$900,000,000 METROPOLITAN TRANSPORTATION AUTHORITY TRANSPORTATION REVENUE BOND ANTICIPATION NOTES Series CP-2 Credit Enhanced

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1 $900,000,000 METROPOLITAN TRANSPORTATION AUTHORITY TRANSPORTATION REVENUE BOND ANTICIPATION NOTES Series CP-2 Credit Enhanced THIRD SUPPLEMENT DATED SEPTEMBER 15, 2010 TO OFFERING MEMORANDUM DATED SEPTEMBER 9, 2010 The information provided below supplements the Offering Memorandum referred to above, as previously supplemented by the Notice of Errata dated September 13, 2010 and the Second Notice of Errata dated September 14, 2010 (the Offering Memorandum ), offering the Metropolitan Transportation Authority Transportation Revenue Bond Anticipation Notes, Series CP-2 Credit Enhanced. The information contained in the Offering Memorandum in Attachment 3 Royal Bank of Canada, acting through a branch located in New York, New York is supplemented to revise the information in paragraph 4 relating to the long-term ratings of Royal Bank by Standard & Poor s Ratings Services and Moody s Investors Service by deleting the first sentence of such paragraph 4 and replacing it in its entirety with the following: The senior long-term unsecured debt of Royal Bank has been assigned ratings of AA- (positive outlook) by Standard & Poor s Ratings Services, Aaa (negative outlook) by Moody s Investors Service and AA (stable outlook) by Fitch Ratings. Moody's Investors Service has placed all the long-term ratings of Royal Bank on review for possible downgrade. METROPOLITAN TRANSPORTATION AUTHORITY

2 $900,000,000 METROPOLITAN TRANSPORTATION AUTHORITY TRANSPORTATION REVENUE BOND ANTICIPATION NOTES Series CP-2 Credit Enhanced SECOND NOTICE OF ERRATA DATED SEPTEMBER 14, 2010 SUPPLEMENTING OFFERING MEMORANDUM DATED SEPTEMBER 9, 2010 The information provided below supplements the Offering Memorandum referred to above, as previously supplemented (the Offering Memorandum ), offering the Metropolitan Transportation Authority Transportation Revenue Bond Anticipation Notes, Series CP-2 Credit Enhanced. The information contained in the Offering Memorandum in Attachment 6 Form of Opinion of Bond Counsel is supplemented to modify paragraph 4 of the Form of Opinion of Bond Counsel to make such paragraph consistent with the information set forth under the caption TAX MATTERS by deleting the last sentence thereof and replacing it with the following sentence: However, we express no opinion as to whether interest on the Notes is excluded from the adjusted current earnings of corporations for purposes of computing the alternative minimum tax imposed on corporations. METROPOLITAN TRANSPORTATION AUTHORITY

3 $900,000,000 METROPOLITAN TRANSPORTATION AUTHORITY TRANSPORTATION REVENUE BOND ANTICIPATION NOTES Series CP-2 Credit Enhanced NOTICE OF ERRATA DATED SEPTEMBER 13, 2010 SUPPLEMENTING OFFERING MEMORANDUM DATED SEPTEMBER 9, 2010 The information provided below supplements the Offering Memorandum referred to above (the Offering Memorandum ), offering the Metropolitan Transportation Authority Transportation Revenue Bond Anticipation Notes, Series CP-2 Credit Enhanced. The information contained in the Offering Memorandum under the caption RATINGS is supplemented to reflect a correction of the rating of the Subseries B Notes from Standard & Poor s Ratings Services by deleting the second sentence thereof and replacing it with the following sentence: The Subseries B Notes have been rated P-1 by Moody s Investors Service, A-1+ by Standard & Poor s Ratings Services and F1+ by Fitch Ratings with the understanding that upon delivery of the Subseries B Notes, Barclays will issue the Barclays Credit Facility. METROPOLITAN TRANSPORTATION AUTHORITY

4 OFFERING MEMORANDUM BOOK ENTRY ONLY Ratings: See RATINGS herein. For a discussion of the tax status of the Notes, see TAX MATTERS herein. $900,000,000 METROPOLITAN TRANSPORTATION AUTHORITY Transportation Revenue Bond Anticipation Notes, Series CP 2 Credit Enhanced $100,000,000 Subseries A $250,000,000 Subseries B $350,000,000 Subseries C $200,000,000 Subseries D The Transportation Revenue Bond Anticipation Notes, Series CP 2 Credit Enhanced (the Notes ) offered hereby are issued in accordance with the terms and provisions of the General Resolution Authorizing Transportation Revenue Obligations of MTA adopted on March 26, 2002, as supplemented (such General Resolution Authorizing Transportation Revenue Obligations as from time to time amended or supplemented being herein called the Resolution ), including as supplemented by the Series CP 2 Transportation Revenue Bond Anticipation Note and Related Parity Debt Supplemental Resolution adopted by MTA on July 28, 2010, authorizing the issuance, at one time, or from time to time, of the Notes. The Notes are being issued to finance transit and commuter projects. In connection with the Notes, MTA has entered into four separate Letter of Credit and Reimbursement Agreements (each a Reimbursement Agreement and collectively, the Reimbursement Agreements ) as follows: (i) with respect to the Subseries A Notes, a credit facility with TD Bank, N.A. ( TD Bank ), pursuant to which TD Bank will issue an irrevocable direct pay letter of credit expiring on September 12, 2013 (the TD Bank Credit Facility ); (ii) with respect to the Subseries B Notes, a credit facility with Barclays Bank PLC ( Barclays ), pursuant to which Barclays will issue an irrevocable direct pay letter of credit expiring on September 12, 2013 (the Barclays Credit Facility ); (iii) with respect to the Subseries C Notes, a credit facility with Royal Bank of Canada ( Royal Bank ), acting through a branch located in New York, New York, pursuant to which Royal Bank will issue an irrevocable direct pay letter of credit expiring on September 14, 2012 (the Royal Bank Credit Facility ) and (iv) with respect to the Subseries D Notes, a credit facility with Citibank, N.A. ( Citibank and, together with TD Bank, Barclays and Royal Bank, the Credit Facility Issuers ), pursuant to which Citibank will issue an irrevocable direct pay letter of credit expiring on September 12, 2013 (the Citibank Credit Facility and together with the TD Bank Credit Facility, the Barclays Credit Facility and the Royal Bank Credit Facility, the Credit Facilities ). Each Credit Facility shall be issued in favor of The Bank of New York Mellon, acting as Issuing and Paying Agent (the Issuing and Paying Agent ), in order to pay principal and interest (calculated at the rate of 10% per annum for a period of 90 days and based on a year of 360 days) due on the Notes as provided therein. In addition to the proceeds of draws under the Credit Facilities, the principal of and interest on the Notes are payable solely from the proceeds of (1) other Notes, (2) the Series CP 2 Bonds, and (3) though not pledged therefor, notes or other evidences of indebtedness or any other amounts, in each case if and to the extent such amounts may lawfully be used to make such payments. The Notes are not secured by any other funds, accounts or amounts that are pledged to the payment of bonds or parity obligations issued under the Resolution. See SECURITY FOR THE NOTES. The Notes are not a debt of the State of New York, The City of New York or any other local government unit, and the State, the City and other local government units are not liable thereon. MTA has no taxing power. The Notes will be executed and delivered only as fully registered notes without coupons, in the principal amount of $100,000 and additional increments of $1,000 above $100,000. The Notes will be initially executed and delivered under a book entry only system and will be registered in the name of Cede & Co., as Noteholder and Securities Depository Nominee of The Depository Trust Company, New York, New York. Principal and interest on the Notes will be payable through the Issuing and Paying Agent. This cover page contains certain information for general reference only. It is not intended to be a summary of the security or terms of the Notes. Investors are advised to read the entire offering memorandum, including any portion hereof included by specific reference, to obtain information essential to the making of an informed decision. MORGAN STANLEY (Dealer for Subseries A) BARCLAYS CAPITAL (Dealer for Subseries B) RBC CAPITAL MARKETS (Dealer for Subseries C) CITI (Dealer for Subseries D) September 9, 2010

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6 Metropolitan Transportation Authority 347 Madison Avenue New York, New York (212) Website: Jay H. Walder... Chairman and Chief Executive Officer Andrew M. Saul... Vice-Chairman Andrew B. Albert... Non-Voting Member John H. Banks III... Member Robert C. Bickford... Member James F. Blair... Non-Voting Member Norman E. Brown... Non-Voting Member Allen P. Cappelli... Member Donald Cecil... Member Patrick Foye... Member Doreen M. Frasca... Member Ira R. Greenberg... Non-Voting Member Jeffrey A. Kay... Member Mark D. Lebow... Member Susan G. Metzger... Member Mark Page... Member Mitchell H. Pally... Member Norman I. Seabrook... Member James L. Sedore, Jr.... Member Nancy Shevell... Member Vincent Tessitore, Jr.... Non-Voting Member Ed Watt... Non-Voting Member Carl V. Wortendyke... Member Charles Monheim... Chief Operating Officer Robert E. Foran... Chief Financial Officer James B. Henly, Esq.... General Counsel Patrick J. McCoy... Director, Finance NIXON PEABODY LLP New York, New York Bond Counsel LAMONT FINANCIAL SERVICES CORPORATION Wayne, New Jersey Financial Advisor i

7 No Unauthorized Offer. This offering memorandum is not an offer to sell, or the solicitation of an offer to buy, the Notes in any jurisdiction where the purchase of Notes would be unlawful. MTA has not authorized any dealer, salesperson or any other person to give any information or make any representation in connection with the offering of the Notes, except as set forth in this offering memorandum. No other information or representations should be relied upon. No Contract or Investment Advice. This offering memorandum is not a contract and does not provide investment advice. Investors should consult their financial advisors and legal counsel with questions about this offering memorandum and the Notes being offered, or anything else related to this note issue. Information Subject to Change. Information and expressions of opinion are subject to change without notice, and it should not be inferred that there have been no changes since the date of this document. Neither the delivery of, nor any sale made under, this offering memorandum shall under any circumstances create any implication that there has been no change in MTA s affairs or in any other matters described herein. Forward-Looking Statements. Many statements contained in this offering memorandum, including the appendices documents included by specific cross-reference, that are not historical facts are forward-looking statements, which are based on MTA s beliefs, as well as assumptions made by, and information currently available to, the management and staff of MTA. Because the statements are based on expectations about future events and economic performance and are not statements of fact, actual results may differ materially from those projected. The words anticipate, assume, estimate, expect, objective, projection, plan, forecast, goal, budget or similar words are intended to identify forward-looking statements. The words or phrases to date, now, currently, and the like are intended to mean as of the date of this offering memorandum. Projections. The projections set forth in this offering memorandum were not prepared with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, but, in the view of MTA s management, were prepared on a reasonable basis, reflect the best currently available estimates and judgments, and present, to the best of management s knowledge and belief, the expected course of action and the expected future financial performance of MTA. However, this information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this offering memorandum are cautioned not to place undue reliance on the prospective financial information. Neither MTA s independent auditors, nor any other independent auditors, have compiled, examined, or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability. Neither MTA s independent auditors, nor any other independent auditors, have been consulted in connection with the preparation of the prospective financial information set forth in this offering memorandum, which is solely the product of MTA and its affiliates and subsidiaries, and the independent auditors assume no responsibility for its content. No Guarantee of Information by Dealers. The Dealers have provided the following sentence for inclusion in this offering memorandum: The Dealers have reviewed the information in this offering memorandum in accordance with, and as part of, their respective responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Dealers do not guarantee the accuracy or completeness of such information. Credit Facility Issuer Information. Other than with respect to information concerning the Credit Facility Issuers contained in Attachments 1-4 of this offering memorandum, none of the information in this offering memorandum has been supplied or verified by the related Credit Facility Issuer and the related Credit Facility Issuer does not make any representation or warranty, express or implied, as to the accuracy or completeness of information it has neither supplied nor verified, the validity of the Notes, or the tax-exempt status of the interest on the Notes. SEC Rule 15c2-12. SEC Rule 15c2-12 does not require MTA to enter into a written agreement for the benefit of holders of the Notes to provide continuing disclosure. MTA regularly files continuing disclosure in connection with other debt offerings. ii

8 TABLE OF CONTENTS INTRODUCTION... 1 MTA and Other Related Entities... 1 Information Provided in Appendix A... 2 Where to Find Information... 2 Recent Developments... 3 THE NOTES... 5 General... 5 Purpose of the Notes... 5 Description of the Notes... 5 SECURITY FOR THE NOTES... 6 General... 6 THE 2010 CREDIT FACILITIES AND THE credit facility issuers... 6 TD Bank Credit Facility... 7 Barclays Credit Facility... 7 Royal Bank Credit Facility... 7 Citibank Credit Facility... 8 LITIGATION... 8 TAX MATTERS... 8 General... 8 Backup Withholding... 9 LEGALITY FOR INVESTMENT... 9 APPROVAL OF LEGAL PROCEEDINGS RATINGS ADDITIONAL INFORMATION Attachment 1 TD Bank, N.A. Attachment 2 Barclays Bank PLC Attachment 3 Royal Bank of Canada, acting through a branch located in New York, New York Attachment 4 Citibank, N.A. Attachment 5 Book-Entry-Only System Attachment 6 Form of Opinion of Bond Counsel iii

9 Information Included by Specific Cross-reference. The following portions of MTA s 2010 Combined Continuing Disclosure Filings, filed with the Electronic Municipal Market Access System (EMMA) of the Municipal Securities Rulemaking Board (MSRB), are included by specific cross-reference in this offering memorandum, along with material that updates this offering memorandum and that is filed with EMMA prior to the delivery date of the Notes, together with any supplements or amendments thereto: Appendix A The Related Entities (in the form filed with EMMA on April 30, 2010) Appendix B Audited Consolidated Financial Statements of Metropolitan Transportation Authority for the Years Ended December 31, 2009 and 2008 The following documents have also been filed with EMMA and are included by specific cross-reference in this offering memorandum: MTA s Unaudited Consolidated Financial Statements for the three-month period ending March 31, 2010 Summary of Certain Provisions of the Transportation Resolution Definitions and Summary of Certain Provisions of the Standard Resolution Provisions Form of the Interagency Agreement For convenience, copies of MTA s Unaudited Consolidated Financial Statements for the three-month period ended March 31, 2010 can be found on the MTA website ( under the caption About the MTA Financial Information Budget. The remaining documents listed above can be found under the caption MTA Home About the MTA Financial Information Investor Information. No statement on the MTA s website is included by specific crossreference herein. See FURTHER INFORMATION in Part III. Definitions of certain terms used in the summaries may differ from terms used in this offering memorandum, such as the use herein of the popular names of the MTA affiliates and subsidiaries. iv

10 OFFERING MEMORANDUM $900,000,000 METROPOLITAN TRANSPORTATION AUTHORITY Transportation Revenue Bond Anticipation Notes, Series CP-2 Credit Enhanced $100,000,000 Subseries A $250,000,000 Subseries B $350,000,000 Subseries C $200,000,000 Subseries D MTA and Other Related Entities INTRODUCTION The Metropolitan Transportation Authority (MTA) was created by special New York State legislation in 1965, as a public benefit corporation, which means that it is a corporate entity separate and apart from the State, without any power of taxation frequently called a public authority. MTA is governed by board members appointed by the Governor, with the advice and consent of the State Senate. MTA has responsibility for developing and implementing a single, integrated mass transportation policy for MTA s service region (the MTA Commuter Transportation District), which consists of New York City and the seven New York metropolitan-area counties of Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk and Westchester. It carries out some of those responsibilities by operating the Transit and Commuter Systems through its subsidiary and affiliate entities: the New York City Transit Authority and its subsidiary, the Manhattan and Bronx Surface Transit Operating Authority; the Staten Island Rapid Transit Operating Authority; The Long Island Rail Road Company; the Metro-North Commuter Railroad Company; the Metropolitan Suburban Bus Authority (MTA Long Island Bus); the MTA Bus Company; and MTA Capital Construction Company. MTA issues debt obligations to finance a substantial portion of the capital costs of these systems, other than MTA Long Island Bus. Triborough Bridge and Tunnel Authority (MTA Bridges and Tunnels), another affiliate of MTA, is a public benefit corporation empowered to construct and operate toll bridges and tunnels and other public facilities in New York City. MTA Bridges and Tunnels issues debt obligations to finance the capital costs of its facilities and the Transit and Commuter Systems. MTA Bridges and Tunnels surplus amounts are used to fund certain transit and commuter operations and capital projects. The board members of MTA serve as the board members of MTA s affiliates and subsidiaries, which, together with MTA, are referred to herein as the Related Entities. MTA and the other Related Entities are described in detail in Appendix A to MTA s 2010 Combined Continuing Disclosure Filings (Appendix A), which is included by specific crossreference in this offering memorandum. The following table sets forth the legal and popular names of the Related Entities. Throughout this offering memorandum, reference to each agency will be made using the popular names. Legal Name Metropolitan Transportation Authority New York City Transit Authority Manhattan and Bronx Surface Transit Operating Authority Staten Island Rapid Transit Operating Authority MTA Bus Company Metropolitan Suburban Bus Authority The Long Island Rail Road Company Metro-North Commuter Railroad Company MTA Capital Construction Company Triborough Bridge and Tunnel Authority Popular Name MTA MTA New York City Transit MaBSTOA MTA Staten Island Railway MTA Bus MTA Long Island Bus MTA Long Island Rail Road MTA Metro-North Railroad MTA Capital Construction MTA Bridges and Tunnels Capitalized terms used herein and not otherwise defined have the meanings provided by Appendix A. 1

11 Information Provided in Appendix A From time to time, the Governor, the State Comptroller, the City Comptroller, County Executives, State legislators, City Council members and other persons or groups may make public statements, issue reports, institute proceedings or take actions that contain predictions, projections or other information relating to the Related Entities or their financial condition, including potential operating results for the current fiscal year and projected baseline surpluses or gaps for future years, that may vary materially from, question or challenge the information provided in Appendix A. Investors and other market participants should, however, refer to MTA s then current continuing disclosure filings and official statements for information regarding the Related Entities and their financial condition Where to Find Information Information from the MSRB through EMMA. MTA files annual and other information with EMMA. Such information can be accessed at Information Included by Specific Cross-reference. The information listed under the caption Information Included by Specific Cross-reference in the Table of Contents, as filed with the MSRB through EMMA to date, is included by specific cross-reference in this offering memorandum. This means that important information is disclosed by referring to those documents and that the specified portions of those documents are considered to be part of this offering memorandum. This offering memorandum, which includes the specified portions of those filings, should be read in its entirety in order to obtain essential information for making an informed decision in connection with the Notes. Information Available at No Cost. Information filed with the MSRB through EMMA is also available, at no cost, on MTA s website or by contacting MTA, Attn.: Finance Department, at the address on page (i). For important information about MTA s website, see FURTHER INFORMATION in Part III. [The remainder of this page is intentionally left blank.] 2

12 Recent Developments July Financial Plan. On July 28, 2010, the MTA presented its 2011 Preliminary Budget and July Financial Plan (the July Plan) to the Board, which after deficit reducing actions and revised revenue forecasts, projects on an MTA consolidated basis ending net cash balances/(deficits) of $12 million in 2010, $67 million in 2011, ($92) million in 2012, $156 million in 2013, and ($141) million in The MTA s July Plan reflects the revised revenue projections for the Payroll Mobility Tax (PMT) and other dedicated taxes, made by MTA in January and February 2010 lowering the PMT forecast by $336 million and the Metropolitan Mass Transportation Operating Assistance Fund (MMTOA) forecast by $33 million in 2010, based on updated information from New York State Division of the Budget. In addition, MTA has further revised the PMT estimate downward by $50 million in 2010 based on actual collection data through June MTA has also revised both the real estate tax collections for 2010 downward by $112 million and the petroleum business tax receipts downward by $32 million compared to the February Financial Plan estimate. In addition, the MTA made a determination to continue the New York City Student Transit Pass Program following a commitment by New York State and New York City to reimburse the MTA for a portion of its revenue loss associated with providing this service. Taking into account these commitments, continuation of this program will negatively impact the Financial Plan by $6 million in 2010, $20 million in 2011 and $145 million annually in 2012 through 2014 when compared with the February Plan. The July Plan incorporates the effects of the proposed fare and toll revenue yield increases of 7.5% in 2011 and The 2011 proposed 7.5% fare and toll yield increase is projected to provide additional revenues of $413 million in 2011, $432 million in 2012, $437 million in 2013 and $441 million in The 2013 proposed 7.5% fare and toll yield increase is projected to provide additional revenues of $457 million in 2013 and $474 million in The July Plan also includes additional strict spending constraints and budget reductions which are projected to result in combined annualized savings of approximately $525 million starting in In 2010, MTA has achieved significant savings by reducing operating expenses and improving efficiency. MTA reduced non-represented administrative payrolls by 20% at MTA Headquarters and by 15% at all other agencies, eliminating 977 positions and saving $74 million in 2010 and over $100 million annually thereafter. In May, the MTA began implementing a package of service cuts which were designed to have the least customer impact, resulting in savings of $61 million in 2010 and over $100 million annually thereafter. Specific areas company-wide were targeted for immediate cost reductions in order to overhaul the way MTA does business. These savings initiatives, known as the Budget Reduction Program, include: reducing material and supply costs by renegotiating contract terms with MTA s largest suppliers; reducing non-essential material expenditures and controlling inventory; eliminating or deferring projects that fail to meet rigorous financial or customer service benefit criteria; controlling the escalating cost of paratransit service; and managing overtime costs. Targeted cuts were made in maintenance, cleaning and customer service. MTA Bridges & Tunnels has undertaken a topto-bottom reorganization. Total savings from the Budget Reduction Program agency-wide are approximately $200 million in 2010 and each year thereafter. To date, under the actions described above, the administrative cuts, service reductions and Budget Reduction Program, the MTA has achieved savings of $381 million in 2010 and recurring annual savings of over $500 million in 2011 and beyond. The July Plan includes a headcount total that is 3,470 positions lower (including the 977 administration positions referenced above) than projected in the 2009 November Baseline Plan a 5% reduction. MTA has also benefited from some positive operating results. The July Plan projects a $67 million increase in combined fare and toll revenue due to higher than expected utilization. Lower expenses for energy, pensions, health and welfare and debt service are projected to save almost $190 million in 2010 compared to the February Financial Plan. MTA will be seeking additional cost and productivity savings as a part of the July Financial Plan. As a part of the new MTA Efficiency Initiative, administrative, paratransit and overtime expenses will be further reduced in Under the New Labor Initiative, MTA will seek to stabilize its finances by controlling wage and benefit costs. The July Plan assumes that each new labor contract will not impose any additional financial burden on the MTA for two years; this result can be achieved through a combination of salary, wage and fringe benefit cost reductions, productivity improvements or contributions to benefits. Non-represented employees did not receive any wage increase in 2009 and are not scheduled to receive any increase in Taken together, the New Efficiency Initiative and the New Labor Initiative are projected to provide savings of $113 million in 2011 and growing to $403 million in

13 The July Plan includes other actions designed to address the long term financial stability of MTA including making the assumption that Nassau County will resume total funding of Long Island Bus operations for savings of $100 million over the plan period. MTA is currently in negotiations with Nassau County to resolve this issue. Nassau County is considering the possibility of severing the operating agreement with the MTA and running the operation itself, possibly utilizing private contractors. As a cash management action, MTA will be foregoing the 2010 payment for unfunded future retirees health and other benefits of $57 million. For further information see MTA 2010 Combined Continuing Disclosure Filings Appendix A page A-144 and Appendix B Note 5 to the Consolidated Financial Statements. The Plan assumes that payments will be made for unfunded future retirees health and other benefits for each of the years 2011 through The July Plan further provides for the repayment of a $500 million interagency loan in five annual installments beginning in The July Plan assumes modest increases in consolidated ridership and vehicle crossings in MTA projects that consolidated ridership and vehicle crossings, along with farebox and toll revenue, will produce moderate and sustained increases each year from 2011 through 2014 in line with the projected emergence of the regional economy from recession into a period of modest growth. Forecasted MMTOA tax receipts, which are based on New York State s most recent revenue projections, are expected to be higher than the February Plan for all years 2011 through While in the July Plan real estate tax receipts are projected to grow every year, the forecast reflects a slower recovery than was assumed in the February Plan forecast, particularly due to continued weakness in the commercial real estate market. Recent Litigation Payroll Mobility Tax Litigation. On June 7, 2010, MTA received a copy of a summons and complaint filed by William Floyd Union Free School District against the State of New York and, in their official capacities, the Acting Commissioner of the Department of Taxation and Finance and the Chairman and MTA. The plaintiff is a Suffolk County public school district. Its complaint seeks declaratory relief including a declaration that defendants are barred from further collection of the PMT from plaintiff and an order that defendants reimburse plaintiff for its PMT payments plus interest. On June 17, 2010, MTA received a copy of a summons and complaint filed by the Town of Brookhaven, a municipal corporation located in Suffolk County, against the State of New York, the Governor and various officials of the State of New York in their official capacities, and MTA, seeking declaratory relief as well as a stay against further collection of the PMT. On July 12, 2010, MTA was served with a summons and complaint filed by the Town of Southampton and the Town of Southold, municipal corporations located in Suffolk County, against the State of New York, the Governor and various officials of the State of New York in their official capacities, and MTA, also seeking declaratory relief and a stay against further collection of the PMT. On July 22, 2010, MTA was served with a summons and complaint filed by the Town of Huntington, a municipal corporation located in Suffolk County, against the State of New York, the Governor and various officials of the State of New York in their official capacities, and MTA, which also seeks declaratory relief and a stay against further collection of the PMT. On July 29, 2010, MTA was served with a summons and complaint filed by Edward Mangano, in his official capacity as Nassau County Executive, and the County of Nassau against the State of New York, the Governor and various officials of the State of New York in their official capacities, and MTA, also seeking declaratory relief as well as a stay against further collection of the PMT. On August 18, 2010, MTA was served with a summons and complaint filed by C. Scott Vanderhoef, in his official capacity as Rockland County Executive, and the County of Rockland against the State of New York, the Governor and various officials of the State of New York in their official capacities, and MTA, seeking declaratory relief, a stay against further collection of the PMT and compensatory damages in the amount of $220,000,000. Each of these actions are in their earliest stages. Most of the claims in these actions are substantially similar to ones asserted in the Hampton Transportation Ventures Inc. v. Silver action described in Appendix A and MTA believes such claims to be without merit. MTA is reviewing each of the complaints in its entirety, including additional claims, and intends to vigorously defend these actions. Debt Issuance In addition to MTA issuing the Series CP-2 Notes, TBTA will effect a mandatory tender on or about September 29, 2010 (the Purchase Date ) of its variable rate TBTA General Resolution Bonds, Series 2001C. On the Purchase Date, the current irrevocable direct pay letter of credit issued by Bayerische Landesbank, acting through its New York Branch, will be substituted with an irrevocable direct pay letter of credit issued by JPMorgan Chase Bank, N.A.; the Series 2001C Bonds will be subject to a mandatory tender on the Purchase Date at a purchase price equal to the principal and accrued 4

14 interest amount thereof; and the terms and provisions of the Series 2001C Bonds will be amended to reflect the terms and provisions of the remarketed Series 2001C Bonds. General THE NOTES Morgan Stanley & Co. Incorporated has been initially appointed to serve as the dealer for up to $100,000,000 Metropolitan Transportation Authority Transportation Revenue Bond Anticipation Notes, Series CP-2 Credit Enhanced, Subseries A (the Subseries A Notes ); Barclays Capital Inc. has been initially appointed to serve as the dealer for up to $250,000,000 Metropolitan Transportation Authority Transportation Revenue Bond Anticipation Notes, Series CP-2 Credit Enhanced, Subseries B (the Subseries B Notes ); RBC Capital Markets Corporation has been initially appointed to serve as the dealer for up to $350,000,000 Metropolitan Transportation Authority Transportation Revenue Bond Anticipation Notes, Series CP-2 Credit Enhanced, Subseries C (the Subseries C Notes ) and Citigroup Global Markets Inc. has been initially appointed to serve as the dealer for up to $200,000,000 Metropolitan Transportation Authority Transportation Revenue Bond Anticipation Notes, Series CP-2 Credit Enhanced, Subseries D (the Subseries D Notes, and, collectively with the Subseries A Notes, the Subseries B Notes and the Subseries C Notes, the Notes ), (Morgan Stanley & Co. Incorporated, Barclays Capital Inc., RBC Capital Markets Corporation and Citigroup Global Markets Inc. being collectively referred to herein as the Dealers ). The Notes are issued in accordance with the terms and provisions of the General Resolution Authorizing Transportation Revenue Obligations of MTA adopted on March 26, 2002, as supplemented (such General Resolution Authorizing Transportation Revenue Obligations as from time to time amended or supplemented being herein called the Resolution ), including as supplemented by the Series CP-2 Transportation Revenue Bond Anticipation Note and Related Parity Debt Supplemental Resolution (the Commercial Paper Resolution ) adopted by MTA on July 28, 2010, authorizing the issuance, at one time, or from time to time, of the Notes. The Notes are being issued in anticipation of the issuance of bonds (the Series CP-2 Bonds ) pursuant to the Series CP-2 Transportation Revenue Bond Supplemental Resolution (the Series CP-2 Bonds Supplemental Resolution ) adopted by MTA on July 28, 2010 as a supplemental resolution in accordance with the Resolution. The Series CP-2 Bonds are authorized to be issued in an amount sufficient to pay principal of and interest accrued and to accrue on all Notes and Bank Parity Debt (as hereinafter described) to their stated maturity dates. Under the Commercial Paper Resolution, the aggregate principal amount of Notes outstanding at any time may be increased or decreased, provided that at no time may the aggregate principal amount outstanding be in excess of the lesser of (i) the principal component of the Credit Facilities hereinafter described and (ii) $900 million. Each Subseries of Notes will be issued under an Issuing and Paying Agency Agreement, each dated as of September 16, 2010 (the Issuing and Paying Agency Agreements ), between MTA and The Bank of New York Mellon, acting as Issuing and Paying Agent (the Issuing and Paying Agent ). Purpose of the Notes The proceeds of the Notes may be used to (i) finance transit and commuter projects, (ii) pay principal and interest on other outstanding Notes, (iii) reimburse TD Bank, N.A. ( TD Bank ) for draws on its irrevocable direct pay letter of credit (the TD Bank Credit Facility ), (iv) reimburse Barclays Bank PLC ( Barclays ) for draws on its irrevocable direct pay letter of credit (the Barclays Credit Facility ), (v) reimburse Royal Bank of Canada ( Royal Bank ), acting through a branch located in New York, New York, for draws on its irrevocable direct pay letter of credit (the Royal Bank Credit Facility ), (vi) reimburse Citibank, N.A. ( Citibank and, together with TD Bank, Barclays and Royal Bank, the Credit Facility Issuers ) for draws on its irrevocable direct pay letter of credit (the Citibank Credit Facility and, together with the TD Bank Credit Facility, the Barclays Credit Facility and the Royal Bank Credit Facility, the Credit Facilities ) and (vii) fund capitalized interest on the Notes. Description of the Notes The Notes will be dated the date of their respective authentication, will be issued as interest-bearing obligations in denominations of $100,000 and additional increments of $1,000 above $100,000 and, except as described below, will be issued in book-entry-only form through the book-entry-only system of The Depository Trust Company ( DTC ). See Attachment 2 BOOK-ENTRY-ONLY SYSTEM. Each Note will bear interest from its date of issuance at the rate determined at the date of issuance (which may not exceed 12% per annum) and payable at maturity. The Notes are not callable prior to their respective maturity dates. 5

15 The Notes will mature no later than 270 days from their date of issuance; provided that, so long as the Credit Facilities are in effect, no Notes may be issued with a maturity date after the stated expiration date of any Credit Facility supporting such Notes or after the stated expiration date of any substitute Credit Facility supporting such Notes. Interest is computed on the basis of a 365 or 366-day year, as applicable, and the actual number of days elapsed. The principal of and interest on the Notes in book-entry-only form will be paid at maturity to DTC and distributed by it to its Participants as described in Attachment 2 BOOK-ENTRY-ONLY SYSTEM. General SECURITY FOR THE NOTES The principal of and interest on the Notes are payable solely from the proceeds of (1) draws under the applicable Credit Facility, (2) other Notes, (3) the Series CP-2 Bonds, and (4) though not pledged therefor, notes or other evidences of indebtedness or any other amounts, in each case if and to the extent such amounts may lawfully be used to make such payments. The Notes are not secured by any other funds, accounts or amounts that are pledged to the payment of bonds or parity obligations issued under the Resolution. Pursuant to the Series CP-2 Bonds Supplemental Resolution, MTA has authorized the issuance of the Series CP-2 Bonds in an amount sufficient to pay principal of and interest accrued and to accrue on all Notes and Bank Parity Debt to their stated maturity dates. The Notes are not a debt of the State of New York, The City of New York or any other local government unit, and the State, the City and other local government units are not liable thereon. MTA has no taxing power. MTA expects to pay the principal of and interest on the Notes with the proceeds of draws under the related Credit Facility supporting the related subseries of Notes, and to immediately reimburse the Credit Facility Issuers for such draws with the proceeds of the remarketing of additional Notes and other available moneys (in the case of interest) until MTA provides for permanent financing of the projects initially financed with the proceeds of the Notes either by the issuance of the Series CP-2 Bonds or other long-term bonds issued under the Resolution or with Federal grants. MTA may substitute another letter of credit (a "Substitute Letter of Credit") for any of the Credit Facilities provided that the MTA provides at least 15 days' prior notice of the substitution thereof to the Noteholders and the Dealer and any such Substitute Credit Facility may only take effect upon the maturity of all outstanding Notes of the applicable Subseries. THE 2010 CREDIT FACILITIES AND THE CREDIT FACILITY ISSUERS Unless the context otherwise indicates, references in the following description to the Notes apply to the Subseries A, Subseries B, Subseries C and Subseries D Notes independently, and references to Credit Facility apply to the separate Credit Facility relating to the Subseries A, Subseries B, Subseries C and Subseries D Notes, as appropriate. General Description. MTA and TD Bank will enter into a Letter of Credit and Reimbursement Agreement, dated as of September 16, 2010 (the TD Bank Reimbursement Agreement ), with respect to the Subseries A Notes. MTA and Barclays will enter into a Letter of Credit and Reimbursement Agreement, dated as of September 16, 2010 (the Barclays Reimbursement Agreement ), with respect to the Subseries B Notes. MTA and Royal Bank will enter into a Letter of Credit and Reimbursement Agreement, dated as of September 16, 2010 (the Royal Bank Reimbursement Agreement ), with respect to the Subseries C Notes. MTA and Citibank will enter into a Letter of Credit and Reimbursement Agreement, dated as of September 16, 2010, with respect to the Subseries D Notes (the Citibank Reimbursement Agreement and, together with the TD Bank Reimbursement Agreement, the Barclays Reimbursement Agreement and the Royal Bank Reimbursement Agreement, the Reimbursement Agreements ). In order to ensure the timely payment of principal of and interest on the Notes, at MTA s request, TD Bank will issue its Credit Facility for Subseries A Notes, Barclays will issue its Credit Facility for the Subseries B Notes, Royal Bank will issue its Credit Facility for the Subseries C Notes and Citibank will issue its Credit Facility for the Subseries D Notes. On or before the date of maturity of any Note, the Issuing and Paying Agent shall draw on the appropriate Credit Facility an amount equal to the principal amount and interest due on the related Notes maturing on such date. Pursuant to the Issuing and Paying Agency Agreements, any amounts received from any drawing on the Credit Facilities are required to be deposited in the applicable account in the Metropolitan Transportation Authority Transportation Revenue Series CP-2 Credit Enhanced Notes Fund established under the Resolution and held in trust and set aside exclusively for the payment 6

16 of the related Series 2010 Credit Enhanced Notes for which such drawing was made and the Issuing and Paying Agent is required to apply such amounts to the payment of the principal and interest on such Notes upon presentation for payment. MTA will at all times maintain the Credit Facilities or Substitute Credit Facilities. MTA may replace any Credit Facility with a Substitute Credit Facility upon satisfaction of the requirements set forth in the Resolution and any such Substitute Credit Facility may only take effect upon the maturity of all outstanding Notes of the applicable Subseries. The Issuing and Paying Agent will give notice of such substitution to the applicable Dealer and the holders of the applicable Subseries of Notes at least 15 days prior to the date of delivery of such Substitute Credit Facility. TD Bank Credit Facility In connection with the Subseries A Notes, TD Bank will issue the TD Bank Credit Facility in favor of the Issuing and Paying Agent in a stated amount equal to $102,500,000 in order to pay principal and interest (calculated at the rate of 10% per annum for a period of 90 days and based on a year of 360 days) due on the Subseries A Notes as provided therein. Unless extended in accordance with its terms, the stated expiration date of the TD Bank Credit Facility is September 12, All amounts paid under the TD Bank Credit Facility are required to be reimbursed to TD Bank in the manner set forth in the TD Bank Reimbursement Agreement. The obligation to reimburse TD Bank under the TD Bank Reimbursement Agreement and the related obligations of MTA will be evidenced and secured by a Subseries A Bank Note issued by MTA to TD Bank. TD Bank s obligation under the TD Bank Credit Facility will be reduced to the extent of the principal component of any drawing thereunder plus the allocable interest component. Any such reductions related to a drawing to pay the principal of and accrued interest on any Subseries A Notes at maturity will be reinstated automatically to the extent that TD Bank receives reimbursement for the amount of such drawing. For information relating to TD Bank, see Attachment 1. Barclays Credit Facility In connection with the Subseries B Notes, Barclays will issue the Barclays Credit Facility in favor of the Issuing and Paying Agent in a stated amount equal to $256,250,000 in order to pay principal and interest (calculated at the rate of 10% per annum for a period of 90 days and based on a year of 360 days) due on the Subseries B Notes as provided therein. Unless extended in accordance with its terms, the stated expiration date of the Barclays Credit Facility is September 12, All amounts paid under the Barclays Credit Facility are required to be reimbursed to Barclays in the manner set forth in the Barclays Reimbursement Agreement. The obligation to reimburse Barclays under the Barclays Reimbursement Agreement and the related obligations of MTA will be evidenced and secured by a Subseries B Bank Note issued by MTA to Barclays. Barclays s obligation under the Barclays Credit Facility will be reduced to the extent of the principal component of any drawing thereunder plus the allocable interest component. Any such reductions related to a drawing to pay the principal of and accrued interest on any Subseries B Notes at maturity will be reinstated automatically to the extent that Barclays receives reimbursement for the amount of such drawing. For information relating to Barclays, see Attachment 2. Royal Bank Credit Facility In connection with the Subseries C Notes, Royal Bank will issue the Royal Bank Credit Facility in favor of the Issuing and Paying Agent in a stated amount equal to $ 358,750,000 in order to pay principal and interest (calculated at the rate of 10% per annum for a period of 90 days and based on a year of 360 days) due on the Subseries C Notes as provided therein. Unless extended in accordance with its terms, the stated expiration date of the Royal Bank Credit Facility is September 14, All amounts paid under the Royal Bank Credit Facility are required to be reimbursed to Royal Bank in the manner set forth in the Royal Bank Reimbursement Agreement. The obligation to reimburse Royal Bank under the Royal Bank Reimbursement Agreement and the related obligations of MTA will be evidenced and secured by a Subseries C Bank Note issued by MTA to Royal Bank. Royal Bank s obligation under the Royal Bank Credit Facility will be reduced to the extent of the principal component of any drawing thereunder plus the allocable interest component. Any such reductions related 7

17 to a drawing to pay the principal of and accrued interest on any Subseries C Notes at maturity will be reinstated automatically to the extent that Royal Bank receives reimbursement for the amount of such drawing. For information relating to Royal Bank, see Attachment 3. Citibank Credit Facility In connection with the Subseries D Notes, Citibank will issue the Citibank Credit Facility in favor of the Issuing and Paying Agent in a stated amount equal to $205,000,000 in order to pay principal and interest (calculated at the rate of 10% per annum for a period of 90 days and based on a year of 360 days) due on the Subseries D Notes as provided therein. Unless extended in accordance with its terms, the stated expiration date of the Citibank Credit Facility is September 12, All amounts paid under the Citibank Credit Facility are required to be reimbursed to Citibank in the manner set forth in the Citibank Reimbursement Agreement. The obligation to reimburse Citibank under the Citibank Reimbursement Agreement and the related obligations of MTA will be evidenced and secured by a Subseries D Bank Note issued by MTA to Citibank. Citibank s obligation under the Citibank Credit Facility will be reduced to the extent of the principal component of any drawing thereunder plus the allocable interest component. Any such reductions related to a drawing to pay the principal of and accrued interest on any Subseries D Notes at maturity will be reinstated automatically to the extent that Citibank receives reimbursement for the amount of such drawing. For information relating to Citibank, see Attachment 4. LITIGATION There is no litigation or other proceeding pending or, to the knowledge of MTA, threatened in any court, agency or other administrative body (either State or Federal) restraining or enjoining the issuance or delivery of the Notes, the Bank Notes, the Bank Parity Debt or the Series CP-2 Bonds, or in any way questioning or affecting: (i) the proceedings authorizing the Notes, the Bank Notes, the Bank Parity Debt or the Series CP-2 Bonds, or (ii) the validity of any provision of the Notes, the Bank Notes, the Bank Parity Debt or the Series CP-2 Bonds or the Resolution. MTA, its affiliates and subsidiaries are defendants in numerous claims and actions. Certain of these claims and actions, either individually or in the aggregate, are potentially material to holders of the Notes. A summary of certain of these potentially material claims and actions is set forth in Appendix A under the caption LITIGATION. General TAX MATTERS Nixon Peabody LLP is Bond Counsel for the Notes. Their opinion under existing law, relying on certain statements by MTA and assuming compliance by MTA with certain covenants, is that interest on the Notes will be: excluded from a noteholder s federal gross income under the Internal Revenue Code of 1986, not a preference item for a noteholder under the federal alternative minimum tax, and Their opinion is also that under existing law interest on the Notes will be exempt from personal income taxes of New York State and any political subdivisions of the State. See Attachment 3 to this offering memorandum for the form of the opinion that Bond Counsel expects to deliver when the Notes are delivered. No opinion is expressed by Bond Counsel as to whether interest on any of the Notes is excluded from the adjusted current earnings of corporations for purposes of computing the alternative minimum tax imposed on corporations. The Internal Revenue Code imposes requirements on the Notes that MTA must continue to meet after the Notes are issued. These requirements generally involve the way that Note proceeds must be used and invested. If MTA does not meet these requirements, it is possible that a noteholder may have to include interest on the Notes in its federal gross income on a retroactive basis to the date of issue. MTA has covenanted to do everything necessary to meet the requirements of the Internal Revenue Code. 8