Section 16-117-26 - Performance or guaranty type of bond and irrevocable letter or credit(a) The bond shall be a performance or financial guaranty type bond naming the director as the obligee issued by a surety authorized to do business in this State, and which provides that: (1) The bond may be cancelled by the activity desk only if the activity desk gives sixty days prior written notice to the surety and to the director; or(2) The surety may cancel the bond if the surety gives thirty days prior written notice to the director; and(3) The surety shall remain liable for any claims against the bond for a period of six months after cancellation of the bond if any debts are incurred by the activity desk while the bond was in effect and the director notifies the surety of any claims within ninety days of discovery of any claims.(b) The irrevocable letter of credit shall be a guarantee of payment to any consumer who may suffer loss as a result of non-performance by the activity desk for a term of at least one year issued by a federally insured lending institution authorized to do business in the State and shall provide that:(1) Automatic extensions of coverage may be made for additional annual periods;(2) Cancellation may be made by the activity desk only if the activity desk gives prior written notice by certified mail to the director and to the issuer at least ninety days before the letter's expiration date or the date the activity desk intends the coverage to cease being effective, or the issuer gives written notice by certified mail to the director at least sixty days before the expiration date; and(3) The issuer shall remain liable for any claims against the irrevocable letter of credit for a period of six months after the expiration or cancellation of coverage if any debts are incurred by the activity desk while the coverage was in effect and if the director notifies the issuer of any claims within ninety days of discovery of any claims.(c) The amount of coverage of the bond or irrevocable letter of credit shall be equal to the average monthly net sales revenues for a twelve-month period for the activity desk and all branch offices but shall not be less than $50,000 and shall not be more than $100,000.(d) A desk which provides the bond or irrevocable letter of credit for the maximum amount of $100,000 need not submit a notarized report on the monthly net revenues.(e) All applicants applying after March 31, 1993 shall be required to provide coverage of not less than $75,000.(f) Activity desks applying for registration upon adoption of this chapter through March 31, 1993 shall base the initial coverage amount on the average monthly net sales revenues of the activity desk and all branch offices for the twelve-month period ending on June 30, 1992. However, if an activity desk does not have a full twelve-month revenue period on which to base the amount, the coverage amount shall not be less than the average monthly net sales revenue as determined by the months available; provided that the coverage shall not be less than $75,000.(g) The required coverage shall be provided by a single bond or by a single irrevocable letter of credit and shall cover all branch offices of the activity desk. In no case shall the required coverage amount be provided for by multiple bonds or letters of credit or by any combination of bonds or letters of credits.[Eff 1/16/93] (Auth: §§ -2, -17, Act 231, SLH 1992) (Imp: § -10, Act 231, SLH 1992)