Adopted February 25, 1998

Resolution 29708

A RESOLUTION providing for the sale and issuance of The City of Seattle, Washington, Unlimited Tax General Obligation Refunding Bonds, 1998, Series A and Limited Tax General Obligation Refunding Bonds, 1998, Series B, authorized by Ordinance 118824; specifying the amount, maturities, interest rates and other terms of the bonds; appointing a refunding trustee and approving the form and execution of a refunding trust agreement and ratifying, confirming and approving the bond purchase contract and the actions of the Finance Director relating to the sale and issuance of the bonds.

WHEREAS, by Ordinance 118824 (the "Bond Ordinance"), The City of Seattle, Washington (the "City") authorized the issuance of bonds to provide funds with which to pay (i) the costs of refunding all or a portion of the City's outstanding unlimited tax general obligation bonds and limited tax general obligation bonds and (ii) all or part of the costs of issuing and selling those bonds; and

WHEREAS, the City has determined to issue its Unlimited Tax General Obligation Refunding Bonds, 1998, Series A (the "Unlimited Tax Bonds") and Limited Tax General Obligation Refunding Bonds, 1998, Series B (the "Limited Tax Bonds") (collectively the "Bonds") for such purposes; and

WHEREAS, by the Bond Ordinance the City authorized the Finance Director to negotiate a sale of the Bonds and to recommend to the City Council for its approval by resolution the interest rates and other terms of and matters relating to the Bonds consistent with the Bond Ordinance; and

WHEREAS, pursuant to the Bond Ordinance, a preliminary official statement dated February 17, 1998, has been prepared, a sale of the Bonds has been negotiated pursuant to a proposed bond purchase contract (the "Bond Purchase Contract") between the City and Lehman Brothers Inc., on behalf of itself, PaineWebber Incorporated and Artemis Capital Group, Inc. (all such underwriters being collectively referred to below as the "Underwriters"), and the proposed sale of the Bonds to the Underwriters has been recommended to the City Council for its approval with the interest rates and other terms of and matters relating to the Bonds set forth in this resolution; NOW, THEREFORE,

BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEATTLE AS FOLLOWS:

Section 1. Definitions. The following terms shall have the following meanings for all purposes of this resolution:

Acquired Obligations means those noncallable direct obligations of the United States of America listed on Schedule A to the Refunding Trust Agreement.

Refunded Bond Legislation means the legislation described as such in the following chart:

Refunded Bond Legislation

Refunded Bonds

Outstanding Principal Amount

Rate

Ord. 102203

Res. 24162

General Obligation Refunding Bonds, 1973 (the "1973 Refunded Bonds")

$27,720,000 par value

maturing September 1, 1998 2009

5.30% 5.50%

Ord. 96329 & 97896

Res. 24070 & 24109

Neighborhood Improvement Bonds, 1968, Series No. 2 (the "1968 Neighborhood Improvement Series No. 2 Refunded Bonds")

$970,000 par value maturing May 1, 1998 2013

4.50% 5.20%

Ord. 96327 & 96925

Res. 24070 & 24109

Seattle Sewer Improvement Bonds, 1968, Series No. 5 (the "1968 Sewer Improvement Series No. 5 Refunded Bonds")

$6,790,000 par value maturing May 1, 1998 2013

4.50% 5.20%

Ord. 96327 & 96925

Res. 23579 & 23650

Seattle Sewer Improvement Bonds, 1968, Series No. 4 (the "1968 Sewer Improvement Series No. 4 Refunded Bonds")

$6,610,000 par value maturing July 1, 1998 2012

4.50% 5.50%

Ord. 96329 & 97896

Res. 25418 & 25449

Neighborhood Improvement Bonds,1968, Series No. 3 (the "1968 Neighborhood Improvement Series No. 3 Refunded Bonds")

$5,670,000 par value maturing March 1, 1999 2017

5.40% 5.60%

Ord. 106629, 106630 &

107111

Res. 25757

Unlimited Tax General Obligation Bonds, 1978 (the "1978 Refunded Bonds")

$7,970,000 par value maturing March 1, 1999 2003

5.30% -

5.40%

Ord. 101034

Res. 29043

General Obligation

Parking Garage Bonds, 1972 (the "1972 Parking Garage Refunded Bonds")

$1,110,000 par value maturing August 1, 1998 2002

4.75% -

5.60%

Ord. 113875, 113947 &

114065

Res. 27822 & 27830

Limited Tax Levy General Obligation Bonds, 1988, Series B (the "1988 Series B Refunded Bonds")

$3,830,000 par value maturing August 1, 1998 and 2018

6.00% -

6.85%

Ord. 115453

Res. 28303

Public Safety Facilities and Equipment Limited Tax General Obligation Bonds, 1991 (the "1991 Public Safety Refunded Bonds")

$2,625,000 par value maturing August 1, 1998 2011

6.20% -

6.75%

Refunded Bond Legislation

Refunded Bonds

Outstanding Principal Amount

Rate

Ord. 115639 & 115716

Res. 28385 & 28388

West Seattle Bridge Limited Tax General Obligation Refunding Bonds, 1991 (the "1991 West Seattle Bridge Refunded Bonds")

$5,915,000 par value maturing October 1, 1998 2003 & Term Bond due October 1, 2005

6.10% -

6.90%

Ord. 116105

Res. 28527

Limited Tax General Obligation Bonds,

(Capital Facilities Projects), 1992 (the "1992 Capital Facilities Projects Refunded Bonds")

$28,320,000 par value maturing March 1, 1999 2006 & Term Bonds due March 1, 2009 and 2012

5.65% -

7.00 %

Ord. 116081

Res. 28525

Various Purpose Limited Tax General Obligation Bonds, 1992 (the "1992 Various Purpose Refunded Bonds")

$1,015,000 par value maturing March 1, 1999 2007 & Term Bond due March 1, 2012

5.65 % -

6.50%

Refunded Bonds means the bonds described as such in the above chart.

Refunding Plan means the payment, through refunding, of the Refunded Bonds pursuant to and as provided for in the Refunding Trust Agreement as follows:

(a) The delivery by the City to the Refunding Trustee of the proceeds of the Bonds and, if necessary, other money of the City;

(b) The purchase by the Refunding Trustee of the Acquired Obligations at or prior to the date the Bonds are delivered to the original purchaser thereof and the City receives full payment therefor (the "Date of Closing");

(c) The delivery to the City and the Refunding Trustee of a verification by a nationally recognized independent certified public accounting firm verifying the accuracy of the mathematical computations (which computations shall be attached to that report) showing that the Acquired Obligations to be purchased by the Refunding Trustee pursuant to the Refunding Trust Agreement, together with the specified beginning cash balance, if any, and the maturing principal of and interest on such Acquired Obligations, will provide sufficient money (assuming that all principal of and interest on the Acquired Obligations are paid on the due dates thereof and assuming no reinvestment of such maturing principal and interest) to pay principal, interest, and call premium on the Refunded Bonds in accordance with the Refunding Trust Agreement;

(d) (1) The payment of interest when due and the call, payment and redemption on May 1, 1998, of the 1973 Refunded Bonds at a price of par;

(2) The payment of interest when due and the call, payment and redemption on May 1, 1998, of the 1968 Neighborhood Improvement Series No. 2 Refunded Bonds at a price of par;

(3) The payment of interest when due and the call, payment and redemption on May 1, 1998, of the 1968 Sewer Improvement Series No. 5 Refunded Bonds at a price of par;

(4) The payment of interest when due and the call, payment and redemption on July 1, 1998, of the 1968 Sewer Improvement Series No. 4 Refunded Bonds at a price of par;

(5) The payment of interest when due and the call, payment and redemption on September 1, 1998, of the 1968 Neighborhood Improvement Series No. 3 Refunded Bonds at a price of par; and

(6) The payment of interest when due and the call, payment and redemption on September 1, 1998, of the 1978 Refunded Bonds at a price of par.

(7) The payment of interest when due and the call, payment and redemption on August 1, 1998, of the 1972 Parking Garage Refunded Bonds at a price of par;

(8) The payment of interest when due and the call, payment and redemption on August 1, 1998, of the 1988 Series B Refunded Bonds at a price of par;

(9) The payment of interest on and principal of the 1991 Public Safety Refunded Bonds when due up to and including August 1, 2001, and on August 1, 2001, the call, payment and redemption of the remaining 1991 Public Safety Refunded Bonds at a price of par;

(10) The payment of interest on and principal of the 1991 West Seattle Bridge Refunded Bonds when due up to and including October 1, 2001, and on October 1, 2001, the call, payment and redemption of the remaining 1991 West Seattle Bridge Refunded Bonds at 101 percent of par;

(11) The payment of interest on and principal of the 1992 Capital Facilities Projects Refunded Bonds when due up to and including March 1, 2002, and on March 1, 2002, the call, payment and redemption of the remaining 1992 Capital Facilities Projects Refunded Bonds at a price of par; and

(12) The payment of interest on and principal of the 1992 Various Purpose Refunded Bonds when due up to and including March 1, 2002 and on March 1, 2002, the call, payment and redemption of the remaining 1992 Various Purpose Refunded Bonds at a price of par;

(e) The receipt by the Refunding Trustee of the maturing installments of principal of and interest on the Acquired Obligations; and

(f) The Refunding Trustee's payment to the Bond Registrar (as defined in the Bond Ordinance) of money sufficient to make the payments on the Refunded Bonds set forth in the Refunding Trust Agreement.

Refunding Trustee means the entity appointed as Refunding Trustee for the Refunded Bonds pursuant to Section 10 hereof.

Refunding Trust Agreement means the Refunding Trust Agreement between the City and the Refunding Trustee relating to the refunding of the Refunded Bonds, as approved in Section 10 hereof.

The meanings of all other capitalized terms used and not otherwise defined in this resolution shall be as set forth in the Bond Ordinance.

Section 2. The Bonds. The Unlimited Tax Bonds shall be issued in the aggregate principal amount of $53,865,000, and the Limited Tax Bonds shall be issued in the aggregate principal amount of $43,710,000. The Bonds shall be in the denomination of Five Thousand Dollars ($5,000) or any integral multiple thereof within a single maturity, shall be dated March 15, 1998; shall be registered as to both principal and interest; and shall bear interest (computed on the basis of a 360-day year of twelve 30-day months) from their date until the Bonds bearing such interest have been paid or their payment has been duly provided for, payable on the first day of each September and March, commencing September 1, 1998. Interest on the Bonds will be payable by checks, drafts or warrants mailed on the interest payment date to the registered owners at the addresses or accounts for such owners appearing upon the Bond Register on the 15th day of the calendar month preceding the interest payment date, or, if requested in writing by the owner of $1,000,000 or more in principal amount of Bonds at least ten days before an interest payment date, by wire transfer on the interest payment date. The Bonds shall mature on September 1 or March 1 of the following years and in the following amounts and shall bear interest as follows:

Unlimited Tax Bonds

Maturity Dates

Principal Amounts

Interest Rates

9/1/1998

$2,465,000

4.50%

3/1/1999

4,000,000

4.50

3/1/2000

4,205,000

4.50

3/1/2001

4,410,000

4.50

3/1/2002

4,640,000

5.00

3/1/2003

4,895,000

5.00

3/1/2004

3,310,000

5.25

3/1/2005

3,515,000

5.25

3/1/2006

3,730,000

5.50

3/1/2007

3,970,000

5.50

3/1/2008

4,215,000

5.50

3/1/2009

4,475,000

5.50

3/1/2010

1,300,000

5.50

3/1/2011

1,370,000

5.50

3/1/2012

1,460,000

5.50

3/1/2013

875,000

5.25

3/1/2014

235,000

5.25

3/1/2015

245,000

5.25

3/1/2016

265,000

5.25

3/1/2017

285,000

5.25

Limited Tax Bonds

Maturity Dates

Principal Amounts

Interest Rates

9/1/1998

$2,355,000

4.50%

3/1/1999

3,065,000

4.50

3/1/2000

3,195,000

4.50

3/1/2001

3,250,000

4.50

3/1/2002

3,385,000

5.00

3/1/2003

3,300,000

5.00

3/1/2004

3,150,000

5.25

3/1/2005

3,285,000

5.25

3/1/2006

2,505,000

5.50

3/1/2007

2,640,000

5.50

3/1/2008

2,785,000

5.50

3/1/2009

2,935,000

5.50

3/1/2010

3,100,000

5.50

3/1/2011

3,270,000

5.50

3/1/2012

1,490,000

5.50

Section 3. Optional Redemption. The Bonds are not subject to optional redemption prior to maturity.

Section 4. Form of Bonds. The Unlimited Tax Bonds shall be substantially in the form attached hereto as Exhibit A and incorporated herein by this reference, and the Limited Tax Bonds shall be substantially in the form attached hereto as Exhibit B and incorporated herein by this reference.

Section 5. Sale and Delivery of Bonds. The City Council finds that the sale and delivery of the Bonds to the Underwriters at the interest rates and under the conditions set forth in the Bond Ordinance, this Resolution and the Bond Purchase Contract is in the City's best interest and therefore approves the sale of the Bonds to the Underwriters pursuant to the Bond Purchase Contract. The Finance Director is authorized and directed to execute, on behalf of the City, the Bond Purchase Contract substantially in the form attached hereto as Exhibit C and incorporated herein by this reference.

Section 6. Use of Bond Proceeds, Acquisition and Substitution of Acquired Obligations. The principal proceeds of the sale of the Bonds and, if necessary, other money of the City (which amount may be adjusted by the Finance Director prior to the issuance of the Bonds) shall be deposited immediately upon the receipt thereof with the Refunding Trustee and used to discharge the obligations of the City relating to the Refunded Bonds under the Refunded Bond Legislation by providing for the payment of the amounts required to be paid by the Refunding Plan, as defined herein and modified or amplified by the Refunding Trust Agreement, and to pay the costs of issuing and selling the Bonds. The Refunding Plan shall be carried out, and proceeds of the Bonds shall be applied, in accordance with the Bond Ordinance, the Refunded Bond Legislation, this resolution and the laws of the State. The obligations of the City relating to the Refunded Bonds shall be discharged fully by the Refunding Trustee's simultaneous purchase of the Acquired Obligations, bearing such interest and maturing as to principal and interest in such amounts and at such times so as to provide, together with a beginning cash balance, if necessary, for the payment of the amounts required to be paid by the Refunding Plan. The Acquired Obligations shall be subject to substitution as set forth in the Refunding Trust Agreement.

Any surplus money resulting from the sale, transfer, other disposition or redemption of the Acquired Obligations and the substitutions therefor shall be released from the trust estate and transferred to the Bond Fund to be used for any lawful purpose.

If, after the purchase of the Acquired Obligations and payment of the costs of issuing and selling the Bonds, there are unspent Bond proceeds, the Refunding Trustee shall return any such unspent proceeds (except for the begining cash balance) to the City for deposit into the Bond Fund.

Section 7. Call for Redemption of the Refunded Bonds. In accordance with Section 13 of the Bond Ordinance, as a part of the Refunding Plan, the City hereby calls all of the then outstanding Refunded Bonds for redemption on the dates and at the prices set forth in the Refunding Plan plus accrued interest to the date of redemption. Such calls for redemption shall be irrevocable after the delivery of the Bonds to the Underwriters. The Finance Director is authorized and directed to give or cause to be given such notices as are required, at the times and in the manner required, pursuant to the Refunded Bond Legislation, in order to effect the redemption prior to their maturity of the Refunded Bonds.

Section 8. Securities Purchase Agreements. The Finance Director is authorized to select a firm or firms (the "Provider"), and to enter into an agreement or agreements with the Provider, which agreement or agreements shall be approved by the City by resolution and shall comply with the requirements of the Refunding Trust Agreement, providing for the purchase and delivery of securities to be acquired by the Refunding Trustee with proceeds of Acquired Obligations maturing prior to the date those proceeds are to be applied by the Refunding Trustee to pay the principal of and interest on the Refunded Bonds. Any such securities shall comply with the requirements for and shall be deemed "Acquired Obligations" as that term is used in the Bond Ordinance.

Section 9. City Findings With Respect to Refunding. The City Council finds and determines that the issuance and sale of the Bonds will effect savings to the City and its taxpayers and will be in the best interest of the City and in the public interest. In making such findings and determinations, the City Council has given consideration to the fixed maturities and scheduled redemptions of the Bonds, the costs of issuance of the Bonds, and the known earned income from the investment of the proceeds of the issuance and sale of the Bonds and other money, if any, of the City used in the Refunding Plan pending payment and redemption of the Refunded Bonds. The City Council further finds and determines that the money to be deposited with the Refunding Trustee for the defeasance of the Refunded Bonds in accordance with the Bond Ordinance and this resolution will discharge and satisfy the obligations of the City with respect to the Refunded Bonds under the Refunded Bond Legislation, and the pledges, charges, trusts, covenants and agreements of the City therein made or provided for as to the Refunded Bonds, and that the Refunded Bonds shall no longer be deemed to be outstanding under the Refunded Bond Legislation immediately upon the deposit of such money with the Refunding Trustee.

Section 10. Appointment of Refunding Trustee and Authorization of Refunding Trust Agreement. The Bank of New York, is appointed as Refunding Trustee. The Finance Director is authorized and directed to execute and deliver to the Refunding Trustee a Refunding Trust Agreement substantially in the form attached hereto as Exhibit D and incorporated herein by this reference, with such modifications as the Finance Director determines are necessary and appropriate and are consistent with the Bond Ordinance and this resolution.

Section 11. Official Statement Authority. The Finance Director is hereby authorized and directed to review and approve on behalf of the City a final official statement (the "Official Statement") with respect to the Bonds substantially in the form of the mark-up of the preliminary official statement dated February 17, 1998, which mark-up is attached to the Bond Purchase Contract and which mark-up may be supplemented or amended as the Finance Director, with the approval of Bond Counsel, deems necessary or appropriate.

Section 12. Undertaking to Provide Continuing Disclosure. This Section 12 constitutes the written undertaking (the "Undertaking") for the benefit of the holders of the Bonds as required by United States Securities and Exchange Commission (the "SEC") Rule 15c2-12(b)(5) (the "Rule") and pursuant to Section 22 of the Bond Ordinance. The City as an "obligated person" within the meaning of the Rule undertakes to provide or cause to be provided:

(a) to each nationally recognized municipal securities information repository designated by the SEC in accordance with the Rule (each "NRMSIR") and to a state information depository, if one is established in the State and recognized by the SEC (the "SID"), annual financial information and operating data regarding the City of the type included in the Official Statement for the Bonds as follows: (i) annual financial statements of the City prepared in accordance with generally accepted accounting principles promulgated by the Government Accounting Standards Board ("GASB"), as such principles may be changed from time to time by GASB or its successor and as permitted by state law; (ii) a statement of authorized, issued and outstanding general obligation bond debt of the City; (iii) the assessed value of the property within the City subject to ad valorem taxation; and (iv) ad valorem tax levy rates and amounts and percentage of taxes collected.

Annual financial information, as described above, will be provided to each NRMSIR and the SID, not later than the last day of the ninth month after the end of each fiscal year of the City, as such fiscal year may be changed as required or permitted by state law, commencing with the City's fiscal year ending December 31, 1998. The annual financial statements so provided will not be audited, except that if and when audited financial statements are otherwise prepared and available to the City they will be provided. The annual financial information may be provided in a single or multiple documents, and may be incorporated by reference from other documents, including official statements of debt issues with respect to which the City is an obligated person as defined by the Rule, which documents have been filed with each NRMSIR and the SID. If the document incorporated by reference is a "final official statement", it must be available from the Municipal Securities Rulemaking Board ("MSRB"). The City will clearly identify each such other document so incorporated by reference.

(b) to each NRMSIR or the MSRB, and to the SID, timely notice of the occurrence of any of the following events with respect to the Bonds if applicable and material, as set forth in the Rule of which the City has knowledge: (i) principal and interest payment delinquencies; (ii) non-payment related defaults; (iii) unscheduled draws on debt service reserves reflecting financial difficulties; (iv) unscheduled draws on credit enhancements reflecting financial difficulties; (v) substitution of credit or liquidity providers, or their failure to perform; (vi) adverse tax opinions or events affecting the tax-exempt status of the Bonds; (vii) modifications to the rights of the holders of the Bonds; (viii) Bond calls (other than scheduled mandatory redemptions of Term Bonds); (ix) defeasances; (x) release, substitution, or sale of property securing repayment of the Bonds; and (xi) rating changes.

The City will also provide to each NRMSIR or to the MSRB and to the SID timely notice of a failure by the City to provide required annual financial information on or before the date specified above.

The Undertaking may be amended without the consent of any holder of any Bond, any broker, dealer, municipal securities dealer, participating underwriter, rating agency, NRMSIR, the SID or the MSRB, under the circumstances and in the manner permitted by the Rule. The City will give notice to each NRMSIR or the MSRB, and the SID of the substance (or provide a copy) of any amendment to the Undertaking and a brief statement of the reasons for the amendment.

If the City fails to comply with the Undertaking, the City will proceed with due diligence to cause such noncompliance to be corrected as soon as practicable after the City learns of that failure. No failure by the City or other obligated person to comply with the Undertaking shall constitute a default with respect to the Bonds. The sole remedy of any holder of a Bond will be to take such actions as that holder deems necessary and appropriate to compel the City or other obligated person to comply with the Undertaking.

Section 13. Termination of Undertaking. The City's obligations under the Undertaking shall terminate upon the legal defeasance, prior redemption or payment in full of the then outstanding Bonds. The Undertaking, or any provision thereof, will be null and void if the City (i) obtains an opinion of nationally recognized bond counsel or other counsel familiar with the federal securities laws to the effect that those portions of the Rule which require the Undertaking, or any such provision, are invalid, have been repealed retroactively or otherwise do not apply to the Bonds; and (ii) notifies and provides to the SID and either the MSRB or each then existing NRMSIR copies of such opinion.

Section 14. General Authorization. The Mayor, Clerk, and the Finance Director of the City and each of the other appropriate officers of the City are each authorized and directed to do everything as in their judgment may be necessary, appropriate or desirable in order to carry out the terms and provisions of, and complete the transactions contemplated by, the Bond Ordinance and this resolution.

Section 15. Severability. The provisions of this resolution are declared to be separate and severable. If a court of competent jurisdiction, all appeals having been exhausted or all appeal periods having run, finds any provision of this resolution to be invalid or unenforceable as to any person or circumstance, such offending provision shall, if feasible, be deemed to be modified to be within the limits of enforceability or validity. However, if the offending provision cannot be so modified, it shall be null and void with respect to the particular person or circumstance, and all other provisions of this resolution in all other respects, and the offending provision with respect to all other persons and all other circumstances, shall remain valid and enforceable.

Section 16. Ratification of Prior Acts. All acts taken pursuant to the authority of this resolution but prior to its effective date are ratified, approved and confirmed.

Section 17. Section Headings. Section headings in this resolution are used for convenience only and shall not constitute a substantive portion of this resolution.

ADOPTED by the City Council the 25th day of February, 1998, and signed by me in open session in authentication of its adoption this 25th day of February, 1998.

______________________________________

President _______ of the City Council

Filed this 25th day of February, 1998.

(SEAL)

_________________________________________

City Clerk

EXHIBIT A

No. R- $__________

Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the City or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.

UNITED STATES OF AMERICA

STATE OF WASHINGTON

THE CITY OF SEATTLE

UNLIMITED TAX GENERAL OBLIGATION REFUNDING BOND, 1998, SERIES A

INTEREST RATE: MATURITY DATE: CUSIP No.:

%

Registered Owner: CEDE & CO.

Principal Amount:

THE CITY OF SEATTLE, WASHINGTON (the "City"), a municipal corporation of the State of Washington, for value received, promises to pay the Registered Owner identified above on the Maturity Date identified above, the Principal Amount identified above and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) thereon from the later of the date of this Bond or from the most recent interest payment date to which interest has been paid at the Interest Rate per annum set forth above, payable semiannually on each September 1 and March 1, commencing September 1, 1998, to the maturity or earlier redemption of this Bond. If this Bond is duly presented for payment and not paid on its maturity or call date, then interest shall continue to accrue at the Interest Rate identified above until this Bond, both principal and interest, is paid in full or until sufficient money for its payment in full is on deposit in the Bond Fund and this Bond has been called for payment by giving notice to the Registered Owner.

Principal of and premium, if any, and interest on this Bond are payable in lawful money of the United States of America. Principal and premium, if any, are payable only to the Registered Owner upon presentation and surrender of this Bond at the principal office of the fiscal agencies of the City (currently The Bank of New York, New York, New York, and Wells Fargo Bank, National Association, Seattle, Washington), or such other paying agents as designated by the City upon notice to the Registered Owners of the Bonds (the "Bond Registrar"). Payment of each installment of interest shall be made to the Registered Owner whose name appears on the registration books of the City maintained by the Bond Registrar (the "Bond Register") at the close of business on the 15th day of the month preceding the interest payment date (the "Record Date") and shall be paid by check or draft of the Bond Registrar mailed on the interest payment date to the Registered Owner at the address appearing on the Bond Register or, when requested in writing to the Bond Registrar by the Registered Owner of $1,000,000 or more in principal amount of the Bonds at least ten days before an interest payment date, by wire transfer on the interest payment date. Notwithstanding the foregoing, as long as this Bond is registered in the name of Cede & Co., as nominee of DTC, payment of principal, premium, if any, and interest shall be made in accordance with the Letter of Representations among the City, the Bond Registrar and DTC.

This Bond is one of an authorized issue of bonds designated The City of Seattle, Washington, Unlimited Tax General Obligation Refunding Bonds, 1998, Series A (the "Bonds") aggregating $53,865,000 in principal amount, maturing September 1, 1998 and on March 1 in the years 1999 through 2017, inclusive, of like date, tenor and effect, except as to numbers, denominations, options of redemption, maturity dates and interest rates. The Bonds are issued by the City pursuant to Ordinance 118824 and Resolution 29708 of the City (collectively, the "Bond Ordinance") for the purposes of paying the costs of refunding certain of the City's outstanding unlimited tax general obligation bonds and paying the costs of issuing and selling the Bonds, all as provided in the Bond Ordinance. The Bonds are issued in fully registered form in the denomination of $5,000 or any integral multiple thereof within a single maturity.

For as long as any of the Bonds are outstanding, the City has pledged irrevocably to include in its budget and levy taxes annually without limitation as to rate or amount on all of the taxable property within the City in an amount sufficient, together with other money legally available and to be used therefor, to pay when due the principal of and interest on the Bonds, and the full faith, credit and resources of the City have been pledged irrevocably for the annual levy and collection of those taxes and the prompt payment of that principal and interest.

Reference is made to the additional provisions of this Bond in the Bond Ordinance and those additional provisions shall have the same effect for all purposes as if set forth herein. Reference also is made to the Bond Ordinance for the definitions of the capitalized terms used and not otherwise defined herein.

The Bonds are not subject to optional redemption prior to maturity.

Any Bond in the principal amount of greater than $5,000 may be redeemed partially in any integral multiple of $5,000. In such event, upon surrender of that Bond at either of the principal offices of the Bond Registrar, there shall be issued to the Registered Owner a new Bond (or Bonds, at the option of the Registered Owner) of the same maturity and interest rate in any of the denominations authorized by the Bond Ordinance in the aggregate principal amount remaining unredeemed, without charge therefor.

Notice of any such intended redemption shall be sent by first-class mail, postage prepaid, not less than 30 nor more than 60 days prior to the date fixed for redemption, to the Registered Owner of each Bond to be redeemed at the address appearing on the Bond Register at the time the Bond Registrar prepares the notice. In addition, such redemption notice shall be mailed within the same period, postage prepaid, to Moody's Investors Service, Inc. and Standard & Poor's Ratings Services at their offices in New York, New York, or their successors, to Lehman Brothers Inc., at its office in Seattle, Washington, or its successor, and to such other persons and with such additional information as the Finance Director shall determine, but such mailings shall not be a condition precedent to the redemption of such Bonds. The requirements of the Bond Ordinance shall be deemed to be complied with when notice is mailed as herein provided, whether or not it is actually received by the owner of any Bond. If such notice has been given, this Bond will cease to bear interest on the date fixed for redemption, provided that funds sufficient to pay all Bonds called for redemption are on deposit with the Bond Registrar on such date, and this Bond shall no longer be deemed outstanding. Notwithstanding the foregoing, for so long as the Bonds are registered in the name of Cede & Co., as nominee of DTC, notice of redemption shall be given in accordance with the Letter of Representations.

The City has further reserved the right and option to purchase any or all of the Bonds in the open market at any time at a price acceptable to the City plus accrued interest to the date of such purchase. Bonds so purchased shall be retired and canceled.

Reference is made to the Bond Ordinance for other covenants and declarations of the City and other terms and conditions upon which this Bond has been issued, which terms and conditions, including, but not limited to, terms pertaining to defeasance, are made a part hereof by this reference. The City irrevocably and unconditionally covenants that it will keep and perform all of the covenants of this Bond and of the Bond Ordinance.

This Bond shall not be valid or become obligatory for any purpose until the Certificate of Authentication hereon has been signed by the Bond Registrar.

The principal of and premium, if any, and interest on this Bond shall be paid only to the Registered Owner as of the Record Date set forth above and to no other person or entity, and this Bond may not be assigned except on the Bond Register.

In the manner and subject to the limitations set forth in the Bond Ordinance, this Bond may be transferred by the Registered Owner or by such Owner's authorized agent on the Bond Register on completion of the assignment form appearing hereon and surrender and cancellation of this Bond. Upon such transfer, a new Bond (or Bonds, at the option of the new Registered Owner) of an equal aggregate principal amount and of the same maturity and interest rate in any authorized denomination will be issued to the new Registered Owner, without charge, in exchange therefor. This Bond and other Bonds may be surrendered to the Bond Registrar and exchanged, without charge, for an equal aggregate principal amount of Bonds of the same maturity and interest rate in any authorized denomination. The Bond Registrar shall not be obligated to transfer or exchange any Bond during the period between the Record Date and the next succeeding principal or interest payment or redemption date.

The City and the Bond Registrar may deem and treat the Registered Owner of this Bond as its absolute owner for the purpose of receiving payment of principal, premium, if any, and interest and for all other purposes, and neither the City nor the Bond Registrar shall be affected by any notice to the contrary other than proper notice of assignment. As used herein, "Registered Owner" means the person or entity named as Registered Owner of this Bond on the front hereof and on the Bond Register.

It is certified and declared that all acts, conditions and things required to be done precedent to and in the issuance of this Bond have been done, have happened and have been performed as required by law.

IN WITNESS WHEREOF, the City has caused this Bond to be executed on behalf of the City by the facsimile signatures of its Mayor and Finance Director and a facsimile reproduction of the seal of the City to be printed hereon, this fifteenth day of March, 1998.

THE CITY OF SEATTLE,

WASHINGTON

Date of Authentication: ____________________

CERTIFICATE OF AUTHENTICATION

This Bond is one of the fully registered The City of Seattle, Washington, Unlimited Tax General Obligation Refunding Bonds, 1998, Series A, described in the Bond Ordinance.

WASHINGTON STATE FISCAL AGENCY

Bond Registrar

By:_____________________________

ASSIGNMENT

For value received. the undersigned Registered Owner does sell, assign and transfer unto:

______________________________________________________________________ ___________

______________________________________________________________________ ___________

(name, address and social security or other identifying number of assignee) the within-mentioned Bond and irrevocably constitutes and appoints ___________________________ to transfer the same on the Bond Register with full power of substitution in the premises.

DATED:______________________________

____________________________________

Registered Owner

(NOTE: The signature above must correspond with the name of the Registered Owner as it appears on the front of this Bond in every particular, without alteration or enlargement or any change whatsoever.)

Signature Guaranteed:

____________________________________

(NOTE: Signature must be guaranteed

pursuant to law.)

EXHIBIT B

No. R- $__________

Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the City or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.

UNITED STATES OF AMERICA

STATE OF WASHINGTON

THE CITY OF SEATTLE

LIMITED TAX GENERAL OBLIGATION REFUNDING BOND, 1998, SERIES B

INTEREST RATE: MATURITY DATE: CUSIP No.:

%

Registered Owner: CEDE & CO.

Principal Amount:

THE CITY OF SEATTLE, WASHINGTON (the "City"), a municipal corporation of the State of Washington, for value received, promises to pay the Registered Owner identified above on the Maturity Date identified above, the Principal Amount identified above and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) thereon from the later of the date of this Bond or from the most recent interest payment date to which interest has been paid at the Interest Rate per annum set forth above, payable semiannually on each September 1 and March 1, commencing September 1, 1998, to the maturity or earlier redemption of this Bond. If this Bond is duly presented for payment and not paid on its maturity or call date, then interest shall continue to accrue at the Interest Rate identified above until this Bond, both principal and interest, is paid in full or until sufficient money for its payment in full is on deposit in the Bond Fund and this Bond has been called for payment by giving notice to the Registered Owner.

Principal of and premium, if any, and interest on this Bond are payable in lawful money of the United States of America. Principal and premium, if any, are payable only to the Registered Owner upon presentation and surrender of this Bond at the principal office of the fiscal agencies of the City (currently The Bank of New York, New York, New York, and Wells Fargo Bank, National Association, Seattle, Washington), or such other paying agents as designated by the City upon notice to the Registered Owners of the Bonds (the "Bond Registrar"). Payment of each installment of interest shall be made to the Registered Owner whose name appears on the registration books of the City maintained by the Bond Registrar (the "Bond Register") at the close of business on the 15th day of the month preceding the interest payment date (the "Record Date") and shall be paid by check or draft of the Bond Registrar mailed on the interest payment date to the Registered Owner at the address appearing on the Bond Register or, when requested in writing to the Bond Registrar by the Registered Owner of $1,000,000 or more in principal amount of the Bonds at least ten days before an interest payment date, by wire transfer on the interest payment date. Notwithstanding the foregoing, as long as this Bond is registered in the name of Cede & Co., as nominee of DTC, payment of principal, premium, if any, and interest shall be made in accordance with the Letter of Representations among the City, the Bond Registrar and DTC.

This Bond is one of an authorized issue of bonds designated The City of Seattle, Washington, Limited Tax General Obligation Refunding Bonds, 1998, Series B (the "Bonds") aggregating $43,710,000 in principal amount, maturing on September 1, 1998 and March 1 in the years 1999 through 2012, inclusive, of like date, tenor and effect, except as to numbers, denominations, options of redemption, maturity dates and interest rates, The Bonds are issued by the City pursuant to Ordinance 118824 and Resolution 29708 of the City (collectively, the "Bond Ordinance") for the purposes of paying the costs of refunding certain of the City's outstanding limited tax general obligation bonds and paying the costs of issuing and selling the Bonds, all as provided in the Bond Ordinance. The Bonds are issued in fully registered form in the denomination of $5,000 or any integral multiple thereof within a single maturity.

For as long as any of the Bonds are outstanding, the City has pledged irrevocably to include in its budget and levy taxes annually within the constitutional and statutory tax limitations provided by law without a vote of the electors of the City on all of the taxable property within the City in an amount sufficient, together with other money legally available and to be used therefor, to pay when due the principal of and interest on the Bonds, and the full faith, credit and resources of the City have been pledged irrevocably for the annual levy and collection of those taxes and the prompt payment of that principal and interest.

Reference is made to the additional provisions of this Bond in the Bond Ordinance and those additional provisions shall have the same effect for all purposes as if set forth herein. Reference also is made to the Bond Ordinance for the definitions of the capitalized terms used and not otherwise defined herein.

The Bonds are not subject to optional redemption prior to maturity.

Any Bond in the principal amount of greater than $5,000 may be redeemed partially in any integral multiple of $5,000. In such event, upon surrender of that Bond at either of the principal offices of the Bond Registrar, there shall be issued to the Registered Owner a new Bond (or Bonds, at the option of the Registered Owner) of the same maturity and interest rate in any of the denominations authorized by the Bond Ordinance in the aggregate principal amount remaining unredeemed, without charge therefor.

Notice of any such intended redemption shall be sent by first-class mail, postage prepaid, not less than 30 nor more than 60 days prior to the date fixed for redemption, to the Registered Owner of each Bond to be redeemed at the address appearing on the Bond Register at the time the Bond Registrar prepares the notice. In addition, such redemption notice shall be mailed within the same period, postage prepaid, to Moody's Investors Service, Inc. and Standard & Poor's Ratings Services at their offices in New York, New York, or their successors, to Lehman Brothers Inc., at its office in Seattle, Washington, or its successor, and to such other persons and with such additional information as the Finance Director shall determine, but such mailings shall not be a condition precedent to the redemption of such Bonds. The requirements of the Bond Ordinance shall be deemed to be complied with when notice is mailed as herein provided, whether or not it is actually received by the owner of any Bond. If such notice has been given, this Bond will cease to bear interest on the date fixed for redemption, provided that funds sufficient to pay all Bonds called for redemption are on deposit with the Bond Registrar on such date, and this Bond shall no longer be deemed outstanding. Notwithstanding the foregoing, for so long as the Bonds are registered in the name of Cede & Co., as nominee of DTC, notice of redemption shall be given in accordance with the Letter of Representations.

The City has further reserved the right and option to purchase any or all of the Bonds in the open market at any time at a price acceptable to the City plus accrued interest to the date of such purchase. Bonds so purchased shall be retired and canceled.

Reference is made to the Bond Ordinance for other covenants and declarations of the City and other terms and conditions upon which this Bond has been issued, which terms and conditions, including, but not limited to, terms pertaining to defeasance, are made a part hereof by this reference. The City irrevocably and unconditionally covenants that it will keep and perform all of the covenants of this Bond and of the Bond Ordinance.

This Bond shall not be valid or become obligatory for any purpose until the Certificate of Authentication hereon has been signed by the Bond Registrar.

The principal of and premium, if any, and interest on this Bond shall be paid only to the Registered Owner as of the Record Date set forth above and to no other person or entity, and this Bond may not be assigned except on the Bond Register.

In the manner and subject to the limitations set forth in the Bond Ordinance, this Bond may be transferred by the Registered Owner or by such Owner's authorized agent on the Bond Register on completion of the assignment form appearing hereon and surrender and cancellation of this Bond. Upon such transfer, a new Bond (or Bonds, at the option of the new Registered Owner) of an equal aggregate principal amount and of the same maturity and interest rate in any authorized denomination will be issued to the new Registered Owner, without charge, in exchange therefor. This Bond and other Bonds may be surrendered to the Bond Registrar and exchanged, without charge, for an equal aggregate principal amount of Bonds of the same maturity and interest rate in any authorized denomination. The Bond Registrar shall not be obligated to transfer or exchange any Bond during the period between the Record Date and the next succeeding principal or interest payment or redemption date.

The City and the Bond Registrar may deem and treat the Registered Owner of this Bond as its absolute owner for the purpose of receiving payment of principal, premium, if any, and interest and for all other purposes, and neither the City nor the Bond Registrar shall be affected by any notice to the contrary other than proper notice of assignment. As used herein, "Registered Owner" means the person or entity named as Registered Owner of this Bond on the front hereof and on the Bond Register.

It is certified and declared that all acts, conditions and things required to be done precedent to and in the issuance of this Bond have been done, have happened and have been performed as required by law.

IN WITNESS WHEREOF, the City has caused this Bond to be executed on behalf of the City by the facsimile signatures of its Mayor and Finance Director and a facsimile reproduction of the seal of the City to be printed hereon, this fifteenth day of March, 1998.

THE CITY OF SEATTLE,

WASHINGTON

Date of Authentication: ____________________

CERTIFICATE OF AUTHENTICATION

This Bond is one of the fully registered The City of Seattle, Washington, Limited General Obligation Refunding Bonds, 1998, Series B, described in the Bond Ordinance.

WASHINGTON STATE FISCAL AGENCY

Bond Registrar

By:_____________________________

ASSIGNMENT

For value received. the undersigned Registered Owner does sell, assign and transfer unto:

______________________________________________________________________ ___________

______________________________________________________________________ ___________

(name, address and social security or other identifying number of assignee) the within-mentioned Bond and irrevocably constitutes and appoints ___________________________ to transfer the same on the Bond Register with full power of substitution in the premises.

DATED:______________________________

____________________________________

Registered Owner

(NOTE: The signature above must correspond with the name of the Registered Owner as it appears on the front of this Bond in every particular, without alteration or enlargement or any change whatsoever.)

Signature Guaranteed:

____________________________________

(NOTE: Signature must be guaranteed

pursuant to law.)

PAGE

PAGE 4 2Rev29687.doc