Cleveland Clinic Health System Obligated Group - FMSbonds.com

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In selecting Series 2008A Bonds for redemption, the Bond Trustee will treat each Series 2008A Bond asrepresenting that number of the Series 2008A Bonds that is obtained by dividing the principal amount of such Series2008A Bond by the minimum Authorized Denomination. If it is determined that one or more, but not all, of theintegral multiples of the minimum Authorized Denomination of principal amount represented by any Series 2008ABond are to be called for redemption, then, upon notice of intention to redeem such integral multiples of anAuthorized Denomination, the owner of such Series 2008A Bond will forthwith surrender such Series 2008A Bondto the Bond Trustee for payment to such owner of the redemption price of the integral multiples of the AuthorizedDenomination of principal amount called for redemption. The Bond Trustee will deliver to such owner a new Series2008A Bond in the aggregate principal amount of the unredeemed balance of the principal amount of such Series2008A Bond. New Series 2008A Bonds representing the unredeemed balance of the principal amount of suchSeries 2008A Bond will be issued to the registered owner thereof without charge therefor.No redemption of less than all of the Series 2008A Bonds at the time outstanding shall be made pursuantto the Bond Indenture unless the aggregate principal amount of such Series 2008A Bonds to be redeemed is not lessthan an Authorized Denomination. If the Series 2008A Bonds or portions thereof are called for redemption and ifon the redemption date moneys sufficient for the redemption thereof are held by the Bond Trustee, thereafter thoseSeries 2008A Bonds or portions thereof to be redeemed shall cease to bear interest, and shall cease to be secured by,and shall be considered no longer to be outstanding under the Bond Indenture.Optional Purchase in Lieu of Redemption. The Commission and, by their acceptance of the Series 2008ABonds, the Holders of the Series 2008A Bonds irrevocably grant to the Cleveland Clinic, and any assignee of theCleveland Clinic with respect to this right, the option to purchase, at any time when the Series 2008A Bonds areredeemable pursuant to the provisions of the Bond Indenture described above in “Redemption Prior to Maturity”,any Series 2008A Bonds at a purchase price equal to its redemption price, including interest accrued to the purchasedate. To exercise such option with respect to the Series 2008A Bonds, the Cleveland Clinic must give the BondTrustee a Written Request as though such Written Request were a written request of the Commission forredemption, and the Bond Trustee is thereupon required to give the Holders of such Series 2008A Bonds notice ofsuch purchase in the manner specified under the subcaption, “Notice of Redemption,” below as though suchpurchase were a redemption. The purchase of such Series 2008A Bonds will be mandatory and enforceable againstthe Holders of the Series 2008A Bonds. On the date fixed for purchase pursuant to any exercise of such option, theCleveland Clinic is required to pay the purchase price of the Series 2008A Bonds then being purchased to the BondTrustee and the Bond Trustee will pay the same to the owners of such Series 2008A Bonds against delivery thereof.Following such purchase, the Bond Trustee will cause such Series 2008A Bonds to be registered in the name of theCleveland Clinic or its nominee and shall deliver them to the Cleveland Clinic or its nominee. In the case of thepurchase of less than all of the Series 2008A Bonds, the particular Series 2008A Bonds to be purchased will beselected in accordance with the provisions of the Bond Indenture as though such purchase were a redemption.No purchase of Series 2008A Bonds as described above will operate to extinguish the indebtedness of theState evidenced thereby.Notwithstanding the foregoing, no purchase of Series 2008A Bonds as described above in “OptionalPurchase in Lieu of Redemption” may be made unless the Cleveland Clinic shall have delivered a No AdverseEffect Opinion to the Bond Trustee and the Commission concurrently therewith.Notice of Redemption. A copy of the notice of the call for any redemption of the Series 2008A Bonds fromthe Commission to the Bond Trustee identifying the Series 2008A Bonds to be redeemed shall be given by first classmail, postage prepaid, to the Holders of the Series 2008A Bonds to be redeemed at their addresses as shown on theBond Register not later than the fifteenth day prior to the redemption date. That notice will specify the place orplaces where the amounts due upon redemption are payable, the redemption date and the principal amount andmaturity of the Series 2008A Bonds to be redeemed. Failure to give such notice by mailing to any particular Holderor a defect in the notice or mailing to any particular Holder will not affect the validity of such notice with respect toany other Holder to which notice is given in accordance with the provisions of the Bond Indenture.Except for mandatory sinking fund redemptions, prior to the date that a redemption notice is first mailed,funds shall be placed with the Bond Trustee to pay the principal of such Series 2008A Bonds to be redeemed and theaccrued interest thereon to the redemption date and the premium, if any, payable thereon, or such notice shall state10
that the redemption is conditional on such funds being deposited on or prior to the redemption date and that failureto make such a deposit will not constitute an Event of Default under the Bond Indenture.GeneralBOOK-ENTRY SYSTEMInformation concerning The Depository Trust Company (“DTC”) and the Book-Entry System definedbelow has been obtained from DTC and is not guaranteed as to accuracy or completeness by, and is not to beconstrued as a representation by, the Commission, the Underwriter, the Bond Trustee, the Cleveland Clinic or theBorrower.Beneficial ownership in the Series 2008A Bonds will be available to Beneficial Owners (as describedbelow) only by or through DTC Participants via a book-entry system (the “Book-Entry System”) maintained byDTC. If the Series 2008A Bonds are taken out of the Book Entry System and delivered to owners in physical form,as contemplated hereinafter under “Discontinuance of DTC Services,” the following discussion will not apply.DTC and Its ParticipantsDTC will act as securities depository for the Series 2008A Bonds. The Series 2008A Bonds will be issuedas fully registered bonds registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name asmay be requested by an authorized representative of DTC. One fully registered bond certificate will be issued forthe Series 2008A Bonds in the aggregate principal amount of such Series and will be deposited with DTC.DTC, the world’s largest depository, is a limited-purpose trust company organized under the New YorkBanking Law, a “banking organization” within the meaning of the New York Banking Law, a member of theFederal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Codeand a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of1934, as amended. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity,corporate and municipal debt issues, and money market instruments from over 100 countries that DTC’s participants(“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participantsof sales and other securities transactions in deposited securities through electronic computerized book-entry transfersand pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securitiescertificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trustcompanies, clearing corporations and certain other organizations. DTC is a wholly-owned subsidiary of TheDepository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National SecuritiesClearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCCis owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such asboth U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clearthrough or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“IndirectParticipants”). DTC has S&P’s highest rating: AAA. The DTC Rules applicable to its Participants are on file withthe Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com andwww.dtc.org. The content of such websites are not incorporated by reference in this Offering Circular and shouldnot be considered part of this Offering Circular.Purchases of the Series 2008A Bonds under the DTC system must be made by or through DirectParticipants, which will receive a credit for the Series 2008A Bonds on DTC’s records. The ownership interest ofeach actual purchaser of each Series 2008A Bond (“Beneficial Owner”) is in turn to be recorded on the Direct orIndirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase.Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, aswell as periodic statements of their holdings, from the Direct or Indirect Participant through which the BeneficialOwner entered into the transaction. Transfers of ownership interests in the Series 2008A Bonds are to beaccomplished by entries made on the books of Direct and Indirect Participants acting on behalf of BeneficialOwners. Beneficial Owners will not receive certificates representing their ownership interests in Series 2008ABonds, except in the event that use of the book entry system for the Series 2008A Bonds is discontinued.11
Page 1 and 2: NEW ISSUEBOOK ENTRY ONLYSee “RATI
Page 3 and 4: TABLE OF CONTENTSINTRODUCTORY STATE
Page 5 and 6: OFFERING CIRCULARRelating to$452,34
Page 7 and 8: Security and Sources of Payment for
Page 9 and 10: Upon issuance of the Series 2008A B
Page 11 and 12: (ii) acquisition of magnetic resona
Page 13: $147,200,000 Term Bonds Due January
Page 17 and 18: Use of Certain Terms in Other Secti
Page 19 and 20: County BondsThe Cleveland Clinic an
Page 21 and 22: The Cleveland Clinic regularly revi
Page 23 and 24: ESTIMATED SOURCES AND USES OF FUNDS
Page 25 and 26: DEBT SERVICE COVERAGEThe following
Page 27 and 28: MedicareGeneralApproximately 29% of
Page 29 and 30: there is no assurance that the Obli
Page 31 and 32: Medicare Conditions of Participatio
Page 33 and 34: fiscal year’s budget that are in
Page 35 and 36: Federal Regulatory and Contractual
Page 37 and 38: Stark-type statutes have fewer exce
Page 39 and 40: party or for any services rendered
Page 41 and 42: typically in a position to refer pa
Page 43 and 44: OhioOhio Certificate of Need Progra
Page 45 and 46: performance demonstration programs
Page 47 and 48: manifest injustice would otherwise
Page 49 and 50: and properties owned or operated by
Page 51 and 52: plan of reorganization, with one ex
Page 53 and 54: percentage may be composed wholly o
Page 55 and 56: The Internal Revenue Service Form 9
Page 57 and 58: Charity Care, Underinsured and Unin
Page 59 and 60: • Proposals to eliminate the tax-
Page 61 and 62: acting in the capacity of underwrit
Page 63 and 64: Frederick R. Nance, Regional Managi
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FINANCIAL POSITION — D. BALANCE S
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The CommissionBecause the Series 20
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APPENDIX ACLEVELAND CLINIC HEALTH S
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TABLE OF CONTENTSPageINTRODUCTION .
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This Appendix to the Offering Circu
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A. ORIGINS AND FUNDAMENTAL MISSIONT
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C. GOVERNANCE OF THE CLEVELAND CLIN
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Voting Members of theBoard of Trust
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Voting Members of theBoard of Trust
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Principal Operating Officers. The d
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In addition to the broad range of o
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The main campus also includes a com
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GovernanceThe Cleveland Clinic is t
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E. UTILIZATIONThe following tables
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Statistical Information. The follow
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I. COLLABORATIVE PROGRAMSIn additio
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Clinic’s charity care policy, see
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statements filed with Digital Assur
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CLEVELAND CLINIC HEALTH SYSTEMConso
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OBLIGATED GROUPConsolidated Stateme
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PART IV.MANAGEMENT’S DISCUSSION A
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increase in minor equipment purchas
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The following table sets forth the
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pension plans’ funded status in t
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of funding to the pension plan offs
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portfolio. Offsetting the decrease
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• Clinic Care, Inc. (“Clinic Ca
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APPENDIX BCERTAIN FINANCIAL STATEME
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A UDITED C ONSOLIDATED F INANCIAL S
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• Ernst & Young LLPSuite 1300925
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Liabilities and net assetsCurrent l
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Changes in Net AssetsNet AssetsTemp
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Cleveland Clinic Health SystemNotes
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Other Financial Information
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• Ernst & Young LLPSuite 1300925
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Cleveland Clinic Health SystemConso
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Cleveland Clinic Health SystemConso
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APPENDIX CSUMMARY OF BASIC DOCUMENT
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APPENDIX CSUMMARY OF BASIC DOCUMENT
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“Bond Indenture” means the Bond
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period of three months from the com
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PROPERTY”, and all improvements,
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direct, express or charitable trust
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Rate Hedge” for purposes of this
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Debt according to a fixed schedule
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“Officer’s Certificate” means
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provided, however, that Series 2008
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(t) liens on money or obligations d
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Project Administrator. In the event
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“Stated Maturity” means, when u
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(b) the Cleveland Clinic, or if the
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(d) the Master Trustee receives an
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(g) the loan of cash or other non-O
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under this caption shall be deemed
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Supplemental Indenture to which suc
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emedy thereunder, unless the Noteho
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purchase or other acquisition or re
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limitation, (A) the Special Funds a
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(b) Default in the payment of the p
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Fund Requirements, in the order of
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(g) to evidence the appointment of
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THE LEASEThe Lease contains various
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(a) Failure by the Cleveland Clinic
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APPENDIX DPROPOSED FORM OF OPINION
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PROPOSED TEXT OF LEGAL OPINION OFSQ
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October __, 2008Page 32008A Bonds c
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