$114,995,000 MIDLAND COUNTY HOSPITAL DISTRICT OF MIDLAND COUNTY, TEXAS

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1 NEW ISSUE - Book-Entry-Only OFFICIAL STATEMENT Dated August 18, 2009 RATINGS: Fitch: AA Moody s: A1 (see OTHER INFORMATION - Ratings herein) In the opinion of Bond Counsel, assuming continuing compliance by the District (hereinafter defined) after the date of initial delivery of the Series 2009A Bonds described below with certain covenants contained in the Order and the Series 2009A Trust Agreement (each hereinafter defined) authorizing the Series 2009A Bonds and subject to the matters set forth under SERIES 2009A TAX MATTERS herein, interest on the Series 2009A Bonds for federal income tax purposes under existing statutes, regulations, published rulings, and court decisions (1) will be excludable from the gross income of the owners thereof pursuant to section 103 of the Internal Revenue Code of 1986, as amended to the date of initial delivery of the Series 2009A Bonds, and (2) will not be included in computing the alternative minimum taxable income of the owners thereof. See SERIES 2009A TAX MATTERS herein. Interest on the Series 2009B Bonds is included in gross income for federal income tax purposes. See SERIES 2009B TAX MATTERS herein. $114,995,000 MIDLAND COUNTY HOSPITAL DISTRICT OF MIDLAND COUNTY, TEXAS $16,615,000 $98,380,000 Limited Tax Bonds Series 2009A Limited Tax Bonds Taxable Series 2009B (Direct Subsidy-Build America Bonds) (The Series 2009A Bonds have been designated as Qualified Tax-Exempt Obligations for financial institutions) Dated Date: August 1, 2009 Interest Accrues From Date of Initial Delivery Due: May 15, as shown on the inside front cover Payment Terms... Interest on the $16,615,000 Midland County Hospital District of Midland County, Texas Limited Tax Bonds, Series 2009A (the Series 2009A Bonds ) and the $98,380,000 Midland County Hospital District of Midland County, Texas Limited Tax Bonds, Taxable Series 2009B (Direct Subsidy-Build America Bonds) (the Series 2009B Bonds and together with the Series 2009A Bonds, the Bonds ) will accrue from the date on which they are first issued, authenticated and delivered to the initial purchaser thereof (the Underwriter ), will be payable on May 15 and November 15 of each year, commencing May 15, 2010, and will be calculated on the basis of a 360-day year consisting of twelve 30-day months. The definitive Bonds will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ( DTC ) pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Series 2009A Bonds may be acquired in denominations of $5,000 or integral multiples thereof. Beneficial ownership of the Series 2009B Bonds may be acquired in denominations of $1,000 or integral multiples thereof. No physical delivery of the Bonds will be made to the beneficial owners thereof. Principal of and interest on the Bonds will be payable by the Trustee (hereinafter defined) to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds. See THE BONDS - Book-Entry-Only System herein. Security... The Bonds constitute direct obligations of the District payable from the levy and collection of an annual ad valorem tax levied on all taxable property within the District, within the limits prescribed by law as described herein and provided in the Series 2009A Trust Agreement (the Series 2009A Trust Agreement ) dated as of August 1, 2009 between the District and The Bank of New York Mellon Trust Company, National Association, as trustee (the Trustee ) and the Series 2009B Trust Agreement (the Series 2009B Trust Agreement and, together with the Series 2009A Trust Agreement, the Trust Agreement ) dated as of August 1, 2009 between the District and the Trustee (see THE BONDS - Authority for Issuance ). The Trust Agreement does not create a mortgage or other security interest on any real property of the District s hospital system. The Bonds are not obligations of Midland County, Texas (the County ), and the Holders of the Bonds are not entitled to demand payment from any ad valorem taxes, other revenues, or any other assets of the County. See THE BONDS Tax Rate Limitation herein. Authority For Issuance... The Bonds are issued pursuant to the Constitution and general laws of the State of Texas (the State ), including particularly Article IX, Section 9 of the Texas Constitution, Chapter 112, Acts of the 65th Legislature, Regular Session, 1977, as amended (the Enabling Act ), Chapter 1371, Texas Government Code, as amended, an election held in the Midland County Hospital District of Midland County, Texas (the District ) on May 9, 2009, and approved by a majority of the participating voters, and an order (the Order ) adopted by the Board of Directors of the District authorizing the issuance of the Bonds on behalf of the District. In the Order, the Board has delegated the authority to the Chief Executive Officer or the Chief Financial Officer of the District, or the President of the Board (each an Authorized Official ) to execute respective approval certificates evidencing final sale terms of each series of the Bonds. IN THE ORDER, THE DISTRICT HAS RESERVED THE RIGHT TO ISSUE A TOTAL AGGREGATE PRINCIPAL AMOUNT OF BONDS NOT TO EXCEED $115,000,000; HOWEVER, IT HAS RESERVED THE ABILITY (DELEGATED TO A AUTHORIZED OFFICIAL), EXERCISABLE AT ITS SOLE DISCRETION, TO ISSUE THIS AMOUNT (I) ENTIRELY AS SERIES 2009A BONDS, WHICH ARE TAX-EXEMPT BONDS; (II) ENTIRELY AS SERIES 2009B BONDS, WHICH ARE TAXABLE BUILD AMERICA BONDS ISSUED PURSUANT TO THE STIMULUS ACT (DEFINED HEREIN) (SEE THE BONDS Description of the Series 2009B Bonds ); OR (III) ANY COMBINATION OF SERIES 2009A BONDS AND SERIES 2009B BONDS IN A COMBINED PRINCIPAL AMOUNT NOT TO EXCEED THE AFOREMENTIONED MAXIMUM OF $115,000,000. In the Trust Agreement, the District has reserved the right to issue additional ad valorem tax debt of the District under an order or trust agreement in accordance with the laws of the State of Texas and a bond election held within the District, if required. Purpose... Proceeds from the sale of the Bonds will be used for the purposes of (i) purchasing, constructing, renovating, acquiring, repairing, and equipping buildings for hospital purposes in the District, (ii) paying capitalized interest on the Bonds (but only with respect to the proceeds from the sale of the Series 2009A Bonds), and (iii) paying legal, fiscal and other costs of issuance in connection with these projects. (see PLAN OF FINANCE and Appendix A - General Information Regarding the District Project Description ) MATURITY SCHEDULES, INTEREST RATES, INITIAL YIELDS, AND CUSIP NUMBERS See Schedules on Page 2 Redemption... The Series 2009A Bonds are not subject to redemption prior to stated maturity (see THE BONDS - Redemption Provisions for Series 2009A Bonds ). The Series 2009B Bonds are subject to make-whole redemption and to extraordinary redemption (see THE BONDS - Redemption Provisions for Series 2009B Bonds ). In addition, the Series 2009B Term Bonds (defined herein) are subject to mandatory sinking fund redemption (see THE BONDS - Redemption Provisions for Series 2009B Bonds ). Legality... The Bonds are offered for delivery when, as and if issued and received by the Underwriter and subject to the approving opinion of the Attorney General of Texas and the approval of certain legal matters by Fulbright & Jaworski L.L.P., San Antonio, Texas ( Bond Counsel ), as Bond Counsel (see Appendix C, Forms of Bond Counsel s Opinions ). Certain legal matters will be passed upon for the Underwriter by their counsel Vinson & Elkins L.L.P., Dallas, Texas. Delivery... It is expected that the Bonds will be available for delivery through DTC on September 2, Merrill Lynch & Co.

2 MATURITY SCHEDULE, INTEREST RATES, INITIAL YIELDS AND CUSIP NUMBERS $16,615,000 MIDLAND COUNTY HOSPITAL DISTRICT OF MIDLAND COUNTY, TEXAS LIMITED TAX BONDS SERIES 2009A Year (May 15) Amount Interest Rate Yield CUSIP * 2011 $2,065, % 1.360% AW ,140, % 1.770% AX ,240, % 2.190% AY ,355, % 2.680% AZ ,475, % 3.000% BA ,605, % 3.270% BB ,735, % 3.540% BC6 $98,380,000 MIDLAND COUNTY HOSPITAL DISTRICT OF MIDLAND COUNTY, TEXAS LIMITED TAX BONDS TAXABLE SERIES 2009B (DIRECT SUBSIDY-BUILD AMERICA BONDS) Year (May 15) Amount Interest Rate Yield CUSIP * 2018 $2,860, % 5.255% BD ,960, % 5.355% BE ,065, % 5.605% BF ,180, % 5.755% BG ,305, % 5.855% BH5 $27,295, % Term Bonds due May 15, 2029, Priced to Yield 6.340% CUSIP No BJ1 * $55,715, % Term Bonds due May 15, 2039, Priced to Yield 6.440% CUSIP No BK8 * [The remainder of this page is intentionally left blank] CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein are provided by Standard & Poor s, CUSIP Service Bureau, a Division of The McGraw Hill Companies, Inc. CUSIP numbers have been assigned by an independent company not affiliated with the District or the Underwriter and are included solely for the convenience of the holders of the Bonds. Neither the District nor the Underwriter is responsible for the selection or uses of these CUSIP numbers, and no representation is made as to their correctness on the Bonds or as indicated above. The CUSIP number for a specific maturity is subject to being changed after the execution and delivery of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such maturity or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of the Bonds.

3 USE OF INFORMATION This Official Statement, which includes the cover page and the Appendices hereto, does not constitute an offer to sell or the solicitation of an offer to buy in any jurisdiction to any person to whom it is unlawful to make such offer, solicitation or sale. No dealer, broker, salesperson or other person has been authorized to give information or to make any representation other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon. The information set forth herein has been obtained from the District, the County, and other sources believed to be reliable, but such information is not guaranteed as to accuracy or completeness and is not to be construed as the promise or guarantee of the District or the County. This Official Statement contains, in part, estimates and matters of opinion which are not intended as statements of fact, and no representation is made as to the correctness of such estimates and opinions, or that they will be realized. The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, their responsibility to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. THE BONDS ARE EXEMPT FROM REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION AND CONSEQUENTLY HAVE NOT BEEN REGISTERED THEREWITH. THE REGISTRATION, QUALIFICATION, OR EXEMPTION OF THE BONDS IN ACCORDANCE WITH APPLICABLE SECURITIES LAW PROVISIONS OF THE JURISDICTION IN WHICH THE BONDS HAVE BEEN REGISTERED OR EXEMPTED SHOULD NOT BE REGARDED AS A RECOMMENDATION THEREOF. The information and expressions of opinion contained herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder will, under any circumstances, create any implication that there has been no change in the affairs of the District or other matters described. See CONTINUING DISCLOSURE OF INFORMATION for a description of the District s undertaking to provide certain information on a continuing basis. NONE OF THE DISTRICT, THE COUNTY, NOR THE UNDERWRITER MAKE ANY REPRESENTATION OR WARRANTY WITH RESPECT TO THE INFORMATION CONTAINED IN THIS OFFICIAL STATEMENT REGARDING THE DEPOSITORY TRUST COMPANY OR ITS BOOK- ENTRY-ONLY SYSTEM. THIS OFFICIAL STATEMENT CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 2IE OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. SUCH STATEMENTS MAY INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE AND ACHIEVEMENTS TO BE DIFFERENT FROM FUTURE RESULTS. PERFORMANCE AND ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED THAT THE ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE SET FORTH IN THE FORWARD-LOOKING STATEMENTS. IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE SERIES 2009 BONDS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

4 TABLE OF CONTENTS OFFICIAL STATEMENT SUMMARY... i ADMINISTRATION OF DISTRICT AFFAIRS... iii DISTRICT BOARD OF DIRECTORS... III DISTRICT STAFF... III CONSULTANTS AND ADVISORS... III INTRODUCTION... 1 PLAN OF FINANCE... 2 THE BONDS... 2 TAX INFORMATION TABLE 1 VALUATION, EXEMPTIONS AND TAX DEBT TABLE 2 TAXABLE ASSESSED VALUATIONS BY CATEGORY TABLE 3 VALUATION AND TAX DEBT HISTORY TABLE 4 TAX RATE, LEVY AND COLLECTION HISTORY TABLE 5 TEN LARGEST TAXPAYERS TABLE 6 TAX ADEQUACY TABLE 7 ESTIMATED OVERLAPPING DEBT DEBT INFORMATION TABLE 8 TAX DEBT SERVICE REQUIREMENTS TABLE 9 AUTHORIZED BUT UNISSUED TAX DEBT TABLE 10 OTHER OBLIGATIONS FINANCIAL INFORMATION TABLE 11 CONDENSED STATEMENTS OF REVENUES AND EXPENSES AND CHANGES IN ASSETS TABLE 12 CURRENT INVESTMENTS SERIES 2009A TAX MATTERS SERIES 2009B TAX MATTERS CONTINUING DISCLOSURE OF INFORMATION ANNUAL REPORTS MATERIAL EVENT NOTICES AVAILABILITY OF INFORMATION FROM MSRB AND MAC LIMITATIONS AND AMENDMENTS COMPLIANCE WITH PRIOR UNDERTAKINGS OTHER INFORMATION RATINGS REGISTRATION AND QUALIFICATION OF BONDS FOR SALE LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS LEGAL MATTERS AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION UNDERWRITING FORWARD-LOOKING STATEMENTS DISCLAIMER MISCELLANEOUS APPENDIX GENERAL INFORMATION REGARDING THE DISTRICT... A ANNUAL FINANCIAL REPORT... B FORMS OF BOND COUNSEL OPINIONS... C The cover page hereof, this page, the appendices included herein and any addenda, supplement or amendment hereto, are part of the Official Statement.

5 OFFICIAL STATEMENT SUMMARY This summary is subject in all respects to the more complete information and definitions contained or incorporated in this Official Statement. The offering of the Bonds to potential investors is made only by means of this entire Official Statement. No person is authorized to detach this summary from this Official Statement or to otherwise use it without the entire Official Statement. THE DISTRICT... THE BONDS... PAYMENT OF INTEREST... AUTHORITY FOR ISSUANCE... SECURITY FOR THE BONDS... The District is a hospital district created and existing under Article IX, Section 9 of the Constitution of the State of Texas and pursuant to the Enabling Act. It is a political subdivision of the State of Texas which operates a hospital system in the County, and which performs an essential public service of providing hospital and medical care to the District s residents located in the County. Its Board of Directors (the Board ) is composed of seven members elected by voters of individual districts within the District, for staggered, four-year terms. Board members are public officers under the Texas Constitution who as a body exercise sovereign functions of government independent of the control of others, and serve without pay. See Appendix A - General Information Regarding the District herein. The Series 2009A Bonds and the Series 2009B bonds will mature on May 15 in each of the years and in the amounts shown on the inside cover of this Official Statement. See THE BONDS -Description of the Bonds herein. Interest on the Bonds accrues from the date on which they are first issued, authenticated and delivered to the Underwriter, and is payable on each May 15 and November 15, commencing on May 15, 2010, until payment of the principal or redemption price shall have been made or duly provided for on or after the Maturity thereof. See THE BONDS - Description of the Bonds, THE BONDS Redemption of Series 2009A Bonds and THE BONDS Redemption of Series 2009B Bonds herein. The Bonds are issued pursuant to the Constitution and general laws of the State, including particularly Article IX, Section 9 of the Texas Constitution, Chapter 1371, Texas Government Code, as amended, the Enabling Act, an election held in the District on May 9, 2009, and approved by a majority of the participating voters, and the Order adopted by the Board. In the Order, the Board has delegated the authority to the President, the Chief Executive Officer, or the Chief Financial Officer of the District or the President of the Board (each an Authorized Official ) to execute respective approval certificates evidencing final sale terms of each series of the Bonds. See THE BONDS - Authority for Issuance herein. The Bonds constitute direct obligations of the District, payable from the levy and collection of an annual ad valorem tax levied on behalf of the District by the Board, within the limits prescribed by law, on all taxable property located within the District (see THE BONDS - Security and Source of Payment ). The Trust Agreement does not create a mortgage or other security interest on any real property of the District s hospital system. The Bonds are not obligations of Midland County, Texas (the County ), and the Holders of the Bonds are not entitled to demand payment from any ad valorem taxes, other revenues, or any other assets of the County. See THE BONDS Tax Rate Limitation herein. In the Trust Agreement, the District has reserved the right to issue additional ad valorem tax debt of the District under an order or trust agreement in accordance with the laws of the State of Texas and a bond election held within the District, if required. REDEMPTION... The Series 2009A Bonds are not subject to redemption prior to maturity. See THE BONDS - Redemption Provisions for Series 2009A Bonds herein. The Series 2009B Bonds are subject to make-whole redemption and to extraordinary redemption. In addition, the Series 2009B Term Bonds (defined herein) are subject to mandatory sinking fund redemption. See THE BONDS - Redemption Provisions for Series 2009B Bonds. (i)

6 TAX EXEMPTION SERIES 2009A BONDS... QUALIFIED TAX-EXEMPT OBLIGATIONS SERIES 2009A BONDS... TAXABLE BONDS SERIES 2009B BONDS... In the opinion of Bond Counsel, the interest on the Series 2009A Bonds will be excludable from gross income for federal income tax purposes under statutes, regulations, rulings and court decisions existing on the date hereof, subject to the matters described under SERIES 2009A TAX MATTERS herein. The District will designate the Series 2009A Bonds as Qualified Tax-Exempt Obligations for financial institutions (see SERIES 2009A TAX MATTERS Qualified Tax-Exempt Obligations for Financial Institutions ). Interest to be paid on the Series 2009B Bonds is included in gross income for federal income tax purposes. See SERIES 2009B TAX MATTERS herein. USE OF PROCEEDS... RATINGS... BOOK-ENTRY-ONLY SYSTEM... PAYMENT RECORD... Proceeds from the sale of the Bonds will be used for the purposes of (i) purchasing, constructing, renovating, acquiring, repairing, and equipping buildings for hospital purposes in the District, (ii) paying capitalized interest on the Bonds (but only with respect to the proceeds from the sale of the Series 2009A Bonds), and (iii) paying legal, fiscal and other costs of issuance in connection with these projects. The Bonds will be rated AA and A1 by Fitch Ratings ( Fitch ) and Moody s Investors Service, Inc. ( Moody s ), respectively. (see OTHER INFORMATION - Ratings ). The definitive Bonds will be initially registered and delivered only to Cede & Co., the nominee of DTC pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Series 2009A Bonds may be acquired in denominations of $5,000 or integral multiples thereof. Beneficial ownership of the Series 2009B Bonds may be acquired in denominations of $1,000 or integral multiples thereof. No physical delivery of the Bonds will be made to the beneficial owners thereof. Principal of and interest on the Bonds will be payable by the Paying Agent/Registrar to Cede & Co., which wilt make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds (see THE BONDS - Book-Entry-Only System ). The District has never defaulted on the payment of its general obligation tax debt. Fiscal Year Ended 9/30 SELECTED FINANCIAL INFORMATION Per Capita Taxable Assessed Valuation Per Capita Funded Tax Debt Ratio Funded Tax Debt to Taxable Assessed Valuation Estimated County Population (1) Taxable Assessed Valuation (2) Funded Tax Debt % of Total Tax Collections ,383 6,616,239,551 54, % ,707 7,844,615,524 63, % ,563 9,173,465,303 73, % ,116 10,965,914,132 84,586 $114,995,000 (3) $ (3) 1.05% (3) 98% ,715 11,628,074,750 89, ,995,000 (3) (3).99% (3) N/A (1) Source: Texas Department of State Health Services. (2) As reported by the Midland Central Appraisal District on County s annual State Property Tax Board Reports; subject to change during the ensuing year. (3) The Bonds. (ii)

7 ADMINISTRATION OF DISTRICT AFFAIRS Policy making and supervisory functions are the responsibility of, and are vested in, the Board, consisting of seven voting members elected by voters of individual districts within the District. Each member serves for a term of four years or until a successor is appointed and qualified. DISTRICT BOARD OF DIRECTORS Name Occupation Position Term Expires Jay Reynolds Oil & Gas Industry President 10/2012 Dr. Jess Parish Retired Midland Community Vice-President 10/2010 College President Leigh Ann Lane Executive Assistant Secretary 10/2010 Larry Edgerton Accountant Director 10/2010 Pete Hulder Accountant Director 10/2012 Anneliese Hyde Retired Registered Nurse Director 10/2010 Greg Wright Insurance Industry Director 10/2012 DISTRICT STAFF Name Position Length of Service Length of Current Position Russell Meyers President/Chief Executive Officer 7 years 7 years Steve Bowerman Vice President/Chief Financial Officer.5 year.5 year Margaret Robinson Sr. Vice President/Chief Clinical Officer 15 years 15 years Bob Dent Vice President/Nursing Services 2.5 years 2.5 years Cory Edmondson Vice President/Support Services 8 years 5.75 years CONSULTANTS AND ADVISORS Fulbright & Jaworski L.L.P. San Antonio, Texas Parish, Moody & Fikes, P.C. Waco, Texas Bond Counsel Certified Public Accountants [The remainder of this page is intentionally left blank] (iii)

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9 OFFICIAL STATEMENT RELATING TO $114,995,000 MIDLAND COUNTY HOSPITAL DISTRICT OF MIDLAND COUNTY, TEXAS $16,615,000 Limited Tax Bonds Series 2009A $98,380,000 Limited Tax Bonds Taxable Series 2009B (Direct Subsidy-Build America Bonds) INTRODUCTION This Official Statement, which includes the Appendices hereto, provides certain information regarding the issuance of $16,615,000 Midland County Hospital District of Midland County, Texas Limited Tax Bonds, Series 2009A (the Series 2009A Bonds ) and $98,380,000 Midland County Hospital District of Midland County, Texas Limited Tax Bonds, Taxable Series 2009B (Direct Subsidy-Build America Bonds) (the Series 2009B Bonds and, together with the Series 2009A Bonds, the Bonds ). Capitalized terms used in this Official Statement have the same meanings assigned to such terms in an order adopted by the Board of Directors of the District on August 6, 2009 (the Order ), the trust agreement relating to the Series 2009A Bonds (the Series 2009A Trust Agreement ) dated as of August 1, 2009, between the District and The Bank of New York Mellon Trust Company, National Association, as trustee (the Trustee ), and the separate and distinct trust agreement relating to the Series 2009B Bonds (the Series 2009B Trust Agreement and together with the Series 2009A Trust Agreement, the Trust Agreement ) dated as of August 1, 2009, between the District and the Trustee, authorizing the issuance of the Bonds, except as otherwise indicated herein. In the Order, the Board has delegated the authority to the President, the Chief Executive Officer, or the Chief Financial Officer of the District or the President of the Board (each an Authorized Official ) to execute respective approval certificates evidencing final sale terms of each series of the Bonds. There follows in this Official Statement descriptions of the Bonds and certain information regarding the District and its finances. All descriptions of documents contained herein are only summaries and are qualified in their entirety by reference to each such document. Copies of such documents may be obtained from the Trustee, at its offices on 919 Congress Ave., Suite 500, Austin, Texas, 78701, by electronic mail or upon payment of reasonable handling, mailing, and delivery charges. This Official Statement speaks only as to its date, and the information contained herein is subject to change. A copy of this Official Statement, in final form, will be deposited with the Municipal Securities Rulemaking Board, 1900 Duke Street, Suite 600, Alexandria, Virginia See CONTINUING DISCLOSURE OF INFORMATION for a description of the District s undertaking to provide certain information on a continuing basis. DESCRIPTION OF THE DISTRICT... The District is a hospital district created and existing under Article IX, Section 9 of the Constitution of the State of Texas and pursuant to Chapter 112, Acts of the 65th Legislature, Regular Session, 1977, as amended (the Enabling Act ). It is a political subdivision of the State of Texas that operates a hospital system in Midland County, Texas (the County ), and that performs an essential public service of providing hospital and medical care to the District s residents located in the County. Its Board of Directors (the Board ) is composed of seven members elected by voters of individual districts within the District, for staggered, four-year terms. Board members are public officers under the Texas Constitution who, as a body, exercise sovereign functions of government independent of the control of others, and serve without pay. See Appendix A - General Information Regarding the District. The District is not affiliated with the County, which is a separate and distinct political subdivision. 1

10 PLAN OF FINANCE The District anticipates that construction of the new and renovated facilities should require nearly three years, with projected opening in The budget for the project is $175 million: $114,995,000 from proceeds of the Bonds, which were approved by the voters of Midland County on May 9, 2009, and the remaining $60 million from private philanthropy. To date, Midland Memorial Foundation s private fundraising efforts have yielded over $58 million in cash gifts and pledges for the project. See Appendix A General Information Regarding the District - Project Description. THE BONDS DESCRIPTION OF THE SERIES 2009A BONDS... The Series 2009A Bonds are dated as of August 1, 2009, and mature on May 15 of the years and in the amounts and bear interest at per annum rates as shown on the inside cover page (which interest accrues from the date of initial delivery of the Series 2009A Bonds to the Underwriter). Interest will be computed on the basis of a 360-day year of twelve 30-day months, and will be payable on May 15 and November 15 of each year, commencing May 15, The definitive Series 2009A Bonds will be issued only in fully registered form in any integral multiple of $5,000 for any one stated maturity and will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ( DTC ) pursuant to the Book-Entry-Only System described herein. No physical delivery of the Series 2009A Bonds will be made to the beneficial owners thereof. Principal of and interest on the Series 2009A Bonds will be payable by the Trustee to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Series 2009A Bonds. See THE BONDS - Book-Entry-Only System herein. The Series 2009A Bonds are tax-exempt obligations issued pursuant to the provisions of the Order and the Series 2009A Trust Agreement. DESCRIPTION OF THE SERIES 2009B BONDS... The Series 2009B Bonds are dated as of August 1, 2009, and mature on May 15 of the years and in the amounts and bear interest at per annum rates as shown on the inside cover page (which interest accrues from the date of initial delivery of the Series 2009B Bonds to the Underwriter). Interest will be computed on the basis of a 360-day year of twelve 30-day months, and will be payable on May 15 and November 15 of each year, commencing May 15, The definitive Series 2009B Bonds will be issued only in fully registered form in any integral multiple of $1,000 for any one stated maturity and will be initially registered and delivered only to Cede & Co., the nominee of DTC pursuant to the Book-Entry-Only System described herein. No physical delivery of the Series 2009B Bonds will be made to the beneficial owners thereof. Principal of and interest on the Series 2009B Bonds will be payable by the Trustee to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Series 2009B Bonds. See THE BONDS - Book-Entry-Only System herein. The Series 2009B Bonds, are taxable obligations issued pursuant to the provisions of the Order and the Series 2009B Trust Agreement, qualify for and will be designated as Build America Bonds under and pursuant to the authority provided for in the federal American Recovery and Reinvestment Act of 2009, effective February 17, 2009 ( Stimulus Act ), and in accordance with the guidance included in the Internal Revenue Service s Notice , dated effective as of April 3, 2009 ( Notice ). In connection with the issuance of the Series 2009B Bonds, and as permitted in the Stimulus Act, the District anticipates electing an option (which election is irrevocable pursuant to the provisions of the Stimulus Act) permitting it to receive directly from the United States Department of the Treasury ( Department of the Treasury ) a subsidy payment equal to 35% of the interest it pays on the Series 2009B Bonds to the Holders thereof ( Subsidy ). If the District fails to comply with the conditions of Department of the Treasury to the continued receipt of the Subsidy throughout the term of the Series 2009B Bonds, it may no longer receive the Subsidy and could be subject to a claim for return of previously received subsidy payments. In the IRS Forms 8038-CP to be filed with the Internal Revenue Service, the District will provide for the Subsidy to be delivered from the Department of the Treasury directly to the Trustee, for further deposit and allocation to a special interest and sinking subaccount created on the books and records of the Trustee relating solely to the Series 2009B Bonds. The agreement between the District and the Trustee relating to the Series 2009B Bonds provides that the amount held in this special interest and sinking subaccount shall be used to reduce the amount of the regularly 2

11 scheduled debt service payments on the Series 2009B Bonds that the District, acting through the District, is required to make under the Series 2009B Trust Agreement by remitting the same to the Paying Agent/Registrar. Though Notice states that Subsidy payments will be made contemporaneously with each interest payment date on the Series 2009B Bonds, the District anticipates that there will be a lag period (at a minimum, in the short term until the Department of the Treasury implements its electronic payment platform for the Subsidy) between the due date of its debt service payment requirements on the Series 2009B Bonds and the Paying Agent/Registrar s receipt of the Subsidy. Accordingly, the District expects to initially pay the entire amount of its debt service payment requirements on the Series 2009B Bonds from lawfully available funds, with the Subsidy serving as an off-set with respect to future debt service payment requirements on the Series 2009B Bonds. The Subsidy is not directly pledged to the payment of the Series 2009B Bonds. ISSUANCE OF SERIES 2009A BONDS AND SERIES 2009B BONDS IN THE ORDER, THE DISTRICT HAS RESERVED THE RIGHT TO ISSUE AN AGGREGATE PRINCIPAL AMOUNT OF BONDS NOT TO EXCEED $115,000,000; HOWEVER, IT HAS RESERVED THE ABILITY (DELEGATED TO A DESIGNATED AUTHORIZED OFFICIAL), EXERCISABLE AT ITS SOLE DISCRETION, TO ISSUE THIS AMOUNT (I) ENTIRELY AS SERIES 2009A BONDS, WHICH ARE TAX-EXEMPT OBLIGATIONS; (II) ENTIRELY AS SERIES 2009B BONDS, WHICH ARE TAXABLE BUILD AMERICA BONDS ISSUED PURSUANT TO THE STIMULUS ACT; OR (III) ANY COMBINATION OF SERIES 2009A BONDS AND SERIES 2009B BONDS IN A COMBINED PRINCIPAL AMOUNT NOT TO EXCEED THE AFOREMENTIONED MAXIMUM OF $115,000,000. PURPOSE... Proceeds from the sale of the Bonds will be used for the purposes of (i) purchasing, constructing, renovating, acquiring, repairing, and equipping buildings for hospital purposes in the District, (ii) paying capitalized interest on the Bonds (but only with respect to the proceeds from the sale of the Series 2009A Bonds), and (iii) paying legal, fiscal and other costs of issuance in connection with these projects. AUTHORITY FOR ISSUANCE... The Bonds are issued pursuant to the Constitution and general laws of the State, including particularly Article IX, Section 9 of the Texas Constitution, Chapter 1371, Texas Government Code, as amended, the Enabling Act, an election held in the District on May 9, 2009, and approved by a majority of the participating voters, the Order, and the Trust Agreement. In the Order, the Board has delegated the authority to the President, the Chief Executive Officer, or the Chief Financial Officer of the District or the President of the Board (each an Authorized Official ) to execute respective approval certificates evidencing final sale terms of each series of the Bonds. DESIGNATION OF SERIES 2009B BONDS AS BUILD AMERICA BONDS... The Series 2009B Bonds are designated as Build America Bonds and qualified bonds for purposes of the Stimulus Act, and the District is, therefore, eligible to receive a cash subsidy from the United States Treasury in connection therewith. Pursuant to the Stimulus Act, the District expects to receive the Subsidy from the United States Treasury equal to 35% of the interest payable on the Series 2009B Bonds on each debt service payment date. APPLICATION OF SUBSIDY... The District has agreed in the Series 2009B Trust Agreement to direct the Department of the Treasury to pay the Subsidy directly to the Trustee for deposit to the Direct Subsidy Account, a special subaccount of the Bond Fund created under the Series 2009B Trust Agreement. The Subsidy will be held in a segregated subaccount of the Series 2009B Trust Agreement and will be applied, as and when directed by the District, to the payment of principal of and interest on the Series 2009 B Bonds. Each year the District elects to apply a portion of the Subsidy held in the subaccount to the payment of the Series 2009B Bonds, the District will set the tax rate accordingly. SECURITY AND SOURCE OF PAYMENT... The Bonds constitute direct obligations of the District payable from the levy and collection of an annual ad valorem tax levied by the District, within the limits prescribed by law, on all taxable property located within the District. Under the provisions of the Trust Agreement the District has covenanted to deposit such taxes with the Trustee within five (5) business days from their receipt. The Trust Agreement does not create a mortgage or other security interest on any real property of the District. 3

12 In the Trust Agreement, the District has reserved the right to issue additional ad valorem tax debt of the District under an order or trust agreement in accordance with the laws of the State of Texas and a bond election held within the District, if any. PERFECTION OF SECURITY INTEREST... Chapter 1208, as amended, Texas Government Code, applies to the issuance of the Bonds and the pledge of ad valorem tax collections as security therefor, and such pledge is therefore valid, effective and perfected. Should Texas law be amended while the Bonds are outstanding and unpaid, the result of such amendment being that the aforementioned pledge is to be subject to the filing requirements of Chapter 9, Texas Business and Commerce Code, in order to preserve to the registered owners of the Bonds a security interest in such pledge, the District has agreed to take such measures as it determines is reasonable and necessary to enable a filing of a security interest in said pledge to occur. TAX RATE LIMITATION... All taxable property within the District is subject to the assessment, levy and collection by the District of a continuing, direct annual ad valorem tax sufficient to provide for the payment of principal of and interest on all ad valorem tax debt, within the limits prescribed by law. Pursuant to Article IX, Section 9, of the Texas Constitution and an election held in the District on September 11, 1977 and approved by a majority of the participating voters (the Creation Election ), the maximum ad valorem tax rate of the District is limited to $0.75 per $100 of assessed valuation for all purposes. The election authorizing the levy of this constitutional tax in an amount sufficient to pay the principal of and interest on the Bonds was held on May 9, REDEMPTION PROVISIONS FOR SERIES 2009A BONDS No Redemption of Series 2009A Bonds... The Series 2009A Bonds are not subject to redemption prior to stated maturity. REDEMPTION PROVISIONS FOR SERIES 2009B BONDS Make Whole Redemption of Series 2009B Bonds... The Series 2009B Bonds are subject to redemption prior to maturity by written direction of the Board, in whole or in part, on any Business Day, at the Make-Whole Redemption Price. The Make-Whole Redemption Price is the greater of (i) 100% of the principal amount of the Series 2009B Bonds to be redeemed and (ii) the sum of the present value of the remaining scheduled payments of principal and interest to the maturity date of the Series 2009B Bonds to be redeemed, not including any portion of those payments of interest accrued and unpaid as of the date on which the Series 2009B Bonds are to be redeemed, discounted to the date on which the Series 2009B Bonds are to be redeemed on a semi-annual basis, assuming a 360- day year consisting of twelve 30-day months, at the adjusted Treasury Rate plus 35 basis points, plus, in each case, accrued and unpaid interest on the Series 2009B Bonds to be redeemed on the redemption date. The Treasury Rate is, as of any redemption date, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two (2) Business Days prior to the redemption date (excluding inflation indexed securities) (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to the maturity date of the Bonds to be redeemed; provided, however, that if the period from the redemption date to such maturity date is less than one (1) year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one (1) year will be used. Extraordinary Optional Redemption of Series 2009B Bonds... The Series 2009B Bonds are subject to redemption prior to their maturity at the option of the District, in whole or in part upon the occurrence of an Extraordinary Event (as defined herein), at the Extraordinary Redemption Price (defined herein). The Extraordinary Redemption Price is equal to the greater of: (1) 100% of the principal amount of the Series 2009B Bonds to be redeemed; and (2) the sum of the present value of the remaining scheduled payments of principal and interest to the maturity date of the Series 2009B Bonds to be redeemed, not including any portion of those payments of interest accrued and unpaid as of the date on which the Series 2009B Bonds are to be redeemed, discounted to the date on which the Bonds are to be redeemed on a semi-annual basis, assuming a 360-day year consisting of twelve 30-day months, at the Treasury Rate, plus 100 basis points; plus, in each case, accrued interest on the Series 2009B Bonds to be redeemed to the redemption date. An Extraordinary Event will have occurred if a material adverse change has occurred to Section 4

13 54AA or 6431 of the Internal Revenue Code of 1986, as amended (the Code ) (as such Sections were added by Section 1531 of the Recovery Act, pertaining to Build America Bonds ) pursuant to which the Subsidy from the United States Government is reduced or eliminated. At the request of the Trustee, the redemption price of the Series 2009B Bonds to be redeemed at the option of the District will be determined by an independent accounting firm, investment banking firm or financial advisor retained by the District at the District's expense to calculate such redemption price. The Trustee and the District may conclusively rely on the determination of such redemption price by such independent accounting firm, investment banking firm or financial advisor and will not be liable for such reliance. Mandatory Redemption of Series 2009B Bonds... The Series 2009B Bonds maturing on May 15, 2029 and May 15, 2039 (referred to herein as Series 2009B Term Bonds ) are subject to mandatory sinking fund redemption prior to their scheduled maturity from money required to be deposited in the Bond Fund under the Series 2009B Trust Agreement (the Series 2009B Bond Fund ) for such purpose and shall be redeemed in part, by lot or other customary method, at the principal amount thereof plus accrued interest to the date of redemption in the following principal amounts on May 15 in each of the years as set forth below: $27,295,000 Series 2009B Term Bonds due May 15, 2029 Year Principal Amount 2023 $3,435, ,580, ,730, ,885, ,050, ,220, * 4,395,000 $55,715,000 Series 2009B Term Bonds due May 15, 2039 Year Principal Amount * Final Maturity 2030 $4,580, ,780, ,980, ,195, ,415, ,650, ,890, ,140, ,405, * 6,680,000 The principal amount of the Series 2009B Term Bonds required to be redeemed on each such redemption date pursuant to the foregoing operation of the mandatory sinking fund will be reduced, at the option of the District, by the principal amount of any Series 2009B Term Bonds, which, at least 50 days prior to the mandatory sinking fund redemption date, (1) shall have been defeased or acquired by the District and delivered to the Trustee for cancellation, or (2) shall have been purchased and canceled by the Trustee at the request of the District with money in the Series 2009B Bond Fund, or (3) have been redeemed pursuant to the optional redemption provisions set forth above and not theretofore credited against mandatory sinking fund redemption. Notice of Redemption of the Bonds... Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 days prior to the redemption date, to each Holder of Bonds to be redeemed, at its last address appearing in the Bond Register. In Addition, notice of redemption will be sent by certified or registered mail, return 5

14 receipt requested, or by overnight delivery service contemporaneously with such mailing (a) to any Holder of $1,000,000 or more in principal amount of Bonds and (b) to two or more information services of national recognition that disseminate redemption information with respect to municipal bonds. Notice of redemption will also be sent by certified mail, return receipt requested, postage prepaid, to any securities depository registered as such pursuant to the Securities Exchange Act of 1934, as amended, that is a Holder of Bonds to be redeemed so that it is received at least two days prior to the date notice is mailed to Bondholders generally. An additional notice will be mailed not less than 60 nor more than 90 days after the redemption date, by the same means as the first such notice, to any Holder of Bonds selected for redemption that has not surrendered the Bonds called for redemption, at its last address appearing in the Bond Register. All notices of redemption shall state: (1) the redemption date, (2) the redemption price, (3) the identification, including complete official name, series designation and issue date of the Bonds and the CUSIP number, certificate number (if any), principal amounts, interest rates and maturity dates of the Bonds to be redeemed, (4) that on the redemption date, the redemption price having been deposited with the Trustee, each of the Bonds to be redeemed will become due and payable and that interest thereon shall cease to accrue from and after said date, (5) the name and address of the Trustee and any Paying Agent for such Bonds, including the telephone number of a contact person and the place where such Bonds are to surrendered for payment of the redemption price, and (6) any condition to such redemption. AMENDMENTS... Without the consent of the Holders of any Bonds, the District, when authorized by a Board order, and the Trustee at any time may enter into or consent to one or more agreements supplemental to the Trust Agreement for any of the following purposes: (a) to add to the covenants of the District for the benefit of the Holders of Bonds, to surrender any right or power herein or therein conferred upon the District, or to add property to the Trust Estate; (b) to cure any ambiguity or to correct or supplement any provision in the Trust Agreement which may be inconsistent with any other provision therein, or to make any other provisions with respect to matters or questions arising under the Trust Agreement which will not be inconsistent with the Trust Agreement, provided such action shall not adversely affect the interests of the Holders of Bonds; (c) only with respect to the Series 2009B Trust Agreement, to ensure that the Series 2009B Bonds continue to qualify as Build America Bonds and qualified bonds as such terms are described in the Series 2009B Trust Agreement; or (d) to modify or supplement the Trust Agreement in such manner as may be necessary to qualify the Trust Agreement under the Trust Indenture Act of 1939 (the Trust Indenture Act ) as then amended, or under any similar federal or state statute or regulation, including provisions whereby the Trustee accepts such powers, duties, conditions and restrictions hereunder and the District undertakes such covenants, conditions or restrictions additional to those contained in the Trust Agreement as would be necessary or appropriate so to qualify the Trust Agreement; provided, however, that nothing therein contained will be deemed to authorize inclusion in the Trust Agreement or in any agreement supplemental thereto, provisions referred to in Section 316(a)(2) of such Trust Indenture Act or any corresponding provision provided for in any similar statute hereafter in effect. With the consent of the Holders of not less than a majority in principal amount of the outstanding Bonds affected by a supplemental agreement, by Act of such Holders delivered to the District and the Trustee, the District, when authorized by a Board order, and the Trustee may enter into or consent to an agreement or Agreements supplemental to the Trust Agreement or any supplemental agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Trust Agreement or of modifying in any manner the rights of the Holders of the Bonds under the Trust Agreement; provided, however, that no such supplemental agreement or amendment shall, without the consent of the Holder of each Bond affected thereby: (a) change the Stated Maturity of the principal of, or any installment of interest on, any Bonds or any date for mandatory redemption thereof, or reduce the principal amount thereof or the interest thereon or any premium payable upon the redemption thereof, or change the coin or currency in which, any Bonds or the interest thereon is payable, or impair or subordinate the lien of the Trust Agreement on the Trust Estate or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the redemption date), or (b) reduce the percentage in principal amount of Holders is required for any such supplemental agreement, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of the Trust Agreement or certain defaults hereunder and their consequences) provided for in the Trust Agreement, or (c) modify any of the provisions of this Section, except to increase any such percentage or to provide that certain other provisions of the Trust Agreement cannot be modified or waived without the consent of the Holder of each Bond affected thereby. It is not necessary for any Act of Holders of Bonds under this Section to approve the particular form of any proposed 6