Document:

exv10w8

 

EXHIBIT 10.8

INDEMNIFICATION AGREEMENT

     This
Indemnification Agreement (this “Agreement”) is made as of this ___day of                     ,
200_, by and between Tim Hortons Inc., a Delaware corporation (the
“Company”), and
                                                            ,
an individual (“Indemnitee”).

RECITALS

     A. The
bylaws (the “Bylaws”) of the Company provide for the indemnification of the directors
of the Company to the greatest extent permitted by Delaware law, including the Delaware General
Corporation Law, as amended (the “DGCL”).

     B. The Bylaws and the DGCL permit contracts between the Company and the directors of the
Company with respect to indemnification of such directors.

     C. In accordance with the DGCL, the Company may purchase and maintain a policy or policies of
directors’ and officers’ liability insurance covering certain liabilities that may be incurred by
its directors in the performance of their obligations to the Company.

     D. The Company recognizes that capable and qualified individuals are becoming increasingly
reluctant to serve as directors of public corporations as a result of the recent and ongoing
enactment of statutes and regulations pertaining to directors’ responsibilities and the increasing
risk of lawsuits against directors in the current corporate climate, unless such individuals are
provided with more certain and secure protection against exposure to unreasonable personal risk
arising from their service and activities on behalf of a corporation.

     E. The Company is aware that individuals recruited to serve on the boards of public
corporations generally are more likely to agree to provide services to corporations that provide
for separate indemnification agreements with their directors because, unlike indemnification
provisions contained in the certificate of incorporation or the bylaws of a company or state
statutory provisions, the indemnification provisions contained in a separate agreement generally
may not be amended or rescinded without the consent of the director who is a party to the
agreement.

     F. The Company recognizes that it is in the best interests of the Company and its shareholders
to attract and retain capable and qualified individuals to serve on its Board of Directors (the
“Board”) and to enable such directors to exercise their independent business judgment in their
capacities as directors without being affected by the threat of exposure to unreasonable personal
risk.

     G. To induce Indemnitee to serve and/or continue to serve as a director of the Company, the
Company desires Indemnitee to be indemnified and advanced expenses as set forth herein.

 

 

AGREEMENT

     In consideration of Indemnitee’s service as a director of the Company after the date hereof,
the Company and Indemnitee hereby agree as follows:

     1. Certain Definitions. Capitalized terms used but not otherwise defined in this Agreement
shall have the meanings set forth below:

     “Corporate Status” means the fact that a person is or was a director of the Company. A
Proceeding shall be deemed to have been brought by reason of a person’s “Corporate Status” if it is
brought because of the status described in the preceding sentence or because of any action or
inaction on the part of such person in connection with such status.

     “Disinterested Director” means a director of the Company who is not and was not a party to or
threatened with a Proceeding in respect of which indemnification is sought by Indemnitee.

     “Expenses” shall include all reasonable attorneys’ fees, disbursements and retainers, court
costs, transcript costs, fees of experts, witness fees, travel and deposition costs, duplicating
costs, printing and binding costs, telephone charges, postage, delivery service fees and all other
disbursements or expenses of the types customarily incurred in connection with (a) prosecuting,
defending, preparing to prosecute or defend, investigating, settling or appealing a Proceeding
(including the cost of any appeal bond or its equivalent), (b) for purposes of Section 2.1
only, being prepared to be a witness or otherwise participating in a Proceeding or (c) enforcing a
right under this Agreement (including any right to indemnification or advancement of expenses under
this Agreement).

     “Independent Counsel” means an attorney, or a firm having associated with it an attorney, who
neither currently is nor in the past five years has been retained by or performed services for the
Company or any person to be indemnified by the Company.

     “Proceeding” includes any threatened, pending or completed action, suit, arbitration,
alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other
actual, threatened or completed proceeding, whether civil, criminal, administrative or
investigative, in which Indemnitee was, is or would be involved as a party or otherwise (including
as a witness) by reason of the Indemnitee’s Corporate Status, including one pending on or before
the date of this Agreement; but excluding one initiated by an Indemnitee pursuant to Section
7 of this Agreement to enforce Indemnitee’s rights under this Agreement. For purposes of this
definition, the term “threatened” shall be deemed to include, but not be limited to, Indemnitee’s
good faith belief that a claim or other assertion may lead to initiation of a Proceeding.

     “Reviewing Party” means the person, persons or entity selected to make the determination of
the entitlement to indemnification pursuant to Section 5.3 hereof.

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2. Indemnification.

          2.1 Proceedings not by or in Right of Company. The Company hereby agrees to hold harmless and
indemnify Indemnitee to the greatest extent permitted by Delaware law, including the provisions of
the DGCL, and by the Bylaws, as such may be amended from time to time, if Indemnitee was or is a
party, witness, or other participant, or is threatened to be made a party, witness, or other
participant, to any Proceeding, other than a Proceeding by or in the right of the Company, by
reason of Indemnitee’s Corporate Status, against all Expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection
with such Proceeding, if Indemnitee acted in good faith and in a manner Indemnitee reasonably
believed to be in or not opposed to the best interests of the Company and, with respect to any
criminal Proceeding, had no reasonable cause to believe that his or her conduct was unlawful. The
termination of any Proceeding by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not
satisfy the foregoing standard of conduct to the extent applicable thereto.

          2.2 Proceedings by or in Right of Company. The Company hereby agrees to hold harmless and
indemnify Indemnitee to the greatest extent permitted by Delaware law, including the provisions of
the DGCL, and by the Bylaws, as such may be amended from time to time, if Indemnitee was or is a
party or is threatened to be made a party to any Proceeding by or in the right of the Company, by
reason of Indemnitee’s Corporate Status, against all Expenses actually and reasonably incurred by
Indemnitee or on Indemnitee’s behalf in connection with the defense or settlement of such
Proceeding, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be
in or not opposed to the best interests of the Company; provided, however, that, if
applicable law so provides, no indemnification against such Expenses shall be paid in respect of
any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be
liable to the Company unless, and only to the extent that, the Court of Chancery of the State of
Delaware (the “Court”) determines, upon application, that, despite the adjudication of liability
but in view of all of the circumstances of the case, Indemnitee is fairly and reasonably entitled
to indemnity for such Expenses as such Court shall deem proper.

          2.3 Indemnification for Expenses of an Indemnitee Who is Wholly or Partly Successful. To the
extent that Indemnitee has been successful on the merits or otherwise in defense of any Proceeding
referred to in Section 2.1 or 2.2 of this Agreement, or in defense of any claim,
issue or matter in such Proceeding, Indemnitee shall be indemnified against Expenses actually and
reasonably incurred by the Indemnitee or on Indemnitee’s behalf in connection with such Proceeding.

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     3. Advancement of Expenses.

          3.1 Advancement Obligation. The Company shall advance all Expenses incurred by or on behalf
of Indemnitee in connection with any Proceeding prior to the final disposition of such Proceeding
upon receipt of an undertaking by or on behalf of Indemnitee to repay such amount if it shall
ultimately be determined that Indemnitee is not entitled to be indemnified by the Company. Any
advances and undertakings to repay pursuant to this Section 3.1 shall not be secured, shall
not bear interest and shall provide that, if Indemnitee has commenced or thereafter commences legal
proceedings in the Court to secure a determination that Indemnitee should be indemnified under
applicable law with respect to such Proceeding, Indemnitee shall not be required to reimburse the
Company for any advancement of Expenses in respect of such Proceeding until a final judicial
determination is made with respect thereto (as to which all rights of appeal therefrom have been
exhausted or lapsed).

          3.2 Timing and Contents. Any advancement of Expenses pursuant to Section 3.1 hereof
shall be made within ten days after the receipt by the Company of a written statement from
Indemnitee requesting such advancement from time to time and accompanied by or preceded by the
undertaking referred to in Section 3.1 above. Each statement requesting advancement shall
reasonably evidence the Expenses incurred by or on behalf of the Indemnitee in connection with such
Proceeding for which advancement is being sought. 

     4. Contribution in the Event of Joint Liability. Whether or not the indemnification provided
in this Agreement is available, in respect of any Proceeding in which the Company is jointly liable
with Indemnitee (or would be if joined in such Proceeding), the Company shall contribute to the
amount of Expenses, judgments, fines and amounts paid in settlement actually and reasonably
incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the
Company, on the one hand, and Indemnitee, on the other hand, from the transaction from which such
Proceeding arose; provided, however, that the proportion determined on the basis of
relative benefit may, to the extent necessary to conform to law, be further adjusted by reference
to the relative fault of the Company, on the one hand, and Indemnitee, on the other hand, in
connection with the events that resulted in such Expenses, judgments, fines or settlement amounts,
as well as any other equitable considerations that applicable law may require to be considered.
The relative fault of the Company, on the one hand, and Indemnitee, on the other hand, shall be
determined by reference to, among other things, the degree to which their actions were motivated by
intent to gain personal profit or advantage, the degree to which their liability is primary or
secondary, and the degree to which their conduct is active or passive.

5. Procedures and Presumptions for Determination of Entitlement to Indemnification.

          5.1 Timing of Payments. All payments of Expenses, judgments, fines, amounts paid in
settlement and other amounts by the Company to Indemnitee pursuant to this Agreement shall be made
as soon as practicable after written demand therefor by Indemnitee is presented to the Company, but
in no event later than (a) 30 days after such demand is presented or (b) such later date as may be
permitted for the determination of entitlement to indemnification

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pursuant to Section 5.7 hereof, if applicable; provided, however, that
advances of Expenses shall be made within the time period provided in Section 3.2 hereof.

          5.2 Request for Indemnification. Whenever Indemnitee believes that he or she is entitled to
indemnification pursuant to this Agreement, Indemnitee shall submit to the Company a written
request, including therein or therewith such documentation and information as is reasonably
available to Indemnitee and is reasonably necessary to determine whether and to what extent
Indemnitee is entitled to indemnification. Indemnitee shall submit such claim for Indemnification
within a reasonable time, not to exceed five years, after any judgment, order, settlement,
dismissal, arbitration award, conviction, acceptance of a plea of nolo contendere (or its
equivalent) or other full or partial final determination or disposition of the Proceeding (with the
latest date of the occurrence of any such event to be considered the commencement of the five-year
period). The Secretary of the Company shall, promptly upon receipt of such a request for
indemnification, advise the Board in writing that Indemnitee has requested indemnification.

          5.3 Reviewing Party. Upon written request by Indemnitee for indemnification pursuant to the
first sentence of Section 5.2 hereof, to the extent that the Indemnitee’s entitlement to
such indemnification is governed by Section 2.1 or 2.2 of this Agreement, a
determination with respect to Indemnitee’s entitlement thereto shall be made in the specific case
by one of the following methods: (a) so long as there are Disinterested Directors with respect to
such Proceeding, a majority vote of the Disinterested Directors, even though less than a quorum of
the Board, (b) so long as there are Disinterested Directors with respect to such Proceeding, a
committee of such Disinterested Directors designated by a majority vote of such Disinterested
Directors, even though less than a quorum, or (c) if there are no Disinterested Directors or if a
majority of Disinterested Directors so direct, Independent Counsel (designated for such purpose by
the Board) in a written opinion delivered to the Board, a copy of which shall also be delivered to
Indemnitee. The person, persons or entity chosen to make a determination under this Agreement of
the Indemnitee’s entitlement to indemnification shall act reasonably and in good faith in making
such determination.

          5.4 Selection of Independent Counsel. If the determination of entitlement to indemnification
is to be made by Independent Counsel pursuant to Section 5.3 hereof, the Independent
Counsel shall be selected as provided in this Section 5.4. The Independent Counsel shall
be selected by the Board of Directors, and the Company shall promptly give written notice to
Indemnitee advising him or her of the identity of the Independent Counsel so selected. Indemnitee
may, within ten days after such written notice of selection shall have been given, deliver to the
Company a written objection to such selection; provided, however, that such
objection may be asserted only on the ground that the Independent Counsel so selected does not meet
the requirements of “Independent Counsel” as defined in this Agreement, and the objection shall set
forth with particularity the factual basis of such assertion. Absent a proper and timely
objection, the person so selected shall act as Independent Counsel. If a written objection is made
and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and
until such objection is withdrawn or the Court has ruled against such objection. If, within 30
days after submission by Indemnitee of a written request for indemnification pursuant to
Section 5.2 hereof, no Independent Counsel shall have been selected or an Independent
Counsel shall have been selected but an objection thereto shall have been properly made and
remained unresolved, either the Company or Indemnitee may petition the Court for resolution of

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any objection that shall have been made by the Indemnitee to the selection of Independent
Counsel and/or for the appointment as Independent Counsel of a person selected by the Court or by
such other person as the Court shall designate, and the person with respect to whom all objections
are so resolved or the person so appointed shall act as Independent Counsel under Section
5.3 hereof. The Company shall pay any and all reasonable fees and expenses of Independent
Counsel incurred by such Independent Counsel in connection with acting pursuant to Section
5.3 hereof.

          5.5 Burden of Proof. In making a determination with respect to entitlement to indemnification
hereunder, the Reviewing Party shall presume that Indemnitee is entitled to indemnification under
this Agreement. Anyone seeking to overcome this presumption shall have the burden of proof and the
burden of persuasion, by clear and convincing evidence. In making a determination with respect to
entitlement to indemnification hereunder which under this Agreement or applicable law requires a
determination of Indemnitee’s good faith, and/or whether Indemnitee acted in a manner which he or
she reasonably believed to be in or not opposed to the best interests of the Company, and, with
respect to any criminal Proceeding, if Indemnitee had no reasonable cause to believe that
Indemnitee’s conduct was unlawful, the Reviewing Party shall presume that Indemnitee has at all
times acted in good faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the Company and, with respect to any criminal Proceeding, that Indemnitee had
no reasonable cause to believe that Indemnitee’s conduct was unlawful. Anyone seeking to overcome
this presumption shall have the burden of proof and the burden of persuasion, by clear and
convincing evidence. Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action
or inaction is based solely on Indemnitee’s reliance upon the records of the Company and upon such
information, opinions, reports or statements, including financial statements and other financial
data, that were prepared or presented by one or more officers or employees of the Company or
committees of the Board or by any other person as to matters that Indemnitee reasonably believed
were within such person’s professional or expert competence and who was selected by or on behalf of
the Company; provided, however, this sentence shall not be deemed to limit in any way the other
circumstances in which Indemnitee may be deemed to have met such standard of conduct. In addition,
the knowledge and/or actions, or failure to act, of any other director, officer, agent or employee
of the Company shall not be imputed to Indemnitee for purposes of determining the right to
indemnification under this Agreement.

          5.6 No Presumption in Absence of Determination or as Result of Adverse Determination. Neither
the failure of any Reviewing Party to have made a determination as to whether Indemnitee has met
any particular standard of conduct or had any particular belief, nor an actual determination by any
Reviewing Party that Indemnitee has not met such standard of conduct or did not have such belief,
prior to the commencement of legal proceedings by Indemnitee to secure a judicial determination
under this Agreement or applicable law that Indemnitee should be indemnified under this Agreement,
shall be a defense to Indemnitee’s claim or create a presumption that Indemnitee has not met any
particular standard of conduct or did not have any particular belief.

          5.7 Timing of Determination. If the Reviewing Party shall not have made a determination
within 30 days after receipt by the Company of the request therefor, the requisite determination of
entitlement to indemnification shall be deemed to have been made and

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Indemnitee shall be entitled to such indemnification, absent (a) a misstatement by Indemnitee
of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not
materially misleading, in connection with the request for indemnification, or (b) a prohibition of
such indemnification under applicable law; provided, however, that such 30-day
period may be extended for a reasonable time, not to exceed an additional 45 days, if the Reviewing
Party in good faith requires such additional time for obtaining or evaluating documentation and/or
information relating thereto.

          5.8 Cooperation. Indemnitee shall cooperate with the Reviewing Party with respect to
Indemnitee’s entitlement to indemnification, including providing to such Reviewing Party upon
reasonable advance request any documentation or information that is not privileged or otherwise
protected from disclosure and that is reasonably available to Indemnitee and reasonably necessary
to such determination. The Reviewing Party shall act reasonably and in good faith in making a
determination under this Agreement of Indemnitee’s entitlement to indemnification.

     6. Liability Insurance. The Company shall, from time to time, make the good faith
determination whether or not it is practicable for the Company to obtain and maintain a policy or
policies of directors’ and officers’ liability insurance with one or more reputable insurance
companies. Among other considerations, the Company will weigh the costs of obtaining such
insurance coverage against the protection afforded by such coverage. In all policies of directors’
and officers’ liability insurance obtained by the Company, Indemnitee shall be named as an insured
party in such manner as to provide Indemnitee with the same rights and benefits as are afforded to
similarly situated directors of the Company. Notwithstanding the foregoing, the Company shall have
no obligation to obtain or maintain such insurance if the Company determines in good faith that
such insurance is not reasonably available, if the premium costs for such insurance are
disproportionately high compared to the amount of coverage provided, or if the coverage provided by
such insurance is limited by exclusions so as to provide an insufficient benefit. The Company
shall promptly notify Indemnitee of any such determination not to provide insurance coverage. In
the event that the Company does maintain such insurance for the benefit of Indemnitee, the right to
indemnification and advancement of Expenses as provided herein shall apply only to the extent that
Indemnitee has not been indemnified and actually reimbursed pursuant to such insurance.

     7. Remedies of Indemnitee Relating to Indemnification and Advancement of Expenses.

          7.1 Enforcement of Rights. In the event that (a) a determination is made pursuant to
Section 5 of this Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (b) advancement of Expenses is not timely made pursuant to Section 3.2 of this
Agreement, (c) no determination of entitlement to indemnification shall have been made within the
time period specified in Section 5.7 of this Agreement, or (d) payment of indemnified
amounts is not made within the applicable time periods specified in Section 5.1 of this
Agreement, Indemnitee shall thereafter be entitled under this Agreement to commence a proceeding in
the Court, seeking an adjudication of Indemnitee’s entitlement to such indemnification, payment of
indemnified amounts, or advancement of Expenses. Indemnitee shall commence such proceeding seeking
an adjudication within 180 days following the date on

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which Indemnitee first has the right to commence such proceeding pursuant to this Section
7.1. The Company shall not oppose Indemnitee’s right to seek any such adjudication.

          7.2 Standard of Review. In the event that a determination shall have been made pursuant to
Section 5 of this Agreement that Indemnitee is not entitled to indemnification, any
judicial proceeding commenced pursuant to this Section 7 shall be conducted in all respects
as a de novo review on the merits and Indemnitee shall not be prejudiced by reason of that
adverse determination under Section 5.

          7.3 Effect on Company. If a determination shall have been made pursuant to Section 5
of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by
such determination in any judicial proceeding commenced pursuant to this Section 7, absent
(a) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to
make Indemnitee’s statement not misleading, in connection with the request for indemnification or
(b) a prohibition of such indemnification under applicable law.

          7.4 Binding Agreement. Both the Company and the Indemnitee shall be precluded from asserting
in any judicial proceeding commenced pursuant to this Section 7 that the procedures and
presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in the
Court that the Company and the Indemnitee are bound by all the provisions of this Agreement.

          7.5 Indemnitee’s Success on Merits or Otherwise. In the event that Indemnitee commences a
proceeding pursuant to this Section 7 to enforce a right of Indemnitee under this
Agreement, then, to the extent that Indemnitee is successful on the merits or otherwise in such
proceeding, or in connection with any claim, issue or matter therein, Indemnitee shall be
indemnified by the Company against Expenses actually and reasonably incurred by the Indemnitee in
connection with such proceeding.

     8. Exceptions to Right of Indemnification. Notwithstanding any other provision of this
Agreement, Indemnitee shall not be entitled to indemnification under this Agreement:

          8.1 Claims by Indemnitee. With respect to any claim (whether an original claim, counterclaim,
cross-claim or third-party claim) brought or made by Indemnitee in a Proceeding, unless the
bringing or making of such claim shall have been approved or ratified by the Board;
provided, however, that the foregoing shall not apply to any claims brought or made
by Indemnitee to enforce Indemnitee’s rights hereunder.

          8.2 Bad Faith or Frivolous Defenses. For Expenses incurred by Indemnitee with respect to any
action instituted by or in the name of the Company against the Indemnitee to enforce or interpret
this Agreement, if and to the extent that the Court declares or otherwise determines in a final,
unappealable judgment that each of the material defenses asserted by Indemnitee was made in bad
faith or was frivolous.

          8.3 Purchase and Sale of Securities. For Expenses and other liabilities arising from the
purchase and sale by Indemnitee of securities in violation of Section 16(b) of the Securities
Exchange Act of 1934, or any similar state or successor statute.

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          8.4 Unlawful Payments. For Expenses and other liabilities if and to the extent that the Court
declares or otherwise determines in a final, unappealable judgment that the Company is prohibited
by applicable law from making such indemnification payment or that such indemnification payment is
otherwise unlawful.

     9. Notification and Defense of Claim.

          9.1 Notification. Indemnitee agrees promptly to notify the Company in writing upon being
served with any summons, citation, subpoena, complaint, indictment, information or other document
relating to any Proceeding or matter that may be subject to indemnification covered hereunder. The
failure to so notify the Company shall not relieve the Company of any obligation that it may have
to Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or
delay materially prejudices the Company.

          9.2 Defense of Claim. With respect to any Proceeding (other than a Proceeding brought by or
in the right of the Company) as to which Indemnitee notifies the Company of the commencement
thereof:

               (a) The Company may participate therein at its own expense;

               (b) The Company, jointly with any other indemnifying party similarly notified, may assume the
defense thereof, with counsel reasonably satisfactory to Indemnitee. After notice from the Company
to Indemnitee of its election to assume the defense thereof, the Company shall not be liable to
Indemnitee under this Agreement for any Expenses subsequently incurred by Indemnitee in connection
with the defense thereof unless (i) the employment of counsel by Indemnitee or the incurrence of
any other Expense has been authorized by the Company, (ii) Indemnitee shall have reasonably
concluded that there may be a conflict of interest between the Company (or any other person or
persons included in the joint defense) and Indemnitee in the conduct of the defense of such
Proceeding, or (iii) the Company shall not, in fact, have employed counsel to assume the defense of
such Proceeding;

               (c) The Company shall not be liable to Indemnitee under this Agreement for any amounts paid in
settlement in any Proceeding effected without the Company’s written consent;

               (d) The Company shall not settle any Proceeding in any manner that would impose any penalty or
limitation on Indemnitee without Indemnitee’s written consent; and

               (e) Neither the Company nor Indemnitee shall unreasonably withhold its consent to any proposed
settlement; provided, however, that Indemnitee may withhold consent to any
settlement that does not provide a complete release of Indemnitee.

     10. Duration of Agreement. All agreements, rights and obligations of the Company and
Indemnitee contained herein shall continue during the period Indemnitee is a director of the
Company and shall continue thereafter so long as Indemnitee shall be subject under applicable law
to the assertion of any Proceeding (or any proceeding commenced under Section 7 hereof) by
reason of Indemnitee’s Corporate Status, whether or not Indemnitee is acting or serving in

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any such capacity at the time any liability or expense is incurred for which indemnification
can be provided under this Agreement.

     11. Miscellaneous.

          11.1 No Employment Agreement. Nothing contained in this Agreement shall be construed as
giving Indemnitee any right to be retained in the employment of the Company or any of its
subsidiaries or affiliated entities.

          11.2 Entire Agreement. This Agreement constitutes the entire agreement and understanding of
the Company and Indemnitee in respect of its subject matter and supersedes all prior
understandings, agreements and representations by or among the Company and Indemnitee, written or
oral, to the extent they relate in any way to the subject matter hereof.

          11.3 Successors. All of the terms, agreements, covenants, representations, warranties and
conditions of this Agreement are binding upon, and inure to the benefit of and are enforceable by,
the Company and Indemnitee and their respective heirs, executors, administrators, personal
representatives, successors and permitted assigns.

          11.4 Assignment. Neither the Company nor Indemnitee may assign either this Agreement or any
of its rights, interests or obligations hereunder without the prior written approval of the other;
provided, however, that the Company may assign all (but not less than all) of its
rights and interests hereunder to any direct or indirect successor to all or substantially all of
the business or assets of the Company by purchase, merger, consolidation or otherwise.

          11.5 Merger or Consolidation. In the event that the Company shall be a constituent
corporation in a consolidation, merger or other reorganization, the Company, if it shall not be the
surviving, resulting or acquiring entity therein, shall require as a condition thereto that the
surviving, resulting or acquiring entity agree to assume all of the obligations of the Company
hereunder and to indemnify Indemnitee to the full extent provided herein. Whether or not the
Company is the resulting, surviving or acquiring entity in any such transaction, Indemnitee shall
also stand in the same position under this Agreement with respect to the resulting, surviving or
acquiring entity as the Indemnitee would have with respect to the Company if its separate existence
had continued.

          11.6 Notices. All notices, requests, demands, claims and other communications hereunder shall
be in writing. Any notice, request, demand, claim or other communication hereunder shall be deemed
duly given if (and then three business days after) it is sent by registered or certified mail,
return receipt requested, postage prepaid, and addressed to the intended recipient as set forth
below:

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	If to the Company:
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Tim Hortons Inc.	 	 	 	 	 	 	 	 	 	 
	874 Sinclair Road	 	 	 	 	 	 	 	 	 	 
	Oakville, Ontario L6K 2Y1	 	 	 	 	 	 	 	 	 	 
	Attn:
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	Tel:
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	Fax:
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	Electronic Mail:
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	If to Indemnitee:
	 	 	 	 	 	 	 	 	 	 	 	 
	Name:
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	Company:
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	Address:
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	City:
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	State:
	 	 	 	Postal Code:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	Country:
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	Tel:
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	Fax:
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	Electronic Mail:
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 

          Either party may send any notice, request, demand, claim or other communication hereunder to
the intended recipient at the address, facsimile number or electronic mail address set forth above
using any other means (including personal delivery, expedited courier, messenger service, telecopy,
telex, ordinary mail or electronic mail), but no such notice, request, demand, claim or other
communication will be deemed to have been duly given unless and until it actually is received by
the intended recipient. Either party may change the address, facsimile number or electronic mail
address to which notices, requests, demands, claims and other communications hereunder are to be
delivered by giving the other parties notice in the manner herein set forth.

          11.7 Specific Performance. Each of the Company and Indemnitee acknowledges and agrees that
the other would be damaged irreparably if any provision of this Agreement is not performed in
accordance with its specific terms or is otherwise breached. Accordingly, each party agrees that
the other party shall be entitled to an injunction or injunctions to prevent beaches of the
provisions of this Agreement and to enforce specifically this Agreement and its terms and
provisions in any action instituted in the Court, in addition to any other remedy to which such
party may be entitled at law or in equity.

          11.8 Counterparts. This Agreement may be executed in two counterparts, each of which shall be
deemed an original but both of which together shall constitute one and the same instrument.

          11.9 Governing Law; Jurisdiction. This Agreement and the performance of the parties’
obligations hereunder shall be governed by and construed in accordance with the laws of the State
of Delaware, without giving effect to any choice of law principles.

11

 

          In the event of any dispute, claim, action, or controversy arising out of the terms or
conditions of this Agreement, including but not limited to a determination regarding advances or
the payment of amounts in indemnification in accordance with the terms hereof, each party hereto
agrees that such dispute, claim, action or controversy shall be brought and heard exclusively in
the Court, and all applicable appellate courts thereof, and each party hereby waives any objection
to jurisdiction, venue, or forum non conveniens that such party may have otherwise had if
this provision were not included herein.

          11.10 Amendments and Waivers. No amendment, modification, replacement, termination or
cancellation of any provision of this Agreement will be valid, unless the same is in writing and
signed by the parties. No waiver by either party of any default, misrepresentation or breach of
warranty or covenant hereunder, whether intentional or not, may be deemed to extend to any prior or
subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any
way any rights arising because of any prior or subsequent such occurrence.

          11.11 Nonexclusivity of Rights; Survival of Rights; Severability.

               (a) The rights provided by this Agreement (including rights to indemnification, advancement of
expenses and contribution) (i) shall not be exclusive of, and shall be in addition to, any other
rights to indemnification, advancement of expenses or contribution to which Indemnitee may at any
time be entitled under the Certificate, the Bylaws, applicable law (including the DGCL), any
insurance policy, agreement, vote of shareholders or Disinterested Directors or otherwise, as to
any actions or failures to act by Indemnitee, (ii) shall continue pursuant to Section 10
after the Indemnitee has ceased to be a director of the Company and (iii) shall inure to the
benefit of the Indemnitee’s heirs, executors, administrators and personal representatives. In the
event of any changes, after the date of this Agreement, in any applicable law which expands the
right of the Company to indemnify a member of its Board, such changes shall be deemed to be within
the purview of Indemnitee’s rights and the Company’s obligations under this Agreement. In the
event of any change in any applicable law which narrows the right of the Company to indemnify a
member of its Board, such changes, to the extent not otherwise required by applicable law to be
applied to this Agreement, shall have no effect on this Agreement or the parties’ rights and
obligations hereunder.

               (b) The provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or enforceability of the other
provisions hereof; provided, however, that if any provision of this Agreement, as
applied to any party or to any circumstance, is adjudged by the Court not to be enforceable in
accordance with its terms, the parties agree that the Court shall have the power to modify the
provision in a manner consistent with its objectives (and only to the extent necessary) such that
it is enforceable, and/or to delete specific words or phrases, and in its reduced form, such
provision shall then be enforceable and shall be enforced.

          11.12 Subrogation; No Duplicative Payments.

               (a) In the event of payment under this Agreement, the Company shall be subrogated to the
extent of such payment to all of the rights of recovery of Indemnitee, who

12

 

shall execute all papers required and shall do everything that may be necessary to secure such
rights, including the execution of such documents necessary to enable the Company effectively to
bring suit to enforce such rights.

               (b) The Company shall not be liable to make any payment under this Agreement to Indemnitee if
and to the extent that Indemnitee has actually received payment under any insurance policy,
contract, the Bylaws or otherwise of the amounts otherwise payable hereunder.

          11.13 Expenses. Except as otherwise expressly provided in this Agreement, each party shall
bear its own costs and expenses incurred in connection with the preparation, execution and
performance of this Agreement, including all fees and expenses of agents, representatives,
financial advisors, legal counsel and accountants.

          11.14 Construction. If any provision of this Agreement should be deemed to exceed the
authority granted to the Company by Delaware law in effect as of February 1, 2006, then such
provision shall be deemed to be amended to the extent (and only to the extent) necessary to comply
with Delaware law. The parties have participated jointly in the negotiation and drafting of this
Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party because of the authorship of any provision of this Agreement.
Any reference to any federal, state, local or foreign law shall be deemed also to refer to such law
as amended and all rules and regulations promulgated thereunder, unless the context requires
otherwise. The words “include,” “includes,” and “including” shall be deemed to be followed by
“without limitation.” Pronouns in masculine, feminine and neuter genders shall be construed to
include any other gender, and words in the singular form shall be construed to include the plural
and vice versa, unless the context otherwise requires. The words “this Agreement,” “herein,”
“hereof,” “hereby,” “hereunder” and words of similar import refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited. The parties intend that each
representation, warranty and covenant contained herein will have independent significance. If
either party has breached any representation, warranty or covenant contained herein in any respect,
the fact that there exists another representation, warranty or covenant relating to the same
subject matter (regardless of the relative levels of specificity) that the party has not breached
shall not detract from or mitigate the fact that the party is in breach of the first
representation, warranty or covenant. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or interpretation of this
Agreement.

          11.15 Remedies. Except as expressly provided herein, the rights and remedies created by this
Agreement are cumulative and in addition to any other rights or remedies now or hereafter available
at law or in equity or otherwise. Except as expressly provided herein, nothing herein shall be
considered an election of remedies. The assertion or employment of any right or remedy shall not
prevent the concurrent assertion or employment of any other remedy.

          11.16 Mutual Acknowledgement. Nothing in this Agreement is intended to require or shall be
construed as requiring the Company to do or fail to do any act in violation of applicable law.
Both the Company and Indemnitee acknowledge that in certain instances,

13

 

Federal or state law or applicable public policy may prohibit the Company from indemnifying the
Indemnitee under this Agreement or otherwise. Indemnitee understands and acknowledges that the
Company has undertaken and may be required in the future to undertake with the Securities and
Exchange Commission to submit the question of indemnification to the Court in certain circumstances
for a determination of the Company’s right under public policy to indemnify Indemnitee. The
Company’s inability, pursuant to court order, to perform its obligations under this Agreement shall
not constitute a breach of this Agreement.

[The next page is the signature page]

14

 

     IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement as of the
date first hereinabove written.

	 	 	 	 	 	 	 	 	 
	 

	 	TIM HORTONS INC.	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Printed Name:	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	INDEMNITEE	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Printed Name:	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Company:	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Address:	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	City:	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	State:
	 	 
	 	Postal Code:
	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Country:	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Fax:	 	 	 	 	 	 
	 	 	 	 	 

15exv10w18

 

Exhibit 10.18

AMENDED AND RESTATED

ARBITRON INC. DIRECTOR DEFERRED COMPENSATION PROCEDURES

ARTICLE 1

ESTABLISHMENT

          Pursuant to the Arbitron Inc. 1999 Stock Incentive Plan (the “Stock Incentive Plan”), the
Compensation Committee (the “Committee”) sets forth in this document the amended and restated
policies and procedures for the award of deferred stock units to Directors in lieu of the payment
of Retainer Fees or Meeting Fees otherwise payable to the Directors. This document shall be
referred to as the Amended and Restated Arbitron Inc. Director Deferred Compensation Procedures
(the “Procedures”). The Procedures are hereby restated and ratified as of January 1, 2005.

ARTICLE 2

PARTICIPATION

          2.1. Participation

          A Director may elect to receive deferred stock units in lieu of Retainer Fees or Meeting Fees
payable with respect to an upcoming calendar year. Elections may only be made to receive 0%, 50%
or 100% of the Fees to be earned in the upcoming year. The election must be made in writing during
the enrollment period established by the Corporate Secretary that closes prior to the calendar year
in which the Fees otherwise would be paid. The enrollment period shall be a period of up to 60
days ending no later than December 31 of the year prior to the calendar year in which the Fees
otherwise would be paid. The election for the upcoming year shall become irrevocable as of the
close of the enrollment period. Failure to complete an election form by December 31 will result in
Fees for the upcoming year being paid entirely in cash.

          A Director who elects to receive deferred stock units under the Procedures shall become a
Participant, and the Company shall establish a Deferred Stock Unit Account in which such
deferral(s) shall be held in accordance with these Procedures.

          A Director’s election shall specify the percentage of the Director’s Fees converted to
deferred stock units and credited to the Deferred Stock Unit Account.

          The Company shall grant deferred stock units to a Participant at the end of each calendar
quarter in lieu of Retainer Fees or Meeting Fees that otherwise would be paid to the Participant
for his or her Board service during such calendar quarter. The number of deferred stock units
credited is determined by dividing the amount of Fees deferred by the closing price of common stock of the Company (“Common Stock”)
on the last trading day of the calendar quarter. For the purpose of crediting the Deferred Stock
Unit Account for the quarterly Fee deferral, fractional shares shall be rounded to the nearest
whole number of shares. The deferred stock units are fully vested and shall be credited to a
Participant’s Deferred Stock Unit Account on the date of grant.

 

 

          2.2. First-Year Eligibility

          If a Director first becomes eligible to participate in accordance with these Procedures during
a calendar year (i.e., is elected to fill a vacancy on the Board during a calendar year),
notwithstanding the general requirement stated in Section 2.1 that the election be completed and
submitted before the calendar year of commencement, an election may be submitted to the Plan
Administrator within 30 days after the Participant first becomes a Director. If the Director
submits an election form to the Plan Administrator prior to the commencement of his or her term as
a Director, the election will be effective with respect to all Fees payable for the calendar year
of becoming a Director. If the Director does not submit an election form to the Plan Administrator
prior to the commencement of his or her term as a Director, the election will be effective only
with respect to Fees earned and payable during the calendar year following the submission of the
election form to the Plan Administrator.

ARTICLE 3

PAYMENT OF DEFERRED STOCK UNIT ACCOUNT

          3.1. Termination of Board Service

          Payment of the deferred stock units shall not be made until after the Participant’s
termination of service as a Director of the Company. If the Participant’s service as a Director of
the Company ceases for any reason, payment shall be made as previously elected by the Participant
in accordance with Section 3.2 below.

          3.2. Form and Time of Payment

          In each election that the Director completes and submits in connection with the Procedures,
which is confirmed by the Participant’s execution of the Deferred Stock Unit Agreement (the
“Agreement”), the Director shall designate whether payment of his or her Deferred Stock Unit
Account is to be made as a lump sum in shares of Common Stock or as a series of annual installments
of shares of Common Stock, not to exceed 5 such consecutive annual installments.

          If the Participant elects payment as a lump sum, payment shall commence within 30 days after
the end of the calendar quarter in which the

2

 

Participant has ceased to serve as a Director of the Company, with any fractional shares to be
distributed in cash.

          If the Participant elects payment in a series of annual installments, payment shall commence
as of January 1 of the calendar year following the year in which the Participant has ceased to
serve as a Director of the Company (or as soon as reasonably practicable thereafter). The amount
of shares paid in each installment shall be determined by dividing the Participant’s total
remaining deferred stock units by the remaining number of installments to be paid, such that the
divisor shall be reduced by one in each subsequent year. Fractional shares shall be rounded down
to the nearest whole number, except that in the final year in which an installment is to be paid,
any fractional shares shall be distributed in cash.

          In accordance with Notice 2005-1, the Company shall establish one or more special enrollment
period(s) in 2005 pursuant to which a Participant may elect to change the payment form applicable
to deferred stock units credited to the Deferred Stock Unit Account for 2005. The payment form
elected by a Director for deferred stock units credited to the Deferred Stock Unit Account for 2005
shall be effective only with respect to all deferred stock units credited to the Director’s
Deferred Stock Unit Account for 2005, and, thereafter, the payment form elected by a Director
during the enrollment period for the upcoming calendar year shall be effective only with respect to
all deferred stock units credited to the Director’s Deferred Stock Unit Account for such year.

          In the case of a Participant whose Deferred Stock Unit Account includes deferred stock units
credited to the account prior to January 1, 2005 (hereafter the “Pre-2005 Account”), the
Participant’s payment election in effect prior to January 1, 2005 shall apply to those deferred
stock units. In the case of a Participant with a Pre-2005 Account, the Participant may elect to
change the payment form applicable to deferred stock units credited to the account by making a
payment change election in accordance with Section 3.3.

          3.3. Change of Form of Payment

          Solely with respect to payment elections in effect under Section 3.2 for the Pre-2005 Account,
a Participant may change the form of his or her payment election, contingent on the following
requirements having been satisfied:

                         (a) the change must be made in writing and in the form designated by the Plan Administrator;

                         (b) the change must be made at a time when the Participant is still a Director, and must be
consistent with Section 3.2; and

3

 

                         (c) the change will be voided and of no effect if made less than one year prior to the date
that the Director terminates service on the Board.

ARTICLE 4

ACCOUNTS ESTABLISHMENT

          4.1. Accounts

          A Deferred Stock Unit Account shall be established and maintained by the Plan Administrator
for each Participant, in which shall be recorded the Fees converted to deferred stock units. The
deferred stock units shall be credited to the Deferred Stock Unit Account as of the following
dates:

                         (a) The deferred portion of one-fourth of the annual Retainer Fee shall be converted into
deferred stock units and credited to the Deferred Stock Unit Account as of the last day of each
calendar quarter; and

                         (b) The deferred portion of any Meeting Fee shall be converted into deferred stock units and
credited to the Deferred Stock Unit Account as of the last day of the calendar quarter in which
such meeting was held.

          4.2. DSU Value

          Each deferred stock unit credited to the account represents the value of a share of Common
Stock.

          4.3. Dividend Equivalents

          Dividend Equivalents shall be credited to each deferred stock unit on each dividend record
date to the extent of dividends issued on Common Stock, provided the record date for such dividends
is on or after the end of the quarter as of which the deferred stock units are credited to the
Participant. Such Dividend Equivalents shall themselves be converted into deferred stock units as
of the dividend record date by dividing the amount of the Dividend Equivalents by the value of the
Common Stock as of the applicable dividend record date. Any such additional deferred stock units
(or fraction thereof) resulting from Dividend Equivalent credits shall be treated as deferred stock
units and credited to the Deferred Stock Unit Account, and, except as next provided in the
succeeding two sentences, shall be subject to the terms and conditions of the Procedures, the
Agreement, and the Stock Incentive Plan. To the extent permitted by section 409A of the Internal
Revenue Code, the Plan Administrator will credit Dividend Equivalents with respect to each deferred
stock unit accrued to a Participant’s Deferred Stock Unit Account prior to 2005 to the Pre-2005
Account as though they had been credited to the account prior to January 1, 2005. Otherwise,
Dividend Equivalents credited based on a dividend

4

 

record date after December 31, 2004 shall not be treated as credited to the Pre-2005 Account.

          4.4. Effect of Certain Transactions

          In the event of a change in the number of outstanding shares of Common Stock by reason of any
reorganization, merger, consolidation, recapitalization, liquidation, reclassification, stock
dividend, stock split, combination of shares, rights offering, divestiture or extraordinary
dividend (including a spin-off), or any other change in the corporate structure or shares of the
Company that does not result in a Change of Control, the Committee (or, if the Company is not the
surviving corporation in any such transaction, the Board of Directors of the surviving
corporation), in order to prevent dilution or enlargement of the rights of the Participant, will
make appropriate adjustment (which determination shall be conclusive) as to the number and kind of
securities represented by the stock units making up the Deferred Stock Unit Account.

          If there is a Change of Control, then, upon consummation of the Change of Control, but in no
event more than 15 days following the Change of Control, the Company shall provide the Participant
with a cash payment equal to the value per share of the consideration received in the Change of
Control multiplied by the number of deferred stock units. Upon payment of the cash amount just
described, notwithstanding anything to the contrary in the Agreement, the Procedures or the Stock
Incentive Plan, the Agreement shall expire, and no further payment shall be due to the Participant
in respect of the Deferred Stock Unit Account.

ARTICLE 5

SURVIVOR AND DEATH BENEFITS

          5.1. Death Benefit

          Upon the death of a participant Director, all amounts, if any, remaining in his or her
Deferred Stock Unit Account shall be distributed to the Beneficiary designated by the Director in a
lump sum as soon as practicable following the Director’s death.

          If the designated Beneficiary does not survive the Director or dies before receiving payment
of the Director’s Deferred Stock Unit Account, payment shall be made to the estate of the Director.

5

 

ARTICLE 6

ADMINISTRATION

          6.1. Administration

          The Procedures shall be administered by the Committee to the same extent as provided in
Section 3 of the Stock Incentive Plan. The Committee shall have full power and authority to
administer and interpret the Procedures, to establish procedures for administering the Procedures
and to take any and all necessary action in connection therewith. The Committee’s interpretation
and construction of the Procedures shall be conclusive and binding on all persons.

          6.2. Amendment and Termination of the Procedures

          The Committee may, in their sole discretion, amend the Procedures at any time or from time to
time, in whole or in part, and for any reason, by written action. However, no amendment shall
reduce the amount accrued in any Deferred Stock Unit Account as of the date of such amendment.

          The Committee also may terminate the Procedures with respect to the Participants who render
services as Directors or who formerly rendered services as Directors by written action. In the
event of such termination, the Deferred Stock Unit Accounts of participating Directors shall be
paid at such times and in such forms as shall be determined pursuant to Article 3, unless the Board
shall prescribe an earlier time or times for payment of such accounts and such payments would not
result in the imposition of an excise tax under Code section 409A.

ARTICLE 7

GENERAL PROVISIONS

          7.1. Alienation of Benefits

          No Deferred Stock Unit Account payable under the Procedures shall be subject to alienation,
sale, transfer, assignment, pledge, attachment, garnishment, lien, levy or like encumbrance. The
Company shall not in any manner be liable for or subject to the debts or liabilities of any person
entitled to payment hereunder.

          7.2. No Right to Service

          Nothing contained in the Stock Incentive Plan or these Procedures shall be deemed to give any
Director the right to be retained in the service of the Company or to interfere with the right of
the Company to remove or seek the resignation of any Director at any time without regard to the
effect that such removal or resignation may have upon the Director under the Stock Incentive Plan
or these Procedures.

6

 

          7.3. Unfunded Arrangement

          The Deferred Stock Units Account shall be an unfunded, unsecured, contractual obligation of
the Company. The Company shall not be required to segregate any assets to provide payment of
Deferred Stock Unit Accounts, and the Procedures shall not be construed as providing for such
segregation. Any liability of the Company to any Participant or Beneficiary with respect to the
payment of Deferred Stock Unit Accounts shall be based solely upon any contractual obligations
created by the Procedures. Any such obligation shall not be deemed to be secured by any pledge or
other encumbrance or any Company property. Accordingly, the Participant’s rights to payment
hereunder shall be that of an unsecured creditor.

          7.4. Miscellaneous

(a) Construction

          Unless the contrary is plainly required by the context, wherever any words are used herein in
the masculine gender, they shall be construed as though they were also used in the female gender,
and vice versa, and wherever any words are used herein in the singular form, they shall be
construed as though they were also used in the plural form, and vice versa.

(b) Severability

          If any provision of the Procedures is held illegal or invalid for any reason, such illegality
or invalidity shall not affect the remaining parts of the Procedures, and the Procedures shall be
construed and enforced as if such illegal or invalid provision had never been included in it.

(c) Titles and Headings Not to Control

          The titles to Articles and the headings of Sections in the Procedures are for convenience of
reference only, and in the event of any conflict, the text of the Procedures, rather than the
titles or headings, shall control.

(d) Complete Statement of Procedures

          This document is a complete statement of the Procedures. The Procedures may be amended,
modified or terminated only in writing, subject to any terms and conditions for amendment,
modification or termination set forth in the Stock Incentive Plan.

          7.5. Governing Law

          The Procedures shall be governed by the laws of the State of Delaware without regard to its
choice of law provisions.

7

 

ARTICLE 8

DEFINITIONS

     In addition to those definitions set forth in Article 1 or otherwise in the text of these
Procedures, the following terms shall have the meaning assigned below in this Article 8:

     8.1. “Beneficiary” means the person or persons designated by the Director to receive payment
of the Director’s Deferred Stock Unit Account in the event of the death of the Director.

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

     8.3. “Change of Control” means any of the following events:

	 	(i)	 	a merger or consolidation to which the Company is a party if
the individuals and entities who were stockholders of the Company immediately
prior to the effective date of such merger or consolidation have beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act) of less than 50% of
the total combined voting power for election of directors of the surviving
Company immediately following the effective date of such merger or
consolidation;
	 
	 	(ii)	 	the direct or indirect beneficial ownership (as defined in Rule
13d-3 under the Exchange Act) in the aggregate of securities of the Company
representing 51% or more of the total combined voting power of the Company’s
then issued and outstanding securities by any person or entity, or group of
associated persons or entities acting in concert; provided, however, that for
purposes hereof, any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company shall not constitute a Change of Control;
	 
	 	(iii)	 	the direct or indirect beneficial ownership (as defined in
Rule 13d-3 under the Exchange Act) in the aggregate of securities of the
Company representing 25% or more of the total combined voting power of the
Company’s then issued and outstanding securities by any person or entity, or
group of associated persons or entities acting in concert if such acquisition
is not approved by the Board of Directors of the Company prior to any such
acquisition; provided, however, that for purposes hereof, any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company shall not constitute a
Change of Control;

8

 

	 	(iv)	 	the sale of the properties and assets of the Company,
substantially as an entirety, to any person or entity which is not a
wholly-owned subsidiary of the Company;
	 
	 	(v)	 	the stockholders of the Company approve any plan or proposal
for the liquidation of the Company; or
	 
	 	(vi)	 	a change in the composition of the Board at any time during any
consecutive 24 month period such that the “Continuity Directors” cease for any
reason to constitute at least a 70% majority of the Board. For purposes of
this clause, “Continuity Directors” means those members of the Board who either
(A) were directors at the beginning of such consecutive 24 month period, or (B)
were elected by, or on the nomination or recommendation of, at least a
two-thirds majority of the then-existing Board of Directors. As a result, a
director who no longer serves on the Board of Directors, and who is replaced by
an individual nominated or recommended for nomination by a two-thirds vote of
the remaining Board of Directors, does not count as a loss for purposes of
determining whether 70% of the members of the Board of Directors remain in
tact.

     8.4. “Deferred Stock Unit Account” means the bookkeeping account established under these
Procedures by the Company for each Participant, in which shall be reflected amounts credited as
deferred stock units.

     8.5. “Director” means any member of the Board of the Company who is not also an employee of
the Company.

     8.6. “Fee” means compensation expected to be paid by the Company to a Director for services
rendered on or after the effective date, exclusive of any reimbursement by the Company for expenses
incurred by the Director related to attendance at Board meetings or Board committee meetings.

     8.7. “Meeting Fee” means any Fee, other than a Retainer Fee, paid by the Company to a Director
as compensation for attendance at a meeting of the Board or attendance at a meeting of a Board
committee.

     8.8. “Participant” means a Director or former Director who has a Deferred Stock Unit Account
established pursuant to these Procedures.

     8.9. “Retainer Fee” means the annual retainer amount and committee chair fee expected to be
paid by the Company to a Director.

* * * * *

9

 

          To reflect the adoption of the policies and procedures with respect to deferred stock units in
lieu of Fees, the Committee has caused its Chairman to execute this document on behalf of Arbitron
Inc.

	 	 	 	 
	 

	 	ARBITRON INC.

COMPENSATION COMMITTEE	
	 
	 	 	
	 

	 	By: /s/ Kathleen T. Ross	
	 

	 	 
	
	 

	 	Name: Kathleen T. Ross	
	 

	 	Title: EVP and Chief Administrative Officer	

10

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