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                                                                   EXHIBIT 10.34

                              AMENDED AND RESTATED
             ALLIANCE DATA SYSTEMS CORPORATION AND ITS SUBSIDIARIES
                     STOCK OPTION AND RESTRICTED STOCK PLAN

                            Effective April 25, 2001

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                              AMENDED AND RESTATED
             ALLIANCE DATA SYSTEMS CORPORATION AND ITS SUBSIDIARIES
                     STOCK OPTION AND RESTRICTED STOCK PLAN

     Section 1. PURPOSE. The purpose of the Amended and Restated Alliance
Data Systems Corporation and its Subsidiaries Stock Option and Restricted
Stock Plan (the "Plan") is to promote the interests of Alliance Data Systems
Corporation, a Delaware corporation (the "Company"), and any Subsidiary
thereof and the interest of the Company's stockholders by providing an
opportunity to stockholders and selected employees, officers, directors and
other persons performing services for the Company or any Subsidiary thereof
as of the date of the adoption of the Plan or at any time thereafter to
purchase Common Stock of the Company. By encouraging such stock ownership,
the Company seeks to attract, retain and motivate such employees and other
persons and to encourage such employees and other persons to devote their
best efforts to the business and financial success of the Company. It is
intended that this purpose will be effected by the granting of "non-qualified
stock options" and/or "incentive stock options" to acquire the Common Stock
of the Company and/or by the granting of rights to purchase or receive (upon
satisfaction of certain conditions) the Common Stock of the Company on a
"restricted stock" basis. Under the Plan, the Committee shall have the
authority (in its sole discretion) to grant "incentive stock options" within
the meaning of Section 422(b) of the Code, "non-qualified stock options" as
described in Treasury Regulation Section 1.83-7 or any successor regulation
thereto, or "restricted stock" awards.

     The Plan is an amendment and restatement of the Alliance Data Systems
Corporation and its Subsidiaries Stock Option and Restated Stock Purchase
Plan (the "Prior Plan"). All Options and Awards granted prior to the
Effective Date hereof shall be deemed granted pursuant to the terms of the
Prior Plan (except to the extent provisions of this Plan are expressly made
applicable). Options and Awards granted prior to the Effective Date may be
granted only to the extent shares are available for issuance under the terms
of the Prior Plan. As of the Effective Date all Options and Awards granted
shall be granted under the terms and limitations of this Plan.

     Section 2. DEFINITIONS. For purposes of the Plan, the following terms
used herein shall have the following meanings, unless a different meaning is
clearly required by the context:

                2.1 "Award" shall mean an award of (i) the right to purchase
Common Stock granted under the provisions of Section 7 of the Plan or (ii) a
grant of Common Stock subject to specified restrictions.

                2.2 "Board of Directors" shall mean the Board of Directors of
the Company.

                2.3 "Cause" shall mean either the failure to perform in a
competent manner or the willful failure to perform the assigned duties of
one's position, as determined by the Company in its sole discretion.

                2.4 "Change of Control Value" means, for the purposes of
Section 8, the amount determined in Clause (i), (ii) or (iii), whichever is
applicable, as follows: (i) the per share price offered to stockholders of
the Company in any merger, consolidation, sale of assets or

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dissolution transaction, (ii) the price per share offered to stockholders of
the Company in any tender offer or exchange offer whereby a Corporate Change
takes place or (iii) if a Corporate Change occurs other than as described in
Clause (i) or Clause (ii), the Fair Market Value per share determined by the
Committee as of the date determined by the Committee to be the date of
cancellation and surrender of an Option or Award. If the consideration
offered to stockholders of the Company in any transaction described in this
definition or Section 8 consists of anything other than cash, the Committee
shall determine the fair cash equivalent of the portion of the consideration
offered which is other than cash.

                2.5 "Code" shall mean the Internal Revenue Code of 1986, as
amended, and the Treasury Regulations promulgated thereunder.

                2.6 "Committee" shall mean the Board of Directors or a
delegate, as provided for in Section 5 hereof.

                2.7 "Common Stock" shall mean the Common Stock, $0.01 par
value, of the Company.

                2.8 "Corporate Change" mans one of the following events: (i)
the merger, consolidation or other reorganization of the Company in which the
outstanding Common Stock is converted into or exchanged for a different class
of securities of the Company, a class of securities of any other issuer
(except a direct or indirect wholly owned subsidiary of the Company), cash or
other property, (ii) the sale, lease or exchange of all or substantially all
of the assets of the Company to any other corporation or entity (except a
direct or indirect wholly owned subsidiary of the Company), (iii) the
adoption by the stockholders of the Company of a plan of liquidation and
dissolution, (iv) the acquisition (other than any acquisition pursuant to any
other clause of this definition) by any person or entity, including without
limitation a "group" as contemplated by Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (whether or not such Act is then applicable
to the Company), of beneficial ownership, as contemplated by such Section, of
more than twenty percent (20%) (based on voting power) of the Company's
outstanding capital stock, or (v) as a result of or in connection with a
contested election of directors, the persons who were the directors of the
Company before such election shall cease to constitute a majority of the
Board of Directors.

                2.9 "Eligible Optionee" shall mean, with respect to a
Non-Qualified Option and/or Award, any stockholder of the Company, and any
person employed by, or performing services for, the Company or any Parent or
Subsidiary of the Company including, without limitation, directors and
officers of the Company and employees of any stockholder of the Company that
is performing services for the Company.

                2.10 "Employee" shall mean, with respect to an ISO, any
person, including, without limitation, an officer or director of the Company,
who, at the time an ISO is granted to such person hereunder, is employed on a
full-time basis by the Company or any Parent or Subsidiary of the Company.

                2.11 "Effective Date" shall mean the date established by the
Board of Directors in connection with its adoption of the Plan, provided the
Plan is approved by the requisite

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proportion of the stockholders of the Company within twelve (12) months after
adoption by the Board of Directors. Options and Awards may be granted under
the Plan prior to such approval by stockholders, provided that Options and
Awards may not vest or be exercised prior to such approval and all such
Options and Awards shall expire if the stockholders fail to timely approve
the Plan.

                2.12 "Excluded Group" shall mean the group including (a) the
Executive (as defined in Section 5.1), (b) any person who is included in the
Executive Committee, (c) any person with respect to his or her compensation
as a director; and (d) any Insider.

                2.13 "Fair Market Value" shall mean, with respect to Grants
on the date of the initial public offering of the Company, the opening value
on the New York Stock Exchange, and thereafter the average of the high and
low prices on the New York Stock Exchange during the trading hours of the New
York Stock Exchange. Prior to the initial public offering, the Committee
shall make a good faith determination of the Fair Market Value of the Company.

                2.14 "Grant" shall mean an Award or an Option.

                2.15 "Insider" shall mean all officers and directors of the
Company (and its affiliates) who are subject to Section 16b of the Securities
Exchange Act of 1934, as amended.

                2.16 "ISO" shall mean an Option that constitutes an incentive
stock option under Section 422(b) of the Code.

                2.17 "Non-Qualified Option" shall mean an Option granted to a
Participant pursuant to the Plan that is intended to be, and qualifies as, a
"non-qualified stock option" as described in Treasury Regulation Section
1.83-7 or any successor regulation thereto and that shall not constitute or
be treated as an ISO.

                2.18 "Option" shall mean any ISO or Non-Qualified Option
granted to an Employee or Eligible Optionee pursuant to the Plan.

                2.19 "Participant" shall mean any Employee or Eligible
Optionee to whom an Award and/or an Option is granted under the Plan.

                2.20 "Parent" of the Company shall have the meaning set forth
in Section 424(e) of the Code.

                2.21 "Percentile within the Standard & Poor 500" shall mean
the percentile determined by taking every company that was in the Standard &
Poor 500 for the entire measurement period for the Performance Based
Restricted Stock, that continues to be publicly traded at the end of the
measurement period and ranking their cumulative total shareholder return at
the end of the measurement period.

                2.22 "Performance Based Restricted Stock" means an Award of
Common Stock subject to specified restrictions that cause such Common Stock
to vest upon attainment of specified financial goals by the Company.

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                2.23 "Pooling Transaction" means an acquisition of the
Company in a transaction which is intended to be treated as a "pooling of
interests" under generally accepted accounting principles.

                2.24 "Retired" or "Retirement" shall mean that a Participant
has attained at least age 60 and completed at least 60 months of service with
the Company, a Parent or a Subsidiary. The Participant shall receive credit
for his first and last month of service with the Company, Parent or a
Subsidiary without regard to whether he was actually employed by the Company
or Parent, or a Subsidiary on every day of the month.

                2.25 "Subsidiary" of the Company shall have the meaning set
forth in Section 424(f) of the Code.

     Section 3. ELIGIBILITY. Awards and/or Options may be granted to any
Employee or Eligible Optionee; provided however, that an ISO may only be
granted to an Employee. The Committee shall have the sole authority to select
the persons to whom Awards and/or Options are to be granted hereunder, and to
determine whether a person is to be granted a Non-Qualified Option, an ISO or
an Award or any combination thereof; provided that the granting of
Performance Based Restricted Stock Awards will be upon the recommendation of
the Chief Executive Officer of the Company for approval by a committee of
members of the Board of Directors as described in Section 5.1. No person
shall have any right to participate in the Plan unless selected for
participation by the Committee. Any person selected by the Committee for
participation during any one period will not by virtue of such participation
have the right to be selected as a Participant for any other period.

     Section 4. COMMON STOCK SUBJECT TO THE PLAN.

                4.1 NUMBER OF SHARES. The total number of shares of Common
Stock for which Options and/or Awards may be granted under the Plan shall not
exceed in the aggregate eight million seven hundred fifty-three thousand
shares (8,753,000) of Common Stock (subject to adjustment as provided in
Section 8 hereof); provided, however, that all shares issued or to be issued
pursuant to Options or Awards granted under the Prior Plan shall be counted
against such aggregate share limit. The maximum number shares of Common Stock
for which Options or Awards can be granted to an individual in a calendar
year is four million (4,000,000); provided, however, that the maximum number
of shares of Common Stock that may be granted as a Performance Based Stock
Award to any one individual in a single year is 150,000.

                4.2 REISSUANCE. The shares of Common Stock that may be
subject to Options and/or Awards granted under the Plan may be either
authorized and unissued shares or shares reacquired at any time and now or
hereafter held as treasury stock as the Committee may determine. In the event
that an outstanding Option expires or is terminated for any reason, the
shares allocable to the unexercised portion of such Option may again be
subject to an Option and/or Award granted under the Plan. If any shares of
Common Stock issued or sold pursuant to an Award or the exercise of an Option
shall have been repurchased by the Company, then such shares may again be
subject to an Option and/or Award granted under the Plan.

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                4.3 SPECIAL ISO LIMITATIONS.

                    (a) The aggregate Fair Market Value (determined as of the
date an ISO is granted) of the shares of Common Stock with respect to which
ISOs are exercisable for the first time by an Employee during any calendar
year (under all incentive stock option plans of the Company or any Parent or
Subsidiary of the Company) shall not exceed $100,000.

                    (b) If any Option intended to be an ISO fails to qualify
as such, it shall be treated as a Non-Qualified Option.

                    (c) No ISO shall be granted to an Employee who, at the
time the ISO is granted, owns (actually or constructively under the
provisions of Section 424(d) of the Code) stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or any
Parent or Subsidiary of the Company, unless (i) the option price is at least
110% of the Fair Market Value (determination as of the time the ISO is
granted) of the shares of Common Stock subject to the ISO and (ii) the ISO by
its terms is not exercisable more than five years from the date it is granted.

                4.4 LIMITATIONS NOT APPLICABLE TO NON-QUALIFIED OPTIONS OR
AWARDS. Notwithstanding any other provision of the Plan, the provisions of
Section 4.3(a) and (b) shall not apply, nor shall be construed to apply, to
any Non-Qualified Option or Award granted under the Plan.

     Section 5. Administration of the Plan

                5.1 ADMINISTRATION. The Plan shall be administered by the
Board of Directors; provided, however, that the Board of Directors may,
subject to the other express provisions of the Plan, delegate all or a
portion of its responsibilities and authority under the Plan to a committee
consisting of no less than three members of the Board of Directors. Any such
committee shall act by a majority of its members at the time in office and
eligible to vote on a particular matter, and such action may be taken either
by a vote at a meeting (including, without limitation, a telephone
conference) or in writing without a meeting. The Board of Directors may
remove any member of such a committee at any time, and a member of such a
committee may resign upon notice to the Board of Directors. Either the Board
of Directors or such a committee may further delegate all or a portion of its
responsibilities and authority under the Plan to the Chief Executive Officer
of the Company; provided, however, that the Chief Executive Officer shall not
have, or be delegated, any authority with respect to the grant of Options or
Awards to Insiders. Subject to the provisions of this Section 5.1, the Board
of Directors shall be responsible for making all determinations with respect
to (i) all matters under the Plan pertaining to (a) Participants who are
members of the Executive Committee of the Company (the "Executive Committee")
which shall include for purposes of the Plan all Participants who are subject
to Code Section 162(m) and (b) members of the Excluded Group, and (ii) the
number of shares available under the Plan for Options. The Committee shall be
responsible for and make all determinations with respect to Award grants to
Participants who are not members of the Excluded Group. Notwithstanding the
foregoing, the Chief Executive Officer of the Company (the "Executive") shall
have the authority, be responsible for, make all determinations with respect
to and constitute the Committee for all matters under the Plan pertaining to
Participants

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who are not members of the Excluded Group other than (i) the making of Plan
amendments, and (ii) Performance Based Restricted Stock Awards. References
herein to the "Committee" shall mean the Board of Directors, any committee
described in this Section 5.1 and the Chief Executive Officer to the extent
of any responsibilities or authority assigned or delegated to any of them
under or pursuant to the Plan. The provisions of this Section 5.1 shall also
govern Options and Awards granted under the Prior Plan.

                5.2 Grant of Options/Awards.

                    (a) OPTIONS. Except as provided in Subsection (c)
hereunder, the Committee shall have the sole authority and discretion under
the Plan (i) to select the Employees and Eligible Optionees who are to be
granted Options hereunder; (ii) to designate whether any Option to be granted
hereunder is to be an ISO or a Non-Qualified Option; (iii) to establish the
number of shares of Common Stock that may be subject to each Option; (iv) to
determine the time and the conditions subject to which Options may be
exercised in whole or in part; (v) to determine the amount (not less than the
par value per share) and the form of the consideration that may be used to
purchase shares of Common Stock upon exercise of any Option (including,
without limitation, the circumstances under which issued and outstanding
shares of Common Stock that have been held by a Participant for at least six
months may be used by the Participant to exercise an Option); (vi) to impose
restrictions and/or conditions with respect to shares of Common Stock
acquired upon exercise of an Option; (vii) to determine the circumstances
under which shares of Common Stock acquired upon exercise of any Option may
be subject to repurchase by the Company; (viii) to determine the
circumstances and conditions subject to which shares acquired upon exercise
of an Option may be sold or otherwise transferred, including, without
limitation, the circumstances and conditions subject to which a proposed sale
of shares of Common Stock acquired upon exercise of an Option may be subject
to the Company's right of first refusal (as well as the terms and conditions
of any such right of first refusal); (ix) to establish a vesting provision
for any Option relating to the time when (or the circumstances under which)
the Option may be exercised by a Participant, including, without limitation,
vesting provisions that may be contingent upon (A) the Company's meeting
specified financial goals, (B) a Corporate Change of the Company or (C) the
occurrence of other specified events; (x) to accelerate the time when
outstanding Options may be exercised, including, without limitation,
accelerations to a date or dates within six months of the date of grant;
provided, however, that the exercise of any ISOs may be "accelerated" solely
within the meaning of Section 424(h) of the Code; and (xi) to establish any
other terms, restrictions and/or conditions applicable to any Option not
inconsistent with the provisions of the Plan. For purposes of this
subsection, an Option shall be deemed granted on the date the Committee
selects an individual to be an Optionee, determine the number of Shares to be
issued pursuant to such Option, and specify the terms and conditions of such
Option. Notwithstanding the general discretionary nature of the grant of
Options hereunder, (i) every exempt employee within the meaning of the Fair
Labor Standards Act may receive a Grant on the date of the initial public
offering of the Company, with an exercise price equal to the Fair Market
Value of the Common Stock on the date of Grant, and (ii) every individual who
has accepted an offer of employment with the Company as an exempt employee
within the meaning of the Fair Labor Standards Act and who first performs an
hour of service with the Company within thirty (30) days of the initial
public offering of the Company may receive a Grant with an exercise price
equal to the Fair Market

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Value of the Common Stock on the date such employee first performs an hour of
service with the Company.

                    (b) AWARDS. Subject to Section 3 and Section 5.1, the
Committee shall have the sole authority and discretion under the Plan (i) to
select the Employees and Eligible Optionees who are to be granted Awards
hereunder; (ii) to determine the consideration (which may be cash, property
or services rendered) to be paid by a Participant to acquire shares of Common
Stock pursuant to an Award, which amount may be equal to, more than or less
than 100% of the Fair Market Value of such shares on the date the Award is
granted (but in no event less than the par value of such shares); (iii) to
determine the time or times, and the conditions subject to which, Awards may
be made; (iv) to determine the time or times and the conditions subject to
which the shares of Common Stock subject to an Award are to become vested
and/or no longer subject to repurchase by the Company; (v) to establish
transfer restrictions and the terms and conditions on which any such transfer
restrictions with respect to shares of Common Stock acquired pursuant to an
Award shall lapse; (vi) to establish vesting provisions with respect to any
shares of Common Stock subject to an Award, including, without limitation,
vesting provisions which may be contingent upon (A) the Company's meeting
financial goals specified by the Committee, (B) a Corporate Change with
respect to the Company or (C) the occurrence of other specified events; (vii)
to determine the circumstances under which shares of Common Stock acquired
pursuant to an Award may be subject to repurchase by the Company; (viii) to
determine the circumstances and conditions subject to which any shares of
Common Stock acquired pursuant to an Award may be sold or otherwise
transferred, including, without limitations, the circumstances and conditions
subject to which a proposed sale of shares of Common Stock acquired pursuant
to an Award may be subject to the Company's right of first refusal (as well
as the terms and conditions of any such right of first refusal); (ix) to
determine the form of consideration that may be used to purchase shares of
Common Stock pursuant to an Award (including, without limitation, the
circumstances under which issued and outstanding shares of Common Stock that
have been held by a Participant for at least six months may be used by the
Participant to purchase the Common Stock subject to an Award); (x) to
accelerate the time at which any or all restrictions imposed with respect to
any shares of Common Stock subject to an Award will lapse, including, without
limitation, accelerations to a date or dates within six months of the date of
grant; and (xi) to establish any other terms, restrictions and/or conditions
applicable to any Award not inconsistent with the provisions of the Plan.

                    (c) FORMULA AWARDS. Subject to the provisions below, each
non-employee member of the Board of Directors on the date of the initial
public offering of the Company shall receive a Non-Qualified Option for
42,000 shares of Common Stock, with an exercise price equal to the Fair
Market Value of a share of Common Stock on the date of the initial public
offering of the Company; provided, however, that, notwithstanding the
foregoing, if such director has elected in writing, on a form provided by the
Committee, by the date of the initial public offering of the Company to
receive his director compensation from the Company in the form of cash and
Non-Qualified Options the aforementioned Non-Qualified Option shall be for
28,500 shares instead of 42,000 shares of Common Stock. Subject to the
provisions below, every individual who becomes a non-employee member of the
Board of Directors after the initial public offering shall receive on the
date he becomes such a director a Non-Qualified Option for 42,000 shares of
Common Stock, with an exercise price equal to the Fair Market Value of a
share of Common Stock on such date; provided, however, that notwithstanding
the foregoing, if

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such director has elected in writing, on a form provided by the Committee, by
the date he becomes such a director to receive all of his director
compensation from the Company in the form of cash and Non-Qualified Options,
the aforementioned Non-Qualified Option shall be for 28,500 shares instead of
42,000 shares of Common Stock.

                  A non-employee director receiving a formula Grant under
this Section 5.2(c) shall not be precluded from receiving additional Grants
under the Plan.

                  The vesting schedule and other terms of the Grants to
directors under this Section 5.2(c) shall be set forth in agreements with the
directors.

                    (d) BONA FIDE OFFER TO PURCHASE SHARES. This subsection
shall lapse and be of no further force or effect upon completion of an
initial public offering of the Common Stock of the Company. If a Participant
shall at any time prior to the date on which an underwritten public offering
of the Company's Common Stock, registered under the Securities Act of 1933,
as amended (a "Public Offering"), desire to sell all or any of the Common
Stock acquired by the Participant pursuant to an Option or an Award ("Plan
Shares") and obtains a bona fide written offer which Participant desires to
accept (referred to in this Section as the "Offer") to purchase all, or a
portion of the Participant's Plan Shares the Participant shall transmit
copies of the Offer to the Company within five (5) business days after
Participant's receipt of the Offer. Except as provided below, prior to a
Public Offering a Participant may sell Plan Shares only for cash. The Offer
shall set forth its date, the proposed price per share of Common Stock, the
number of shares of Common Stock being sold, and the other terms and
conditions upon which the purchase is proposed to be made, as well as the
name and address of the prospective purchaser. Transmittal of the Offer to
the Company by Participant shall constitute an offer by Participant to sell
all of the Plan Shares which are subject to the Offer to the Company at a
price equal to the cash consideration plus the Fair Market Value of the
non-cash consideration specified in the Offer for such Common Stock (the
"Purchase Price") and upon the other terms set forth in the Offer, except as
hereinafter provided. For a period of sixty (60) days after the submission of
the Offer to the Company, the Company shall have the option, exercisable by
notice to Participant, to accept Participant's offer as to all, but not less
than all, of the Plan Shares that are the subject of the Offer. If the
Company does not exercise its option to purchase within the specified 60 day
period or if the Company waives, in writing, the 60 day period, the
Participant may then, and only then, accept the offer from the prospective
purchaser. Any sale of Plan Stock which occurs without complying with the
provisions of this Section 5.2(d) is null and void.

                    (e) PERFORMANCE BASED RESTRICTED STOCK. The measurement
period for the financial goals that are part of any Performance Based
Restricted Stock Awards will be five complete fiscal years. Such Awards will
be made at the beginning of the measurement period; provided, however, that
notwithstanding the foregoing, Participants who are hired within the first
two years of a measurement period may be granted such an Award with such
modifications as are deemed appropriate by the Committee.

                5.3 INTERPRETATION. The Committee shall be authorized to
interpret the Plan and may, from time to time, adopt such rules and
regulations, not inconsistent with the provisions of the Plan, as it may deem
advisable to carry out the purposes of the Plan.

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                5.4 FINALITY. The interpretation and construction by the
Committee of any provision of the Plan, any Grant, or any factual matter
pertaining thereto under or any agreement evidencing any such Grant shall be
final and conclusive upon all parties.

                5.5 EXPENSES, ETC. All expenses and liabilities incurred by
the Committee in the administration of the Plan shall be borne by the
Company. The Committee may employ attorneys, consultants, accountants or
other persons in connection with the administration of the Plan. The Company,
and its officers and directors, shall be entitled to rely upon the advice,
opinions or valuations of any such persons. No member of the Committee shall
be liable for any action, determination or interpretation taken or made in
good faith with respect to the Plan or any Option and/or Award granted
hereunder.

                5.6 AUTHORITY OF THE BOARD OF DIRECTORS. Notwithstanding any
provision of this Plan to the contrary, the Board of Directors may
independently exercise any and all powers of the Committee or the Executive
or allocate their respective responsibilities to others under the Plan,
including retaining any of them for itself, with respect to any and all
aspects of the Plan in the sole discretion of the Board of Directors. The
Committee and the Executive shall have no authority or obligation with
respect to any matters in connection with the Plan over which the Board of
Directors chooses to act.

     Section 6. TERMS AND CONDITIONS OF OPTIONS.

                6.1 ISOs. The terms and conditions of each ISO granted under
the Plan shall be specified by the Committee and shall be set forth in a
written ISO agreement between the Company and the Participant in such form as
the Committee shall approve. The terms and conditions of each ISO shall be
such that each ISO issued hereunder shall constitute and shall be treated as
an "incentive stock option" as defined in Section 422(b) of the Code. The
terms and conditions of any ISO granted hereunder need not be identical to
those of any other ISO granted hereunder. If any portion of an Option
designated as an ISO is determined for any reason not to qualify as an
incentive stock option within the meaning of Section 422 of the Code, such
Option shall be treated as a Non-Qualified Option for all purposes under the
provisions of the Plan.

                The terms and conditions of each ISO shall include the
following:

                (a) The option price shall be fixed by the Committee but
shall in no event be less than 100% (or 110% in the case of an Employee
referred to in Section 4.3(c) hereof) of the Fair Market Value of the shares
of Common Stock subject to the ISO on the date the ISO is granted.

                (b) ISOs, by their terms, shall not be transferable otherwise
than by will or the laws of descent and distribution, and, during a
Participant's lifetime, an ISO shall be exercisable only by the Participant
or by the guardian or legal representative of the Participant acting in a
fiduciary capacity on behalf of the Participant under state law and court
supervision. The Committee may in its discretion, require a Participant's
guardian or legal representative to supply it with such evidence as the
Committee deems necessary to establish the authority of the guardian or legal
representative to act on behalf of the Participant.

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                (c) The Committee shall fix the term of all ISOs granted
pursuant to the Plan (including, without limitation, the date on which such
ISO shall expire and terminate); provided, however, that such term shall in
no event exceed ten years from the date on which such ISO is granted (or, in
the case of an ISO granted to an Employee referred to in Section 4.3(c)
hereof, such term shall in no event exceed five years from the date on which
such ISO is granted). Each ISO shall be exercisable in such amount or
amounts, under such conditions and at such times or intervals or in such
installments as shall be determined by the Committee in its sole discretion;
provided, however, that, subject to Section 5.2(a)(x) hereof, in no event
shall any ISO be granted to any director or officer of the Company or an
affiliate who is an Insider that is exercisable, in whole or in part, prior
to the date that is six months after the date such ISO is granted to such
director or officer.

                (d) To the extent that the Company or any Parent or
Subsidiary of the Company is required to withhold any Federal, state or local
taxes (including FICA) in respect of any compensation income realized by any
Participant as a result of the exercise of an ISO (if any) a "disqualifying
disposition" of any shares of Common Stock acquired upon exercise of an ISO
granted hereunder, the Company shall deduct from any payments of any kind
otherwise due to such Participant the aggregate amount of such minimum
Federal, state or local taxes required to be so withheld or, if such payments
are insufficient to satisfy such Federal, state or local taxes required to be
withheld, such Participant will be required to pay to the Company, or make
other arrangements satisfactory to the Company regarding payment to the
Company of, the aggregate amount of any such taxes. All matters with respect
to the total amount of taxes to be withheld in respect of any such
compensation income shall be determined by the Committee, in its sole
discretion. If the Committee determines that withholding for FICA purposes is
required upon exercise of an ISO, it will withhold in accordance with this
subsection. In order to effect the withholding described in this subsection
on a disqualifying disposition, the Optionee shall, within ten (10) days of
such disposition, notify the Company in writing as provided in Section 18
hereof.

                (e) In the sole discretion of the Committee the terms and
conditions of any ISO may include any or all of the following provisions:

                    (i) In the event that the Company or any Parent or
Subsidiary of the Company terminates a Participant's employment for Cause,
the unexercised portion of any ISO held by such Participant at that time may
only be exercised within one month after the date on which the Participant
ceased to be so employed, and only to the extent that the Participant could
have otherwise exercised such ISO as of the date on which he ceased to be so
employed. In the event that a Participant terminates his employment with the
Company or any Parent or Subsidiary of the Company, for any reason whatsoever
other than as a result of his death or "disability" (within the meaning of
Section 22(e)(3) of the Code), the unexercised portion of any ISO held by
such person shall cease to be exercisable after his termination date. For
purposes of this subsection, a Participant who transfers to a Subsidiary or
Parent shall not be regarded as having terminated employment, but if a
Subsidiary is sold, exchanged or otherwise disposed of by the Company, a
Participant who continues in the employ of the Subsidiary shall be regarded
as having terminated his or her employment.

                                       10
<PAGE>

                  Notwithstanding the foregoing and anything else herein to
the contrary, if the Committee determines, after full consideration of the
facts presented on behalf of the Company and the Participant, that the
Participant has been engaged in disloyalty to the Company or any of its
affiliates, including, without limitation, fraud, embezzlement, theft,
commission of a felony or proven dishonesty in the course of his employment
or service, or has disclosed trade secrets or confidential information of the
Company or of an affiliate, any unexercised ISO previously granted to the
Participant shall terminate immediately and the Participant shall forfeit all
shares of Common Stock for which the Company has not yet delivered the share
certificates upon refund by the Company of the option price. The Company may
also withhold delivery of share certificates pending the resolution of any
inquiry that could lead to a finding resulting in a forfeiture.

                  (ii)  In the event a Participant shall cease to be employed
by the Company or any Parent or Subsidiary of the Company on a full-time
basis as a result of the termination of such Participant's employment by such
entity other than for Cause or as a result of his death or "disability"
(within the meaning of Section 22(e)(3) of the Code), the unexercised portion
of any ISO held by such Participant at that time may only be exercised within
three (3) months after the date on which the Participant ceased to be so
employed, and only to the extent that the Participant could have otherwise
exercised such ISO as of the date on which he ceased to be so employed. The
foregoing notwithstanding, however if the Participant's cessation of
employment pursuant to this Section 6.1(e)(ii) is by reason of the
Participant's Retirement, "one year" shall be substituted for "three (3)"
months in the preceding sentence, except that the Participant shall not be
entitled to treat any portion of an Option as an ISO if it is exercised more
than three (3) months after Participant's cessation of employment by reason
of Retirement.

                  (iii) In the event a Participant shall cease to be employed
by the Company or any Parent or Subsidiary of the Company on a full-time
basis by reason of his "disability" (within the meaning of Section 22(e)(3)
of the Code), the unexercised portion of any ISO held by such Participant at
that time may only be exercised within one year after the date on which the
Participant ceased to be so employed, and only to the extent that the
Participant could have otherwise exercised such ISO as of the date on which
he ceased to be so employed.

                  (iv) In the event a Participant shall die while in the
employ of the Company or a Parent or Subsidiary of the Company (or within a
period of one month after ceasing to be an Employee for any reason other than
his "disability" (within the meaning of Section 22(e)(3) of the Code) or
within a period of one year after ceasing to be an Employee by reason of such
"disability"), the unexercised portion of any ISO held by such Participant at
the time of his death may only be exercised within one year after the date of
such Participant's death, and only to the extent that the Participant could
have otherwise exercised such ISO at the time of his death. In such event,
such ISO may be exercised by the executor or administrator of the
Participant's estate or by any person or persons who shall have acquired the
ISO directly from the Participant by bequest or inheritance or, if the
Committee so provides, by the person or persons designated by the Participant
as a beneficiary hereunder.

                6.2 NON-QUALIFIED OPTIONS. The terms and conditions of each
Non-Qualified Option granted under the Plan shall be specified by the
Committee, in its sole discretion, and shall be set forth in a written
Non-Qualified Option agreement between the Company and the

                                      11
<PAGE>

Participant in such form as the Committee shall approve. The terms and
conditions of each Non-Qualified Option will be such (and each Non-Qualified
Option agreement shall expressly so state) that each Non-Qualified Option
issued hereunder shall not constitute nor be treated as an "incentive stock
option" as defined in Section 422(b) of the Code, but will be a
"non-qualified stock option" for Federal, state and local income tax
purposes. The terms and conditions of any Non-Qualified Option granted
hereunder need not be identical to those of any other Non-Qualified Option
granted hereunder.

                  The terms and conditions of each Non-Qualified Option
agreement shall include the following:

                  (a) The option (exercise) price shall be fixed by the
Committee and may be equal to, more than or less than 100% of the Fair Market
Value of the shares of Common Stock subject to the Non-Qualified Option on
the date such Non-Qualified Option is granted.

                  (b) The Committee shall fix the term of all Non-Qualified
Options granted pursuant to the Plan (including, without limitation, the date
on which such Non-Qualified Option shall expire and terminate). Such term may
be more than ten years from the date on which such Non-Qualified Option is
granted. Each Non-Qualified Option shall be exercisable in such amount or
amounts, under such conditions (including, without limitation, provisions
governing the rights to exercise such Non-Qualified Option), and at such
times or intervals or in such installments as shall be determined by the
Committee in its sole discretion; provided, however, that, subject to Section
5.2(a)(x) hereof, in no event shall any Non-Qualified Option be granted to
any director or officer of the Company or an affiliate who is an Insider that
is exercisable, in whole or in part, prior to the date that is six months
after the date such Non-Qualified Option is granted to such director or
officer.

                  (c) Except as otherwise provided in this Section 6.2(c), no
Non-Qualified Option shall be transferable otherwise than by will or the laws
of descent and distribution, and during a Participant's lifetime a
Non-Qualified Option shall be exercisable only by the Participant or by the
guardian or legal representative of the Participant acting in a fiduciary
capacity on behalf of the Participant under state law and court supervision.
The Committee may in its discretion, require a Participant's guardian or
legal representative to supply it with such evidence as the Committee deems
necessary to establish the authority of the guardian or legal representative
to act on behalf of the Participant. Notwithstanding the foregoing, a
Non-Qualified Option shall be transferable pursuant to a "domestic relations
order" as defined in the Code or Title I of the Employee Retirement Income
Security Act, or the rules thereunder, and also shall be transferable,
without payment of consideration, to (a) immediate family members of the
holder (I.E., optionee, spouse or former spouse, parents, issue including
adopted and "step" issue, or siblings), (b) trusts for the benefit of
immediate family members, (c) partnerships whose only partners are such
family members, and (d) to any other transferee permitted by a rule adopted
by the Committee in an individual case. Any transferee will be subject to all
of the conditions set forth in the Non-Qualified Option prior to its transfer.

                  (d) To the extent that the Company is required to withhold
any Federal, state or local taxes in respect of any compensation income
realized by any Participant in respect of any Non-Qualified Option granted
hereunder or in respect of any shares of Common Stock

                                       12
<PAGE>

acquired upon exercise of a Non-Qualified Option, the Company shall deduct
from any payments of any kind otherwise due to such Participant the aggregate
minimum amount of such Federal, state or local taxes required to be so
withheld or, if such payments are insufficient to satisfy such Federal, state
or local taxes, or if no such payments are due or to become due to such
Participant, then, such Participant will be required to pay to the Company,
or make other arrangements satisfactory to the Company regarding payment to
the Company of the aggregate amount of any such taxes. All matters with
respect to the total amount of taxes to be withheld in respect of any such
compensation income shall be determined by the Board of Directors, in its
sole discretion.

                (e) In the sole discretion of the Committee the terms and
conditions of any Non-Qualified Option may include provisions similar to any
of the provisions set forth in Subsection 6.1(e) hereof.

     Section 7. TERMS AND CONDITIONS OF AWARDS. The terms and conditions of
each Award granted under the Plan shall be specified by the Committee, in its
sole discretion, and shall be set forth in a written agreement between the
Participant and the Company, in such form as the Committee shall approve. The
terms and provisions of any Award granted hereunder need not be identical to
those of any other Award granted hereunder.

                (a) The consideration (which may be cash, property or
services rendered) to be paid by a Participant to acquire the shares of
Common Stock pursuant to an Award shall be fixed by the Committee and may be
equal to, more than or less than 100% of the Fair Market Value of the shares
of Common Stock subject to the Award on the date the Award is granted (but in
no event less than the par value of such shares).

                (b) Each Award shall contain such vesting provisions, such
transfer restrictions and such other restrictions and conditions as the
Committee, in its sole discretion, may determine, including, without
limitation, the circumstances under which the Company shall have the right
and option to repurchase shares of Common Stock acquired pursuant to an
Award; provided, however, that, subject to Section 5.2(b)(x) hereof, in no
event shall any portion of any Award be granted to an officer or director of
the Company or an affiliate who is an Insider that is exercisable, in whole
or in part, prior to the date that is six months after the date such Award
(or portion thereof) is granted to such director or officer.

                (c) Stock certificates representing Common Stock acquired
pursuant to an Award shall bear a legend referring to any restrictions
imposed on such Stock and such other matters as the Committee may determine.

                (d) To the extent that the Company or any Parent or
Subsidiary is required to withhold any Federal, state or local taxes
(including FICA) in respect of any compensation income realized by the
Participant in respect of any compensation income realized by the Participant
in respect of an Award granted hereunder, in respect of any shares acquired
pursuant to an Award, or in respect of the vesting of any such shares of
Common Stock, then the Company shall deduct from any payments of any kind
otherwise due to such Participant the aggregate amount of such minimum
Federal, state or local taxes required to be so withheld, or if such payments
are insufficient to satisfy such Federal, state or local taxes, or if no such
payments are due or to become due to such Participant, then such Participant
will be required to pay to the

                                      13
<PAGE>

Company, or make other arrangements satisfactory to the Company regarding
payment to the Company of, the aggregate amount of any such taxes. All
matters with respect to the total amount of taxes to be withheld in respect
of any such compensation income shall be determined by the Committee, in its
sole discretion.

     Section 8. RECAPITALIZATION OR REORGANIZATION.

                (a) Except as hereinafter otherwise provided, Options and
Awards and any agreements evidencing Options and Awards shall be subject to
adjustment by the Committee at its discretion as to the number and price of
shares of Common Stock or other consideration subject to Options or Awards in
the event of changes in the outstanding Common Stock by reason of stock
dividends, stock splits, reverse stock-splits, recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges or other
relevant changes in capitalization occurring after the date of the grant of
any Options or Awards.

                (b) The existence of the Plan and the Options or Awards
granted hereunder shall not affect in any way the right or power of the Board
of Directors or the stockholders of the Company to make or authorize any
adjustment, recapitalization, reorganization or other change in the Company's
capital structure or its business, any merger or consolidation of the
Company, any issue of debt or equity securities having any priority or
preference with respect to or affecting Common Stock or the rights thereof,
the dissolution or liquidation of the Company or any sale, lease, exchange or
other disposition of all or any part of its assets or business or any other
corporate act or proceeding.

                (c) The shares with respect to which Options and Awards may
be granted are shares of Common Stock as presently constituted, but if, and
whenever, prior to the expiration of an Option or Award theretofore granted,
the Company shall effect a subdivision or consolidation or the payment of a
stock dividend on Common Stock without receipt of consideration by the
Company, the number of shares of Common Stock subject to an Award or with
respect to which Options may thereafter be exercised (i) in the event of an
increase in the number of outstanding shares shall be proportionately
increased and the purchase price per share shall be proportionately reduced,
and (ii) in the event of a reduction in the number of outstanding shares
shall be proportionately reduced, and the purchase price per share shall be
proportionately increased.

                (d) If the Company recapitalizes or otherwise changes its
capital structure, thereafter upon any exercise of an Option theretofore
granted the Optionee shall be entitled to purchase under such Option, in lieu
of the number of shares of Common Stock as to which such Option shall then be
exercisable, the number and class of shares of stock and securities and the
cash and other property to which the Optionee would have been entitled
pursuant to the terms of the recapitalization if, immediately prior to such
recapitalization, the Optionee had been the holder of record of the number of
shares of Common Stock then covered by such Option.

                (e) In the event of a Corporate Change, then no later than
(i) two business days prior to any Corporate Change referenced in Clause (i),
(ii), (iii) or (v) of the definition thereof or (ii) ten business days after
any Corporate Change referenced in Clause (iv) of the definition thereof, the
Committee, acting in its sole discretion without the consent or approval of

                                       14
<PAGE>

any Optionee, shall act to effect one or more of the following alternatives
with respect to outstanding Options which acts may vary among individual
Optionees, may vary among Options held by individual Optionees and, with
respect to acts taken pursuant to Clause (i) above, may be contingent upon
effectuation of the Corporate Change; (A) accelerate the time at which
Options then outstanding may be exercised so that such Options may be
exercised in full for a limited period of time on or before a specified date
(before or after such Corporate Change) fixed by the Committee, after which
specified date all unexercised Options and all rights of Optionees thereunder
shall terminate; (B) require the mandatory surrender to the Company by
selected Optionees of some or all of the outstanding Options held by such
Optionees (irrespective of whether such Options are then exercisable under
the provisions of the Plan) as of a date (before or after such Corporate
Change) specified by the Committee, in which event the Committee shall
thereupon cancel such Options and pay to each Optionee an amount of cash per
share equal to the excess, if any, of the Change of Control Value of the
shares subject to such Option over the exercise price(s) under such Options
for such shares; (C) make such adjustments to Options then outstanding as the
Committee deems appropriate to reflect such Corporate Change (provided,
however, that the Committee may determine in its sole discretion that no
adjustment is necessary to Options then outstanding); (D) provide that
thereafter upon any exercise of an Option theretofore granted the Optionee
shall be entitled to purchase under such Option, in lieu of the number of
shares of Common Stock as to which such Option shall then be exercisable, the
number and class of shares of stock or other securities or property
(including, without limitation, cash) to which the Optionee would have been
entitled pursuant to the terms of the agreement of merger, consolidation or
sale of assets or plan of liquidation and dissolution if, immediately prior
to such merger, consolidation or sale of assets or any distribution in
liquidation and dissolution of the Company, the Optionee had been the holder
of record of the number of shares of Common Stock then covered by such
Option; or (E) provide, if so negotiated by the Company, for the assumption
of the Options by the surviving entity in any Corporate Change.

                (f) Plan provisions to the contrary notwithstanding, with
respect to any Awards outstanding at the time a Corporate Change occurs, the
Committee may, in its discretion, provide (i) for full vesting of all Common
Stock awarded to the Participants pursuant to such Awards as of the date of
such Corporate Change and (ii) that all restrictions applicable to such Award
shall terminate as of such date.

     Section 9. EFFECT OF THE PLAN ON EMPLOYMENT RELATIONSHIP. Neither the
Plan nor any Option and/or Award granted hereunder to a Participant shall be
construed as conferring upon such Participant any right to continue in the
employ of (or otherwise provide services to) the Company or any Subsidiary or
Parent thereof, or limit in any respect the right of the Company or any
Subsidiary or Parent thereof to terminate such Participant's employment or
other relationship with the Company or any Subsidiary or Parent, as the case
may be, at any time.

     Section 10. AMENDMENT OF THE PLAN. The Board of Directors may amend the
Plan from time to time as it deems desirable; provided, however, that (i)
without the approval of the holders of a majority of the outstanding capital
stock of the Company entitled to vote thereon or consent thereto, the Board
of Directors may not amend, the Plan (x) to increase (except for increases
due to adjustments in accordance with Section 8 hereof) the aggregate number
of shares of Common Stock for which Options and/or Awards may be granted
hereunder, (y) to decrease the minimum exercise price specified by the Plan
in respect of ISOs or (z) to change the class of Employees

                                      15
<PAGE>

eligible to receive ISOs under the Plan and (ii) without the approval of the
Participant or Participants adversely effected, the Board of Directors may
not amend the Plan in a manner that has an adverse effect on the vested
rights of any Participant under any Award or Option theretofore granted under
the Plan. Notwithstanding the foregoing, a committee described in Section 5.1
hereof may make any technical or clerical changes to the Plan, and the Board
may also delegate to such a committee the right to amend the Plan, or any
other responsibility with respect to the Plan, in any respect not described
in Section 10(i) above.

     Section 11. AMENDMENT OF AN AWARD OR OPTION. Subject to provisions of
the Plan, the Committee shall have the right to amend any Option or Award
issued to a Participant, subject to the Participant's written consent, in the
event such amendment is not favorable to the Participant or if such amendment
has the effect of changing an ISO to a Non-Qualified Option; provided,
however, that the consent of the Participant shall not be required for any
amendment made pursuant to Section 5.2(a)(x) or Section 5.2(b)(x). In
elaboration of the foregoing, a Participant is not required to consent to the
deemed acceleration of an ISO, unless such deemed acceleration would cause
the ISO to be treated as a Non-Qualified Option or otherwise have adverse
income tax consequences.

     Section 12. TERMINATION OF THE PLAN. The Board of Directors may
terminate the Plan at any time. Unless the Plan shall theretofore have been
terminated by the Board of Directors, the Plan shall terminate ten years
after the Effective Date. No Grant may be made hereunder after termination of
the Plan. The termination or amendment of the Plan shall not alter or impair
any rights or obligations under any Option and/or Award theretofore granted
under the Plan.

     Section 13. AWARDS TO FOREIGN NATIONALS AND EMPLOYEES OUTSIDE THE UNITED
STATES. To the extent the Committee deems it necessary, appropriate or
desirable to comply with foreign law or practice and to further the purpose
of this Plan, the Committee may, without amending the Plan, (i) establish
rules applicable to Grants to Participants who are foreign nationals or are
employed outside the United States, or both, including rules that differ from
those set forth in the Plan, and (ii) make Grants to such Participants in
accordance with those rules.

     Section 14. GOVERNING LAW. To the extent not preempted by Federal law
the Plan, and all agreements thereunder, shall be construed in accordance
with and governed by the laws of the State of Texas, without regard to its
conflicts of law principles.

     Section 15. INDEMNIFICATION. Each person who constitutes, or has been a
member of, the Committee, or of the Board of Directors, shall be indemnified
and held harmless by the Company, Parent, or Subsidiary as applicable against
and from any loss, cost, liability or expense that may be imposed upon or
reasonably incurred by such person in connection with or resulting from any
claim, action, suit or proceeding to which such person may be a party or in
which such person may be involved by reason of any action taken or failure to
act under the Plan and against and from any and all amounts paid by such
person in a suit, a settlement approved by the Company, or paid by such
person in satisfaction of any judgment in any such action, suit, or
Proceeding against such person, except in relationship to matters as to which
it shall be adjudged in such action, suit or proceeding, that the director or
Committee or Committee member is liable for gross negligence or willful
misconduct in the performance of his or her duties, provided such person
shall give the Company, Parent or Subsidiary, as applicable, an opportunity,
at its own

                                       16
<PAGE>

expense, to handle and defend the same before such person undertakes to
handle or defend it. The foregoing right of indemnification shall not be
exclusive of any rights of indemnification to which such person may be
entitled under the Company's Articles of Incorporation or by-laws, as a
matter of law, or otherwise, or any other power that the Company may have to
indemnify them or hold them harmless.

     Section 16. SUCCESSORS. All obligations of the Company under the Plan or
an Agreement with respect to Grants hereunder shall be binding upon any
successor to the Company, whether the existence of such successor is the
result of a direct or indirect purchase of all or substantially all of the
business and/or assets of the Company, or of a merger, consolidation, or
otherwise.

     Section 17. EFFECT UPON OTHER COMPENSATION. Nothing contained herein
shall preclude the Company, Parent or any Subsidiary from adopting other or
additional compensation arrangements for its employees or directors. The
effect under any other benefit plan of the Company, Parent, or any Subsidiary
of an inclusion in income by virtue of a Grant hereunder shall be determined
under such other plan.

     Section 18. NOTICE. Notice to the Company pursuant to the Plan shall be
deemed given if in writing including, without limitation, facsimile or any
other communication transmitted to the general counsel of the Company. Notice
to the Grantee or Grantee's estate, if applicable, shall be given by
registered mail to such person's last known address.

     Section 19. DELIVERY OF THE PLAN. A copy of this Plan shall be delivered
to the Secretary of the Company and shall be shown by him to each eligible
person making reasonable inquiry concerning it.

     Section 20. POOLING TRANSACTION. Notwithstanding anything contained
herein to the contrary, in the event of Corporate Change which is also
intended to constitute a Pooling Transaction, the Committee is authorized and
directed to take such actions, if any, as are specifically recommended by an
independent accounting firm retained by the Company to the extent reasonably
necessary in order to assure that the Pooling Transaction will qualify as
such.

     Section 21. GOVERNMENT APPROVALS. Each Grant is subject to the
requirement that, if at any time, the Committee determines in its sole
discretion, that the consent or approval of any governmental regulatory body
is necessary or desirable as a condition of, or in connection with, a Grant
or the issuance of Shares hereunder, no Grant shall be made or Shares issued,
in whole or in part, unless such consent or approval has been effected or
obtained free of conditions as acceptable to the Committee.

                                       17<PAGE>

                                                                   EXHIBIT 10.56

PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT

                               SUPPLIER AGREEMENT

                                     BETWEEN

                      LOYALTY MANAGEMENT GROUP CANADA INC.

                                       and

                                   AIR CANADA

                           Dated as of April 24, 2000

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                                           PAGE
<S>               <C>                                                                                      <C>

ARTICLE 1         RIGHT TO PURCHASE..............................................................................1

1.1               Right to Purchase..............................................................................1

1.2               Capacity.......................................................................................2

1.3               Capacity Guarantee.............................................................................3

1.4               Insufficient Capacity..........................................................................4

1.5               Other Requirements.............................................................................4

1.6               Treatment of Passengers Holding Tickets........................................................4

1.7               Reports and Audits.............................................................................5

1.8               Protection of Program..........................................................................5

1.9               Determination of **** Routes and **** Routes...................................................5

ARTICLE 2         FARES..........................................................................................6

2.1               Special Fares..................................................................................6

2.2               Additional Payment.............................................................................6

ARTICLE 3         TERM...........................................................................................7

3.1               Term...........................................................................................7

3.2               Breach.........................................................................................7

3.3               **** Sponsor...................................................................................7

3.4               Post-Termination Rights........................................................................7

ARTICLE 4         CONFIDENTIALITY AND TRADE-MARKS................................................................8

4.1               Confidentiality................................................................................8

4.2               Announcements..................................................................................9

4.3               Trade-Marks....................................................................................9

ARTICLE 5         WARRANTIES AND CCAA PAYMENT...................................................................10

5.1               Warranties....................................................................................10

5.2               Indemnity.....................................................................................10

5.3               CCAA Process and Payment......................................................................11

ARTICLE 6         GENERAL.......................................................................................11

6.1               Entire Agreement..............................................................................11

6.2               Unconditional Obligation......................................................................11

6.3               Release.......................................................................................11

**** PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT.

                                       -i-

<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

6.4               Injunction....................................................................................11

6.5               Severability and Time of Essence..............................................................12

6.6               Governing Law.................................................................................12

6.7               Costs and Expenses............................................................................12

6.8               Waiver........................................................................................12

6.9               Successors and Assigns........................................................................12

6.10              Counterparts..................................................................................13

</TABLE>

SCHEDULE A            -    Definitions and Interpretation

SCHEDULE B            -    Special Fares

SCHEDULE C            -    Reservations, Commissions and Travel Restrictions

SCHEDULE D            -    Other Commitments

SCHEDULE E            -    Job Description for LMGC Ombudsman

SCHEDULE F            -    LMGC News Release

SCHEDULE G            -    **** Routes

SCHEDULE H            -    LMGC Projections

SCHEDULE I            -    ****

**** PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT.

                                       -ii-

<PAGE>

                               SUPPLIER AGREEMENT

                  THIS AGREEMENT is made as of April 24, 2000 between LOYALTY
MANAGEMENT GROUP CANADA INC. and AIR CANADA.

                  WHEREAS LMGC wishes to purchase airline tickets from Airline,
and Airline has agreed to sell airline tickets to LMGC, subject to and in
accordance with the terms of this Agreement;

                  AND WHEREAS terms used herein have the meanings set forth in
Schedule A hereto and the principals of interpretation set out therein apply to
this Agreement;

                  NOW THEREFORE, in consideration of the premises and the mutual
promises and covenants hereinafter set forth, the parties now agree as follows:

                                    ARTICLE 1
                                RIGHT TO PURCHASE

1.1          RIGHT TO PURCHASE.

         (a) Starting on May 1, 2000 and thereafter throughout the Term, LMGC
shall have the right to buy Special Tickets from Airline and each Regional
Airline, and Airline will make available, and either cause each of the Regional
Airlines to make available or obtain itself from each such Regional Airline and
make available, for purchase by LMGC, Special Tickets, at the Special Fares and
otherwise on the terms and conditions hereof. Airline shall also use its best
efforts to cause CAI (so long as it is not a Regional Airline (and as a result,
subject to the previous sentence)) to comply with the terms of this Agreement in
all respects (including supplying Special Tickets for Airline Seats at the
Special Fares) as if it were a Regional Airline. Any reference herein to the
purchase by LMGC of Special Tickets or Airline Seats includes any such purchase
by any Subsidiary of LMGC (including LMG Travel) and Airline agrees that any
such Subsidiary may purchase Special Tickets hereunder at the Special Fares.

         (b) During the Initial Period (but subject to Section 1.2), LMGC may
purchase Special Tickets at the Special Fares for any Airline Seats offered by
Airline or any Regional Airline. During the Additional Period, however, LMGC
may only purchase Special Tickets at the Special Fares for itineraries which
(i) include a **** Route or (ii) do not include a **** Route because of the
exclusion set out in Schedule I where the segment from Schedule I is part of a
larger itinerary that does not have other **** as described in Section 1.9(b).

**** PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT.

<PAGE>

                                      -2-

1.2          CAPACITY.

         (a) Except as otherwise provided herein, during the Initial Period
LMGC shall (and shall be entitled to) book Special Tickets in **** Class and
shall be entitled to the priority currently associated therewith (not to be
lower than that available to any other Person booking into **** Class). Except
as otherwise provided herein, during the Additional Period LMGC shall (and
shall be entitled to) book Special Tickets in a class to be designated by
Airline which may, but need not be, **** Class, and which will satisfy the
requirements for the Additional Period set out herein (the "Other Class").

         (b) Airline agrees to load and maintain the Special Fares in ****
Class during the Initial Period and in the Other Class during the Additional
Period, and make such Special Fares accessible in SABRE throughout the Term
and to give LMGC and LMG Travel (and no one else outside of Airline or a
Regional Airline) access to such fares. No other Person or entity entitled to
book into **** Class at any time will have greater rights thereto or to the
capacity provided thereby, than LMGC. Airline represents and warrants to LMGC
that the following statements regarding **** Class are now true and covenants
that such statements will be true (subject to Section 1.2(c) below) throughout
the Term: (i) **** Class is loaded such that it is accessible in SABRE and can
be viewed by LMGC within SABRE, (ii) it is available on every route of Airline
and all Regional Airlines, (iii) it is always initially set to more than ****
on each existing route, (iv) it regularly provides an initial availability for
a route when set of at least **** percent of the seats available on the route,
excluding business class or superior seats, including first class; (v) there
are no partitions in such class that would affect LMGC and block bookings are
only permitted in such class on an infrequent basis; and (vi) the class is
intended for **** and similar Persons, including, as of the date hereof, ****
which currently books tickets only into such class, and certain public fares
such as youth, student and similar fares. The parties have discussed LMGC's
current and projected needs and flight patterns for Airline Seats and a
description of such needs is attached as Schedule H hereto. Airline confirms
that it is its expectation that LMGC's rights to book into **** Class as
contemplated hereby will generally satisfy those needs during the Initial
Period, although it gives no warranty as to availability on specific flights
or routes, and LMGC confirms that it is its expectation that it will book to
its forecasts, as reflected in Schedule H, during the Initial Period, although
it gives no warranty as to what actual levels of bookings will be. If,
notwithstanding the **** and **** capacity guarantees set out in Section 1.3,
LMGC determines that, for a period of at least 60 days during the Initial
Period, it is generally not able to meet such needs in respect of itineraries
commencing on or after September 1, 2000, it may notify Airline thereof and in
such event Airline will determine and implement some other approach that will
enable such needs to be generally met, including, if required to resolve the
issue, allowing LMGC to book into some other class or creating a separate
booking class for LMGC to book into during the Initial Period.

         (c) If at any time or from time to time during the Initial Period,
Airline changes its booking classes so that **** Class no longer exists or
makes any material changes to the parameters associated with such class,
Airline shall designate another booking class into which LMGC shall be
entitled to book Special Tickets and which will provide LMGC with
substantially the same

**** PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT.

<PAGE>

                                     - 3 -

parameters as described in Section 1.2(b). For purposes hereof, any such
replacement class shall thereafter be referred to as "**** Class".

         (d) The parties will meet annually to review the concept of LMGC being
permitted access to the capacity provided from time to time by Airline under
"web specials" made available on Airline's web site. Such access would be
provided in order to permit LMGC to assist Airline in utilizing such capacity,
by issuing Special Tickets therefrom to its Collectors. The price payable by
LMGC for any Airline Seats booked therefrom shall not be any greater than the
applicable Special Fare at such time, but any such Airline Seats shall be
subject to the same conditions as provided in the relevant web special. Airline
will allow LMGC reasonable access on such basis to book Special Tickets from at
least one such web special during the Initial Period, but otherwise Airline has
no obligation to provide LMGC such access. LMGC's rights under this Section
1.2(c) are in addition to, and not in limitation of, its capacity entitlements
under the balance of this Section 1.3.

1.3          CAPACITY GUARANTEE.

         (a) The provisions of Sections 1.3(b) and (c) below shall apply only in
respect of itineraries booked by LMGC for the period on or after September 1,
2000 and LMGC acknowledges that Airline cannot commit to such capacity
guarantees for itineraries prior thereto. Airline shall however use its
commercially reasonable best efforts to ensure that LMGC's needs for capacity
are satisfied in respect of itineraries prior thereto.

         (b) Subject to Section 1.3(a), Airline shall ensure that, at all
times during the Term, for each **** day period which commences at least ****
days after such time, the total of:

                  (i)      all Airline Seats of Airline and each Regional
                           Airline on each **** Route which are available to be
                           booked by LMGC at the Special Fares on flights
                           departing in such **** day period, plus

                  (ii)     all Airline Seats of Airline and each Regional
                           Airline on such **** Route which at such time have
                           been booked by LMGC at the Special Fares for
                           flights departing in such **** day period,

is at least **** of the aggregate Airline Seats offered by Airline and the
Regional Airlines for such **** day period on such **** Route.

         (c) In addition, but again subject to Section 1.3(a), Airline shall
also ensure that, at all times during the Term, for each **** day period which
commences at least **** days after such time, the total of:

                  (i)      all Airline Seats of Airline and each Regional
                           Airline on each **** Route, and on each **** Route
                           shown in Schedule I, which are available to be
                           booked by LMGC at the Special Fares on flights
                           departing in such **** day period, plus

**** PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT.

<PAGE>

                                      -4-

                  (ii)     all Airline Seats of Airline and each Regional
                           Airline on such **** Route or such **** Route, as
                           applicable, which at such time have been booked by
                           LMGC at the Special Fares for flights departing in
                           such **** day period,

is at least **** of the aggregate Airline Seats offered by Airline and the
Regional Airlines for such **** day period on such **** Route or such ****
Route, as applicable. For greater certainty, LMGC acknowledges that during the
Additional Period it can only purchase Special Tickets at the Special Fares
for the purposes described in the second sentence of Section 1.1(b) and
accordingly the capacity guarantee set out in this Section 1.3(c) only applies
during the Additional Period with respect to itineraries that meet those
requirements.

1.4          INSUFFICIENT CAPACITY. If at any time LMGC, acting reasonably,
determines (whether from reviewing the reports Airline provides under Section
1.7, from a review of SABRE or otherwise) that the capacity made available to
LMGC on a **** Route or **** Route with respect to a particular **** day
period that has not been completed does not comply with Section 1.3, LMGC may
notify Airline thereof. If Airline has not remedied the situation to the
reasonable satisfaction of LMGC within 72 hours thereafter, LMGC shall be
entitled to book Special Tickets on such **** Route or **** Route, as
applicable, in any other economy booking classes in order to ensure that it
has the capacity required under Section 1.3 with respect to such **** day
period, and the fares payable by LMGC for such Special Tickets shall still be
the Special Fares. Similarly, if at any time LMGC determines that it was not
provided sufficient capacity on a **** Route or **** Route with respect to any
particular **** day period that has then been completed, it may notify Airline
thereof. If Airline has not remedied the situation to the reasonable
satisfaction of LMGC within 72 hours thereafter, LMGC shall be entitled, for
the **** day period thereafter and in addition to the capacity otherwise
provided hereunder on such **** Route or **** Route, as applicable, to book
additional Airline Seats at the Special Fares in any other economy booking
classes in a number sufficient to make up the deficiency for that particular
**** day period. In selecting other classes to look to for purposes of this
Section 1.4, LMGC shall review the available classes in order of priority,
starting with the lowest priority as advised to LMGC from time to time by
Airline in writing. If, as a result of booking Special Tickets in any such
other class for which the Special Fares have not been loaded, LMGC pays an
amount therefor greater than the Special Fares, Airline shall promptly make
any required adjustments in connection therewith.

1.5          OTHER REQUIREMENTS. Airline shall, and shall ensure that each
Regional Airline shall, comply with Schedule D hereto. In addition, the terms
of this Agreement will be subject to the reservations, commissions, travel,
ticket use and other procedures and requirements as set forth in Schedule C
hereto.

1.6          TREATMENT OF PASSENGERS HOLDING TICKETS. Except as described in
Schedule C, Airline shall, and shall ensure that each Regional Airline shall,
treat and serve each passenger holding a Special Ticket in the same manner as
each other economy passenger of Airline or such Regional Airline, as
applicable, including as to loading priorities, entitlement to denied
boarding

**** PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT.

<PAGE>

                                      -5-

compensation, flight cancellation compensation, baggage limits, or any
disruption or compensation, all in accordance with applicable industry
tariffs and conditions of carriage.

1.7          REPORTS AND AUDITS. On or before the 15th day of each month
during the Term, Airline shall provide LMGC with a report in mutually agreed
upon form showing both projected and historical data and, at a minimum,
showing, for at least each of the three months immediately thereafter, (i)
those routes for which there is no availability to LMGC in such month, (ii)
those routes for which there is low and rapidly diminishing capacity to LMGC
in such month, and (iii) those routes for which there is sufficient capacity
to LMGC in such month. Availability for this purpose shall be determined by
availability in the class or classes into which LMGC is then booking
hereunder and based on the aggregate number of Airline Seat available on such
routes during such month. LMGC shall have the right, on reasonable notice to
Airline and during normal business hours and no more than twice each calendar
year, to engage an independent third party to audit Airline's records in
order to confirm the accuracy of such reports, and in each case the cost of
such audit shall be paid by LMGC unless any such audit reveals that the
capacity shown to be available to LMGC in a report was incorrect by more than
5%, in which case Airline shall pay the cost of such audit.

1.8          PROTECTION OF PROGRAM. Title to the Program, AMRM and all rights
represented thereby or related thereto, are reserved at all times to LMGC.
LMGC may determine, in its sole discretion, the duration, form, scope and
content of the Program and may effect termination, addition, deletion or
other modification or change thereof or thereto as it may, in its sole
discretion, determine. For greater certainty, this Section 1.8 is not
intended to give LMGC the right to change the Program in a manner that would
reduce its obligations hereunder.

1.9          DETERMINATION OF **** ROUTES AND **** ROUTES.

         (a) On each January 1 during the Term, Schedule G setting out the
**** Routes shall be deemed amended to consist of each **** Route in respect
of which no Air Carrier (other than Airline, CAI or any Regional Airline of
either) provides **** (whether or not ****) **** service as of the November 15
immediately prior thereto utilizing planes with seating capacity for at least
**** passengers.

         (b) On each January 1 during the Term, Schedule I shall be deemed
amended to consist of each **** Route in respect of which an Air Carrier
(other than Airline, CAI or any Regional Airline of either) provides ****
(whether or not ****) **** service as of the November 15 immediately prior
thereto utilizing planes with seating capacity for at least **** passengers.

         (c) If at any time the parties are unable to agree by December 15th
of any year, for purposes of Section 1.9(a) or (b) above, as to the ****
Routes to be described in Schedule G or the **** Routes to be described in
Schedule I, either party may refer the matter to confidential and binding
arbitration under the ARBITRATIONS ACT (Ontario) before a single arbitrator
who shall be instructed to provide his or her determination as soon as
possible. The cost thereof shall be split equally between the parties. In the
event of such a referral, the applicable schedule

**** PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT.

<PAGE>

                                      -6-

shall only be amended under this Section 1.9 on the date of such
determination, and such determination shall be final and binding for purposes
of this Section 1.9.

                                    ARTICLE 2
                                      FARES

2.1          SPECIAL FARES.

         (a) The Special Fares as of May 1, 2000 are as set out in Part 1 of
Schedule B. On January 1, 2001, the Special Fares will be adjusted with
respect to all Special Tickets purchased on or after that date to the amounts
set out in Part 2 of Schedule B. On ****, the Special Fares will be adjusted
with respect to all Special Tickets purchased on or after that date to the
amounts set out in Part 3 of Schedule B. Provided Airline has paid to LMGC
**** as contemplated in Section 5.3, (i) on **** the Special Fares will be
adjusted with respect to all Special Tickets purchased on or after that date
to the amounts set out in Part 4 of Schedule B, and (ii) on **** the Special
Fares will be adjusted with respect to all Special Tickets purchased on or
after that date to the amounts set out in Part 5 of Schedule B. If for any
reason whatsoever (including the CCAA Plan not being approved or no amounts
being distributed to unsecured creditors thereunder by December 31, 2000),
Airline has not paid LMGC **** as contemplated in Section 5.3 by December 31,
2000, the price increases contemplated for **** and **** shall not take place
but shall be replaced by a **** price increase from the amounts set out in
Part 3 of Schedule B on each such date.

         (b) For each Special Ticket purchased by LMGC hereunder, LMGC shall pay
Airline the applicable Special Fare. The Special Fares exclude any applicable
transportation tax, excess baggage charges, airport taxes, federal inspection
fees, passenger facility charges, departure taxes, GST, sales, transfer or use
taxes, or any similar taxes, levies or charges, or any other ancillary duties
and charges (collectively, "Additional Charges") and LMGC shall either pay or
cause its Collectors to pay to Airline any applicable Additional Charges.
Infants (i.e. under 2 years old) who do not occupy a separate Airline Seat shall
be carried free of charge, except for any applicable Additional Charges and
except as otherwise required by applicable law or by regulations or policies
applicable to the airline industry.

2.2          ADDITIONAL PAYMENT. As soon as possible, but in any event by July
1, 2000, Airline shall dedicate at least one employee exclusively for the
purpose of fulfilling the responsibilities and having the job position and
qualifications described in Schedule E hereto. In consideration of Airline
fulfilling such responsibility, LMGC shall, within 30 days of such person
being hired, pay to Airline an amount (which shall apply in respect of the
period from the date of hire up to and including December 31, 2000) determined
based on pro rating **** over the period left in the 2000 calendar year from
the date of such hire. Within 30 days following commencement of each
subsequent calendar year during the Term, LMGC shall pay an additional **** to
Airline. The amount so paid by LMGC shall be applied on account of the salary
due to such individual and other related expenses of Airline in connection
therewith. If the Term ends part way through any calendar year, Airline shall
provide LMGC with a proportionate rebate of the amount so paid. In addition,
if at any time such position remains vacant during a calendar year for more
than 60 days in aggregate or such individual fails to fulfil

**** PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT.

<PAGE>

                                      -7-

the responsibilities set out in Schedule E, LMGC shall also be entitled to a
proportionate rebate of the amount paid based on the total period during
which such position remained vacant or during which such individual so failed
to fulfil such responsibilities.

                                    ARTICLE 3
                                      TERM

3.1          TERM. This Agreement shall be come into effect as of May 1, 2000
and shall continue in full force and effect thereafter until December 31,
2004, at which time this Agreement shall terminate, provided that Airline
shall still be bound to honour any Special Tickets purchased hereunder on or
prior to the termination date which have a travel date which occurs
thereafter and shall comply with Section 1.6 in connection therewith
notwithstanding such termination.

3.2          BREACH. If either party hereto fails to (i) pay any amounts when
due and payable hereunder, and such failure continues for a period of fifteen
Business Days after written notice of such failure referring to this Section
3.2 is given to such party by the other party; (ii) comply with Section 4.3
and such failure continues for a period of fifteen days after written notice
of such failure referring to this Section 3.2 is given by the other party, or
(iii) observe or perform any of its other obligations under this Agreement
and such failure continues for a period of thirty days after written notice
of such failure referring to this Section 3.2 is given by the other party,
then without prejudice to any other rights or remedies the other party may
have, this Agreement may be terminated by the other party by notice to the
defaulting party so long as such failure is still continuing at the time of
giving such notice.

3.3          **** SPONSOR. If at any time LMGC permits Collectors to redeem
AMRM earned from a **** Sponsor, or from **** as a conversion reward under the
**** program operated by **** or any similar points conversion program
hereafter introduced by ****, in either case for Airline Seats purchased
hereunder at the Special Fares, Airline may notify LMGC thereof in writing
referring to this Section 3.3 and demand that such practice cease. If such
practice is still continuing 15 days after receipt by LMGC of such notice,
Airline may terminate this Agreement on not less than 90 days written notice
to LMGC, provided that such notice must be given no later than 90 days
following the expiry of such 15 day period. In addition, LMGC agrees that, if
at any time **** wishes to offer AMRM as a redemption option under any points
conversion program which is promoted by reference to the fact that points
earned thereunder can be redeemed for flights on Air Canada, LMGC shall use
all reasonable efforts to persuade **** not to proceed therewith. Airline
acknowledges, however, that LMGC may not have the right to force **** not to
proceed with any such program and shall have no liability if **** does proceed
therewith.

3.4          POST-TERMINATION RIGHTS. Notwithstanding any termination of this
Agreement, the parties shall continue to be liable for all financial and
other monetary obligations respectively incurred by each of them pursuant to
this Agreement prior to such termination until the time each of such
obligations shall have been fully satisfied, and exercise by either party of
its right to terminate under any provision of this Agreement will not affect
or impair its right to enforce its

**** PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT.

<PAGE>

                                      -8-

other rights or remedies under this Agreement. All obligations of each party
that have accrued before termination or that are of a continuing nature will
survive termination.

                                    ARTICLE 4
                         CONFIDENTIALITY AND TRADE-MARKS

4.1          CONFIDENTIALITY.

         (a) Throughout the Term and for a period of 5 years following the
termination of this Agreement, each party will, and will cause each of its
Representatives (as defined below) to, hold in strictest confidence and not
use in any manner whatsoever and only disclose to those of its Representatives
who have a need to know same for purposes of this Agreement, any Confidential
Information (as defined below) of the other party, whether provided before or
after the date of this Agreement, including any Confidential Information
provided by LMGC to Airline in connection with Airline's initial determination
of whether to enter into this Agreement; provided that the foregoing will not
apply (i) to use by LMGC of its data base; (ii) where disclosure of
Confidential Information is required by law or in order to enforce rights
under or in connection with this Agreement or the subject matter hereof; (iii)
where the Confidential Information which has been disclosed had already ceased
to be confidential through no fault of the disclosing party or its
Representatives; (iv) to disclosure by LMGC of any terms of this Agreement to
its or its Affiliates' actual or prospective financiers or investors or
otherwise in connection with a financing, including disclosing to any
underwriter, potential purchasers of LMGC's or any of its Affiliate's shares
or business and including their respective counsel, or (v) to disclosure by
Airline to CAI, unless the CCAA Plan is not approved in which case Airline may
not thereafter disclose Confidential Information of LMGC to CAI unless
otherwise permitted hereunder. In addition, LMGC may disclose, on a
confidential basis, the term of this Agreement, the existence of price
increases hereunder and the percentage amount thereof (but not the actual
fares), the confidentiality restrictions, termination events and provisions
relating to **** Sponsors and **** to existing, future or prospective Sponsors
or suppliers, and Airline may disclose, on a confidential basis, the term of
this Agreement, the existence of price increases hereunder and the aggregate
percentage amount thereof (but not the actual fares), the confidentiality
restrictions, termination events and provisions relating to **** Sponsors and
**** to ****.

         (b) "Confidential Information" of a party means all information and
documents, whether on paper, in computer readable format or otherwise, relating
to such party's business, which is or is treated by such party as being of a
confidential nature (and is known or should have been known by the other party
hereto as being of a confidential nature or being so treated) and has been or is
from time to time made known to or is otherwise learned by the other party or
any of its Representatives as a result of the relationship hereunder, including
the terms (but not the existence) of this Agreement (including the pricing
hereunder). In the case of LMGC, its Confidential Information will also include
all information disclosed to or otherwise learned by Airline concerning the
Program, the terms (including pricing) of the Terminated Supplier Agreement and
the Short Term CAI Supplier Agreement and the existence or substance of and the
background to any discussions among CAI, Airline and/or LMGC with regards to the
subject

**** PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT.

<PAGE>

                                      -9-

matter hereof and termination of the Terminated Supplier Agreement, whether
before or after the date hereof. "Representative" means, with respect to any
party, any of its directors, officers or employees or outside auditors,
lawyers or advertising or p.r. agencies, but for greater certainty, not any
other outside consultants or agencies.

         (c) If any party is served with a subpoena or other legal process or
other governmental request requiring the production or disclosure of any
Confidential Information, or for any other reason believes that it is required
by law to disclose any Confidential Information of the other party, then that
party will, before complying, promptly notify the other party and use all
reasonable efforts to permit the other party a reasonable period of time to
intervene and contest disclosure or production, and will in any event use all
reasonable efforts to ensure confidential treatment of such Confidential
Information if so disclosed.

4.2          ANNOUNCEMENTS. Airline acknowledges that LMGC intends to issue a
news release forthwith after execution hereof substantially in the form
attached as Schedule F, and consents thereto. Subject thereto, neither party
shall issue any news releases in respect of the entering into of this
Agreement or the background thereto, without the prior written consent of the
other party, which consent shall not be unreasonably withheld. In addition,
but subject to the exceptions as to confidentiality set forth in clauses (i)
through (v) of Section 4.1(a), throughout the Term (i) Airline will refrain,
and will use all reasonable efforts to ensure that its Representatives (as
defined in Section 4.1) refrain, from making statements to third parties,
including the press or regulatory authorities, which denigrate or otherwise
refer in an unfavourable manner to the Program or its features or the
business relationship between the parties, or otherwise having discussions to
such effect with any third parties, and (ii) LMGC will refrain, and will use
all reasonable efforts to ensure that its Representatives (as defined in
Section 4.1) refrain, from making statements to third parties, including the
press, or regulatory authorities which denigrate or otherwise refer in an
unfavourable manner to Airline or its business or the business relationship
between the parties, or otherwise having discussions to such effect with any
third parties.

4.3          TRADE-MARKS.

         (a) Except as otherwise provided herein or as required by law,
neither LMGC nor Airline shall use any logo or trade-mark of the other without
the prior written permission of the other. In addition, during the Initial
Period, LMGC may use the name "Air Canada" in advertising or promotional
material for purposes of identifying to current, future or potential
Collectors or Sponsors the availability of Airline Seats from Airline as a
redemption option and subject to the following restrictions (which, in the
case of clauses (i) and (ii), shall not apply to displays on web sites): (i)
the Air Canada name will not appear on the same page as the name of **** or
****, (ii) it will appear only together with the name of another supplier to
the Program, and (iii) LMGC will not permit **** or **** to use such name in
their marketing or promotional materials relating to the Program. LMGC may not
use such name in such materials during the Additional Period, except as
otherwise required by law. For greater certainty, however, the foregoing
restrictions shall not prohibit LMGC telephone agents or other representatives
from using the name "Air Canada" when discussing availability or bookings for
flights with Collectors, and other uses in connection with travel, (e.g.
itinerary and tickets). In

**** PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT.

<PAGE>

                                      -10-

addition, nothing contained herein shall affect LMGC's rights to use
trade-marks or logos of CAI in accordance with LMGC's current practices. Upon
implementation of the CCAA Plan or any transfer of any of CAI's logos or
trade-marks (including the names "Canadian" or "Canadian Airlines") to
Airline or any Affiliate of Airline, Airline will ensure that LMGC continues
to have the right to use CAI's logos and trade-marks (including the names
"Canadian" or "Canadian Airlines") in accordance with its current practice,
but only for so long as they continue to be used by either CAI or Airline or
any Affiliate thereof.

         (b) Notwithstanding the permission to use the name Air Canada as set
forth in Section 4.3(a), Airline shall have the right to examine and to approve
or disapprove in advance the contents and appearance of any advertising or
promotional materials proposed to be used by LMGC which incorporate such name,
but (i) Airline shall not unreasonably withhold or delay its approval of such
materials, (ii) it shall in any event provide its decision as soon as possible
and not later than 7 days after request therefor from LMGC, and (iii) upon
providing any approval, no further approval will be required for subsequent
materials which have the same or a substantially similar approach to the display
of such name.

         (c) Neither party shall have any liability for any breach of this
Section 4.3 unless such breach continues for a period of fifteen days after
written notice thereof referring to this Section 4.3 is given to such party by
the other party demanding that such breach cease, and in any event, the maximum
aggregate liability of either party for any breach of, or otherwise in
connection with, this Section 4.3, whether on one or more than one occasion, is
****.

                                    ARTICLE 5
                           WARRANTIES AND CCAA PAYMENT

5.1          WARRANTIES. Each of the parties hereto represents and warrants
to the other party, that (i) the entering into, execution and delivery of
this Agreement and the performance of its obligations hereunder have been
duly and validly authorized and approved by all necessary corporate action on
its part, (ii) no consent or approval of any other Person or of any court is
required to the entry into, execution or delivery of this Agreement or to the
performance of its obligations hereunder, except such as have been obtained,
(iii) this Agreement has been validly executed and delivered by such party,
and is a valid and legally binding obligation of such party enforceable
against such party in accordance with its terms, subject to usual exceptions
regarding bankruptcy and other laws affecting creditors rights generally and
those with respect to specific performance and injunction, and (iv) there are
no outstanding claims, litigation, arbitrations, investigations or other
proceedings existing or, to the knowledge of each party, pending or
threatened which would enjoin, restrict or prohibit performance by such party
of its obligations hereunder.

5.2          INDEMNITY. Each party shall indemnify and hold the other party
(and in the case of LMGC, any of its Subsidiaries who purchase tickets
hereunder) and their respective directors, officers, employees and agents
harmless from and against any and all losses, claims, damages, liabilities,
costs, fees and other expenses whatsoever (including legal fees on a
solicitor and his own client basis) suffered or incurred by the other party
which arise from or are caused by the non-performance or improper performance
of any obligations of such first party hereunder, or

**** PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT.

<PAGE>

                                      -11-

any breach or untruth of any of its representations or warranties contained
herein, or, in the case of the indemnity in favour of LMGC, any liability of
Airline or any Regional Airline to any Person for any injuries or damages
which result from the provision or sale of any air transportation or related
services and/or merchandise by or through Airline or any Regional Airline, to
such Person.

5.3          CCAA PROCESS AND PAYMENT. The parties acknowledge that, by
Assignment dated as of the date hereof, LMGC has assigned the Claim to
Airline. In consideration of such assignment and the price increases
contemplated hereby for **** and ****, Airline shall pay to LMGC, within five
Business Days following distribution or payment of any amounts in respect of
the Claim, ****. Without limiting Section 6.2, Airline's obligation to pay
such amount is absolute and unconditional and applies notwithstanding any of
the matters referred to in Section 6.2. If Airline fails to pay such amount to
LMGC when due, then, without prejudice to any other rights or remedies LMGC
may have, LMGC may set off such amount against any amounts otherwise payable
hereunder to Airline, and Airline shall pay interest to LMGC from the due date
of such payment until such payment is made in full at **** per annum.

                                    ARTICLE 6
                                     GENERAL

6.1          ENTIRE AGREEMENT. This Agreement together with the Assignment
between the parties of even date contains the entire agreement between the
parties relating to the subject matter hereof and supersedes all previous
agreements, understandings or arrangements, verbal or written, relating
thereto. This Agreement may only be modified, superseded or amended by an
agreement or modification in writing signed by both of the parties hereto.

6.2          UNCONDITIONAL OBLIGATION. Airline's obligation to comply
herewith and provide Airline Seats to LMGC at the Special Fares and otherwise
as contemplated thereby, is an independent obligation of Airline which shall
apply notwithstanding any matter or thing affecting CAI, including any
reorganization, bankruptcy, receivership or other proceeding affecting CAI
and including the current proceedings under the CCAA affecting CAI (the "CCAA
Proceedings"), the treatment of CAI's obligations in the CCAA Proceedings,
the success or lack of success of the CCAA Proceedings, the treatment of the
Claim in the CCAA Proceedings, whether or not the Claim is disputed by any
other Person or Airline has the right to vote or receive distributions of the
Claim in the CCAA Proceedings, and regardless of the amount of any recovery
in respect of the Claim.

6.3          RELEASE. LMGC and Airline each release each other and their
respective Affiliates, other than, for greater certainty, CAI, from all
costs, damages and liability in connection with any matters which have
occurred prior to the date of this Agreement with respect to the Terminated
Supplier Agreement or any matter relating thereto.

6.4          INJUNCTION. Airline acknowledges that a breach of its
obligations under any of Sections 1.1, 1.2, 1.3, 1.4, 1.6, 1.7, 4.1, 4.2 or
4.3 and LMGC acknowledges that a breach of any of its obligations under
Sections 4.1, 4.2 or 4.3, will cause irreparable harm to the other party for

**** PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT.

<PAGE>

                                      -12-

which money damages alone will provide inadequate compensation. Accordingly,
the parties agree that injunctive relief to prevent any such breaches or a
mandatory order or specific performance requiring continued performance of
the provisions in question, as applicable, is appropriate and necessary to
prevent the continuation of such a breach.

6.5          SEVERABILITY AND TIME OF ESSENCE. If any provision of this
Agreement is held by a court of competent jurisdiction or by any governmental
agency or authority to be invalid, such holding shall not have the effect of
invalidating the other provisions of this Agreement which shall nevertheless
remain binding and effective between the parties. Time is of the essence
hereof.

6.6          GOVERNING LAW. This Agreement shall be construed under and
governed by the laws of the Province of Ontario and the laws of Canada
applicable therein. The Parties hereto attorn to the non-exclusive
jurisdiction of the courts of Ontario.

6.7          COSTS AND EXPENSES. Airline shall pay all reasonable
out-of-pocket costs and expenses, including legal costs and expenses on a
solicitor and his own client basis, incurred by LMGC in connection with the
negotiation and documentation of the transactions contemplated in this
Agreement, the Terminated Supplier Agreement and/or the Short Term CAI
Supplier Agreement as well as those incurred by LMGC in connection with the
insolvency proceedings relating to CAI, including those incurred in
anticipation thereof and/or to protect LMGC's interests in connection
therewith, the whole up to a maximum of **** plus GST, but in any event, not
including any such costs or expenses incurred by LMGC prior to December 31,
1999. Subject to the following proviso, Airline shall make such payment
promptly following receipt of copies of invoices therefor, provided that LMGC
need not provide Airline with the detail from LMGC of the work performed in
connection with such invoices including daily work entries, provided further
that Airline need not make such payment earlier than the first to occur of (i)
five Business Days following distribution or payment of any amounts in respect
of the Claim, and (ii) July 15, 2000.

6.8          WAIVER. Any term or condition of this Agreement may be waived at
any time by the party which is entitled to the benefit thereof, but such
waiver shall only be effective if evidenced by a writing signed by such
party. A waiver on one occasion shall not be deemed to be a waiver of the
same or of any other breach on any other occasion. Any previous waiver,
forbearance, or course of dealing will not affect the right of either party
to require strict performance of any provision of this Agreement.

6.9          SUCCESSORS AND ASSIGNS. Neither party may assign its rights or
obligations hereunder without the prior written consent of the other, except
that either party may, without consent, assign its rights hereunder (i) to any
Affiliate either as part of a bona fide corporate reorganization, or a sale of
all or substantially all of its assets, but no such assignment shall relieve
such party from its obligations hereunder, and (ii) by way of security to any
financier; provided that if any **** or **** enforces upon any such security
provided by LMGC and operates the Program on its own for more than one month,
Airline may, on not less than 20 Business Days prior notice to such **** or
**** sent no later than four weeks after the end of such month, elect to
terminate this Agreement, in which event, this

**** PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT.

<PAGE>

                                      -13-

Agreement shall terminate at the end of the period specified in any such
notice if, at the end of such period, such **** or **** is still so operating
the Program.

6.10         COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which taken together shall be deemed to constitute one and the same
instrument. Counterparts may be executed either in original or faxed form and
the parties hereto adopt any signatures received by a receiving fax machine
as original signatures of the parties; provided, however, that any party
providing its signature in such manner shall promptly forward to the other
party an original of the signed copy of this Agreement which was so faxed.

             IN WITNESS WHEROF the parties have executed this Agreement as
of the date and year first above written.

                                 LOYALTY MANAGEMENT GROUP CANADA INC.

                                 By:         /s/ John Scullion
                                            ------------------------------------
                                 Name:       John Scullion
                                            ------------------------------------
                                 Title:      President & Chief Executive Officer
                                            ------------------------------------

                                 AIR CANADA

                                 By:         /s/ Calvin Bovinescu
                                            ------------------------------------
                                 Name:       Calvin Bovinescu
                                            ------------------------------------
                                 Title:      Executive Vice President
                                             Corporate Development & Strategy
                                            ------------------------------------

**** PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT.

<PAGE>

                                   SCHEDULE A

                         DEFINITIONS AND INTERPRETATION

                  In this Agreement (including the recitals hereto), the
following terms shall have the following meanings:

"ADDITIONAL PERIOD" means the period from and including January 1, 2003 to and
including December 31, 2004.

"AFFILIATE" has the meaning set out in the CANADA BUSINESS CORPORATIONS ACT.

"AGREEMENT" means this Agreement including the Schedules to this Agreement all
as amended or supplemented from time to time.

"AIR CARRIER" means an airline or air carrier, or a Person which otherwise
engages in the business of carrying passengers by air.

"AIRLINE" means Air Canada, its successors and permitted assigns.

"AIRLINE SEATS" means seats for travel on flights for any City Pair Served as
operated by Airline or any Regional Airline.

**** means ****

"AMRM" means AIR MILES-TM- reward miles.

"BUSINESS DAY" means any day on which banks are open for business in Montreal,
Quebec and Toronto, Ontario, excluding Saturdays, Sundays and statutory holidays
in those cities.

"CCAA" means the COMPANIES CREDITORS ARRANGEMENT ACT.

"CCAA PLAN" means the proposed plan of compromise and arrangement of Canadian
Airlines Corporation and CAI, intended to be filed with the Court of Queens
Bench of Alberta on April 25, 2000, or any subsequent plan of compromise and
arrangement issued by either or both of such Persons in connection with the CCAA
Proceedings.

"CCAA PROCEEDINGS" has the meaning set out in Section 6.2.

"CAI" means Canadian Airlines International Ltd., its successors and permitted
assigns.

"CITY PAIR" means two cities or other locations between which any Air Carrier
offers scheduled service, whether domestic or international and whether or not
non-stop or direct.

**** PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT.

<PAGE>

                                      -2-

"CITY PAIRS SERVED" means all City Pairs for which Airline or any Regional
Airline (or any combination thereof) has, at the time in question, scheduled
service, whether domestic or international.

"CLAIM" means the claim of LMGC and its subsidiaries against CAI assigned by
LMGC to Airline.

"COLLECTOR" means any Person who is registered with LMGC as a collector of AMRM.

"**** SPONSOR" means, subject to the following sentence, any Sponsor which is
(i) a ****, or (ii) a Person whose principal business is the issuance of ****
to individuals who do not buy goods or services from such Person or its
Affiliates or franchisees. In any event, however, "**** Sponsor" shall not
include **** or **** or any successors thereto (whether by amalgamation,
purchase of assets or otherwise) or replacements (in whole or in part) thereof
as a Sponsor.

"INITIAL PERIOD" means the period from the date hereof to and including December
31, 2002.

"LMGC" means Loyalty Management Group Canada Inc., its successors and permitted
assigns.

"LMG TRAVEL" means LMG Travel Services Limited and its successors.

"**** ROUTE" means (i) any two cities or other locations in Canada between
which Airline or any Regional Airline has non-stop scheduled service, so long
as at least one of the two cities or other locations is not a **** (but in any
event not including any City Pair Served described in Schedule I hereto, as
such Schedule may be amended from time to time in accordance with Section
1.9), and (ii) any **** Route.

"OTHER CLASS" has the meaning set out in Section 1.2(a).

"PERSON" includes an individual and his or her legal representatives, a
corporation, a partnership, a trust, an unincorporated organization, the
government of a country or any political subdivision thereof, or any agency or
department of any such government.

"PROGRAM" means the AIR MILES-TM- program established by LMGC in Canada.

"REGIONAL AIRLINES" means, at any time, each Affiliate of Airline which, at such
time, is an Air Carrier, including for greater certainty, any Air Carrier which
hereafter becomes an Affiliate of Airline (effective as of the date it becomes
an Affiliate of Airline). Without limiting the foregoing, if the CCAA Plan is
approved, CAI shall be deemed to be a Regional Airline, whether or not it is
then an Affiliate of Airline.

"**** ROUTES" means each of the City Pairs Served described in Schedule G
hereto, as such Schedule may be amended from time to time in accordance with
Section 1.9.

**** PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT.

<PAGE>

                                      -3-

"SHORT TERM CAI SUPPLIER AGREEMENT" means the letter agreement made as of the
date hereof between LMGC and CAI providing for the termination of the Terminated
Supplier Agreement and a new short term supplier arrangement between LMGC and
CAI.

"SPECIAL FARES" means the fares set out in Schedule B.

"SPECIAL TICKETS" means tickets (including electronic tickets) for Airline Seats
issued to passengers in connection with the Program.

"SPONSOR" means any Person granted a licence by LMGC or otherwise permitted by
LMGC to issue or arrange for the issuance of AMRM.

"SUBSIDIARY" has the meaning set out in the CANADA BUSINESS CORPORATIONS ACT.

"TERM" means the period from the date hereof to the date this Agreement
terminates.

"TERMINATED SUPPLIER AGREEMENT" means the Supplier Agreement made as of March
15, 1995 between LMGC and CAI, as amended.

"****" means each of ****, ****, ****, ****, ****, ****, ****, ****, ****,
****, **** and ****, and in each case, their regional airports (such as ****
in respect of **** and **** in respect of ****).

"**** ROUTES" means any two cities or other locations between which Airline or
any Regional Airline has non-stop scheduled service, so long as both such
cities or other locations are ****.

"**** CLASS" means the booking class maintained by Airline currently in the
**** of its yield management hierarchy and designated as "**** class", or in
the case of any Regional Airline which utilizes different booking classes, a
booking class that is comparable in all material respects with **** Class, and
in either event, any replacement class therefor established hereunder from
time to time.

                  The division of this Agreement into Articles and Sections, the
insertion of headings, and the provision of any table of contents are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement. Unless the context requires otherwise, (i)
words importing the singular include the plural and vice versa and words
importing gender include all genders, and (ii) references in this Agreement to
Sections or Schedules are to Sections or Schedules of this Agreement. Except as
otherwise expressly provided in the Agreement, all dollar amounts referred to in
this Agreement are stated in Canadian dollars. In this Agreement, "including"
means "including, without limitation" and "includes" means "includes without
limitation".

**** PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT.

<PAGE>

                                   SCHEDULE B

                                  SPECIAL FARES

<TABLE>
<CAPTION>

---------------- --- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
                     PART 1          PART 2          PART 3          PART 4          PART 5
---------------- --- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
                     2000            2001            2002            2003            2004
---------------- --- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
                     PEAK   OFF PEAK PEAK   OFF PEAK PEAK   OFF PEAK PEAK   OFF PEAK PEAK   OFF PEAK
---------------- --- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
<S>              <C> <C>    <C>      <C>    <C>      <C>    <C>      <C>    <C>      <C>    <C>
Domestic         SH   ****    ****    ****    ****    ****    ****    ****    ****    ****    ****
---------------- --- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------

                 MH   ****    ****    ****    ****    ****    ****    ****    ****    ****    ****
---------------- --- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------

                 LH   ****    ****    ****    ****    ****    ****    ****    ****    ****    ****
---------------- --- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------

Transborder      SH   ****    ****    ****    ****    ****    ****    ****    ****    ****    ****
---------------- --- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------

                 MH   ****    ****    ****    ****    ****    ****    ****    ****    ****    ****
---------------- --- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------

                 LH   ****    ****    ****    ****    ****    ****    ****    ****    ****    ****
---------------- --- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------

International         ****    ****    ****    ****    ****    ****    ****    ****    ****    ****
---------------- --- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------

</TABLE>

**** PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT.

<PAGE>

                                      - 2 -

Minimum charge for a Peak Period Flight is **** and for an Off-Peak Period
Flight is ****.

For purposes hereof, a flight is "Off Peak" where the first leg of the
outbound flight departs after **** and before **** (or before **** for
bookings made during the Additional Period), excluding any outbound departures
during the period **** to **** inclusive. All other flights are "Peak".

For purposes hereof: (i) an "SH" or "Short Haul Flight" is any flight (other
than an International Flight) of **** miles (based on round trip mileage);
(ii) a "MH" or "Medium Haul Flight" is any flight of (other than an
International Flight) of **** miles (based on round trip mileage); (iii) a
"LH" or "Long Haul Flight" is any flight (other than an International Flight)
of **** or more miles (based on round trip mileage); (iv) a "domestic flight"
is any flight with both origin and destination within Canada, (v) a
"transborder flight" is any flight with an origin within either Canada or the
continental United States to a destination within either Canada or the
continental United States, other than a domestic flight and (vi) an
"International Flight" is any flight which entails flying over the Atlantic or
Pacific Oceans (including any flights to Hawaii, Mexico, Central and South
America) and any other flight which does not have both an origin and a
destination within Canada or the continental United States.

Round trip mileage will be as shown in the SABRE Reservation System, and will be
based on the distance between origin and destination points, regardless of the
segments flown from origin to destination.

**** PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT.

<PAGE>

                                   SCHEDULE C

                RESERVATIONS, COMMISSIONS AND TRAVEL RESTRICTIONS

1.    Reservations, which must include round trip travel, must be made at
      least 14 days, but not more than 330 days, prior to planned departure
      date.

2.    The return trip must be booked at the time a reservation is made for
      the outbound segment.

3.    All round trip travel must be completed not later than 315 days after
      the date of reservation.

4.    No blackout dates will be applicable for booking.

5.    All travel must be on a round trip or an open jaw trip basis.

6.    Each Special Ticket, which will not include en route stopovers, must
      include a Saturday night stayover at destination.

7.    Airline shall pay LMGC (or LMG Travel) commissions in respect of sales
      of all tickets (including tickets for companion seats, but not
      including Special Tickets purchased hereunder at the Special Fares) on
      the basis of Airline's standard commission agreement for each calendar
      year during the Term. LMGC shall not however be entitled to any
      override in connection with sales of Special Tickets or companion
      tickets, but shall be entitled to standard travel agency override for
      sale of other tickets, including all sales by Extra Miles Travel.

8.    All Special Tickets and Special Fares are subject to the tariff
      restrictions and Warsaw Convention Limitations, as applicable, with
      respect to (but only with respect to) limits of compensation for,
      damage to Persons or property.

The restrictions in clauses 1, 3, 5 and 6 shall not apply to tickets purchased
under web specials as contemplated in Section 1.2(c).

<PAGE>

                                   SCHEDULE D

                                OTHER COMMITMENTS

1.    Gold Collectors shall receive a discount of 10% off the cost of any
      companion tickets purchased through LMGC or any of its Subsidiaries, up
      to a maximum of **** return trips each calendar year. For purposes
      hereof, a companion ticket means a ticket purchased in conjunction with
      the purchase of, and having the same itinerary as, a Special Ticket.

2.    During each 12 month period in the Initial Period, Airline shall make
      available to LMGC, up to **** return trip Airline Seats, either on
      Airline's or a Regional Airline's flights, as selected by LMGC, to be
      used in connection with the Canadian Special Olympics. Such Airline Seats
      shall be made available to LMGC at the Special Fares. These seats
      are subject to regular availability of inventory as per this Agreement and
      use thereof by LMGC shall be included in determining bookings made by
      LMGC for purposes of Section 1.3 (b) and (c).

3.    During each 12 month period in the Initial Period, Airline shall provide
      LMGC with **** return trips on City Pairs Served, either on Airline's or a
      Regional Airline's flights, to be used in connection with LMGC's Sponsor
      activities. Ten such return trips shall be provided to LMGC at no cost to
      LMGC and **** such return trips shall be provided to LMGC at a cost
      equivalent to AD 75. LMGC and Airline shall mutually agree to the
      destinations chosen for such return trips.

4.    Airline shall make available to LMGC not less than **** AD's (AD 75's)
      (return trip) for each 12 month period of the Term, of which no less than
      **** shall be **** Class and the balance shall be **** Class.

**** PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT.

<PAGE>

                                   SCHEDULE E

                       JOB DESCRIPTION FOR LMGC OMBUDSMAN

OBJECTIVE

         To maximize the inventory made available to LMGC under this Agreement.

TASKS

         o Liasing between LMGC and Air Canada Revenue Management.
         o Reporting availability on Air Canada to LMGC.
         o Reporting bookings made on Air Canada to LMGC.
         o Trouble-shooting specific capacity issues with Air Canada Revenue
           Management.
         o Advising and reporting to LMGC of Air Canada's schedule and capacity
           planning.
         o Identifying capacity opportunities for LMGC.
         o Implementing web specials and other potential marketing opportunities
           for LMGC at Air Canada.

AIR MILES CONTACT

         o Speak with Reward Services at LMGC at least once a week.
         o Meet with Reward Services at LMGC at least quarterly, at LMGC offices
           in Toronto.

QUALIFICATIONS

         Minimum 3 years experience at Air Canada or Canadian Airlines in
revenue management, planning or financial analysis (if possible).

<PAGE>

                                   SCHEDULE F

                                LMGC NEWS RELEASE

FOR IMMEDIATE RELEASE

               AIR MILES PROGRAM REACHES AGREEMENT WITH AIR CANADA
           COLLECTORS CAN NOW FLY ON CANADIAN AIRLINES AND AIR CANADA

TORONTO, Ontario - April 26, 2000 - The Loyalty Group, operator of the AIR MILES
Reward Program, today announced it has reached an agreement with Canadian
Airlines and Air Canada that will allow it to offer reward flights on both
airlines to AIR MILES Collectors across Canada.

"We are thrilled to be able to continue to offer travel on Canadian Airlines to
our 11 million AIR MILES Collectors, and we welcome Air Canada as a new airline
supplier to the AIR MILES Reward Program," said John Scullion, President and
Chief Executive Officer, The Loyalty Group. "Canadian Airlines has always been a
valued supplier to the Program, and we now look forward to extending that
partnership with Air Canada," he added.

AIR MILES Collectors can continue to redeem their reward miles and book
domestic flights on Canadian Airlines and international flights on our four
other airline partners: American Airlines, KLM, Northwest Airlines and United
Airlines. Collectors can redeem their reward miles for Air Canada flights
beginning in May 2000.

Terms of the agreement are confidential and will not be disclosed. The Loyalty
Group's claim in connection with Canadian Airlines' restructuring plan has been
assigned to Air Canada as part of the new agreement with Air Canada.

The Loyalty Group launched the AIR MILES Reward Program in March 1992,
offering Canadians the opportunity to collect AIR MILES reward miles while
shopping for everyday goods and services. There are over 100 participating
Sponsors across Canada representing over 12,000 retail locations. In addition
to free flights, AIR MILES reward miles can be exchanged for over 100
different rewards from movie passes to attractions to merchandise like
electronics, watches and toys.

For further information, contact:

John Wright
Senior Vice President
The Loyalty Group
(416) 228-6614

<PAGE>

                                   SCHEDULE G

                                  **** ROUTES

****
****
****
****
****
****
****
****
****
****
****
****
****
****
****
****
****
****
****

o The above list is non-directional.

**** PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT.

<PAGE>

                                   SCHEDULE H

                                LMGC PROJECTIONS

Year 2000*       -  **** round trip Special Tickets
Year 2001        -  **** round trip Special Tickets
Year 2002        -  **** round trip Special Tickets

*full year

All numbers include the additional **** seats from Schedule D - Section 2.

**** PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT.

<PAGE>

                                   SCHEDULE I

                                      ****

[TO BE MUTUALLY AGREED UPON BY PARTIES]

**** PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT.

<PAGE>

                                      - 1 -

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