Cleveland Clinic Health System Obligated Group - FMSbonds.com

plan of reorganization, with one exception discussed below, it must be approved by the vote of each class ofimpaired creditors. A class approves a plan if, of those who vote, those holding more than one-half in number andtwo-thirds in amount vote in favor of a plan. Approval by classes of interests requires a vote in favor of the plan bytwo-thirds in amount. If these levels of votes are attained, those voting against the plan or not voting at all arenonetheless bound by the terms thereof. Other than as provided in the confirmed plan, all claims and interests aredischarged and extinguished. If less than all of the impaired classes accept the plan, the plan may nevertheless beconfirmed by the bankruptcy court, and the dissenting claims and interests would be bound thereby. For this tooccur, one of the impaired classes must vote to accept the plan and the bankruptcy court must determine that theplan does not “discriminate unfairly” and is “fair and equitable” with respect to the nonconsenting class. A plan isfair and equitable if each class is treated in accordance with its credit priority and no class receives a distributionuntil senior classes are paid in full. The Bankruptcy Code establishes different fair and equitable tests for securedclaims and interest holders. To be confirmed, the bankruptcy court must also determine that a plan, among otherrequirements, provides creditors with more than would be received in the event of liquidation, is proposed in goodfaith, and the debtor’s performance is feasible.Risks Related to Obligated Group FinancingsThe obligations of the members of the Obligated Group under the Master Notes and the Master TrustIndenture will be limited to the same extent as the obligations of any debtor under applicable federal and state lawsgoverning bankruptcy, insolvency and avoidance of fraudulent transfers and the application of general principles ofcreditors’ rights and as additionally described below. Although, upon the issuance of the Series 2008 Bonds, theCleveland Clinic, CCHS-East Region, Fairview, Lutheran, Marymount and Florida Clinic will be the only ObligatedIssuers and members of the Combined Group under the Master Trust Indenture, the Master Trust Indenture permitsthe addition of other Obligated Issuers if certain conditions are met. See “APPENDIX C — SUMMARY OFBASIC DOCUMENTS — The Master Trust Indenture — The Combined Group.”The joint and several obligations described herein of the members of the Obligated Group to makepayments of debt service on the Master Notes issued pursuant to and under the Master Trust Indenture may not beenforceable to the extent (1) enforceability may be limited by applicable bankruptcy, moratorium, reorganization,fraudulent conveyance or similar laws affecting the enforcement of creditors’ rights and by general equitableprinciples or (2) such payments (a) are requested to be made with respect to payments on any Master Note that isissued for a purpose that is not consistent with the charitable purposes of the member of the Obligated Group fromwhich such payment is requested or that is issued for the benefit of any entity other than a tax-exempt organization;(b) are requested to be made from any money or assets that are donor restricted or that are subject to a direct orexpress trust that does not permit the use of such money or assets for such payment; (c) would result in the cessationor discontinuation of any material portion of the health-care or related services previously provided by the memberof the Obligated Group from which such payment is requested; or (d) are requested to be made pursuant to any loanviolating applicable usury laws. The extent to which the money or assets of any present or future member of theObligated Group falls within the categories referred to above cannot be determined and could be substantial. Theforegoing notwithstanding, the accounts of the Obligated Issuers are and will continue to be combined for financialreporting purposes and will be used in determining whether various covenants and tests contained in the MasterTrust Indenture (including tests relating to the issuance of Additional Indebtedness) are satisfied.A member of the Obligated Group may not be required to make any payment of any Master Note, orportion thereof, or the recipient of such payment may be compelled to return such payment, the proceeds of whichwere not lent or otherwise disbursed to such member to the extent that such payment would conflict with, or wouldbe prohibited or avoidable under applicable laws.The application of the law relating to the enforceability of guaranties or obligations of a member of theObligated Group to make debt service payments on behalf of another member of the Obligated Group, is notamenable to an unqualified declaration of whether a transfer would be prohibited or subject to avoidance.As a general matter, in addition to a transfer of property made with the actual intent to hinder, defraud ordelay creditors, a transfer of an interest in property by an entity may be avoided if the transfer is made for less than“reasonably equivalent value” or “fair consideration” and the transferor (i) is insolvent (e.g., is unable to pay itsdebts as they become due), (ii) rendered insolvent by the transaction, (iii) is undercapitalized (i.e., operating or about47