Cleveland Clinic Health System Obligated Group - FMSbonds.com

Under existing law, the remedies specified by the Bond Indenture and the State Financing Lease may notbe readily available or may be limited. A court may decide not to order the specific performance of the covenantscontained in these documents. The various legal opinions to be delivered concurrently with the delivery of theSeries 2008A Bonds will be qualified as to the enforceability of the various legal instruments by limitations imposedby State and federal laws, rulings and decisions affecting remedies and by bankruptcy, reorganization or other lawsaffecting the enforcement of creditors’ rights or the application of general principles of equity.The enforceability of the State Financing Lease and the Bond Indenture may be subject to subordination orprior claims in certain instances other than bankruptcy proceedings. For a discussion of examples of possiblelimitations on enforceability and of possible subordination or prior claims, see “BONDHOLDERS’ RISKS –Enforcement of Remedies; Risks of Bankruptcy” and “- Risks Related to Obligated Group Financings”.THE SERIES 2008A BONDS DO NOT REPRESENT OR CONSTITUTE A DEBT OR PLEDGEOF THE FAITH AND CREDIT OF THE COMMISSION OR THE STATE, WILL NOT BE SECURED BYAN OBLIGATION OR PLEDGE OF ANY MONEY RAISED BY TAXATION, AND DO NOT GRANT TOTHE HOLDERS ANY RIGHTS TO HAVE THE STATE OR ANY POLITICAL SUBDIVISION THEREOFLEVY ANY TAXES OR APPROPRIATE ANY FUNDS FOR THE PAYMENT OF THE BOND SERVICECHARGES ON THE SERIES 2008A BONDS.GeneralThe Series 2008A Bonds will be issued under and pursuant to the Bond Indenture. The Cleveland Clinicand the Commission will enter into the State Financing Lease, under which the Commission will lease the LeasedPremises to the Cleveland Clinic. The terms of the State Financing Lease will require the Cleveland Clinic to make,or cause to be made, payments of Basic Rent that will be sufficient to pay the Bond Service Charges on theSeries 2008A Bonds and all other Bonds outstanding under the Bond Indenture, as and when due. To secure itsobligation to pay Basic Rent under the State Financing Lease, the Cleveland Clinic will deliver to the Commission,and the Commission will assign without recourse to the Bond Trustee, the Sixtieth Master Note, issued pursuant tothe Master Trust Indenture under which the Cleveland Clinic, CCHS - East Region, Fairview, Lutheran, Marymountand Florida Clinic will be, as of the date the Series 2008A Bonds are issued, the only Obligated Issuers. TheCleveland Clinic will also deliver to the Commission, and the Commission will assign without recourse to the BondTrustee, the Variable Rate Note to secure the Variable Rate Bonds to be issued concurrently with the issuance of theSeries 2008A Bonds under the Bond Indenture. The Cleveland Clinic has also issued several other Master Notes thatare currently outstanding and which secure bonds outstanding under the County Bond Indenture.The Series 2008A Bonds, the Variable Rate Bonds and any Additional Bonds issued pursuant to the BondIndenture will be secured on a parity by the Bond Indenture. The Series 2008A Bonds, the Variable Rate Bonds andany such Additional Bonds are referred to collectively as the “Bonds.”The Bond Service Charges on the Series 2008A Bonds will be payable solely from amounts payable by theCleveland Clinic as Basic Rent under the State Financing Lease, together with all other Hospital Receipts, allmoneys derived under the Sixtieth Master Note and all moneys and investments held by the Bond Trustee in theSpecial Funds established under the Bond Indenture. To secure the Series 2008A Bonds, the Commission haspledged and assigned without recourse all of its rights in Hospital Receipts and will assign without recourse all of itsinterest in the Sixtieth Master Note to, and will transfer and grant a lien on all of its right, title and interest in theSpecial Funds in favor of, the Bond Trustee. No revenues of the Commission or any Obligated Issuer are pledged tothe payment of the Series 2008A Bonds, and the Series 2008A Bonds are not secured by any mortgage on orsecurity interest in any assets of an Obligated Issuer (except to the extent that the State Financing Lease may bedeemed to constitute a security agreement under applicable Ohio law) other than the Gross Receipts of the ObligatedIssuers that are pledged under the Master Trust Indenture. See “Security Interest in Gross Receipts” below underthis caption. The Commission’s rights and interest in the Hospital Receipts and the Special Funds under the BondIndenture and the State Financing Lease have been assigned directly to the Bond Trustee. The remaining rights andinterest of the Commission under the State Financing Lease (except for Unassigned Rights) have been assigned tothe Master Trustee as security for the Master Notes.14