The parties to this Agent Reporting Agreement ("Agreement" or "ARA") are the Agent, and the Airlines Reporting Corporation ("ARC") headquartered in Arlington ,VA on its own behalf and on behalf of the Carriers that are parties to the ARC Carrier Services Agreement ("Carrier" or "Carriers") which appoint the Agent under this Agreement.
The purpose of the Agreement is to address the way in which Agents report and settle ARC Traffic Documents through the ARC-administered Settlement Plan in a competitive and efficient manner, as well as to outline the rights and obligations of the parties to this Agreement.
Terms used throughout this Agreement are defined in Part IX of this Agreement.
In consideration of these statements and the mutual covenants and agreements that follow, the parties acknowledge, understand, and agree:
Part I: Scope of Agreement
1. This Agreement:
1.1. Becomes effective between ARC and Agent on the effective date stated in the Memorandum of Agreement completed as part of Agent's application;
1.2. Is binding between Agent and each Carrier that appoints Agent , and establishes a principal agent relationship between Agent and Carrier;
1.3. Governs the terms and conditions under which Agent is authorized to issue ARC Traffic Documents at and through Agent's Locations in the United States;
1.4. Covers all Agent Locations, including any that may be approved for inclusion on the ARC Agency List after the effective date of this Agreement;
1.5. Supersedes any and all prior agreements, unless otherwise stated, between Agent and any Carrier party to the Carrier Services Agreement concerning the issuance of ARC Traffic Documents; and
1.6. Incorporates the latest version of the Industry Agent's Handbook (IAH) available on ARC's website as if fully set forth herein by reference.
2. This Agreement does not:
2.1. Extend to the terms and conditions under which Agent is authorized to issue tickets and other documents that Carriers may provide to Agent;
2.2. Constitute the entire relationship between Agent and Carriers and is specifically limited to the terms and conditions contained herein. This Agreement does not, for example, address fares charged by Carriers, or any commissions, incentives, or other forms of remuneration, if any, provided by Carriers to Agent, as those matters are solely between Carriers and Agent; or
2.3. Authorize Agent to admit, accept, or receive service of summons or any other process on behalf of Carriers or ARC.
3. Agent acknowledges and agrees:
3.1. To comply with and be bound by all instructions and requirements in the IAH;
3.2. To supply and receive notices consistent with this Agreement and Section A of the IAH;
3.3. To seek to maintain, at all times, ethical standards of business in its dealing with its clients, the public, ARC, and Carriers; and
3.4. This Agreement will be construed in accordance with, and governed by, the laws of the Commonwealth of Virginia. State and Federal courts of the Commonwealth of Virginia will have personal jurisdiction over all collection matters arising under this Agreement. All Transactions that occur under this Agreement will be deemed to occur in the United States.
3.5. ARC and its affiliates may from time to time receive funds from Agents and/or Carriers pursuant to this Agreement, including but not limited to any Financial Instruments required hereunder, and ARC agrees, on behalf of itself and its affiliates, that ARC and/or its affiliates shall manage such funds (less any fees due and payable from time to time to ARC and/or its affiliates) during the term of this Agreement.
4. Amendments to This Agreement
4.1. ARC will make available to Agent each future amendment to this Agreement at least 45 calendar days prior to the amendment's effective date, unless otherwise specified. If this Agreement is subject to termination, such termination will occur without regard to whether an amendment alters any provision related to the basis for the termination.
5. Concurrence with Future Amendments to This Agreement
5.1. Agent's concurrence with future Amendments may occur in one of the following ways:
5.1.1. Signing a subsequent Memorandum of Agreement binding ARC, Agent, and Carriers appointing Agent, to the terms and conditions of this Agreement;
5.1.2. Obtaining through an electronic signature;
5.1.3. Continuing performance under the Agreement, such as Submission of Sales Report(s) or access to ARC Tools, will constitute Agent's agreement to be bound by the amended Agreement; or
5.1.4. Obtaining or occurring by any other means adopted by the ARC Board of Directors.
6. Termination of This Agreement
6.1. Agent may submit written notice of voluntary termination of this Agreement at any time.
6.1.1. Termination will take effect 14 calendar days after receipt of notice or on the date indicated in Agent's notice, whichever is later, subject to the fulfillment by each of the parties of all obligations under this Agreement.
6.2. ARC may terminate Agent's Agreement according to the requirements of this Agreement.
6.3. Whenever, under the terms of this Agreement, ARC is required to remove Agent or Agent's Location(s) from the ARC Agency List, ARC will terminate this Agreement with respect to Agent or affected Location.
6.4. Upon termination, all unused ARC Traffic Documents (paper format) must be disposed of according to Section B of the IAH. ARC may designate a representative to remove all ARC Traffic Documents (paper format) from Agent.
6.5. Upon termination, Agent must provide all monies due and payable to any Carriers, and a complete and satisfactory accounting.
6.6. Upon termination and ARC's request, Agent must return to ARC all supporting documents listed in Section C of the IAH that are less than or equal to 2 years of age as of the date of termination. Until returned or destroyed in a secure manner, all supporting documentation containing personal data, such as credit card information, must be maintained in a secure and confidential manner.
6.7. Whenever this Agreement is terminated, ARC will notify all Carriers and advise them of the reason and the effective date of the termination. ARC will also notify System Providers to inhibit issuance of ARC Traffic Documents by Agent. Additionally, Agent must cease use of its ARC Number(s), unless Agent reclassifies to an ARC Verified Travel Consultant.
6.8. Upon termination of this Agreement, in the event Agent fails to fulfill its obligations to Submit all Sales Reports, Agent authorizes ARC to Submit the Sales Reports that have not previously been Submitted and to draft Agent's designated bank account for the amounts owed for such Sales Reports . Agent will indemnify and hold harmless ARC; ARC's officers, employees, and representatives; and Carriers from all damages, losses, or claims resulting from ARC's Submission of the Sales Reports under the terms of this Section.
6.9. ARC will be considered a real party in interest in any cause of action, suit, or arbitration to enforce the terms of this Agreement, including those brought by ARC after the termination of this Agreement to collect amounts Agent owes to Carriers or ARC.
Part II: Agent Operating Requirements
7. Agent must electronically confirm compliance with Accreditation, eligibility, and retention requirements of this Agreement, including, but not limited to, ownership status and other personnel requirements, at a minimum on an annual basis as determined by ARC.
8. Requirements for Remaining on the ARC Agency List
8.1. Purpose: The ARC Agency List includes information on each Agent and Location, and is used to identify Entities and locations approved by ARC.
8.2. If Agent wishes to have a place of business included as a Location on the ARC Agency List, Agent must submit an application in the form required by ARC. Carriers will be notified of the application and the status.
8.3. In order to be accepted onto, and remain on the ARC Agency List, Agent must meet all of the following requirements:
8.3.1. Agent must submit a materially accurate application for inclusion on the ARC Agency List, changes to Agent's status or listing on the ARC Agency List, or in any attachments to those applications.
8.3.2. Any person that is involved in the day-to-day operations of the agency and has access to monies from services issued on ARC Traffic Documents must be a U.S. citizen, U.S. national, or an alien authorized to work in the United States.
8.3.3. Agent is legally authorized and registered, according to federal, state, and local requirements to conduct business in the United States.
8.3.4. Agent's Location must have the licenses required by the jurisdiction in which it is located. Required licenses include, but are not limited to, any and all licenses mandated by federal, state, or local authority, which enable Agent to lawfully conduct business at each of its Locations.
8.3.5. The name of Agent is not the same as, or misleadingly similar to, a Carrier's name unless authorized by the Carrier to do so.
8.3.6. Agent must designate and maintain the following roles, which may be filled by the same or different individuals:
18.104.22.168. Management Qualifier who is: (i) Agent or a full time employee of Agent; and (ii) is responsible for the operations of Agent and Agent's Location(s);
22.214.171.124. ARC Specialist who has passed the ARC Specialist examination, and maintains the requirements of the ARC Specialist program; [Note: The CAS became mandatory for all new Agents, as well as new branch locations (including on-sites), and Type II and V ownership changes, seeking ARC approval on or after July 1, 1999. The ARC Specialist Program replaced the Certified ARC Specialist (CAS) Program on September 30, 2005, and persons holding a valid CAS certificate at that time were transitioned into the ARC Specialist Program and do not have to successfully complete the ARC Specialist examination until the current CAS certificate expires.]
126.96.36.199. Document Retrieval Service (DRS) Security Manager who will perform administrative functions for Agent's DRS users in accordance with instructions provided by ARC; and
188.8.131.52. My ARC Primary Administrator who will perform administrative functions for Agent's My ARC users including but not limited to creating and terminating individual My ARC user accounts, in accordance with instructions provided by ARC.
8.3.7. Agent must comply with the Financial Obligation requirements within Part IV of this Agreement and Section D of the IAH.
8.3.8. Agent must provide an Operational E-mail Address.
9. Grounds for Removal of Agent from ARC Agency List
9.1. Agent is ineligible for retention on the ARC Agency List if:
9.1.1. Agent fails to meet the requirements stated in Subsection 8.3 of this Agreement, including material misrepresentation or inaccuracy in any application; or
9.1.2. ARC has reason to believe that Agent; any Entity holding a financial or ownership interest in Agent; or any officer, director, employee, or Management Qualifier has had any of the following:
184.108.40.206. Financial interest in, or affiliation with, any Agent previously removed from the ARC Agency List;
220.127.116.11. Financial interest in, or affiliation with, any Agent presently declared in default under the provisions of Section 33 of this Agreement; or
18.104.22.168. Felony conviction or misdemeanor related to financial activities or computer fraud, or has been found by a court of competent jurisdiction to have committed a breach of fiduciary duty involving the use of funds of others.
9.2. The provisions for ineligibility in Section 9.1 may be waived if, based on investigation of all information and facts, ARC determines that Agent can be relied on to adhere to the terms of this Agreement. If the conduct invoking this provision occurred more than 7 years prior to the filing of a complaint with the Arbiter, there will be a presumption Agent can be relied upon to adhere to the terms of this Agreement.
10. Compliance with Applicable Laws
10.1. Agent must comply with all applicable U.S., international, and local laws.
10.2. In collecting, processing, and transmitting any personal data, such as credit card information, Agent must:
10.2.1. Treat the data in a secure and confidential manner, disclosing it only to those Entities Agent is lawfully bound to do so; and
10.2.2. Consent to an inspection by ARC, as described in Subsection 12.3 of this Agreement, in the event of a data security breach.
10.3. If required by applicable data protection laws, Agent will deliver a notice to the client disclosing all of the following:
10.3.1. Personal data collected by Agent will be supplied to ARC for purposes of carrying out the contract between the client and any relevant Carrier; and
10.3.2. Client may contact ARC's Customer Care Center to request a copy of the personal data held by ARC and to request whether or not ARC will amend, modify, correct, or delete the personal data.
11. Agent Appointment by Carrier
11.1. Purpose: Section 11 describes the appointments Carriers may grant to Agents.
11.2. A Carrier may grant Agent an appointment, by either General Concurrence or Specific Appointment as described in Section E of the IAH, permitting Agent to issue ARC Traffic Documents on behalf of the Carrier.
11.2.1. General Concurrence is a Carrier's authorization to ARC to appoint all Accredited Agents on the Carrier's behalf.
11.2.2. Specific Appointment is a Carrier's specific appointment of an Agent(s). Agent is not authorized to issue ARC Traffic Documents without the Carrier's direct authority.
11.3. Agent must comply with all Carrier instructions, and must not make any representation a Carrier has not previously authorized.
11.4. Agent must be appointed by a Carrier to identify Carrier on any segment of an issued ARC Traffic Document.
11.5. Carrier may terminate Agent's appointment at any time with written notice. ARC will provide notice to System Providers to inhibit issuance of ARC Traffic Documents on that Carrier upon termination by the Carrier of an Agent's (specific or general) appointment.
11.6. If Agent fails to pay a Debit Memo sent by Carrier, or is in default to Carrier under this Agreement, excluding liability for stolen ARC Traffic Documents, Carrier may terminate its appointment of Agent.
12. Retention and Inspection of Agent Records
12.1. Agent must retain copies of the documents listed in Section C of the IAH for a period of at least 2 years from Submission Deadline for those documents.
12.2. Agent acknowledges and agrees that ARC and its designees have the right to inspect Agent's records to ensure compliance with the terms of this Agreement.
12.3. Agent will be apprised of the purpose or occasion for an inspection, and will be obligated to provide only those documents material and relevant to the examination, and that are requested by the authorized representative. ARC will provide a copy of a written report prepared by the ARC representative who has completed an inspection of Agent's books and records.
12.4. At any time, a Carrier may examine Agent's records concerning ARC Traffic Documents issued by Agent on the Carrier's behalf.
13. Reviews of Breaches by Agent
13.1. In situations where it appears to ARC that there may be or has been fraudulent conduct on the part of Agent (such as falsification of traffic documents and sales reports, misuse of the IAR system, as well as those activities described in Section F of the IAH), and there is a clear and present danger of substantial loss to ARC or Carriers, ARC may:
13.1.1. Immediately remove Agent's paper-format ARC Traffic Documents;
13.1.2. Notify Carriers; or
13.1.3. Notify System Providers to inhibit the issuance of ARC Traffic Documents, in paper and electronic format, by all of Agent's Locations and all Agents under Common Control with Agent.
13.2. For any actions taken by ARC under Section 13 of this Agreement, Agent has the right to appeal to the Arbiter on an expedited basis using procedures established by the Arbiter. ARC will terminate Agent's Agreement without further notice if all of the following actions do not occur within 10 calendar days after the date of ARC's demand notification to Agent:
13.2.1. Arbiter has received an appeal from Agent;
13.2.2. ARC has received all ARC Traffic Documents (paper format) entrusted to Agent; and
13.2.3. ARC has received from Agent the original of a properly executed "Personal Guaranty of Payment and Performance" found in Section G of the IAH.
13.3. Upon termination of Agent's Agreement under this Section, ARC will take action as directed in Subsections 6.7 and 6.8 of this Agreement.
14. ARC Tools and Online Services
14.1.1. Agent acknowledges and agrees that any communication or business transaction with ARC through an ARC Tool (e.g., an application, form or request) by any individual who has been granted access to the ARC Tool by the Agent's My ARC Primary Administrator or Tool Administrator, will be deemed to have been submitted and authorized directly by the Agent. Such submissions will have the same force and effect as if they were submitted and/or signed (where applicable) directly by an owner or officer of the Agent.
15. Change of Agent Name, Physical Address, Operational E-mail, Officer(s), or Designated Personnel; Abandonment of Location
15.1. Purpose: Agent must maintain accurate information on record with ARC, in the required form and manner, in order to facilitate timely communication and efficient operations.
15.2. Agent must notify ARC (in writing) of any change in Agent's legal name at least 30 calendar days prior to the change. The name change must meet the requirements in Subsection 8.3.5 of this Agreement.
15.3. Agent must notify ARC (in writing) of any address change within 30 calendar days of the change.
15.3.1. ARC will notify Agent if there is reason to believe, based on any reliable evidence, that Agent has abandoned its Location(s) and/or ceased operations without prior written notice.
15.3.2. If Agent fails to respond within 15 days of the date of ARC's notice described in 15.3.1, this Agreement will be terminated on the 16th day after the date of the notice and ARC will take action as directed in Subsections 6.7 and 6.8.
15.4. Whenever the legal name or address of Agent changes, Agent must:
15.4.1. Execute an amendment to the Memorandum of Agreement reflecting Agent's new legal name; and
15.4.2. Provide a Financial Instrument, in the correct amount and form required by ARC, which includes Agent's new legal name and address;
15.5. ARC will update the ARC Agency List and notify Carriers of Agent's change of name and/or address.
15.6. Change of Agent's Operational E-mail Address
15.6.1. Agent must notify ARC (in writing) of any change to Agent's Operational E-mail Address within one business day of the change, according to instructions provided in Section A of the IAH.
15.6.2. Failure to provide ARC with timely notification of Agent's change of e-mail address does not relieve Agent of liability for adhering to the requirements of this Agreement and the IAH.
15.7. Change of Officer(s) or Identity of Officer(s)
15.7.1. Agent must provide written notice to ARC within 30 calendar days of the removal or addition of any officer(s), or any other change in the identity of its officers (e.g., change in married name). This provision does not apply if Agent is a publicly traded Entity. A publicly traded Entity is one whose shares are listed on a securities exchange or are regularly traded in an over-the-counter market.
15.8. Change of Designated Personnel
15.8.1. Agent must notify ARC (in writing) of any change to the designated personnel listed in Subsection 8.3.6 of this Agreement.
15.9. If Agent fails to timely notify ARC of any changes referenced in this Section 15, or the changes do not meet the requirements of this Agreement, ARC may take appropriate action consistent with Part VI of this Agreement.
16. Change of Ownership
16.1. Agent may not assign or transfer this Agreement without the prior written approval of ARC. For purposes of this Agreement, a merger, sale, or transfer of all, or substantially all, of Agent's assets will constitute an assignment or transfer that requires ARC's prior written approval if those assets include Agent's rights and obligations granted in this agreement including, without limitation, Agent's right to ARC Traffic Documents. See Section I of the IAH for examples of types of ownership changes. This provision does not apply if Agent is a publicly traded Entity.
16.2. Agent remains liable for all obligations to ARC and Carriers that accrue prior to ARC's approval of the ownership change until ARC enters into an Agent Reporting Agreement with the proposed new owner(s). ARC will notify Carriers when an application is received and when an application is approved, withdrawn, or disapproved.
16.3. If ARC determines that an ownership change has occurred without ARC's written approval, ARC may take appropriate action consistent with Part VI of this Agreement.
16.4. If ARC disapproves an application for a change of ownership, the applicant may obtain a review by the Arbiter of the disapproval in accordance with Part VI of this Agreement.
17. Change of Ownership Due to Death of Agent Sole Proprietor or Partner
17.1. On notification of the death of Agent sole proprietor or partner, ARC will take action as described in Section I of the IAH.
18. Temporary Closure
18.1. In the event of a situation beyond Agent's control, such as fire, flood, or illness, Agent may request to temporarily close its Location(s) in accordance with procedures provided in Section J of the IAH.
Part III: Ticketing and Sales Reporting
19. Purpose: Part III of this Agreement describes requirements for the proper and correct issuance, reporting, and settlement of ARC Traffic Documents.
20. Ticketing Requirements
20.1. Agent will use the ticketing identification of any Carrier scheduled to participate in the transportation provided Carrier has authorized Agent to do so.
20.2. In the event ticketing identification of a Carrier scheduled to participate in the transportation is not available, Agent will use the identification of any other ARC Carrier who has provided authorization for such use.
20.3. No segment will be permitted on any Carrier for which Agent has not received prior authorization.
20.4. The information shown on any delivered documents must be in accordance with the applicable rules, regulations, and instructions furnished to Agent by ARC or by Carriers.
21. ARC Traffic Documents
21.1. Agent must exercise reasonable care, as described in Section B of the IAH, in the issuance or disclosure of ARC Traffic Documents, data, or numbers to prevent the unauthorized issuance or use of such ARC Traffic Documents, data, or numbers.
21.2. Reasonable care includes effective, electronic challenge and authentication, such as Log-in Credentials, including, for example, Usernames, PIN and password of any user accessing agent hardware, systems, or any other systems or hardware that can be used to issue ARC Traffic Documents, data, and numbers in an electronic format.
21.3. Agent must implement appropriate physical, electronic, and managerial procedures and systems to prevent unauthorized access to, issuance, or use of ARC Traffic Documents and related Transactional Data. See Section B of the IAH.
21.4. Agent must only use ARC Traffic Documents supplied to it by ARC for Transactions issued under this Agreement.
21.5. In the absence of specific permission of a Carrier,
21.5.1. Agent must process Transactions issued on ARC Traffic Documents with the same form of payment provided by the client.
21.5.2. Agent must not use a credit card which is issued in the name of the Agent, or in the name of any of the Agent's personnel, or in the name of any third party (other than the client), for Transactions issued on ARC Traffic Documents.
21.6. Agent must not disclose to, or otherwise give, any third party a client's credit card information, except when the disclosure is necessary for Agent to perform its obligations under this Agreement.
21.7. Agent may refund any fare or charge applicable to air transportation only if sold by Agent and for which Agent has issued an ARC Traffic Document. Agent will issue refund(s) only to the person authorized to receive the refund(s) and according to the tariffs, rules, regulations, and instructions issued by Carriers.
21.8. Unless granted explicit authority by the ticketing Carrier whose ARC Traffic Document is to be issued, Agent will not:
21.8.1. Issue an ARC Traffic Document in exchange for any traffic document previously issued by another agent or Carrier; or
21.8.2. Issue an ARC Traffic Document in exchange for a traffic document previously issued by Agent naming another Carrier as the ticketing Carrier.
22. Agent must deliver to its clients:
22.1. Proper and correct ARC Traffic Documents; and
22.2. All supporting documentation authorized or required by Carriers.
23. Delivery and Withdrawal of ARC Traffic Documents
23.1. Upon Agent's proper request and payment of fees, ARC will supply Agent with paper-format ARC Traffic Documents.
23.2. The terms governing Agent's security of ARC Traffic Documents, and the manner in which ARC Traffic Documents may be issued and must be accounted for are set forth under this Agreement, instructions provided by ARC, and in Section B of the IAH.
23.3. All ARC Traffic Documents supplied to Agent must be held in trust for ARC by Agent until issued to Agent's clients, or until otherwise accounted for to ARC or Carriers, and must be surrendered to ARC upon demand pursuant to this Agreement.
23.4. This Agreement does not confer upon Agent, nor will Agent otherwise be deemed to have, any ownership interest in any ARC Traffic Documents, or any other Transactional information or data supplied to Agent under this Agreement.
23.5. ARC Traffic Documents (paper format) supplied for issuance at a specified Location covered by this Agreement must not be filled out or validated at any other Location.
23.6. Agent will not accept custody of, or deliver, blank, pre-validated, or partially written ARC Traffic Documents not previously assigned to Agent under this Agreement. Should Agent be approached by another Agent to distribute blank, pre-validated, or partially written ARC Traffic Documents, or to distribute ARC Traffic Documents not provided to Agent through the System Provider (electronic format), Agent must immediately notify the ARC Fraud Prevention Department.
24. Submission of Agent Sales Report(s)
24.1. Agent must Submit its Sales Report(s) in compliance with the instructions provided in this Agreement and Section K of the IAH.
24.2. Agent must Submit the Sales Report to ARC no later than the Submission Deadline.
24.3. Agent must Submit its Sales Report(s) to ARC via IAR.
24.4. Agent will be subject to the additional operating requirements of Section 34 if, during any 12-month period, two or more of Agent's Sales Reports have not been Submitted by the next business day after ARC's notice to Agent and such Sales Reports are ultimately Submitted prior to the termination date of this Agreement.
24.5. Agent's Sales Report(s) must:
24.5.1. Account for and include all ARC Traffic Documents issued and validated during the Sales Report Period;
24.5.2. Confirm the accuracy of data included in the Sales Report; and
24.5.3. Authorize a settlement amount reflecting the maximum amount to be drawn by ARC from Agent's designated account. ARC will not draft for more than the authorized amount.
25. Settlement of Sales
25.1. Agent acknowledges and agrees that ARC will, based on Agent's Submitted Sales Report, draft Agent's designated bank account for the authorized amount. No draft shall be presented to the Agent's designated bank account based on information not contained in Agent's Sales Report, except for drafts for amounts stated in this Agreement such as annual, transaction or compensatory fees, or as the Agent may otherwise specifically authorize. The draft will occur no earlier than the fifth calendar day after the close of the Sales Report Period .
25.2. If Agent has no Transactions in its Sales Report during the Sales Report Period, ARC will automatically Submit a "No Sales" Report on Agent's behalf.
25.3. Agent acknowledges and agrees that it remains financially liable and responsible for all Transactions issued by Agent during each Sales Report Period including those not submitted in Agent's Sales Report.
25.4. All monies and credit card billing documents, less applicable commission(s), Agent collects for sales hereunder are property of Carriers, and will be held in trust by Agent until satisfactorily accounted for to Carriers.
26. Transactional Data Collected During Each Sales Period
26.1. All Transactional Data may be reviewed by ARC or Carrier at any time during or after the Sales Report Period.
26.2. Agent acknowledges that all Transactional Data may be used by Carriers and ARC for processing Transactions , and any other lawful purpose .
27. Other Authorized Settlement Arrangements
27.1. Carrier will give good faith consideration to alternative settlement arrangements, and nothing contained in this Agreement precludes either Agent or Carriers from proposing that Agent either:
27.1.1. Settle amounts owed to Carrier pursuant to a Variable Remittance Plan (described in Section L of the IAH) for Transactions Agent has Submitted for that Carrier; or
27.1.2. Use that Carrier's Traffic Documents.
27.2. Carrier refusal to enter into an alternate settlement arrangement is not, in itself, evidence of bad faith.
Part IV: Financial Obligations
28. Purpose: Part IV of this Agreement describes the financial requirements necessary to ensure accurate and proper accounting, reporting, and settlements of funds between ARC, Agent, and Carriers.
29. Agent Bank Account
29.1. Agent must designate a bank account, for the benefit of ARC and Carriers, for the deposit of:
29.1.1. Proceeds, held in trust, for the sales of air transportation and ancillary services for which ARC Traffic Documents were issued; and
29.1.2. Funds that may be required to pay any other amount ARC is authorized to draft from the account.
29.2. Agent must give ARC written notice of Agent's intention to change bank accounts at least 7 business days prior to the beginning of the affected Sales Report Period.
30. Financial Instrument
30.1. Purpose: Agent's Financial Instrument is used after termination of the Agent's ARA in order to cover all amounts owed by Agent to Carriers and ARC for Transactions issued on ARC Traffic Documents supplied in trust to Agent. This includes, but is not limited to, all amounts owed for Transactions that have been used but not reported or paid for; amounts owed for dishonored drafts; and amounts owed as a result of the loss misapplication, theft, forgery, or unlawful use of ARC Traffic Documents, unless the Agent has been relieved of liability for such under this Agreement.
30.2. Agent must maintain a Financial Instrument in the form and amount required by ARC for the joint and several benefit of Carriers and ARC . At no time will the Financial Instrument be less than $10,000 or more than $70,000, unless Agent has Associate Branches or becomes subject to the additional operating requirements under Section 34 of this Agreement .
30.3. ARC will inform Agent of the required Financial Instrument amount 90 calendar days prior to the anniversary date of Agent's Financial Instrument. If an adjustment is required, Agent must comply with the new requirement no later than the anniversary date.
30.4. If ARC determines Agent has failed to adjust the form or the amount of its Financial Instrument as required by this Agreement, ARC will apply to the Arbiter for an authorization to:
30.4.1. Remove ARC Traffic Documents (paper format), and notify System Providers to inhibit the issuance of ARC Traffic Documents by Agent and all Agent Locations; and
30.4.2. Notify Carriers that Agent is no longer authorized to issue ARC Traffic Documents.
30.5. If at any time, ARC is notified Agent's Financial Instrument will be, or is, no longer valid, ARC will notify Agent (in writing), and will, on the effective date of the cancellation:
30.5.1. Remove ARC Traffic Documents from Agent; and
30.5.2. Notify System Providers to inhibit issuance of ARC Traffic Documents in paper and electronic format by Agent and all of Agent's Locations.
30.6. Unless Agent provides to ARC a proper replacement Financial Instrument within 30 calendar days after the cancellation, ARC will terminate this Agreement and take action as directed in Subsections 6.7 and 6.8.
30.7. To avoid actions under Subsections 30.4 and 30.5 of this Agreement, Agent may assign a Certificate of Deposit in the form and amount required for the Financial Instrument.
30.7.1. The effective date and ARC's acceptance of the assignment of the Certificate of Deposit must be no later than the date of cancellation of the Financial Instrument.
30.7.2. ARC will accept the assignment of a Certificate of Deposit as a substitute for no more than 30 calendar days from the date of the cancellation.
31. Administrative and Application Fees
31.1. Agent agrees to pay an administrative fee to ARC for each of Agent's Locations to defray a portion of the costs associated with operating the ARC Settlement Plan and half of the costs associated with operating the Travel Agent Arbiter Program, Inc.
31.2. The administrative fee is comprised of two parts: an annual fixed amount for each Location and a fee for Transactions processed through the ARC Settlement Plan (ASP) for each Location. The administrative fee is calculated according to the formula described in Section M of the IAH.
31.3. The administrative fee will be determined by the ARC Board of Directors. ARC will notify Agent (in writing) of the annual fixed amount and the per Transaction fee amount for the following year before the end of the current calendar year.
31.4. Agent authorizes ARC to collect the administrative fee by drafting Agent's designated bank account. Alternatively, Agent must make payment directly to ARC if required by ARC notice.
31.5. Annual Fixed Amount
31.5.1. ARC will draft Agent's annual fixed amount according to the procedures described in Section M of the IAH.
31.5.2. If the annual fixed amount is not paid within 14 calendar days of the due date, ARC may remove Agent or Location involved from the ARC Agency List, terminate this Agreement, and take action as directed in Subsections 6.7 and 6.8 of this Agreement.
31.6. Transaction Fees
31.6.1. ARC will calculate the transaction fee and draft the designated account of each Location on the schedule outlined in Section M of the IAH.
31.6.2. If the transaction fee remains unpaid 14 calendar days after the due date, ARC may remove Agent or Location involved from the ARC Agency List, terminate this Agreement, and take action as directed in Subsections 6.7 and 6.8 of this Agreement.
31.7. Agent agrees to pay all fees related to applications for changes to Agent's status, such as Agent name or ownership. These fees are related to the administrative expenses for processing the application and updating ARC's database. See www.ARCCorp.com for the current application and fee information.
Part V: Defaults and Additional Operating Requirements
32. Purpose: Part V of this Agreement covers financial irregularities that may result in defaults or additional Agent operating requirements.
33.1. Section 33 governs the conditions under which ARC may deem Agent to be in default.
33.2. Dishonored ARC draft
33.2.1. ARC will notify Agent and Agent's surety if a draft for payment of Agent's Sales Reports is dishonored. Agent agrees to wire funds to ARC to cover any dishonored draft by the close of the next business day.
33.2.2. Agent acknowledges that upon failure to comply with the requirements in Subsection 33.2.1, ARC will take action as directed in Subsection 33.5.
33.3. Unreported Sales and Improperly Reported Transactions
33.3.1. ARC will notify Agent if Agent has failed to include in its Sales Report all ARC Traffic Documents issued through the close of the Sales Report Period, or has included other Improperly Reported Transactions.
33.3.2. Unless the Agent wires funds or provides supporting documents within the time frame stated in ARC's notice, to cover the Unreported Sales and/or Improperly Reported Transactions, ARC will notify the Carriers, and, where a clear and present danger of substantial loss is present, ARC will take action as directed in Subsection 33.5.
33.4. Failure to Submit Sales Reports
33.4.1. If Agent has failed to Submit a Sales Report by the Submission Deadline, ARC will notify Agent.
33.4.2. Unless Agent immediately Submits its Sales Report, ARC will take action as directed in Subsection 33.5.
33.5. Consequences of Failure to Pay for Dishonored Draft(s), Unreported Sales and/or Improperly Reported Transactions, and Failure to Timely Submit Sales Reports
33.5.1. If any of the actions in Subsections 33.2, 33.3, or 33.4 of the ARA occur, ARC will:
22.214.171.124. Withdraw from the Agent, and all Agents and Locations under Common Control with the Agent, all ARC Traffic Documents (paper format);
126.96.36.199. Notify Carriers; and
188.8.131.52. Notify System Providers to inhibit the issuance of ARC Traffic Documents (paper and electronic format) by such Agent and Locations.
33.6. Compensatory Fees
33.6.1. ARC will assess compensatory fees as described in Section M of the IAH, and notify Agent of the amount and the date on which payment will be due.
33.6.2. Agent authorizes ARC to collect the compensatory fee by drafting Agent's designated bank account. Alternatively, Agent must make payment directly to ARC if required by ARC notice.
33.7. If Agent Unable to Satisfy Debt
33.7.1. If Agent does not Submit the required Sales Report(s) or fails to make full payment of all amounts owed to Carriers or ARC, on or before the 31st calendar day after the date of ARC's written notice of a default, this Agreement will terminate automatically and without further notice, unless Agent satisfies the requirements outlined in Section K of the IAH.
33.7.2. In accordance with Section K.5 of the IAH, each Agent to whom notice under sections 33.2, 33.3 or 33.4 has been sent will be required to have executed on its behalf and filed with ARC the "Personal Guaranty of Payment and Performance" as set forth in Section G of the IAH if the Agent's financial or reporting irregularities under Section 33.2, 33.3 and 33.4 of the ARA create a danger of substantial loss to ARC and/or the carriers.
33.8. Insufficient Settlement Authorizations
33.8.1. If ARC determines that the amount authorized by Agent is less than the amount owed to Carriers for Transactions issued during the Sales Report Period, ARC will notify Agent of the amount due and request that Agent reauthorize its report (New), provide payment within the time frame stated in ARC's notice, or authorize ARC to draft Agent's bank account for the actual required amount.
33.8.2. If Agent fails to timely pay all amounts owed, or fails to authorize the draft for the required amount, ARC will take such action as it deems appropriate.
34. Requirements for Agents Subject to Additional Operating Requirements
34.1. Agent will be subject to the requirements of this Section if, during any 12-month period, any of the following occur:
34.1.1. Two or more of Agent's drafts for Sales Reports have been dishonored, and are not paid by the close of the following business day;
34.1.2. Two or more of Agent's Sales Reports have not been Submitted by the next business day after notice to Agent from ARC and such Sales Reports are ultimately Submitted prior to the termination date of this Agreement;
34.1.3. Agent has been declared in default pursuant to Section 33 of this Agreement and the amount of the default equals or exceeds the amount of Agent's Financial Instrument ; or
34.1.4. Agent has been declared in default pursuant to Section 33 of this Agreement two or more times, regardless of the amount of the default.
34.2. A Sales Report will not be considered late for the purposes of Section 34 if Agent provides evidence of timely Submission or if Agent qualifies for an exemption under the conditions stated in Section K of the IAH.
34.3. ARC will notify Agent (in writing) and Carriers 30 calendar days (New) in advance of the date when the additional operating requirements are effective (effective date). The notice will also inform Agent of the additional operating requirements that must be accomplished prior to the effective date stated in the notice. These requirements will include:
34.3.1. A Financial Instrument, in the form required by ARC, and in an amount equal to or greater than Agent's net cash remittances for a current 6-week period (New). The Financial Instrument may be a rider or amendment to the existing Financial Instrument and will be calculated to take into account the amount of the existing Financial Instrument;
34.3.2. ARC's rejection of any application to open additional Location(s) submitted or pending while Agent is subject to this Section; and
34.3.3. Execution of the "Personal Guaranty of Payment and Performance" as set forth in Section G of the IAH.
34.4. Requirements of Subsection 34.3 may also include the establishment of an automatic overdraft protection agreement, to be provided to ARC in writing from Agent's bank.
34.5. If Agent is not in compliance as of the effective date of this Section, or at any time during the 12-month period following the effective date stated in the notice, ARC will terminate this Agreement with Agent and take action as directed in Subsections 6.7 and 6.8 of this Agreement.
34.6. If, following the effective date of this Section, and Agent's compliance with the provisions of Subsections 34.3 and 34.4 of this Agreement, there are no instances of dishonored drafts, late reports, or defaults within a 12-month period, ARC will remove the additional operating requirements of this Section and notify Carriers.
34.7. If, following the effective date of this Section, there is an additional dishonored draft, late report, or default, ARC will terminate this Agreement and take action as directed in Subsections 6.7 and 6.8 of this Agreement.
34.8. Agent may appeal to the Arbiter ARC's determination that Agent is subject to this Section. The appeal will be given expedited consideration, and while the appeal is pending, this Section will continue to apply to Agent unless or until the Arbiter rules in favor of Agent or Agent's compliance with Subsections 34.3 and 34.4.
Part VI: Travel Agent Arbiter
35. Disputes between Agent and ARC must be resolved by the Arbiter according to the rules and procedures determined by the Arbiter. The Arbiter's decision will be final and binding. However, neither Agent nor ARC is prohibited from seeking judicial relief to enforce the Arbiter's decision or to compel compliance with this Agreement prior to filing of an answer, or other responsive pleading, in a proceeding concerning such requirement or prohibition before the Arbiter.
Part VII: Liability and Waiver of Claim
36. Agent acknowledges and agrees that:
36.1. Carrier will indemnify and hold harmless Agent, and Agent's officers and employees, from all responsibility and liability for any damage, expense, or loss to any person, Entity, or thing caused by or arising from any negligent act, omission, or misrepresentation of Carrier; or Carrier's representatives, agents, or employees relating directly or indirectly to the performance of the duties and obligations of the Carrier under this Agreement.
36.2. Agent will indemnify and hold harmless Carrier and ARC; and Carrier and ARC officers, agents, and employees from all responsibility and liability for any damage, expense, or loss to any person, Entity, or thing caused by or arising from any negligent act, omission, or misrepresentation of Agent; or Agent's representatives, agents, or employees relating directly or indirectly to the performance of the duties and obligations of Agent under this Agreement.
36.3. Unless Agent is determined not to be liable under Subsection 36.4, Agent will be liable for (and will indemnify and hold harmless Carrier; and Carrier's officers, agents, and employees from) any and all damage, expense, or loss incurred on account of the loss, misapplication, theft, forgery, or unlawful use of ARC Traffic Documents (paper or electronic format), or other supplies furnished by or on behalf of the Carrier to Agent.
36.4. Agent will not be liable for resulting losses, if, at the time of a proven theft or unlawful use, Agent is determined by ARC to have met all of the following requirements:
36.4.1. Agent has been in compliance with the Security Guidelines for Traffic Documents in Section B of the IAH;
36.4.2. Agent has exercised reasonable care for the protection of ARC Traffic Documents (paper and electronic format);
36.4.3. Agent, upon discovery, immediately has reported the theft or unlawful use to the appropriate law enforcement authorities; and
36.4.4. Agent has promptly notified the ARC Fraud Prevention Department, by telephone, fax, or e-mail, of the particulars of such theft or unlawful use.
36.5. The exemption in Subsection 36.4 does not apply in cases where losses are due to the theft or unlawful use of ARC Traffic Documents by Agent, or Agent's employees or independent contractors.
36.6. Unless Agent is relieved of liability pursuant to this Section, proceeds of the Financial Instrument will be applied to any and all damage, expense, or loss, on account of the loss, misapplication, theft, forgery, or unlawful use of ARC Traffic Documents, ARC-issued numbers, or other supplies furnished by or on behalf of Carrier to Agent.
36.7. Reasonable care, as used here, includes, but is not limited to, compliance with the safeguards required in IAH, Section B. In making the determination of reasonable care, ARC may rely on the findings of the ARC fraud investigators, representatives, or cooperating security officers of Carriers. If ARC determines Agent did not exercise reasonable care, ARC will inform Agent of the specific details in which Agent failed to exercise reasonable care. Agent may appeal ARC's determination to the Arbiter pursuant to Part VI of this Agreement.
36.7.1. If ARC files a complaint with the Arbiter alleging Agent failed to comply with safeguards set forth in Section B, ARC shall rely on the finding of the Arbiter in determining whether or not reasonable care was exercised by Agent.
36.8. Agent expressly waives any and all claims, causes of action, or rights to recovery based upon libel, slander, or defamation by reason of publication of asserted grounds or reasons for removal from the ARC Agency List or such other action which may have been required, or of alleged violations or other charges for which review of Agent's eligibility is requested, as is reasonably related to the performance of appropriate functions specified for ARC, its officers and employees, representatives, or the Arbiter.
36.9. If ARC uses legal counsel to (i) enforce its right to repossess ARC Traffic Documents (paper format) because Agent failed or refused to surrender them upon demand made pursuant to this Agreement, and/or (ii) otherwise obtain compliance by Agent with the provisions of this Section, Agent shall also be liable to ARC for any and all attorney's fees, and also for any additional costs actually incurred by ARC for the collection for costs of this action, if ARC's action is adjudicated or otherwise resolved in ARC's favor. If ARC's action is adjudicated or otherwise resolved in favor of Agent, ARC must reimburse Agent for all costs incurred, and for the reasonable fees of Agent's attorneys, in defending itself against ARC's action. The term "costs" as used here includes, but is not limited to, court costs, litigation bond premiums, private investigator fees incurred in attempting to locate Traffic Documents, and locksmith fees.
36.10. If ARC uses legal counsel to enforce its right to inspect Agent's books and records because Agent failed or refused to permit an inspection upon demand made pursuant to this Agreement, Agent must reimburse ARC for all costs incurred, and for the reasonable fees of ARC's attorneys, if ARC's demand is adjudicated or otherwise resolved in ARC's favor. If ARC's demand is adjudicated or otherwise resolved in favor of Agent, ARC must reimburse Agent for all costs incurred, and for the reasonable fees of Agent's attorneys, in defending itself against ARC's demand. The term "costs" as used here includes, but is not limited to, court costs and litigation bond premiums.
36.11. Agent agrees to indemnify and hold Carrier harmless from and against any claim arising from the failure of Agent to refund to the authorized refund payee the proper amount of fare or other charges collected.
36.12. Agent agrees that whenever an ARC representative must go to an Agent or other location to remove ARC Traffic Documents, collect funds due hereunder, etc., Agent will pay the out-of-pocket special service costs incurred by ARC in conjunction with such action.
36.13. Agent assumes liability for use, misuse, or unauthorized use of Agent's Log-in Credentials supplied by ARC, regardless of whether the Log-in Credentials were created by Agent or by ARC. Agent will indemnify, defend, and hold harmless ARC; ARC's owners, directors, officers, employees, representatives, and participating Carriers, from injury or damage to any person, property, or Entity including, but not limited to Agent, resulting from any such use, misuse, or unauthorized use of Agent's Log-in Credentials.
Part VIII: Waiver and Severability
37. A waiver by any party of any breach or default by another party will not be construed as a waiver of any other breach or default whether or not similar and whether or not occurring before or after the subject breach.
38. If any provision of this Agreement is held invalid in a court of law or equity, the remaining provisions will remain in full force and effect and will be construed as if the invalid provisions were not included in this Agreement.
Part IX: Definitions
39. For the purposes of this Agreement:
39.1. ACCREDITATION means Agent's application and Location(s) have been approved by ARC and have been included on the ARC Agency List.
39.2. AGENT means any Entity approved by ARC to issue ARC Traffic Documents.
39.3. ARBITER means the Travel Agent Arbiter established as an independent entity (Travel Agent Arbiter Program Inc.) to decide disputes between ARC, Agents, and applicants.
39.4. ARC AGENCY LIST means the list owned and maintained by ARC, which includes, among other things, the name, address, and ARC number(s) used to identify each Location that has been approved by ARC.
39.5. ARC NUMBER is ARC's 8-digit identifier for each Agent Location.
39.6. ARC SETTLEMENT PLAN (ASP) is the system through which Agent reports and settles ARC Traffic Documents issued on behalf of Carriers.
39.7. ARC SPECIALIST is a person who has passed, and maintains the requirements of, the ARC Specialist examination.
39.8. ARC TRAFFIC DOCUMENTS means all industry standard forms and documents (paper and electronic) that ARC may provide to Agent, in trust, and for which Agent is responsible. This term does not include Carriers' own traffic documents.
39.9. CARRIER means any Entity that has executed the ARC Carrier Services Agreement or is otherwise authorized by ARC to take part in ARC programs as a participating Carrier for purposes of this Agreement.
39.10. COMMON CONTROL means two or more Agents controlled by the same Entity or Entities.
39.10.1. CONTROL or CONTROLLED means the power or authority to manage, direct, superintend, restrict, regulate, govern, administer, or oversee; and the term embraces every form of Control, actual or legal; direct or indirect; negative or affirmative; individual, joint, several, or family, without regard to the type or number of intervening or supervening persons involved.
39.11. CREDIT MEMO means any written or electronic transmission from a Carrier to Agent authorizing Agent to deduct a specified dollar amount from Agent's Sales Report.
39.12. DEBIT MEMO means a written or electronic transmission from a Carrier to Agent for payment of an Agent obligation.
39.13. ENTITY includes, but is not limited to, a sole proprietor, corporation, partnership, association, company, or firm.
39.14. FINANCIAL INSTRUMENT means bond, irrevocable letter of credit and/or a cash security deposit.
39.15. GENERAL CONCURRENCE means a Carrier's authorization to ARC to appoint all Agents on the ARC Agency List on Carrier's behalf.
39.16. IMPROPERLY REPORTED TRANSACTION means an ARC Traffic Document(s) Submitted in Agent's Sales Report that contains unauthorized, false, and/or inaccurate data. Improperly Reported Transaction does not include those Transactions corrected prior to Submission.
39.17. INDUSTRY AGENTS' HANDBOOK (IAH) means the ARC-authored document (print or electronic) that contains additional rules and instructions under this Agreement. The IAH is incorporated by reference as though fully set forth in this Agreement.
39.18. INTERACTIVE AGENT REPORTING (IAR) means the ARC tool through which Agent accesses and Submits its Sales Reports.
39.19. LOCATION means a place of business operated by Agent that is both approved by ARC and on the ARC Agency List. Location types include the following:
39.19.1. INDEPENDENT means any Location that does not have a Branch or Associate Branch;
39.19.2. HOME OFFICE means any Location that has one or more Branches or Associate Branches;
39.19.3. BRANCH means any Location that is wholly owned by the Agent's Home Office as a single entity, which has full responsibility for the Branch under this Agreement; and
39.19.4. ASSOCIATE BRANCH means any Location which is not a single entity with the Home Office, in which the Home Office, or the Entity that owns the Home Office, has any ownership interest. The Home Office has full responsibility for the Associate Branch under this Agreement. The requirements for the Associate Branches are set forth in Section N of the IAH.
39.19.5. Additional Office Types
184.108.40.206. The requirements relating to ticket fulfillment locations remain in effect and are found in Section O of the IAH.
220.127.116.11. Satellite ticket printer locations and centralized service locations, included on the ARC Agency List prior to January 1, 2013, remain in effect. Refer to Section O of the IAH.
39.20. LOG-IN CREDENTIAL means the unique credentials, including, without limitation, the Username, User ID, password, or responses to identity verification questions, which Agent uses to access ARC's systems.
39.21. MANAGEMENT QUALIFIER is the appointed Agent or Agent employee responsible for Agency's operations.
39.22. MEMORANDUM OF AGREEMENT is the Agreement signature page by which Agent and ARC consent to be bound by the terms of this Agreement. ARC signs on behalf of ARC and Carriers.
39.23. OPERATIONAL E-MAIL ADDRESS means the e-mail address Agent has designated for receiving directives and other critical notices from ARC.
39.24. PERIOD ENDING DATE (or PED) means the last day of the Sales Report Period, Sunday.
39.25. SALES REPORT means the list in IAR of all Transactions issued by Agent with Agent's ARC Number during the Sales Report Period.
39.26. SALES REPORT PERIOD means the 7-day period, Monday through Sunday, during which Transactions are issued.
39.27. SPECIFIC APPOINTMENT is when a Carrier specifically appoints Agent(s). Agent is not authorized to issue ARC Traffic Documents without Carrier's direct authority to do so.
39.28. SUBMISSION DEADLINE means the date and time by which a Sales Report is required to be Submitted. The Submission Deadline is 11:59 p.m. EST of the Tuesday following the end of the Sales Report Period, or the Wednesday following the end of the Sales Report Period if Monday or Tuesday is a holiday designated in the IAH.
39.29. SUBMIT means certifying the accuracy of Transactions in the Sales Report and authorizing the settlement amount associated with the Sales Report.
39.30. SYSTEM PROVIDER means a non-ARC Entity, whose services Agent uses to issue ARC Traffic Documents and/or in support of its reporting obligations under this Agreement. System Providers have entered into agreements with ARC and Carriers in support of these service offerings. System Providers include, but are not limited to, Computerized Reservation Systems (CRSs) and Global Distribution Systems (GDSs).
39.31. TRANSACTION or TRANSACTIONAL DATA means the ticketing and other information included in the Sales Report.
39.32. UNITED STATES includes the fifty states, the District of Columbia, and any U.S. territory, including, but not limited to Puerto Rico, the U.S. Virgin Islands, and American Samoa.
39.33. UNREPORTED SALE means a Transaction completed using any ARC Traffic Document(s) that has not been Submitted by Agent.
39.34. VARIABLE REMITTANCE PLAN is an arrangement negotiated between an individual Carrier and Agent, under which Agent settles ARC Traffic Documents directly with an individual Carrier.
39.35. VERIFIED TRAVEL CONSULTANT (VTC) means an ARC-approved Entity that is not authorized to issue ARC Traffic Documents on behalf of Carriers.