1. (a) A bond required under the Alcoholic Beverage Code, §11.11 and §61.13, must be executed only on forms prescribed by this agency with the licensee or permittee as principal, a qualified surety company doing business in this state as surety and the state as payee.
2. (b) All bonds of permittees and licensees shall be payable in Travis County.
3. (c) A separate surety, in the amount of $5,000 or $10,000, shall be obtained, submitted and maintained for each license or permit as set out in the Alcoholic Beverage Code, §11.11 and §61.13.
4. (d) If certificates of deposit, savings accounts or letters of credit are furnished, the administrator or his designee shall keep them in his possession. Interest earned on a certificate of deposit or savings account is not subject to the assignment and remains the property of the owner of the certificate of deposit or savings account.
5. (e) A certificate of deposit or savings account furnished by a licensee or permittee must be assigned to the state, in a manner approved by the administrator or his designee, to secure payment to the state.
6. (f) A letter of credit furnished by a licensee or permittee, under this rule, must be on a form approved by the administrator or his designee and contain any conditions required by the administrator to secure payment to the state.
7. (g) The surety bond, assignment of certificate of deposit, savings account, or letter of credit may be continuous in nature and must cover the minimum time required of the applicant to qualify for exemption from the surety imposed by the Alcoholic Beverage Code, §11.11 and §61.13.

8. (h) Qualifications of Surety.

   1. (1) A surety company, to qualify to provide bonds under this rule, must be licensed by this state and in "good standing" with the State Board of Insurance, Comptroller of Public Accounts, Secretary of State and any other regulatory agencies with jurisdiction over its affairs.
   2. (2) A bank, savings institution or credit union, in addition to the requirements of the Alcoholic Beverage Code, §11.11 and §61.13, must have a physical facility in this state to accept cash deposits, make cash advances to customers and carry out day-to-day operations within this state.

9. (i) Submission of Security.

   1. (1) An applicant for an original or renewal license or permit must submit, at the time of their application, the security as prescribed by the Alcoholic Beverage Code, §11.11 and §61.13, and meet the requirements of this rule.
   2. (2) Failure to submit the necessary surety in proper form will result in the denial of the application.

10. (j) Forfeiture of the Bond.

    1. (1) When a license or permit is cancelled, or a final adjudication that the licensee or permittee has committed three violations of the Alcoholic Beverage Code since September 1, 1995, the commission shall notify the licensee or permittee, in writing, of its intent to seek forfeiture of the bond.
    2. (2) The licensee or permittee may, within 30 days of the notice specified in paragraph (1) of this subsection, request hearing on the question of whether the criteria for forfeiture of the bond, as established by the Alcoholic Beverage Code, §11.11 and §61.13, and this rule have been satisfied. The hearing shall be conducted in accordance with the Administrative Procedure Act.
    3. (3) Evidence that an agent or servant of the licensee or permittee has been adjudicated guilty of, or granted deferred adjudication for, an offense under the Alcoholic Beverage Code, because of conduct occurring during the performance of his/her duties for the licensee or permittee, shall constitute evidence of an adjudication that the licensee or permittee has violated a provision of the Alcoholic Beverage Code. This paragraph only applies to violations which were not attributable to the licensee or permittee because of the operations of the Alcoholic Beverage Code, §106.14.
    4. (4) Upon entry of final order against the licensee or permittee in the hearing described in paragraph (2) of this subsection, or upon waiver of said hearing by the licensee or permittee, the commission shall notify the surety company, bank, savings institution or credit union to remit to the state the amount of surety required within ten days after notification.
    5. (5) The commission may institute action in its own name, for the benefit of the state, on the surety supporting the bond, and against the bank, savings institution or credit union, as set forth in the Alcoholic Beverage Code, §11.70, to recover the surety.

11. (k) Release of Surety.

    1. (1) A surety company may terminate liability by giving the proper 30 day written notice, as provided in the Alcoholic Beverage Code, §11.71.
    2. (2) Grounds for termination of a permit/license upon termination of liability by surety is the same as provided in the Alcoholic Beverage Code, §11.71.
    3. (3) Upon expiration of the license or permit, its voluntary cancellation, or upon the applicant's subsequent approval for exemption from the surety requirement, the licensee or permittee may request the release and return of the security supporting their license or permit.
    4. (4) The release of this security will not be unreasonably withheld; however, the surety company, bank, savings institution or credit union is not released from its obligation until they receive written notice of the release from this agency.

Source Note:The provisions of this §33.24 adopted to be effective August 31, 1995, 20 TexReg 6322; amended to be effective April 25, 1996, 21 TexReg 3361.