Michigan Finance Authority · $154,140,000 michigan finance authority hospital revenue bonds (mclaren health care) series 2016 $154,140,000 4.40% term bond due may 15, 2046, priced∗

NEW ISSUE – BOOK-ENTRY ONLY RATINGS†: Fitch: AA- Moody’s: Aa3

In the opinion of the Attorney General of the State of Michigan and in the opinion of Dickinson Wright PLLC, Bond Counsel, subject to compliance with certain covenants, under existing law, (1) the interest on the Series 2016 Bonds while in the Fixed Rate Mode and bearing interest at a Fixed Rate is excluded from gross income for federal income tax purposes except as described under “TAX MATTERS” herein, and (2) the Series 2016 Bonds and the interest thereon are free and exempt from all state, city, county or other taxation provided by the laws of the State of Michigan, except for estate, inheritance and gift taxes and taxes on transfers. (See “TAX MATTERS” herein.)

$154,140,000MICHIGAN FINANCE AUTHORITY

HOSPITAL REVENUE BONDS(McLAREN HEALTH CARE)

SERIES 2016

Dated: Date of Delivery Due: As Set Forth on the Inside Cover

The Series 2016 Bonds are issuable only as fully registered bonds without coupons and, when issued, will be registered in the name of and held by Cede & Co., as nominee for The Depository Trust Company (“DTC”), New York, New York. DTC will act as securities depository for the Series 2016 Bonds. Purchases of beneficial interests in the Series 2016 Bonds will be made in book-entry form in denominations of $5,000 or any integral multiple thereof with respect to the Series 2016 Bonds while bearing interest in the Fixed Rate. Except as herein described, such purchasers will not receive certificates representing their beneficial interests in the Series 2016 Bonds. See “THE SERIES 2016 BONDS – Book-Entry Only System” herein.

The Series 2016 Bonds will bear interest initially at the Fixed Rate for the Fixed Rate Period set forth on the inside cover of this Limited Offering Memorandum. The Michigan Finance Authority (the “Issuer”), at the direction of the Parent (as defined herein), may convert the Series 2016 Bonds to another Interest Rate Mode from time to time, as described in this Limited Offering Memorandum. While in the Fixed Rate Mode, interest on the Series 2016 Bonds will be payable on each May 15 and November 15, commencing on November 15, 2016 and calculated on the basis of a 360-day year of twelve 30-day months. Principal or redemption price of and interest on the Series 2016 Bonds will be paid by The Bank of New York Mellon Trust Company, N.A., as Bond Trustee. So long as DTC or its nominee, Cede & Co., is the registered owner of the Series 2016 Bonds, such payments will be made directly to DTC or such nominee. Disbursement of such payments to the DTC Participants is the responsibility of DTC, and disbursements of such payments to the beneficial owners is the responsibility of the DTC Participants and the Indirect Participants, as more fully described herein.

The Issuer is issuing the Series 2016 Bonds to provide funds to loan to McLaren Health Care Corporation (the “Parent”), for itself and as Obligated Group Agent on behalf of each other Member of the Obligated Group, to be used by certain Credit Group Members, herein defined, together with other available funds, (i) to pay costs of the Project, as described herein and (ii) to pay the costs of issuing the Series 2016 Bonds.

The principal of, premium, if any, and interest on, the Series 2016 Bonds are payable from payments to be made on Obligation No. 22 (“Obligation No. 22”). Obligation No. 22 is issued under a Master Trust Indenture, dated as of June 1, 1998, as supplemented (the “Master Indenture”), between the Parent and The Bank of New York Mellon Trust Company, N.A., as successor master trustee (the “Master Trustee”). Upon the issuance of Obligation No. 22, the Parent will be the only member of the Obligated Group under the Master Indenture. The Master Indenture directly obligates only the Obligated Group Members. However, the Master Indenture requires the Obligated Group Members to cause each Credit Group Member, (i) to pay, loan or transfer such amounts, sufficient with other available monies to enable the Obligated Group to pay amounts due and payable on Obligation No. 22 and the other Obligations issued under the Master Indenture and (ii) to comply with certain other covenants in the Master Indenture.

THE SERIES 2016 BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY AND ARE NOT A DEBT OR LIABILITY OF THE STATE OF MICHIGAN OR ANY POLITICAL SUBDIVISION OF THE STATE OF MICHIGAN. THE AUTHORITY HAS NO TAXING POWER.

The Series 2016 Bonds may be subject to optional, mandatory and extraordinary optional redemption prior to maturity and are subject to mandatory tender and purchase in lieu of redemption, all as described herein. See “THE SERIES 2016 BONDS” herein.

From their date of delivery, the obligation to purchase the Series 2016 Bonds upon mandatory tender will not be supported by any form of liquidity agreement. Any Series 2016 Bonds that are not remarketed will be required to be purchased by the Obligated Group from its own funds. Failure of the Obligated Group to purchase any Series 2016 Bonds that are not remarketed shall constitute an Event of Default under the Loan Agreement and the Bond Indenture described herein. See “THE SERIES 2016 BONDS—Remarketing of Series 2016 Bonds” and “—Liquidity for Payment of the Purchase Price” herein.

This Limited Offering Memorandum describes the terms of the Series 2016 Bonds only while the Series 2016 Bonds bear interest in the initial Fixed Rate Mode. Prospective purchasers of the Series 2016 Bonds should not rely on this Limited Offering Memorandum if the Series 2016 Bonds are converted to an Interest Rate Mode other than the initial Fixed Rate Mode. If the Parent elects to convert the Series 2016 Bonds to another Interest Rate Mode, a new Limited Offering Memorandum or a supplement to this Limited Offering Memorandum describing the terms of such Series 2016 Bonds during such Interest Period will be delivered.

The Series 2016 Bonds will be issued by the Issuer and placed by J.P. Morgan Securities LLC, as placement agent (the “Placement Agent”), with DNT Asset Trust (the “Purchaser”), an affiliate of JPMorgan Chase Bank, N.A., as purchaser of the Series 2016 Bonds, subject to certain conditions, including the approval of legality by Dickinson Wright PLLC of Lansing, Michigan, Bond Counsel to the Issuer, and by the Attorney General of the State of Michigan and the approval of certain legal matters by Payne, Broder & Fossee, P.C., Bingham Farms, Michigan, counsel for the Obligated Group, and by Kutak Rock LLP, Washington, DC, counsel for the Purchaser. It is expected that the Series 2016 Bonds in definitive form will be available for delivery to DTC in New York, New York, on or about July 28, 2016.

This cover page contains certain information for quick reference only. It is not intended to be a summary of the security or terms of this bond issue. Investors are instructed to read this entire Limited Offering Memorandum to obtain information essential to making an informed investment decision.

Placement Agent

The date of this Limited Offering Memorandum is July 25, 2016.

† For an explanation of ratings, see “RATINGS” herein.

$154,140,000 MICHIGAN FINANCE AUTHORITY

HOSPITAL REVENUE BONDS (McLAREN HEALTH CARE)

SERIES 2016

$154,140,000 4.40% Term Bond due May 15, 2046, Priced∗ @ Par, CUSIP 59447T JR5†

∗ Not Reoffered. † A registered trademark of The American Bankers Association. CUSIP is provided by Standard & Poor’s CUSIP Service

Bureau, a Standard & Poor’s Financial Services LLC business. CUSIP numbers are provided for convenience of reference only. None of the Authority, the Corporation, the Trustee, the Placement Agent or the Purchaser assume any responsibility for the accuracy of such numbers.

No broker, dealer, salesman or other person has been authorized to give any information or to make any representations other than those contained in this Limited Offering Memorandum in connection with the Bonds and, if given or made, such information or representations must not be relied upon as having been authorized by the Issuer, the Obligated Group, the Placement Agent or the Purchaser. Neither the delivery of this Limited Offering Memorandum nor any sale hereunder shall under any circumstances create any implication that there has been no change in the affairs of the Issuer or the Obligated Group since the date hereof. This Limited Offering Memorandum does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Series 2016 Bonds in any jurisdiction to any person to whom it is unlawful to make such offer, solicitation or sale. The Issuer neither has nor assumes any responsibility as to the accuracy of the information in this Limited Offering Memorandum (other than that under the headings “INTRODUCTORY STATEMENT,” to the extent it contains information pertaining to the Issuer, “THE AUTHORITY” and “LITIGATION,” to the extent it contains information pertaining to the Issuer), all of which has been furnished by others.

______________________________________________

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS IN THIS

LIMITED OFFERING MEMORANDUM Certain statements included or incorporated by reference in this Limited Offering Memorandum

constitute “forward-looking statements.” Such statements generally are identifiable by the terminology used such as “plan,” “expect,” “estimate,” “budget” or other similar words. Such forward-looking statements include but are not limited to certain statements contained in the information under the captions “PLAN OF FINANCING,” and “BONDHOLDERS’ RISKS” in the forepart of this Limited Offering Memorandum. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The Parent does not plan to issue any updates or revisions to those forward-looking statements if or when its expectations or events, conditions or circumstances on which such statements are based occur.

THE SERIES 2016 BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND

EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR WITH ANY STATE SECURITIES COMMISSION.

[THIS PAGE INTENTIONALLY LEFT BLANK]

TABLE OF CONTENTS

Page

INTRODUCTORY STATEMENT ............................................................................................................. 1 THE MICHIGAN FINANCE AUTHORITY .............................................................................................. 4

General ............................................................................................................................................ 4 Members of the Issuer ..................................................................................................................... 4

THE SERIES 2016 BONDS ........................................................................................................................ 5 General ............................................................................................................................................ 6 Conversion of Series 2016 Bonds to Other Interest Rate Modes .................................................... 6 Tender of the Series 2016 Bonds .................................................................................................... 7 Remarketing of Series 2016 Bonds ................................................................................................. 8 Liquidity for Payment of the Purchase Price .................................................................................. 8 Redemption ..................................................................................................................................... 9 Book-Entry Only System .............................................................................................................. 10

PAYMENT PROVISIONS RELATING TO THE SERIES 2016 BONDS .............................................. 13 General ......................................................................................................................................... 13

Revenue Fund ............................................................................................................................... 14 The Loan Agreement .................................................................................................................... 14 The Master Indenture; Obligation No. 22 ..................................................................................... 14 The Credit Group .......................................................................................................................... 15

The Master Indenture .................................................................................................................... 16 PLAN OF FINANCING ............................................................................................................................ 18 ESTIMATED SOURCES AND USES OF FUNDS ................................................................................. 19 BONDHOLDERS’ RISKS ........................................................................................................................ 19

General .......................................................................................................................................... 19 Impact of Disruptions in the Credit Markets and General Economic Factors .............................. 20 Healthcare Reform ........................................................................................................................ 21 General Reimbursement Policies and Regulations Affecting Healthcare Providers .................... 26 Medicare Reimbursement of Credit Group Operations ................................................................ 26 Medicaid Program ......................................................................................................................... 30 Participation in Managed Care Programs ..................................................................................... 32 Blue Cross and Blue Shield of Michigan ...................................................................................... 33 Licensing, Surveys, Accreditation, and Audits ............................................................................. 33 Negative Rankings Based on Clinical Outcomes, Cost, Quality, Patient Satisfaction and Other Performance Measures ........................................................................................................ 34 Payer Audits and Withholds ......................................................................................................... 34 HIPAA Administrative Simplification Provisions ........................................................................ 35 Civil and Criminal Fraud and Abuse Laws and Enforcement ...................................................... 35 EMTALA Obligations .................................................................................................................. 40 Antitrust ........................................................................................................................................ 40 Integrated Delivery Systems ......................................................................................................... 41 Competition .................................................................................................................................. 42 Capital Needs v. Capital Capacity; Government Regulation and Approvals ............................... 44 Information Systems ..................................................................................................................... 44 Equipment ..................................................................................................................................... 45 Employees ..................................................................................................................................... 45 Medical Staff ................................................................................................................................. 46 Insurance ....................................................................................................................................... 46 State Laws and Regulations .......................................................................................................... 47 Failure to Obtain Certificates of Need .......................................................................................... 47

TABLE OF CONTENTS

Page

Affiliation, Merger, Acquisition, Transfer, and Divestiture ......................................................... 47 Tax-Exempt Status ........................................................................................................................ 48 Environmental Matters .................................................................................................................. 50 Factors That Could Affect the Future Financial Condition of the Credit Group .......................... 51 Pension Plans ................................................................................................................................ 52 Other Factors Affecting Healthcare Facilities .............................................................................. 52 Risks Related to Outstanding Obligations .................................................................................... 53 Interest Rate Swaps and Other Hedge Risk .................................................................................. 54 Pledge of Gross Revenues ............................................................................................................ 54 Factors Concerning the Enforceability of the Master Indenture ................................................... 55 Series 2016 Bond Ratings ............................................................................................................. 56 Tax-Exempt Status of the Series 2016 Bonds ............................................................................... 56 Investments ................................................................................................................................... 57

NEGOTIABILITY ..................................................................................................................................... 57 BONDS NOT A DEBT OF THE STATE ................................................................................................. 57 LITIGATION ............................................................................................................................................. 57 LEGAL MATTERS ................................................................................................................................... 58 TAX MATTERS ........................................................................................................................................ 58

General .......................................................................................................................................... 58 Future Developments .................................................................................................................... 59

CONTINUING DISCLOSURE ................................................................................................................. 59 RATINGS .................................................................................................................................................. 60 OTHER MATTERS ................................................................................................................................... 60

APPENDIX A Definitions and Summary of Certain Documents APPENDIX B Summary of Certain Provisions of the Master Indenture APPENDIX C Form of Bond Counsel Opinion APPENDIX D Form of Continuing Disclosure Agreement

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LIMITED OFFERING MEMORANDUM

$154,140,000MICHIGAN FINANCE AUTHORITY

HOSPITAL REVENUE BONDS (McLAREN HEALTH CARE)

SERIES 2016

INTRODUCTORY STATEMENT

The following statement is subject in all respects to more complete information contained in this Limited Offering Memorandum. This entire Limited Offering Memorandum, including the appendices attached hereto, should be read by any prospective purchaser of the Series 2016 Bonds. No person is authorized to detach this Introductory Statement from this Limited Offering Memorandum or to otherwise use it without this entire Limited Offering Memorandum, including the appendices attached hereto.

Purpose of this Limited Offering Memorandum. The purpose of this Limited Offering Memorandum, including the cover page and the appendices, is to set forth information relating to the $154,140,000 aggregate principal amount of Michigan Finance Authority Hospital Revenue Bonds (McLaren Health Care) Series 2016 (the “Series 2016 Bonds”). The Michigan Finance Authority (the “Issuer”) will issue the Series 2016 Bonds pursuant to a Bond Indenture (the “Bond Indenture”) entered into by and between the Issuer and The Bank of New York Mellon Trust Company, N.A., a national banking association, as trustee (the “Bond Trustee”), dated as of July 1, 2016. The proceeds of the Series 2016 Bonds will provide funds to be loaned by the Issuer to McLaren Health Care Corporation (the “Parent”), for itself and as Obligated Group Agent on behalf of each other Member of the Obligated Group, for use by certain members of the Credit Group (as defined below).

This Limited Offering Memorandum describes the terms of the Series 2016 Bonds only while the Series 2016 Bonds bear interest at the Fixed Rate. Prospective purchasers of the Series 2016 Bonds should not rely on this Limited Offering Memorandum for any Series 2016 Bonds bearing interest at a rate other than the Fixed Rate.

Michigan Finance Authority. The Issuer is the issuer of the Series 2016 Bonds. The Issuer was

created in 2010 for the purposes of fostering and promoting the borrowing of money by governmental units within Michigan for financing public improvements and other eligible purposes. See “THE AUTHORITY” below for more information.

McLaren Health Care. The Parent and its subsidiary hospitals and other related entities (the Parent, together with such hospitals and other related entities are hereinafter referred to collectively as “McLaren Health Care”) include twelve hospital facilities, as well as over 200 ambulatory centers, imaging centers, a network of cancer centers and providers, an employed primary care physician network, commercial and Medicaid HMOs and PPOs covering over 245,000 lives, home health care and hospice, durable medical equipment, retail pharmacy services, all located in Michigan and a wholly-owned medical malpractice insurance company.

For information on the history, organization and financial operations of McLaren Health Care and consolidated audited financial statements and the unaudited consolidated financial statements, reference is made to offering documents and continuing disclosure filings relating to the Credit Group on the Electronic Municipal Market Access (“EMMA”) website of the Municipal

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Securities Rulemaking Board (the “MSRB”). Access to such information will be made available to the public without charge by the MSRB.

Plan of Financing. The proceeds of the Series 2016 Bonds are being used to provide funds to be loaned by the Issuer to the Parent, for itself and as Obligated Group Agent on behalf of each other Member of the Obligated Group, to be used, together with other available funds, (i) to pay the costs of the Project (as described below) and (ii) to pay the costs of issuing the Series 2016 Bonds. See “THE PLAN OF FINANCING” herein for more information.

The Issuer will loan the proceeds of the Series 2016 Bonds to the Parent pursuant to a Loan Agreement (the “Loan Agreement”), dated as of July 1, 2016, between the Issuer and the Parent, as described below. See also “ESTIMATED SOURCES AND USES OF FUNDS” herein.

Payment and Security for the Series 2016 Bonds. To evidence its obligation to repay the loan of the proceeds of the Series 2016 Bonds, the Parent will execute and deliver to the Trustee, as assignee of the Issuer, Obligation No. 22, dated the date of issuance of the Series 2016 Bonds (“Obligation No. 22”). Obligation No. 22 is issued and secured under and pursuant to a Master Trust Indenture, dated as of June 1, 1998 (the “Master Indenture”), as supplemented by Supplemental Indenture Number 22, dated as of July 1, 2016 (the “Supplemental Indenture”), by and between the Parent, for itself and as Obligated Group Agent on behalf of each other Member of the Obligated Group, and The Bank of New York Mellon Trust Company, N.A., Detroit, Michigan, as successor trustee (in such capacity, the “Master Trustee”). Obligation No. 22 requires the Obligated Group to make payments sufficient to provide for the full payment of principal and premium (if any) and interest on the Series 2016 Bonds. See “PAYMENT PROVISIONS RELATING TO THE SERIES 2016 BONDS” and “APPENDIX A – Definitions and Summary of Certain Documents.” Under the Master Indenture, the members of the Obligated Group, as it may exist from time to time, jointly and severally guarantee the payment of all obligations secured under the Master Indenture (“Obligations”), including Obligation No. 22 and any additional Obligations previously or hereafter executed and delivered by any Member of the Obligated Group as described herein. Obligation No. 22 and any additional Obligations issued by the Obligated Group will be equally and ratably secured by a security interest in the Gross Revenues of the Members of the Credit Group (as defined below). See “APPENDIX B – Summary of Certain Provisions of the Master Indenture – The Master Indenture – The Obligations; Payment of the Obligations; Payment and Pledge of Gross Revenues to Master Trustee; Credit Group Members.” The Master Indenture permits other parties to become members of the Obligated Group under certain circumstances, and permits members of the Obligated Group to be released from their obligations under the Master Indenture under certain circumstances. At the time Obligation No. 22 is issued, the Parent will be the only member of the Obligated Group (the “Obligated Group”). However, the Master Indenture requires the Obligated Group Members to cause each Credit Group Member (hereinafter defined) (i) to pay, loan or transfer such amounts sufficient with other available monies to enable the Obligated Group to pay amounts due and payable on Obligation No. 22 and the other Obligations issued under the Master Indenture and (ii) to comply with certain other covenants in the Master Indenture. See “PAYMENT PROVISIONS RELATING TO THE SERIES 2016 BONDS – The Master Indenture; Obligation No. 22.”

Obligation No. 22 is cross-defaulted and secured on a parity with the other Obligations under the Master Indenture. See “PAYMENT PROVISIONS RELATING TO THE SERIES 2016 BONDS – The Master Indenture – Events of Default.” Further, an Event of Default under the Master Indenture or a Default under the Loan Agreement constitutes an Event of Default under the Bond Indenture. See “APPENDIX B – Summary of Certain Provisions of the Master Indenture – The Master Trust Indenture – Defaults and Remedies.”

Certain of the Parent’s subsidiaries will be Designated Affiliates (the “Designated Affiliates”) under the Master Indenture. Certain of the Parent’s subsidiaries may become Limited Credit Group

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Participants (the “Limited Credit Group Participants” and, together with the Obligated Group Members and the Designated Affiliates, the “Credit Group” and the “Credit Group Members” or “Members of the Credit Group”). To become a Designated Affiliate, the Obligated Group Agent must designate a corporation or other entity as a Designated Affiliate and any Member of the Obligated Group must control such Designated Affiliate in the manner described below. To become a Limited Credit Group Participant, the Obligated Group Agent must designate a corporation or other entity as a Limited Credit Group Participant and any Member of the Obligated Group or a Designated Affiliate must have entered into a contract or other agreement under which such entity is obligated to make payments to the Obligated Group Member and to comply with the provisions of the Master Indenture applicable to such Limited Credit Group Participant. Under the Master Indenture, “control” means the power to direct the management, policies and disposition of assets and actions of such Person, directly or indirectly, to the extent required to cause such Designated Affiliate or Limited Group Participant to comply with the terms and conditions of the Master Indenture, whether through the ownership of voting securities, partnership interest, membership, reserved powers, the power to appoint members, trustees or directors, through contractual arrangements, or otherwise. See “PAYMENT PROVISIONS RELATING TO THE SERIES 2016 BONDS” below.

As of the date of issuance of the Series 2016 Bonds, the Parent will have designated McLaren Regional Medical Center d/b/a McLaren Flint (“McLaren Flint”), Lapeer Regional Medical Center d/b/a McLaren Lapeer Region (“McLaren Lapeer Region”), Bay Regional Medical Center d/b/a McLaren Bay Region (“McLaren Bay Region”), Ingham Regional Medical Center d/b/a McLaren-Greater Lansing (“McLaren Greater Lansing”), the McLaren Lapeer Region Foundation (the “McLaren Lapeer Region Foundation”), Women’s Hospital Association of Flint, Michigan d/b/a The McLaren Foundation (the “McLaren Foundation”), Mount Clemens Regional Medical Center d/b/a McLaren Macomb (“McLaren Macomb”), Mount Clemens Regional Healthcare Foundation d/b/a McLaren Macomb Healthcare Foundation (the “McLaren Macomb Healthcare Foundation”), McLaren Oakland, McLaren Northern Michigan, Central Michigan Community Hospital d/b/a McLaren Central Michigan (“McLaren Central Michigan”), McLaren Port Huron, Barbara Ann Karmanos Cancer Institute, and Barbara Ann Karmanos Cancer Hospital, d/b/a Karmanos Cancer Center, each a Michigan nonprofit corporation, as Designated Affiliates, and there will not be any Limited Credit Group Participants.

For information on the history, organization and financial operations of each Member of the Credit Group and consolidated audited financial statements and the unaudited consolidated financial statements, reference is made to offering documents and continuing disclosure filings relating to the Credit Group on the EMMA website of the MSRB.

The Parent maintains, directly or indirectly, control over the appointment of the governing board members of the Members of the Credit Group. The Parent exercises authority over various matters concerning each Member of the Credit Group, including overall strategic planning, approval of operating and capital budgets, approval of incurrence of indebtedness and coordination of legislative and regulatory activities, including reimbursement matters.

The Series 2016 Bonds will be issued as limited obligations of the Issuer and will be payable solely from and secured solely by a pledge of the revenues derived by the Issuer from the Loan Agreement (except for certain indemnification payments and certain fees and expenses), Obligation No. 22 (including the payments made thereunder) and by certain other funds pledged under the Bond Indenture. See “PAYMENT PROVISIONS RELATING TO THE SERIES 2016 BONDS.” The Series 2016 Bonds will not be secured by a legal or equitable pledge of, or mortgage upon any facilities of the Issuer or any other facilities of the Parent or any other Member of the Credit Group.

Bondholders’ Risks. There are risks associated with the purchase of the Series 2016 Bonds. See the caption “BONDHOLDERS’ RISKS” for a discussion of certain of these risks.

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Defined Terms. All capitalized terms used in this Limited Offering Memorandum, unless otherwise defined or the context otherwise indicates, shall have the same meanings as in the Master Indenture, the Supplemental Indenture, the Loan Agreement and the Bond Indenture. Certain of these definitions are summarized in APPENDIX A of this Limited Offering Memorandum.

Underlying Documents. The descriptions and summaries of various documents hereinafter set forth do not purport to be comprehensive or definitive, and reference is made to each document for the complete details of all terms and conditions. All statements herein are qualified in their entirety by reference to each such document. Copies of the Master Indenture, the Supplemental Indenture, the Loan Agreement and the Bond Indenture are available in reasonable quantities upon request to the Issuer.

THE MICHIGAN FINANCE AUTHORITY

General

The Michigan Finance Authority is an autonomous public body corporate, separate and distinct from the State, created by Executive Order No. 2010-2 issued by the Governor on March 4, 2010 (the “Executive Order”) and effective by its terms on May 30, 2010. Under the Executive Order, among other things, the Issuer is the successor to various bonding authorities including: the Michigan Municipal Bond Authority, the Michigan State Hospital Finance Authority, the Michigan Public Educational Facilities Authority, the Michigan Higher Education Facilities Authority, the Michigan Tobacco Settlement Finance Authority, the Michigan Higher Education Assistance Authority, the Michigan Forest Finance Authority, and the Michigan Higher Education Student Loan Authority, all of which were created by statute for the purposes of fostering and promoting the borrowing of money by governmental units within the State for financing public improvements and other eligible purposes. In order to effectuate such purposes, the Issuer is authorized to issue its bonds or notes and to make money available to governmental units by the purchase of their municipal obligations. In addition to the Series 2016 Bonds, the Issuer (including its various predecessor authorities under the Executive Order) has outstanding, and the Issuer expects to issue in the future, short and long term obligations under other Issuer programs. The security for the Series 2016 Bonds does not serve as security for the Issuer’s other program obligations.

Under the Executive Order, the Issuer is housed within the State Department of Treasury but exercises its powers, duties and functions independently of the State Treasurer (except for the State Treasurer’s appointment of administrative staff and exercise of certain administrative functions related to staff, pursuant to the Governor’s Executive Order No. 2002-12). The Issuer’s address is Richard H. Austin Building, 430 West Allegan Street, Lansing, Michigan 48922, and its telephone number is (517) 335-0994.

Members of the Issuer

The Issuer is governed by a seven member Board of Directors (the “Board”). The State Treasurer serves as the Chairperson of the Board. The Authority is authorized to employ an Executive Director, legal and technical experts and other officers, agents or employees, permanent or temporary.

The members of the Board are appointed by the Governor of the State with the advice and consent of the State Senate. The members serve for various terms and may continue to serve until successors are appointed and file the oath of office or, in the event of resignation, until the Governor accepts such resignation. The members of the Board are:

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Nick A. Khouri, Chairperson State Treasurer Bill Beekman

Vice President and Secretary of the Board of Trustees, Michigan State University

Charlotte P. Edwards Vice President and Community Development Officer, Citizens Bank

Donald H. Gilmer Retired Administrator, Kalamazoo County Timothy Hoffman Travis Jones Julie Ann Karkosak

Director of Regulatory Affairs, Consumers Energy Senior Vice President and CFO, GreenStone Farm Credit Services Vice President and General Counsel, Toyota Boshoku America, Inc.

The Executive Director of the Issuer is Mary G. Martin, Director, Bureau of State and Authority Finance, Michigan Department of Treasury.

The Bond Indenture provides that the covenants, stipulations, promises, agreements and obligations of the Issuer contained in such Bond Indenture are those of the Issuer and not of any member of the Board or any officer or employee of the Issuer in his or her individual capacity and that no recourse shall be had for the payment of the principal of or interest on the Series 2016 Bonds or for any claim based thereon or on the Bond Indenture against any member of the Board, any officer or employee of the Issuer or any person executing the Series 2016 Bonds.

The Series 2016 Bonds are limited obligations of the Issuer as described in this Limited Offering Memorandum. The Issuer is not generally liable on the Series 2016 Bonds or on any other obligation incurred by the Issuer under the Bond Indenture. The Series 2016 Bonds are not general obligations and do not constitute debts or pledges against the general credit of the Issuer or the credit or taxing power of the State. The Series 2016 Bonds are limited obligations of the Issuer, which will, if and when issued, be payable solely through revenues, properties or other funds as described in this Limited Offering Memorandum and the Bond Indenture. No owner of any Series 2016 Bond shall have the right to demand payment of the principal of, premium, if any, or interest on such Series 2016 Bond out of any funds to be raised by taxation. The Issuer has no taxing power.

The Issuer has not prepared any material for inclusion in this Limited Offering Memorandum except the matters under the headings “THE AUTHORITY” and “LITIGATION” (to the extent that the information therein relates to the Issuer). The distribution of this Limited Offering Memorandum has been duly approved and authorized by the Issuer. Such approval and authorization do not, however, constitute a representation of approval by the Issuer of the accuracy or sufficiency of any information contained herein except to the extent of the information contained in this section.

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THE SERIES 2016 BONDS

The following is a summary of certain provisions of the Series 2016 Bonds. Reference is made to the Series 2016 Bonds for the complete text thereof and to the Bond Indenture for all of the provisions relating to the Series 2016 Bonds. The discussion herein is qualified by such reference. See APPENDIX A for definitions of certain words and terms used herein.

The following summary describes the terms of the Series 2016 Bonds only while the Series 2016 Bonds are in the initial Fixed Rate Period and bear interest at the Fixed Rate. Prospective purchasers of the Series 2016 Bonds should not rely on this summary for any Series 2016 Bonds bearing interest at a rate other than the initial Fixed Rate.

General

The Series 2016 Bonds will initially bear interest at the Fixed Rate, commencing on the Date of Issue. The Series 2016 Bonds will be issued as fully registered Series 2016 Bonds without coupons in initial denominations of $5,000 and integral multiples thereof during a Fixed Rate Period, subject to the book-entry procedures described herein.

When a Fixed Rate Mode is in effect, interest on the Series 2016 Bonds shall be calculated on the basis of a 360-day year of twelve 30-day months. Payment of interest on the Series 2016 Bonds shall be made on May 15 and November 15, commencing November 15, 2016. Payment of interest on the Series 2016 Bonds in a Fixed Rate Mode shall be made to the owner of record of such Series 2016 Bond on the Record Date before an Interest Payment Date.

Conversion of Series 2016 Bonds to Other Interest Rate Modes

At the option of the Parent, all (but not a portion) of the Series 2016 Bonds in the initial Fixed Rate Mode may be converted to another Interest Rate Mode on any date on and after the first anniversary of the issuance of the Bonds. No later than the seventh Business Day before the notice to Holders of the Series 2016 Bonds to be converted is required to be given as provided below, the Parent will give written notice to the Notice Parties of its intention to effect a change in the Interest Rate Mode to another Interest Rate Mode and, if the change is to a Term Rate Mode, the length of the initial Interest Period.

The date on which the Series 2016 Bonds are converted to a different Interest Rate Mode is a “Conversion Date.” Notice of the proposed change in Interest Rate Mode shall be given by the Tender Agent to the Owners of the Series 2016 Bonds not later than the 20th day preceding the Conversion Date. The Series 2016 Bonds may be converted from the initial Fixed Rate Mode to bear interest in a Weekly Mode, a Flexible Mode, a Three Month LIBOR Indexed Mode, a Flexible Index Mode, an Index Mode, a FRN Rate Mode, a Term Rate Mode or a Window Mode.

Upon such conversion, the Series 2016 Bonds will be subject to mandatory tender for purchase as described below under “—Tender of the Series 2016 Bonds—Mandatory Tender for Purchase.” The following items shall have been delivered to the Bond Trustee, the Paying Agent and the Remarketing Agent (to be appointed pursuant to the Bond Indenture) on or prior to the Conversion Date:

(i) a Favorable Opinion of Bond Counsel dated the Conversion Date;

(ii) if there is to be a Liquidity Facility or an Alternate Liquidity Facility or a Credit Facility or an Alternate Credit Facility delivered in connection with such change, the following items: (a) such facility, (b) a Favorable Opinion of Bond Counsel, (c) an Opinion of Counsel for the provider of the

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Alternate Credit Facility or Alternate Liquidity Facility and (d) if applicable or not waived, written evidence of the provision for the purchase from the prior Credit Facility or Liquidity Facility Provider, of all Series 2016 Bonds owned by such provider, if any, at a price equal to the principal amount thereof plus accrued and unpaid interest, and payment of all amounts due under the related reimbursement agreement on or before the effective date of such new Credit Facility, Alternate Letter of Credit, Liquidity Facility or Alternate Liquidity Facility;

(iii) a Rating Confirmation Notice; and

(iv) in the case of Series 2016 Bonds to be converted to the Window Mode, the Initial Window Spread shall be determined by the Remarketing Agent on a Business Day no later than the Conversion Date. The sum of the SIFMA Index plus the Initial Window Spread shall be equal to the rate of interest per annum determined by the Remarketing Agent (based on an examination of tax exempt obligations comparable, in the judgment of the Remarketing Agent, to the Series 2016 Bonds and known by the Remarketing Agent to have been priced or traded under then prevailing market conditions) to be the minimum interest rate which, if borne by the Series 2016 Bonds, would enable the Remarketing Agent to sell all of the Series 2016 Bonds to be converted on the Conversion Date at a price (without regard to accrued interest) equal to the principal amount thereof.

In the event that the conditions for a proposed conversion to a new Interest Rate Mode are not met, (i) such new Interest Rate Mode shall not take effect on the proposed Conversion Date, notwithstanding any prior notice to the Holders of such conversion, and (ii) the Series 2016 Bonds shall stay in the Fixed Rate Mode in effect immediately prior to the proposed Conversion, with interest rates established in accordance with the Bond Indenture on and as of the failed Conversion Date.

Notwithstanding anything herein to the contrary, the Parent may rescind any election by it to change an Interest Rate Mode prior to the Conversion Date by giving written notice thereof to the Notice Parties prior to 10:00 a.m. on the Business Day preceding such Conversion Date.

Tender of the Series 2016 Bonds

No Optional Tender. The Series 2016 Bonds bearing interest at a Fixed Rate are not subject to optional tender.

Mandatory Purchase Date. The Series 2016 Bonds shall be subject to mandatory purchase on the Conversion Date (the “Mandatory Purchase Date”). The Tender Agent shall give notice of such mandatory purchase by mail to the Owners of the Series 2016 Bonds subject to mandatory purchase no less than 20 days prior to the Mandatory Purchase Date. From and after the Mandatory Purchase Date, no further interest on the Series 2016 Bonds shall be payable to the registered owners thereof, provided that there are sufficient funds available on the Mandatory Purchase Date to pay the purchase price. See “—Liquidity for Payment of the Purchase Price” and “—Insufficient Funds for Purchase” below.

Source of Funds for Purchase of Series 2016 Bonds. Except as set forth in the Bond Indenture, the Tender Agent shall purchase tendered Series 2016 Bonds from the tendering Owners at the applicable Purchase Price by wire transfer in immediately available funds. Funds for the payment of such Purchase Price shall be derived solely from the following sources in the order of priority indicated and none of the Tender Agent, the Bond Trustee or the Remarketing Agent shall be obligated to provide funds from any other source:

(i) immediately available funds on deposit in the Remarketing Proceeds Account derived from the remarketing of tendered Series 2016 Bonds;

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(ii) immediately available funds on deposit in the Liquidity Facility Purchase Account drawn under the Liquidity Facility (if any); and

(iii) moneys of the Parent on deposit in the McLaren Health Purchase Account.

If no Liquidity Facility is in effect, the Parent is obligated to deposit amounts into the McLaren Health Purchase Account sufficient to pay the Purchase Price to the extent that amounts on deposit in the Remarketing Proceeds Account are insufficient therefor. The obligation to purchase the Series 2016 Bonds upon mandatory tender is not currently supported by any Liquidity Facility.

Insufficient Funds for Purchase. If moneys sufficient to pay the Purchase Price of all tendered Series 2016 Bonds to be purchased on any Mandatory Purchase Date are not available (i) no purchase shall be consummated on such Mandatory Purchase Date; (ii) all tendered Series 2016 Bonds shall be returned to the holders thereof; and (iii) all remarketing proceeds shall be returned to the Remarketing Agent for return to the persons providing such moneys. The failure to purchase all Series 2016 Bonds tendered for purchase shall constitute an Event of Default under the Loan Agreement. In such event, all such tendered Series 2016 Bonds shall bear interest at the Maximum Rate during the period of time from and including the Mandatory Purchase Date to (but not including) the date that the Purchase Price of all such tendered Series 2016 Bonds has been paid to the owners thereof (the “Delayed Remarketing Period”). The Parent may direct the conversion of the tendered Series 2016 Bonds to a different Interest Rate Mode during the Delayed Remarketing Period. The Bond Trustee shall give five Business Days’ notice of such conversion to the Holders of the Series 2016 Bonds to be converted. During the Delayed Remarketing Period, the Bond Trustee may, upon direction of the Parent, apply amounts on deposit in the Redemption Fund to the redemption of such Series 2016 Bonds, as a whole or in part, on any Business Day during the Delayed Remarketing Period, at a Redemption Price without premium. During the Delayed Remarketing Period, the Bond Trustee shall give five Business Days’ notice of such redemption to the Holders of the Series 2016 Bonds to be redeemed. During the Delayed Remarketing Period, interest on all Series 2016 Bonds shall be paid to the Holders thereof (i) on the first Business Day of each calendar month occurring during the Delayed Remarketing Period and (ii) on the last day of the Delayed Remarketing Period.

Remarketing of Series 2016 Bonds

The Remarketing Agent (to be appointed pursuant to the Bond Indenture) shall use its best efforts, subject to the terms and conditions of the Remarketing Agreement (to be entered into pursuant to the Bond Indenture), to offer for sale all of the Series 2016 Bonds required to be purchased on the Mandatory Purchase Dates described in the section above entitled “—Tender of the Series 2016 Bonds—Mandatory Purchase Date.”

Notwithstanding the above, the Remarketing Agent may sell any Series 2016 Bonds owned by the Remarketing Agent at a price that is more or less than the Purchase Price. The Remarketing Agent will not knowingly remarket Series 2016 Bonds to the Issuer or the Parent or any affiliate of either of them; provided that the Remarketing Agent is permitted to sell any Series 2016 Bonds owned by the Remarketing Agent to the Issuer or the Parent. In connection with the remarketing of any Series 2016 Bonds with respect to which notice of redemption or notice of mandatory purchase has been given, the Remarketing Agent will notify each person to which such Series 2016 Bonds are remarketed of such notice of redemption or notice of mandatory purchase.

Anything in the Bond Indenture to the contrary notwithstanding, if there shall have occurred and be continuing a Credit Provider Failure or a Liquidity Provider Failure, the Remarketing Agent shall not remarket any Series 2016 Bonds. All other provisions of the Bond Indenture, including without limitation, those relating to the setting of interest rates and Interest Periods and mandatory and optional purchases, shall remain in full force and effect during the continuance of such Event of Default.

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Liquidity for Payment of the Purchase Price

Funds for the purchase of Series 2016 Bonds that have been tendered for purchase, pursuant to the mandatory tender requirements described herein, will be provided, first, from the proceeds of the remarketing of such Series 2016 Bonds and then, to the extent remarketing proceeds are insufficient to provide all funds required to purchase such Series 2016 Bonds, from funds provided by the Parent. The obligation to purchase the Series 2016 Bonds upon mandatory tender is not supported by any Liquidity Facility. The failure to purchase all Series 2016 Bonds tendered for purchase shall constitute an Event of Default under the Loan Agreement and the Bond Indenture. See “APPENDIX A – Definitions and Summary of Certain Documents – The Bond Indenture – Events of Default; Remedies” and “– Loan Agreement – Events of Default” and “– Remedies on Default.”

Redemption

Optional Redemption. While the Fixed Rate is in effect, the Series 2016 Bonds shall be subject to redemption prior to their stated maturity, at the option of the Parent, in whole or in part, on any date on or after the first anniversary of the date of issuance of the Series 2016 Bonds at a Redemption Price of the principal amount of the Series 2016 Bonds to be redeemed, plus accrued interest to the redemption date.

Purchase in Lieu of Redemption. Unless otherwise provided in a supplemental bond indenture, whenever Series 2016 Bonds are subject to redemption, they may instead be purchased at the option of the Parent at a purchase price equal to the Redemption Price. All such purchases may be subject to conditions to the Issuer’s obligation to purchase such Series 2016 Bonds and shall be subject to the condition that money for the payment of the purchase price therefor is available on the date set for such purchase. Notice of purchase having been given in the manner set forth in the Bond Indenture, then, if sufficient money to pay the purchase price of such Series 2016 Bonds is held by the Bond Trustee, the purchase price of the Series 2016 Bonds or portions thereof so called for purchase shall become due and payable on the date set for purchase, upon presentation and surrender of such Series 2016 Bonds to be purchased at the office or offices specified in such notice, and, in the case of Series 2016 Bonds presented by other than the Holder, together with a written instrument of transfer duly executed by the Holder or his duly authorized attorney. No purchased Series 2016 Bond shall be considered to be no longer Outstanding by virtue of its purchase and each such purchased Series 2016 Bond shall be registered in the name or at the direction of the Issuer.

Mandatory Sinking Fund Redemption. The Series 2016 Bonds are also subject to redemption prior to their stated maturity on each May 15 on or after May 15, 2040 in part (by lot) from Sinking Fund Installments, in the amounts set forth below, on the dates set forth below, at a Redemption Price equal to the principal amount thereof and interest accrued thereon to the date fixed for redemption, without premium, as set forth below.

Mandatory Sinking Fund

Installment Date (May 15)

Mandatory Sinking Fund Installments

Mandatory Sinking Fund Installment Date (May 15)

Mandatory Sinking Fund Installments

2040 $17,945,000 2044 $ 23,525,000 2041 18,505,000 2045 24,120,000 2042 22,370,000 2046† 24,735,000 2043 22,940,000

__________________

† Maturity

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Extraordinary Redemption. The Series 2016 Bonds are subject to redemption prior to their stated maturities, at the option of the Parent, as Obligated Group Agent, given to the Bond Trustee at least 45 days prior to the date fixed for redemption (or such fewer number of days as is acceptable to the Bond Trustee) in whole or in part (in such amounts as may be specified by the Parent) on any date, from hazard insurance or condemnation proceeds received with respect to the facilities of any of the members of the Credit Group and deposited in the Special Redemption Account of the Redemption Fund, at a Redemption Price without premium.

Notice of Redemption; Effect of Redemption; Rescission of Notice of Redemption. Notice of redemption will be mailed by the Bond Trustee, not less than 30 days and not more than 60 days prior to the redemption date, to the respective holders of any Series 2016 Bonds designated for redemption at their addresses appearing on the Series 2016 Bond registration books of the Bond Trustee. The failure by the Bond Trustee to mail notice of redemption to any one or more of the Holders of any Series 2016 Bonds designated for redemption shall not affect the sufficiency of the proceedings for the redemption of such Series 2016 Bonds with respect to the Holder or Holders to whom such notice was mailed. Notice of redemption having been given as described above and moneys for payment of the Redemption Price of the Series 2016 Bonds (or portions thereof) so called for redemption being held by the Bond Trustee, on the date fixed for redemption designated in such notice, the Series 2016 Bonds (or portions thereof) so called for redemption shall become due and payable at the Redemption Price specified in such notice, interest on such Series 2016 Bonds shall cease to accrue from and after the redemption date, said Series 2016 Bonds (or portions thereof) shall cease to be entitled to any benefit or security under the Bond Indenture, and the Holders of said Series 2016 Bonds shall have no rights in respect thereof except to receive payment of said Redemption Price from funds held by the Bond Trustee for such payment. Any notice of optional or extraordinary optional redemption may be conditional and may be rescinded by written notice given to the Bond Trustee by the Parent no later than five Business Days prior to the redemption date, in which case the Bond Trustee will give notice of such rescission as soon as practicable to the holders to whom notice of redemption was given.

Book-Entry Only System The information in this section concerning DTC and DTC’s book-entry-only system has been

obtained from the sources that the Issuer believes to be reliable, but the Issuer does not take any responsibility for the accuracy thereof.

The Depository Trust Company, New York, New York (“DTC”) will act as securities depository for the Series 2016 Bonds. The ownership of one fully registered Series 2016 Bond for each maturity as set forth on the inside cover page hereof, each in the aggregate principal amount of such maturity, will be registered in the name of Cede & Co., as nominee for DTC. SO LONG AS CEDE & CO. IS THE REGISTERED OWNER OF THE SERIES 2016 BONDS, AS NOMINEE OF DTC, REFERENCES HEREIN TO THE BONDHOLDERS, HOLDERS OR REGISTERED OWNERS OF THE SERIES 2016 BONDS SHALL MEAN CEDE & CO. AND SHALL NOT MEAN THE BENEFICIAL OWNERS OF THE SERIES 2016 BONDS.

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking” organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, 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 Participants of sales and other

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securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of the Series 2016 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2016 Bonds on DTC’s records. The ownership interest of each actual purchaser of each Series 2016 Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect 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, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2016 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Series 2016 Bonds, except in the event that use of the book-entry-only system for the Series 2016 Bonds is discontinued.

To facilitate subsequent transfers, all Series 2016 Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2016 Bonds with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2016 Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Series 2016 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Series 2016 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2016 Bonds, such as redemptions, tenders, and defaults. For example, Beneficial Owners of the Series 2016 Bonds may wish to ascertain that the nominee holding the Series 2016 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

While the Series 2016 Bonds are in the book-entry-only system, redemption notices shall be sent to DTC. If less than all of the Series 2016 Bonds within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Series 2016 Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI

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Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Series 2016 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Redemption proceeds, distributions, and dividend payments on the Series 2016 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Issuer or the Bond Trustee, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC (nor its nominee), the Bond Trustee or the Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

Principal and interest payments on the Series 2016 Bonds will be made to DTC. DTC’s practice is to credit Direct Participant’s accounts on a payment date in accordance with their respective holdings shown on DTC’s records unless DTC has reason to believe that it will not receive payment on such payment date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Bond Trustee, the Issuer, or the Members of the Obligated Group, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the Issuer or the Bond Trustee, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants.

DTC may discontinue providing its services with respect to the Series 2016 Bonds at any time by giving notice to the Issuer or the Bond Trustee. Under such circumstances, in the event that a successor depository is not obtained, Series 2016 Bond certificates are required to be printed and delivered.

In addition, the Issuer may discontinue the book-entry-only system for the Series 2016 Bonds at any time by giving reasonable notice to DTC. In that event, Series 2016 Bond certificates will be printed and delivered to DTC.

The information in this section concerning DTC and DTC’s book-entry-only system has been obtained from sources that the Issuer believes to be reliable, but the Issuer takes no responsibility for the accuracy thereof.

THE AUTHORITY, THE OBLIGATED GROUP AND THE BOND TRUSTEE CANNOT AND DO NOT GIVE ANY ASSURANCES THAT DTC, THE DIRECT PARTICIPANTS OR THE INDIRECT PARTICIPANTS WILL DISTRIBUTE TO THE BENEFICIAL OWNERS OF THE SERIES 2016 BONDS (i) PAYMENTS OF PRINCIPAL OF OR INTEREST AND PREMIUM, IF ANY, ON THE SERIES 2016 BONDS, (ii) ANY DOCUMENT REPRESENTING OR CONFIRMING BENEFICIAL OWNERSHIP INTERESTS IN SERIES 2016 BONDS, OR (iii) REDEMPTION OR OTHER NOTICES SENT TO DTC OR CEDE & CO., ITS NOMINEE, AS THE REGISTERED OWNER OF THE SERIES 2016 BONDS, OR THAT THEY WILL DO SO ON A TIMELY BASIS OR THAT DTC, DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS WILL SERVE AND ACT IN

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THE MANNER DESCRIBED IN THIS LIMITED OFFERING MEMORANDUM. THE CURRENT “RULES” APPLICABLE TO DTC ARE ON FILE WITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE CURRENT “PROCEDURES” OF DTC TO BE FOLLOWED IN DEALING WITH THE PARTICIPANTS ARE ON FILE WITH DTC.

NEITHER THE AUTHORITY, THE OBLIGATED GROUP NOR THE BOND TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY DIRECT PARTICIPANT, INDIRECT PARTICIPANT OR ANY BENEFICIAL OWNER OR ANY OTHER PERSON WITH RESPECT TO: (1) THE SERIES 2016 BONDS; (2) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT; (3) THE PAYMENT BY DTC TO ANY PARTICIPANT, OR BY ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT TO ANY BENEFICIAL OWNER OF ANY AMOUNT DUE WITH RESPECT TO THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2016 BONDS; (4) THE DELIVERY BY DTC TO ANY PARTICIPANT, OR BY ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT TO ANY BENEFICIAL OWNER OF ANY NOTICE WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE BOND INDENTURE TO BE GIVEN TO BONDHOLDERS; (5) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF THE SERIES 2016 BONDS; OR (6) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS BONDHOLDER.

So long as the Series 2016 Bonds are held in the book-entry system, the principal and purchase price of and interest and premium on such Series 2016 Bonds will be paid through the facilities of DTC (or a successor securities depository). Otherwise, the principal and purchase price of or premium on such Series 2016 Bonds is payable upon surrender thereof at the designated office of the Bond Trustee; and interest on such Bonds is payable by check of the Bond Trustee mailed on the Interest Payment Date for such Series 2016 Bonds to such Holder at the address of such Holder as it appears on the registration books maintained by the Bond Trustee or at such other address furnished in writing by such Holder to the Bond Trustee prior to the last day of the month next preceding an Interest Payment Date (the “Record Date”). In the case of any Holder of such Series 2016 Bonds in an aggregate principal amount of $1,000,000 or more as of the close of business of the Bond Trustee on the Record Date for a particular Interest Payment Date, interest on such Series 2016 Bonds is payable by wire transfer sent on the Interest Payment Date for such Series 2016 Bonds to such Holder to an account within the continental United States of America as specified in writing by such Holder to such Bond Trustee prior to such Record Date.

PAYMENT PROVISIONS RELATING TO THE SERIES 2016 BONDS

General

The Series 2016 Bonds are limited obligations of the Issuer, payable solely from payments made by the Obligated Group on Obligation No. 22 and from certain funds held under the Bond Indenture. The Issuer’s operating funds and the Rebate Fund will not secure the payment of the Series 2016 Bonds. Payments required by Obligation No. 22 will be sufficient to pay the principal of, redemption premium, if any, and interest on the Series 2016 Bonds, when due.

Pursuant to the Master Indenture, the Parent, as Obligated Group Agent, will issue to the Issuer Obligation No. 22 to secure the Obligated Group’s obligation to make loan repayments under the Loan Agreement. The Issuer will assign certain of its right, title and interest in Obligation No. 22 to the Bond Trustee under the Bond Indenture. Obligation No. 22 and any other Obligations issued under the Master Indenture will be general obligations of the Parent and any future Member of the Obligated Group,

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secured by a pledge of the Gross Revenues of the Members of the Credit Group, but will not be secured by any other pledge of, mortgage on or security interest in assets of the Parent or any future Member of the Credit Group. No Designated Affiliate or Limited Credit Group Participant, as such, will be obligated to pay Obligation No. 22 but will be required, under separate agreements with the Parent which are not pledged or assigned to the Series 2016 Bondholders, to provide the Parent with sufficient funds to pay Obligation No. 22. See “The Credit Group” below.

THE SERIES 2016 BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY NOT CONSTITUTING A GENERAL OBLIGATION AND DO NOT CONSTITUTE OR CREATE ANY DEBT OR DEBTS, LIABILITY OR LIABILITIES ON BEHALF OF THE STATE OF MICHIGAN (THE “STATE”) OR ANY POLITICAL SUBDIVISION THEREOF, OR A LOAN OF THE CREDIT OF THE STATE OR A PLEDGE OF THE FAITH AND CREDIT OF THE STATE OR OF ANY POLITICAL SUBDIVISION THEREOF, BUT ARE PAYABLE SOLELY FROM THE FUNDS PROVIDED UNDER OBLIGATION NO. 22, THE LOAN AGREEMENT, THE MASTER INDENTURE, THE SUPPLEMENTAL INDENTURE AND THE BOND INDENTURE. THE ISSUANCE OF THE SERIES 2016 BONDS UNDER THE BOND INDENTURE WILL NOT DIRECTLY OR INDIRECTLY OR CONTINGENTLY OBLIGATE THE STATE OR ANY POLITICAL SUBDIVISION THEREOF TO LEVY OR TO PLEDGE ANY FORM OF TAXATION WHATEVER THEREFOR, OR TO MAKE ANY APPROPRIATION FOR THEIR PAYMENT. THE AUTHORITY HAS NO TAXING POWER.

Revenue Fund

The Bond Indenture creates and establishes a Revenue Fund, as more fully described under the

caption “Definitions and Summary of Certain Documents -- The Bond Indenture” in APPENDIX A. Periodic deposits are required to be made to the Revenue Fund in accordance with the Bond Indenture for the payment of interest on, and principal and redemption of, the Series 2016 Bonds.

The Loan Agreement

Pursuant to the Loan Agreement, the Obligated Group agrees to make payments to the Issuer in

such amounts and at such times as are sufficient in the aggregate to pay in full, when due, the principal of, premium, if any, and interest on Obligation No. 22 which shall be at times and in amounts sufficient to pay the principal of, premium, if any, and interest on the Series 2016 Bonds.

The Master Indenture; Obligation No. 22

As security for the Series 2016 Bonds, the Obligated Group will issue Obligation No. 22 under

the Master Indenture in a principal amount equal to the principal amount of the Series 2016 Bonds. The terms of Obligation No. 22 will require payments by the Members of the Obligated Group, which, together with other moneys available therefor (and interest earned thereon), will be sufficient to provide for the payment of the principal of, premium, if any, and interest on the Series 2016 Bonds. The Obligated Group shall receive a credit on Obligation No. 22 for payments made by the Obligated Group under the Loan Agreement.

Obligation No. 22 and all other Obligations issued under the Master Indenture will be general obligations of the Members of the Obligated Group, which agree to be jointly and severally liable under the Master Indenture. The Parent is the only member of the Obligated Group under the Master Indenture. Subject to meeting the requirements of the Master Indenture, others may become Members of the Obligated Group. There can be no assurance that such requirements will be met or that any additional

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party will become a Member of the Obligated Group. See “APPENDIX B – Summary of Certain Provisions of the Master Indenture – The Master Trust Indenture – Entrance Into the Obligated Group.” Obligation No. 22 and all other Obligations issued under the Master Indenture will be secured by a pledge of the Gross Revenues of the Credit Group. See “APPENDIX B – Summary of Certain Provisions of the Master Indenture -- The Master Trust Indenture – The Obligations; Payment of the Obligations; Payment and Pledge of Gross Revenues to Master Trustee; Credit Group Members.”

Obligation No. 22 is cross-defaulted and secured on a parity with all other Obligations under the Master Indenture. See “APPENDIX B – Summary of Certain Provisions of the Master Indenture – The Master Indenture – Defaults and Remedies.” Further, an “Event of Default” under the Master Indenture or a Default under a Loan Agreement constitutes an Event of Default under the Bond Indenture. See “APPENDIX A – Definitions and Summary of Certain Documents – The Bond Indenture – Events of Default; Remedies.”

The Credit Group

The Credit Group under the Master Indenture consists of the Obligated Group Members, the Designated Affiliates and the Limited Credit Group Participants. To become a Designated Affiliate, the Obligated Group Agent must designate a corporation or other entity as a Designated Affiliate and any Member of the Obligated Group must control such Designated Affiliate in the manner described below. To become a Limited Credit Group Participant, the Obligated Group Agent must designate a corporation or other entity as a Limited Credit Group Participant and any Member of the Obligated Group or a Designated Affiliate must have entered into a contract or other agreement under which such entity is obligated to make payments to the Obligated Group Member and to comply with the provisions of the Master Indenture applicable to such Limited Credit Group Participant. Under the Master Indenture, “control” means the power to direct the management, policies and disposition of assets and actions of such Person, directly or indirectly, to the extent required to cause such Designated Affiliate or Limited Credit Group Participant to comply with the terms and conditions of the Master Indenture, whether through the ownership of voting securities, partnership interest, membership, reserved powers, the power to appoint members, trustees or directors through contractual arrangements or otherwise.

As of the date of issuance of the Series 2016 Bonds, the Parent will have designated McLaren Flint, McLaren Lapeer Region, McLaren Bay Region, McLaren Greater Lansing, McLaren Lapeer Region Foundation, the McLaren Foundation, McLaren Macomb, McLaren Macomb Healthcare Foundation, McLaren Oakland, McLaren Northern Michigan, McLaren Central Michigan, McLaren Port Huron, Barbara Ann Karmanos Cancer Institute and Barbara Ann Karmanos Cancer Hospital as Designated Affiliates, and there will not be any Limited Credit Group Participants.

With certain exceptions, the ability to control Designated Affiliates or Limited Credit Group Participants, as described above, permits the Parent to require compliance by the Credit Group Members with the covenants and restrictions contained in the Master Indenture, by replacement of the members of the governing body of such Designated Affiliate, if necessary. Notwithstanding the provisions of the Master Indenture, the ability of a Member of the Obligated Group to make any payment on behalf of another Member or to cause a Designated Affiliate or Limited Credit Group Participant to make any payment, loan or transfer may not be permitted by or may be subject to recovery for the benefit of other creditors of such Member of the Obligated Group, Designated Affiliate or Limited Credit Group Participant under applicable fraudulent transfer, fraudulent conveyance, bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights. For a description of the effect of the Federal Bankruptcy Code and other laws affecting creditors’ rights on the ability of the Parent to enforce the Master Indenture with respect to all Designated Affiliates and Limited Credit Group

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Participants, see “BONDHOLDERS’ RISKS – Factors Concerning the Enforceability of the Master Indenture” herein.

The Designated Affiliates and the Limited Credit Group Participants are not members of the Obligated Group and each may cease being a Designated Affiliate or a Limited Credit Group Participant under the Master Indenture at any time at the discretion of the Parent. The Parent does not have sufficient assets or revenues of its own to pay debt service on the Series 2016 Bonds should the Parent declare all Designated Affiliates and Limited Credit Group Members to no longer be Members of the Credit Group. However, the Members of the Obligated Group covenant under the Master Indenture to cause each of the Credit Group Members to pay all Indebtedness under the Master Indenture. See “BONDHOLDERS’ RISKS – Factors Concerning the Enforceability of the Master Indenture” below.

THE MASTER INDENTURE PROVIDES THAT AFTER AN ENTITY IS DESIGNATED AS A DESIGNATED AFFILIATE OR A LIMITED CREDIT GROUP PARTICIPANT, THE PARENT MAY AT ANY TIME DECLARE THAT SUCH ENTITY IS NO LONGER A DESIGNATED AFFILIATE OR LIMITED CREDIT GROUP PARTICIPANT, RESPECTIVELY. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE DESIGNATED AFFILIATES ON THE DATE OF DELIVERY OF THE SERIES 2016 BONDS WILL CONTINUE TO BE SO DESIGNATED OR THAT OTHER ENTITIES WILL BECOME DESIGNATED AFFILIATES OR LIMITED CREDIT GROUP PARTICIPANTS.

The Series 2016 Bonds are payable solely from certain funds and accounts created under the Bond Indenture (but excluding the Rebate Fund, moneys held to pay Series 2016 Bonds called for redemption and Authority operating funds), and from payments made on Obligation No. 22.

The Master Indenture

Payments on Obligation No. 22 will be the joint and several obligations of the Parent and any future Members of the Obligated Group. Notwithstanding uncertainties as to the enforceability of the covenant of each Member of the Obligated Group in the Master Indenture to be jointly and severally liable for Obligation No. 22 and of the obligation of the Parent to cause each Designated Affiliate and Limited Credit Group Participant to make transfers to the Parent as required to enable the Parent to make payments on Obligation No. 22 (as described herein under “BONDHOLDERS’ RISKS – Factors Concerning the Enforceability of the Master Indenture”), and the fact that no Designated Affiliate or Limited Credit Group Participant is obligated to make any such payments to Series 2016 Bondholders, the revenue of the Members of the Obligated Group and of the Designated Affiliates or Limited Credit Group Participants will be combined in determining whether various covenants and tests contained in the Master Indenture are met.

The Master Indenture imposes certain restrictions on the actions of the Members of the Obligated Group and on the Designated Affiliates and Limited Credit Group Participants for the benefit of all holders of Obligation No. 22. Such terms include, among others, restrictions on Liens on the Property of a Member of the Obligated Group, Designated Affiliates or Limited Credit Group Participants which constitutes a material part of the primary operations of such Person and maintenance of certain rates and charges for services provided by the Designated Affiliates and Limited Credit Group Participants. See “APPENDIX B – Summary of Certain Provisions of the Master Indenture – The Master Trust Indenture – Liens on Property; Right of Contest” and “– Rates and Charges.”

While the Master Indenture requires the Obligated Group to demonstrate each fiscal year that the Credit Group’s Historical Debt Service Coverage Ratio is not less than 1.10 to 1, the sole remedy for a failure to maintain such ratio in any particular fiscal year is the requirement that the Parent retain a

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Consultant to make recommendations with respect to the operations of the Obligated Group in order to increase such ratio in the next succeeding fiscal year. See “APPENDIX B – Summary of Certain Provisions of the Master Indenture – The Master Trust Indenture.” The Master Indenture does not specifically restrict the ability of the Members of the Credit Group to transfer Property, including cash, marketable securities or receivables, to anyone, including related or affiliated persons or persons who control the Parent directly or indirectly, or the ability of the Parent to release control of Designated Affiliates or the Limited Credit Group Participants. See “APPENDIX B – Summary of Certain Provisions of the Master Indenture – The Master Trust Indenture – Sale, Lease or Other Disposition of Property.”

The Master Indenture does not limit Funded Indebtedness including the issuance of additional Obligations. Additional Obligations may be secured by collateral which need not be pledged to secure any other Obligations (including Obligation No. 22). The Master Indenture provides that no Member of the Obligated Group, Designated Affiliate or Limited Credit Group Participant shall create or incur or permit to be created or incurred any Lien on any Property of any Member, Designated Affiliate or Limited Credit Group Participant which constitutes a material part of the primary operations of such Person, except Permitted Encumbrances. In addition to other Liens permitted in the definition of Permitted Encumbrances, Liens are Permitted Encumbrances if the total aggregate Book Value of the Property subject to a Lien does not exceed 25% of the value of the total assets of the Credit Group Members (other than a Limited Credit Group Participant). The Property subject to such Liens could consist in part or in whole of cash, marketable securities or accounts receivable. Furthermore, such Property could consist in part or in whole of Property of Designated Affiliates. See “APPENDIX B – Summary of Certain Provisions of the Master Indenture – The Master Indenture – Definitions – Permitted Encumbrances.”

Under the Master Indenture, Obligation No. 22 is a general obligation of the Parent and any future Member of the Obligated Group. No Designated Affiliate or Limited Credit Group Participant, as such, will be directly obligated to pay Obligation No. 22 or to advance any funds therefor. However, in the Master Indenture, the Parent will covenant and agree that it will cause each Designated Affiliate, and will use reasonable efforts to cause each of the Limited Credit Group Participants (subject to contractual and organizational limitations) to pay, loan or otherwise transfer to the Parent such amounts as are necessary to pay debt service on Obligation No. 22 or portions thereof and on any other Obligations issued under the Master Indenture. The Master Indenture applies directly only to the Parent and any future Member of the Obligated Group. However, the Master Indenture requires that the Parent will cause each Designated Affiliate and Limited Credit Group Participant to charge fees and rates for its services sufficient to enable the Parent to be able to pay amounts due on outstanding Obligations and to comply with certain other covenants in the Master Indenture, which include requirements for maintenance of corporate existence of Designated Affiliates and Limited Credit Group Participants. Further, the Master Indenture imposes restrictions on Liens on property of all Designated Affiliates and Limited Credit Group Participants. THE MASTER INDENTURE DOES NOT CONTAIN LIMITATIONS OR TESTS FOR THE INCURRENCE OF FUNDED INDEBTEDNESS AND CONTAINS ONLY LIMITED RESTRICTIONS FOR THE SALE, LEASE OR OTHER DISPOSITION OF ANY PROPERTY. See “APPENDIX B – Summary of Certain Provisions of the Master Indenture – The Master Trust Indenture – Permitted Funded Indebtedness” and “– Sale, Lease or Other Disposition of Property.”

The Master Indenture provides for a pledge of the Gross Revenues of the Members of the Credit Group to secure payment of the Obligations. See “APPENDIX B – Summary of Certain Provisions of the Master Indenture – The Master Trust Indenture – The Obligations; Payment of the Obligations; Payment and Pledge of Gross Revenues to Master Trustee; Credit Group Members.” The security interest in the Gross Revenues has been granted by the Credit Group to the Master Trustee for the benefit of the Holders of Obligations, including the Issuer as a Holder of Obligation No. 22, to secure the payment of all

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Obligations. It is not likely that such security interest will be enforceable as to certain items of the Gross Revenues. Thus, in the event of default by the Obligated Group under a Loan Agreement or Master Indenture, it is doubtful that the Master Trustee would be able to require third party payors, including Medicare and Medicaid, to make payments under their programs directly to it. In addition, such security interest is subject to (i) certain exceptions under the Michigan Uniform Commercial Code (the “UCC”); (ii) statutory liens; (iii) rights arising in favor of the United States of America or any agency thereof; (iv) present or future prohibitions against assignment contained in any state or federal statutes or regulations; (v) constructive trusts, equitable liens or other rights impressed or conferred by any state or federal court in the exercise of its equitable jurisdiction; (vi) the application of federal bankruptcy laws and similar state laws affecting creditors’ rights and remedies generally, including insolvency, reorganization, liquidation, and fraudulent conveyance laws, in the event that any Member of the Credit Group files or has filed against it a petition for relief under such laws, or otherwise becomes subject to such laws; and (vii) the filing of appropriate continuation statements pursuant to the UCC as from time to time in effect.

For a more detailed description of the Master Indenture including the provisions thereof relating to the Designated Affiliates and Limited Credit Group Participants, see “APPENDIX B – Summary of Certain Provisions of the Master Indenture – The Master Trust Indenture.”

PLAN OF FINANCING

The Issuer will loan the proceeds of the Series 2016 Bonds to the Parent. The Parent and other

Members of the Credit Group will use the proceeds of the Series 2016 Bonds, together with other funds available, (a) to pay costs of the Project, including a portion of the interest on the Series 2016 Bonds during the construction period of the Project, and (b) to pay the costs of issuing the Series 2016 Bonds. The Loan Agreement provides for disbursement of the proceeds from the sale of the Series 2016 Bonds for such purposes. The Project will consist of the construction, installation and equipping of an approximately 173,000 square foot six-level (including top floor and basement) new South Tower connected to the south side of the existing main hospital at the 1st and 2nd floors; the construction, installation and equipping of an approximately 18,000 square foot two-story cancer center addition connected to the east side of the existing emergency department; the acquisition and installation of a MRT Unit; the renovation, installation and equipping of approximately 157,000 square feet of space in the existing main hospital; partial demolition of approximately 61,000 square feet of space in the existing West Tower; and the expansion and renovation of the existing kitchen/cafeteria and upgrades to the existing lobby and connecting corridors in the main hospital, all located at the McLaren Port Huron main hospital campus and owned and operated by McLaren Port Huron. The Project will also consist of the construction, installation and equipping of an approximately 63,000 square foot three-story McLaren Corporate Building located on Regency Park Drive in Grand Blanc Township, Genesee County, Michigan, to be owned and operated by the Parent. The Parent and JPMorgan Chase Bank, N.A. (the "Provider") have entered into an interest rate swap in the initial notional amount of $154,140,000 (the “Rate Swap”) and a total return swap in the initial notional amount of $154,140,000 (the "TRS"). The obligations of the Parent to the Provider under the Rate Swap and the TRS will be secured under the Master Indenture through the issuance of Obligation No. 23 and Obligation No. 24 to the Provider.

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ESTIMATED SOURCES AND USES OF FUNDS

Summarized below are the estimated sources and uses of funds for the Series 2016 Bonds.

Sources of Funds:

Par Amount $154,140,000 Total: $154,140,000 Uses of Funds:

Cost of the Project(1) $153,510,010 Costs of Issuance(2) 629,990 Total: $154,140,000

(1) Includes capitalized interest on the Series 2016 Bonds. (2) Includes costs for Purchaser’s fees, legal, accounting, trustee, printing and other expenses relating to the issuance of the Series 2016 Bonds.

BONDHOLDERS’ RISKS

The following is a discussion of certain risks that could affect payments to be made with respect to the Series 2016 Bonds. Such discussion is not exhaustive, should be read in conjunction with all other parts of this Limited Offering Memorandum and should not be considered as a complete description of all risks that could affect such payments. Prospective purchasers of the Series 2016 Bonds should analyze carefully the information contained in this Limited Offering Memorandum, including the Appendices hereto, and additional information in the form of the complete documents summarized herein, copies of which are available as described in this Limited Offering Memorandum, and offering documents and continuing disclosure filings relating to the Credit Group on the EMMA website of the MSRB.

General

The Series 2016 Bonds are special and limited obligations of the Issuer, payable solely from certain funds held by the Bond Trustee under the Bond Indenture, the amounts received from the Obligated Group under the Loan Agreement and amounts received from the Obligated Group under the Master Indenture. The ability of the Credit Group and any future Members of the Credit Group to realize revenues in amounts sufficient to pay debt service on the Series 2016 Bonds when due is affected by and subject to conditions which may change in the future to an extent and with effects that cannot be determined at this time. Thus, no representation or assurance can be given that the Members of the Credit Group will realize revenues in amounts sufficient to pay debt service when due on the Series 2016 Bonds and the other obligations of the Credit Group. The risk factors discussed below should be considered in evaluating the Obligated Group’s ability to make payments due under the Bond Indenture, the Loan Agreement and the Obligation No. 22 in amounts sufficient to provide for payment of the principal of and interest on the Series 2016 Bonds. The receipt of future revenues by the Credit Group is subject to, among other factors, federal and state laws, regulations and policies affecting the health care industry and the policies and practices of major managed care providers, private insurers and other third-party payors and private purchasers of

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health care services. The effect on the Members of the Credit Group of recently enacted laws and regulations and recently adopted policies, and of future changes in federal and state laws, regulations and policies, and private policies, cannot be determined at this time. Loss of established contracts with managed care providers by the Credit Group or any future Member of the Credit Group could also adversely affect future revenues. Future economic conditions, which may include an inability to control expenses in periods of inflation, and other conditions, including demand for health care services, the availability and affordability of insurance, including without limitation malpractice and casualty insurance, availability of nursing and other professional personnel, the capability of management of each Member of the Credit Group, the receipt of grants and contributions, referring physicians’ and self-referred patients’ confidence in the Members of the Credit Group, economic and demographic developments in the United States, the State of Michigan and the service area of the Credit Group, and competition from other health care institutions in the service area, together with changes in rates, costs, third-party payments and governmental laws, regulations and policies, may adversely affect revenues and expenses and, consequently, the ability of the Credit Group to make payments under the Loan Agreement and of the Members of the Credit Group to make payments under the Obligation No. 22. Impact of Disruptions in the Credit Markets and General Economic Factors

The domestic and international financial crisis that began in 2007 continued for a number of years and had a negative impact on the national and state economies. In response to the financial crisis, legislation, including the Dodd-Frank Act, was enacted, additional legislation has been considered by Congress and regulatory action has been considered by various Federal agencies, the Federal Reserve Board and foreign governments, which legislation and regulations are intended to increase the regulation of domestic and global credit markets. The effects of these legislative, regulatory and other governmental actions are unclear. The financial crisis also had a material adverse impact on many commercial insurers. National economic conditions could have an adverse effect on the commercial insurers from which the Credit Group obtains insurance and reinsurance, and could adversely impact both the cost and availability of insurance and reinsurance. The Credit Group has significant holdings in a broad range of investments. Market fluctuations have affected and will continue to affect materially the value of those investments and those fluctuations may be, and historically have been, material. Investment income (including both realized and unrealized gains on investments) has contributed significantly to the Credit Group’s financial results over recent years. Future market volatility may have a material positive or negative impact on the Credit Group’s financial results. Market declines could also limit the Credit Group’s access to the credit markets and increase the Credit Group’s borrowing costs. The financial condition of the Credit Group is also threatened by particular pressures resulting from national economic conditions, including risks of: increased inflation, increased interest rates, increased pressure on the federal government to decrease Medicare funding, on the federal and state governments to decrease Medicaid funding and on employers to reduce healthcare coverage and increase deductibles; increased unemployment, uncompensated care and bad debt; and decreased return on investments. In August 2011, President Obama signed the Budget Control Act of 2011 (the “Budget Control Act”). The Budget Control Act limited the federal government’s discretionary spending caps at levels necessary to reduce expenditures by $917 billion from the federal budget baseline for federal fiscal years

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2012 through 2021. Medicare, Social Security, Medicaid and other entitlement programs were not affected by the limit on discretionary spending caps. The Budget Control Act also created a bipartisan joint congressional committee to identify additional deficit reductions. Because the committee failed to propose a plan to cut the deficit by an additional $1.2 trillion for fiscal years 2013 through 2021, the Budget Control Act mandated that a 2% reduction in Medicare spending, among other reductions, would take effect in January 2013. The American Taxpayer Relief Act of 2012 postponed the scheduled reduction until March 2013, and the 2% Medicare spending reduction ultimately took effect beginning in April 2013. In December 2013, the Bipartisan Budget Act of 2013 was enacted, which extended through 2023 the 2% reduction in Medicare spending. The reduction to Medicare spending cannot come at the cost of beneficiaries, therefore Medicare payments to providers have been reduced. Management of the Obligated Group Agent has taken appropriate actions to minimize the impact of such reductions on its budget. Additional actions by the federal government likely will need to be taken in the near future with respect to sequestration, reductions and the deficit. Management of the Obligated Group Agent cannot predict how these actions or reductions will be structured, what other deficit reduction initiatives may be proposed by Congress or whether Congress will attempt to suspend or restructure the ordered or automatic budget cuts. However, if effective, these reductions could have a material adverse effect on the financial condition of the Credit Group. Further, with no long-term resolution in place for federal deficit reduction, hospital and physician reimbursement are likely to continue to be targets for reduction with respect to any interim or long-term federal deficit reduction efforts. Healthcare Reform

The Patient Protection and Affordable Care Act became law on March 23, 2010, as subsequently amended by the Health Care and Education Reconciliation Act of 2010 (collectively, referred to herein as the “Health Care Reform Act”). The Health Care Reform Act is intended to address disparities in the cost and delivery of health care to United States residents. Certain of the provisions of the Health Care Reform Act are contained in a bill passed by the House of Representatives and the Senate on March 25, 2010 and signed by the President on March 30, 2010 (the “Reconciliation Agreement”). The changes to various aspects of the health care system in the Health Care Reform Act are far-reaching and include, among many others, substantial adjustments to Medicare reimbursement, establishment of individual mandates for health care coverage, extension of coverage to certain populations, provision of incentives for employer-provided health care insurance, restrictions on physician-owned hospitals, and increased efficiency and oversight provisions. In addition, implementation of the various provisions of the Health Care Reform Act are subject to delay, either pursuant to the terms of the provisions themselves or, as described below, court challenges from opponents to the Health Care Reform Act. Broadly speaking, the provisions of the Health Care Reform Act that encourage or mandate health care coverage for individuals can be expected to reduce the amount of uncompensated care the Credit Group provides. However, revisions to the Medicare reimbursement program could reduce revenues. Soon after enactment, the Health Care Reform Act became the subject of court challenges and efforts to repeal or modify its substantive provisions. In a June 28, 2012 decision, the U.S. Supreme Court upheld most of the provisions of the Health Care Reform Act, but rejected a requirement that states significantly expand Medicaid eligibility. Instead, each state must determine whether federal financial incentives included in the Act merit expanding its Medicaid program.

Michigan obtained approval from the Centers for Medicare and Medicaid Services (“CMS”) to implement Medicaid expansion through a demonstration waiver called the “Healthy Michigan Plan.” The waiver initially was approved on December 30, 2013, and was implemented beginning April 1, 2014. On

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December 17, 2015, CMS approved Michigan’s waiver amendment, with new authorities to take effect in April 2018, after the expansion has been in effect for 48 months. Some of the provisions of the Health Care Reform Act became effective immediately or within a few months of final approval, while others will be phased in over time, ranging from one year to ten years. Because of the complexity of the Health Care Reform Act generally, additional legislation is likely to be considered and enacted over time. The Health Care Reform Act will also require the promulgation of substantial regulations with significant effects on the health care industry. Thus, the health care industry will be subjected to significant new statutory and regulatory requirements and, consequently, to structural and operational changes and challenges for a substantial period of time. Management of the Obligated Group Agent continues to analyze the Health Care Reform Act in order to assess the effects of the legislation on current and projected operations, financial performance and financial condition. However, management cannot predict with any reasonable degree of certainty or reliability any interim or ultimate effects of the legislation. Moreover, the full ramifications of the Health Care Reform Act may become apparent only over time and through later regulatory and judicial interpretations. Portions of the Health Care Reform Act have already been limited, delayed or nullified as a result of executive action, legislative amendments and judicial interpretations and future actions may further change its impact. The uncertainties regarding the implementation of the Health Care Reform Act create unpredictability for the strategic and business planning efforts of health care providers, which in itself constitutes a risk. A significant component of the Health Care Reform Act is reformation of the sources and methods by which consumers will pay for health care for themselves and their families and by which employers will procure health insurance for their employees and dependents and, as a consequence, expansion of the base of consumers of health care services. One of the primary drivers of the Health Care Reform Act is to provide or make available, or subsidize the premium costs of, health care insurance for consumers who are uninsured (or underinsured) and who fall below certain income levels. The Health Care Reform Act accomplishes that objective through various provisions, summarized as follows: (i) creating active markets (referred to as exchanges) in which individuals and small employers can purchase health care insurance for themselves and their families or their employees and dependents, (ii) providing subsidies for premium costs to individuals and families based upon their income relative to federal poverty levels, (iii) mandating that individual consumers obtain and certain employers provide a minimum level of health care insurance, and providing for penalties or taxes on consumers and employers that do not comply with these mandates, (iv) establishing insurance reforms that expand coverage generally through such provisions as prohibitions on denials of coverage for pre-existing conditions and elimination of lifetime or annual cost caps, and (v) expansion of existing public programs, including Medicaid, for individuals and families.

The Health Care Reform Act also makes changes aimed at reducing projected growth of the Medicare program, including reducing Medicare Advantage payments, reducing reimbursement under the disproportionate share hospital program, and tying provider payments more closely to efficiency and quality outcomes. The Health Care Reform Act provides for new methods and increased resources to combat waste, fraud and abuse, as well as demonstration programs relating to alternative approaches for medical malpractice disputes. The Health Care Reform Act also funds various demonstration programs and pilot projects and other voluntary programs to evaluate and encourage new provider delivery models and payment structures, including “accountable care organizations” and bundled provider payments.

Some of the specific provisions of the Health Care Reform Act that may affect hospital operations, financial performance or financial conditions are described below. This listing is not, is not intended to be, and should not be considered by the reader as, comprehensive. The Health Care Reform

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Act is complex and comprehensive, and includes a myriad of new programs and initiatives and changes to existing programs, policies, practices and laws.

· The Health Care Reform Act reduces the annual Medicare market basket updates for hospitals through September 30, 2019. In addition, as of October 1, 2011, the market basket updates became subject to productivity adjustments. The reductions in market based updates and the productivity adjustments have had (and will continue to have) a disproportionately negative effect upon those providers (such as the Credit Group) that are relatively more dependent upon Medicare than other providers. The combination of reductions to the market basket updates and the imposition of the productivity adjustments may result in reductions in Medicare payment per discharge on a year-to-year basis.

· The Health Care Reform Act reduces payments under the “Medicare Advantage” programs (Medicare managed care) through September 30, 2019, which may result in increased premiums or out-of-pocket costs to Medicare beneficiaries enrolled in Medicare Advantage plans. Those beneficiaries may terminate their participation in those plans and opt for the traditional Medicare fee-for-service program. The reduction in payments to Medicare Advantage programs may also lead to decreased payments to providers by managed care companies operating Medicare Advantage programs. All or any of these outcomes will have a disproportionately negative effect upon those providers with relatively high dependence upon Medicare managed care revenues. The Obligated Group’s dependence on Medicare managed care revenues is relatively low.

· The Health Care Reform Act establishes a value-based purchasing program designed to

provide incentive payments to hospitals based on performance on quality and efficiency measures under the Medicare program. These incentive payments are funded through a pool of money collected from all hospital providers. See “Negative Rankings Based on Clinical Outcomes, Cost, Quality, Patient Satisfaction and Other Performance Measures.”

· Under the provisions of the Health Care Reform Act, beginning in federal fiscal year

2014, hospitals receiving Medicare disproportionate share hospital (“DSH”) payments (i.e., those hospitals that care for a disproportionate share of low-income Medicare beneficiaries) were slated to have their DSH payments reduced by potentially 75%. The base 25% was to be supplemented by additional payments based on the volume of uninsured and uncompensated care provided by each such hospital. However, the budget agreement reached ahead of the December 13, 2013, deadline delayed the fiscal year 2014 cuts until fiscal year 2016, but increased the overall level of reductions and extended cuts through fiscal year 2023. Separately, beginning in federal fiscal year 2017, Medicaid DSH allotments to each state also will be reduced, based on a methodology to be determined by the United States Department of Health and Human Services. The Protecting Access to Medicare Act of 2014, signed into law on April 1, 2014, delays the beginning of Medicaid DSH payment reductions until federal fiscal year 2017 but increases the level of such reductions and extends them through federal fiscal year 2024. The Credit Group’s DSH payments are not a significant portion of its revenues.

· Medicaid programs have been expanded to a broader population with incomes up to 133% of federal poverty levels. The Congressional Budget Office (“CBO”) has estimated that 16 million consumers who were previously uninsured will become newly eligible for Medicaid through 2019 as a result of this expansion. Providers operating in markets with large Medicaid and uninsured populations have benefited from increased revenues resulting from increased

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utilization and reductions in bad debt or uncompensated care. The increase in utilization also increases costs of providing that care, which may or may not be offset by increased revenues.

· Medicare payments that would have previously been made to hospitals that have a high

rate of potentially preventable readmissions for certain clinical conditions were, and will continue to be, reduced by specified percentages to account for those excess and “preventable” hospital readmissions.

· Commencing October 1, 2014, Medicare payments to certain hospitals for hospital-

acquired conditions were reduced by 1%. Effective July 1, 2011, federal payments to states for Medicaid services related to preventable hospital acquired conditions were prohibited.

· Effective October 1, 2011, health care insurers were required to include quality

improvement covenants in their contracts with hospital providers, and were required to report their progress on such actions to the Secretary of Health and Human Services (“HHS”).

· Commencing January 1, 2015, health care insurers participating in the health insurance

exchanges are allowed to contract only with hospitals that have implemented programs designed to ensure patient safety and enhance quality of care. The effect of these provisions upon the process of negotiating contracts with insurers or the costs of implementing such programs cannot be predicted.

· With varying effective dates, the Health Care Reform Act enhances the ability to detect

and reduce waste, fraud, and abuse in public programs through provider enrollment screening, enhanced oversight periods for new providers and suppliers, and enrollment moratoria in areas identified as being at elevated risk of fraud in all public programs, and by requiring Medicare and Medicaid program providers and suppliers to establish compliance programs. The Health Care Reform Act requires the development of a database to capture and share health care provider data across federal health care programs and provides for increased penalties for fraud and abuse violations, and increased funding for anti-fraud activities.

· The Health Care Reform Act imposes additional requirements for tax-exemption upon

tax-exempt hospitals, including obligations to adopt and publicize a financial assistance policy; limit charges to patients who qualify for financial assistance to the lowest amount charged to insured patients; and control the billing and collection processes. Additionally, effective for tax years January 1, 2013 and after, tax-exempt hospitals must conduct a community needs assessment and adopt an implementation strategy to meet those identified needs. Failure to satisfy these conditions may result in the imposition of fines and the loss of tax-exempt status. On December 29, 2014, the Secretary of the Treasury issued final regulations under Section 501(r) of the Code that provide detailed and comprehensive guidance relating to requirements for community health needs assessments, financial assistance policies, emergency medical care policies, limitations on charges and billing and collection practices, and also provide guidance on consequences of failure to satisfy Section 501(r) requirements. These final regulations are complex and may be administratively burdensome to implement. Generally, the regulations apply to tax years beginning after December 29, 2015, and provide that a hospital organization may rely on a reasonable, good faith interpretation of the Section 501(r) requirements for tax years beginning on or before December 29, 2015, which may include compliance with certain prior proposed regulations under Section 501(r).

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· The Health Care Reform Act establishes an Independent Payment Advisory Board (the “Board”) to develop proposals to improve the quality of care and to limit cost increases. Beginning January 15, 2019, if the Medicare growth rate exceeds the target, the Board is required to develop proposals to reduce the growth rate and require the Secretary of HHS to implement those proposals, unless Congress enacts legislation related to the proposals. The Health Care Reform Act creates a Center for Medicare and Medicaid Innovation to test

innovative payment and service delivery models and to implement various demonstration programs and pilot projects to test, evaluate, encourage and expand new payment structures and methodologies to reduce health care expenditures while maintaining or improving quality of care. Demonstration efforts include bundled payments under Medicare and Medicaid, and comparative effectiveness research programs that compare the clinical effectiveness of medical treatments and develop recommendations concerning practice guidelines and coverage determinations. Other provisions encourage the creation of new health care delivery programs, such as accountable care organizations or combinations of provider organizations, that voluntarily meet quality thresholds to share in the cost savings they achieve for the Medicare program. The outcomes of these projects and programs, including their effect on payments to providers and financial performance, cannot be predicted.

The Health Care Reform Act establishes a Medicare Shared Savings Program that seeks to promote accountability and coordination of care through the creation of Accountable Care Organizations (“ACOs”). The program will allow hospitals, physicians and others to form ACOs and work together to invest in infrastructure and redesign integrated delivery processes to achieve high quality and efficient delivery of services. ACOs that achieve quality performance standards will be eligible to share in a portion of the amounts saved by the Medicare program. HHS has significant discretion to determine key elements of the program, including what steps providers must take to be considered an ACO, how to decide if Medicare program savings have occurred, and what portion of such savings will be paid to ACOs. It remains unclear to what extent providers will pursue federal ACO status or whether the required investment would be warranted by increased payment. Nevertheless, it is anticipated that private insurers may seek to establish similar incentives for providers, while requiring less infrastructural and organizational change. The potential impacts of these initiatives are unknown, but introduce greater risk and complexity to health care finance and operations.

The outcomes of these projects and programs, including their effect on payments to providers and

financial performance, cannot be predicted. The Health Care Reform Act also imposes insurance coverage requirements on employers and on

group health plans. These changes may also adversely affect the Credit Group. Efforts to repeal and/or amend provisions of the Health Care Reform Act are from time to time

pending in Congress. In addition, the Health Care Reform Act is subject to further judicial interpretation. At this time it is not possible to predict the outcomes of any future executive branch or legislative attempts to repeal or amend the Health Care Reform Act or any judicial interpretations of the Health Care Reform Act.

It is not known what additional health care reform measures may be proposed or adopted or, if adopted, what effect such measures would have on the Credit Group’s operations or revenue. However, the increase in focus and interest on federal and state health care reform may increase the likelihood of further significant changes affecting the health care industry in the near future. There can be no assurance that recently enacted, currently proposed or future health care legislation, regulation or other changes in the administration or interpretation of governmental health care programs will not have an adverse effect on the Credit Group. Reductions in funding levels of the Medicare program, changes in payment methods

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under the Medicare and Medicaid programs, reductions in state funding, or other legislative or regulatory changes could materially reduce the Credit Group’s income. General Reimbursement Policies and Regulations Affecting Healthcare Providers

Healthcare, especially at the hospital level, is a highly regulated industry with complicated and frequently changing regulations arising both from payment programs and governmental police power generally. Healthcare providers such as the Credit Group are subject to federal, state, and local laws and regulations. Future changes in those laws or regulations, particularly relating to reimbursement under the Medicare and Medicaid programs, could adversely affect the operations or financial results of the Credit Group. Any future action by federal or state government that limits or reduces the total funds available under the Medicare and Medicaid programs or alters reimbursement methodologies could lower the amount of reimbursement available to the Credit Group. Furthermore, non-governmental health insurers often adopt Medicare payment policies. Healthcare providers are increasingly subject to audits, investigations, and litigation that may threaten access to governmental reimbursement programs, require substantial repayments of funds received, require payment of fines and penalties, generate adverse publicity and create significant legal and other transaction costs. In response to perceived abuses and actual violations of the terms of existing federal, state and local healthcare payment programs, these agencies have increased their audit and enforcement activities, and federal and state legislation has been considered or enacted providing for or expanding existing civil and criminal penalties against certain activities. Federal, state and local agencies have increased their scrutiny of transactions involving nonprofit, tax-exempt organizations and are focusing in particular upon limitations on the use of charitable assets and revenues. Additionally, other legislation restructuring the delivery and financing of healthcare could be considered by Congress or state legislatures in the future. No prediction can be made about the final passage of federal or state legislation or its impact, if any, on any particular healthcare service or provider. Therefore, no assurance can be given that any such legislation, if enacted, will not materially adversely affect the revenues of the Credit Group and its ability to make payments on the Series 2016 Bonds. Medicare Reimbursement of Credit Group Operations

General. The Medicare program is an important payment source of patient services revenue for the Obligated Group. For example, approximately 51% of the patient services revenue of the Credit Group was derived from the Medicare program for the fiscal year ended September 30, 2015. Any revisions to the Medicare program or to the Medicare participation status of any of the Credit Group’s facilities may significantly affect the Credit Group’s revenues. Medicare is a federal program administered by Centers for Medicare and Medicaid Services (“CMS”), an agency of the United States Department of Health and Human Services (“HHS”) through contracts with various Medicare contractors. Hospital benefits are available under the Medicare program, within prescribed limits, to qualified beneficiaries who are age 65 or older, disabled, or qualify for the End Stage Renal Disease Program. In general, Medicare Part A covers inpatient hospital services, skilled nursing facility (“SNF”) care, hospice, and some home healthcare, while Medicare Part B covers physician services, outpatient hospital services, diagnostic tests, outpatient therapy, and various health-related supplies. However, such coverage includes certain deductible and coinsurance obligations imposed on Medicare beneficiaries. The Credit Group has been and will be affected significantly by changes made in the last several years to federal healthcare laws and regulations, particularly those pertaining to Medicare and Medicaid, including the Health Care Reform Act. The purpose of much of the recent statutory and regulatory

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activity has been to limit or reduce government healthcare costs, particularly costs under the Medicare and Medicaid programs. Diverse and complex mechanisms to limit the amount of money paid to healthcare providers under both the Medicare and Medicaid programs have been enacted, and have caused significant reductions in some aspects of these programs. The laws and regulations governing Medicare reimbursement are extremely complex and subject to interpretation. In addition, there is no guarantee that the reimbursement methodologies described below for Medicare inpatient and outpatient hospital or SNF services will continue in their present format, since those methodologies and the associated payment rates have been the frequent subject of Congressional action, including in the Health Care Reform Act. Payment for Inpatient Hospital Services. A substantial portion of the Medicare revenues of the Credit Group is derived from payments made for services rendered to Medicare beneficiaries under a hospital inpatient prospective payment system (“IPPS”). Under IPPS, for each covered hospitalization Medicare pays a predetermined base operating payment and a separate predetermined base payment for capital-related costs. Each hospitalization of a Medicare beneficiary is classified into one of several hundred diagnosis-related groups (“DRGs”), and the base operating and capital payments for that hospitalization are adjusted to reflect the relative average costliness of the specific DRG. The IPPS payment rate is not correlated to the hospital’s actual cost of treating a particular patient. It is a fixed sum, generally based on national DRG rates (reflecting national average costs for treatment and average capital costs, weighted for the complexity of different cases and the intensity of hospital resources necessary to furnish care), and further adjusted by an area wage index intended to reflect geographic differences in the costs of labor. In addition, for certain Medicare beneficiaries who have unusually long or costly hospital stays, referred to as “outliers,” additional payments may be provided above those specified for the applicable DRG. In addition, DRG rates are subject to adjustment by CMS and are subject to federal budget considerations. The legislation that created the IPPS requires that payments under the IPPS be adjusted annually based on the national average cost of providing inpatient services (the “market basket”). For every year since 1983, Congress has modified the increases and given substantially less than the increase in the “market basket” index. The Health Care Reform Act includes reductions in the annual market basket adjustments and provides for overall reductions in DRG-based payments to be phased in through 2019. If a hospital incurs operating and capital costs in treating Medicare inpatients which exceed the DRG level of reimbursement, the hospital will experience a loss from providing these services.

The DRG reductions are intended to offset incentive payments to hospitals under the Hospital Value Based Purchasing (“HVBP”) program created pursuant to the Health Care Reform Act, which links a portion of Medicare IPPS payments to performance on certain quality measures. The HVBP program is intended to shift from payments based on volume to payments based on performance. The HVBP program was implemented with respect to discharges on or after October 1, 2012. Under the program, Medicare will make incentive payments to hospitals based on specified performance measures (which hospitals report under the Hospital Inpatient Quality Reporting program). The measures include both clinical process of care measures and patient experience of care (survey) measures. Hospitals are scored on these measures on both achievement (relative to other hospitals) and improvement (relative to the hospitals’ own performance during a baseline period). Data and scores are made available to the public on the Hospital Compare website. See “Negative Rankings Based on Clinical Outcomes, Cost, Quality, Patient Satisfaction and Other Performance Measures.” The measures are expected to change over time, in order to continue to raise the bar as quality improves for hospitals generally. Management cannot predict the potential long-term effects of the HVBP program on the Credit Group.

Effective October 1, 2013, CMS adopted a policy known as the Inpatient Hospital Prepayment

Review “Probe & Educate” review process or the “Two-Midnight” rule. The “Two-Midnight” policy

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specified that hospital stays spanning two or more midnights after the beneficiary is properly and formally admitted as an inpatient will be presumed to be “reasonable and necessary” for purposes of inpatient reimbursement. With some exceptions, stays not expected to extend past two midnights were to be billed as outpatient. In response to industry concerns about the rule, enforcement of the rule was delayed and CMS proposed changes to the rule and stated that it will continue to monitor and adjust the rule as necessary. In November 2015, CMS announced changes to the “Two Midnight” rule so that certain stays that are less than two midnights would be payable under Medicare Part A on a case-by-case basis based on the judgment of the admitting physician. However, the implementation of the “Two-Midnight” rule may have an adverse financial impact for hospitals.

There is no assurance that the Members of the Credit Group will be paid amounts that will reflect

adequately their costs incurred in providing inpatient hospital services to Medicare beneficiaries, as well as any changes in the cost of providing healthcare or in the cost of healthcare technology being made available to Medicare beneficiaries. The ultimate effect of the IPPS on the hospital members of the Credit Group will depend on their ability to control their costs involved in providing inpatient hospital services. Payment for Hospital Outpatient Services. A significant amount of the Credit Group’s revenue comes from hospital outpatient services to Medicare beneficiaries. Outpatient hospital services are paid by Medicare at predetermined rates based upon Ambulatory Patient Classification Groups (“APCs”). The payment rate established for each APC is based upon national median hospital costs (including operating and capital costs) adjusted for variations in labor costs across geographic areas. Depending on the services provided, hospitals may be paid for more than one APC per patient encounter. CMS makes additional payment adjustments including: (i) outlier payments for services where the hospital’s costs exceed a threshold amount determined by CMS for that service and (ii) transitional pass-through payments for certain drugs and medical devices. Some hospital outpatient services (such as physical, speech and occupational therapy) are paid on the basis of the Medicare Physician Fee Schedule, instead of APCs. There can be no assurance that Medicare’s hospital outpatient rates will be sufficient to cover the actual costs allocable to Medicare patient care. Because of the fixed nature of Medicare payments for hospital outpatient services, the ultimate effect depends upon the hospital’s ability to control the costs of providing such services. Additionally, Congress or regulators in the future may impose additional limits or cutbacks in such payments or modify the method of calculating such payments. Medicare Provider-Based Standards. The Medicare and Medicaid programs pay certain facilities and services, including, for example, outpatient surgical facilities, diagnostic centers, and physician offices and clinics, differently depending upon whether they are “provider-based” or “freestanding.” A provider-based facility or service is an integral part of another provider, such as a hospital. Provider-based designation can result in higher Medicare and Medicaid payments for services furnished at the provider-based facility and also may increase the co-insurance liability of Medicare beneficiaries for those services. The Medicare Payment Advisory Commission recommended in 2012 that Congress amend the Social Security Act to eliminate provider-based status for physician offices/clinics operated as hospital departments. Such a recommendation, if adopted, would have adverse financial effects on many hospitals. The Bipartisan Budget Act of 2015 created a mandate that new off-campus hospital outpatient departments established on or after November 2, 2015, will not be eligible for provider-based reimbursement under the outpatient prospective payment system after January 1, 2017. A Medicare regulation has been in effect since 2000 that defines the criteria that must be met to qualify as a provider-based facility. Providers may make their own determination as to whether a given facility qualifies as provider-based and bill accordingly for services furnished in that facility. Alternatively, providers may elect voluntarily to obtain a determination of provider-based status from the Medicare program, thereby eliminating the risk of incorrectly billing a facility as provider-based and being subject to retroactive recoupment of the difference between freestanding and provider-based rates.

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Management of the Obligated Group Agent believes that all facilities or services, which currently are or have been treated as provider-based, met and continue to meet all applicable criteria for such designation. However, should a determination be made to the contrary, reclassification of facilities now billed as provider-based to freestanding may adversely affect those facilities’ payments under the Medicare and Medicaid programs, and could require the Credit Group to repay funds to Medicare and Medicaid. Medicare Advantage Plans. The Balanced Budget Act of 1997 substantially expanded the health-plan options for Medicare beneficiaries by creating a new Medicare Part C program, currently called Medicare Advantage Plans. The purpose of the program was to provide Medicare beneficiaries with an opportunity to obtain Medicare-covered services through various managed care organizations and other alternatives to traditional fee-for-service Medicare. However, Medicare beneficiaries may elect to remain in traditional fee-for-service Medicare. Hospitals are paid by some Medicare Advantage Plans at the same rates as under traditional fee-for-service Medicare and in other cases the Medicare Advantage Plan establishes its own payment schedule. The latter type of Medicare Advantage Plan poses the same risks for the Credit Group as are discussed below with respect to managed care organizations generally. It is impossible to determine the effect on the Credit Group and its revenues of Medicare managed-care programs which may be instituted in the future. Additional Medicare Payments to Hospitals. Additional Medicare payments may be made to individual hospitals. For example, hospitals that treat a disproportionately large number of low-income patients are known as disproportionate share hospitals (“DSH”) and receive the DSH payments described above. Additional “outlier payments” are also made to hospitals that treat patients who are more costly to treat than the average patient. Additionally, hospitals are paid for a portion of their direct and indirect graduate-medical-education (“GME”) costs and their bad debts on Medicare co-payments and deductibles. These forms of additional payments are also subject to reductions and modifications as a result of amendments to relevant statutes or regulations. The Credit Group has from time to time qualified for DSH payments and may be adversely affected by reductions to such payments (see discussion above regarding the Health Care Reform Act). Medicare Conditions of Participation; Utilization Review. Hospitals must comply with standards called “Conditions of Participation” in order to be eligible for continuing enrollment in Medicare and Medicaid. CMS is responsible for ensuring that hospitals meet these regulatory Conditions of Participation. Failure to comply with the Conditions of Participation could result in loss of eligibility to participate in the Medicare and Medicaid programs. Departicipation from federal health care programs would have a material negative effect on the financial condition and results of operation of the Credit Group.

Payment for SNF Services. Medicare provides reimbursement for certain skilled nursing care in Medicare-certified facilities. A resident will qualify for Medicare reimbursement only if the patient’s admission to the nursing home facility is immediately subsequent to the patient’s three or more day stay at an acute care facility and the patient’s condition meets Medicare’s medical necessity criteria for skilled nursing care. Reimbursement under Medicare Part A for nursing care is limited to a 100-day period for each qualified resident for each qualified stay.

Under the Balanced Budget Act of 1997, CMS implemented in 1998 a Part A per diem prospective payment system for skilled nursing facilities, similar to the DRG prospective payment system for acute care providers under Medicare. The SNF reimbursement rate is based on an “unadjusted federal per diem rate,” which is derived from the weighted average of standardized allowable costs for all nursing facilities for the cost reporting period which begin in 1995, updated by a factor based on the skilled

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nursing facility market basket percentage. The unadjusted federal rate is then adjusted for (i) case mix, based on a resident classification system, i.e., Resource Utilization Groups (“RUGs”), that accounts for the relative resource utilization of different patient types; and (ii) wages and related costs for the area, compared to the national average of such costs. Payment rates are updated each fiscal year using a skilled nursing facility market basket index.

Some Medicare beneficiaries are not eligible for coverage of a SNF stay under Part A of Medicare. In such cases, Medicare pays the SNF only for selected ancillary services, including physical and occupational therapy, under Medicare Part B.

There is no guarantee that market basket updates will continue to be made on an annual basis. In addition, the Health Reform Act contains certain changes to Medicare reimbursement that may negatively impact the Medicare reimbursement levels for the Credit Group. Starting in federal fiscal year 2012, the market basket adjustment is reduced by a productivity adjustment, which may result in payments lower than in previous years. The Health Reform Act may also expand to the SNF setting Medicare “value-based purchasing” and limits on payment for institution-acquired conditions. The full impact of these provisions is unknown and subsequent laws, regulations, and guidance documents with changes to Medicare payments may be issued.

Other future legislation, regulation or actions by the federal government are expected to continue the trend toward more restrictive limitations on reimbursement for long term care services. At present, no determination can be made concerning whether, or in what form, such legislation could be introduced and enacted into law. Similarly, the impact of future cost control programs and future regulations upon SNFs’ financial performance cannot be determined at this time.

Medicaid Program

General. All Members of the Credit Group are participating providers in the Michigan Medicaid program, a state-administered program that is funded jointly by federal and state governments that pays for medical care provided to qualifying indigent Michigan residents. Approximately 17% of the patient services revenue of the Credit Group consisted of Medicaid charges for the fiscal year ended September 30, 2015. While federal laws impose certain basic requirements on the individual Medicaid plans developed by Michigan and other states, each state develops its own payment system; determines the type, amount, duration and scope of services; establishes eligibility standards, and administers its own program. Medicaid expansion has initially been positive for the Credit Group. As expected, the Credit Group has experienced a shift from self-pay/uninsured patients to Medicaid since Healthy Michigan took effect. Medicaid Hospital Payments. The State of Michigan has enrolled a substantial portion of the Medicaid-eligible population in managed care plans (“Medicaid Health Plans”) that contract with the State and are paid capitation rates and, in turn, contract individually with hospitals and other providers. Michigan pays on a fee schedule basis for services to Medicaid patients who are not enrolled in a Medicaid Health Plan. Separate payments for graduate medical education are made directly to hospitals by the Medicaid program. Quality Assurance Assessment Program. Since 2002, the State of Michigan has required medical providers, including hospitals, most nursing facilities, HMOs and Community Mental Health agencies, to participate in the Quality Assurance Assessment Program (“QAAP”) pursuant to which such providers are assessed a QAAP fee that is paid to the State. The fee is assessed on each provider’s net patient revenue before deduction of expenses and less Medicare net revenue; the fee is capped by statute at 5.5% of total provider industry revenue for the fiscal year in question. The State in turn uses a portion

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of the revenue generated by the QAAP fees to increase the reimbursement rates paid to the taxed provider group for services to Medicaid recipients (the “Quality Assurance Supplement”). The State’s use of QAAP fees to increase provider rates generates federal matching funds. With such federal matching funds included in the rate increase, a provider group (as a whole) receives more revenue in Medicaid reimbursement than it paid in taxes.

There is no assurance that Medicaid payments calculated in the manner described above will be sufficient to cover the expenses of operating the taxed provider facilities. Furthermore, these rates may be reduced based on Executive Order, legislative mandate, or other State cost savings initiatives. There is no guarantee that the Quality Assurance Supplement received by a given provider will equal or exceed the QAAP fees paid by that provider. In addition, the QAAP fees will no longer be assessed or collected in the event that the QAAP is not eligible for federal matching funds. The Credit Group has been a net beneficiary under the QAAP Program.

Federally-Facilitated Marketplace (FFM). The Federally-Facilitated Marketplace (“FFM”) began offering health coverage in Michigan in 2015 through a state partnership model. The FFM makes assessments of Medicaid/CHIP eligibility and then transfers the applicant’s account to the state agency for a final eligibility determination. Michigan has expanded Medicaid coverage to low-income adults. The Obligated Group Agent is currently reviewing the model, but at this time is unable to determine what impact, if any, the model will have on the revenues and financial condition of the Credit Group.

Children’s Health Insurance Program (CHIP). The Social Security Act authorizes the Children’s Health Insurance Program (“CHIP”) to provide increased access to health coverage for children in families with income too high to qualify for Medicaid but too low to afford private coverage. Michigan has implemented CHIP, calling its program MIChild. The federal government matches state spending for CHIP at a rate than that is subject to change. Michigan must periodically submit its CHIP plan to the federal government for review to determine if it meets federal requirements. If it does not meet the federal requirements, Michigan could lose its federal funding for its program. A decision to tighten the eligibility requirements, thereby decreasing the number of individuals eligible for CHIP, the loss of federal approval for Michigan’s program, or the failure of the federal government to appropriate funds for CHIP, could have an adverse financial effect on the Credit Group. Funding Considerations. Payments made to the members of the Obligated Group under the Michigan Medicaid program are subject to change as a result of federal or state legislative and administrative actions, including changes in the methods for calculating payments, the amount of payments that will be made for covered services and the types of services covered under the program. Payments for services rendered to Michigan Medicaid beneficiaries remain subject to appropriations by the Michigan Legislature of sufficient funds to pay the incurred payment obligations for the Medicaid program. Delays in appropriations and state budget deficits, which may occur from time to time, create a risk that payment to the Credit Group for services to Medicaid beneficiaries will be delayed or withheld. The Credit Group is also at risk for the adequacy of the payment rates it is able to negotiate with Medicaid Health Plans and the solvency of the Medicaid Health Plans with which it contracts. State Budgets. Many states, including Michigan, face financial challenges, including erosion of general fund tax revenues. These factors have resulted in a shortfall between revenue and spending demands. The financial challenges facing states may negatively affect health care providers in a number of ways, including a greater number of indigent patients who are unable to pay for their care and a greater number of individuals who qualify for Medicaid and/or reductions in Medicaid reimbursement rates.

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Participation in Managed Care Programs

Healthcare coverage for many individuals is provided by various managed care organizations (“MCOs”) that negotiate discounts from providers and use economic incentives to reduce or limit the cost and utilization of healthcare services such as inpatient hospital care. MCOs include health maintenance organizations (“HMOs”) and preferred provider organizations (“PPOs”). Under PPO plans, there may be financial incentives for subscribers to use only those providers that contract with the plans. Under an exclusive-provider plan, which includes many HMOs, coverage is limited to services furnished by contracted providers. Therefore, MCOs may direct patients away from non-contracted providers by denying coverage for services provided by them or imposing significant costs on the patient for use of a non-contracted provider. The Credit Group currently has contractual agreements with MCOs by which certain Credit Group Members serve as participating providers. Payments from MCOs typically are lower than those received from traditional indemnity/commercial insurers. Most MCOs currently pay hospitals on a discounted fee-for-service basis, a discounted per diem, or a prospective payment. The discounts negotiated by MCOs may result in payment at less than actual costs and the volume of patients directed to a contracted provider may vary significantly from projections. If payment under an HMO contract is insufficient to meet the hospital’s costs of care, the financial condition of the hospital could erode rapidly and significantly. Often, contracts are enforceable for a stated term, regardless of hospital losses. Further, MCO contracts may require that the hospital care for admitted enrollees for a certain period of time regardless of whether the MCO has funds to pay the hospital. Increasingly, physician practice groups, independent practice associations and physician management companies have become a part of the process of negotiating payment rates with hospitals. This involvement has taken many forms, but typically increases the competition for limited payment resources from MCOs. In regions where managed care is becoming prevalent, hospitals must be capable of attracting and maintaining managed care business, often on a regional basis. To do so, regional coverage and aggressive pricing may be required. However, it is also essential that contracting hospitals be able to provide the contracted services without significant operating losses, which may in turn require innovative cost containment efforts. There is no assurance that the Credit Group will maintain managed care contracts or obtain other similar contracts in the future. Failure to maintain contracts could have the effect of reducing the Credit Group’s market share, patient base and revenues. Conversely, participation may maintain or increase the patient base but could result in lower net income or operating losses to the Credit Group if it is unable to contain its costs.

High-deductible insurance plans have become more common in recent years, and the Health Care Reform Act is expected to encourage the increase in high-deductible insurance plans as the health care exchanges include a variety of plans, several of which offer lower monthly premiums in return for higher deductibles. High-deductible plans may contribute to lower inpatient volumes as patients may forgo or choose less expensive medical treatment to avoid having to pay the costs of the high deductibles. There is also a potential concern that some patients with high-deductible plans will not be able to pay their medical bills as they may not be able to cover their high deductible.

Approximately 4% of the patient services revenue of the Credit Group for the fiscal year ended

September 30, 2015 are attributable to managed care programs.

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Blue Cross and Blue Shield of Michigan

Certain Members of the Credit Group are a party to a Participating Hospital Agreement with Blue Cross and Blue Shield of Michigan (“BCBSM”). For the fiscal year ended September 30, 2015, BCBSM charges represented approximately 17% of the patient services revenues of the Credit Group. BCBSM reimburses hospitals for various outpatient services based on predetermined rate schedules, which may or may not be adequate to cover the Credit Group’s cost of providing the services in question. In addition, BCBSM has implemented a hospital performance incentive/disincentive program. An individual hospital’s ability to earn incentive payments, and avoid disincentives depends on meeting certain quality, utilization and community health standards. Licensing, Surveys, Accreditation, and Audits

Health facilities, including those of the Credit Group, are subject to numerous legal, regulatory, professional and private licensing, reimbursement, certification and accreditation requirements. These include, but are not limited to, requirements relating to Medicare Conditions of Participation, requirements for participation in Medicaid, state licensing agencies, private payors, and accreditation standards. The hospitals operated by the Credit Group are currently accredited by The Joint Commission (“TJC”) or the Healthcare Facilities Accreditation Program (“HFAP”). Such accreditation is voluntary, time-limited and subject to renewal. Although, TJC and HFAP are private organizations, they play an important role in the Medicare program because they have been granted “deeming authority” for hospitals. A hospital will be deemed to meet the Medicare Conditions of Participation (and be eligible for Medicare payment) if it is accredited by TJC or HFAP. The loss of such accreditation by a provider results in a loss of this “deemed status,” which means representatives of the Medicare program must survey the provider directly to assess compliance with the Conditions of Participation, which can be a rigorous process. However, at any time, CMS may still require a survey of an accredited hospital by a state agency to verify the hospital actually meets the Conditions of Participation. Blue Cross Blue Shield of Michigan requires that hospitals operated by the Credit Group be accredited by one of three organizations (including TJC) as a condition to participating with Blue Cross. The addition of new accreditation standards by TJC or HFAP is possible and the results are unpredictable. The Credit Group cannot predict what effect new regulations, accreditation standards, and/or certification standards may have on its future operations. Renewal and continuation of certain of the Credit Group’s licenses, certifications and accreditations are based on inspections, surveys, audits, investigations or other reviews, some of which may require affirmative action by the Credit Group. Management of the Obligated Group Agent currently anticipates no difficulty renewing or continuing currently held licenses, certifications or accreditations, nor does management anticipate a reduction in third-party payments from such events that would materially adversely affect the operations or financial condition of the Credit Group. Nevertheless, actions in any of these areas could result in the loss of utilization or revenues or the ability of the Credit Group to operate all or a portion of its healthcare facilities and, consequently, could have a material adverse effect on the Credit Group’s operations.

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Negative Rankings Based on Clinical Outcomes, Cost, Quality, Patient Satisfaction and Other Performance Measures

Health plans, Medicare, Medicaid, employers, trade groups and other purchasers of health services, private standard-setting organizations and accrediting agencies increasingly are using statistical and other measures in efforts to characterize, publicize, compare, rank and change the quality, safety and cost of health care services provided by hospitals and physicians. The United States Department of Health and Human Services (“HHS”) has established the “Hospital Compare” website (http://www.medicare.gov/hospitalcompare/), which is expected to be expanded and improved as Health Care Reform Act provisions place more emphasis on the collection and utilization of health care data. Published rankings such as “score cards,” tiered hospital networks with higher copayments and deductibles for nonemergent use of lower-ranked providers, “pay for performance” and other financial and non-financial incentive programs are being introduced to affect the reputation and revenue of hospitals and the members of their medical staffs and to influence the behavior of consumers and providers such as the members of the Credit Group. Measures of quality based on clinical outcomes of patient care, reduction in costs, patient satisfaction and investment in health information technology are becoming increasingly common. Measures of performance set by others that characterize a hospital negatively may adversely affect its reputation and financial condition.

The Health Care Reform Act includes “value-based purchasing” provisions, including hospital performance scores, aimed at tying Medicare provider payments more closely to efficiency and quality outcomes. There are 24 specific measures that are analyzed which represent the domains of Process of Care, Patient Outcomes, Patient Satisfaction and Efficiency measures which CMS has adopted for use in federal fiscal year 2016. Performance on the measures is evaluated for improvement against an organization’s individual targets as well as national median benchmarks. The program is funded through the reduction of hospital inpatient care payments by 1%, beginning in federal fiscal year 2013, progressing to 2% by federal fiscal year 2017. This reduction may be offset by incentive payments for hospitals that meet or exceed certain quality standards. The members of the Credit Group experienced a 1.5% reduction in 2015. These provisions are expected to increase the importance of hospital performance data, which will be publicly available on the Hospital Compare website.

Payer Audits and Withholds

Healthcare providers participating in Medicare are subject to audits and retroactive adjustments by various organizations with which CMS contracts to administer the Medicare program (“Medicare Contractors”). Based upon an audit, a Medicare Contractor may make certain determinations with regard to Medicare claims submitted by a provider, such as a conclusion that a discharge has been assigned an improper DRG, that services may not have been provided under the direct supervision of a physician (to the extent so required), that a patient should not have been characterized as an inpatient, that certain services provided prior to an admission as an inpatient should not have been separately billed as outpatient services, or that certain required procedures or processes were not satisfied. As a consequence, payments to a hospital or other provider may be retroactively disallowed. Medicare payments may also be withheld from a provider to offset alleged overpayments. Similar audits, withholds and recoupments occur under the Medicaid program. These audits often require several years to reach the final determination of amounts earned. Providers also have rights of appeal. The members of the Credit Group have settled their Medicare and Medicaid cost reports through the 2011 filing year.

In addition, under certain circumstances, Medicare or Medicaid payments made may be determined to have been made as a consequence of improper claims that violated the federal False Claims Act or other federal statutes, thereby possibly subjecting the provider to substantial civil or criminal sanctions. Further, contracts between hospitals and third-party payors often have contractual audit, setoff

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and withhold language that may cause substantial, retroactive adjustments. Such contractual provisions also could have a material adverse effect on the financial condition and results of operations of the Credit Group. Management of the Obligated Group Agent is unaware of any situation that may lead to potential audits or adjustments that, in turn, may have a material adverse effect on the operations or financial condition of the Credit Group. HIPAA Administrative Simplification Provisions

The Health Insurance Portability and Accountability Act of 1996, as amended (“HIPAA”) imposes certain privacy and security standards for individual health information on “covered entities,” including most health care providers. HIPAA prohibits the use and disclosure of “Protected Health Information” or “PHI” except as expressly permitted by HIPAA. HIPAA also requires the standardization of certain electronic data transactions. HIPAA was amended with the enactment of the Health Information Technology for Economic and Clinical Health Act (“HITECH”) as part of the American Recovery and Reinvestment Act of 2009. Among other things, HITECH and the final regulations promulgated thereunder on January 25, 2013 (i) extend the majority of HIPAA privacy and security obligations beyond “covered entities” to “business associates;” (ii) impose specific breach notification requirements on “covered entities” and “business associates;” (iii) establish additional administrative requirements pertaining to PHI and electronic health records maintained by “covered entities;” and (iv) strengthens enforcement and penalties associated with violations of the privacy and security rules. HITECH also granted enforcement authority to State Attorneys General. Penalties for violation of HIPAA include substantial civil monetary penalties ranging from $100 up to $50,000 per violation. HITECH created a tiered approach to civil monetary penalties providing for penalties up to $1.5 million for all violations of an identical requirement during a calendar year. Criminal penalties may also be imposed on any person who knowingly obtains or discloses protected health information in violation of HIPAA ranging from $50,000 to $250,000 in fines and/or imprisonment for up to 10 years. Office for Civil Rights has the authority to conduct compliance reviews to determine whether a “covered entity” or “business associate” is complying with HIPAA requirements, and to investigate complaints filed by any person who believes a covered entity is not complying with those requirements. The Credit Group maintains formal plans for compliance with all applicable HIPAA and HITECH requirements, has trained its staff and employees in these requirements and maintains specified HIPAA Compliance Officers for Privacy and Security who have been provided the authority to supervise, update and enforce policies and procedures designed to assure HIPAA compliance. To date, all HIPAA investigations of the Credit Group have resulted in either minimal corrective action plans or determinations that the Credit Group’s policies and procedures complied with HIPAA standards. No fine or penalty has been imposed on the Credit Group for any HIPAA-related matter. While the Obligated Group Agent believes it has taken reasonable and appropriate steps in the design of policies and procedures and in its supervision so as to maintain HIPAA compliance, it cannot be predicted when or to what extent complaints may be filed or investigations undertaken, which could involve the expenditure of possibly substantial sums to defend and the possibility of fines or other penalties should HHS determine that any covered component of the Credit Group is not in compliance with HIPAA requirements. Civil and Criminal Fraud and Abuse Laws and Enforcement

Federal and state healthcare fraud and abuse laws regulate both the provision of services to government program beneficiaries and the methods and requirements for submitting claims for services rendered to such beneficiaries. Under these laws, individuals and organizations can be penalized for

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submitting claims for services that are not provided, billed in a manner other than as actually provided, not medically necessary, provided by an improper person, accompanied by an illegal inducement to utilize or refrain from utilizing a service or product, or billed in a manner that does not otherwise comply with applicable government requirements. Congress has extended the scope of certain fraud and abuse laws to include violations against private healthcare plans. Federal and state governments have a range of criminal, civil and administrative sanctions available to penalize and remediate healthcare fraud and abuse, including recoveries of amounts paid to the provider or multiples thereof, exclusion of the provider from participation in the Medicare/Medicaid programs, fines, civil monetary penalties, and suspension of payments and, in the case of individuals, imprisonment. Fraud and abuse cases may be prosecuted by one or more government entities and/or private individuals, and more than one of the available penalties may be imposed for each violation. The federal government has made the investigation and prosecution of healthcare fraud and abuse a priority, and Congress has authorized significant funding of this effort. As a result, there have been a substantial number of investigations, prosecutions and civil enforcement proceedings of healthcare-related fraud and abuse in recent years. Additionally, many states prohibit remuneration (in cash or kind) for patient referrals where ultimately an insurance company will pay claims. Laws governing fraud and abuse apply to arrangements between hospitals and individuals or healthcare enterprises with which hospitals do business, including other hospitals, home-health agencies, long-term-care entities, infusion providers, pharmaceutical providers, insurers, health-maintenance organizations, preferred-provider organizations, third-party administrators, physicians, physician groups, and physician-practice-management companies. Fraud and abuse prosecutions can have a catastrophic effect on a provider and potentially a material adverse impact on the financial condition of other entities in the healthcare-delivery system of which that entity is a part. Based on the prohibited activity in which a provider has engaged, governmental agencies and officials may bring actions against providers under the civil or criminal False Claims Acts, statutes prohibiting referrals for compensation or fee-splitting, or the “Stark law,” which prohibits referrals by a physician for the furnishing of “designated health services” (including inpatient and outpatient services) to certain organizations in which the physician has a financial relationship, and also prohibits billing for such services unless an exception applies. The civil and criminal monetary assessments and penalties may be substantial. If and to the extent the Credit Group had engaged in a prohibited activity and judicial or administrative proceedings were concluded adversely to the Credit Group, such outcome could materially adversely affect the Credit Group. The following discussion of criminal and civil laws is not intended to be a complete list of all criminal and civil fraud statutes related to healthcare but rather a representative sample of various laws aimed at prohibiting and enforcing violations related to healthcare. State Anti-Fraud Laws. In addition to statutes concerning referrals of patients or businesses for which payment is ultimately made by third-party payment programs funded by the government, Michigan has statutes which contain similar prohibitions with respect to patients, goods, services and items for which payment is or may be made in whole or in part by the Medicaid program, health care corporations or other health care insurers. Criminal Fraud and Abuse Liability. Both individuals and organizations are subject to prosecution under the criminal fraud and abuse statutes. Criminal conviction for an offense may result in substantial fines and/or the provider’s exclusion and debarment from all government programs. Criminal False Claims Act. The Criminal False Claims Act (“Criminal FCA”) prohibits anyone from knowingly submitting a false, fictitious or fraudulent claim to the federal government. There are numerous specific rules that a healthcare provider must follow with respect to the submission of claims.

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Violation of the Criminal FCA can result in imprisonment of five years and a fine of up to $250,000 for an individual or $500,000 for an organization.

Anti-Kickback Law. The federal Anti-Kickback Law is a criminal statute that prohibits anyone from knowingly and willfully soliciting, receiving, offering or paying any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, in return for or to induce (1) a referral or (2) the purchasing, leasing, ordering or arranging for recommending the purchase, lease or order of any item or service that is covered by a federal or state healthcare program. The Anti-Kickback Law applies to virtually every person and entity with which a hospital does business. In recent years, it has been aggressively enforced.

The criminal sanctions for a conviction under the Anti-Kickback provisions are imprisonment for not more than five years, a fine of not more than $25,000 for each offense, or both, for each incident or offense, although the fine may be increased to $250,000 for individuals and $500,000 for organizations. If a party is convicted of a criminal offense related to participation in the Medicare program or any state healthcare program, or is convicted of a felony relating to healthcare fraud, the Secretary of HHS is required to bar the party from participation in federal healthcare programs and to notify the appropriate state agencies to bar the individual from participation in the state healthcare programs. In addition, the Office of Inspector General (“OIG”) of HHS has the authority to impose civil assessments and fines and to exclude hospitals engaged in prohibited activities from the Medicare, Medicaid, TRICARE (a healthcare program providing benefits to dependents of members of the uniformed services), and other federal healthcare programs for not less than five years. In addition to certain statutory exceptions to the Anti-Kickback Law, the OIG has promulgated a number of regulatory “safe harbors” under the Anti-Kickback Law designed to protect certain payment and business practices. The Health Care Reform Act amended the Anti-Kickback Law to clarify that a person need not have actual knowledge of the Anti-Kickback Law or specific intent to violate the Anti-Kickback Law, to be found in violation. Civil Fraud and Abuse Liability. Unlike criminal statutes, which require the government to prove that the healthcare provider intended to violate the law, civil statutes may be violated simply by the provider’s participation in a prohibited financial arrangement or the provider having knowledge that its claims procedures are not in full compliance with the law. Civil False Claims Act. The Civil False Claims Act (“Civil FCA”) allows the federal government to recover significant damages from persons or entities that submit fraudulent claims for payment to a federal agency. It also permits private individuals to initiate actions on behalf of the government in lawsuits called qui tam actions. These qui tam plaintiffs, or “whistleblowers,” can recover significant amounts from the damages awarded to the government. Under the Civil FCA, healthcare providers may be liable if they take steps to obtain improper payments from the government by knowingly submitting false claims. In several cases, Civil FCA violations have been alleged solely on the existence of alleged kickback or self-referral arrangements, even in the absence of evidence that false claims had been submitted as a result of those arrangements. The Department of Justice has also begun using the Civil FCA in its prosecutions of nursing homes for providing substandard care. If the courts ultimately determine that the Civil FCA applies to these alleged violations, the financial costs necessary for even an innocent healthcare provider to fight or settle a matter could be material. If found liable under the Civil FCA, a healthcare provider is subject to repay up to triple the actual damages incurred by the federal government and mandatory financial penalties ranging from $5,500 up to $11,000 for each violation of the Civil FCA.

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On May 20, 2009, President Obama signed into law the Fraud Enforcement Recovery Act of 2009 (the “FERA”), which modifies and clarifies certain provisions of the Civil FCA. In part, the FERA amends the Civil FCA such that the Civil FCA penalties may now apply to any person, including an organization that does not contract directly with the government, who knowingly makes, uses or causes to be made or used, a false record or statement material to a false or fraudulent claim paid in part by the federal government. The Health Care Reform Act expands the Civil FCA to require that any Medicare or Medicaid overpayment must be reported and returned to CMS, the state, intermediary or carrier within sixty (60) days of the date the overpayment was identified or the due date of the cost report whichever is later. Any overpayment retained after that deadline will give rise to liability under the civil FCA. The Health Care Reform Act extends Civil FCA liability to provide that any claim for items or services resulting from a violation of the Anti-Kickback Law constitutes a false or fraudulent claim under the Civil FCA. The Health Care Reform Act also amends the Civil FCA by abolishing the “public disclosure bar” (which prohibited a relator from bringing a qui tam action based on allegations that had previously been disclosed through public proceedings or private litigation). The Health Care Reform Act narrows the definition of “public disclosure” and broadens the exception for whistleblowers claiming to be the “original source” of the publicly disclosed allegations, such that a person may now bring a qui tam action if prior to the public disclosure, the person provided the information on which the allegations were based or has knowledge that is independent of and materially adds to the publicly disclosed allegations. There can be no assurances that regulatory authorities or investigators will not determine that certain activities or operations of the Credit Group violate those laws because in some cases the scope of those laws may be vague and subject to interpretation. Stark Law. The Physician Self-Referral Statute (“Stark”) prohibits a physician from referring a Medicare or Medicaid patient to an entity with which the physician has a financial relationship for certain designated health services, unless the financial relationship meets the requirements of certain exceptions. Stark defines “financial relationship” broadly to include ownership and compensation arrangements. Unlike the Anti-Kickback Statute, Stark does not require wrongful intent or culpable conduct on the part of one or both parties. If a prohibited financial relationship exists, the physician may not refer Medicare or Medicaid patients to an entity for certain designated health services and the entity may not present a claim for such services. If a Medicare fiscal intermediary or carrier determines that there has been a Stark violation, it must deny payment, and the physician and entity must refund any amounts collected from any individual. Further, HHS may seek substantial civil monetary penalties for each illegal referral and for any scheme designed to circumvent the Stark requirements. If Stark violations are prosecuted under the Civil FCA, the potential liability would be increased. It should be noted that the Health Care Reform Act includes a prohibition on physician-owned hospitals, but grandfathers facilities that had a provider number as of December 31, 2010. The Health Care Reform Act provides an exemption from growth limits for certain “high Medicaid facilities.” Because the Stark law is subject to interpretation, there can be no assurance that in the future regulatory authorities will not determine that one or more aspects of the operations of the Credit Group violate the Stark law. Civil Monetary Penalties Law. The federal Civil Monetary Penalties Law (“CMPL”) provides for administrative sanctions against healthcare providers for a broad range of billing and other abuses. A

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healthcare provider is liable under the CMPL if it knowingly presents, or causes to be presented, improper claims for reimbursement to a federal or state agency, such as those that administer the Medicare and Medicaid programs. A hospital that participates in arrangements known as “gainsharing,” through which the hospital pays physicians to limit or reduce services to Medicare fee-for-service beneficiaries also may be subject to substantial civil monetary penalties. A healthcare provider may be found liable under the CMPL even if it did not have actual knowledge of the impropriety of the claim. It is sufficient that the provider “should have known” that the claim was false. Ignorance of the Medicare regulations is no defense. The Secretary of HHS, acting through the OIG, also has both mandatory and permissive authority to exclude individuals and entities from participation in federal healthcare programs pursuant to CMPL.

Mitigation. Providers may potentially reduce their exposure to federal criminal fines and penalties pursuant to Federal Sentencing Guidelines and their practical exposure to such claims, Stark referral law violations, and civil penalties by establishing effective corporate compliance programs (including periodic review of hospital/physician relationships, billing and coding practices and compliance with the requirements of federal criminal and civil laws and regulations), preparing policies and procedures for promptly returning to the government any payments received by way of inappropriate or illegal referrals, and responding in an effective manner to complaints regarding potentially illegal financial and other arrangements. Implementation and enforcement of an effective compliance program can substantially reduce the level of federal criminal fines and penalties if, in fact, a violation is determined to exist. No assurance can be given that, as a result of the existence of a corporate compliance program, the potential liability will be reduced or eliminated. Exclusions from Medicare or Medicaid Participation. The term “exclusion” means that an excluded party may not participate in Medicare or state healthcare programs and, correspondingly, no reimbursement (including Medicare, Medicaid and the Maternal and Child Health programs) will be made for any services rendered by the excluded party or for any services rendered on the order or under the supervision of an excluded physician. The Secretary of HHS is required to exclude from program participation for not less than five years any individual or entity who has been convicted of a criminal offense relating to the delivery of any item or service reimbursed under Medicare or a state healthcare program; any criminal offense relating to patient neglect or abuse in connection with the delivery of healthcare; a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility or other misdemeanor in connection with the delivery of healthcare services financed or with respect to any act or omission in a healthcare program (other than Medicare or a state healthcare program) operated by or financed in whole or in part by a governmental agency; or a felony offense relating to the illegal manufacture, distribution, prescription or dispensing of a controlled substance. The Secretary also has permissive authority to exclude individuals or entities under certain other circumstances, such as a misdemeanor conviction for fraud in connection with delivery of healthcare services or conviction for obstruction of an investigation of a healthcare violation. The minimum period of exclusion for certain permissive exclusions is three years. Enforcement Activity. Enforcement activity against healthcare providers is increasing, and enforcement authorities are adopting more aggressive approaches. In the current regulatory climate, it is anticipated that many hospitals and physician groups will be subject to investigation, audit or inquiry regarding billing practices or false claims. As with other healthcare providers, the Credit Group may be the subject of Medicare intermediary or carrier, the Office of Inspector General, U.S. Attorney General, Department of Justice Medicaid fraud control unit and/or state attorney general or other state investigations, audits or inquiries in the future. Because of the complexity of these laws, the instances in which an alleged violation may arise to trigger such investigations, audits or inquiries are increasing and

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could result in expensive and prolonged enforcement action against the Credit Group. Because these laws may be vague and subject to interpretation, there can be no assurance that regulatory authorities will not determine that one or more aspects of the operations of the Credit Group violate these laws. The Credit Group has internal policies and procedures and has developed and implemented compliance programs that management of the Obligated Group Agent believes will effectively reduce exposure for violations of these laws. However, because the government’s enforcement efforts presently are widespread within the industry and may vary from region to region, there can be no assurance that the compliance program will significantly reduce or eliminate the exposure of the Credit Group to civil or criminal sanctions or adverse administrative determinations. The Obligated Group Agent’s management does not believe that the activities and operations of the Credit Group violate these fraud and abuse laws or constitute a federal healthcare offense. However, there can be no assurance that in the future regulatory authorities or investigators will not determine that certain activities or operations violate those laws because in some cases the scope of those laws may be vague and subject to interpretation. EMTALA Obligations

To ensure public access to emergency health care without ability to pay, Congress enacted the Emergency Medical Treatment and Active Labor Act (“EMTALA”) in 1986, the so-called “anti-dumping” statute. Generally, EMTALA requires that Medicare-participating hospitals provide an “appropriate medical screening” to all patients who “come to the emergency department” to determine if an emergency medical condition exists. If such a condition exists, the hospital must provide treatment within its capabilities until the patient’s condition is stabilized. This screening and treatment requirement applies with regard to all persons, not just Medicare beneficiaries, and applies regardless of the person’s ability to pay. A hospital may not delay the provision of a medical screening examination in order to inquire about the patient’s ability to pay or method of payment. Over the last few years, the federal government has increased its enforcement of EMTALA. Failure to comply with this law can result in exclusion from the Medicare and Medicaid programs as well as civil and criminal penalties. Additionally, a hospital may be held liable to any patient who suffered injuries as a result of a violation of EMTALA and may be liable to the receiving hospital for financial losses suffered as a result of a transfer in violation of EMTALA. Any failure of the Credit Group to meet its responsibilities under this law could materially affect its financial condition. Management of the Obligated Group Agent believes its policies and procedures are in material compliance with EMTALA, but no assurance can be given that a violation of EMTALA will not be found. Any sanctions imposed as a result of an EMTALA violation could have a material adverse effect on the future operations or financial condition of the Credit Group. Antitrust

Enforcement of the antitrust laws against healthcare providers has become more common in recent years. Antitrust liability may arise in a wide variety of circumstances, including medical-staff privilege disputes, third-party contracting, physician relations, joint ventures, mergers and affiliations, and acquisition activities. While the application of federal and state antitrust laws to healthcare is still evolving, enforcement activities by federal and state agencies appear to be increasing. In particular, the Federal Trade Commission has publicly acknowledged increasing enforcement action in the area of physician joint-contracting. Likewise, increased enforcement action exists relating to a retrospective review of completed hospital mergers. Violations of the antitrust laws could subject a hospital to criminal and civil enforcement by federal and state agencies, as well as treble damages liability by private litigants. At various times, a hospital may be subject to an investigation by a governmental agency charged with the enforcement of the antitrust laws, or may be subject to administrative or judicial action by a federal or

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state agency or a private party. The most common areas of potential liability are joint activities among providers with respect to payor contracting, medical-staff credentialing, and use of a hospital’s local market power for entry into related healthcare businesses. From time to time, an affiliate may be involved in joint-contracting activity with other hospitals or providers. The precise degree to which this or similar joint-contracting activities may expose the Credit Group to antitrust risk from governmental or private sources is dependent on specific facts which may change from time to time. A U.S. Supreme Court decision now allows physicians who are subject to adverse peer review proceedings to file federal antitrust actions against hospitals. Hospitals, including those in the Credit Group, regularly have disputes regarding credentialing and peer review, and may be subject to antitrust liability in such a capacity. In addition, hospitals occasionally indemnify medical staff members who are involved in such credentialing and peer-review activities, and therefore hospitals may also be liable with respect to such indemnity. Also, court decisions have established private causes of action against hospitals that use their local market power to promote ancillary healthcare businesses in which they have an interest. Such activities may result in liability for the hospitals under certain circumstances where a competitor suffers business damage. The ability of hospitals to consummate mergers, acquisitions, or affiliations may also be impaired by the antitrust laws. Liability in any of these or other antitrust areas may be substantial, depending on the facts and circumstances of each case. From time to time, the Credit Group is or will be involved in a variety of activities which may be subject to scrutiny under the antitrust laws, and it cannot be predicted when or to what extent liability may arise. The precise degree to which certain activities may expose the Credit Group to antitrust risk from governmental or private sources is dependent on a myriad of factual matters that may change from time to time. Integrated Delivery Systems

Health facilities and health care systems may own, control or have affiliations with relatively large physician groups and independent practice associations. Frequently the sponsoring health facility or health system will be the capital and funding source for such alliances and may have an ongoing financial commitment to provide growth capital and support operating deficits.

These types of alliances are generally designed to respond to trends in the delivery of medicine to

better integrate hospital and physician care, to increase physician availability to the community and/or to enhance the managed care capability of the affiliated hospitals and physicians. However, these goals may not be achieved and an unsuccessful alliance may be costly and counterproductive to all of the above stated goals.

These types of alliances are likely to become increasingly important to the success of hospitals as

a result of changes to the health care delivery and reimbursement systems that are intended to restrain the rate of increases of health care costs, encourage coordinated care, promote collective provider accountability and improve clinical outcomes. The Health Care Reform Act authorizes several alternative payment programs for Medicare that promote, reward or necessitate integration among hospitals, physicians and other providers.

Whether these programs will achieve their objectives and be expanded or mandated as conditions

of Medicare participation cannot be predicted. However, Congress and CMS have clearly emphasized continuing the trend away from the fee-for-service reimbursement model, which began in the 1980s with the introduction of the prospective payment system for inpatient care, and toward an episode based payment model that rewards use of evidence-based protocols, quality and satisfaction in patient outcomes, efficiency in using resources, and the ability to measure and report clinical performance. This shift is

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likely to favor integrated delivery systems, which may be better able than stand-alone providers to realize efficiencies, coordinate services across the continuum of patient care, track performance and monitor and control patient outcomes. Changes to the reimbursement methods and payment requirements of Medicare, which is the dominant purchaser of medical services, are likely to prompt equivalent changes in the commercial sector, because commercial payors frequently follow Medicare’s lead in adopting payment policies.

While payment trends may stimulate the growth of integrated delivery systems, these systems

carry with them the potential for legal or regulatory risks. Many of the risks discussed above may be heightened in an integrated delivery system. Current laws, in many respects, were not designed to accommodate coordinated action among hospitals, physicians and other health care providers to set standards, reduce costs and share savings, among other things. In October 2011, CMS, the Federal Trade Commission and the Department of Justice jointly issued guidance regarding waivers and safe harbors to enable providers to participate in the Medicare Shared Savings Program. Although CMS and the agencies that enforce these laws are expected to continue to institute new regulatory exceptions, safe harbors or waivers that will enable providers to participate in payment reform programs, there can be no assurance that such regulations will be forthcoming or that any regulations or guidance issued will sufficiently clarify the scope of permissible activity. State law prohibitions or state law requirements may also introduce complexity, risk and additional costs in organizing and operating integrated delivery systems. Tax-exempt hospitals and health systems also face the risk in affiliating with for-profit entities that the Internal Revenue Service will determine that compensation practices or business arrangements result in private benefit or private use or generate unrelated business income for the hospitals and health systems. In addition, integrated delivery systems present business challenges and risks. Inability to attract or retain participating physicians may negatively affect managed care, contracting and utilization. The technological and administrative infrastructure necessary both to develop and operate integrated delivery systems and to implement new payment arrangements in response to changes in Medicare and other payor reimbursement is costly. Hospitals may not achieve savings sufficient to offset the substantial costs of creating and maintaining this infrastructure.

Health care providers, responding to health care reform and other industry pressures are increasingly moving toward integrated delivery systems, managing the health of populations of individuals, patient-centered medical homes, bundled payments and capitated insurance plans. Some health care organizations that traditionally operated hospitals may, directly or in partnership, take on actual insurance risk. Competition

Hospitals and health facilities providing services to residents and employees in the Credit Group’s service area are the major source of competition for the Credit Group. Competition from a variety of potential sources, including, but not limited to, inpatient and outpatient healthcare facilities, clinics and physicians, may adversely affect the utilization and/or revenues of the Credit Group. In addition, nontraditional competitors, such as physician-management companies, disease-management companies and outpatient service providers, could have the same effect. Certain new competitors, such as home-health and infusion providers, and certain niche providers, such as specialized cardiology, dialysis or oncology companies, specifically target hospital patients as their prime source of revenue growth. Furthermore, because existing and potential competitors may not be subject to the regulations and restrictions applicable to the Credit Group, these competitors may be more flexible in their ability to adapt to competitive opportunities and risks. If these competitors and any future competitors are successful, some of the most profitable aspects of hospital operations may be stripped away and/or overall hospital utilization may decline.

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Additionally, mergers or affiliations of existing competitors may create larger, more viable entities that may be more formidable competitors than the original constituent entities. While the effect of such actions is uncertain, mergers and acquisitions can be expected to increase competition in the healthcare field, and the utilization and revenues of the Credit Group could be adversely affected. Alternatively, existing competitors could fail, which could decrease competition in a particular region, but which could force the Credit Group to accommodate significantly higher volumes, including significantly higher volumes of uninsured or under-insured patients and charity care. The Credit Group is likely to face increased competition in the future from other general hospitals, skilled nursing facilities, home-health agencies, rehabilitation and therapy centers, increasingly sophisticated physician-group practices, and from other healthcare providers that offer comparable healthcare services. There also is concern regarding the proliferation of specialty hospitals and, in particular, physician-owned specialty hospitals, due to the potential for those hospitals to attract selected profitable services from full-service community hospitals, thereby adversely impacting the ability of those community hospitals to continue offering adequate quality and quantity of services for the communities they serve. The Credit Group has responded to this concern by entering into certain relationships and joint ventures with physicians. See APPENDIX A of the Official Statement relating to the Series 2015D Bonds on EMMA website under the caption “McLAREN’S STRATEGIC VISION FOR HEALTH CARE DELIVERY – PHYSICIAN ALIGNMENT.” There have been recent initiatives at the federal level to stop or significantly limit the development of these specialty hospitals, including in the Health Care Reform Act, but at this time the effect of this initiative is uncertain. As such, management of the Obligated Group Agent cannot fully assess the impact of the development of specialty hospitals on its future operations, but believes that the actions it has taken to strengthen the relationship between the Credit Group and physicians will lessen any adverse impact. The growth of e-commerce also may result in a shift in the way that healthcare is delivered. Persons residing in the Credit Group’s service area may be able to receive certain health services from remote providers. For example, physicians will be able to provide certain services over the internet (e.g., teleradiology and second opinions). Pharmaceuticals and other health services may also now be ordered on-line. Additionally, other service providers in competition with the Credit Group may now compete through this new medium by advertising their services and providing easy registration for competing services over the internet. Also, alternative forms of healthcare payment including managed-care organizations and consumer-driven care, as well as expanded preventive medicine and outpatient treatment, could affect the Credit Group’s ability to maintain its market share at current levels.

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Capital Needs v. Capital Capacity; Government Regulation and Approvals

Hospital and other health care operations are capital intensive. Regulation, technology and expectations of physicians and patients require constant and often significant capital investment. Total capital needs may exceed capital capacity. Furthermore, capital capacity of hospitals and health systems may be reduced as a result of any credit market dislocations. In addition, the ability of the Credit Group to complete future or planned projects may be adversely affected by legislative, regulatory, administrative or enforcement action at the local, state or national level with respect to a variety of matters, including zoning or land use controls, environmental policy and taxation. Such factors could also affect the ability to complete the Project. Certain governmental permits and approvals are required in connection with the construction or operation of planned and future projects. Delays in obtaining, or failure to obtain, such permits or approvals could prevent planned projects from being completed or prevent a member of the Credit Group from successfully operating facilities following completion.

Information Systems

The ability to adequately price and bill health care services and to accurately report financial results depends on the integrity of the data stored within information systems, as well as the operability of such systems. Information systems require an ongoing commitment of significant resources to maintain, protect and enhance existing systems and develop new systems to keep pace with continuing changes in information processing technology, evolving systems and regulatory standards. There can be no assurance that efforts to upgrade and expand information systems capabilities, protect and enhance these systems, and develop new systems to keep pace with continuing changes in information processing technology will be successful or that additional systems issues will not arise in the future. Such efforts could be costly and are subject to cost overruns and delays in application, which could negatively affect the financial condition of the Credit Group.

Electronic media are also increasingly being used in clinical operations, including the conversion from paper to electronic medical records, computerization of order entry functions and the implementation of clinical decision-support software. The reliance on information technology for these purposes imposes new expectations on physicians and other workforce members to be adept in using and managing electronic systems. It also introduces risks related to patient safety, and to the privacy, accessibility and preservation of health information. Technology malfunctions, malware or failure to understand and use information systems properly could result in the dissemination of or reliance on inaccurate information, as well as in disputes with patients, physicians and other health care professionals. A number of health care providers have recently been the victims of hacker attacks with randsomware, in which hackers attempt to extort money in exchange for returning the provider’s systems to normal. Health information systems may also be subject to different or higher standards or greater regulation than other information technology or the paper-based systems previously used by health care providers, which may increase the cost, complexity and risks of operations. All of these risks may have adverse consequences on hospitals and health care providers.

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Federal and state authorities are increasingly focused on the importance of protecting the confidentiality of individuals’ personal information, including patient health information. Many states have enacted laws requiring businesses to notify individuals of security breaches that result in the unauthorized release of personal information. In some states, notification requirements may be triggered even where information has not been used or disclosed, but rather has been inappropriately accessed. State consumer protection laws may also provide the basis for legal action for privacy and security breaches and frequently, unlike federal laws, authorize a private right of action. In particular, the public nature of security breaches exposes health organizations to increased risk of individual or class action lawsuits from patients or other affected persons, in addition to government enforcement. Failure to comply with restrictions on patient privacy or to maintain robust information security safeguards, including taking steps to ensure that contractors who have access to sensitive patient information maintain the confidentiality of such information, could damage a health care provider’s reputation and materially adversely affect business operations.

Despite the implementation of network security measures by the members of the Credit Group, their information technology systems may be vulnerable to breaches, hacker attacks, computer viruses, physical or electronic break-ins and other similar events or issues. Such events or issues could lead to the inadvertent disclosure of protected health information or other confidential information or could have an adverse effect on the ability of the Credit Group to provide health care services.

The Electronic Health Records Incentive Program, enacted as part of the Health Care Reform Act provides for incentive payments under both the Medicare and Medicaid programs to eligible hospitals that demonstrate meaningful use of certified electronic health records (“EHR”) technology. Health care providers demonstrate their meaningful use of EHR technology by meeting objectives specified by CMS for using health information technology and by reporting on specified clinical quality measures. Beginning in 2015, providers that do not meet federal standards in this area will be subject to reimbursement reductions. The Health Care Reform Act generally strengthens federal involvement in health care data collection and use. Pursuant to the Health Care Reform Act’s goal of simplifying health care administration, it is expected that unified information technology operating rules and security standards will be established.

Equipment

Scientific and technological advances, new procedures, drugs and devices, preventive medicine, occupational health and safety, and outpatient healthcare delivery may reduce utilization and revenues of the Credit Group in the future. Technological advances in recent years have accelerated the trend toward the use by hospitals of sophisticated and costly equipment and services, and the Credit Group may have to incur significant costs to acquire the equipment needed to maintain or enhance its competitive position. The acquisition and operation of certain equipment and services may continue to be a significant factor in hospital utilization, but the ability of the Credit Group to offer such equipment or services may be subject to the availability of equipment and specialists, governmental approval and the ability to finance such acquisitions and operations. In addition, new excise taxes on medical equipment could result in increased costs to the Credit Group (although such taxes are currently subject to a moratorium through the end of 2017). Employees

The ability of the Members of the Credit Group to employ and retain qualified employees, and their ability to maintain good relations with such employees and the unions they may be represented by, affect the quality of services to patients and the financial condition of the Credit Group. For a discussion

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of the employees of the Credit Group and existing union relationships, see APPENDIX A of the Official Statement relating to the Series 2015D Bonds on EMMA website under the caption “EMPLOYEES.” Nursing Shortages. In recent years, the healthcare industry has suffered from a scarcity of nursing and other qualified healthcare technicians and personnel. Factors underlying this trend include a decrease in the number of persons entering the nursing profession and an increase in the number of nurses specializing in home healthcare. Any of these factors may be expected to intensify in the future, aggravating the shortage of nursing personnel or other qualified healthcare personnel. This trend could force the Credit Group to pay higher salaries to nursing and other qualified healthcare personnel as competition for such employees intensifies and, in an extreme situation, could lead to difficulty in keeping the Credit Group’s facilities licensed to provide nursing care and thus eligible for reimbursement under Medicare and Medicaid. Medical Staff

Physician Relations. The primary relationship between a hospital and physicians who practice in it is through the hospital’s organized medical staff. Medical staff bylaws, rules and policies establish the criteria and procedures by which a physician may be awarded medical staff membership and privileges, or may have his or her membership and/or privileges curtailed, denied or revoked. Physicians who are denied medical staff membership or certain clinical privileges, or who have such membership or privileges curtailed, denied or revoked often file legal actions against hospitals. Such actions may include a wide variety of claims, some of which could result in substantial uninsured damages to a hospital. In addition, failure of the hospital governing body to adequately oversee the conduct of its medical staff may result in hospital liability to third parties. All hospitals, including the hospitals of the Credit Group are subject to such risk. An emerging area of potential risk for all hospitals surrounds the appropriate management of physician conflicts of interest with hospitals that grant practice privileges. This is described as “economic credentialing” by physicians who oppose efforts of hospitals to manage the presence of direct competitors within the leadership or boardroom. This issue requires all hospitals to thoughtfully manage these potential conflicts in order to maintain a healthy, collegial and professional relationship with the independent medical staff, while ensuring that the organization is not suffering irreversible harm from a competitor gaining specific or specialized information not available to the public regarding the hospital’s plans. In the worst circumstances, such efforts have led to litigation and potentially material impacts on the practice patterns of physicians at a specific facility. It is not possible to predict the course of such decisions or make any assurances that the Credit Group will be successful in managing such conflicts without causing some changes in physician practice patterns that could have a material effect on the Credit Group. Insurance

The dollar amount of patient damage recoveries in professional liability lawsuits filed against physicians and hospitals remains potentially significant. The ability of, and the cost to, the Credit Group to insure or otherwise protect itself against professional liability claims may adversely affect their future results of operations or financial condition. The ability of health care providers to obtain professional liability insurance in Michigan, like most of the rest of the United States, has deteriorated as rates for such insurance have increased and commercial providers have reduced their participation in, or withdrawn entirely from, the medical malpractice insurance realm. The future ability of the Credit Group to insure or otherwise protect itself against professional liability claims remains in question and the cost of such protection will likely continue to rise, which may adversely affect the financial condition of the Credit Group.

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The Credit Group currently has professional liability insurance coverage, comprehensive general liability coverage and excess liability insurance coverage. For a discussion of the Credit Group’s malpractice and general liability insurance coverage, see APPENDIX A of the Official Statement relating to the Series 2015D Bonds on EMMA website under the caption “OTHER INFORMATION—Litigation and Insurance.” State Laws and Regulations

Legislation may be introduced from time to time in the Michigan Legislature relating to the operations and reimbursement of health care providers, including hospitals. No precise determination can be made at this time whether the bills that have been or may be introduced or the regulations which may be proposed for the purpose of containment of costs, or otherwise affecting hospital revenues or increasing the competition among hospitals, will be enacted or, if enacted, whether and to what degree such legislation will affect the future financial condition or results of operations of the Credit Group or its ability to make future capital expenditures. Failure to Obtain Certificates of Need

The Michigan Certificate of Need statute, as amended, provides, in part, that a person shall not acquire an existing or begin operation of a new “health facility,” make a “change in bed capacity” of a “health facility,” initiate, replace or expand a “covered clinical service,” or acquire “covered medical equipment,” and that a “health facility” shall not make a “covered capital expenditure,” with certain exceptions, without first obtaining a Certificate of Need (“CON”) from the Michigan Department of Community Health, which documents a demonstrated need and grants permission for the proposed project. The capital expenditure threshold has been substantially increased for certain covered projects, thereby subjecting fewer proposed projects to CON review. In 2014, the capital expenditure threshold was $3,160,000 for capital expenditures (for projects involving clinical service areas) for currently submitted CON applications. This threshold amount is adjusted each year to account for cost of living increases. Projects involving non-clinical service areas do not require a CON. Recent amendments have also increased the penalties to which a person is subject for failure to obtain a necessary CON. If a provider fails to obtain required approvals, such provider will be subject to penalties which may include civil fines, the obligation to refund amounts paid by patients or third party payors, injunctions to restrain or prevent violations of the CON law, and a loss of license, among other sanctions. As a result of these sanctions, Medicare and Medicaid certification may also be affected. In addition, a CON may be subject to revocation in the event the utilization projections forming the basis for the initial approval are not achieved. Management of the Obligated Group Agent is not aware of any proceeding or investigation in which a violation of the CON laws by the Credit Group is alleged by any governmental agency. Proposals to eliminate the CON requirement for licensed hospital facilities in Michigan have been suggested. Elimination of the CON requirement would likely increase competition. Affiliation, Merger, Acquisition, Transfer, and Divestiture

Significant numbers of affiliations, mergers, acquisitions, transfers, and divestitures have occurred in the healthcare industry in recent years. As part of its ongoing planning process, the Credit Group is considering and will continue to consider the potential acquisition of operations or properties which may become affiliated with or become part of the Credit Group, as well as the potential disposition of certain existing Credit Group operations or properties. As a result, it is possible that the organizations and assets which currently make up the Credit Group may change from time to time, subject to the provisions in the financing documents that apply to merger, sale, disposition, or purchase of assets. Additionally, any such initiative may involve significant capital commitments and/or capital or operating

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risk and there can be no assurance that these projects, if pursued, will not lead to material adverse consequences to the Credit Group.

In addition to relationships with other hospitals and physicians, the Credit Group may consider investments, ventures, affiliations, development and acquisition of other health care-related entities that support the overall operations of the Credit Group. In addition, the Credit Group may pursue transactions with health insurers, MCOs, preferred provider organizations, third-party administrators and other health insurance related businesses. Because of the integration occurring throughout the health care field, management will consider these arrangements if there is a perceived strategic or operational benefit for the Credit Group. Any initiative may involve significant capital commitments and/or capital or operating risk in a business in which the Credit Group may have less expertise than in hospital operations. There can be no assurance that these projects, if pursued, will not lead to material adverse consequences to the Credit Group. Tax-Exempt Status

Each Member of the Credit Group is exempt from federal income tax as a charitable organization (a “501(c)(3) Organization”) under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”). The exclusion of interest on the Series 2016 Bonds from gross income for federal tax purposes is dependent upon the maintenance by each Member of the Credit Group that owns or uses any of the facilities financed with the proceeds of the Series 2016 Bonds of its status as a 501(c)(3) Organization. A loss by any such Member of the Credit Group of its status as a 501(c)(3) Organization could result in interest on the Series 2016 Bonds becoming included in gross income for federal tax purposes retroactive to the date of issuance of the Series 2016 Bonds. The status of an organization as a 501(c)(3) Organization and the exclusion from taxation of the property and income of such organizations has been the subject of increased scrutiny by federal, state and local legislatures and regulatory authorities. The IRS has expressed increased interest in the status of hospitals and other types of healthcare providers as 501(c)(3) Organizations, particularly with respect to the impact on such status of hospital involvement in physician recruitment or retention arrangements, acquisition of physician practices, joint ventures with for-profit entities, and patient referral patterns. In addition, taxing authorities in certain jurisdictions have sought to impose or increase taxes related to the property and operations of non-profit organizations, including healthcare organizations, particularly where such authorities are dissatisfied with the amount of service provided to indigent residents. Currently, a penalty available to the IRS under the Code for use against 501(c)(3) Organizations is the revocation of tax-exempt status. Although the IRS has rarely taken such a step with regard to a tax-exempt hospital, it could increase these revocations in the future. Loss of status as a 501(c)(3) Organization for any Member of the Credit Group could result in loss of tax exemption of the Series 2016 Bonds, and defaults in covenants regarding the Series 2016 Bonds. It could also trigger the loss of tax-exempt status of related tax-exempt debt of the Credit Group. Loss of tax-exempt status could also result in substantial tax liabilities on corporate income. In some cases, the IRS has imposed substantial monetary penalties on tax-exempt hospitals. In these cases, the IRS and the hospitals in question have entered into a “closing agreement” regarding the IRS’s investigation into alleged activities which may jeopardize the hospital’s tax-exempt status. Such closing agreements usually require the hospital to make substantial penalty payments, agree to cease the activities in question, and agree to comply with a list of other requirements and restrictions. In addition, the IRS may impose “intermediate sanctions” for certain excess benefit transactions undertaken by tax-exempt organizations. In such cases, the intermediate sanctions provisions permit the

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IRS to impose a penalty excise tax on (i) any “disqualified person” (similar to an insider of the organization) who receives an excess benefit from the organization, and (ii) any organization manager, such as officers, trustees, and directors, who knowingly participated in the transaction that resulted in the payment of an excess benefit to the disqualified person. These penalty excise taxes will generally be imposed in lieu of revocation of the organization’s tax-exempt status, and will be imposed on the disqualified person and the participating managers personally, rather than on the tax-exempt organization. In certain cases, the IRS has imposed future charity-care or public-benefit obligations on tax-exempt hospitals in lieu of revoking their tax-exempt status, and required that certain transactions be altered, terminated, or avoided in the future and/or required governance or management changes. It is difficult to predict the scope of any future legislation or the course of any future regulatory actions that may relate to 501(c)(3) Organizations, or that may affect the exclusion from taxation of income earned and property owned by such organizations. There can be no assurance that future changes in federal, state, or local laws, rules, regulations, and policies governing the tax treatment of the property and operations of 501(c)(3) Organizations in general, and of hospitals in particular, will not materially affect the future operations of the Credit Group. The Credit Group is not aware of any action regarding, or investigation of, the status of any member as a 501(c)(3) Organization. The tax-exempt status of nonprofit corporations and exclusion of income earned by them from taxation has been the subject of review by various federal, state and local legislative, regulatory and judicial bodies. This review has included proposals to broaden and strengthen existing federal and state law with respect to unrelated business income of nonprofit corporations, private use of nonprofit corporation assets, executive compensation, board conflicts of interest, the provision of charity care and community benefit, and the use of tax-exempt financing. It is not possible to predict the scope or effect of future legislative or regulatory actions with respect to the regulation and taxation of nonprofit corporations; however, generally actions and proposals that have been made have been vigorously challenged and contested. There can be, however, no assurance that future changes in the laws and regulations of the federal, state or local governments will not materially and adversely affect the operations and revenues of the Credit Group by requiring the payment of income or real estate taxes, by restricting its access to tax-exempt financing, or by requiring the increased provision of uncompensated healthcare service. Bond Examinations. The Internal Revenue Service conducts an audit program to examine compliance with the requirements applicable to tax-exempt obligations. If the Series 2016 Bonds become the subject of an audit, under current IRS procedures, the Issuer or the Credit Group would be treated as a taxpayer in the initial stages of an audit, and the owners of the Series 2016 Bonds would have limited rights to participate in the audit process. The initiation of an audit with respect to the Series 2016 Bonds could adversely affect the market value and liquidity of the Series 2016 Bonds, even though no final determination about the tax-exempt status would have been made. If an audit were to result in a final determination that the Series 2016 Bonds do not qualify as tax-exempt obligations, such a determination could be retroactive in effect to the date of issuance of the Series 2016 Bonds. Local Government Challenges to Property Tax-Exemptions. Recent years have seen significantly increased efforts by local governments in many states to challenge the exempt status of nonprofit corporations’ real property. The bases for these challenges generally have been either nonuse of real property for the charitable object of the tax-exempt organization or inadequate levels of public benefit or uncompensated care. In Illinois, for example, the Illinois Supreme Court recently upheld a decision relating to a local taxing authority’s decision to deny a request for property tax exemption for a not-for-profit hospital on the

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basis that the hospital had not proven with clear and convincing evidence that it was operating within a charitable purpose under applicable Illinois law. Additionally, similar challenges have been based on a variety of grounds, including allegations of aggressive billing and collection practices and excessive financial margins. Several of these disputes have been determined in favor of the taxing authorities or have resulted in settlements. While the Obligated Group Agent is not aware of any current challenge to the tax exemption afforded to any material real property of the Credit Group, there can be no assurance that these types of challenges will not occur in the future. Unrelated Business Income. The IRS and state, county and local taxing authorities may undertake audits and reviews of the operations of tax-exempt hospitals with respect to the generation of unrelated business taxable income. The Credit Group engages in activities that may generate unrelated business taxable income. Management of the Obligated Group Agent believes that it has properly accounted for and reported unrelated business taxable income generally; nevertheless, an investigation or audit could lead to a challenge that could result in taxes, interest and penalties with respect to such income and, in some cases, ultimately could affect the tax-exempt status of the Members of the Credit Group, as well as the exclusion from gross income for federal income tax purposes of the interest payable on the Series 2016 Bonds. Indigent Care. Tax-exempt organizations that own and operate hospitals often treat large numbers of indigent patients who, for various reasons, are unable to pay for their medical care. These hospitals may be susceptible to economic and political changes that could increase the number of indigents or the hospital’s responsibility for caring for this population. General economic conditions that affect the number of employed individuals who have health coverage also affect the ability of patients to pay for their care. Similarly, changes in governmental policy, which may result in coverage exclusions under federal, state and local healthcare programs (including Medicare and Medicaid), may increase the frequency and cost of providing indigent treatment in such hospitals. It is also possible that future legislation could require that 501(c)(3) Organizations that own and operate hospitals must maintain minimum levels of indigent care as a condition to federal income tax exemption or exemption from certain state or local taxes. It is anticipated that 32 million previously uninsured individuals will have health care coverage by 2019 as a result of the Health Care Reform Act. The expansion of the Medicaid program to provide coverage for certain childless adults with incomes below 133% of the federal poverty level is anticipated to account for coverage of 16 million of the 32 million previously uninsured. Safety net health care providers such as the Credit Group that historically served the neediest of the community with little to no reimbursement, should receive increased revenue and experience a reduction in uncompensated health care costs. No determination can be made, however, as to whether the Credit Group’s indigent-care commitments could constitute a material and adverse risk in the future even with the enactment of the Health Care Reform Act. Environmental Matters

Healthcare providers are subject to a wide variety of federal, state, and local environmental and occupational health and safety laws and regulations, which address, among other things, provider operations or facilities and properties owned or operated by providers. The types of regulatory requirements faced by healthcare providers include, but are not limited to: air and water quality control requirements; waste management requirements; specific regulatory requirements applicable to asbestos, polychlorinated biphenyls, and radioactive substances; requirements for providing notice to employees and members of the public about hazardous materials handled by or located at facilities of healthcare providers; and requirements for training employees in the proper handling and management of hazardous materials and wastes.

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In their role as owners and/or operators of properties or facilities, healthcare providers may be subject to liability for investigating and remedying any hazardous substances that have come to be located on the property, as well as for any such substances that may have migrated off of the property. Typical healthcare provider operations include, but are not limited to, in various combinations, the handling, use, storage, transportation, disposal, and/or discharge of hazardous, infectious, toxic, radioactive, flammable, and other hazardous materials, wastes, pollutants, or contaminants. As such, healthcare provider operations are particularly susceptible to the practical, financial, and legal risks associated with compliance with such laws and regulations. Those risks may result in damage to individuals, property, or the environment; may interrupt operations and/or increase their costs; may result in legal liability, which could in turn result in significant damages, injunctions, or fines; and may result in investigations, administrative proceedings, penalties, or other governmental agency actions. There is no guarantee that the Credit Group will not encounter such risks in the future, and such risks may result in material adverse consequences to the operations or financial condition of the Credit Group. At the present time, management of the Credit Group is not aware of any pending or threatened claim, investigation or enforcement action regarding such environmental or occupational health and safety issues that, if determined adversely to the Credit Group, would have a material adverse effect on the Credit Group’s operations or financial condition. Factors That Could Affect the Future Financial Condition of the Credit Group

The future financial condition of the Credit Group could be affected adversely by, among other things, legislation, regulatory actions including governmental investigations, technology changes, increased competition from other healthcare providers, changes in demand for healthcare services, demographic changes and malpractice claims and other litigation. Some of such changes might include the following: Continued Utilization of the Facilities of the Credit Group. Physicians have the option of admitting patients, with the patients’ consents, to the Credit Group’s facilities or to other acute care hospitals or similar facilities that are not controlled by the Credit Group. The revenues of the Credit Group could decrease if medical staff members admit patients to facilities other than those operated by the Credit Group. The Credit Group faces competition from other hospitals and healthcare facilities and could face additional competition in the future as a result of the construction of new, or the renovation of existing, hospitals in the areas served by them. No assurance can be given that occupancy of the Credit Group’s facilities will not be adversely affected by the availability of other hospital and healthcare facilities in the service areas of the Credit Group’s facilities and elsewhere. Moreover, other non-hospital providers are increasingly delivering services in direct competition with hospitals. Possible Future Legislation. In each recent session of the United States Congress, bills have been introduced or considered for introduction that would affect the means and amount of payment for healthcare services, encourage alternate-care-delivery methods, impose more onerous regulation of tax-exempt entities, provide additional patient protections and address many other subjects affecting healthcare-delivery. The Health Care Reform Act is the most recent attempt to address the complete reform of the national healthcare-delivery system. Because of the importance of the national healthcare delivery system and its cost to the federal government, it is expected that potential legislation will continue to be introduced. Generally, potential legislation will limit increases to the amount the federal government pays for healthcare while requiring that participating healthcare providers maintain or increase the services provided by them. Therefore, most, if not all, potential legislation could have a

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negative effect on the revenues and costs of healthcare providers. To the extent that potential legislation becomes law, it is likely to have an adverse effect on the financial condition of the Credit Group and such effect could be material. Some states have adopted and many more have considered adopting healthcare reform legislation that would change the payment for healthcare services, including specifically, payment for services to patients covered by Medicaid or similar programs, and the way healthcare services are delivered. Though these legislative efforts are different in scope and form, most include one or more of the following: (i) cost reduction measures, using budget or cost increase approval as enforcement mechanisms; (ii) creation of health-purchasing alliances; (iii) modification of payment provisions under Medicaid or similar programs; (iv) taxes or assessments on hospitals to fund the costs of such programs and the cost of providing care to uninsured persons; (v) bans on certain self-referrals by physicians; (vi) limits on the authority of hospital boards to take action on medical-staff-credentialing matters; (vii) penalties for offering, paying, soliciting or receiving consideration for referring patients covered by Medicaid or other payor contracts; (viii) “any willing provider” laws that require a managed-care network to accept as part of the network any provider that makes an application and is located within the applicable geographic area; (ix) transparency and competition measures requiring hospitals to disclose pricing and/or provide discounts at specified levels to uninsured patients, and (x) regulation of direct managed-care agreements between providers and self-insured employers. Because most state healthcare-reform legislation has been adopted or is being considered only recently, management of the Credit Group is unable to assess the impact of such legislation on its future financial condition. Pension Plans

McLaren Health Care maintains multiple defined benefit plans which covers certain employees. Benefits are frozen under these plans. Benefit costs and obligations related to the plans are measured as of McLaren Health Care’s year end using assumptions including discount rate, expected long-term return on plan assets, and mortality estimates. As of September 30, 2015, the recorded benefit obligation for these plans was $1.265 billion, $282 million more than the Plan assets of $983 million. McLaren Health Care contributed $48.3 million in 2015 to the defined benefit plans.

McLaren Health Care develops assumptions based on historical experience and expectation of

future events. Although management believes the assumptions used are appropriate, the use of different assumptions could have a significant effect on the amount of benefit costs and obligations recognized in the financial statements. McLaren Health Care uses actuarial tables issued by the Society of Actuaries (“SOA”) to develop mortality estimates. Subsequent to September 30, 2014, the SOA issued updated versions of their mortality tables. McLaren Health Care will begin to use the updated mortality tables to develop mortality estimates beginning with the September 30, 2015 measurement date. This change is expected to meaningfully increase recognized benefit obligations and the associated contributions to defined benefit plans. See APPENDIX A of the Official Statement relating to the Series 2015D Bonds on EMMA website under the caption “PENSION PLANS.” Other Factors Affecting Healthcare Facilities

In the future, the following additional factors, among others, may affect the operations and financial performance of healthcare facilities, including those operated by the Credit Group, to an extent that cannot be determined at this time:

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1. Future medical and scientific advances, pressures for efficiency generated by health care reform measures, changes in third-party reimbursement programs, the development of and the requirement for the option for health-maintenance organizations in labor contracts, preventive medicine, improved occupational health and safety, and improved outpatient care, all of which could result in decreased usage of inpatient facilities of the Credit Group.

2. Possible introduction and adoption in the state of legislation or other requirements

(private or governmental) that would establish a rate-setting agency with statutory control over hospitals and hospital costs and rates or that would require hospitals to justify the appropriateness of existing medical services on the basis of criteria established at the federal or state level.

3. An inflationary economy and difficulties in increasing room charges and other fees, while

at the same time maintaining the amount and quality of health services, may affect the ability of the Credit Group to maintain sufficient operating margins.

4. Imposition of wage and price controls for the healthcare industry could affect the ability

of the Credit Group to maintain sufficient operating margins. 5. Demand for the services of the Credit Group might be reduced if the population residing

in the service area of the Credit Group should decline or alternative healthcare-delivery systems are developed.

6. Increased unemployment or other adverse economic conditions in the service area of the

Credit Group could increase the proportion of patients who are unable to pay fully for the cost of their care. In addition, increased unemployment caused by a general downturn in the economy of the service area or the state or by the closing of operations of one or more major employers in the area may result in a loss of health-insurance benefits for a portion of the patients of the Credit Group.

7. Natural disasters or acts of terrorism, including bioterrorism, could result in the Credit

Group providing significant unreimbursed services, as well as causing property damage, employee injury and service interruptions.

Risks Related to Outstanding Obligations

Increased Interest Rates. Certain outstanding Obligations of the Obligated Group issued under the Master Indenture are variable rate obligations, the interest rates on which could rise. Such interest rates vary on a periodic basis and may be converted to a fixed interest rate. This protection against rising interest rates is limited, however, because the Members of the Obligated Group would be required to continue to pay interest at the variable rate until they are permitted to convert the obligations to a fixed rate pursuant to the terms of the applicable transaction documents.

Remarketing Risk. Certain outstanding bonds secured by Obligations of the Obligated Group are variable rate demand obligations that certain Members of the Obligated Group are required to purchase upon short notice. Although certain Members of the Obligated Group have entered into remarketing agreements and liquidity agreements with respect to certain of such obligations to provide for the remarketing or payment of such obligations, the performance or financial condition of the remarketing agents and the liquidity providers would affect the marketability and remarketing or payment of such obligations.

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Liquidity Risk. From time to time, the Parent has entered into or may enter into liquidity agreements with different banks to provide liquidity for the purchase of variable rate demand obligations issued for the benefit of the Parent and the Credit Group. These liquidity agreements will expire prior to the last maturity dates of the applicable variable rate bonds. If the Parent is unable or chooses not to extend or replace the liquidity agreements with respect to any of the variable rate bonds issued on its behalf, the Obligated Group would be required to provide liquidity for the payment of any such variable rate bonds that are tendered by the holders thereof, and the cash reserves of the Credit Group would be affected until such variable rate bonds are remarketed.

Certain other outstanding bonds secured by Obligations of the Obligated Group have been placed with commercial banks or other financial institutions. In each such transaction the holders have agreed to hold the bonds for a specified period of time which expires prior to the last maturity dates of the applicable bonds. Upon the expiration of such period, the applicable bonds are subject to mandatory tender and purchase by the Obligated Group. In such instance, there can be no assurance that the Obligated Group will be able to extend, remarket or refinance such outstanding bonds and available cash and investments of the Obligated Group could be reduced to purchase such tendered bonds.

Covenants. The variable rate demand obligations, bonds placed with commercial banks and

credit facility described above are subject to the terms of various agreements with the providers and/or holders thereof. These agreements may contain financial and other covenants of the Obligated Group which are in addition to those covenants set forth in the Master Indenture, which covenants and agreements may be substantively different than those of the Master Indenture.

Interest Rate Swaps and Other Hedge Risk

Any interest rate swap or other hedge agreement to which the Credit Group may be a party may, at any time, have a negative value to the Credit Group. If either a swap or other hedge counterparty or the Credit Group terminates such an agreement when the agreement has a negative value to the Credit Group, the Credit Group would generally be obligated to make a termination payment to the counterparty in the amount of such negative value, and such payment could be substantial and potentially materially adverse to the Credit Group’s financial condition. A counterparty may generally only terminate such an agreement upon the occurrence of defined termination events such as nonpayment by the Credit Group and any insurer thereof, or in the event rating agencies withdraw or downgrade the ratings of the Credit Group and an insurer of the Credit Group’s obligation under such an agreement, if any, below specified levels. In addition to the risk of termination at a negative value, interest rate swaps involve the risk that the counterparty does not make payments under the interest rate swap and the risk that the basis for the payments received pursuant to the interest rate swap will not match the payments on the long-term indebtedness related to such interest rate swap. Pledge of Gross Revenues

The Master Indenture provides for a pledge of the Gross Revenues of the Members of the Credit Group to secure payment of the Obligation No. 22 issued thereunder as provided in the Supplemental Indenture. Such security interest is not certain to be enforceable against all items constituting Gross Revenues. The Master Trustee may not be able to require all third party payors, including Medicare and Medicaid, to make payments under their programs directly to it. A security interest in certain collateral, such as cash and cash equivalents, can only be perfected by possession or control; the Master Trustee may not have sufficient control of the Obligated Group’s cash or cash equivalents to constitute a perfected security interest. In addition, as disclosed elsewhere herein, certain exceptions and limitations to the security interest in revenues may exist and limit the effectiveness of the pledge of Gross Revenues.

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Factors Concerning the Enforceability of the Master Indenture

The Members of the Obligated Group are jointly and severally liable for Obligations issued under the Master Indenture. The accounts of the Members of the Credit Group will be consolidated for financial reporting purposes and will be used in determining whether various covenants and tests contained in the Master Indenture (including tests relating to the incurrence of Additional Indebtedness) are met, notwithstanding the uncertainties as to the enforceability described in the preceding paragraphs and below. Under the United States Bankruptcy Code, a trustee in bankruptcy or, under state fraudulent conveyance statutes, a creditor of a guarantor may avoid an obligation incurred by the guarantor if, among other bases therefor, (1) the guarantor has not received fair consideration or reasonably equivalent value in exchange for the guaranty, and (2) the guaranty renders the guarantor insolvent, as defined in the United States Bankruptcy Code or state fraudulent conveyances statutes, or (3) the guarantor is undercapitalized. Interpretations by courts of the Bankruptcy Code with respect to transactions similar to the transaction discussed above and of the tests of “insolvency,” “reasonably equivalent value” and “fair consideration” have resulted in a conflicting body of case law. It is possible that in an action involving the enforceability of an agreement to make payments on an Obligation by a Member of the Credit Group, the Obligation may not be enforced if it is determined that such Member did not receive sufficient consideration for the Obligation and that the incurrence of such Obligation has rendered or will render such Member insolvent or unable to carry out its charitable purposes. In addition, the joint and several obligations described herein of Members of the Obligated Group to make payments on Obligations issued under the Master Indenture (including transfers in connection with voluntary dissolution or liquidation) may not be enforceable to the extent (1) enforceability may be limited by applicable bankruptcy, moratorium, reorganization or similar laws affecting the enforcement of creditors’ rights and by general equitable principles and (2) such payments (i) are requested with respect to payments on an Obligation which are issued for the benefit of a Member other than the Member from which such payment is requested and which was issued for a purpose which is not consistent with the charitable purposes of the Member of the Credit Group from which such payment is requested or which are issued for the benefit of any Member of the Credit Group which is not a Tax Exempt Organization; (ii) are requested to be made from any moneys or assets which are donor restricted or which are subject to a direct or express trust which does not permit the use of such moneys or assets for such a payment; (iii) would result in the cessation or discontinuation of any material portion of the health care or related services previously provided by the Member of the Credit Group from which such payment is requested; or (iv) are requested to be made pursuant to any loan violating applicable usury laws. The extent to which the assets of any future Member of the Credit Group may fall within the categories (i), (ii) and (iii) above with respect of the Series 2016 Bonds cannot now be determined. The amount of such assets that could fall within such categories could be substantial. In addition to the foregoing, common law authority and authority under state statutes permit state courts to terminate the existence of a nonprofit corporation or undertake supervision of its affairs on various grounds, including a finding that such corporation has insufficient assets to carry out its stated charitable purposes or has taken such action which renders it unable to carry out such purposes. Such court action may arise on the court’s own motion pursuant to a petition of the State Attorney General or such other persons who have interests different from those of the general public, pursuant to the common law and statutory power to enforce charitable trusts and to see to the application of their funds to their intended charitable uses.

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Series 2016 Bond Ratings

There is no assurance that the ratings assigned to the Series 2016 Bonds at the time of issuance will not be lowered or withdrawn at any time, the effect of which could adversely affect the market price for and marketability of the Series 2016 Bonds. Tax-Exempt Status of the Series 2016 Bonds

It is expected that the Series 2016 Bonds will qualify as tax-exempt obligations for federal income tax purposes as of the date of issuance. See “TAX MATTERS.” Bond Counsel and the Attorney General are delivering their respective opinions with respect to certain aspects of the tax status of the Series 2016 Bonds, the forms of which are attached to this Limited Offering Memorandum as APPENDIX C and should be read in their entirety for a complete understanding of the scope of the opinion and the conclusions expressed. A legal opinion is only the expression of professional judgment and does not constitute a guaranty with respect to the matters covered. In addition, the opinions of Bond Counsel and the Attorney General speak only as to their dates, and Bond Counsel and the Attorney General do not undertake to advise bondholders about subsequent developments. The tax status of the Series 2016 Bonds could be affected by post-issuance events. Various requirements of the Code must be observed or satisfied after the issuance of the Series 2016 Bonds in order for such interest to remain excludable from gross income of the holders thereof. These requirements include restrictions on the use of the proceeds of the Series 2016 Bonds, ownership, use and operation of the facilities financed by the Series 2016 Bonds, investment of proceeds of the Series 2016 Bonds, the rebate of so-called excess arbitrage earnings, the continuing qualification of the Members of the Credit Group as 501(c)(3) Organizations under the Code, and restrictions on the amount of issuance costs financed with the proceeds of the Series 2016 Bonds. See “TAX MATTERS.” Compliance with these requirements is the responsibility of the Credit Group. Failure to comply could result in the inclusion of interest on the Series 2016 Bonds in gross income retroactive to the date of issuance of the Series 2016 Bonds. In addition to post-issuance compliance, a change in law after the date of issuance of the Series 2016 Bonds could affect the tax-exempt status of the Series 2016 Bonds or the economic benefit of investing in the Series 2016 Bonds. For example, Congress could eliminate the exemption for interest on the Series 2016 Bonds, or it could reduce or eliminate the federal income tax, or it could adopt a so-called “flat tax.” The Bond Indenture does not provide for mandatory redemption of the Series 2016 Bonds or payment of any additional interest or penalty if a determination is made that the Series 2016 Bonds do not comply with the existing requirements of the Code or if a subsequent change in law adversely affects the tax-exempt status of the Series 2016 Bonds or the economic benefit of investing in the Series 2016 Bonds.

Purchasers of the Series 2016 Bonds should consult their tax advisors regarding any pending or proposed legislation, regulatory initiatives or litigation. The disclosures and opinions expressed herein are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the Series 2016 Bonds, and no opinion is expressed as of any date subsequent thereto or with respect to any proposed or pending legislation, regulatory initiatives or litigation. Tax legislation, administrative actions taken by tax authorities and court decisions, whether at the federal or state level, may adversely affect the tax-exempt status of interest on the Series 2016 Bonds under federal or state law and could affect the market price for, or the marketability of, the Series 2016 Bonds.

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Investments

Investment income has historically constituted a significant portion of the excess of revenue over expenses of the Credit Group. No assurance can be given that the investments of the Credit Group will produce returns consistent with historical performance or that losses on the Credit Group’s investments will not occur in the future. See APPENDIX A of the Official Statement relating to the Series 2015D Bonds on EMMA website under the caption “INVESTMENT POLICY AND MANAGEMENT.”

NEGOTIABILITY

The Hospital Finance Authority Act, Act 38, Public Acts of Michigan, 1969, as amended (the “Act”), pursuant to which the Issuer will issue the Series 2016 Bonds, provides that, whether or not the Series 2016 Bonds are of such form or character as to be negotiable instruments under the Uniform Commercial Code of Michigan (the “UCC”), the Series 2016 Bonds issued under the Act will be negotiable instruments within the meaning of and for all the purposes of the UCC, subject only to the provisions of the Series 2016 Bonds for registration.

BONDS NOT A DEBT OF THE STATE

The Series 2016 Bonds will be limited obligations of the Issuer not constituting a general obligation. The Series 2016 Bonds will not constitute or create any debt or debts, liability or liabilities of the State or any political subdivision thereof other than the Issuer, whose liabilities are restricted to the limited obligations of the Series 2016 Bonds, or a loan of the credit of the State or a pledge of the faith and credit of the State or of any political subdivision, but will be payable solely from the funds provided therefor. The issuance of the Series 2016 Bonds under the Bond Indenture will not directly or indirectly or contingently obligate the State or any political subdivision thereof to levy or pledge any form of taxation whatever therefor or to make any appropriation for their payment. The Issuer has no taxing power.

LITIGATION

There is no pending litigation of any nature now served upon the Issuer or to the Issuer’s knowledge threatened against the Issuer to restrain or enjoin the issuance, sale, execution or delivery of the Series 2016 Bonds, or in any way contesting or affecting the validity of the Series 2016 Bonds or any proceedings of the Issuer taken with respect to the issuance or sale thereof, or the pledge or application of any moneys or security provided for the payment of the Series 2016 Bonds or the existence of or powers of the Issuer.

There is no action, suit, proceeding, inquiry or investigation at law or before or by any court, public board or body known to the Parent to be pending, or threatened, against the Parent or any Credit Group Member nor, to the Parent’s knowledge, is there any basis therefor, wherein an unfavorable decision, ruling or finding would adversely affect the validity of the Series 2016 Bonds, the Loan Agreement, Obligation No. 22, the Master Indenture, the Supplemental Indenture or the Bond Indenture.

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LEGAL MATTERS

The legality of the authorization, issuance, sale and delivery of the Series 2016 Bonds is subject to the approval of Dickinson Wright PLLC of Lansing, Michigan, Bond Counsel to the Issuer, and the Attorney General of the State of Michigan, whose approving opinions will be delivered upon the issuance of the Series 2016 Bonds.

Certain legal matters will be passed on for the Purchaser by its counsel, Kutak Rock LLP, Washington, DC, and for the Obligated Group by its counsel, Payne, Broder & Fossee, P.C., Bingham Farms, Michigan, neither of which firms is passing upon the legality of the Series 2016 Bonds.

Dickinson Wright PLLC, has in the past, are now and may in the future represent the Issuer, the Credit Group, or the Purchaser with respect to matters unrelated to the issuance of the Series 2016 Bonds. By the purchase of one or more of the Series 2016 Bonds, such purchaser consents to such unrelated representations and to such firm acting as Bond Counsel with respect to the Series 2016 Bonds.

TAX MATTERS

General

In the opinion of the Attorney General of the State of Michigan and in the opinion of Dickinson Wright PLLC, Bond Counsel, based on their examination of the documents described in their opinions, under existing law, the interest on the Series 2016 Bonds while in the Fixed Rate Mode and bearing interest at a Fixed Rate (a) is excluded from gross income for federal income tax purposes, and (b) is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, it should be noted that certain corporations must take into account interest on the Series 2016 Bonds in determining adjusted current earnings for the purpose of computing such alternative minimum tax. The opinion set forth in clause (a) above is subject to the condition that the Issuer and the Obligated Group comply with all requirements of the Internal Revenue Code of 1986, as amended (the “Code”), that must be satisfied subsequent to the issuance of the Series 2016 Bonds in order that interest thereon be (or continue to be) excluded from gross income for federal income tax purposes. Failure to comply with such requirements could cause the interest on the Series 2016 Bonds to be included in gross income retroactive to the date of issuance of the Series 2016 Bonds. The Obligated Group has covenanted, on behalf of itself and the Issuer, to comply with all such requirements. The Attorney General and Bond Counsel will express no opinion regarding other federal tax consequences arising with respect to the Series 2016 Bonds and the interest thereon.

By the terms of the Bond Indenture, the Loan Agreement and other relevant documents, the interest rate on the Series 2016 Bonds may be converted from the Fixed Rate to a different Interest Rate Mode or certain other changes or actions may be taken under the circumstances and subject to the terms and conditions set forth in such documents subject to receipt of an approving opinion of nationally recognized bond counsel. The Attorney General and Bond Counsel will express no opinion as to the effect upon any Series 2016 Bond or the excludability of the interest thereon from gross income for federal income taxation purposes resulting from any such Conversion of any of the Series 2016 Bonds from the Fixed Rate Mode to a different Interest Rate Mode or any other such change or action.

Prospective purchasers of the Series 2016 Bonds should be aware that (i) interest on the Series

2016 Bonds is included in the effectively connected earnings and profits of certain foreign corporations for purposes of calculating the branch profits tax imposed by Section 884 of the Code, (ii) interest on the Series 2016 Bonds may be subject to a tax on excess net passive income of certain S corporations

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imposed by Section 1375 of the Code, (iii) interest on the Series 2016 Bonds is included in the calculation of modified adjusted gross income for purposes of determining taxability of social security or railroad retirement benefits, (iv) the receipt of interest on the Series 2016 Bonds by life insurance companies may affect the federal tax liability of such companies, (v) in the case of property and casualty insurance companies, the amount of certain loss deductions otherwise allowed is reduced by a specific percentage of, among other things, interest on the Series 2016 Bonds, (vi) registered owners acquiring the Series 2016 Bonds subsequent to initial issuance will generally be required to treat market discount recognized under Section 1276 of the Code as ordinary taxable income, (vii) the receipt or accrual of interest on the Series 2016 Bonds may cause disallowance of the earned income credit under Section 32 of the Code, (viii) interest on the Series 2016 Bonds is subject to backup withholding under Section 3406 of the Code in the case of registered owners that have not reported a taxpayer identification number and are not otherwise exempt from backup withholding, and (ix) registered owners of the Series 2016 Bonds may not deduct interest on indebtedness incurred or continued to purchase or carry the Series 2016 Bonds, and financial institutions may not deduct that portion of their interest expense allocated to interest on the Series 2016 Bonds.

In the opinion of the Attorney General of the State of Michigan and in the opinion of Dickinson

Wright PLLC, Bond Counsel, based on their examination of the documents described in their opinions, under existing law, the Series 2016 Bonds and the interest thereon are free and exempt from all state, city, county or other taxation provided by the laws of the State of Michigan, except for estate, inheritance and gift taxes and taxes on transfers.

Future Developments

NO ASSURANCE CAN BE GIVEN THAT ANY FUTURE LEGISLATION OR

CLARIFICATIONS OR AMENDMENTS TO THE CODE, IF ENACTED INTO LAW, WILL NOT CONTAIN PROPOSALS THAT COULD CAUSE THE INTEREST ON THE SERIES 2016 BONDS TO BE SUBJECT DIRECTLY OR INDIRECTLY TO FEDERAL OR STATE OF MICHIGAN INCOME TAXATION, ADVERSELY AFFECT THE MARKET PRICE OR MARKETABILITY OF THE SERIES 2016 BONDS, OR OTHERWISE PREVENT THE REGISTERED OWNERS FROM REALIZING THE FULL CURRENT BENEFIT OF THE STATUS OF THE INTEREST THEREON. FURTHER, NO ASSURANCE CAN BE GIVEN THAT ANY SUCH FUTURE LEGISLATION, OR ANY ACTIONS OF THE INTERNAL REVENUE SERVICE, INCLUDING, BUT NOT LIMITED TO, SELECTION OF THE SERIES 2016 BONDS FOR AUDIT EXAMINATION, OR THE AUDIT PROCESS OR RESULT OF ANY EXAMINATION OF THE SERIES 2016 BONDS OR OTHER BONDS THAT PRESENT SIMILAR TAX ISSUES, WILL NOT ADVERSELY AFFECT THE MARKET PRICE OF THE SERIES 2016 BONDS.

INVESTORS SHOULD CONSULT WITH THEIR TAX ADVISORS AS TO THE TAX

CONSEQUENCES OF THEIR ACQUISITION, HOLDING OR DISPOSITION OF THE SERIES 2016 BONDS AND THE TAX CONSEQUENCES OF THE ORIGINAL ISSUE DISCOUNT OR PREMIUM THEREON, IF ANY.

CONTINUING DISCLOSURE

The Parent will enter into a Continuing Disclosure Agreement with the Bond Trustee for the Series 2016 Bonds (each a “Continuing Disclosure Agreement” and collectively, the “Continuing Disclosure Agreement”) in connection with the issuance and sale of the Series 2016 Bonds to provide certain financial and operating data concerning its affairs on a continuing basis for owners of the Series 2016 Bonds. No financial or operating data concerning the Issuer will be provided on a continuing basis,

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and the Issuer assumes and will have no liability to the owners of the Series 2016 Bonds (or the owner of any beneficial interest therein) or any other person with respect to any of the information provided by the Parent pursuant to the Continuing Disclosure Agreement. For a description of the Continuing Disclosure Agreement, see “APPENDIX D – Form of Continuing Disclosure Agreement.”

There have been no instances in the five years prior to the date of this Limited Offering Memorandum in which the Parent failed to comply, in all material respects, with any previous undertakings in a written contract or agreement specified in paragraph (b)(5)(i) of the Rule 15c2-12 promulgated by the Securities and Exchange Commission.

RATINGS

Fitch Ratings (“Fitch”) has assigned the Series 2016 Bonds a rating of “AA-” and Moody’s Investors Service Inc. (“Moody’s”) has assigned the Series 2016 Bonds a rating of “Aa3.” These ratings reflect only the view of such organizations, and an explanation of the significance of such ratings may be obtained only from the rating agency furnishing such rating. There is no assurance that such ratings will be maintained for any given period of time or that such ratings will not be revised downward, suspended or withdrawn entirely by such rating agencies, if in their sole judgment, circumstances so warrant. Any such downward revision, suspension or withdrawal of such ratings may have an adverse effect on the market price of the Series 2016 Bonds.

OTHER MATTERS

Only the information set forth under the caption “THE AUTHORITY” was furnished by the Issuer. The Parent furnished the information relating to the Parent and Credit Group under the captions “INTRODUCTORY STATEMENT,” “PLAN OF FINANCING” and “BONDHOLDERS’ RISKS,” and the information under the caption “ESTIMATED SOURCES AND USES OF FUNDS.”

Any statements in this Limited Offering Memorandum involving matters of opinion, whether or not expressly stated as such, are so intended and are not representations of fact.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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The summaries or descriptions of provisions of the Act, the Series 2016 Bonds, the Loan Agreement, the Bond Indenture, the Master Indenture and the Supplemental Indenture, and all references to other materials not purported to be quoted in full, are only brief outlines of some of the provisions thereof and do not purport to summarize or describe all of the provisions thereof. Section and table headings and captions are included for convenience only and should not be construed as modifying the text of this Limited Offering Memorandum.

MICHIGAN FINANCE AUTHORITY

Executive Director

APPROVED: McLAREN HEALTHCARE CORPORATION By: /s/ David E. Mazurkiewicz

Senior Vice President and Chief Financial Officer

By: /s/ Mary G. Martin


APPENDIX A

Definitions and Summary of Certain Documents

The following is a summary of certain provisions of the Bond Indenture as defined herein and the Loan Agreement as defined herein that are not described elsewhere in this Limited Offering Memorandum.

These summaries do not purport to be comprehensive and reference should be made to the Bond Indenture and the Loan Agreement for a full and complete statement of their provisions.

The Limited Offering Memorandum only describes the terms and provisions of the Series 2016 Bonds, and the documents relating thereto, while the Series 2016 Bonds bear interest at an Initial Fixed Rate. The following summaries of the Bond Indenture and Loan Agreement include summaries of other Modes referenced in such documents that are not applicable during the initial Fixed Period.


TABLE OF CONTENTS

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DEFINITIONS OF CERTAIN TERMS ...................................................................................................... 1

BOND INDENTURE ................................................................................................................................. 18

Calculation and Payment of Interest; Change in Interest Rate Mode; Maximum Rate................. 18

Determination of Flexible Rates and Interest Periods During Flexible Mode .............................. 19

Determination of Interest Rates During the Daily Mode and the Weekly Mode .......................... 20

Determination of Term Rates and Fixed Rates ............................................................................. 20

Determination of Window Rates ................................................................................................... 21

Alternate Rates .............................................................................................................................. 21

Determination of Three Month LIBOR Index Rates ..................................................................... 22

FRN Rate and FRN Rate Period ................................................................................................... 23

Changes in Interest Rate Mode ..................................................................................................... 32

Transfer of Bonds .......................................................................................................................... 37

Exchange of Bonds ........................................................................................................................ 38

Establishment of Funds and Accounts .......................................................................................... 38

Bond Purchase Fund ...................................................................................................................... 42

Insufficient Funds for Tenders ...................................................................................................... 42

Amendments on Mandatory Purchase Date .................................................................................. 43

Appointment of Remarketing Agent ............................................................................................. 43

Investment of Moneys in Funds and Accounts ............................................................................. 44

Particular Covenants ..................................................................................................................... 46

Events of Default; Remedies ......................................................................................................... 48

Application of Revenues and Other Funds After Default ............................................................. 50

Termination of Proceedings .......................................................................................................... 53

Remedies Not Exclusive ............................................................................................................... 53

Notice to Bondholders of Default ................................................................................................. 53

Amendments to Bond Indenture Permitted ................................................................................... 53

Effect of Supplemental Bond Indenture ........................................................................................ 55

Defeasance .................................................................................................................................... 55

Certain Affiliates Not Liable ......................................................................................................... 56

LOAN AGREEMENT ............................................................................................................................... 56

General .......................................................................................................................................... 56

Loan of Proceeds; Payments of Principal, Premium and Interest ................................................. 56

Additional Payments ..................................................................................................................... 57

Prepayment .................................................................................................................................... 58

Obligations Unconditional ............................................................................................................ 58

Events of Default ........................................................................................................................... 59

Remedies on Default ..................................................................................................................... 61

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DEFINITIONS OF CERTAIN TERMS

The following are definitions of certain terms used in this Definitions and Summary of Certain Documents. All capitalized terms not defined below or elsewhere in this Limited Offering Memorandum have the meanings set forth in the Bond Indenture.

“Additional Payments” means the payments so designated and required to be made by McLaren Health pursuant to the Loan Agreement.

“Alternate Credit Facility” means a letter of credit, including, if applicable, a confirming letter of credit, bond insurance policy or similar credit facility issued and delivered to the Bond Trustee or Tender Agent, as appropriate, by a commercial bank, savings institution, insurer, pension fund or other financial institution, which by its terms shall constitute the irrevocable undertaking of the issuer thereof to pay the principal of and interest on the Bonds when due, delivered to the Bond Trustee or Tender Agent, as appropriate, pursuant to the Loan Agreement and the Bond Indenture which replaces a Credit Facility then in effect, in each case as from time to time amended, supplemented or modified.

“Alternate Liquidity Facility” means a line of credit, letter of credit, standby purchase agreement or similar liquidity facility issued by one or more commercial banks, pension funds or other financial institutions and delivered or otherwise made available to the Tender Agent in accordance with the Loan Agreement and the Bond Indenture which replaces a Liquidity Facility then in effect, in each case as from time to time amended, supplemented or modified.

“Alternate Rate” means, on any Rate Determination Date for any Interest Rate Mode, and for any current long-term unenhanced ratings assigned by Moody’s, Fitch, or S&P to the Parity Debt of the Obligated Group (for purposes of this definition, a “Parity Debt Rating”), the rate per annum set forth in the following tables. The Tender Agent shall make the determinations required by this determination, upon notification from the Issuer, if there is no Remarketing Agent, if the Remarketing Agent fails to make any such determination or if the Remarketing Agent has suspended its remarketing efforts in accordance with the Remarketing Agreement.

Prior to a Determination of Taxability:

If the Parity Debt Rating level (Moody’s/S&P/Fitch) equals:

The Alternate Rate shall equal the greater of:

Aaa/AAA/AAA 110% of SIFMA and 1.00% Aa2/AA+/AA+ 125% of SIFMA and 2.00% Aa3/AA-/AA- or higher 150% of SIFMA and 3.00%A3/A-/A- or higher 175% of SIFMA and 4.00% Baa1/BBB+/BBB+ 225% of SIFMA and 6.00% Baa2/BBB/BBB 250% of SIFMA and 7.00% Baa3/BBB-/BBB- 300% of SIFMA and 8.00%Below Baa3/BBB-/BBB- 400% of SIFMA and 12.00%

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From and After a Determination of Taxability:

If the Parity Debt Rating level (Moody’s/S&P/Fitch) equals: The Alternate Rate shall equal the greater of:

Aaa/AAA/AAA 110% of One-Month LIBOR and 1.00% Aa2/AA+/AA+ 125% of One-Month LIBOR and 2.00% Aa3/AA-/AA- or higher 150% of One-Month LIBOR and 3.00% A3/A-/A- or higher 175% of One-Month LIBOR and 4.00% Baa1/BBB+/BBB+ 225% of One-Month LIBOR and 8.00% Baa2/BBB/BBB 250% of One-Month LIBOR and 10.00% Baa3/BBB-/BBB- 300% of One-Month LIBOR and 12.00% Below Baa3/BBB-/BBB- 400% of One-Month LIBOR and 14.00%

In the event there is a split among such ratings, the Alternate Rate will be determined as follows: if ratings are in effect (i) from only one of Moody’s, S&P or Fitch, the Alternate Rate shall be equal to the level set forth above corresponding to such rating, (ii) from any two of Moody’s, S&P or Fitch, the Alternate Rate shall be equal to the level set forth above corresponding to the lower rating from either of such Rating Agencies (provided, however, that if the levels set forth above corresponding to the ratings differ by more than one level, the Alternate Rate shall be equal to the level set forth above corresponding to the rating one level above the lower of the two ratings), (iii) from all three of Moody’s, S&P and Fitch and only two of such ratings are equivalent, the Alternate Rate shall be equal to the level set forth above corresponding to such two equivalent ratings and (iv) from all three of Moody’s, S&P and Fitch, and none of such ratings are equivalent, the Alternate Rate shall be equal to the level set forth above corresponding to the middle rating. Any change in the Alternate Rate shall apply from and after the date of such Rating change.

“Automatic Termination Event” means an event of default set forth in a Reimbursement Agreement between McLaren Health and a Liquidity Facility Provider which would result in the immediate termination or suspension of the Liquidity Facility prior to its stated expiration date without prior notice from the Liquidity Facility Provider to the Tender Agent.

“Bond Indenture” means the Bond Indenture, as originally executed or as it may from time to time be supplemented, modified or amended by any Supplemental Bond Indenture.

“Bonds” or “Series 2016 Bonds” means the Michigan Finance Authority Hospital Revenue Bonds (McLaren Health Care) Series 2016.

“Business Day” means any day other than (i) a Saturday or Sunday or (ii) a day on which the Principal Corporate Trust Office or the Designated Office of the Bond Trustee, Paying Agent or the Remarketing Agent are required or authorized to be closed or (iii) a day on which the office of the Credit Facility Provider or Liquidity Facility Provider at which it will pay draws or advances are required or authorized to be closed or (iv) a day on which The New York Stock Exchange is closed.

“Calculation Agent” means the Bond Trustee or an agent appointed by the Bond Trustee to calculate the FRN Rate.

“Call Protection Date” means, with respect to each Tender Period, the date determined pursuant to the Bond Indenture.

“Certificate,” “Statement,” “Request” and “Requisition” of the Issuer, the Obligated Group Agent or McLaren Health mean, respectively, a written certificate, statement, request or requisition signed in the

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name of the Issuer by its Chairperson, another Authority Member, an Authorized Officer of the Issuer or such other person as may be designated and authorized to sign for the Issuer in writing to the Bond Trustee, or in the name of the Obligated Group Agent or McLaren Health by an Authorized Representative of McLaren Health or the Obligated Group Agent, respectively. Any such instrument and supporting opinions or representations, if any, may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument. If and to the extent required by the Bond Indenture, each such instrument shall include the statements provided for in the Bond Indenture.

“Code” means the Internal Revenue Code of 1986, as amended, or any successor statute thereto and any regulations promulgated thereunder.

“Continuing Disclosure Agreement” means the Continuing Disclosure Agreement, dated as of July 1, 2016, between McLaren Health, in its capacity as Obligated Group Agent, and accepted by The Bank of New York Mellon Trust Company, N.A., as the dissemination agent.

“Conversion” has the meaning ascribed to such term in the Bond Indenture.

“Conversion Date” means with respect to the Bonds in a particular Interest Rate Mode, the day on which the interest rate on the Bonds changes to another Interest Rate Mode.

“Conversion Notice” means the notice from McLaren Health to the other Notice Parties of McLaren Health’s intention to change the Interest Rate Mode with respect to the Bonds.

“Costs of Issuance” means all items of expense directly or indirectly payable by or reimbursable to the Issuer or McLaren Health and related to the authorization, issuance, sale and delivery of the Bonds, including but not limited to advertising and printing costs, costs of preparation and reproduction of documents, filing and recording fees, initial fees and charges of the Bond Trustee and the Master Trustee, initial and ongoing fees and charges of the Issuer, Liquidity Facility fees, Credit Facility fees, legal fees and charges, fees and disbursements of consultants and professionals, Rating Agency fees, fees and charges for preparation, execution, transportation and safekeeping of the Bonds, and any other cost, charge or fee in connection with the original issuance of the Bonds.

“Costs of Issuance Fund” means the fund so designated and established pursuant to the Bond Indenture.

“Credit Facility” means a letter of credit, including, if applicable, a confirming letter of credit, bond insurance policy or similar credit facility issued and delivered to the Bond Trustee or Tender Agent, as appropriate, by a commercial bank, savings institution, insurer, pension fund or other financial institution, which by its terms shall constitute the irrevocable undertaking of the issuer thereof to pay the principal of and interest on the Bonds when due, delivered to the Bond Trustee or Tender Agent, as appropriate, pursuant to the Loan Agreement, or, in the event of the delivery of an Alternate Credit Facility, such Alternate Credit Facility.

“Credit Facility Provider” means the commercial bank, savings institution, insurer, pension fund, or other financial institution issuing a Credit Facility or an Alternate Credit Facility.

“Credit Facility Provider Failure” or “Liquidity Facility Provider Failure” means a failure of the Credit Facility Provider or Liquidity Facility Provider, as applicable, to pay a properly presented and conforming draw or request for advance under the Credit Facility or Liquidity Facility, as applicable, or the filing or commencement of any bankruptcy or insolvency proceedings by or against the Credit Facility Provider or Liquidity Facility Provider, as applicable, or the Credit Facility Provider or Liquidity Facility

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Provider, as applicable, shall declare a moratorium on the payment of its unsecured debt obligations or shall repudiate the Credit Facility or Liquidity Facility, as applicable.

“Credit Group” has the meaning set forth in the Master Indenture.

“Current Mode” has the meaning specified in the Bond Indenture. “Daily Mode” means the Interest Rate Mode during which the Bonds bear interest at the Daily

Rate. “Daily Rate” means the per annum interest rate on any Bond in the Daily Mode determined

pursuant to the Bond Indenture.

“Daily Rate Period” means the period during which a Bond in the Daily Mode shall bear interest at a Daily Rate, which shall be from the Business Day upon which a Daily Rate is set to but not including the next succeeding Business Day.

“Date of Issuance” means the date of issuance of the Bonds.

“Delayed Remarketing Period” has the meaning specified in the Bond Indenture. “Determination of Taxability” means, and shall occur when, (i) the Bond Trustee receives written

notice from McLaren Health or the Issuer, supported by an opinion of Bond Counsel selected and approved by McLaren Health, that interest on the Bonds is includable in the gross income of Bondholders for federal income tax purposes or (ii) the Bond Trustee receives a copy of a written adverse determination sent to the Issuer or a bondholder by the Internal Revenue Service asserting that interest on the Bonds is includable in the gross income of Bondholders for federal income tax purposes, which adverse determination results in the right to seek administrative appeal before the IRS Office of Appeals; provided, however, that such a claim shall not be deemed a Determination of Taxability unless McLaren Health and the Issuer are afforded reasonable opportunity (at McLaren Health’s sole expense and for a period not to exceed six months) to pursue any judicial or administrative remedy available to McLaren Health or the Issuer with respect to such claim and such judicial or administrative actions have resulted in a final determination that it is taxable.

“Electronic Means” means the following communications methods: e-mail, facsimile

transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Bond Trustee, or another method or system specified by the Bond Trustee as available for use in connection with its services under the Bond Indenture.

“Eligible Bonds” means any Bonds than Liquidity Facility Bonds or Bonds owned by, for the account of, or on behalf of, the Issuer or any member of the Credit Group.

“Event of Default” means any of the events specified in the Bond Indenture. “Expiration Date,” when used with respect to a Liquidity Facility or a Credit Facility, means (i)

the date upon which the Liquidity Facility or Credit Facility is scheduled to expire (taking into account any extensions of such Expiration Date by virtue of extensions of a particular Liquidity Facility or Credit Facility, from time to time) in accordance with its terms and (ii) a Liquidity Facility Cancellation Date.

“Favorable Opinion of Bond Counsel” means an opinion of Bond Counsel addressed to the Issuer and the Bond Trustee to the effect that the action proposed to be taken is authorized or permitted by the Bond Indenture and the Act and will not result in the inclusion of interest on the Bonds in gross income for federal income tax purposes.

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“FINRA” means the Financial Industry Regulatory Authority, its successors and assigns.

“Fixed Rate” means, with respect to the initial Fixed Rate Period commencing on the Date of Issuance, the Fixed Rate set forth in the Bond Indenture, and with respect to any conversion of the Bonds to the Fixed Rate Period, the per annum interest rate on any Bond in the Fixed Rate Mode determined pursuant to the Bond Indenture.

“Fixed Rate Bond” means a Bond in the Fixed Rate Mode.

“Fixed Rate Mode” means the Interest Rate Mode during which the Bonds bear interest at the Fixed Rate.

“Fixed Rate Period” means for the Bonds in the Fixed Rate Mode, the period during which the Bonds bear interest in a Fixed Rate Mode.

“Flexible Index Interest Period” means the period during which the Bonds shall bear interest in the Flexible Index Mode, as provided in the Bond Indenture.

“Flexible Index Mode” means the Mode in which the interest rate payable with respect to the Bonds is adjusted pursuant to the Bond Indenture, and the Tender Period of which does not exceed 270 days.

“Flexible Mode” means the Interest Rate Mode during which the Bonds bear interest at the Flexible Rate.

“Flexible Rate” means the per annum interest rate on a Bond in the Flexible Mode determined for

such Bond pursuant to the Bond Indenture. The Bonds in the Flexible Mode may bear interest at different Flexible Rates.

“Flexible Rate Bond” means a Bond in the Flexible Mode.

“Flexible Rate Period” means the period of from one to 270 calendar days (which period must end on a day preceding a Business Day) during which a Flexible Rate Bond shall bear interest at a Flexible Rate, as established by the Remarketing Agent pursuant to the Bond Indenture. The Bonds in the Flexible Mode may be in different Flexible Rate Periods.

“FRN Rate” means a variable interest rate on the Bonds established in accordance with the Bond Indenture.

“FRN Rate Mode” means the Interest Rate Mode during which the Bonds bear interest at a FRN Rate.

“FRN Rate Percentage” means, with respect to any Conversion of the Bonds to a FRN Rate

Period, the percentage determined by the Remarketing Agent on or prior to the Conversion Date pursuant to the Bond Indenture.

“FRN Rate Period” means each period during which a FRN Rate is in effect.

“FRN Rate Spread” means, with respect to any Conversion of the Bonds to a FRN Rate Period, the spread determined by the Remarketing Agent on or prior to the Conversion Date pursuant to the Bond Indenture.

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“Hospital” means McLaren Port Huron which is a Michigan nonprofit corporation, and any successor corporation.

“Index” means any of (a) One Month LIBOR, (b) the Three Month LIBOR Rate, (c) SIFMA, (d) the Consumer Price Index or (e) any other index chosen by McLaren Health in consultation with the Remarketing Agent.

“Index Interest Period” means the period during which a Bond shall bear interest in the Index Mode, as provided in the Bond Indenture.

“Index Mode” means the Mode in which the interest rate payable with respect to the Bonds is adjusted pursuant to the Bond Indenture.

“Index Spread” means with respect to a Tender Period, a fixed per annum rate determined by the Remarketing Agent in accordance with the Bond Indenture.

“Index Tender Rate” means the rate of interest, determined for any Interest Accrual Period, equal to the sum of (a) the SIFMA Average Index Rate calculated for such Interest Accrual Period and (b) the Index Spread applicable for the related Tender Period.

“Initial Window Spread” means, with respect to any Conversion to a Window Rate Period, the spread determined by the Remarketing Agent on or prior to the Conversion Date pursuant to the Bond Indenture.

“Interest Account” means the account by that name in the Revenue Fund established pursuant to the Bond Indenture.

“Interest Accrual Date” means with respect to any period during which Bonds bear interest at an

Index Tender Rate, the first day of each Tender Period and, thereafter, each Interest Payment Date during that Tender Period.

“Interest Accrual Period” means the period during which a Bond accrues interest payable on the next Interest Payment Date applicable thereto. Each Interest Accrual Period shall commence on (and include) the last Interest Payment Date to which interest has been paid (or, if no interest has been paid, from the date of original authentication and delivery of the Bonds) to, but not including, (a) the next Interest Payment Date on which interest is to be paid, or (b) any Redemption Date, as applicable. If, at the time of authentication of any Bond, interest is in default or overdue on the Bonds, such Bond shall bear interest from the date to which interest has previously been paid in full or made available for payment in full on Outstanding Bonds.

“Interest Component” means the maximum amount stated in the Liquidity Facility or Credit Facility, as applicable (as reduced and reinstated from time to time in accordance with the terms thereof), which may be drawn for the payment of the portion of the Purchase Price of tendered Bonds corresponding to interest accrued on the tendered Bonds.

“Interest Coverage Rate” means the rate per annum which is used in the Liquidity Facility or Credit Facility, as applicable, to calculate the Interest Component of such Liquidity Facility or Credit Facility, as applicable.

“Interest Payment Date” means each date on which interest is to be paid and is: (i) with respect to the Bonds in the Flexible Mode, each Mandatory Purchase Date applicable thereto; (ii) with respect to the Bonds in the Daily Mode, the Weekly Mode, the Flexible Index Mode, the FRN Rate Mode or the Index

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Mode, the first Business Day of each calendar month; (iii) with respect to the Bonds in a Term Rate Mode (other than during a Three Month Term Rate Period) or for the initial Fixed Rate Mode, May 15 and November 15, commencing November 15, 2016, or if in a different Mode and subsequently converted to a Fixed Rate Mode, the fifteenth day of the sixth calendar month following the month in which such Term Rate Mode or a Fixed Rate Mode takes effect, and the fifteenth day of each sixth calendar month thereafter or, upon the receipt by the Bond Trustee of a Favorable Opinion of Bond Counsel, any other six-month interval chosen by McLaren Health (beginning with the first such day which is at least three months after the Conversion Date) and, with respect to a Term Rate Period, the final day of the current Interest Period if other than a regular six-month interval; (iv) with respect to the Bonds in the Three Month LIBOR Indexed Mode or a Term Rate Mode during a Three Month Term Rate Period, each February 15, May 15, August 15, and November 15 (beginning with the first such day after the applicable Conversion Date); (v) with respect to Bonds in the Window Mode, the first Thursday of each calendar month, or if the first Thursday is not a Business Day, the next succeeding Business Day; (vi) (without duplication as to any Interest Payment Date listed above) each Maturity Date, Mandatory Purchase Date and Redemption Date; (vii) each Unscheduled Mandatory Tender Date on which all Outstanding Bonds are purchased as provided in the Bond Indenture; (viii) each Scheduled Mandatory Tender Date and (ix) with respect to any Liquidity Facility Bonds, the day set forth in the Reimbursement Agreement.

“Interest Period” means, for the Bonds in a particular Interest Rate Mode, the period of time that the Bonds bear interest at the rate (per annum) which becomes effective at the beginning of such period, and shall include a Flexible Rate Period, a Daily Rate Period, a Weekly Rate Period, a Three Month LIBOR Interest Period, a Term Rate Period, a Fixed Rate Period, a Flexible Index Interest Period, an Index Interest Period, a FRN Rate Period and a Window Rate Period.

“Interest Rate Mode” means, as the context may require, the Flexible Mode, the Daily Mode, the Weekly Mode, the Term Rate Mode, the Fixed Rate Mode, the Three Month LIBOR Indexed Mode, the Flexible Index Mode, the Index Mode, the FRN Rate Mode or the Window Mode.

“Investment Securities” means any of the following that at the time are legal investments under

the laws of the State of Michigan for moneys held under the Bond Indenture and then proposed to be invested therein, provided that each obligation shall mature, or will be subject to redemption by the holder thereof at the option of such holder, not later than the respective dates when the moneys will be required for the purposes intended:

(I) (a) United States Government Obligations as described in clause (1) of the definition thereof,

(b) (1) obligations of any of the following federal agencies which obligations represent the full faith and credit of the United States of America:

− Export Import Bank − Farm Credit System Financial Assistance Corporation − Rural Economic Community Development Administration

(formerly the Farmers Home Administration) − General Services Administration − U.S. Maritime Administration − Small Business Administration − Government National Mortgage Association (GNMA) − U.S. Department of Housing & Urban Development (PHA’s) − Federal Housing Administration − Federal Financing Bank,

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(2) direct obligations of any of the following federal agencies which obligations are not fully guaranteed by the full faith and credit of the United States of America:

− Obligations of the Resolution Funding Corporation (REFCORP) − Senior debt obligations of the Federal Home Loan Bank System,

(3) obligations of any other federal agency which obligations represent the

full faith and credit of the United States of America,

(c) direct obligations of, or obligations the timely payment of principal of and interest on which are unconditionally guaranteed by the State of Michigan if the State of Michigan has ratings at the time of purchase on its outstanding general obligation debt from S&P and Moody’s equal to or higher than the Rating Category of “A,”

(d) certificates of deposit or banker’s acceptances issued by any bank (including the Bond Trustee and its affiliates) which is insured by the Federal Deposit Insurance Corporation (“FDIC”), and which, so long as required by the Act, is a member of the Federal Reserve System, and, which, at the time of purchase, has a short term “Bond Deposit” rating of “P-1” or better by Moody’s and a “Short Term CD” rating of “A-1” or better by S&P,

(e) repurchase agreements collateralized by United States Government Obligations

described in clause (1) of “United States Government Obligations” or obligations of any federal agency described in clause (b) above, or if hereafter permitted by the Act or approved in writing by the State Treasurer, United States Government Obligations described in clause (2) or (3) of “United States Government Obligations,” with any registered broker/dealer subject to the Securities Investors’ Protection Corporation jurisdiction or any commercial bank insured by the FDIC, if at the time of purchase (i) such broker/dealer or bank has an uninsured, unsecured and unguaranteed obligation rated “P-1” or “A3” or better by Moody’s and “A-1” or “A-” or better by S&P or (ii) the parent entity of such broker/dealer or commercial bank meets the rating requirements of clause (i) above and issues a guarantee of full and timely performance of the obligations of such broker/dealer or commercial bank under the repurchase agreement; provided:

(1) a master repurchase agreement or specific written repurchase agreement governs the transactions; and

(2) the securities are held by the Bond Trustee or an independent third party acting solely as agent (“Agent”) for the Bond Trustee free and clear of any lien, and such third party is (A) a Federal Reserve Bank or (B) a bank which is a member of the FDIC and which has combined capital, surplus and undivided profits of not less than $50 million and the Bond Trustee shall have received written confirmation from such third party that it holds such securities, free and clear of any lien, as agent for the Bond Trustee; and

(3) a perfected first security interest under the Uniform Commercial Code, or book entry procedures prescribed at 31 C.F.R. 306.1 et seq. or 31 C.F.R. 350.0 et seq. in such securities is created for the benefit of the Bond Trustee; and

(4) the repurchase agreement has a term of 180 days or less, the collateral securities are valued no less frequently than weekly and the Bond Trustee or the Agent will liquidate the collateral securities if any deficiency in the required collateral percentage is not restored within two Business Days of such valuation; and

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(5) the fair market value of the securities in relation to the amount of the repurchase obligation, including principal, purchase price and interest, is equal to at least 102%; and

(f) commercial paper that is rated at the time of purchase within the two highest Rating Categories by at least two of S&P, Moody’s and Fitch and that matures not more than 270 days after the date of purchase; and

(g) mutual funds (including those for which the Bond Trustee or an affiliate performs services for a fee, whether as a custodian, transfer agent, investment advisor or otherwise) composed solely of investments described in (I) hereof, or if hereafter permitted by the Act or approved in writing by the State Treasurer, described in (II) below, and

(II) to the extent hereafter permitted by the Act and approved in writing by the State Treasurer,

(a) United States Government Obligations described in clause (2) or (3) of “United States Government Obligations,”

(b) bonds or notes issued by any state or municipality which are rated at the time of purchase by Moody’s and S&P equal to or higher than A,

(c) rights to receive the principal of and/or the interest on such Investment Securities whether through direct ownership as evidenced by physical possession of such obligations or unmatured interest coupons or by registration as to ownership on the books of the Issuer or its duly authorized paying agent or transfer agent or securities depositary, or certificates or other instruments evidencing an undivided ownership interest in payments of the principal of and/or interest on such obligations, and

(d) investment agreements collateralized by United States Government Obligations or obligations of any federal agency described in clause (I)(b) above, with any institution (1) whose debt securities are rated at the time of purchase equal to or higher than “A,” (or the highest Rating Category of short term obligations if the investment is a short term obligation) by S&P and Moody’s or (2) if the parent entity of such institution meets the rating requirements of clause (1) in the Bond Indenture and issues a guarantee of full and timely performance of the obligations of such institution under the investment agreement; provided:

(1) a specific written agreement governs the transaction; and

(2) the securities are held free and clear of any lien by the Bond Trustee or an independent third party acting solely as agent (“Agent”) for the Bond Trustee, and such third party is (A) a Federal Reserve Bank or (B) a bank which is a member of the FDIC and which has combined capital, surplus and undivided profits of not less than $50 million and the Bond Trustee shall have received written confirmation from such third party that it holds such securities, free and clear of any lien, as agent for the Bond Trustee; and

(3) a perfected first security interest under the Uniform Commercial Code, or book entry procedures prescribed at 31 C.F.R. 306.1 et seq. or 31 C.F.R. 350.0 et seq. in such securities is created for the benefit of the Bond Trustee; and

(4) the fair market value of the securities in relation to the amount invested under the investment agreement is equal to at least 102%.

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“Issuer” means the Michigan Finance Authority, a body corporate and politic duly organized and existing under the laws of the State of Michigan, including particularly the Act and Executive Order No. 2010-02, and its successors.

“Liquidity Facility” means a line of credit, a standby bond purchase agreement, letter of credit or similar liquidity facility issued by a commercial bank, savings institution, pension fund or other financial institution which, by its terms, shall provide for the payment of the Purchase Price of Bonds tendered and not remarketed, and delivered to the Bond Trustee pursuant to the Loan Agreement, or, in the event of the delivery of an Alternate Liquidity Facility, such Alternate Liquidity Facility.

“Liquidity Facility Bonds” means Bonds purchased with moneys drawn under (or otherwise obtained pursuant to the terms of) a Liquidity Facility, but excluding Bonds no longer considered to be Liquidity Facility Bonds in accordance with the terms of the Liquidity Facility.

“Liquidity Facility Cancellation Date” means the effective date of the cancellation of a Liquidity Facility pursuant to the Bond Indenture.

“Liquidity Facility Purchase Account” means the account by that name created in the Bond Indenture.

“Liquidity Facility Provider” means any commercial bank, insurance company, pension fund or other financial institution which provides a Liquidity Facility or Alternate Liquidity Facility for the Bonds.

“Loan Agreement” means that certain loan agreement, dated as of July 1, 2016, between the Issuer and McLaren Health.

“Loan Default Event” means any of the events specified in of the applicable provisions of the

Loan Agreement. “Loan Repayments” means the payments so designated and required to be made by McLaren

Health pursuant to the Loan Agreement.

“London Banking Day” means any day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency) in the City of London, United Kingdom.

“Long-Term Mode” means a Three Month LIBOR Indexed Mode, a Term Rate Mode (except during a Three Month Term Rate Period), a FRN Rate Mode or a Fixed Rate Mode.

“Mandatory Purchase Date” means: (i) with respect to a Flexible Rate Bond the first Business Day following the last day of each Flexible Rate Period with respect to such Bond, (ii) for Bonds in the Term Rate Mode or the FRN Rate Mode, the first Business Day following the last day of each Term Rate Period or each FRN Rate Period, as applicable, (iii) any Conversion Date (except a Conversion between the Daily Mode and the Weekly Mode), (iv) any Substitution Date, (v) the fifth Business Day prior to the Expiration Date, (vi) the date specified by the Bond Trustee following the occurrence of an event of default (other than as a result of an Automatic Termination Event) under a Reimbursement Agreement, which date shall be a Business Day selected by the Bond Trustee that is not later than the Business Day preceding the termination date specified by the Credit Facility Provider or the Liquidity Facility Provider and is at least twenty days after the Bond Trustee’s receipt of notice of such event of default from the Credit Facility Provider or the Liquidity Facility Provider; (vii) the date specified by the Bond Trustee following receipt of notice by the Bond Trustee from the Credit Facility Provider that the Credit Facility will not be reinstated following a drawing to pay interest on the Bonds (other than interest on Bonds no longer Outstanding after such drawing) which date shall be a Business Day not more than five days after

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the Bond Trustee’s receipt of such notice, (viii) for Bonds in the Daily Mode or Weekly Mode, any Business Day specified by McLaren Health not less than 20 days after the Bond Trustee’s receipt of a notice from McLaren Health of its intent to exercise the option to cause a mandatory tender of the Bonds and in no event later than the day preceding the Expiration Date, and (ix) a Window Mandatory Tender Date.

“Mandatory Tender Date” means each date on which the Bonds are subject to mandatory tender as provided in the Bond Indenture.

“Mandatory Tender Window” means, during a Window Rate Period, (i) a period of 210 days, beginning on the Business Day a Window Optional Tender Notice is received by the Remarketing Agent, or (ii) a period of such other number of days specified by the Remarketing Agent, with the consent of McLaren Health, in a written notice to the Issuer, the Bond Trustee, the Tender Agent, the Liquidity Facility Provider (if any) and the Credit Facility Provider (if any). Any change in the Mandatory Tender Window shall become effective only on a Window Mandatory Tender Date or any other Mandatory Purchase Date for all of the Bonds that occurs during such Window Rate Period.

“Master Indenture” means the Master Trust Indenture, dated as of June 1, 1998, between McLaren Health, as Obligated Group Agent on behalf of the Obligated Group and the Master Trustee, as originally executed and as it may from time to time be supplemented, modified or amended in accordance with the terms thereof.

“Maturity Date” means May 15, 2046 and, while the Bonds are in the Fixed Rate Mode, any Serial Maturity Date.

“Maximum Rate” means (i) with respect to all Bonds other than Liquidity Facility Bonds, a rate of interest of 12% per annum or, if lower, the highest rate allowed by law, and (ii) with respect to Liquidity Facility Bonds, the rate specified in the Liquidity Facility or, if lower, the highest rate allowed by law.

“McLaren Health” means McLaren Health Care Corporation, a Michigan nonprofit and public benefit corporation, or any corporation that is the surviving, resulting or transferee corporation in any merger, consolidation or transfer of assets permitted under the Master Indenture.

“McLaren Health Purchase Account” means the account by that name created in the Bond Indenture.

“MMI Procedures” means the Securities Depository’s Operational Arrangements and the Issuing/Paying Agent General Operating Procedures for Money Market Instruments as the same may be amended and modified from time to time.

“Mode” means, as the context may require, the Daily Mode, the Weekly Mode, the Term Rate Mode, the Fixed Rate Mode, the Flexible Mode, the Three Month LIBOR Indexed Mode, the Flexible Index Mode, the Index Mode, the FRN Rate Mode, or the Window Mode.

“New Mode” has the meaning specified in the Bond Indenture.

“Notice Parties” means the Bond Trustee, the Tender Agent, the Remarketing Agent, the Paying Agent, the Credit Facility Provider, the Liquidity Facility Provider and McLaren Health.

“Obligated Group Agent” means McLaren Health or any other Person designated as the “Obligated Group Agent” pursuant to the Master Indenture.

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“Obligation” or “Bond Obligation” means McLaren Obligated Group Obligation No. 22 issued under the Master Indenture and the Supplement.

“One Month LIBOR” means the rate for deposits in U.S. dollars with one-month maturity as published by Reuters (or such other service utilized for the purpose of displaying London interbank offered rates for U.S. dollar deposits) as of 11:00 A.M., London time on the second London Banking Day prior to the Reset Date, except that, if such rate is not available on the Reset Date, One Month LIBOR means a rate determined on the basis of the rates at which deposits in U.S. dollars for a one-month maturity and in a principal amount of at least U.S. $1,000,000 are offered at approximately 11:00 A.M., London time, on the Reset Date, to prime banks in the London interbank market by the Reference Banks (as defined in “Three Month LIBOR Rate” below). The Quotation Agent shall request the principal London office of each of such Reference Banks to provide a quotation of its rate. If at least two such quotations are provided, One Month LIBOR will be the arithmetic mean of such quotations. If fewer than two quotations are provided, One Month LIBOR will be the arithmetic mean of the rates quoted by three (if three quotations are not provided, two or one, as applicable) major banks in New York City, selected by the Quotation Agent, at approximately 11:00 A.M. on the Reset Date for loans in U.S. dollars to leading European banks in a principal amount of at least U.S. $1,000,000 having a one-month maturity. If none of the banks in New York City selected by the Quotation Agent is then quoting rates for such loans, then One Month LIBOR for the ensuing interest period will mean One Month LIBOR as of the immediately preceding Reset Date.

“Par Call Date” means (a) for a FRN Rate Period of three years or longer, the date six months prior to the end of the then current FRN Rate Period, or (b) the date specified in a notice to the Bond Trustee delivered in accordance with the Bond Indenture, as applicable.

“Person” means an individual, corporation, firm, association, partnership, trust or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof.

“Principal Account” means the account by that name in the Revenue Fund established pursuant to the Bond Indenture.

“Principal Corporate Trust Office” or “Designated Office” means, as appropriate, the designated corporate trust office of (1) the Bond Trustee, which as of the date of the Bond Indenture is located at the address set forth in the Bond Indenture, or (2) the Tender Agent, which as of the date hereof, shall be the same as the Bond Trustee.

“Principal Payment Date” means any date upon which the principal amount of Bonds is due under the Bond Indenture, including the Maturity Date, any Serial Maturity Date and any Redemption Date, or the date the maturity of any Bond is accelerated pursuant to the terms of the Bond Indenture and otherwise.

“Project” means the “2016 Projects,” as such term is defined in the Tax Certificate and Agreement, as the same may be modified from time to time in accordance with the provisions of the Tax Certificate and Agreement.

“Project Fund” means the fund by that name established pursuant to the Bond Indenture.

“Purchase Date” means (i) for a Bond in the Daily Mode or the Weekly Mode, any Business Day selected by the Beneficial Owner of said Bond pursuant to the provisions of the Bond Indenture, and (ii) any Mandatory Purchase Date.

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“Purchase Price” means: (a) with respect to any Bonds to be purchased on any Purchase Date, Mandatory Purchase Date, Scheduled Mandatory Tender Date or Unscheduled Mandatory Tender Date which is not an Interest Payment Date, an amount equal to 100% of the principal amount of any Bonds purchased on such date, plus unpaid accrued interest, if any, to such date; and (b) with respect to any Bonds to be purchased on any Purchase Date, Mandatory Purchase Date, Scheduled Mandatory Tender Date or Unscheduled Mandatory Tender Date which is an Interest Payment Date, an amount equal to 100% of the principal amount of any Bonds purchased on such date.

“Quotation Agent” means JPMorgan Chase Bank, N.A. or such other quotation agent as may be designated by McLaren Health.

“Rate Determination Date” means any date on which the interest rate on Bonds is determined, which, (i) in the case of the Flexible Mode, will be the first day of an Interest Period; (ii) in the case of the Daily Mode, will be each Business Day commencing with the first day (which must be a Business Day) the Bonds become subject to the Daily Mode; (iii) in the case of the Weekly Mode, (A) each Wednesday or, if Wednesday is not a Business Day, then the Business Day next succeeding such Wednesday and (B) a day not later than the Business Day preceding a Conversion Date, a Substitution Date or a Mandatory Purchase Date specified in clause (viii) of the definition of Mandatory Purchase Date; (iv) in the case of the Term Rate Mode, will be a Business Day no earlier than fifteen (15) Business Days and no later than the Business Day next preceding the first day of an Interest Period (and with respect to a Three Month Term Rate Period will be the fifth Business Day preceding the first day of each Three Month Term Rate Period), as determined by the Remarketing Agent; (v) in the case of the Three Month LIBOR Indexed Mode, will be a date that is two (2) London Business Days preceding the first day of each Three Month LIBOR Interest Period; (vi) in the case of the Fixed Rate Mode, will be a date determined by the Remarketing Agent which will be at least one Business Day prior to the Conversion Date; (vii) in the case of the FRN Rate Mode, each Reset Date; (viii) in the case of the Window Mode, each Thursday or if Thursday is not a Business Day, then the Business Day next succeeding such Thursday; and (ix) in the case of the Flexible Index Mode and the Index Mode, will be the date determined according to the Bond Indenture.

“Rebate Fund” means the Rebate Fund established pursuant to the Bond Indenture.

“Record Date” means (i) with respect to Bonds in a Short-Term Mode or the FRN Rate Mode, the last Business Day before an Interest Payment Date; and (ii) with respect to Bonds in a Long-Term Mode other than the FRN Rate Mode, the last day (whether or not a Business Day) of the month next preceding each Interest Payment Date.

“Redemption Date” means the date fixed for redemption of Bonds subject to redemption in any notice of redemption given in accordance with the terms of the Bond Indenture.

“Redemption Fund” means the fund by that name established pursuant to the Bond Indenture.

“Redemption Price” means, with respect to any Bond (or portion thereof), the principal amount of such Bond (or portion) plus the applicable premium, if any, and accrued interest to, but not including, the Redemption Date, payable upon redemption thereof pursuant to the provisions of such Bond and the Bond Indenture.

“Remarketing Agent” means any Remarketing Agent or successor or additional Remarketing Agent appointed in accordance with the Bond Indenture.

“Remarketing Agreement” means that certain remarketing agreement, if necessary, relating to the Bonds, by and between McLaren Health and the Remarketing Agent or any similar agreement between

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McLaren Health and the Remarketing Agent, as it may be amended or supplemented from time to time in accordance with its terms.

“Remarketing Proceeds Account” means the account by that name created in the Bond Indenture.

“Remarketing Window” has the meaning given in the Bond Indenture.

“Required Stated Amount” means at any time of calculation, an amount equal to the aggregate principal amount of all Bonds then Outstanding together with interest accruing thereon (assuming an annual rate of interest equal to the Interest Coverage Rate) for the period specified in a Certificate of the Obligated Group Agent to be the minimum period specified by the Rating Agencies then rating the Bonds as necessary to obtain (or maintain), in the case of a Liquidity Facility, the short-term rating of the Bonds or, in the case of a Credit Facility, the long-term rating of the Bonds.

“Reset Date” means the Conversion Date upon which the Bonds begin bearing interest at a FRN rate, and thereafter during a FRN Rate Period, every Thursday or if any Thursday is not a U.S. Government Securities Business Day, the next succeeding U.S. Government Securities Business Day, subject to being changed to a different day of the week as provided in the Bond Indenture.

“Responsible Officer” means, when used with respect to the Bond Trustee, any vice president, assistant vice president, senior associate, associate or other officer of the Bond Trustee within the corporate trust office specified in the Bond Indenture (or any successor corporate trust office) customarily performing functions similar to those performed by the persons who at the time will be such officers, respectively, or to whom any corporate trust matter is referred at the corporate trust office specified in the Bond Indenture because of such person’s knowledge of and familiarity with the particular subject and having direct responsibility for the administration of the Bond Indenture.

“Revenue Fund” means the fund by that name established pursuant to the Bond Indenture.

“Revenues” means all amounts received by the Issuer or the Bond Trustee for the account of the Issuer pursuant or with respect to the Loan Agreement or the Obligation, including, without limiting the generality of the foregoing, Loan Repayments (including both timely and delinquent payments and any late charges, and whether paid from any source), prepayments, insurance proceeds, condemnation proceeds and all interest, profits or other income derived from the investment of amounts in any fund or account established pursuant to the Bond Indenture, but not including any Administrative Fees and Expenses or any moneys required to be deposited in the Rebate Fund.

“Scheduled Mandatory Tender” means the mandatory tender for purchase of Bonds in the Index Mode or the Flexible Index Mode pursuant to the provisions of the Bond Indenture and excludes any mandatory tender of Bonds in the Index Mode or the Flexible Index Mode pursuant to the Bond Indenture.

“Scheduled Mandatory Tender Date” means, with respect to each Tender Period, the date determined pursuant to the Bond Indenture.

“Scheduled Mandatory Tender Failure” means the failure of McLaren Health to pay or provide for the payment of the Purchase Price of all Bonds required to be purchased on a Scheduled Mandatory Tender Date pursuant to the Bond Indenture.

“Serial Bonds” means the Bonds maturing on the Serial Maturity Dates, as determined pursuant to the Bond Indenture.

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“Serial Maturity Dates” means the dates on which the Serial Bonds mature, as determined pursuant to the Bond Indenture.

“Serial Payments” means the payments to be made in payment of the principal of the Serial Bonds on the Serial Maturity Dates.

“Short-Term Mode” means the Daily Mode, the Weekly Mode, the Flexible Mode, the Flexible Index Mode, the Index Mode, the Term Rate Mode (during a Three Month Term Rate Period only) or the Window Mode.

“SIFMA” or “SIFMA Index” means, as of any date, the per annum rate published or reported by Municipal Market Data on its SIFMA Municipal Swap Index most recently available, or if the SIFMA Municipal Swap Index is no longer published or reported, the rate per annum published or reported on the S&P Municipal Bond 7 Day High Grade Index (formerly the S&P Weekly High Grade Index), or if neither the SIFMA Municipal Swap Index nor the S&P Municipal Bond 7 Day High Grade Index is published, such alternate interest rate index as the Remarketing Agent shall select as most comparable to the SIFMA Municipal Swap Index.

“SIFMA Average Index Rate” means, during each Interest Accrual Period, the per annum rate equal to the average of SIFMA in effect for each day in such Interest Accrual Period.

“Sinking Fund Installment” means the amount required by the Bond Indenture to be paid by the Issuer on any single date for the retirement of Bonds.

“Special Record Date” means the date established by the Bond Trustee pursuant to the Bond Indenture as a record date for the payment of defaulted interest on the Bonds.

“Special Redemption Account” means the account by that name in the Redemption Fund established pursuant to the Bond Indenture.

“Substitution Date” means (i) the date upon which an Alternate Credit Facility or Alternate Liquidity Facility is scheduled to be substituted for the Credit Facility or Liquidity Facility then in effect, or (ii) the effective date of a Credit Facility or Liquidity Facility issued or delivered with respect to Bonds not then covered by a Credit Facility or Liquidity Facility.

“Supplement” means that certain Supplemental Indenture Number 22, dated as of July 1, 2016, between McLaren Health, as Obligated Group Agent on behalf of the Obligated Group, and the Master Trustee, pursuant to which the Obligation is issued.

“Supplemental Bond Indenture” means any indenture hereafter duly authorized and entered into between the Issuer and the Bond Trustee, supplementing, modifying or amending the Bond Indenture; but only if and to the extent that such Supplemental Bond Indenture is specifically authorized under the Bond Indenture.

“Tender Agent” means the commercial bank, trust company or other entity which may from time to time be appointed to serve as Tender Agent under the Bond Indenture. Until such time as an alternate Tender Agent is appointed, the Tender Agent will be the Bond Trustee.

“Tender Notice” means a notice delivered by Electronic Means or in writing that states (i) the principal amount of such Bond to be purchased pursuant to the provisions of the Bond Indenture, (ii) the Purchase Date on which such Bond is to be purchased, (iii) applicable payment instructions with respect to the Bonds being tendered for purchase and (iv) an irrevocable demand for such purchase.

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“Tender Notice Deadline” means (i) during the Daily Mode, 11:00 A.M. on any Business Day and (ii) during the Weekly Mode, 5:00 P.M. on the Business Day seven days prior to the applicable Purchase Date.

“Tender Period” means, with respect to Bonds bearing interest in a Flexible Index Mode, a period determined pursuant to the provisions of the Bond Indenture.

“Tender Period Standard Date” means, with respect to any Tender Period, during a Flexible Index Mode or an Index Mode, the date which is six months prior to the Scheduled Mandatory Tender Date for such Tender Period.

“Term Rate” means the per annum interest rate for the Bonds in the Term Rate Mode determined pursuant to the provisions of the Bond Indenture.

“Term Rate Mode” means the Interest Rate Mode during which the Bonds bear interest at the

Term Rate.

“Term Rate Period” means the period from (and including) the Conversion Date to (but excluding) the last day of the first period that the Bonds shall be in the Term Rate Mode as established by McLaren Health for the Bonds pursuant to the provisions of the Bond Indenture and, thereafter, the period from (and including) the beginning date of each successive Interest Period selected for the Bonds by McLaren Health pursuant to the Bond Indenture while it is in the Term Rate Mode to (but excluding) the commencement date of the next succeeding Interest Period, including another Term Rate Period. Except as otherwise provided in the Bond Indenture (including during a Three Month Term Rate Period), an Interest Period for the Bonds in the Term Rate Mode must be at least 180 days in length.

“Three Month LIBOR Index Rate” means the per annum interest rate borne by the Bonds during each Three Month LIBOR Interest Period determined in accordance with the Bond Indenture.

“Three Month LIBOR Indexed Mode” means the Interest Rate Mode during which the Bonds bear interest at the Three Month LIBOR Index Rate.

“Three Month LIBOR Interest Period” means, during the Three Month LIBOR Indexed Mode, the period from (and including) the Conversion Date to the first Interest Payment Date and thereafter means the period from (and including) an Interest Payment Date to but not including the following Interest Payment Date (regardless of whether or not such Interest Payment Dates are Business Days).

“Three Month LIBOR Rate” means the rate for deposits in U.S. dollars with a three-month maturity that appears on Reuters Screen LIBOR01 Page (or such other page as may replace that page on that service, or such other service utilized for the purpose of displaying London interbank offered rates for U.S. dollar deposits) as of 11:00 A.M., London time, on the Rate Determination Date, except that, if such rate does not appear on such page on the Rate Determination Date, the Three Month LIBOR Rate means a rate determined on the basis of the rates at which deposits in U.S. dollars for a three-month maturity and in a principal amount of at least U.S. $1,000,000 are offered at approximately 11:00 A.M., London time, on the Rate Determination Date, to prime banks in the London interbank market by four major banks in the London interbank market (the “Reference Banks”) selected by the Quotation Agent. The Quotation Agent is to request the principal London office of each of such Reference Banks to provide a quotation of its rate. If at least two such quotations are provided, the Three Month LIBOR Rate will be the arithmetic mean of such quotations. If fewer than two quotations are provided, the Three Month LIBOR Rate will be the arithmetic mean of the rates quoted by three (if three quotations are not provided, two or one, as applicable) major banks in New York City, selected by the Quotation Agent, at approximately 11:00 A.M. on the Rate Determination Date, for loans in U.S. dollars to leading European banks in a principal amount

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of at least U.S. $1,000,000 having a three-month maturity. If the banks in New York City selected by the Quotation Agent are not then quoting rates for such loans, then the Three Month LIBOR Rate for the ensuing Three Month LIBOR Interest Period will mean the Three Month LIBOR Rate then in effect.

“Three Month Term Rate Period” means each Term Rate Period with a duration of three calendar months.

“Undelivered Bond” means any Bond which constitutes an Undelivered Bond under the Bond Indenture.

“United States Government Obligations” means (1) direct obligations of (including obligations issued or held in book entry form on the books of) the Department of the Treasury of the United States of America, (2) cash (insured at all times by the Federal Deposit Insurance Corporation) or (3) senior debt obligations of agencies sponsored by the United States government.

“U.S. Government Securities Business Day” means any day except for a Saturday, a Sunday, a day on which the Securities Industry and Financial Markets Association, or its successor, recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. government securities, or a day that is not a Business Day.

“Unscheduled Mandatory Tender” means any mandatory tender for purchase of Bonds in the Index Mode pursuant to the provisions of the Bond Indenture and excludes any mandatory tender of Bonds in the Index Mode or the Flexible Index Mode pursuant to the Bond Indenture or any mandatory tender of the Bonds bearing interest in a Mode other than a Flexible Index Mode or an Index Mode.

“Unscheduled Mandatory Tender Date” means a date for the mandatory tender of Bonds in the Index Mode or the Flexible Index Mode pursuant to the provisions of the Bond Indenture.

“Variable Rate Mode” means a Short-Term Mode or the Term Rate Mode.

“Weekly Mode” means the Interest Rate Mode during which the Bonds bear interest at the Weekly Rate.

“Weekly Rate” means the per annum interest rate on the Bonds in the Weekly Mode determined pursuant to the provisions of the Bond Indenture.

“Weekly Rate Period” means the period during which a Bond in the Weekly Mode shall bear a Weekly Rate, which shall be the period commencing on Thursday of each week to and including Wednesday of the following week, except (i) if the Bonds are issued in the Weekly Mode, in which case the first Weekly Rate Period shall be from the Date of Issuance to and including the Wednesday of the following week, (ii) in connection with a Conversion to the Weekly Rate, in which case the first Weekly Rate Period shall be from the Conversion Date to and including the Wednesday of the following week, (iii) in the case of a Substitution Date or Mandatory Purchase Date specified in clause (viii) of the definition of Mandatory Purchase Date, in which case the Weekly Rate Period prior to the Substitution Date or such Mandatory Purchase Date shall end on the day before the Substitution Date or such Mandatory Purchase Date and a new Weekly Rate Period shall commence on the Substitution Date or such Mandatory Purchase Date and end on the Wednesday of the following week and (iv) in connection with a Conversion from the Weekly Mode, the last Weekly Rate Period shall end on the day next preceding the Conversion Date.

“Window Calculation Agent” means the Bond Trustee or an agent appointed by the Bond Trustee to calculate the Window Rate.

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“Window Mandatory Tender Date” means the date specified for the mandatory purchase of a Bond in the Window Mode pursuant to the Bond Indenture.

“Window Mode” means the Interest Rate Mode during which the Bonds bear interest at the Window Rate.

“Window Optional Tender Date” means the date specified for the purchase of a Bond in the

Window Mode upon optional tender pursuant to the Bond Indenture.

“Window Optional Tender Notice” has the meaning given in the Bond Indenture.

“Window Rate” means the per annum interest rate on the Bonds in the Window Mode determined pursuant to the Bond Indenture.

“Window Rate Period” means the period during which a Bond in the Window Mode shall bear interest at a Window Rate, which shall be the period commencing on Thursday of each week to and including Wednesday of the following week, except (i) if the Bonds are issued in the Window Mode, in which case the first Window Rate Period shall be from the Date of Issuance to and including the Wednesday of the following week, (ii) in connection with a Conversion to the Window Rate, in which case the first Window Rate Period shall be from the Conversion Date to and including the Wednesday of the following week, (iii) in the case of a Substitution Date or Mandatory Purchase Date specified in clause (ix) of the definition of Mandatory Purchase Date, in which case the Window Rate Period prior to the Substitution Date or such Mandatory Purchase Date shall end on the day before the Substitution Date or such Mandatory Purchase Date and a new Window Rate Period shall commence on the Substitution Date or such Mandatory Purchase Date and end on the Wednesday of the following week and (iv) in connection with a Conversion from the Window Mode, the last Window Rate Period shall end on the day next preceding the Conversion Date.

“Window Spread” means, during a Window Rate Period, (i) the Initial Window Spread, or (ii) a revised spread determined by the Remarketing Agent pursuant to the Bond Indenture.

BOND INDENTURE

The following is a summary of certain provisions of the Bond Indenture. This summary does not purport to be complete or definitive and reference is made to the Bond Indenture for the complete terms thereof.

General

The Bond Indenture sets forth the terms of the Bonds, the nature and extent of the security, the various rights of the holders of the Bonds, the rights, duties and immunities of the Bond Trustee and the rights and obligations of the Issuer. Certain provisions of the Bond Indenture are summarized below; other provisions are summarized in this Limited Offering Memorandum under the caption “THE SERIES 2016 BONDS.”

Calculation and Payment of Interest; Change in Interest Rate Mode; Maximum Rate

When a Short-Term Mode, a FRN Rate Mode, a Three Month LIBOR Indexed Mode or a Term Rate Mode of less than one year is in effect, interest shall be calculated on the basis of a 365/366 day year for the actual number of days elapsed. When a Term Rate Mode of greater than one year or Fixed Rate Mode is in effect, interest shall be calculated on the basis of a 360 day year comprised of twelve 30-day

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months. Payment of interest on each Bond shall be made on each Interest Payment Date for such Bond for unpaid interest accrued during the Interest Accrual Period to the Owner of record of such Bond on the applicable Record Date. During the Flexible Index Mode and the Index Mode, payment shall be made on each Interest Payment Date for unpaid interest accrued from and including the Interest Accrual Date immediately preceding the Interest Payment Date; except that payment shall be made on the initial Interest Payment Date for the Bonds for unpaid interest accrued from and including the Date of Issuance. Notwithstanding the foregoing, while the Bonds are in a Flexible Index Mode or an Index Mode, any conflict or inconsistency between the provisions of the Bond Indenture shall be resolved in favor of the provisions of the Bond Indenture relating to the “Determination of Index Tender Rates and Interest Accrual Periods for Bonds in Index Mode or Flexible Index Mode.”

The Bonds in any Interest Rate Mode may be changed to any other Interest Rate Mode (a “Conversion”) at the times and in the manner in the Bond Indenture as provided. Subsequent to such Conversion the Bonds may again be changed to a different Interest Rate Mode at the times and in the manner provided in the Bond Indenture.

No Bonds will bear interest at an interest rate higher than the Maximum Rate.

In the absence of manifest error, the determination of interest rates (including any determination of rates in connection with a New Mode) and interest periods by the Remarketing Agent, the record of interest rates maintained by the Paying Agent, and the determination of the Window Rate by the Window Calculation Agent, will be conclusive and binding upon the Remarketing Agent, the Paying Agent, the Bond Trustee, the Issuer, McLaren Health, the Owners and the Beneficial Owners.

Determination of Flexible Rates and Interest Periods During Flexible Mode

An Interest Period for the Bonds in the Flexible Mode will be of such duration of from one to 270 calendar days, ending on a day preceding a Business Day or the Maturity Date, as the Remarketing Agent shall determine in accordance with the provisions of the Bond Indenture. A Flexible Rate Bond can have an Interest Period, and bear interest at a Flexible Rate, different than another Flexible Rate Bond. In making the determinations with respect to Interest Periods, subject to limitations imposed by the second preceding sentence and in the Bond Indenture, on each Rate Determination Date for a Flexible Rate Bond, the Remarketing Agent will select for such Bond the Interest Period which would result in the Remarketing Agent being able to remarket such Bond at par in the secondary market at the lowest average interest cost for all Flexible Rate Bonds; provided, however, that if the Remarketing Agent has received notice from McLaren Health that the Bonds are to be changed from the Flexible Mode to any other Interest Rate Mode, the Remarketing Agent shall select Interest Periods which do not extend beyond the resulting applicable Mandatory Purchase Date of the Bonds.

Except while the Bonds are registered in a Book-Entry System, in order to receive payment of the Purchase Price the Owner of any Bond in the Flexible Mode must present such Bond to the Paying Agent, by 12:00 noon on the Rate Determination Date, in which case, the Paying Agent will pay the Purchase Price to such Owner by 3:00 P.M. on the same day.

By 1:00 P.M. on each Rate Determination Date, the Remarketing Agent, with respect to each Bond in the Flexible Mode which is subject to adjustment on such date, shall determine the Flexible Rate(s) for the Interest Periods then selected for such Bond and shall give notice by Electronic Means to the Paying Agent and McLaren Health, of the Interest Periods, the Purchase Date(s) and the Flexible Rate(s). The Remarketing Agent shall make the Flexible Rate and Interest Period available after 2:00 P.M. on each Rate Determination Date by telephone or Electronic Means to any Beneficial Owner or Notice Party requesting such information.

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Determination of Interest Rates During the Daily Mode and the Weekly Mode

The interest rate for the Bonds in the Daily Mode or Weekly Mode will be the rate of interest per annum determined by the Remarketing Agent on and as of the applicable Rate Determination Date as the minimum rate of interest which, in the opinion of the Remarketing Agent under then-existing market conditions, would result in the sale of the Bonds in the Daily Rate Period or Weekly Rate Period, as applicable, at a price equal to the principal amount thereof, plus interest, if any, accrued through the Rate Determination Date during the then current Interest Accrual Period.

During the Daily Mode, the Remarketing Agent will establish the Daily Rate by 10:00 A.M. on each Rate Determination Date. The Daily Rate for any day during the Daily Mode which is not a Business Day will be the Daily Rate established on the immediately preceding Rate Determination Date. The Remarketing Agent will make the Daily Rate available no less frequently than once each week by Electronic Means to each Notice Party requesting such rate.

During the Weekly Mode, the Remarketing Agent will establish the Weekly Rate by 4:00 P.M. on each Rate Determination Date. The Weekly Rate will be in effect during the applicable Weekly Rate Period. The Remarketing Agent will make the Weekly Rate available no later than 5:00 P.M. on the Business Day following the Rate Determination Date by Electronic Means to each Notice Party requesting such rate.

Determination of Term Rates and Fixed Rates

Term Rates. Except as provided in the Bond Indenture under the section “Alternate Rates,” once the Bonds are changed to the Term Rate Mode, the Bonds will continue in the Term Rate Mode until changed to another Interest Rate Mode in accordance with the Bond Indenture. Absent written direction from McLaren Health to the contrary at least 20 days prior the end of any Term Rate Period, while the Bonds bear interest in the Term Rate Mode, the duration of the next succeeding Term Rate Period will be of the same duration as the Term Rate Period currently in effect or, if shorter, the period to but not including the applicable Maturity Date. The Term Rate will be determined by the Remarketing Agent not later than 4:00 P.M. on the Rate Determination Date, and the Remarketing Agent will make the Term Rate available by telephone or by Electronic Means to any Notice Party requesting such rate. The Term Rate will be the minimum rate which, in the sole judgment of the Remarketing Agent, would result in a sale of the Bonds at a price equal to the principal amount thereof on the Rate Determination Date for the Interest Period selected by McLaren Health in writing delivered to the Remarketing Agent before such Rate Determination Date. If a new Interest Period is not selected by McLaren Health prior to a Rate Determination Date, the new Interest Period will be the same length as the current Interest Period (or such lesser period as shall be necessary to comply with the last sentence of this paragraph). The Remarketing Agent will make the Term Rate available by telephone or Electronic Means after 5:00 P.M. on the Rate Determination Date to any Notice Party requesting such Term Rate. Upon request of any Notice Party the Paying Agent will give notice of such rate by Electronic Means. No Interest Period in the Term Rate Mode may extend beyond the applicable Maturity Date.

Fixed Rates. The purchaser of the Bonds shall, prior to closing, determine the Fixed Rate for the Bonds for the initial Fixed Rate Period. Thereafter, the Remarketing Agent shall determine the Fixed Rate for the Bonds being subsequently converted to the Fixed Rate Mode in the manner and at the times as follows: not later than 4:00 P.M. on the applicable Rate Determination Date, the Remarketing Agent shall determine the Fixed Rate (or Rates, if the Bonds will have Serial Maturity Dates in accordance with the provisions of the Bond Indenture). Except as set forth in the Bond Indenture, the Fixed Rate shall be the minimum interest rate which, in the sole judgment of the Remarketing Agent, will result in a sale of the Bonds at a price equal to the principal amount thereof on the Rate Determination Date. The Remarketing Agent shall make the Fixed Rate available by telephone or by Electronic Means after 5:00

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P.M. on the Rate Determination Date to any Notice Party requesting such Fixed Rate. Upon request of any Notice Party the Paying Agent shall give Notice Party requesting such Fixed Rate. Upon request of any Notice Party the Paying Agent shall give notice of such rate by Electronic Means.

Determination of Window Rates

Determination of Window Rate. During each Window Rate Period, the Bonds will bear interest at the Window Rate, which will be determined by the Window Calculation Agent each Thursday (or if such day is not a Business Day, then on the next succeeding Business Day) and shall be equal to the SIFMA Index on such day plus the Window Spread. The Window Calculation Agent shall furnish each Window Rate so determined to the Bond Trustee, the Remarketing Agent, the Issuer and McLaren Health by Electronic Means no later than the Business Day next succeeding the date of determination. The first Window Rate for each Window Rate Period will be determined on or prior to the first day of such Window Rate Period, shall apply to the period commencing on the first day of such Window Rate Period and ending on and including the next succeeding Wednesday and shall be equal to the SIFMA Index as of the first day of such Window Rate Period (or, if the first day of such Window Rate Period is not a Thursday, the SIFMA Index as of the Thursday preceding the first day of such Window Rate Period) plus the Window Spread. Thereafter, each Window Rate shall apply to the period commencing on and including Thursday and ending on and including the next succeeding Wednesday, unless such Window Rate Period ends on a day other than Wednesday, in which event the last Window Rate for such Window Rate Period shall apply to the period commencing on and including the Thursday preceding the last day of such Window Rate Period and ending on and including the last day of such Window Rate Period.

Change in Window Spread. During each Window Rate Period, the Remarketing Agent may (i) with the consent of McLaren Health, increase the Window Spread effective as of any Window Optional Tender Date during each Remarketing Window, any Window Mandatory Tender Date or any other Mandatory Tender Date for all of the Bonds that occurs pursuant to the provisions of the Bond Indenture during such Window Rate Period, or (ii) reduce the Window Spread effective as of any Window Mandatory Tender Date or any other Mandatory Tender Date for all of the Bonds that occurs pursuant to the provisions of the Bond Indenture during such Window Rate Period. The sum of the SIFMA Index plus the revised Window Spread shall be equal to the rate of interest per annum determined by the Remarketing Agent (based on an examination of tax exempt obligations comparable, in the judgment of the Remarketing Agent, to the Bonds and known by the Remarketing Agent to have been priced or traded under then prevailing market conditions) to be the minimum interest rate which, if borne by the Bonds, would enable the Remarketing Agent to sell all of the Bonds on the effective date of the revised Window Spread at a price (without regard to accrued interest) equal to the principal amount thereof. A revised Window Spread shall apply to all Bonds bearing interest at a Window Rate as of the effective date of the revised Window Spread. The Remarketing Agent shall give notice of the revised Window Spread to the Bond Trustee by Electronic Means not later than the second Business Day after the effective date of such revised Window Spread. The Bond Trustee shall give notice of such revised Window Spread by first-class mail to the Holders, with a copy to the Issuer, McLaren Health, the Tender Agent and the Liquidity Facility Provider (if any) or the Credit Facility Provider (if any), not later than the second Business Day after receiving notice of such Window Spread from the Remarketing Agent.

Alternate Rates

Subject only to the provisions of the Bond Indenture regarding insufficient funds for tenders, the interest rate on the Bonds will be determined as provided in the Bond Indenture during any period that (i) the Remarketing Agent or the Window Calculation Agent, as applicable, fails or is unable to determine the interest rate or Interest Period for the Bonds other than when the Bonds are in the Three Month LIBOR Indexed Mode, the Index Mode, or the Flexible Index Mode, (ii) the method by which the Remarketing Agent or the Window Calculation Agent, as applicable, determines the interest rate or

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Interest Period with respect to the Bonds (or the selection by McLaren Health of the Interest Periods for Bonds in the Term Rate Mode) is held to be unenforceable by a court of law of competent jurisdiction, or (iii) if the Remarketing Agent suspends its remarketing effort in accordance with the Remarketing Agreement; provided that, if such period is longer than thirty (30) consecutive days, the interest rate on the Bonds commencing on the thirty-first day of such period until the end of such period will equal the Maximum Rate. These provisions will continue to apply until such time as the Remarketing Agent (or the Window Calculation Agent, or McLaren Health, if applicable) again makes such determinations. In the case of clause (ii) above, the Remarketing Agent (or the Window Calculation Agent, or McLaren Health, if applicable) will again make such determination at such time as there is delivered to the Remarketing Agent, or the Window Calculation Agent, as applicable, and McLaren Health an opinion of Bond Counsel to the effect that there are no longer any legal prohibitions against such determinations. The following will be the methods by which the interest rates and, in the case of the Flexible and Term Rate Modes, the Interest Periods, will be determined for the Bonds as to which any of the events described in clauses (i), (ii) or (iii) will be applicable. Such methods shall be applicable from and after the date any of the events described in clauses (i), (ii) or (iii) first become applicable to the Bonds until such time as the events described in clauses (i), (ii) or (iii) are no longer applicable to the Bonds. These provisions will not apply if McLaren Health fails to select an Interest Period for the Bonds in the Term Rate Mode for a reason other than as described in clause (ii) above.

For Flexible Rate Bonds, the next Interest Period will be from, and including, the first day following the last day of the current Interest Period for the Bonds to, but excluding, the next succeeding Business Day and thereafter will commence on each Business Day and extend to, but exclude, the next succeeding Business Day. For each such Interest Period, the interest rate for the Bonds will be the applicable Alternate Rate in effect on the Business Day that begins an Interest Period.

If the Bonds are in the Daily Mode, the Weekly Mode or the FRN Rate Mode, then the Bonds will bear interest during each subsequent Interest Period at the Alternate Rate in effect on the first day of such Interest Period.

If the Bonds are then in the Term Rate Mode, then the Bonds will automatically convert to Flexible Rate Bonds, with an Interest Period commencing on the first day following the last day of the current Interest Period for the Bonds to, but excluding, the next succeeding Business Day and thereafter will commence on each Business Day and extend to, but exclude, the next succeeding Business Day. For each such Interest Period, the interest rate for the Bonds will be the applicable Alternate Rate in effect at the beginning of each such Interest Period.

If the Bonds are then in the Window Mode, then the Window Rate for such subsequent Interest Period will be equal to 85% of the interest rate on 30 day high grade unsecured commercial paper notes sold through dealers by major corporations as reported in The Wall Street Journal on the day such Window Rate would otherwise be determined as provided in the Bond Indenture for such Window Rate Period, plus the Window Spread.

Determination of Three Month LIBOR Index Rates

During each Three Month LIBOR Interest Period, the Bonds will bear interest at the Three Month LIBOR Index Rate, which will be the rate of interest per annum determined by the Bond Trustee on the Rate Determination Date to be the sum of (a) 67% of the Three Month LIBOR Rate and (b) a rate per annum determined on or before the Conversion Date by the Remarketing Agent, in its sole discretion based on market conditions at the time such rate is determined, which, when added to the rate calculated pursuant to clause (a) results in a Three Month LIBOR Index Rate necessary to sell the Bonds at 100% of the principal amount thereof on the Conversion Date. The Three Month LIBOR Index Rate will be rounded upward or downward to the fifth decimal place and the Three Month LIBOR Index Rate may not

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exceed the Maximum Rate. Upon the request of the holder of any Bond, the Bond Trustee will provide the Three Month LIBOR Index Rate then in effect and, if determined, the Three Month LIBOR Index Rate that will become effective for the next Three Month LIBOR Interest Period. The Bond Trustee’s determination of any Three Month LIBOR Index Rate, and its calculation of the amount of interest for any Three Month LIBOR Interest Period, will be final and binding in the absence of manifest error.

FRN Rate and FRN Rate Period

Determination of FRN Rate. During each FRN Rate Period, the Bonds will bear interest at the FRN Rate, which will be determined, with respect to the initial FRN Rate Period by the Calculation Agent, and thereafter by the Calculation Agent on each Reset Date and with respect to a Conversion to the FRN Rate Period, by the Remarketing Agent on or prior to the Conversion Date, and thereafter by the Calculation Agent on each Reset Date. The first FRN Rate for each FRN Rate Period will be determined on or prior to the first day of such FRN Rate Period and shall apply to the period commencing on the first day of such FRN Rate Period to but not including the following Reset Date. Thereafter, each FRN Rate shall apply to the period commencing on and including a Reset Date, to but not including the next succeeding Reset Date. The FRN Rate shall be the sum of (i) the product of the applicable Index multiplied by the FRN Rate Percentage, plus (ii) the FRN Rate Spread. On or prior to the Conversion Date to a FRN Rate Period, McLaren Health shall designate the Index to be in effect during such FRN Rate Period and the Remarketing Agent shall determine the FRN Rate Percentage and FRN Rate Spread that will result in the Remarketing Agent selling the Bonds at a price equal to par on the Conversion Date. Such Index, FRN Rate Percentage and FRN Rate Spread will be in effect through the last day of such FRN Rate Period, and thereafter shall be applied by the Calculation Agent in determining the FRN Rate on each Reset Date. The Calculation Agent shall furnish each FRN Rate so determined to the Bond Trustee, the Remarketing Agent (if any), the Issuer and McLaren Health by Electronic Means no later than the Business Day next succeeding the date of determination. During each FRN Rate Period, interest on the Bonds will be established on each Reset Date with reference to an Index that can reasonably be expected to measure contemporaneous variations in the cost of newly borrowed funds in U.S. Dollars, multiplied by a factor that is more than 65 basis points and less than 135 basis points, plus a spread that is a fixed rate.

Adjustment to FRN Rate.

(a) Subject to the Bond Indenture, at any time McLaren Health, by written direction or notice, as applicable, to the Issuer, to the Bond Trustee, the Tender Agent (if any), the Credit Facility Provider (if any), the Liquidity Facility Provider (if any), and the Remarketing Agent (if any), may elect that the Bonds will bear interest at a FRN Rate. Such direction of McLaren Health shall specify (i) the proposed Conversion Date, which date shall be (1) a Business Day not earlier than the fifteenth (15th) day following the second Business Day after receipt by the Bond Trustee of such direction, (2) in the case of a Conversion from a Term Rate Period, the day immediately following the last day of the then-current Term Rate Period or a day on which the Bonds otherwise would be subject to optional redemption pursuant to the Bond Indenture if such Conversion did not occur, (3) in the case of a Conversion from a Daily Rate Period or Weekly Rate Period the day immediately following the last day of such Interest Period with respect to the Bonds, (4) in the case of a Conversion from a Flexible Rate Period, the day immediately following the last day of the Flexible Rate Period, (5) in the case of a Conversion from an Index Rate or Flexible Index Rate, a Scheduled Mandatory Tender Date or an Unscheduled Mandatory Tender Date, (6) in the case of a Conversion from a Window Rate Period, the day immediately following the last day of such Interest Period with respect to the Bonds, and (7) in the case of a Conversion from another FRN Rate Period, the day immediately following the last day of the then-current FRN Rate Period or a day on which the Bonds otherwise would be subject to optional redemption pursuant to the Bond Indenture if such Conversion did not occur; (ii) the date of delivery for the Bonds to be purchased, on such Conversion Date; and (iv) the Index to be in effect for such FRN Rate Period and the last day of such FRN Rate

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Period (which last day shall be a day that immediately precedes a Business Day). In addition, such direction shall be accompanied by (1) a letter of Bond Counsel that it expects to be able to give a Favorable Opinion of Bond Counsel on the Conversion Date, and (2) a form of the notice to be mailed by the Bond Trustee to the Holders of Bonds as provided in the Bond Indenture. During each FRN Rate Period commencing on a date so specified and ending on the day immediately preceding the effective date of the next succeeding Interest Period for the Bonds, the interest rate borne by the Bonds shall be a FRN Rate.

(b) Notwithstanding clause (b) of the definition of Par Call Date, McLaren Health may (if a

Favorable Opinion of Bond Counsel is delivered to the Bond Trustee) specify in a notice to the Bond Trustee and the Issuer delivered no later than 5 Business Days prior to the proposed Conversion Date for a new FRN Rate Period identified in the direction delivered pursuant to the immediately preceding paragraph, a Par Call Date for such FRN Rate Period that occurs on any Business Day during such new FRN Rate Period.

(c) If, by the fifteenth (15th) day prior to the last day of any FRN Rate Period which ends on

a day other than the day immediately preceding the Maturity Date, the Bond Trustee shall not have received notice of McLaren Health’s election that, during the next succeeding Interest Period, the Bonds will bear interest in a specified Mode, then the next succeeding Interest Period for such Bonds shall be a Weekly Rate Period until such time as the Bonds are subject to Conversion.

Notice of Adjustment to FRN Rate Period. The Bond Trustee shall give notice by first-class mail of a Conversion to a FRN Rate Period to the Holders of the Bonds not less than fifteen (15) days prior to the Conversion Date. Such notice shall state: (i) that the interest rate on the Bonds shall be converted to a FRN Rate unless Bond Counsel fails to deliver a Favorable Opinion of Bond Counsel to the Issuer, the Bond Trustee, McLaren Health and the Remarketing Agent as to such Conversion on the Conversion Date, McLaren Health rescinds its election to convert the interest rate to a FRN Rate as provided in the Bond Indenture, or the other conditions precedent to such Conversion are not met; (ii) the proposed Conversion Date; and (iii) that the Bonds are subject to mandatory tender for purchase on such proposed Conversion Date, regardless of whether any or all conditions to the Conversion are met, and setting forth the applicable Purchase Price and the place of delivery for purchase of such Bonds.

Change of Date of Determination of FRN Rate. Upon any mandatory tender of the Bonds in connection with a Conversion of the Bonds to a FRN Rate Period, the Reset Date, being the day of the week on which the Calculation Agent determines the FRN Rate (which as of the execution and delivery of the Bond Indenture is Thursday) may be changed to a different day of the week as designated by McLaren Health in a Certificate of McLaren Health delivered to the Calculation Agent, the Bond Trustee, the Remarketing Agent (if any), the Tender Agent (if any), the Credit Facility Provider (if any) and the Liquidity Facility Provider (if any) prior to such mandatory tender. Upon such mandatory tender, the first FRN Rate for each FRN Rate Period will be determined on or prior to the first day of such FRN Rate Period and shall apply to the period commencing on the first day of such FRN Rate Period and ending on the day (whether or not a Business Day) immediately preceding the next succeeding Reset Date. Thereafter, each FRN Rate shall apply to the period commencing on the Reset Date and ending on the day (whether or not a Business Day) immediately preceding the next succeeding Reset Date, unless such FRN Rate Period shall end on a day other than the day (whether or not a Business Day) preceding a Reset Date, in which event the last FRN Rate for such FRN Rate Period shall apply to the period commencing on the Reset Date preceding the last day of such FRN Rate Period and ending on the last day of such FRN Rate Period (whether or not a Business Day).

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Determination of Index Tender Rates and Interest Accrual Periods for Bonds in Index Mode or Flexible Index Mode

Interest Rate during Index Mode or Flexible Index Mode. During the period beginning with the first day on which the Bonds bear interest in the Index Mode or Flexible Index Mode and ending on the effective date of a Conversion to a Mode other than the Index Mode or Flexible Index Mode, the interest rate borne by the Bonds shall be an Index Tender Rate.

Determination of SIFMA Average Index Rate and Index Tender Rate. During each Tender Period, no later than 11:00 A.M. on the Business Day immediately preceding each Interest Payment Date while the Bonds bear interest in the Index Mode or the Flexible Index Mode, the Calculation Agent shall deliver written notice to McLaren Health and the Remarketing Agent specifying the SIFMA Average Index Rate and the Index Tender Rate for, and the aggregate amount of interest that accrued during, the Interest Accrual Period ending on the day preceding such Interest Payment Date together with a detailed calculation of the foregoing. All percentages resulting from the calculation of the SIFMA Average Index Rate will be rounded, if necessary, to the nearest ten-thousandth of a percentage point with five hundred thousandths of a percentage point rounded upward, and all dollar amounts used in or resulting from such calculation of interest on the Bonds while bearing interest in an Index Mode or a Flexible Index Mode will be rounded to the nearest cent (with one-half cent being rounded upward).

Index Spread; Adjustment of Index Spread. With respect to subsequent Tender Periods, the Index Spread will be determined and adjusted as provided in the Bond Indenture. During each Tender Period, the Index Spread with respect to such Tender Period shall apply to all Bonds.

Duration of Tender Period. Each Tender Period shall commence on the first to occur of (i) the Scheduled Mandatory Tender Date of the immediately preceding Tender Period, (ii) an Unscheduled Mandatory Tender Date in connection with any Unscheduled Mandatory Tender if all Bonds are actually purchased pursuant to the provisions of the Bond Indenture, and (iii) the effective date of a Conversion from another Mode to an Index Mode or a Flexible Index Mode. Each Tender Period shall terminate on the first to occur of (a) the Scheduled Mandatory Tender Date, (b) an Unscheduled Mandatory Tender Date in connection with any Unscheduled Mandatory Tender if all Bonds are actually purchased pursuant to the provisions of the Bond Indenture, (c) the first date on which the Bonds bear interest in a Mode other than the Index Mode or a Flexible Index Mode, or (d) the date on which all Bonds are redeemed in accordance with the terms of the Bond Indenture or all principal, purchase price and accrued interest on all Bonds are otherwise paid in full. Notwithstanding the foregoing, if on the Scheduled Mandatory Tender Date or Unscheduled Mandatory Tender Date, the Purchase Price is not paid in full, the Tender Period shall not terminate and shall continue until such time as the Purchase Price is paid in full.

Conversion to and Election with Respect to Index Mode or Flexible Index Mode. McLaren Health, by written notice of Conversion to the other Notice Parties, may elect that there be a Conversion such that the Bonds will bear interest in an Index Mode or Flexible Index Mode. Such direction of McLaren Health shall specify:

(i) the election of either an Index Mode or a Flexible Index Mode;

(ii) the effective date of the Conversion to an Index Mode or Flexible Index Mode, which shall be (x) a Business Day not earlier than the seventh (7th) day following the date such direction is given, or (y) a day on which the Bonds would otherwise be subject to optional redemption pursuant to the Bond Indenture if such change did not occur;

(iii) the related Call Protection Date; and

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(iv) the Business Day that McLaren Health elects to be the Scheduled Mandatory Tender Date of the Tender Period commencing on the effective date of the Conversion to an Index Mode or a Flexible Index Mode (provided, that the Scheduled Mandatory Tender Date shall not be earlier than three (3) months after the commencement of the Tender Period).

Call Protection. With respect to any Tender Period commencing on the effective date of the Conversion to an Index Mode or a Flexible Index Mode, the Call Protection Date for such Tender Period shall be the Tender Period Standard Date; provided that, if McLaren Health delivers to the Bond Trustee a Favorable Opinion of Bond Counsel and specifies such Call Protection Date in the direction delivered pursuant to the Bond Indenture, McLaren Health may determine that any Business Day during the such Tender Period will be the Call Protection Date for such Tender Period.

Notice of Election of Index Mode or Flexible Index Mode. The Bond Trustee shall give notice of the mandatory tender for purchase of Bonds in connection with a Conversion to an Index Mode or a Flexible Index Mode to the Owners of the Bonds.

Scheduled Mandatory Tender in Index Mode or Flexible Index Mode. Unless the Bonds subject to a Tender Period have been purchased (including in connection with a Conversion or an Unscheduled Mandatory Tender) or redeemed prior to the Scheduled Mandatory Tender Date for such Tender Period, the Owners of all of the Bonds shall tender for purchase, and McLaren Health shall purchase, all of the Bonds on the Scheduled Mandatory Tender Date for such Tender Period. The Bond Trustee shall give notice of each Scheduled Mandatory Tender as provided in the Bond Indenture.

Unscheduled Mandatory Tender in Index Mode or Flexible Index Mode.

(a) Right to Require Unscheduled Mandatory Tender. While the Bonds bear interest in an Index Mode or a Flexible Index Mode, at its option, McLaren Health may require, during each Tender Period, the Owners of all (but not less than all) of the Bonds to tender the Bonds for purchase, from the source of funds provided in Bond Indenture, on any Business Day from and after the Call Protection Date of such Tender Period. McLaren Health shall exercise its option by delivering to the Bond Trustee at its Principal Corporate Trust Office and the Remarketing Agent, no later than ten (10) days before the Unscheduled Mandatory Tender Date for Bonds in an Index Mode, the written notice of Unscheduled Mandatory Tender described in the Bond Indenture. While in the Flexible Index Mode, at least five (5) Business Days prior any Unscheduled Mandatory Tender Date, McLaren Health shall provide Electronic Notice to the Remarketing Agent and the Bond Trustee of its intent to schedule an Unscheduled Mandatory Tender Date and the Bond Trustee shall no later than one (1) Business Day following receipt of such notice, send Electronic Notice to EMMA (as defined in the Bond Indenture) of the intent to schedule an Unscheduled Mandatory Tender Date. The notice of intention to schedule an Unscheduled Mandatory Tender Date shall authorize the Remarketing Agent to provide Electronic Notice to the Bond Trustee of an Unscheduled Mandatory Tender Date. The Remarketing Agent shall exercise the option to schedule an Unscheduled Mandatory Tender Date by delivering to the Bond Trustee at its Principal Corporate Trust Office, no later than 11:00 A.M. one (1) Business Day before the Unscheduled Mandatory Tender Date the Electronic Notice of the Unscheduled Mandatory Tender Date in the form described in the Bond Indenture. The Bond Trustee shall give notice of each Unscheduled Mandatory Tender as provided in the Bond Indenture. Except as provided in the Bond Indenture, the Bond Trustee shall pay to the Owners of the Bonds the Purchase Price on the related Unscheduled Mandatory Tender Date as provided in the Bond Indenture.

(b) Rescission. While in the Index Mode, McLaren Health shall have the option to deliver to the Bond Trustee at its Principal Corporate Trust Office and the Remarketing Agent, on or prior to 10:00 A.M. on the Business Day immediately preceding the Unscheduled Mandatory Tender Date for an Unscheduled Mandatory Tender, a notice to the effect that McLaren Health elects to rescind such

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Unscheduled Mandatory Tender. The Bond Trustee shall give notice of such rescission as soon thereafter as practicable in the same manner and to the same persons as notice of Unscheduled Mandatory Tender was given pursuant to the Bond Indenture. If McLaren Health so rescinds an Unscheduled Mandatory Tender, then no purchase shall occur, the Bonds shall continue to bear interest at the Index Tender Rate in effect during the Tender Period then in effect, without change or modification and the Tender Period then in effect shall continue until terminated in accordance with the Bond Indenture.

(c) Failure to Meet Conditions. Any Unscheduled Mandatory Tender shall be conditioned upon (i) amounts sufficient to pay the Purchase Price of such mandatory tender being on deposit from the source described in the Bond Indenture, with the Bond Trustee on the Unscheduled Mandatory Tender Date and (ii) in connection with any change in the Call Protection Date for the next succeeding Tender Period from the Tender Period Standard Date pursuant to the Bond Indenture, the delivery of the Favorable Opinion of Bond Counsel described in the Bond Indenture. If on an Unscheduled Mandatory Tender Date the conditions described in the immediately preceding sentence are not satisfied, then no purchase of Bonds shall occur, the Bonds shall continue to bear interest at the Index Tender Rate in effect during the Tender Period then in effect without change or modification and the Tender Period then in effect shall continue until terminated in accordance with the Bond Indenture. The Bond Trustee shall give notice of such failure as soon thereafter as practicable in the same manner and to the same persons as notice of Unscheduled Mandatory Tender was given pursuant to the Bond Indenture. Failure by McLaren Health to pay or cause to be paid the Purchase Price of any Bonds tendered pursuant to the Bond Indenture for any reason shall not constitute an Event of Default. No such failure shall affect McLaren Health’s right to require Owners of Bonds to tender their Bonds pursuant to the Bond Indenture during the remainder of the Tender Period then in effect or during any subsequent Tender Period.

Purchase of Bonds in a Flexible Index Mode or Index Mode. Except as otherwise provided in the Bond Indenture with respect to an Unscheduled Mandatory Tender, each Bond as to which a Tender Notice for purchase on a Purchase Date has been delivered or which is subject to mandatory tender for purchase on a Mandatory Purchase Date, Scheduled Mandatory Tender Date or Unscheduled Mandatory Tender Date shall be purchased on such date at the applicable Purchase Price but solely from the sources of payment provided in the Bond Indenture. Unless otherwise provided in a Representation Letter, all Bonds required to be purchased in accordance with the Bond Indenture shall be tendered for purchase by delivery to the Bond Trustee at its Principal Corporate Trust Office on or prior to the Mandatory Purchase Date, Scheduled Mandatory Tender Date or Unscheduled Mandatory Tender Date, as applicable, and, except as otherwise provided in the Bond Indenture with respect to an Unscheduled Mandatory Tender, shall be purchased but solely from the sources of payment provided in the Bond Indenture. If the Owner of a Bond is required but fails to deliver a Bond required to be purchased in accordance with the Bond Indenture, and sufficient moneys from the sources set forth in the Bond Indenture, are available to pay the Purchase Price of all Bonds to be purchased, such Bond shall constitute an Undelivered Bond with the consequences set forth in the Bond Indenture.

Notice of Mandatory Tender of Bonds for Purchase in Flexible Index Mode or Index Mode. Notice of each mandatory tender of Bonds bearing interest in a Flexible Index Mode or an Index Mode shall be given to the Owners as provided in the Bond Indenture. Notice of each other mandatory tender for purchase (other than for mandatory tender for purchase of a Bond in the Flexible Index Mode or an Index Mode) shall be given by the Bond Trustee by mail or Electronic Notice to the Owners not less than seven (7) days prior to the Mandatory Purchase Date, Scheduled Mandatory Tender Date or Unscheduled Mandatory Tender Date, as applicable, with copies thereof to be given to the other Notice Parties. During a Flexible Index Mode, the Bond Trustee shall provide Electronic Notice of the mandatory tender for purchase to the Securities Depository no later than 12:00 P.M. on the Business Day immediately prior to the designated Scheduled Mandatory Tender Date or Unscheduled Mandatory Tender Date and the Bond Trustee shall also use its best efforts to file notice of such notice of mandatory tender for purchase with the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access System (“EMMA”),

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or any successor thereto, by 4:30 P.M. on such date. Each such notice shall state (i) the Mandatory Purchase Date, Scheduled Mandatory Tender Date or Unscheduled Mandatory Tender Date, as applicable, (ii) (A) if the Bonds are registered in the name of a Securities Depository, the procedures for tendering such Bonds to receive the Purchase Price thereof in accordance with the procedures provided by such Securities Depository; or (B) if the Bonds are not registered in the name of a Securities Depository, that the Purchase Price of any Bond so tendered shall be payable only upon surrender of such Bond to the Bond Trustee at its Principal Corporate Trust Office (which shall be specified in such notice), together with an instrument of transfer thereof, in form satisfactory to the Bond Trustee, executed in blank by the Owners thereof or their duly authorized attorney, with such signature medallion guaranteed by a bank, trust company or member firm of the New York Stock Exchange; (iii) that any Bond not so tendered for purchase as required shall be deemed to have been so tendered and, upon provision for payment of the Purchase Price thereof from the funds specified in the Bond Indenture, shall be deemed to have been purchased on the Mandatory Purchase Date, Scheduled Mandatory Tender Date or Unscheduled Mandatory Tender Date, as applicable, after which no interest shall accrue thereon for the benefit of the Owner required to so tender such Bond and such Owner shall have no rights under the Bond Indenture as the Owner of such Bond except the right to receive the Purchase Price thereof, (iv) that, subject to the Bond Indenture, all Bonds subject to such mandatory tender for purchase shall be purchased on the applicable Mandatory Purchase Date, Scheduled Mandatory Tender Date or Unscheduled Mandatory Tender Date, as applicable, at the applicable Purchase Price, but solely from the from the sources set forth in the Bond Indenture.

Undelivered Bonds in Flexible Index Mode or Index Mode. Any Bond for which a Tender Notice has been given pursuant to the Bond Indenture or which is subject to mandatory tender for purchase in accordance with the Bond Indenture, in each case which is not tendered for purchase as required by the Bond Indenture, shall nonetheless be deemed to have been so tendered and, upon provision for payment of the Purchase Price thereof from the funds specified in the Bond Indenture, shall be deemed to have been purchased on the Mandatory Purchase Date, the Scheduled Mandatory Tender Date or the Unscheduled Mandatory Tender Date, as applicable, after which no interest shall accrue on such Bond for the benefit of the Owner required to tender such Bond from and after such Mandatory Purchase Date, Scheduled Mandatory Tender Date or Unscheduled Mandatory Tender Date, as applicable, and such Owner shall have no rights under the Bond Indenture as the Owner of such Bond except the right to receive the Purchase Price thereof from the funds available therefor pursuant to the Bond Indenture.

Remarketing of Bonds in Connection with Scheduled Mandatory Tender in the Flexible Rate Mode or the Index Mode. During each Tender Period in the Index Mode or the Flexible Index Mode, upon establishing the Index Spread for the next succeeding Tender Period pursuant to the Bond Indenture, the Remarketing Agent shall offer for sale and use its best efforts to remarket in accordance with the Remarketing Agreement all Bonds at a price equal to the principal amount thereof, such that the Index Spread for the next Tender Period will be adjusted pursuant to the Bond Indenture to be the minimum fixed per annum interest rate spread to SIFMA available in the marketplace. The Remarketing Agent shall sell any Bonds tendered pursuant to a Scheduled Mandatory Tender at the principal amount thereof; provided that upon delivery of a Favorable Opinion of Bond Counsel, McLaren Health shall have the right to direct the Remarketing Agent to sell any Bonds tendered pursuant to a Scheduled Mandatory Tender at a discount or at a premium.

Determination of Scheduled Mandatory Tender Date in Connection with a Scheduled Mandatory Tender. Unless the Bonds subject to a Tender Period have been purchased (including in connection with a Conversion or an Unscheduled Mandatory Tender) or redeemed prior to the Scheduled Mandatory Tender Date for such Tender Period, McLaren Health, by direction to the other Notice Parties by Electronic Means, not later than ten (10) days before the Scheduled Mandatory Tender Date for each Tender Period for Bonds in an Index Mode or a Flexible Index Mode, shall determine the Scheduled Mandatory Tender Date for all Bonds for the Tender Period immediately following the purchase of Bonds pursuant to the

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Bond Indenture. Such Scheduled Mandatory Tender Date may be any Business Day during the next Tender Period except that the Scheduled Mandatory Tender Date shall not be a date that is earlier than three (3) months after the commencement of the Tender Period, and while in the Flexible Index Mode such Scheduled Mandatory Tender Date shall not exceed two hundred seventy (270) days after the commencement of the Tender Period. If McLaren Health is required to deliver a written direction described in the Bond Indenture but fails to do so, then the Scheduled Mandatory Tender Date for the Tender Period immediately following the purchase of Bonds pursuant to the Bond Indenture shall be for Bonds in the Index Mode the date that is one (1) year after the commencement of the Tender Period (unless such date is not a Business Day, in which case the Scheduled Mandatory Tender Date shall be the first Business Day following such date) and for Bonds in the Flexible Index Mode the date that is two hundred seventy (270) days after the commencement of the Tender Period (unless such date is not a Business Day, in which case the Scheduled Mandatory Tender Date shall be the first Business Day preceding such date).

Establishment of Call Protection Date in Connection with a Scheduled Mandatory Tender. With respect to any Tender Period commencing on a Scheduled Mandatory Tender Date on which the Bonds are purchased pursuant to the Bond Indenture, the Call Protection Date shall be the Tender Period Standard Date; provided that, if McLaren Health delivers to the Bond Trustee a Favorable Opinion of Bond Counsel and specifies such Call Protection Date in the direction delivered pursuant to the Bond Indenture, McLaren Health may determine that the Call Protection Date for such Tender Period shall be any Business Day during such Tender Period.

Determination of Index Spread in Connection with a Scheduled Mandatory Tender. Unless the Bonds subject to a Tender Period have been purchased (including in connection with a Conversion or an Unscheduled Mandatory Tender) or redeemed prior to the Scheduled Mandatory Tender Date for such Tender Period, no later than 5:00 P.M. on the date that is two (2) Business Days before the Scheduled Mandatory Tender Date for each Tender Period, the Remarketing Agent shall determine the Index Spread with respect to the Tender Period immediately following such Scheduled Mandatory Tender Date. The Remarketing Agent shall determine the Index Spread which shall be equal to the minimum fixed spread to SIFMA which, if borne by the Bonds, would enable the Remarketing Agent to sell all Bonds tendered pursuant to the Scheduled Mandatory Tender on the Scheduled Mandatory Tender Date at a price equal to the principal amount thereof. With respect to all Bonds sold with an Index Tender Rate based on an Index Spread determined by the Remarketing Agent pursuant to the Bond Indenture, the determination of the Index Spread so determined by the Remarketing Agent shall be conclusive and binding on the Notice Parties and the Owners of the Bonds. On each date that the Remarketing Agent determines an Index Spread pursuant to the Bond Indenture, the Remarketing Agent shall furnish to the other Notice Parties telephonic notice (promptly confirmed in writing) or written notice or notice by Electronic Means stating such Index Spread.

Purchase of Bonds on Scheduled Mandatory Tender Date. Bonds required to be purchased in accordance with the Bond Indenture shall be purchased from the Owners thereof, on the Scheduled Mandatory Tender Date, at the Purchase Price from the sources and in the order of priority indicated in the Bond Indenture. McLaren Health has irrevocably committed to pay the Purchase Price of all Bonds on each Scheduled Mandatory Tender Date pursuant to the Loan Agreement.

Consequences of a Scheduled Mandatory Tender Failure. Upon the occurrence of a Scheduled Mandatory Tender Failure on any Scheduled Mandatory Tender Date, the following shall occur:

(A) The Bond Trustee shall promptly return all Bonds to the Owners thereof together with notice of such insufficiency and the Bond Trustee and the Remarketing Agent shall promptly return all remarketing proceeds to the persons providing such moneys without interest;

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(B) The Tender Period then in effect shall terminate on such Scheduled Mandatory Tender Date and the Bonds will bear interest at the Index Tender Rate for the Tender Period commencing on the Scheduled Mandatory Tender Date of the immediately preceding Tender Period to the earliest to occur of the purchase of the Bonds by or on behalf of McLaren Health or the payment of the principal of the Bonds; and

(C) An Event of Default under the Bond Indenture shall occur.

Effect of a Successful Remarketing on Scheduled Mandatory Tender Date. In the event moneys on deposit with the Bond Trustee are sufficient to pay the Purchase Price of Bonds to be purchased pursuant to the Bond Indenture on the Scheduled Mandatory Tender Date, the following shall occur:

(A) The Tender Period in effect immediately before such purchase shall terminate on the Scheduled Mandatory Tender Date and a new Tender Period shall commence on such date; and

(B) The Index Spread with respect to the Bonds for the new Tender Period shall be the Index Spread determined pursuant to the Bond Indenture.

Notification of Scheduled Mandatory Tender Failure. On the date of a Scheduled Mandatory Tender Failure, the Bond Trustee shall deliver a notice by mail or Electronic Means to (i) McLaren Health, (ii) the respective Owners of any Bonds, (iii) the Remarketing Agent, and (iv) one or more information services, which shall state (A) that a Scheduled Mandatory Tender Failure occurred, (B) the Bond Trustee will return all Bonds tendered on the Scheduled Mandatory Tender Date to the Owners thereof, and (C) an Event of Default has occurred.

Remarketing of Bonds in Connection with Unscheduled Mandatory Tender in the Flexible Index Mode or the Index Mode. Upon receipt of notice of an Unscheduled Mandatory Tender from McLaren Health or notice of intent to schedule an Unscheduled Mandatory Tender Date pursuant to the Bond Indenture, the Remarketing Agent shall offer for sale and use its best efforts to remarket in accordance with the Remarketing Agreement all Bonds at a price equal to the principal amount thereof, such that the Index Spread for the next Tender Period will be adjusted pursuant to the Bond Indenture to be the minimum fixed per annum interest rate spread to SIFMA available in the marketplace. The Remarketing Agent shall sell any Bonds tendered pursuant to an Unscheduled Mandatory Tender at the principal amount thereof; provided that if McLaren Health delivers a Favorable Opinion of Bond Counsel, McLaren Health shall have the right to direct the Remarketing Agent to sell any Bonds tendered pursuant to an Unscheduled Mandatory Tender at a discount or at a premium.

Determination of Scheduled Mandatory Tender Date in Connection with Unscheduled Mandatory Tender. McLaren Health, by direction to the other Notice Parties by Electronic Notice or telecopy not later than ten (10) days before each Unscheduled Mandatory Tender Date with respect to Bonds in the Index Mode, shall determine the Scheduled Mandatory Tender Date for the Tender Period immediately following the purchase of Bonds pursuant to Bond Indenture. While the Bonds are in a Flexible Index Mode, in accordance with the authorization provided by McLaren Health to the Remarketing Agent and the Bond Trustee in the notice of intent to schedule an Unscheduled Mandatory Tender Date pursuant to the Bond Indenture, the Remarketing Agent shall, no later than 11:00 A.M. one (1) Business Day before the Unscheduled Mandatory Tender Date determine the Scheduled Mandatory Tender Date for the Tender Period immediately following the purchase of the Bonds pursuant to the Bond Indenture. Such Scheduled Mandatory Tender Date may be any Business Day except that the Scheduled Mandatory Tender Date shall not be a date that is earlier than three (3) months after the commencement of the Tender Period, and while in the Flexible Index Mode such Scheduled Mandatory Tender Date shall not exceed two hundred seventy (270) days after the commencement of the Tender Period.

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Establishment of Call Protection Date in Connection with Unscheduled Mandatory Tender. With respect to any Tender Period commencing on a Unscheduled Mandatory Tender Date that the Bonds are purchased pursuant to the Bond Indenture, the Call Protection Date shall be the Tender Period Standard Date; provided that, if McLaren Health delivers to the Bond Trustee a Favorable Opinion of Bond Counsel and specifies such Call Protection Date in the direction delivered pursuant to the Bond Indenture, McLaren Health may determine that the Call Protection Date for such Tender Period shall be any Business Day during such Tender Period.

Determination of Index Spread in Connection with Unscheduled Mandatory Tender. No later than 5:00 P.M. on the date that is two (2) Business Days before each Unscheduled Mandatory Tender Date while in the Index Mode, the Remarketing Agent shall determine the Index Spread with respect to the Tender Period immediately following such Unscheduled Mandatory Tender Date. While the Bonds are in a Flexible Index Mode, in accordance with the authorization provided by McLaren Health to the Remarketing Agent in the notice of intent to schedule an Unscheduled Mandatory Tender Date pursuant to the Bond Indenture, the Remarketing Agent shall, no later than 11:00 A.M. one (1) Business Day before the Unscheduled Mandatory Tender Date determine Index Spread with respect to the Tender Period immediately following such Unscheduled Mandatory Tender Date. The Remarketing Agent shall determine the Index Spread which shall be equal to the minimum fixed spread to SIFMA which, if borne by the Bonds, would enable the Remarketing Agent to sell all Bonds tendered pursuant to the Unscheduled Mandatory Tender on the Unscheduled Mandatory Tender Date at a price equal to the principal amount thereof. With respect to all Bonds sold with an Index Tender Rate based on an Index Spread determined by the Remarketing Agent pursuant to the Bond Indenture, the determination of the Index Spread so determined by the Remarketing Agent shall be conclusive and binding on the Notice Parties and the Owners of the Bonds. On each date that the Remarketing Agent determines an Index Spread pursuant to the Bond Indenture, the Remarketing Agent shall furnish to McLaren Health and the Bond Trustee telephonic notice (promptly confirmed in writing) or written notice or notice by Electronic Means stating such Index Spread.

Purchase of Bonds on Unscheduled Mandatory Tender Date. Subject to the Bond Indenture, McLaren Health shall cause Bonds required to be purchased in accordance with the Bond Indenture to be purchased on each Unscheduled Mandatory Tender Date from the Owners thereof, at the Purchase Price from the source indicated in the Bond Indenture.

Consequences of an Unscheduled Mandatory Tender Failure or a Rescission. If McLaren Health shall rescind any Unscheduled Mandatory Tender pursuant to the Bond Indenture or if any of the conditions of any Unscheduled Mandatory Tender is not satisfied pursuant to the Bond Indenture then McLaren Health shall not have any obligation to purchase any Bonds and no purchase of Bonds shall occur. In such event the following shall occur:

(A) The Bond Trustee shall return all Bonds to the Owners thereof together with notice of the basis for such return and the Bond Trustee and the Remarketing Agent shall return all remarketing proceeds to the persons providing such moneys without interest;

(B) The Bonds shall continue to bear interest at the Index Tender Rate in effect during such Tender Period without change or modification and the Tender Period then in effect shall continue until terminated in accordance with the Bond Indenture); and

(C) No Event of Default under the Bond Indenture shall have occurred.

Effect of a Successful Remarketing of Bonds on Unscheduled Mandatory Tender Date. In the event moneys on deposit with the Bond Trustee are sufficient to pay the Purchase Price of Bonds to be purchased pursuant to the Bond Indenture and all other conditions are satisfied, the following shall occur:

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(A) The Tender Period in effect immediately before such tender shall terminate on such Unscheduled Mandatory Tender Date and a new Tender Period shall commence on such date; and

(B) The Index Spread with respect to the Bonds for the new Tender Period shall be the Index Spread determined pursuant to the Bond Indenture.

Delivery of Bonds in Connection with a Scheduled Mandatory Tender or an Unscheduled Mandatory Tender.

(i) With respect to the delivery of Bonds in connection with a Scheduled Mandatory Tender or an Unscheduled Mandatory Tender, the Bond Trustee shall determine timely and proper delivery of Bonds pursuant to the Bond Indenture and the proper delivery of such Bonds. Such determination shall be binding on the Owners of such Bonds, McLaren Health and the Remarketing Agent, absent manifest error.

(ii) Bonds purchased with moneys described in the Bond Indenture shall be made available by the Bond Trustee to the Remarketing Agent for delivery to the purchasers thereof against payment therefor.

(iii) Bonds delivered as provided in the Bond Indenture shall be delivered in the manner directed by the recipient thereof.

Changes in Interest Rate Mode

(a) Subject to the provisions of the Bond Indenture, McLaren Health may, on and after the first anniversary of the issuance of the Bonds, effect a Conversion with respect to all (but not a portion) the Bonds by following the procedures set forth in the Bond Indenture. If a Conversion makes the Bonds subject to Rule 15c2-12 promulgated under the Securities Act of 1934, as amended, it will be a condition to the Conversion that McLaren Health shall have executed a continuing disclosure undertaking satisfying the requirements of such Rule and will cooperate with the Remarketing Agent, and any Underwriter (as defined in such Rule) in satisfying the requirements of such Rule. In connection with any Conversion from a Flexible Index Mode to any other Interest Rate Mode, in the event the MMI Procedures are not applicable to such New Mode, McLaren Health and the Bond Trustee will take all reasonable efforts to remove the Bonds from the Book-Entry System using the MMI Procedures.

(b) Changes to Interest Rate Modes. Except for Conversions to the Index Mode and the

Flexible Index Mode, conversions to the Fixed Rate Mode and Conversions to the FRN Rate Mode, the Bonds may be changed from one Interest Rate Mode to another Interest Rate Mode as follows:

(i) Conversion Notice; Notice to Owners. No later than a Business Day which is at least seven (7) Business Days prior to the date on which the Tender Agent is required to notify the registered owners (or such shorter time as may be agreed to by the Issuer, McLaren Health, the Bond Trustee, the Tender Agent and the Remarketing Agent) preceding the proposed Conversion Date, McLaren Health will give written notice to the Notice Parties of its intention to effect a change in the Interest Rate Mode from the Interest Rate Mode then prevailing (for purposes of this paragraph, the “Current Mode”) to another Interest Rate Mode (for purposes of this paragraph, the “New Mode”) specified in such written notice, and, if the change is to a Term Rate Mode, the length of the initial Interest Period as set by McLaren Health. In the case of a change to a Term Rate Mode or from one Term Rate Mode to another Term Rate Mode, such notice to the Notice Parties will also include a statement as to whether there will be a Liquidity Facility and/or Credit Facility in effect with respect to the Bonds following such change and the identity of any provider of such Liquidity Facility and/or Credit Facility. Notice of the proposed Conversion will be given by the Tender Agent to the Owners of the Bonds not later than the 20th

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day next preceding the Conversion Date provided that no notice need be given for a Conversion Date occurring on the first Business Day following the last day of a Flexible Rate Period or Term Rate Mode or on a Substitution Date. Such notice shall state: (1) the Interest Rate Mode to which the Conversion will be made and the Conversion Date; (2) (a) in the case of a change from any Interest Rate Mode other than from the Daily Mode to the Weekly Mode or from the Weekly Mode to the Daily Mode, that the Bonds will be subject to mandatory purchase on the Conversion Date (regardless of whether all of the conditions to the change in the Interest Rate Mode are satisfied except in the case of a Conversion from the Three Month LIBOR Indexed Mode) and the Purchase Price of the Bonds; and (b) in the case of a change from the Daily Mode to the Weekly Mode or from the Weekly Mode to the Daily Mode, that the Bonds will not be subject to mandatory purchase on the Conversion Date; and (3) if the Book-Entry System is no longer in effect, information with respect to required delivery of Bond certificates and payment of Purchase Price. If the Conversion is from the Three Month LIBOR Indexed Mode, such notice will state that the Bonds are subject to mandatory purchase on the Conversion Date and will also state that if the conditions to the Conversion are not satisfied, then the Bonds will not be subject to mandatory tender, and will stay in the Three Month LIBOR Indexed Mode and the interest rate will be established by the Paying Agent on the failed Conversion Date in accordance with the Bond Indenture, as if no Conversion Date had been proposed.

(ii) Determination of Interest Rates. The New Mode will commence on the Conversion Date and the interest rate(s) (together, in the case of a change to the Flexible Mode, with the Interest Period(s)) will be determined by the Remarketing Agent (or McLaren Health in the case of the Interest Period for the Bonds converted to the Term Rate Mode) in the manner provided in the Bond Indenture, as applicable, to the New Mode. Such determination will be conclusive and binding upon the Issuer, McLaren Health, the Bond Trustee and the Owners of the Bonds to which such rate will be applicable.

(iii) Conditions Precedent:

(A) The Conversion Date will be:

(1) In the case of a change from the Fixed Rate, any Business Day on and after the first anniversary of the date of issuance of the Bonds;

(2) in the case of a change from the Flexible Mode, the next Mandatory Purchase Date for all of the Flexible Rate Bonds;

(3) in the case of a change from the Daily or Weekly Mode (other than to the Daily or Weekly Mode), or a change from the Window Mode, any Interest Payment Date and in the case of a change from the Daily or Weekly Mode to the Daily or Weekly Mode, any Business Day;

(4) in the case of a change from the Term Rate Mode or the FRN Rate Mode to another Interest Rate Mode, or from a Term Rate Period to a Term Rate Period of a different duration, or from a Three Month LIBOR Indexed Mode to another Interest Rate Mode, the Conversion Date shall be limited to any Interest Payment Date on which the Bonds are subject to optional redemption, or to the day immediately following the last day of the then-current FRN Rate Period for the Bonds in the FRN Rate Mode, or a day on which the Bonds would otherwise be subject to optional redemption pursuant to the Bond Indenture if such Conversion did not occur, or to the last Interest Payment Date of the

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current Term Rate Period, as the case may be. Such Bonds shall be purchased on such Conversion Date at a Purchase Price equal to 100% of the principal amount thereof, provided that if such Bonds would otherwise be subject to optional redemption on such Conversion Date at a Redemption Price of more than 100% of the principal amount thereof, such Bonds shall be purchased at a Purchase Price equal to such Redemption Price; and

(5) in the case of a Conversion from the Index Mode or the Flexible Index Mode, a Scheduled Mandatory Tender Date or an Unscheduled Mandatory Tender Date in accordance with the provisions of the Bond Indenture. In no event shall a Conversion occur prior to the Call Protection Date while the Bonds bear interest in the Index Mode.

(B) If the Bonds to be converted are in the Flexible Mode, no Interest Period set after delivery by McLaren Health to the Remarketing Agent of the notice of the intention to effect a Conversion shall extend beyond the day preceding the proposed Conversion Date.

(C) The following items shall have been delivered to the Bond Trustee, the

Paying Agent and the Remarketing Agent on or prior to the Conversion Date:

(1) a Favorable Opinion of Bond Counsel dated the Conversion Date and addressed to the Notice Parties;

(2) if there is to be a Liquidity Facility or an Alternate Liquidity Facility or a Credit Facility or an Alternate Credit Facility delivered in connection with such change, the items required by the Bond Indenture; and

(3) a Rating Confirmation Notice, or if the Conversion Date is a Mandatory Purchase Date, a notice from the Rating Agencies of the rating(s) to be assigned the Bonds on such Conversion Date.

(D) It is a condition to the Conversion of the Bonds from the Three Month LIBOR Indexed Mode that all Bonds being converted be remarketed on the Conversion Date.

(E) In the case of Bonds to be converted to the Window Mode, the Initial Window Spread will be determined by the Remarketing Agent on a Business Day no later than the Conversion Date. The sum of the SIFMA Index plus the Initial Window Spread shall be equal to the rate of interest per annum determined by the Remarketing Agent (based on an examination of tax exempt obligations comparable, in the judgment of the Remarketing Agent, to the Bonds and known by the Remarketing Agent to have been priced or traded under then prevailing market conditions) to be the minimum interest rate which, if borne by the Bonds, would enable the Remarketing Agent to sell all of the Bonds on the Conversion Date at a price (without regard to accrued interest) equal to the principal amount thereof.

(c) Change to Fixed Rate Mode. At the option of McLaren Health, all or any portion of the Bonds in an Interest Rate Mode other than a Fixed Rate Mode (in an amount which is an Authorized Denomination for the new Rate Period) may be changed to the Fixed Rate Mode, as provided in this paragraph. On any Business Day which is at least seven (7) Business Days prior to the date on which the

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Paying Agent is required to notify the registered owners (or such shorter time as may be agreed to by the Issuer, McLaren Health, the Bond Trustee and the Remarketing Agent, but in any event not less than the 20th day next preceding the Conversion Date) before the proposed Conversion Date, McLaren Health shall give written notice to the Notice Parties stating that the Interest Rate Mode will be changed to the Fixed Rate Mode and setting forth the proposed Conversion Date. Such notice will also state whether or not there shall be a Credit Facility with respect to the Bonds following such change and, if so, the identity of the Credit Facility Provider. In addition, such notice will state whether some or all of the Bonds to be converted will be converted to Serial Bonds and, if so, the applicable Serial Maturity Dates and Serial Payments, all as determined pursuant to subsection (v) of this subsection (c). Any such Conversion will be made as follows:

(i) Conversion Date. The Conversion Date will be:

(A) in the case of a change from the Flexible Mode, the next Mandatory Purchase Date for the Flexible Rate Bonds;

(B) in the case of a change from the Daily Mode, Weekly Mode, or Window Mode, any Interest Payment Date;

(C) in the case of a change from the Term Rate Mode, the FRN Rate Mode or the Three Month LIBOR Indexed Mode, the Conversion Date shall be limited to any Interest Payment Date on which the Bonds are subject to optional redemption, or to the day immediately following the last day of the then-current FRN Rate Period for the Bonds in the FRN Rate Mode, or a day on which the Bonds would otherwise be subject to optional redemption pursuant to the Bond Indenture if such conversion did not occur, or to the next Mandatory Purchase Date for the Term Rate Bonds, as the case may be. Such Bonds shall be purchased on such Conversion Date at a Purchase Price equal to 100% of the principal amount thereof, provided that if such Bonds would otherwise be subject to optional redemption on such Conversion Date at a Redemption Price of more than 100% of the principal amount thereof, such Bonds shall be purchased at a Purchase Price equal to such Redemption Price; and

(D) in the case of a Conversion from the Index Mode or the Flexible Index Mode, a Scheduled Mandatory Tender Date or an Unscheduled Mandatory Tender Date in accordance with the provisions of the Bond Indenture. In no event shall a Conversion occur prior to the Call Protection Date while the Bonds bear interest in the Index Mode.

(ii) Notice to Owners. Not later than the 20th day next preceding the Conversion Date, the Paying Agent shall mail, in the name of McLaren Health, a notice of such proposed change to the Owners of the Bonds stating that the Interest Rate Mode will be changed to the Fixed Rate Mode and the proposed Conversion Date. Such notice shall also state that such Owner is required to tender such Owner’s Bonds for purchase on such proposed Conversion Date regardless of whether all of the conditions to the change to the Fixed Rate Mode are satisfied except in the case of a Conversion from the Three Month LIBOR Indexed Mode. If the Conversion is from the Three Month LIBOR Indexed Mode, such notice shall state that the Bonds are subject to mandatory purchase on the Conversion Date and shall also state that if the conditions to the Conversion are not satisfied, then the Bonds shall not be subject to mandatory tender, and shall stay in the Three Month LIBOR Indexed Mode and the interest rate shall be established by the Paying Agent on the failed Conversion Date in accordance with the Bond Indenture, as if no Conversion Date had been proposed.

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(iii) General Provisions Applying to Change to Fixed Rate Mode. The change to the Fixed Rate Mode shall not occur unless the following items shall have been delivered to the Issuer, McLaren Health, the Bond Trustee, the Credit Facility Provider, if any, and the Remarketing Agent on or prior to the Conversion Date:

(A) a Favorable Opinion of Bond Counsel dated the Conversion Date and addressed to the Issuer, McLaren Health, the Bond Trustee and the Remarketing Agent;

(B) if there is to be Credit Facility delivered in connection with such change, the items required by the Bond Indenture in connection with the delivery of an Alternate Credit Facility, and

(C) notice from the Rating Agencies of the rating(s) to be assigned the Bonds on such Conversion Date.

(iv) Determination of Interest Rate. The Fixed Rate (or rates in the case of Serial Bonds) for the Bonds to be converted to the Fixed Rate Mode shall be established by the Remarketing Agent on the Rate Determination Date applicable thereto pursuant to the provisions of the Bond Indenture. Such determination shall be conclusive and binding upon the Issuer, McLaren Health, the Bond Trustee, the Credit Facility Provider, if any, and the Owners of the Bonds to which such rate will be applicable. Not later than 5:00 P.M., on the date of determination of the Fixed Rate, the Remarketing Agent shall notify the Bond Trustee, the Credit Facility Provider, the Issuer and McLaren Health of such rate by telephone.

(v) Serialization and Sinking Fund; Price. Upon Conversion of the Bonds to the Fixed Rate Mode, the Bonds shall be remarketed at par, shall mature on the same Maturity Date(s) and be subject to the same mandatory sinking fund redemption, if any, and special redemption provisions, if any, as set forth in the Bond Indenture for any prior Interest Rate Mode; provided, however, that if McLaren Health shall deliver to the Bond Trustee a Favorable Opinion of Bond Counsel, McLaren Health may elect to (1) have some of the Bonds be Serial Bonds and some subject to sinking fund redemption even if such Bonds were not Serial Bonds or subject to mandatory sinking fund redemption prior to such change, (2) change the optional redemption dates and/or premiums set forth in the Bond Indenture, and/or (3) sell some or all of the Bonds at a premium or a discount to par.

(d) Failure to Satisfy Conditions Precedent to an Interest Rate Conversion. In the event the conditions described above in paragraphs (a) or (b), as applicable, of this section entitled “Changes in Interest Rate Mode”) have not been satisfied by the applicable Conversion Date, then the New Mode will not take effect (although, except in the case of a failed Conversion from the Three Month LIBOR Indexed Mode or the Window Mode, any mandatory purchase will be made on such date if notice has been sent to the Owners stating that such Bonds would be subject to mandatory purchase on such date). If the failed Conversion was from the Flexible Mode, the Bonds will remain in the Flexible Mode with interest rates and Interest Periods to be established by the Remarketing Agent on the failed Conversion Date in accordance with the Bond Indenture. If the failed Conversion was from the Daily Mode, the Bonds will remain in the Daily Mode, and if the failed Conversion was from the Weekly Mode, the Bonds will remain in the Weekly Mode, in each case with interest rates established in accordance with the Bond Indenture on and as of the failed Conversion Date. If the failed Conversion was from the Window Mode, then the Bonds will not be subject to mandatory tender and the Bonds shall remain in the Window Mode with interest rates established in accordance with the Bond Indenture on and as of the failed Conversion Date. If the failed Conversion was from the Term Rate Mode, then the Bonds shall stay in the Term Rate Mode for an Interest Period ending on the following Interest Payment Date for the Bonds in the Term Rate Mode and the interest rate shall be established by the Remarketing Agent on the failed Conversion

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Date in accordance with the Bond Indenture. If the failed Conversion was from the Three Month LIBOR Indexed Mode, then the Bonds will not be subject to mandatory tender and the Bonds will remain in the Three Month LIBOR Indexed Mode, with interest rates established in accordance with the Bond Indenture on and as of the failed Conversion Date. If the failed Conversion was from the FRN Rate Mode, then the Bonds shall stay in the FRN Rate Mode as in effect immediately prior to the proposed Conversion, with interest rates established in accordance with the Bond Indenture on and as of the failed Conversion Date. If the Current Mode is an Index Mode or a Flexible Index Mode, the Tender Period for all Outstanding Bonds will extend from and including the date on which the New Mode was to take effect to and including the date which was the Scheduled Mandatory Tender Date (and, if such date is not a Business Day, then the Business Day preceding such date while in a Flexible Index Mode and the Business Day following such date while in an Index Mode).

(e) Rescission of Election. Notwithstanding anything in the Bond Indenture to the contrary, McLaren Health may rescind any election by it to change an Interest Rate Mode as described above prior to the Conversion Date by giving written notice thereof to the Notice Parties prior to 10:00 A.M. on the Business Day preceding such Conversion Date. If the Tender Agent receives notice of such rescission prior to the time the Tender Agent has given notice to the Holders of the Bonds, then such notice of Conversion shall be of no force and effect. If the Tender Agent receives notice from McLaren Health of rescission of an Interest Rate Mode change after the Tender Agent has given notice thereof to the Holders of the Bonds, then if the proposed Conversion Date would have been a Mandatory Purchase Date, such date shall continue to be a Mandatory Purchase Date except if the Conversion is from the Three Month LIBOR Indexed Mode or the Window Mode. If the proposed Conversion was from the Flexible Mode, the Bonds shall remain in the Flexible Mode with interest rates and Interest Periods to be established by the Remarketing Agent on the proposed Conversion Date in accordance with the Bond Indenture. If the proposed Conversion was from the Daily Mode, the Bonds shall remain in the Daily Mode, and if the proposed Conversion was from the Weekly Mode, the Bonds shall remain in the Weekly Mode, in each case with interest rates established in accordance with the Bond Indenture on and as of the proposed Conversion Date. If the proposed Conversion was from the Window Mode, the Bonds shall remain in the Window Mode with interest rates established in accordance with the Bond Indenture on and as of the proposed Conversion Date. If the Bonds are in the Window Mode immediately prior to such proposed Conversion and sufficient remarketing proceeds are not available for the purchase of all Bonds on the date which would have been the effective date of such proposed Conversion, then McLaren Health shall be deemed to have rescinded its election to make such Conversion. If the Bonds were in a Window Rate Period immediately prior to such proposed Conversion, the Bond Trustee shall give notice of the rescission by Electronic Means as soon as practicable and in any event not later than the next succeeding Business Day to the Holders thereof. If the proposed Conversion was from the Term Rate Mode, then the Bonds shall stay in the Term Rate Mode for an Interest Period ending on the following Interest Payment Date for the Bonds in the Term Rate Mode and the interest rate shall be established by the Remarketing Agent on the proposed Conversion Date in accordance with the Bond Indenture. If the Remarketing Agent is unable to determine the interest rate on the proposed Conversion Date, the provisions of the Bond Indenture shall apply in effect at the beginning of each such Interest Period. If the proposed Conversion was from the Three Month LIBOR Indexed Mode, the Bonds shall remain in the Three Month LIBOR Indexed Mode, with interest rates established in accordance with the Bond Indenture on and as of the proposed Conversion Date.

Transfer of Bonds

Any Bond may, in accordance with its terms, be transferred, upon the bond registration books required to be kept pursuant to the provisions of the Bond Indenture, by the Person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such registered Bond for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form approved by the Bond Trustee.

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Whenever any Bond or Bonds will be surrendered for transfer, the Issuer will execute and the Bond Trustee will authenticate and deliver a new Bond or Bonds for a like aggregate principal amount of the same series. The Bond Trustee will require the Bondholder requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer.

The Bond Trustee will not transfer any Bond if the Bond Trustee has received notice from the Remarketing Agent to the effect that the Remarketing Agent has received notice of tender of such Bond from the Holder of such Bond.

The Bond Trustee will not be required to transfer any Bond, except to the Credit Facility Provider (if any) or the Liquidity Facility Provider (if any), during the 15 days immediately preceding (1) the date on which notice of redemption of Bonds is given or (2) the date on which Bonds will be selected for redemption.

Exchange of Bonds

Bonds may be exchanged at the Designated Office, for a like aggregate principal amount of Bonds of other Authorized Denominations with the same maturity. The Bond Trustee will require the Bondholder requesting such exchange to pay any tax or other governmental charge required to be paid with respect to such exchange.

The Bond Trustee will not be required to exchange any Bond, except to the Credit Facility Provider (if any) or the Liquidity Facility Provider (if any), during the 15 days immediately preceding (1) the date on which notice of redemption is given or (2) the date on which Bonds will be selected for redemption.

Establishment of Funds and Accounts

The Bond Indenture creates a Revenue Fund, an Interest Account, a Principal Account, a Redemption Fund, a Costs of Issuance Fund, a Project Fund and a Rebate Fund. All of such Funds and Accounts are to be held by the Bond Trustee pursuant to the Bond Indenture.

Revenue Fund. All Revenues shall be promptly deposited by the Bond Trustee upon receipt thereof in a special fund designated as the “Revenue Fund” which the Bond Trustee is directed by the Bond Indenture to establish, maintain and hold in trust pursuant to the Bond Indenture (except as otherwise provided in the Bond Indenture), and except that all moneys received by the Bond Trustee and required by the Loan Agreement or the Obligation to be deposited in the Bond Purchase Fund or the Redemption Fund, shall be promptly deposited in the Bond Purchase Fund and Redemption Fund, respectively. All Revenues deposited with the Bond Trustee shall be held, disbursed, allocated and applied by the Bond Trustee only as provided in the Bond Indenture.

On or before the dates specified below, the Bond Trustee shall transfer from the Revenue Fund and deposit into the following respective accounts (each of which the Bond Trustee is directed by the Bond Indenture to establish and maintain within the Revenue Fund) the following amounts, in the following order of priority, the requirements of each such account (including the making up of any deficiencies in any such account resulting from lack of Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any transfer is made to any account subsequent in priority:

First: to the Interest Account on or before each Interest Payment Date, the amount of interest becoming due and payable on such Interest Payment Date on all Bonds then Outstanding, until the balance in said account is equal to said amount of interest; and

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Second: to the Principal Account, on or before each Principal Payment Date, the amount of the Sinking Fund Installment becoming due and payable on such Principal Payment Date, until the balance in said account is equal to said amount of such Sinking Fund Installment.

Any moneys remaining in the Revenue Fund after the foregoing transfers will be transferred to McLaren Health as an overpayment of Loan Repayments with respect to the Bonds.

Application of Interest Account. All amounts in the Interest Account will be used and withdrawn by the Bond Trustee solely for the purpose of paying interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds purchased pursuant to the Bond Indenture or redeemed prior to maturity pursuant to the Bond Indenture) or to reimburse the Credit Facility Provider with respect to drawings under the Credit Facility for such purposes. Unless there has been an Event of Default, so long as the Credit Facility is in effect and has been drawn upon to provide sufficient funds to pay in full an interest payment when due as required in the Bond Indenture, the Bond Trustee will use moneys in the Interest Account deposited by McLaren Health to reimburse the Credit Facility Provider (if any) for such drawing in such manner as to provide for receipt by the Credit Facility Provider (if any) on the same Business Day as the draw is funded.

Application of Principal Account. (a) All amounts in the Principal Account will be used and withdrawn by the Bond Trustee solely to pay Sinking Fund Installments, to pay principal of the Bonds at maturity or to pay principal of the Bonds upon purchase or redemption as provided in the Bond Indenture or to reimburse the Credit Facility Provider with respect to drawings under the Credit Facility for such purposes. Unless there has been an Event of Default, so long as the Credit Facility is in effect and has been drawn upon to provide sufficient funds to pay a principal payment when due as required in the Bond Indenture, the Bond Trustee shall use moneys in the Principal Account deposited by McLaren Health to reimburse the Credit Facility Provider (if any) for such drawing in such manner as to provide for receipt by the Credit Facility Provider (if any) on the same Business Day as the draw is funded.

(b) On each Sinking Fund Installment date established pursuant to the Bond Indenture, the Bond Trustee will apply the Sinking Fund Installment required on that date to the redemption (or payment at maturity, as the case may be) of Bonds, upon the notice and in the manner provided in the Bond Indenture; provided, however, that, at any time prior to giving such notice of such redemption, the Bond Trustee may apply moneys in the Principal Account to the purchase of Bonds at public or private sale, as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Account) as directed in writing by the Obligated Group Agent, except that the purchase price (excluding accrued interest) shall not exceed the par amount of the Bonds so purchased. If, during the twelve-month period immediately preceding a Sinking Fund Installment payment date, the Bond Trustee has purchased Bonds with moneys in the Principal Account, or, during said period and prior to giving said notice of redemption, the Obligated Group Agent has deposited Bonds with the Bond Trustee (together with a Request of the Obligated Group Agent, to apply such Bonds to the Sinking Fund Installment due on said date), or Bonds were at any time purchased or redeemed by the Bond Trustee from the Redemption Fund and allocable to said Sinking Fund Installment, such Bonds shall be applied, to the extent of the full principal amount thereof, to reduce said Sinking Fund Installment. All Bonds purchased or deposited as described in this paragraph (b), if any, shall be cancelled by the Bond Trustee. Bonds purchased from the Principal Account, purchased or redeemed from the Redemption Fund, or deposited by the Obligated Group Agent with the Bond Trustee shall be allocated first to the next succeeding Sinking Fund Installment for such Bonds, then as a credit against such future Sinking Fund Installments for such Bonds as the Obligated Group Agent may specify in writing.

Redemption Fund. The Bond Trustee will establish, maintain and hold in trust a fund separate from any other fund established and maintained under the Bond Indenture designated as the “Redemption Fund” and within the Redemption Fund a separate Optional Redemption Account and a separate Special

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Redemption Account. All amounts deposited in the Optional Redemption Account and the Special Redemption Account will be used and withdrawn by the Bond Trustee solely for the purpose of redeeming Bonds, in the manner and upon the terms and conditions specified in the Bond Indenture, on the next succeeding date of redemption for which notice has not previously been given and at the Redemption Prices then applicable to redemptions from the Optional Redemption Account and the Special Redemption Account, respectively, or to reimburse the Credit Facility Provider (if any) with respect to drawings under the Credit Facility for such purpose; provided, however, that, at any time prior to giving such notice of redemption, the Bond Trustee will, upon direction of the Obligated Group Agent, apply such amounts to the purchase of Bonds at public or private sale, as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Account) as the Obligated Group Agent may direct, except that the purchase price (exclusive of accrued interest) may not exceed the Redemption Price then applicable to such Bonds; and provided, further, that in the case of the Optional Redemption Account, in lieu of redemption on such next succeeding date of redemption, or in combination therewith, amounts in such account may be transferred to the Revenue Fund to the extent not needed to redeem Bonds for which notice of redemption has previously been given by the Bond Trustee and credited against Loan Repayments with respect to the Bonds in order of their due date as set forth in a Request of the Obligated Group Agent.

Costs of Issuance Fund. The Bond Trustee shall establish, maintain and hold in trust a separate

fund designated as the “Costs of Issuance Fund.” The moneys in the Costs of Issuance Fund will be used and withdrawn by the Bond Trustee to pay the Costs of Issuance upon requisition of the Obligated Group Agent stating the person to whom payment is to be made, the amount to be paid, the purpose for which the obligation was incurred and that such payment is a proper charge against the Costs of Issuance Fund. On November 15, 2016, or upon the earlier Request of the Obligated Group Agent, amounts, if any, remaining in the Costs of Issuance Fund shall be transferred to the Interest Account.

Project Fund. The Bond Trustee shall establish, maintain and hold in trust a separate fund designated as the “Project Fund.” The moneys in the Project Fund shall be used and withdrawn by the Bond Trustee to pay the costs of the Project. No moneys in the Project Fund shall be used to pay Costs of Issuance or to pay any costs relating to a project which is not listed in the Tax Certificate and Agreement, regardless of whether or not such project falls within the definition of “Project” unless the Issuer and the Bond Trustee shall have received a Favorable Opinion of Bond Counsel as to such payment.

Before any payment from the Project Fund shall be made, the Obligated Group Agent shall file or cause to be filed with the Bond Trustee a Requisition substantially in the form attached to the Bond Indenture stating (1) the item number of such payment; (2) the name of the Person to whom each such payment is due, which may be the Obligated Group Agent or the Hospital in the case of reimbursement for Project costs theretofore paid by the Obligated Group Agent or the Hospital, respectively; (3) the respective amounts to be paid; (4) the purpose by general classification for which each obligation to be paid was incurred; and (5) that obligations in the stated amounts have been incurred by the Obligated Group Agent or the Hospital and are presently due and payable and that each item thereof is properly chargeable against the Project Fund and has not been previously paid from the Project Fund.

Upon receipt of a Requisition, the Bond Trustee shall pay the amount set forth in such Requisition as directed by the terms thereof out of the Project Fund. The Bond Trustee shall rely fully on any such Requisition delivered pursuant the Bond Indenture and shall not be required to make any investigation in connection therewith. The Bond Trustee shall not make any such payment if it has received any written notice of claim of lien, attachment upon, or claim affecting the right to receive payment of, any of the monies to be so paid, that has not been released or will not be released simultaneously with such payment.

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When the Project shall have been completed, there shall be delivered to the Bond Trustee a Certificate of the Obligated Group Agent stating the fact and date of such completion and stating that all of the costs thereof have been determined and paid (or that all of such costs have been paid less specified claims that are subject to dispute and for which a retention in the Project Fund is to be maintained in the full amount of such claims until such dispute is resolved). Upon the receipt of such Certificate, the Bond Trustee shall transfer any remaining balance in the Project Fund, less the amount of any such retention, to the Optional Redemption Account and apply such funds to the optional redemption of Bonds.

Notwithstanding anything to the contrary above, if there is an Event of Default under the Bond Indenture, the Bond Trustee shall not disburse moneys as provided in the Bond Indenture, but shall use any moneys in the Project Fund to pay principal of and interest on the Bonds if there are insufficient funds in the Revenue Fund.

Rebate Fund. The Bond Trustee shall establish and maintain a fund separate from any other fund established and maintained under the Bond Indenture designated as the “Rebate Fund.” Within the Rebate Fund, the Bond Trustee shall maintain such accounts as shall be specified in the Bond Indenture. Subject to the transfer provisions provided in paragraph (e) below, all money at any time deposited in the Rebate Fund shall be held by the Bond Trustee in trust, to the extent required to satisfy the Rebate Amount (as defined in the Tax Certificate and Agreement), for payment to the federal government of the United States of America. Neither the Issuer, McLaren Health, the Obligated Group Agent nor the Holder of any Bonds shall have any rights in or claim to such money. All amounts deposited into or on deposit in the Rebate Fund will be governed by the Bond Indenture. The Bond Trustee will be deemed conclusively to have complied with such provisions if it follows the written directions of the Obligated Group Agent including supplying all necessary information in the manner provided in the Tax Certificate and Agreement, and shall have no liability or responsibility to investigate, monitor or enforce compliance by McLaren Health or the Issuer with the terms of the Tax Certificate and Agreement. The Issuer shall be deemed conclusively to have complied with the provisions of the Bond Indenture if it takes such action as may reasonably be requested by McLaren Health pursuant to the Tax Certificate and Agreement.

Upon the Obligated Group Agent’s written direction, an amount will be deposited to the Rebate Fund by the Bond Trustee from deposits by the Obligated Group Agent or from available investment earnings on amounts held in the Revenue Fund, if and to the extent required, so that the balance in the Rebate Fund will equal the Rebate Amount. Computations of the Rebate Amount will be furnished to the Bond Trustee by or on behalf of McLaren Health in accordance with the Tax Certificate and Agreement and the Bond Trustee may conclusively rely upon such computations. The Bond Trustee has no duty or obligation to compute or confirm the computation of the Rebate Amount.

The Bond Trustee will have no obligation to rebate any amounts required to be rebated pursuant to the Bond Indenture, other than from moneys held in the funds and accounts created under the Bond Indenture or from other moneys provided to it by the Obligated Group Agent.

At the written direction of the Obligated Group Agent, the Bond Trustee will invest all amounts held in the Rebate Fund in Investment Securities, subject to the restrictions set forth in the such written direction. Neither the Issuer nor the Bond Trustee will be liable for any consequences arising from such investment. Money shall not be transferred from the Rebate Fund except as provided in the next following paragraph.

Upon receipt of the Obligated Group Agent’s written directions, the Bond Trustee will remit part or all of the balances in the Rebate Fund to the United States, as so directed. In addition, if the Obligated Group Agent so directs in writing, the Bond Trustee will deposit money into or transfer money out of the Rebate Fund from or into such accounts or funds, as so directed. Any funds remaining in the Rebate Fund

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after redemption and payment of all of the Bonds and payment and satisfaction of any Rebate Amount will be withdrawn and remitted to the Obligated Group Agent.

Notwithstanding any other provision of the Bond Indenture, the obligation to remit the Rebate Amounts to the United States and to comply with all other requirements of the Bond Indenture and the Tax Certificate and Agreement will survive the defeasance or payment in full of the Bonds.

Bond Purchase Fund

There is established pursuant to the Bond Indenture and there shall be maintained with the Tender Agent, as agent for the Bond Trustee, a separate fund to be known as the “Bond Purchase Fund.” The Tender Agent shall further establish separate accounts within the Bond Purchase Fund to be known as the “Liquidity Facility Purchase Account,” the “Remarketing Proceeds Account” and the “McLaren Health Purchase Account.”

(a) Remarketing Proceeds Account. Upon receipt of the proceeds of a remarketing of a Bond

on the date such bond is to be purchased, the Tender Agent shall deposit such proceeds in the Remarketing Proceeds Account for application to the Purchase Price of the Bonds. Notwithstanding the foregoing, upon the receipt of the proceeds of a remarketing of Liquidity Facility Bonds, the Tender Agent shall immediately pay such proceeds to the Liquidity Facility Provider to the extent of any amount owing to the Liquidity Facility Provider.

(b) Liquidity Facility Purchase Account. Upon receipt from the Bond Trustee of the immediately available funds transferred to the Tender Agent pursuant to the Bond Indenture, the Tender Agent shall deposit such money in the Liquidity Facility Purchase Account for application to the Purchase Price of the Bonds to the extent that the moneys on deposit in the Remarketing Proceeds Account shall not be sufficient. Any amounts deposited in the Liquidity Facility Purchase Account and not needed with respect to the Purchase Price for any Bonds shall be immediately returned to the Liquidity Facility Provider.

(c) McLaren Health Purchase Account. Upon receipt of Funds from McLaren Health pursuant to the Bond Indenture, the Tender Agent shall deposit such Funds in McLaren Health Purchase Account for application to the Purchase Price of the Bonds. Any amounts deposited in McLaren Health Purchase Account and not needed with respect to the Purchase Price for any Bonds shall be immediately refunded to McLaren Health.

(d) Investment. Amounts held in the Liquidity Facility Purchase Account and the Remarketing Proceeds Account by the shall be held uninvested and separate and apart from all other funds and accounts.

Insufficient Funds for Tenders

(a) If moneys sufficient to pay the Purchase Price of all tendered Bonds to be purchased on any Purchase Date are not available (1) no purchase shall be consummated on such Purchase Date; (2) all tendered Bonds shall be returned to the Holders thereof; and (3) all remarketing proceeds shall be returned to the Remarketing Agent for return to the Persons providing such moneys.

(b) All Bonds will bear interest at the Maximum Rate during the period of time from and including the applicable Purchase Date to (but not including) the date that the Purchase Price of all such tendered Bonds has been paid to the owners thereof (the “Delayed Remarketing Period”). In the case of a conflict between other specified provisions of the Bond Indenture and the provisions of the Bond

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Indenture described in this paragraph, the provisions of the Bond Indenture described in this paragraph will govern.

(c) McLaren Health may direct the Conversion of the tendered Bonds to a different Interest Rate Mode during the Delayed Remarketing Period. Notwithstanding anything in the Bond Indenture to the contrary, the Bond Trustee shall give five Business Days’ notice of such Conversion to the Holders of the Bonds to be converted.

(d) Subject to the terms of the Remarketing Agreement, the Remarketing Agent shall continue to use its best efforts to remarket all of the tendered Bonds.

(e) During the Delayed Remarketing Period, the Bond Trustee may, upon direction of McLaren Health, apply amounts on deposit in the Redemption Fund to the redemption of such Tendered Bonds, as a whole or in part on any Business Day during the Delayed Remarketing Period, at a Redemption Price without premium. Notwithstanding any other provision in the Bond Indenture to the contrary, during the Delayed Remarketing Period, the Bond Trustee shall give five Business Days’ notice of such redemption to the Holders of the Bonds to be redeemed.

(f) During the Delayed Remarketing Period, interest on all Bonds shall be paid to the Holders thereof (i) the first Business Day of each calendar month occurring during the Delayed Remarketing Period and (ii) on the last day of the Delayed Remarketing Period.

Amendments on Mandatory Purchase Date

The owner of a Bond shall be deemed to have consented to any amendment proposed to become effective on any Mandatory Purchase Date for such Bond.

Appointment of Remarketing Agent

The Remarketing Agent shall be appointed pursuant to the Remarketing Agreement to remarket Bonds pursuant to the Bond Indenture and perform the other duties of the Remarketing Agent described under the Bond Indenture, and to keep such books and records as shall be consistent with prudent industry practice and to make such books and records available for inspection by the Issuer and the Bond Trustee at all reasonable times. The Remarketing Agent shall act as such under the Remarketing Agreement.

The Remarketing Agent may at any time resign and be discharged of the duties and obligations created by the Bond Indenture as set forth in the Remarketing Agreement. The Remarketing Agent may suspend its remarketing efforts as set forth in the Remarketing Agreement. The Remarketing Agent may be removed at any time, at the direction of McLaren Health as set forth in the Remarketing Agreement. Any successor Remarketing Agent shall be selected by McLaren Health, and shall be a member of FINRA shall have a capitalization of at least fifteen million dollars ($15,000,000), shall be authorized by law to perform all the duties set forth in the Bond Indenture and shall be acceptable to the Credit Facility Provider and Liquidity Facility Provider. McLaren Health’s delivery to the Bond Trustee of a certificate setting forth the effective date of the appointment of a successor Remarketing Agent and the name of such successor shall be conclusive evidence that (i) if applicable, the predecessor Remarketing Agent has been removed in accordance with the provisions of the Bond Indenture and (ii) such successor has been appointed and is qualified to act as Remarketing Agent under the terms of the Bond Indenture.

If the Remarketing Agent consolidates with, merges or converts into, or transfers all or substantially all of its assets (or, in the case of a bank, national banking association or trust company, its corporate assets) to, another corporation, the resulting, surviving or transferee corporation without any further act shall be the successor Remarketing Agent.

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Pledge and Assignment; Revenue Fund

Subject only to the provisions of the Bond Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Bond Indenture, there are pledged by the Bond Indenture to secure the payment of the principal of and premium, if any, and interest on the Bonds in accordance with their terms and the provisions of the Bond Indenture, all of the Revenues (including proceeds of the sale of the Bonds) and any other amounts held in any fund or account established pursuant to the Bond Indenture (other than the Bond Purchase Fund and the Rebate Fund). Said pledge shall constitute a lien on and security interest in such assets and shall attach, be perfected and be valid and binding from and after delivery by the Bond Trustee of the Bonds, without any physical delivery thereof or further act.

The Issuer transfers in trust, grants a security interest in and assigns to the Bond Trustee, for the

benefit of the Holders from time to time of the Bonds, all of the Revenues and other assets described as pledged in the preceding paragraph and all of the right, title and interest of the Issuer in the Loan Agreement (except for (i) the right to receive any Administrative Fees and Expenses to the extent payable to the Issuer, (ii) any rights of the Issuer to indemnification, and (iii) the obligation of McLaren Health to make deposits pursuant to the Tax Certificate and Agreement). Subject to the provisions of the Bond Indenture with respect to the control of remedial proceedings by the Credit Facility Provider, the Bond Trustee shall be entitled to and shall collect and receive all of the Revenues, and any Revenues collected or received by the Issuer shall be deemed to be held, and to have been collected or received, by the Issuer as the agent of the Bond Trustee and shall forthwith be paid by the Issuer to the Bond Trustee. The Bond Trustee also shall be entitled to and shall take all steps, actions and proceedings reasonably necessary in its judgment to enforce all of the rights of the Issuer and all of the obligations of McLaren Health under the Loan Agreement and of the Obligated Group Agent and the other Members of the Obligated Group under the Obligation.

Investment of Moneys in Funds and Accounts

All moneys in any of the funds and accounts established pursuant to the Bond Indenture (other than the Bond Purchase Fund) shall be invested by the Bond Trustee, upon written direction of the Obligated Group Agent, solely in Investment Securities. Moneys in the Bond Purchase Fund shall remain uninvested. Investment Securities shall be purchased at such prices as the Obligated Group Agent may direct. The directions of the Obligated Group Agent shall be subject to the limitations set forth in the Bond Indenture. All Investment Securities shall be acquired subject to the limitations as to maturities as set forth in the Bond Indenture and such additional limitations or requirements consistent with the foregoing as may be established by Request of the Obligated Group Agent. The Bond Trustee may conclusively rely upon such instructions as to both the suitability and legality of the directed investments. No Request of the Obligated Group Agent shall impose any duty on the Bond Trustee inconsistent with its fiduciary responsibilities. In the absence of directions from the Obligated Group Agent, the Bond Trustee shall not be responsible or liable for keeping the moneys held by it under the Bond Indenture fully invested in Investment Securities. The Bond Trustee may make any and all such investments through its own investment department or that of its affiliates or subsidiaries and may charge is ordinary and customary fees for such trades, including investment maintenance fees.

Moneys in all funds and accounts (other than the Bond Purchase Fund) shall be invested in Investment Securities maturing not later than the date on which it is estimated that such moneys will be required for the purposes specified in the Bond Indenture. Investment Securities purchased under a repurchase agreement may be deemed to mature on the date or dates on which the Bond Trustee may deliver such Investment Securities for repurchase under such agreement.

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All interest, profits and other income received from the investment of moneys in the Rebate Fund shall be deposited when received in such fund. All interest, profits and other income received from the investment of moneys in the Project Fund shall be deposited when received in such fund, except as provided in the Bond Indenture. All interest, profits and other income received from the investment of moneys in any other fund or account established pursuant to the Bond Indenture shall be deposited when received in the Revenue Fund, except as provided in the Bond Indenture. Notwithstanding anything to the contrary contained in this paragraph, an amount of interest received with respect to any Investment Security equal to the amount of accrued interest, if any, paid as part of the purchase price of such Investment Security shall be credited to the fund or account for the credit of which such Investment Security was acquired.

Investment Securities acquired as an investment of moneys in any fund or account established

under the Bond Indenture shall be credited to such fund or account. In computing for any purpose under the Bond Indenture the amount in any fund or account on any date, the value of any investments shall be calculated as follows:

(i) as to investments priced by any nationally recognized pricing service used by the Bond Trustee, the price provided by such service;

(ii) as to investments the bid and asked prices of which are published on a regular basis in The Wall Street Journal (or, if not there, then in The New York Times): the average of the bid and asked prices for such investments so published on or most recently prior to such time of determination;

(iii) as to investments the bid and asked prices of which are not published on a regular basis in The Wall Street Journal or The New York Times: the average bid price at such time of determination for such investments by any two nationally recognized government securities dealers (selected by the Bond Trustee in its absolute discretion) at the time making a market in such investments;

(iv) as to certificates of deposit and bankers acceptances: the face amount thereof, plus accrued interest; and

(v) as to any investment not specified above: the value thereof established by prior agreement between the Issuer and the Bond Trustee.

The Bond Trustee may commingle any of the amounts on deposit in the funds or accounts established pursuant to the Bond Indenture (other than the Bond Purchase Fund or the Rebate Fund) into a separate fund or funds for investment purposes only, provided that all funds or accounts held by the Bond Trustee under the Bond Indenture shall be accounted for separately as required by the Bond Indenture. The Bond Trustee may act as principal or agent in the making or disposing of any investment. The Bond Trustee may sell at the best price reasonably obtainable, or present for redemption, any Investment Securities so purchased whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such Investment Security is credited, and, subject to the provisions of the Bond Indenture with respect to the Bond Trustee, neither the Issuer nor the Bond Trustee shall be liable or responsible for any loss resulting from any investment made in accordance with the provisions of the Bond Indenture. Although the Issuer and McLaren Health each recognizes that it may obtain a broker confirmation or written statement containing comparable information at no additional cost, the Issuer and McLaren Health agree that confirmations of investment transactions as they occur are not required to be issued by the Bond Trustee for each month in which a monthly statement is rendered. No statement need be rendered for any fund or account if no activity occurred in such fund or account during such month.

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The Bond Trustee may make investments permitted by the Bond Indenture through or from its own bond department or trust investments department, or its parent’s or affiliate’s bond department or trust investments department and may charge its ordinary and customary fees for such trades, including cash sweep account fees. Except as otherwise provided under the Bond Indenture or agreed in writing among the parties to the Bond Indenture, McLaren Health shall retain the authority to institute, participate and join in any plan of reorganization, readjustment, merger or consolidation with respect to the Issuer of any securities held under the Bond Indenture, and, in general, to exercise each and every other power or right with respect to each such asset or investment as individuals generally have and enjoy with respect to their own assets and investment, including power to vote upon any securities.

Particular Covenants

Punctual Payment. The Issuer shall punctually cause to be paid the principal or Redemption Price and interest to become due in respect of all the Bonds, in strict conformity with the terms of the Bonds and the Bond Indenture, according to the true intent and meaning thereof, but only out of Revenues and other assets pledged for such payment, as provided in the Bond Indenture.

Extension of Payment of Bonds. The Issuer shall not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of payment of any claims for interest by the purchase or funding of such Bonds or claims for interest or by any other arrangement; and in case the maturity of any of the Bonds or the time of payment of any such claims for interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any default under the Bond Indenture, to the benefits of the Bond Indenture, except subject to the prior payment in full of the principal or Purchase Price of all of the Bonds then Outstanding and of all claims for interest thereon which shall not have been so extended. Nothing in this paragraph will be deemed to limit the right of the Issuer to issue obligations for the purpose of refunding any Outstanding Bonds, and such issuance shall not be deemed to constitute an extension of maturity of such Bonds.

Against Encumbrances. The Issuer shall not create any pledge, lien, charge or other encumbrance upon the Revenues and other assets pledged or assigned under the Bond Indenture while any of the Bonds are Outstanding, except the pledges and assignments created by the Bond Indenture, and will assist the Bond Trustee in contesting any such pledge, lien, charge or other encumbrance which may be created. Subject to this limitation, the Issuer expressly reserves the right to enter into one or more other indentures for any of its corporate purposes, including other programs under the Act, and reserves the right to issue other obligations for such purposes.

Power to Issue Bonds and Make Pledge and Assignment. The Issuer is duly authorized pursuant to law to issue the Bonds and to enter into the Bond Indenture and to pledge and assign the Revenues and other assets purported to be pledged and assigned, respectively, under the Bond Indenture in the manner and to the extent provided in the Bond Indenture. The Bonds and the provisions of the Bond Indenture are and will be the legal, valid and binding limited obligations of the Issuer in accordance with their terms, and the Issuer and Bond Trustee shall at all times, to the extent permitted by law, defend, preserve and protect said pledge and assignment of Revenues and other assets and all the rights of the Bondholders under the Bond Indenture against all claims and demands of all Persons whomsoever.

Accounting Records and Financial Statements. The Bond Trustee shall at all times keep, or cause to be kept, proper books of record and account prepared in accordance with trust accounting standards, in which complete and accurate entries shall be made of all transactions relating to the receipt, investment, disbursement, allocation and application of the proceeds of the Bonds, the Revenues, the Loan Agreement and all funds and accounts established pursuant to the Bond Indenture. Such books of record and account shall be available for inspection by the Issuer, the Credit Facility Provider (if any), the Liquidity Facility

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Provider (if any), the Obligated Group Agent, McLaren Health and any Bondholder or such Bondholder’s agent or representative duly authorized in writing, during the Bond Trustee’s business hours on days on which the Bond Trustee is open for business, subject to reasonable regulations established by the Bond Trustee.

The Bond Trustee shall file and furnish to the Issuer (if requested in writing), the Credit Facility Provider (if any), the Liquidity Facility Provider (if any) and to each Bondholder who shall have filed such Bondholder’s name and address with the Bond Trustee for such purpose within thirty days after each May 15, a complete financial statement (which need not be audited) covering receipts, disbursements, allocation and application of Revenues and any other moneys (including proceeds of Bonds) in any of the funds and accounts established pursuant to the Bond Indenture for the prior twelve-month period. The Bond Trustee shall also furnish a copy of any such monthly statement to McLaren Health and the Obligated Group Agent.

Tax Covenants. The Issuer shall at all times do and perform all acts and things permitted by law and the Bond Indenture which are necessary or desirable in order to assure that interest paid on the Bonds (or any of them) will be excluded from gross income for federal income tax purposes and shall take no action that would result in such interest not being so excluded. Without limiting the generality of the foregoing, the Issuer agrees to comply with the provisions of the Tax Certificate and Agreement. This covenant shall survive payment in full or defeasance of the Bonds.

Enforcement of Loan Agreement and the Obligation. Subject to the provisions of the Bond Indenture with respect to the control of remedial proceedings by the Credit Facility Provider (if any), the Bond Trustee shall promptly collect all amounts due from McLaren Health pursuant to the Loan Agreement and from the Obligated Group pursuant to the Obligation, shall perform all duties imposed upon it pursuant to the Loan Agreement and shall diligently enforce, and take all steps, actions and proceedings reasonably necessary for the enforcement of, all of the rights of the Issuer and all of the obligations of McLaren Health pursuant to the Loan Agreement.

Amendment of Loan Agreement. Except as provided in the Bond Indenture, the Issuer shall not amend, modify or terminate any of the terms of the Loan Agreement, or consent to any such amendment, modification or termination, unless the written consent of the holders of (i) the Credit Facility Provider (if any) (provided that the Credit Facility is then in effect or any amounts are owing to the Credit Facility Provider and the Credit Facility Provider (if any) is not in default under its payment obligations under the Credit Facility) or (ii) the Holders of a majority in principal amount of the Bonds then Outstanding (if no Credit Facility is in effect or the Credit Facility Provider (if any) is then in default under its payment obligations under the Credit Facility) and the Liquidity Facility Provider (if any) to such amendment, modification or termination is filed with the Bond Trustee; provided, however, that no such amendment, modification or termination shall reduce the amount of Loan Repayments to be made to the Issuer or the Bond Trustee by McLaren Health pursuant to the Loan Agreement, or extend the time for making such payments, without the written consent of all of the Holders of the Bonds then Outstanding.

Notwithstanding the provisions of the Bond Indenture to the contrary, the Issuer and McLaren Health may, with the prior written consent of the Bond Trustee, amend or modify the Loan Agreement, or any provision thereof, or may consent to the amendment or modification thereof, in any manner not inconsistent with the terms and provisions of the Bond Indenture, for any one or more of the following purposes: (a) to cure any ambiguity or formal defect in the Loan Agreement; (b) to grant to or confer upon the Issuer or Bond Trustee, for the benefit of the Bondholders, any additional rights, remedies, powers or authorities that lawfully may be granted to or conferred upon the Issuer or the Bond Trustee; (c) to amend or modify the Loan Agreement, or any part thereof, in any manner specifically required or permitted by the terms thereof, including, without limitation, as may be necessary to maintain the exclusion from gross income for purposes of federal income taxation of the interest on the Bonds; (d) to provide that a Bond

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may be secured by a Credit Facility or other additional security not otherwise provided for in the Bond Indenture or the Loan Agreement; (e) to modify, amend or supplement the Loan Agreement, or any part thereof, or any supplement thereto, in such manner as the Bond Trustee, McLaren Health and the Remarketing Agent, if any, deem necessary in order to comply with any statute, regulation, judicial decision or other law relating to secondary market disclosure requirements with respect to tax-exempt obligations of the type that includes the Bonds; (f) to provide for the appointment of a successor Securities Depository; (g) to provide for the availability of certificated Bonds; (h) to provide for changes in the components of the Project, to the extent permitted by the Bond Indenture and the Loan Agreement; (i) to provide for the addition of any interest rate mode or to provide for the modification or deletion of any Interest Rate Mode so long as no Bonds will be operating in the Interest Rate Mode when it is to be so modified or deleted, or to amend, modify or alter the interest rate setting provisions, tender provision or Conversion provisions for any then existing Interest Rate Mode so long as no Bonds will be operating in the Interest Rate Mode when such provisions are to be so amended, modified or altered; provided that, in each case, there is delivered to the Bond Trustee a Favorable Opinion of Bond Counsel; and (j) to make any other change which does not, in the opinion of the Bond Trustee, have a material adverse effect upon the interests of the Bondholders.

Continuing Disclosure. Pursuant to the Loan Agreement, McLaren Health has undertaken all

responsibility for compliance with continuing disclosure requirements, and the Issuer shall have no liability to the Holders of the Bonds or any other Person with respect to S.E.C. Rule 15c2-12, as amended. Notwithstanding any other provision of the Bond Indenture, failure of McLaren Health or the Dissemination Agent (as defined in the Continuing Disclosure Agreement) to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default under the Bond Indenture; provided, however, the Bond Trustee may or the Holders of at least 25% in aggregate principal amount of Outstanding Bonds, shall) or any Bondholder or Beneficial Owner may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause McLaren Health to comply with its obligations under the Loan Agreement or to cause McLaren Health or the Dissemination Agent to comply with its obligations under the Continuing Disclosure Agreement.

Events of Default; Remedies

Events of Default. The following events shall be Events of Default under the Bond Indenture:

(a) default in the due and punctual payment of the principal or Redemption Price of any Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for redemption, by acceleration or otherwise, or default in the redemption of any Bonds from Sinking Fund Installments in the amount and at the times provided therefor;

(b) default in the due and punctual payment of any installment of interest on any Bond when and as such interest installment shall become due and payable;

(c) if no Liquidity Facility is in effect, failure to pay the Purchase Price of any Bond tendered pursuant to the Bond Indenture when such payment is due;

(d) default in any material respect by the Issuer in the observance of any of the other covenants, agreements or conditions contained in the Bond Indenture or the Bonds, if such default shall have continued for a period of sixty (60) days after written notice thereof, specifying such default and requiring the same to be remedied, shall have been given to the Issuer and McLaren Health by the Bond Trustee, or to the Issuer, McLaren Health and the Bond Trustee by the Credit Facility Provider (if any) or by the Holders of not less than twenty-five percent (25%) in aggregate principal amount of the Bonds at the time Outstanding;

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(e) a Loan Default Event; or

(f) receipt by the Bond Trustee of notice from the Credit Facility Provider (if any) that an Event of Default (as defined in the Reimbursement Agreement) has occurred under a Reimbursement Agreement and requesting acceleration of the Bonds pursuant to the Bond Indenture.

Upon actual knowledge of a Responsible Officer of the existence of any Event of Default as described in the Bond Indenture, the Bond Trustee shall notify McLaren Health, the Obligated Group Agent, the Issuer and the Master Trustee in writing as soon as practicable; provided, however, that the Bond Trustee need not provide notice of any Loan Default Event if McLaren Health has expressly acknowledged the existence of such Loan Default Event in a writing delivered to the Bond Trustee, the Obligated Group Agent, the Issuer and the Master Trustee.

Remedies. Whenever any Event of Default referred to in the Bond Indenture has happened and is continuing, the Bond Trustee may take the following remedial steps:

(a) In the case of an Event of Default described in clause (a), (b) or (c) under the subheading “Events of Default” above, the Bond Trustee may, and upon the written request of the Credit Facility Provider (if any) or the Holders of not less than 66-2/3% in aggregate principal amount of the Bonds at the time Outstanding with the consent of the Credit Facility Provider (if any), or upon the occurrence of an Event of Default described in clause (f) under the subheading “Events of Default” above, the Bond Trustee shall, promptly upon such occurrence, by notice in writing to the Issuer, McLaren Health, the Credit Facility Provider (if any) and the Liquidity Facility Provider (if any), notify the Issuer and the Obligated Group Agent of such Event of Default and declare the principal of all the Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in the Bond Indenture to the contrary notwithstanding. Upon any such declaration the Bond Trustee shall promptly draw upon any then existing Credit Facility in accordance with the terms thereof and apply the amount so drawn to pay the principal of and interest on the Bonds enhanced by such Credit Facility so declared to be due and payable. Interest on the Bonds shall cease to accrue as of the date of declaration. The Bond Trustee, as promptly as feasible following acceleration of the Bonds, shall notify the Bondholders of the date of acceleration and the cessation of accrual of interest on the Bonds in the same manner as for a notice of redemption; provided, however, that failure to give such notice shall not affect the acceleration of the Bonds;

(b) In the case of an Event of Default described in clause (d) under the subheading “Events of Default” above, the Bond Trustee may take whatever action at law or in equity is necessary or desirable to enforce the performance, observance or compliance by the Issuer with any covenant, condition or agreement by the Issuer under the Bond Indenture; and

(c) In the case of an Event of Default described in clause (e) under the subheading “Events of Default” above, the Bond Trustee may take whatever action the Issuer would be entitled to take, and shall take whatever action the Issuer would be required to take, pursuant to the Loan Agreement in order to enforce the provisions of the Loan Agreement.

Any such declaration, however, is subject to the condition that if, at any time after such declaration and before any judgment or decree for the payment of the moneys due shall have been obtained or entered, and before the Credit Facility has been drawn upon in accordance with its terms and honored, McLaren Health shall deposit with the Bond Trustee a sum sufficient to pay all the principal (including any Sinking Fund Installments) or Redemption Price of and installments of interest on the Bonds, payment of which is overdue, with interest on such overdue principal at the rate borne by the respective Bonds, and the reasonable charges and expenses of the Bond Trustee, and any and all other

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defaults known to the Bond Trustee and the Credit Facility Provider (if any) (other than in the payment of principal of and interest on the Bonds due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Bond Trustee and the Credit Facility Provider (if any) or provision deemed by the Bond Trustee and the Credit Facility Provider (if any) to be adequate shall have been made therefor, then, and in every such case, the Credit Facility Provider (if any) or the Holders of at least a majority in aggregate principal amount of the Bonds then Outstanding, with the written consent of the Credit Facility Provider (if any) and confirmation that the Credit Facility (if any) has been reinstated to the Required Stated Amount, by written notice to the Issuer and to the Bond Trustee, may, on behalf of the Holders of all the Bonds, rescind and annul such declaration and its consequences and waive such default; but no such rescission and annulment shall extend to, affect any subsequent default or impair or exhaust any right or power consequent thereon.

Nothing contained in the Bond Indenture, however, shall require the Bond Trustee to exercise any remedies in connection with an Event of Default unless a Responsible Officer of the Bond Trustee shall have actual knowledge or shall have received written notice of such Event of Default as described in the Bond Indenture.

Notwithstanding any other provision of the Bond Indenture except as provided in the following

sentence, the Bond Trustee may not exercise any remedy in the event of a default described under clause (a), (b), (c), (d) or (e) under the subheading “Events of Default” above without the written consent of the Credit Facility Provider (if any), so long as the Credit Facility is in effect and the Credit Facility Provider (if any) is not in default under its payment obligations under the Credit Facility. The Bond Trustee may exercise any and all remedies under the Bond Indenture and the Loan Agreement (except acceleration) to collect any fees or expenses due from McLaren Health to the Bond Trustee or the Issuer without obtaining the consent of the Credit Facility Provider (if any); provided that the Bond Trustee shall first provide written notice to the Credit Facility Provider (if any) of its intent to exercise such remedies and provide the Credit Facility Provider (if any) with an opportunity to cure any failure of McLaren Health with respect to such fees, expenses and indemnification prior to exercising any such remedy.

Application of Revenues and Other Funds After Default

If an Event of Default has occurred and is continuing, all Revenues and any other funds then held or thereafter received by the Bond Trustee under any of the provisions of the Bond Indenture (other than payments received from the Credit Facility Provider (if any), or moneys required to be deposited in the Rebate Fund or the Bond Purchase Fund) shall be applied by the Bond Trustee as follows and in the following order:

(1) to the payment of any expenses necessary in the opinion of the Bond Trustee to protect the interests of the Holders of the Bonds and payment of reasonable fees and expenses of the Bond Trustee (including reasonable fees and disbursements of its counsel) incurred in and about the performance of its powers and duties under the Bond Indenture; and

(2) to the payment of the principal or Redemption Price of and interest then due on the Bonds (upon presentation of the Bonds to be paid, and stamping thereon of the payment if only partially paid or surrender thereof if fully paid) subject to the provisions of the Bond Indenture, as follows:

(i) unless the principal of all of the Bonds shall have become or have been declared due and payable,

First: to the payment to the Persons entitled thereto of all installments of interest then due in the order of the maturity of such installments, and, if the

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amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof ratably, according to the amounts due thereon, to the Persons entitled thereto, without any discrimination or preference; and

Second: to the payment to the Persons entitled thereto of the unpaid principal (including Sinking Fund Installments) or Redemption Price of any Bonds which shall have become due, whether at maturity or by call for redemption, in the order of their due dates, with interest on the overdue principal at the rate borne by the respective Bonds, and, if the amount available shall not be sufficient to pay in full all the Bonds due on any date, together with such interest, then to the payment thereof ratably, according to the amounts of principal or Redemption Price due on such date to the Persons entitled thereto, without any discrimination or preference.

(ii) If the principal of all of the Bonds shall have become or have been declared due and payable, to the payment of the principal, purchase price and interest then due and unpaid upon the Bonds, with interest on the overdue principal at the rate borne by the respective Bonds, and, if the amount available shall not be sufficient to pay in full the whole amount so due and unpaid, then to the payment thereof ratably, without preference or priority of principal over interest, or of interest over principal, or of any installment of interest over any other installment of interest, or of any Bond over any other Bond, according to the amounts due respectively for principal, purchase price and interest, to the Persons entitled thereto without any discrimination or preference.

When the Bond Trustee incurs expenses or renders services after the occurrence of an act of bankruptcy with respect to the Issuer or McLaren Health, the expenses and the compensation for the services are intended to constitute expenses of administration under any federal or state bankruptcy, insolvency, arrangement, moratorium, reorganization or other debtor relief law.

Bond Trustee to Represent Bondholders. The Bond Indenture irrevocably appoints the Bond Trustee (and the successive respective Holders of the Bonds, by taking and holding the same, shall be conclusively deemed to have so appointed the Bond Trustee) as trustee and true and lawful attorney-in-fact of the Holders of the Bonds for the purpose of exercising and prosecuting on their behalf such rights and remedies as may be available to such Holders under the provisions of the Bonds, the Bond Indenture, the Loan Agreement, the Obligation, the Act and applicable provisions of any other law.

Upon the occurrence and continuance of an Event of Default or other occasion giving rise to a right in the Bond Trustee to represent the Bondholders, the Bond Trustee in its discretion may, and upon the written request of the Credit Facility Provider (if any), or the Holders of not less than twenty five percent (25%) in aggregate principal amount of the Bonds then Outstanding with the consent of the Credit Facility Provider (if any), and upon being indemnified to its satisfaction therefor, will, proceed to protect or enforce its rights or the rights of such Holders or the Credit Facility Provider (if any) by such appropriate action, suit, mandamus or other proceedings as it deems most effectual to protect and enforce any such right, at law or in equity, either for the specific performance of any covenant or agreement contained in the Bond Indenture, or in aid of the execution of any power in the Bond Indenture granted, or for the enforcement of any other appropriate legal or equitable right or remedy vested in the Bond Trustee, the Credit Facility Provider (if any), or in such Holders under the Bond Indenture, the Loan Agreement, the Obligation, the Act or any other law; and upon instituting such proceeding, the Bond Trustee will be entitled, as a matter of right, to the appointment of a receiver of the Revenues and other amounts and assets pledged under the Bond Indenture, pending such proceedings. If more than one such request is received by the Bond Trustee from the Holders, the Bond Trustee will follow the written request executed

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by the Holders of the greater percentage of Bonds then Outstanding in excess of twenty-five percent (25%). All rights of action under the Bond Indenture or the Bonds or otherwise may be prosecuted and enforced by the Bond Trustee without the possession of any of the Bonds or the production thereof in any proceeding relating thereto, and any such suit, action or proceeding instituted by the Bond Trustee will be brought in the name of the Bond Trustee for the benefit and protection of all the Holders of such Bonds, subject to the provisions of the Bond Indenture.

Direction of Proceedings by Bondholders. Anything in the Bond Indenture to the contrary notwithstanding, the Credit Facility Provider (if any) or the Holders of a majority in aggregate principal amount of the Bonds then Outstanding, but with the consent of the Credit Facility Provider (if any), will have the right, by an instrument or concurrent instruments in writing executed and delivered to the Bond Trustee, to direct the method of conducting all remedial proceedings taken by the Bond Trustee under the Bond Indenture, provided that such direction will not be otherwise than in accordance with law and the provisions of the Bond Indenture, and that the Bond Trustee will have the right to decline to follow any such direction that in the opinion of the Bond Trustee would be unjustly prejudicial to Bondholders not parties to such direction, and that in no event will the Bondholders directly have the right to make drawings under the Liquidity Facility.

Limitation on Bondholders’ Right to Sue. No Holder of any Bond will have the right to institute

any suit, action or proceeding at law or in equity, for the protection or enforcement of any right or remedy under the Bond Indenture, the Loan Agreement, the Obligation, the Act or any other applicable law with respect to such Bond, unless (1) such Holder shall have given to the Bond Trustee written notice of the occurrence of an Event of Default; (2) the Holders of not less than twenty-five percent (25%) in aggregate principal amount of the Bonds then Outstanding will have made written request upon the Bond Trustee to exercise the powers granted in the Bond Indenture or to institute such suit, action or proceeding in its own name; provided, however, that if more than one such request is received by the Bond Trustee from the Holders, the Bond Trustee will follow the written request executed by the Holders of the greater percentage of Bonds then Outstanding in excess of twenty-five percent (25%); (3) such Holder or said Holders will have tendered to the Bond Trustee indemnity satisfactory to it against the costs, expenses and liabilities to be incurred in compliance with such request; and (4) the Bond Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Bond Trustee.

Such notification, request, tender of indemnity and refusal or omission are declared by the Bond Indenture, in every case, to be conditions precedent to the exercise by any Holder of Bonds of any remedy under the Bond Indenture or under law; it being understood and intended that no one or more Holders of Bonds shall have any right in any manner whatever by such Holder’s or Holders’ action to affect, disturb or prejudice the security of the Bond Indenture or the rights of any other Holders of Bonds, or to enforce any right under the Bond Indenture, the Loan Agreement, the Obligation, the Act or other applicable law with respect to the Bonds, except in the manner provided in the Bond Indenture, and that all proceedings at law or in equity to enforce any such right shall be instituted, had and maintained in the manner provided in the Bond Indenture and for the benefit and protection of all Holders of the Outstanding Bonds, subject to the provisions of the Bond Indenture.

Absolute Obligation of Issuer. Nothing contained in any provision of the Bond Indenture, or in the Bonds, shall affect or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal or Redemption Price of and interest on the Bonds to the respective Holders of the Bonds at their respective dates of maturity, or upon call for redemption, as provided in the Bond Indenture, but only out of the Revenues and other assets pledged therefor in the Bond Indenture, and not otherwise, or affect or impair the right of such Holders, which is also absolute and unconditional, to enforce such payment by virtue of the contract embodied in the Bonds.

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Termination of Proceedings

In case any proceedings taken by the Bond Trustee, the Credit Facility Provider (if any), or any one or more Bondholders on account of any Event of Default shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Bond Trustee, the Credit Facility Provider (if any), or the Bondholders, then in every such case the Issuer, the Bond Trustee, the Credit Facility Provider (if any), the Liquidity Facility Provider (if any) and the Bondholders, subject to any determination in such proceedings, shall be restored to their former positions and rights under the Bond Indenture, severally and respectively, and all rights, remedies, powers and duties of the Issuer, the Bond Trustee, the Credit Facility Provider (if any), the Liquidity Facility Provider (if any) and the Bondholders shall continue as though no such proceedings had been taken.

Remedies Not Exclusive

No remedy in the Bond Indenture conferred upon or reserved to the Bond Trustee, the Credit Facility Provider (if any), the Liquidity Facility Provider (if any), or to the Holders of the Bonds is intended to be exclusive of any other remedy or remedies, and each and every such remedy, to the extent permitted by law, will be cumulative and in addition to any other remedy given under the Bond Indenture or now or hereafter existing at law or in equity or otherwise.

No Waiver of Default

No delay or omission of the Bond Trustee, the Credit Facility Provider (if any), the Liquidity Facility Provider (if any), or of any Holder of the Bonds to exercise any right or power arising upon the occurrence of any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy given by the Bond Indenture to the Bond Trustee, the Credit Facility Provider (if any), the Liquidity Facility Provider (if any), or to the Holders of the Bonds may be exercised from time to time and as often as may be deemed expedient.

Notice to Bondholders of Default

The Bond Trustee will promptly give written notice by first class mail to the Bondholders, the Liquidity Facility Provider (if any) and the Credit Facility Provider (if any) of the occurrence of an Event of Default, if the Bond Trustee has actual knowledge of such Event of Default, and of the giving of any notice as provided in the Bond Indenture or as provided in the Loan Agreement with respect to an Event of Default.

Amendments to Bond Indenture Permitted

(a) The Bond Indenture and the rights and obligations of the Issuer, the Holders of the Bonds and the Bond Trustee may be modified or amended from time to time and at any time by an indenture or indentures supplemental to the Bond Indenture, which the Issuer, at the request of McLaren Health, and the Bond Trustee may enter into with the written consent of (i) the Credit Facility Provider (if any) (so long as the Credit Facility is in effect or any amounts are owing to the Credit Facility Provider (if any) and the Credit Facility Provider (if any) is not then in default under its payment obligations under the Credit Facility) or (ii) the Holders of a majority in aggregate principal amount of all Bonds then Outstanding (if no Credit Facility is in effect or the Credit Facility Provider (if any) is then in default under its payment obligations under the Credit Facility), and the Liquidity Facility Provider (if any), and the Obligated Group Agent shall have been filed with the Bond Trustee. No such modification or amendment shall (1) extend the stated maturity of any Bond, or reduce the amount of principal thereof, or extend the time of payment or change the method of computing the rate of interest thereon, or extend the time of payment of interest thereon, or reduce any premium payable upon the redemption thereof, or change the Purchase

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Price to be paid to Holders tendering their Bonds, without the consent of the Holder of each Bond so affected, or (2) reduce the aforesaid percentage of Bonds the consent of the Holders of which is required to effect any such modification or amendment, or permit the creation of any lien on the Revenues and other assets pledged under the Bond Indenture prior to or on a parity with the lien created by the Bond Indenture, or deprive the Holders of the Bonds of the lien created by the Bond Indenture on such Revenues and other assets (except as expressly provided in the Bond Indenture), without the consent of the Holders of all Bonds then Outstanding. It shall not be necessary for the consent of the Bondholders to approve the particular form of any Supplemental Bond Indenture, but it will be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Issuer and the Bond Trustee of any Supplemental Bond Indenture pursuant to this subsection (a), the Bond Trustee shall mail a notice, setting forth in general terms the substance of such Supplemental Bond Indenture to each Rating Agency then rating the Bonds, to the Liquidity Facility Provider (if any), to the Credit Facility Provider (if any) and to the Bondholders at the addresses shown on the registration books maintained by the Bond Trustee. Any failure to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such Supplemental Bond Indenture.

(b) The Bond Indenture and the rights and obligations of the Issuer, the Bond Trustee and the

Holders of the Bonds may also be modified or amended from time to time and at any time by an indenture or indentures supplemental to the Bond Indenture, which the Issuer and the Bond Trustee may enter into with the consent of the Obligated Group Agent (and, if required by the terms of a Reimbursement Agreement, the Credit Facility Provider (if any) and the Liquidity Facility Provider (if any), after it has been given written notice of such supplemental indenture, unless such modification or amendment affects only the Fixed Rate Bonds), but without the necessity of obtaining the consent of any Bondholders, only to the extent permitted by law and only for any one or more of the following purposes:

(i) to add to the covenants and agreements of the Issuer contained in the Bond Indenture other covenants and agreements thereafter to be observed, to pledge or assign additional security for the Bonds (or any portion thereof), or to surrender any right or power in the Bond Indenture reserved to or conferred upon the Issuer; provided, however, that no such covenant, agreement, pledge, assignment or surrender shall materially adversely affect the interests of the Holders of the Bonds;

(ii) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective provision, contained in the Bond Indenture, or in regard to matters or questions arising under the Bond Indenture, as the Issuer or the Bond Trustee may deem necessary or desirable and not inconsistent with the Bond Indenture, and which shall not materially adversely affect the interests of the Holders of the Bonds;

(iii) to modify, amend or supplement the Bond Indenture in such manner as to permit the qualification of the Bond Indenture under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute, and which shall not materially adversely affect the interests of the Holders of the Bonds;

(iv) to evidence or give effect to, or to conform to the terms and provisions of, any Liquidity Facility;

(v) to evidence or give effect to, or to conform to the terms and provisions of, any Credit Facility;

(vi) to facilitate and implement any book entry system (or any termination of a book entry system) with respect to the Bonds;

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(vii) to maintain the exclusion from gross income for purposes of federal income taxation of interest payable with respect to the Bonds; or

(viii) to make any modification or amendment to the Bond Indenture which will be effective upon the remarketing of Bonds following the mandatory tender of the Bonds.

The Bond Trustee may in its discretion, but shall not be obligated to, enter into any such Supplemental Bond Indenture authorized as described in paragraphs (a) or (b) of this section entitled “Amendments to Bond Indenture Permitted” which materially adversely affects the Bond Trustee’s own rights, duties or immunities under the Bond Indenture or otherwise.

Effect of Supplemental Bond Indenture

Upon the execution of any Supplemental Bond Indenture pursuant to the Bond Indenture, the Bond Indenture will be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under the Bond Indenture of the Issuer, the Bond Trustee and all Holders of Bonds Outstanding shall thereafter be determined, exercised and enforced under the Bond Indenture subject in all respects to such modification and amendment, and all the terms and conditions of any such Supplemental Bond Indenture will be deemed to be part of the terms and conditions of the Bond Indenture for any and all purposes.

Defeasance

Discharge of Bond Indenture. The Bonds may be paid by the Issuer or the Bond Trustee on behalf of the Issuer in any of the following ways:

(a) by paying or causing to be paid the principal or Redemption Price of and interest on all Bonds Outstanding, as and when the same become due and payable (from funds other than moneys paid pursuant to the Credit Facility);

(b) by depositing with the Bond Trustee, in trust, at or before maturity, moneys or securities in the necessary amount (as provided in Bond Indenture) to pay when due or redeem all Bonds then Outstanding (from funds other than moneys paid pursuant to the Credit Facility); or

(c) delivering to the Bond Trustee, for cancellation by it, all Bonds then Outstanding.

If the Issuer shall also pay or cause to be paid all other sums payable under the Bond Indenture by the Issuer, and no amounts are owing to the Credit Facility Provider (if any), and McLaren Health shall have paid all Administrative Fees and Expenses payable to the Issuer pursuant to the Loan Agreement, then and in that case at the election of the Issuer (evidenced by a Certificate of the Issuer filed with the Bond Trustee signifying the intention of the Issuer to discharge all such indebtedness and the Bond Indenture), and notwithstanding that any Bonds shall not have been surrendered for payment, the Bond Indenture and the pledge of Revenues and other assets made under the Bond Indenture and all covenants, agreements and other obligations of the Issuer under the Bond Indenture (except as otherwise provided in the Bond Indenture) shall cease, terminate, become void and be completely discharged and satisfied. In such event, upon the request of the Issuer, the Bond Trustee shall cause an accounting for such period or periods as may be requested by the Issuer to be prepared and filed with the Issuer and shall execute and deliver to the Issuer all such instruments as may be necessary to evidence such discharge and satisfaction, and the Bond Trustee shall pay over, transfer, assign or deliver to McLaren Health (unless such moneys are proceeds of the Credit Facility and moneys are owed to the Credit Facility Provider (if any) by McLaren Health, in which event to the Credit Facility Provider (if any)) all moneys or securities or other property held by it pursuant to the Bond Indenture which are not required for the payment or redemption

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of Bonds not theretofore surrendered for such payment or redemption; provided that in all events moneys in the Rebate Fund will be subject to the provisions of the Bond Indenture.

Discharge of Liability on Bonds. Upon the deposit with the Bond Trustee, in trust, at or before maturity, of money or securities in the necessary amount (as provided in the Bond Indenture) to pay or redeem any Outstanding Bond (whether upon or prior to its maturity or the redemption date of such Bond), provided that, if such Bond is to be redeemed prior to maturity, notice of such redemption shall have been given as provided in the Bond Indenture or provision satisfactory to the Bond Trustee shall have been made for the giving of such notice, then all liability of the Issuer in respect of such Bond shall cease, terminate and be completely discharged, except only that thereafter the Holder thereof will be entitled to payment of the principal of and interest on such Bond by the Issuer, and the Issuer shall remain liable for such payments, but only out of such money or securities deposited with the Bond Trustee as aforesaid for their payment, subject, however, to the provisions of the Bond Indenture.

Certain Affiliates Not Liable

No organization sponsored by McLaren Health or any organization with whom it is affiliated in any manner, other than the Members of the Obligated Group, is liable under the Bond Indenture, the Master Indenture, the Obligation or the Loan Agreement for the commitments of McLaren Health or any of the Members of the Obligated Group made in the Master Indenture, the Obligation or the Loan Agreement.

LOAN AGREEMENT

The following is a summary of certain provisions of the Loan Agreement. This summary does not purport to be complete or definitive, and reference is made to the Loan Agreement for the complete terms thereof.

General

The Loan Agreement provides the terms of the loan of all proceeds of Bonds by the Issuer to the Obligated Group and the repayment of such loan by the Obligated Group.

Loan of Proceeds; Payments of Principal, Premium and Interest

Pursuant to the Loan Agreement, the Issuer lends and advances to the Obligated Group for the benefit of the Hospital and McLaren Health, and the Obligated Group borrows and accepts from the Issuer, a loan in a principal amount equal to the aggregate principal amount of the Bonds, the net proceeds of which loan shall be equal to the net proceeds received from the sale of the Bonds, such proceeds to be applied under the terms and conditions of the Loan Agreement and the Bond Indenture. In consideration of such loan, the Obligated Group agrees to pay, or cause to be paid, “Loan Repayments” in an amount sufficient to enable the Bond Trustee to make the transfers and deposits required at the times and in the amounts pursuant to the Bond Indenture. Each Loan Repayment shall be made in immediately available funds. Notwithstanding the foregoing, the Obligated Group agrees to make payments, or cause payments to be made, at the times and in the amounts required to be paid as principal or Redemption Price of and interest on the Bonds from time to time Outstanding under the Bond Indenture and other amounts required to be paid under the Bond Indenture, as the same shall become due whether at maturity, upon redemption, by declaration of acceleration or otherwise.

Except as otherwise expressly provided in the Loan Agreement, all amounts payable by the Obligated Group to the Issuer under the Loan Agreement summarized in the preceding paragraph shall be

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paid to the Bond Trustee or other parties entitled thereto, as assignee of the Issuer, and the Loan Agreement and all right, title and interest of the Issuer in any such payments are assigned and pledged by the Obligated Group and the Issuer to the Bond Trustee so long as any Bonds remain Outstanding.

Additional Payments

In addition to Loan Repayments, the Obligated Group shall also pay to the Issuer, the Bond Trustee and the Tender Agent, if any, or the designated agent of any of them, as the case may be, “Additional Payments,” as follows:

(a) On or before March 1 in each year, in arrears, an amount sufficient to assure payment in full of the allocable share of the Obligated Group (as determined by the Issuer) of the general operating expenses of the Issuer, but such allocable share shall not exceed for any year one-tenth of one percent (.1%) of the average principal amount of the Bonds Outstanding under the Bond Indenture during the year preceding each March 1 payment.

(b) All taxes and assessments of any type or character charged to the Issuer or to the Bond Trustee affecting the amount available to the Issuer or the Bond Trustee from payments to be received under the Loan Agreement or in any way arising due to the transactions contemplated by the Loan Agreement (including taxes and assessments assessed or levied by any public agency or governmental authority of whatsoever character having power to levy taxes or assessments) but excluding franchise taxes based upon the capital and/or income of the Bond Trustee and taxes based upon or measured by the net income of the Bond Trustee; provided, however, that the Obligated Group shall have the right to protest any such taxes or assessments and to require the Issuer or the Bond Trustee, at the Obligated Group’s expense, to protest and contest any such taxes or assessments levied upon them and that Obligated Group shall have the right to withhold payment of any such taxes or assessments pending disposition of any such protest or contest unless such withholding, protest or contest would adversely affect the rights or interests of the Issuer or the Bond Trustee;

(c) All reasonable fees, charges, expenses and indemnities of the Issuer, the Bond Trustee and the Tender Agent under the Loan Agreement and under the Bond Indenture, as and when the same become due and payable;

(d) The reasonable fees and expenses of such accountants, consultants, attorneys and other experts as may be engaged by the Issuer or the Bond Trustee to prepare audits, financial statements, reports, opinions or provide such other services required under the Loan Agreement or the Bond Indenture; and

(e) All other reasonable and necessary fees and expenses attributable to the Bonds, the Loan Agreement or the Obligation, including without limitation all payments required pursuant to the Tax Certificate and Agreement.

Such Additional Payments shall be billed to the Obligated Group by the Issuer, the Bond Trustee and the Tender Agent, as applicable, from time to time, together with a statement certifying that the amount billed has been incurred or paid for one or more of the above items and, if applicable, supporting invoices. Amounts so billed shall be paid by the Obligated Group within thirty (30) days after receipt of the bill by the Obligated Group Agent.

Failure of the Obligated Group to comply with any requirements to pay such Additional Payments as described above shall be an Event of Default under the Loan Agreement which shall entitle the Issuer or the Bond Trustee, in the name of the Issuer, to the remedy of specific performance.

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The obligations of the Obligated Group to pay such Additional Payments as described above shall survive the termination of the Loan Agreement and shall not be limited by the terms of the Obligation.

Prepayment

The Obligated Group shall have the right, so long as all amounts which have become due under the Loan Agreement have been paid, at any time or from time to time to prepay all or any part of the Loan Repayments and the Issuer agrees that the Bond Trustee shall accept such prepayments when the same are tendered. Prepayments may be made by payments of cash, deposit of United States Government Obligations or surrender of Bonds, as contemplated by the Loan Agreement). All such prepayments (and the additional payment of any amount necessary to pay the applicable premium, if any, payable upon the redemption of Bonds) shall be deposited upon receipt at Obligated Group’s direction in (i) the Principal Account, (ii) the Optional Redemption Account of the Redemption Fund, if the Bonds are to be redeemed pursuant the Bond Indenture, or (iii) the Special Redemption Account of the Redemption Fund (or in such other Bond Trustee escrow account as may be specified by the Obligated Group Agent), if the Bonds are to be redeemed pursuant to the Bond Indenture, and at the request of and as determined by the Obligated Group Agent, credited against payments due under the Loan Agreement or used for the redemption or purchase of Outstanding Bonds in the manner and subject to the terms and conditions set forth in the Bond Indenture. Notwithstanding any such prepayment or surrender of Bonds, as long as any Bonds remain Outstanding or any Additional Payments required to be made under the Loan Agreement remain unpaid, the Obligated Group shall not be relieved of its obligations under the Loan Agreement.

Payment of Purchase Price of Bonds

The Obligated Group agrees that, if a Liquidity Facility is not in effect as permitted under the Bond Indenture and the Loan Agreement or if the Liquidity Facility Provider has not paid the full amount required by the Bond Indenture at the times required under the Bond Indenture, it shall pay to the Tender Agent all amounts necessary for the purchase of Bonds pursuant to the Bond Indenture and not deposited with the Tender Agent by the Remarketing Agent from the proceeds of the sale of such Bonds pursuant to the Bond Indenture, except on a Window Optional Tender Date or in connection with an Unscheduled Mandatory Tender in an Index Mode or a Flexible Index Mode. Each such payment by the Obligated Group to the Tender Agent pursuant to the Bond Indenture will be in immediately available funds and paid to the Tender Agent at its Designated Office by 2:30 P.M. on each date upon which a payment is to be made pursuant to the Bond Indenture.

If a Conversion is consummated where the Interest Period ends on the final maturity date of the Bonds pursuant to the Bond Indenture, the provisions of the Loan Agreement summarized in his section entitled “Payment of Purchase Price of Bonds” will be terminated following such Conversion with respect to such Bonds.

Obligations Unconditional

The obligations of the Obligated Group under the Loan Agreement are absolute and unconditional, notwithstanding any other provision of the Loan Agreement, the Supplement, the Obligation, the Master Indenture or the Bond Indenture. Until the Loan Agreement is terminated and all payments under the Loan Agreement are made, the Obligated Group:

(a) will pay all amounts required under the Loan Agreement without abatement, deduction or set-off except as otherwise expressly provided in the Loan Agreement;

(b) will not suspend or discontinue any payments due under the Loan Agreement for any reason whatsoever, including, without limitation, any right of set-off or counterclaim;

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(c) will perform and observe all its other agreements contained in the Loan Agreement; and

(d) except as provided in the Loan Agreement, will not terminate the Loan Agreement for any cause, including, without limiting the generality of the foregoing, damage, destruction or condemnation of the health facilities financed with the proceeds of the Bonds or any part thereof, commercial frustration of purpose, any change in the tax or other laws of the United States of America or the State of Michigan or any political subdivision thereof, or any failure of the Issuer to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with the Loan Agreement.

The rights of the Bond Trustee or any party or parties on behalf of whom the Bond Trustee is acting will not be subject to any defense, set-off, counterclaim or recoupment whatsoever, whether arising out of any breach of any duty or obligation of the Issuer, the Master Trustee or the Bond Trustee owing to the Obligated Group, or by reason of any other indebtedness or liability at any time owing by the Issuer, the Master Trustee or the Bond Trustee to the Obligated Group.

Tax Covenant

Each Obligated Group Member covenants that pursuant to the requirement of Treasury Regulations Sections 1.148-1(b) (“program investment”), neither the Obligated Group nor any related person contemplated by such regulations will purchase Bonds in an amount related to the amount of the Obligation.

Each Member of the Obligated Group covenants for itself and on behalf of each Credit Group Member, to the extent permitted by law, each shall comply, for itself and on behalf of the Issuer, with Section 148 of the Code and shall take all actions within its control necessary to maintain the exclusion of the interest on the Bonds from gross income for purposes of federal income taxation under the Code, including but not limited to, actions relating to the rebate of arbitrage earnings and the expenditure and investment of Bond proceeds and moneys deemed to be Bond proceeds. In furtherance of this covenant, the Obligated Group agrees for itself and for each Credit Group Member to comply with the Tax Certificate and Agreement, as such certificate may be amended from time to time, as a source of guidance for compliance with the Code.

Each Member of the Obligated Group covenants for itself and for each Credit Group Member that it will, from time to time and at any time, upon such Member’s own initiative, or upon the request of the Bond Trustee or the Issuer, amend, supplement or modify the Tax Certificate and Agreement, to the extent permitted by law, to maintain the exclusion of interest on the Bonds from gross income for purposes of federal income taxation under the Code and the regulations promulgated thereunder; provided, however, each Member of the Obligated Group shall receive or deliver, as the case may be, the opinion of nationally recognized bond counsel, satisfactory to the Issuer, stating that such amendment, supplement or modification is necessary to maintain such exclusion of the interest on the Bonds from gross income for federal income tax purposes prior to amending, supplementing or modifying the Tax Certificate and Agreement as provided in the Loan Agreement.

Each Member of the Obligated Group represents that it and each Credit Group Member is duly organized and existing under the law of the State of Michigan. Each Member of the Obligated Group covenants that it has the legal power to execute, deliver and perform the Loan Agreement and any other documents required hereby. The Obligated Group covenants and agrees that (a) no Member of the Obligated Group and no Credit Group Member will perform any act or enter into any agreement or omit to perform any act or fulfill any requirement that would have the effect of jeopardizing the exclusion of

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the interest on the Bonds from gross income for purposes of federal income taxation and (b) each Member of the Obligated Group and each Credit Group Member will maintain, extend and renew its corporate existence and at all times be qualified to do business in each state where such qualification is required under the laws of such state.

Events of Default

Each of the following events shall constitute and be referred to in the Loan Agreement as a “Loan Default Event”:

(a) Failure by the Obligated Group to pay in full any payment required under the Loan

Agreement or by the Obligated Group to pay in full any payment required under the Obligation when due, whether on an Interest Payment Date or at maturity, upon a date fixed for prepayment, by declaration, upon tender of the Bonds for purchase pursuant to the Bond Indenture (except on a Window Optional Tender Date or in connection with an Unscheduled Mandatory Tender in an Index Mode or a Flexible Index Mode), or otherwise pursuant to the terms of the Loan Agreement or thereof;

(b) Any Member of the Obligated Group or Credit Group Member shall fail to perform, observe or comply with any of the terms, covenants, conditions or provisions contained in the Loan Agreement applicable to such Member for a period of thirty (30) days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Obligated Group Agent by the Issuer or the Bond Trustee; provided, however, that if the failure shall be such that it cannot be corrected within such period, but such failure can be corrected, it shall not constitute an Event of Default if corrective action is instituted within such period and diligently pursued until the failure is corrected or until sixty (60) days after such default can be corrected;

(c) Any Member of the Obligated Group or Credit Group Member which is a federally tax-exempt organization shall lose its status as a federally tax-exempt organization or fail to perform, observe or comply with the terms, covenants and conditions or provisions of the Loan Agreement which results in loss of the exclusion of the interest paid or to be paid on the Bonds from gross income for federal income tax purposes;

(d) The commencement of proceedings seeking an order for relief in a court in respect of a Member of the Obligated Group in an involuntary case under the federal bankruptcy laws, as now or hereafter constituted, or under any other applicable federal or state bankruptcy, insolvency or similar law, or the commencement of proceedings seeking the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of a Member of the Obligated Group or for any substantial part of the property of a Member of the Obligated Group, or the commencement of proceedings seeking an order winding up or liquidating the affairs of a Member of the Obligated Group and the continuance of any such proceedings for a period of ninety (90) consecutive days;

(e) The commencement by a Member of the Obligated Group of a voluntary case under the federal bankruptcy laws, as now constituted or hereafter amended, or any other applicable federal or state bankruptcy, insolvency or other similar law, or the consent by either it to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of a Member of the Obligated Group or for any substantial part of its property, or the making by it of any assignment for the benefit of creditors or the failure of one of a Member of the Obligated Group generally to pay its debts as such debts become due, or the taking of corporate action by a Member of the Obligated Group in furtherance of any of the foregoing; or

(f) The occurrence of an Event of Default as defined under the Bond Indenture.

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Remedies on Default

If a Loan Default Event shall occur, then, and in each and every such case during the continuance of such Loan Default Event, the Bond Trustee on behalf of the Issuer, but subject to the limitations in the Bond Indenture as to the enforcement of remedies, may take one of the following actions:

(a) If the principal of and interest accrued on the Bonds shall have been declared immediately due and payable under the Bond Indenture, the Master Indenture or the Supplement, as the holder of the Obligation, require the Master Trustee to declare all obligations issued and outstanding under the Master Indenture to be immediately due and payable.

(b) To institute any actions or proceedings at law or in equity for the collection of Loan

Repayments or other sums due and unpaid under the Loan Agreement, to prosecute any such action or proceeding to judgment or final decree and to enforce any such judgment or final decree and collect in the manner provided by law any moneys adjudged or decreed to be payable.

(c) In case there shall be pending proceedings for the bankruptcy or for the reorganization of

a Member of the Obligated Group under the federal bankruptcy laws or any other applicable law, or in case a receiver or trustee shall have been appointed for the property of a Member of the Obligated Group, to file and prove a claim or claims for the whole amount owing under the Loan Agreement plus interest owing and unpaid in respect thereof and, in case of any judicial proceedings, to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Issuer or the Bond Trustee allowed in such judicial proceedings relative to a Member of the Obligated Group, its creditors, or its property, and to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute the same after the deduction of its charges and expenses; and any receiver, assignee or trustee in bankruptcy or reorganization is authorized to make such payments to the Bond Trustee, and to pay to the Bond Trustee any amount due it for compensation and expenses, including counsel fees incurred by it up to the date of such distribution.

(d) The Issuer or the Bond Trustee may exercise any and all rights and remedies provided at

law or under equitable principles or, as the holder on behalf of the Issuer of the Obligation, under the Master Indenture, in enforcing and realizing upon the security interests therein granted, if any, according to the terms thereof and applicable law.

(e) To bring an action at law or in equity to enforce the performance by the Obligated Group

of its obligations under the Loan Agreement.

No remedy conferred in the Loan Agreement upon the Issuer or the Bond Trustee is intended to be exclusive of any other available remedy or remedies, but such remedies shall be in addition to every other remedy now or hereafter existing at law or in equity or by statute.

If the Bond Trustee or the Issuer shall have commenced proceedings to exercise or enforce any right or remedy under the Loan Agreement and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely, then and in every such case, the Obligated Group, the Issuer and the Bond Trustee shall be restored to their respective rights and positions under the Loan Agreement and all rights and remedies of the Obligated Group, the Issuer and the Bond Trustee shall continue as though no such proceedings had been taken, but subject to the limitations of any such adverse determination.


APPENDIX B

SUMMARY OF CERTAIN PROVISIONS OF THE MASTER TRUST INDENTURE

TABLE OF CONTENTS

Page B-

B-i

THE MASTER TRUST INDENTURE ....................................................................................................................... 1

Definitions ..................................................................................................................................................... 1 The Obligations; Payment of the Obligations; Payment and Pledge of Gross Revenues to Master

Trustee; Credit Group Members ................................................................................................... 10 Entrance Into the Obligated Group .............................................................................................................. 15 Cessation of Status as an Obligated Group Member ................................................................................... 16 Substitute Obligations Upon Withdrawal Of An Obligated Group Member............................................... 17 Liens on Property; Right of Contest ............................................................................................................ 17 Permitted Funded Indebtedness ................................................................................................................... 18 Rates and Charges ....................................................................................................................................... 18 Insurance ..................................................................................................................................................... 19 Sale, Lease or Other Disposition of Property .............................................................................................. 19 Merger, Consolidation, Sale or Conveyance ............................................................................................... 19 Other Covenants of the Members ................................................................................................................ 20 Defaults and Remedies ................................................................................................................................ 21 Direction of Proceedings ............................................................................................................................. 22 Waiver of Events of Default ........................................................................................................................ 23 Supplemental Master Indentures ................................................................................................................. 23

THE SUPPLEMENT ................................................................................................................................................. 25

Obligation No. 22 ........................................................................................................................................ 25 Redemption of Obligation No. 22 ............................................................................................................... 25 Events of Default and Remedies ................................................................................................................. 25

B-1

DEFINITIONS AND SUMMARY OF CERTAIN DOCUMENTS

Brief descriptions of the Master Indenture and the Supplement are included hereafter in this summary. Such descriptions do not purport to be comprehensive or definitive. All references herein to the Master Indenture and the Supplement are qualified in their entirety by reference to each such document. Copies of the Master Indenture and the Supplement are available for review prior to issuance and delivery of the Bonds at the offices of the Bond Trustee. All references to the Bonds are qualified in their entirety by references to the definitive forms thereof and the information with respect thereto included in the Bond Indenture.

THE MASTER TRUST INDENTURE

The Master Indenture contains various definitions, covenants, security provisions, terms and conditions, certain of which are summarized below. Reference is made to the Master Indenture for a full and complete statement of its provisions.

Definitions

“Affiliate” means a corporation, partnership, joint venture, association, limited liability company or similar entity which controls or which is controlled, directly or indirectly, by a Obligated Group Member.

“Board Resolution” means a copy of a resolution delivered to the Master Trustee and certified by the Secretary or an Assistant Secretary of a Person to have been duly adopted by the Governing Body of such Person and to be in full force and effect on the date of such delivery.

“Bondholder,” “holder” or “owner of the Bonds” means the registered owner of any Related Bond.

“Book Value,” when used with respect to Property, means the value of such Property, net of accumulated depreciation and amortization, as reflected in the most recent financial statements of the Credit Group, provided that such aggregate shall be calculated in such a manner that no portion of the value of any Property of any Credit Group Member is included more than once.

“Capitalized Lease” means any lease of real or personal property which, in accordance with generally accepted accounting principles, is required to be capitalized on the balance sheet of the lessee.

“Code” means the Internal Revenue Code of 1986, as amended from time to time. Each reference to a section of the Code herein shall be deemed to include the United States Treasury Regulations, including temporary and proposed regulations, relating to such section which are applicable to a series of Related Bonds or the use of the proceeds thereof.

“Consultant” means a professional consulting, financial advisory, accounting, investment banking or commercial banking firm selected by the Obligated Group Agent and not unacceptable to the Master Trustee, having the skill and experience necessary to render the particular report required and having a favorable reputation for such skill and experience, which firm does not control any Credit Group Member and is not controlled by or under common control with any Credit Group Member.

“Corporation” means McLaren Health Care Corporation, a Michigan nonprofit corporation, and its successors and assigns and any surviving, resulting or transferee corporation.

“Counsel” means an attorney duly admitted to practice law before the highest court of any state and, without limitation, may include independent or in-house legal counsel for any Obligated Group Member, the Master Trustee or a Related Bond Trustee.

“Credit Group” means, collectively, all the Credit Group Members as of a particular time, of the Credit Group, from and after the date of the Master Indenture.

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“Credit Group Member” means as of a particular time (a) each Obligated Group Member, (b) each Limited Credit Group Participant, or (c) each Designated Affiliate.

“Debt Service Requirements” means, with respect to the period of time for which calculated, the aggregate of the payments due during such period in respect of principal (whether at maturity, as a result of mandatory sinking fund redemption, mandatory prepayment or otherwise) and interest on outstanding Funded Indebtedness of each Person or a group of Persons with respect to which calculated; provided that:

(a) interest shall be excluded from the determination of the Debt Service Requirements to the extent that Funded Interest is used to pay such interest;

(b) principal of Funded Indebtedness shall be excluded from the determination of Debt Service Requirements to the extent that amounts on deposit in an irrevocable escrow (including, where appropriate, the earnings or other increment to accrue thereon) are applied to pay such principal; and

(c) any portion of any Funded Indebtedness of a Person or a group of Persons for which (i) an Interest Rate Agreement has been entered into by a Person or a group of Persons, and (ii) such Interest Rate Agreement is designated by the Person or group of Persons as being related to that Funded Indebtedness, such Funded Indebtedness shall be deemed to bear interest for the period of time that such Interest Rate Agreement is in effect at a net rate which takes into account the interest payments made by the Person or group of Persons on such Funded Indebtedness and the payments made or received by such Person or group of Persons with respect to such Interest Rate Agreement, but only if the long-term credit rating of the provider of the Interest Rate Agreement (or any guarantor thereof) is in one of the three highest rating categories of any Rating Agency (without regard to any refinements of gradation of a rating category by numerical modifier or otherwise) or is at least as high as that of the Person or group of Persons (whichever is highest).

“Designated Affiliate” means any Person designated by the Obligated Group Agent as such in accordance with the terms of the Master Indenture, and over which any Obligated Group Member maintains control, directly or indirectly, including the power to direct the management, policies, disposition of assets and actions of such Designated Affiliate to the extent required to cause such Designated Affiliate to comply with the terms and conditions of the Master Indenture, through the ownership of such Person’s voting securities, partnership interests, membership, reserved powers, the power to appoint such Person’s members, trustees or directors or otherwise.

“Escrow Obligations” means, (i) with respect to any Obligation which secures a series of Related Bonds, those securities permitted to be used to defease, refund or advance refund such series of Related Bonds under the Related Bond Indenture, or (ii) with respect to any other Obligation, those securities identified as such in the Supplemental Master Indenture pursuant to which such Obligation was issued.

“Expenses” means, for any period, the aggregate of all expenses calculated under generally accepted accounting principles, including without limitation any taxes, incurred by the Person or group of Persons involved during such period, but excluding (a) interest on Funded Indebtedness, (b) depreciation and amortization, (c) any unrealized loss resulting from changes in the value of investment securities, (d) extraordinary expenses (including without limitation losses on the sale of assets other than in the ordinary course of business and losses on the extinguishment of debt), (e) any expenses resulting from a forgiveness of or the establishment of reserves against Funded Indebtedness of an affiliate which does not constitute an extraordinary expense and, (f) losses resulting from any reappraisal, revaluation or write-down of assets and (g) if such calculation is being made with respect to the Credit Group, excluding any such expenses attributable to transactions between any Credit Group Member and any other Credit Group Member; provided, however, so long as any Funded Indebtedness is deemed to bear interest taking into account an Interest Rate Agreement, any payments made by the Person or group of Persons under such Interest Rate Agreement shall be excluded from the definition of “Expenses.”

“Facilities” means all land, leasehold interests and buildings and all fixtures and equipment (as defined in the Uniform Commercial Code or equivalent statute in effect in the state where such fixtures or equipment are located) of a Person.

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“Fiscal Year” means, for the Obligated Group Agent, any 12-month period beginning on October 1 of any calendar year and ending on September 30 of the following calendar year or such other consecutive 12-month period selected by the Obligated Group Agent as the fiscal year for the Obligated Group Agent and its affiliates; and for any other Credit Group Member, any consecutive 12-month period selected by such Member and not unacceptable to the Obligated Group Agent as the fiscal year for such Member and its affiliates.

“Fitch” means Fitch Ratings (formerly known as Fitch IBCA, Inc.), its successors and assigns.

“Funded Indebtedness” means, with respect to any Person, (a) all indebtedness of such Person for money borrowed or credit extended which is not Short-Term; (b) all indebtedness of such Person for money borrowed or credit extended pursuant to a commercial paper program, (c) all indebtedness of such Person incurred or assumed in connection with the acquisition or construction of Property which is not Short-Term; (d) any guaranty by such Person of indebtedness for money borrowed or credit extended, which indebtedness so guaranteed is not Short-Term; and (e) rental payments under Capitalized Leases entered into by the Person; provided, however, that Funded Indebtedness that could be described by more than one of the foregoing categories shall not in any case be considered more than once for the purpose of any calculation made pursuant to the Master Indenture; and provided further that Funded Indebtedness shall not include (i) indebtedness of one Credit Group Member to another Credit Group Member, (ii) the joint and several liability of any Credit Group Member on Funded Indebtedness issued by another Credit Group Member, (iii) Interest Rate Agreements, (iv) any obligation to repay moneys deposited by patients or others with a Credit Group Member as security for or as prepayment of the cost of patient care or any rights of residents of life care, elderly housing or similar facilities to endowment or similar funds deposited by or on behalf of such residents, or (v) any guaranty by any Credit Group Member of indebtedness of any other Credit Group Member, provided, however, with respect to any guaranty of indebtedness of a Limited Credit Group Participant, the amount of indebtedness of any Limited Credit Group Participant which exceeds the amount payable by such Limited Credit Group Participant pursuant to such Participant's contract shall be included as Funded Indebtedness.

“Funded Interest” means amounts irrevocably deposited in escrow to pay interest on Funded Indebtedness or Related Bonds and interest earned on amounts irrevocably deposited in escrow to the extent such interest earned is applied to pay interest on Funded Indebtedness or Related Bonds.

“Governing Body” means the board of directors, board of trustees or similar group in which the right to exercise the powers of corporate directors or trustees is vested or an executive committee of such board or any duly authorized committee of that board to which the relevant powers of that board have been lawfully delegated in the governing documents.

“Gross Revenues” means all gross revenues, rents, profits, receipts, benefits, royalties, money and income of any Obligated Group Member and any Credit Group Member who is a Designated Affiliate or Limited Credit Group Participant arising from services provided by Obligated Group Members and Credit Group Members or arising in any manner with respect to, incident to, or on account of the Obligated Group Members' and Credit Group Members' operations, including, without limitation, (i) the Obligated Group Members' and Credit Group Member' rights under agreements with insurance companies and prepaid health organizations, as well as rights under agreements with Medicare, Medicaid, and governmental units (including rights to Medicare and Medicaid loss recapture) in accordance with applicable regulations and (ii) gifts, grants, bequests, donations, contributions and pledges to any Obligated Group Member and (iii) insurance proceeds or any award, or payment in lieu of an award, resulting from condemnation proceedings, and all rights to receive the foregoing, whether now owned or hereafter acquired by any Obligated Group Member and any Credit Group Member and regardless of whether generated in the form of accounts, accounts receivable, contract rights, chattel paper, documents, general intangibles, instruments, investment property, proceeds of insurance and all proceeds of the foregoing, whether cash or noncash; excluding, however, gifts, grants, bequests, donations, contributions and pledges to any Obligated Group Member and any Credit Group Member heretofore or hereafter made, and the income and gains derived therefrom, which are specifically restricted by the donor or grantor to a particular purpose which is inconsistent with its use for payments required under the Master Indenture or on any Obligations, except that gifts, grants, bequests, donations, contributions and pledges which may be applied at the discretion of an Obligated Group Member or any Credit Group Member to the payments due under the Master Indenture or any Obligations for any period shall not be excluded for purposes of determining Gross Revenues of the Obligated Group Member or the Credit Group Member for such period.

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“Historical Debt Service Coverage Ratio” means, for any period of time, the ratio consisting of a numerator equal to the amount determined by dividing Income Available for Debt Service for that period by the Debt Service Requirements on Funded Indebtedness for such period and a denominator of one; provided that, when such calculation is being made with respect to the Credit Group, Income Available for Debt Service and Debt Service Requirements shall be determined only with respect to those Persons who are Credit Group Members at the close of such period.

“Income Available for Debt Service” means, for any period, the sum of (a) the excess (or deficit) of Revenues over Expenses of the Obligated Group Members and the Designated Affiliates for such period, plus (b) for each Limited Credit Group Participant, the lesser of (1) the excess of Revenues over Expenses of such Limited Credit Group Participant for such period, or (2) the amount required to be paid or available to the Obligated Group Member or Designated Affiliate pursuant to the contract, or agreement between such Limited Credit Group Participant and the Obligated Group Member or Designated Affiliate.

“Interest Rate Agreement” means an interest rate exchange, hedge or similar agreement, which agreement may include, without limitation, an interest rate swap, a forward or futures contract or an option (e.g. a call, put, cap, floor or collar) and which agreement does not constitute an obligation to repay money borrowed, credit extended or the equivalent thereof.

“Lien” means any mortgage, pledge or lease of, security interest in or lien, charge, restriction or encumbrance on any Property of the Person involved in favor of, or which secures any obligation to, any Person other than a Credit Group Member and any Capitalized Lease under which any Credit Group Member is lessee and the lessor is not a Credit Group Member.

“Limited Credit Group Participant” means a Person designated by the Obligated Group Agent with whom a Obligated Group Member or a Designated Affiliate has entered into a contract or other agreement, under which such Person is obligated to make such portion of the payments required by the terms of the Master Indenture in the amount specified in such contract or other agreement, perform all of the other obligations of a Credit Group Member under the Master Indenture, and do all things necessary to permit the Obligated Group to perform its respective obligations and covenants under the Master Indenture; provided that together with such identification there shall be delivered to the Master Trustee (a) a fully executed copy of such contract or other agreement and (b) an opinion of Counsel acceptable to the Master Trustee to the effect that such contract or other agreement is a valid and binding obligation of such Person enforceable in accordance with its terms, subject to customary exceptions for bankruptcy, insolvency and other laws generally affecting enforcement of creditors’ rights and application of general principals of equity and to the exceptions set forth in Exhibit A to the Master Indenture.

“Master Indenture” means the Master Trust Indenture dated as of June 1, 1998, as it may from time to time be amended or supplemented in accordance with the terms of the Master Indenture.

“Master Trustee” means The Bank of New York Mellon Trust Company, N.A. (successor to J.P. Morgan Trust Company, N.A. and NBD Bank) or any successor trustee under the Master Indenture.

“Moody’s” means Moody’s Investors Service, Inc., its successors and assigns.

“Non-Recourse Indebtedness” means any indebtedness the liability for which is effectively limited to property, plant and equipment (as classified under generally accepted accounting principles) and the income therefrom, the cost of which property, plant and equipment shall have been financed with the proceeds of such indebtedness with no recourse, directly or indirectly, to any other Property of any Credit Group Member.

“Obligated Group” means collectively, the Obligated Group Members.

“Obligated Group Agent” means the Corporation or such other Obligated Group Member as may be designated from time to time pursuant to written notice to the Master Trustee executed by the President or Chairperson of the Governing Body of the Corporation or, if the Corporation is no longer a Obligated Group Member, of each Obligated Group Member.

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“Obligated Group Member” or “Member of the Obligated Group” or “Member” means the Corporation and each other Member of the Obligated Group with respect to the Master Indenture.

“Obligation” means any evidence of indebtedness issued by an Obligated Group Member pursuant to the Master Indenture which has been authenticated by the Master Trustee pursuant to the Master Indenture.

“Obligation Holder” means the registered owner of any fully registered or book entry Obligation unless alternative provision is made in the Supplemental Master Indenture pursuant to which such Obligation is issued for establishing ownership of such Obligation, in which case such alternative provision shall control.

“Officer’s Certificate” means a certificate signed by the president or a vice president of the Obligated Group Agent or such other person designated in writing by such president or vice president or by resolution of the governing body of the Obligated Group Agent.

“Opinion of Bond Counsel” means a written opinion of nationally recognized municipal bond counsel, which counsel and opinion, including without limitation the scope, form, substance and other aspects thereof, are not unacceptable to the Master Trustee.

“Outstanding Obligations” or “Obligations outstanding” means all Obligations which have been duly authenticated and delivered by the Master Trustee under the Master Indenture, except:

(a) Obligations canceled after purchase in the open market or because of payment at or prepayment or redemption prior to maturity;

(b) (i) Obligations for the payment or redemption of which cash or Escrow Obligations shall have been theretofore deposited with the Master Trustee (whether upon or prior to the maturity or redemption date of any such Obligations); provided that if such Obligations are to be prepaid or redeemed prior to the maturity thereof, notice of such prepayment or redemption shall have been given or irrevocable arrangements satisfactory to the Master Trustee shall have been made therefor, or waiver of such notice satisfactory in form to the Master Trustee shall have been filed with the Master Trustee and (ii) Obligations securing Related Bonds for the payment or redemption of which cash or Escrow Obligations shall have been theretofore deposited with the Related Bond Trustee (whether upon or prior to the maturity or redemption date of any such Obligations); provided that if such Related Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given or arrangements satisfactory to the Related Bond Trustee shall have been made therefor, or waiver of notice satisfactory in form to the Related Bond Trustee shall have been filed with the Related Bond Trustee;

(c) Obligations in lieu of which others have been authenticated under the Master Indenture; and

(d) For the purpose of all consents, approvals, waivers and notices required to be obtained or given under the Master Indenture, Obligations held or owned by any Credit Group Member.

Notwithstanding the foregoing, any Obligation securing Related Bonds shall be deemed outstanding if such Related Bonds are Outstanding.

“Outstanding Related Bonds” or “Related Bonds Outstanding” means all Related Bonds which have been duly authenticated and delivered by the Related Bond Trustee under the Related Bond Indenture and are deemed outstanding under the terms of such Related Bond Indenture or, if such Related Bond Indenture does not specify when Related Bonds are deemed outstanding thereunder, all such Related Bonds which have been so authenticated and delivered, except:

(a) Related Bonds canceled after purchase in the open market or because of payment at or redemption prior to maturity;

(b) Related Bonds for the payment or redemption of which cash or Escrow Obligations of the type described in clause (i) of the definition thereof shall have been theretofore deposited with the Related Bond Trustee

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(whether upon or prior to the maturity or redemption date of any such Bonds) in accordance with the Related Bond Indenture; provided that if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given or arrangements satisfactory to the Related Bond Trustee shall have been made therefor, or waiver of such notice satisfactory in form to the Related Bond Trustee shall have been filed with the Related Bond Trustee;

(c) Related Bonds in lieu of which others have been authenticated under the Related Bond Indenture; and

(d) For the purposes of all covenants, approvals, waivers and notices required to be obtained or given under the Related Bond Indenture, Related Bonds held or owned by a Credit Group Member.

“Paying Agent” means the bank or banks, if any, designated pursuant to a Related Bond Indenture to receive and disburse the principal of and interest on any Related Bonds or designated pursuant to the Master Indenture to receive and disburse the principal of and interest on any Obligations.

“Permitted Encumbrances” means the Master Indenture, any Related Loan Document, any Related Bond Indenture and, as of any particular time:

(a) Liens arising by reason of good faith deposits with a Credit Group Member in connection with tenders, leases of real estate, bids or contracts (other than contracts for the payment of money), deposits by any Credit Group Member to secure public or statutory obligations, or to secure, or in lieu of, surety, stay or appeal bonds, and deposits as security for the payment of taxes or assessments or other similar charges; any Lien arising by reason of deposits with, or the giving of any form of security to, any governmental agency or any body created or approved by law or governmental regulation for any purpose at any time as required by law or governmental regulation as a condition to the transaction of any business or the exercise of any privilege or license, or to enable any Credit Group Member to maintain self-insurance or to participate in any funds established to cover any insurance risks or in connection with workmen’s compensation, unemployment insurance, pensions or profit sharing plans or other social security plans or programs, or to share in the privileges or benefits required for corporations participating in such arrangements;

(b) any Lien on Property acquired subject to an existing Lien, if at the time of such acquisition, the aggregate amount remaining unpaid on the indebtedness secured thereby (whether or not assumed by the Credit Group Member) does not exceed the fair market value or (if such Property has been purchased) the lesser of the acquisition price or the fair market value of the Property subject to such Lien as determined in good faith by the Governing Body of the Credit Group Member;

(c) any Lien on any Property of any Credit Group Member granted in favor of or securing indebtedness to any other Credit Group Member;

(d) any Lien on Property if such Lien equally and ratably secures all of the Obligations and, if the Obligated Group Agent shall so determine, any other indebtedness of any Credit Group Member;

(e) leases which relate to Property of a Credit Group Member which is of a type that is customarily the subject of such leases, such as office space for physicians and educational institutions, including leases for food service facilities, gift shops and radiology or other health care specialty services, pharmacy and similar departments; leases, licenses or similar rights to use Property to which any Credit Group Member is a party existing as of June 1, 1998 and any renewals and extensions thereof; and any leases, licenses or similar rights to use Property whereunder a Credit Group Member is lessee, licensee or the equivalent thereof upon fair and reasonable terms no less favorable to the lessee or licensee than would obtain in a comparable arm’s-length transaction;

(f) Liens for taxes and special assessments which are not then delinquent, or if then delinquent are being contested in accordance with the terms of the Master Indenture summarized under the caption “Liens on Property” below;

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(g) utility, access and other easements and rights-of-way, restrictions, encumbrances and exceptions which do not materially interfere with or materially impair the operation of the Property affected thereby (or, if such Property is not being then operated, the operation for which it was designed or last modified);

(h) any mechanic’s, laborer’s, materialman’s, supplier’s or vendor’s Lien or right in respect thereof if payment is not yet due under the contract in question or if such Lien is being contested in accordance with the provisions of the Master Indenture summarized under the caption “Liens on Property” below;

(i) such Liens, defects, irregularities of title and encroachments on adjoining property as normally exist with respect to property similar in character to the Property involved and which do not materially adversely affect the value of, or materially impair, the Property affected thereby for the purpose for which it was acquired or is held by the owner thereof, including without limitation statutory liens granted to banks or other financial institutions, which liens have not been specifically granted to secure Indebtedness and which do not apply to Property which has been deposited as part of a plan to secure indebtedness;

(j) zoning laws and similar restrictions which are not violated by the Property affected thereby;

(k) statutory rights under Section 291, Title 42 of the United States Code, as a result of what are commonly known as Hill-Burton grants, and similar rights under other federal statutes or statutes of the state in which the Property involved is located;

(l) all right, title and interest of the state where the Property involved is located, municipalities and the public in and to tunnels, bridges and passageways over, under or upon a public way;

(m) Liens on or in Property given, granted, bequeathed or devised by the owner thereof existing at the time of such gift, grant, bequest or devise, provided that (i) such Liens consist solely of restrictions on the use thereof or the income therefrom, or (ii) such Liens secure indebtedness which is not assumed by any Credit Group Member and such Liens attach solely to the Property (including the income therefrom) which is the subject of such gift, grant, bequest or devise;

(n) Liens of or resulting from any judgment or award, the time for the appeal or petition for rehearing of which shall not have expired, or in respect of which any Credit Group Member shall at any time in good faith be prosecuting an appeal or proceeding for a review and in respect of which a stay of execution pending such appeal or proceeding for review shall be in existence;

(o) Liens on moneys deposited by patients or others with a Credit Group Member as security for or as prepayment of the cost of patient care or any rights of residents of life care, elderly housing or similar facilities to endowment or similar funds deposited by or on behalf of such residents;

(p) Liens on Property due to rights of third party payors for recoupment of excess reimbursement paid;

(q) any security interest in a rebate fund, any depreciation reserve, debt service or interest reserve, debt service fund or any similar fund established pursuant to the terms of any Supplemental Master Indenture, Related Bond Indenture or Related Loan Document in favor of the Master Trustee, a Related Bond Trustee or the holder of the Indebtedness issued pursuant to such Supplemental Master Indenture, Related Bond Indenture or Related Loan Document or the provider of any liquidity or credit support for such Related Bond or indebtedness;

(r) any Lien on any Related Bond or any evidence of indebtedness of any Credit Group Member acquired by or on behalf of any Credit Group Member by the provider of liquidity or credit support for such Related Bond or indebtedness;

(s) such Liens, covenants, conditions and restrictions, if any, which do not secure indebtedness and which are other than those of the type referred to in this definition, as are set forth in the Master Indenture, and which (i) in the case of Property owned by any Credit Group Member on the date of delivery of the Master

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Indenture, do not and will not, so far as can reasonably be foreseen, materially adversely affect the value of the Property currently affected thereby or materially impair the same, and (ii) in the case of any other Property, do not materially impair or materially interfere with the operation or usefulness thereof for the purpose for which such Property was acquired or is held by a Credit Group Member;

(t) Liens on any Property of the initial Credit Group Member at the effective date of the Master Indenture;

(u) Liens on Property of a Person existing at the time such Person is merged into or consolidated with a Credit Group Member, or at the time of a sale, lease or other disposition of the properties of a Person as an entirety or substantially as an entirety to a Credit Group Member which becomes part of a Property that secures Indebtedness that is assumed by a Credit Group Member as a result of any such merger, consolidation or acquisition; provided, that no such Lien may be increased, extended, renewed or modified after such date to apply to any Property of a Credit Group Member not subject to such Lien on such date unless such Lien as so increased, extended, renewed or modified is otherwise permitted under the Master Indenture;

(v) any other Liens on any Property expressly permitted by the Master Indenture or approved in writing by the holders of all of the Outstanding Obligations;

(w) Liens on any Property of a Credit Group Member to secure any indebtedness incurred for the purpose of financing all or any part of the purchase price or the cost of constructing or improving the Property subject to such Liens; provided, that such Liens shall not apply to any Property theretofore owned by a Credit Group Member, other than any theretofore unimproved real property on which the Property so constructed or improved is located; and

(x) Liens on Property of a Credit Group Member (other than a Limited Credit Group Participant), in addition to those Liens permitted as defined above in this definition of Permitted Encumbrances, if the total aggregate principal amount of the indebtedness secured by Liens permitted pursuant to this subsection (x), Liens on accounts receivable arising as a result of the sale of such accounts receivable with or without recourse and Liens which secure Non-Recourse Indebtedness, does not exceed 25% of the Book Value of the total assets of the Credit Group Members (other than a Limited Credit Group Participant) (or, at the option of the Credit Group, the current value of the total assets of the Credit Group Members (other than a Limited Credit Group Participant), as established by the report of an independent appraiser not objected to by the Master Trustee prepared not more than three years prior to the date such Lien is established.

(y) Rights reserved to or vested in any municipality or public authority by the terms of any right, power, franchise, grant, license, permit or provision of law, affecting any Property, to (1) terminate such right, power, franchise, grant, license or permit, provided that the exercise of such right would not materially impair the use of such Property or materially and adversely affect the value thereof, or (2) purchase, condemn, appropriate or recapture, or designate a purchaser of, such Property;

(z) Rights of setoff and banker’s liens with respect to funds on deposit in a financial institution in the ordinary course of business.

(aa) Any Lien which is a Permitted Lien as defined in that certain Master Indenture dated as of August 1, 1990, between McLaren General Hospital, Inc. (now McLaren Regional Medical Center) and the NBD Bank, N.A., including any supplements or amendments thereto.

(bb) Any Lien on Property of a Limited Credit Group Participant.

(cc) any Lien on Property delivered as collateral by the Obligated Group or any Obligated Group Member pursuant to the terms of an Interest Rate Agreement.

“Permitted Investments” shall mean (i) with respect to any Obligation which secures a series of Related Bonds, the obligations in which the Related Bond Trustee may invest funds under the Related Bond Indenture, (ii)

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with respect to any Obligations for which a Supplemental Master Indenture specifies certain permitted investments, the investments so specified and (iii) in all other cases such legal and prudent investments as are agreed upon by the Obligated Group Agent and the Master Trustee.

“Person” means any natural person, firm, joint venture, association, partnership, business trust, corporation, limited liability corporation, public body, agency or political subdivision thereof or any other similar entity.

“Property” means any and all rights, titles and interests in and to any and all property, whether real or personal, tangible (including cash) or intangible, wherever situated and whether now owned or hereafter acquired.

“Rating Agency” means Moody’s, Fitch or Standard & Poor’s.

“Related Bond Indenture” means any indenture, bond resolution or other comparable instrument pursuant to which Related Bonds are issued.

“Related Bonds” means any revenue bonds or similar obligations issued by any state, commonwealth or territory of the United States or any municipal corporation or other political subdivision formed under the laws thereof or any constituted authority, agency or instrumentality of any of the foregoing empowered to issue obligations on behalf thereof, the proceeds of which are loaned or otherwise made available to any Credit Group Member in consideration, whether in whole or in part, of the execution, authentication and delivery of an Obligation or Obligations to such governmental issuer.

“Related Bond Trustee” means any trustee under any Related Bond Indenture and any successor trustee thereunder or, if no trustee is appointed under a Related Bond Indenture, the Related Issuer.

“Related Issuer” means the issuer of a series of Related Bonds.

“Related Loan Document” means any document or documents (including without limitation any lease, sublease or installment sales contract) pursuant to which any proceeds of any Related Bonds are advanced to any Credit Group Member (or any Property financed or refinanced with such proceeds is leased, sublet or sold to a Credit Group Member).

“Revenues” means, for any period, the revenues of a Person, as determined in accordance with generally accepted accounting principles; but excluding (i) any unrealized gain or loss resulting from changes in the value of investment securities, (ii) any gains on the sale or other disposition of fixed or capital assets not in the ordinary course, (iii) earnings resulting from any reappraisal, revaluation or write-up of fixed or capital assets or (iv) any revenues recognized from deferred revenues related to entrance fees; provided, however, that if such calculation is being made with respect to the Credit Group, such calculation shall be made in such a manner so as to exclude any revenues attributable to transactions between any Credit Group Member and any other Credit Group Member; provided, however, so long as any Funded Indebtedness is deemed to bear interest taking into account an Interest Rate Agreement, any payments received by the Person or group of Persons under such Interest Rate Agreement shall be excluded from the definition of “Revenues.”

“Short-Term” when used in connection with indebtedness, means indebtedness of a Person having an original maturity less than or equal to one year and not renewable at the option of the debtor for, or not subject to any binding commitment to refinance or otherwise provide for such indebtedness for a term greater than one year beyond the date of original issuance.

“Standard & Poor’s” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., its successors and assigns.

“Supplemental Master Indenture” means an indenture amending or supplementing the Master Indenture entered into pursuant to the provisions of the Master Indenture summarized under the caption “Supplemental Master Indentures” below after the date of the Master Indenture.

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“Tax-Exempt Organization” means a Person organized under the laws of the United States of America or any state thereof which is an organization described in Section 501(c)(3) of the Code, which is exempt from federal income taxation under Section 501(a) of the Code, and which is not a “private foundation” within the meaning of Section 509(a) of the Code, or corresponding provisions of federal income tax laws from time to time in effect.

“Written Request” means a request in writing signed by the President or any Vice President of a Credit Group Member, or any other officers designated by such Credit Group Member.

The Obligations; Payment of the Obligations; Payment and Pledge of Gross Revenues to Master Trustee; Credit Group Members

The total principal amount of Obligations and the number of Obligations that may be created under the Master Indenture are not limited.

Obligation No. 22 is intended to be the absolute and unconditional, joint and several obligation of each Member of the Obligated Group. See “BONDHOLDERS’ RISKS – Factors Concerning the Enforceability of the Master Indenture” in the forepart of this Limited Offering Memorandum. Obligation No. 22 will not be secured by any pledge or mortgage of, or security interest in, any assets of any Member except the pledge of Gross Revenues and except for additional security which may be granted to certain Obligations as described below. Any Credit Group Member may incur additional Indebtedness (which, with respect to Members of the Obligated Group, may include additional Obligations). Such additional Indebtedness may be secured by security in addition to any security provided for the Obligations or any other indebtedness (including without limitation, letters or lines of credit, insurance or Liens on the Property, including health care Facilities, of the Members of the Credit Group or security interests in depreciation reserve, debt service or interest reserve or debt service or similar funds). Such security need not be extended to any other Indebtedness (including the Obligations or any other Obligation). See “Liens on Property; Right of Contest” below and “Definitions - Permitted Encumbrances” above. The Master Indenture provides that Supplemental Master Indentures pursuant to which one or more series of Obligations entitled to additional security are issued may provide for such supplements or amendments to the provisions of the Master Indenture, including the provisions thereof relating to the exercise of remedies upon the occurrence of an event of default, as are necessary to provide such security and to permit realization upon such security solely for the benefit of the Obligations entitled thereto.

Each Obligated Group Member unconditionally and irrevocably jointly and severally agrees that it will promptly pay the principal of, premium, if any, interest on, and purchase price of every Obligation issued under the Master Indenture at the place, on the dates and in the manner provided in the Master Indenture and in said Obligations according to the true intent and meaning thereof, notwithstanding any specific schedule of payments. If any Obligated Group Member does not tender payment of any installment of principal, premium or interest on any Obligation when due and payable, the Master Trustee shall provide prompt written notice of such nonpayment to such Obligated Group Member and the Obligated Group Agent.

Each Obligated Group Member shall cause each of its Designated Affiliates to pay or otherwise transfer to the Obligated Group Agent or other Obligated Group Member such amounts as are necessary to duly and punctually pay the principal of, premium, if any, interest on and purchase price of all Outstanding Obligations, and all other amounts payable by the Obligated Group Members on the dates, at the times, at the places and in the manner provided in the Master Indenture and in such Obligations. In addition, each Obligated Group Member shall cause each Limited Credit Group Participant to pay or otherwise transfer such amounts to the Obligated Group Agent (subject to contractual limitations).

Each Member of the Obligated Group unconditionally and irrevocably agrees that it shall be jointly and severally obligated and shall pay all amounts becoming due and payable on all Obligations according to the terms of such Obligations and the Master Indenture.

The issuance of Obligations by the Obligated Group is a common enterprise and it is the intention of the Obligated Group that each and every Obligation shall constitute the direct Obligation of each and every Obligated Group Member and not a contingent or indirect Obligation. Notwithstanding the intention of the Obligated Group and the express language contained in the Master Indenture, should the Obligation of any Obligated Group Member

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be construed otherwise, each Member of the Obligated Group unconditionally waives, and shall cause its Designated Affiliates and Limited Group Participants to waive (except to the extent expressly provided in the Master Indenture), diligence, presentment, protest, notice of dishonor, demand for payment, extension of time of payment, notice of acceptance of its duties under the Master Indenture, nonpayment at maturity and indulgences and notices of every kind (except to the extent expressly provided in the Master Indenture) and consents to any and all forbearances and extensions of the time of payment of the Obligations, and to any and all changes in the terms, covenants and conditions thereof hereafter made or granted pursuant to the terms of the Master Indenture. The Members of the Obligated Group further agree that the Members of the Credit Group shall have no right of subrogation whatsoever with respect to the Obligations, or to any moneys due and unpaid thereon, unless and until all Holders of the Obligations shall have received payment in full of all sums due in connection with any Obligation.

Each Member of the Obligated Group agrees that its obligation to pay the Obligations shall not be impaired, modified, changed, released or limited in any manner whatsoever by any impairment, modification, change, release, or limitation of the liability of any Credit Group Member or its estate in bankruptcy resulting from the operation of any present or future provision of the federal bankruptcy laws or other similar laws, or from the decision of any court.

The Obligated Group Agent shall at all times maintain with the Master Trustee an accurate and complete list of all Credit Group Members. The Designated Affiliates, as of the date of the issuance of the Bonds, are McLaren Regional Medical Center, Lapeer Regional Medical Center, Bay Regional Medical Center, Ingham Regional Medical Center, the Lapeer McLaren Region Foundation, Women’s Hospital Association of Flint, Michigan, Mount Clemens Regional Medical Center, Mount Clemens Regional Healthcare Foundation, McLaren Oakland, McLaren Northern Michigan, Central Michigan Community Hospital, Port Huron Hospital, Barbara Ann Karmanos Cancer Institute and Barbara Ann Karmanos Cancer Hospital.

Each Obligated Group Member covenants that it will cause each of the Credit Group Members under its control to comply with the terms and conditions of the Master Indenture which are applicable to such Person.

To secure pari passu the punctual payment of all Obligations issued and to be issued under the Master Indenture and the performance by the Obligated Group and the Credit Group Members of their respective obligations, each Obligated Group Member and each Credit Group Member who is a Designated Affiliate or Limited Credit Group Participant pledges, assigns and agrees to pay all Gross Revenues to the Master Trustee in accordance with the terms of the Master Indenture. The Obligated Group shall provide executed financing statements evidencing the security interest of the Master Trustee in the Gross Revenues in form required by the Uniform Commercial Code for filing in each state in which Property or additional facilities are located. So long as any Obligations are Outstanding, each Obligated Group Member and each such Credit Group Member shall execute such renewals and extensions of the financing statements as shall be necessary to maintain and preserve the perfection of the lien on the Gross Revenues granted in the Master Indenture. Upon written request of the Master Trustee, each Obligated Group Member and each such Credit Group Member shall also execute and deliver to the Master Trustee from time to time such amendments or supplements to the Master Indenture and financing statements as may be reasonably necessary or appropriate to include as security under the Master Indenture any property in which the Master Trustee may by law acquire a security interest and which is within the intended coverage of the pledge of Gross Revenues. The Obligated Group shall not sell any portion of the Gross Revenues nor shall the Obligated Group create or permit the creation of any pledge, lien, charge or encumbrance of any kind on the Gross Revenues or any part thereof that is prior to or on a parity with the lien granted by the Master Indenture; provided, however, each Obligated Group Member and each such Credit Group Member may create a pledge, lien, charge or encumbrance in connection with any patient loan program utilizing a third party financing vehicle with respect to recourse to such Member or if such pledge, lien, change, or encumbrance is otherwise a Permitted Encumbrance under the Master Indenture.

Each Member of the Obligated Group jointly and severally covenants promptly to pay or cause to be paid the principal of and premium, if any, and interest on Obligations issued under the Master Indenture at the place, on the dates, and in the manner provided in the Master Indenture, in the Supplemental Master Indentures, and in the Obligations according to the terms thereof whether at maturity, upon proceedings for redemption, by acceleration, or otherwise. In the event that any installment of principal of or interest on any Obligation shall not be paid when and as the same becomes due and payable (each a “Delinquent Installment”), then the Master Trustee shall give notice

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thereof to the Obligated Group Agent, and the Obligated Group Members jointly and severally covenant and agree that upon such notice, the Obligated Group Members shall transfer and deposit or cause each Credit Group Member who is a Designated Affiliate to transfer and deposit, each day to the extent permitted by law, to an account main-tained by the Master Trustee and designated by such notice, all Gross Revenues, and the Obligated Group Members jointly and severally pledge to the payment of the principal of and premium, if any, and interest on Obligations issued under the Master Indenture all Gross Revenues so transferred and deposited. The foregoing procedure shall continue from day to day until notice to cease such daily transfers and deposits is received by the Obligated Group Agent from the Master Trustee. Any Gross Revenues so transferred may be returned to any Obligated Group Member or Credit Group Member at such time and in such amounts as the Master Trustee in its discretion may direct for payment of current or past due operating expenses of such Obligated Group Member or Credit Group Member (“Master Trustee Discretionary Transfers”). The Obligated Group Members and such Credit Group Members agree that a failure to transfer and deposit the Gross Revenues shall cause irreparable harm to the Holders of Obligations and entitle the Master Trustee, with or without notice, to take action to compel the specific performance of the obligation to transfer and deposit Gross Revenues. Upon the transfer and deposit of Gross Revenues, net of any collection costs incurred by the Master Trustee and any Master Trustee Discretionary Transfers, equal to the amount of the Delinquent Installments, the Master Trustee shall promptly give notice to the Obligated Group Agent for the Obligated Group to cease such daily transfers and deposits. The Master Trustee shall apply such transferred and deposited moneys, net of any collection costs incurred by the Master Trustee and any Master Trustee Discretionary Transfers, in accordance with the provisions of the Master Indenture and, in the event that the net amount of Gross Revenues so transferred and deposited exceeds the amount of the Delinquent Install-ments, the Master Trustee shall at the time of giving notice to the Obligated Group Agent for cessation of such daily transfers and deposits return any such excess to the Obligated Group Agent for distribution by it to the appropriate Obligated Group or Credit Group Member or Members.

The term “Collateral” shall refer to the foregoing Gross Revenues together with any other Property in which the Master Trustee may hereafter be granted a Lien or security interest for the benefit of Obligation Holders.

The Members of the Obligated Group warrant, covenant and agree as follows:

(1) After an Event of Default has occurred under the Master Indenture or any of the Obligations Outstanding under the Master Indenture, the Obligated Group shall:

(a) furnish to the Master Trustee, in such form and at such intervals as the Master Trustee may request, information adequate to identify the Collateral which is subject to the security interest created under the Master Indenture (including its cost and location), and reports with respect to the acquisition and sale of such Collateral; and

(b) report to the Master Trustee in such form and at such intervals and with such supporting evidence as the Master Trustee may request, the account balances and the nature and extent of those accounts, the names and addresses of account debtors, and information with respect to the payments on and aging of such accounts; and

(c) keep adequate records of the Collateral and such other records to be consistent with the purposes of the security interest created under the Master Indenture; and

(d) allow the Master Trustee, upon reasonable notice and at reasonable times, to examine, inspect and make abstracts from, or copy any of the Obligated Group’s or Credit Group's books and records (relating to the Collateral or otherwise), and to arrange for verification of accounts directly with account debtors or by other methods; and

(e) authorize the Master Trustee or its duly authorized agent to endorse, in the name of the appropriate Member of the Obligated Group or Credit Group, any checks or other items which are received in payment of any account or for any goods, equipment or inventory subject to the security interest created under the Master Indenture, and to do any and all things necessary in order to reduce the same to money; and

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(f) upon request of the Master Trustee, to assemble the Collateral and make it available to the Master Trustee at any place designated by the Master Trustee, which shall be reasonably convenient to the Master Trustee and the Obligated Group; and

(2) the Corporation shall mark its records and, if requested by the Master Trustee, the Collateral to clearly indicate the security interest of the Master Trustee; and

(3) at the time any Collateral becomes subject to a security interest under the Master Indenture in favor of the Master Trustee, the Members of the Obligated Group and the Credit Group shall be deemed to have warranted that:

(a) one Member is the lawful owner of such Collateral and has the right and authority to subject the same to the security interest vested in the Master Trustee; and

(b) except as otherwise permitted in the Master Indenture, none of the Collateral is subject to any security interest other than the security interest being created in favor of the Master Trustee, for and on behalf of the Obligation Holders, and there are no financing statements with respect thereto on file other than in favor of the Master Trustee except for Permitted Encumbrances and financing statements evidencing the same; and

(c) each respective Member has acquired its rights in the Collateral in the ordinary course of its business; and

(4) on each occasion when any Member of the Obligated Group or Credit Group provides evidence to the Master Trustee as to the account balances and the nature and extent of those accounts in which that Member has rights, such Member shall be deemed to have warranted that:

(a) except as otherwise indicated, all accounts so evidenced are valid and enforceable without performance by that Member of any other act; and

(b) the account balances so evidenced are in fact owing; and

(c) other than as specified by that Member, and except for doubtful accounts as determined in accordance with GAAP, there are no offsets or counterclaims or defenses against any of such accounts of which that Member knows or should know in the exercise of due care and diligence; and

(5) the Members of the Obligated Group and Credit Group will keep the Collateral free at all times from any and all liens, security interests or encumbrances except for Permitted Encumbrances; and

(6) the Members of the Obligated Group and Credit Group shall permit the Master Trustee or its agents or attorneys, upon reasonable notice and at reasonable times, to inspect the Collateral and for such purpose may enter upon any and all premises where the Collateral is or might be kept or located; and

(7) to the extent permitted by applicable law, the Members of the Obligated Group and Credit Group shall do all acts and things and will execute all writings to establish, maintain and continue a perfected and valid security interest of the Master Trustee in the Collateral as provided in the Master Indenture, and shall promptly, on demand, pay all costs and expenses of filing and recording all instruments, including the costs of any searches by the Master Trustee, to establish and determine the validity and the priority of the Master Trustee’s security interests; and

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(8) the Members of the Obligated Group and Credit Group shall pay promptly, and within the time that they can be paid without interest or penalty, all taxes, governmental charges, assessments and similar imposts and charges at any time levied or assessed upon or against the Collateral which are now, or hereafter may become, a lien, charge or encumbrance upon any of the Collateral, except to the extent contested in good faith as permitted in the Master Indenture, provided, however, that if any Member of the Obligated Group or Credit Group fails to pay any such taxes, assessments or other imposts or charges, the Master Trustee shall have the option to make such payment on behalf of such Member of the Obligated Group or Credit Group, and the Members agree to repay the Master Trustee forthwith all amounts so expended by the Master Trustee, with interest at the rate of two percentage points above the stated prime lending rate of the Master Trustee in effect from time to time; and

(9) the Obligated Group Members and the Credit Group Members shall keep the Collateral in good condition and shall safeguard and protect the same from loss, damage or deterioration from any cause whatsoever, normal wear and tear excepted; and

(10) the Obligated Group shall reimburse the Master Trustee, in accordance with the provisions of the Uniform Commercial Code, for all expenses, including reasonable attorney fees and legal expenses, incurred by the Master Trustee in enforcing performance of the Obligated Group’s obligations, in defending the Master Trustee’s security interests and the priority thereof, or in pursuing any of the Master Trustee’s or Obligation Holders’ rights or remedies; and

If directed in writing by the Master Trustee upon the occurrence of any Event of Default, or when required by the Master Indenture, the Obligated Group and the Credit Group shall, with respect to the Collateral:

(1) take appropriate action to collect and enforce payment of all accounts; and

(2) endorse to the Master Trustee and forthwith deliver to the Master Trustee all such payments in the form received by the Obligated Group and such Credit Group Members, without commingling such payments with any funds belonging to the Members of the Obligated Group and such Credit Group Members; and

(3) hold in trust for the Master Trustee all Collateral in which a security interest is granted under the Master Indenture; and

(4) forthwith deliver to the Master Trustee all property in the Obligated Group’s or Credit Group Members' possession or thereafter coming into its possession through enforcement of any such rights or security interests.

The Master Trustee shall have no duty as to the collection or protection of Collateral or the proceeds thereof, nor as the preservation of any rights pertaining thereto, beyond the use of reasonable care in the custody and preservation of Collateral, if any, in the possession of the Master Trustee. The Obligated Group and such Credit Group Members shall take all steps necessary to preserve rights against prior parties with respect to instruments and chattel paper of each Member of the Obligated Group and Credit Group, if any, in the possession of the Master Trustee.

In the event of acceleration of indebtedness upon the occurrence of an Event of Default, the Master Trustee shall have and may exercise any one or more of the rights and remedies provided under the Master Indenture or by law to a secured party, including, without limitation, the right to take possession and sell, lease or otherwise dispose of any or all of the Collateral.

The Obligated Group and each such Credit Group Member shall, upon the occurrence of an Event of Default, and if not waived or cured as permitted under the Master Indenture, upon request of the Master

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Trustee, notify the account debtors or obligors of the security interest of the Master Trustee in any accounts subject to the security interest created under the Master Indenture, and to direct payment thereof to the Master Trustee. The Master Trustee itself may, during the continuation of such Event of Default, so notify and direct any such account debtor or obligor to direct payment thereof to the Master Trustee, and may take control of any proceeds to which it may be entitled under the Master Indenture. For such purposes, each Member of the Obligated Group and each such Member of the Credit Group:

(1) constitutes and appoints the Master Trustee its true and lawful attorney, for it and in its name, place and stead, to demand, receive, sue for and give acquittances for any moneys due or to become due on any such account; and

(2) with respect to any Collateral, assents to all extensions or postponements of the time of payment thereof or any other indulgence in connection therewith, to each substitution, exchange or release of Collateral, to the addition or release of any party primarily or secondarily liable, to the acceptance of partial payments thereon and the settlement, compromise or adjustments thereof, all in such manner and at such time or times as the Master Trustee shall deem advisable.

The proceeds of any sale or other disposition of Collateral authorized by the Master Indenture shall be applied in accordance with the provisions of the Master Indenture. The Obligated Group and each such Credit Group Member shall remain liable for any deficiency and shall pay the same to the Master Trustee immediately upon demand.

Nothing contained in the Master Indenture is intended, nor shall it be construed, to preclude the Master Trustee, or the Obligation Holders, from pursuing any other remedy provided by law for the collection of the indebtedness or any portion thereof, or the enforcement of any other Obligations issued under the Master Indenture, or for the recovery of any other sum to which the Master Trustee, or the Obligation Holders, may be or become entitled under the Master Indenture.

No waiver of default shall be effective unless it is in writing signed by an officer of the Master Trustee, and no waiver of any default or forbearance on the part of the Master Trustee in enforcing any of its rights under the Master Indenture shall operate as a waiver of any other default or of the same default on a future occasion or of such right.

The security interest created under the Master Indenture shall be terminated only by the filing of a termination statement in accordance with the applicable provisions of the Uniform Commercial Code. Until terminated, the security interests created shall continue in full force and effect and shall secure and be applicable to all outstanding Obligations. The security interests created under the Master shall terminate when the Obligations issued under the Master Indenture are no longer Outstanding under the Master Indenture, unless their existence and effect are otherwise extended.

Until termination of the security interest created under the Master Indenture, the Master Trustee shall have and may exercise any and all of the rights and remedies given by the Master Indenture, or given to a secured party under the Uniform Commercial Code. The Master Indenture and all such rights and remedies shall inure to the benefit of the Master Trustee’s successors and assigns and to any other holder who derives from the Master Trustee title to or an interest in the indebtedness or any other obligations of the Obligated Group and such Credit Group Members and the legal representatives, successors and assigns of the Obligated Group and such Credit Group Members.

The Master Trustee neither assumes nor shall it have any duty of performance or other responsibility under any contracts in which the Master Trustee is an assignee of contract rights.

The address of the Obligated Group’s principal place of business, and the location of the Collateral and records, is 401 South Ballenger Highway, Flint, Michigan 48532.

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Entrance Into the Obligated Group

Any Person may become an Obligated Group Member if:

(a) Such Person shall execute and deliver to the Master Trustee a Supplemental Master Indenture acceptable to the Master Trustee which shall be executed by the Master Trustee and the Obligated Group Agent on behalf of each then-current Obligated Group Member, containing (i) the agreement of such Person to become a Obligated Group Member and thereby to become subject to compliance with all provisions of the Master Indenture, and unconditionally and irrevocably (subject to the right of such Person to cease its status as a Obligated Group Member pursuant to the terms and conditions of the Master Indenture) to jointly and severally make payments upon each Obligation at the times and in the amounts provided in each such Obligation, and (ii) representations and warranties by such Person substantially similar to those set forth in the Master Indenture other than the representation that such Person is a Tax-Exempt Organization if such Person is not a Tax-Exempt Organization and except that any representation regarding organization and good standing shall refer to the actual type and state of organization of such person (but with such deviations as are acceptable to the Master Trustee);

(b) Each of the Obligated Group Members shall have approved in writing the admission of such Person to the Obligated Group;

(c) The Master Trustee shall have received a certificate of the Obligated Group Agent which demonstrates that, immediately upon such Person becoming a Obligated Group Member, no event of default exists under the Master Indenture and no event shall have occurred which with the passage of time or the giving of notice, or both, would become an event of default;

(d) The Master Trustee shall have received an opinion of Counsel to the effect that (i) the instrument described in paragraph (a) above has been duly authorized, executed and delivered and constitutes a legal, valid and binding agreement of such Person, enforceable in accordance with its terms, subject to customary exceptions for bankruptcy, insolvency and other laws generally affecting enforcement of creditors’ rights and application of general principles of equity and to the exceptions set forth in the Master Indenture (ii) the addition of such Person to the Obligated Group will not adversely affect the status as a Tax-Exempt Organization of any Obligated Group Member which otherwise has such status, (iii) the Person which is to become a Obligated Group Member is liable on all Obligations outstanding under the Master Indenture, as if such Obligations were originally issued by such Person, subject to the customary exceptions for bankruptcy, insolvency and other laws generally affecting enforcement of creditors’ rights and the application of general principles of equity and to the applicable exceptions set forth in the Master Indenture, and (iv) under then existing law such person becoming a Obligated Group Member will not subject any Obligation to the registration provisions of the Securities Act of 1933, as amended (or that such Obligations have been so registered if registration is required);

(e) The Master Trustee shall have received an Opinion of Bond Counsel to the effect that under then existing law the addition of such Person as a Obligated Group Member will not adversely affect the validity of any Related Bond or any exemption from federal or state income taxation of interest payable thereon to which such Related Bond would otherwise be entitled; and

(f) Exhibit D to the Master Indenture is amended to include a description of any Permitted Encumbrances on the Property of such Person of the type described in paragraph (s)(ii) of the definition thereof, and Exhibit C is amended to add such Person as an Obligated Group Member.

Cessation of Status as an Obligated Group Member

Each Obligated Group Member covenants that it will not take any action, corporate or otherwise, which would cause it or any successor thereto into which it is merged or consolidated under the terms of the Master Indenture to cease to be an Obligated Group Member except in accordance with the provisions of the Master Indenture summarized under this caption. An Obligated Group Member may cease to be an Obligated Group Member if:

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(a) If the Obligated Group Member proposing to withdraw from the Obligated Group is a party to any Related Loan Documents with respect to Related Bonds which remain outstanding, another Obligated Group Member shall issue an Obligation under the Master Indenture evidencing or assuming the obligation of the withdrawing Obligated Group Member in respect of such Related Bonds;

(b) The Master Trustee shall have received an Opinion of Bond Counsel to the effect that, under then existing law, the cessation by the Obligated Group Member of its status as a Obligated Group Member will not adversely affect the validity of any Related Bond or any exemption from federal or state income taxation of interest payable thereon to which such Bond would otherwise be entitled;

(c) The Master Trustee shall have received a certificate of the Obligated Group Agent which demonstrates that prior to and immediately after such cessation, no event of default exists under the Master Indenture and no event shall have occurred which with the passage of time or the giving of notice, or both, would become an event of default;

(d) The Master Trustee shall have received an opinion of Counsel (which Counsel and opinion, including without limitation the scope, form, substance and other aspects thereof, are not unacceptable to the Master Trustee) to the effect that the cessation by such Obligated Group Member of its status as a Obligated Group Member will not adversely affect the status as a Tax-Exempt Organization of any Obligated Group Member which otherwise has such status; and

(e) Each of the Obligated Group Members shall have approved in writing the withdrawal of such Obligated Group Member.

The Master Indenture does not specifically restrict the Members of the Obligated Group’s ability to transfer Property, including cash, marketable securities or receivables, to anyone, including related or affiliated persons or persons who control the Members directly or indirectly, or release control of Limited Credit Group Participants or Designated Affiliates or the ability of the Members of the Obligated Group to withdraw from the Obligated Group.

Substitute Obligations Upon Withdrawal Of An Obligated Group Member

In the event any Obligated Group Member ceases to be a Member of the Obligated Group and another Obligated Group Member issues an Obligation under the Master Indenture in accordance with the provisions of the Master Indenture, such Obligation shall be surrendered to the Master Trustee in exchange for a substitute Obligation (without, in the case of any Obligation issued to secure a series of Related Bonds, notice to or consent of any Related Bondholder), provided that such substitute Obligation provides for payments of principal, interest, premium, purchase price and other amounts identical to the surrendered Obligation.

Liens on Property; Right of Contest

No Obligated Group Member shall, and no Obligated Group Member shall permit any Credit Group Member to, create or incur or permit to be created or incurred or to exist any Lien on any Property of any Credit Group Member, except Permitted Encumbrances. No Credit Group Member shall be required to remove any Lien which is not a Permitted Encumbrance, pay or otherwise satisfy and discharge its obligations, indebtedness (other than any Obligations), demands and claims against it or to comply with any Lien, law, ordinance, rule, order, decree, decision, regulation or requirement, so long as such Credit Group Member shall contest, in good faith and at its cost and expense, in its own name and behalf, the amount or validity thereof, in an appropriate manner or by appropriate proceedings which shall operate during the pendency thereof to prevent the collection of or other realization upon the obligation, indebtedness, demand, claim or Lien so contested, and the sale, forfeiture, or loss of its Property or any part thereof, provided, that no such contest shall subject any Related Issuer, Related Bond Trustee, Obligation holder or the Master Trustee to the risk of any liability. While any such matters are pending, such Credit Group Member shall not be required to pay, remove or cause to be discharged the obligation, indebtedness, demand, claim or Lien being contested unless such Credit Group Member agrees to settle such contest. Each such contest shall be promptly prosecuted to final conclusion (subject to the right of such Credit Group Member engaging in such a contest to settle such contest), and in any event the Obligated Group Member shall save, and each Obligated Group

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Member agrees to cause the Credit Group Members to save, all Related Issuers, Related Bond Trustees, Obligation holders and the Master Trustee harmless from and against all losses, judgments, decrees and costs (including attorneys’ fees and expenses in connection therewith) as a result of such contest and will, promptly after the final determination of such contest or settlement thereof, pay and discharge the amounts which shall be determined to be payable therein, together with all penalties, fines, interests, costs and expenses thereon or incurred in connection therewith. The Credit Group Member engaging in such a contest shall give the Master Trustee prompt written notice of any such contest. Each Obligated Group Member waives and each Obligated Group Member agrees to cause the Credit Group Members under its control to waive, to the extent permitted by law, any right which it may have to contest (i) any Obligation issued for the benefit of another Obligated Group Member or (ii) any Obligation issued to secure or in connection with Related Bonds.

If the Master Trustee shall notify any Credit Group Member that, in the opinion of Counsel, by nonpayment of or noncompliance with any of the foregoing items the Property of such Credit Group Member or any substantial part thereof will be subject to imminent loss or forfeiture, then such Obligated Group Member shall promptly pay, and shall cause the Credit Group Members to promptly pay, all such unpaid items and cause them to be satisfied and discharged. See “INTRODUCTORY STATEMENT – Payment and Security for the Series 2016 Bonds” in the forepart of this Limited Offering Memorandum.

Permitted Funded Indebtedness

Except as may be expressly provided in any Supplemental Master Indenture, the ability of any Credit Group Member to incur Funded Indebtedness including, with respect to Obligated Group Members, Funded Indebtedness evidenced by Obligations and the amount and terms of such Funded Indebtedness, is not limited by the provisions of the Master Indenture.

Rates and Charges

Each Obligated Group Member covenants and agrees to, and each Obligated Group Member covenants to cause each of the Credit Group Members to, conduct its business on a revenue-producing basis and to charge such fees and rates and to exercise such skill and diligence as to provide income from its Property together with other available funds sufficient to pay promptly all payments due on the Obligations, all expenses of operation, maintenance and repair of its Property and all other payments required to be made by it under the Master Indenture to the extent permitted by law. Each Obligated Group Member further covenants and agrees that it will, and each Obligated Group Member covenants that it will cause each of the Credit Group Members under its control to, from time to time as often as necessary and to the extent permitted by law, revise its rates, fees and charges in such manner as may be necessary or proper to comply with the provisions of the Master Indenture summarized under this caption.

The Obligated Group Agent shall calculate the Historical Debt Service Coverage Ratio of the Credit Group for each Fiscal Year of the Obligated Group Agent and deliver a copy of such calculations to the Persons to whom financial statements are required to be delivered under the provisions of the Master Indenture.

If in any such Fiscal Year the Historical Debt Service Coverage Ratio of the Credit Group is less than 1.10 to 1, the Master Trustee shall require the Obligated Group Agent at its expense to retain a Consultant to make recommendations with respect to the rates, fees and charges of the Credit Group and the Credit Group Members’ methods of operation and other factors affecting its financial condition in order to increase such Historical Debt Service Coverage Ratio for the succeeding Fiscal Year to at least 1.10 to 1.

The Obligated Group Agent shall provide a copy of the Consultant’s report and recommendations, if any, to each Credit Group Member, the Master Trustee and each Related Bond Trustee. Each Obligated Group Member shall follow, and each Obligated Group Member shall cause each Credit Group Member to follow, the recommendations of the Consultant applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of such Obligated Group Member) and permitted by law, subject in the case of a Limited Credit Group Participant to the terms of the contract or agreement. The provisions of the Master Indenture summarized under this caption shall not be construed to prohibit any Credit Group Member from serving indigent patients to the extent required for such Member to continue its qualification as a Tax-Exempt Organization or from

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serving any other class or classes of patients without charge or at reduced rates so long as such service does not prevent the Credit Group from satisfying the other requirements of the Master Indenture summarized under this caption.

The foregoing provisions notwithstanding, if in any such Fiscal Year the Historical Debt Service Coverage Ratio of the Credit Group is less than 1.10 to 1, the Master Trustee shall not be obligated to require the Obligated Group Agent to retain a Consultant to make such recommendations if: (a) there is filed with the Master Trustee (who shall provide a copy to each Related Bond Trustee) a written report addressed to them of a Consultant (which Consultant and report, including without limitation the scope, form, substance and other aspects of such report, are not unacceptable to the Master Trustee) which contains an opinion of such Consultant that applicable laws or regulations have prevented the Credit Group from generating Income Available for Debt Service during such Fiscal Year in an amount sufficient to produce a Historical Debt Service Coverage Ratio of the Credit Group of 1.10 to 1 or higher, and, if requested by the Master Trustee, such report is accompanied by a concurring opinion of Counsel (which Counsel and opinion, including without limitation the scope, form, substance and other aspects thereof, are not unacceptable to the Master Trustee) as to any conclusions of law supporting the opinion of such Consultant; (b) the report of such Consultant indicates that the fees and rates charged by the Credit Group Members are such that, in the opinion of the Consultant, the Credit Group has generated the maximum amount of Revenues reasonably practicable given such laws or regulations; and (c) the Historical Debt Service Coverage Ratio of the Credit Group was at least 1.00 to 1 for such Fiscal Year. The Obligated Group Agent shall not be required to cause the Consultant’s report referred to in the preceding sentence to be prepared more frequently than once every two Fiscal Years if at the end of the first of such two Fiscal Years the Obligated Group Agent provides to the Master Trustee (who shall provide a copy to each Related Bond Trustee) an opinion of Counsel (which Counsel and opinion, including without limitation the scope, form, substance and other aspects thereof, are not unacceptable to the Master Trustee) to the effect that the applicable laws and regulations underlying the Consultant’s report delivered in respect of the previous Fiscal Year have not changed in any material way.

Insurance

Each Obligated Group Member covenants and agrees to, and each Obligated Group Member covenants to cause each of the Credit Group Members to, maintain or cause to be maintained at its sole cost and expense, insurance (which may be self-insurance) with respect to its Property, the operation thereof and its business against such casualties, contingencies and risks (including but not limited to public liability and employee dishonesty) and in amounts not less than is customary in the case of corporations engaged in the same or similar activities and similarly situated and as is adequate to protect its Property and operations.

Sale, Lease or Other Disposition of Property

Except as may be expressly provided in the provisions other Master Indenture summarized under the next caption or in any Supplemental Master Indenture, the ability of any Credit Group Member to sell, lease or otherwise dispose of (including without limitation any involuntary disposition) any Property is not limited by the provisions of the Master Indenture. See “INTRODUCTORY STATEMENT – Payment and Security for the Series 2016 Bonds” in the forepart of this Limited Offering Memorandum.

Merger, Consolidation, Sale or Conveyance

(a) Each Obligated Group Member agrees that it will not merge into, or consolidate with, one or more corporations which are not Obligated Group Members, or allow one or more of such corporations to merge into it, or sell or convey all or substantially all of its Property to any Person who is not a Obligated Group Member, unless:

(i) Any successor corporation to such Obligated Group Member (including without limitation any purchaser of all or substantially all the Property of such Obligated Group Member) is a corporation organized and existing under the laws of the United States of America or a state thereof and shall execute and deliver to the Master Trustee an appropriate instrument, satisfactory to the Master Trustee, containing the agreement of such successor corporation to assume, jointly and severally, the due and punctual payment of the principal of, premium, if any, and interest on and purchase price of all Obligations according to their tenor and the due and punctual

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performance and observance of all the covenants and conditions of the Master Indenture to be kept and performed by such Obligated Group Member;

(ii) Immediately after such merger or consolidation, or such sale or conveyance, no Obligated Group Member would be in default in the performance or observance of any covenant or condition of any Related Loan Document or the Master Indenture and the Master Trustee shall receive an Officer’s Certificate of the Obligated Group Agent to such effect;

(iii) The Master Trustee receives an opinion of Counsel to the effect that (a) such consolidation, merger, conveyance or transfer and any such assumption and Supplemental Master Indenture delivered in connection therewith comply with the requirements described in the Master Indenture; (b) all conditions precedent to such transaction have been complied with and that it is proper for the Master Trustee to join in the execution of any instrument required to be executed and delivered; (c) the Person which is the surviving entity meets the conditions contained in the Master Indenture and is liable on all Obligations Outstanding under the Master Indenture, as if such Obligations were originally issued by such Person; and (d) under then existing law such merger, consolidation, sale or conveyance will not subject any Obligations to the registration provisions of the Securities Act of 1933, as amended (or that such Obligations have been so registered if registration is required); and

(iv) If all amounts due or to become due on all Related Bonds have not been fully paid to the holders thereof or fully provided for, there shall be delivered to the Master Trustee an Opinion of Bond Counsel to the effect that under then existing law the consummation of such merger, consolidation, sale or conveyance would not adversely affect the validity of such Related Bonds or the exemption otherwise available from federal or state income taxation of interest payable on such Related Bonds.

(b) In case of any such consolidation, merger, sale or conveyance and upon any such assumption by the successor corporation, such successor corporation shall succeed to and be substituted for its predecessor, with the same effect as if it had been named in the Master Indenture as such Obligated Group Member and the Obligated Group Member party to such transaction, if it is not the survivor, shall thereupon be relieved of any further obligation or liabilities under the Master Indenture or upon the Obligations and such Obligated Group Member as the predecessor or non-surviving corporation may thereupon or at any time thereafter be dissolved, wound up or liquidated. Any successor corporation to such Obligated Group Member thereupon may cause to be signed and may issue in its own name Obligations under the Master Indenture. All Obligations so issued by such successor corporation under the Master Indenture shall in all respects have the same legal rank and benefit under the Master Indenture as Obligations theretofore or thereafter issued in accordance with the terms of the Master Indenture as though all of such Obligations had been issued under the Master Indenture by such prior Obligated Group Member without any such consolidation, merger, sale or conveyance having occurred.

(c) In case of any such consolidation, merger, sale or conveyance such changes in phraseology and form (but not in substance) may be made in Obligations thereafter to be issued as may be appropriate.

(d) Any such consolidation, merger, sale or conveyance shall be on such terms as shall fully preserve the right and powers of the Master Trustee and the owners of the Obligations.

(e) Except as may be expressly provided in any Supplemental Master Indenture or in its contract or agreement, the ability of any Limited Credit Group Participant or Designated Affiliate to merge into, or consolidate with, one or more corporations, or allow one or more corporations to merge into it, or sell or convey all or substantively all of its Property to any Person is not limited by the provisions of the Master Indenture.

Other Covenants of the Members

Each Obligated Group Member covenants to, and each Obligated Group Member covenants to cause each of the Credit Group Members to:

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(a) Except as otherwise expressly provided in the Master Indenture (i) preserve its corporate or other separate legal existence, and (ii) be qualified to do business and conduct its affairs in each jurisdiction where its ownership of Property or the conduct of its business or affairs requires such qualification.

(b) Promptly pay or otherwise satisfy and discharge all of its obligations and Indebtedness and all demands and claims against it as and when the same become due and payable which if not so paid, satisfied or discharged would constitute a default or an event of default under the provisions of the Master Indenture.

(c) At all times comply with all terms, covenants and provisions of any Liens at such time existing upon its Property or any part thereof or securing any of its indebtedness.

(d) In the case any Person which is a Tax-Exempt Organization at the time it becomes a Credit Group Member, so long as all amounts due or to become due on all Related Bonds have not been fully paid to the holders thereof or provision for such payment has not been made, to take no action or suffer any action to be taken by others, including any action which would result in the alteration or loss of its status as a Tax-Exempt Organization, which could result in any such Related Bond being declared invalid or result in the interest on any Related Bond, which is otherwise exempt from federal or state income taxation, becoming subject to such taxation.

(e) Operate all of its Facilities so as not to discriminate on a legally impermissible basis.

(f) At its sole cost and expense, promptly comply with all present and future laws, ordinances, orders, decrees, decisions, rules, regulations and requirements of every duly constituted governmental authority, commission and court and the officers thereof which may be applicable to it or any of its affairs, business, operations and Property, any part thereof, any of the streets, alleys, passageways, sidewalks, curbs, gutters, vaults and vault spaces adjoining any of its Property or any part thereof or to the use or manner of use, occupancy or condition of any of its Property or any part thereof.

The foregoing provisions of the Master Indenture notwithstanding, any Credit Group Member may (i) cease to be a nonprofit corporation or (ii) take actions which could result in the alteration or loss of its status as a Tax-Exempt Organization if prior thereto there is delivered to the Master Trustee (1) an Opinion of Bond Counsel to the effect that such actions would not adversely affect the validity of any Related Bond, the exemption from federal or state income taxation of interest payable on any Related Bond otherwise entitled to such exemption or adversely affect the enforceability in accordance with its terms of the Master Indenture against any Person, and (2) an opinion of Counsel to the effect that under then-existing law such action will not subject any Obligations to the registration provisions of the Securities Act of 1933, as amended (or that such Obligations have been so registered if registration is required).

Defaults and Remedies

Each of the following events is an “event of default” under the Master Indenture:

(a) failure to pay any installment of interest or principal, or any premium, or the purchase price of any Obligation when the same shall become due and payable, whether at maturity, upon any date fixed for prepayment or by acceleration or otherwise and the continuance of the failure for five days, or for such other applicable grace period set forth in the Supplemental Master Indenture pursuant to which such Obligation is issued; or

(b) failure of any Obligated Group Member to comply with, observe or perform any of the covenants, conditions, agreements or provisions of the Master Indenture and to remedy such default within 60 days after written notice thereof to such Obligated Group Member and the Obligated Group Agent from the Master Trustee or the holders of at least 25% in aggregate principal amount of the outstanding Obligations; provided, that if such default cannot with due diligence and dispatch be wholly cured within 60 days but can be wholly cured, the failure of the Obligated Group Member to remedy such default within such 60-day period shall not constitute a default under the Master Indenture if the Obligated Group Member shall commence with due diligence and dispatch the curing of such default and, having so commenced the curing of such default, shall thereafter prosecute and complete the same with due diligence and dispatch; or

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(c) default in the payment of the principal of, premium, if any, or interest on any indebtedness (other than Non-Recourse Indebtedness or any indebtedness evidenced by an Obligation) of any Obligated Group Member in an amount in excess of 1% of the Revenues of the Credit Group, including without limitation any indebtedness created by any Related Loan Document, as and when the same shall become due, or an event of default as defined in any mortgage, indenture, loan agreement or other instrument under or pursuant to which there was issued or incurred, or by which there is secured, any such indebtedness of any Obligated Group Member, and which default in payment or event of default entitles the holder thereof (or a credit enhancer exercising the rights of such holder) to declare or, in the case of any Obligation, to request that the Master Trustee declare, such Indebtedness due and payable prior to the date on which it would otherwise become due and payable; provided, however, that such default shall not constitute an event of default under the Master Indenture if within 30 days, or within the time allowed for service of a responsive pleading if any proceeding to enforce payment of the Indebtedness is commenced (i) the Obligated Group Members of the Obligated Group in good faith commence proceedings to contest the existence or payment of such Indebtedness, and (ii) sufficient moneys are escrowed with a bank or trust company for the payment of such Indebtedness; or

(d) any Obligated Group Member admits insolvency or bankruptcy or its inability to pay its debts as they mature, or is generally not paying its debts as such debts become due, or makes an assignment for the benefit of creditors or applies for or consents to the appointment of a trustee, custodian or receiver for such Member, or for the major party of its Property; or

(e) bankruptcy, dissolution, reorganization, arrangement, insolvency or liquidation proceedings, proceedings under Title 11 of the United States Code, as amended, or other proceedings for relief under any bankruptcy law or similar law for the relief of debtors are instituted by or against any Obligated Group Member (other than bankruptcy proceedings instituted by any Obligated Group Member against third parties), and if instituted against any Obligated Group Member are allowed against such Obligated Group Member or are consented to or are not dismissed, stayed or otherwise nullified within 90 days after such institution; or any Obligated Group Member admits in writing its inability to pay its debts generally as they become due.

If an event of default has occurred and is continuing, the Master Trustee may, and if requested by the holders of not less than 25% in aggregate principal amount of Outstanding Obligations shall, by notice in writing delivered to the Obligated Group Agent, declare the entire principal amount of all Obligations then outstanding under the Master Indenture and the interest accrued thereon immediately due and payable, and the entire principal and such interest shall thereupon become immediately due and payable, subject, however, to the provisions of the Master Indenture summarized under the caption “Waiver of Events of Default” with respect to waivers of events of default.

Upon the occurrence of any event of default under the Master Indenture, the Master Trustee may pursue any available remedy including a suit, action or proceeding at law or in equity to enforce the payment of the principal of, premium, if any, and interest on the Obligations outstanding under the Master Indenture and any other sums due under the Master Indenture and may collect such sums in the manner provided by law out of the Property of any Obligated Group Member wherever situated.

Unless the security interest in the Collateral is otherwise terminated, the Master Trustee may commence a civil action to exercise and enforce all or any of its rights under the security instruments given in connection with the Master Indenture and may direct all third parties from whom the Gross Revenues are due or payable to pay such Gross Revenues directly to the Master Trustee and exercise any other rights with respect to the Gross Revenues that are available to a secured party under applicable law.

Direction of Proceedings

The holders of 25% or more in aggregate principal amount of the Obligations then outstanding which have become due and payable in accordance with their terms or have been declared due and payable pursuant to the provisions of the Master Indenture and have not been paid in full in the case of remedies exercised to enforce such payment, or the holders of 25% or more in aggregate principal amount of the Obligations then outstanding in the case of any other remedy, shall have the right, at any time, by an instrument or instruments in writing executed and delivered to the Master Trustee, to direct the method and place of conducting all proceedings to be taken in

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connection with the enforcement of the terms and conditions of the Master Indenture or for the appointment of a receiver or any other proceedings under the Master Indenture; provided, that such direction shall not be otherwise than in accordance with the provisions of law and of the Master Indenture and that the Master Trustee shall have the right to decline to comply with any such request if the Master Trustee shall be advised by counsel (who may be its own counsel) that the action so directed may not lawfully be taken or the Master Trustee in good faith shall determine that such action would be unjustly prejudicial to the holders of the Obligations not parties to such direction.

The foregoing notwithstanding, the holders of 25% or more in aggregate principal amount of the Obligations then outstanding which are entitled to the exclusive benefit of certain security in addition to that intended to secure all or other Obligations shall have the right, at any time, by an instrument or instruments in writing executed and delivered to the Master Trustee, to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of the Master Indenture, the Supplemental Master Indenture or Indentures pursuant to which such Obligations were issued or so secured or any separate security document in order to realize on such security; provided, however, that such direction shall not be otherwise than in accordance with the provisions of law and of the Master Indenture.

Waiver of Events of Default

If, at any time after the principal of all Obligations shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered and before the acceleration of any Related Bond, any Obligated Group Member shall pay or shall deposit with the Master Trustee a sum sufficient to pay all matured installments of interest upon all such Obligations and the principal and premium, if any, of all such Obligations that shall have become due otherwise than by acceleration (with interest on overdue installments of interest and on such principal and premium, if any, at the rate borne by such Obligations to the date of such payment or deposit, to the extent permitted by law) and the expenses of the Master Trustee, and any and all events of default under the Master Indenture, other than the nonpayment of principal of and accrued interest on such Obligations that shall have become due by acceleration, shall have been remedied, then and in every such case the holders of 25% or more in aggregate principal amount of all Obligations then outstanding, by written notice to the Obligated Group Agent and to the Master Trustee, may waive all events of default and rescind and annul such declaration and its consequences; but no such waiver or rescission and annulment shall extend to or affect any subsequent event of default, or shall impair any right consequent thereon.

Supplemental Master Indentures

Subject to the limitations set forth in the next paragraph, the Obligated Group Members and the Master Trustee may, without the consent of, or notice to, any of the Obligation holders, amend or supplement the Master Indenture, for any one or more of the following purposes:

(a) To cure any ambiguity or defective provision in or omission from the Master Indenture in such manner as is not inconsistent with and does not impair the security of the Master Indenture or adversely affect the holder of any Obligation;

(b) To grant to or confer upon the Master Trustee for the benefit of the Obligation holders any additional rights, remedies, powers or authority that may lawfully be granted to or conferred upon the Obligation holders and the Master Trustee, or either of them, to add to the covenants of the Obligated Group Members for the benefit of the Obligation holders or to surrender any right or power conferred under the Master Indenture upon any Obligated Group Member;

(c) To assign and pledge under the Master Indenture any additional revenues, properties or collateral;

(d) To evidence the succession of another corporation to the agreements of a Obligated Group Member or the Master Trustee, or the successor of any thereof under the Master Indenture;

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(e) To permit the qualification of the Master Indenture under the Trust Indenture Act of 1939, as then amended, or under any similar federal statute hereafter in effect or to permit the qualification of any Obligations for sale under the securities laws of any state of the United States;

(f) To provide for the refunding or advance refunding of any Obligation;

(g) To provide for the issuance of Obligations;

(h) To reflect the addition to or withdrawal of an Obligated Group Member from the Obligated Group, including the issuance of a substitute Obligation under the provisions of the Master Indenture and the necessary changes to Exhibit C and Exhibit D of the Master Indenture;

(i) To provide for the issuance of Obligations with original issue discount, provided such issuance would not materially adversely affect the holders of Outstanding Obligations;

(j) To permit an Obligation to be secured by security which is not extended to all Obligation holders; and

(k) To modify or eliminate any of the terms of the Master Indenture if:

(i) such Supplemental Master Indenture expressly provides that any such modifications or eliminations shall become effective only when there is no Obligation Outstanding of any series created prior to the execution of such Supplemental Master Indenture; and

(ii) the Master Trustee may, in its discretion, decline to enter into any such Supplemental Master Indenture which, in its opinion, may not afford adequate protection to the Master Trustee when the same becomes operative;

(l) To evidence the succession of another Person to any Obligated Group Member and the assumption by any such successor of the covenants of such Obligated Group Member in the Master Indenture and in the Obligations; or

(m) To make any other change which, in the opinion of the Master Trustee, does not materially adversely affect the holders of any of the Obligations, including without limitation any modification, amendment or supplement to the Master Indenture or any indenture supplemental to the Master Indenture in such a manner as to establish or maintain exemption of interest on any Related Bonds under a Indenture from federal income taxation under applicable provisions of the Code.

The holders of a majority in aggregate principal amount of the Obligations which are outstanding under the Master Indenture at the time of the execution of such Supplemental Master Indenture or, in case less than all of the several series of Obligations are affected thereby, the holders of a majority in aggregate principal amount of the Obligations of each series affected thereby which are outstanding under the Master Indenture at the time of the execution of such Supplemental Master Indenture, shall have the right, from time to time, anything contained in the Master Indenture to the contrary notwithstanding, to consent to and approve the execution by the Obligated Group Members and the Master Trustee of such Supplemental Master Indentures as shall be deemed necessary and desirable by the Obligated Group Members for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in the Master Indenture or in any Supplemental Master Indenture; provided, however, that nothing contained in the Master Indenture shall permit, or be construed as permitting, (a) an extension of the stated maturity or reduction in the principal amount of or reduction in the rate or extension of the time of paying of interest on or reduction of any premium payable on the redemption of, any Obligation, without the consent of the holder of such Obligation, (b) a reduction in the aforesaid aggregate principal amount of Obligations the holders of which are required to consent to any such Supplemental Master Indenture, without the consent of the holders of all the Obligations at the time outstanding which would be affected by the action to be taken, (c) the creation of any lien ranking prior to or on a parity with the lien of the Master Indenture with respect to the trust estate, if any, subject to the provisions of the Master Indenture or

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terminate the lien of the Master Indenture on any Property at any time subject to the provisions of the Master Indenture or deprive the holder of any Obligation of the security afforded by the lien of the Master Indenture except as otherwise provided in the Master Indenture, or (d) modification of the rights, duties or immunities of the Master Trustee, without the written consent of the Master Trustee.

THE SUPPLEMENT

The following is a summary of certain provisions of the Supplement. Reference is made to the Supplement for a full and complete statement of its provisions. Capitalized terms shall have the meanings set forth above under the heading “THE MASTER TRUST INDENTURE – Definitions” and as provided in the Bond Indenture. See APPENDIX A–Definitions and Summary of Certain Documents–Bond Indenture for the provisions of the Bond Indenture.

Obligation No. 22

Obligation No. 22 is created by the Supplement and will be delivered by the Obligated Group to the Bond Trustee to evidence the obligation of the Obligated Group to pay the Bonds. Obligation No. 22 provides, in part, that the Obligated Group promises to pay to the Bond Trustee the principal amount of the Bonds together with interest thereon becoming due and payable on the Bonds and such redemption premiums, if any, fee payments, and other amounts as are required to be paid by the Obligated Group in the Bond Indenture, less any credits to which the Obligated Group may be entitled.

Prior to or simultaneously with the issuance of Obligation No. 22, all conditions precedent to the issuance of the Bonds set forth in the Bond Indenture must be satisfied.

Redemption of Obligation No. 22

If all or any portion of the Bonds are to be redeemed prior to maturity in accordance with the provisions of the Bond Indenture, the principal of the Bonds shall be subject to prepayment or redemption, in whole or in part, upon payment of a sum, in cash or Investment Securities, or both, sufficient together with any other cash and Investment Securities held by the Bond Trustee under the Bond Indenture and available for such purpose, to cause the Outstanding Bonds (as defined in the Bond Indenture) which are to be redeemed to be deemed to be Bonds which are not Outstanding within the meaning of the Bond Indenture and to pay any Rebate Payments or other amounts required to be paid pursuant to the Bond Indenture, or paid to the Credit Facility Provider as provided in the Credit Facility or Credit Facility Provider Agreement (each as defined in the Bond Indenture), as the case may be. Any amount so paid shall be paid to and deposited with the Bond Trustee under the Bond Indenture for deposit to funds established by the Bond Indenture in the manner and for the use as provided in the Bond Indenture.

Events of Default and Remedies

Each of the Events of Default specified under “THE MASTER TRUST INDENTURE – Defaults and Remedies,” and, in addition thereto, each of the following events shall constitute an Event of Default under a Supplement and the Master Indenture:

(a) An Event of Default (as defined in Loan Agreement) under the Loan Agreement.

(b) The Bond Trustee under the Bond Indenture declaring all Bonds due and payable in accordance with the provisions of the Bond Indenture.

(c) The Obligated Group or any Member thereof failing to make any payment to be made by it or them under the Supplement as and when the same shall become due and payable.

(d) The Obligated Group or any Member thereof failing to perform, observe or comply with any of the nonmonetary terms, covenants, conditions or provisions contained in the Supplement for a period of sixty (60) days after the date upon which written notice of such failure requiring the same to be remedied shall have been

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given to the Obligated Group Agent by the Master Trustee, Bond Trustee or the Issuer; provided, however, that if such failure shall be such that it cannot be corrected within such period, it shall not constitute an Event of Default under the Supplement if corrective action is instituted within such period and diligently pursued until the failure is corrected or until sixty (60) days after such default could have been corrected.

In addition to any right that either the Master Trustee or the Issuer may have under the Master Indenture to declare, or cause to be declared, the principal amount of all Obligations Outstanding (as defined in the Master Indenture) to be immediately due and payable, thereupon causing such principal amount to become and be immediately due and payable, upon the occurrence of an Event of Default under the Supplement or the Master Indenture, the Master Trustee shall, if requested by the Issuer (regardless of whether the Outstanding principal amount of Obligation No. 22 equals at least a majority of the aggregate principal amount of all Obligations (as defined in the Master Indenture) then Outstanding, and regardless whether there has been an offer of indemnity from the Issuer), give notice pursuant to the provisions of the Master Indenture to the Obligated Group Agent declaring the principal of Obligation No. 22 then Outstanding to be due and immediately payable, and upon any such declaration the entire principal of Obligation No. 22 then Outstanding shall become and shall be immediately due and payable, anything in the Master Indenture, or in any Obligation (as defined in the Master Indenture) or in Obligation No. 22 to the contrary notwithstanding.

Upon the occurrence of an Event of Default under the Supplement or the Master Indenture, the Issuer or the Bond Trustee shall be entitled to institute a suit, action or proceeding in equity or at law upon or under or with respect to the Master Indenture seeking any remedy provided under the Master Indenture after giving the notice specified in the Supplement if the Master Trustee shall have neglected or refused to institute any such action, suit or proceeding after receipt from the Issuer or the Bond Trustee of the written request (but not the offer of indemnity) otherwise required of holders of not less than a majority in aggregate principal amount of Obligations (as defined in the Master Indenture) then Outstanding.

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APPENDIX C

FORM OF BOND COUNSEL OPINION

July 28, 2016

Michigan Finance Authority Lansing, Michigan

As bond counsel to the Michigan Finance Authority (the "Authority"), we submit this opinion with respect to the issuance by the Authority of its Michigan Finance Authority Hospital Revenue Bonds (McLaren Health Care), Series 2016 (the "Bonds"), bearing an original issuance date of July 28, 2016, in the aggregate principal sum of $154,140,000. Unless otherwise defined herein, capitalized terms used in this opinion shall have the meanings given to them in the Bond Indenture, dated as of July 1, 2016, between the Authority and The Bank of New York Mellon Trust Company, N.A., as Bond Trustee. We have examined a certified transcript of proceedings with respect to the Bonds, including a certified copy of Resolution No. 2016-07 adopted by the Authority on July 19, 2016, and executed counterparts of the Bond Indenture, the Loan Agreement, and the non-arbitrage and tax compliance certificates of the Obligated Group and the Authority dated this date. We have also reviewed such other information, records, and documents as, in our judgment, are necessary or advisable to deliver the opinions expressed herein, and we have examined an executed Bond or a specimen thereof. As to questions of fact material to our opinion we have, with your consent, relied upon the certified proceedings and other certifications of public officials and the officers of the Obligated Group furnished to us, without undertaking to verify the same by independent investigation. The Bonds are issued under and pursuant to Executive Order 2010-2 and Act No. 38, Michigan Public Acts of 1969, as amended (the "Act"), by the Authority for the purpose of providing funds to be used by the Hospital and McLaren, together with other available funds, to finance the costs of the Project, and to pay the costs of issuing the Bonds. The Bonds are issuable as fully registered bonds only in the denominations of $5,000 or any integral multiple of $5,000. The Bonds bear interest from their dated date payable on each Interest Payment Date (as defined in the Bond Indenture).

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The Bonds are payable and subject to redemption prior to maturity on the conditions, at the times, in the manner payable and as specified in the Bond Indenture. With respect to the power of the Obligated Group to enter into and perform its obligations under the Loan Agreement and other documents to which it is a party, the due authorization, execution and delivery of the Loan Agreement and the other documents to which the Obligated Group is a party and the validity and enforceability of them against the Obligated Group, and the tax-exempt status of the Obligated Group Agent and the Hospital under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), we refer you to the opinion of Payne, Broder & Fossee, P.C., counsel to the Obligated Group, dated the date of this letter and addressed to you. As to questions of fact material to our opinion, we have, with your consent, relied upon representations of the Authority and the Obligated Group contained in the Loan Agreement and the Bond Indenture, the certified proceedings and other certifications of public officials and others furnished to us, including certifications furnished to us by or on behalf of the Obligated Group, without undertaking to verify the same by independent investigation. Based upon and subject to the foregoing, we are of the opinion that, under existing law: 1. The Authority, pursuant to the Act, is a public body corporate and politic of the State of Michigan, is legally organized and validly existing under the Constitution and laws of the State of Michigan, including particularly the Act, and is legally authorized and empowered to adopt the Authorizing Resolution, to execute and deliver the Loan Agreement and the Bond Indenture and to issue and deliver the Bonds. 2. The Authorizing Resolution has been duly adopted by the Authority and is a valid and binding action of the Authority. The Bond Indenture and the Loan Agreement have been duly executed and delivered by the Authority and, assuming proper authorization and execution by all other parties thereto, the Bond Indenture and the Loan Agreement constitute valid and binding agreements of the Authority enforceable in accordance with their terms. 3. The Bonds have been duly authorized to be issued and delivered by the Authority, all conditions precedent to the delivery thereof have been fulfilled and, when duly authenticated, the Bonds will constitute valid and binding obligations of the Authority enforceable in accordance with their terms. The Bonds do not constitute obligations or create any debt of the State of Michigan, nor do they constitute a general obligation of the Authority, but the principal of and the interest and redemption premium, if any, on the Bonds are payable solely from the sources provided therefor in the Bond Indenture. 4. The interest on the Bonds while in the Fixed Rate Mode and bearing interest at a Fixed Rate (a) is excluded from gross income for federal income tax purposes, and (b) is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, it should be noted that certain corporations must take into account interest on the Bonds in determining adjusted current earnings for the purpose of

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computing such alternative minimum tax. The opinion set forth in clause (a) above is subject to the condition that the Authority and the Obligated Group comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be (or continue to be) excluded from gross income for federal income tax purposes. The Obligated Group has covenanted, on behalf of itself and the Authority, to comply with all such requirements. Failure to comply with such requirements could cause the interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds and the interest thereon. 5. The Bonds and the interest thereon are free and exempt from all state, city, county or other taxation provided by the laws of the State of Michigan, except estate, inheritance and gift taxes and taxes on transfers. The enforceability of the rights and remedies set forth in the Authorizing Resolution, the Bond Indenture, the Loan Agreement and the Bonds may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws affecting creditors' rights generally, now existing or hereafter enacted, and by the application of general principles of equity, including those relating to equitable subordination. We express no opinion herein as to the accuracy, adequacy or completeness of the Official Statement relating to the Bonds. This opinion is given as of the date hereof and we assume no obligation to update or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur.

Respectfully submitted,


APPENDIX D

FORM OF CONTINUING DISCLOSURE AGREEMENT

$154,140,000 Michigan Finance Authority

Hospital Revenue Bonds (McLaren Health Care)

Series 2016

This Continuing Disclosure Agreement (the “Disclosure Agreement”) is executed and delivered by McLaren Health Care Corporation (the “Obligated Group Agent”), on behalf of itself and as Obligated Group Agent on behalf of the Obligated Group (as defined below), and is accepted by The Bank of New York Mellon Trust Company, N.A., as Dissemination Agent, in connection with the issuance by the Michigan Finance Authority (the “Authority”) of its Hospital Revenue Bonds (McLaren Health Care) Series 2016 in the aggregate principal amount of $154,140,000 (the “Bonds”). The Bonds are being issued pursuant to a Bond Indenture (the “Bond Indenture”), dated as of July 1, 2016, between the Authority and The Bank of New York Mellon Trust Company, N.A., as Trustee. The proceeds of the Bonds are being loaned by the Authority to the Obligated Group Agent for use by certain Credit Group Members (as defined below) pursuant to a Loan Agreement (the “Loan Agreement”) dated as of July 1, 2016, between the Authority and the Obligated Group Agent, for itself and as Obligated Group Agent on behalf of the Obligated Group. The Obligated Group Agent, for itself and as Obligated Group Agent on behalf of the Obligated Group, covenants and agrees as follows:

SECTION 1. Purpose of the Disclosure Agreement. (a) This Disclosure Agreement is being executed and delivered by the Obligated Group Agent for the benefit of the Bondholders and the Beneficial Owners.

(b) In consideration of the purchase and acceptance of any and all of the Bonds by those who shall hold the same or shall own beneficial ownership interests therein from time to time, this Disclosure Agreement shall be deemed to be and shall constitute a contract between the Obligated Group and the Bondholders and Beneficial Owners from time to time of the Bonds, and the covenants and agreements herein set forth to be performed on behalf of the Obligated Group shall be for the benefit of the Bondholders and Beneficial Owners of any and all of the Bonds.

SECTION 2. Definitions. In addition to the definitions set forth in the Bond Indenture, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:

“Annual Report” shall mean any Annual Report provided by the Obligated Group Agent pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.

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“Beneficial Owner” shall mean any person which has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any Bonds (including any person holding Bonds through nominees, depositories or other intermediaries).

“Credit Group” or “Members of the Credit Group” shall mean the Parent and certain of the Parent’s affiliates designated as a Designated Affiliate or Limited Credit Group Participant pursuant to the Master Indenture.

“Dissemination Agent” shall mean the Obligated Group Agent or the person the Obligated Group Agent has appointed in writing to act as Dissemination Agent on behalf of the Obligated Group and who has provided a written acceptance of such appointment with the Obligated Group Agent. As provided herein, the Obligated Group Agent shall initially appoint The Bank of New York Mellon Trust Company, N.A. as Dissemination Agent.

“EMMA” means the Electronic Municipal Market Access system of the MSRB, or such other system, internet web site, or repository hereafter described by the MSRB for submission of electronic filing pursuant to the Rule.

“GAAP” shall mean generally accepted accounting principles, as such principles are prescribed, in part, by the Financial Accounting Standards Board and modified by the Government Accounting Standards Board and in effect from time to time.

“Listed Events” shall mean any of the events listed in Section 6(a) of this Disclosure Agreement.

“Master Indenture” means the Master Trust Indenture dated as of June 1, 1998 between the Obligated Group Agent and the Master Trustee.

“Master Trustee” means The Bank of New York Mellon Trust Company, N.A., and its successors and assigns.

“Member,” “Members,” “Members of the Obligated Group” and “Obligated Group” shall have the meanings ascribed thereto in the Master Indenture.

“MSRB” shall mean the Municipal Securities Rulemaking Board established in accordance with the provisions of Section 15B(b)(1) of the 1934 Act.

“1934 Act” shall mean the Securities Exchange Act of 1934, as amended.

“Obligated Group Agent” means the Parent, or such other Member of the Obligated Group as may succeed to the obligations of the Parent hereunder.

“Obligated Person” means a Member of the Obligated Group or the Credit Group.

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“Parent” shall mean McLaren Health Care Corporation.

“Quarterly Report” shall mean any quarterly financial statement provided by the Obligated Group Agent pursuant to Section 5 of this Disclosure Agreement.

“Rule” shall mean Rule 15c2-12 (17 CFR Part 240, §240.15c2-12) promulgated by the SEC pursuant to the 1934 Act, as the same may be amended from time to time, together with all interpretive guides or other official interpretations or explanations thereof that are promulgated by the SEC.

“SEC” shall mean the United States Securities and Exchange Commission.

“State” shall mean the State of Michigan.

SECTION 3. Provision of Annual Reports. (a) Each year, the Obligated Group Agent shall provide, or shall cause the

Dissemination Agent to provide, not later than the date one hundred fifty (150) days after the last day of the Credit Group’s fiscal year, commencing with the Credit Group’s Annual Report for its fiscal year ended September 30, 2016, to EMMA an Annual Report for the preceding fiscal year which is consistent with the requirements of Section 4 of this Disclosure Agreement. Currently, the Credit Group’s fiscal year commences on October 1. In each case, the Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by specific reference other information as provided in Section 4 of this Disclosure Agreement; provided, however, that if the audited financial statements of the Credit Group are not available by the deadline for filing the Annual Report, they shall be provided when and if available, and unaudited financial statements in a format similar to the audited financial statements most recently prepared for the Credit Group shall be included in the Annual Report.

(b) The Annual Report shall be submitted to EMMA either through web-based electronic submission interface or through electronic computer-to-computer data connections with EMMA in accordance with the submission process, document format and configuration requirements established by the MSRB. The Annual Report shall also include all related information required by the MSRB to accurately identify: (i) the category of information being provided; (ii) the period covered by the Annual Report; (iii) the issues or specific securities to which the Annual Report is related (including CUSIP number, issuer name, state, issue description/securities name, dated date, maturity date, and/or coupon rate); (iv) the name of the Obligated Group Members; (v) the name and date of the document; and (vi) contact information of the Dissemination Agent or the submitter.

(c) If the Obligated Group Agent is unable to provide an Annual Report to EMMA by the date required in subsection (a), the Obligated Group Agent shall cause the Dissemination Agent to send a notice, in a timely manner, to the MSRB through EMMA, in substantially the form attached as EXHIBIT A.

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(d) If the Credit Group’s fiscal year changes, the Obligated Group Agent shall cause the Dissemination Agent to send written notice of such change to the MSRB through EMMA in substantially the form attached as EXHIBIT B. If such change will result in the Credit Group’s fiscal year ending on a date later than the ending date prior to such change, the Obligated Group Agent shall provide notice of such change to EMMA, on or prior to the deadline of filing the Annual Report in effect when the Obligated Group Agent operated under its prior fiscal year. Such notice may be provided to the MSRB through EMMA along with the Annual Report, provided that it is filed at or prior to the deadline described above.

(e) If a Dissemination Agent has been appointed by the Obligated Group Agent, (i) the Obligated Group Agent shall provide the Annual Report to the Dissemination Agent not later than fifteen (15) business days (or such lesser number of days as is acceptable to the Dissemination Agent) prior to the date by which it must be provided to EMMA under subsection (a) above and (ii) the Dissemination Agent shall file a report with the Obligated Group Agent certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided to EMMA.

SECTION 4. Content of Annual Reports. The Credit Group’s Annual Report shall contain or include by reference the following:

(a) The audited financial statements of the Credit Group for its fiscal year immediately preceding the due date of the Annual Report.

(b) An update of the financial information and operating data relating to the Credit Group of the same general nature as that contained in the tables under the subcaptions “Historical Utilization Statistics,” “Historical Financial Summary,” “Historical Debt to Capitalization Ratio,” “Historical and Pro Forma Debt Service Coverage,” “Liquidity—Cash and Cash equivalents,” “Liquidity—Grand Total” and “Liquidity—Days Cash and Investments on Hand” under the caption “INFORMATION CONCERNING THE CREDIT GROUP” in APPENDIX A to the Official Statement relating to the $154,160,000 Michigan Finance Authority Hospital Revenue Refunding Bonds (McLaren Health Care) Series 2015D FRN.

The Credit Group’s financial statements shall be audited and prepared in accordance with GAAP.

Any or all of the items listed above may be included by specific reference to other documents that previously have been provided to the MSRB through EMMA. Notwithstanding the foregoing, if the document included by reference is a final official statement, it need only be available from the MSRB. The Obligated Group Agent shall clearly identify each such other document so included by reference.

SECTION 5. Provision of Quarterly Reports.

(a) The Obligated Group Agent shall provide, or shall cause the Dissemination Agent to provide, to EMMA within 45 days following the close of each calendar quarter of each fiscal year other than the last quarter and 60 days following the close of the last calendar quarter of each fiscal year, a copy of the internally-prepared quarterly financial statements for the quarter then ended, which financial statements shall include a balance sheet as of the end of each such

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quarter, and a statement of operations and changes in net assets for the quarter, provided that such quarterly financial statements shall be certified by an officer of the Obligated Group Agent as being true and correct to the best of his or her knowledge and belief, but shall be subject to audit and fiscal year-end adjustments.

(b) The quarterly financial information described above shall be submitted by the Obligated Group Agent to EMMA in the same manner as the Annual Report provided for in this Agreement.

(c) If a Dissemination Agent has been appointed by the Obligated Group Agent, (i) the Obligated Group Agent shall provide the quarterly financial information to the Dissemination Agent not later than fifteen (15) business days (or such lesser number of days as is acceptable to the Dissemination Agent) prior to the date by which it must be provided to EMMA under subsection (a) above and (ii) the Dissemination Agent shall file a report with the Obligated Group Agent certifying that the quarterly financial information has been provided pursuant to this Agreement, stating the date it was provided to EMMA.

SECTION 6. Reporting of Significant Events.

(a) The Obligated Group Agent covenants to provide, or cause to be provided to the MSRB through EMMA, in an electronic format prescribed by the MSRB, notice of the occurrence of any of the following events with respect to the Bonds, if material, in a timely manner not in excess of ten business days after the occurrence of the event, in accordance with the Rule:

(1) principal and interest payment delinquencies;

(2) non-payment related defaults, if material;

(3) unscheduled draws on debt service reserves reflecting financial difficulties;

(4) unscheduled draws on credit enhancements reflecting financial difficulties;

(5) substitution of credit or liquidity providers, or their failure to perform;

(6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds;

(7) modifications to rights of Bond holders, if material;

(8) Bond calls, if material, and tender offers;

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( 9 ) d e f e a s a n c e s ;

(10) release, substitution, or sale of property securing repayment of the securities, if material;

(11) r a t ing changes ;

(12) bankruptcy, insolvency, receivership or similar event of an Obligated Person;

(13) the consummation of a merger, consolidation, or acquisition involving an Obligated Person or the sale of all or substantially all of the assets of an Obligated Person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and

(14) appointment of a successor or additional trustee or the change of name of a trustee, if material.

(b) Whenever the Obligated Group Agent obtains knowledge of the occurrence of a Listed Event, the Obligated Group Agent shall as soon as possible determine if such event would constitute material information for the Bondholders, provided, that any event listed under Section 6(a)(1), (3), (4), (5), (9), (11) (only with respect to any change in any rating on the Bonds) or (12) above will always be deemed to be material. Events listed under Section 6(a)(6) and (8) above will always be deemed to be material except with respect to that portion of those events which must be determined to be material.

(c) The Obligated Group Agent shall, in a timely manner not in excess of ten business days after the occurrence of a Listed Event, cause a notice of the occurrence of the Listed Event, determined to be material in accordance with the Rule, to be electronically filed with EMMA together with a significant event notice cover sheet substantially in the form attached as Exhibit C. In connection with providing a notice of the occurrence of a Listed Event described in Section 6(a)(9) above, the Obligated Group Agent shall include in the notice explicit disclosure as to whether the Bonds have been escrowed to maturity or escrowed to call, as well as appropriate disclosure of the timing of maturity or call.

(d) The Obligated Group Agent acknowledges that it is not required to provide a notice of a Listed Event with respect to credit enhancement when the credit enhancement is added after the primary offering of the Bonds, the Obligated Group Agent does not apply for or participate in obtaining such credit enhancement, and such credit enhancement is not described in the offering memorandum for the Bonds.

SECTION 7. Termination of Reporting Obligation. The Obligated Group Agent’s obligations under this Agreement shall terminate upon the legal defeasance of the Bonds or upon the payment in full of all of the Bonds. Notwithstanding the foregoing, (i) if the Rule shall be

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amended, modified or changed so that all or any part of the information currently required to be provided thereunder shall no longer be required to be provided thereunder and the Obligated Group Agent has received an opinion of legal counsel experienced in the area of federal securities law to that effect, then such information shall no longer be required to be provided hereunder, and (ii) if and to the extent the Rule or any provision thereof shall be declared by a court of competent and final jurisdiction to be, in whole or in part, invalid, unconstitutional, null and void, or otherwise inapplicable to the Bonds, then the information required to be provided hereunder, insofar as it was required to be provided by a provision of the Rule so declared, shall no longer be required to be provided hereunder.

SECTION 8. Dissemination Agent. The Bank of New York Mellon Trust Company, N.A. is hereby appointed to act as the initial Dissemination Agent hereunder. The Obligated Group Agent may, from time to time, appoint a successor Dissemination Agent or discharge any then acting Dissemination Agent, with or without cause, provided that if at any time there shall be no Dissemination Agent appointed and acting hereunder or the then appointed and acting Dissemination Agent shall fail to perform its obligations hereunder, the Obligated Group Agent shall discharge such obligations until such time as it shall appoint a successor Dissemination Agent or the then appointed and acting Dissemination Agent shall resume the performance of such obligations. The acting Dissemination Agent may resign at any time upon providing 30 days prior written notice to the Obligated Group Agent.

SECTION 9. Amendment. Notwithstanding any other provision of this Disclosure Agreement, this Disclosure Agreement may be amended, without the consent of any Bondholder, if the Obligated Group Agent receives an opinion of legal counsel experienced in the area of federal securities law to the effect that:

(a) such amendment is made in connection with a change in circumstances that arises from a change in legal requirements, a change in law or a change in the identity, nature or status of the Credit Group or types of activities in which the Credit Group is engaged;

(b) this Disclosure Agreement, as so amended, would have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and

(c) such amendment does not materially impair the interests of the Bondholders.

If the amendment or waiver results in a change to the annual financial information required to be included in the Annual Report pursuant to Section 4 of this Disclosure Agreement, the first Annual Report that contains the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of such change in the type of operating data or financial information being provided. If the amendment or waiver involves a change in the accounting principles to be followed in preparing financial statements, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared based on the new accounting principles and those prepared based on the former accounting principles. The comparison shall include a qualitative discussion of such differences and the impact of the changes on the presentation of

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the financial information. To the extent reasonably feasible, the comparison also shall be quantitative. A notice of the change in the accounting principles should be sent by the Obligated Group to the MSRB through EMMA. Further, if the annual financial information required to be provided in the Annual Report can no longer be generated because the operations to which it related have been materially changed or discontinued, a statement to that effect shall be included in the first Annual Report that does not include such information.

(d) If the amendment results in a change to the accounting principles to be followed in preparing financial statements as set forth in Section 4 of this Disclosure Agreement, the Annual Report for the year in which the change is made shall include a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of such differences and the impact of the changes on the presentation of the financial information. To the extent reasonably feasible, the comparison shall also be quantitative. A notice of the change in accounting principles shall be sent by the Obligated Group Agent, or the Dissemination Agent (if other than the Obligated Group Agent) at the written direction of the Obligated Group Agent, to the MSRB through EMMA.

SECTION 10. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Obligated Group Agent from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report, Quarterly Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the Obligated Group Agent chooses to include any information in any Annual Report, Quarterly Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Obligated Group Agent shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report, Quarterly Report or notice of occurrence of a Listed Event.

SECTION 11. Failure to Comply. In the event of a failure of the Obligated Group Agent or the Dissemination Agent (if other than the Obligated Group Agent) to comply with any provision of this Disclosure Agreement, any Bondholder or Beneficial Owner may bring an action to obtain specific performance of the obligations of the Obligated Group Agent or the Dissemination Agent (if other than the Obligated Group Agent) under this Disclosure Agreement, but no person or entity shall be entitled to recover monetary damages hereunder under any circumstances, and any failure to comply with the obligations under this Disclosure Agreement shall not constitute a default with respect to the Bonds or under the Bond Indenture. Notwithstanding the foregoing, if the alleged failure of the Obligated Group Agent to comply with this Disclosure Agreement is the inadequacy of the information disclosed pursuant hereto, then the Bondholders and the Beneficial Owners (on whose behalf a Bondholder has not acted with respect to this alleged failure) of not less than a majority of the aggregate principal amount of the then outstanding Bonds must take the actions described above before the Obligated Group Agent shall be compelled to perform with respect to the adequacy of such information disclosed pursuant to this Disclosure Agreement.

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SECTION 12. Duties of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement. The Dissemination Agent, including its officers, directors, employees and agents, shall:

(a) not be liable for any action taken or omitted with respect to this Disclosure Agreement so long as it shall have acted in good faith and without gross negligence;

(b) be entitled to compensation for its services hereunder as provided in a separate written agreement with the Obligated Group Agent, which is made a part hereof, and for reimbursement of its out-of-pocket expenses including, but not by way of limitation, the fees and costs of attorneys or agents which it may find necessary to engage in performance of its duties hereunder, all to be paid by the Obligated Group Agent;

(c) be, and hereby is, indemnified and saved harmless by the Obligated Group Agent from all losses, liabilities, costs and expenses, including attorney fees and expenses, which may be incurred by it as a result of its acceptance of its appointment as Dissemination Agent or arising from the performance of its duties pursuant to this Disclosure Agreement, unless such losses, liabilities, costs and expenses shall have been finally adjudicated to have resulted from the willful misconduct or gross negligence of the Dissemination Agent, and such indemnification shall survive its resignation or removal, or the termination of this Disclosure Agreement;

(d) have only those duties as are specifically provided herein, which shall be deemed purely ministerial in nature, and shall under no circumstance be deemed a fiduciary for the University. IN NO EVENT SHALL THE DISSEMINATION AGENT BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY (i) DAMAGES OR EXPENSES ARISING OUT OF THE SERVICES PROVIDED HEREUNDER, OTHER THAN DAMAGES WHICH RESULT FROM THE DISSEMINATION AGENT'S FAILURE TO ACT IN ACCORDANCE WITH THE STANDARDS SET FORTH IN THIS AGREEMENT, OR (ii) SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES, EVEN IF THE DISSEMINATION AGENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES;

(e) have the right, but not the obligation, to consult with counsel of choice and shall not be liable for action taken or omitted to be taken by Dissemination Agent either in accordance with the advice of such counsel or in accordance with any opinion of counsel to the Obligated Group Agent addressed and delivered to the Dissemination Agent; and

(f) have the right to perform any of its duties hereunder through agents, attorneys, custodians or nominees, and shall not be responsible for the misconduct or negligence of such agents, attorneys, custodians and nominees appointed by it with due care.

Any banking association or corporation into which the Dissemination Agent may be merged, converted or with which the Dissemination Agent may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Dissemination Agent shall be a party, or any banking association or corporation to which all or substantially all of the corporate trust business of the Dissemination Agent shall be transferred, shall succeed to all the Dissemination Agent’s rights, obligations and immunities hereunder without the execution

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or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding.

SECTION 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Obligated Group Agent, the Obligated Group, the Credit Group, the Dissemination Agent, the Bondholders and the Beneficial Owners, and shall create no rights in any other person or entity.

SECTION 14. Additional Disclosure Obligations. The Obligated Group Agent acknowledges and understands that other State and federal laws, including, without limitation, the Securities Act of 1933, as amended, and Rule 10b-5 promulgated by the SEC pursuant to the 1934 Act, may apply to the Credit Group, and that under some circumstances, compliance with this Disclosure Agreement, without additional disclosures or other action, may not fully discharge all duties and obligations of the Credit Group under such laws.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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SECTION 15. Governing Law. This Disclosure Agreement shall be construed and interpreted in accordance with the laws of the State, and any suits and actions arising out of this Disclosure Agreement shall be instituted in a court of competent jurisdiction in the State. Notwithstanding the foregoing, to the extent this Disclosure Agreement addresses matters of federal securities laws, including the Rule, this Disclosure Agreement shall be construed and interpreted in accordance with such federal securities laws and official interpretations thereof.

Date: July 28, 2016

MCLAREN HEALTH CARE CORPORATION, on behalf of itself and as Obligated Group Agent on behalf of the Obligated Group By: ____________________________________

Senior Vice President and Chief Financial Officer

Accepted by:

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.

By: ______________________________

Its:

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Exhibit A

Notice to the MSRB of Failure to File Annual Report

Name of Obligated Group/Credit Group:

Name of Bond Issue: $154,140,000 Michigan Finance Authority Hospital Revenue Bonds (McLaren Health Care) Series 2016

Date of Bonds: July 28, 2016

NOTICE IS HEREBY GIVEN that McLaren Health Care Corporation has not provided an Annual/Quarterly Report with respect to the above-named Bonds as required by the Continuing Disclosure Agreement dated July 28, 2016. McLaren Health Care Corporation anticipates that the Annual/Quarterly Report will be filed by, 20__.

MCLAREN HEALTH CARE CORPORATION, on behalf of itself and as Obligated Group Agent on behalf of the Obligated Group

By: ____________________________________

Its: _____________________________________

Dated:

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Exhibit B

Notice to the MSRB of Change in Credit Group’s Fiscal Year

Name of Obligated Group/Credit Group:

Name of Bond Issue: $154,140,000 Michigan Finance Authority Hospital Revenue Bonds (McLaren Health Care) Series 2016

Date of Bonds: July 28, 2016

NOTICE IS HEREBY GIVEN that the Credit Group’s fiscal year has changed. Previously, the Credit Group’s fiscal year ended on [____]. I t now ends on [ ] .

MCLAREN HEALTH CARE CORPORATION, on behalf of itself and as Obligated Group Agent on behalf of the Obligated Group

By: ____________________________________

Its:

Dated:

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Exhibit C Significant Event Notice

Cover Sheet

This cover sheet and significant event notice should be provided in an electronic format to the Municipal Securities Rulemaking Board pursuant to Securities and Exchange Commission Rule 15c2-12(b)(5)(i)(C) and (D).

Obligated Group’s, Credit Group’s and/or other Obligated Person’s name: _________________

Obligated Group’s Six-Digit CUSIP Number(s): ______________________________________

or Nine-Digit CUSIP Number(s) to which this significant event notice relates: ______________

Number of pages of attached significant event notice: __________________________________

Description of Significant Events Notice (Check One):

1. ____Principal and interest payment delinquencies

2. ___ Non-payment related defaults

3. ____Unscheduled draws on debt service reserves reflecting financial difficulties

4. ___ Unscheduled draws on credit enhancements reflecting financial difficulties

5. ___ Substitution of credit or liquidity providers, or their failure to perform

6. ____ Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security

7. _____Modifications to rights of Bond holders

8. _____Bond calls

9. _____T e n d e r o f f e r s

10. _____Defeasances

11. _____Release, substitution, or sale of property securing repayment of the securities

12. _____R a t i n g c h a n g e s

13. _____Bankruptcy, insolvency, receivership or similar event of the obligated person

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14. ____The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms

15. ____Appointment of a successor or additional trustee or the change of name of a trustee

16. ____Other significant event notice (specify) _________________________

I hereby represent that I am authorized by McLaren Health Care Corporation or its agent to distribute this information publicly:

Signature: _________________________________________________________________

Name: Tile:

Employer: _________________________________________________________________

Address: __________________________________________________________________

City, State, Zip Code: __________________________________________________________

Voice Telephone Number: ( )

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