Supplier Agreement - Loyalty Management Group Canada Inc. and Air Canada
SUPPLIER AGREEMENT
BETWEEN
LOYALTY MANAGEMENT GROUP CANADA INC.
and
AIR CANADA
Dated as of April 24, 2000
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TABLE OF CONTENTS
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PAGE
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.
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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
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.
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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.
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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.
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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.
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(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.
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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.
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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.
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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.
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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.
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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
<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
---------------- --- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
Domestic SH **** **** **** **** **** **** **** **** **** ****
---------------- --- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
MH **** **** **** **** **** **** **** **** **** ****
---------------- --- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
LH **** **** **** **** **** **** **** **** **** ****
---------------- --- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
Transborder SH **** **** **** **** **** **** **** **** **** ****
---------------- --- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
MH **** **** **** **** **** **** **** **** **** ****
---------------- --- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
LH **** **** **** **** **** **** **** **** **** ****
---------------- --- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
International **** **** **** **** **** **** **** **** **** ****
---------------- --- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
**** 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 -