exv10w5



 






Exhibit 10.5




TIM HORTONS INC.




2006 STOCK INCENTIVE PLAN




     Section 1. Purpose. The purpose of this Tim Hortons Inc. 2006 Stock Incentive Plan (the
“Plan”) is to strengthen Tim Hortons Inc. (the “Company”) by providing an incentive
to the employees and directors of the Company and its subsidiaries (the “Subsidiaries”) and
thereby encouraging them to devote their abilities and industry to the success of the Company’s
business enterprise. It is intended that this purpose be achieved by extending to employees
(including future employees who have received a formal written offer of employment) and directors
of the Company and its Subsidiaries an added long-term incentive for high levels of performance and
unusual efforts through the grant of Restricted Stock, Options, Stock Appreciation Rights, Dividend
Equivalent Rights, Performance Awards, Share Awards, Formula Restricted Stock Units and Stock Units
(as each term is herein defined).



     Section 2. Administration of the Plan.



          2.1. Committee Composition; Powers. The Plan shall be administered by a committee
(the “Committee”) which initially shall be the Board. Until such time that the Board
appoints a successor Committee comprised of not less than three (3) members of the Board to
administer the Plan, the compensation committee of the board of directors of Wendy’s shall serve in
an advisory role to the Committee and may make recommendations to the Committee relating to
administration of the Plan as set forth herein. The members of the Committee shall serve at the
pleasure of the Board, which shall have the power at any time, or from time to time, to remove
members from the Committee or to add members thereto. Except during the period during which the
Board is the Committee, each member of the Committee shall be a Nonemployee Director and shall
satisfy any applicable stock exchange requirements. The Committee shall construe and interpret the
Plan, establish such operating guidelines and rules as it deems necessary for the proper
administration of the Plan and make such determinations and take such other action in connection
with the Plan as it deems necessary and advisable. It shall determine the Eligible Individuals to
whom and the time or times at which Awards and Options shall be granted, the number of Shares to be
subject to each Award and Option, the terms and conditions of each Award and Option (and amendments
thereto) and the duration of leaves of absence which may be granted to Grantees and Optionees
without constituting a termination of their employment, or status as a director for purposes of the
Plan. Any such construction, interpretation, rule, determination or other action taken by the
Committee pursuant to the Plan shall be final, binding and conclusive on all interested parties,
including without limitation the Company and all Grantees and Optionees.




          2.2. Committee Action. Actions by a majority of the Committee at a meeting at which a
quorum is present, or actions approved in writing by all of the members of the Committee, shall be
the valid acts of the Committee. Subject to applicable law, the Committee may delegate its
authority under the Plan to any other person or persons. No member of the Board or the Committee
shall be liable for any action or determination made in good faith with respect to the Plan or any
Award or Option granted under it.




 









 








          2.3. No Repricing of Options or Stock Appreciation Rights. The Committee shall have
no authority to make any adjustment (other than in connection with a stock dividend,
recapitalization or other transaction where an adjustment is permitted or required under the terms
of the Plan) or amendment, and no such adjustment or amendment shall be made, that reduces or would
have the effect of reducing the exercise price of an Option or Stock Appreciation Right previously
granted under the Plan, whether through amendment, cancellation or replacement grants, or other
means, unless the Company’s shareholders shall have approved such adjustment or amendment.




     Section 3. Maximum Number of Shares Subject to Plan.  



          3.1. Number of Shares Authorized for Issuance. Subject to any adjustment as provided
in the Plan, the Shares to be issued under the Plan may be, in whole or in part, authorized but
unissued Shares or issued Shares which shall have been reacquired by the Company and held by it as
treasury shares. The aggregate number of Shares that may be made the subject of Awards or Options
granted under the Plan shall not exceed 2,900,000, and not more than
1,000,000 Shares may be made the
subject of Incentive Stock Option Awards under the Plan. The number of Shares that may be the
subject of Options and Stock Appreciation Rights granted to an Eligible Individual in any calendar
year may not exceed 250,000 Shares. The number of Shares that may be the subject of Performance
Shares granted to an Eligible Individual in any calendar year may not
exceed 250,000 Shares. The
dollar amount of cash or the Fair Market Value of Shares that any Eligible Individual may receive
in any calendar year in respect of Performance Units denominated in
dollars may not exceed U.S. $4,000,000.




          3.2. Calculating Shares Available.




               (i) Upon the granting of an Award or an Option, the number of Shares available under this
Section 3 for the granting of further Awards and Options shall be reduced as follows:



                    (a) In connection with the granting of an Award or an Option (other than the granting of a
Performance Unit denominated in dollars or Dividend Equivalent Rights), the number of Shares
available under this Section 3 for the granting of further Options and Awards shall be reduced by
the number of Shares in respect of which the Option or Award is granted or denominated; provided,
however, that if any Option is exercised by tendering Shares, either actually or by attestation, to
the Company as full or partial payment of the Option Price, the maximum number of Shares available
under this Section 3 shall be increased by the number of Shares so tendered, but in no case shall
the maximum number of Shares available under this Section 3
exceed 2,900,000 without shareholder
approval.



                    (b) In connection with the granting of a Performance Unit denominated in dollars, the number
of Shares available under this Section 3 for the granting of further Options and Awards initially
shall be reduced by an amount equal to the quotient of (i) the dollar amount in which the
Performance Unit is denominated, divided by (ii) the Fair Market Value of a Share on the date the
Performance Unit is granted, with a corresponding adjustment if the Performance Unit is ultimately
settled in whole or in part with a different number of Shares.




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                    (c) In connection with the granting of a Dividend Equivalent Right, the number of Shares
available under this Section 3 shall not be reduced; provided, however, that if Shares are issued
in settlement of a Dividend Equivalent Right, the number of Shares available for the granting of
further Options and Awards under this Section 3 shall be reduced by the number of Shares so issued.



               (ii) Whenever any outstanding Option or Award or portion thereof expires, is canceled, is
settled in cash (including the settlement of tax withholding obligations using Shares) or is
otherwise terminated for any reason without having been exercised or payment having been made in
respect of the entire Option or Award, the Shares allocable to the expired, canceled, settled or
otherwise terminated portion of the Option or Award may again be the subject of Options or Awards
granted hereunder. In addition, upon settlement of a Stock Appreciation Right in Shares, the
excess of the number of Shares covered by the Stock Appreciation Right over the number of Shares
issued in settlement of the Stock Appreciation Right may again be the subject of Options or Awards
granted hereunder.



     Section 4. Restricted Stock; Stock Units.



          4.1. Restricted Stock. The Committee, from time to time, subject to the terms and
provisions of the Plan, may grant to any Eligible Individual an Award of Restricted Stock, which
shall be evidenced by an Agreement. Each Agreement shall contain such restrictions, terms and
conditions as the Committee may, in its discretion, determine and (without limiting the generality
of the foregoing) such Agreements may require that an appropriate legend be placed on Share
certificates. Awards of Restricted Stock shall be subject to the terms and provisions set forth
below in this Section 4.1.




               (i) Rights of Grantee. Shares of Restricted Stock granted pursuant to an Award
hereunder shall be issued in the name of the Grantee as soon as reasonably practicable after the
Award is granted, provided that the Grantee has executed and all documents which the Committee may
require as a condition to the issuance of such Shares, which may include an Agreement evidencing
the Award, the appropriate blank stock powers and an escrow agreement. If a Grantee shall fail to
execute any documents which the Committee may require within the time period prescribed by the
Committee at the time the Award of Restricted Stock is granted, the Award shall be null and void.
At the discretion of the Committee, Shares issued in connection with an Award of Restricted Stock
shall be deposited together with the stock powers with an escrow agent (which may be the Company)
designated by the Committee. Unless the Committee determines otherwise as set forth in the
Agreement, upon delivery of the Shares to the escrow agent (which may be in the form of book entry
Shares), the Grantee shall have all of the rights of a stockholder with respect to such Shares,
including the right to vote the Shares and to receive all dividends or other distributions paid or
made with respect to the Shares.



               (ii) Non-Transferability. Until all restrictions upon the Shares of Restricted Stock
awarded to a Grantee shall have lapsed in the manner set forth in Section 4.1(iii), such Shares
shall not be sold, transferred or otherwise disposed of and shall not be pledged or otherwise
hypothecated.



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               (iii) Lapse of Restrictions.



                    (a) Generally. Restrictions upon Shares of Restricted Stock awarded hereunder shall
lapse at such time or times and on such terms and conditions as the Committee may determine. The
Agreement evidencing the Award shall set forth any such restrictions.



                    (b) Effect of Change in Control. Upon a Change in Control, the restrictions upon
Shares of Restricted Stock shall lapse.



               (iv) Treatment of Dividends. At the time an Award of Shares of Restricted Stock is
granted, the Committee may, in its discretion, determine that the payment to the Grantee of
dividends, or a specified portion thereof, declared or paid on such Shares by the Company shall be
(a) deferred until the lapsing of the restrictions imposed upon such Shares and (b) held by the
Company for the account of the Grantee until such time. In the event that dividends are to be
deferred, the Committee shall determine whether such dividends are to be reinvested in Shares
(which shall be held as additional Shares of Restricted Stock) or held in cash. If deferred
dividends are to be held in cash, there may be credited interest on the amount of the account at
such times and at a rate per annum as the Committee, in its discretion, may determine. Payment of
deferred dividends in respect of Shares of Restricted Stock (whether held in cash or as additional
Shares of Restricted Stock), together with interest accrued thereon, if any, shall be made upon
the lapsing of restrictions imposed on the Shares in respect of which the deferred dividends were
paid, and any dividends deferred (together with any interest accrued thereon) in respect of any
Shares of Restricted Stock shall be forfeited upon the forfeiture of such Shares.



               (v) Delivery of Shares. Upon the lapse of the restrictions on Shares of Restricted
Stock, the Committee shall cause a stock certificate or evidence of book entry Shares to be
delivered to the Grantee with respect to such Shares of Restricted Stock, free of all restrictions
hereunder.



          4.2. Stock Unit Awards.




               (i) Grant. The Committee, from time to time, subject to the terms and provisions of
the Plan, may grant to any Eligible Individual an Award of Stock Units, which shall be evidenced
by an Agreement. Each Agreement shall contain such restrictions, terms and conditions as the
Committee may, in its discretion, determine.



               (ii) Payment of Awards. Each Stock Unit shall represent the right of the Grantee to
receive a payment upon vesting of the Stock Unit or on any later date specified by the Committee
equal to the Fair Market Value of a Share as of the date the Stock Unit was granted, the vesting
date or such other date as determined by the Committee at the time the Stock Unit was granted.
The Committee may, at the time a Stock Unit is granted, provide a limitation on the amount payable
in respect of each Stock Unit. The Committee may provide for the settlement of Stock Units in
cash or with Shares having a Fair Market Value equal to the payment to which the Grantee has
become entitled, or a combination thereof.



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               (iii) Effect of Change in Control. Upon a Change in Control, Stock Units shall
become fully vested.



     Section 5. Non-Employee Director Restricted Stock Unit Grants.



          5.1. Formula Restricted Stock Unit Grants. Beginning in 2006, each year each Eligible
Director shall be granted 2,730 Formula Restricted Stock Units. Each Formula Restricted Stock Unit
shall be accompanied by one (1) related Dividend Equivalent Right. Such Formula Restricted Stock
Units and related Dividend Equivalent Rights shall be granted on May 1 of each year. In the event
that an insufficient number of Shares remains available under the Plan to make Awards to all
Eligible Directors in a fiscal year, then unless the Plan is amended to provide additional Shares
or the Company adopts another stock plan under which the Eligible Directors can participate, the
Eligible Directors shall participate on a pro-rata basis.




          5.2. Formula Restricted Stock Unit and Dividend Equivalent Right Agreements. All
Formula Restricted Stock Units and related Dividend Equivalent Rights shall be evidenced by an
Agreement, which shall include the following terms and conditions:




               (i) Grantee and Number of Units. Each Agreement shall state the name of the Eligible
Director to whom the Formula Restricted Stock Units have been granted and shall state the number
of Formula Restricted Stock Units and Dividend Equivalent Rights granted.



               (ii) Dividend Equivalent Units Accompanying Formula Restricted Stock Units. Each
Dividend Equivalent Right shall provide that any dividends or distributions that are paid with
respect to Shares subject to the Formula Restricted Stock Units to which the Dividend Equivalent
Right relates shall be automatically converted into additional Formula Restricted Stock Units
based on the Fair Market Value of a Share on the date such dividend is paid (provided that no
fractional Formula Restricted Stock Units shall be granted). The amount of any cash dividends or
distributions remaining in respect of a fractional Share shall be added to any subsequent cash
dividends or distributions paid in respect of Shares subject to Formula Restricted Stock Units and
converted into additional Formula Restricted Stock Units or, if earlier, paid to the Eligible
Director upon the vesting of the Formula Restricted Stock Unit in respect of which such dividend
or distribution was paid, in accordance with Section 5.2(iv) below.



               (iii) Non-Transferability. Until the Formula Restricted Stock Units awarded to the
Grantee have vested in the manner set forth in Section 5.2(iv), such units shall not be sold,
transferred or otherwise disposed of and shall not be pledged or otherwise hypothecated.



               (iv) Vesting; Issuance of Shares.



                    (a) General Vesting. One-third of the Formula Restricted Stock Units shall vest on
each of the first two anniversaries of the grant date of such Formula Restricted Stock Units, and
the remainder shall vest on November 1 following the second anniversary of the grant date of such
Formula Restricted Stock Units.



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                    (b) Vesting Upon Certain Terminations of Service. In the event a Grantee’s services
as a director of the Company is terminated by reason of the Grantee’s death, the Grantee’s becoming
Disabled, or by reason of the Grantee’s Retirement, then all Formula Restricted Stock Units
(including all Dividend Equivalent Rights granted in respect of such units) held by the Grantee
shall become immediately vested as of the date of such termination.



                    (c) Effect of Change in Control. Upon a Change in Control, the restrictions upon
Formula Restricted Stock Units shall lapse.



               (v) Issuance of Shares. Upon vesting of Formula Restricted Stock Units pursuant to
Section 5.2(iv), (A) the Committee shall cause a stock certificate or evidence of book entry
Shares to be delivered to the Grantee with respect to the Shares subject to the vested Formula
Restricted Stock Units, free of all restrictions hereunder and (B) the Dividend Equivalent Rights
related to the vested Formula Restricted Stock Units shall terminate.



               (vi) Termination of Services by Grantee. Except as otherwise set forth in Section
5.2(iv), upon the termination of a Grantee’s services as a director, for any reason whatsoever,
the unvested Formula Restricted Stock Units (including any Dividend Equivalent Rights granted in
respect of such units) shall be forfeited as of the date of such termination.



     Section 6. Option Grants to Eligible Individuals.



          6.1. Selection of Optionees. The Committee, from time to time, subject to the terms
and provisions of the Plan, may grant Options to any Eligible Individual. In determining the
persons to whom Options shall be granted and the number of Shares to be covered by each Option, the
Committee may take into account the nature of the services rendered by such persons, their present
and potential contribution to the success and growth of the Company and its Subsidiaries, and such
other factors as the Committee, in its discretion, shall deem relevant. Any Eligible Individual
who has been granted an Option under a prior stock option plan of the Company may be granted an
additional Option or Options under the Plan if the Committee shall so determine.




          6.2. Option Requirements. The Options granted pursuant to this Section 6 shall be
authorized by the Committee and shall be evidenced by an Agreement, which Agreement shall include
the following terms and conditions:




               (i) Optionee. Each Agreement shall state the name of the Optionee to whom the Option
has been granted.



               (ii) Number of Shares. Each Agreement shall state the number of Shares to which that
Option pertains.



               (iii) Purchase Price. Each Agreement shall state the Option Price, which shall be
not less than one hundred percent (100%) of the Fair Market Value of the Shares covered by such
Option on the date of grant of such Option.



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               (iv) Length of Option. Each Option granted pursuant to this Section 6 shall be
granted for a period to be determined by the Committee but in no event to exceed more than ten
(10) years. However, each Option shall be exercisable only during such portion of its term as the
Committee shall determine and, subject to Section 11, only if the Optionee is employed by the
Company or a Subsidiary at the time of such exercise. The Committee may, subsequent to the
granting of any Option, extend the term thereof, but in no event shall the term as so extended
exceed the maximum term provided for in the first sentence on this Section 6.2(iv).



               (v) Exercise of Option. Each Optionee shall have the right to exercise his or her
Option at the time or times and in the manner specified in the Plan or in the Agreement evidencing
such Option. The Committee may accelerate the exercisability of any Option granted to an Eligible
Individual or any portion thereof at any time.



          6.3. Types of Stock Options. The Options granted under the Plan may be Nonqualified
Stock Options or Incentive Stock Options. Incentive Stock Options may be granted only to Eligible
Individuals who are employees of the Company or its “parent corporation” or a “subsidiary
corporation” (as such terms are defined in Section 424 of the Code). Notwithstanding anything to
the contrary contained in this Section 6, no Incentive Stock Option shall be granted to an
individual owning stock possessing more than ten percent (10%) of the total combined voting power
of the Company, or its parent corporation or subsidiary corporations unless (i) the Option Price at
the time such Option is granted is equal to at least one hundred ten percent (110%) of the Fair
Market Value of the Shares subject to the Option, and (ii) such Option by its terms is not
exercisable after the expiration of five (5) years from the date such Option is granted. Further,
the aggregate Fair Market Value (determined at the time the Option is granted) of the Shares with
respect to which Incentive Stock Options are exercisable for the first time by the Optionee during
any calendar year (under all such plans of the Company and its Subsidiaries) shall not exceed one
hundred thousand dollars (U.S. $100,000.00).




          6.4. Method of Exercise of Options. Each Option shall be exercised pursuant to the
terms of such Option as set forth in the applicable Agreement and pursuant to the terms of the Plan
by giving notice to the Company at its principal place of business or other address designated by
the Company, accompanied by cash, certified check, delivery of Shares (valued at their Fair Market
Value) or other property acceptable to the Committee, in payment of the Option Price for the number
of Shares specified. From time to time the Committee may establish procedures relating to effecting
such exercises, including procedures for cashless exercises through a registered broker-dealer. No
fractional Shares (or cash in lieu thereof) shall be issued as a result of exercising an Option.
The Company shall make delivery of such Shares as soon as possible; provided, however, that if any
law or regulation or securities exchange rule requires the Company to take action with respect to
the Shares specified in such notice before issuance thereof, the date of delivery of such Shares
shall then be extended for the period necessary to take such action.




          6.5. Non-Transferability of Options. Except to the extent that, pursuant to the terms
of the Plan or an Agreement, an Optionee’s legal representative or estate is permitted to exercise
an Option, an Option is exercisable during an Optionee’s lifetime only by the Optionee. The
Options shall not be transferable except by will or the laws of descent and distribution.




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          6.6. Change in Control. In the event of a Change in Control, all Options outstanding
on the date of such Change in Control shall become immediately and fully exercisable.




          6.7. Buy Out of Option Gains. At any time after any Option becomes exercisable, the
Committee shall have the right to elect, in its sole discretion and without the consent of the
holder thereof, to cancel such Option and pay to the Optionee the excess of the Fair Market Value
of the Shares covered by such Option over the Option Price of such Option at the date the Committee
provides written notice (the “Buy Out Notice”) of the intention to exercise such right.
Buy outs pursuant to this provision shall be effected by the Company as promptly as possible after
the date of the Buy Out Notice. Payments of buy out amounts may be made in cash, in Shares, or
partly in cash and partly in Shares, as the Committee deems advisable. To the extent payment is
made in Shares, the number of shares shall be determined by dividing the amount of the payment to
be made by the Fair Market Value of a Share at the date of the Buy Out Notice. In no event shall
the Company be required to deliver a fractional Share in satisfaction of this buy out provision.




     Section 7. Stock Appreciation Rights.



          7.1. Grant. The Committee, from time to time, subject to the terms and provisions of
the Plan, may, either alone or in connection with the grant of an Option, grant to any Eligible
Individual Stock Appreciation Rights in accordance with the Plan, the terms and conditions of which
shall be set forth in an Agreement. A Stock Appreciation Right may be granted (a) at any time if
unrelated to an Option, or (b) if related to an Option, either at the time of grant or at any time
thereafter during the term of the Option.




          7.2. Stock Appreciation Right Related to an Option. If granted in connection with an
Option, a Stock Appreciation Right shall cover the same Shares covered by the Option (or such
lesser number of Shares as the Committee may determine) and shall, except as provided in this
Section 7, be subject to the same terms and conditions as the related Option.




               (i) Exercise. A Stock Appreciation Right granted in connection with an Option shall
be exercisable at such time or times and only to the extent that the related Options are
exercisable, and will not be transferable except to the extent the related Option may be
transferable. A Stock Appreciation Right granted in connection with an Incentive Stock Option
shall be exercisable only if the Fair Market Value of a Share on the date of exercise exceeds the
exercise price specified in the related Incentive Stock Option Agreement.



               (ii) Amount Payable. Upon the exercise of a Stock Appreciation Right related to an
Option, the Grantee shall be entitled to receive an amount determined by multiplying (i) the
excess of the Fair Market Value of a Share on the last trading date immediately preceding the date
of exercise of such Stock Appreciation Right over the Option Price under the related Option, by
(ii) the number of Shares as to which such Stock Appreciation Right is being exercised.
Notwithstanding the foregoing, the Committee may limit in any manner the amount payable with
respect to any Stock Appreciation Right by including such a limit in the Agreement evidencing the
Stock Appreciation Right at the time it is granted.



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               (iii) Treatment of Related Options and Stock Appreciation Rights Upon Exercise. Upon
the exercise of a Stock Appreciation Right granted in connection with an Option, the Option shall
be canceled to the extent of the number of Shares as to which the Stock Appreciation Right is
exercised, and upon the exercise of an Option granted in connection with a Stock Appreciation
Right, the Stock Appreciation Right shall be canceled to the extent of the number of Shares as to
which the Option is exercised or surrendered.



          7.3. Stock Appreciation Right Unrelated to an Option. A Stock Appreciation Right
unrelated to an Option shall cover such number of Shares as the Committee shall determine.




               (i) Terms; Duration. Stock Appreciation Rights unrelated to Options shall contain
such terms and conditions as to exercisability, vesting and duration as the Committee shall
determine, but in no event shall they have a term of greater than ten (10) years. However, each
Stock Appreciation Right shall be exercisable only during such portion of its term as the
Committee shall determine and, subject to Section 11, only if the Grantee is employed by the
Company or a Subsidiary at the time of such exercise.



               (ii) Amount Payable. Upon exercise of a Stock Appreciation Right unrelated to an
Option, the Grantee shall be entitled to receive an amount determined by multiplying (a) the
excess of the Fair Market Value of a Share on the date preceding the date of exercise of such
Stock Appreciation Right over the Fair Market Value of a Share on the date the Stock Appreciation
Right was granted, by (b) the number of Shares as to which the Stock Appreciation Right is being
exercised. Notwithstanding the foregoing, the Committee may limit in any manner the amount
payable with respect to any Stock Appreciation Right by including such a limit in the Agreement
evidencing the Stock Appreciation Right at the time it is granted.



               (iii) Non-Transferability. No Stock Appreciation Right unrelated to an Option shall
be transferable by the Grantee otherwise than by will or the laws of descent and distribution, and
such Stock Appreciation Right shall be exercisable during the lifetime of such Grantee only by the
Grantee or his or her guardian or legal representative.



          7.4. Method of Exercise. Stock Appreciation Rights shall be exercised by a Grantee
only by giving written notice to the Company at its principal place of business or other address
designated by the Company, specifying the number of Shares with respect to which the Stock
Appreciation Right is being exercised. If requested by the Committee, the Grantee shall deliver
the Agreement evidencing the Stock Appreciation Right being exercised and the Agreement evidencing
any related Option to the Company, which shall endorse thereon a notation of such exercise and
return such Agreement to the Grantee.




          7.5. Form of Payment. Payment of the amount determined under Section 7.2(ii) or
7.3(ii) may be made in the discretion of the Committee solely in whole Shares in a number
determined at their Fair Market Value on the date preceding the date of exercise of the Stock
Appreciation Right, or solely in cash, or in a combination of cash and Shares. If the Committee
decides to make full payment in Shares and the amount payable results in a fractional Share,
payment for the fractional Share will be made in cash.




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          7.6. Effect of Change in Control. In the event of a Change in Control, all Stock
Appreciation Rights shall become immediately and fully exercisable.




     Section 8. Dividend Equivalent Rights. The Committee, from time to time, subject to the terms
and provisions of the Plan, may grant Dividend Equivalent Rights to any Eligible Individual in
tandem with an Option or Award or as a separate Award. The terms and conditions applicable to each
Dividend Equivalent Right shall be specified in the Agreement under which the Dividend Equivalent
Right is granted. Except as provided in Section 5, amounts payable in respect of Dividend
Equivalent Rights may be payable currently or, if applicable, deferred until the lapsing of
restrictions on such Dividend Equivalent Rights or until the vesting, exercise, payment, settlement
or other lapse of restrictions on the Option or Award to which the Dividend Equivalent Rights
relate. In the event that the amounts payable in respect of Dividend Equivalent Rights are to be
deferred, the Committee shall determine whether such amounts are to be held in cash or reinvested
in Shares or deemed (notionally) to be reinvested in Shares. If amounts payable in respect of
Dividend Equivalent Rights are to be held in cash, there may be credited at the end of each year
(or portion thereof) interest on the amount of the account at the beginning of the year at a rate
per annum as the Committee, in its discretion, may determine. Dividend Equivalent Rights may be
settled in cash or Shares or a combination thereof, in a single installment or multiple
installments, as determined by the Committee. Notwithstanding the foregoing, a Dividend Equivalent
Right granted in connection with or related to an Option or a Stock Appreciation Right shall be
granted in a manner and on such terms as will not result in the related Option or Stock
Appreciation Right as being treated as providing for deferred compensation under Section 409A of
the Code and the regulations promulgated thereunder.



     Section 9. Performance Awards.



          9.1. Performance Units. The Committee, from time to time, subject to the terms and
provisions of the Plan, may grant to any Eligible Individual an Award of Performance Units, the
terms and conditions of which shall be set forth in an Agreement. Performance Units may be
denominated in Shares or a specified dollar amount and, contingent upon the attainment of specified
Performance Objectives within the Performance Cycle, each Unit represents the right to receive
payment as provided in Sections 9.1(i) and (ii) of (a) in the case of Share-denominated Performance
Units, the Fair Market Value of a Share on the date the Performance Unit was granted, the date the
Performance Unit became vested or any other date specified by the Committee, (b) in the case of
dollar-denominated Performance Units, the specified dollar amount or (c) a percentage (which may be
more than 100%) of the amount described in clause (a) or (b) depending on the level of Performance
Objective attainment; provided, however, that the Committee may at the time a Performance Unit is
granted specify a maximum amount payable in respect of a vested Performance Unit. Each Agreement
shall specify the number of Performance Units to which it relates, the Performance Objectives which
must be satisfied in order for the Performance Units to vest and the Performance Cycle within which
such Performance Objectives must be satisfied.




               (i) Vesting and Forfeiture. Subject to Sections 9.3(iii) and 9.4, a Grantee shall
become vested with respect to the Performance Units to the extent that the Performance Objectives
set forth in the Agreement are satisfied for the Performance Cycle.



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               (ii) Payment of Awards. Subject to Section 9.3(iii) and 9.4, payment to Grantees in
respect of vested Performance Units shall be made as soon as practicable after the last day of the
Performance Cycle to which such Award relates. Subject to Section 9.4, such payments may be made
entirely in Shares valued at their Fair Market Value, entirely in cash, or in such combination of
Shares and cash as the Committee in its discretion shall determine at any time prior to such
payment; provided, however, that if the Committee in its discretion determines to make such
payment entirely or partially in Shares of Restricted Stock, the Committee must determine the
extent to which such payment will be in Shares of Restricted Stock and the terms of such
Restricted Stock at the time the Award is granted.



          9.2. Performance Shares. The Committee, from time to time, subject to the terms and
provisions of the Plan, may grant to any Eligible Individual an Award of Performance Shares, the
terms and conditions of which shall be set forth in an Agreement. Each Agreement may require that
an appropriate legend be placed on Share certificates. Awards of Performance Shares shall be
subject to the following terms and provisions:




               (i) Rights of Grantee. Performance Shares shall be issued in the name of the Grantee
as soon as reasonably practicable after the Award is granted, or on such other date as the
Committee may determine, provided that the Grantee has executed all documents which the Committee
may require as a condition to the issuance of such Performance Shares, which may include an
Agreement evidencing the Award, the appropriate blank stock powers and an escrow agreement. If a
Grantee shall fail to execute any documents which the Committee may require within the time period
prescribed by the Committee at the time the Award of Performance Shares is granted, the Award
shall be null and void. At the discretion of the Committee, Shares issued in connection with an
Award of Performance Shares shall be deposited together with the stock powers with an escrow agent
(which may be the Company) designated by the Committee. Unless the Committee determines otherwise
as set forth in the Agreement, upon delivery of the Shares to the escrow agent (which may be in
the form of book entry Shares), the Grantee shall have all of the rights of a stockholder with
respect to such Shares, including the right to vote the Shares and to receive all dividends or
other distributions paid or made with respect to the Shares.



               (ii) Non-Transferability. Until any restrictions upon the Performance Shares awarded
to a Grantee shall have lapsed in the manner set forth in Section 9.2(iii) or 9.4, such
Performance Shares shall not be sold, transferred or otherwise disposed of and shall not be
pledged or otherwise hypothecated.



               (iii) Lapse of Restrictions. Subject to Sections 9.3(iii) and 9.4, restrictions upon
Performance Shares awarded hereunder shall lapse and such Performance Shares shall become vested
at such time or times and on such terms, conditions and satisfaction of Performance Objectives as
the Committee may, in its discretion, determine at the time an Award is granted. Performance
Shares with respect to which Performance Objectives have been attained may also be subject to
additional vesting conditions based on continued service or such other conditions as may be
established by the Committee at the time the Award is granted.



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               (iv) Treatment of Dividends. At the time the Award of Performance Shares is granted,
the Committee may, in its discretion, determine that the payment to the Grantee of dividends, or a
specified portion thereof, declared or paid on Shares represented by such Award which have been
issued by the Company to the Grantee shall be (i) deferred until the lapsing of the restrictions
imposed upon such Performance Shares and (ii) held by the Company for the account of the Grantee
until such time. In the event that dividends are to be deferred, the Committee shall determine
whether such dividends are to be reinvested in Shares (which shall be held as additional
Performance Shares) or held in cash. If deferred dividends are to be held in cash, there may be
credited interest on the amount of the account at such times and at a rate per annum as the
Committee, in its discretion, may determine. Payment of deferred dividends in respect of
Performance Shares (whether held in cash or in additional Performance Shares), together with
interest accrued thereon, if any, shall be made upon the lapsing of restrictions imposed on the
Performance Shares in respect of which the deferred dividends were paid, and any dividends
deferred (together with any interest accrued thereon) in respect of any Performance Shares shall
be forfeited upon the forfeiture of such Performance Shares.



               (v) Delivery of Shares. Upon the lapse of the restrictions on Performance Shares
awarded hereunder, the Committee shall cause a stock certificate or evidence of book entry Shares
to be delivered to the Grantee with respect to such Performance Shares, free of all restrictions
hereunder.



          9.3. Performance Objectives




               (i) Establishment. Performance Objectives for Performance Awards may be expressed in
terms of earnings per share, earnings (which may be expressed as earnings before specified items),
return on assets, return on invested capital, revenue, operating income, cash flow, total
shareholder return or any combination thereof. Performance Objectives may be in respect of the
performance of the Company, any of its Subsidiaries, any of its Operating Units or any combination
thereof. Performance Objectives may be absolute or relative (to prior performance of the Company
or to the performance of one or more other entities or external indices) and may be expressed in
terms of a progression within a specified range. The Performance Objectives with respect to a
Performance Cycle shall be established in writing by the Committee by the earlier of (x) the date
on which a quarter of the Performance Cycle has elapsed or (y) the date which is ninety (90) days
after the commencement of the Performance Cycle, and in any event while the performance relating
to the Performance Objectives remain substantially uncertain.



               (ii) Effect of Certain Events. At the time of the granting of a Performance Award,
or at any time thereafter, in either case to the extent permitted under Section 162(m) of the Code
and the regulations thereunder without adversely affecting any Performance Award that is intended
to constitute Performance-Based Compensation, the Committee may provide for the manner in which
performance will be measured against the Performance Objectives (or may adjust the Performance
Objectives) to reflect the impact of specified corporate transactions (such as a stock split or
stock dividend), special charges, accounting or tax law changes and other extraordinary or
nonrecurring events.



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               (iii) Determination of Performance. Prior to the vesting, payment, settlement or
lapsing of any restrictions with respect to any Performance Award that is intended to constitute
Performance-Based Compensation made to a Grantee who is subject to Section 162(m) of the Code, the
Committee shall certify in writing that the applicable Performance Objectives have been satisfied
to the extent necessary for such Award to qualify as Performance-Based Compensation. The
Committee shall not be entitled to exercise any discretion otherwise authorized hereunder with
respect to such Options or Awards if the ability to exercise such discretion or the exercise of
such discretion itself would cause the compensation attributable to such Options or Awards to fail
to qualify as Performance-Based Compensation.



          9.4. Effect of Change in Control. Unless the Committee determines otherwise at the
time of grant of a Performance Award, in the event of a Change in Control:




               (i) With respect to Performance Units, the Grantee shall (i) become vested in all outstanding
Performance Units as if all Performance Objectives had been satisfied at the highest level by the
Company and the Grantee and (ii) be entitled to receive in respect of all Performance Units which
become vested as a result of a Change in Control a cash payment within ten (10) days after such
Change in Control.



               (ii) With respect to Performance Shares, all restrictions shall lapse immediately on all
outstanding Performance Shares as if all Performance Objectives had been satisfied at the highest
level by the Company and the Grantee.



          9.5. Non-Transferability. Until the vesting of Performance Units or the lapsing of
any restrictions on Performance Shares, as the case may be, such Performance Units or Performance
Shares shall not be sold, transferred or otherwise disposed of and shall not be pledged or
otherwise hypothecated.




          9.6. Performance-Based Compensation Treatment. At the time of grant of any
Performance Award intended to constitute Performance-Based Compensation, the Committee shall so
designate such Award.




     Section 10. Share Awards. The Committee, from time to time, subject to the terms and
provisions of the Plan, may grant to any Eligible Individual a Share Award on such terms and
conditions as the Committee may determine in its sole discretion. Share Awards may be made as
additional compensation for services rendered by the Eligible Individual or may be in lieu of cash
or other compensation to which the Eligible Individual is entitled from the Company.



     Section 11. Effect of a Termination of Employment on Options and Awards.



          11.1. Earlier Termination of Employment. Upon the termination of an Optionee’s or
Grantee’s employment with the Company and its Subsidiaries, for any reason whatsoever, except as
otherwise set forth in this Section 11, in an Agreement or, with the consent of such individual, as
determined by the Committee at any time prior to or after such termination, Options and Awards
granted to such individual will be treated as follows:




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               (i) Any Options and Stock Appreciation Rights will (A) to the extent not vested and
exercisable as of the date of such termination of employment, terminate on the date of such
termination of employment and (B) to the extent vested and exercisable as of the date of such
termination of employment, remain exercisable for a period of thirty (30) days following the date
of such termination of employment or, in the event of such Optionee’s or Grantee’s death during
such thirty (30) day period, remain exercisable by the estate of the deceased individual until the
end of the period of one year following the date of such termination of employment (but in no
event beyond the maximum term of the Option or Stock Appreciation Right).



               (ii) Any unvested portion of any Restricted Stock or Stock Units will be immediately
forfeited.



               (iii) Any Performance Shares or Performance Units will terminate.



               (iv) Any other Awards to the extent not vested will terminate.



          11.2. Upon Death or Disability. Except as otherwise provided in an Agreement, in the
event an Optionee’s or Grantee’s employment is terminated with the Company and its Subsidiaries as
a result of such individual’s death or such individual becoming Disabled, Options and Awards
granted to such individual will be treated as follows:




               (i) Any Options or Stock Appreciation Rights shall become immediately exercisable as of the
date of such termination of employment, and the Optionee or Grantee, or in the event the Optionee
or Grantee is incapacitated and unable to exercise the rights granted hereunder, the individual’s
legal guardian or legal representative, or in the event the Optionee or Grantee dies, the estate
of the deceased individual, shall have the right to exercise any rights the Optionee or Grantee
would otherwise have had under the Plan for a period of one year after the date of such
termination (but in no event beyond the maximum term of the Option or Stock Appreciation Right).



               (ii) Any unvested portion of any Restricted Stock or Stock Units will become immediately
vested.



               (iii) Any Performance Shares or Performance Units will remain outstanding and the Grantee or
the Grantee’s estate will be entitled to a pro-rata portion of the payment otherwise payable in
respect of the Award (based on the number of full weeks the Grantee was employed by the Company or
a Subsidiary during the applicable Performance Cycle over the total number of weeks in such
Performance Cycle), which will be paid on the date the Award would have been paid if the Grantee
had remained employed with the Company or a Subsidiary.



          11.3. Upon Retirement. Except as otherwise provided in an Agreement, in the event an
Optionee’s or Grantee’s employment with the Company and its Subsidiaries is terminated by reason of
such individual’s Retirement, Options and Awards granted to such individual will be treated as
follows:




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               (i) With respect to any Options and Stock Appreciation Rights, for a period of 48 months
following the date of such Retirement (but in no event beyond the maximum term of the Option or
Stock Appreciation Right), the Options or Stock Appreciation Rights shall remain outstanding and
(i) to the extent not then fully vested, will continue to vest in accordance with the applicable
vesting schedule, and (ii) the Optionee or Grantee shall have the right to exercise any rights the
individual would otherwise have had under the Plan. Notwithstanding the foregoing, in the event
that an Optionee does not exercise an Incentive Stock Option prior to the expiration of the
three-month period after the date of the Optionee’s Retirement, such Option shall be treated as a
Nonqualified Stock Option upon exercise.



               (ii) Any unvested portion of any Restricted Stock or Stock Units will become immediately
vested.



               (iii) Any Performance Shares or Performance Units will remain outstanding and the Grantee
will be entitled to a pro-rata portion of the payment otherwise payable in respect of the Award
(based on the number of full weeks the Grantee was employed by the Company or a Subsidiary during
the applicable Performance Cycle over the total number of weeks in such Performance Cycle), which
will be paid on the date the Award would have been paid if the Grantee had remained employed with
the Company or a Subsidiary.



          11.4. Upon Termination of Employment in Connection with Certain Dispositions. Except
as otherwise provided in an Agreement, in the event an Optionee’s or Grantee’s employment with the
Company and its Subsidiaries is terminated without Cause in connection with a disposition of one or
more restaurants or other assets by the Company or its Subsidiaries, or in connection with a sale
or other disposition of a Subsidiary, the Options and Awards granted to such individual will be
treated as follows:




               (i) With respect to Options and Stock Appreciation Rights, such Award will remain outstanding
and (i) to the extent not then fully vested, will continue to vest in accordance with the
applicable vesting schedule, and (ii) the Optionee or Grantee will have the right to exercise any
rights the individual would otherwise have had under the Plan for a period of one year following
the date of such termination of employment (but in no event beyond the maximum term of the Option
or Stock Appreciation Right).



               (ii) Any unvested portion of any Restricted Stock or Stock Units will become immediately
vested.



               (iii) Any Performance Shares or Performance Units will remain outstanding and the Grantee
will be entitled to a pro-rata portion of the payment otherwise payable in respect of the Award
(based on number of full weeks the Grantee was employed by the Company or a Subsidiary during the
applicable Performance Cycle over the total number of weeks in such Performance Cycle), which will
be paid on the date the Award would have been paid if the Grantee had remained employed with the
Company or a Subsidiary.



     Section 12. Effect of Change in Common Shares Subject to the Plan.



          12.1. In the event of a Change in Capitalization, the Committee shall conclusively determine
the appropriate adjustments, if any, to (i) the maximum number and class





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of Shares or other stock or securities with respect to which Options or Awards may be granted
under the Plan, (ii) the maximum number and class of Shares or other stock or securities with
respect to which Options or Awards may be granted to any Eligible Individual in any calendar year,
(iii) the number and class of Shares or other stock or securities which are subject to outstanding
Options or Awards granted under the Plan and the exercise price therefor, if applicable, (iv) the
number and class of Shares or other securities in respect of which Formula Restricted Stock Units
are to be granted under Section 5 and (v) the Performance Objectives.




          12.2. Any such adjustment in the Shares or other stock or securities (i) subject to
outstanding Incentive Stock Options (including any adjustments in the exercise price) shall be made
in such manner as not to constitute a modification as defined by Section 424(h)(3) of the Code and
only to the extent otherwise permitted by Sections 422 and 424 of the Code or (ii) subject to
outstanding Options or Awards that are intended to qualify as Performance-Based Compensation shall
be made in such a manner as not to adversely affect the treatment of the Options or Awards as
Performance-Based Compensation.




          12.3. If, by reason of a Change in Capitalization, a Grantee of an Award shall be entitled to,
or an Optionee shall be entitled to exercise an Option with respect to, new, additional or
different shares of stock or securities of the Company or any other corporation, such new,
additional or different shares shall thereupon be subject to all of the conditions, restrictions
and performance criteria which were applicable to the Shares subject to the Award or Option, as the
case may be, prior to such Change in Capitalization.




     Section 13. Effect of Certain Transactions. Subject to Sections 4.1(iii)(b), 4.2(iii), 6.6,
7.6 and 9.4 or as otherwise provided in an Agreement, following (a) the liquidation or dissolution
of the Company or (b) a merger or consolidation of the Company (a “Transaction”), either
(i) each outstanding Option or Award shall be treated as provided for in the agreement entered into
in connection with the Transaction or (ii) if not so provided in such agreement, each Optionee and
Grantee shall be entitled to receive in respect of each Share subject to any outstanding Options or
Awards, as the case may be, upon exercise of any Option or payment or transfer in respect of any
Award, the same number and kind of stock, securities, cash, property or other consideration that
each holder of a Share was entitled to receive in the Transaction in respect of a Share; provided,
however, that such stock, securities, cash, property, or other consideration shall remain subject
to all of the conditions, restrictions and performance criteria which were applicable to the
Options and Awards prior to such Transaction. The treatment of any Option or Award as provided in
this Section 13 shall be conclusively presumed to be appropriate for purposes of Section 12.



     Section 14. Listing and Registration of Common Shares. If at any time the Board shall
determine that listing, registration or qualification of the Shares covered by an Option or Award
upon any securities exchange or under any state, provincial or federal law or the consent or the
approval of any governmental regulatory body is necessary or desirable as a condition of or in
connection with the purchase of Shares under the Option, the Option may not be exercised in whole
or in part, and Shares shall not be delivered in connection with any other Award, unless and until
such listing, registration, qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Board. Any person exercising an Option or receiving
Shares in connection with any other Award shall make such representations and



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agreements and furnish such information as the Board or the Committee may request to assure
compliance with the foregoing or any other applicable legal requirements.



     Section 15. Misconduct. In the event that an Optionee or Grantee has (i) used for profit or
disclosed to unauthorized persons, confidential information or trade secrets of the Company or its
Subsidiaries, or (ii) breached any contract with or violated any fiduciary obligation to the
Company or its Subsidiaries, or (iii) engaged in unlawful trading in the securities of the Company
or its Subsidiaries or of another company based on information gained as a result of that
Optionee’s or Grantee’s employment with, or status as a director to, the Company or its
Subsidiaries, then that Optionee or Grantee shall forfeit all rights under any outstanding Option
or Award granted under the Plan and all of that Optionee’s or Grantee’s outstanding Options or
Awards shall automatically terminate, unless the Committee shall determine otherwise.



     Section 16. Payment Following Death or Incapacity. In the event any amounts or Shares become
payable or issuable pursuant to an Award or Option after the Grantee or Optionee dies or becomes
incapacitated, such amounts or Shares shall be paid or issued, in the case of death, to the
decedent’s estate or, in the case of incapacity, to the Grantee’s or Optionee’s legal guardian or
legal representative.



     Section 17. Foreign Employees. Without amending the Plan, the Committee may grant Options or
Awards to Eligible Individuals who are foreign nationals on such terms and conditions different
from those specified in the Plan as may in the judgment of the Committee be necessary or desirable
to foster and promote achievement of the purposes of the Plan, and, in furtherance of such
purposes, the Committee may make such modifications, amendments, procedures, and the like as may be
necessary or advisable to comply with provisions of laws of other countries in which the Company or
its Subsidiaries operate or have employees.



     Section 18. Deferral of Payments or Vesting. Notwithstanding anything to the contrary
contained herein, the Committee may provide for the deferral of the issuance or vesting of Shares
or the payment of cash in respect of an Option or Award granted under the Plan; provided that such
deferral shall be provided at the time of grant of an Option or Award. The terms and conditions of
any such deferral shall be set forth in the Agreement evidencing such Option or Award.



     Section 19. No Rights to Options, Awards or Employment. No individual shall have any claim or
right to be granted an Option or Award under the Plan. Having received an Option or Award under
the Plan shall not give an individual any right to receive any other grant under the Plan. No
Optionee or Grantee shall have any rights to or interest in any Option or Award except as set forth
herein. Neither the Plan nor any action taken herein shall be construed as giving any individual
any right to be retained in the employ of the Company or its Subsidiaries, or as a member of the
Board.



     Section 20. Multiple Agreements. The terms of each Option or Award may differ from other
Options or Awards granted under the Plan at the same time, or at some other time. The Committee
may also grant more than one Option or Award to a given Eligible Individual



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during the term of the Plan, either in addition to, or in substitution for, one or more
Options or Awards previously granted to that Eligible Individual.



     Section 21. Withholding of Taxes.



          21.1. At such times as an Optionee or Grantee recognizes taxable income in connection with the
receipt of Shares or cash hereunder (a “Taxable Event”), the Optionee or Grantee shall pay
to the Company an amount equal to the federal, state, provincial and local income taxes and other
amounts as may be required by law to be withheld by the Company in connection with the Taxable
Event (the “Withholding Taxes”) prior to the issuance, or release from escrow, of such
Shares or the payment of such cash. The Company shall have the right to deduct from any payment of
cash to an Optionee or Grantee an amount equal to the Withholding Taxes in satisfaction of the
obligation to pay Withholding Taxes. In satisfaction of the obligation to pay Withholding Taxes to
the Company, an Optionee or Grantee may elect to have withheld a portion of the Shares then
issuable to him or her having an aggregate Fair Market Value equal to the Withholding Taxes.




          21.2. If an Optionee makes a disposition, within the meaning of Section 424(c) of the Code and
regulations promulgated thereunder, of any Share or Shares issued to such Optionee pursuant to the
exercise of an Incentive Stock Option within the two-year period commencing on the day after the
date of the grant or within the one-year period commencing on the day after the date of transfer of
such Share or Shares to the Optionee pursuant to such exercise, the Optionee shall, within ten (10)
days of such disposition, notify the Company thereof, by delivery of written notice to the Company
at its principal executive office.




     Section 22. Amendment or Termination; Duration. Subject to applicable regulatory
requirements, the Board may amend or terminate the Plan at any time, provided that the Board shall
not make any change in the Options or Awards that will impair the rights of the Optionee or Grantee
therein, without the consent of the Optionee or Grantee.



     Section 23. Other Actions. The Plan shall not restrict the authority of the Committee, the
Board or of the Company or its Subsidiaries for proper corporate purposes to grant or assume stock
options, other than under the Plan, to or with respect to any employee, director or other person.
The adoption of the Plan by the Board shall not be construed as amending, modifying or rescinding
any previously approved incentive arrangement or as creating any limitations on the power of the
Board to adopt such other incentive arrangements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under the Plan, and such arrangements may
be either applicable generally or only in specific cases.



     Section 24. Costs and Expenses. Except as provided in Section 21 hereof with respect to
taxes, the costs and expenses of administering the Plan shall be borne by the Company, and shall
not be charged to any grant nor to any Employee receiving a grant.



     Section 25. Plan Unfunded. The Plan shall be unfunded. Except for reserving a sufficient
number of authorized Shares to the extent required by law to meet the requirements of the Plan, the
Company shall not be required to establish any special or separate fund or to make any other
segregation of assets to assure payment of any grant under the Plan.



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     Section 26. Laws Governing Plan. The Plan shall be construed under and governed by the laws
of the State of Delaware.



     Section 27. Captions. The captions to the several sections hereof are not a part of the Plan,
but are merely guides or labels to assist in locating and reading the several sections hereof.



     Section 28. Effective Date. The effective date of the Plan, as determined by the Board, shall
be the date the Company’s initial public offering of its common stock.



     Section 29. Definitions. Unless the context clearly indicates otherwise, the following terms,
when used in the Plan, shall have the respective meanings set forth below:



          29.1. “Agreement” means the written agreement between the Company and an Optionee or
Grantee evidencing the grant of an Option or Award and setting forth the terms and conditions
thereof.




          29.2. “Award” means a grant of Restricted Stock, a Stock Unit, a Formula Restricted
Stock Unit, a Stock Appreciation Right, a Performance Award, a Dividend Equivalent Right, a Share
Award or any or all of them.




          29.3. “Board” means the Board of Directors of the Company.




          29.4. “Cause” means:




               (i) in the case of an Eligible Director, the commission of an act of fraud or intentional
misrepresentation or an act of embezzlement, misappropriation or conversion of assets or
opportunities of the Company or any of its Subsidiaries; and



               (ii) in the case of an Optionee or Grantee whose employment with the Company or a Subsidiary
is subject to the terms of an employment agreement between such Optionee or Grantee and the
Company or Subsidiary, which employment agreement includes a definition of “Cause,” the term
“Cause” as used in the Plan or any Agreement shall have the meaning set forth in such employment
agreement during the period that such employment agreement remains in effect following a Change in
Control; and



               (iii) in all other cases, (a) intentional failure to perform reasonably assigned duties, (b)
dishonesty or willful misconduct in the performance of duties, (c) intentional violation of
Company or applicable Subsidiary policy, (d) involvement in a transaction in connection with the
performance of duties to the Company or any of its Subsidiaries which transaction is adverse to
the interests of the Company or any of its Subsidiaries and which is engaged in for personal
profit or (e) willful violation of any law, rule or regulation in connection with the performance
of duties (other than traffic violations or similar offenses); provided, however, that following a
Change in Control clause (a) of this Section 29.4(iii) shall not constitute “Cause.”



          29.5. “Change in Capitalization” means any increase or reduction in the number of
Shares, or any change (including, but not limited to, in the case of a spin-off, dividend or other
distribution in respect of Shares, a change in value) in the Shares or exchange of Shares for a





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different number or kind of shares or other securities of the Company or another corporation,
by reason of a reclassification, recapitalization, merger, consolidation, reorganization, spin-off,
split-up, issuance of warrants or rights or debentures, stock dividend, stock split or reverse
stock split, cash dividend, property dividend, combination or exchange of shares, repurchase of
shares, change in corporate structure or otherwise.




          29.6. “Change in Control” shall mean the occurrence of:




               (i) An acquisition (other than directly from the Company) of any common stock or other voting
securities of the Company entitled to vote generally for the election of directors (the
“Voting Securities”) by any “Person” (as the term person is used for purposes of
Section 13(d) or 14(d) of the Exchange Act, immediately after which such Person has
“Beneficial Ownership” (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of thirty percent (30%) or more of the then outstanding shares of the Company’s common stock
or the combined voting power of the Company’s then outstanding Voting Securities; provided,
however, in determining whether a Change in Control has occurred, Voting Securities which are
acquired in a “Non-Control Acquisition” (as hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control. A “Non-Control Acquisition” shall mean
an acquisition by (i) an employee benefit plan (or a trust forming a part thereof) maintained by
(A) the Company 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 Company
(for purposes of this definition, as “Subsidiary”), (ii) the Company or its Subsidiaries, (iii)
any Person in connection with a “Non-Control Transaction” (as hereinafter defined), (iv) Wendy’s
International, Inc. (“Wendy’s”), or (v) any Person in connection with any distribution of
Shares by Wendy’s to its shareholders;



               (ii) The individuals who, as of the Effective Date, are members of the Board (the
“Incumbent Board”), cease for any reason (other than directors resigning and transitioning
in connection a complete spin-off of Shares owned by Wendy’s to its shareholders) to constitute at
least seventy percent (70%) of the members of the Board; provided, however, that if the election,
or nomination for election by the Company’s common stockholders, of any new director was approved
by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of
the Plan, be considered as a member of the Incumbent Board; provided further, however, that no
individual shall be considered a member of the Incumbent Board if such individual initially
assumed office as a result of an actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board (a “Proxy Contest”) including by reason of any
agreement intended to avoid or settle any Proxy Contest; or



               (iii) The consummation of:



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



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                         (1) the stockholders of the Company, immediately before such merger, consolidation or
reorganization, own directly or indirectly immediately following such merger, consolidation or
reorganization, at least seventy percent (70%) of the combined voting power of the outstanding
voting securities of the corporation resulting from such merger or consolidation or reorganization
(the “Surviving Company”) in substantially the same proportion as their ownership of the
Voting Securities immediately before such merger, consolidation or reorganization,



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



                         (3) no Person other than (i) the Company, (ii) any Subsidiary, (iii) any employee benefit plan
(or any trust forming a part thereof) that, immediately prior to such merger, consolidation or
reorganization, was maintained by the Company or any Subsidiary, or (iv) any Person who,
immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of
thirty percent (30%) or more of the then outstanding Voting Securities or common stock of the
Company, has Beneficial Ownership of thirty percent (30%) or more of the combined voting power of
the Surviving Company’s then outstanding voting securities or its common stock;



                    (b) A complete liquidation or dissolution of the Company; or



                    (c) The sale or other disposition of all or substantially all of the assets of the Company to
any Person (other than a transfer to a Subsidiary).


Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any
Person (the “Subject Person”) acquired Beneficial Ownership of more than the permitted
amount of the then outstanding common stock or Voting Securities as a result of the acquisition of
common stock or Voting Securities by the Company which, by reducing the number of shares of common
stock or Voting Securities then outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Persons, provided that if a Change in Control would occur (but
for the operation of this sentence) as a result of the acquisition of common stock or Voting
Securities by the Company, and after such share acquisition by the Company, the Subject Person
becomes the Beneficial Owner of any additional common stock or Voting Securities which increases
the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person,
then a Change in Control shall occur.



If an Eligible Individual’s employment is terminated by the Company without Cause prior to the date
of a Change in Control but the Eligible Individual 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 the Plan provided a Change in
Control shall actually have occurred.




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          29.7. “Code” means the U.S. Internal Revenue Code of 1986, as amended.




          29.8. “Disabled,” with regard to any particular Optionee or Grantee, shall have the
meaning (i) set forth in Section 22(e)(3) of the Code, in the context of determining the period
during which Incentive Stock Options granted to an Optionee may be exercised and (ii) set forth in
the Company’s long term disability program applicable to such Optionee or Grantee in all other
contexts or, if no long term disability program is applicable to such Optionee or Grantee, as set
forth in the Company’s long term disability program generally applicable to officers of the
Company.




          29.9. “Dividend Equivalent Right” means a right to receive all or some portion of the
cash dividends that are or would be payable with respect to Shares.




          29.10. “Eligible Director” means a member of the Board who is not an employee of the
Company or any of its Subsidiaries.




          29.11. “Eligible Individual” means any of the following individuals who is designated
by the Committee as eligible to receive Options or Awards subject to the conditions set forth
herein: (a) any director or employee of the Company or a Subsidiary, or (b) any individual to whom
the Company or a Subsidiary has extended a formal, written offer of employment.




          29.12. “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.




          29.13. “Fair Market Value” on any date shall be equal to the mean of the high and low
prices at which Shares are traded on the Toronto Stock Exchange on such date.




          29.14. “Formula Restricted Stock Units” means Formula Restricted Stock Units granted
pursuant to Section 5.




          29.15. “Grantee” means a person to whom an Award has been granted under the Plan.




          29.16. “Incentive Stock Option” means an Option satisfying the requirements of Section
422 of the Code and designated by the Committee as an Incentive Stock Option.




          29.17. “Nonemployee Director” means a director of the Company who is a “nonemployee
director” within the meaning of Rule 16b-3 promulgated under the Exchange Act.




          29.18. “Nonqualified Stock Option” means an Option which is not an Incentive Stock
Option.




          29.19. “Operating Unit” means any operating unit or division of the Company designated
as a Operating Unit by the Committee.




          29.20. “Option” means a Nonqualified Stock Option, an Incentive Stock Option, a
Formula Option, or any or all of them.




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          29.21. “Optionee” means a person to whom an Option has been granted under the Plan.




          29.22. “Option Price” means the price at which a Share covered by an Option granted
hereunder may be purchased.




          29.23. “Outside Director” means a member of the Board who is an “outside director”
within the meaning of Section 162(m) of the Code and the regulations promulgated thereunder.




          29.24. “Performance Awards” means Performance Units, Performance Shares or either or
both of them.




          29.25. “Performance-Based Compensation” means any Option or Award that is intended to
constitute “performance-based compensation” within the meaning of Section 162(m)(4)(C) of the Code
and the regulations promulgated thereunder.




          29.26. “Performance Cycle” means the time period specified by the Committee at the
time Performance Awards are granted during which the performance of the Company, a Subsidiary or a
Operating Unit will be measured.




          29.27. “Performance Objectives” has the meaning set forth in Section 9.3.




          29.28. “Performance Shares” means Shares issued or transferred to an Eligible
Individual under Section 9.2.




          29.29. “Performance Units” means Performance Units granted to an Eligible Individual
under Section 9.1.




          29.30. “Plan” means this Tim Hortons Inc. 2006 Stock Incentive Plan, as amended and
restated from time to time.




          29.31. “Restricted Stock” means Shares issued or transferred to an Eligible Individual
pursuant to Section 4.1.




          29.32. “Retirement” means (i) in the case of an employee of the Company or a
Subsidiary, the definition provided for such term in an Agreement and (ii) in the case of a member
of the Board, termination of membership on the Board at or after attaining age 55 with at least
three (3) years of service as a member of the Board, other than by reason of death, Disability or
for Cause.




          29.33. “Share Award” means an Award of Shares granted pursuant to Section 10.




          29.34. “Shares” means shares of the common stock, par value $.001 per share, of the
Company and any other securities into which such shares are changed or for which such shares are
exchanged.




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          29.35. “Stock Appreciation Right” means a right to receive all or some portion of the
increase in the value of the Shares as provided in Section 7 hereof.




          29.36. “Stock Unit” means a right granted to an Eligible Individual under Section 4.2
representing a number of hypothetical Shares.




     Section 30. Toronto Stock Exchange Definitions. For the purposes of Sections 30 and 31,
“insider”, “security based compensation arrangements” and “service provider” have the following
meanings:



          30.1 “Insider” means,




               (i) every director or senior officer of the Company;



               (ii) every director or senior officer of a company that is itself an insider or subsidiary of
the Company;



               (iii) any person or company who beneficially owns, directly or indirectly, voting securities
of the Company or who exercises control or direction over voting securities of the Company or a
combination of both carrying more than 10% of the voting rights attached to all voting securities
of the Company for the time being outstanding other than voting securities held by the person or
company as underwriter in the course of a distribution; and



               (iv) the Company where it has purchased, redeemed or otherwise acquired any of its securities,
for so long as it holds any of its securities.



          30.2 “Security Based Compensation Arrangements” include:




               (i) stock option plans for the benefit of employees, insiders, service providers or any one of
such groups;



               (ii) individual stock options granted to employees, service providers or insiders if not
granted pursuant to a plan previously approved by the Company’s securityholders;



               (iii) stock purchase plans where the Company provides financial assistance or where the
Company matches the whole or a portion of the securities being purchased;



               (iv) stock appreciation rights involving issuances of securities from treasury;



               (v) any other compensation or incentive mechanism involving the issuance or potential
issuances of securities of the Company; and



               (vi) security purchases from treasury by an employee, insider or service provider which is
financially assisted by the Company by any means whatsoever.



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For greater certainty, arrangements which do not involve the issuance from treasury or potential
issuance from treasury of securities of the Company do not constitute security based compensation
arrangements.




          30.3 “Service provider” is a person or company engaged by the Company to provide
services for an initial, renewable or extended period of twelve months or more.




     Section 31. Toronto Stock Exchange Requirements. The number of shares of common stock
issuable to Insiders, at any time, under all Security Based Compensation Arrangements of the
Company, may not exceed 10% of the Company’s issued and outstanding shares of common stock; and the
number of shares of common stock issued to Insiders within any one year period, under all Security
Based Compensation Arrangements of the Company, may not exceed 10% of the Company’s issued and
outstanding shares of common stock.




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