Section 135-7-003 - Terms and Conditions of the Bond003.01 Replacement of Bonds 003.01A The Department may allow the permittee to replace an approved bond with another type of bond described in 002 above, if the liability which has accrued against the permittee on the permit area is transferred to such replacement bonds.003.01B The Department shall not release existing bonds until the permittee has submitted and the Department has approved acceptable replacement bonds.003.02 Surety bonds shall be subject to the following conditions:003.02A The bond may be subject to cancellation by the surety company; provided that, no such cancellation, nor release of the surety company's liability under the bond, shall be effective sooner than one hundred twenty days following receipt by the Department and the permittee of written notice of cancellation sent by certified mail, return receipt requested. Such one hundred twenty day period shall be measured from the later of the receipt by the Department or permittee of such notice. In the event of cancellation, the permittee must provide a replacement bond in accordance with subsection 003.01 no later than forty-five days prior to the effective date of cancellation specified in the notice. Failure of the permittee to obtain a replacement bond shall result in revocation of its bond.003.02B The bond shall provide that the surety and the permittee shall be jointly and severally liable to the amount of such bond.003.02C The bond shall provide that: 003.02C1 The surety will give prompt notice to the permittee and the Department of any notice received or action filed alleging the insolvency or bankruptcy of the surety, or alleging any violation of regulatory requirements that could result in suspension or revocation of the surety's license to do business;003.02C2 In the event the surety becomes unable to fulfill its obligations under the bond for any reason, notice shall be given immediately to the permittee and the Department; and003.02C3 Upon the incapacity of a surety by reason of bankruptcy, insolvency or suspension or revocation of its license, the permittee shall obtain a replacement bond within sixty days. Failure of the permittee to obtain a replacement bond shall result in revocation of its permit.003.03 Collateral bonds, except for letters of credit, shall be subject to the following conditions: 003.03A The Department shall value collateral at its current market value, not face value; and003.03B The Department shall only accept certificates of deposit which are automatically renewable.003.04 Irrevocable letters of credit shall be subject to the following conditions: 003.04A The letter shall be payable to the State of Nebraska in part or in full upon demand and receipt from the Department of a notice or forfeiture pursuant to section 005.03 below;003.04B The letter shall contain terms which authorize the Department to draw upon the letter, in full, to obtain cash collateral in the event the permittee has failed to furnish a replacement bond at least thirty days prior to the expiration of the letter; and003.04C The total amount of letters of credit that will be accepted from any bank for any permittee, on all permits held by the permittee, shall not exceed the bank's maximum legal lending limit as required by the appropriate Nebraska or Federal banking regulatory agency.003.04D The letter of credit shall provide that: 003.04D1 The bank shall give prompt notice to the permittee and the Department of any notice received or action filed alleging the insolvency or bankruptcy of the bank, or alleging any violations of regulatory requirements which could result in suspension or revocation to the bank's charter or license to do business; 003.04D2 In the event the bank becomes unable to fulfill its obligations under the letter of credit for any reason, notice shall be given immediately to the permittee and the Department; and003.04D3 Upon the incapacity of a bank by reason or bankruptcy, insolvency, or suspension or revocation of its charter or license, the permittee shall obtain a replacement bond within sixty days. Failure of the permittee to obtain a replacement bond shall result in revocation of its permit.135 Neb. Admin. Code, ch. 7, § 003