The Holmes Harbor Sewer District in Washington State, four of its formercommissioners, and two bond counsel have tentatively agreed to settle with bondholdersin a lawsuit over $20 million of bonds that were sold in October 2000 to finance anoffice park, but were later found to have been illegally issued, a lawyer for thebondholders said yesterday.

"We have reached tentative settlements with most of the defendants in the lawsuit," saidDavid D. Hoff, a lawyer with Tousley Brain Stephens PLLC in Seattle who is representingthe bondholders.The tentative settlements are with the district, former commissioners Don A. Cardner andhis wife, Don Wills and his wife, Linda Zolt and Heather Ann Koch, as well as Michael W.McCall and Charles J. Tull, who served as co-bond and disclosure counsel for the bonddeal, Hoff said. The district indemnified the former commissioners and will be makingsettlement payments on their behalf, he said. The settlements would leave U.S. Trust &Co., the trustee for the bond issue; Prudential Securities Inc., Wedbush MorganSecurities Inc., the two broker-dealers that sold the bonds; and Terry Martin, thedeveloper, as defendants in the lawsuit.

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