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Ordinance 1957CITY OFF EDMONDS, WASHINGTON ORDINANCE NO. /f-,S'7 A14 ORDINANCE specifying and adopting a plan or system for the acquisition and construction of certain additions and betterments to and extensions and improvements of the combined water and sewerage systems comprising the waterworks utility of the City; declaring the estimated cost thereof as nearly as may be; providing for the issuance of $4,805,000 par value of "Water and Sewer Revenue Refunding and Construction Bonds, 1977," for the purpose of providing a part of the funds (a) to carry out the plan or system for the acquisition and construction of certain additions and betterments to and extensions and improvements of the waterworks utility of the City specified and adopted herein, and (b) to pay, retire and refund the outstand- ing "Wa"ter and Sewer Revenue Bonds, 1959," "Water and Sewer Revenue Bonds, 1960," "Water and Sewer Revenue Bonds, 1961," "Water and Sewer Revenue Bonds, 1965," "Water and Sewer Revenue Bonds, 1966," "Water and Sewer Revenue Bonds, 1967," "Water and Sewer Revenue Bonds, 1970" (interest only), "Water and Sewer Revenue Refunding Bonds, 1972," and "Water and Sewer Revenue Refunding Bonds, 1976," of the City; fixing the date, form, denomination, maturities, interest rates, terms and covenants of such bonds; creating a special refunding fund to provide for the refunding operation; creating a special bond redemption fund to provide for the payment of the bonds authorized herein and bonds hereafter issued on a parity therewith; providing for and authorizing the purchase of certain obligations out of the proceeds of the sale of the bonds herein authorized and out of money presently on hand in the bond redemption funds for the bonds being refunded and for the use and application of the money to be derived from such investment; providing for the payment and redemption of the outstanding bonds to be refunded; authorizing the execution of an agreement with Rainier National Bank as Refunding Trustee; and confirming the sale and providing for the delivery of the bonds herein authorized to Seattle -Northwest Securities Corporation of Seattle, Washington. WHEREAS, the City of Edmonds, Washington (hereinafter called the "City"), by Ordinance No. 635 passed June 17, 1953, specified and adopted a system or plan of additions to and betterments and extensions of the waterworks system of the City, including additions to and betterments and extensions of the system of sewerage of the City; provided that the existing system of sewerage, including all additions, betterments and extensions thereto, should become a part of the waterworks utility of the City; provided for the issuance of not to exceed $275,000 par value of "Water and Sewer Revenue Bonds, 1953," in one or more series to provide the funds required to pay the cost thereof; and provided for the issuance and sale of $135,000 par value of bonds as "Series A" for the purpose of obtaining funds to carry out a portion of said system or plan of additions to and betterments and extensions of the sewerage system of the City, - which would become a part of the waterworks utility of the City; and WHEREAS, pursuant to Ordinance No. 695 passed April 16, 1957, an additional $140,000 par value of said total authorized issue of "Water and Sewer Revenue Bonds, 1953," were issued as "Series B"; and WHEREAS, the City by.Ordinance No. 773 passed July 7, 1959, specified and adopted a system or plan,of additions to and betterments and extensions of the waterworks utility of the City, including the sewerage system as a part thereof, and issued and sold $240,000 par value of "Water and Sewer Revenue Bonds, 1959" (hereinafter referred to as the "1959 Bonds"), to obtain the funds with which to pay the cost thereof, the lien and charge upon the gross revenues from the combined water and sewer systems comprising the waterworks utility of the City for such bonds and any parity bonds thereafter issued being junior and inferior to'the prior lien and charge upon such -2- gross revenues for the then outstanding "City of Edmonds Water Revenue Bonds, 1949" (all of which bonds have now been retired), "Water and Sewer Revenue Bonds, 1953, Series A," and "Water and Sewer Revenue Bonds, 1953, Series B"; and WHEREAS, by Section 13 of said Ordinance No. 773, the City reserved the right to issue additional and/or refunding water and sewer revenue bonds which would constitute a lien and charge upon the gross revenues of the waterworks utility, including the sewerage system as a part thereof and including all additions thereto and betterments, replacements and extensions thereof at any time made, on a parity with said 1959 Bonds if certain conditions should be met and complied with at the time of the issuance of such additional and/or refunding water and sewer revenue bonds; and WHEREAS, the City by Ordinance No. 814 passed May 3, 1960, heretofore issued and sold $150,000 par value of "Water and Sewer Revenue Bonds, 1960" (hereinafter referred to as the "1960 Bonds"), and by Ordinance No. 909 passed November 21, 1961, heretofore issued and sold $100,000 par value of "Water and Sewer Revenue Bonds, 1961" (hereinafter referred to as the "1961 Bonds"), both of said bond issues having been issued on a parity of lien with the outstanding 1959 Bonds and with each other pursuant to the provisions of Section 13 of Ordinance No. 773; and WHEREAS, pursuant to Ordinance No. 1042 passed March 3, 1964, the City issued and sold $215,000 par value -of "Water and Sewer Refunding Revenue Bonds, 1964" (hereinafter referred to as the "1964 Bonds"), to obtain,the funds with which to pay, retire Isle and cancel on July 1, 1964, all of the outstanding "Water and Sewer Revenue Bonds, 1953, Series A," and on May 1, 1964, all of the outstanding "Water and Sewer Revenue Bonds, 1953, Series B," all of which bonds were called, paid and retired on said respective call dates and which 1964 Bonds were issued on a parity of lien with the 1959 Bonds, the 1960 Bonds and the 1961 Bonds in accordance with the provisions of Section 13 of Ordinance No. 773; and WHEREAS, pursuant to Ordinance No. 1141 passed September 21, 1965, the City issued and sold $125,000 par value of "Water and Sewer Revenue Bonds, 1965" (hereinafter referred to as the "1965 Bonds"), pursuant to Ordinance No. 1207 passed May 17, 1966, the City issued and sold $1,000,000 par value of "Water and Sewer Revenue Bonds, 1966" (hereinafter referred to as the "1966 Bonds"), pursuant to Ordinance No. 1314 passed July 5, 1967, the City issued and sold $400,000 par value of "Water and Sewer Revenue Bonds, 1967" (hereinafter referred to as the "1967 Bonds"), and pursuant to Ordinance No. 1506 passed October 20, 1970, the City issued and sold $1,000,000 par value of "Water and Sewer Revenue Bonds, 1970" (hereinafter referred to as the "1970 Bonds"), all of which bond issues were issued on a parity of lien with the 1959 Bonds and all subsequent issues of parity bonds above referred to and with each other in accordance with the provisions of Section 13 of Ordinance No. 773; and WHEREAS, pursuant to Ordinance No. 1603 passed June 20, 1972, the City issued and sold $1,035,000 par value of "Water and Sewer Revenue Refunding Bonds, 1972" (hereinafter referred to as the -4- "1972 Bonds"), for the purpose of providing funds to redeem and retire on December 1, 1982, all of the then outstanding 1970 Bonds, which 1972 Bonds, after the payment and retirement of the 1970 Bonds, were issued on a parity of lien with the 1959 Bonds and all subsequent issues of parity bonds above referred to and with each other in accordance with the provisions of Section 13 of Ordinance No. 773; and WHEREAS, pursuant to Ordinance No. 1719 passed July 2, 1974, the City issued and sold $2,000,000 par value of "Water and Sewer Revenue Bonds, 1974" (hereinafter referred to as the "1974 Bonds"), to obtain the funds with which to pay the cost of carrying out a system or plan of additions to and betterments and extensions of the waterworks utility of the City, including the system of sewerage as a part thereof, the lien and charge upon the gross revenues from the waterworks utility of the City, including the system of sewerage as a part thereof, for the 1974 Bonds and any additional bonds issued on a parity therewith being subordinate and junior to the prior lien and charge upon such revenues for the 1959 Bonds, the 1960 Bonds, the 1961 Bonds, the 1964 Bonds, the 1965 Bonds, the 1966 Bonds, the 1967 Bonds, the 1970 Bonds (prior to their payment and retirement on December 1, 1982) and the 1972 Bonds (after the payment and retirement of the 1970 Bonds on December 1, 1982) ;- and WHEREAS, pursuant to Ordinance No. 1886 passed December 21, 1976, the City issued and sold $2,025,000 par value of "Water and Sewer Revenue Refunding Bonds, 1976" (hereinafter referred to as the -5- "1976 Bonds"), for the purpose of obtaining a part of the funds with which to refund, pay and retire on January 1, 1989, the outstanding 1974 Bonds of the City, the lien and charge upon the gross revenues of the waterworks utility of the City, including the system of sewerage as a part thereof, for the 1976 Bonds being subordinate and junior to the prior lien and charge upon such revenues for all of the outstanding bonds referred to in the immediately preceding paragraph pertaining to the 1974 Bonds; and WHEREAS, there are presently outstanding $118,000 par value of 1959 Bonds which mature serially on August 1 in each of the years 1978 through 1981, and all bear interest at the rate of 4.40% per annum; and WHEREAS, there are presently outstanding $65,000 par value of 1960 Bonds maturing serially on May 1 in each of the years 1978 through 1982, a part of which 1960 Bonds bear interest at the rate of 4.40% per annum, and the remainder of which 1960 Bonds bear interest at the rate of 4.20% per annum;,,and WHEREAS, there are presently outstanding $100,000 par value of 1961 Bonds which mature serially on December 1 in each of the years 1982 through 1984, and all bear interest at the rate of 4.25% per annum; and WHEREAS, there are presently outstanding $40,000 par value of 1965 Bonds which mature serially on October 1 in each of the years 1978 through 1981, and all bear interest at the rate of 3.75% per annum; and WHEREAS, there are presently outstanding $625,000 par value of 1966 Bonds which mature serially on June 1 in each of the 9012 years 1978 through 1986, a part of which 1966 Bonds bear interest at the rate of 4.25% per annum and the remainder of which 1966 Bonds bear interest at the rate of 4.375% per annum; and WHEREAS, there are presently outstanding $235,000 par value of 1967 Bonds which mature serially on July 1 in each of the years 1978 through 1986, a part of which 1967 Bonds bear interest at the rate of 4.75% per annum and the remainder of which 1967 Bonds bear interest at the rate of 5% per annum; and WHEREAS, there are presently outstanding $1,000,000 par value of 1970 Bonds but provision for the refunding, payment and retirement of the principal only of which has been irrevocably provided for from the investment proceeds received from the issuance and sale of the 1972 Bonds leaving only interest on such 1970 Bonds payable through December 1, 1982 (the call date for the payment of the principal of such 1970 Bonds) not provided for by such refunding; and WHEREAS, there are presently outstanding $1,035,000 par value of 1972 Bonds which mature serially on September 1 in each of the years 1983 through 1991, all of which 1972 Bonds bear interest at the rate of 5.75% per annum (the City having previously irrevocably made provision for the payment of the interest on such 1972 Bonds coming due up to and including September 1, 1982); and WHEREAS, there are presently outstanding $2,020,000 par value of 1976 Bonds which mature serially on July 1 in each of the years 1985 through 1999, which 1976 Bonds bear interest at various rates from 6.00% to 6.25% per annum, and as provided in Ordinance No. 1886 and in the 1976 Bonds, the City reserved the right to redeem the 1976 Bonds as a whole, or in part in inverse numerical order, on July 1, 1986, or on any semiannual interest payment date thereafter, -7- at 101% of par plus accrued interest to date of redemption, which redemption price shall reduce 1/2 of to annually to par on or after July 1, 1988; and WHEREAS, the City Council has determined that it is in the best interest of the City that all of such outstanding water and sewer revenue bonded debt of the City be consolidated into a single issue in order to modify debt service and reserve requirements, to eliminate the junior lien position of the 1976 Bonds and to modify covenants and other terms of the bonds to be refunded; and WHEREAS, after due consideration it appears to the City Council that in addition to the governmental purpose for refunding the outstanding 1959 Bonds, 196G Bonds, 1961 Bonds, 1965 Bonds, 1966 Bonds, 1967 Bonds, 1970 Bonds (interest only), 1972 Bonds and 1976 Bonds as aforesaid, it also appears to the City Council that (a) all of the outstanding 1959 Bonds may be refunded by providing funds for the payment of the principal of and interest on such 1959 Bonds as the same become due up through August 1, 1981; (b) all of the outstanding 1960 Bonds may be refunded by providing funds for the payment of the principal of and interest on such 1960 Bonds as the same become due up through May 1, 1982; (c) all of the outstanding 1961 Bonds may be refunded by providing funds for the payment of the principal of and interest on such 1961 Bonds as the same become due up through December 1, 1984; (d) all of the outstanding 1965 Bonds may be refunded by providing funds for the payment of the principal of and interest on such 1965 Bonds as the same become due up through October 1, 1981;:(e) all of the outstanding 1966 Bonds may be refunded by providing funds for the payment of the principal M-OM of and interest on such 1966 Bonds as the same shall become due up through June 1, 1986; (f) all of the outstanding 1967 Bonds may be refunded by providing funds for the payment of the principal of and interest on such 1967 Bonds as the same become due up through July 1, 1986; (g) all of the outstanding 1970 Bonds may be refunded by providing funds for the payment of the interest only on such 1970 Bonds until December 1, 1982, at which time all of the principal of such 1970 Bonds will be paid and retired from the invested proceeds of the 1972 Bonds; (h) all of the outstanding 1972 Bonds may be refunded by providing funds for the payment of the principal of and interest on such 1972 Bonds as the same become due beginning March 1, 1983, up through September 1, 1991; and (i) all of the outstanding 1976 Bonds may be refunded by. -the payment of the principal of and interest on such 1976 Bonds until January 1, 1997, at which time all of the 1976 Bonds which mature on July 1 in each of the years 1997 through 1999 will be called, paid and retired by the issuance and sale of refunding bonds so that a saving will be effected by the difference between the principal and interest costs over the life of the refunding bonds and the principal and interest costs over the life of such outstanding 1959 Bonds, 1960 Bonds, 1961 Bonds, 1965 Bonds, 1966 Bonds, 1967 Bonds, 1970 Bonds (interest only), 1972 Bonds and 1976 Bonds; and WHEREAS, ' in order to effect such refunding in the manner that will be most advantageous to the City, its water and sewer ratepayers and its taxpayers, it is hereby found necessary and advisable that certain "Acquired Obligations" (hereinafter identified) bearing interest and maturing at such time or times as necessary to accomplish the refunding as aforesaid be purchased out of a portion of the proceeds of the sale of the bonds herein authorized (herein- after called the "Bonds") and other money of the City legally available therefor; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF EDMONDS, WASHINGTON, DO ORDAIN, as follows: Section 1. Definitions. As used in this ordinance the following words shall have the following meanings: (a) "Bond Fund" shall mean the special fund of the City known as the "Water and Sewer Revenue Bond Fund, 1977," created by this ordinance for the payment of the principal of and interest on the Bonds and all Future Parity Bonds of the City hereafter issued. (b) "Bonds" shall mean the $4,805,000 par value of "Water and Sewer Revenue Refunding and Construction Bonds, 1977," of the City authorized by and to be issued for the purposes provided in and pursuant to this ordinance. (c) "1959 Bonds" shall mean the outstanding "Water and Sewer Revenue Bonds, 1959," of the City issued under date of August 1, 1959, pursuant to Ordinance No. 773 of which $118,000 are outstanding. (d) "1960 Bonds" shall mean the outstanding "Water and Sewer Revenue Bonds, 1960," of the City issued under date of May 1, 1960, pursuant to Ordinance No. 814 of which $65,000 are outstanding. (e) "1961 Bonds" shall mean the outstanding "Water and Sewer Revenue Bonds, 1961," of the City issued under date of December 1, 1961, pursuant to Ordinance No. 909 of which $100,000 are outstanding. -10- (f) "1965 Bonds" shall mean the outstanding "Water and Sewer Revenue Bonds, 1965," of the City issued under date of October 1, 1965, pursuant to Ordinance No. 1141 of which $40,000 are outstanding. (g) "1966 Bonds" shall mean the outstanding "Water and Sewer Revenue Bonds, 1966," of the City issued under date of June 1, 1966, pursuant to Ordinance No. 1207 of which $625,000 are outstanding. (h) "1967 Bonds" shall mean the outstanding "Water and Sewer Revenue Bonds, 1967," of the City issued under date of July 1, 1967, pursuant to Ordinance No. 1314 of which $235,000 are outstanding. (i) "1970 Bonds" shall mean the outstanding "Water and Sewer Revenue Bonds, 1970," of the City issued under date of December 1, 1970, pursuant to Ordinance No. 1506 of which $1,000,000 are outstanding, provision for the refunding, payment and retirement of the principal only thereof on December 1, 1982, has been irrevocably provided for out of the investment proceeds of the 1972 Bonds, leaving only interest thereon not covered by such refunding operation and reference herein to the refunding of such 1970 Bonds shall be deemed to include only the interest payable thereon. U) "1972 Bonds" shall mean the outstanding "Water and Sewer Revenue Refunding Bonds, 1972," of the City issued under date of March 1, 1972, pursuant,to Ordinance No. 1603 of which $1,035,000 are outstanding. (k) "1976 Bonds" shall mean the outstanding "Water and Sewer Revenue Refunding Bonds, 1976," of the City issued under date of December 1, 1976, pursuant to Ordinance No. 1886 of which $2,020,000 are outstanding.: ' -11- (1) "City" shall mean the City of Edmonds, Washington, a duly organized and existing noncharter code city under the laws of the State of Washington. (m) "Future Parity Bonds" shall mean all revenue bonds of the City issued after the date of the issuance of the Bonds and having a lien upon the Revenue of the System for the payment of the principal thereof and interest thereon equal to the lien upon such Revenue for the payment of the principal of and interest on the Bonds. (n) "Operating and Maintenance Expenses" shall mean all reasonable expenses incurred by the City in causing the System to be operated and maintained in good repair, working order and condition, but shall not include any depreciation or taxes or charges in lieu of taxes levied or imposed by the City. (o) "Outstanding Bonds" shall when used hereinafter be deemed to collectively include all of the outstanding 1959 Bonds, 1960 Bonds, 1961 Bonds, 1965 Bonds, 1966 Bonds, 1967 Bonds, 1970 Bonds, 1972 Bonds and 1976 Bonds. (p) "Principal and Interest Account" shall mean the account of that name created in the Bond Fund for the payment of the principal of and interest on the Bonds and all Future Parity Bonds of the City payable out of such fund. (q) "1977 Refunding Fund" shall mean that -special fund of the City so designated and created by this ordinance to carry out the refunding operation. (r) "Reserve Account" shall mean the account of that name created in the Bond Fund by this ordinance for the purpose of -12- securing the payment of the principal of and interest on the Bonds and all Future Parity Bonds of the City payable out of such fund. (s) "Revenue of the System" shall mean all the earnings and revenue received by the System from any source whatsoever, except general ad valorem taxes, ULID Assessments, proceeds from the sale of City property, and bond proceeds. (t) "System" shall mean the combined water supply and distribution system and sanitary sewage disposal system of the City as the same may be added to, improved and extended for as long as any of the Bonds and any Future Parity Bonds are outstanding. (u) "Term Bond Maturity Year" shall mean any maturity year in which the outstanding amount of revenue bonds payable out of the Bond Fund are scheduled to mature (regardless of any reservation of rights of redemption prior to maturity) is more than 1.25 times tree average annual principal maturity of the bonds payable out of such Fund for the three years immediately preceding such Term Bond Maturity Year. (v) "Term Bonds" shall mean the outstanding bonds payable out of the Bond Fund maturing in any Term Bond Maturity Year. (w) "ULID" shall mean utility local improvement district. (x) "ULID Assessments" shall mean the assessments levied in such ULID of the City which may hereafter be created pursuant to state law and shall include installments thereof and interest and any penalties thereon. Section 2. Plan and System Adopted. It is hereby found and declared that the public health and welfare require and 099C it is in the best interests of the inhabitants of the City that certain water system improvements be undertaken within the City, and the City, therefore, hereby specifies and adopts a plan or system for the acquisition and construction of additions and betterments to and extensions and improvements of the System to consist of the following: (a) There shall be constructed a 3 million gallon steel storage reservoir at the 5 Corners tank site, including pump house, three 25 h.p. pumps, valves, miscellaneous piping, flow controls and telemetering. (b) There shall be replaced and installed approxi- mately 3-1/2 miles of water main consisting of 8" or 6" ductile iron in various City streets as set forth in Exhibit "A" attached hereto and by this reference made a part hereof. (c) There shall be installed 23 fire hydrants, including valves, tees and other fittings. There shall be included in the foregoing all necessary wyes, valves, couplings, connections and appurtenances, together with all work as may be incidental to and necessary to the foregoing construction and installation. The City shall acquire all property, both real and personal or any interest therein, equipment, rights -of -way, easements and franchises necessary to carry -out said plan, which is all as more particularly set forth in reports, maps, plans and specifications prepared by the City Engineer. The City Council may make such changes in the details of said plan, either prior to or during the course of actual construction, which may be found necessary and desirable as long as such changes do not substantially affect or;change the main general part of said plan or the services to be rendered thereby. -14- Section 3. Life Expectancy of Improvements. The life of the additions, betterments and extensions set forth in Section 2 of this ordinance is hereby declared to be more than 22 years. Section 4. Estimated Cost and Financing of Improvements. The estimated cost of the acquisition, construction and installation of the above described additions and betterments to and extensions and ,improvements of the System, including the discount on the purchase price of the Bonds allocated thereto, is hereby declared to be, as near as may be, the sum of $1,000,000 and shall be paid from the proceeds received from the issuance and sale of the Bonds allocated to new construction, being the last numbered $1,000,000 par value of such Bonds. Section 5. Declaration of Adequacy of Revenues. The Revenue of the System anticipated to be derived from the operation and maintenance of the System will, in the judgment of the City Council, be more than sufficient to meet the Operating and Maintenance Expenses and to permit the setting aside into the ,Bond Fund out of the Revenue of the System of sufficient amounts to pay the interest on the Bonds herein authorized to be issued as such interest becomes due and payable and to pay and redeem all of such Bonds at maturity. Section 6. Provision for Issuance of Bonds. For the purpose of providing a part of the money required (a) to carry out the plan or system for the acquisition and construction of certain additions and betterments to and extensions and improvements of the System herein adopted and hereby ordered to be carried out, and (b) to pay the principal of and interest on: -15- (1) The 1959 Bonds coming due up to and including August 1, 1981; (2) The 1960 Bonds coming due up to and including May 1, 1982; (3) The 1961 Bonds coming due up to and including December 1, 1984; (4) The 1965 Bonds coming due up to and including October 1, 1981; (5) The 1966 Bonds coming due up to and including June 1, 1986; (6) The 1967 Bonds corning due up to and including July 1, 1986; (7) The 1970 Bonds (interest only) coming due up to and including December 1, 1982. (8) The 1972 Bonds coming due beginning March 1, 1983, up to and including September 1, 1991; and (9) The 1976 Bonds coming due up to and including January 1, 1997, and to redeem and retire on January 1, 1997, the outstanding 1976 Bonds maturing after January 1, 1997; the City shall issue the Bonds in the aggregate principal amount of $4,805,000. The Bonds shall be designated "Water and Sewer Revenue Refunding and Construction Bonds, 1977"-(Herein defined as the "Bonds"); shall be in the denomination of $5,000 each; shall be dated November 1, 1977; shall bear interest payable on July 1, 1978, and semiannually thereafter on the first days of January and July of each year, interest to maturity to be evidenced by coupons to be attached to the Bonds with full obligation on the part of tree City to pay interest at the Bond rate or rates from and after the Bond maturity dates until the Bonds with interest are paid in full. Both principal of and interest on the Bonds shall be payable in•lawful money of the United -16- States of America at the office of the Director of Finance of th'e City or, at the option,of the holders thereof, at either fiscal agency of the State of Washington in the cities of Seattle, Washington, or New York, New York. The Bonds shall be payable solely from the Bond Fund and shall be a valid claim of the holders thereof only as against the Bond Fund and the fixed amount of the Revenue of the System and ULID Assessments pledged to such fund and shall not be a general obligation of the City. The Bonds shall be numbered, bear interest and mature in accordance with the following schedule; Bond Numbers Interest (Inclusive) Amounts Rates Maturities 1 to 28 $140,000 5.80% January 1, 1981 29 to 58 150,000 5.80% January 1, 1982 59 to 90 160,000 5.80% January 1, 1983 91 to 123 165,000 5.80% January 1, 1984 124 to 159 180,000 5.80% January 1, 1985 160 to 197 190,000 5.80% January 1, 1986 198 to 237 200,000 5.80% January 1, 1987 238 to 279 210,000 5.80% January 1, 1988 280 to 324 225,000 5.80% January 1, 1989 325 to 372 240,000 5.80% January 1, 1990 373 to 423 255,000 5.90% January 1, 1991 424 to 477 270,000 6.00% January 1, 1992 478 to 534 285,000 6.00% January 1, 1993 535 to 595 305,000 6.109 January 1, 1994 596 to 659 320,000 6.10% January 1, 1995 660 to 728 345,000 6.10% January 1, 1996 729 to 801 365,000 6.20% January 1, 1997 802 to 879 390,000 6.20% January 1, 1998 880 to 961 410,000 6.20% January 1, 1999 Section 7. Option for Prior Redemption. Bonds numbered 1 to 324, inclusive, maturing January 1, 1981, through January 1, 1989, are issued without the right of the City to redeem the same prior to their respective maturity dates. -17- The City reserves the right to redeem Bonds numbered 325 to 961, inclusive, maturing January 1, 1990, through January 1, 1999, as a whole, or in part in inverse numerical order, from money derived from any source, at the following times and prices if redeemed on the following dates, plus accrued interest to date of redemption in each case: On January 1, 1989, and July 1, 1989, at 10200- On January 1, 1990, and July 1, 1990, at 101-1/2% On January 1, 1991, and July 1, 1991, at 101% On January 1, 1992, and July 1, 1992, at 100-1/2% On January 1, 1993, and thereafter, at 100% (Par) Notice of any call for the redemption of any of the Bonds prior to their respective maturity dates shall be published once in the official newspaper of the City not less than 30 nor more than 45 days prior to the interest coupon due date on which the Bonds would be redeemed. Notice of such call for redemption shall also be mailed to Seattle -Northwest Securities Corporation at its principal place of business in Seattle, Washington, or its successor, not less than 30 nor more than 45 days prior to the interest coupon due date upon which the Bonds would be redeemed. In addition, such redemption notices shall also be.mailed to Moody's Investors Service, Inc., and Standard & Poor's Corporation at their offices in New York, New York, but such notices shall not be a condition precedent to any such redemption. Interest on any Bonds so called for redemption shall cease on the date fixed for such redemption upon payment of the call price into the Bond Fund. The City further reserves the right to purchase any or all of the Bonds in the open market at any time at a price not in excess of the call price applicable at the next succeeding call date. -18- Section 8. Establishment of Bond Fund and Refundin Operation. There is hereby created and established in the office of the Director of Finance of the City a special fund to be known and designated as the "Water and Sewer Revenue Bond Fund, 1977" (herein defined as the "Bond Fund"), which fund is to be drawn upon for the sole purpose of paying the principal of and interest on the Bonds and any Future Parity Bonds from and after the date thereof. Such fund is hereby divided into two accounts, namely, a Principal and Interest Account and a Reserve Account. There is hereby also created and established in the office of the Director of Finance of the City an additional fund to be known and designated as the "1977 Refunding Fund." Immediately upon receipt of payment in full for the Bonds, the accrued interest received, if any, shall be deposited in the Principal and Interest Account in the Bond Fund. $980,000 of the principal proceeds received, being from the issuance of the last numbered $1,000,000 par value of the Bonds, shall be deposited in the r ]c �xlc C`c r.��r crn lic Fund of the City and used to carry out the improvements specified and adopted in Section 2 hereof. The balance of the principal proceeds received from the issuance of the Bonds shall be deposited in the 1977 Refunding Fund and an amount equal to the accrued interest on the Outstanding Bonds from the last principal and interest payment dates of such Outstanding Bonds.to the date of delivery of the Bonds to the purchaser thereof, and an amount of principal, being a total of $450,000, shall be transferred from the principal and interest and reserve accounts in the respective bond funds for the Outstanding Bonds and deposited in the 1977 Refunding Fund. The money in the -19- 1977 Refunding Fund shall be used immediately upon the receipt thereof to discharge the obligations of the City under Ordinance No. 773 passed July 7, 1959, authorizing the issuance of the 1959 Bonds, Ordinance No. 814 passed May 3, 1960, authorizing the issuance of the 1960 Bonds, Ordinance No. 909 passed November 21, 1961, authorizing the issuance of the 1961 Bonds, Ordinance No. 1141 passed September 21, 1965, authorizing the issuance of the 1965 Bonds, Ordinance No. 1207 passed May 17, 1966, authorizing the issuance of the 1966 Bonds, Ordinance No. 1314 passed July 5, 1967, authorizing the issuance of the 1967 Bonds, Ordinance No. 1506 passed October 20, 1970, authorizing the issuance of the 1970 Bonds, Ordinance No. 1603 passed June 20, 1972, authorizing the issuance of the 1972 Bonds and Ordinance No. 1$86 passed December 21, 1976, authorizing the issuance of the 1976 Bonds by providing for the payment as hereinafter set forth in this section of the principal of and interest on said Outstanding Bonds. To the extent practicable the City shall discharge such obligations by the pVrchase of Federal Land Bank Bonds and United States Treasury Certificates of Indebtedness, Notes and Bonds - state and local government series (commonly referred to as "book entries" [BE]) ("Acquired Obligations") bearing such interest and maturing as to principal and interest in such amounts and at such times so as to provide the money required to pay (a) the principal of and interest on the 1959 Bonds as the same shall become due up to and including August 1, 1981; (b) the principal of and interest on the 1960 Bonds as the same shall become due up to and including May; 1, 1982; (c) the principal of and interest -20- on the 1961 Bonds as the same shall become due up to and including December 1, 1984; (d) the principal of and interest on the 1965 Bonds as the same shall become due up to and including October 1, 1981; (e) the principal of and interest on the 1966 Bonds as the same shall become due up to and including June 1, 1986; (f) the principal of and interest on the 1967 Bonds as the same shall become due up to and including July 1, 1986; (g) the interest only on the 1970 Bonds as the same shall become due up to and including December 1, 1982; (h) the principal of and interest on the 1972 Bonds as the same shall become due beginning March 1, 1983, up to and including September 1, 1991; and (i) the principal of and interest on the 1976 Bonds as the same shall become due up to and including January 1, 1997, and to redeem and retire on January 1, 1997, all outstanding 1976 Bonds maturing on July 1 in each of the years 1997 through 1999. Such "Acquired Obligations" are more particularly described in the proposal of Seattle -Northwest Securities Corporation hereinafter referred to and are set forth in Schedule "A" attached to the Agreement hereinafter referred to and attached hereto as Exhibit "B." Such "Acquired Obligations" and a beginning cash balance of $^ 4-6. r"' from the proceeds of the sale of the Bonds shall be irrevocably deposited with Rainier National Bank, Saattle, Washington (hereinafter called the "Refunding Trustee"). Any amounts described in this section which are not provided for in full by the purchase and deposit of the "Acquired Obligations" described in this section shall be provided for by the irrevocable deposit of a portion of the proceeds of sale of the Bonds or other money of the City with the aforesaid Refunding Trustee. -21- All the money received as principal of or interest on'such "Acquired Obligations" shall be held by the Refunding Trustee for the credit of the City for the 1977 Refunding Fund, shall be held in trust and shall be used for the sole purpose of paying the Outstanding Bonds as aforesaid. Any money remaining in the 1977 Refunding Fund after the payment and retirement in full of the Outstanding Bonds as aforesaid shall be transferred and paid into the Principal and Interest Account in the Bond Fund. All of such "Acquired Obligations" purchased as a part of the refunding plan are irrevocably dedicated to the purpose set forth in this ordinance, and such investments or the earnings or the proceeds therefrom may be used for no other purpose, nor may any of such investments be liquidated prior to maturity. Section 9. Call for Redemption of 1976 Bonds. The City hereby irrevocably calls for redemption on January 1, 1997, all of the outstanding 1976 Bonds maturing after such call date at a price of par plus accrued interest to such date of redemption. Such call for redemption shall be irrevocable after the delivery of the Bonds to the initial purchaser thereof. The Refunding Trustee, on behalf of the Director of Finance of the City, is hereby authorized and directed to give notice of the redemption of the 1976 Bonds in accordance with the provisions of Ordinance No. 1886 pertaining to the 1976 Bonds. Section 10. RefundingI Trustee's Duties and Agreement. The Refunding Trustee is hereby authorized and directed to pay the principal of and interest on the Outstanding Bonds as aforesaid when -22- due from the "Acquired Obligations" and money deposited with the, Refunding Trustee pursuant to Section 8 of this ordinance. All "Acquired Obligations" and the money deposited with the Refunding Trustee and any income therefrom shall be held and applied in accordance with the provisions of the applicable bond ordinance pertaining to each issue of the Outstanding Bonds and this ordinance and with the statutes of the State of Washington. All necessary and proper fees, compensation and expenses of the Refunding Trustee for the Bonds and all other costs incidental to the setting up of the escrow to accomplish the refunding of the Outstanding Bonds, including but not limited to an allocable portion of bond counsel's fees chargeable to such escrow (60%) for the refunding portion of the Bonds and an escrow computation fee to Seattle -Northwest Securities Corporation, shall be paid out of the principal proceeds of the Bonds. The costs relating to the issuance and delivery of the Bonds, including bond printing and an allocable portion of bond counsel's fees chargeable to the preparation of the legal proceedings and furnishing an approving legal opinion covering the refunding portion of the Bonds (40%), shall be paid by Seattle - Northwest Securities Corporation as purchaser of the Bonds. The allocable portion of bond counsel's fee chargeable to the new money portion of the Bonds shall be paid by the City out of the principal proceeds of the new money portion of the Bonds. The proper officers and agents of the City are directed to obtain from the Refunding Trustee an agreement setting forth the duties, obligations and responsibilities of the Refunding Trustee in connection with the -23- redemption and retirement of the Outstanding Bonds as provided herein and stating that such provisions for the payment of the fees, compensation and expenses of such Refunding Trustee are satisfactory to it. In order to carry out the purposes of this ordinance, the Mayor and City Clerk of the City are authorized and directed to execute and deliver to Rainier National Bank, Seattle, Washington, an agreement substantially in the form attached hereto marked Exhibit "B" and by this reference thereto made a part of this ordinance. Section 11. Deposits to Bond Fund and Bond Fund Considerations. So long as Bonds are outstanding against the Bond Fund, the Director of Finance of the City shall set aside and pay into the Bond Fund out of the Revenue of the System a fixed amount, without regard to any fixed proportion, namely: (a) Into the Principal and Interest account, at least 20 days prior to each principal payment date and each interest payment date, an amount sufficient, together with any ULID Assessment collections deposited therein in connection with any Future Parity Bonds hereafter issued, to pay the principal amount maturing on each maturity date of the Bonds and any Future Parity Bonds hereafter issued and outstanding and an amount sufficient to pay the interest payable on the Bonds and such Future Parity Bonds on such interest payment date; and (b) Into the Reserve Account, in substantially equal annual payments, such amounts so that by no later than November 1, 1982, there shall be on deposit in such Reserve Account a total reserve at least equal to the average annual debt service requirements, both principal and interest, of the Bonds, excluding the principal of any Term Bonds. The Reserve Account shall be maintained in such total average annual debt service required reserve amount, except for -24- withdrawals therefrom as authorized herein, at all times so long' as any of the Bonds is outstanding, PROVIDED, that when the total amount in the Bond Fund shall equal the total amount of principal and interest for all outstanding bonds payable out of the Bond Fund to the last maturity thereof, no further payment need be made into the Bond Fund, and PROVIDED, FURTHER, that the amount in such Reserve Account may be reduced at any time to an amount not less than such average annual debt service requirements for the Bonds then outstanding. In the event that there shall be a deficiency in the Principal and Interest Account in the Bond Fund to meet maturing installments of either principal or interest, as the case may be, such deficiency shall be made up from the Reserve Account by the withdrawal of cash therefrom for that purpose. Any deficiency created in the Reserve Account by reason of any such withdrawal shall then be made up from the money from the Revenue of the System and/or ULID Assessments, if any, payable into the Bond Fund first available after making necessary provision for the required payments into the Principal and Interest Account. The money in the Reserve Account shall otherwise be held intact and may be applied against the last outstanding bonds payable out of the Bond Fund. All money in the Bond Fund not needed to meet the payments of principal and interest when due may be kept on deposit in the official bank depository fo the City or in any national bank or may be invested in any legal investment. Interest on any such investment or on such bank account shall be deposited in and become a part of the Bond Fund. -25- The City Council and corporate authorities of the City hereby declare that in fixing the amounts to be paid into the Bond Fund they have considered and had due regard for the Operating and Maintenance Expenses and have not set aside into the Bond Fund a greater amount or proportion of the Revenue of the System than in their judgment will be available over and above the Operating and Maintenance Expenses, and that no portion of the Revenue of the System has been previously pledged for any other indebtedness except for payment of the Outstanding Bonds, provision for the retirement and payment of which is herein made. Section 12. Lien Position of Bonds. All Revenue of the System is hereby pledged to the payments required to be made into the Bond Fund, and the Bonds shall constitute a charge and lien upon such Revenue prior and superior to all other charges and liens whatsoever, excluding Operating and Maintenance Expenses, except that the charge and lien upon such Revenue for the Bonds shall be on a parity with the charge and lien upon the same and upon any ULID Assessments hereafter pledged to be paid into the Bond Fund for any Future Parity Bonds, the charge and lien upon such Revenue for the 1959 Bonds, 1960 Bonds, 1961 Bonds, 1965 Bonds, 1966 Bonds, 1967 Bonds, 1970 Bonds and 1972 Bonds being defeased as a matter of law immediately upon deposit with the Refunding Trustee of the money and book entry "Acquired Obligations" (being direct obligations of the United States of America and equivalent to cash) which are hereby pledged first to the payment of such 1959 Bonds, 1960 Bonds, 1961 Bonds, 1965 Bonds, 1966 Bonds,, 1967 Bonds, 1970 Bonds and 1972 Bonds -26- and the charge and lien upon such Revenue for the 1976 Bonds being defeased pursuant to the provisions of Section 10 of Ordinance No. 1886 immediately upon deposit with the Refunding Trustee of the "Acquired Obligations" (the Federal Land Bank Bonds being pledged solely to the payment of such 1976 Bonds and to be used with the remaining book entries), all as provided herein. Section 13. Covenants. The City hereby covenants and agrees with the owner and holder of each Bond at any time outstanding as follows; (a) That it will establish, maintain and collect such rates and charges for water and sanitary sewage disposal service so long as any Bonds and any Future Parity Bonds are outstanding which, together with other miscellaneous Revenue of the System (excluding ULID Assessments), will provide amounts annually at least equal to 1.25 times the portion of annual debt service, excluding the principal of any Term Bonds, on the Bonds and Future Parity Bonds actually paid from such Revenue of the System, and not from ULID Assessments, after payment of Operating and Maintenance Expenses (herein called the "Coverage Requirement"). In determining the amount of debt service subject to coverage, there shall be deducted from the annual principal and interest required to be paid each year, an amount equal to the percentage of the debt service for each year on each issue of outstanding Future Parity Bonds and the Bonds equal to.the percentage arrived at by dividing the original total amount of the ULID Assessments specifically peldged to the Bond Fund in that issue by the original total principal amount of such issue. To simplify, where ULIDs are involved, only the debt service on that portion of any Future Parity Bond issue not covered by ULID Assessments must be subject to the 25% Coverage Requirement. (b) That it will at all times maintain and keep the System in good repair, working order and condition, and also will at all times operate such System and the business in connection therewith in an efficient manner and at a reasonable cost. -27- (c) That it will not sell, lease, mortgage or in any manner encumber or dispose of all the property of the System unless provision is made for payment into the Bond Fund of a sum sufficient to pay the principal of and interest on all bonds payable out of the Bond Fund at any time outstanding, and that it will not sell, lease, mortgage, or in any manner encumber or dispose of any part of the property of said System that is used, useful and material to the operation thereof, unless provision is made for replacement thereof, or for payment into the Bond Fund of the total amount of Revenue received which shall not be less than an amount which shall bear the same ratio to the amount of outstanding bonds payable out of the Bond Fund as the Revenue available for debt service for such outstanding bonds for the twelve months preceding such sale, lease, encumbrance or disposal from the portion of the System sold, leased, encumbered or disposed of bears to the Revenue available for debt service for such bonds from the entire System for the same period. Any such money so paid into the Bond Fund shall be used to retire such. outstanding bonds at the earliest possible date. (d) That it will, while any of the Bonds remains outstanding, keep proper and separate accounts and records in which complete and separate entries shall be made of all transactions relating to its System, and it will furnish any subsequent holder or holders of the Bonds if the Bonds shall be owned by other than a Fund of the City, at the written request of such holder or holders, complete operating and income statements of said System in reasonable detail covering any calendar year, showing the financial condition of the water and sewer departments and compliance with the terms and conditions of this ordinance, not more than 120 days after the close of such calendar year, and it will grant any holder or holders of at least 25% of the outstanding Bonds the right at all reasonable times to inspect the entire System and all records, accounts and data of the City relating thereto. Upon request of any holder of any of said Bonds, it will also furnish to such holder a copy of the most recently completed audit of the City's accounts by the State Auditor of Washington or such other audit as is authorized by law in lieu thereof. (e) That it will not furnish water or sanitary sewage disposal service to any customer whatsoever free of charge and will promptly take legal action to enforce collection of all delinquent accounts. Q►•E:M (f) That it will carry the types of insurance on its System properties in the amounts normally carried by private water and sewer companies engaged in the operation of water and sewerage systems, and the cost of such insurance shall be considered a part of Operating and Maintenance Expenses. If, as, and when, the United States of America or some agency thereof shall provide for War Risk Insurance, the City further agrees to take out and maintain such insurance on all or such portions of said System on which such War Risk Insurance may be written in an amount or amounts to cover adequately the value thereof. (g) That it will pay all Operating and Maintenance Expenses and otherwise meet the obligations of the City as herein set forth. (h) That if a ULID is ever established hereafter in the connection with the issuance of Future Parity Bonds and the ULID Assessments therefrom pledged to be paid into the Bond Fund, the City will promptly collect all Assessments levied therein. Such Assessments may be used to pay the principal of and interest on any bonds payable out of the Bond Fund without said Assessments being particularly allocated to the payment of principal and interest on any particular series of such Future Parity Bonds, including the Fonds. (i) That it will not make any use of the proceeds of sale of the Bonds or any other funds of the City which may be deemed to be proceeds of such Bonds pursuant to Section 103(c)(2) of the Internal Revenue Code, as amended, and the applicable Regulations thereunder which, if such use had been reasonably expected on the date of delivery of the Bonds to the initial purchaser thereof, would have caused the Bonds to be "Arbitrage Bonds" within the meaning of said section and said Regulations. (j) That it will use, pay out and distribute the Revenue of the System, other than money deposited in bond redemption funds, in the following order of priority: (_1) To pay Operating and Maintenance Expenses. (2) To meet the required debt service payments, including Reserve Account accumulation in the Bond Fund, on the Bonds and any Future Parity Bonds hereafter issued. -29- (3) To meet the required debt service on any water and sewer revenue bonds issued having a charge and lien on the Revenue of the System junior to the Bonds; to redeem and retire any then outstanding water and sewer revenue bonds or to purchase any or all of those bonds in the open market as provided in this ordinance; to make necessary betterments and replace- ments of or repairs, additions or extensions to the System; or for any other lawful purpose. Section 14. Bond Form. The Bonds shall be in substanti- ally the following form: No. UNITED STATES OF AMERICA STATE OF WASHINGTON CITY OF EDMONDS $5,000 WATER AND SEWER REVENUE REFUNDING AND CONSTRUCTION BOND, 1977 The City of Edmonds, State of Washington (hereinfter called the "City"), for value received promises to pay to bearer on the FIRST DAY OF JANUARY, 19 , the principal sum of FIVE THOUSAND DOLLARS together with interest thereon at the rate of per annum, payable on July 1,-1978, and semiannually thereafter on the first days of January and July of each year, upon presentation and surrender of the attached interest coupons as they severally mature up to the bond maturity date and with full obligation on the part of the City to pay interest at the same rate from and after the bond maturity date until this bond with interest is paid in full, or funds are available in the "Water and Sewer Revenue Bond Fund, 1977" (hereinafter called the "Bond Fund"), for payment in full. Both principal of and interest on this bond are payable in lawful money of the United States of America at the office of the Director of Finance of the City or, at the option of the holder hereof, at either fiscal agency of the State of Washington in the Cities of Seattle, Washington, or New York, New York, solely out of. the special fund created by Ordinance No. 1957, , and referred to herein as the "Bond Fund," into which fund the City hereby irrevocably binds itself -30- to pay certain fixed amounts out of the gross revenues of the waterworks utility of the City, including the sanitary sewage disposal system as a part thereof, now belonging to or which may hereafter belong to the City, including all additions, extensions and betterments thereof now or at any time made or constructed (herein- after referred to as the "System"), without regard to any fixed proportion, namely, amounts sufficient, together with utility local improvement district assessments hereinafter referred to, to pay the principal of and interest on this issue of bonds as they respectively due and to accumulate a reserve, all at the times and in the manner set forth in Ordinance No. 1957 (hereinafter referred to as the "Bond Ordinance"). The bonds are not a general obligation of the City. The gross revenues from the System are hereby pledged for the payment of the bonds of this issue at any time outstanding, both principal and interest, and such payment and pledge shall constitute a charge and lien upon such gross revenues prior and superior to all other charges and liens whatsoever, excluding charges for operation and maintenance of such System as defined in the Bond Ordinance, except that the charge and lien upon such gross revenues for the bonds of this issue shall be on a parity with the charge and lien upon the same and any utility local improvement district assessments here- after collected and pledged to be paid into the Bond Fund for any additional revenue bonds hereafter issued on a parity therewith in accordance with the provisions of Section 16 of the Bond Ordinance. This bond is one of a total issue of $4., 805, 000 par value of bonds, all of like date, tenor and effect, except as to maturities, interest rates and option of redemption, all payable from the Bond Fund and all issued by the City under and in pursuance of the laws of the State of Washington, particularly Chapter 138, Laws of 1965, lst Ex. Ses., as amended, known as the "Refunding Bond Act" (RCW Chapter 39.53), and the Bond Ordinance for the purpose of providing a part of the funds (a) to carry out the plan or system for the acquisition and construction of certain additions and betterments to and extensions and improvements of the System specified and adopted and ordered to be carried out by the Bond Ordinance, and (b) to refund, pay and retire all of its outstanding "Water and Sewer Revenue Bonds, 1959," dated August 1, 1959, "Water and Sewer Revenue Bonds, 1960," dated May 1, 1960, "Water and Sewer Revenue Bonds, 1961," dated December 1, 1961, "Water and Sewer Revenue Bonds, 1965," dated October 1, 1965, "Water and Sewer Revenue Bonds, 1966," dated June 1, 1966, "Water and Sewer Revenue -31- Bonds, 1967," dated July 1, 1967, "Water and Sewer Revenue Bonds, 1970," dated December 1, 1970 (interest only), "Water and Sewer Revenue Refunding Bonds, 1972," dated March 1, 1972, and "Water and Sewer Revenue Refunding Bonds, 1976," dated December 1, 1976, all as provided in the Bond Ordinance, and is issued in full compliance with the ordinances of the City and the Constitution and laws of the State of Washington. Reference is made to the Bond Ordinance as more fully describing the covenants with and rights of holders of bonds of this issue. Bonds numbered 1 to 324, inclusive, maturing January 1, 1981, through January 1, 1989, are issued without the right of the City to redeem the same prior to their respective maturity dates. The City reserves the right to redeem bonds numbered 325 to 961, inclusive, maturing January 1, 1990, through January 1, 1999, as a whole, or in part in inverse numerical order, from money derived from any source, at the following times and prices if redeemed on the follow- ing dates, plus accrued interest to date of redemption in each case: On January 1, 1989, and July 1, 1989, at 102% On January 1, 1990, and July 1, 1990, at 101-1/2% On January 1, 1991, and July 1, 1991, at 101% on January 1, 1992, and July 1, 1992, at 100-1/2% On January 1, 1993, and thereafter at 100% (Par) Notice of any call for the redemption of any of the bonds prior to their respective maturity dates shall be published once in the official newspaper of the City not less than 30 nor more than 45 days prior to the interest coupon due date on which the bonds would be redeemed. Notice of such call for redemption shall also be mailed to Seattle -Northwest Securities Corporation at its principal place of business in Seattle, Washington, or its successor, not less than 30 nor more than 45 days prior to the interest coupon due date upon which the bonds would be redeemed. In addition, such redemption notices shall also be mailed to Moody's Investors Service, Inc., and Standard & Poor's Corporation at their offices in New York, New York, but such notices shall not be a condition precedent to any such redemption. Interest on any bonds so called for redemption shall cease on the date fixed for such redemption upon payment of the call price into the Bond Fund. -32- The City further reserves the right to purchase any or all of the bonds in the open market at any time at a price not in excess of the call price applicable at the next succeeding call date. The City hereby covenants and agrees with the holders of each and every one of the bonds of this issue to fully carry out all covenants and meet all obligations of the City as set forth in the Bond Ordinance. It is hereby certified and declared that the bonds of this issue are issued pursuant to and in strict compliance with the Constitution and laws of the State of Washington and the ordinances of the City, and that all acts, conditions and things required to be done precedent to and in the issuance of this bond have happened, have been done and have been performed as required by law. IN WITNESS WHEREOF, the City has caused this bond to be signed by the manual signature of its Mayor and attested by the facsimile signature of its City Clerk and its printed facsimile seal to be reproduced hereon and the interest coupons to be signed with the facsimile signatures of such officials this first day of November, 1977. CITY OF EDMONDS, WASHINGTON By ATTEST: (facsimile signature) City Clerk Mayor The interest coupons attached to the Bonds shall be in substantially the following form: Coupon No. (Unless the bond referred to below shall have been previously redeemed) On the FIRST DAY OF (JANUARY)(JULY), 19 , the CITY OF EDMONDS, WASHINGTON, upon presentation and surrender of this coupon will pay to bearer at the office of the Director of Finance of the City'or, at the option of the holder hereof, at either fiscal agency of the State -33- of Washington in the Cities of Seattle, Washington, or. New York, New York, the sum shown hereon in lawful money of the United States of America from the special fund of the City known as the "Water and Sewer Revenue Bond Fund, 1977," such sum being the interest then due on its "Water and Sewer Revenue Refunding and Construction Bond, 1977," dated November 1, 1977, and numbered CITY OF EDMONDS, WASHINGTON By (facsimile signature) Mayor ATTEST: (facsimile signature) City Clerk Section 15. Execution of Bonds. The Bonds shall be printed on lithographed forms, shall be signed by the manual signature of the Mayor and attested by the facsimile signature of the City Clerk, and pursuant to RCW 39.62.030 shall have the seal of the City in printed facsimile reproduced thereon, and the interest coupons attached thereto shall bear the facsimile signatures of the Mayor and the City Clerk. Section 16. Provision for Future Parity Bonds. The City reserves the right to issue Future Parity Bonds which will constitute a charge and lien upon the Revenue of the System and ULID Assessments hereafter pledged to be paid into the Bond Fund on a parity with the Bonds if the following conditions should be met and complied with at the time of the issuance of such Future Parity Bonds, to -wit: (1) At the time of issuance of such Future Parity Bonds, there shall not be any deficiency in the Bond Fund or the Reserve Account therein. (2) Each ordinance providing for the issuance of such Future Parity Bonds shall require that all Assess- ments levied in any ULID created in connection with the Future Parity Bonds then being 'issued will be paid directly into the Bond Fund. -34- (3) Each ordinance providing for the issuance of such Future Parity Bonds shall provide for the payment of the principal thereof and interest thereon out of the Bond Fund. (4) The ordinance authorizing any Future Parity Bonds shall require that the Reserve Account be increased within a period of five years after the date of issuance of the Future Parity Bonds to an amount equal to the average annual principal and interest requirements on all Future Parity Bonds, including the Bonds and the Future Parity Bonds proposed to be issued, excluding from such amount the principal amount of any Term Bonds included in the Future Parity Bonds issue. (5) At the time of the issuance of such Future Parity Bonds, the City shall have on file a certificate from an independent licensed professional engineer experienced in the design, construction and operation of municipal utilities, showing that in his professional opinion, the annual Revenue of the System, after payment of Operating and Maintenance Expenses, available for debt service on the Bonds, Future Parity Bonds then outstanding and the Future Parity Bonds proposed to be issued for each year shall be at least equal to the Coverage Require- ment (1.25 times that amount of debt service to be paid from operating Revenue and not Assessments). In determining whether the City is able to comply with the parity conditions, the Revenue of the System of the City, less Operating and Maintenance Expenses, for any twelve consecutive calendar months out of the immediately preceding twenty-four consecutive months shall be used. The following adjustments may be made to the historical net operating Revenue of the System: (1) Any rate change that has taken place or been approved, may be reflected; (2) Revenue may be added from customers actually added to the System subsequent to the 12-month base period; (3) Revenue may be added from customers to be served by the improvements being constructed out of the proceeds of the Future Parity Bonds to be issued; and -35- (4) A full year's revenue may be included from any customer being served, but who has not been receiving service for the full period of operation used as a basis for the certificate; and (5) Actual or reasonably anticipated changes in the Operating and Maintenance Expenses subsequent to such 12-month period shall be added or deducted, as is applicable. Nothing contained in the provisions for parity shall prevent the City from issuing revenue bonds having a junior lien on the Revenue of the System or from pledging the payment of ULID Assessments into a bond redemption fund or account created to pay and secure the payment of the principal and interest on such junior lien bonds as long as such ULID Assessments are levied to pay part or all of the cost of improvements being constructed out of the proceeds of the sale of such junior lien bonds. Neither shall anything contained in this ordinance prevent the City from issuing revenue bonds to refund maturing revenue bonds of the City for the payment of which money is not otherwise available. Section 17. Defeasance Clause. In the event the City shall issue advance refunding bonds pursuant to the laws of the State of Washington, or have money available from any other lawful source, to pay the principal of and interest on the Bonds or such portion thereof included in the refunding plan as the same become due and payable and to refund all such then outstanding Bonds and to pay the costs of refunding, and shall have irrevocably set aside for and pledged to such payment and refunding, money and/or direct obligations of the United States of America or other legal investments sufficient in amount, together with known earned income from the -36- investments thereof, to make such payments and to accomplish the .refunding as scheduled (hereinafter called the "trust account") and shall irrevocably make provisions for redemption of such Bonds, then in that case all right and interest of the owners or holders of the Bonds to be so retired or refunded and the appurtenant coupons (hereinafter collectively called the "defeased Bonds") in the covenants of this ordinance, in the Revenue of the System, funds and accounts, including ULID Assessments, obligated to the payment of such Bonds shall thereafter cease and become void, except such owners and holders shall have the right to receive payment of the principal of and interest on the defeased Bonds from the trust account and, in the event the funds in the trust account are not available for such payment, shall have the residual right to receive payment of the principal of and interest on the defeased Bonds from the Revenue of the System and ULID Assessments without any priority of lien or charge against that Revenue and Assessments or covenants with respect thereto except to be paid therefrom. After the establishing and full funding of such trust account, the City may then apply any money in any other fund or account established for the payment or redemption of the defeased Bonds to any lawful purposes as it shall determine, subject only to the rights of the holders of any other bonds then outstanding. In the event that the refunding plan provides that the Bonds being refunded or the refunding bonds to be issued be secured by cash and/or direct obligations of the United States of America or other legal investments pending the prior redemption of those Bonds being refunded and if: such refunding plan also provides that -37- certain cash and/or direct obligations of the United States of America or other legal investments are irrevocably pledged for the prior redemption of those Bonds included in the refunding plan, then only the debt service on the Bonds which are not defeased Bonds and the refunding bonds, the payment of which is not so secured by the refunding plan, shall be included in the computation of coverage for issuance of Future Parity Bonds and the annual computation of coverage for determining compliance with the rate covenants. Section 18. Temporary Bond. Pending the printing, execution and delivery to the purchaser of the definitive Bonds, the City may cause to be executed and delivered to such purchaser a single temporary Bond in the principal amount of $4,805,000. Such temporary Bond shall bear the same date of issuance, interest rates, principal payment dates and terms and covenants as the definitive Bonds, and shall be issued as a fully registered bond in the name of such purchaser, and shall be in such form as acceptable to such purchaser. Such temporary Bond shall be exchanged for the definitive Bonds as soon as the same are printed, executed and available for delivery. Section 19. Sale and Delivery of Bonds. Seattle - Northwest Securities Corporation of Seattle, Washington, heretofore offered to purchase the Bonds at a price of $98.00 per each $100.00 of par plus accrued interest to the date of delivery of the Bonds, the City to furnish the printed Bonds and the unqualified approving legal opinion of Messrs. Roberts, Shefelman, Lawrence, Gay & Moch, municipal bond counsel of Seattle, Washington, and the purchaser to pay the cost of printing such Bonds, bond rating service charges, an -38- allocable portion of the cost of such legal opinion as set forth in Section 10 above and the cost of delivering the Bonds to such purchaser. Bond counsel's opinion shall state that bond counsel has not reviewed, and thus expresses no opinion concerning, the completeness or accuracy of any official statement, offering circular or other sales material relating to the issuance of the Bonds or otherwise used in connection with the Bonds. The City Council, being of the opinion that it was in the best interests of the City to accept such offer, duly accepted the same on November 1, 1977, and such acceptance is hereby ratified and confirmed. The Bonds shall, therefore, immediately upon their execution be delivered to the purchaser upon payment for the Bonds in accordance with such offer. Section 20. Effective Date. This ordinance shall take effect and be in force five days after its passage, approval and legal publication. PASSED by the City Council of the City of Edmonds, Washington, at a regular open public meeting thereof and APPROVED by the Mayor this 15th day of November, 1977. ATTEST: City Clerk FORM APPROVED: LA ,c --. City Attorney i CITY OF EDMONDS, WASHINGTON By Mayor -39- E X H I B I T A Waterline installation and replacements, location and termini as listed below: A. 2800 feet of 8" ductile iron pipe from 168th and 62nd Avenue northwesterly to 68th Avenue West and North Meadowdale Road. B. Casper Street: From Third Avenue North to Seventh Avenue North, 550 feet of 6" ductile iron pipe with one (1) fire hydrant. C. Daley Street: From Third Avenue North to Sixth Avenue North, 670 feet of 6" ductile iron pipe with one (1) fire hydrant. D. 194th Place Southwest: From 88th Avenue West to 89th Pl. West, 400 feet of 8" ductile iron pipe with one (1) fire hydrant. E. 84th Avenue West: From 196th Street Southwest to 184th Street Southwest, 3,900 feet of 6" ductile iron pipe with three (3) fire hydrants. F. 80th Avenue West: From 200th Street Southwest to 188th Street Southwest, 3,900 feet of ductile iron pipe with five (5) fire hydrants. A G. 81st Place West: From 81st Place West to 82nd Avenue West, 200 feet of 6" ductile iron pipe with one (1) fire hydrant. H. 82nd Place West: From 212th Street Southwest to 84th Avenue West, 1,100 feet of 6" ductile iron pipe with two (2) fire hydrants. I. 82nd Avenue West: From 217th Street Southwest to 218th Street Southwest, 350 feet of 6" ductile iron pipe with no fire hydrants. J. 85th Place West: From 218th Street Southwest to 219th Street Southwest, 300 feet of 6" ductile iron pipe with one (1) fire hydrant. K. 96th Avenue West: From Bowdoin Way to 220th Street Southwest, 2,700 feet of 6" ductile• iron pipe with five (5) fire hydrants. EXHIBIT A Page Two L. 218th Street Southwest: From 76th Avenue West to 74th Avenue West, 650 feet of 8" ductile iron pipe with one (1) fire hydrant. M. Highway 99: From 222nd Street Southwest to 224th Street Southwest, 1,500 feet of 8" ductile iron pipe with one (1) fire hydrant. N. Highway 99: From 220th Street Southwest to 224th Street Southwest, 1,400 feet of 8" ductile iron pipe with two (2) fire hydrants. 0. 234th Street Southwest: From Highway 99 to 76th Avenue West, 1,350 feet of 6" ductile iron pipe with two (2) fire hydrants. A G R E E M E N T THIS AGREEMENT made and entered into as of the 45 61) day of November, 1977, by and between the CITY OF EDMONDS, WASHINGTON, a municipal corporation of the State of Washington (the "City"), and RAINIER NATIONAL BANK, Seattle, Washington (the "Refunding Trustee"); W1. I T N E S S E T H: SECTION 1. Recitals. The City now has outstanding the following bonds: (a) $118,000 principal amount of its "Water and Sewer Revenue Bonds, 1959," issued under date of August 1, 1959 (hereinafter called the "1959 Bonds"), which bonds mature on August 1 in each of the years 1978 through 1981, and all bear interest at the rate of 4.40% per annum; (b) $65,000 principal amount of its "Water and Sewer Revenue Bonds, 1960," issued under date of May 1, 1960 (hereinafter called the "1960 Bonds"), which bonds mature on May 1 in each of the years 1978 through 1982, a part of which 1960 Bonds bear interest at the rate of 4.40% per annum and the remainder of which 1960 Bonds bear interest at the rate of 4.20% per annum; (c) $100,000 principal amount of its "Water and Sewer Revenue Bonds, 1961," issued under date of December 1, 1961 (hereinafter called the "1961 Bonds"), which bonds mature on December 1 in each of the years 1982 through 1984, and all bear interest at the rate of 4.25% per annum; (d) $40,000 principal amount of its "Water and Sewer Revenue Bonds, 1965," issued under date of October 1, 1965 (hereinafter called the "1965 Bonds"), which bonds mature on October 1 in each of the years 1978 through 1981, and all bear interest at the rate of 3.75% per annum; (e) $625,000 principal amount of its "Water and Sewer Revenue Bonds, 1966," issued under date of June 1, 1966 (hereinafter called the "1966 Bonds"), which bonds mature on June 1 in each of the years 1978 through 1986, a part of which 1966 Bonds bear interest at the rate of 4.25% per annum and the remainder of which 1966 Bonds bear interest at the rate of 4.375% per annum; (f) $235,000 principal amount of its "Water and Sewer Revenue Bonds, 1967," issued under date of July 1, 1967 (hereinafter called the "1967 Bonds"), which bonds mature on July 1 in each of the years 1978 through 1986, a part of which 1967 Bonds bear interest at the rate of 4.75% per annum and the remainder of which 1967 Bonds bear interest at the rate of 5% per annum; (g) $1,000,000 principal amount of its "Water and Sewer Revenue Bonds, 1970," issued under date of December 1, 1970 (hereinafter called the "1970 Bonds"), provision for the refunding, payment and retirement of the principal only thereof on December 1, 1982, has been irrevocably provided for out of the investment proceeds of the 1972 Bonds leaving only interest on such 1970 Bonds not covered by such refunding operation, which bonds bear interest at various rates from 6.70% to 7% per annum; (h) $1,035,000 principal amount of its "Water and Sewer Revenue Refunding Bonds, 1972," issued under date of March 1, 1972 (hereinafter called the "1972 Bonds"), which bonds mature on September 1 in each of the years 1983 through 1991, all of which 1972 Bonds bear interest at the rate of 5.75% per annum; and (i) $2,020,000 principal amount of its "Water and Sewer Revenue Refunding Bonds, 1976," issued under date of December 1, 1976 (hereinafter called the "1976 Bonds"), which bonds mature on July l'in each of the years 1985 through 1999, which bonds bear interest at various rates from 6% to 6.25% per annum. (All of which bonds are sometimes hereinafter referred to as the "Outstanding Bonds.") Pursuant to Ordinance No. 1957 passed by the City Council and approved by the Mayor on November 15, 1977, the City has determined: (a) All of the outstanding 1959 Bonds may be refunded by providing funds for the payment of the principal of and interest on such 1959 Bonds as the same become due up through August 1, 1981; -2- (b) All of the outstanding 1960 Bonds may be refunded by providing funds for the payment of the principal of and interest on such 1960 Bonds as the same become due up through May 1, 1982; (c) All of the outstanding 1961 Bonds may be refunded by providing funds for the payment of the principal of and interest on such 1961 Bonds as the same become due up through December 1, 1984; (d) All of the outstanding 1965 Bonds may be refunded by providing funds for the payment of the principal of and interest on such 1965 Bonds as the same become due up through October 1, 1981; (e) All of the outstanding 1966 Bonds may be refunded by providing funds for the payment of the principal of and interest on such 1966 Bonds as the same become due up through June 1, 1986; (f) All of the outstanding 1-967 Bonds may be refunded by providing funds for the payment of the principal of and interest on such 1967 Bonds as the same become due up through July 1, 1986; (g) All of the outstanding 1970 Bonds may be refunded by providing funds for the payment of the interest only on such 1970 Bonds as the same becomes due up through December 1, 1982 (the call date for the principal of such 1970 Bonds); [h) All of the outstanding 1972 Bonds may be refunded by providing funds for the payment of the principal of and interest on such 1972 Bonds as the same become due beginning March 1, 1983, up through September 1, 1991; and (i) All of the outstanding 1976 Bonds may be refunded by providing funds for the payment of the principal of and interest on such 1976 Bonds as the same become due up through January 1, 1997, at which time all outstanding 1976 Bonds, which mature on July 1 in each of the years 1997 through 1999, will be called, paid and retired; out of the proceeds of the sale of its "Water and Sewer Revenue Refunding and Construction Bonds,.1977" (hereinafter referred to as the "Bonds"), and money presently on hand in the bond redemption funds for all of such Outstanding Bonds. -3- SECTION 2. Provisions for Refunding. To accomplish the refunding of all of the 1959 Bonds, 1960 Bonds, 1961 Bonds, 1965 Bonds, 1966 Bonds, 1967 Bonds, 1970 Bonds (interest only), 1972 Bonds and 1976 Bonds, including the payment of principal and interest to become due on all of such Outstanding Bonds as they respectively become due and to call and pay such 1976 Bonds as set forth in the immediately preceding section, the City, simultaneously with the delivery of the Bonds issued pursuant to said Ordinance No. 1957, does hereby agree irrevocably to deposit with the Refunding Trustee in trust for the security and benefit of the holders and owners of the Outstanding Bonds and the Bonds the sum of $ 116,1V0, 2 in cash from the proceeds of sale of the Bonds and Federal Land Bank Bonds and United States Treasury Certificates of Indebtedness, Notes and Bonds state and local government series (commonly referred to as "book entries" [BE]) with amounts, interest rates and maturities as more particularly set forth in Schedule "A" attached to this Agreement and by this reference incorporated herein, which securities are hereinafter referred to as "Acquired Obligations," and such cash and "Acquired Obligations," with the investment income therefrom, will be sufficient to pay: (a) The principal of and interest on the 1959 Bonds as the same shall become due up to and including August 1, 1981; (b) The principal of and interest on the 1960 Bonds as the same shall become due up to and including May 1, 1982; (c) The principal of and interest on the 1961 Bonds as the same shall become due up to and including December 1, 1984; -4- (d) The principal of and interest on the 1965 Bonds as the same shall become due up to and including October 1, 1981; (e) The principal of and interest on the 1966 Bonds as the same shall become due up to and including June 1, 1986; (f) The principal of and interest on the 1967 Bonds as the same shall become due up to and including July 1,1986; (g) The interest only -.on the 1970 Bonds as the sarae shall become due up to and including December 1, 1982; (h) The principal of and interest on the 1972 Bonds as the same shall become due beginning March 1, 1983, up to and including September 1, 1991; and (i) The principal of and interest on the 1976 Bonds as the same shall become due up to and including January 1, 1997, at which time all of the 1976 Bonds, which mature on July 1 in each of the years 1997 through 1999, will be called, paid and retired. On or before the delivery of the Bonds, -the City agrees that it will cause to be delivered to the Refunding Trustee a statement setting forth the amount of interest and principal to be paid on each semiannual interest payment date for such Outstanding Bonds and the amount of principal required on January!l, 1997, to pay and redeem the outstanding 1976 Bonds maturing after such call date as aforesaid. The City by said Ordinance No. 1957 has irrevocably called for redemption on January 1, 1997, all of the outstanding 1976 Bonds at a redemption price of 100% of par plus accrued interest to such date of redemption. Such call for redemption shall be irrevocable upon the delivery of the Bonds. The Refunding Trustee, on behalf of -5- the Director of Finance of the City, shall provide for the publication and mailing of the proper notice of such redemption or prepayment in accordance with the provisions of Ordinance No. 1886 pertaining to the outstanding 1976 Bonds. Provision for the giving of such notice of redemption or prepayment has irrevocably been made by the City. SECTION 3. Disbursements by Refunding Trustee. The Refunding Trustee shall present for payment on the due date thereof the "Acquired Obligations" so deposited and shall apply the proceeds derived therefrom in accordance with the provisions of this section. Money shall be transferred by the Refunding Trustee to the Director of Finance of the City in amounts sufficient to pay the interest on and principal of each issue of the Outstanding Bonds coming due and payable.on or before each respective payment date and the redemption price to be payable with respect to the outstanding 1976 Bonds on their call date as aforesaid. SECTION 4. Nonreinvestment of Funds; Custody and Safekeepin of "Acquired Obligations". All money deposited with the Refunding Trustee or received by the Refunding Trustee as maturing principal or interest on the "Acquired Obligations" prior to the time required to make the payments hereinbefore set forth shall be held by the Refunding Trustee and shall not be reinvested. All income derived from the "Acquired Obligations" and any money deposited with the Refunding Trustee pursuant to Section 2 hereof in the hands of the Refunding Trustee (which money is not -6- tM required to make the payments hereinbefore required to be made) shall be paid to the Director of Finance of the City for the credit of the "1977 Refunding Fund" of the City as and when realized and collected for use and application as other money deposited in said "1977 Refunding Fund." For as long as any of the Outstanding Bonds are outstanding, on or before the loth day of each month, commencing with the month of January, 1978, the Refunding Trustee shall render a statement as of the last day of the preceding month to the Director of Finance of the City, which statement shall set forth the "Acquired Obligations" which have matured, the amounts received by the Refunding Trustee by reason of such maturity and the investment income received from such "Acquired Obligations," the amounts paid to such Director of Finance for credit to the "1977 Refunding Fund" and the dates of such delivery for the payment of the interest on and principal of each issue of such Outstanding Bonds as the same shall become due and/or payable and the final payment of the redemption price for the outstanding 1976 Bonds on their call date and any other transactions of the Refunding Trustee pertaining to its duties and obligations as set forth herein. All "Acquired Obligations," money and investment income deposited with or received by the Refunding Trustee pursuant to this Agreement shall be subject to the trust created by this Agreement and the Refunding Trustee shall be liable for the preservation and safekeeping thereof. SECTION 5. Duties and Obligations of Refundinq Trustee. The duties and obligations of the Refunding Trustee shall be as -7- prescribed by the provisions of this Agreement, and the Refunding Trustee shall not be liable except for the performance of its duties and obligations as specifically set forth herein and to act in good faith in the performance thereof, and no implied duties or obligations shall be incurred by such Refunding Trustee other than those specified herein. The Refunding Trustee may consult with counsel of its choice and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or not taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel. Provisions for the fees, compensation and expenses of the Refunding Trustee satisfactory to it have been made. ATTEST: City Clerk CITY OF EDMONDS, WASHINGTON A . By ayor RAINIER NATIONAL BANK By W12 Trust Officer S CHEDU? A CITY OF EDMONDS ACQUIRED OBLIGATIONS SECURITY PAR MATURITY DESCRIPTION AMOUNT COUPON BATE BE $ 234,000 7.610010 1101197 *FLB 450,000 7.950000 10/21/96 BE 267,000 7.600000 7/01/96 BE 244,000 7.550000 7/01/95 BE 231,000 7.550000 7/01/94 BE 210,000 7.500000 7101193 BE 198,000 7.500000 7101192 BE 178,000 7.000000 9/01/91 BE 206,000 7.000000 9/01/90 BE 200,000 7.000000 9/01/89 BE 189,000 7.000000 9/01/88 BE 169,000 7.000000 9/01/87 BE 6,000 7.000000 9/01/86 BE 48,000 6.500000 7/01/86 BE 96,000 3.330000 6/01/86 BE 6,000 0.000000 9/01/85 BE 48,000 6.500000 7/01/85 BE 100,000 3.330000 6/01/85 BE 28,000 0.000000 12/01/84 BE 7,000 0.000000 9/01/84 BE 37,000 6.500000 7/01/84 BE 63,000 0.000000 6/01/84 BE 8,000 0.000000 1/01/84 BE 33,000 0.000000 12/01/83 BE 6,000 0.000000 9/01/83 BE 37,000 6.500000 7101183 BE 51,000 0.000000 6/01/83 BE 7,000 0.000000 1/01/83 BE 11,000 0.000004 12/01/82 BE 32,000 6.500000 7101182 BE 77,000 0.000000 6/01/82 BE 7,000 0.000000 1/01/82 BE 3,000 0.000000 12/01/81 BE 18,000 4.400000 8/01/81 BE 31,000 6.500000 7101181 BE 64,000 0.000000 6/01/81 BE 7,000 0.000000 1/01/81 BE 4,000 0.000000 12/01/80 BE 35,000 4.400000 8/01/80 BE 31,000 6.000000 7/01/80 BE 46,000 0.000000 6/01/80 BE 6,000 0.000000 1/01/80 BE 6,000 0.000000 112/01/79 BE 33,.000 0.000000 8101179 BE 26,000 6.000000 7101179 BE 47,000 0.000000 6/01/79 BE 6,000 0.000000 1/01/79 BE 7,000 0.000000 12/01/78 BE 32,000 4.400000 8/01/78 BE 25,000 6.500000 7101178 BE 60,000 0.000000 6101178