Cleveland Clinic Health System Obligated Group - FMSbonds.com

to operate without property constituting reasonably sufficient capital given its business operations), or (iv) intendedor expected to incur debts that it could not pay as they became due.The lack of certainty in the treatment of transfers is attributable to several factors. First, there is no trueuniform law governing fraudulent transfers. Such transfers may be avoided under the Bankruptcy Code, state lawvariants of the Uniform Fraudulent Transfer Act and its predecessor, the Uniform Fraudulent Conveyance Act, orother non-uniform statutes or common law principles. Second and more importantly, the standards for determiningthe reasonable equivalence of value, or the fairness of consideration, and the measure for determining insolvency aresubjective standards resolved in the exercise of judicial discretion after engaging in a fact intensive analysis. Thissubjectivity has resulted in a conflicting body of case law and a lack of certainty as to whether a given transferwould be subject to avoidance.In addition, the Bankruptcy Code provides a means to avoid transfers of a debtor’s interests in propertymade on account of an antecedent debt within 90 days of the debtor filing for relief, or one year if the transferee isan “insider,” if as a result of that transfer the transferee receives more than he would have received in a liquidationof the debtor under Chapter 7 of the Bankruptcy Code. Whether the creation of a lien, or a payment, made by amember of the Obligated Group would be determined to be avoidable would be dependent on the particularcircumstances surrounding the transfer.There exists, in addition to the foregoing, common law authority and authority under various state statutespursuant to which courts may terminate the existence of a not-for-profit corporation or undertake supervision of itsaffairs on various grounds, including a finding that the corporation has insufficient assets to carry out its statedcharitable purposes or has taken some action that renders it unable to carry out its purposes. Such court action mayarise on the court’s own motion or pursuant to a petition of the attorney general of a particular state or other personswho have interests different from those of the general public, pursuant to the common law and statutory power toenforce charitable trusts and to see to the application of their funds to their intended charitable uses.Certain Matters Relating to Enforceability of Security Interest in Gross ReceiptsThe enforceability, priority and perfection of the security interest in Gross Receipts created under theMaster Trust Indenture may be limited by a number of factors, including, without limitation: (i) provisionsprohibiting the direct payment of amounts due to health care providers from Medicaid and Medicare programs topersons other than such providers; (ii) the absence of an express provision permitting assignment of receivables dueunder the contracts between the Obligated Issuers and third-party payors, and present or future legal prohibitionsagainst assignment; (iii) certain judicial decisions which cast doubt on the right of the Master Trustee, in the event ofthe bankruptcy of an Obligated Issuer, to collect and retain accounts receivable from Medicare, Medicaid and othergovernmental programs; (iv) commingling of proceeds of accounts receivable with other moneys of the ObligatedIssuers not so pledged under the Master Trust Indenture; (v) statutory liens; (vi) rights arising in favor of the UnitedStates of America or any agency thereof; (vii) constructive trusts or equitable or other rights impressed or conferredthereon by a federal or state court in the exercise of its equitable jurisdiction; (viii) federal and state laws governingfraudulent transfers as discussed above; (ix) federal bankruptcy laws that may affect the enforceability of the MasterTrust Indenture or the security interest in the Gross Receipts; (x) rights of third parties in Gross Receipts convertedto cash and not in the possession of the Master Trustee; and (xi) claims that might arise if appropriate financing orcontinuation statements or amendments of financing statements are not filed in accordance with the UniformCommercial Code, as from time to time in effect.Matters Relating to the Security for the Series 2008 BondsCertain amendments to the Master Trust Indenture may be made with the consent of the holders of not lessthan a majority of the aggregate principal amount of outstanding Master Notes. Such amount may be composedwholly or partially of the holders of the outstanding Master Notes (including Master Notes issued in the future) otherthan Master Notes issued in connection with the issuance of the Series 2008 Bonds. Such amendments could bematerial and may adversely affect the security of the holders of the Series 2008 Bonds.Certain amendments to the Bond Indenture may be made with the consent of the holders of not less than51% of the outstanding aggregate principal amount of the bonds outstanding under the Bond Indenture. Such48