Document:

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                          BNY TRUST COMPANY OF CANADA,

                                 AS DEPOSITARY

                                    - and -

                        OWNERS AND BENEFICIAL OWNERS OF
                    HOLDING COMPANY DEPOSITARY RECEIPTS FOR
                   COMMON SHARES OF CANADIAN PACIFIC LIMITED
                          AND DEPOSITORS OF SECURITIES

                                    - and -

                           MERRILL LYNCH CANADA INC.,
                      AS COORDINATOR AND INITIAL DEPOSITOR

                                ---------------

                               DEPOSIT AGREEMENT

                                ---------------

                             September 4, 2001

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<PAGE>

                               TABLE OF CONTENTS

                                   ARTICLE 1.

                                 INTERPRETATION

<TABLE>
 <C>   <S>                                                                   <C>
 1.1.   Definitions........................................................    1
 1.2.  Rules of Construction...............................................    5
 1.3.  Schedules...........................................................    5
 1.4.  Headings and Table of Contents......................................    5
 1.5.  Gender..............................................................    5
 1.6.  Invalidity of Provisions............................................    5
 1.7.  Governing Law.......................................................    6

                                   ARTICLE 2.

                            INITIAL DEPOSIT PROGRAM

 2.1.   Depositary.........................................................    6
 2.2.  Coordinator and Initial Depositor...................................    6
 2.3.  Consultation........................................................    6
 2.4.  Coordination of Deposits and Fees...................................    6
 2.5.  Initial Deposit Program.............................................    8
 2.6.  Compliance with Orders..............................................    8
 2.7.  Statements..........................................................    8
 2.8.  Termination.........................................................    8

                                   ARTICLE 3.

                  DEPOSIT OF SECURITIES AND ISSUE OF RECEIPTS

 3.1.   Deposit of Securities..............................................    8
 3.2.  Delivery of Receipts................................................    9
 3.3.  Acceptance by Depositary............................................    9
 3.4.  Beneficial Ownership of Securities..................................    9
 3.5.  Place of Custody....................................................    9
 3.6.  Book-Entry System...................................................    9
 3.7.  Termination of Book-Entry System....................................   10
 3.8.  Form of Receipts....................................................   10
 3.9.  Transfer of Receipts................................................   10
 3.10. Register............................................................   10
 3.11. Registration of Transfers...........................................   10
 3.12. Split-up of Certificates............................................   11
 3.13. Co-Transfer Agents..................................................   11

                                   ARTICLE 4.

                             SURRENDER OF RECEIPTS

 4.1.  Surrender of Receipts...............................................   11
 4.2.  Delivery of Underlying Securities...................................   11
 4.3.  Requirements For Delivery of Underlying Securities..................   11
 4.4.  Cancellation and Destruction of Surrendered Certificates............   11
</TABLE>

                                       i
<PAGE>

                               DEPOSIT AGREEMENT

       THIS AGREEMENT is made as of the 4th day of September, 2001,

BETWEEN:

         BNY TRUST COMPANY OF CANADA, a trust company formed under the laws
    of Canada

         (referred to in this Agreement as the "Depositary")

         - and -

         each Depositor, Owner and Beneficial Owner (each as defined in this
    Agreement)

         - and -

         MERRILL LYNCH CANADA INC., a corporation incorporated under the laws
    of Canada

         ("Merrill Lynch")

RECITALS:

     A. Canadian Pacific Limited, a corporation organized under the laws of
Canada, has announced a plan to split into five separate public companies
(namely, PanCanadian Petroleum Limited, Canadian Pacific Railway Company,
Fording Inc., CP Ships Holdings Inc. and Fairmont Hotels & Resorts Inc. and to
distribute shares of such companies to its shareholders in respect of their
common shares;

     B. The parties wish to provide for the deposit with the Depositary prior
to the Reorganization of common shares of Canadian Pacific Limited and
thereafter of the securities of the Successor Companies, which will be
received in respect of such shares or that such shares will become in the
Reorganization, the creation of Receipts representing the Securities so
deposited and the execution and delivery of certificates evidencing the
Receipts;

     C. Merrill Lynch desires to co-ordinate, promote and commence the deposit
of Securities hereunder during the Initial Deposit Period; and

     D. The parties wish to establish the form of the certificates evidencing
the Receipts.

     NOW THEREFORE in consideration of the mutual covenants and agreements
contained in this Agreement and other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties hereto
agree as follows:

                                   ARTICLE 1

                                Interpretation

1.1. Definitions

     In this Agreement,

         1.1.1. "Additional Securities" means any securities that are, or
    that are the same class as, securities that are issued in respect of, in
    conversion of or in exchange for Underlying Securities including
    distributions in connection with an event of the type referred to in
    sections 7.5.1, 7.6.1 or 7.7, but only if such class of securities is (i)
    registered under section 12 of the Securities Exchange Act of 1934, as
    amended, (ii) issued by a reporting issuer under the Securities Act
    (Ontario), and (iii) listed

                                       1
<PAGE>

    for trading on (x) a Canadian national securities exchange and (y) either
    a United States national securities exchange or through NASDAQ;

         1.1.2. "Aggregate Coordination Fee" means the aggregate coordination
    fee received by the Depositary in connection with the delivery of CP
    Shares during the Initial Deposit Period and held by the Depositary as of
    the date of payment of such fee to Merrill Lynch;

         1.1.3. "Agreement" means this agreement and all schedules attached
    to this agreement, in each case as they may be amended or supplemented
    from time to time, and the expressions "hereof", "herein", "hereto",
    "hereunder", "hereby" and similar expressions refer to this agreement as
    a whole and unless otherwise indicated, references to Articles and
    sections are to Articles and sections in this agreement;

         1.1.4. "Beneficial Owner" means any person owning a beneficial
    interest in any Security or Receipt;

         1.1.5. "Book-Entry System" means the book-entry settlement system
    maintained by CDS;

         1.1.6. "Business Day" means any day other than Saturday, Sunday or
    any statutory holiday in the Province of Ontario;

         1.1.7. "Canadian Disclosure Document" means the disclosure document
    used in connection with the offer of the Receipts in Canada pursuant to a
    prospectus exemption from applicable Canadian securities regulatory
    authorities;

         1.1.8. "Canadian Securities Laws" means all statutes and regulations
    applicable to the trading of securities in any province or territory of
    Canada, including applicable rules, policy statements and blanket rulings
    and orders promulgated by Canadian securities regulatory authorities and
    including all decisions or orders of Canadian securities regulatory
    authorities applicable to the Receipts;

         1.1.9. "CDS" means The Canadian Depositary for Securities Limited,
    its nominees and their respective successors;

         1.1.10. "CDS Participant" means a Person such as DTC, an investment
    dealer or a financial institution that has an account with CDS;

         1.1.11. "Closing Date" means the Business Day after the last day of
    the Initial Deposit Period;

         1.1.12. "CP Shares" means common shares of Canadian Pacific Limited
    prior to completion of the Reorganization;

         1.1.13. "Deliver" means (a) when used with respect to Securities,
    either (i) one or more book-entry transfers of such Securities to an
    account at CDS designated by the Person entitled to such delivery for
    further credit as specified by such Person or (ii) in the case of
    Securities for which the Book-Entry System is not available, the delivery
    of certificates evidencing such Securities to the Person entitled to such
    delivery, duly endorsed for transfer or accompanied by proper instruments
    of transfer in form acceptable to the Person entitled to such delivery
    and (b) when used with respect to Receipts, either (i) one or more book-
    entry transfers of Receipts to an account at CDS designated by the Person
    entitled to such delivery for further credit as specified by such Person
    or (ii) in the event CDS ceases to make the Book-Entry System available
    for the Receipts, execution and delivery at the Office of the Depositary
    of one or more certificates evidencing such Receipts;

         1.1.14. "Depositary" means BNY Trust Company of Canada, a trust
    company formed under the laws of Canada, or any successor as Depositary
    under this Agreement;

                                       2
<PAGE>

         1.1.15. "Depositor" means any Person who deposits Securities with
    the Depositary either for its own account or on behalf of another Person
    who is the Owner or Beneficial Owner of such Securities;

         1.1.16. "DTC" means The Depositary Trust Company, its nominees and
    their respective successors;

         1.1.17. "DTC Participant" means a Person such as an investment
    dealer or a financial institution that has an account with DTC;

         1.1.18. "Foreign Currency" shall have the meaning ascribed to such
    term in section 7.10.

         1.1.19. "Governmental Entity" means (a) any multinational, federal,
    provincial, state, regional, municipal, local or other government,
    governmental or public department, central bank, court, tribunal,
    arbitral body, commission, board, bureau or agency, domestic or foreign,
    (b) any subdivision, agent, commission, board, or authority of any of the
    foregoing, or (c) any quasi-governmental or private body exercising any
    regulatory, expropriation or taxing authority under or for the account of
    any of the foregoing;

         1.1.20. "Initial Deposit Amount" means 2,500 CP Shares;

         1.1.21. "Initial Deposit Period" means the period from the date on
    which the prospectus, Canadian Disclosure Document or similar document
    prepared in connection with the issuance of Receipts is first sent to
    holders of CP Shares until September 26, 2001 or such later date prior to
    the commencement date of the Reorganization as will be agreed by Merrill
    Lynch and the Depositary;

         1.1.22. "Initial Deposit Program" means the program for the deposit
    of Securities during the Initial Deposit Period, as coordinated and
    promoted by Merrill Lynch in accordance with this Agreement;

         1.1.23. "Laws" means all laws, statutes, codes, ordinances, decrees,
    rules, regulations, by-laws, statutory rules, principles of law,
    published policies and guidelines, judicial or arbitral or administrative
    or ministerial or departmental or regulatory judgements, orders,
    decisions, rulings or awards, including general principles of common and
    civil law, and terms and conditions of any grant of approval, permission,
    authority or license of any Governmental Entity, statutory body
    (including The Toronto Stock Exchange and other exchanges) or self-
    regulatory organization (including NASDAQ, the New York Stock Exchange
    and other exchanges), and the term "applicable" with respect to such Laws
    and in the context that refers to one or more Persons, means that such
    Laws apply to such Person or Persons or its or their business,
    undertaking, property or securities and emanate from a Person having
    jurisdiction over the Person or Persons or its or their business,
    undertaking, property or securities;

         1.1.24. "NASDAQ" means the Nasdaq National Market System;

         1.1.25. "Noon Rate" means the Bank of Canada daily noon rate,
    expressed as an amount of Canadian dollars per one United States dollar;

         1.1.26. "Office of the Depositary" means the office of the
    Depositary at which its depositary receipt business is administered
    which, at the date of this Agreement, is 4 King Street West, Suite 1101,
    Toronto, Ontario M5H 1B6;

         1.1.27. "Order" means a written order or request;

         1.1.28. "Owner" means any Person in whose name a Receipt is
    registered on the books of the Depositary maintained for that purpose;

         1.1.29. "Ownership" means the registered ownership on the books of
    the Depositary of Securities or a Receipt;

                                       3
<PAGE>

         1.1.30 . "Payment Currency" shall have the meaning ascribed to such
    term in section 7.10.

         1.1.31 . "Person" means any individual, limited liability company,
    corporation, partnership, joint venture, association, joint stock
    company, trust (including any trust beneficiary), unincorporated
    organization or government or any agency or political subdivision
    thereof;

         1.1.32. "prospectus", unless the context otherwise requires,
    includes a registration statement;

         1.1.33. "qualify," "qualified" and "qualification" refer to (i) the
    qualification under Canadian Securities Laws of a prospectus in respect
    of a distribution or distribution to the public, as the case may be, of
    securities and (ii) a registration effected by preparing and filing a
    registration statement under the United States Securities Act of 1933, as
    amended, (including a prospectus) in compliance with U.S. Securities
    Laws, and the declaration or ordering of the effectiveness of such
    registration statement, provided that no stop order or other order
    suspending the effectiveness of such registration statement is in effect;

         1.1.34. "Receipt" means a Holding Company Depositary Receipt for
    common shares of Canadian Pacific Limited issued under this Agreement and
    that represents the Owner's right to receive the Underlying Securities
    held by the Depositary under this Agreement;

         1.1.35. "Reclassification Event" means any change in nominal value,
    change in par value, split-up, consolidation or any other
    reclassification of any Underlying Securities, or any recapitalization,
    reorganization, merger or consolidation or sale of assets affecting the
    issuer of any Underlying Security in circumstances where the provisions
    of sections 7.5 and 7.6 do not apply;

         1.1.36. "Reorganization" means the announced plan of reorganization
    of Canadian Pacific Limited to split into the Successor Companies and to
    distribute the shares of the Successor Companies to its shareholders;

         1.1.37. "Restricted Securities" means Securities that (i) are
    subject to resale restrictions under Canadian Securities Laws, (ii) have
    been acquired directly or indirectly from the issuer or its affiliates
    (as defined in Rule 144 under the United States Securities Act of 1933,
    as amended) in a transaction or chain of transactions not involving any
    public offering, or that are held by an officer or director (or person
    performing similar functions) or other affiliate of the issuer, or (iii)
    would require qualification in connection with the public offer and sale
    thereof, or that are subject to other restrictions on sale or deposit
    under a shareholder agreement or the corporate documents of the issuer;

         1.1.38. "SEC" means the Securities and Exchange Commission of the
    United States or any successor Governmental Entity in the United States;

         1.1.39. "Securities" means, as long as such securities are (i)
    registered under section 12 of the Securities Exchange Act of 1934, as
    amended, (ii) issued by a reporting issuer under the Securities Act
    (Ontario), and (iii) listed on (x) a Canadian national securities
    exchange and (y) either on a United States national securities exchange
    or through NASDAQ:

                1.1.37.1. prior to the completion of the Reorganization, CP
           Shares; and

                1.1.37.2. after the completion of the Reorganization, (i) the
           securities of the Successor Companies that will be distributed in
           respect of CP Shares in the Reorganization or that CP Shares will
           become in the Reorganization and (ii) Additional Securities, in the
           case of (i) and (ii), any of which must be deposited under this
           Agreement for issuance of Receipts;

         1.1.40. "Securities Issuer" means prior to the completion of the
    Reorganization, Canadian Pacific Limited, and thereafter, as of any time,
    the issuer of a class of Securities;

         1.1.41. "Securities Laws" means Canadian Securities Laws and U.S.
    Securities Laws;

                                       4
<PAGE>

         1.1.42. "Securities Registrar" means the entity that presently
    carries out the duties of registrar for any Securities or any successor
    as registrar for any Securities and any other appointed agent of a
    Securities Issuer for the transfer and registration of Securities;

         1.1.43. "Successor Companies" means any of the separate public
    companies that result from the Reorganization and/or interests which
    Canadian Pacific Limited distributes in the Reorganization;

         1.1.44. "Surrender" means, when used with respect to Receipts, (a)
    one or more book-entry transfers of Receipts to the CDS account of the
    Depositary or (b) the surrender to the Depositary at the Office of the
    Depositary of one or more certificates evidencing such Receipts, in
    either case for the purposes of withdrawal of Underlying Securities, and
    "Surrendered" has a corresponding meaning;

         1.1.45. "Underlying Securities" means, as of any time, Securities
    that are deposited with the Depositary for the issuance of Receipts and
    are at such time held under this Agreement and any other securities,
    property or cash received by the Depositary in respect thereof and at
    such time held hereunder; and

         1.1.46. "U.S. Securities Laws" means the United States Securities
    Act of 1933, as amended, and the rules and regulations of the SEC
    promulgated thereunder and the United States Securities Exchange Act of
    1934, as amended, and the rules and regulations of the SEC promulgated
    thereunder.

1.2. Rules of Construction

     Unless the context otherwise requires:

         (a) a term has the meaning assigned to it;

         (b) "or" is not exclusive;

         (c) "including" means including without limitation; and

         (d) words in the singular include the plural and words in the plural
    include the singular.

1.3. Schedules

     The following are the schedules attached to this Agreement:

         Schedule 3.8--Form of Receipt
         Schedule 11.4--Form of Audited Schedules

1.4. Headings and Table of Contents

     The inclusion of headings and a table of contents in this Agreement is for
convenience of reference only and will not affect the construction or
interpretation hereof.

1.5. Gender

     In this Agreement, unless the context otherwise requires, words importing
gender include all genders.

1.6. Invalidity of Provisions

     To the extent permitted by applicable Laws, each of the provisions
contained in this Agreement and the Receipts is distinct and severable and a
declaration of invalidity or unenforceability of any such provision or part
thereof by a court of competent jurisdiction will not affect the validity or
enforceability of any other provision hereof or of the Receipts. To the extent
permitted by applicable Laws, the parties waive any Laws

                                       5
<PAGE>

which render any provision of this Agreement or the Receipts invalid or
unenforceable in any respect. The parties will engage in good faith
negotiations to replace any provision which is declared invalid or
unenforceable with a valid and enforceable provision, the economic effect of
which comes as close as possible to that of the invalid or unenforceable
provision which it replaces.

1.7. Governing Law

      This Agreement and the Receipts will be governed by and construed in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein.

                                   ARTICLE 2

                            Initial Deposit Program

2.1. Depositary

      The Depositary hereby agrees to act as the depositary for the Receipts,
subject to the terms and conditions hereof. The Depositary agrees that it will
not, as depositary or in a similar capacity, (i) sponsor or participate in any
other program or (ii) enter into any other agreement in connection with any
instrument, in either case designed to evidence ownership of or represent the
Securities in a single trading instrument.

2.2. Coordinator and Initial Depositor

      Merrill Lynch hereby agrees to act as the coordinator and initial
depositor with respect to the Initial Deposit Program subject to the terms and
conditions hereof. Merrill Lynch hereby agrees to coordinate and promote the
deposit of Securities hereunder during the Initial Deposit Period and to
solicit the deposit of Securities during the Initial Deposit Program in
compliance with applicable Laws. In addition, Merrill Lynch hereby agrees to
deposit with the Depositary as of the date of commencement of the Initial
Deposit Period, the Initial Deposit Amount to receive Receipts, when issued.
Notwithstanding anything herein to the contrary, the Depositary will not be
required to and will not accept any deposits of CP Shares in accordance with
the terms and conditions hereof until such time as the Depositary has received
the Initial Deposit Amount from Merrill Lynch.

2.3. Consultation

      Merrill Lynch shall consult with the Depositary in connection with the
activities of Merrill Lynch in preparing informational, promotional and
marketing materials regarding the Initial Deposit Program and the Receipts for
brokers, dealers, commercial banks and trust companies and other persons,
including the Owners and Beneficial Owners.

2.4. Coordination of Deposits and Fees

      2.4.1. Prior to the Reorganization, one CP Share will be required to be
deposited in order to receive one Receipt.

      2.4.2. Subject to the terms and conditions of this Agreement, the
Depositary will, prior to the Reorganization, (i) receive deposits of CP Shares
that are accompanied by (A) any appropriate instrument or instruments of
transfer, or endorsement, in form satisfactory to the Depositary, together with
all such certifications as may be required by the Depositary in accordance with
the provisions of this Agreement, and (B) if the Depositary requires, an Order
directing the Depositary to execute and deliver to, or upon an Order of, the
Person or Persons stated in such Order, a Receipt or Receipts representing such
deposit, and (ii) during the

                                       6
<PAGE>

Initial Deposit Period, receive and pay out coordination fees payable by or on
behalf of Depositors as charged by Merrill Lynch in consideration for
coordinating, promoting and soliciting such deposits, as follows:

          2.4.2.1. During the Initial Deposit Period, CP Shares may be
    deposited with the Depositary, along with a cash payment equal to the
    applicable coordination fee. In respect of each CP Share deposited and
    not validly withdrawn prior to the expiration of the Initial Deposit
    Period, Merrill Lynch will be entitled to receive from or on behalf of
    Depositors a cash payment of the coordination fee. In addition, a dealer
    fee may be accepted by a broker or dealer depositing CP Shares on behalf
    of a Beneficial Owner in the case of deposits of up to 9,999 CP Shares
    on behalf of any one Beneficial Owner. The Depositary will not accept
    deposits of CP Shares that are not accompanied by payment of the
    applicable coordination fee. However, the Depositary will in no way be
    obligated to determine if a depositing broker or dealer is entitled to a
    dealer fee. The amounts of the coordination fee and the dealer fee, if
    applicable, are set forth below:

          If the coordination fee and dealer fee, if applicable, are paid in
    U.S. dollars:

<TABLE>
<CAPTION>
               Number of CP Shares
            Deposited by a Beneficial      Coordination Fee       Dealer Fee per
                      Owner                  per CP Share            CP Share
            -------------------------      ----------------       --------------
            <S>                            <C>                    <C>
             Up to - 2,499                    U.S.$0.10             U.S.$0.20
             2,500 - 9,999                    U.S.$0.10             U.S.$0.10
            10,000 - 99,999                   U.S.$0.10                N/A
            100,000 or more                   U.S.$0.05                N/A
</TABLE>

    If the coordination fee and dealer fee, if applicable, are paid in
    Canadian dollars the fees will be the approximate Canadian dollar
    equivalent of the U.S. dollar fee, as determined by Merrill Lynch prior
    to the start of the Initial Deposit Period. In order to qualify for the
    reduced U.S.$0.05 coordination fee, depositors of 100,000 or more CP
    Shares must certify that they are eligible for the reduced coordination
    fee by following the procedures established by the Depositary at the
    time they deposit CP Shares.

          2.4.2.2. The Depositary may refuse to accept CP Shares presented
    for deposit at any time, whether or not the transfer books of the
    Securities Issuer or the Securities Registrar, if applicable, are
    closed, that are not accompanied by an agreement or assignment, or other
    instrument satisfactory to the Depositary, that provides for the prompt
    transfer to the Depositary of any dividend or right to subscribe for
    Additional Securities or to receive other property which any person in
    whose name the Securities are or have been recorded may thereafter
    receive upon or in respect of such deposited Securities, or in lieu
    thereof, such agreement of indemnity or other agreement as shall be
    satisfactory to the Depositary.

          2.4.2.3. If during the Initial Deposit Period the Depositary
    receives notice from a Depositor that such Person wishes to withdraw any
    or all of the CP Shares so deposited, the Depositary will, subject to
    the terms and conditions of this Agreement, Deliver to or upon the Order
    of that Person the number of CP Shares withdrawn. Such Delivery shall be
    made without unreasonable delay. Upon receiving notice of withdrawal
    from a Depositor of CP Shares, the Depositary will make arrangements to
    return to the Depositor who made the deposit the coordination fee the
    Depositary received with respect to such withdrawn deposit as soon as is
    practicable.

          2.4.2.4. On the Closing Date, the Depositary will, at the
    direction of Merrill Lynch: (a) Deliver Receipts to or upon the Order of
    the Depositor(s) who have deposited and not withdrawn CP Shares and have
    paid applicable fees on their own behalf or on behalf of Beneficial
    Owners and (b) deliver to Merrill Lynch the Aggregate Coordination Fee
    by wire transfer of immediately available funds; Merrill Lynch shall
    designate a bank account for that purpose by notice to the Depositary no
    less than two Business Days prior to the end of the Initial Deposit
    Period.

                                       7
<PAGE>

2.5. Initial Deposit Program

      The duties, responsibilities and obligations of the parties with respect
to the Initial Deposit Program hereto will be limited to those expressly set
forth herein and no duties, responsibilities or obligations will be inferred or
implied. The Depositary will not be required to, and will not, expend or risk
any of its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, other than the payment of its out-
of-pocket expenses in connection with acting as Depositary in connection with
the Initial Deposit Program.

2.6. Compliance with Orders

      If at any time prior to the issuance of Receipts the Depositary or
Merrill Lynch is served with any judicial or administrative order, judgment,
decree, writ or other form of judicial or administrative process which in any
way affects any property held by the Depositary hereunder (including but not
limited to orders of attachment or garnishment or other forms of levies or
injunctions or stays relating to the transfer of such property), such party is
authorized to comply therewith in any manner as it or its legal counsel of its
own choosing deems appropriate; and if such party complies with any such
judicial or administrative order, judgment, decree, writ or other form of
judicial or administrative process, such party will not be liable to any of the
other parties hereto or to any other Person or entity even though such order,
judgment, decree, writ or process may be subsequently modified or vacated or
otherwise determined to have been without legal force or effect.

2.7. Statements

      During the Initial Deposit Period, the Depositary will provide to Merrill
Lynch periodic statements not less often than weekly identifying transactions,
transfers or holdings of any property received, held or delivered hereunder;
provided that in the 10 Business Days prior to the Closing Date, such
statements will be provided to Merrill Lynch daily.

2.8. Termination

      Unless this Agreement is earlier terminated in accordance with section
13.2 or 13.3, the Initial Deposit Program will terminate at the end of the
Initial Deposit Period.

                                   ARTICLE 3

                  Deposit of Securities and Issue of Receipts

3.1. Deposit of Securities

      3.1.1. From time to time after the termination of the Initial Deposit
Program and subject to the terms and conditions of this Agreement, a Depositor
may deposit Securities in the classes and amount specified in section 3.1.2
below by Delivery thereof to the Depositary, together with, if the Depositary
so requires, an Order directing the Depositary to Deliver to, or upon the Order
of, the Person or Persons stated in such Order, a Receipt or Receipts for the
number of Securities so deposited.

      3.1.2. Prior to the Reorganization, one CP Share will be required to be
deposited in order to receive one Receipt. After the Reorganization, the
Securities that must be deposited at any time in order to receive one Receipt
will be the classes and amount of shares of the Successor Companies that, as of
the time of deposit, have resulted from one CP Share in the Reorganization or
that one CP Share has become in the Reorganization provided, however, that if
securities cease to be outstanding because of an event described in section
7.6.1 or

                                       8
<PAGE>

7.7, are retained by the Depositary pursuant to section 7.5.1 or 7.7 or are
distributed or surrendered by the Depositary pursuant to section 7.6 or 7.7,
the classes and number of Securities that must be deposited in order to receive
one Receipt will be changed as provided in such sections. After the
Reorganization, the Depositary may require a minimum deposit of Securities so
that the Receipts issued in respect of each deposit will only represent, in the
aggregate, whole Underlying Securities.

3.2. Delivery of Receipts

      Upon receipt by the Depositary of any deposit pursuant to section 3.1,
the Depositary, subject to the terms and conditions hereof, will Deliver to or
upon the Order of the Person who made the deposit the number of Receipts
issuable in respect of such deposit, but only upon payment to the Depositary of
the fees and expenses of the Depositary as provided in section 8.5 and of all
taxes and governmental charges and fees payable in connection with such
deposit.

3.3. Acceptance by Depositary

      The Depositary will hold the Underlying Securities on behalf of the
Owners for the purposes, and subject to and limited by the terms and conditions
set forth in this Agreement.

3.4. Beneficial Ownership of Securities

      Beneficial ownership of Securities deposited with the Depositary
hereunder will, unless a Receipt representing such Securities is transferred in
accordance with this Agreement, at all times remain with the Beneficial Owner
unaffected by the deposit with the Depositary.

3.5. Place of Custody

      Underlying Securities may be held by the Depositary in Canada at such
place and in such manner as the Depositary will determine.

3.6. Book-Entry System

      3.6.1. The Depositary will apply to CDS for acceptance of the Receipts in
its Book-Entry System. So long as the Receipts are eligible for the Book-Entry
System, unless otherwise required by law and notwithstanding anything to the
contrary in this Agreement, all Receipts shall be evidenced by one or more
global certificates registered in the name of CDS or its nominee and no Person
acquiring beneficial ownership of such Receipts will receive or be entitled to
receive a certificate evidencing Receipts. The global certificates registered
in the name of CDS or its nominee shall bear the following legend:

      "Unless this certificate is presented by an authorized representative of
The Canadian Depository for Securities Limited ("CDS") to BNY Trust Company of
Canada for registration of transfer, exchange or payment, and any certificate
issued in respect thereof is registered in the name of CDS & CO., or in such
other name as is requested by an authorized representative of CDS (and any
payment is made to CDS & CO. or to such other entity as is requested by an
authorized representative of CDS), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered holder
hereof, CDS & CO., has an interest herein."

      3.6.2. Ownership of beneficial interests in Receipts evidenced by such
global certificate or certificates will be shown on, and the transfer of such
ownership shall be effected only through, records maintained by CDS, CDS
Participants or DTC Participants.

                                       9
<PAGE>

3.7. Termination of Book-Entry System

      If, at any time when Receipts are evidenced by a global certificate, CDS
ceases to make its Book-Entry System available for such Receipts, the
Depositary will issue separate certificates evidencing Receipts to the CDS
Participants entitled thereto, with such additions, deletions and modifications
to this Agreement and to the form of certificate evidencing Receipts as Merrill
Lynch and the Depositary may, from time to time, agree.

3.8. Form of Receipts

      3.8.1. The certificates evidencing Receipts will be substantially in the
form set forth in Schedule 3.8, with appropriate modifications after completion
of the Reorganization and as hereinafter provided. The certificates evidencing
Receipts may be endorsed with or have incorporated in the text thereof such
legends or recitals or modifications not inconsistent with the provisions of
this Agreement as may be required by the Depositary or required to comply with
any applicable Laws or to conform with any usage with respect thereto, or to
indicate any special limitations or restrictions to which any particular
Securities or the Receipts are subject by reason of the date of issuance of the
Securities or otherwise.

      3.8.2. No Receipt will be valid or obligatory for any purpose unless a
certificate evidencing such Receipt will have been executed by the Depositary
by the manual or facsimile signature of a duly authorized signatory of the
Depositary.

      3.8.3. Certificates evidencing Receipts bearing the manual or facsimile
signature of a signatory of the Depositary who was at the time such
certificates were executed a duly authorized signatory of the Depositary will
bind the Depositary, notwithstanding that such signatory has ceased to hold
such office prior to the delivery of such certificates.

      3.8.4. From time to time, the Depositary may call for Owners to deliver
outstanding certificates evidencing Receipts in exchange for new certificates
specifically describing any applicable change in the classes and quantities of
securities that must be deposited for issuance of Receipts.

3.9. Transfer of Receipts

      A certificate evidencing Receipts and the Receipts evidenced thereby,
when properly endorsed or accompanied by proper instruments of transfer, will
be transferable by Delivery with the same effect as in the case of a negotiable
instrument under the laws of Ontario; provided, however, that the Depositary,
notwithstanding any notice to the contrary, may treat the Owner of Receipts as
the absolute owner thereof for the purpose of determining the Person entitled
to distribution of dividends or other distributions or to any notice provided
for in this Agreement and for all other purposes.

3.10. Register

      The Depositary will keep or cause to be kept a register of Owners of
Receipts and will provide for the registration of Receipts and the registration
of transfers and exchanges of Receipts.

3.11. Registration of Transfers

      The Depositary, subject to the terms and conditions hereof, will register
transfers of Ownership of Receipts on its transfer books from time to time,
upon any Surrender of a certificate evidencing such Receipts, by the Owner in
person or by a duly authorized attorney, properly endorsed or accompanied by
proper instruments of transfer, and duly stamped as may be required by
applicable Laws. Thereupon the Depositary will execute a new certificate or
certificates evidencing such Receipts, and deliver the same to or upon the
Order of the Person entitled thereto.

                                       10
<PAGE>

3.12. Split-up of Certificates

     Upon surrender to the Depositary at the Office of the Depositary of a
certificate evidencing Receipts for the purposes of effecting a split-up or
combination of such certificate or certificates, the Depositary will execute
and deliver one or more new certificate or certificates evidencing such
Receipts.

3.13. Co-Transfer Agents

     The Depositary may appoint one or more co-transfer agents for the purpose
of effecting transfers, combinations and split-ups of Receipts at designated
transfer offices on behalf of the Depositary. In carrying out its functions, a
co-transfer agent may require evidence of authority and compliance with
applicable Laws and other requirements by Owners or Persons entitled to
Receipts and will be entitled to protection and indemnity to the same extent
as the Depositary.

                                   ARTICLE 4

                             Surrender of Receipts

4.1. Surrender of Receipts

     An Owner of Receipts will be entitled to Delivery of the amounts of
Underlying Securities at the time represented by those Receipts upon (a)
Surrender of those Receipts, (b) payment of the fees of the Depositary as
provided in section 8.5 and (c) payment of all taxes and charges payable in
connection with such Surrender and withdrawal of the Underlying Securities.

4.2. Delivery of Underlying Securities

     4.2.1. Delivery of Underlying Securities under section 4.1 may be made
by:

         (a) Delivery of Securities to such Owner or in accordance with an
    Order by such Owner; and

         (b) any available form of delivery of any other Underlying
    Securities to which such Owner is then entitled to such Owner or in
    accordance with an Order by such Owner.

     4.2.2. The Depositary will, subject to sections 5.3, 6.1, 6.2 and 7.12,
Deliver the Underlying Securities as promptly as practicable.

4.3. Requirements For Delivery of Underlying Securities

     A certificate evidencing Receipts Surrendered may be required by the
Depositary to be properly endorsed in blank or accompanied by proper
instruments of transfer in blank, and if the Depositary so requires, the Owner
will execute and deliver to the Depositary an Order directing the Depositary
to cause the Underlying Securities being withdrawn to be Delivered to or upon
the Order of a Person or Persons designated in such Order. Thereupon the
Depositary shall Deliver at the Office of the Depositary, subject to sections
5.1, 6.1, 6.2 and 7.12 and to the other terms and conditions of this
Agreement, to or upon the Order of a Person or Persons designated in such
Order delivered to the Depositary as above provided, the amount of Underlying
Securities represented by such Receipts.

4.4. Cancellation and Destruction of Surrendered Certificates

     All certificates evidencing Receipts Surrendered to the Depositary will
be cancelled by the Depositary. The Depositary is authorized to destroy
certificates so cancelled.

                                      11
<PAGE>

                                   ARTICLE 5

          Additional Provisions for Deposit and Surrender of Receipts

5.1. Limitations on Delivery, Registration of Transfer and Surrender of
Receipts

      As a condition precedent to the Delivery, registration of transfer,
split-up, combination or Surrender of any Receipt, the Depositary may require:
(a) payment from or on behalf of the Depositor of Securities or the presentor
of the Receipts of a sum sufficient to reimburse the Depositary for any tax or
other charge and any stock transfer or registration fee with respect thereto
(including any such tax or charge and fee with respect to Securities being
deposited or withdrawn); (b) payment of any applicable fees as herein provided;
(c) production of proof satisfactory to the Depositary as to the identity and
genuineness of any signature; and (d) compliance with any requirements the
Depositary may establish consistent with the provisions of this Agreement.

5.2. Suspension of Deposit and Surrender of Receipts

      The Delivery of Receipts against deposits of Securities, the registration
of transfer of Receipts or the Surrender of Receipts may be suspended,
generally or in particular instances, (a) during any period when the transfer
books of the Depositary are closed or the transfer books of a Securities Issuer
are closed or (b) if any such action is deemed necessary or advisable by the
Depositary at any time or from time to time, provided that the Surrender of
Receipts may not be suspended except for (i) temporary delays caused by closing
the transfer books of the Depositary or a Securities Issuer, (ii) the payment
of fees, taxes and applicable charges, and (iii) compliance with any applicable
Laws relating to the Receipts or to the withdrawal of the Underlying
Securities. Without limitation of the foregoing, the Depositary will not
knowingly accept for deposit hereunder any Securities required to be qualified
under Securities Laws or Deliver any Receipts therefor unless the public offer
and sale of those Securities by the holder is permitted under Securities Laws.

5.3. Lost Certificates

      If any certificate evidencing Receipts is mutilated, destroyed, lost or
stolen, the Depositary will execute and deliver a new certificate in exchange
and substitution for such mutilated certificate upon cancellation thereof, or
in lieu of and in substitution for such destroyed, lost or stolen certificate.
Before the Depositary will execute and deliver a new certificate in
substitution for a destroyed, lost or stolen certificate, the Owner will have
(a) filed with the Depositary (i) an Order for such execution and delivery and
(ii) a sufficient indemnity bond, and (b) satisfied any other reasonable
requirements imposed by the Depositary. The Depositary will not execute and
deliver a new certificate if the Depositary has notice that the Receipts have
been acquired by a good faith purchaser.

                                   ARTICLE 6

        Certain Obligations of Owners, Beneficial Owners and Depositors

6.1. Filing Proofs, Certificates and Other Information

      Any Depositor of Securities or any Owner of Receipts may be required from
time to time to (a) file with the Depositary such proof of citizenship or
residence, exchange control approval, or such information relating to the
registration on the books of any Securities Issuer, (b) execute such
certificates and (c) make such representations and warranties, as the
Depositary may require. The Depositary may withhold the Delivery or
registration of transfer of any Receipts or the Delivery of any Underlying
Securities until such proof or other information is filed or such certificates
are executed or such representations and warranties made.

                                       12
<PAGE>

6.2. Liability of Owner for Taxes and Other Charges

      If any tax or other charge will become payable by the Depositary with
respect to any Receipts or Underlying Securities, such tax or other charge will
be payable by the Owner of such Receipts to the Depositary. The Depositary will
refuse to effect any transfer of such Receipts or any withdrawal of Underlying
Securities represented by such Receipts until such payment is made, and may
withhold any dividends or other distributions, or may sell for the account of
the Owner thereof Underlying Securities constituting any multiples of the
securities which must be deposited for issuance of Receipts, and may apply such
dividends or other distributions or the proceeds of any such sale in payment of
such tax or other charge and the Owner of such Receipts will remain liable for
any deficiency.

6.3. Warranties on Deposit of Securities

      Every Depositor of Securities will be deemed to represent and warrant
that: (a) such Securities and each certificate therefor are validly issued and
are fully paid and non assessable; (b) the Depositor is duly authorized to
deposit the Securities; (c) at the time of Delivery, such Securities are free
and clear of any lien, pledge, encumbrance, right, charge or claim (other than
the rights created hereby); and (d) such Securities are not, and Receipts
representing such Securities would not be, Restricted Securities. Such
representations and warranties will survive the deposit of Securities, issuance
of Receipts or termination of this Agreement.

6.4. Authorization of Depositary

      Every Depositor and every Person that becomes an Owner or Beneficial
Owner will be deemed thereby to authorize the Depositary to execute and deliver
this Agreement on that Person's behalf and will be deemed to be bound hereby as
if the Person was an original signatory hereto.

                                   ARTICLE 7

                           The Underlying Securities

7.1. Reports

      The Depositary will, to the extent lawful, forward to each Owner,
including with respect to fractional interests in the Underlying Securities
represented by such Owner's Receipt, any reports and communications, including
any financial statements, information circular, proxy statement or other
soliciting material, received by the Depositary from a Securities Issuer which
are received by the Depositary as the holder of the Underlying Securities or
its appointed agent, unless such reports and communications have been forwarded
to such Owner by or on behalf of such Securities Issuer or its appointed agent.

7.2. Voting Instructions for Underlying Securities

      7.2.1. Upon receipt by the Depositary or its appointed agent of notice of
any meeting of, or solicitation of proxies from, holders of Underlying
Securities, the Depositary will, to the extent lawful, mail or cause to be
mailed to the Owners (a) such information as is contained in such notice of
meeting or solicitation and (b) materials that enable the Owners as of the
close of business on a specified record date, subject to applicable Laws and
the provisions of the corporate documents of the Securities Issuer, to instruct
the Depositary as to the exercise of the voting rights, if any, or giving of
proxies, as applicable, in respect of the amount of Underlying Securities
represented by their respective Receipts.

      7.2.2. Upon the Order of an Owner of a Receipt, received on or before a
date established by the Depositary for such purpose, the Depositary will
endeavour, insofar as feasible, to (i) vote or cause to be voted,

                                       13
<PAGE>

or to give a proxy, as applicable, in respect of, the amount of Underlying
Securities represented by such Receipt in accordance with the instructions set
forth in such request or (ii) upon the request of an Owner, provide that Owner
(or a person designated by that Owner) with documentation necessary to attend
that meeting of the holders of Underlying Securities and vote any number of
those Underlying Securities requested by that Owner that does not exceed the
number of those Underlying Securities represented by that Owner's Receipts and
as to which that Owner has not given voting instructions to the Depositary. The
Depositary will aggregate the votes of all fractional interests in Underlying
Securities represented by the Receipts and will endeavour to vote the largest
possible number of whole shares of Underlying Securities. The Depositary will
not vote or attempt to exercise the right to vote that attaches to, or give a
proxy with respect to, Underlying Securities other than in accordance with such
instructions. Notwithstanding anything herein to the contrary, the Depositary
will not be required to vote any fractional remainder on the aggregate
Underlying Securities voted pursuant to this Section 7.2.2.

7.3. Cash Distributions

      7.3.1. Subject to sections 7.3.2 and 7.10, whenever the Depositary
receives any cash dividend or other cash distribution on any Underlying
Securities, the Depositary will distribute the amount received (net of the fees
of the Depositary as provided in section 8.5, if applicable) to the Owners
entitled thereto, in proportion to the number of Receipts held by them
respectively; provided, however, that in the event that the respective
Securities Issuer or the Depositary is required to withhold and does withhold
from such cash dividend or such other cash distribution an amount on account of
taxes, the amount distributed to the Owners will be reduced accordingly.

      7.3.2. The Depositary will distribute only such amount, however, as can
be distributed without attributing to any Owner a fraction of one cent. Any
such fractional amounts will be rounded to the nearest whole cent and so
distributed to Owners entitled thereto.

7.4. Rights Offerings

      7.4.1. If a Securities Issuer offers or causes to be offered to the
holders of any Underlying Securities any rights to subscribe for Additional
Securities or other securities, the Depositary will make such rights available
to all Owners, unless by the terms of such rights offering or for any other
reason it is not lawful or is not practicable for the Depositary to make such
rights available in which case the Depositary will, if lawful and feasible, use
reasonable efforts to dispose of such rights on behalf of Owners and distribute
the net proceeds (after deduction of any expenses of the Depositary and any
fees as provided in section 8.5) to Owners. If by the terms of such rights
offering or for any other reason it is not lawful and feasible for the
Depositary to make the rights available or to dispose of the rights and make
the net proceeds available to Owners, the Depositary will allow the rights to
lapse.

      7.4.2. For greater certainty, the Depositary will not offer rights to
Owners unless both the rights and the securities to which such rights relate
are either exempt from qualification under Securities Laws with respect to a
distribution to all Owners or are qualified under the provisions of such laws.

      7.4.3. The Depositary will not be responsible for any error in
determining, in good faith, whether it is lawful or practicable to make such
rights available to Owners in general or any Owner in particular.

7.5. Other Distributions

      7.5.1. If any distribution received by the Depositary in respect of any
Underlying Securities consists of a dividend in, or free distribution of
Additional Securities, the Depositary will, to the extent lawful and
practicable, retain such Additional Securities under this Agreement, and the
amount of such Additional

                                       14
<PAGE>

Securities so retained in respect of each Receipt will be added to the classes
and quantities of securities that must be deposited for issuance of Receipts.

      7.5.2. Subject to the provisions of section 8.5, if the Depositary
receives any distribution in respect of the Underlying Securities other than a
distribution (i) distributed by the Depositary pursuant to section 7.3, (ii)
retained by the Depositary pursuant to section 7.5.1 or (iii) of rights
pursuant to section 7.4, then the Depositary will, subject to section 7.12,
cause the securities or property received by it to be distributed to the Owners
entitled thereto, in proportion to the number of Receipts held by them
respectively; provided, however, that if such distribution cannot be made
proportionately among the Owners entitled thereto, or if for any other reason
(including, but not limited to, any requirement that a Securities Issuer or the
Depositary withhold an amount on account of taxes or other governmental charges
or that such securities be qualified under Securities Laws in order to be
distributed to Owners) such distribution is not lawful and feasible, the
Depositary will adopt another equitable and practicable method for the purpose
of effecting such distribution, including, but not limited to, the public or
private sale of the securities or property thus received, or any part thereof,
and the net proceeds of any such sale (after deduction of any expenses of the
Depositary and any fees as provided in section 8.5) will be distributed by the
Depositary to the Owners entitled thereto as in the case of a distribution
pursuant to section 7.3.

7.6. Reconstitution Events

      7.6.1. If (a) any class of Securities ceases to be outstanding as a
result of, or is surrendered by the Depositary in connection with, a merger,
consolidation, corporate combination or other event of the Securities Issuer,
and (b) as a result, the Depositary receives securities which are not
Securities of a Successor Company or Additional Securities, then the Depositary
will, if it has actual knowledge of such event, to the extent lawful and
practicable and subject to section 7.12, distribute any securities so received
by the Depositary to the Owners in proportion to their ownership of Receipts.
Effective on the date that class of Securities ceases to be outstanding or is
surrendered by the Depositary, that class of Securities will cease to be part
of the securities that must be deposited for issuance of Receipts.

      7.6.2. If any class of Underlying Securities is delisted from trading on
its primary exchange or market in the United States or Canada and is not listed
for trading on another national securities exchange in Canada or the United
States or through NASDAQ, as the case may be, within five Business Days from
the date of such delisting, the Depositary will, if it has actual knowledge of
such event, to the extent lawful and practicable and subject to section 7.12,
distribute the Underlying Securities of such class to the Owners in proportion
to their ownership of Receipts. Effective on the date of such distribution,
such class of Securities will cease to be a part of the securities that must be
deposited for issuance of Receipts.

      7.6.3. In the event that any Securities Issuer no longer has a class of
Securities registered under section 12 of the United States Securities and
Exchange Act of 1934, as amended, or ceases to be a reporting issuer under the
Securities Act (Ontario), the Depositary will, if it has actual knowledge of
such event, to the extent lawful and practicable and subject to section 7.12,
distribute the Underlying Securities of such Securities Issuer to the Owners in
proportion to their ownership of Receipts. Effective on the date of such
distribution, such class of Securities will cease to be part of the securities
that must be deposited for issuance of Receipts.

      7.6.4. If the SEC determines that a Securities Issuer is an investment
company under the United States Investment Company Act of 1940, and the
Depositary has actual knowledge of such SEC determination, then the Depositary
will, to the extent lawful and practicable and subject to section 7.12,
distribute the Securities of such Securities Issuer to the Owners in proportion
to their ownership of Receipts. Effective on the date of such distribution, the
Securities of such Securities Issuer will cease to be part of the securities
that must be deposited for issuance of Receipts.

                                       15
<PAGE>

      7.6.5. If this section 7.6 would otherwise require the Depositary to
distribute the last remaining Underlying Securities, the Depositary may require
the Surrender of Receipts and compliance with Article 4, including payment of
the fees of the Depositary as provided in section 8.5, as a condition of
effecting the distribution.

7.7. Reclassification Event

      7.7.1. If a Reclassification Event occurs and the Depositary receives
Securities in respect of any Underlying Securities in connection with such
Reclassification Event, the Depositary will, to the extent lawful and
practicable, retain such Securities under this Agreement; and, in such case,
the amount of Securities so retained in respect of each Receipt will be added
to the classes and quantities of securities which must be deposited with the
Depositary for issuance of Receipts. If the Depositary receives securities that
are not Securities in connection with a Reclassification Event then the
Depositary will, to the extent lawful and practicable and subject to section
7.12, distribute any securities so received by the Depositary to the Owners in
proportion to their Ownership of Receipts.

      7.7.2. Any class of Securities that ceases to be outstanding as a result
of, or that is surrendered by the Depositary in connection with, any
Reclassification Event will, effective on the date such class of Securities
ceases to be outstanding or is surrendered by the Depositary, no longer be part
of the securities that must be deposited for issuance of Receipts.

7.8. Fixing of Record Date

      7.8.1. Whenever any cash dividend or other cash distribution becomes
payable or any distribution other than cash is made, or whenever the Depositary
receives notice of any meeting of, or solicitation of proxies from, holders of
any Underlying Securities, or whenever a fee will be charged by the Depositary
under section 8.5, or whenever for any reason there is an event that causes a
change in the composition of the securities that must be deposited for issuance
of Receipts, or whenever the Depositary finds it necessary or convenient in
respect of any matter, the Depositary will fix a record date (a) for the
determination of the Owners who will be (i) entitled to receive such dividend
or distribution or the net proceeds of the sale thereof, (ii) entitled to give
instructions to the Depositary for the exercise of voting rights at any such
meeting or solicitation or (iii) required to pay such fee, or (b) on or after
which each Receipt will represent such changed group of securities.

      7.8.2. In the case of clause (a)(i) and (a)(ii) of section 7.8.1, the
Depositary will use its reasonable efforts to ensure that, to the extent
practicable, the record date set hereunder will be the same as the record date
set by the Securities Issuer.

      7.8.3. Subject to the terms and conditions hereof, the Owners on a record
date established by the Depositary will, as applicable: (a) be entitled to
receive the amount distributable by the Depositary with respect to such
dividend or other distribution or the net proceeds of sale thereof; (b) be
entitled to give voting instructions or act in respect of any other such
matter; or (c) be obligated to pay such fee.

7.9. Withholding

      In the event that the Depositary determines that any distribution in
property (including Securities and rights to subscribe therefor) is subject to
any tax or other charge that the Depositary is obligated to withhold,
notwithstanding anything to the contrary herein, the Depositary may by public
or private sale dispose of all or a portion of such property (including
Securities and rights to subscribe therefor) in such amounts and in such manner
as the Depositary considers necessary and practicable to pay any such taxes or
charges and the Depositary will distribute the net proceeds of any such sale
after deduction of such taxes or charges to the Owners entitled thereto in
proportion to the number of Receipts held by them respectively.

                                       16
<PAGE>

7.10. Conversion to United States Dollars

      The parties hereto acknowledge that, as of the date hereof, payment of
dividends by a Securities Issuer is expected to be made in Canadian Dollars.
The Depositary shall distribute cash hereunder to each Owner in Canadian
dollars or, if requested in writing by that Owner, in U.S. dollars (the
currency to be distributed being referred to as the "Payment Currency"). To the
extent the Depositary receives a currency other than the Payment Currency (that
other currency being referred to as "Foreign Currency"), the Depositary shall
act in accordance with the following provisions:

      7.10.1. Whenever the Depositary receives Foreign Currency, by way of
dividends or other distributions or the net proceeds from the sale of
securities, property or rights, and if at the time of the receipt thereof the
Foreign Currency so received can in the judgement of the Depositary be
converted on a reasonable basis into Payment Currency and the resulting Payment
Currency transferred to Canada and distributed to the relevant Owners, the
Depositary will convert or cause to be converted, by sale or in any other
manner that it may determine, such Foreign Currency into Payment Currency, and
such Payment Currency will be distributed to the Owners entitled thereto. Such
distribution may be made upon an averaged or other practicable basis without
regard to any distinctions among Owners on account of exchange restrictions,
the date of delivery of any Receipt or otherwise and will be net of any
expenses of conversion incurred by the Depositary.

      7.10.2. If such conversion or distribution can be effected only with the
approval or license of any Governmental Entity, the Depositary will file such
application for approval or license, if any, as it may deem desirable.

      7.10.3. If at any time the Depositary shall determine that in its
judgment any currency received by the Depositary that otherwise would be
converted to Payment Currency under this section, is not convertible on a
reasonable basis into Payment Currency transferable to Canada and distributable
to the relevant Owners, or if any approval or license of any Governmental
Entity which is required for such conversion is denied or in the opinion of the
Depositary is not obtainable, or if any such approval or license is not
obtained within a reasonable period as determined by the Depositary, the
Depositary will either distribute the currency received by the Depositary to,
or hold such currency uninvested and without liability for interest thereon for
the respective accounts of, the Owners entitled to receive the same. If any
conversion of currency, in whole or in part, cannot be effected for
distribution to some of the Owners entitled thereto, the Depositary will make
such conversion and distribution in Payment Currency to the extent permissible
to the Owners entitled thereto pro rata to their ownership of Receipts and will
either distribute the balance of the currency received by the Depositary to, or
hold such currency uninvested and without liability for interest thereon for
the respective accounts of, the Owners entitled thereto pro rata to their
ownership of Receipts. Any currency held by the Depositary for the accounts of
Owners entitled thereto in accordance with this section 7.10.3 shall be
converted by the Depositary to Payment Currency and distributed as soon as
reasonably practicable.

7.11. Timing of Distributions

      Distributions under this Agreement will be made by the Depositary as soon
as is practicable.

7.12. Limitation on Distributions

      Notwithstanding any provision of this Agreement which requires or permits
the Depositary to distribute or Deliver any securities to Owners, the
Depositary will not distribute to any Owner any fraction of a share. Instead,
the Depositary will, to the extent lawful, use reasonable efforts to sell the
aggregate of such fractions and distribute the proceeds, net of the expenses of
the Depositary and the fees of the Depositary as provided for in this
Agreement, to the Owners entitled thereto as in the case of a distribution
received in cash. The Depositary will not charge Owners or Beneficial Owners of
Receipts brokerage fees for sales pursuant to this section 7.12 in connection
with a surrender of Receipts under section 4.1.

                                       17
<PAGE>

                                   ARTICLE 8

                                 The Depositary

8.1. Maintenance of Office and Transfer Books by the Depositary

      Until termination of this Agreement:

          8.1.1. the Depositary will maintain in the City of Toronto,
    Ontario, facilities for the execution and Delivery, registration,
    registration of transfers and Surrender of Receipts in accordance with
    the provisions hereof;

          8.1.2. the Depositary will keep books for the registration of
    Receipts and transfers of Receipts which at all reasonable times will be
    open for inspection by the Owners;

          8.1.3. subject to section 5.2, the Depositary may close the
    transfer books at any time or from time to time; and

          8.1.4. if any Receipts are listed on one or more stock exchanges,
    the Depositary will act as registrar or appoint a registrar or one or
    more co-registrars for registry of such Receipts in accordance with any
    requirements of such exchange or exchanges.

8.2. Prevention or Delay in Performance by the Depositary

      Neither the Depositary nor any of its directors, employees, agents or
affiliates will incur any liability to any Owner, Beneficial Owner or Depositor
if, by reason of any provision of any present or future applicable Laws, or by
reason of any provision, present or future, of the corporate documents of any
Securities Issuer, or by reason of any provisions of any securities issued or
distributed by any Securities Issuer, or any offering or distribution thereof,
or by reason of any act of God or war or other circumstances beyond its
control, the Depositary is prevented or forbidden from, or would be subject to
any civil or criminal penalty on account of, doing or performing any act or
thing which by the terms of this Agreement it is provided will be done or
performed. The Depositary will not incur any liability to any Owner, Beneficial
Owner or Depositor by reason of any non-performance or delay, caused as
aforesaid, in the performance of any act or thing which by the terms of this
Agreement it is provided will or may be done or performed. Where, by the terms
of an offering or distribution to which sections 7.4, 7.5 or 7.6 apply, or for
any other reason, it is not lawful and practicable to make such distribution or
offering available to Owners, and the Depositary may not dispose of such
distribution or offering on behalf of such Owners and make the net proceeds
available to such Owners, then the Depositary shall not make such distribution
or offering available to Owners and shall allow any rights, if applicable, to
lapse.

8.3. Obligations of the Depositary

      8.3.1. The Depositary does not assume any obligation nor will it be
subject to any liability under this Agreement to any Owner, Beneficial Owner or
Depositor (including, without limitation, liability with respect to the
validity or worth of the Underlying Securities), except that it agrees to
perform its obligations specifically set forth herein without negligence or bad
faith, and no implied duties will be read into this Agreement against the
Depositary.

      8.3.2. The Depositary is not under any obligation to prosecute any
action, suit or other proceeding in respect of any Underlying Securities or in
respect of the Receipts.

                                       18
<PAGE>

      8.3.3. The Depositary is not liable for any action or non-action by it in
reliance upon the advice of or information from legal counsel, accountants, any
Depositor, any Owner or any other Person believed by it in good faith to be
competent to give such advice or information.

      8.3.4. The Depositary is not responsible for any failure to carry out any
instructions to vote any of the Underlying Securities, or for the manner in
which any such vote is cast or the effect of any such vote, provided that any
such action or non-action is without negligence or bad faith.

      8.3.5. Except as specifically provided in section 7.1, the Depositary has
no obligation to monitor or to obtain any information concerning the business
or affairs of any Securities Issuer or to advise Owners or Beneficial Owners of
any event or condition affecting any Securities Issuer.

      8.3.6. The Depositary has no obligation to comply with any direction or
instruction from any Owner or Beneficial Owner regarding Receipts except to the
extent specifically provided herein.

      8.3.7. The Depositary is not liable for any acts or omissions made by a
successor Depositary whether in connection with a previous act or omission of
the Depositary or in connection with any matter arising wholly after the
resignation of the Depositary, provided that in connection with the issue out
of which such potential liability arises the Depositary performed its
obligations without negligence or bad faith while it acted as Depositary.

      8.3.8. The duties and responsibilities and liabilities of the Depositary
are limited by, and are only those specifically set forth in, this Agreement.

8.4. Resignation or Removal of the Depositary; Appointment of Successor
Depositary

      8.4.1. The Depositary may at any time resign as Depositary hereunder by
written notice of its election so to do, delivered to Merrill Lynch, and such
resignation will take effect upon the appointment of a successor Depositary and
its acceptance of such appointment as hereinafter provided. Notwithstanding any
other provision of this Agreement, any resignation of the Depositary shall not
be effective until a duly appointed successor Depositary has agreed in an
instrument in writing acceptable to The Toronto Stock Exchange Inc. and the New
York Stock Exchange, Inc., respectively, acting reasonably, to be bound by the
provisions applicable to the Depositary under any agreement(s) then existing
between the Depositary in its capacity or related to its obligations as
Depositary and The Toronto Stock Exchange Inc. and the New York Stock Exchange,
Inc., respectively.

      8.4.2. If at any time the Depositary is in material breach of its
obligations hereunder and the Depositary fails to cure such breach within 30
days after receipt by the Depositary of written notice from Owners of 25% or
more of the outstanding Receipts or from Merrill Lynch specifying such default
and requiring the Depositary to cure such default, Merrill Lynch, acting on
behalf of the Owners, may remove the Depositary by written notice delivered to
the Depositary in the manner provided in section 14.3, and such removal will
take effect upon the appointment of the successor Depositary and its acceptance
of such appointment as hereinafter provided. Notwithstanding any other
provision of this Agreement, any removal of the Depositary shall not be
effective until a duly appointed successor Depositary has agreed in an
instrument in writing acceptable to The Toronto Stock Exchange Inc. and the New
York Stock Exchange, Inc., respectively, acting reasonably, to be bound by the
provisions applicable to the Depositary under any agreement(s) then existing
between the Depositary in its capacity or related to its obligations as
Depositary and The Toronto Stock Exchange Inc. and the New York Stock Exchange,
Inc., respectively.

                                       19
<PAGE>

      8.4.3. If the Depositary acting hereunder resigns or is removed, Merrill
Lynch will use its reasonable efforts to appoint a successor Depositary, which
will be a bank or trust company having an office in Canada and (i) will have
the capital surplus set forth in Section 26(a)(1) of the United States
Investment Company Act of 1940; (ii) will be affiliated with a U.S. bank that
is a state-chartered bank that is a member of the Federal Reserve System; (iii)
will be regulated as a trust company under the Canadian Trust and Loan
Companies Act; and (iv) will be regulated by the Canadian Office of the
Superintendent of Financial Institutions. Every successor Depositary will
execute and deliver to its predecessor and to Merrill Lynch an instrument in
writing accepting its appointment hereunder, and will execute and deliver to
The Toronto Stock Exchange Inc. and the New York Stock Exchange, Inc.,
respectively, an instrument in writing acceptable to The Toronto Stock Exchange
Inc. and the New York Stock Exchange, Inc., respectively, acting reasonably,
pursuant to which such successor Depositary agrees to be bound by the
provisions applicable to the Depositary under any agreement(s) then existing
between the Depositary in its capacity or related to its obligations as
Depositary and The Toronto Stock Exchange Inc. and the New York Stock Exchange,
Inc., respectively, and thereupon such successor Depositary, without any
further act or deed, will become fully vested with all the rights, powers,
duties and obligations of its predecessor; but such predecessor, nevertheless,
upon payment of all sums due it and on the written request of Merrill Lynch,
will execute and deliver an instrument transferring to such successor all
rights and powers of such predecessor hereunder, will duly assign, transfer and
deliver all right, title and interest in the Underlying Securities to such
successor, and will deliver to such successor a list of the Owners of all
outstanding Receipts. Such successor Depositary will promptly mail notice of
its appointment to the Owners.

      8.4.4. Any corporation into or with which the Depositary may be merged,
consolidated or converted will be the successor of such Depositary without the
execution or filing of any document or any further act.

8.5. Charges of Depositary

      The following charges will be incurred by any Person depositing
Securities or by any Person Surrendering Receipts or to whom Receipts are
Delivered or any Owner, as applicable:

          8.5.1. taxes and charges and other fees payable in respect of the
    Receipts or any Underlying Securities;

          8.5.2. fees payable in respect of the Receipts or any Underlying
    Securities assessed by third-party custodians, depositories, depositary
    banks or transfer agents;

          8.5.3. a fee of U.S.$0.10 or less per Receipt (provided that if
    the number of Receipts to be issued is not an integral multiple of 100,
    the aggregate fee will be calculated by rounding up the number of
    Receipts Delivered to the nearest 100) for the execution and Delivery of
    Receipts other than pursuant to the Initial Deposit Program; provided,
    however, that if such fee is paid in Canadian dollars, the Depositary
    will charge an amount in Canadian dollars equal to the product of the
    relevant U.S. dollar fee and the last published Noon Rate on the
    Business Day on which the Securities are deposited;

          8.5.4. a fee of U.S.$0.10 or less per Receipt for the Surrender of
    Receipts (provided that if the number of Receipts to be Surrendered is
    not an integral multiple of 100, the aggregate fee will be calculated by
    rounding up the number of Receipts Surrendered to the nearest 100);
    provided, however, that if such fee is paid in Canadian dollars, the
    Depositary will charge an amount in Canadian dollars equal to the
    product of the relevant U.S. dollar fee and the last published Noon Rate
    on the Business Day on which the Receipts are Surrendered;

          8.5.5. an annual fee that will accrue on the day Receipts are
    first issued and thereafter on the first day of each calendar year at a
    rate of $0.015 or less per Receipt per year for the Depositary's
    services hereunder (which fee will be assessed against Owners as of the
    date or dates set by the Depositary in accordance with section 7.8 and
    will be collected at the Depositary's discretion only by deducting such
    fee from one or more cash dividends or other cash distributions);
    provided, however,

                                       20
<PAGE>

    that if (i) such fee is paid in Canadian dollars, the Depositary will
    charge an amount in Canadian dollars equal to the product of the
    relevant U.S. dollar fee and the last published Noon Rate on the date on
    which the Depositary calculates the fee and (ii) the total cash
    dividends and other cash distributions the record date for which falls
    in any calendar year are not sufficient to pay the fee under this
    section 8.5.5 for such year with respect to each Receipt, the Depositary
    will waive the unpaid portion of the fee payable with respect to such
    Receipt; and

          8.5.6. to the extent applicable, such expenses as are incurred by
    the Depositary in the conversion of Foreign Currency pursuant to section
    7.10.

8.6. Retention of Documents

      The Depositary is authorized to destroy those documents, records, bills
and other data compiled during the term hereof at the times permitted by the
laws or regulations governing the Depositary.

                                   ARTICLE 9

                                 Merrill Lynch

9.1. Prevention or Delay in Performance by Merrill Lynch

      Neither Merrill Lynch nor any of its directors, employees, agents or
affiliates will incur any liability to any Owner, Beneficial Owner or Depositor
if by reason of any provision of any present or future applicable Laws, or by
reason of any provision, present or future, of the corporate documents of any
Securities Issuer, or by reason of any provisions of any securities issued or
distributed by any Securities Issuer, or any offering or distribution thereof,
or by reason of any act of God or war or other circumstances beyond its
control, Merrill Lynch is
prevented or forbidden from, or would be subject to any civil or criminal
penalty on account of, doing or performing any act or thing which by the terms
of this Agreement it is provided will be done or performed. Merrill Lynch will
not incur any liability to any Owner, Beneficial Owner or Depositor by reason
of any non-performance or delay, caused as aforesaid, in the performance of any
act or thing which by the terms of this Agreement it is provided will or may be
done or performed, or by reason of any exercise of, or failure to exercise, any
discretion provided for in this Agreement.

9.2. Obligations of Merrill Lynch

      9.2.1. Merrill Lynch does not assume any obligation nor will it be
subject to any liability hereunder to any Owner, Beneficial Owner or Depositor
(including, without limitation, liability with respect to the validity or worth
of the Underlying Securities), except that it agrees to perform its obligations
specifically set forth herein without negligence or bad faith.

      9.2.2. Merrill Lynch is not under any obligation to prosecute any action,
suit or other proceeding in respect of any Underlying Securities or in respect
of the Receipts.

      9.2.3. Merrill Lynch is not liable for any action or non-action by it in
reliance upon the advice of or information from legal counsel, accountants, any
Depositor, any Owner or any other Person believed by it in good faith to be
competent to give such advice or information.

      9.2.4. Merrill Lynch has no obligation to comply with any direction or
instruction from any Owner or Beneficial Owner regarding Receipts except to the
extent specifically provided herein.

                                       21
<PAGE>

                                   ARTICLE 10

                                Indemnification

10.1. Indemnification of Merrill Lynch

      The Depositary shall indemnify Merrill Lynch, their directors, employees,
agents and affiliates against, and holds each of them harmless from, any loss,
liability, cost, expense or judgement (including, but not limited to, the fees
and expenses of counsel) (collectively "Indemnified Amounts") (i) caused by the
negligence or bad faith of the Depositary or (ii) arising out of any written
information regarding the name and address of the Depositary furnished in
writing to Merrill Lynch (and not materially changed or altered) expressly for
use in a prospectus relating to the Receipts or the Canadian Disclosure
Document or similar document.

10.2. Indemnification of the Depositary

      Merrill Lynch shall indemnify the Depositary, its directors, employees,
agents and affiliates against, and hold each of them harmless from, any
Indemnified Amounts that are incurred by any of them and that arise out of (a)
acts performed or omitted pursuant to the provisions hereof, as it may be
amended, modified or supplemented from time to time, (b) any filings with or
submissions to the SEC or Canadian securities regulatory authorities in
connection with or with respect to the Receipts (including any prospectus (or
the Canadian Disclosure Document or similar document used to offer the Receipts
in Canada and any amendments or supplements thereto filed with or submitted to
the SEC or Canadian securities regulatory authorities or any periodic reports
or updates that may be filed under Securities Laws), or (c) any failure to make
any filings or submissions to the SEC or Canadian securities regulatory
authorities which are required to be made in connection with or with respect to
the Receipts, except that Merrill Lynch shall not have any obligations under
this section 10.2 to pay Indemnified Amounts incurred as a result of and
attributable to (i) the negligence or bad faith of, or material breach of the
terms of this Agreement by, the Depositary, (ii) written information regarding
the name and address of the Depositary furnished in writing to Merrill Lynch
(and not materially changed or altered) expressly for use in the prospectus (or
the Canadian Disclosure Document or similar document used to offer the Receipts
in Canada) filed with or submitted to the SEC or Canadian securities regulatory
authorities relating to the Receipts, or (iii) any misrepresentations or
omissions made by a Depositor (other than Merrill Lynch) in connection with
such Depositor's offer and sale of Receipts.

10.3. Indemnification Not Available or Sufficient

      If the indemnification provided for in this section is unavailable or
insufficient to hold harmless the indemnified party, then the indemnifying
party will contribute to the Indemnified Amounts referred to in section 10.1 or
10.2, as the case may be, (i) in such proportion as is appropriate to reflect
the relative benefits received by Merrill Lynch on the one hand and the
Depositary on the other hand from the offering of the Receipts which are the
subject of the action or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of Merrill Lynch on the one hand and the Depositary on the
other hand in connection with the action, statement or omission which resulted
in such Indemnified Amount as well as any other relevant equitable
considerations. The relative benefits received by Merrill Lynch on the one hand
and the Depositary on the other will be deemed to be in the same proportions as
the total fees from the offering of the Receipts which are the subject of the
action (before deducting expenses) received by Merrill Lynch bear to the total
fees received by the Depositary from the offering of such Receipts. The
relative fault will be determined by reference to, among other things, whether
any untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact from which the action arises relates
to information supplied by Merrill Lynch or the Depositary and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission or the act or omission from which the
action arises. The amount of Indemnified Amounts referred to in the first
sentence of this section 10.3 will be

                                       22
<PAGE>

deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this section 10.3.

                                   ARTICLE 11

                             Securities Law Filings

11.1. Qualification of Receipts

      11.1.1. Merrill Lynch has prepared and filed or submitted (A) a
registration statement under the United States Securities Act of 1933, as
amended (including a prospectus) with the SEC for the Receipts and (B) the
Canadian Disclosure Document, and Merrill Lynch represents and warrants to the
Depositary that these documents do not contain an untrue statement of a
material fact or omit to state any material fact that is required to be stated
or that is necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

      11.1.2. So long as this Agreement remains in effect, Merrill Lynch will:

          11.1.2.1. take such action as is necessary from time to time to
    qualify or exempt from qualification the Receipts for offering and sale
    on a continuous basis under Securities Laws, including the preparation
    and filing of amendments and supplements to such registration statement,
    prospectus, Canadian Disclosure Document or similar document and
    obtaining and satisfying the conditions of any necessary exemption;

          11.1.2.2. promptly notify the Depositary of any amendment or
    supplement to the registration statement, prospectus, Canadian
    Disclosure Document or similar document, of any order preventing or
    suspending the use of the registration statement, prospectus, Canadian
    Disclosure Document or similar document, of any request for the amending
    or supplementing of the registration statement, prospectus, Canadian
    Disclosure Document or similar document or if any event or circumstance
    occurs which is known to Merrill Lynch as a result of which the
    registration statement, prospectus, Canadian Disclosure Document or
    similar document, as then amended or supplemented, would include an
    untrue statement of a material fact or omit to state a material fact
    that is required to be stated or that is necessary to make the
    statements therein, in the light of the circumstances under which they
    were made, not misleading;

          11.1.2.3. provide the Depositary from time to time with copies,
    including copies in electronic form, of the registration statement,
    prospectus, Canadian Disclosure Document or similar document, as amended
    and supplemented, in such quantities as the Depositary may reasonably
    request; and

          11.1.2.4. in addition to its obligations in section 11.4 hereof,
    prepare and file any periodic reports or updates that may be required
    under applicable Securities Laws and, without limiting the foregoing,
    will prepare and file the following in Ontario on the System for
    Electronic Document Analysis and Retrieval of the Canadian Securities
    Administrators: (A) while it is used in connection with the issuance of
    Receipts, the Canadian Disclosure Document; and (B) reports on Form 8-K
    filed with the SEC (or similar forms) with respect to the Receipts
    quarterly or periodically if the Receipts are subject to a major event;
    and (C) the documents required by section 11.4.

11.2. Prospectus Delivery

      The Depositary will, if required by Securities Laws, in any manner
permitted by such Laws, deliver at the time of issuance of Receipts, a copy of
the relevant prospectus, Canadian Disclosure Document or similar document, as
most recently furnished to it by Merrill Lynch for that purpose, to each Person
depositing Securities for the issuance of Receipts.

                                       23
<PAGE>

11.3. Listing of Receipts

      The Depositary will apply for the listing of the Receipts on The Toronto
Stock Exchange and the New York Stock Exchange (unless either the New York
Stock Exchange or The Toronto Stock Exchange requires Merrill Lynch to apply
for the listing of the Receipts, in which case Merrill Lynch will apply for
such listing(s)) and Merrill Lynch and the Depositary will each do all such
acts and things as may be reasonably required by such exchanges in connection
with the listing, including a listing application and/or listing agreement.

11.4. Audited Schedules

      11.4.1. The Depositary will prepare, and Merrill Lynch will file in
Ontario electronically through the System for Electronic Document Analysis and
Retrieval of the Canadian Securities Administrators, within 140 days of
December 31 in each year, an audited schedule of Underlying Securities and
schedule of distributions received by, annual fees paid to and expenses
deducted by the Depositary hereunder and remittances to Owners of Receipts,
substantially in the form attached as Schedule 11.4 hereto. If the Depositary
fails to prepare the Schedules required by this section 11.4.1, Merrill Lynch
will prepare or cause to be prepared and will file or cause to be filed the
audited schedules required by this section 11.4.1. For greater certainty, if
the Depositary fails to prepare the Schedules required by this section 11.4.1,
the Depositary will provide to Merrill Lynch all information and make available
all records required in order for these Schedules to be prepared.

      11.4.2. In the event that the auditor appointed to report on the
schedules referred to in section 11.4.1 hereof resigns or is terminated,
Merrill Lynch will prepare or cause to be prepared and file or cause to be
filed in Ontario electronically through the System for Electronic Document
Analysis and Retrieval of the Canadian Securities Administrators the "Reporting
Package" referred to in section 4.2 of National Policy Statement 31 of the
Canadian Securities Administrators (or in analogous provisions of any successor
policy under Canadian Securities Laws), in the form and within the time periods
prescribed in National Policy Statement 31 of the Canadian Securities
Administrators (or in analogous provisions of any successor instrument under
Canadian Securities Laws).

                                   ARTICLE 12

                   Covenants, Representations and Warranties

12.1. Orders

      The Depositary and Merrill Lynch covenant with each other to, after
reviewing notice of any such fact, inform the other of (i) the issuance of any
restraining order or denial of any application for approval of the initiation
or threat of any proceedings, litigation or investigation with respect to the
Initial Deposit Program or the Receipts or the execution, delivery and
performance of this Agreement, by or before any Governmental Entity, (ii) any
stop order suspending the validity or effectiveness of the registration
statement, prospectus, Canadian Disclosure Document or similar document
relating to the Receipts, or any proceedings for such purpose that are pending
before or threatened by Canadian securities regulatory authorities or the SEC
or (iii) the occurrence of any event or the discovery of any fact, the
occurrence or existence of which could cause (A) the Depositary to desire to
amend or terminate this Agreement, (B) Merrill Lynch to amend, modify or cease
distribution of or activities relating to the Initial Deposit Program or (C)
any representation or warranty made by Merrill Lynch or the Depositary
contained in this Agreement to be untrue or inaccurate.

                                       24
<PAGE>

                                   ARTICLE 13

                           Amendment and Termination

13.1. Amendment

      The Depositary and Merrill Lynch may amend any provisions of this
Agreement without the consent of any Owner or Beneficial Owner. Any amendment
that imposes or increases any fees or charges (other than taxes and other
charges, registration fees or other such expenses), or that otherwise
prejudices any substantial existing right of the Owners or Beneficial Owners
will not become effective until 30 days after notice of such amendment is given
to the Owners. Every Owner or Beneficial Owner, at the time any amendment so
becomes effective, will be deemed, by continuing to hold any Receipt or an
interest therein, to consent and agree to such amendment and to be bound by
this Agreement as amended thereby. In no event will any amendment impair the
right of the Owner of any Receipt to Surrender such Receipt and receive the
Underlying Securities represented thereby, except in order to comply with
mandatory provisions of applicable Laws.

13.2. Termination Due to Later Developments

      13.2.1. If, during the Initial Deposit Period, the Depositary or Merrill
Lynch tentatively concludes because of facts arising since the date of this
Agreement that the viability of the Receipts has been materially impaired,
then, in such event, such party will immediately so notify the other and each
of the Depositary or Merrill Lynch agrees to negotiate in good faith for a
period of up to 10 days in order to determine whether or not to continue with
the Initial Deposit Program as contemplated herein. If, after such good faith
negotiations, any of the Depositary or Merrill Lynch reasonably concludes that
the viability of the Receipts is materially impaired, then such party will
provide written notice of such conclusion to the other and this Agreement will
be terminated as of the date of receipts of such notice ("Termination Notice"),
and no party will have any further obligations hereunder; provided however, the
obligations of the parties pursuant to Article 10 hereof will survive such
termination, as will the obligations of the parties pursuant to section 13.2.3
below.

      13.2.2. If:

            (i) any regulatory approval or relief required by Merrill Lynch or
            the Depositary has not been obtained; or

            (ii) the Receipts have not been approved for listing on a national
            securities exchange in Canada and either a national securities
            exchange in the United States or the NASDAQ, in each case subject
            only to notice of issuance;

prior to the end of the Initial Deposit Period, then this Agreement will
terminate immediately and automatically, and no party will have any further
obligations under this Agreement; except that the obligations of the parties
under Article 10 and section 13.2.3. below will survive that termination.

      13.2.3. If this Agreement is terminated pursuant to section 13.2.1 or
section 13.2.2 and notwithstanding anything to the contrary contained herein,
then the Depositary will return any Securities deposited and fees paid
hereunder to the Depositors thereof and will not cause the issuance of any
Receipts.

13.3. Termination Following Initial Deposit Period

      Unless otherwise terminated pursuant to the terms of this Agreement, this
Agreement will terminate on December 31, 2041. This Agreement will terminate by
the Depositary mailing notice of such termination to the Owners of all Receipts
then outstanding at least 30 days prior to the date set for termination if any
of the following occurs:

          13.3.1. the Depositary is notified that the Receipts are no longer
    listed on a national securities exchange in Canada and either a national
    securities exchange in the United States or the NASDAQ

                                       25
<PAGE>

    and are not approved for listing on another national securities exchange
    in Canada and either a national securities exchange in the United States
    or the NASDAQ, as the case may be, within 5 Business Days of their
    delisting;

          13.3.2. Owners of at least 75% of the outstanding Receipts (other
    than Merrill Lynch and its affiliates) notify the Depositary that they
    elect to terminate this Agreement; or

          13.3.3. 60 days have expired after the Depositary delivered to
    Merrill Lynch a written notice of its election to resign and a successor
    Depositary has not been appointed, accepted its appointment hereunder
    and agreed to be bound by the provisions applicable to the Depositary
    under any agreement(s) then existing between the Depositary and The
    Toronto Stock Exchange Inc. as provided in section 8.4.

13.4. Effect of Termination

      13.4.1. On and after a termination of the Agreement pursuant to section
13.3, the Owner of a Receipt will, upon (i) Surrender of such Receipt at the
Office of the Depositary, (ii) payment of the fee of the Depositary for the
Surrender of Receipts set forth in section 8.5, and (iii) payment of any
applicable taxes or charges, be entitled to Delivery, to him or upon his Order,
of the Underlying Securities represented by such Receipt.

      13.4.2. If any Receipts remain outstanding after the termination of the
Agreement pursuant to section 13.3, the Depositary thereafter will: (a)
discontinue the registration of transfers of Receipts, (b) suspend the
distribution of dividends or other distribution to the Owners thereof, (c) not
give any further notices or perform any further acts hereunder, except that the
Depositary will continue to collect dividends and other distributions
pertaining to Underlying Securities and hold the same uninvested and without
liability for interest, (d) sell rights as provided herein, and (e) continue to
Deliver Underlying Securities, together with any dividends or other
distributions received with respect thereto and the net proceeds of the sale of
any rights or other property, in exchange for Receipts Surrendered to the
Depositary (after deducting or upon payment of, in each case, the fee of the
Depositary set forth in 8.5 for the Surrender of Receipts, any expenses for the
account of the Owner of such Receipts in accordance with the terms and
conditions hereof, and any applicable taxes or governmental charges).

      13.4.3. At any time after the expiration of one year following the date
of termination hereof, the Depositary may sell the Underlying Securities then
held and may thereafter hold uninvested the net proceeds of any such sale,
together with any other cash then held by it hereunder, unsegregated and
without liability for interest, for the pro rata benefit of Owners of Receipts
that have not been Surrendered, such Owners thereupon becoming general
creditors of the Depositary with respect to such net proceeds. After making
such sale, the Depositary will be discharged from all obligations hereunder,
except to account for such net proceeds and other cash (after deducting, in
each case, the fee of the Depositary for the Surrender of Receipts, any fees of
the Depositary due and owing from the Owner of such Receipts pursuant to
section 8.5, any expenses for the account of the Owner of such Receipts in
accordance with the terms and conditions hereof, and any applicable taxes or
governmental charges).

      13.4.4. Upon the termination hereof, Merrill Lynch will be discharged
from all obligations hereunder, except for its obligations to the Depositary
under Article 10.

                                       26
<PAGE>

                                   ARTICLE 14

                                 Miscellaneous

14.1. Parties; Binding Effect

      The Owners, Beneficial Owners and Depositors from time to time are
parties hereto, are bound by all of the terms and conditions hereof and of the
Receipts and are entitled to all of the rights and benefits hereof, by their
acceptance of Receipts or any interest therein or by their depositing
Securities, as the case may be. For greater certainty, any Person who transfers
Receipts to another Person is deemed to assign its rights hereunder and under
the transferred Receipts to the transferee and the transferee, on transfer of
the Receipts, hereby is deemed to become a party hereto and is thereby bound by
all of the terms and conditions hereof and of the Receipts and is entitled to
all of the rights and benefits hereof and of the Receipts.

14.2. No Disclaimer of Liability

      No disclaimer of liability under the United States Securities Act of
1933, as amended, is intended by any provision of this Agreement.

14.3. Notices

      Any notice or other communication required or permitted to be given
hereunder must be in writing and will be given by prepaid first-class mail, by
facsimile or other means of electronic communication or by hand-delivery as
hereinafter provided. Any such notice or other communication, if mailed by
prepaid first-class mail at any time other than during a general discontinuance
of postal service due to strike, lockout or otherwise, will be deemed to have
been received on the fourth Business Day after the post-marked date thereof, or
if sent by facsimile or other means of electronic communication, will be deemed
to have been received on the Business Day following the sending, or if
delivered by hand will be deemed to have been received at the time it is
delivered to the applicable address noted below either to the individual
designated below or to an individual at such address having apparent authority
to accept deliveries on behalf of the addressee. Notice of change of address
will also be governed by this section. In the event of a general discontinuance
of postal service due to strike, lock-out or otherwise, notices or other
communications will be delivered by hand or sent by facsimile or other means of
electronic communication and will be deemed to have been received in accordance
with this section. Notices and other communications will be addressed as
follows:

          (a) if to the Depositary:

                  BNY Trust Company of Canada
                  4 King Street West, Suite 1101
                  Toronto, Ontario
                  M5H 1B6

                  Attention: Marcia Redway
                  Telecopier number: (416) 360-1711/1727

          (b) if to an Owner to the address of the Owner as it appears in
    the transfer books of the Depositary.

                                       27
<PAGE>

          (c) if to Merrill Lynch

                  Merrill Lynch Canada Inc.
                  BCE Place, Suite 400
                  181 Bay Street
                  Toronto, Ontario
                  M5J 2V8

                  Attention: Mitch Cox
                  Telecopier number: (212) 738-1954

                  with a copy to Merrill Lynch's Counsel at:

                  Torys
                  Suite 3000, Maritime Life Tower
                  Toronto-Dominion Centre
                  Toronto, Ontario
                  M5K 1N2

                  Attention: Karen Malatest
                  Telecopier number: (416) 865-7380

                  -and-

                  Shearman & Sterling
                  599 Lexington Avenue
                  New York, NY 10022-6069

                  Attention: Andrew Janszky
                  Telecopier number: (212) 848-7179

14.4. Time of Essence

      Time is of the essence of this Agreement.

14.5. Counterparts

      This Agreement may be signed in counterparts and each of such
counterparts will constitute an original document and such counterparts, taken
together, will constitute one and the same instrument. Copies of this Agreement
will be filed with the Depositary and will be open to inspection by any Owner
during business hours.

                                       28
<PAGE>

      IN WITNESS WHEREOF the parties hereto have executed this Agreement.

                                          BNY Trust Company of Canada

                                         /s/ Marcia Redway

                                          by:__________________________________

                                          Name: Marcia Redway

                                          Title:Assistant Vice-President

                                          Owners and Beneficial Owners of
                                          Holding Company Depositary Receipts
                                          for Common Shares of Canadian
                                          Pacific Limited and Depositors of
                                          Securities, by BNY Trust Company of
                                          Canada, as Depositary

                                          /s/ Marcia Redway

                                          by:__________________________________

                                          Name: Marcia Redway

                                          Title:Assistant Vice-President

                                          Merrill Lynch Canada Inc.

                                         /s/ Ronald S. Lloyd

                                          by:__________________________________

                                          Name: Ronald S. Lloyd

                                          Title:Executive Vice President and

                                          Head of Investment Banking

                                       29
<PAGE>

                                  SCHEDULE 3.8

                                Form of Receipt

      THE RECEIPTS EVIDENCED HEREBY REPRESENT RIGHTS WITH RESPECT TO UNDERLYING
SECURITIES (AS DEFINED IN THE DEPOSIT AGREEMENT REFERRED TO HEREIN) HELD BY THE
DEPOSITARY AND DO NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND ARE NOT
GUARANTEED BY MERRILL LYNCH CANADA INC. OR ANY OF ITS AFFILIATES. THE RECEIPTS
EVIDENCED HEREBY DO NOT EVIDENCE AN INTEREST IN AND ARE NOT GUARANTEED BY THE
DEPOSITARY, BUT THEY DO EVIDENCE OBLIGATIONS OF THE DEPOSITARY TO THE EXTENT
SET FORTH IN THE DEPOSIT AGREEMENT. NEITHER THE RECEIPTS NOR THE UNDERLYING
SECURITIES ARE INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR ANY OTHER
PERSON.

      Unless this certificate is presented by an authorized representative of
The Canadian Depository for Securities Limited ("CDS") to BNY Trust Company of
Canada for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of CDS & CO., or in such other name as is
requested by an authorized representative of CDS (and any payment is made to
CDS & CO. or to such other entity as is requested by an authorized
representative of CDS), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered holder hereof,
CDS & CO., has an interest herein.

                                      S-1
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
 <C> <S>                                                                  <C>
  1. The Deposit Agreement..............................................   S-4
  2. Beneficial Ownership of Securities.................................   S-4
  3. Form of Receipts...................................................   S-4
  4. Transfer of Receipts...............................................   S-4
  5. Register...........................................................   S-4
  6. Registration of Transfers..........................................   S-4
  7. Split-up of Certificates...........................................   S-5
  8. Co-Transfer Agents.................................................   S-5
  9. Surrender of Receipts..............................................   S-5
 10. Delivery of Underlying Securities..................................   S-5
 11. Requirements for Delivery of Underlying Securities.................   S-5
      Limitations on Delivery, Registration of Transfer and Surrender of
 12. Receipts...........................................................   S-5
 13. Suspension of Deposit and Surrender of Receipts....................   S-6
 14. Filing Proofs, Certificates and Other Information..................   S-6
 15. Liability of Owner for Taxes and Other Charges.....................   S-6
 16. Warranties on Deposit of Securities................................   S-6
 17. Authorization of Depositary........................................   S-6
 18. Reports............................................................   S-7
 19. Voting Instructions for Underlying Securities......................   S-7
 20. Cash Distributions.................................................   S-7
 21. Rights Offerings...................................................   S-8
 22. Other Distributions................................................   S-8
 23. Reconstitution Events..............................................   S-8
 24. Reclassification Events............................................   S-9
 25. Fixing of Record Date..............................................   S-9
 26. Withholding........................................................  S-10
 27. Conversion to United States Dollars................................  S-10
 28. Timing of Distributions............................................  S-11
 29. Limitation on Distributions........................................  S-11
 30. Maintenance of Office and Transfer Books by the Depositary.........  S-11
 31. Prevention or Delay in Performance by the Depositary...............  S-11
 32. Obligations of the Depositary......................................  S-12
      Resignation or Removal of the Depositary; Appointment of Successor
 33. Depositary.........................................................  S-12
 34. Charges of Depositary..............................................  S-13
 35. Prevention or Delay in Performance by Merrill Lynch................  S-14
 36. Amendment..........................................................  S-14
 37. Termination........................................................  S-15
 38. Effect of Termination..............................................  S-15
 39. Parties; Binding Effect............................................  S-16
</TABLE>

                                      S-2
<PAGE>

                          BNY TRUST COMPANY OF CANADA

                      HOLDING COMPANY DEPOSITARY RECEIPTS
                 FOR COMMON SHARES OF CANADIAN PACIFIC LIMITED

      No.  One                                 CUSIP NO. 12616K 106

      BNY Trust Company of Canada, as Depositary (hereinafter called the
"Depositary"), hereby certifies that CDS & Co., as nominee of The Canadian
Depositary for Securities Limited, or registered assigns, IS THE OWNER OF  *
Holding Company Depositary Receipts for common shares of Canadian Pacific
Limited ("Receipts") each representing the securities described in the Deposit
Agreement referred to in this certificate. At the date hereof, each Receipt
represents the right to receive one common share of Canadian Pacific Limited,
which is deposited under the Deposit Agreement at the Office of the Depositary
set forth below. The specification of the securities represented by each
Receipt is subject to change as provided in the Deposit Agreement. The Office
of the Depositary is located at 4 King Street West, Suite 1101, Toronto,
Ontario M5H 1B6.

BNY TRUST COMPANY OF CANADA,            Trust Created by the Deposit Agreement
as registrar and transfer agent         for the Issuance of the Receipts, by
                                        BNY Trust Company of Canada, as
                                        Depositary

By: _________________________________   By: ________________________________

*  That number of Receipts held at The Canadian Depository for Securities
   Limited as shown on Schedule A.

                                      S-3
<PAGE>

1. The Deposit Agreement

      This Receipt is issued upon the terms and conditions set forth in the
Deposit Agreement, dated as of September 4, 2001, as it may be amended and
supplemented from time to time in accordance with its terms, (the "Deposit
Agreement"), agreed to by and among the Depositary, all Owners and Beneficial
Owners from time to time of the Receipts and Depositors from time to time of
Securities, and Merrill Lynch Canada Inc. By becoming an Owner or Beneficial
Owner, or by depositing Securities, such Person agrees to become a party to the
Deposit Agreement and become bound by all the terms and conditions thereof. The
Deposit Agreement sets forth the rights of Depositors, Owners and Beneficial
Owners and the rights and duties of the Depositary in respect of the Securities
deposited thereunder and any and all other securities, property and cash from
time to time received in respect of such Securities and held thereunder (such
Securities, other securities, property, and cash are herein called "Underlying
Securities"). Copies of the Deposit Agreement are on file at the Office of the
Depositary in Toronto.

      The statements made in this Receipt are summaries of certain provisions
of the Deposit Agreement and are qualified by and subject to the detailed
provisions of the Deposit Agreement, to which reference is hereby made.
Capitalized terms not defined herein shall have the meanings set forth in the
Deposit Agreement.

2. Beneficial Ownership of Securities

      Beneficial ownership of Securities deposited with the Depositary under
the Deposit Agreement will, unless a Receipt representing such Securities is
transferred in accordance with the Deposit Agreement, at all times remain with
the Beneficial Owner thereof unaffected by the deposit with the Depositary.

3. Form of Receipts

      Certificates evidencing Receipts bearing the manual or facsimile
signature of a signatory of the Depositary who was at the time such
certificates were executed a duly authorized signatory of the Depositary will
bind the Depositary, notwithstanding that such signatory has ceased to hold
such office prior to the delivery of such certificates. From time to time, the
Depositary may call for Owners to deliver outstanding certificates evidencing
Receipts in exchange for new certificates specifically describing any
applicable change in the classes and quantities of securities that must be
deposited for issuance of Receipts.

4. Transfer of Receipts

      A certificate evidencing Receipts and the Receipts evidenced thereby,
when properly endorsed or accompanied by proper instruments of transfer, will
be transferable by Delivery with the same effect as in the case of a negotiable
instrument under the laws of Ontario; provided, however, that the Depositary,
notwithstanding any notice to the contrary, may treat the Owner of Receipts as
the absolute owner thereof for the purpose of determining the Person entitled
to distribution of dividends or other distributions or to any notice provided
for in the Deposit Agreement and for all other purposes.

5. Register

      The Depositary will keep or cause to be kept a register of Owners of
Receipts and will provide for the registration of Receipts and the registration
of transfers and exchanges of Receipts.

6. Registration of Transfers

      The Depositary, subject to the terms and conditions of the Deposit
Agreement, will register transfers of Ownership of Receipts on its transfer
books from time to time, upon any Surrender of a certificate evidencing such
Receipts, by the Owner in person or by a duly authorized attorney, properly
endorsed or accompanied by

                                      S-4
<PAGE>

proper instruments of transfer, and duly stamped as may be required by
applicable Laws. Thereupon the Depositary will execute a new certificate or
certificates evidencing such Receipts, and deliver the same to or upon the
Order of the Person entitled thereto.

7. Split-up of Certificates

      Upon surrender to the Depositary at the Office of the Depositary of a
certificate evidencing Receipts for the purposes of effecting a split-up or
combination of such certificate or certificates, the Depositary will execute
and deliver one or more new certificate or certificates evidencing such
Receipts.

8. Co-Transfer Agents

      The Depositary may appoint one or more co-transfer agents for the purpose
of effecting transfers, combinations and split-ups of Receipts at designated
transfer offices on behalf of the Depositary. In carrying out its functions, a
co-transfer agent may require evidence of authority and compliance with
applicable Laws and other requirements by Owners or Persons entitled to
Receipts and will be entitled to protection and indemnity to the same extent as
the Depositary.

9. Surrender of Receipts

      An Owner of Receipts will be entitled to Delivery of the amounts of
Underlying Securities at the time represented by those Receipts upon (a)
Surrender of those Receipts, (b) payment of the fees of the Depositary as
provided in section 8.5 of the Deposit Agreement and (c) payment of all taxes
and charges payable in connection with such Surrender and withdrawal of the
Underlying Securities.

10. Delivery of Underlying Securities

      Delivery of Underlying Securities upon Surrender of Receipts by an Owner
may be made by: (a) Delivery of Securities to such Owner or in accordance with
an Order by such Owner; and (b) any available form of delivery of any other
Underlying Securities to which such Owner is then entitled to such Owner or in
accordance with an Order by such Owner. The Depositary will, subject to section
5.3, 6.1, 6.2 and 7.12 of the Deposit Agreement, Deliver the Underlying
Securities as promptly as practicable.

11. Requirements for Delivery of Underlying Securities

      A certificate representing Receipts Surrendered may be required by the
Depositary to be properly endorsed in blank or accompanied by proper
instruments of transfer in blank, and if the Depositary so requires, the Owner
will execute and deliver to the Depositary an Order directing the Depositary to
cause the Underlying Securities being withdrawn to be Delivered to or upon the
Order of a Person or Persons designated in such Order. Thereupon the Depositary
shall Deliver at the Office of the Depositary, subject to sections 5.1, 6.1,
6.2 and 7.12 of the Deposit Agreement and to the other terms and conditions of
the Deposit Agreement, to or upon the Order of a Person or Persons designated
in such Order delivered to the Depositary as above provided, the amount of
Underlying Securities evidenced by such Receipts.

12. Limitations on Delivery, Registration of Transfer and Surrender of Receipts

      As a condition precedent to the Delivery, registration of transfer,
split-up, combination or Surrender of any Receipt, the Depositary may require:
(a) payment from or on behalf of the Depositor of the Securities or presentor
of the Receipts of a sum sufficient to reimburse the Depositary for any tax or
other charge and any stock transfer or registration fee with respect thereto
(including any such tax or charge and fee with respect to Securities being
deposited or withdrawn); (b) payment of any applicable fees as provided in the
Deposit

                                      S-5
<PAGE>

Agreement; (c) production of proof satisfactory to the Depositary as to the
identity and genuineness of any signature; and (d) compliance with any
requirements the Depositary may establish consistent with the provisions of the
Deposit Agreement.

13. Suspension of Deposit and Surrender of Receipts

      The Delivery of Receipts against deposits of Securities, the registration
of transfer of Receipts or the Surrender of Receipts may be suspended,
generally or in particular instances, (a) during any period when the transfer
books of the Depositary are closed or the transfer books of a Securities Issuer
are closed or (b) if any such action is deemed necessary or advisable by the
Depositary at any time or from time to time, provided that the Surrender of
Receipts may not be suspended except for (i) temporary delays caused by closing
the transfer books of DTC or CDS or a Securities Issuer, (ii) the payment of
fees, taxes and applicable charges, and (iii) compliance with any applicable
Laws relating to the Receipts or to the withdrawal of the Underlying
Securities. Without limitation of the foregoing, the Depositary will not
knowingly accept for deposit under the Deposit Agreement any Securities
required to be qualified under Securities Laws unless the public offer and sale
of those Securities by the holder is permitted under Securities Laws.

14. Filing Proofs, Certificates and Other Information

      Any Depositor of Securities or any Owner of Receipts may be required from
time to time to (a) file with the Depositary such proof of citizenship or
residence, exchange control approval, or such information relating to the
registration on the books of any Securities Issuer, (b) execute such
certificates and (c) make such representations and warranties, as the
Depositary may require. The Depositary may withhold the Delivery or
registration of transfer of any Receipts or the Delivery of any Underlying
Securities until such proof or other information is filed or such certificates
are executed or such representations and warranties made.

15. Liability of Owner for Taxes and Other Charges

      If any tax or other charge will become payable by the Depositary with
respect to any Receipts or Underlying Securities, such tax or other charge will
be payable by the Owner of such Receipts to the Depositary. The Depositary will
refuse to effect any transfer of such Receipts or any withdrawal of Underlying
Securities represented by such Receipts until such payment is made, and may
withhold any dividends or other distributions, or may sell for the account of
the Owner thereof Underlying Securities constituting any multiples of the
securities which must be deposited for issuance of Receipts, and may apply such
dividends or other distributions or the proceeds of any such sale in payment of
such tax or other charge and the Owner of such Receipts will remain liable for
any deficiency.

16. Warranties on Deposit of Securities

      Every Depositor of Securities will be deemed to represent and warrant
that: (a) such Securities and each certificate therefor are validly issued and
are fully paid and non assessable; (b) the Depositor is duly authorized to
deposit the Securities; (c) at the time of Delivery, such Securities are free
and clear of any lien, pledge, encumbrance, right, charge or claim (other than
the rights created by the Deposit Agreement); and (d) such Securities are not,
and Receipts representing such Securities would not be, Restricted Securities.
Such representations and warranties will survive the deposit of Securities,
issuance of Receipts or termination of the Deposit Agreement.

17. Authorization of Depositary

      Every Depositor and every Person that becomes an Owner or Beneficial
Owner will be deemed thereby to authorize the Depositary to execute and deliver
the Deposit Agreement on that Person's behalf and

                                      S-6
<PAGE>

will be deemed to be bound by the Deposit Agreement as if the Person was an
original signatory to the Deposit Agreement.

18. Reports

      The Depositary will, to the extent lawful, forward to each Owner,
including with respect to fractional interests in the Underlying Securities
represented by such Owner's Receipts, any reports and communications, any
financial statements, information circular, proxy statement or other soliciting
material, received by the Depositary from a Securities Issuer which are
received by the Depositary as the holder of the Underlying Securities or its
appointed agent, unless such reports and communications have been forwarded to
such Owner by or on behalf of such Securities Issuer or its appointed agent.

19. Voting Instructions for Underlying Securities

      (a) Upon receipt by the Depositary or its appointed agent of notice of
any meeting of, or solicitation of proxies from, holders of Underlying
Securities, the Depositary will, to the extent lawful, mail or cause to be
mailed to the Owners (i) such information as is contained in such notice of
meeting or solicitation and (ii) materials to enable the Owners as of the close
of business on a specified record date, subject to applicable Laws and the
provisions of the corporate documents of the Securities Issuer, to instruct the
Depositary as to the exercise of the voting rights, if any, or giving of
proxies, as applicable, in respect of the amount of Underlying Securities
represented by their respective Receipts.

      (b) Upon the Order of an Owner of a Receipt, received on or before a
record date established by the Depositary for such purpose, the Depositary will
endeavour, insofar as feasible, to (i) vote or cause to be voted, or to give a
proxy, as applicable, in respect of the amount of Underlying Securities
represented by such Receipt in accordance with the instructions set forth in
such request or (ii) upon the request of an Owner, provide that Owner (or a
person designated by that Owner) with documentation necessary to attend that
meeting of the holders of Underlying Securities and vote any number of those
Underlying Securities requested by that Owner that does not exceed the number
of those Underlying Securities represented by that Owner's Receipts and as to
which that Owner has not given voting instructions to the Depositary. The
Depositary will aggregate the votes of all fractional interests in Underlying
Securities represented by the Receipts and will endeavor to vote the largest
possible number of whole shares of Underlying Securities. The Depositary will
not vote or attempt to exercise the right to vote that attaches to, or give a
proxy with respect to, Underlying Securities other than in accordance with such
instructions. Notwithstanding anything in the Deposit Agreement to the
contrary, the Depositary will not be required to vote any fractional remainder
on the aggregate Underlying Securities voted pursuant to section 7.2.2 of the
Deposit Agreement.

20. Cash Distributions

      Subject to sections 7.3.2 and 7.10 of the Deposit Agreement, whenever the
Depositary receives any cash dividend or other cash distribution on any
Underlying Securities, the Depositary will distribute the amount thus received
(net of the fees of the Depositary as provided in section 8.5 of the Deposit
Agreement, if applicable) to the Owners entitled thereto, in proportion to the
number of Receipts held by them respectively; provided, however, that in the
event that the respective Securities Issuer or the Depositary is required to
withhold and does withhold from such cash dividend or such other cash
distribution an amount on account of taxes, the amount distributed to the
Owners will be reduced accordingly. The Depositary will distribute only such
amount, however, as can be distributed without attributing to any Owner a
fraction of one cent. Any such fractional amounts will be rounded to the
nearest whole cent and so distributed to Owners entitled thereto.

                                      S-7
<PAGE>

21. Rights Offerings

      (a) If a Securities Issuer offers or causes to be offered to the holders
of any Underlying Securities any rights to subscribe for Additional Securities
or other securities, the Depositary will make such rights available to all
Owners, unless by the terms of such rights offering or for any other reason it
is not lawful and is not practicable for the Depositary to make such right
available in which case the Depositary will, if lawful and feasible, use
reasonable efforts to dispose of such rights on behalf of Owners and distribute
the net proceeds (after deduction of any expenses of the Depositary and any
fees as provided in section 8.5 of the Deposit Agreement) to Owners. If by the
terms of such rights offering or for any other reason it is not lawful and
feasible for the Depositary to make the rights available or to dispose of the
rights and make the net proceeds available to Owners, the Depositary will allow
the rights to lapse.

      (b) For greater certainty, the Depositary will not offer rights to Owners
unless both the rights and the securities to which such rights relate are
either exempt from qualification under Securities Laws with respect to a
distribution to all Owners or are qualified under the provisions of such Laws.

      (c) The Depositary will not be responsible for any error in determining,
in good faith, whether it is lawful or practicable to make such rights
available to Owners in general or any Owner in particular.

22. Other Distributions

      (a) If any distribution received by the Depositary in respect of
Underlying Securities consists of a dividend in, or free distribution of,
Additional Securities, the Depositary will, to the extent lawful and
practicable, retain such Additional Securities under the Deposit Agreement, and
the amount of such Additional Securities so retained in respect of each Receipt
will be added to the classes and quantities of securities that must be
deposited for issuance of Receipts. If such Additional Securities are retained
pursuant to section 7.5.1 of the Deposit Agreement the classes and number of
securities that must be deposited in order to receive one Receipt will be
changed as provided therein.

      (b) Subject to the provisions of section 8.5 of the Deposit Agreement, if
the Depositary receives any distribution in respect of Underlying Securities
other than a distribution (i) distributed by the Depositary pursuant to section
7.3 of the Deposit Agreement, (ii) retained by the Depositary pursuant to
section 7.5.1 or 7.7.1 of the Deposit Agreement or (iii) of rights pursuant to
section 7.4 of the Deposit Agreement, then the Depositary will, subject to
section 7.12 of the Deposit Agreement, cause the securities or property
received by it to be distributed to the Owners entitled thereto, in proportion
to the number of Receipts held by them respectively; provided, however, that if
such distribution cannot be made proportionately among the Owners entitled
thereto, or if for any other reason (including, but not limited to, any
requirement that a Securities Issuer or the Depositary withhold an amount on
account of taxes or other governmental charges or that such securities be
qualified under Securities Laws in order to be distributed to Owners) the
distribution is not lawful and feasible, the Depositary will adopt another
equitable and practicable method for the purpose of effecting such
distribution, including, but not limited to, the public or private sale of the
securities or property thus received, or any part thereof, and the net proceeds
of any such sale (after deduction of any expenses of the Depositary and any
fees as provided in section 8.5 of the Deposit Agreement) will be distributed
by the Depositary to the Owners entitled thereto as in the case of a
distribution pursuant to section 7.3 of the Deposit Agreement.

23. Reconstitution Events

      (a) If (i) any class of Securities ceases to be outstanding as a result
of, or is surrendered by the Depositary in connection with, a merger,
consolidation, corporate combination or other event of the Securities Issuer,
(ii) as a result, the Depositary receives securities which are not Securities
of a Successor Company or Additional Securities, then the Depositary will, if
it has actual knowledge of such event, to the extent lawful and practicable and
subject to section 7.12 of the Deposit Agreement, distribute any securities so
received by

                                      S-8
<PAGE>

the Depositary to the Owners in proportion to their ownership of Receipts.
Effective on the date that class of Securities ceases to be outstanding or is
surrendered by the Depositary, that class of Securities will cease to be part
of the securities that must be deposited for issuance of Receipts.

      (b) If any class of Securities is delisted from trading on its primary
exchange or market in the United States or Canada and is not listed for trading
on another national securities exchange in Canada or the United States or
through NASDAQ, as the case may be, within five Business Days from the date of
such delisting, the Depositary will, if it has actual knowledge of such event,
to the extent lawful and practicable and subject to section 7.12 of the Deposit
Agreement, distribute the Underlying Securities of such class to the Owners in
proportion to their ownership of Receipts. Effective on the date of such
distribution, such class of Securities will cease to be a part of the
securities that must be deposited for issuance of Receipts.

      (c) In the event that any Securities Issuer no longer has a class of
Securities registered under section 12 of the United States Securities and
Exchange Act of 1934, as amended, or ceases to be a reporting issuer under the
Securities Act (Ontario), the Depositary will, if it has actual knowledge of
such event, to the extent lawful and practicable and subject to section 7.12 of
the Deposit Agreement, distribute the Underlying Securities of such Securities
Issuer to the Owners in proportion to their ownership of Receipts. Effective on
the date of such distribution, such class of Securities will cease to be part
of the securities that must be deposited for issuance of Receipts.

      (d) If the SEC determines that a Securities Issuer is an investment
company under the United States Investment Company Act of 1940, and the
Depositary has actual knowledge of such SEC determination, then the Depositary
will, to the extent lawful and practicable and subject to section 7.12 of the
Deposit Agreement, distribute the Underlying Securities of such Securities
Issuer to the Owners in proportion to their ownership of Receipts. Effective on
the date of such distribution, the Securities of such Securities Issuer will
cease to be part of the securities which must be deposited for issuance of
Receipts.

      (e) If section 7.6 of the Deposit Agreement would otherwise require the
Depositary to distribute the last remaining Underlying Securities, the
Depositary may require the Surrender of Receipts and compliance with Article 4
of the Deposit Agreement, including payment of the fees of the Depositary
pursuant to section 8.5 of the Deposit Agreement, as a condition of effecting
that distribution.

24. Reclassification Events

      If a Reclassification Event occurs and the Depositary receives Securities
in respect of any Underlying Securities in connection with such
Reclassification Event, the Depositary will, to the extent lawful and
practicable, retain such Securities under the Deposit Agreement, and, in such
case, the amount of Securities so retained in respect of each Receipt will be
added to the classes and quantities of securities that must be deposited with
the Depositary for issuance of Receipts. If such Securities are retained
pursuant to section 7.7.1 of the Deposit Agreement the classes and number of
securities that must be deposited in order to receive one Receipt will be
changed as provided therein. If the Depositary receives securities that are not
Securities in connection with a Reclassification Event then the Depositary
will, to the extent lawful and practicable and subjection to section 7.12 of
the Deposit Agreement, distribute any securities so received by the Depositary
to the Owners in proportion to their Ownership of Receipts. Any class of
Securities that ceases to be outstanding as a result of, or that is surrendered
by the Depositary in connection with, any Reclassification Event will,
effective on the date such class of securities ceases to be outstanding or is
surrendered by the Depositary, no longer be part of the securities that must be
deposited for the issuance of Receipts.

25. Fixing of Record Date

      Whenever any cash dividend or other cash distribution becomes payable or
any distribution other than cash is made, or whenever the Depositary receives
notice of any meeting of, or solicitation of proxies from,

                                      S-9
<PAGE>

holders of any Underlying Securities, or whenever a fee will be charged by the
Depositary under section 8.5 of the Deposit Agreement, or whenever for any
reason there is an event that causes a change in the composition of the
securities that must be deposited for issuance of Receipts, or whenever the
Depositary finds it necessary or convenient in respect of any matter, the
Depositary will fix a record date (a) for the determination of the Owners who
will be (i) entitled to receive such dividend or distribution or the net
proceeds of the sale thereof, (ii) entitled to give instructions to the
Depositary for the exercise of voting rights at any such meeting or
solicitation or (iii) required to pay such fee, or (b) on or after which each
Receipt will represent such changed group of securities. The Depositary will
use its reasonable efforts to ensure that, to the extent practicable, the
record date set for the purposes of clauses (a)(i) and (a)(ii) will be the same
as the record date set by the Securities Issuer. Subject to the terms and
conditions of the Deposit Agreement, the Owners on a record date established by
the Depositary will, as applicable: (a) be entitled to receive the amount
distributable by the Depositary with respect to such dividend or other
distribution or the net proceeds of sale thereof; (b) be entitled to give
voting instructions or act in respect of any other such matter; or (c) be
obligated to pay such fee.

26. Withholding

      In the event that the Depositary determines that any distribution in
property (including Securities and rights to subscribe therefor) is subject to
any tax or other charge that the Depositary is obligated to withhold,
notwithstanding anything to the contrary in the Deposit Agreement, the
Depositary may by public or private sale dispose of all or a portion of such
property (including Securities and rights to subscribe therefor) in such
amounts and in such manner as the Depositary considers necessary and
practicable to pay any such taxes or charges and the Depositary will distribute
the net proceeds of any such sale after deduction of such taxes or charges to
the Owners entitled thereto in proportion to the number of Receipts held by
them respectively.

27. Conversion to United States Dollars

      The parties to the Deposit Agreement have acknowledged that payment of
dividends by Securities Issuers is expected to be made in Canadian Dollars. The
Depositary shall distribute cash under the Deposit Agreement to each Owner in
Payment Currency. To the extent the Depositary receives Foreign Currency, the
Depositary shall act in accordance with the following provisions:

          (a) Whenever the Depositary receives Foreign Currency, by way of
    dividends or other distributions or the net proceeds from the sale of
    securities, property or rights, and if at the time of the receipt
    thereof the Foreign Currency so received can in the judgement of the
    Depositary be converted on a reasonable basis into Payment Currency and
    the resulting Payment Currency transferred to Canada and distributed to
    the relevant Owners, the Depositary will convert or cause to be
    converted, by sale or in any other manner that it may determine, such
    Foreign Currency into Payment Currency and such Payment Currency will be
    distributed to the Owners entitled thereto. Such distribution may be
    made upon an averaged or other practicable basis without regard to any
    distinctions among Owners on account of exchange restrictions, the date
    of delivery of any Receipt or otherwise and will be net of any expenses
    of conversion incurred by the Depositary.

          (b) If such conversion or distribution can be effected only with
    the approval or license of any Governmental Entity, the Depositary will
    file such application for approval or license, if any, as it may deem
    desirable.

          (c) If at any time the Depositary shall determine that in its
    judgment any currency received by the Depositary that otherwise would be
    converted to Payment Currency under section 7.10 of the Deposit
    Agreement, is not convertible on a reasonable basis into Payment
    Currency transferable to Canada and distributable to the relevant
    Owners, or if any approval or license is not obtained within a
    reasonable period as determined by the Depositary, the Depositary will
    either distribute the currency

                                      S-10
<PAGE>

    received by the Depositary to, or hold such currency uninvested and
    without liability for interest thereon for the respective accounts of,
    the Owners entitled to receive the same. If any conversion of currency,
    in whole or in part, cannot be effected for distribution to some of the
    Owners entitled thereto, the Depositary will make such conversion and
    distribution in Payment Currency to the extent permissible to the Owners
    entitled thereto pro rata to their ownership of Receipts and will either
    distribute the balance of the currency received by the Depositary to, or
    hold such currency uninvested and without liability for interest thereon
    for the respective accounts of, the Owners entitled thereto pro rata to
    their ownership of Receipts. Any currency held by the Depositary for the
    accounts of Owners entitled thereto in accordance with section 7.10.3 of
    the Deposit Agreement shall be converted by the Depositary to Payment
    Currency and distributed as soon as reasonably practicable.

28. Timing of Distributions

     Distributions under the Deposit Agreement will be made by the Depositary
as soon as is practicable.

29. Limitation on Distributions

     Notwithstanding any provision of the Deposit Agreement which requires or
permits the Depositary to distribute or Deliver any securities to Owners, the
Depositary will not distribute to any Owner any fraction of a share. Instead,
the Depositary will, to the extent lawful, use reasonable efforts to sell the
aggregate of such fractions and distribute the proceeds, net of the expenses
of the Depositary and the fees of the Depositary as provided for in the
Deposit Agreement, to the Owners entitled thereto as in the case of a
distribution received in cash. The Depositary will not charge Owners or
Beneficial Owners of Receipts brokerage fees for sales pursuant to section
7.12 of the Deposit Agreement in connection with a surrender of receipts under
section 4.1 of the Deposit Agreement.

30. Maintenance of Office and Transfer Books by the Depositary

     Until termination of the Deposit Agreement:

         (a) the Depositary will maintain in the City of Toronto, Ontario,
    facilities for the execution and Delivery, registration, registration of
    transfers and Surrender of Receipts in accordance with the provisions of
    the Deposit Agreement;

         (b) the Depositary will keep books for the registration of Receipts
    and transfers of Receipts which at all reasonable times will be open for
    inspection by the Owners;

         (c) subject to section 5.2 of the Deposit Agreement, the Depositary
    may close the transfer books at any time or from time to time; and

         (d) if any Receipts are listed on one or more stock exchanges, the
    Depositary will act as registrar or appoint a registrar or one or more
    co-registrars for registry of such receipts in accordance with any
    requirements of such exchange or exchanges.

31. Prevention or Delay in Performance by the Depositary

     Neither the Depositary nor any of its directors, employees, agents or
affiliates will incur any liability to any Owner, Beneficial Owner or
Depositor if by reason of any provision of any present or future applicable
Laws, or by reason of any provision, present or future, of the corporate
documents of any Securities Issuer, or by reason of any provisions of any
securities issued or distributed by any Securities Issuer, or any offering or
distribution thereof, or by reason of any act of God or war or other
circumstances beyond its control, the Depositary will be prevented or
forbidden from, or be subject to any civil or criminal penalty on account of,
doing or performing any act or thing which by the terms of this Agreement it
is provided will be done or performed. The Depositary will not incur any
liability to any Owner, Beneficial Owner or Depositor by reason

                                     S-11
<PAGE>

of any non-performance or delay, caused as aforesaid, in the performance of any
act or thing which by the terms of this Agreement it is provided will or may be
done or performed, or by reason of any exercise of, or failure to exercise, any
discretion provided for in this Agreement. Where, by the terms of an offering
or distribution to which sections 7.4, 7.5 or 7.6 of the Deposit Agreement
apply, or for any other reason, it is not lawful and practicable to make such
distribution or offering available to Owners, and the Depositary may not
dispose of such distribution or offering on behalf of such Owners and make the
net proceeds available to such Owners, then the Depositary shall not make such
distribution or offering available to Owners and shall allow any rights, if
applicable, to lapse.

32. Obligations of the Depositary

      (a) The Depositary does not assume any obligation nor will it be subject
to any liability under the Deposit Agreement to any Owner, Beneficial Owner or
Depositor (including, without limitation, liability with respect to the
validity or worth of the Underlying Securities), except that it agrees to
perform its obligations specifically set forth in the Deposit Agreement without
negligence or bad faith, and no implied duties will be read into the Deposit
Agreement against the Depositary.

      (b) The Depositary is not under any obligation to prosecute any action,
suit or other proceeding in respect of any Underlying Securities or in respect
of the Receipts.

      (c) The Depositary is not liable for any action or non-action by it in
reliance upon the advice of or information from legal counsel, accountants, any
Depositor, any Owner or any other Person believed by it in good faith to be
competent to give such advice or information.

      (d) The Depositary is not responsible for any failure to carry out any
instructions to vote any of the Underlying Securities, or for the manner in
which any such vote is cast or the effect of any such vote, provided that any
such action or non-action is without negligence or bad faith.

      (e) Except as specifically provided in section 7.1 of the Deposit
Agreement, the Depositary has no obligation to monitor or to obtain any
information concerning the business or affairs of any Securities Issuer or to
advise Owners or Beneficial Owners of any event or condition affecting any
Securities Issuer.

      (f) The Depositary has no obligation to comply with any direction or
instruction from any Owner or Beneficial Owner regarding Receipts except to the
extent specifically provided in the Deposit Agreement.

      (g) The Depositary is not liable for any acts or omissions made by a
successor Depositary whether in connection with a previous act or omission of
the Depositary or in connection with any matter arising wholly after the
resignation of the Depositary, provided that in connection with the issue out
of which such potential liability arises the Depositary performed its
obligations without negligence or bad faith while it acted as Depositary.

      (h) The duties and responsibilities and liabilities of the Depositary are
limited by, and are only those specifically set forth in, the Deposit
Agreement.

33. Resignation or Removal of the Depositary; Appointment of Successor
Depositary

      (a) The Depositary may at any time resign as Depositary by written notice
of its election so to do, delivered to Merrill Lynch, and such resignation will
take effect upon the appointment of a successor Depositary and its acceptance
of such appointment as provided in the Deposit Agreement. Notwithstanding any
other provision of the Deposit Agreement, any resignation of the Depositary
shall not be effective until a duly appointed successor Depositary has agreed
in an instrument in writing acceptable to The Toronto Stock Exchange Inc. and
the New York Stock Exchange, Inc., respectively, acting reasonably, to be bound
by the

                                      S-12
<PAGE>

provisions applicable to the Depositary under any agreement(s) then existing
between the Depositary in its capacity or related to its obligations as
Depositary and The Toronto Stock Exchange Inc. and the New York Stock Exchange,
Inc., respectively.

      (b) If at any time the Depositary is in material breach of its
obligations under the Deposit Agreement and the Depositary fails to cure such
breach within 30 days after receipt by the Depositary of written notice from
Owners of 25% or more of the outstanding Receipts or from Merrill Lynch
specifying such default and requiring the Depositary to cure such default,
Merrill Lynch, acting on behalf of the Owners, may remove the Depositary by
written notice delivered to the Depositary in the manner provided in section
14.3 of the Deposit Agreement, and such removal will take effect upon the
appointment of the successor Depositary and its acceptance of such appointment
as hereinafter provided. Notwithstanding any other provision of the Deposit
Agreement, any removal of the Depositary shall not be effective until a duly
appointed successor Depositary has agreed in an instrument in writing
acceptable to The Toronto Stock Exchange Inc. and the New York Stock Exchange,
Inc., respectively, acting reasonably, to be bound by the provisions applicable
to the Depositary under any agreement(s) then existing between the Depositary
in its capacity or related to its obligations as Depositary and The Toronto
Stock Exchange Inc. and the New York Stock Exchange, Inc., respectively.

      (c) If the Depositary acting under the Deposit Agreement resigns or is
removed, Merrill Lynch will use its reasonable efforts to appoint a successor
Depositary, which will be a bank or trust company having an office in Canada
and (i) will have the capital surplus set forth in Section 26(a)(1) of the
United States Investment Company Act of 1940; (ii) will be affiliated with a
U.S. bank that is a state-chartered bank that is a member of the Federal
Reserve System; (iii) will be regulated as a trust company under the Canadian
Trust and Loan Companies Act; and (iv) will be regulated by the Canadian Office
of the Superintendent of Financial Institutions. Every successor Depositary
will execute and deliver to its predecessor and to Merrill Lynch an instrument
in writing accepting its appointment under the Deposit Agreement, and thereupon
such successor Depositary, without any further act or deed, will become fully
vested with all the rights, powers, duties and obligations of its predecessor;
but such predecessor, nevertheless, upon payment of all sums due it and on the
written request of Merrill Lynch, will execute and deliver an instrument
transferring to such successor all rights and powers of such predecessor under
the Deposit Agreement, will duly assign, transfer and deliver all right, title
and interest in the Underlying Securities to such successor, and will deliver
to such successor a list of the Owners of all outstanding Receipts. Such
successor Depositary will promptly mail notice of its appointment to the
Owners.

      (d) Any corporation into or with which the Depositary may be merged,
consolidated or converted will be the successor of such Depositary without the
execution or filing of any document or any further act.

34. Charges of Depositary

      The following charges will be incurred by any Person depositing
Securities or by any Person Surrendering Receipts or to whom Receipts are
Delivered or any Owner, as applicable:

          (a) taxes and charges and other fees payable in respect of the
    Receipts or any Underlying Securities;

          (b) fees payable in respect of the Receipts or any Underlying
    Securities assessed by third-party Depositaries, depositories,
    depositary banks or transfer agents;

          (c) a fee of U.S.$0.10 or less per Receipt (provided that if the
    number of Receipts to be issued is not an integral multiple of 100, the
    aggregate fee will be calculated by rounding up the number of Receipts
    Delivered to the nearest 100) for the execution and Delivery of Receipts
    other than pursuant to the Initial Deposit Program; provided, however,
    that if such fee is paid in Canadian dollars, the Depositary will charge
    an amount in Canadian dollars equal to the product of the

                                      S-13
<PAGE>

    relevant U.S. dollar fee and the last published Noon Rate on the
    Business Day on which the Securities are deposited;

          (d) a fee of U.S.$0.10 or less per Receipt for the Surrender of
    Receipts (provided that if the number of Receipts to be Surrendered is
    not an integral multiple of 100, the aggregate fee will be calculated by
    rounding up the number of Receipts Surrendered to the nearest 100);
    provided, however, that if such fee is paid in Canadian dollars, the
    Depositary will charge an amount in Canadian dollars equal to the
    product of the relevant U.S. dollar fee and the last published Noon Rate
    on the Business Day on which the Receipts are Surrendered;

          (e) an annual fee that will accrue on the day the Receipts are
    first issued and thereafter on the first day of each calendar year at a
    rate of $0.015 or less per Receipt per year for the Depositary's
    services under the Deposit Agreement (which fee will be assessed against
    Owners of record as of the date or dates set by the Depositary in
    accordance with section 7.8 of the Deposit Agreement and will be
    collected at the Depositary's discretion only by deducting such fee from
    one or more cash dividends or other cash distributions); provided,
    however, that if (i) such fee is paid in Canadian dollars, the
    Depositary will charge an amount in Canadian dollars equal to the
    product of the relevant U.S. dollar fee and the last published Noon Rate
    on the date on which the Depositary calculates the fee and (ii) the
    total cash dividends and other cash distributions the record date for
    which falls in any calendar year are not sufficient to pay the annual
    fee for such year with respect to each Receipt, the Depositary will
    waive the unpaid portion of the fee payable with respect to such
    Receipt; and

          (f) to the extent applicable, such expenses as are incurred by the
    Depositary in the conversion of Foreign Currency pursuant to section
    7.10 of the Deposit Agreement.

35. Prevention or Delay in Performance by Merrill Lynch

      Neither Merrill Lynch nor any of its directors, employees, agents or
affiliates will incur any liability to any Owner, Beneficial Owner or Depositor
if by reason of any provision of any present or future applicable Laws, or by
reason of any provision, present or future, of the corporate documents of any
Securities Issuer, or by reason of any provisions of any securities issued or
distributed by any Securities Issuer, or any offering or distribution thereof,
or by reason of any act of God or war or other circumstances beyond its
control, Merrill Lynch is prevented or forbidden from, or would be subject to
any civil or criminal penalty on account of, doing or performing any act or
thing which by the terms of the Deposit Agreement it is provided will be done
or performed. Merrill Lynch will not incur any liability to any Owner,
Beneficial Owner or Depositor by reason of any non-performance or delay, caused
as aforesaid, in the performance of any act or thing which by the terms of the
Deposit Agreement it is provided will or may be done or performed, or by reason
of any exercise of, or failure to exercise, any discretion provided for in the
Deposit Agreement.

36. Amendment

      The Depositary and Merrill Lynch may amend any provisions of the Deposit
Agreement without the consent of any Owner or Beneficial Owner. Any amendment
that imposes or increases any fees or charges (other than taxes and other
charges, registration fees or other such expenses), or that otherwise
prejudices any substantial existing right of the Owners or Beneficial Owners
will not become effective until 30 days after notice of such amendment is given
to the Owners. Every Owner or Beneficial Owner, at the time any amendment so
becomes effective, will be deemed, by continuing to hold any Receipt or an
interest therein, to consent and agree to such amendment and to be bound by
this Agreement as amended thereby. In no event will any amendment impair the
right of the Owner of any Receipt to Surrender such Receipt and receive the
Underlying Securities represented thereby, except in order to comply with
mandatory provisions of applicable Laws.

                                      S-14
<PAGE>

37. Termination

      Unless otherwise terminated pursuant to the terms of the Deposit
Agreement, the Deposit Agreement will terminate on December 31, 2041. The
Deposit Agreement will terminate by the Depositary mailing notice of such
termination to the Owners of all Receipts then outstanding at least 30 days
prior to the date set for termination if any of the following occurs:

          (a) the Depositary is notified that the Receipts are no longer
    listed on a national securities exchange in Canada and the United States
    (or through NASDAQ) and are not approved for listing on another national
    securities exchange in Canada or the United States or through NASDAQ, as
    the case may be, within 5 Business Days of their delisting;

          (b) Owners of at least 75% of the outstanding Receipts (other than
    Merrill Lynch and its affiliates) notify the Depositary that they elect
    to terminate the Deposit Agreement; or

          (c) 60 days have expired after the Depositary delivered to Merrill
    Lynch and the Owners a written notice of its election to resign and a
    successor Depositary has not been appointed and accepted its appointment
    as provided in section 8.4 of the Deposit Agreement.

38. Effect of Termination

      (a) On and after a termination of the Deposit Agreement pursuant to
section 13.3 of the Deposit Agreement, the Owner of a Receipt will, upon (i)
Surrender of such Receipt at the Office of the Depositary, (ii) payment of the
fee of the Depositary for the Surrender of Receipts set forth in section 8.5 of
the Deposit Agreement, and (iii) payment of any applicable taxes or charges, be
entitled to Delivery, to him or upon his Order, of the Underlying Securities
represented by such Receipt.

      (b) If any Receipts will remain outstanding after the termination of the
Deposit Agreement pursuant to section 13.3 of the Deposit Agreement, the
Depositary thereafter will: (a) discontinue the registration of transfers of
Receipts, (b) suspend the distribution of dividends or other distribution to
the Owners thereof, (c) not give any further notices or perform any further
acts under the Deposit Agreement, except that the Depositary will continue to
collect dividends and other distributions pertaining to Underlying Securities
and hold the same uninvested and without liability for interest, (d) sell
rights as provided in the Deposit Agreement, and (e) continue to Deliver
Underlying Securities, together with any dividends or other distributions
received with respect thereto and the net proceeds of the sale of any rights or
other property, in exchange for Receipts Surrendered to the Depositary (after
deducting or upon payment of, in each case, the fee of the Depositary set forth
in 8.5 of the Deposit Agreement for the Surrender of Receipts, any expenses for
the account of the Owner of such Receipts in accordance with the terms and
conditions of the Deposit Agreement, and any applicable taxes or governmental
charges).

      (c) At any time after the expiration of one year following the date of
termination of the Deposit Agreement, the Depositary may sell the Underlying
Securities then held and may thereafter hold uninvested the net proceeds of any
such sale, together with any other cash then held by it under the Deposit
Agreement, unsegregated and without liability for interest, for the pro rata
benefit of Owners which have not been Surrendered, such Owners thereupon
becoming general creditors of the Depositary with respect to such net proceeds.
After making such sale, the Depositary will be discharged from all obligations
under the Deposit Agreement, except to account for such net proceeds and other
cash (after deducting, in each case, the fee of the Depositary for the
Surrender of Receipts, any fees of the Depositary due and owing from the Owner
of such Receipts pursuant to section 8.5 of the Deposit Agreement, any expenses
for the account of the Owner of such Receipts in accordance with the terms and
conditions of the Deposit Agreement, and any applicable taxes or governmental
charges).

                                      S-15
<PAGE>

      (d) Upon the termination of the Deposit Agreement, Merrill Lynch will be
discharged from all obligations under the Deposit Agreement, except for its
obligations to the Depositary under Article 10 of the Deposit Agreement.

39. Parties; Binding Effect

      The Owners, Beneficial Owners and Depositors from time to time are
parties to the Deposit Agreement, are bound by all of the terms and conditions
hereof and of the Receipts and are entitled to all of the rights and benefits
of the Deposit Agreement, by their acceptance of Receipts or any interest
therein or by their depositing Securities, as the case may be. For greater
certainty, any Person who transfers Receipts to another Person is deemed to
assign its rights under the Deposit Agreement and under the transferred
Receipts to the transferee and the transferee, on transfer of the Receipts, is
deemed to become a party to the Deposit Agreement and is thereby bound by all
of the terms and conditions of the Deposit Agreement and of the Receipts and is
entitled to all of the rights and benefits of the Deposit Agreement and the
Receipts.

                                      S-16
<PAGE>

                                   SCHEDULE A

Re: Security Description: Other

  CUSIP Number: 12616K106

  Global Note No.: 1                    Dated: September  . , 2001

  Registered Holder: CDS & CO.

      This SCHEDULE A is an attachment to and forms a part of the Global Note
described above. It is the official record of all increases and decreases in
the number of issued and outstanding securities represented by the Global Note
as a result of new issuances of the security by the Depositary or the
cancellation of existing securities surrendered by the holders.

<TABLE>
<CAPTION>
                 Transaction                      Global Note    Depositary
    Date           Details       Debit   Credit     Balance     Confirmation
    ----         -----------     -----   ------   -----------   ------------
<S>            <C>               <C>     <C>      <C>           <C>
Sept.  . /01   Opening Balance                         .

</TABLE>

                                      S-17
<PAGE>

                                 SCHEDULE 11.4
                               Audited Schedules

                                AUDITORS' REPORT

To the Holders of CP HOLDRS

      We have audited the schedule of shares underlying CP HOLDRS as at
December 31, 2001, the schedule of distributions received by, annual fees paid
to and expenses deducted by the depositary and remittances to holders of
HOLding Company Depositary Receipts for shares of Canadian Pacific Limited ("CP
HOLDRS") for the year then ended. These schedules are the responsibility of
management of the depositary. Our responsibility is to express an opinion on
these schedules based on our audit.

      We conducted our audit in accordance with auditing standards generally
accepted in Canada. Those standards require that we plan and perform an audit
to obtain reasonable assurance whether the schedules are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the schedules. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the schedules.

      In our opinion, these schedules present fairly, in all material respects,
the shares underlying CP HOLDRS as at December 31, 2001, the schedule of
distributions received by, annual fees paid to and expenses deducted by the
depositary and remittances to holders of CP HOLDRS for the year then ended in
accordance with the policies disclosed in note 2 to the schedules.

                                          Chartered Accountants

Toronto, Canada
 .

                                      S-18
<PAGE>

                                   CP HOLDRS

                    Schedule of Shares Underlying CP HOLDRS
                               Per 100 CP HOLDRS
                               December 31, 2001

<TABLE>
<CAPTION>
                                                                       Market
                                                           Number       Value
                                                        ------------ -----------
                                                        [200. 200.]* [200. 200.]
                                                        ----- ------ ----- -----
<S>                                                     <C>   <C>    <C>   <C>
CP HOLDRS outstanding (note 1) ........................   .     .    $ .   $ .
                                                         ===   ===   ====  ====
</TABLE>

      Evidencing ownership of Holders of CP HOLDRS in:

Underlying Shares (note 4)

<TABLE>
<CAPTION>
                                                  Number of Shares
Company                                           Per 100 CP HOLDRS Market Value
-------                                           ----------------- ------------
                                                                    [200 . 200.]
                                                                    ------ -----
<S>                                               <C>               <C>    <C>
 . ..............................................         .            .     .
 . ..............................................         .            .     .
 . ..............................................         .            .     .
 . ..............................................         .            .     .
 . ..............................................         .            .     .
                                                                     ----  ----
                                                                     $ .   $ .
                                                                     ====  ====
</TABLE>

      See accompanying notes.
--------
*  In first year, comparative information would not be provided.

                                      S-19
<PAGE>

                                   CP HOLDRS

           Schedule of Distributions received by, Annual Fees paid to
           and Expenses deducted by the Depositary and Remittances to
                              Holders of CP HOLDRS
                          Year ended December 31, 2001

<TABLE>
<CAPTION>
                                                                      Per 100
                                                                     CP HOLDRS
                                                                    ------------
                                                                    [200. 200.]*
                                                                    ----- ------
<S>                                                                 <C>   <C>
Distributions Received by the Depositary........................... $ .    $ .
                                                                    ====   ====
Annual fee (note 3)................................................ $ .    $ .
                                                                    ====   ====
Expenses deducted by the depositary................................ $ .    $ .
                                                                    ====   ====
Remittances to CP HOLDRS........................................... $ .    $ .
                                                                    ====   ====
</TABLE>

      See accompanying notes.
--------
*  In first year, comparative information would not be provided.

                                      S-20
<PAGE>

                                   CP HOLDRS

                               Notes to Schedules

December 31, 2001

1. CP HOLDRS

      CP HOLDRS are receipts executed and delivered by BNY Trust Company of
Canada (the "depositary"). Each receipt represents beneficial ownership of
underlying shares. The shares are held on behalf of the holders of CP HOLDRS by
the depositary.

      A holder of CP HOLDRS has the right to withdraw the underlying shares
represented thereby by (i) surrendering the CP HOLDRS to the depositary, (ii)
paying the cancellation fee and (iii) paying all taxes and charges in
connection with the surrender and withdrawal.

      Any amount received by the depositary as a dividend or other distribution
on an underlying share will be regarded as having been received by the holder
of the related CP HOLDR for income tax purposes at the time such amount is
received by the depositary.

2. Significant policies followed in the preparation of the schedules

Schedule of shares underlying CP HOLDRS

      CP HOLDRS are presented at their market value at year-end, based on the
last trade in the calendar year as quoted on The Toronto Stock Exchange.

      The underlying shares are presented at their market value at year-end,
based on the last trade in the calendar year as quoted on The Toronto Stock
Exchange, or, if not listed on The Toronto Stock Exchange, based on the last
trade in the calendar year as quoted on the principal market on which the
shares are traded.

Schedule of Distributions received by Annual Fees Paid to and Expenses Deducted
by the Depositary and Remittances to Holders of CP HOLDRS

      Dividend distributions are recorded on a cash basis, consistent with the
basis on which they are recorded for tax purposes.

      The accounting policies followed in the preparation of these schedules
are in accordance with generally accepted accounting principles except that
dividend distributions are recorded on a cash basis as opposed to being
recorded on the ex-dividend date.

3. Changes in the portfolio of underlying shares

      The changes in the composition of the portfolio of underlying shares
evidenced by a round-lot of 100 CP HOLDRS which occurred during the year are as
follows:

       .

                                      S-21<PAGE>

                                                                   Exhibit 10.10

                             STOCKHOLDERS' AGREEMENT

                                  By and Among

                               HARU HOLDING CORP.
                             BENIHANA NATIONAL CORP.
                               MEI PING MATSUMURA
                                       and
                             ESTATE OF ARTHUR CUTLER

                                                   Dated as of: December 9, 1999

<PAGE>

                             STOCKHOLDERS' AGREEMENT

     STOCKHOLDERS' AGREEMENT dated as of the 6th day of December, 1999 by and
                                             ---
among, Haru Holding Corp., a Delaware corporation whose address is c/o Benihana
Inc., 8685 Northwest 53/rd/ Terrace, Miami, Florida 33166 (the "Company"),
Benihana National Corp. ("BNC"), a Delaware corporation whose address is 8685
Northwest 53/rd/ Terrace, Miami, Florida 33166, Mei Ping Matsumura
("Matsumura"), an individual whose address is 8 Jean Drive, Englewood Cliffs,
New Jersey 07632, and the Estate of Arthur Cutler ("Cutler"), whose address is
c/o Alicart, Inc., 118 West 27/th/ Street, 10/th/ Floor, New York, New York
10001. Matsumura, Cutler and their permitted transferees are hereinafter
sometimes referred to collectively as the "Minority Stockholders."

                                R E C I T A L S :

     The authorized capital stock of the Company consists of one thousand
(1,000) shares of issued and outstanding common stock, par value $.01 per share
(the "Common Stock"), and one thousand (1,000) shares of preferred stock, par
value $1.00 per share. There are no shares of preferred stock issued or
outstanding.

     Prior to the date hereof, Matsumura and Tsu Wang ("Wang") were the record
owners of all of the issued and outstanding Common Stock. Pursuant to a certain
Stock Sale Agreement dated as of August 5, 1999 and amended as of November 12,
1999 (as amended, the "Sale Agreement"), by and among BNC, Matsumura and Wang,
on the date hereof, Matsumura and Wang are selling eighty (80%) percent of the
issued and outstanding Common Stock to BNC, so that, after giving effect to such
sale, the Stock will be owned, beneficially and of record, as follows:

<PAGE>

                  BNC                                         800 Shares
                  Matsumura                                   180 Shares
                  Cutler                                       20 Shares
                                                            -----
                                                            1,000 Shares

The foregoing also gives effect to making a previously held beneficial interest
of Cutler of record.

     The Company, through two subsidiaries, Haru Amsterdam Avenue Corp, a New
York corporation and Haru Third Avenue Corp., a New York corporation, operates
Japanese sushi-style restaurants under the name Haru. A third subsidiary, 1501
Broadway Restaurant Corp, a New York corporation, is a tenant of space in which
a third Haru restaurant will be established. The parties anticipate that the
Company will be opening additional Haru restaurants as opportunities and
finances permit.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties agree as follows:

     1.   Definitions.
          -----------

          Capitalized terms not otherwise defined herein shall have the meanings
set forth below:

               "Affiliate" of any person means another person controlling,
          controlled by or under common control with such person.

               "Amount of Company Debt" means, as of the end of the Pricing
          Fiscal Year, the total of all indebtedness (including all accrued and
          unpaid interest) of the Company and its subsidiaries (including,
          without limitation, indebtedness to stockholders of the Company and,
          in the case of indebtedness to BNC, all accrued and unpaid interest
          thereof computed at the rate of interest charged to BNC (or its

                                       -2-

<PAGE>

          parent, Benihana Inc.) under their primary bank line of credit (which
          is, on the date hereof, with First Union National Bank)) other than
          accounts payable incurred in the ordinary course of business.

               "Board" means the Board of Directors of the Company.

               "Call Price" means (A) Five and One-Half (5 1/2) times (B) the
          Company's Consolidated Cash Flow for the Pricing Fiscal Year, from
          which total is subtracted (C) the Amount of Company Debt, which total
          is divided by (D) the number of shares of Common Stock outstanding as
          at the date of such computation.

               "Consolidated Amortization Expense" means the amortization
          expense of the Company and its Subsidiaries for the acquisition of
          intangibles (other than goodwill arising from a future acquisition by
          the Company or a Subsidiary), determined on a consolidated basis in
          accordance with GAAP.

               "Consolidated Cash Flow," for any period, means Consolidated Net
          Operating Income, (A) increased by the sum of (i) the Consolidated
          Interest Expense for such period, (ii) the Consolidated Income Tax
          Expense for such period, (iii) the Consolidated Depreciation Expense
          for such period, (iv) the Consolidated Amortization Expense for such
          period and (v) other non-cash items which reduced Consolidated Net
          Operating Income in such period and (B) decreased by the sum of the
          non-cash items which increased Consolidated Net Operating Income in
          such period.

               "Consolidated Depreciation Expense" means the depreciation
          expense of the Company and its Subsidiaries, determined on a
          consolidated basis in accordance with GAAP.

                                       -3-

<PAGE>

               "Consolidated Income Tax Expense," for any period, means the
          aggregate of the income tax expense of the Company and its
          Subsidiaries for such period (to the extent deducted in determining
          Consolidated Net Operating Income), determined on a consolidated basis
          in accordance with GAAP.

               "Consolidated Interest Expense" means, for any period, the
          interest expense of the Company and its Subsidiaries accrued on
          Indebtedness of the Company or any Subsidiaries determined on a
          consolidated basis in accordance with GAAP.

               "Consolidated Net Operating Income" means, for any period, the
          aggregate net income of the Company and its Subsidiaries, determined
          on a consolidated basis in accordance with GAAP.

               "GAAP" means generally accepted accounting principles for the
          restaurant industry as in effect on the date of this Agreement,
          applied on a consistent basis throughout any given period of
          measurement.

               "Immediate Family" for each Minority Stockholder means such
          Minority Stockholder's spouse, parents, lineal descendants and
          siblings, and the spouses of any of the foregoing, and trusts solely
          for the benefit of one or more of the foregoing.

               "Member Representative" means Mei Ping Matsumura.

               "Pricing Fiscal Year" means the Company's fiscal year ended next
          preceding July 1, 2005.

               "Put Price" means (A) Four and One-Half (4 1/2) times (B) the
          Company's Consolidated Cash Flow for the Pricing Fiscal Year, from
          which total is subtracted (C) the Amount of Company Debt, which total
          is divided by (D) the number of shares of Common Stock outstanding as
          at the date of such computation.

                                       -4-

<PAGE>

               "Subsidiary" means any corporation of which more than 50% of the
          voting stock or any partnership, limited liability company or joint
          venture of which 50% of the voting stock or profit interests, is owned
          or Controlled, directly or indirectly, by the Company or one or more
          Subsidiaries of the Company or a combination thereof.

               "Transfer" means any transfer, sale, gift, assignment, or bequest
          whether or not voluntary or by action of law including, without
          limitation, any transfers in enforcement of liens or judgments,
          sheriff's sales and sales in bankruptcy.

     2.   Corporate Governance. The Company shall be managed by a Board
          --------------------
consisting of four (4) directors. For so long as Matsumura owns her shares of
the Stock, she shall have the right to nominate one (1) of such directors, and
BNC shall have the right to nominate the remaining three (3) directors. Each of
BNC, Cutler and Matsumura agree, for itself and its successors and assigns, to
vote as stockholders in any election of directors, for the persons nominated as
set forth in the preceding sentence.

     3.   Put Option of Minority Stockholders and Call Option of BNC.
          ----------------------------------------------------------

          3.1  At any time during the period commencing July 1, 2005 and ending
on September 30, 2005, the Minority Stockholders shall have a one-time option
("Put Option") to sell to BNC, and to cause BNC to purchase, all, but not less
than all, of the Common Stock owned by the Minority Stockholders (including any
transferees) in its entirety. Such option shall be exercised by delivering to
BNC a written notice (the "Put Notice") of exercise signed by all Minority
Stockholders.

          3.2  The purchase price for each share of Common Stock being sold by
the Minority Stockholders pursuant to Section 3.1 shall be the Put Price.

                                       -5-

<PAGE>

          3.3 The closing of the sale of shares of Common Stock by the Minority
Stockholders in consequence of the exercise of the Put Option shall take place
at the offices of the Company or such other place as BNC shall elect at a date
selected by BNC, which is not more than 15 days after the Put Price is
determined and the Put Price shall be paid by BNC in cash on closing.

          3.4 Provided the Minority Stockholders shall not have exercised their
Put Option pursuant to the provisions of Section 3.1 hereof, BNC shall have a
one-time option ("Call Option") exercisable commencing October 1, 2005 and
ending December 31, 2005 to purchase all, but not less than all, of the Common
Stock owned by the Minority Stockholders (including any transferees) in its
entirety. Such option shall be exercised by delivering to the Member
Representative a written notice (the "Call Notice") of exercise signed by BNC.

          3.5 The purchase price for each share of Common Stock being purchased
by BNC pursuant to Section 3.4 shall be the Call Price.

          3.6 The closing of the purchase of shares of Common Stock owned by the
Minority Stockholders by BNC in consequence of the exercise of the Call Option
shall take place at the offices of the Company or such other place as BNC shall
elect at a date selected by BNC, which is not more than fifteen (15) days after
the Call Price is determined, and the Call Price shall be paid by BNC in cash on
Closing.

          3.7 The calculation of Consolidated Cash Flow of the Company shall be
made in accordance with GAAP and the books and records of the Company's (and its
subsidiaries) business shall be maintained in such a manner as to allow for such
computation to be fairly determined.

          3.8 Purchaser will deliver its calculation of Consolidated Cash Flow
of the company to the Member Representative within seventy-five (75) days after
the end of the Pricing

                                       -6-

<PAGE>

Fiscal Year. The Member Representative shall have ten (10) business days
following delivery of the calculation of Consolidated Cash Flow for Pricing
Fiscal Year to object to such calculation and the Member Representative will
have access to BNC's work papers used in connection with the determination of
Consolidated Cash Flow. If the Member Representative does not timely object, she
will be deemed to have accepted such calculation. If the Member Representative
does timely object, BNC and the Member Representative shall promptly commence
good faith negotiations with the view to resolving such dispute or controversy,
provided that, if such disputed controversy shall not have been resolved by
-------------
mutual agreement of the parties or their respective accountants within thirty
(30) days after BNC's receipt of the Member Representative Notice of Objection,
then either Purchaser or the Member's Representative shall have the right to
submit the dispute to arbitration conducted in accordance with the Commercial
Arbitration Rules or then existing rules for commercial arbitration of the
American Arbitration Association. The arbitration shall be held in the City of
New York before a single arbitrator who shall be selected by mutual agreement of
the parties from among a list of seven potential arbitrators provided by the
American Arbitration Association. If the parties cannot agree on an arbitrator
from this first list, the parties hereto shall select an arbitrator for such
arbitration from the second list of seven potential arbitrators provided by the
American Arbitration Association with the Member Representative, on the one
hand, and BNC, on the other, alternatively striking names, with the last name
remaining to be the arbitrator so selected. The arbitration shall be binding and
conclusive as between Purchaser and the Member Representative, absent fraud or
manifest error. Each party shall bear its own fees and expenses in connection
with any such arbitration and shall be responsible for paying one-half of the
fees and expenses charged by the arbitrators.

                                       -7-

<PAGE>

          3.9  In exercising the Put Option set forth herein or in accepting
payment for their Common Stock as a result of the exercise by BNC of the Call
Option, each Minority Stockholder shall be deemed to have represented and
warranted to BNC that such Minority Stockholder owns good title to the shares
being sold free and clear of any and all liens, encumbrances and other rights,
that such Minority Stockholder has the authority, power and capability to effect
such sale and that after payment for such shares, and that BNC will have good
and marketable title to said shares.

          3.10 The Minority Stockholders acknowledge that BNC and its Affiliates
presently serve sushi in the Benihana restaurants and operate separate sushi
restaurants presently called "Sushi Doraku" and that these operations may be
developed further and not included in the Company's business.

     4.   Restrictions On Transfer; Legends.
          ---------------------------------

          4.1  Each of the Minority Stockholders agrees not to make any
voluntary Transfer of the Common Stock owned by such Minority Stockholder
without the written consent of BNC or as otherwise provided herein, except that
such Minority Stockholder may make a voluntary Transfer by gift to a member of
such Minority Stockholder's Immediate Family, provided that the recipient of
such Transfer agrees in a writing (which is satisfactory in form and substance
to BNC) to be bound by this Agreement with respect to such shares as if a
signatory hereto.

          4.2  In the event that any shares of Common Stock are Transferred
involuntarily, or Transferred in violation of this Agreement, such Transfer will
give to BNC the right, exercisable by written notice to the record owner of such
shares, to purchase the shares so Transferred at a purchase price equal to the
book value of such shares determined from the Company's financial statements as
of the end of the Company's fiscal year preceding such Transfer. Such right
shall be exercisable for three (3) years after BNC receives notice of any
Transfer.

                                       -8-

<PAGE>

          4.3  Each certificate representing shares of Common Stock shall be
stamped with a legend as follows:

                    "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
               SHARES DESCRIBED IN AND SUBJECT TO A STOCKHOLDERS'
               AGREEMENT (THE "AGREEMENT"), DATED AS OF DECEMBER __,
               1999, A COPY OF WHICH IS ON FILE AT THE OFFICE OF THE
               CORPORATION. SUCH AGREEMENT PROVIDES, AMONG OTHER
               THINGS, FOR CERTAIN RESTRICTIONS ON THE SALE, TRANSFER,
               PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE
               SHARES REPRESENTED BY THIS CERTIFICATE, AND FOR CERTAIN
               RIGHTS OF THE CORPORATION OR OTHERS TO PURCHASE THE
               SHARES REPRESENTED BY THIS CERTIFICATE. THE CORPORATION
               WILL FURNISH TO THE OWNER OF THE SHARES REPRESENTED BY
               THIS CERTIFICATE UPON REQUEST, WITHOUT CHARGE, A COPY
               OF SUCH AGREEMENT."

                    THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
               BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
               REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE
               SECURITIES LAWS OF ANY STATE. SUCH SHARES MAY NOT BE
               SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
               OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER
               THAT SUCH REGISTRATION IS NOT REQUIRED BY SAID ACT OR
               STATE LAWS.

     5.   Drag Along; Come Along.
          ----------------------

          5.1  As used in this Agreement, the term "Sale of Control Transaction"
means any sale or transfer of Stock by BNC (including in such term for all
purposes of this Section 5, the successors , assigns and Affiliates of BNC), or
any sale and issuance of Common Stock by the Company, or any merger,
consolidation or other corporate transaction which would result in BNC

                                  -9-

<PAGE>

and/or its affiliates beneficially owning less than fifty (50%) percent of the
combined voting power of all shares of the capital stock of the Company entitled
to vote generally in the election of directors of the Company.

          5.2  BNC shall not enter into or complete any Sale of Control
Transaction unless the Minority Stockholders are given the opportunity to
participate therein (i.e., to sell for the same consideration and on the same
terms as are applicable to the sale of shares of Stock owned by BNC, the same
percentage of the shares of Stock beneficially owned by each Minority
Stockholder as equals the percentage of the total number of shares of Stock
owned by BNC which is to be sold by BNC in the Sale of Control Transaction). In
addition, BNC shall have the right to require that each Minority Stockholder
participate in the Sale of Control Transaction, and the Minority Stockholders
agree to be bound to participate in such Sale of Control Transaction.

          5.3  BNC shall give each Minority Stockholder written notice of any
proposed Sale of Control Transaction (the "Sale Notice") at least fifteen (15)
business days prior to the closing thereof. The Sale Notice shall contain a
description of the proposed Sale of Control Transaction and the terms and
conditions thereof, including a description of the consideration to be received
by BNC for each share of Stock being sold by BNC in the Sale of Control
Transaction, and shall state whether BNC is requiring the Minority Stockholders
to participate in the Transaction. If the Sale of Control Notice does not state
that the Minority Stockholders are required to participate in the Sale of
Control Transaction, each Minority Stockholder shall nonetheless have the right
to elect to do so by giving written notice of its election to do so to BNC not
later than ten (10) days after the giving of the Sale of Control Notice.

     6.   Termination Of This Agreement.
          -----------------------------

                                       -10-

<PAGE>

          This Agreement shall terminate and be of no further force and effect
upon the first to happen of the following:

          (i)   Voluntary or involuntary dissolution and liquidation of the
                Company;

          (ii)  The sale by the Company of any class of common shares of the
                Company for cash in a public offering registered under the
                Securities Act of 1933;

          (iii) The occurrence of a Sale of Control Transaction; or

          (iv)  September 1, 2024.

     7.   Specific Performance.
          --------------------

          Because the Common Stock will be closely held and the market
therefor will be limited, the parties mutually acknowledge that irreparable
injury would result if this Agreement were not performed according to its terms.
Therefore, the parties acknowledge and agree that the respective rights and
obligation hereunder shall be specifically enforceable in a court of equity by a
decree of specific performance and appropriate injunctive relief may be applied
for an granted in connection therewith, without requiring the posting of any
bond or other security therefor and without requiring any showing of actual
damage, or of likelihood or imminence of actual damage, or that monetary damages
would not provide an adequate remedy. Any such equitable remedy shall be
cumulative and not exclusive, and shall be in addition to any other remedies
(including, without limitation, monetary damages for breach of contract) which
any party may have under this Agreement or otherwise.

                                       -11-

<PAGE>

        8.     General.
               -------

               8.1  Binding Nature. This Agreement shall be binding upon and
                    --------------
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives and permitted successors and
assigns, and shall be binding upon any person (including any corporation,
association or other legal entity) to whom any shares of Common Stock are
transferred (even if in violation of the provisions of this Agreement) and the
heirs, executors, administrators and assigns of such person.

               8.2  Entire Understanding. This Agreement, together with the Sale
                    --------------------
Agreement, sets forth the entire understanding of the parties hereto with
respect to the subject matter hereof and thereof and supersedes all prior
agreements, arrangements and understandings, written and oral, among the parties
hereto as to such subject matter. Except as specifically set forth herein, no
party hereto has made or relied upon any representations, warranties, covenants
or understandings of any other party hereto in entering into this Agreement.

               8.3  No Waiver. The waiver by any party hereof of any breach of
                    ---------
any provision of this Agreement shall not constitute or operate as a waiver of
any other breach of such provision or of any other provisions hereof, nor shall
any failure to enforce any provision hereof operate as a waiver of such
provision of any other provision hereof.

               8.4  Other Documents. Each party hereto agrees to execute such
                    ---------------
further instruments and documents, and to take such further actions, as any
other such party may reasonably require in order to effectuate the terms and
purposes of this Agreement and the transactions contemplated hereby.

                                       -12-

<PAGE>

                8.5  Amendment. This Agreement may not be amended, nor may any
                     ---------
provisions hereof be modified or waived, except by an instrument duly signed by
or on behalf of each party hereof.

                8.6  Notices. All notices, demands and other communication
                     -------
required or permitted to be given or made hereunder shall be deemed sufficiently
given or made if sent by registered or certified mail, postage prepaid, return
receipt requested, by hand delivery or by facsimile transmission, each party at
the address set forth as follows:

                If to BNC or the Company:   c/o Benihana Inc.
                                            8685 Northwest 53/rd/ Terrace
                                            Miami, Florida 33166
                                            Attn: Joel A. Schwartz, President

                If to Cutler:               Ms Alice Cutler
                                            c/o Alicart, Inc.,
                                            118 West 27/th/ Street, 10/th/ Floor
                                            New York, New York 10001.

                If to Matsumura:            Ms. Mei Ping Matsumura
                                            8 Jean Drive
                                            Englewood Cliffs, New Jersey 07632

or at such other address or addresses as any party hereto shall designate by
written notice to the other parties hereto, given in accordance with the
provisions of this Section. Copies of all notices and other communications being
sent to the Company or BNC shall be sent to Dornbush Mensch Mandelstam &
Schaeffer, LLP, 747 Third Avenue, New York, New York 10017, Attention: Darwin C.
Dornbush, and copies of all notices and other communications being sent to the
Minority Stockholders shall be sent to Michael L. Paikin, Esq., 551 Fifth
Avenue, New York, New York 10017. Except as otherwise expressly provided herein,
any such notice, demand or other communication shall be deemed to have been duly
given or made as of the date so mailed, as evidenced by the postmark on the
envelope or the notation of time and date on the facsimile or hand

                                       -13-

<PAGE>

delivery receipt, as the case may be. Any such communication delivered otherwise
than as provided above, and any notice of change of address hereunder, shall be
deemed given or made only at the time actually received by the person to whom it
is addressed.

                8.7   Governing Law. This Agreement shall in all events be
                      -------------
governed by and construed in accordance with the internal laws of the State of
New York without reference to the principles of conflict of laws, irrespective
of the particular forum in which an action may be brought to enforce or secure
an interpretation of this Agreement and irrespective of the principal place of
business, residence or domicile of any party hereto.

                8.8   Headings. Section headings contained herein are inserted
                      --------
for convenience of reference only and are not in any way intended to affect the
meaning or interpretation of this Agreement.

                8.9   Execution In Counterparts. This Agreement may be executed
                      -------------------------
in any number of counterparts, each of which shall be deemed an original but all
of which taken together shall constitute on and the same documents, and any
party hereto may execute this Agreement by signing any such counterpart.

                8.10  Reclassification, etc. The provisions of this Agreement
                      ---------------------
shall apply to any capital stock of the Company as may hereafter be issued or
transferred to any Minority Stockholder in respect of his shares as a
consequence of any exchange or reclassification of the Common Stock, corporate
reorganization, recapitalization, consolidation or merger, shares split or
shares dividend, or other like event. All references to shares of Common Stock
will be deemed amended and adjusted to equitably adjust for any such exchange,
reclassification, consolidation, merger, shares dividend, shares split or other
like event.

                                       -14-

<PAGE>

          8.11  Gender. As used in this Agreement, words in the masculine
                ------
gender include the feminine and neuter genders, and vice versa, where the
context so requires.

          8.12  No Right Of Employment.  No right of employment of any party
                ----------------------
hereto is implied either by ownership of shares of Common Stock or by any
provision in this Agreement.

         IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement as of the day and year first above written.

                                                 BENIHANA NATIONAL CORP.

                                                 By:  /s/ Joel A. Schwartz
                                                     -------------------------
                                                             President

                                       -15-

<PAGE>

                               HARU HOLDING CORP.

                               By:    /s/ Joel A. Schwartz
                                  ----------------------------------
                                      Joel Schwartz, President

                                      /s/ Mei Ping Matsumura
                               -------------------------------------
                                         Mei Ping Matsumura

                               ESTATE OF ARTHUR CUTLER

                               By:    /s/ Alice Cutler
                                  ----------------------------------
                                     Alice Cutler, Executrix

                                       -16-

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