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I C ,. <br />(4) The trustee has a perfected first priority security interest in the collateral. <br />(5) Collateral is free and clear of third-party liens and in the case of SIPC broker was <br />not acquired pursuant to a repo or reverse repo. <br />(6) Failure to maintain the requisite collateral percentage, after a two day restoration <br />period, will require the trustee to liquidate collateral. <br />(7) Valuation of Collateral <br />(a) The securities must be valued weekly, marked-to-market at current market <br />price l~us accrued interest <br />(b) The value of collateral must be equal to 104% of the amount of cash <br />transferred by the municipal entity to the dealer bank or security firm under the <br />repo plus accrued interest. If the value of securities held as collateral slips <br />below 104% of the value of the cash transferred by municipality, then <br />additional cash and/or acceptable securities must be transferred. If, however, <br />the securities used as collateral are FNMA or FHLMC, then the value of <br />collateral must equal 105%. <br />Legal opinion which must be delivered to the municipal entitv: <br />Repo meets guidelines under state law for legal investment of public funds. <br />12. Pre-refunded municipal bonds rated "Aaa" by Moody's and "AAA" by S&P. If, however, <br />the issue is only rated by S&P (i.e., there is no Moody's rating), then the pre-refunded bonds <br />must have been pre-refunded with cash, direct U.S. or U.S. guaranteed obligations, or AAA <br />rated pre-refunded municipals to satisfy this condition. <br />