Canadian Pacific Railway Limited (TSE:CP) Files An 8-K Termination of a Material Definitive Agreement

ITEM1.02

On January18, 2017, in connection with E. Hunter Harrisons
resignation from all positions held by him at Canadian Pacific
Railway Limited (the Company), as discussed further below, the
Company announced that, to a Separation Agreement, dated
January18, 2017, between Mr.Harrison and the Company (the
Separation Agreement), the material terms of which are described
in Item5.02 below, the Post-Retirement Consulting Agreement,
dated July25, 2016, between the Company and Mr.Harrison (the
Consulting Agreement) will be terminated effective January31,
2017. As a result of this termination, Mr.Harrison will not be
providing any consulting or other services to the Company
following his resignation. A copy of the Consulting Agreement was
filed as Exhibit 10.1 to the Companys Form 8-K filed on July26,
2016.

On January18, 2017, the Company announced the resignation of E.
Hunter Harrison from all positions held by him at the Company,
including as the Companys Chief Executive Officer and a member of
the Board of Directors of the Company, effective January31, 2017
(the Resignation Date). Mr.Harrisons decision to resign was not
as a result of any disagreement with the Company. In connection
with Mr.Harrisons resignation, the Company entered into the
Separation Agreement with Mr.Harrison. Under the terms of the
Separation Agreement, the Company has agreed to a limited waiver
of Mr.Harrisons non-competition obligations, which would allow
him to work for another Class 1 railroad, other than Canadian
National Railway Company, BNSF Railway Co. or Union Pacific
Railroad. The Company has also agreed to a limited waiver of
Mr.Harrisons non-solicitation obligations, provided that
Mr.Harrison cannot solicit or hire the Companys employees above
the level of manager, other than the Companys Chief of Staff as
of the Resignation Date. Mr.Harrisons modified non-competition
and non-solicitation obligations have a 36- month term beginning
on the Resignation Date. Mr.Harrison will remain bound by the
confidentiality restrictions in his existing employment agreement
and agreed to certain standstill obligations with respect to the
Company for a term of 36 months from the Resignation Date.

On or prior to the first regular payroll date following the
Resignation Date, the Company has agreed to pay Mr.Harrison a
lump sum amount equal to accrued rights and will pay his cash
bonus with respect to fiscal 2016 on the date active named
executive officers of the Company are paid their bonus for fiscal
2016 in an amount based purely on corporate results with no
negative discretion. to the terms of the Separation Agreement,
Mr.Harrison is not eligible for any bonus for the 2017 calendar
year.

Mr.Harrison has agreed to the Separation Agreement to forfeit all
(i)pension and post-retirement benefits, other than under the
registered pension plan(s), if any, (ii)health benefits,
including retiree medical benefits and Medicare supplement policy
for Mr.Harrison or his spouse, except his medical benefits under
the Companys health plans will terminate on February28, 2017 and
he will retain his COBRA rights, and (iii)other benefits and
perquisites other than Mr.Harrisons current tax equalization
benefits under his employment agreement. Mr.Harrison has also
agreed to surrender for cancellation his vested performance share
units (PSUs) granted on January31, 2014 in exchange for a cash
payment of US$4,806,470 on or prior to the first regular payroll
date of the Company following the Resignation Date. He has also
agreed to surrender for cancellation all of the his remaining
PSUs and vested and unvested options and deferred share units
(DSUs), other than the specified number of the 650,000 vested
options (the Retained Options) granted to the Mr.Harrison on
June26, 2012, with an exercise price of C$73.39. The specified
number of options will be the number of options obtained by
subtracting US$55,000,000 from the value, based on the closing
price of the Companys common stock

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on the New York Stock Exchange (NYSE) on January30, 2017, of all
options and DSUs that are vested or would vest prior to the
Resignation Date (the Remaining Amount), and dividing the
Remaining Amount by the difference between the closing price of
the Companys common stock on the NYSE on January30, 2017 and the
exercise price of the options, with currency conversion as
appropriate in accordance with the Companys practice. to the
Separation Agreement, Mr.Harrison and the Company have agreed
that, notwithstanding the fact that the Retained Options are not
exercisable until June26, 2017, Mr.Harrison is permitted to
exercise the Retained Options on the Resignation Date or
thereafter and Mr.Harrison will elect a cashless exercise of the
Retained Options on the Resignation Date (or as soon thereafter
as legally permitted). The total value of benefits and awards
forfeited by Mr.Harrison is approximately C$118 million
(approximately USD$88,465,000), with the value of the equity
awards surrendered calculated based on their in-the-money value
relative to the trading price of the Companys shares on
January18, 2017.

Mr.Harrison has agreed to sell all of the shares of the Company
he owns, directly or indirectly, by no later than May31, 2017. He
will resign from all positions held by him with the Company and
its subsidiaries, including as a director of the Company,
effective as of the Resignation Date and will execute and deliver
a full and final release in favor of the Company.

The foregoing description of the Separation Agreement is
qualified in its entirety by reference to the Separation
Agreement, a copy of which is filed as Exhibit 10.1 to this
Current Report on Form 8-K and is incorporated herein by
reference.

As previously disclosed, the Board of the Directors of the
Company reached an agreement on July23, 2016 with Keith Creel,
currently the Companys President and Chief Operating Officer, for
Mr.Creel to become President and Chief Executive Officer of the
Company effective July1, 2017 (or such earlier date on which the
parties agree that Mr.Creel will begin his duties as CEO because
of the earlier-than anticipated departure of Mr.Harrison),
subject to Mr.Creels remaining an employee in good standing
through such date. As a result of Mr.Harrisons resignation, on
January18, 2017, the Company announced the appointment of Keith
Creel as President and Chief Executive Officer of the Company,
effective January31, 2017.

A copy of the press release announcing the resignation of
Mr.Harrison and the appointment of Mr.Creel as President and CEO
is attached as Exhibit 99.1 to this Current Report on Form 8-K.

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About Canadian Pacific Railway Limited (TSE:CP)

Canadian Pacific Railway Limited (CP), together with its subsidiaries, operates a transcontinental railway in Canada and the United States. The Company operates in rail transportation segment. The Company’s business mix includes bulk commodities, merchandise freight and intermodal traffic over a network of approximately 12,500 miles, serving the principal business centers of Canada from Montreal, Quebec, to Vancouver, British Columbia, and the United States Northeast and Midwest regions. The Company transports bulk commodities, merchandise freight and intermodal traffic. Bulk commodities include Canadian grain, U.S. grain, coal, potash, and fertilizers and sulfur. Merchandise freight consists of finished vehicles and automotive parts, as well as forest and industrial and consumer products. Intermodal traffic consists of retail goods in overseas containers that can be transported by train, ship and truck and in domestic containers and trailers that can be moved by train and truck.

Canadian Pacific Railway Limited (TSE:CP) Recent Trading Information

Canadian Pacific Railway Limited (TSE:CP) closed its last trading session up +0.80 at 201.91 with 372,464 shares trading hands.