PUBLIC NOTICE

ORDINANCE ADOPTION

ORDINANCE NO. 38.03

At its Regular Meeting of May 14, 2018 the Lake Orion Village Council accepted for first reading and adopted ORDINANCE NO. 38.03, AN ORDINANCE TO PROVIDE FOR THE ACQUISITION, CONSTRUCTION, FURNISHING AND EQUIPPING OF IMPROVEMENTS TO THE WATER SUPPLY AND SEWAGE DISPOSAL SYSTEM OF THE VILLAGE OF LAKE ORION; TO PROVIDE FOR THE ISSUANCE AND SALE OF REVENUE BONDS TO PAY THE COST THEREOF; TO PRESCRIBE THE FORM OF THE BONDS; TO PROVIDE FOR THE COLLECTION OF REVENUES FROM THE SYSTEM SUFFICIENT FOR THE PURPOSE OF PAYING THE COSTS OF OPERATION AND MAINTENANCE OF THE SYSTEM AND TO PAY THE PRINCIPAL OF AND INTEREST ON THE BONDS; TO PROVIDE FOR THE SEGREGATION AND DISTRIBUTION OF THE REVENUES; TO PROVIDE FOR THE RIGHTS OF THE HOLDERS OF THE BONDS IN ENFORCEMENT THEREOF; AND TO PROVIDE FOR OTHER MATTERS RELATING TO THE BONDS AND THE SYSTEM.

THE VILLAGE OF LAKE ORION ORDAINS:

Section 1. Definitions. Whenever used in this Ordinance, except when otherwise indicated by the context, the following terms shall have the following meanings:

(a) “Act 94” means Act　94, Public Acts of Michigan, 1933, as amended.

(b) “Additional Bonds” shall mean any additional bonds of equal standing with the Series 2018 Bonds issued pursuant to Section 17 of this Ordinance.

(c) “Adjusted Net Revenues” means for any operating year the excess of revenues over expenses for the System determined in accordance with generally accepted accounting principles, to which shall be added depreciation, amortization, interest expense on Bonds and payments to the Issuer in lieu of taxes, to which may be made the following adjustments:

(i) Revenues may be augmented by the amount of any rate increases adopted prior to the issuance of Additional Bonds or to be placed into effect before the time principal or interest on the Additional Bonds becomes payable from Revenues as applied to quantities of service furnished during the operating year or portion thereof that the increased rates were not in effect.

(ii) Revenues may be augmented by amounts which may be derived from rates and charges to be paid by new customers of the System.

The adjustment of revenues and expenses by the factors set forth in (i) and (ii) above shall be reported upon by professional engineers or certified public accountants or other experts not in the regular employment of the Issuer.

(d) “Authority” means the Michigan Finance Authority.

(e) “Authorized Officers” means the President and the Village Clerk.

(f) “Bond” or “Bonds” means the Series 2018 Bonds, together with any additional Bonds hereafter issued of equal standing with the Series 2018 Bonds.

(g) “Engineers” means Hubbell, Roth and Clark, Inc., consulting engineers of Howell, Michigan.

(h) “Issuer” means the Village of Lake Orion, County of Oakland, State of Michigan.

(i) “MDEQ” means the Michigan Department of Environmental Quality, or its successor agency.

(j) “Project” means the acquisition and construction of improvements to the System, including but not limited to, replacing approximately 34,100 feet of undersized 4 and 6-inch water main with 8-inch water main; replacing approximately 1,000 feet of undersized 6-inch water main with 12-inch water main; and replacing approximately 4,400 feet of 8-inch water main with 8-inch water main, together with all site work, necessary interests in land, rights-of-way, appurtenances and attachments thereto, all as described in the plans and specifications prepared by the Engineer.

(k) “Purchase Contract” means the Purchase Contract to be entered into between the Authority and the Issuer relating to the purchase by the Authority of the Series 2018 Bonds.

(l) “Revenues” and “Net Revenues” mean the revenues and net revenues of the System and shall be construed as defined in Section　3 of Act　94, including with respect to “Revenues”, the earnings derived from the investment of moneys in the various funds and accounts established by this Ordinance, and other revenues derived from or pledged to operation of the System.

(m) “Series 2018 Bonds” means the Water Supply and Sewage Disposal System Revenue Bonds, Series 2018, of the Issuer in the principal amount of not to exceed $6,035,000 authorized pursuant to this Ordinance.

(n) “Sufficient Government Obligations” means direct obligations of the United States of America or obligations the principal and interest on which is fully guaranteed by the United States of America, not redeemable at the option of the Issuer, the principal and interest payments upon which, without reinvestment of the interest, come due at such times and in such amounts as to be fully sufficient to pay the interest as it comes due on the Bonds and the principal and redemption premium, if any, on the Bonds as it comes due whether on the stated maturity date or upon earlier redemption. Securities representing such obligations shall be placed in trust with a bank or trust company, and if any of the Bonds are to be called for redemption prior to maturity, irrevocable instructions to call the Bonds for redemption shall be given to the paying agent.

(o) “Supplemental Agreement” means the supplemental agreement among the Issuer, the Authority and MDEQ relating to the Series 2018 Bonds.

(p) “System” means the entire Water Supply and Sewage Disposal System of the Issuer, including the Project and all additions, extensions and improvements hereafter acquired.

Section 2. Necessity; Approval of Plans and Specifications. It is hereby determined to be a necessary public purpose of the Issuer to acquire and construct the Project in accordance with the plans and specifications prepared by the Engineers, which plans and specifications are hereby approved. The Project qualifies for the Drinking Water Revolving Fund financing program being administered by the MDEQ and the Authority, whereby bonds of the Issuer are sold to the Authority and bear interest at a fixed rate of two percent (2.00%) per annum.

Section 3. Costs; Useful Life. The total cost of the Project is presently estimated at approximately Six Million Thirty-Five Thousand Dollars ($6,035,000) including the payment of incidental expenses as specified in Section 4 of this Ordinance, which estimate of cost is hereby approved and confirmed, and the period of usefulness of the Project is estimated to be not less than thirty (30) years.

Section 4. Payment of Cost; Bonds Authorized. To pay part of the cost of acquiring and constructing the Project, including payment of legal, engineering, financial and other expenses incident thereto and incident to the issuance and sale of the Series 2018 Bonds, the Issuer shall borrow the sum of not to exceed Six Million Thirty-Five Thousand Dollars ($6,035,000) and issue the Series 2018 Bonds therefore pursuant to the provisions of Act　94. The remaining cost of the Project is being defrayed from funds of the Issuer on hand and other funds legally available for such use.

Section 5. Issuance of Series 2018 Bonds; Details. The Series 2018 Bonds of the Issuer, to be designated WATER SUPPLY AND SEWAGE DISPOSAL SYSTEM REVENUE BONDS, SERIES 2018 are authorized to be issued in the aggregate principal sum of not to exceed Six Million Thirty-Five Thousand Dollars ($6,035,000) as finally determined by order of the MDEQ for the purpose of paying all or part of the cost of the Project, including the costs incidental to the issuance, sale and delivery of the Series 2018 Bonds. The Series 2018 Bonds shall be payable out of the Net Revenues, as set forth more fully in Section 8 hereof.

The Series 2018 Bonds shall be in the form of a single fully registered, nonconvertible bond of the denomination of the full principal amount thereof, dated as of the date of delivery, payable in principal installments as finally determined by the order of the MDEQ at the time of sale of the Series 2018 Bonds and approved by the Authority and an Authorized Officer. Principal installments of the Series 2018 Bonds shall be payable on April 1 in the years 2020 through 2038, inclusive, or such other payment dates as hereinafter provided. Interest on the Series 2018 Bonds shall be payable on October 1 and April 1 of each year, commencing October 1, 2018 or on such other interest payments dates as hereinafter provided. Final determination of the principal amount of and interest on the Series 2018 Bonds and the payment dates and amounts of principal installments of the Series 2018 Bonds shall be evidenced by execution of the Purchase Contract and each of the Authorized Officers is authorized and directed to execute and deliver the Purchase Contract when it is in final form and to make the determinations set forth above; provided, however, that the first principal installment shall be due no earlier than April 1, 2020 and the final principal installment shall be due no later than April 1, 2048 and that the total principal amount shall not exceed $6,035,000.

The Series 2018 Bonds shall bear interest at a rate of two percent (2.00%) per annum on the par value thereof or such other rate as evidenced by execution of the Purchase Contract, but in any event not to exceed the rate permitted by law, and any Authorized Officers as shall be appropriate shall deliver the Series 2018 Bonds in accordance with the delivery instructions of the Authority.

The Series 2018 Bonds principal amount is expected to be drawn down by the Issuer periodically, and interest on the principal amount shall accrue from the date such principal amount is drawn down by the Issuer.

The Series 2018 Bonds shall not be convertible nor exchangeable into more than one fully registered bond. Principal of and interest on the Series 2018 Bonds shall be payable as provided in the Series 2018 Bond form in this Ordinance.

The Series 2018 Bonds shall be subject to optional redemption by the Issuer with the prior written approval of the Authority and on such terms as may be required by the Authority.

The Village Clerk shall record on the registration books payment by the Issuer of each installment of principal or interest or both when made and the cancelled checks or other records evidencing such payments shall be returned to and retained by the Village Clerk.

Upon payment by the Issuer of all outstanding principal of and interest on the Series 2018 Bonds, the Authority shall deliver the Series 2018 Bonds to the Issuer for cancellation.

Section 6. Execution of Series 2018 Bonds. The Series 2018 Bonds shall be signed by the manual or facsimile signatures of the President and Village Clerk and shall have the corporate seal of the Issuer or facsimile thereof impressed thereon. The Series 2018 Bonds bearing the manual signatures of the President and the Village Clerk sold to the Authority shall require no further authentication.

Section 7. Registration and Transfer. Any Bond may be transferred upon the books required to be kept pursuant to this section by the person in whose name it is registered, in person or by the registered owner’s duly authorized attorney, upon surrender of the Bond for cancellation, accompanied by delivery of a duly executed written instrument of transfer in a form approved by the transfer agent. Whenever any Bond or Bonds shall be surrendered for transfer, the Issuer shall execute and the transfer agent shall authenticate and deliver a new Bond or Bonds, for like aggregate principal amount. The transfer agent shall require payment by the bondholder requesting the transfer of any tax or other governmental charge required to be paid with respect to the transfer. The transfer agent shall not be required (i)　to issue, register the transfer of or exchange any Bond during a period beginning at the opening of business 15 days before the day of the giving of a notice of redemption of Bonds selected for redemption as described in the form of the Series 2018 Bond contained in Section 16 of this Ordinance and ending at the close of business on the day of that giving of notice, or (ii)　to register the transfer of or exchange of any Bond so selected for redemption in whole or in part, except the unredeemed portion of Bonds being redeemed in part. The Issuer shall give the transfer agent notice of call for redemption at least 20 days prior to the date notice of redemption is to be given.

The transfer agent shall keep or cause to be kept, at its principal office, sufficient books for the registration and transfer of the Bonds, which shall at all times be open to inspection by the Issuer; and, upon presentation for such purpose, the transfer agent shall, under such reasonable regulations as it may prescribe, transfer or cause to be transferred, on said books, Bonds as hereinbefore provided.

If any Bond shall become mutilated, the Issuer, at the expense of the holder of the Bond, shall execute, and the transfer agent shall authenticate and deliver, a new Bond of like tenor in exchange and substitution for the mutilated Bond, upon surrender to the transfer agent of the mutilated Bond. If any Bond issued under this Ordinance shall be lost, destroyed or stolen, evidence of the loss, destruction or theft may be submitted to the transfer agent and, if this evidence is satisfactory to both and indemnity satisfactory to the transfer agent shall be given, and if all requirements of any applicable law including Act　354, Public Acts of Michigan, 1972, as amended (“Act　354”), being sections 129.131 to 129.135, inclusive, of the Michigan Compiled Laws have been met, the Issuer, at the expense of the owner, shall execute, and the transfer agent shall thereupon authenticate and deliver, a new Bond of like tenor and bearing the statement required by Act　354, or any applicable law hereafter enacted, in lieu of and in substitution for the Bond so lost, destroyed or stolen. If any such Bond shall have matured or shall be about to mature, instead of issuing a substitute Bond the transfer agent may pay the same without surrender thereof.

Section 8. Payment of Series 2018 Bonds; Security; Priority of Lien. Principal of and interest on the Series 2018 Bonds shall be payable solely from the Net Revenues, and to secure such payment, there is hereby created a statutory lien upon the whole of the Net Revenues which shall be a first lien to continue until payment in full of the principal of and interest on all Bonds payable from the Net Revenues, or until sufficient cash or Sufficient Government Obligations have been deposited in trust for payment in full of all Bonds of a series then outstanding, principal and interest on such Bonds to maturity, or, if called for redemption, to the date fixed for redemption together with the amount of the redemption premium, if any. Upon deposit of cash or Sufficient Government Obligations, as provided in this paragraph, the statutory lien shall be terminated with respect to that series of Bonds, the holders of that series shall have no further rights under this Ordinance except for payment from the deposited funds, and the Bonds of that series shall no longer be considered to be outstanding under this Ordinance.

Section 9. Bondholders’ Rights; Receiver. The holder or holders of the Bonds representing in the aggregate not less than twenty percent (20%) of the entire principal amount thereof then outstanding, may, by suit, action, mandamus or other proceedings, protect and enforce the statutory lien upon the Net Revenues of the System, and may, by suit, action, mandamus or other proceedings, enforce and compel performance of all duties of the officers of the Issuer, including the fixing of sufficient rates, the collection of Revenues, the proper segregation of the Revenues of the System and the proper application thereof. The statutory lien upon the Net Revenues, however, shall not be construed as to compel the sale of the System or any part thereof.

If there is a default in the payment of the principal of or interest on the Series 2018 Bonds, any court having jurisdiction in any proper action may appoint a receiver to administer and operate the System on behalf of the Issuer and under the direction of the court, and by and with the approval of the court to perform all of the duties of the officers of the Issuer more particularly set forth herein and in Act 94.

The holder or holders of the Series 2018 Bonds shall have all other rights and remedies given by Act 94 and law, for the payment and enforcement of the Series 2018 Bonds and the security therefore.

Section 10. Management; Fiscal Year. The operation, repair and management of the System and the acquiring and constructing of the Project shall continue to be under the supervision and control of the Issuer. The Issuer may employ such person or persons in such capacity or capacities as it deems advisable to carry on the efficient management and operation of the System. The Issuer may make such rules and regulations as it deems advisable and necessary to assure the efficient management and operation of the System. The System shall be operated on the basis of an operating year which shall coincide with the Issuer’s fiscal year.

Section 11. Rates and Charges; No Free Service. The rates and charges for service furnished by and the use of the System and the methods of collection and enforcement of the collection of the rates shall be those in effect on the date of adoption of this Ordinance. No free service or use of the System, or service or use of the System at less than cost, shall be furnished by the System to any person, firm or corporation, public or private, or to any public agency or instrumentality, including the Issuer.

Section 12. Funds and Accounts; Flow of Funds. Commencing upon the adoption of this Ordinance, all funds belonging to the System shall be continued and maintained as provided herein and all Revenues of the System shall continue to be set aside as collected and credited to a fund to be designated WATER SUPPLY AND SEWAGE DISPOSAL SYSTEM RECEIVING FUND (the “Receiving Fund”). The Revenues credited to the Receiving Fund are pledged for the purpose of the following accounts and shall be transferred or debited from the Receiving Fund periodically in the manner and at the times and in the order of priority hereinafter specified:

A. OPERATION AND MAINTENANCE ACCOUNT: Out of the Revenues credited to the Receiving Fund there shall be first set aside in, or credited to, a fund designated OPERATION AND MAINTENANCE ACCOUNT (the “Operation and Maintenance Account”), monthly a sum sufficient to provide for the payment of the next month’s expenses of administration and operation of the System and such current expenses for the maintenance thereof as may be necessary to preserve the same in good repair and working order.

A budget, showing in detail the estimated costs of administration, operation and maintenance of the System for the next ensuing operating year, shall be prepared by the Issuer prior to the commencement of each ensuing operating year.

B. BOND AND INTEREST REDEMPTION ACCOUNT: There shall be established and maintained a separate depository account designated BOND AND INTEREST REDEMPTION ACCOUNT (the “Redemption Account”), the moneys on deposit therein from time to time to be used solely for the purpose of paying the principal of, redemption premiums (if any) and interest on the Series 2018 Bonds.

Out of the Revenues remaining in the Receiving Fund, after provision for the Operation and Maintenance Account, there shall be set aside each month in the Redemption Account a sum proportionately sufficient to provide for the payment when due of the current principal of and interest on the Series 2018 Bonds, less any amount in the Redemption Account representing accrued interest on the Series 2018 Bonds or investment income on amounts on deposit in the Redemption Account. Commencing on the first day of the first fiscal year quarter following the delivery of the first installment of the Series 2018 Bonds until the entire principal amount of the Series 2018 Bonds has been received, the amount set aside each month for interest on the Series 2018 Bonds shall be equal to a fraction derived from the number of months from the first day of the first month following delivery of the first installment to the first interest payment date of the total amount of interest on the Series 2018 Bonds next coming due. Commencing on the first interest payment date after the entire principal amount of the Series 2018 Bonds has been received, the amount set aside each month for interest on the Series 2018 Bonds shall be 1/6 of the total amount of interest on the Series 2018 Bonds next coming due. The amount set aside each month for principal, commencing the first day of the first fiscal year quarter following the delivery of the initial installment of the Bonds, shall be equal to that amount which is that fraction derived from the number of months from that date to the first principal payment date of the amount of principal next coming due by maturity and the amount set aside each month for principal payment commencing on the first principal payment date, shall be 1/12 of the amount of principal next coming due by maturity. If there is any deficiency in the amount previously set aside, that deficiency shall be added to the next succeeding monthly requirements. The amount to be set aside for the payment of principal and interest on any date shall not exceed the amount which, when added to the money on deposit in the Redemption Account, including investment income thereon, is necessary to pay principal and interest due on the Series 2018 Bonds on the next succeeding principal payment date.

No further payments need be made into the Redemption Account after enough of the principal installments of the Series 2018 Bonds have been retired so that the amount then held in the Redemption Account is equal to the entire amount of principal and interest which will be payable at the time of maturity of all the principal installments of the Series 2018 Bonds then remaining outstanding.

The moneys in the Redemption Account shall be invested in accordance with Section 14 of this Ordinance, and profit realized or income earned on such investment shall be used or transferred as provided in Section 13 of this Ordinance.

C. SURPLUS MONEYS: Thereafter, any Revenues in the Receiving Fund after satisfying all the foregoing requirements of this Section may, at the discretion of the Issuer, be used for any of the following purposes:

1. Transferred to the Redemption Account and used for the purchase of Bonds on the open market at not more than the fair market value thereof or used to redeem Bonds prior to maturity.

2. Retained in the Receiving Fund.

Section　13. Priority　of　Funds. In the event the moneys in the Receiving Fund are insufficient to provide for the current requirements of the Operation and Maintenance Account or the Redemption Account, any moneys or securities in other funds of the System, except the proceeds of sale of the Bonds, shall be credited or transferred, first, to the Operation and Maintenance Account, and second to the Redemption Account.

Section　14. Investments. Moneys in the funds and accounts established herein and moneys derived from the proceeds of sale of the Bonds, may be invested by the Issuer in United States of America obligations or in obligations the principal of and interest on which is fully guaranteed by the United States of America and any investments now or hereafter permitted by Act 94 or other controlling law. Investment of moneys in the Redemption Account being accumulated for payment of the next maturing principal or interest payment of the Bonds shall be limited to obligations bearing maturity dates prior to the date of the next maturing principal or interest payment on the Bonds. In the event investments are made, any securities representing the same shall be kept on deposit with the bank or trust company having on deposit the fund or funds or account from which the purchase was made. Profit realized or interest income earned on investment of funds in the Funds established hereunder shall be deposited in or credited to the Fund having realized the profit or earned the interest (unless otherwise expressly provided in this Ordinance or as determined by the Issuer), such deposit or credit to occur periodically but not less often than at the end of each fiscal year.

Section 15. Bond Proceeds. The proceeds of the sale of the Series 2018 Bonds as received by the Issuer from the Authority shall be deposited in a bank or banks qualified to act as depository of the proceeds of sale under the provisions of Section　15 of Act　94, in an account designated 2018 Construction Fund (the “2018 Construction Fund”). Moneys in the 2018 Construction Fund shall be applied solely in payment of the costs of the Project, including any engineering, legal and other expenses incident thereto and to the financing thereof.

Section 16. Bond Form. The Series 2018 Bonds shall be in substantially the following form with such changes or completion as necessary or appropriate to give effect to the intent of this Ordinance, and further subject to such modifications which may be required by the Michigan Attorney General and the Authority and approved by bond counsel:

UNITED STATES OF AMERICA

STATE OF MICHIGAN

COUNTY OF OAKLAND

VILLAGE OF LAKE ORION

WATER SUPPLY AND SEWAGE DISPOSAL SYSTEM REVENUE BOND

SERIES 2018

REGISTERED OWNER: Michigan Finance Authority

PRINCIPAL AMOUNT: _______Dollars ($________)

DATE OF ORIGINAL ISSUE: ________, 2018

The VILLAGE OF LAKE ORION, County of Oakland, State of Michigan (the “Village”), for value received, hereby promises to pay, but only out of the hereinafter described Net Revenues of the Village’s Water Supply and Sewage Disposal System (hereinafter defined), to the Michigan Finance Authority (the “Authority”), or registered assigns, the Principal Amount shown above, or such portion thereof as shall have been advanced to the Village pursuant to a Purchase Contract between the Village and the Authority and a Supplemental Agreement by and among the Village, the Authority and the State of Michigan acting through the Department of Environmental Quality, in lawful money of the United States of America, unless prepaid prior thereto as hereinafter provided.

During the time funds are being drawn down by the Village under this bond, the Authority will periodically provide to the Village a statement showing the amount of principal that has been advanced and the date of each advance, which statement shall constitute prima facie evidence of the reported information; provided that no failure on the part of the Authority to provide such a statement or to reflect a disbursement or the correct amount of a disbursement shall relieve the Village of its obligation to repay the outstanding Principal Amount actually advanced, all accrued interest thereon, and any other amount payable with respect thereto in accordance with the terms of this bond.

The Principal Amount shall be payable on the dates and in the annual principal installment amounts set forth in Schedule A attached hereto and made a part hereof, as such Schedule may be adjusted if less than _________ is disbursed to the Village or if a portion of the Principal Amount is prepaid as provided below, with interest on said principal installments from the date each said installment is delivered to the holder hereof until paid at the rate of two percent (2.00%) per annum. Interest is first payable on [October 1, 2018], and semiannually thereafter and principal is payable on the first day of April commencing [April 1, 2020] (as set forth in the Purchase Contract) and annually thereafter.

The Bonds may be subject to redemption prior to maturity by the Issuer only with the prior written consent of the Authority and on such terms as may be required by the Authority.

Notwithstanding any other provision of this bond, as long as the Authority is the owner of this bond, (a) this bond is payable as to principal, premium, if any, and interest at the designated office of The Bank of New York Mellon Trust Company, N.A., or at such other place as shall be designated in writing to the Village by the Authority (the “Authority’s Depository”); (b)　the Village agrees that it will deposit with the Authority’s Depository payments of the principal of, premium, if any, and interest on this bond in immediately available funds by 12:00 noon at least five business days prior to the date on which any such payment is due whether by maturity, redemption or otherwise; in the event that the Authority’s Depository has not received the Village’s deposit by 12:00 noon on the scheduled day, the Village shall immediately pay to the Authority as invoiced by the Authority an amount to recover the Authority’s administrative costs and lost investment earnings attributable to that late payment; and (c) written notice of any redemption of this bond shall be given by the Village and received by the Authority’s Depository at least 40 days prior to the date on which such redemption is to be made.

Additional Interest

In the event of a default in the payment of principal or interest hereon when due, whether at maturity, by redemption or otherwise, the amount of such default shall bear interest (the “additional interest”) at a rate equal to the rate of interest which is two percent above the Authority’s cost of providing funds (as determined by the Authority) to make payment on the bonds of the Authority issued to provide funds to purchase this bond but in no event in excess of the maximum rate of interest permitted by law. The additional interest shall continue to accrue until the Authority has been fully reimbursed for all costs incurred by the Authority (as determined by the Authority) as a consequence of the Village’s default. Such additional interest shall be payable on the interest payment date following demand of the Authority. In the event that (for reasons other than the default in the payment of any municipal obligation purchased by the Authority) the investment of amounts in the reserve account established by the Authority for the bonds of the Authority issued to provide funds to purchase this bond fails to provide sufficient available funds (together with any other funds which may be made available for such purpose) to pay the interest on outstanding bonds of the Authority issued to fund such account, the Village shall and hereby agrees to pay on demand only the Village’s pro rata share (as determined by the Authority) of such deficiency as additional interest on this bond.

For prompt payment of principal and interest on this bond, the Village has irrevocably pledged the revenues of the Water Supply and Sewage Disposal System of the Village, including all appurtenances, extensions and improvements thereto (the “System”), after provision has been made for reasonable and necessary expenses of operation, maintenance and administration (the “Net Revenues”), and a statutory lien thereon is hereby recognized and created.

This bond is a single, fully registered, non convertible bond in the principal sum indicated above issued pursuant to Ordinance No.38.03 duly adopted by the Village Council of the Village (the “Ordinance”), and under and in full compliance with the Constitution and statutes of the State of Michigan, including specifically Act　94, Public Acts of Michigan, 1933, as amended, for the purpose of paying part of the cost of acquiring, constructing, furnishing and equipping improvements to the System.

For a complete statement of the revenues from which and the conditions under which this bond is payable, a statement of the conditions under which additional bonds of superior and equal standing may hereafter be issued and the general covenants and provisions pursuant to which this bond is issued, reference is made to the above-described Ordinance.

This bond is a self-liquidating bond, payable, both as to principal and interest, primarily from the Net Revenues of the System. The principal of and interest on this bond are secured by the statutory lien hereinbefore mentioned.

The Village has covenanted and agreed, and does hereby covenant and agree, to fix and maintain at all times while any bonds payable from the Net Revenues of the System shall be outstanding, such rates for service furnished by the System as shall be sufficient to provide for payment of the interest upon and the principal of the bonds of this issue, as and when the same shall become due and payable, and to maintain a bond Redemption Account therefore, to provide for the payment of expenses of administration and operation and such expenses for maintenance of the System as are necessary to preserve the same in good repair and working order, and to provide for such other expenditures and funds for the System as are required by said Ordinance.

This bond is transferable only upon the books of the Village by the registered owner in person or the registered owner’s attorney duly authorized in writing, upon the surrender of this bond together with a written instrument of transfer satisfactory to the transfer agent, duly executed by the registered owner or the registered owner’s attorney duly authorized in writing, and thereupon a new bond or bonds in the same aggregate principal amount and of the same maturity shall be issued to the transferee in exchange therefore as provided in the Ordinance authorizing the bonds, and upon payment of the charges, if any, therein prescribed.

It is hereby certified and recited that all acts, conditions and things required by law to be done precedent to and in the issuance of this bond and the series of bonds of which this is one have been done and performed in regular and due time and form as required by law.

IN WITNESS WHEREOF, the Village of Lake Orion, County of Oakland, State of Michigan, by its Village Council, has caused this bond to be executed with the manual signatures of its President and its Clerk and the corporate seal of the Village to be impressed hereon, all as of the Date of Original Issue.

VILLAGE OF LAKE ORION

Susan C. Galeczka, CMC CMMC

Village Clerk

DEQ Project No. 7429-01

DEQ Approved Amt. $_____________

SCHEDULE A

Based on the schedule provided below unless revised as provided in this paragraph, repayment of the principal of the bond shall be made until the full amount advanced to the Village is repaid. In the event the Order of Approval issued by the Department of Environmental Quality (the “Order”) approves a principal amount of assistance less than the amount of the bond delivered to the Authority, the Authority shall only disburse principal up to the amount stated in the Order. In the event (1) that the payment schedule approved by the Village and described below provides for payment of a total principal amount greater than the amount of assistance approved by the Order or (2) that less than the principal amount of assistance approved by the Order is disbursed to the Village by the Authority, the Authority shall prepare a new payment schedule which shall be effective upon receipt by the Village.

Maturity Date Principal Amount

April 1, 2020

April 1, 2021

April 1, 2022

April 1, 2023

April 1, 2024

April 1, 2025

April 1, 2026

April 1, 2027

April 1, 2028

April 1, 2029

April 1, 2030

April 1, 2031

April 1, 2032

April 1, 2033

April 1, 2034

April 1, 2035

April 1, 2036

April 1, 2037

April 1, 2038

Interest on the bond shall accrue on principal disbursed by the Authority to the Issuer from the date principal is disbursed, until paid, at the rate of 2.50% per annum, payable April 1, 2016, and semi-annually hereafter.

The Issuer agrees that it will deposit with the Authority’s Depository, or such other place as shall be designated in writing to the Issuer by the Authority payments of the principal of, premium, if any, and interest on this bond in immediately available funds by 12:00 noon at least five business days prior to the date on which any such payment is due whether by maturity, redemption or otherwise. In the event that the Authority’s Depository has not received the Issuer’s deposit by 12:00 noon on the scheduled day, the Issuer shall immediately pay to the Authority as invoiced by the Authority an amount to recover the Authority’s administrative costs and lost investment earnings attributable to that late payment.

Interest on the Bond shall accrue on that portion of principal disbursed by the Authority to the Village pursuant to the Order from the date such portion is disbursed, until paid, at the rate of 2.00% per annum, payable [October 1, 2018], and semi-annually thereafter.

The Village agrees that it will deposit with The Bank of New York Mellon Trust Company, N.A., or at such other place as shall be designated in writing to the Village by the Authority (the “Authority’s Depository”) payments of the principal of, premium, if any, and interest on this Bond in immediately available funds by 12:00 noon at least five business days prior to the date on which any such payment is due whether by maturity, redemption or otherwise. In the event that the Authority’s Depository has not received the Village’s deposit by 12:00 noon on the scheduled day, the Village shall immediately pay to the Authority as invoiced by the Authority an amount to recover the Authority’s administrative costs and lost investment earnings attributable to that late payment.

Section 17. Additional Bonds. Except as hereinafter provided, the Issuer shall not issue additional Bonds of equal or prior standing with the Series 2018 Bonds.

The right is reserved in accordance with the provisions of Act 94, to issue additional Bonds payable from the Revenues of the System which shall be of equal standing and priority of lien on the Net Revenues of the System with the Series 2018 Bonds but only for the following purposes and under the following terms and conditions:

(a) To complete the Project in accordance with the plans and specifications therefor. Such bonds shall not be authorized unless the engineers in charge of construction shall execute a certificate evidencing the fact that additional funds are needed to complete the Project in accordance with the plans and specifications therefor and stating the amount that will be required to complete the Project. If such certificate shall be so executed and filed with the Issuer, it shall be the duty of the Issuer to provide for and issue additional revenue bonds in the amount stated in said certificate to be necessary to complete the Project in accordance with the plans and specifications plus an amount necessary to issue such bonds or to provide for part or all of such amount from other sources.

(b) For subsequent repairs, extensions, enlargements and improvements to the System or for the purpose of refunding part of any Bonds then outstanding or for both purposes and paying costs of issuing such additional Bonds including deposits which may be required to be made to a bond reserve account, if any. Bonds for such purposes shall not be issued pursuant to this subparagraph (b) unless the Adjusted Net Revenues of the System for the preceding twelve-month operating year shall be at least equal to one hundred ten percent (110%) of the maximum amount of principal and interest thereafter maturing in any operating year on the then outstanding Bonds and on the additional Bonds then being issued. If the additional Bonds are to be issued in whole or in part for refunding outstanding Bonds, the annual principal and interest requirements shall be determined by deducting from the principal and interest requirements for each operating year the annual principal and interest requirements of any Bonds to be refunded from the proceeds of the additional Bonds. For purposes of this subparagraph (b) the Issuer may elect to use as the last preceding operating year any operating year ending not more than sixteen months prior to the date of delivery of the additional Bonds. Determination by the Issuer as to existence of conditions permitting the issuance of additional Bonds shall be conclusive. No additional Bonds of equal standing as to the Net Revenues of the System shall be issued pursuant to the authorization contained in this subparagraph if the Issuer shall then be in default in making its required payments to the Operation and Maintenance Account or the Redemption Account.

(c) For refunding all or a part of the outstanding Bonds and paying costs of issuing such additional Bonds including deposits which may be required to be made to a bond reserve account, if any. No additional Bonds shall be issued pursuant to this subsection unless the maximum amount of principal and interest maturing in any operating year after giving effect to the refunding shall be less than the maximum amount of principal and interest maturing in any operating year prior to giving effect to the refunding.

Section 18. Negotiated Sale; Application to　MDEQ and Authority; Execution of Documents. The Issuer determines that it is in the best interest of the Issuer to negotiate the sale of the Series 2018 Bonds to the Authority because the Drinking Water Revolving Fund financing program provides significant interest savings to the Issuer compared to competitive sale in the municipal bond market. The Authorized Officers are hereby authorized to make application to the Authority and to the MDEQ for placement of the Series 2018 Bonds with the Authority. The actions taken by the Authorized Officers with respect to the Series 2018 Bonds prior to the adoption of this Ordinance are ratified and confirmed. The Authorized Officers are authorized to execute and deliver the Purchase Contract, the Supplemental Agreement, and the Issuer’s Certificate. Each of the Authorized Officers is further individually authorized to execute and deliver such contracts, documents and certificates as are necessary or advisable to qualify the Series 2018 Bonds for the Drinking Water Revolving Fund. Prior to the delivery of the Series 2018 Bonds to the Authority, any Authorized Officer is hereby authorized to make such changes to the form of the Series 2018 Bonds contained in Section 14 of this Ordinance as may be necessary to conform to the requirements of Act 227, Public Acts of Michigan 1985, as amended (“Act 227”), including, but not limited to changes in the principal maturity and interest payment dates and references to additional security required by Act 227.

Section 19. Approval of Bond Details. The Authorized Officers are each hereby authorized to adjust the final bond details set forth herein to the extent necessary or convenient to complete the transaction authorized herein, and in pursuance of the foregoing is authorized to exercise the authority and make the determinations authorized pursuant to Section 7a(1)(c) of Act 94, including but not limited to determinations regarding interest rates, prices, discounts, maturities, principal amounts, denominations, dates of issuance, interest payment dates, redemption rights, the place of delivery and payment, and other matters, provided that the principal amount of Series 2018 Bonds issued shall not exceed the principal amount authorized in this Ordinance, the interest rate per annum on the Series 2018 Bonds shall not exceed two percent (2.00%) per annum, and the Series 2018 Bonds shall mature in not more than thirty (30) annual installments.

Section 20. Covenant Regarding Tax Exempt Status of the Bonds. The Issuer shall, to the extent permitted by law, take all actions within its control necessary to maintain the exemption of the interest on the Series 2018 Bonds from general federal income taxation (as opposed to any alternative minimum or other indirect taxation) under the Internal Revenue Code of 1986, as amended, (the “Code”), including, but not limited to, actions relating to any required rebate of arbitrage earnings and the expenditure and investment of Series 2018 Bond proceeds and moneys deemed to be Series 2018 Bond proceeds.

Section 21. Approval of Bond Counsel. The representation of the Issuer by Miller, Canfield, Paddock and Stone, P.L.C. (“Miller Canfield”), as bond counsel is hereby approved, notwithstanding the representation by Miller Canfield of the Authority in connection with the Drinking Water Revolving Fund program which may include advising the Authority with respect to the borrowing.

Section 22. Savings Clause. All ordinances, resolutions or orders, or parts thereof, in conflict with the provisions of this Ordinance are, to the extent of such conflict, repealed.

Section 23. Severability; Paragraph Headings; and Conflict. If any section, paragraph, clause or provision of this Ordinance shall be held invalid, the invalidity of such section, paragraph, clause or provision shall not affect any of the other provisions of this Ordinance. The paragraph headings in this Ordinance are furnished for convenience of reference only and shall not be considered to be part of this Ordinance.

Section 24. Publication and Recordation. This Ordinance shall be published in full in the Lake Orion Review, a newspaper of general circulation in the Issuer qualified under State law to publish legal notices, promptly after its adoption, and shall be recorded in the Ordinance Book of the Issuer and such recording authenticated by the signatures of the President and Village Clerk.

Section 25. Effective Date. This Ordinance shall be effective upon its adoption and publication.

Adopted and signed this 14th day of May, 2018.

Kenneth Van Portfliet

President

Susan C. Galeczka, CMC CMMC

Village Clerk