-Disclosure Period”), directly or indirectly, disclose to any person or in any way make use of (other than for the benefit of the Corporation or its Affiliates), in any manner, any of the Confidential Information; provided, however, that such Confidential Information shall be deemed not to include information which is or becomes generally available to the public other than as a result of disclosure by the Executive.

2.2 Non-Competition

The Executive further acknowledges and agrees that:

(a) the Executive will acquire skills and experience, and gain special knowledge, during the course of his employment with the Corporation or an Affiliate, which, if utilized by the Executive in the performance of Prohibited Activities, would be extremely harmful to the Corporation’s or an Affiliate’s competitive positioning and, further, there would be a high probability of inevitable disclosure of Confidential Information, notwithstanding any intention that may exist on the part of the Executive to abide by the provisions of Section 2.1; and

(b) the provisions of Sections 2.1, 2.3, 2.4, 2.5, 2.6, 2.7 and 2.8 are insufficient to protect the Corporation’s and its Affiliates’ proprietary interest in the Confidential Information in the event that the Executive engages in Prohibited Activities.

In accordance with the matters acknowledged and agreed to by the Executive above and in consideration of the payments and other benefits to be received by the Executive in connection with his employment as President and Chief Executive Officer, the Executive hereby agrees that he shall not (without the prior written consent of the Corporation), during the Restricted Period, within the Prohibited Area whether on his own account or in conjunction with or on behalf of any other person, and whether as an employee, director, officer, shareholder, partner, principal, agent, franchisee, consultant or in any other capacity whatsoever, engage in Prohibited

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Activities; provided, however, that the Executive may accept employment with a Prescribed Competitor that is a diversified company, so long as such employment pertains solely to that part of the Prescribed Competitor’s business which is not in competition with any business of the Corporation or one of its Affiliates.

The provisions of this Section 2.2 shall apply only in respect of those aspects of the business of the Corporation or one of its Affiliates (i) with or for which the Executive had oversight responsibility, contributed to strategic plans, or otherwise had special knowledge or other significant interaction or interface while employed by the Corporation or one of its Affiliates, or (ii) in respect of which the Executive had access to any Confidential Information belonging to the Corporation or any of its Affiliates during the term of his employment.

Notwithstanding the foregoing restrictions, the Executive may acquire securities (i) of a class or series that is traded on any stock exchange or over the counter if such securities represent not more than 2% of the issued and outstanding securities of such class or series, (ii) of a mutual fund or other investment entity that invests in a portfolio the selection and management of which is not within the control of the investor, or (iii) held in a fully managed account where the Executive does not direct or influence in any manner the selection of any investment in such securities.

2.3 Fiduciary

Notwithstanding any other provisions of this Agreement, the Executive acknowledges and agrees that:

(a) the Executive is a fiduciary of the Corporation and its Affiliates and is bound by fiduciary duties to the Corporation and its Affiliates, including to act in the best interests of the Corporation and its Affiliates, and all other such duties as arise at law and, as such, and not by way of limitation of the foregoing, he will not take any action as a result of which relations between the Corporation or its Affiliate(s) and their consultants, franchisees, investors, customers, clients, suppliers, distributors, employees or others may be impaired or which might otherwise be detrimental to the business interests or reputation of the Corporation or its Affiliates;

(b) he will not take advantage of, derive a benefit or otherwise profit from any business opportunities that the Executive became aware of in the course of employment with the Corporation even if the Corporation does not take advantage of or exploit such opportunities; and

(c) the fiduciary duties owing by the Executive to the Corporation and its Affiliates shall survive termination of his employment, howsoever occurring.

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2.4 Non-Solicitation of Franchisees and other Business Associates

The Executive hereby agrees that he shall not during the Restricted Period, whether on his own behalf or in conjunction with or on behalf of any other person, directly or indirectly, solicit, or assist in soliciting, offer, or entice, consult, provide advice to, or otherwise be involved with:

Solicitation of Franchisees Regarding Competitive Activities

(a) a franchisee of (or operator under an operating/license agreement with) the Corporation or one of its Affiliates as of the Date of Termination to: (a) engage in any act or activity that (whether independently or jointly with other persons) would be a breach of the franchise or operating/license agreement in place with the Corporation or one of its Affiliates if undertaken by the franchisee/operator during the term of the franchise or operating/license agreement; or (b) during the entire term of the franchise or operating/license agreement, become a franchisee, operator or licensee, or business partner of, or otherwise be associated in a business venture or arrangement, after the expiration or termination (for any reason) of the franchisee/operator/licensee’s agreement with the Corporation or one of its Affiliates, that (A) offers, purchases, sells, manufactures, processes or promotes any products or services that are the same or substantially similar to, the principal products and/or services offered by the Corporation or one of its Affiliates as of the Date of Termination or that the Executive knows or should reasonably know, as of the Date of Termination, are expected to be principal products or services offered or provided by the Corporation or one of its Affiliates during the Restricted Period (collectively, the “competitive products and/or services”); or (B) would result in a breach of the franchise, license or operating agreement if undertaken while such agreement were still in effect.

A “principal product” or “principal service” means any product or service comprising greater than 2% of average gross sales for U.S., Canadian, or International restaurants, considered respectively.

Solicitation of Business Contacts re: Competitive Activities

(b) any joint venture, affiliate, business partner, or other person, entity or association who has an agreement with the Corporation or one of its Affiliates as of the Date of Termination to: (A) offer, purchase, sell, manufacture, process or promote, directly or indirectly, any competitive products and/or services; or (B) enter into a joint venture, strategic alliance, or other business venture or arrangement including, but not limited to, new restaurant development activities (all of the foregoing, a “venture”), that would result, directly or indirectly, in such venture offering, purchasing, selling, manufacturing, processing or promoting, directly or indirectly, any competitive products and/or services.

General Solicitation Activities

(c) a franchisee of (or operator under an operating/license agreement with) the Corporation or one of its Affiliates to engage in any act or activity, whether individually or collectively with other franchisees, operators, or persons, that is adverse or contrary to the direct or indirect interests of the Corporation or its Affiliates’ business, financial or general relationship with such franchisees and/or operators.

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(d) the organization or facilitation of, or provision of management services to, an association or organization of franchisees (or operators under operating/license agreements) with respect to the business or any other relationship that such franchisees (or operators under operating/license agreement) have with the Corporation or one of its Affiliates.

For greater clarity, such prohibited activities include but are not limited to the organization or facilitation of, or provision of management services to, an association or organization of franchisees (or operators under operating/license agreements) with respect to the business or any other relationship that such franchisees (or operators under operating/license agreements) have with the Corporation or one or more of its Affiliates, including but not limited to any such organization or association that would act as an additional layer of required negotiations between the Corporation and/or one or more of its Affiliates and its (or their) franchisees (or operators under operating/license agreements).

2.5 Non-Solicitation of Employees

The Executive hereby agrees that he will not, during the Restricted Period, either on his own behalf or in conjunction with or on behalf of any other person, directly or indirectly, except with the prior written consent of the Corporation, induce, solicit, entice or procure, any person who is employed by, or is under contract as a permanent, full-time agent of, the Corporation and/or any of its Affiliates, to leave such employment if:

(a) the Executive had personal contact, involvement, or dealings with such employee or agent in performing his duties;

(b) the employee or agent reported to the Executive;

(c) the Executive gained knowledge of the quality of work performance or abilities of the employee or agent during his tenure with the Corporation or one or more of the Corporation’s Affiliates; or

(d) the employee or agent has participated in strategic business plans, projects, or activities for the Corporation or one or more of the Corporation’s Affiliates that would be detrimental to the Corporation’s interest (or the interest of one or more of the Corporation’s Affiliates) if disclosed to a competitor of the Corporation (or one or more of the Corporation’s Affiliates).

Without limiting the foregoing, the Executive will not, directly or indirectly, release names of any “salaried” employees of the Corporation or its Affiliates to recruiters, headhunters or employment agencies.

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2.6 Non-interference with Suppliers

The Executive hereby agrees that he will not, during the Restricted Period, either on his own behalf or in conjunction with or on behalf of any other person, directly or indirectly, interfere, seek to interfere, induce and/or incite another person to interfere, or take steps to interfere with the continuance of supplies (or the terms relating to such supplies) from any suppliers who have been supplying products, materials or services to the Corporation or any of its Affiliates, franchisees, joint ventures, or other person with whom the Corporation or any of its Affiliates have engaged in a business relationship at any time during the term of the Executive’s employment.

2.7 Non-Disparagement

During the Restricted Period and thereafter, the Executive agrees not to make, publish or provide, or encourage or induce others to make, publish or provide, any statements, comments, or remarks, whether oral, in writing or electronically transmitted, that are, or would reasonably be considered to be disparaging, derogatory or defamatory, or that criticize, malign, harm, prejudice, result in loss or injury to, ridicule, disparage or which are otherwise derogatory of, the Corporation (including, but not limited to, any processes or policies thereof) or any of its Affiliates, agents, executives, employees, officers, directors, shareholders or restaurant owners. The Executive further will not take, or encourage or induce others to take, any action or authorize any pattern of conduct which could reasonably be expected to adversely affect the personal or professional reputation of the Corporation or any of its Affiliates, agents, executives, employees, officers, directors, shareholders or restaurant owners. For greater certainty, the restrictions contained in this Section 2.7 shall apply, without limitation, to any statements, comments or remarks made to the press or media, in interviews, in public communications, at speaking engagements and at meetings of shareholders of the Corporation. Nothing in this Section 2.7 shall be construed as an implied waiver of the other terms of this Agreement that limit the Executive’s ability to make any such statements or remarks.

2.8 Quiet Period

The Executive agrees that, without in any way limiting or modifying the covenants and other obligations set forth in this Agreement, during the Restricted Period and thereafter, he will not make any public statements to the press or media regarding the Corporation or its Affiliates, agents, executives, employees, officers, directors, restaurant owners or products; his employment with the Corporation and/or its Affiliates; or the termination and resignation of his positions with the Corporation; all of the foregoing without the prior written approval of the Corporation. For the avoidance of doubt, during the Restricted Period and thereafter, the Executive shall not grant interviews, make public communications, take speaking opportunities, publish or provide any information or materials regarding the Corporation or its Affiliates, agents, executives, employees, officers, directors, restaurant owners or products in any way either on his own initiative or in response to any inquiry from the press, public media or other similar third parties, without the prior written approval of the Corporation as to the nature of the communication and the express substance of the communication to be made.

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2.9 Suspension of Time Periods During Breach

If the Executive is in breach of any of the terms of this Article 2, the running of the Non-Disclosure Period or respective Restricted Period, as applicable, shall be stayed and shall recommence upon the date the Executive ceases to be in breach thereof, whether voluntarily or by injunction, with the time period not reduced by the duration of the “stay.”

2.10 Disclosure

During the Non-Disclosure Period and the Restricted Period, the Executive shall inform, and consents to the Corporation in its sole discretion informing, any prospective employer or actual employer of the existence of this Agreement and the obligations which it imposes upon the Executive under all sections of this Article 2.

2.11 Return of Materials

All files, forms, brochures, books, materials, written correspondence, memoranda, documents, manuals, computer disks, software products and lists (including financial and other information and lists of customers, suppliers, products and prices) pertaining to the Corporation or to any of its Affiliates which may come into the possession or control of the Executive (whether furnished by the Corporation, an Affiliate, or any customer, franchisee, investor, supplier, distributor, employee or consultant), shall at all times remain the property of the Corporation or such Affiliate, as the case may be. Upon termination of the Executive’s employment for any reason, the Executive agrees to immediately return all such property of the Corporation or of any of its Affiliates in the possession of the Executive or directly or indirectly under the control of the Executive. The Executive agrees not to make, for his personal or business use or that of any other person, reproductions or copies of any such property or other property of the Corporation or of any of its Affiliates.

2.12 Trading Pre-clearance

The Executive shall be required to pre-clear with the senior attorney in the Corporation’s securities practice group (the “Senior Attorney”), or his/her designee, any trades in the securities of the Corporation of which the Executive is the legal or beneficial owner, or any securities of any successor of the Corporation for a period of 12 months following the Date of Termination. 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 insider reporting requirements, for so long as, and to the extent, applicable.

2.13 Intellectual Property

(a) All worldwide rights, title and interest in any and all advances, computer programs, concepts, compositions, data, database technologies, designs, discoveries, domain names, drawings, formulae, ideas, improvements, integrated circuit typographies, inventions, know-how, mask works, sketches, software, practices, processes, research materials, trade secrets, work methods, patents, trade-marks, copyright works and any other intellectual property (whether

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registrable or not) produced, made, composed, written, performed, or designed by the Executive, either alone or jointly with others, in the course of the Executive’s employment with the Corporation and/or its Affiliates and in any way relating to the business of the Corporation and/or its Affiliates (the “Intellectual Property”), shall vest in and be the exclusive property of the Corporation.

(b) Both during the term of this Agreement and following termination of employment with the Corporation, the Executive will fully and promptly disclose to the Corporation, complete details of any Intellectual Property right arising in connection with the Executive’s employment, with the intention that the Corporation shall have full knowledge and ownership of the working and practical applications of such right.

(c) At the expense of the Corporation, the Executive will co-operate in executing all necessary deeds and documents and shall co-operate in all other such acts and things as the Corporation may reasonably require in order to vest such Intellectual Property rights in the name of the Corporation.

(d) The Executive hereby waives any and all author’s moral and proprietary rights that the Executive may now or in the future have in any Intellectual Property developed in the course of the Executive’s employment with the Corporation.

(e) The Corporation shall have the sole and exclusive ownership of and right of control over any and all business, customers, and goodwill created or developed by the Executive in the course of the Executive’s employment with the Corporation, including all information, records, and documents concerning business and customer accounts and all other instruments, documents, records, data, and information concerning or relating to the Corporation’s and/or its Affiliates’ business activities, interests and pursuits.

ARTICLE 3

CONSIDERATION

3.1 Consideration

The Executive acknowledges and agrees that the consideration supporting the Executive’s covenants and obligations set forth herein, particularly including but not limited to those set forth in Article 2 hereof, consists of his initial employment by the Corporation, and the compensation and other benefits delivered in connection therewith. In the event that any such consideration consists of a payment that would be made or is due and payable after a Date of Termination, such payment is subject to forfeiture and set-off if the Executive is in breach of this Agreement at such time as the payment is otherwise due, as further described in Section 4.4 hereof.

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ARTICLE 4

GENERAL

4.1 Reasonableness of Restrictions and Covenants

The Executive hereby confirms and agrees that the covenants and restrictions pertaining to the Executive contained in this Agreement, including, without limitation, those contained in Article 2, are reasonable and valid and hereby further acknowledges and agrees that the Corporation and its Affiliates would suffer irreparable injury in the event of any breach by the Executive of his obligations under any such covenant or restriction. Accordingly, the Executive hereby acknowledges and agrees that damages would be an inadequate remedy at law in connection with any such breach and that the Corporation and its Affiliates shall therefore be entitled, in addition to any other right or remedy which they may have at law, in equity or otherwise, to temporary and permanent injunctive relief enjoining and restraining the Executive from any such breach.

4.2 Representations and Acknowledgements

The Executive represents and acknowledges that:

(a) the Executive has had sufficient time to review and consider this Agreement thoroughly;

(b) the Executive has read and understands the terms of this Agreement and the Executive’s obligations hereunder, including his obligations under Article 2;

(c) the Executive has been given the opportunity to consult, and has in fact consulted independent legal counsel regarding his rights and obligations under this Agreement, as well as its interpretation and effect, and has been given an opportunity to obtain such other advice as the Executive may desire in connection with entering into this Agreement;

(d) this Agreement is entered into voluntarily and without any pressure; and

(e) a court of competent jurisdiction may, to the extent allowable under applicable law, modify, revise, or change the covenants set forth in Article 2 hereof to the extent required to render any or all (or any part) of such covenants binding on, and legally enforceable against, the Executive, as further described in Section 4.3 hereof.

4.3 Severability

If any provision of this Agreement, including the breadth or scope of the provisions contained in Article 2 (whether as to the Non-Disclosure Period, the Prohibited Activities, the respective Restricted Period, the Prohibited Area, or otherwise), shall be held by any court of competent jurisdiction to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the validity or enforceability of the remaining provisions, or part thereof, of this Agreement and such remaining provisions, or part thereof, shall remain

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enforceable and binding. In addition, should a court determine that any provision or portion of any provision of this Agreement is not reasonable or valid, the parties hereto agree that such provision should be interpreted and enforced to the maximum extent which the court deems reasonable or valid and the parties agree to request that the court apply notional severance to give effect to the restrictions in this Agreement to the fullest extent deemed reasonable or valid by the court. In particular, if such court determines that the duration of the Non-Disclosure Period and/or the respective Restricted Period and/or the scope of the Prohibited Activities or the Prohibited Area is unreasonable, the parties agree to reduce such duration and/or scope to such extent as may be necessary to ensure that the covenants in this Agreement are reasonable in the circumstances, as determined by the court.

4.4 Entire Agreement; Forfeiture and Set-Off Remedies

This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether written or oral, except for the Offer Letter and the Change in Control Agreement, the terms of which also apply. There are no conditions, covenants, agreements, representations, warranties or other provisions, express or implied, collateral, statutory or otherwise, relating to the subject matter hereof, except as may be provided herein, in the Change in Control Agreement, or in the Offer Letter. The terms of this Agreement shall survive the termination of either or both of the Change in Control Agreement and the Offer Letter.

Notwithstanding anything set forth in the Change in Control Agreement, the Offer Letter, or in any other offer or promotional letter agreement(s); benefit plans, programs or otherwise, including but not limited to any equity incentive plan, bonus or short-term incentive plan; any termination or severance agreement; or, any other employment or change in control agreement under which the Executive either participates or is a party (collectively, the “other agreement(s)”), all payments (whether in equity or cash) under such other agreement(s) that are to be paid to the Executive after the Date of Termination, shall be forfeited by the Executive in the event that the Executive is in breach of any of the terms of this Agreement at the time payment is due and owing under such other agreement(s). The foregoing remedy in favour of the Corporation and its Affiliates shall operate notwithstanding any contrary term or provision of any other agreement(s), and is not an exclusive remedy to the Corporation and its Affiliates. Rather, it is in addition to any other remedy available to the Corporation and its Affiliates at law or in equity as a result of the Executive’s breach of this Agreement.

4.5 Notices

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 Corporation 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:

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If to the Corporation, to:

Chairman of the Board

Tim Hortons Inc.

874 Sinclair Road

Oakville, ON L6K 2Y1

With a copy to:

General Counsel

Tim Hortons Inc.

874 Sinclair Road

Oakville, ON L6K 2Y1

If to Executive, to:

The Corporation or the Executive may, by notice given to the other 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.

4.6 Governing Law

(a) This Agreement shall be interpreted and enforced in accordance with, and the respective rights and obligations of the parties shall be governed by, the laws of the Province of Ontario and the federal laws of Canada applicable in that province.

(b) Each of the parties irrevocably and unconditionally: (i) submits to the non-exclusive jurisdiction of the courts of the Province of Ontario over any action or proceeding arising out of or relating to this Agreement, (ii) waives any objection that it might otherwise be entitled to assert to the jurisdiction of such courts, and (iii) agrees not to assert that such courts are not a convenient forum for the determination of any such action or proceeding.

4.7 Amendments and Waivers

No amendment or waiver of any provision of this Agreement shall be binding on any party unless consented to in writing by such party. No waiver of any provision of this Agreement shall constitute a waiver of any other provision, nor shall any waiver of any provision of this Agreement constitute a continuing waiver unless otherwise expressly provided.

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4.8 Successors and Assigns

The Executive acknowledges that the services to be rendered pursuant to this Agreement are unique and personal. Accordingly, the Executive may not assign any of the Executive’s rights or delegate any of the Executive’s duties or responsibilities under this Agreement. The Executive hereby consents to the Corporation assigning its rights, duties and obligations under this Agreement to an Affiliate or to a purchaser or transferee of the Corporation upon a Change in Control. This Agreement shall inure to the benefit of and shall be binding on and enforceable by and against the heirs, executors, administrators and legal personal representatives of the Executive and the successors and assigns of the Corporation.

4.9 Counterparts

This Agreement and all documents contemplated by or delivered under or in connection with this Agreement may be executed and delivered in any number of counterparts, with the same effect as if all parties had signed and delivered the same document, and all counterparts shall be construed together to be an original and will constitute one and the same agreement.

4.10 Cooperation

The Executive agrees to provide the Corporation with such assistance as it may reasonably require, following the Date of Termination, to transfer all existing mandates, and/or job duties, responsibilities and accountabilities, to his/her successor, without additional compensation. The Executive further agrees that he shall cooperate with the Corporation (or, for all purposes of this paragraph, any Affiliate) and the Corporation’s (or Affiliate’s) designated agents and counsel in connection with any litigation or arbitration, or any potential litigation or arbitration, and/or in connection with any investigation, inquiry or other proceeding, including, but not limited to, regulatory or law enforcement investigations, inquiries or proceedings concerning or relating to matters in which he was involved as an employee. This cooperation shall include, but is not limited to, providing the Corporation, or the Corporation’s designated agents and counsel, with all requested information or documents; meetings with the Corporation’s designated agents or counsel, government representatives, or other third parties at the Corporation’s request at mutually agreed times and locations; and testifying. The Corporation agrees to reimburse the Executive for any reasonable travel or other expenses reasonably incurred by him in connection with his cooperation in accordance with the Corporation’s then-applicable officer expense reimbursement policy. The Executive will not be entitled to any fees, payments, or compensation in connection with providing cooperation in connection with litigation or other matters described in this section.

4.11 Headings

The headings and section references in this Agreement are for convenience only and will not affect the interpretation of this Agreement.

4.12 Language

This Agreement originally will be written in the English language, and all questions of interpretation of this Agreement shall be resolved by reference to the same as written in English. All communications between the parties arising out of or in connection with this Agreement shall be in English. Les parties aux présentes conviennent expressément que le Contrat qu’ils concluront entre eux, ainsi que tous les pièces à conviction, documents et révélations précontractuels connexes ou qui s’y rattachent, soient entièrement rédigés, signés et distribués en Anglais seulement.

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IN WITNESS WHEREOF this Agreement has been executed by the parties as of the date first above written.

	TIM HORTONS INC.
	by	/S/ PAUL D. HOUSE
		Name: Paul D. House
		Title: Chief Executive Officer and President
SIGNED in the presence of:	MARC CAIRA
/S/ JILL E. AEBKER		/S/ MARC CAIRA
Witness

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Exhibit A

Prescribed Competitors

1. Bruegger’s

2. Cara Operations Ltd.

3. Coffee Culture

4. Coffee Time

5. Country Style

6. Dunkin Brands

7. Green Mountain Coffee Roasters

8. McDonald’s

9. Panera

10. Peet’s Coffee and Tea

11. The Second Cup Ltd.

12. SIR Corp.

13. Starbucks

14. Subway

15. Timothy’s Coffee

16. The Wendy’s Company

17. Yum! Brands

***********************

TIM HORTONS INC.
by	/S/ PAUL D. HOUSE
	Name: Paul D. House
	Title: Chief Executive Officer and President

SIGNED in the presence of:	MARC CAIRA
/S/ JILL E AEBKER	by	/S/ MARC CAIRA
Witness		Signature
		MARC CAIRA
		Print Name

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EX-10.3

Exhibit 10.3

CHANGE IN CONTROL AGREEMENT

Between

TIM HORTONS INC.

And

MARC CAIRA

This Agreement is made and entered into effective as of July 2, 2013, by and between TIM HORTONS INC., a corporation governed by the Canada Business Corporations Act (the “EMPLOYER”) and Marc Caira, an individual (the “EXECUTIVE”), who are the parties to this Agreement.

RECITALS

(1) The EMPLOYER and certain of its subsidiaries 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 desires to be employed by the EMPLOYER, and the EMPLOYER desires to retain the EXECUTIVE as the President and Chief Executive Officer of the EMPLOYER.

(4) The EMPLOYER desires to be assured of the continued services of the EXECUTIVE 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 the EMPLOYER, the terms, conditions and environment of his employment will not be unreasonably affected.

(5) This Agreement is intended to be in addition to any other agreements the parties may have entered into concurrently with, or prior to the date hereof, or may enter into prior to a CHANGE IN CONTROL as defined herein, regarding the EXECUTIVE’s employment.

(6) The EMPLOYER desires 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 the EMPLOYER, and advising whether or not he believes a potential change of control is in the best interests of the EMPLOYER and its shareholders. The

EMPLOYER further desires to be assured of the dedication of the EXECUTIVE to maximizing the value to be received by the shareholders of the EMPLOYER 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 acknowledges and agrees that the consideration supporting the EXECUTIVE’s covenants and obligations set forth herein, consists of initial employment by the EMPLOYER.

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 the EMPLOYER.

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

(a) An acquisition (other than directly from the EMPLOYER) of any common shares or other voting securities of the EMPLOYER 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 EMPLOYER’s then outstanding common shares or the combined voting power of the EMPLOYER’s then outstanding Voting Securities; provided, however, in determining whether a CHANGE IN CONTROL has occurred, common shares or 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) maintained by (A) the EMPLOYER 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 the EMPLOYER (a “Subsidiary”), (ii) the EMPLOYER or its Subsidiaries, or (iii) any Person in connection with a “Non-Control Transaction” (as hereinafter defined);

(b) The individuals who, as of May 7, 2013, are members of the Board of the EMPLOYER (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

EMPLOYER’s shareholders, 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 Agreement, 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, amalgamation or reorganization with or into the EMPLOYER or in which securities of the EMPLOYER are issued (a “Merger”), unless such Merger is a “Non-Control Transaction.” A “Non-Control Transaction” shall mean a Merger where:

(A) the shareholders of the EMPLOYER 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 THI”) in substantially the same proportion as their ownership of the Voting Securities immediately before such Merger,

(B) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such Merger 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) the EMPLOYER, (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 EMPLOYER or any Subsidiary, or (iv) any Person who, immediately prior to such Merger had Beneficial Ownership of thirty percent (30%) or more of the EMPLOYER’s then outstanding common shares or the combined voting power of the EMPLOYER’s then outstanding Voting Securities, has Beneficial Ownership of thirty percent (30%) or more of the then outstanding common shares of the Surviving THI or the combined voting power of the Surviving THI’s then outstanding voting securities;

(ii) a complete liquidation or dissolution of the EMPLOYER; or

(iii) the sale or other disposition of all or substantially all of the assets of the EMPLOYER 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 shares or Voting Securities as a result of the acquisition of common shares or Voting Securities by the EMPLOYER which, by reducing the number of common shares or Voting Securities then outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person, provided that if a CHANGE IN CONTROL would occur (but for the operation of this sentence) as a result of the acquisition of common shares or Voting Securities by the EMPLOYER, and after such acquisition by the EMPLOYER, the Subject Person becomes the Beneficial Owner of any additional common shares or Voting Securities which increases the percentage voting power 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 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) 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 (B) an insider report filed with the Ontario Securities Commission in Toronto, Ontario, Canada, and the duplicate of which is actually received by the EMPLOYER, 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 the EMPLOYER are not members of the Incumbent Board as described in subparagraph (b) of Section 1 of this Agreement; 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 the EMPLOYER’s 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 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 the EMPLOYER’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 subsection 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 the EMPLOYER 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 EMPLOYER’s Board of Directors, or a duly authorized committee thereof shall review annually the performance of the EXECUTIVE, the results of operations and financial condition of the EMPLOYER, 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 favourable 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) plans which afford participation and benefits to the EXECUTIVE on a basis not less favourable 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 of the EMPLOYER, 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’s 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 EMPLOYER’s 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, 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. 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 OF TERMINATION (as defined in Section 4.3 below), which, with respect to termination under this Section 4.1 only, sets 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 specifies the particulars thereof in detail, and (2) the EXECUTIVE shall have been provided an opportunity to be heard by the Board of Directors of the EMPLOYER (with the assistance of the 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 kilometre 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 a Subsidiary of the EMPLOYER (or its successor’s) business (or the

business of any successor to the EMPLOYER or a subsidiary of the EMPLOYER 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 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 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 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, other than due to the EXECUTIVE’s death, shall be effective without such NOTICE OF TERMINATION.

4.4 Termination Date, Etc. “TERMINATION DATE” shall mean, (a) the date of the EXECUTIVE’s death or (b) 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. Subject to Section 8.4, 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 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 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 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 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 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 each of 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 each of 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 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 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 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 favourable 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 favourable 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 two years following the TERMINATION DATE, the EMPLOYER shall pay to the EXECUTIVE 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.

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 on Equity Awards. If, during the EMPLOYMENT TERM, the EXECUTIVE’s employment shall be terminated (i) by the EMPLOYER other than for CAUSE or death or (ii) by the EXECUTIVE for GOOD REASON, (a) any options to purchase shares of the EMPLOYER and any stock appreciation rights or restricted stock units, or other equity awards granted by the EMPLOYER 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 award to the EXECUTIVE by the EMPLOYER shall lapse. If, during the EMPLOYMENT TERM, the EXECUTIVE’s employment is terminated by the EMPLOYER for CAUSE, by the EXECUTIVE’s death, or by the EXECUTIVE other than for GOOD REASON, the treatment of any options to purchase shares of the EMPLOYER, any stock appreciation rights or restricted stock units, or other equity awards granted by the EMPLOYER to the EXECUTIVE, or any stock award to the EXECUTIVE by the EMPLOYER shall be determined pursuant to the terms of the applicable EMPLOYER Stock Incentive Plan, which shall be in effect, as amended, supplemented or restated, as of the applicable time, that governs the treatment of such options, stock appreciation rights, restricted stock units, stock awards or other equity awards.

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 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 the EMPLOYER or any successor to the EMPLOYER 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 Notwithstanding anything to the contrary contained in this Agreement, the EXECUTIVE shall be required to pre-clear with the senior attorney in the EMPLOYER’s securities practice group (the “Senior Attorney”), or his/her designee, any trades in the securities of the EMPLOYER of which the EXECUTIVE is the legal or beneficial owner, or any securities of any successor of the EMPLOYER 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 insider reporting requirements, for so long as, and to the extent, applicable.

8.3 Notwithstanding anything to the contrary contained in this Agreement, the restrictions on competition and other restrictions imposed upon the EXECUTIVE by this Section 8 may be enforced by the EMPLOYER 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 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.

8.4 Notwithstanding anything set forth herein to the contrary, the EXECUTIVE acknowledges and agrees that the EMPLOYER’s Recoupment Policy Relating to Performance-Based Compensation originally adopted by the Board of Directors of Tim Hortons Inc., a Delaware corporation, on February 19, 2009 and assumed and adopted by the Board of Directors of the EMPLOYER on September 28, 2009, as may be amended from time to time thereafter (the “Recoupment Policy”) (a) is binding on the EXECUTIVE, (b) the EXECUTIVE is a “Senior Executive” under such Recoupment Policy, (c) all performance-based compensation awarded to the EXECUTIVE in accordance with the terms and conditions of this Agreement or otherwise under any incentive, bonus or other plan of the EMPLOYER or its Subsidiaries are subject to the Recoupment Policy and (d) the EXECUTIVE acknowledges having received a copy of the Recoupment Policy.

Notwithstanding anything to the contrary contained herein, all payments, awards, and other amounts payable or due to the EXECUTIVE hereunder are subject to the EMPLOYER’s (or an affiliate of the EMPLOYER’s) right to reclaim, or require forfeiture of, such payments or other amounts in accordance with the terms of any separate agreement, understanding, or arrangement between the EXECUTIVE and the EMPLOYER, or any affiliate of the EMPLOYER, including but not limited to any employment agreement, offer letter for initial employment, promotional letter setting forth the terms of the EXECUTIVE’s promotion, change in control agreement, and/or post-employment covenant agreement, including but not limited to the Post-Employment Covenant Agreement (as hereinafter defined).

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:

Chairman

Tim Hortons Inc.

874 Sinclair Road

Oakville, ON L6K 2Y1

With a copy to:

General Counsel

Tim Hortons Inc.

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 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 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 the EMPLOYER; provided, however, that the obligations of this Agreement may not be transferred by the EMPLOYER, except in accordance with the following proviso: provided further, however, that if the EMPLOYER transfers to any other person substantially all of its assets and/or business by merger, amalgamation, consolidation, sale of assets or otherwise, the EMPLOYER must transfer its obligations hereunder to such other person and such other person must accept such transfer and assume the obligations of the EMPLOYER imposed hereby, resulting in a permissible assignment and transfer of this Agreement by the EMPLOYER. 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 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. Additional Terms Set Forth in Employment and Post-Employment Covenants Agreement. The EXECUTIVE and the EMPLOYER have entered into the Employment and Post-Employment Covenants Agreement, dated effective as of July 2, 2013 (the “Covenants Agreement”), which sets forth obligations on the EXECUTIVE regarding confidentiality, non-competition, non-solicitation and others. The terms of the Covenants Agreement shall apply in addition to all of the terms set forth herein (and not in replacement of any of the terms hereof), and a breach of the terms of the Covenants Agreement shall result in a breach of the terms of this Agreement as well.

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

EXECUTIVE:

/S/ MARC CAIRA

Marc Caira

THE EMPLOYER: TIM HORTONS INC.
By:	/S/ PAUL D. HOUSE
Print Name: Paul D. House
Title: Chief Executive Officer and President

EX-99

Exhibit 99

TIM HORTONS INC.

Safe Harbor Under the Private Securities Litigation Reform Act of 1995 and Canadian Securities Laws

The Private Securities Litigation Reform Act of 1995 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. Canadian securities laws have corresponding safe harbor provisions, subject to certain additional requirements including the requirement to state the assumptions used to make the forecasts set out in forward-looking statements. Tim Hortons Inc. (the “Company”) desires to take advantage of these “safe harbor” provisions.

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,” “outlook,” “forecast” or words of similar meaning, or future or conditional verbs, such as “will,” “should,” “could” or “may.” Examples of forward-looking statements that may be contained in our public disclosure from time to time include, but are not limited to, statements concerning management’s expectations relating to possible or assumed future results, our strategic goals and our priorities, and the economic and business outlook for us, for each of our business segments and for the economy generally. Many of the factors that could determine our future performance are beyond our ability to control or predict. The following factors, in addition to other factors set forth in our Form 10-K filed on February 21, 2013 (“Form 10-K”), as updated in the Quarterly Report on Form 10-Q filed on May 8, 2013, with the U.S. Securities and Exchange Commission (“SEC”) and the Canadian Securities Administrators (“CSA”), and in other press releases, communications, or filings made with the SEC or the CSA, could cause our actual results to differ materially from the expectation(s) included in forward-looking statements and, if significant, could materially affect the Company’s business, sales revenue, share price, financial condition, and/or future results, including causing the Company to (i) close restaurants, (ii) fail to realize same-store sales growth targets, which are critical to achieving our financial targets, (iii) fail to meet the expectations of our securities analysts or investors, or otherwise fail to perform as expected, (iv) experience a decline and/or increased volatility in the market price of its stock, (v) have insufficient cash to engage in or fund expansion activities, dividends, or share repurchase programs, or (vi) increase costs, corporately or at restaurant level, which may result in increased restaurant-level pricing, which in turn may result in decreased guest demand for our products resulting in lower sales, revenue, and earnings. Additional risks and uncertainties not currently known to us or that we currently believe to be immaterial may also materially adversely affect our business, financial condition, and/or operating results. We assume no obligation to update or alter any forward-looking statements after they are made, whether as a result of new information, future events, or otherwise, except as required by applicable law.

Forward-looking statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to, assumptions about: the absence of an adverse event or condition that damages our strong brand position and reputation; the absence of a material increase in competition or in volume of type of competitive activity within the quick service restaurant segment of the food service industry; general worldwide economic conditions; cost and availability of commodities; the ability to retain our senior management team or the inability to attract and retain new qualified personnel; continuing positive working relationships with the majority of the Company’s restaurant owners; the absence of any material adverse effects arising as a result of litigation; and there being no significant change in the Company’s ability to comply with current or future regulatory requirements. We are presenting this information for the purpose of informing you of management’s current expectations regarding these matters, and this information may not be appropriate for any other purposes.

Factors Affecting Growth and Other Important Strategic Initiatives. There can be no assurance that the Company will be able to achieve new restaurant or same-store sales growth objectives, that new restaurants will be profitable or that strategic initiatives will be successfully implemented. 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. The Company may also enter markets where its brand is not well known and where it has little or no operating experience and as a result, may not achieve 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 enters new markets, it may be necessary to increase restaurant owner relief and support costs, which lowers its earnings. 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. The Company’s failure to successfully implement growth and various other strategies and initiatives related to international development may have a negative impact on the overall operation of its business and may result in increased costs or inefficiencies that it cannot currently anticipate. The Company may also continue to selectively close restaurants that are not achieving acceptable levels of profitability or change its growth strategies over time, where appropriate. Such closures

may be accompanied by impairment charges that may have a negative impact on the Company’s earnings. The success of any restaurant depends in substantial part on its location. There can be no assurance that current locations will continue to be attractive as demographic patterns or economic conditions change. If we cannot obtain desirable locations for restaurants at reasonable prices, the Company’s ability to affect its growth strategy will be adversely affected. The Company has vertically integrated manufacturing, warehouse and distribution capabilities which may at times result in delays or difficulties. The Company also 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 as well as various other risks. In addition, there can be no assurance that the Company will be able to complete the desirable transactions, for reasons including restrictive covenants in debt instruments or other agreements with third parties. The Company may continue to pursue strategic alliances (including co-branding) with third parties for different types of development models and products and there can be no assurance that: significant value will be recognized through such strategic alliances; the Company will be able to maintain its strategic alliances; or, the Company will be able to enter into new strategic relationships in the future. Entry into such relationships as well as the expansion of the Company’s current business through such initiatives may expose it to additional risks that may adversely affect the Company’s brand and business. The Company’s financial outlook and long-range targets are based on the successful implementation, execution and guest acceptance of the Company’s strategic plans and initiatives; accordingly, the failure of any of these criteria could cause the Company to fall short of achievement of its financial objectives and long-range aspirational goals.

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 94.0% of our reportable segment revenues, and 97.5% of our reportable segment operating income in fiscal 2012. 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 guests’ connection to and perception of its brand, and a positive relationship with its restaurant owners. Brand value can be severely damaged, even by isolated incidents, including those that may be beyond the Company’s control such as: actions taken or not taken by its restaurant owners relating to health, safety, environmental, welfare, labour, public policy or social issues; contaminated food; litigation and claims (including litigation by, other disputes with, or negative relationship with restaurant owners); failure of security breaches or other fraudulent activities associated with its networks and systems; illegal activity targeted at the Company; and negative incidents occurring at or affecting its strategic business partners (including in connection with co-branding initiatives, international licensing arrangements and its self-serve kiosk model), affiliates, and corporate social responsibility programs. The Company’s brand could also be damaged by falsified claims or the quality of products from its vertically integrated manufacturing plants, and potentially negative publicity from various sources, including social media sites on a variety of topics and issues, whether true or not, which are beyond its control.

Competition. The quick service restaurant industry is intensely competitive with respect to price, service, location, personnel, qualified restaurant owners, real estate sites and type and quality of food. The Company and its restaurant owners 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, promotional and operational programs, discounting activities, price, changing demographic patterns and trends, changing consumer preferences and spending patterns, including weaker consumer spending in difficult economic times, or a desire for a more diversified menu, changing health or dietary preferences and perceptions, 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 greater financial and other resources than it does, including substantially larger marketing budgets and greater leverage from their marketing spend. In addition, the Company’s major competitors continue to engage in discounting, free sampling and other promotional activities.

Economic Conditions. The Company’s operating results and financial condition are sensitive to and dependent upon discretionary spending by guests, which may be affected by uncertainty in general economic conditions that could drive down demand for its products and result in fewer transactions or decrease average cheque per transaction at our restaurants. The Company cannot predict the timing or duration of suppressed economic conditions which could have an adverse effect on our business, results of operations and financial condition.

Product Innovation and Extensions. Achievement of the Company’s same-store sales strategy is dependent, among other things, on its ability to extend the product offerings of its existing brands and introduce innovative new products. Although it devotes significant focus to the development of new products, the Company may not be successful in developing innovative new products or its new products may not be commercially successful. The Company’s financial results and its ability to maintain or improve its competitive position will depend on its ability to effectively gauge the direction of the market and consumer trends and initiatives and successfully identify, develop, manufacture, market and sell new or improved products in response to such trends.

Senior Management Team. The Company is currently in a CEO transition period. With the change in leadership, there is a risk to retention of other members of senior management, even with the existing retention program in place, as well as the continuity of business initiatives, plans and strategies through the transition period. The Company is also in the process of implementing a corporate reorganization involving the realignment of roles and responsibilities under the new structure, which has resulted in a slight net reduction in the size of its employee base due to the departure of certain employees as well as vacancies in certain positions which

need to be filled. Any lack of required resources for a prolonged period of time could negatively impact our operations and ability to execute our strategic initiatives, harm our ability to retain and motivate our current employees, and negatively impact our ability to attract new employees.

Commodities. The Company is exposed to price volatility in connection with certain key commodities that it purchases in the ordinary course of business such as coffee, wheat, edible oils, sugar, and other product costs which can impact revenues, costs and margins. Although the Company monitors its exposure to commodity prices and its forward hedging program partially mitigates the negative impact of any costs increases, price volatility for commodities it purchases has increased due to conditions beyond its control, including recent economic and political conditions, currency fluctuations, availability of supply, weather conditions, pest damage and consumer demand and consumption patterns. Increases and decreases in commodity costs are largely passed through to restaurant owners and the Company and its restaurant owners have some ability to increase product pricing to offset a rise in commodity prices, subject to restaurant owner and guest acceptance, respectively. A number of commodities have recently experienced elevated prices relative to historic prices. Although the Company generally secures commitments for most of its key commodities that generally extend over a six-month period, these may be at higher prices than its previous commitments. In addition, if further escalation in prices continues, the Company may be forced to purchase commodities at higher prices at the end of the respective terms of its current commitments. If the supply of commodities, including coffee, fails to meet demand, the Company’s restaurant owners may experience reduced sales which in turn, would reduce our rents and royalty income as well as distribution income. Such a reduction in the Company’s income may adversely impact the Company’s business and financial results.

Food Safety and Health Concerns. Incidents or reports, whether true or not, of food-borne illness and injuries caused by or claims of food tampering, employee hygiene and cleanliness failures or impropriety at Tim Hortons, and the potential health impacts of consuming certain of the Company’s products or other quick service restaurants unrelated to Tim Hortons, could result in negative publicity, damage the Company’s brand value and potentially lead to product liability or other claims. Any decrease in guest traffic or temporary closure of any of the Company’s restaurants as a result of such incidents or negative publicity may have a material adverse effect on its business, results of operations and financial condition.

Distribution Operations and Supply Chain. The occurrence of any of the following factors is likely to result in increased operating costs and decreased profitability of the Company’s distribution operations and supply chain and may also injure its brand, negatively affect its results of operations and its ability to generate expected earnings and/or increase costs, and/or negatively impact the Company’s relationship with its restaurant owners: higher transportation or shipping costs; inclement weather; increased food and other supply costs; having a single source of supply for certain of its food products; potential cost and disruption of a product recall; shortages or interruptions in the availability or supply of perishable food products and/or their ingredients; potential negative impacts on our relationship with our restaurant owners associated with an increase of required purchases, or prices, of products purchased from the Company’s distribution business; and political, physical, environmental, labour or technological disruptions in the Company’s or its suppliers’ manufacturing and/or warehouse plants, facilities or equipment.

Importance of Restaurant Owners. A substantial portion of the Company’s earnings come from royalties and other amounts paid by restaurant owners, who operated 99.5% of the Tim Hortons restaurants as of December 30, 2012. The Company’s revenues and profits would decline and its brand reputation could also be harmed if a significant number of restaurant owners were to experience, among other things, operational or financial difficulties or labour shortages or significant increases in labour costs. Although the Company generally enjoys a positive working relationship with the vast majority of its restaurant owners, active and/or potential disputes with restaurant owners could damage its reputation and/or its relationships with the broader restaurant owner group. The Company’s restaurant owners are independent contractors and, as a result, the quality of their operations may be diminished by factors beyond the Company’s control. Any operational shortcoming of a franchise restaurant is likely to be attributed by consumers to the Company’s entire system, thus damaging its brand reputation and potentially affecting revenues and profitability. There can be no assurance that the Company will be able to continue to attract, retain and motivate higher performing restaurant owners.

Litigation. The Company is or may be subject to claims incidental to the business, including: obesity litigation; health and safety risks or conditions of the Company’s restaurants associated with design, construction, site location and development, indoor or airborne contaminants and/or certain equipment utilized in operations; employee claims for employment or labour matters, including potentially, class action suits regarding wages, discrimination, unfair or unequal treatment, harassment, wrongful termination, or overtime compensation claims; claims from restaurant owners and/or operators regarding profitability or wrongful termination of their franchise or operating (license) agreement(s); taxation authorities regarding certain tax disputes; and falsified claims. The Company’s current exposure with respect to pending legal matters could change if determinations by judges and other finders of fact are not in accordance with management’s evaluation of these claims and the Company’s exposure could exceed expectations and have a material adverse effect on its financial condition and results of operations.

Government Regulation. The Company and its restaurant owners are subject to various international, 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 limitation of vehicle emissions in drive-thrus; anti-idling bylaws; regulation of litter, packaging and recycling requirements; regulation relating to discharge, storage, handling, release and/or disposal of hazardous or toxic substances; and other governmental laws and regulations), traffic, franchise, design and other matters. Additional governmental laws and regulations affecting the Company and its restaurant owners include: business licensing; franchise laws and regulations; health, food preparation, sanitation and safety; privacy; immigration, employment and labour (including applicable minimum wage requirements, benefits, overtime, working and safety conditions, family leave and other employment matters, and citizenship requirements); advertising and marketing; product safety and regulations regarding nutritional content, including menu labeling; existing, new or future regulations, laws, treaties or the interpretation or enforcement thereof relating to tax matters that may affect the Company’s ongoing tax disputes, realization of the Company’s tax assets, disclosure of tax-related matters, and expansion of the Company’s business into new territories through its strategic initiatives, joint ventures, or other types of programs, projects or activities; tax laws affecting restaurant owners’ business; accounting and reporting requirements and regulations; anti-corruption; and new or future regulations regarding sustainability. Compliance with these laws and regulations and planning initiatives undertaken in connection therewith could increase the cost of doing business and, depending upon the nature of the Company’s and its restaurant owners’ responsive actions thereto, could damage the Company’s reputation. Changes in these laws and regulations, or the implementation of additional regulatory requirements, particularly increases in applicable minimum wages, tax law, planning or other matters may, among other things, adversely affect the Company’s financial results; anticipated effective tax rate, tax liabilities, and/or tax reserves; business planning within its corporate structure; its strategic initiatives and/or the types of projects it may undertake in furtherance of its business; or franchise requirements.

In addition, a taxation authority may disagree with certain views of the Company with respect to the interpretation of tax treaties, laws and regulations and take the position that material income tax liabilities, interests, penalties or amounts are payable by the Company, including in connection with certain of its public or internal company reorganizations. Contesting such disagreements or assessments may be lengthy and costly and, if the Company were unsuccessful in disputing the same, the implications could be materially adverse to it and affect its anticipated effective tax rate, projected results, future operations and financial condition, where applicable.

International Operations. The Company’s international operations are and will continue to be subject to various factors of uncertainty, and there is no assurance that international operations will achieve or maintain profitability or meet planned growth rates. The implementation of the Company’s international strategic plan may require considerable management time as well as start-up expenses for market development before any significant revenues and earnings are generated. Expansion into new international markets carries risks similar to those risks described above and more fully in the Form 10-K relative to expansion into new markets in the U.S.; however, some or all of these factors may be more pronounced in markets outside Canada and the U.S. due to cultural, political, legal, economic, regulatory and other conditions and differences. Additionally, the Company may also have difficulty exporting its proprietary products into international markets or finding suppliers and distributors to provide it with adequate supplies of ingredients meeting its standards in a cost-effective manner.

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), discretionary 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, changes in capital market conditions that affect valuations of restaurant companies in general or the value of the Company’s stock in particular, and litigation relating to food quality, handling or nutritional content. 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 (including environmental regulations), 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 restaurant owners 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. Unforeseen events, including war, armed conflict, terrorism and other international, regional or local instability or conflicts (including labour issues), embargos, trade barriers, public health issues (including tainted food, food-borne illness, food tampering and water

supply or widespread/pandemic illness such as the avian, H1N1 or norovirus flu), and natural disasters such as flooding, earthquakes, hurricanes, or other adverse weather and climate conditions could disrupt the Company’s operations, disrupt the operations of its restaurant owners, suppliers, or guests, or result in political or economic instability.

Reliance on Systems. If the network and information systems and other technology systems that are integral to retail operations at system restaurants and at the Company’s manufacturing and distribution facilities, and at its office locations are damaged or interrupted from power outages, computer and telecommunications failures, computer worms, viruses, phishing and other destructive or disruptive software, security breaches, catastrophic events and improper or personal usage by employees, such an event could have an adverse impact on the Company and its guests, restaurant owners and employees, including a disruption of its operations, guest dissatisfaction or a loss of guests or revenues. The Company relies on third-party vendors to retain data, process transactions and provide certain services. In the event of failure in such third party vendors’ systems and processes, the Company could experience business interruptions or privacy and/or security breaches surrounding its data. The Company continues to enhance its integrated enterprise resource planning system. The introduction of new modules for inventory replenishment, sustainability, and business reporting and analysis will be implemented. There may be risks associated with adjusting to and supporting the new modules which may impact the Company’s relations with its restaurant owners, vendors and suppliers and the conduct of its business generally. If the Company fails to comply with new and/or increasingly demanding laws and regulations regarding the protection of guest, supplier, vendor, restaurant owner, employee and/or business data, or if the Company (or a third party with which it has entered into a strategic alliance) experiences a significant breach of guest, supplier, vendor, restaurant owner, employee or Company data, the Company’s reputation could be damaged and result in lost sales, fines, lawsuits and diversion of management attention. The use of electronic payment systems and the Company’s reloadable cash card makes it more susceptible to a risk of loss in connection with these issues, particularly with respect to an external security breach of guest information that the Company, or third parties under arrangement(s) with it, control.

Other Significant Risk Factors. The following factors could also cause the Company’s actual results to differ from its expectations: fluctuations in the U.S. and Canadian dollar exchange rates; 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); liabilities and losses associated with owning and leasing significant amounts of real estate; changes in its debt levels and a downgrade on its credit ratings; and certain anti-takeover provisions that may have the effect of delaying or preventing a change in control.

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date and time made. Except as required by federal or provincial securities laws, the Company undertakes no obligation to publicly release any revisions to forward-looking statements, or to update them to reflect events or circumstances occurring after the date forward-looking statements are made, or to reflect the occurrence of unanticipated events.