Exhibit 10(iv)

TIM HORTONS INC.

Board of Directors

Governance Guidelines

Adopted February 2006

(Revised July 2006)

The Board of Directors (the “Board”), as elected by the shareholders and, except
for matters reserved to the shareholders by law or by the Corporation’s internal
legislation, as the ultimate decision-making body of the Corporation, has
adopted unanimously its Principles of Governance – Philosophy, Role and Mission.
In order to give effect to those Principles, the Board also has adopted
unanimously these Governance Guidelines (“Guidelines”) concerning its structure,
membership, performance, operations, and management oversight. These Guidelines
are general expressions of intent rather than a code of regulations; they are
intended to be flexible and enabling rather than rigid and limiting. These
Guidelines have been prepared with consideration and effect given to the
Sarbanes-Oxley Act of 2002, the Securities and Exchange Commission’s regulations
promulgated thereunder, the listing standards of the New York Stock Exchange and
the Toronto Stock Exchange, the regulations of the Ontario Securities Commission
and include certain other “best practices” provisions that reflect the dynamic
and evolving process related to corporate governance matters.

The basic responsibility of each Director is to exercise his or her business
judgment in a manner he or she reasonably believes to be in the best interests
of the Corporation and its shareholders. Directors are entitled to rely on the
honesty and integrity of the Corporation’s executives and its outside advisors
and auditors to the fullest extent permitted by law.

BOARD STRUCTURE

Within the limitations set by shareholder vote and legislation, the number of
directors should allow for the inclusion of qualified candidates and for the
requirements of Board committee staffing. As a general objective, subject to
exceptions recommended by the Directors, it is the Board’s goal that a
substantial majority of its members be independent Directors, that is, those who
meet the definition of “independent” director under the listing standards of the
New York Stock Exchange, as affirmatively determined by the Board in its
business judgment, and have no employee status or business conflict with the
Corporation or who meet applicable definitions of law, regulation, rule, charter
or other corporate legislation, the Principles or these Guidelines
(collectively, “Requirement[s]”) for Board or particular committee service.

The Chief Executive Officer of the Corporation, if not also Chair of the Board,
is expected to be a Director. The Board selects the Corporation’s Chief
Executive Officer and the Chair of the Board in a manner that it determines to
be in the best interests of the Corporation and its shareholders. The Board does
not have a policy as to whether the role of the Chief Executive Officer and the
Chair of the Board should be separate, and if they are separate, whether the
Chair of the Board should be selected from the non-management Directors or be an
employee of the Corporation. No senior manager other than Chief Executive
Officer is expected or entitled to be a Director solely by virtue of his or her
present or past position as senior manager.

Absent exceptional circumstances persuasive to the Board, persons to be elected
to the Board should be 75 years or younger at the time of their election or
re-election. A non-management Director whose position or responsibility at the
time of election changes is expected to tender his or her resignation for
consideration by the Nominating and Corporate Governance Committee; a management
Director who leaves the Corporation is expected to resign from the Board.

The committees of the Board at present include the Audit Committee, comprised
entirely of independent Directors, the Human Resource and Compensation
Committee, the Nominating and Corporate Governance Committee, the Executive
Committee, the Finance Committee and such other committees as the Board may
create and maintain from time to time. Each committee is charged to meet the
responsibilities set forth in the Requirements and otherwise as determined by
the Board. The Board has approved written charters for the Audit, Human Resource
and Compensation, and Nominating and Corporate Governance Committees, and
certain key responsibilities of those committees are summarized below:

 

  •   Audit Committee. At least one member of the Audit Committee must meet the
definition of an “audit committee financial expert” as that term is defined in
the rules and regulations of the Securities and Exchange Commission. The Audit
Committee is directly responsible for the appointment, compensation, retention
and oversight of the work of the Corporation’s independent auditor. The Audit
Committee provides assistance to the Board in fulfilling its oversight
responsibility relating to (a) the integrity of the Corporation’s financial
statements, (b) the Corporation’s compliance with legal and regulatory
requirements, (c) the independent auditor’s qualifications and independence,
(d) the performance of the Corporation’s internal audit function.

 

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  •   Human Resource and Compensation Committee. The Human Resource and
Compensation Committee has responsibility to review and approve corporate goals
and objectives relevant to Chief Executive Officer compensation, evaluate the
Chief Executive Officer’s performance in light of those goals and objectives
and, either as a committee or together with the other independent Directors (as
directed by the Board), determine and approve the Chief Executive Officer’s
compensation package. The Human Resource and Compensation Committee also makes
recommendations to the Board with respect to the compensation of non-CEO
executive officers and with respect to incentive-compensation plans and
equity-based plans.

 

  •   Nominating and Corporate Governance Committee. The Nominating and
Corporate Governance Committee is responsible for identifying individuals
qualified to become Board members, consistent with the criteria in these
Guidelines, as they may be amended, and to recommend to the Board individuals to
be nominated, including a review of any shareholder nominations, as Directors at
the Annual Shareholders’ Meeting. The Nominating and Corporate Governance
Committee also reviews and reports to the Board on matters of corporate
governance and reviews these Guidelines and recommends revisions as appropriate.

Committee membership assignments are determined by the Board, on recommendation
of the Nominating and Corporate Governance Committee, taking account of
Corporation needs, individual attributes, service rotation, and other relevant
factors. The composition of Director membership on the Human Resource and
Compensation Committee and Nominating and Corporate Governance Committee shall
be determined in accordance with the Requirements, which allow “controlled
companies” to transition to fully-independent Director membership on these
Committees within one year after the “controlled company” ceases to be
controlled. Notwithstanding the latitude afforded by these transition rules, the
Human Resource and Compensation Committee and Nominating and Corporate
Governance Committee shall be, at all times, comprised of a majority of
independent Directors, and, pursuant to the Requirements, within one year after
the Corporation ceases to be controlled, each Director serving on the Human
Resource and Compensation Committee and Nominating and Corporate Governance
Committee shall be an independent Director.

DIRECTOR SELECTION, ORIENTATION AND EVALUATION

Director selection and nomination for reelection are a responsibility of the
Board, acting on recommendation of the Nominating and Corporate Governance
Committee, and giving attention to the following qualifications:

 

  •   High personal and professional ethics, integrity, practical wisdom and
mature judgment;

 

  •   Board training and experience in business, government, education or
technology;

 

  •   Expertise that is useful to the Corporation and complementary to the
background and experience of other Board members;

 

  •   Willingness to devote the required amount of time to carrying out the
duties and responsibilities of Board membership;

 

  •   Commitment to serve on the Board over a period of several years to develop
knowledge about the Corporation and its operations;

 

  •   Willingness to represent the best interests of all shareholders and
objectively appraise management’s performance; and

 

  •   Board diversity, and other relevant factors as the Board may determine.

Selection of candidates is on the bases of, first, Corporation needs, and,
second, identification of persons responsive to those needs. Directors may
consider, giving such weight as they deem appropriate, ancillary attributes such
as energy, terms served, change in employment status, and other directorships.

Upon the recommendation and under the supervision of the Nominating and
Corporate Governance Committee, the Board establishes and maintains programs for
initial and periodic orientation of each director in the obligations of
directors generally and the business of the Corporation specifically, including
operations, finance, franchise development and relations, real estate
development and management, compliance and auditing, corporate business ethics,
and corporate organization.

The Directors expect that each of them will attend meetings of the Board and
assigned committees and participate actively in the work of the Board. Except in
compelling circumstances, any Director who during two consecutive full calendar
years attended fewer than 75% of the total of (a) all Board meetings held during
the period for which he or she has been a Director (including regularly
scheduled, special and telephonic meetings) and (b) all meetings held by all
committees on which he or she served (during the periods that he or she served)
shall be asked to tender his or her resignation from the Board forthwith, and
such Director will not be nominated for re-election at the expiration of his or
her then current term. The Directors are invited and expected to attend the
Annual Shareholders’ Meeting.

 

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The Directors expect that each of them will own stock in the Corporation, with
each director’s holdings valued at least two and one-half times his or her
annual compensation received from the Corporation and in any event appropriate
to his or her circumstances.

As an alternative to term limits, not less than six months prior to the date on
which the Corporation’s nominations to the shareholders for the election and
reelection of Directors are due, the Nominating and Corporate Governance
Committee will review the performance of each person potentially standing for
election or reelection and make appropriate recommendations to the Board
concerning that person’s candidacy.

Not less than annually, the Nominating and Corporate Governance Committee will
prepare a report to the Board concerning director orientation and evaluation.

BOARD OPERATIONS

Non-management Director compensation, both form(s) and amount(s), are determined
by the Board, taking into account general and specific demands of Board and
committee service, Corporation performance, comparisons with other firms of
similar size and complexity, competitive factors, and other factors which it
deems relevant. A management director receives no additional compensation for
his or her service as a Director. The Human Resource and Compensation Committee
and the Nominating and Corporate Governance Committee will report to the Board
not less than annually on Board compensation matters.

The non-management Directors schedule regular executive sessions attendant to
each Board meeting. The independent Directors evaluate Chief Executive Officer
performance and, with the recommendation of the Human Resource and Compensation
Committee, the performance goals and other criteria on which the Chief Executive
Officer and other senior management are compensated at least once each year.

If the Chief Executive Officer serves as Chair of the Board, the Chair of the
Nominating and Corporate Governance Committee shall serve as lead Director, and
in that capacity preside at executive sessions of the independent Directors
(except where the principal matters to be considered are within the scope of
authority of one of the other chairs); coordinate with the Chief Executive
Officer in planning director orientation scheduling and agenda matters
generally; and be available to serve as a communication channel between the
Board and the Chief Executive Officer. Where the Chair of the Board is an
independent Director, he or she shall also serve as chair of the Nominating and
Corporate Governance Committee. In recognizing the roles of Chair of the Board
and lead Director, the Board emphasizes that it is not intending to limit
individual Board member responsibility or access and communication to management
or to limit management access to individual Board member advice and counsel.

Each committee meets, as determined by its chair with the concurrence of the
Board, in sufficient times and durations to satisfy the Requirements and its
responsibilities. Each of the committees comprised entirely of independent
Directors schedules regular executive sessions attendant to each Board meeting.
Where the Chair of the Board is an independent Director and is not serving as an
appointed member of any committee of the Board, he or she shall be an ex officio
member of each such committee and be afforded the opportunity to participate in
meetings of such committees, although he or she shall not be entitled to
committee attendance fees or to vote with respect to any matter decided by a
committee to which he or she is not an appointed member.

The Board, acting on its own initiative or on the recommendation of one or more
of its committees or the officers of the Corporation, may engage experts or
consultants where it deems the engagement to be necessary or appropriate to the
fulfillment of its responsibilities.

Except as otherwise specified in the Requirements, it is the policy of the
Corporation that all major decisions be considered by the Board acting as a
whole and references herein to the Board generally are to its actions in that
capacity. Except where a Requirement dictates to the contrary or as delegated to
a committee in a written charter approved by the Board, all decisions of any
committee are subject to control and direction of the Board.

Subject to the Requirements and the approval of the Board and each committee
chair in matters within the purview of his or her committee, the Chair and Chief
Executive Officer set the agendas for meetings of the Board. The committee
chairs, with the assistance of management, set the agendas for meetings of their
committees. With the recommendation of the Chief Executive Officer,
presentations on matters considered by the Board are made by managers
responsible for the operations or matters under consideration.

The Board, after consulting with counsel, determines whether conflicts of
interest exist on a case-by-case basis, with the objective, among others, that
the Directors voting on an issue are not conflicted with respect to that issue.
The Directors

 

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expect that each of them will disclose actual or potential conflicts to further
these objectives. In addition, not less than annually each Director affirms the
existence or absence of actual or potential conflicts and that affirmation is
reported to the Nominating and Corporate Governance Committee.

MANAGEMENT OVERSIGHT

The Board considers its functions to include taking an active role in strategic
and business planning, reviewing management’s performance against plans, and
aligning compensation schemes to match Corporate performance, as well as
advising and counseling senior management. In fulfilling these functions,
Directors expect to communicate primarily with senior management but have direct
access to all officers and employees of the Corporation.

Not less than annually, the Chief Executive Officer reports to the Board
(excluding, to the extent appropriate, any affected officer of the Corporation
who is a director) on strategic plans and planning processes, long term and
emergency senior management succession plans, performance of senior management,
relations with mission critical trading partners, business ethics, compliance
with laws, and other matters as the Board may direct. The Corporation’s
succession planning also includes policies regarding Chief Executive Officer
selection and performance evaluations, as well as policies regarding Chief
Executive Officer succession planning in the event of an emergency or retirement
of the Chief Executive Officer.

The Chief Executive Officer reports to the Board not less than quarterly on
operations, earnings and profits, material and significant events, progress
toward meeting periodic performance or other goals, material transactions not in
ordinary course of business, and other matters as the Board may direct.

In advance of scheduled meetings of the Board and its committees, senior
management selects and organizes material related to agenda items to allow the
Directors to be prepared for discussion of those items.

The Directors and senior management communicate between scheduled meetings upon
the occurrence of events considered by either to be significant or noteworthy.

It is the general policy of the Corporation that management speaks for the
Corporation. Communications with shareholders, potential investors, customers,
communities, trading partners, creditors, governments, and the public concerning
Corporate events and affairs are the responsibility of the Chief Executive
Officer and his or her designees, giving due regard to the general oversight of
the Board, the requirements of law, and the interests of the Corporation. The
policy is not preclusive of director communications with shareholders, but it is
suggested that management be consulted and participate in any such
communications.

GENERAL

The Board approves the Corporation’s Standards of Business Practices applicable
to employees and officers of the Corporation. The Audit Committee monitors that
its provisions are being met. The Board also approves the Code of Business
Conduct applicable to Directors of the Corporation. A waiver, if any, of any
provision of the Standards of Business Practices for an executive officer, or of
any provision of the Code of Business Conduct for a Director, will be approved
and disclosed in compliance with the listing standards of the New York Stock
Exchange or other Requirements.

Each of the Directors is committed to the principle that the effectiveness of
the Board is dependent upon open, full, and free discussion of issues in an
atmosphere of mutual respect and collegiality.

These Guidelines are intended to be consistent with and are subject to
applicable requirements of law and regulation, exchange rules, and formal
actions of the shareholders and Directors of the Corporation.

It is the responsibility of the Chief Executive Officer to educate management of
the Corporation on the role of the Board, the Principles of Governance and these
Guidelines.

These Guidelines are reviewed, and as appropriate revised, by the Board from
time to time.

These Guidelines are, and any amendments thereto will be, displayed on the
Corporation’s website and a printed copy will be made available to any
shareholder of the Corporation who requests such.

 

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