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securities); (D) the Trustee must have a perfected first priority security interest <br /> in the collateral; (E) the collateral must be free and clear of third-party liens <br /> and, in the case of a broker which falls under the jurisdiction of the Securities <br /> Investors Protection Corporation, are not subject to a repurchase agreement or <br /> a reverse repurchase agreement; (F) failure to maintain the requisite collateral <br /> percentage, after a two day restoration period, will require the Trustee to <br /> liquidate the collateral; (G) the securities must be valued no less frequently <br /> than weekly, marked-to-market at current market price plus accrued interest <br /> and the value of collateral must be equal to 104% of the amount of cash <br /> transferred by the Trustee to the dealer bank or securities firm under the <br /> repurchase agreement plus accrued interest (unless the securities used as <br /> collateral are obligations of the Federal National Mortgage Association or the <br /> Federal Home Loan Mortgage Corporation, in which case the collateral must <br /> be equal to 105% of the amount of cash transferred by the Trustee to the <br /> dealer bank or securities firm under the repurchase agreement plus accrued <br /> interest). If the value of the securities held as collateral falls below 104% of <br /> the value of the cash transferred by the Trustee, then additional cash and/or <br /> acceptable securities must be transferred; and <br /> (iii) a legal opinion must be delivered to the Trustee to the effect that <br /> the repurchase agreement meets guidelines under state law for legal investment <br /> of public funds; <br /> (k) the Local Agency Investment Fund of the State of California, created <br /> pursuant to section 16429.1 of the California Government Code, to the extent the <br /> Trustee is authorized to register such investment in its name. The Trustee may <br /> restrict investments in the Local Agency Investment Fund if required to keep monies <br /> available for the purposes of the Indenture; <br /> (1) Deposits in the Commingled Investment Pool maintained by the <br /> Treasurer-Tax Collector of the County of Orange; provided however that such <br /> deposits shall not be considered Permitted Investments for the Reserve Account; <br /> (m) An Investment Agreement; and <br /> (n) Any other investment approved by the Bond Insurer. <br /> Principal Account <br /> The term "Principal Account" shall have the meaning given to such term in <br /> Section 5.03. <br /> LA1-63221.5 14 <br />