$55,855,000 THE ALABAMA PUBLIC HEALTH CARE AUTHORITY LEASE REVENUE BONDS (DEPARTMENT OF PUBLIC HEALTH FACILITIES), SERIES 2015

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1 NEW ISSUE Book Entry Only Moody s: Aa2 (stable outlook) S&P: AA- (stable outlook) (See Ratings herein) In the opinion of Bond Counsel, interest on the Series 2015 Bonds is, under law existing and in effect as of the date of the original issuance of the Series 2015 Bonds, (i) excluded from gross income of the holders thereof for purposes of federal income taxation, subject to the qualifications described herein under the heading TAX MATTERS, (ii) not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; such interest, however, is includable in the adjusted current earnings in computing the federal alternative minimum tax imposed on certain corporations and (iii) exempt from present State of Alabama income taxation. See TAX MATTERS herein for further information and certain other federal tax consequences arising with respect to the Series 2015 Bonds. Dated: Delivery Date $55,855,000 THE ALABAMA PUBLIC HEALTH CARE AUTHORITY LEASE REVENUE BONDS (DEPARTMENT OF PUBLIC HEALTH FACILITIES), SERIES 2015 Due: September 1, as shown on the inside cover The Series 2015 Bonds are limited obligations of the Issuer payable from rental payments to be received by the Issuer from the alabama Department of Public Health, a department of the State of Alabama (the Lessee ), pursuant to a Lease Agreement, dated as of September 1, 2005, as previously amended, and as supplemented by a First Supplement to Lease Agreement, dated as of March 1, The Series 2015 Bonds are issued pursuant to a Trust Indenture, dated as of September 1, 2005, as supplemented by a First Supplemental Trust Indenture, dated as of March 1, 2015 (collectively, the Indenture ), between the Issuer and First Commercial Bank, Birmingham, Alabama, as trustee (the Trustee ). The Indenture provides for the issuance of Additional Bonds upon compliance with certain conditions contained therein. See SOURCE OF PAYMENT AND SECURITY Additional Bonds herein. Interest on the Series 2015 Bonds due on each Interest Payment Date (each March 1 and September 1, beginning September 1, 2015) will be made by check or draft mailed on such Interest Payment Date to the persons who are registered Holders of Series 2015 Bonds on the Regular Record Date for such Interest Payment Date. Principal of the Series 2015 Bonds is payable on each September 1, as shown on the inside cover. Payment of principal of (and premium, if any) the Series 2015 Bonds (and payment of interest on the Series 2015 Bonds due upon redemption on any date other than an Interest Payment Date) will be made only upon surrender of the Series 2015 Bonds to the Trustee at the Office of the Trustee. The Series 2015 Bonds are subject to redemption prior to maturity as more fully described herein. The Series 2015 Bonds are limited obligations of the Issuer payable solely from the sources described herein. See SOURCE OF PAYMENT AND SECURITY General herein. The Issuer has no taxing power, and Holders of the Series 2015 Bonds shall have no right to compel the exercise of any taxing power by any governmental entity or agency of the State. The Lease Agreement is a year-to-year obligation of the Lessee, renewable each year at the option of the Lessee. The Series 2015 Bonds will be issued as fully registered bonds, and when issued, will be registered in the name of CEDE & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ). Purchases of beneficial interests in the Series 2015 Bonds will be made in book-entry form only and purchasers of a beneficial interest in the Series 2015 Bonds ( Beneficial Owners ) will not receive physical delivery of the certificates representing their interests in the Series 2015 Bonds. The principal of and interest on the Series 2015 Bonds will be paid directly to DTC, so long as DTC or its nominee is the registered owner of the Series 2015 Bonds. The disbursements of such payments to the Beneficial Owners of the Series 2015 Bonds will be the responsibility of the DTC Direct Participants and the Indirect Participants, all as defined and more fully described in this Official Statement under the caption THE SERIES 2015 BONDS Book-Entry System. FOR MATURITY SCHEDULE, SEE INSIDE COVER THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION. The Series 2015 Bonds are offered when, as and if issued, subject to the approving opinion of Balch & Bingham LLP, Birmingham, Alabama, Bond Counsel. It is expected that the Series 2015 Bonds will be available for delivery through the facilities of DTC in New York, New York on or about March 12, Thornton Farish Inc. This Official Statement is dated March 3, The Frazer Lanier Company Incorporated Benchmark Securities

2 $55,855,000 THE ALABAMA PUBLIC HEALTH CARE AUTHORITY LEASE REVENUE BONDS (DEPARTMENT OF PUBLIC HEALTH FACILITIES), SERIES 2015 Series 2015 Serial Bonds Maturity Principal Amount Interest Rate Yield CUSIP 2015 $ 320, % 0.250% CE , % 0.500% BG , % 0.850% BH , % 1.240% BJ , % 1.500% BK , % 1.730% BL , % 1.950% BM , % 2.200% BN , % 2.360% BP , % 2.510% BQ , % 2.640% c BR ,025, % 2.750% c BS ,080, % 2.880% c BT ,135, % 3.000% c BU ,190, % 3.060% c BV ,250, % 3.130% c BW ,315, % 3.450% BX ,355, % 3.250% c BY ,420, % 3.310% c BZ ,775, % 3.620% c CF6 Series 2015 Term Bonds $3,025, % Term Bonds due September 1, 2035; Yield: 3.750%; CUSIP: CB5 $13,790, % Term Bonds due September 1, 2039; Yield: 4.000%; CUSIP: CH2 $17,085, % Term Bonds due September 1, 2044; Yield: 3.700% c ; CUSIP: CD1 All bonds priced to produce the yield indicated. c Priced to March 1, 2025 optional redemption date.

3 THE ALABAMA PUBLIC HEALTH CARE AUTHORITY Members of the Board of Directors Dr. Donald E. Williamson, Chairman Grover T. Wedgeworth, Secretary/Treasurer Bill Newton, Acting State Finance Director Ricky Elliott Evelyn Finkleu Lynne Noah Monique Tucker BOND COUNSEL Balch & Bingham LLP Birmingham, Alabama COUNSEL TO THE ISSUER Hand Arendall LLC Birmingham, Alabama

4 NO DEALER, BROKER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED BY THE AUTHORITY, THE STATE OF ALABAMA OR THE UNDERWRITERS TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS WITH RESPECT TO THE AUTHORITY OR ITS SERIES 2015 BONDS, OTHER THAN THOSE CONTAINED IN THIS OFFICIAL STATEMENT, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY ANY OF THE FOREGOING. THIS OFFICIAL STATEMENT DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF, THE SERIES 2015 BONDS BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH OFFER, SOLICITATION OR SALE. THE INFORMATION SET FORTH HEREIN HAS BEEN OBTAINED FROM THE AUTHORITY, THE STATE OF ALABAMA AND OTHER SOURCES WHICH ARE BELIEVED TO BE RELIABLE, BUT SUCH INFORMATION IS NOT GUARANTEED AS TO ACCURACY OR COMPLETENESS, AND IS NOT TO BE CONSTRUED AS A REPRESENTATION, BY THE UNDERWRITERS. THE UNDERWRITERS HAVE PROVIDED THE FOLLOWING SENTENCE FOR INCLUSION IN THIS OFFICIAL STATEMENT. THE UNDERWRITERS HAVE REVIEWED THE INFORMATION IN THIS OFFICIAL STATEMENT IN ACCORDANCE WITH, AND AS A PART OF, ITS RESPONSIBILITIES TO INVESTORS UNDER THE FEDERAL SECURITIES LAWS AS APPLIED TO THE FACTS AND CIRCUMSTANCES OF THIS TRANSACTION, BUT THE UNDERWRITERS DO NOT GUARANTEE THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION. The Series 2015 Bonds have not been registered under the Securities Act of 1933, as amended, or any state securities laws, and neither the Securities and Exchange Commission nor any state regulatory agency will pass upon the accuracy, completeness or adequacy of this Official Statement. This Official Statement is not to be construed as a contract or agreement between the Authority and the purchasers or holders of any of the Series 2015 Bonds. All quotations from and summaries and explanations of provisions of laws and documents herein do not purport to be complete, and reference is made to such laws and documents for full and complete statements of their provisions. Any statements made in this Official Statement involving estimates or matters of opinion, whether or not expressly so stated, are intended merely as estimates or opinions and not as representations of fact. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement, nor any sale made hereunder, shall under any circumstances create an implication that there has been no change in the affairs of the Authority or the State of Alabama since the date hereof. The delivery of this Official Statement does not imply that the information contained herein is correct on any date subsequent to the date of this official statement. IN CONNECTION WITH THE OFFERING OF THE SERIES 2015 BONDS, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2015 BONDS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE AUTHORITY HAS NO CONTROL OVER THE TRADING OF THE SERIES 2015 BONDS AFTER THEIR SALE BY THE AUTHORITY. Information regarding reoffering yields or prices included in this Official Statement is the responsibility of the Underwriters.

5 TABLE OF CONTENTS Page INTRODUCTION...1 THE SERIES 2015 BONDS...3 General Description of the Series 2015 Bonds...3 Authority for Issuance...3 Redemption Provisions...4 Registration, Transfer and Exchange...6 Book-Entry System...7 SOURCE OF PAYMENT AND SECURITY...10 General...10 The Lease...11 Additional Bonds...12 THE FINANCING DOCUMENTS...12 THE FACILITIES...12 The Original Facilities and 2005 Facilities...12 The 2015 Facilities...14 THE PLAN OF FINANCING...14 SOURCES AND USES OF FUNDS...15 THE ISSUER...15 THE DEPARTMENT...16 TOTAL DEBT SERVICE REQUIREMENTS...18 Outstanding Indebtedness of the Issuer...18 Schedule of Debt Service Requirements...18 RISK FACTORS...20 RISK FACTORS...20 Limitation on Remedies...20 Economic Conditions...20 Tax-Exempt Status of the Series 2015 Bonds...21 Future Legislation Could Affect Tax-Exempt Obligations...22 Lack of Liquidity for the Series 2015 Bonds...22 Ratings...22 SOVEREIGN IMMUNITY...23 i

6 TAX MATTERS...23 Federal Tax-Exempt Status of Series 2015 Bonds...23 Federal Tax Preference Treatment...23 State Tax-Exempt Status...23 Certain Collateral Federal Tax Consequences...24 Information Reporting and Backup...24 Opinions of Bond Counsel...24 Original Issue Discount...25 Original Issue Premium...25 Other Considerations...26 No Bank Qualification...26 LEGAL MATTERS...26 LITIGATION...26 CONTINUING DISCLOSURE AGREEMENT...27 Description of Agreement...27 Compliance with Prior Undertakings...29 FORWARD-LOOKING STATEMENTS...29 APPENDICES...30 RATINGS...30 UNDERWRITING...31 ECONOMIC, DEMOGRAPHIC AND FINANCIAL FACTORS...31 MISCELLANEOUS...31 APPENDIX A - APPENDIX B - APPENDIX C - APPENDIX D - Certain Information With Respect to the State of Alabama Definitions Summary of the Financing Documents Proposed Opinion of Bond Counsel ii

7 OFFICIAL STATEMENT Regarding $55,855,000 THE ALABAMA PUBLIC HEALTH CARE AUTHORITY LEASE REVENUE BONDS (DEPARTMENT OF PUBLIC HEALTH FACILITIES) SERIES 2015 INTRODUCTION This Official Statement is being furnished in connection with the issuance by The Alabama Public Health Care Authority (the "Issuer") of its Lease Revenue Bonds (Department of Public Health Facilities), Series 2015 (the "Series 2015 Bonds") in the aggregate principal amount of $55,855,000. The Issuer is a public corporation organized and existing under the laws of the State of Alabama (the "State"), including the provisions of Title 22, Chapter 21, Articles 11 and 11A of the Code of Alabama 1975 (the "Enabling Law"). The Series 2015 Bonds will be issued under a Trust Indenture, dated as of September 1, 2005 (the "Original Indenture") between the Issuer and First Commercial Bank, as trustee (the "Trustee"), as supplemented by a First Supplemental Trust Indenture, dated as of March 1, 2015 (the "First Supplemental Indenture" and together with the Original Indenture herein the "Indenture"), between the Issuer and the Trustee. The Issuer has previously issued its Lease Revenue Bonds (Department of Public Health Facilities), Series 2005 (the "Series 2005 Bonds") in the original aggregate principal amount of $57,975,000. The Series 2005 Bonds were issued to (i) advance refund certain prior bonds of the Issuer that financed the acquisition, construction and equipping of certain public health care facilities in the State (the "Original Facilities") and (ii) finance the acquisition, construction and equipping of certain public health care facilities in the State (the "2005 Facilities"). The Series 2015 Bonds are being issued to (i) advance refund a portion of the Series 2005 Bonds (the "Refunded Bonds") and (ii) finance the acquisition, construction and equipping of certain laboratory facilities, training and office facilities and county health department facilities all constituting public health care facilities of the Issuer (the "2015 Facilities"). See "THE FACILITIES" herein. The portion of the Series 2005 Bonds that is not being refunded is herein referred to as the "Unrefunded Series 2005 Bonds", and, upon the issuance of the Series 2015 Bonds, the Series 2015 Bonds and the Unrefunded Series 2005 Bonds will be the only bonds outstanding under the Indenture. The Series 2015 Bonds, the Unrefunded Series 2005 Bonds and any additional parity bonds ("Additional Bonds") subsequently issued under the Indenture are collectively referred to herein as the "Bonds." Pursuant to a Lease Agreement, dated as of September 1, 2005 (the "Original Lease Agreement"), between the Issuer and the State, acting by and through its Department of Public Health (the "Lessee"), as previously amended to add descriptions of the Project Sites for the 2005 Facilities, and as supplemented by a First Supplement to Lease Agreement, dated as of March 1, 2015 (the "First Supplement to Lease Agreement" and together with the Original Lease Agreement, as previously amended, herein the "Lease Agreement"), between the Issuer and the 1

8 Lessee, the 2015 Facilities will be acquired, constructed, installed and equipped by the Issuer, and the Original Facilities, the 2005 Facilities and the 2015 Facilities (collectively, the "Facilities") will be leased to the Lessee. The current term of the Lease Agreement will expire on September 30, 2015, with successive renewal options of one year each. Rental payments and other amounts payable under the Lease Agreement during any annual term are designed to be sufficient to pay the principal of, premium, if any, and interest on the Series 2015 Bonds due in the same year. See "SOURCE OF PAYMENT AND SECURITY" herein. The Series 2015 Bonds are limited obligations of the Issuer payable solely out of (i) payments by the Lessee pursuant to the Lease Agreement, (ii) funds held by the Trustee under the Indenture (except for the Reserve Fund which is not available to pay debt service on the Series 2015 Bonds), and (iii) any other revenues, rentals or receipts derived by the Issuer from the leasing or sale of the Facilities. Pursuant to the Indenture, the Issuer has assigned and pledged to the Trustee all right, title and interest of the Issuer in and to the Lease Agreement (except for certain rights personal to the Issuer). The Series 2015 Bonds are secured on a parity of lien with the Unrefunded Series 2005 Bonds and any Additional Bonds subsequently issued under the Indenture. The Issuer has no taxing power. Except to the extent of its obligations under the Lease Agreement, neither the State nor any political subdivision of the State shall in any event be liable for the payment of the principal of, or premium, if any, or interest on, the Series 2015 Bonds or for the performance of any pledge, obligation or agreement of any kind whatsoever which may be undertaken by the Issuer. None of the Series 2015 Bonds or any of the agreements or obligations of the Issuer shall be construed to constitute an indebtedness of the State or any political subdivision of the State within the meaning of any constitutional or statutory provision whatsoever. See "SOURCE OF PAYMENT AND SECURITY" herein. The Series 2015 Bonds are subject to redemption at the times and under the circumstances set forth herein. See "THE SERIES 2015 BONDS Redemption Provisions" herein. Certain capitalized terms used in this Official Statement are defined in APPENDIX B hereto. This Official Statement speaks only as of its date, and the information contained herein is subject to change. Summary descriptions of the Issuer, the Lessee, the Facilities, the Series 2015 Bonds, the Indenture and the Lease Agreement are included in the text of or Appendices to this Official Statement. The descriptions herein do not purport to be complete and are qualified in their entirety by reference to each specific document being described, forms of which may be obtained, during the initial offering period, at the office of The Frazer Lanier Company, Incorporated, as representative of the Underwriters, whose address is 300 Water Street, Montgomery, Alabama All such descriptions are further qualified in their entirety by reference to bankruptcy, insolvency and other similar laws and principles of equity relating to or affecting generally the enforcement of creditors' rights. 2

9 General Description of the Series 2015 Bonds THE SERIES 2015 BONDS The Series 2015 Bonds will bear interest from their date and will mature on the dates and in the amounts set forth on the inside cover page of this Official Statement. The Series 2015 Bonds will be issuable only as fully registered bonds without coupons in denominations of $5,000 or any multiple thereof and, when issued, will be registered in the name of Cede & Co., a nominee of The Depository Trust Company ("DTC"), New York, New York. The Series 2015 Bonds will bear interest at the applicable rates per annum set forth on the inside cover page of this Official Statement. All Series 2015 Bonds with the same maturity will bear interest at the same rate. While the Series 2015 Bonds are held under the book-entry only system of DTC, individual purchasers ("Beneficial Owners") of the Series 2015 Bonds will not receive physical delivery of bond certificates. See "THE SERIES 2015 BONDS Book-Entry System" herein. Interest on the Series 2015 Bonds will be payable semiannually on March 1 and September 1, beginning September 1, 2015 and will be calculated on the basis of a 360-day year with 12 months of 30 days each. Principal of the Series 2015 Bonds is payable on September 1 in the years and amounts shown on the inside cover page, subject to prior redemption. Payment of interest due on each Interest Payment Date will be made by check or draft mailed on such Interest Payment Date to the persons who are registered holders of the Series 2015 Bonds on the Regular Record Date for such Interest Payment Date, and payment of principal of (and premium, if any) the Series 2015 Bonds (and payment of interest on the Series 2015 Bonds due upon redemption on any date other than an Interest Payment Date) will be made only upon surrender of the Series 2015 Bonds to the Trustee at the Office of the Trustee. A Holder of Series 2015 Bonds in an aggregate principal amount of not less than $1,000,000 may, upon the terms and conditions of the Indenture, request payment of Debt Service by wire transfer to an account of such Holder maintained at a bank in the continental United States or by any other method providing for payment in same-day funds that is acceptable to the Trustee. So long as DTC or its nominee is the registered owner of the Series 2015 Bonds, the payment of principal of (and premium, if any) and interest on the Series 2015 Bonds shall be made by the Trustee to DTC, disbursements of such payments to DTC Direct Participants is the responsibility of DTC and disbursements of such payments to the Beneficial Owners is the responsibility of Direct Participants or Indirect Participants as more fully described in "THE SERIES 2015 BONDS Book-Entry System" herein. The Trustee is also Bond Registrar and Paying Agent. Its corporate trust office for transacting business in its capacity as trustee under the Indenture is located at 800 Shades Creek Parkway, Birmingham, Alabama Authority for Issuance The Series 2015 Bonds are being issued pursuant to the Enabling Law. For a brief summary of the Enabling Law and the Issuer's powers, see "THE ISSUER" herein. 3

10 Redemption Provisions The Series 2015 Bonds are subject to redemption prior to maturity as follows: Optional Redemption. The Series 2015 Bonds maturing on September 1, 2025 and thereafter may be redeemed in whole or in part (but if in part, in integral multiples of the smallest Authorized Denomination) at the option of the Issuer (exercised upon direction of the Lessee if no Lease Default exists) on or after March 1, 2025, at a redemption price equal to 100% of the principal amount redeemed, plus accrued interest to the redemption date. If less than all Series 2015 Bonds are to be optionally redeemed, the principal amount of Series 2015 Bonds of each maturity to be redeemed may be specified by the Issuer (with the consent of the Lessee if no Lease Default exists) by written notice to the Trustee, or, in the absence of timely receipt by the Trustee of such notice, shall be selected by the Trustee by lot or by such other method as the Trustee shall deem fair and appropriate; provided, however, that the principal amount of Series 2015 Bonds of each maturity to be redeemed must be a multiple of the smallest Authorized Denomination of the Series 2015 Bonds. If less than all Series 2015 Bonds with the same maturity are to be optionally redeemed, the particular Series 2015 Bonds of such maturity to be redeemed shall be selected by the Trustee by lot or by such other method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to the smallest Authorized Denomination of the Series 2015 Bonds, or a multiple thereof) of the principal of Series 2015 Bonds of such maturity of a denomination larger than the smallest Authorized Denomination. Mandatory Redemption of Term Bonds. The Series 2015 Term Bonds maturing on September 1, 2035 (the "2035 Term Bonds") shall be redeemed, at a redemption price equal to 100% of the principal amount to be redeemed plus accrued interest thereon to the redemption date, on September 1 in the years and principal amounts (after credit as provided below) as follows: $3,025,000 Term Bonds due September 1, 2035 Mandatory Redemption Date Amount 2034 $1,485, * 1,540,000 * final maturity Not less than 30 or more than 60 days prior to each mandatory redemption date with respect to the 2035 Term Bonds, the Trustee shall proceed to select for redemption, by lot, 2035 Term Bonds, or portions thereof, in an aggregate principal amount equal to the amount required to be redeemed and shall call such 2035 Term Bonds or portions thereof for redemption on such mandatory redemption date. The Issuer (or the Lessee if no Lease Default exists) may, not less than 60 days prior to any such mandatory redemption date, direct that any or all of the following amounts be credited against the principal amount of 2035 Term Bonds scheduled for redemption on such date: (i) the principal amount of 2035 Term Bonds delivered by the Issuer or the Lessee 4

11 to the Trustee for cancellation and not previously claimed as a credit; and (ii) the principal amount of 2035 Term Bonds previously redeemed (other than 2035 Term Bonds redeemed pursuant to this paragraph) and not previously claimed as a credit. The Series 2015 Term Bonds maturing on September 1, 2039 (the "2039 Term Bonds") shall be redeemed, at a redemption price equal to 100% of the principal amount to be redeemed plus accrued interest thereon to the redemption date, on September 1 in the years and principal amounts (after credit as provided below) as follows: * final maturity $13,790,000 Term Bonds due September 1, 2039 Mandatory Redemption Date Amount 2036 $3,260, ,380, ,510, * 3,640,000 Not less than 30 or more than 60 days prior to each mandatory redemption date with respect to the 2039 Term Bonds, the Trustee shall proceed to select for redemption, by lot, 2039 Term Bonds, or portions thereof, in an aggregate principal amount equal to the amount required to be redeemed and shall call such 2039 Term Bonds or portions thereof for redemption on such mandatory redemption date. The Issuer (or the Lessee if no Lease Default exists) may, not less than 60 days prior to any such mandatory redemption date, direct that any or all of the following amounts be credited against the principal amount of 2039 Term Bonds scheduled for redemption on such date: (i) the principal amount of 2039 Term Bonds delivered by the Issuer or the Lessee to the Trustee for cancellation and not previously claimed as a credit; and (ii) the principal amount of 2039 Term Bonds previously redeemed (other than 2039 Term Bonds redeemed pursuant to this paragraph) and not previously claimed as a credit. The Series 2015 Term Bonds maturing on September 1, 2044 (the "2044 Term Bonds") shall be redeemed, at a redemption price equal to 100% of the principal amount to be redeemed plus accrued interest thereon to the redemption date, on September 1 in the years and principal amounts (after credit as provided below) as follows: $17,085,000 Term Bonds due September 1, 2044 Mandatory Redemption Date Amount 2041 $3,965, ,160, ,370, * 4,590,000 * final maturity 5

12 Not less than 30 or more than 60 days prior to each mandatory redemption date with respect to the 2044 Term Bonds, the Trustee shall proceed to select for redemption, by lot, 2044 Term Bonds, or portions thereof, in an aggregate principal amount equal to the amount required to be redeemed and shall call such 2044 Term Bonds or portions thereof for redemption on such mandatory redemption date. The Issuer (or the Lessee if no Lease Default exists) may, not less than 60 days prior to any such mandatory redemption date, direct that any or all of the following amounts be credited against the principal amount of 2044 Term Bonds scheduled for redemption on such date: (i) the principal amount of 2044 Term Bonds delivered by the Issuer or the Lessee to the Trustee for cancellation and not previously claimed as a credit; and (ii) the principal amount of 2044 Term Bonds previously redeemed (other than 2044 Term Bonds redeemed pursuant to this paragraph) and not previously claimed as a credit. Notice of Redemption. Unless waived by the Holders of all Series 2015 Bonds then Outstanding, notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the redemption date, to each Holder of Series 2015 Bonds to be redeemed, at such Holder's address appearing in the Bond Register. All notices of redemption shall state: (1) the redemption date, (2) the redemption price, (3) the principal amount of Series 2015 Bonds to be redeemed, and, if less than all Outstanding Series 2015 Bonds are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the Series 2015 Bonds to be redeemed, (4) that on the redemption date, the redemption price of each of the Series 2015 Bonds to be redeemed will become due and payable and that the interest thereon shall cease to accrue from and after said date and (5) the place or places where the Series 2015 Bonds to be redeemed are to be surrendered for payment of the redemption price. Registration, Transfer and Exchange The Issuer shall cause to be kept at the Office of the Trustee a register (herein sometimes referred to as the "Bond Register") in which, subject to such reasonable regulations as it may prescribe, the Issuer shall provide for the registration of Series 2015 Bonds and registration of transfers of Series 2015 Bonds entitled to be registered or transferred as herein provided. The Trustee is hereby appointed "Bond Registrar" for the purpose of registering Series 2015 Bonds and transfers of Series 2015 Bonds as herein provided. Upon surrender for transfer of any Series 2015 Bond at the Office of the Trustee, the Issuer shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Series 2015 Bonds of the same maturity, of any Authorized Denomination and of a like aggregate principal amount. If and to the extent so provided with respect to the Series 2015 Bonds, at the option of the Holder, Series 2015 Bonds may be exchanged for other Series 2015 Bonds of the same maturity, of any Authorized Denomination and of a like aggregate principal amount, upon surrender of the Series 2015 Bonds to be exchanged at the Office of the Trustee. Whenever any Series 2015 Bonds are so surrendered for exchange, the Issuer shall execute, and the Trustee shall authenticate and deliver, the Series 2015 Bonds which the Bondholder making the exchange is entitled to receive. 6

13 All Series 2015 Bonds issued upon any transfer or exchange of Series 2015 Bonds shall be the valid obligations of the Issuer and entitled to the same security and benefits under the Indenture as the Series 2015 Bonds surrendered upon such transfer or exchange. Every Series 2015 Bond presented or surrendered for transfer or exchange shall (if so required by the Issuer or the Bond Registrar) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Issuer and the Bond Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any transfer or exchange of Series 2015 Bonds, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Series 2015 Bonds. The Issuer shall not be required (i) to transfer or exchange any Series 2015 Bond during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Series 2015 Bonds and ending at the close of business on the day of such mailing, or (ii) to transfer or exchange any Series 2015 Bond so selected for redemption in whole or in part, or (iii) to exchange any Series 2015 Bond during a period beginning at the opening of business on any Regular Record Date for the Series 2015 Bonds and ending at the close of business on the relevant Interest Payment Date therefor. Book-Entry System The information in this section concerning DTC and DTC's book-entry system has been obtained from sources the Issuer, the Lessee and the Underwriters believe to be reliable, but the Issuer, the Lessee and the Underwriters take no responsibility for the accuracy or completeness thereof. There can be no assurance that DTC will abide by its procedures or that such procedures will not be changed from time to time. The Series 2015 Bonds will be issued as fully-registered bonds in the name of Cede & Co., as nominee of DTC, as registered owner of the Series 2015 Bonds. Purchasers of such Series 2015 Bonds will not receive physical delivery of bond certificates. For purposes of this Official Statement, so long as all of the Series 2015 Bonds are in the custody of DTC, references to Bondholders shall mean DTC or its nominee. DTC will act as securities depository for the Series 2015 Bonds. The Series 2015 Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Series 2015 Bond certificate will be issued for each maturity of the Series 2015 Bonds, in the aggregate principal amount of such maturity, and will be deposited with DTC. 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

14 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 post-trade settlement among Direct Participants of sales and other 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 whollyowned 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 on DTC can be found at Purchases of Series 2015 Bonds, in the denomination of $5,000 principal amount or any integral multiple of $5,000 in excess thereof, under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2015 Bonds on DTC's records. The ownership interest of each actual purchaser of each Series 2015 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 expected, however, 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 2015 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 2015 Bonds, except in the event that use of the book-entry system for the Series 2015 Bonds is discontinued. To facilitate subsequent transfers, all Series 2015 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 2015 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee, does not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2015 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Series 2015 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 Series

15 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2015 Bonds, such as redemptions, defaults, and proposed amendments to the Series 2015 Bond documents. For example, Beneficial Owners of Series 2015 Bonds may wish to ascertain that the nominee holding the Series 2015 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. Redemption notices shall be sent to DTC. If less than all of the Series 2015 Bonds of a maturity are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such Series 2015 Bonds to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Series 2015 Bonds unless authorized by a Direct Participant in accordance with DTC's MMI 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 2015 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal, redemption price and interest payments on the Series 2015 Bonds will be made by the Trustee 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 Trustee, on a payment 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 in 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 Trustee, the Issuer or the Lessee, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, redemption price and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Issuer or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. THE ISSUER, THE LESSEE AND THE TRUSTEE WILL HAVE NO RESPONSIBILITY OR OBLIGATION TO SUCH PARTICIPANTS, OR TO THE PERSONS FOR WHOM THEY ACT AS NOMINEES WITH RESPECT TO THE SERIES 2015 BONDS, OR TO ANY BENEFICIAL OWNER IN RESPECT OF THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT, THE PAYMENT BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT IN RESPECT OF THE PRINCIPAL OR REDEMPTION PRICE OF OR INTEREST ON THE SERIES 2015 BONDS, ANY NOTICE WHICH IS PERMITTED OR REQUIRED TO BE GIVEN TO BONDHOLDERS UNDER THE INDENTURE, THE SELECTION BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY PERSON TO RECEIVE PAYMENT IN THE EVENT OF A 9

16 PARTIAL REDEMPTION OF THE SERIES 2015 BONDS, OR ANY OTHER ACTION TAKEN BY DTC AS REGISTERED BONDHOLDER. DTC may discontinue providing its services as depository with respect to the Series 2015 Bonds at any time by giving reasonable notice to the Issuer. Under such circumstances, in the event that a successor depository is not obtained, bond certificates are required to be printed and delivered. The Issuer, at the direction of the Lessee or Trustee, shall discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, bond certificates will be printed and delivered to DTC. General SOURCE OF PAYMENT AND SECURITY The Series 2015 Bonds are limited obligations of the Issuer payable solely out of and secured on a parity of lien with all other Bonds issued under the Indenture by a pledge of the payments to be made by the Lessee pursuant to the Lease Agreement, money held by the Trustee in the funds and accounts created in the Indenture (except for the Reserve Fund which does not secure the Series 2015 Bonds) and from any other revenues, rentals or receipts derived by the Issuer from the leasing or sale of the Facilities. The Series 2015 Bonds do not constitute general obligations of the Issuer, or a charge upon any revenues or property of the Issuer, other than the revenue derived from the Lease Agreement or the leasing or sale of the Facilities. The Issuer has no taxing power. Except to the extent of its obligations under the Lease Agreement, neither the State nor any political subdivision thereof shall be liable for the payment of the Series 2015 Bonds or for the performance of any pledge, obligation or agreement of any kind whatsoever which may be undertaken by the Issuer. The Series 2015 Bonds shall never constitute an indebtedness of the State or any political subdivision of the State within the meaning of any constitutional provision or statutory limitation. Payment of the Series 2015 Bonds is secured on a parity with all other Bonds issued and outstanding under the Indenture by the lien of the Indenture on the trust estate created thereunder, which consists generally of (i) the rights of the Issuer under the Lease Agreement (except for certain rights personal to the Issuer); (ii) any other revenues, rentals or receipts derived by the Issuer from the leasing or sale of the Facilities; and (iii) funds or deposits in, or forming a part of, the Special Funds (except for the Reserve Fund which does not secure the Series 2015 Bonds), subject to the provisions of the Indenture controlling the application thereof. The trust estate created under the Indenture is for the equal and proportionate protection and benefit of the Holders, present and future, of the Bonds equally and ratably, without preference, priority or distinction of any Bond over another Bond by reason of priority in issuance or acquisition or otherwise (except for the Reserve Fund which does not secure the Series 2015 Bonds). 10

17 The Lease The Facilities will be leased by the Issuer to the Lessee pursuant to the Lease Agreement, which is a year-to-year obligation subject to annual renewals at the option of the Lessee. See "SUMMARY OF THE FINANCING DOCUMENTS Summary of the Lease Agreement" in APPENDIX C herein. During each Annual Term of the Lease Agreement, the Lessee is required to pay Basic Rental Payments to the Issuer in monthly installments designed to be sufficient (i) to provide for the payment of the Debt Service on the Unrefunded Series 2005 Bonds and the Series 2015 Bonds; and (ii) to restore any deficiency in the Reserve Fund to the Reserve Fund Requirement over a period of 12 months. Such Basic Rental Payments under the Lease Agreement have been assigned to the Trustee and will be deposited by the Trustee in the Bond Fund or the Reserve Fund, as appropriate. Under the Constitution and laws of the State, the State and its departments are generally prohibited from incurring debt, including any obligation to pay rent under a long-term lease, without specific authorization in the form of a Constitutional amendment. No such amendment has been obtained with respect to the Lease Agreement. The Supreme Court of Alabama has held, however, that an obligation of the State which is payable out of the current revenues of the State and extends for a period of not more than one fiscal year, does not constitute a "debt" within the Constitutional limitation described above. As a result, the Lease Agreement will be effective until September 30, 2015, and thereafter will be subject to successive one-year renewal options which, if exercised by the Lessee, will permit the Lease Agreement to be renewed annually for a total term of up to 30 years or until there are no Bonds Outstanding under the Indenture. Further, the rents payable by the Lessee in any year will be payable only out of the current revenues of the Department for that year. The Lessee receives a significant portion of its annual revenues from appropriations from the State. The ability of the Lessee to perform its obligations to pay rent under the Lease Agreement in any given year, and its ability to renew the Lease Agreement for any subsequent year, will depend to a significant extent on the amount appropriated to the Department by the Alabama Legislature in each fiscal year. If, for any fiscal year, the Legislature fails or refuses to appropriate sufficient funds to the Lessee to pay the rental obligations of the Lessee under the Lease Agreement, the Lessee may be unable to pay the rental obligations and may determine not to renew the Lease Agreement. For general financial information concerning the State, including its budgetary practices, see APPENDIX A hereto. For information concerning the sovereign immunity of the State, see "SOVEREIGN IMMUNITY" herein. The Lessee also receives a substantial portion of its annual revenues from the federal government, and such revenues could be reduced in the future or restrictions could be placed on the use of such revenues that would make such revenues unavailable for the payment of the Lessee's rental obligations under the Lease Agreement. See "THE DEPARTMENT" herein. For information concerning certain risks involved with ownership of the Series 2015 Bonds see "RISK FACTORS" herein. In the event of the issuance of Additional Bonds on a parity with the Series 2015 Bonds and the Unrefunded Series 2005 Bonds, the Lease Agreement may be amended to increase the annual rentals payable thereunder to a level sufficient to provide for the annual debt service requirements for the Series 2015 Bonds, the Unrefunded Series 2005 Bonds and such Additional Bonds. 11

18 Additional Bonds The Issuer may at any time and from time to time, if no Event of Default exists (but only at the request and with the approval of the Lessee), issue Additional Bonds, on a parity of lien with the Series 2015 Bonds and the Unrefunded Series 2005 Bonds, within the limitations of and upon compliance with the provisions of the Indenture for any one or more of the following purposes: (1) to refund or redeem all or any portion of any one or more Series of Bonds then Outstanding; (2) to finance the costs of the acquisition, construction or equipping of the Facilities to be leased to or for the benefit of the Lessee; (3) to finance the acquisition, construction or equipping of additions, improvements or modifications to the Facilities, including without limitation any additional real property or interests therein, any additional buildings, structures or other improvements and any additional personal property and fixtures; (4) any other lawful purpose under the Enabling Law; and (5) to refund or redeem any obligations of the Issuer or the Lessee incurred for the purpose specified in paragraph (2), (3) or (4) above. THE FINANCING DOCUMENTS For a summary of certain provisions of the Indenture and the Lease Agreement not described elsewhere in this Official Statement, see APPENDIX C hereto. The Original Facilities and 2005 Facilities THE FACILITIES The Refunded Bonds were issued to finance or refinance the acquisition, construction, installation and equipping of a number of public health care facilities in various locations throughout the State for lease to the Lessee. The following facilities are currently owned by the Issuer and leased to the Lessee pursuant to the Lease Agreement: 12

19 Original Facilities and 2005 Facilities Location Barbour County 2 Bibb County 1 Calhoun County 1 Chambers County 1 Chilton County 1 Choctaw County 1 Clarke County 2 Clay County 1 Conecuh County 2 Dale County 2 Dallas County 1 Greene County 2 Hale County 2 Henry County 2 Jackson County 1 Lamar County 1 Lawrence County 1 Limestone County 2 Macon County 1 Marengo County 1 Marion County 1 Marshall County 2 Monroe County 1 Morgan County 1, 4 Perry County 1 Randolph County 2 Russell County 1 Shelby County 1 St. Clair County (Pell City) 3 Sumter County 1 Tallapoosa (Alexander City) 3 Tallapoosa (Dadeville) 1 Talladega (Sylacauga) 1 Tuscaloosa County 2 Washington County 2 Winston County 2 Montgomery County 1 Type of Facility county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department county health department Warehouse (1635 Mitchell Young Rd) 1 Facility was acquired with proceeds of the Series 1996 Bonds. 2 Facility was acquired with proceeds of the Series 2005 Bonds. 3 Facility was acquired with proceeds of Series 1996 Bonds and renovated with proceeds of the Series 2005 Bonds. 4 The existing Morgan County Project Site and Facility are expected to be released from the demise of the Lease Agreement pursuant to the terms of the Lease Agreement when the new facility is placed in service. The 2015 Facilities will include a new Morgan County Project Site and Facility that will be leased to the Lessee. 13

20 Upon the issuance of the Series 2015 Bonds and the execution and delivery of the First Supplement to Lease Agreement, the Original Lease Agreement, as previously amended, will be further amended to include the 2015 Facilities and to increase the Basic Rental Payments to provide for the payment of the principal of (and premium, if any) and interest on the Series 2015 Bonds and the Unrefunded Series 2005 Bonds. The 2015 Facilities A portion of the proceeds of the Series 2015 Bonds will be deposited in the Series 2015 General Account of the Construction Fund and used to pay the costs of acquiring, constructing, installing, and equipping (i) laboratory facilities in the City of Montgomery, Alabama, (ii) facilities in the City of Montgomery, Alabama to house the Department's women, infants and children (WIC) training, emergency preparedness, EMS, and radiation safety unit and (iii) county health department facilities in Morgan County, Alabama, to be leased to the Lessee. A portion of the proceeds of the Series 2015 Bonds will be deposited in the Series 2015 Capitalized Interest Account of the Construction Fund and used to pay interest during the construction period on the portion of the Series 2015 Bonds used to acquire the 2015 Facilities. The Issuer has not yet acquired the proposed 2015 Facilities. As provided in the Lease Agreement, the Issuer and the Lessee will arrange as promptly as possible after the issuance of the Series 2015 Bonds for the Project Sites for the 2015 Facilities to be acquired by the Issuer and for the 2015 Facilities to be acquired, constructed, installed and equipped on such sites. The Lessee has retained Robins & Morton, Birmingham, Alabama as its project and construction manager for the development of the 2015 Facilities and expects the acquisition, construction, installation and equipping of the 2015 Facilities to be completed by December, The Financing Documents contain provisions permitting the Lessee to make certain changes to the plans and specifications to the Facilities, to release Facilities from the demise of the Lease Agreement and to add additional Facilities to the Lease Agreement. See "SUMMARY OF THE FINANCING DOCUMENTS Summary of the Lease Agreement" in APPENDIX C herein. THE PLAN OF FINANCING A portion of the proceeds from the sale of the Series 2015 Bonds remaining after payment of the costs of issuance will be deposited with the trustee for the Refunded Bonds (First Commercial Bank, the "Refunded Bonds Trustee") under the terms of an Escrow Trust Agreement, dated as of March 1, 2015, between the Issuer and the Refunded Bonds Trustee (the "Escrow Agreement"). All funds held by the Refunded Bonds Trustee under the Escrow Agreement will be held in trust for the payment of debt service on the Refunded Bonds to and including September 1, 2015, and for the redemption of the Refunded Bonds maturing on September 1, 2016, and thereafter, on September 1, 2015, at a redemption price equal to 100% of the principal amount thereof. The funds held by the Refunded Bonds Trustee under the Escrow Agreement will be invested in Federal Securities. Upon the deposit of a portion of the proceeds of the Series 2015 Bonds with the Refunded Bonds Trustee under the Escrow Agreement and the investment of such funds as provided in the Escrow Agreement, the Refunded Bonds will be 14

21 defeased and will no longer be deemed to be outstanding under the Indenture, will no longer be an obligation of the Issuer and will no longer be secured by the revenues from the Lease Agreement. The proceeds from the sale of the Series 2015 Bonds remaining after payment of the costs of issuing the Series 2015 Bonds and the deposit with the Refunded Bonds Trustee under the Escrow Agreement will be deposited in the Series 2015 General Account and Series 2015 Capitalized Interest Account of the Construction Fund held by the Trustee under the Indenture and applied to the acquisition, construction and/or renovation of the 2015 Facilities and the payment of capitalized interest on the Series 2015 Bonds. SOURCES AND USES OF FUNDS The estimated sources and uses of funds are as follows: Sources of Funds Principal amount of Series 2015 Bonds $55,855, Net original issue premium 4,114, Lessee contribution 11,500, Transfer from Bond Fund 89, Total Sources $71,559, Uses of Funds Deposit to Escrow Agreement $25,391, Deposit to Series 2015 General Account 30,860, of the Construction Fund Lessee contribution used for Project Costs 11,500, Deposit to Series 2015 Capitalized Interest 3,454, Account of the Construction Fund Underwriters' discount 223, Other costs of issuance 130, Total Uses $71,559, THE ISSUER The Alabama Public Health Care Authority is a public corporation duly incorporated under the provisions of the Enabling Law, by certificate of incorporation duly filed for record in the office of the Judge of Probate of Monroe County, Alabama. Under the provisions of the Enabling Law, the Issuer is authorized to issue the Series 2005 Bonds and the Series 2015 Bonds, to acquire, construct, install, equip, renovate and/or refurbish the Facilities, to lease the Facilities to the Lessee and to secure the Bonds by a pledge of the revenues and other amounts derived from the Issuer's ownership of the Facilities under the Lease Agreement. 15

22 The current members of the Board of Directors of the Issuer are as follows: Name Term Expires Dr. Donald E. Williamson, Chairman November 21, 2019 Grover T. Wedgeworth, Secretary/Treasurer November 21, 2019 Bill Newton, State Finance Director November 21, 2019 Ricky Elliott November 18, 2018 Evelyn Finkleu November 1, 2019 Lynne Noah November 1, 2019 Monique Tucker October 9, 2018 THE DEPARTMENT The Department is an agency of the State created under State law and charged with the responsibility for enforcing the State's public health laws, exercising supervision and control over the county boards of health and providing public health services to the residents of the State. State law also provides for the creation of the State Committee of Public Health (the "State Committee") which is organized as a 16 member board composed of 12 members of the board of censors of the Medical Association of the State and the chairmen of four councils (dental health, environmental health, disease prevention and health cost and administration). The State Committee serves as the board of directors of the Department and appoints the State Health Officer, who serves as the Chief Executive Officer of the Department. The State Health Officer's primary responsibility is to organize the Department's direct comprehensive public health programs. Policies, rules and regulations regarding public health are established by the State Committee. State and county health department activities are under the supervision of the State Health Officer, Dr. Donald E. Williamson, MD, who has served in that position since The Department is one of the largest agencies of the State with approximately 3,000 employees and a budget exceeding $791 million in fiscal year The Department is a major, essential provider of clinical and home health services through a wide range of programs. It also provides regulatory and support services. During the fiscal year 2014, over 173,000 clinic visits and services were provided. More than 208,000 home health visits were made and over 370,000 hours of services were provided to elderly and disabled patients. During fiscal year 2014, the Department's regulatory programs issued over 7,100 Emergency Medical Technician licenses, 1,650 health facility licenses covering over 48,600 beds, and 11,000 on-site sewage system permits. The Department also inspected over 42,000 food establishments and conducted over 40 solid waste inspections. The Department's funds are derived each year from state and local appropriations and from payments by the federal government for services rendered through grants, contracts, and fees for health services to eligible patients. For fiscal year 2015, over 88% of the Department's total budget is attributable to funds derived from Medicare, Medicaid, contracts and federal grants. Each of these programs contain costs reimbursement features allowing the Department to 16

23 recoup its cost of providing services. The rental payments required of the Department under the Lease Agreement are presently an allowable cost under such federal programs. Approximately half of the debt service cost of the Bonds is currently reimbursed under such federal programs. The following table contains information concerning the Department's revenues received for the fiscal years 2010 through 2014 and budgeted revenues for the 2015 fiscal year: (all amounts in millions) Source of Funds (2) Budgeted 2015 State $ 62.9 $ 74.6 $ 64.8 $ 50.9 $ 50.4 $ 49.4 Federal Grant Programs Local Reimbursement Programs (1) Totals $540.5 $553.8 $510.7 $499.7 $458.8 $481.0 Note: The table excludes amounts for the Children's Health Insurance Program (CHIP). (1) Consisting primarily of federally financed reimbursement programs such as Medicare and Medicaid. (2) At the direction of the Governor, the Department transferred a major federal cost-based reimbursed program to another State agency. The Department had been receiving State matching funds for the program prior to the transfer in addition to federal reimbursements. The Department lost the State and federal revenues associated with the program upon the transfer, but the revenue loss was almost entirely offset by the costs saved upon the transfer of responsibility for the administration of the program. The transfer of the federal program first impacted the Department's budget during the 2012 fiscal year. The Department's budget consists of state appropriations from the State's General Fund and Education Trust Fund as well as federal funds, fees, and cost-based reimbursement. State appropriations to the Department are subject to proration if the revenues received by the General Fund or Education Trust Fund are less than the budgeted revenues for such Funds resulting in insufficient revenues to pay all appropriations for such fiscal year in full. During the past five fiscal years, proration was declared in the General Fund during the 2010, 2011 and 2012 fiscal years and in the Education Trust Fund during the 2010 and 2011 fiscal years. See APPENDIX A hereto for additional information regarding State budgetary matters, including proration. The Department depends to a significant degree on payments made by the federal government and by the State under Medicare, Medicaid and other programs. Governmental payors are currently under severe budgetary constraints and it is possible that reductions in revenues received by the Department under these programs will occur in the future. The Department cannot predict the extent to which governmental budgetary constraints and policies may result in a reduction of revenues from governmental programs. Adverse developments in this area could result in reductions in the Department's revenues, and such reductions could be material to the Lessee's ability to make Basic Renal Payments under the Lease Agreement. In 2010, Congress enacted and the President signed the "Patient Protection and Affordable Care Act" (the "Affordable Care Act"), which made significant changes in the way health care is financed, organized and delivered. Among its many provisions, the Affordable 17

24 Care Act restructures the private health insurance market, sets minimum standards for health coverage, creates a mandate for most United States residents to obtain health insurance coverage, requires the creation of health insurance exchanges, provides for subsidies for the purchase of insurance and expands Medicaid, among other changes. At this time, it is not possible to predict the effects of the Affordable Care Act on the Department. The laboratory facilities that will comprise a portion of the 2015 Facilities are expected to produce additional revenues associated with new testing services that the Department will be able to provide with modern laboratory facilities. The acquisition, construction and equipping of the 2015 Facilities is also expected to eliminate certain existing lease obligations of the Department and result in cost savings from efficiencies achieved with the new facilities. Such additional revenues and cost savings are expected to provide a portion of the revenues necessary to fund the debt service on the Series 2015 Bonds; however, no assurances can be given as to the amount of such revenues and cost savings that will be achieved or that such amounts will not be offset by reduced revenues or increased costs in the Department's other operations. Outstanding Indebtedness of the Issuer TOTAL DEBT SERVICE REQUIREMENTS Upon the issuance of the Series 2015 Bonds and the defeasance of the Refunded Bonds, the Series 2015 Bonds and the Unrefunded Series 2005 Bonds will constitute the only Outstanding Bonds of the Issuer. Schedule of Debt Service Requirements The following table sets forth the total debt service requirements on a fiscal year basis on the Series 2015 Bonds and the Unrefunded Series 2005 Bonds: 18

25 Debt Service Requirements Fiscal Year Ending September 30 Series 2015 Bonds Principal Interest * Unrefunded Series 2005 Bonds Total 2015 $ 320,000 $1,162, $ 1,166, $ 2,649, ,000 2,470, ,660, ,821, ,000 2,456, ,657, ,819, ,000 2,435, ,658, ,818, ,000 2,406, ,662, ,819, ,000 2,376, ,659, ,816, ,000 2,345, ,660, ,816, ,000 2,312, ,664, ,817, ,000 2,270, ,663, ,819, ,000 2,226, ,661, ,818, ,000 2,180, ,662, ,817, ,025,000 2,131, ,661, ,817, ,080,000 2,080, ,658, ,818, ,135,000 2,026, ,657, ,819, ,190,000 1,969, ,660, ,820, ,250,000 1,909, ,660, ,820, ,315,000 1,847, ,658, ,820, ,355,000 1,804, ,658, ,818, ,420,000 1,737, ,660, ,817, ,485,000 1,666, ,665, ,816, ,540,000 1,614, ,666, ,820, ,260,000 1,560, ,820, ,380,000 1,437, ,817, ,510,000 1,311, ,821, ,640,000 1,179, ,819, ,775,000 1,043, ,818, ,965, , ,819, ,160, , ,816, ,370, , ,818, ,590, , ,819, Totals $55,855,000 $52,151, $34,386, $142,392, * A portion of each interest payment on the Series 2015 Bonds through the September 1, 2017 Interest Payment Date will be paid from funds to be deposited in the Series 2015 Capitalized Interest Account of the Construction Fund at closing. 19

26 RISK FACTORS An investment in the Series 2015 Bonds involves certain risks which must be carefully considered and evaluated by investors. In making a decision whether to purchase the Series 2015 Bonds, potential investors should consider certain risks and investment considerations which could affect the ability of the Issuer and the Lessee to pay debt service on the Series 2015 Bonds in a timely manner and which could affect the marketability of or the market price for the Series 2015 Bonds. These risks and investment considerations are discussed throughout this Official Statement. Certain of these risks and investment considerations are set forth in this section for convenience, but this discussion is not intended to be a comprehensive or exhaustive compilation of all possible risks and investment considerations nor a substitute for an independent evaluation of the information presented in this Official Statement. Each prospective purchaser of Series 2015 Bonds should read this Official Statement in its entirety, including the appendices hereto, and should consult such prospective purchaser's own investment and/or legal advisor for a more complete explanation of the matters that should be considered when evaluating an investment such as the Series 2015 Bonds. Each prospective purchaser should carefully examine his, her or its own financial condition in order to make a judgment as to his, her or its ability to bear the risk of an investment in the Series 2015 Bonds and whether or not the Series 2015 Bonds are an appropriate investment for them. Limitation on Remedies The remedies available under the Indenture upon the occurrence of an Event of Default are in many respects dependent upon judicial actions, which are often subject to substantial discretion and delay. Remedies available to holders of the Series 2015 Bonds for Events of Default may be limited or restricted by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights and general principles of equity, including the exercise of judicial discretion in appropriate cases, as well as the valid exercise of the constitutional powers of the United States of America and the sovereign and police powers of the State of Alabama. See also "SOVEREIGN IMMUNITY" herein. Economic Conditions The financial affairs of the Lessee will be affected by, and will be subject to, general economic and political events and conditions that will change in the future to an extent and with effects that cannot be determined at this time. These general economic and political events and conditions include, among other things, population, demographic and employment changes and trends; periods of inflation or deflation; variable patterns of national and regional economic growth, whether cyclical or structural in nature; disruptions in credit and financial markets; political gridlock concerning, among other matters, national tax and spending policies and health care policies; political developments in the State and the United States of America; budget and debt limit controversies, both nationally and at the State level; unusually large numbers of business failures and business and consumer bankruptcies and policy responses, or lack thereof, to the foregoing. 20

27 Tax-Exempt Status of the Series 2015 Bonds It is expected that the Series 2015 Bonds will qualify as tax-exempt obligations for federal income tax purposes as of the date of issuance. See "TAX MATTERS" herein. Bond Counsel is delivering its opinion with respect to certain aspects of the tax status of the Series 2015 Bonds, the form of which is attached to this Official Statement as Exhibit D and should be read in its 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 opinion of bond counsel speaks only as of its date, and Bond Counsel does not undertake to advise the holders of Series 2015 Bonds about subsequent developments. The tax status of the Series 2015 Bonds could be affected by post-issuance events. Various requirements of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), must be observed or satisfied after the issuance of the Series 2015 Bonds in order for the Series 2015 Bonds to qualify for, and retain, tax-exempt status. These requirements include use of the proceeds of the Series 2015 Bonds, use of the facilities financed by the Series 2015 Bonds, investment of the proceeds of the Series 2015 Bonds, and the rebate of so-called excess arbitrage earnings. Compliance with these requirements is the responsibility of the Issuer and the Lessee. Failure to comply could result in the inclusion of interest on the Series 2015 Bonds in gross income retroactive to the date of issuance of the Series 2015 Bonds. The Internal Revenue Service conducts an audit program to examine compliance with the requirements regarding tax-exempt status. Under current IRS procedures in the initial stages of an audit with respect to the Series 2015 Bonds, the Issuer and the Lessee would be treated as the taxpayer, and the holders of the Series 2015 Bonds may have limited rights to participate in the audit process. The initiation of an audit with respect to the Series 2015 Bonds could adversely affect the market value and liquidity of the Series 2015 Bonds, even though no final determination about the tax-exempt status has been made. If an audit results in a final determination that the Series 2015 Bonds do not qualify as tax-exempt obligations, such a determination could be retroactive in effect to the date of issuance of the Series 2015 Bonds. In addition to post-issuance compliance, a change in law after the date of issuance of the Series 2015 Bonds could affect the tax-exempt status of the Series 2015 Bonds or the economic benefits of investing in the Series 2015 Bonds. For example, Congress could eliminate the tax exemption for interest on the Series 2015 Bonds, or it could reduce or eliminate the federal income tax, or it could adopt a so-called "flat tax." See "RISK FACTORS Future Legislation Could Affect Tax-Exempt Obligations" below. The Indenture does not provide for an increase in the interest rate on the Series 2015 Bonds or mandatory redemption of the Series 2015 Bonds if a determination is made that the Series 2015 Bonds do not comply with the existing requirements of the Internal Revenue Code or if a subsequent change in law adversely affects the tax-exempt status of the Series 2015 Bonds or the economic benefits of investing in the Series 2015 Bonds. 21

28 Future Legislation Could Affect Tax-Exempt Obligations The federal government is considering various proposals to reduce federal budget deficits and the amount of federal debt, including proposals that would eliminate or reduce indirect expenditures made through various deductions and exemptions currently allowed by the income tax laws. The exemption for interest on tax-exempt obligations is one of the indirect expenditures that could be affected by a deficit reduction initiative. Some deficit-reduction proposals would completely eliminate the exemption for interest on all tax-exempt obligations. Other proposals would place an aggregate cap on the total amount of exemptions and deductions that may be claimed by a taxpayer, or a cap on the exemption for interest on all tax-exempt obligations. Some proposals would limit the benefit of the exemption for interest on tax-exempt obligations for taxpayers with incomes above certain thresholds. Changes in the rate of the federal income tax, including so-called "flat tax" proposals, could also reduce the value of the exemption. Such legislative proposals, if enacted into law, could prevent the holders of the Series 2015 Bonds from realizing the full benefit of the tax status of interest on the Series 2015 Bonds under current federal tax law. The introduction or enactment of any such legislative proposal may also affect the market price for, or the marketability of, the Series 2015 Bonds. Changes affecting the exemption for interest on tax-exempt bonds, if enacted, could apply to tax-exempt obligations already outstanding, including the Series 2015 Bonds, as well as obligations issued after the effective date of such legislation. It is not possible to predict whether Congress will adopt legislation affecting the exemption for tax-exempt bonds, what the provisions of such legislation may be, whether any such legislation will be retroactive in effect, or what effect any such legislation may have on investors in the Series 2015 Bonds. Investors should consult their own tax advisers about the prospects and possible results of future legislation that could affect the exemption for interest on tax-exempt obligations. Lack of Liquidity for the Series 2015 Bonds The Issuer and the Lessee cannot assure potential investors that an active secondary market for the Series 2015 Bonds will exist. Moreover, even if an active secondary market for the Series 2015 Bonds does exist, depending on prevailing interest rates and market conditions generally, the Series 2015 Bonds could trade at a discount from their par amount. Holders of the Series 2015 Bonds may not be able to sell their Series 2015 Bonds in the future or such sale may not be at a price equal to or greater than the par amount of the Series 2015 Bonds. As a result, Holders of the Series 2015 Bonds may not be able to liquidate their investment quickly, at an attractive price or at all. See also "RISK FACTORS Ratings" for information regarding possible consequences of the ratings on the liquidity of the Series 2015 Bonds. Ratings No assurance can be given that the ratings assigned to the Series 2015 Bonds at the time of issuance (see "RATINGS") will continue for any given period of time after their issuance, and the Issuer and Lessee make no representations regarding the future ratings assigned to the Series 2015 Bonds. Further, there is no assurance that the ratings assigned to the Series 2015 Bonds 22

29 will not be lowered or withdrawn at any time, which could adversely affect the market price for and liquidity of the Series 2015 Bonds. SOVEREIGN IMMUNITY Under the doctrine of sovereign immunity, a state of the United States of America cannot be sued by its own citizens. Under the United States Constitution, a state cannot be sued by citizens of another state of the United States of America or by citizens or subjects of any foreign state. The doctrine of sovereign immunity applies to the State, and the execution and delivery by the Department of the Lease Agreement does not constitute express consent by the State or the Department to be sued by the holders of the Series 2015 Bonds. Section 14 of the Alabama Constitution provides that the State shall never be made a defendant in any court of law or equity. The Supreme Court of Alabama has held that the immunity granted by Section 14 cannot be waived by the Legislature or any State authority. This constitutional prohibition of suits against the State extends to officers of the State acting in their official capacities, subject to certain limited exceptions, such as actions to compel state officials to perform ministerial acts. Consequently, if the Department fails to make timely payment of the amounts due under the Lease Agreement, there can be no assurance that holders of the Series 2015 Bonds will have any right of action against the Department or any of its officers to enforce the obligations of the Department under the Lease. TAX MATTERS Under existing law, the tax status of the Series 2015 Bonds will include the following characteristics: Federal Tax-Exempt Status of Series 2015 Bonds Interest on the Series 2015 Bonds will be excluded from gross income for federal income tax purposes if the Issuer and the Lessee comply with all requirements of the Internal Revenue Code that must be satisfied subsequent to the issuance of the Series 2015 Bonds in order that interest thereon be and remain excluded from gross income. Failure to comply with such requirements could cause the interest on the Series 2015 Bonds to be included in gross income, retroactive to the date of issuance of such Bonds. The Issuer and the Lessee have covenanted to comply with all such requirements. Federal Tax Preference Treatment Interest on the Series 2015 Bonds will not be an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, such interest will be taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. State Tax-Exempt Status Interest on the Series 2015 Bonds will be exempt from State of Alabama income taxation. 23

30 Certain Collateral Federal Tax Consequences Holders and prospective purchasers of the Series 2015 Bonds should be aware that the ownership of the Series 2015 Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty and life insurance companies, individual recipients of Social Security or railroad retirement benefits, certain S corporations with "excessive net passive income," foreign corporations subject to a branch profits tax, other foreign persons and organizations, life insurance companies, and taxpayers deemed to have incurred or continued indebtedness to purchase or carry the Series 2015 Bonds. Prospective purchasers of the Series 2015 Bonds should consult their tax advisors as to whether the collateral tax consequences described in this paragraph or other tax consequences may be applicable to their financial situation. Information Reporting and Backup In addition to other types of income, information reporting requirements apply to interest on tax-exempt obligations, including the Series 2015 Bonds. In general, such requirements are satisfied if the recipient of payments of interest provides the payor with a completed IRS Form W-9, "Request for Taxpayer Identification Number and Certification," or if such recipient is one of a limited class of persons exempt from information reporting. Foreign persons and organizations and other non-u.s. holders may be asked or required to provide an appropriate completed IRS Form W-8 in lieu of Form W-9 in order to establish their U.S. tax status. A recipient not otherwise exempt from information reporting who fails to satisfy the information reporting requirements will be subject to "backup withholding," which means that the payor is required to deduct and withhold a tax from each interest payment received, calculated in the manner set forth in the Internal Revenue Code. For the foregoing purpose, a "payor" generally refers to the person or entity from whom a recipient receives its payments of interest or who collects such payments on behalf of the recipient, such as a broker-dealer or bank. If a prospective purchaser considering buying a Series 2015 Bond through a brokerage account has executed a Form W-9 (or Form W-8 where appropriate) in connection with the establishment of such account, as generally can be expected, no backup withholding should occur, unless such prospective purchaser is for another reason, subject to backup withholding. Whether or not a prospective purchaser is subject to backup withholding does not affect the exclusion of interest on the Series 2015 Bonds from gross income for federal income tax purposes. Any amounts withheld pursuant to backup withholding would be allowed as a refund or a credit against the owner's Federal income tax once the required information is furnished to the Internal Revenue Service. Prospective purchasers of the Series 2015 Bonds should consult their tax advisors as to whether backup withholding may be applicable to their financial situation. Opinions of Bond Counsel The form of Bond Counsel's opinion with respect to the Series 2015 Bonds is expected to be substantially as set forth in APPENDIX D to this Official Statement. 24

31 The opinions of Bond Counsel express the professional judgment of Bond Counsel relating to the legal issues explicitly addressed therein. By rendering the opinions, Bond Counsel does not become an insurer or guarantor of an expression of professional judgment of the transaction opined upon, or of the future performance of parties to such transaction, and the rendering of such opinion does not guarantee the outcome of any legal dispute that may arise in connection with the transaction. Original Issue Discount Under existing law, the original issue discount in the selling price of a Series 2015 Bond, to the extent properly allocable to each holder of such Bond, is excludable from gross income for federal income tax purposes with respect to such holder. The original issue discount is the excess of the stated redemption price at maturity of such Series 2015 Bond over its initial offering price to the public, excluding underwriters and other intermediaries, at which price a substantial amount of the Series 2015 Bonds of such maturity were sold. Under Section 1288 of the Internal Revenue Code, original issue discount on tax-exempt bonds accrues on a compound basis. The amount of original issue discount that accrues to a holder of a Series 2015 Bond during any accrual period generally equals (i) the issue price of such Series 2015 Bond plus the amount of original issue discount accrued in all prior accrual periods, multiplied by (ii) the yield to maturity of such Series 2015 Bond (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period), minus (iii) any interest payable on such Series 2015 Bond during such accrual period. The amount of original issue discount so accrued in a particular accrual period will be considered to be received ratably on each day of the accrual period, will be excludable from gross income for federal income tax purposes, and will increase the holder's tax basis in such Series 2015 Bond. Purchasers of any Series 2015 Bond at an original issue discount should consult their tax advisors regarding the determination and treatment of original issue discount for federal income tax purposes, and with respect to state and local tax consequences of owning such Series 2015 Bond. Original Issue Premium An amount equal to the excess of the purchase price of a Series 2015 Bond over its stated redemption price at maturity constitutes premium on such Bond. A purchaser of a Series 2015 Bond must amortize any premium over such Bond's term using constant yield principles, based on the Bond's yield to maturity. As premium is amortized, the purchaser's basis in such Series 2015 Bond and the amount of tax-exempt interest received will be reduced by the amount of amortizable premium properly allocable to such purchaser. This will result in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes on sale or disposition of such Bond prior to its maturity. Even though the purchaser's basis is reduced, no federal income tax deduction is allowed. Purchasers of any Series 2015 Bonds at a premium, whether at the time of initial issuance or subsequent thereto, should consult their tax advisors with respect to the determination and treatment of premium for federal income tax purposes, and with respect to state and local tax consequences of owning such Bonds. 25

32 Other Considerations The foregoing discussion does not address the effects of any applicable federal income, state, local or foreign tax laws other than those specifically discussed above. Prospective purchasers are urged to consult their own tax adviser concerning the federal income tax consequences of owning and disposing of the Series 2015 Bonds, as well as any consequences under the laws of any state, local or foreign taxing jurisdiction. See "RISK FACTORS Tax-Exempt Status of the Series 2015 Bonds" and "RISK FACTORS Future Legislation Could Affect Tax-Exempt Obligations" herein for a discussion of certain risk factors relating to investment in the Series 2015 Bonds. No Bank Qualification Any financial institution purchasing any of the Series 2015 Bonds should note that such obligations will not qualify as "qualified tax-exempt obligations" under Section 265(b)(3) of the Internal Revenue Code with respect to the deduction of interest costs attributable to carrying or purchasing the Series 2015 Bonds. LEGAL MATTERS All legal matters incidental to the authorization and issuance of the Series 2015 Bonds by the Issuer are subject to the approval of Balch & Bingham LLP, Birmingham, Alabama, Bond Counsel, whose approving opinion is expected to be delivered with the Series 2015 Bonds in the form attached hereto as APPENDIX D. Certain legal matters will be passed upon for the Issuer by its counsel, Hand Arendall LLC, Birmingham, Alabama. The legal opinions to be delivered concurrently with the delivery of the Series 2015 Bonds express the professional judgment of the attorneys rendering the opinions regarding the legal issues expressly addressed therein. By rendering a legal opinion, the opinion giver does not become an insurer or guarantor of the result indicated by that expression of professional judgment, of the transaction on which the opinion is rendered, or of the future performance of parties to the transaction. Nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. LITIGATION There is not now pending or, to the knowledge of the Issuer, threatened any litigation restraining or enjoining the issuance or delivery of the Series 2015 Bonds or the proceedings or authority under which they are to be issued. Neither the creation, organization or existence of the Issuer, nor the title of the present members or other officers of the Issuer to their respective offices is being contested. There is no litigation pending or, to its knowledge, threatened which in any manner questions the right of the Issuer or the Lessee to enter into the Lease Agreement or the right of the Issuer to secure the Series 2015 Bonds in the manner provided in the Indenture. 26

33 Description of Agreement CONTINUING DISCLOSURE AGREEMENT The Issuer has determined that no financial or operating data concerning the Issuer is material to an evaluation of the offering of the Series 2015 Bonds or to any decision to purchase, hold or sell the Series 2015 Bonds and the Issuer will not provide any such information. The Lessee has undertaken all responsibilities for any continuing disclosure to Bondholders as described below, and the Issuer shall have no obligation or liability to the Holders of the Series 2015 Bonds or any other person with respect to the Continuing Disclosure Agreement entered into by the Lessee pursuant to Rule 15c2-12 (the "Rule") adopted by the United States Securities and Exchange Commission under the Securities Act of 1934, as amended. The following is a brief description of the Continuing Disclosure Agreement to be executed by the Lessee. Such description does not purport to be comprehensive or definitive; all references herein to the Continuing Disclosure Agreement are qualified in their entirety by reference to such document, copies of which are available at the offices of the Underwriters. The Lessee has covenanted for the benefit of the Beneficial Owners of the Series 2015 Bonds to provide to the Municipal Securities Rulemaking Board (the "MSRB") (i) certain financial information and operating data relating to the Lessee on an annual basis (the "Annual Financial Information") within 270 days after the end of its fiscal year, beginning with the fiscal year ending September 30, 2015, (ii) the State's Comprehensive Annual Financial Report prepared in accordance with generally accepted accounting principles, when available, and (iii) notices ("Event Notices") in a timely manner not in excess of ten (10) business days after the occurrence of the event, as required by the Rule, to the MSRB, of any of the following events: 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 TEB) or other material notices or determinations with respect to the tax status of the Series 2015 Bonds, or other material events affecting the tax status of the Series 2015 Bonds; 7. modifications of the rights of holders of the evidence of indebtedness, if material; 8. bond calls, if material, and tender offers; 9. defeasances; 27

34 10. release, substitution or sale of property securing repayment of the evidence of indebtedness, if material; 11. rating changes; 12. bankruptcy, insolvency, receivership, or similar event of the 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 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, if material; and 14. appointment of a successor or additional trustee or the change of name of a trustee, if material. The Annual Financial Information will include financial information and operating data relating to the Lessee of the type found in following the sections of this Official Statement: "THE DEPARTMENT" in the table showing the Lessee's sources of revenues and "TOTAL DEBT SERVICE REQUIREMENTS Schedule of Debt Service Requirements" reflecting all outstanding Bonds. The Lessee has covenanted to provide in a timely manner to the MSRB notice of the Lessee's failure to provide the Annual Financial Information on or before the date specified above. All filings to be provided to the MSRB under the agreement shall be made by posting such information in electronic format on the MSRB's EMMA system at accompanied by identifying information as prescribed by the MSRB. All such filings shall be made in conformity with the procedures and requirements established by the MSRB in effect at the time of such filing. The Lessee shall never be subject to money damages for its failure to comply with its obligations to provide the required information. The only remedy available to the Beneficial Owners of the Series 2015 Bonds for breach by the Lessee of its obligations to provide the required information shall be the remedy of specific performance or mandamus against appropriate officials of the Lessee. The failure by the Lessee to provide the required information shall not be an event of default with respect to the Series 2015 Bonds under the Indenture. No person other than the Lessee shall have any liability or responsibility for compliance by the Lessee with its obligations to provide information. The Trustee and the Issuer have not undertaken any responsibility with respect to any required reports, notices or disclosures. The Lessee may from time to time choose to provide other information in addition to the information and notices listed above, but the Lessee does not undertake in the Continuing Disclosure Agreement to commit to provide any such additional information or to update or to continue to provide such additional information or notices once provided. 28

35 The Lessee may amend the Continuing Disclosure Agreement and any provision of the Continuing Disclosure Agreement may be waived, if such amendment or waiver is supported by an opinion of counsel expert in federal securities laws, to the effect that such amendment or waiver would not cause the undertakings therein to violate the Rule taking into account any subsequent change in or official interpretation of the Rule. The Lessee reserves the right to terminate its obligation to provide Annual Financial Information, the State's Comprehensive Annual Financial Report and notices of material events, as set forth above, if and when the Lessee no longer remains an obligated person with respect to the Series 2015 Bonds within the meaning of the Rule. Compliance with Prior Undertakings The Lessee filed the audited financial statements of the State for (i) the 2013 fiscal year on March 31, 2014, (ii) the 2012 fiscal year on March 29, 2013, (iii) the 2011 fiscal year on March 30, 2012, (iv) the 2010 fiscal year on March 31, 2011 and (v) the 2009 fiscal year on March 2, The audited financial statements of the State contained some, but not all of the information constituting the Lessee's "Annual Report" under the continuing disclosure agreement entered into in connection with the issuance of the Series 2005 Bonds. The balance of the information comprising such Annual Reports was not filed for any of such fiscal years until February 16, The Lessee also failed to file notices that its Annual Reports (the portions thereof not included in the State's audited financial statements) for the fiscal years ended September 30, 2009 through 2013 would not be filed by the respective filing deadlines. The Series 2005 Bonds are insured by a bond insurance company. The ratings on the bond insurance company and the insured ratings on the Series 2005 Bonds have been downgraded at various times during the past five years. Information about the downgrades was publicly reported. The underlying ratings on the Series 2005 Bonds have also changed during the past five years. The Lessee did not file notices with respect to such insured and underlying ratings changes until February 16, FORWARD-LOOKING STATEMENTS Certain statements contained in this Official Statement including, without limitation, statements containing the words "estimates," "believes," "anticipates," "expects," and words of similar import, constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Lessee, the State, or other entities to which the forwardlooking statements relate to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are necessarily based on various assumptions and estimates and are inherently subject to various risks and uncertainties, including risks and uncertainties relating to the possible invalidity of the underlying assumptions and estimates and possible changes or developments in social, economic, business, industry, market, legal, and regulatory circumstances and conditions and actions taken or omitted to be taken by third parties, including customers, suppliers, business partners and competitors, and legislative, 29

36 judicial, and other governmental authorities and officials. Assumptions to the foregoing involve judgments with respect to, among other things, future economic, competitive, and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Lessee and the State. Any of such assumptions could be inaccurate and, therefore, there can be no assurance that the forwardlooking statements included in this Official Statement will prove to be accurate. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forwardlooking statements. The Issuer, the Lessee and the Underwriter disclaim any obligation to update any such factors or to publicly announce the results of any revision to any of the forward-looking statements contained herein to reflect future events or developments. APPENDICES The Appendices to this Official Statement contain information concerning the Financing Documents and certain economic, demographic and financial information with respect to the State. Such Appendices are an integral part of this Official Statement and should be read in their entirety. RATINGS Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's Ratings Services ("S&P") are expected to assign ratings to the Series 2015 Bonds of "Aa2" with a stable outlook and "AA-" with a stable outlook, respectively. Any further explanation of the significance of such ratings may be obtained only from Moody's or S&P, as appropriate. The ratings are not recommendations to buy, sell or hold the Series 2015 Bonds. There is no assurance that such ratings will remain in effect for any given period of time or that they may not be lowered or withdrawn entirely if, in the judgment of the rating agency assigning such rating, circumstances should warrant such action. Any such downward revision or withdrawal of any rating assigned to the Series 2015 Bonds could have an adverse effect on their market price. No party or entity, including, without limitation, the Issuer, the Lessee and the State, will necessarily undertake any responsibility after the issuance of the Series 2015 Bonds to assure maintenance of the ratings or to oppose any revision or withdrawal thereof. Moody's and S&P each establish their own criteria for rating debt obligations such as the Series 2015 Bonds, and the application of such rating criteria is solely within the discretion of such rating agencies. Such rating criteria may be changed from time to time, and any such change may result in a reduction in, or withdrawal of, the ratings assigned to the Series 2015 Bonds by the rating agency even if there has been no change in the financial or economic affairs of the Lessee. Due to the ongoing uncertainty regarding the economy of the United States of America, including, without limitation, matters such as the future political uncertainty regarding the United States debt limit, obligations issued by state and local governments, such as the Series 2015 Bonds, could be subject to a rating downgrade. Additionally, if a significant default or other financial crisis should occur in the affairs of the United States or any of its agencies, then such 30

37 event could also adversely affect the ratings and market value of outstanding debt obligations, including the Series 2015 Bonds. UNDERWRITING The Series 2015 Bonds are being purchased from the Authority initially by The Frazer Lanier Company, Incorporated, Thornton Farish Inc. and Benchmark Securities (collectively, the "Underwriters") at a price of $59,746, (which price reflects an underwriting discount of $223, and net original issue premium of $4,114,818.70). The Series 2015 Bonds may be sold and offered to certain dealers (including dealers depositing such bonds into investment trusts) at prices lower than such public offering prices, and such public offering prices may be changed from time to time by the Underwriters. ECONOMIC, DEMOGRAPHIC AND FINANCIAL FACTORS Certain economic, demographic and financial factors respecting the State are presented in this Official Statement as APPENDIX A. MISCELLANEOUS The references herein and in APPENDIX C to the Financing Documents being executed in connection with the issuance of the Series 2015 Bonds are summaries of certain provisions of such documents. Such summaries do not purport to be complete, and for full and complete statements of such provisions reference is made to the respective documents. Copies of such documents are on file at the Office of the Trustee. The agreement of the Issuer and the Lessee with the holders of the Series 2015 Bonds is set forth in the Series 2015 Bonds and the Financing Documents executed in connection with the issuance of the Series 2015 Bonds, and neither any advertisement of the Series 2015 Bonds nor this Official Statement is to be construed as constituting an agreement or contract with purchasers of the Series 2015 Bonds. Issuer. The execution and delivery of this Official Statement have been duly authorized by the THE ALABAMA PUBLIC HEALTH CARE AUTHORITY By: /s/ Donald E. Williamson, M.D. Chairman of its Board of Directors 31

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39 APPENDIX A CERTAIN INFORMATION REGARDING THE STATE OF ALABAMA