$199,555,000 Maryland Economic Development Corporation … · 2017. 2. 11. · The 2012 Series Bonds are offered, subject to prior sale, when, as, and if delivered by the Issuer,

OFFICIAL STATEMENT DATED OCTOBER 17, 2012

New Issue - Book-Entry Only Ratings: (See “RATINGS” herein)

In the opinion of Bond Counsel, the principal amount of the 2012 Series Bonds and the interest thereon are exempt from State, municipal and local taxation in the State of Maryland under existing law; no opinion is expressed as to such exemption from estate or inheritance taxes, or any other taxes not levied or assessed directly on the 2012 Series Bonds or the interest thereon. Interest on the 2012 Series Bonds is NOT excludable from gross income for federal income tax purposes. See “TAX MATTERS” herein.

$199,555,000 Maryland Economic Development Corporation

Lease Revenue Refunding Bonds (Maryland Aviation Administration Facilities)

2012 Series (Taxable) secured by a Lease between

Maryland Economic Development Corporation and the Maryland Aviation Administration Dated: Date of Delivery Due: June 1, as shown below

____________________________

Due

(June 1) Amount Interest Rate^ Price^ CUSIP

Due (June 1) Amount

Interest Rate^ Price^ CUSIP

2013 $11,980,000 0.300% 100.000% 57420PGD2 2022 $10,320,000 2.800% 100.585% 57420PGN0 2014 10,050,000 0.600 100.047 57420PGE0 2023 10,610,000 2.880 100.000 57420PGP5 2015 10,105,000 0.750 100.050 57420PGF7 2024 10,915,000 2.900 98.736 57420PGQ3 2016 10,185,000 1.250 100.244 57420PGG5 2025 11,235,000 3.050 98.658 57420PGR1 2017 10,320,000 1.450 100.309 57420PGH3 2026 11,575,000 3.150 98.582 57420PGS9 2018 10,460,000 1.800 100.317 57420PGJ9 2027 11,940,000 3.250 98.511 57420PGT7 2019 10,645,000 2.050 100.367 57420PGK6 2028 12,325,000 3.350 98.444 57420PGU4 2020 10,865,000 2.250 100.416 57420PGL4 2029 12,740,000 3.760 100.000 57420PGV2 2021 10,070,000 2.500 100.538 57420PGM2 2030 13,215,000 3.810 100.000 57420PGW0

^ The interest rates shown above are the interest rates payable by the Issuer resulting from the successful bids for the 2012 Series Bonds on October 17, 2012. The prices shown above are furnished by the successful bidder for the 2012 Series Bonds. All other information concerning the terms of the reoffering of the 2012 Series Bonds should be obtained from such successful bidder. See “SALE AT COMPETITIVE BIDDING” herein.

The 2012 Series Bonds are issuable only as fully registered bonds in denominations of $5,000 or any integral multiple thereof. All of the 2012 Series Bonds initially will be maintained under the book-entry system under which The Depository Trust Company, New York, New York (“DTC”), will act as securities depository. Purchases of the 2012 Series Bonds will be in book-entry form only. So long as the 2012 Series Bonds are maintained under the book-entry system, payments of the principal of the 2012 Series Bonds, payable annually on each June 1, beginning June 1, 2013, and interest on the 2012 Series Bonds, payable initially on June 1, 2013, and thereafter on each December 1 and June 1 will be made when due by Manufacturers & Traders Trust Company, as trustee (the “Trustee”), to DTC in accordance with the Trust Indenture dated as of October 1, 2012 (the “Trust Indenture”) between Maryland Economic Development Corporation (the “Issuer”) and the Trustee. The Trustee will have no obligation to make payments to any beneficial owner of any 2012 Series Bond. See “DESCRIPTION OF THE 2012 SERIES BONDS-Book-Entry Only System.”

The 2012 Series Bonds are subject to redemption prior to maturity, including special mandatory redemption, as described under the heading “DESCRIPTION OF THE 2012 SERIES BONDS – Redemption Prior to Maturity.”

Proceeds of the 2012 Series Bonds will be used to (i) refund in advance of maturity the Issuer’s Lease Revenue Refunding Bonds (Maryland Aviation Administration Facilities), 2003 Series and (ii) pay for certain costs of issuance relating to the 2012 Series Bonds.

The 2012 Series Bonds are limited obligations of the Issuer, payable solely from Base Rentals and Additional Rentals paid by the Maryland Aviation Administration (the “MAA”) pursuant to an Amended and Restated Lease Agreement by and between the Issuer and the MAA. The Rentals are assigned by the Issuer to the Trustee, pursuant to the Trust Indenture.

The MAA’s obligation to pay Rentals is subject to annual appropriation therefor by the General Assembly. The General Assembly is not obligated to make such appropriations. Neither the Lease nor the 2012 Series Bonds shall ever constitute an indebtedness or a charge against the general taxing powers or give rise to a pecuniary liability of the Issuer, the MAA, the Department of Transportation of Maryland or the State of Maryland. The Issuer has no taxing power.

This cover page is not a summary of the issue. Prospective investors should read this Official Statement in its entirety to make an informed investment decision.

The 2012 Series Bonds are offered, subject to prior sale, when, as, and if delivered by the Issuer, subject to the approval of McGuireWoods LLP, Baltimore, Maryland, Bond Counsel and certain other conditions specified in the official Notice of Sale. Certain legal matters will be passed upon for the MAA by Louisa H. Goldstein, Assistant Attorney General, Counsel to the MAA. The 2012 Series Bonds are expected to be available for delivery through the facilities of DTC in New York, New York on or about October 31, 2012.

This Official Statement does not constitute an offering of any security other than the original offering of the 2012 Series Bonds identified on the cover hereof. No dealer, broker, salesman or other person has been authorized to give any information or to make any representation with respect to the 2012 Series Bonds other than those contained in this Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized. This Official Statement does not constitute an offer to sell or the solicitation of any offer to buy nor shall there be any sale of the 2012 Series Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. This Official Statement is not to be construed as an agreement or contract between the Issuer and the purchasers or owners of any of the 2012 Series Bonds.

All quotations from and summaries and explanations of provisions of law and documents herein do not purport to be complete and reference is made to such laws and documents for full and complete statements of their provisions. Any statements made in this Official Statement involving estimates or matters of opinion, whether or not expressly so stated, are intended merely as estimates or opinions and not as representations of fact. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale of the 2012 Series Bonds shall under any circumstances create any implication that there has been no change in the affairs of the Issuer, the MAA, the Department of Transportation of Maryland or the State of Maryland.

The Issuer is responsible only for the information relating to the Issuer under the headings “THE ISSUER” and “LITIGATION” to the extent such information relates to the Issuer, and the Issuer is not responsible for and does not certify the accuracy or sufficiency of the disclosures made herein or any other information provided by the MAA, the Department of Transportation of Maryland, the State of Maryland or any other person.

CUSIP numbers set forth herein copyrighted by the American Bankers Association. CUSIP data herein is provided by Standard & Poor’s CUSIP Service Bureau, a division of The McGraw Hill Companies Inc. solely for the convenience of the holders of the 2012 Series Bonds only at the time of issuance of the 2012 Series Bonds and none of the Issuer, the Department of Transportation of Maryland and the MAA undertakes any responsibility for their accuracy now or at any time in the future. The CUSIP data are not intended to create a database and do not serve in any way as a substitute for the CUSIP Service Bureau. The CUSIP numbers are subject to being changed after the issuance of the 2012 Series Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of the 2012 Series Bonds.

[Remainder of Page Intentionally Left Blank]

i

TABLE OF CONTENTS Page

INTRODUCTION ............................................................................................................................................................................ 2 ESTIMATED SOURCES AND USES OF PROCEEDS ................................................................................................................. 4

Sources and Uses of Funds ............................................................................................................................................................ 4 PLAN OF FINANCING ................................................................................................................................................................... 4

Refunding of 2003 Series Bonds ................................................................................................................................................... 4 The Project .................................................................................................................................................................................... 4

DESCRIPTION OF THE 2012 SERIES BONDS ............................................................................................................................ 5 General Description ...................................................................................................................................................................... 5 Redemption Prior to Maturity ....................................................................................................................................................... 5 Book-Entry Only System .............................................................................................................................................................. 6 Registration and Exchange of 2012 Series Bonds ......................................................................................................................... 8

SECURITY AND SOURCES OF REPAYMENT ........................................................................................................................... 8 Base Rentals; Additional Rentals .................................................................................................................................................. 8 Appropriation by General Assembly ............................................................................................................................................. 8 Security Interest ............................................................................................................................................................................ 9

THE ISSUER .................................................................................................................................................................................... 9 Membership and Organization ...................................................................................................................................................... 9 Powers ......................................................................................................................................................................................... 10 Bonds and Notes ......................................................................................................................................................................... 10

THE DEPARTMENT OF TRANSPORTATION .......................................................................................................................... 11 Officials of the Department ......................................................................................................................................................... 11 Maryland Aviation Administration ............................................................................................................................................. 12 Transportation Trust Fund ........................................................................................................................................................... 16 Taxes and Fees ............................................................................................................................................................................ 17 Federal Aid .................................................................................................................................................................................. 18 Consolidated Transportation Bonds ............................................................................................................................................ 19 Additional Information Incorporated by Reference .................................................................................................................... 19

THE MARYLAND TRANSPORTATION AUTHORITY ............................................................................................................ 19 Financings ................................................................................................................................................................................... 19

THE STATE OF MARYLAND ..................................................................................................................................................... 21 State Government ........................................................................................................................................................................ 21 State Finances ............................................................................................................................................................................. 22 Additional Information Incorporated by Reference .................................................................................................................... 36

CERTAIN RISKS OF OWNERSHIP OF THE 2012 SERIES BONDS ........................................................................................ 36 Failure to Appropriate ................................................................................................................................................................. 36 Uncertainty of Remedies ............................................................................................................................................................. 37

TAX MATTERS ............................................................................................................................................................................ 37 State and Local Tax Exemption .................................................................................................................................................. 37 Federal Law ................................................................................................................................................................................. 37

LEGAL MATTERS ........................................................................................................................................................................ 37 LITIGATION ................................................................................................................................................................................. 37 SALE AT COMPETITIVE BIDDING ........................................................................................................................................... 38 VERIFICATION OF MATHEMATICAL COMPUTATIONS ..................................................................................................... 38 RATINGS ....................................................................................................................................................................................... 38 FINANCIAL ADVISOR ................................................................................................................................................................ 38 CONTINUING DISCLOSURE ...................................................................................................................................................... 38 MISCELLANEOUS ....................................................................................................................................................................... 39

Appendix A - Information with respect to the State of Maryland included by reference Appendix B - Information with respect to the Department of Transportation of Maryland

included by reference Appendix C - Summaries of the Lease and the Trust Indenture Appendix D - Proposed Form of Opinion of Bond Counsel Appendix E - Form of Notice of Sale Appendix F - Proposed Form of Continuing Disclosure Agreement

2

OFFICIAL STATEMENT

$199,555,000 MARYLAND ECONOMIC DEVELOPMENT CORPORATION

LEASE REVENUE REFUNDING BONDS (MARYLAND AVIATION ADMINISTRATION FACILITIES)

2012 SERIES (TAXABLE)

INTRODUCTION

This Official Statement, including the cover page and the Appendices hereto, provides information concerning Maryland Economic Development Corporation, a body politic and corporate and a public instrumentality of the State of Maryland (the “Issuer”), the Department of Transportation of Maryland (the “Department”), a principal department of the State of Maryland (the “State”), and the proposed issuance by the Issuer of $199,555,000 in aggregate principal amount of the Issuer’s Lease Revenue Refunding Bonds (Maryland Aviation Administration Facilities), 2012 Series (Taxable) (the “2012 Series Bonds”). The 2012 Series Bonds and any Additional Bonds issued under the Trust Indenture (defined below) are referred to herein collectively as the “Bonds.”

Definitions of certain terms used in this Official Statement are set forth in Appendix C to this Official Statement.

Authority for Issuance: The 2012 Series Bonds are authorized by Sections 10-101 through 10-132, inclusive of the Economic Development Article of the Annotated Code of Maryland, as amended (the “Act”), a Resolution adopted by the Board of Directors of the Issuer on August 20, 2012 (the “Resolution”), and a Trust Indenture, dated as of October 1, 2012 (the “Trust Indenture”), by and between the Issuer and Manufacturers and Traders Trust Company, as trustee thereunder (the “Trustee”).

Purpose of Issue: Pursuant to the Act, the Issuer previously issued its Lease Revenue Bonds (Maryland Aviation Administration Facilities), 2003 Series in the original aggregate principal amount of $223,660,000 (the “2003 Series Bonds”) in order to finance a portion of the costs of construction by the Issuer of an approximately 508,890 gross square foot terminal expansion to the Baltimore/Washington International Thurgood Marshall Airport, Maryland (“BWI” or the “Airport”) (the “Project”) located on approximately 5.62 acres at BWI in Anne Arundel County, Maryland (the “Property” and, together with the Project, the “Facility”), and to pay for the costs of issuance relating to the 2003 Series Bonds. The Property is owned by the Maryland Aviation Administration, a statutorily created agency of the State and a unit within the Department (the “MAA”), and is leased to the Issuer pursuant to a Ground Lease between the MAA and the Issuer (the “Ground Lease”). Concurrently with the issuance of the 2003 Series Bonds, the Facility was leased by the Issuer to the MAA pursuant to a Lease Agreement dated as of April 1, 2003 (the “Original Lease”). The Facility will continue to be leased, with an option to purchase, by the Issuer to the MAA pursuant to the Original Lease, as amended and restated by an Amended and Restated Lease Agreement dated as of October 1, 2012 (the “Lease”), by and between the Issuer and the MAA and approved by the Board of Public Works of the State of Maryland on October 3, 2012.

Proceeds of the 2012 Series Bonds will be applied to refund the 2003 Series Bonds in advance of their respective scheduled maturities and to pay certain costs of issuance of the 2012 Series Bonds. See “PLAN OF FINANCING” herein.

Security: Pursuant to the Lease, the MAA has agreed to pay rentals in consideration of the right of the MAA to use the Facility during the Term of the Lease (the “Base Rentals”) in amounts and at times sufficient to pay when due the principal of, premium, if any, and interest on the 2012 Series Bonds. The Issuer has assigned its right to receive Base Rentals to the Trustee for the benefit of the Bondholders. Base Rentals are payable by the MAA directly to the Trustee. The MAA also has agreed to pay to the Trustee for the account of the Issuer the Additional Rentals in

3

consideration of the right of the MAA to use the Property during the Term of the Lease. See “SECURITY AND SOURCES OF REPAYMENT” herein.

The Bonds are payable solely from, and are equally and ratably secured, together with any Additional Bonds, by a pledge of, the Trust Estate comprised of all Rentals paid by the MAA to the Trustee pursuant to the Lease. Payment of the Bonds is further secured by a security interest in certain revenues derived by the MAA from the Facility to be transferred by the MAA to the Trustee upon the occurrence of a default by the MAA under the Lease (the “Lease Revenues”). See “SECURITY AND SOURCES OF REPAYMENT” herein.

Rentals Subject to Appropriation: The MAA’s obligations under the Lease, including its obligation to pay Rentals, and other amounts required under the Lease, are absolute and unconditional, such payments to be made without exercise of any rights of set-off, recoupment or counterclaim, but are subject to and dependent upon annual appropriation by the General Assembly of the State (the “General Assembly”). The General Assembly is not obligated to make such appropriations. In the event that the General Assembly fails to make any such annual appropriation, the Trustee may take only those actions permitted by the Lease, including a termination of the Lease and the transfer of the Lease Revenues by the MAA to the Trustee to be applied by the Trustee in accordance with the Trust Indenture. See Appendix C – “SUMMARIES OF THE LEASE AND THE TRUST INDENTURE – The Lease – Term of Lease; Failure to Appropriate.” Upon the occurrence of a Failure to Appropriate, the MAA will not be obligated to pay Rentals beyond the last day of the Fiscal Year for which an appropriation is available and neither the Issuer nor the Trustee will have any right to compel the MAA to make such payments. THE REMEDIES AVAILABLE TO THE ISSUER AND THE TRUSTEE IN THE EVENT OF A FAILURE TO APPROPRIATE ARE LIMITED AND DO NOT INCLUDE THE RIGHT TO INSTITUTE LEGAL PROCEEDINGS TO COMPEL PAYMENT OF ANY RENTALS FOR WHICH THERE IS NOT AN APPROPRIATION NOR MAY THE ISSUER OR THE TRUSTEE SEEK A JUDGMENT AGAINST THE MAA. A FAILURE TO APPROPRIATE IS NOT AN EVENT OF DEFAULT.

Limited Nature of Issuer’s Obligations: THE 2012 SERIES BONDS AND ANY PREMIUM AND INTEREST THEREON ARE LIMITED OBLIGATIONS OF THE ISSUER, THE PRINCIPAL, PREMIUM AND INTEREST ON WHICH ARE PAYABLE SOLELY FROM THE TRUST ESTATE. NEITHER THE 2012 SERIES BONDS NOR ANY PREMIUM NOR INTEREST THEREON SHALL EVER (1) CONSTITUTE AN INDEBTEDNESS OR A CHARGE AGAINST THE GENERAL CREDIT OR TAXING POWERS OF THE STATE, ANY POLITICAL SUBDIVISION THEREOF, THE MAA, THE DEPARTMENT, THE ISSUER OR ANY OTHER PUBLIC BODY OR (2) CONSTITUTE OR GIVE RISE TO ANY PECUNIARY LIABILITY OF THE STATE, ANY POLITICAL SUBDIVISION THEREOF, THE MAA, THE DEPARTMENT, OR ANY OTHER PUBLIC BODY (OTHER THAN THE ISSUER AS HEREIN DESCRIBED). THE ISSUANCE OF THE 2012 SERIES BONDS IS NOT DIRECTLY OR INDIRECTLY OR CONTINGENTLY AN OBLIGATION, MORAL OR OTHER, OF THE STATE OR ANY POLITICAL SUBDIVISION THEREOF TO LEVY ANY FORM OF TAXATION WHATSOEVER THEREFOR OR TO MAKE ANY APPROPRIATION FOR THEIR PAYMENT. THE 2012 SERIES BONDS DO NOT CONSTITUTE AN INDEBTEDNESS TO WHICH THE FAITH OR CREDIT OF THE STATE, THE MAA, THE DEPARTMENT, THE ISSUER OR ANY OTHER PUBLIC BODY IS PLEDGED. THE ISSUER HAS NO TAXING POWER.

Continuing Disclosure: The Department on behalf of itself and the State will undertake in a Continuing Disclosure Agreement to comply with the provisions of Rule 15c2-12 promulgated by the Securities and Exchange Commission and as in effect on the date hereof, by providing certain limited annual financial information and material event notices required by Rule 15c2-12. See “CONTINUING DISCLOSURE” herein.

This Official Statement contains brief descriptions of the Facility, the terms of the 2012 Series Bonds and the security therefor, certain risks pertaining to investment in the 2012 Series Bonds, the Issuer, the MAA, the Department, the State, the Lease and the Trust Indenture, which descriptions do not purport to be comprehensive. All summaries herein are qualified in their entirety by reference to statutes, documents and agreements, copies of which are available for inspection at the corporate trust office of the Trustee in Baltimore, Maryland.

4

ESTIMATED SOURCES AND USES OF PROCEEDS

Sources and Uses of Funds

The estimated sources and uses of funds for the Facility and the financing thereof from the proceeds to be received from the sale of the 2012 Series Bonds, are as follows:

Sources of Funds 2012 Series Bonds $199,555,000.00 Net original issue premium (discount) (523,947.85) Total Sources $199,031,052.15 Uses of Funds Deposit to Escrow Deposit Fund $197,824,681.52 Costs of issuance(a) 465,000.00 Underwriter’s discount 737,120.25 Additional proceeds 4,250.38 Total Uses $199,031,052.15

________________ (a) Includes legal and rating agency fees and certain other costs of issuance, but does not include underwriter’s discount.

PLAN OF FINANCING

Refunding of 2003 Series Bonds

The proceeds of the 2012 Series Bonds will be used (i) to refund the 2003 Series Bonds and (ii) to pay certain administrative, underwriting, legal, financing and miscellaneous expenses related to the issuance and sale of the 2012 Series Bonds. See “ESTIMATED SOURCES AND USES OF PROCEEDS.”

In order to effect the refunding of the 2003 Series Bonds, a portion of the proceeds of the 2012 Series Bonds will be applied to the purchase of non-callable direct obligations of, or obligations the principal and interest on which are guaranteed by the United States of America or ownership interest therein (collectively, “Federal Securities”), which will be deposited with Manufacturers and Traders Trust Company (the “Escrow Deposit Agent”) under an Escrow Deposit Agreement (the “Escrow Deposit Agreement”) between the Issuer and the Escrow Deposit Agent. Such Federal Securities will be payable as to principal and interest at such times and in such amounts as will be sufficient to pay when due the principal of and the interest on the 2003 Series Bonds. See “VERIFICATION OF MATHEMATICAL COMPUTATIONS.” The Escrow Deposit Agent will apply the maturing principal of and the interest on the Federal Securities to the payment of (i) the interest on (a) the 2003 Series Bonds scheduled to mature after June 1, 2013 prior to and on their date of redemption and (b) the 2003 Series Bonds maturing on June 1, 2013 prior to and on the maturity date thereof and (ii) the principal amount of the 2003 Series Bonds maturing on June 1, 2013 and the redemption price of the 2003 Series Bonds to be redeemed on such date. The Escrow Agent has been irrevocably instructed to redeem the outstanding 2003 Series Bonds on June 1, 2013, which is the earliest practicable redemption date at a redemption price equal to the principal amount thereof plus accrued interest. The Federal Securities will be pledged only to the payment of the 2003 Series Bonds and will not be available for the payment of the 2012 Series Bonds. After the deposit of the Federal Securities as described above, the Issuer will be discharged from all of its obligations with respect to the 2003 Series Bonds and the lien on the Trust Estate pledged to secure the 2003 Series Bonds will be released.

The Project

The 2003 Series Bonds were issued to finance the acquisition and construction of the Project which included an expansion and renovation of Pier A, Pier B, and the Terminal Building at BWI in response to airline service requirements. Pier A and Pier B were expanded to approximately 92,390 square feet and 68,860 square feet, respectively, for concessions, holdrooms and passenger service areas on the upper level and airline operations, and

5

baggage make-up areas on the lower level. The Terminal area was expanded approximately 347,640 square feet for ticketing, airline ticketing offices, tenant offices, security screening, concessions, and holdrooms on the upper level, and baggage claim, baggage screening, concessions, and passenger service areas on the lower level. The expanded sections include six new gates on Pier A, four new gates on Pier B, and five new gates in the Terminal area. Pier D and other airport locations were modified to accommodate the relocation of several airlines from Piers A and C. Construction of the Project was completed on or about February 2006.

The Project was necessary to accommodate the expansion of airline operations of Southwest Airlines (“Southwest”) and general airport expansion at BWI. Southwest acquired AirTran Airlines (“AirTran”) in the fall of 2011. The two airlines operate in Pier A and Pier B. Southwest and AirTran currently offer a combined 225 daily departures from BWI to 59 destinations and accounted for 71.7% of enplanements at the Airport in Fiscal Year 2012. See “THE DEPARTMENT OF TRANSPORTATION – Baltimore/Washington International Thurgood Marshall Airport” herein.

DESCRIPTION OF THE 2012 SERIES BONDS

General Description

The 2012 Series Bonds are dated their date of delivery, bear interest from their dated date at the rates set forth on the cover page of this Official Statement, payable on June 1, 2013 and semiannually thereafter on each December 1 and June 1, mature on the dates and in the amounts set forth on the cover page hereof, and are subject to redemption prior to maturity only as hereinafter set forth. The 2012 Series Bonds are issuable in fully registered form in denominations of integral multiples of $5,000.

The 2012 Series Bonds initially will be maintained under a book-entry system. Beneficial Owners shall have no right to receive physical possession of the 2012 Series Bonds, and payments of the principal or redemption price of and interest on the 2012 Series Bonds will be made as described below under “Book-Entry Only System.”

Redemption Prior to Maturity

The 2012 Series Bonds are subject to redemption prior to maturity, at the redemption prices with interest accrued to the redemption dates, only as described below. If fewer than all 2012 Series Bonds are redeemed, the Issuer, with the consent of the MAA if it is not then in default under the Lease, shall select the particular series and maturities of the 2012 Series Bonds or portions thereof to be redeemed. If fewer than all of the 2012 Series Bonds of any one maturity shall be called for redemption, then the Trustee shall select the particular 2012 Series Bonds or portions thereof to be redeemed from such maturity by lot or in such manner as the Trustee in its discretion may deem proper.

Special Mandatory Redemption. The 2012 Series Bonds shall be redeemed in whole or in part at any time at a redemption price equal to the principal amount thereof, plus accrued interest to the date fixed for redemption, from the amounts deposited in the Principal Account of the Bond Fund from (i) Net Proceeds of insurance or condemnation not required or requested in accordance with the Lease either to rebuild or modify the Project after the damage or destruction of the Project or to prepay Additional Rentals or to acquire additional land after condemnation of the Facility, or (ii) Net Proceeds of insurance or condemnation and such additional funds as may be provided by the MAA to prepay the Facility Purchase Price if MAA chooses to redeem the 2012 Series Bonds in the case where the Net Proceeds are insufficient to pay in full the cost of any repair, restoration, modification or improvement of the Facility in accordance with the Lease, such redemption to be made as soon as practicable after monies are available.

Optional Redemption. The 2012 Series Bonds shall be subject to optional redemption prior to maturity by the Issuer at the written direction of the MAA in whole or in part on June 1, 2022, or at any time thereafter, at the redemption price of 100% of the principal amount thereof, plus accrued interest to the date fixed for redemption.

Notice of Redemption. The Trustee shall give notice of a redemption of the 2012 Series Bonds by first class postage not more than 45 days and not fewer than 30 days prior to the date fixed for redemption, to the Owner

6

of each 2012 Series Bond (or portion thereof) to be redeemed at the address shown on the registration books maintained by the Trustee (or any successor Registrar) as of the Record Date. The failure of any Owner to receive such notice shall not affect the validity of the proceedings for redemption of any 2012 Series Bonds. The 2012 Series Bonds or portions thereof called for redemption shall become due and payable on the date fixed for redemption and, if monies for their redemption have been deposited with the Trustee on or before such date, then interest on such 2012 Series Bonds or portions thereof shall cease to accrue to the Owner thereof as of such date.

Book-Entry Only System

The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the 2012 Series Bonds. The 2012 Series Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered 2012 Series Bond certificate will be issued for each maturity of the 2012 Series Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC.

DTC, the world’s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book- entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of 2012 Series Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 2012 Series Bonds on DTC’s records. The ownership interest of each actual purchaser of each 2012 Series Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the 2012 Series Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in 2012 Series Bonds, except in the event that use of the book-entry system for the 2012 Series Bonds is discontinued.

To facilitate subsequent transfers, all 2012 Series Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of 2012 Series Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the 2012 Series Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such 2012 Series Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by

7

arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of 2012 Series Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the 2012 Series Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond Documents. For example, Beneficial Owners of 2012 Series Bonds may wish to ascertain that the nominee holding the 2012 Series Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the 2012 Series Bonds within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to 2012 Series Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the 2012 Series Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Payment of the principal of, premium, if any, and interest on the 2012 Series Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detailed information from the Issuer or the Trustee, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC nor its nominee, Trustee, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Issuer or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to Beneficial Owners will be the responsibility of Direct and Indirect Participants.

DTC may discontinue providing its services as securities depository with respect to the 2012 Series Bonds at any time by giving reasonable notice to the Issuer or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, 2012 Series Bond certificates are required to be printed and delivered.

The Issuer may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, 2012 Series Bond certificates will be printed and delivered.

NEITHER THE ISSUER, THE MAA, THE DEPARTMENT, THE TRUSTEE, THE REGISTRAR NOR THE PAYING AGENT WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO DIRECT PARTICIPANTS, TO INDIRECT PARTICIPANTS OR TO ANY BENEFICIAL OWNER WITH RESPECT TO 1) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC, ANY DIRECT PARTICIPANT OR ANY INDIRECT PARTICIPANT; 2) THE PAYMENT BY DTC, ANY DIRECT PARTICIPANT OR ANY INDIRECT PARTICIPANT OF ANY AMOUNT WITH RESPECT TO THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE 2012 SERIES BONDS; 3) ANY NOTICE WHICH IS PERMITTED OR REQUIRED TO BE GIVEN TO BONDHOLDERS; 4) ANY CONSENT GIVEN BY DTC OR OTHER ACTION TAKEN BY DTC AS BONDHOLDER; OR 5) THE SELECTION BY DTC, ANY DIRECT PARTICIPANT OR ANY INDIRECT PARTICIPANT OF ANY BENEFICIAL OWNER TO RECEIVE PAYMENT IN THE EVENT OF A PARTIAL REDEMPTION OF 2012 SERIES BONDS.

The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the Issuer, the Department and the MAA believe to be reliable, but none of the Issuer, the Department and MAA takes any responsibility for the accuracy thereof.

8

Registration and Exchange of 2012 Series Bonds

So long as the 2012 Series Bonds are maintained under a book-entry system, transfers of ownership interests in the 2012 Series Bonds will be made as described above under “Book-Entry Only System.” The transfer of any 2012 Series Bond is registrable by the Registered Owner, and any 2012 Series Bond may be exchanged for an equal aggregate principal amount of 2012 Series Bonds of other authorized denominations, upon presentation and surrender of such 2012 Series Bond at the corporate office of the Trustee designated in the Trust Indenture, together with an assignment duly executed by the registered owner or his duly authorized attorney or legal representative. The Trustee may require the person requesting any such exchange or transfer to reimburse it for any tax or other governmental charge payable in connection therewith.

SECURITY AND SOURCES OF REPAYMENT

THE 2012 SERIES BONDS AND ANY PREMIUM AND INTEREST THEREON ARE LIMITED OBLIGATIONS OF THE ISSUER, THE PRINCIPAL AND PREMIUM AND INTEREST ON WHICH ARE PAYABLE SOLELY FROM THE TRUST ESTATE. NEITHER THE 2012 SERIES BONDS NOR THE INTEREST THEREON SHALL EVER (1) CONSTITUTE AN INDEBTEDNESS OR A CHARGE AGAINST THE GENERAL CREDIT OR TAXING POWERS OF THE STATE, ANY POLITICAL SUBDIVISION THEREOF, THE MAA, THE DEPARTMENT, THE ISSUER OR ANY OTHER PUBLIC BODY OR (2) CONSTITUTE OR GIVE RISE TO ANY PECUNIARY LIABILITY OF THE STATE, ANY POLITICAL SUBDIVISION THEREOF, THE MAA, THE DEPARTMENT, OR ANY OTHER PUBLIC BODY (OTHER THAN THE ISSUER AS HEREIN DESCRIBED). THE ISSUANCE OF THE 2012 SERIES BONDS IS NOT DIRECTLY OR INDIRECTLY OR CONTINGENTLY AN OBLIGATION, MORAL OR OTHER, OF THE STATE OR ANY POLITICAL SUBDIVISION THEREOF TO LEVY ANY FORM OF TAXATION WHATSOEVER THEREFOR OR TO MAKE ANY APPROPRIATION FOR THEIR PAYMENT. THE 2012 SERIES BONDS DO NOT CONSTITUTE AN INDEBTEDNESS TO WHICH THE FAITH OR CREDIT OF THE STATE, THE MAA, THE DEPARTMENT, THE ISSUER OR ANY OTHER PUBLIC BODY IS PLEDGED. THE ISSUER HAS NO TAXING POWER. See “THE DEPARTMENT OF TRANSPORTATION – Transportation Trust Fund” herein for a description of the transportation revenues.

Base Rentals; Additional Rentals

The MAA has agreed to pay or cause to be paid directly to the Trustee during the Term of the Lease (subject to annual appropriations) the Base Rentals in consideration of the right of the MAA to use the Facility during the Term. Base Rentals equal the corresponding amounts of the principal of and interest on the 2012 Series Bonds as the same become due. Base Rentals are payable 15 days preceding the corresponding payment of principal and interest on the 2012 Series Bonds.

The MAA also has agreed to pay to the Trustee, for deposit into the Additional Rentals Fund on behalf of the Issuer, Additional Rentals in consideration of the right of the MAA to use the Property during the Term. Additional Rentals are required to be paid upon invoice from the Issuer to the MAA.

Appropriation by General Assembly

The MAA is required under the Lease to pay Rentals which are subject in each year to appropriation by the General Assembly. The General Assembly meets annually for a ninety-day session beginning the second Wednesday in January. Although the sources of funds appropriated to pay the Rentals are not limited to any particular source of State revenues, it is intended that the Rentals will be paid from funds in the Transportation Trust Fund. All expenditures of the Department are paid from the Transportation Trust Fund. Certain of the Department’s revenues deposited in the Transportation Trust Fund are pledged to the payment of the Department’s Consolidated Transportation Bonds. See “THE DEPARTMENT OF TRANSPORTATION – Transportation Trust Fund” herein.

The MAA has covenanted under the Lease that the appropriate officers of the MAA charged with the responsibility of formulating capital and current budget proposals and supplemental appropriation recommendations shall (i) for each Fiscal Year during the Term, include in the current budget proposals and appropriation

9

recommendations submitted to the General Assembly all Rentals due and owing for such Fiscal Year, (ii) include in such budget proposals and appropriations recommendations to be submitted by the Governor of the State to the General Assembly for each successive Fiscal Year information and recommendations as necessary regarding the leasing of the Facility, the public purposes therefor and the Rentals required therefor under the Lease, (iii) recommend supplemental appropriations, as necessary to pay all Rentals as may be due and owing in each Fiscal Year, (iv) do all things lawfully within their power annually to request the appropriation of funds anticipated by the Lease, and (v) use their best efforts to secure timely approval and appropriation by the General Assembly prior to the beginning of each ensuing Fiscal Year of those items in said budget proposals and supplemental appropriations recommendations pertaining to the Facility, and any and all such amounts as may become due under the Lease from time to time.

Security Interest

Pursuant to the Trust Indenture, as security for the payment of the principal of, premium, if any, and interest on the Bonds, the Issuer has assigned to the Trustee all of the Issuer’s right, title and interest in (i) all Rentals paid by the MAA to the Trustee or otherwise pursuant to the Lease, (ii) the proceeds of the Bonds and all amounts from time to time on deposit in the funds and accounts established by the Trust Indenture (except for the amounts on deposit in the Administration Expenses Fund), (iii) all Net Casualty Proceeds resulting from the occurrence of a Casualty to the Project, (iv) all Net Condemnation Proceeds deposited in the Insurance and Condemnation Fund pursuant to the Lease, and (v) all other revenues derived from the Lease or from the exercise of remedies thereunder (collectively the “Revenues”). Revenues do not include amounts paid by the MAA as Administration Expenses or Impositions.

THE ISSUER

The Issuer is a body politic and corporate and an instrumentality created pursuant to the Act. The Issuer was established by statute in 1984 to assist in and complement existing programs of the Maryland Department of Business and Economic Development, by, among other things, providing direct property development capability for economic development purposes. Pursuant to the terms of the Act, the Issuer is authorized to issue revenue bonds to finance and refinance projects (as defined in the Act).

Membership and Organization

The Act provides that the Issuer shall be governed by a Board of Directors (the “MEDCO Board”) consisting of 12 residents of the State of Maryland. The Secretaries of Business and Economic Development and Transportation serve as ex-officio voting Directors. The remaining ten members of the MEDCO Board are appointed by the Governor with the advice and consent of the Senate to four-year terms. Two of these ten are intended to represent local government, three are to be knowledgeable in real estate or commercial financing, three are to be knowledgeable in industrial development or industrial relations and two members are intended to represent the general public. The MEDCO Board elects its own Chair, Vice Chair and Treasurer. The MEDCO Board appoints an Executive Director, subject to the approval of the Governor of Maryland, who serves at the pleasure of the MEDCO Board as the chief administrative officer, managing the administrative affairs and technical activities of the Issuer in accordance with policies and procedures that the MEDCO Board establishes. In addition to the Executive Director, the Issuer has ten full-time and one part-time professional employees.

Robert C. Brennan was appointed the Executive Director of the Issuer in May, 2004 by the MEDCO Board with the approval of the Governor of Maryland. Prior to his appointment, Mr. Brennan served in the Maryland Department of Business and Economic Development (“DBED”) as the Assistant Secretary for the Rural Regions in Maryland and administered the DBED’s financing programs. Mr. Brennan began his professional career as an asset-based lender with Maryland National Industrial Finance, and he spent twenty years in the commercial banking and leasing industry. Prior to leaving the field of banking, Mr. Brennan held the title of Senior Vice President of First Fidelity Bank.

10

The members of the Board of Directors of the Issuer are as follows:

Martin G. Knott, Jr., Chairman; term expires June 30, 2015; President, Knott Mechanical, Inc.

Douglas Hoffberger, Vice Chairman; term expires June 30, 2015; Keystone Realty Company, Inc.

Scott Dorsey, Treasurer, term expires June 30, 2016; President, Merritt Properties, LLC.

David H. Michael, term expires June 30, 2014; The Michael Companies, Inc.

Dana B. Stebbins, term expires June 30, 2015; President/CEO, The Cornelius Group.

Frederick J. Puente, term expires June 30, 2016; President, Blind Industries and Services of Maryland.

Herbert D. Frerichs, Jr., Esquire, term expires June 30, 2014; Venable LLP.

Jennifer R. Terrasa, Esquire, term expires June 30, 2014; Member, Howard County Council.

Barbara G. Buehl, term expires June 30, 2016; Allegany County Department of Tourism.

Christian S. Johansson, ex-officio; Secretary of Business and Economic Development.

Darrell B. Mobley, ex-officio; Acting Secretary of Transportation.

There is currently one vacancy on the MEDCO Board. MEDCO Board members serve until reappointed or until a successor is appointed and qualifies.

Powers

The Act authorizes the Issuer, among other things, to acquire, improve, develop, manage, market, maintain, lease as lessor or as lessee, and operate any project (as defined in the Act) within the State; to acquire property and other interests in land as necessary or convenient to improve or operate any project; to borrow money and issue bonds to finance and refinance any part of the cost of a project; to secure the payment of any portion of such borrowing by pledge of or mortgage or deed of trust on its property or revenues; to accept loans, grants or assistance of any kind from the federal government, a governmental unit of the State or local government or any private source; to fix and collect rates, fees and charges for services and facilities it provides; and to do all things necessary or convenient to carry out the powers expressly granted by the Act.

Bonds and Notes

As of June 30, 2012, the Issuer had total outstanding bonds and notes of approximately $2.521 billion, including indebtedness with respect to 113 projects of various types, including mortgages, notes, revenue bonds, lease revenue bonds, industrial revenue bonds, adjustable rate pooled financing revenue bonds, and first mortgage revenue bonds. The Issuer is also a party to direct financing leases and operating leases.

The several series of outstanding bonds and notes issued by the Issuer are limited obligations of the Issuer, payable solely from revenues of the Issuer received in connection with the respective projects financed or refinanced, and do not constitute general obligations of the Issuer, and the full faith and credit of the Issuer is not pledged to the payment of the principal or redemption price of and interest on these series of bonds or notes. Although certain revenue bonds issued by the Issuer have been in default as to principal and interest, the sources of payment for such defaulted bonds are separate and distinct from the source of payment for the Bonds.

Assets of the Issuer other than the Trust Estate are not available to satisfy claims of holders of the 2012 Series Bonds. Property and funds held by or mortgaged to the Issuer for a particular issue of bonds are not available to satisfy claims of holders of other issues of the Issuer’s bonds. The Issuer has no taxing power.

The Issuer intends to issue other series of bonds and notes for the purpose of financing and refinancing projects, and each such series will be issued pursuant to a resolution or trust agreement separate and apart from any other resolution or trust agreement, except to the extent a series of bonds may be issued on a parity with bonds of another series if permitted by the applicable resolution or trust agreement or issued pursuant to a general bond resolution of the Issuer.

11

THE DEPARTMENT OF TRANSPORTATION

The Department has the responsibility for most State-owned transportation facilities and programs, exclusive of toll facilities. This responsibility includes the planning, financing, construction, operation and maintenance of various modes of transportation and carrying out various related licensing and administrative functions. The statutorily created transportation agencies, which are encompassed by the Department, are the MAA, the Maryland Port Administration (“MPA”), the Maryland Transit Administration (“MTA”), the Motor Vehicle Administration (“MVA”), and the State Highway Administration (“SHA” and collectively, the “Administrations”).

The Secretary of Transportation is empowered, on behalf of the Department, to exercise or perform any power or duty that any of the Administrations may exercise or perform. These powers and duties involve, among others, the operation of the Airport, including the power to set landing fees and to rent space to airlines and concessionaires; the operation of various State-owned buildings and marine terminals in the Port of Baltimore, including the power to fix and collect rental and other fees for the use of these facilities; the construction and maintenance of the State Highway System; the operation of all mass transit facilities in the Baltimore Metropolitan Transit District, including the operation of the bus and rail systems in this District, and the power to fix and collect the fares for these systems; the operation of the MARC commuter rail system by contract with Amtrak and CSX railroad companies, including the power to fix and collect the fares for this system; the licensing and registration of all motor vehicles and motor vehicle operations in the State; and the power to acquire any property by purchase or condemnation that is necessary to exercise or perform these powers and duties. Officials of the Department

The following are brief resumes of key Department officials:

Darrell B. Mobley, Acting Secretary of Transportation: Mr. Mobley was appointed by Governor Martin O’Malley to serve as Acting Secretary of the Department (“Acting Secretary”) effective August 1, 2012. He has been the Deputy Secretary since the Governor’s initial appointment in January 2011. As Acting Secretary, he oversees the Administrations, a $3.6 billion annual budget and approximately 10,000 employees. In addition to his Chief Operating Officer role as Deputy Secretary, Mr. Mobley was a member of the Montgomery County Transit Task Force and continues to chair the Maryland Electric Vehicle Infrastructure Council. From July to December 2011, he also served as the Interim State Highway Administrator until the new Administrator was appointed. Earlier in his career, Mr. Mobley was the State Highway Administrations’ District Engineer for Prince George’s and Montgomery counties where he oversaw an estimated annual capital expenditures budget of $250 million and provided leadership and direction to a workforce of approximately 500 state and contractual employees. A native of Baltimore, Mr. Mobley has more than 22 years of public and private sector experience combined. He has also worked for two consulting engineering firms throughout his career. Mr. Mobley’s notable accomplishments include overseeing the design and construction of the nation’s first American Recovery and Reinvestment Act stimulus project, the Hughesville Transportation Improvement Project, and several interchange projects along MD 32 at Airfield, Canine and Samford Roads. Mr. Mobley has a Bachelor of Science in Civil Engineering from the University of Delaware and has two Associate Degrees, one in Construction Management and the other in Land Surveying Technology.

Leif Dormsjo, Acting Deputy Secretary of Transportation: Mr. Dormsjo was appointed by Governor Martin O’Malley to serve as Acting Deputy Secretary of the Department (“Acting Deputy Secretary”) on August 1, 2012. In this capacity, he oversees the Administrations and a $3.6 billion annual budget as the Chief Operating Officer for approximately 10,000 employees. Prior to his appointment, Mr. Dormsjo was the Senior Advisor to the Maryland Transportation Secretary for Business Development. In this role, he focused on advancing real estate, infrastructure, Transit-Oriented Development (TOD) projects and MDOT’s public-private partnership program. Mr. Dormsjo also has served as the Secretary’s Chief of Staff from 2007 to 2010. He has significant experience in public-sector management, having served as the Chief of Staff for the Baltimore Department of Transportation as well as the Deputy Director of the CitiStat Program in the Baltimore Mayor’s Office. He received a bachelor’s degree in Modern European history from Wesleyan University in Middletown, Connecticut. Mr. Dormsjo earned a master’s degree in public policy from Harvard University’s John F. Kennedy School of Government, with a concentration in transportation policy and urban affairs. He currently sits on the Governor’s Workforce Investment Board’s Interagency Committee.

12

Denise R. Ferguson, Assistant Attorney General and Counsel to the Department: Ms. Ferguson was appointed Counsel to the Department on December 11, 2002. Prior to her appointment, Ms. Ferguson served as Assistant Secretary of the Maryland Department of the Environment from 2001 to 2002. Ms. Ferguson held the position of Director of the Division of Air and Waste Management with the Delaware Department of Natural Resources and Environmental Control from 1999 to 2001. Ms. Ferguson also served as Deputy Counsel and Counsel to the Maryland Department of the Environment from 1989 to 1992 and 1993 to 1999, respectively. She has worked in the federal government as a Branch Chief and Assistant Enforcement Counsel in the Superfund Division of the Office of Enforcement for the U.S. Environmental Protection Agency from 1992 to 1993. Ms. Ferguson also was a Trial Attorney with the U.S. Department of Justice Lands and Natural Resources Division from 1987 to 1989 and an Assistant United States Attorney in the U.S. Attorney’s Office for the Southern District of Texas from 1983 to 1987. Ms. Ferguson was an associate with the New York law firm of Davis Polk and Wardwell from 1980 to 1983. Ms. Ferguson is a graduate of Wellesley College and Harvard Law School.

David L. Fleming, Chief Financial Officer: Mr. Fleming was appointed Director of Finance and Chief

Financial Officer on May 11, 2005. He oversees the State’s Transportation Trust Fund that supports all capital and operating programs for the Department, the $3.6 billion annual budget, and the development of the Transportation Six-year Financial Plan. He began his career in transportation in 1987 at the Department’s Secretary’s Office in the Office of Finance. He has served as a Senior Financial Analyst, Manager of Financial Planning and Analysis, and Deputy Director of the Office of Finance before being appointed Chief Financial Officer for the Department. Prior to joining the Department, Mr. Fleming worked in private industry for eight years in various accounting positions. He holds a Bachelor’s Degree in Accounting and Finance from Towson University in Maryland and a Master’s Degree in Business Administration from Loyola College.

Maryland Aviation Administration

The MAA was established by the Maryland General Assembly on July 1, 1971. The MAA, as provided by the Transportation Article of the Annotated Code of Maryland, is responsible for fostering and developing aviation activity and facilities throughout the State and operating State-owned airports. By legislative action in the 1972 Session of the General Assembly, ownership of the Airport was acquired by the State from the City of Baltimore on July 26, 1972 and responsibility for its operation, maintenance, protection, and development was assigned to the MAA. Martin State Airport (“Martin Airport”) was purchased by the State on July 1, 1975. The MAA operates Martin Airport as a joint facility, serving the needs of private and corporate aircraft owners and two squadrons of the Maryland Air National Guard and the Maryland State Police. In addition to filling the present need for such facilities, Martin Airport serves as a federally designated reliever airport for non-commercial air carrier traffic at the Airport.

The Staff of the MAA

The Executive Director is responsible for carrying out the powers and duties vested by law in MAA and for adopting and carrying out regulations.

The Executive Office includes four Deputy Executive Directors, overseeing the following areas: Facilities Development and Engineering, Business Management and Administration, Operations and Maintenance, and Technology, Human Resources, Safety and Training. The position of Deputy Executive Director of Business Management and Administration is currently vacant. Also in the Executive Office are the Office of Regional Aviation Assistance; the Office of the Attorney General; and the Office of Fair Practices.

Within Facilities Development and Engineering are the Office of Planning and Environmental Services; the Office of Capital Programs; the Office of Design and Construction; and the Office of Procurement.

Within Operations and Maintenance are the Office of Airport Operations, Office of Airport Security; the Office of Transportation and Terminal Services; the Baltimore/Washington Fire and Rescue Department; the Office of Maintenance and Utilities; and Martin Airport.

13

Within Business Management and Administration are the Office of Air Service Development and Strategic Analysis; the Office of Commercial Management; the Office of Marketing, Communications and Customer Service; and the Office of Finance.

Within Technology, Human Resources, Safety and Training are the Office of Technology; the Office of Safety, Training and Risk Management; the Office of Business Relations; and the Office of Human Resources.

The following comprise the principal managerial staff of the MAA:

Paul J. Wiedefeld, A.A.E., Executive Director: Mr. Wiedefeld was appointed Executive Director of the MAA in December 2010. With this appointment, Mr. Wiedefeld returned to the post he held from 2002 to 2005. As Executive Director, he oversees the management of BWI and Martin Airport while administering technical and financial assistance to public-use general aviation airports across the State. Prior to his appointment, Mr. Wiedefeld served as Administrator of the Maryland Transit Administration from 2007 to 2009. Prior to 2007, Mr. Wiedefeld served as Senior Vice President with the international transportation planning and engineering firm Parsons Brinckerhoff (“PB”) where he was responsible for all business management activities in the Mid-Atlantic Region. From 2002 until his return to PB in 2006, he held the position of Executive Director of the MAA where he managed the operations of BWI through the largest expansion in airport history. From 1991 to 1994, Mr. Wiedefeld was Director of the Department’s Office of Systems Planning and Evaluation. Mr. Wiedefeld began his transportation career in 1981 holding various positions in local and regional government before beginning his tenure with the Department. Mr. Wiedefeld received a Bachelor of Science degree in Political Science from Towson University and a Master’s degree in City and Regional Planning from Rutgers University.

Edward P. Carey, Deputy Executive Director, Technology, Human Resources, Safety and Training: Mr. Carey is responsible for the management, oversight, procurement, budgeting and strategic planning for the following departments: Technology, Telecommunications, Human Resources, Safety, Training, Risk Management and Business Relations. He began work at the MAA in 1984 as an aviation planner and managed the MAA’s aviation planning group from 1989 to 1995. From 1995 through 1999, he served as Senior Aviation Planner for the Metropolitan Washington Airports Authority, where he was involved in planning and development of a $2 billion capital program for both Reagan National and Dulles International Airports. In 1999, he returned to the MAA as Director of Aviation Noise and Abatement. From 2000 to 2002 he served as Chief of Staff for the MAA, and from 2002 to 2005, he was the Director of Aviation Technology. From 2005 to 2009, he served as Deputy Executive Director for Technology & Community Affairs overseeing aviation technology, noise abatement, community affairs, real estate and the operation of Martin State Airport. Mr. Carey is a graduate from the University of Maryland College Park.

Wayne S. Pennell, A.A.E., Deputy Executive Director, Operations and Maintenance: Mr. Pennell was appointed Deputy Executive Director of Operations and Maintenance for the MAA in July 2003. He is responsible for airport operations, security, maintenance and utilities, transportation and terminal services, fire rescue, and emergency medical operations for both Martin Airport and BWI. Prior to his appointment at the MAA, Mr. Pennell served as the Area General Manager for Signature Flight Support/ASIG from December 1989 to July 2003. As a U.S. Army Reserve Chief Warrant Officer – Aviator in the late 1980’s, Mr. Pennell earned both rotorcraft and single/multi fixed wing commercial instrument pilot certifications.

Paul L. Shank, Deputy Executive Director, Facilities Development and Engineering: Mr. Shank oversees the planning, design and construction of BWI’s capital improvement and systems preservation programs at BWI and Martin Airport. As the head of Facilities Development and Engineering, he also oversees Capital Programs, Design and Construction, Noise and Land Use Compatibility, Planning and Environmental Services, and Procurement. Mr. Shank has over 30 years of experience in airport development and associated transportation, commercial and institutional development throughout the United States and overseas. He has over three decades of experience managing projects; capital development programs; departments; branch offices and full-service consulting firms. Mr. Shank is a licensed Professional Engineer in the State of Maryland. He is a 1980 graduate of the University of Maryland with a degree in Civil Engineering. Mr. Shank is also a Certified Member of the American Association of Airport Executives.

14

Louisa Goldstein, Principal Counsel: Ms. Goldstein has served as Principal Counsel for MAA since February, 1989. From 1980 through February, 1989, Ms. Goldstein served as Assistant Attorney General for the State Highway Administration. As Principal Counsel, Ms. Goldstein supervises the activities of MAA’s legal staff, drafts and reviews agency contracts, supervises tort defense and contract claim litigation, and advises MAA and its employees regarding federal law relating to airports, operations, security, management, financial, real estate, risk-management, environmental, land use and noise, procurement and personnel issues. Ms. Goldstein received a Bachelor of Arts degree from the American University, earned a Juris Doctor degree from the Washington College of Law, American University, and holds a Master of Taxation degree from the Georgetown University Law Center. She is a member of Airports Council International – North America Legal Steering Committee. She is a member of the Maryland and District of Columbia Bars.

Patrick Bradley, Director, Office of Finance: Mr. Bradley was promoted to Director, Office of Finance in December 2009. As Director, Office of Finance, Mr. Bradley has management responsibility for the Accounting, Budget, Audit and Financial Planning and Analysis departments. Prior to that, Mr. Bradley had served in an Acting capacity as Director, Office of Finance from September 2008 to November 2009, as Manager of Finance from 2003 to 2008 and as Budget Manager for 2002. Prior to his service with the Maryland Aviation Administration, Mr. Bradley held financial analysis and management positions with International Business Machines (IBM), the Coca Cola Company and America Online (AOL) as well as serving for six years as an officer in the United States Army. Mr. Bradley received a Bachelor of Science degree in Accounting from Arizona State University, a Master’s of Science degree in Systems Management from the University of Southern California and a Master’s of Business Administration degree from New York University

Baltimore/Washington International Thurgood Marshall Airport

The Airport is one of the three major airports serving the Washington-Baltimore metropolitan area, which is the fourth largest population and travel market in the United States. Located 10 miles south of Baltimore and 25 miles north of Washington, D.C., BWI is situated on a 3,200-acre site in Anne Arundel County, Maryland. The Airport is a major commercial air carrier airport, ranking 23rd in the U.S. based on total calendar year 2010 passenger traffic. More than 30 scheduled airlines, including commuter and cargo air carriers, serve BWI and currently provide an average of 353 domestic and international flights daily. During Fiscal Year 2012, 22.4 million passengers used BWI, an increase of 0.6% compared to Fiscal Year 2011 figures.

The Airport is in the Washington-Baltimore metropolitan area, the fourth largest and wealthiest metro area in the United States. BWI draws the majority of its passengers from the Washington-Baltimore area, however many passengers from Southern Pennsylvania and Delaware also use BWI due to its combination of convenient highway and rail access, low fares and “easy come, easy go” reputation.

During Fiscal Year 2012, approximately 11.33 million passengers enplaned at BWI, up from 11.27 million in Fiscal Year 2011, which is an increase of 0.6%.

The large market area served by BWI, combined with a convenient terminal layout, an uncongested airfield system, and close proximity to many East Coast destinations led Southwest to pick BWI as its first East Coast airport in September 1993. Southwest’s decision to bring its high-frequency low cost service to BWI has had a substantial, positive impact on BWI’s local origin and destination traffic base. From a modest beginning in 1993 with eight flights to two cities, Southwest has increased operations to a current summer peak of 199 daily flights to 47 destinations. Passenger enplanements for Southwest reached 6.5 million at BWI in Fiscal Year 2012. Southwest was subsequently joined at BWI by three other low-cost carriers, AirTran, JetBlue and Spirit.

AirTran was the second largest carrier at BWI, handling nearly 1.6 million enplaned passengers in Fiscal Year 2012 and currently serves 18 destinations. In the fall of 2011, Southwest announced the acquisition of AirTran. The two carriers handled 71.3% of the enplaned passengers at BWI in Fiscal Year 2012. In November 2011, AirTran moved its operations to Concourse A/B alongside Southwest. The two carriers received a single operating certificate on March 1, 2012.

15

In addition to the low-cost carriers, BWI is served by legacy mainline carriers American Airlines, Delta Air Lines, United/Continental Airlines and US Airways. These carriers and their affiliated regional partners enplaned nearly 3.0 million passengers at BWI in Fiscal Year 2012, and provided nonstop service to 19 destinations.

Several carriers offer international service from BWI. Air Canada has nonstop service from BWI to Toronto, with connections to points throughout Canada. British Airways provides BWI with daily nonstop service to London’s Heathrow Airport. Scheduled service is offered by AirTran to the destinations of Aruba, Bermuda, Cancun, Montego Bay (Jamaica) and Nassau (The Bahamas). Frontier provides seasonal service from BWI to Punta Cana, Dominican Republic. Condor began twice-weekly nonstop service to Frankfurt, Germany on July 2, 2012. The closest alternative international facilities are Washington Dulles International Airport and Philadelphia International Airport.

The major airfield facilities at BWI consist of four runways: east-west Runway 10/28 is currently 10,500 feet long and 200 feet wide; northwest-southeast Runway 15R/33L is 9,500 feet long and 150 feet wide; northeast-southwest Runway 4/22 is 6,000 feet long and 150 feet wide; and northwest-southeast commuter Runway 15L/33R is 5,000 feet long and 100 feet wide. Runways 10/28, 15R/33L, and 15L/33R are all equipped with precision Instrument Landing Systems. Runway 10/28 is equipped with Category II landing aids and the other runways are Category I qualified. Associated taxiways provide efficient access from the runways to the airline parking, general aviation, and air cargo ramps.

The passenger terminal, consisting of approximately 1.8 million square feet, comprises five concourses and 73 gates (68 jet and five commuter). The terminal contains facilities for a number of activities, including baggage claim, federal inspection services, ground transportation, airline ticket counters, airline operations, food and beverage services, news and gift shops, retail, restrooms, telephones, and public circulation areas.

The air cargo complex at BWI comprises five buildings located adjacent to Aviation Boulevard (Md. Rte. 170), three buildings located on Terminal Road and one building located on Mathison Way. The nine buildings combined contain approximately 395,000 square feet of cargo building space.

General aviation facilities are located on the northeast side of BWI. These general aviation facilities include several hangar buildings and the fixed base operator facilities, along with a 22-acre aircraft and parking ramp.

The Airport is served by a consolidated rental car facility which was placed in service in 2003 and is currently managed and operated by eight on-airport rental car companies. The consolidated rental car facility consolidates all rental car operations into a single facility that includes maintenance/storage facilities for rental car operators. It accommodates over 8,300 vehicles and is accessible by shuttle bus service.

Amtrak’s BWI Rail Station is located on the intercity high-speed rail line that extends from Washington, D.C. to New York City, and on to Boston. The BWI Rail Station also accommodates the local Maryland Rail Commuter (“MARC”) service between the Baltimore metropolitan area and Washington, D.C. MAA operates shuttle services to and from the BWI passenger terminal and the BWI Rail Station.

BWI is directly linked to downtown Baltimore and other Baltimore regional destinations by the MTA Light Rail service that operates directly into the terminal. MTA also operates local bus service to BWI from several destinations, and has recently begun express bus service linking BWI to Montgomery County via the recently opened Intercounty Connector toll road. Howard County Transit provides bus service to BWI from Columbia, Maryland. Also, the Washington Metropolitan Area Transit Authority (“WMATA”) provides bus service to BWI from the Greenbelt Metro Station, which is part of the WMATA Metrorail system serving Washington, D.C., Maryland and Northern Virginia.

Transportation Trust Fund

The Transportation Trust Fund was established in 1971 by Chapter 526 of the Laws of Maryland of 1970. The Transportation Trust Fund is credited with taxes, fees, charges, bond proceeds, federal grants for transportation

16

purposes and other receipts (excluding passenger facility charges and rental car customer facility charges and, to the extent required for debt service on obligations issued on behalf of the Department by the Maryland Transportation Authority (the “Authority”), certain parking revenues) of the Department. All expenditures of the Department are made from the Transportation Trust Fund. The Department may use funds in the Transportation Trust Fund for any lawful purpose related to the exercise of its powers, duties and obligations, after meeting its debt service requirements. Unexpended funds remaining in the Transportation Trust Fund at the close of each fiscal year do not revert to the General Fund but remain in the Transportation Trust Fund. To implement the Governor’s budget for fiscal year 2004, the General Assembly in its 2003 Session enacted a bill (Chapter 203 of the Laws of Maryland of 2003) which provided that in fiscal year 2003 and 2004, $160,000,000 and $154,913,000, respectively, of motor vehicle registration fees and other user fees from the MVA be deposited in the General Fund rather than in the Transportation Trust Fund. The bill also required the Governor, on or before December 1, 2003, to submit a plan for replacement of funds transferred under this act. The Governor submitted a plan to replenish the Transportation Trust Fund through General Fund budget appropriations beginning in fiscal year 2006. During the 2004 Session of the General Assembly, legislation was enacted requiring the Governor to include in the fiscal year 2006 budget bill an appropriation to the Transportation Trust Fund in an amount equal to the lesser of $50,000,000 or the excess General Fund surplus over $10,000,000, with the cumulative amount appropriated to the Transportation Trust Fund being capped at $314,913,000. A $50,000,000 appropriation to the Transportation Trust Fund was included in the Fiscal Year 2006 State budget. At the 2005 Session of the General Assembly, however, this legislation was repealed and the balance of the original capped appropriation of $314,913,000, net of the $50,000,000 transferred to the Transportation Trust Fund in Fiscal Year 2006 (or $264,913,000), was directed to be transferred to the Authority for purposes of the ICC (defined below). The General Assembly authorized certain sources of revenues to finance the construction of an Intercounty Connector (the “ICC”). The ICC is defined in Chapters 471 and 472, Acts of 2005 as the east-west multimodal highway in Montgomery and Prince George’s counties between Interstate 270 and Interstate 95/U.S. Route 1. In order to finance the ICC, the General Assembly provided that the Governor shall transfer funds to the Authority from the Transportation Trust Fund in the amount of $22,000,000 in Fiscal Year 2005 and $38,000,000 in Fiscal Year 2006, and that the Governor shall also transfer to the Authority from the Transportation Trust Fund at least $30,000,000 each year for Fiscal Years 2007 through 2010. Transfers in these amounts for Fiscal Years 2005 through 2010 have been made.

During the 2007 Special Session of the General Assembly, legislation was enacted to overhaul the State’s tax structure and increase funding to the Transportation Trust Fund, the General Fund, and other State programs by providing additional revenue sources. These revenue sources include sales and use tax revenues, vehicle excise tax, corporation income tax, uninsured motorist penalty fees, security interest filing fees, certain (vanity) registration plate fees and other titling fees. The legislation also provided a requirement that the Department provide certain information on proposed projects in its 2010-2015 CTP. In addition, the General Assembly adopted legislation to increase the maximum allowable aggregate principal amount of outstanding consolidated transportation bonds from $2,000,000,000 to $2,600,000,000 effective January 1, 2008.

During the 2011 Session of the General Assembly, legislation was enacted to end future Highway User Revenue transfers to the General Fund and to distribute a portion of the corporation income and general sales tax revenues previously credited to the Transportation Trust Fund to the General Fund. Under existing law, as amended in the 2007 Special Session of the General Assembly and further amended in the 2008 and 2011 Sessions, the following sources of funds are available to the Transportation Trust Fund. Taxes and Fees Highway User Revenues - Highway User Revenues include the following taxes and fees after the deduction of certain programmatic expenses provided by law and required distributions to the General Fund and/or political subdivisions of the State:

1. Motor Vehicle Fuel Tax and Fees – these taxes and fees consist of the following:

17

(a) The 23 1/2¢ on each gallon other than aviation gasoline and 24 1/4¢ on each gallon of special fuels other than turbine fuel after deductions for certain refunds and collection costs and a 2.3% distribution to the Chesapeake Bay 2010 Trust Fund and/or the General Fund; and

(b) The fee for a 15-day trip permit for a commercial vehicle at an amount equal to the tax rate on special fuel other than turbine fuel, in effect at the time the permit is issued, and payable on 174 gallons of motor vehicle fuel.

2. Motor Vehicle Titling Tax: As of July 1, 2008, two-thirds of the excise tax imposed at the rate of 6% of the fair market value, excluding trade in allowance, of certain motor vehicles for which certificates of title are issued. 3. Sales and Use Tax: 80% of 45% of the revenues from the collection of the Sales and Use Tax on short-term vehicle rentals. 4. Motor Vehicle Registration Fees: A registration fee on all motor vehicles that ranges from $2.50 to $1,800.00 per vehicle. 5. Corporation Income Tax: 24% of the revenues derived from the State’s 8.25% corporation income tax after certain General Fund reductions. In Fiscal Year 2013, beginning July 1, 2012, the percentage distribution will be 9.5%. For Fiscal Years 2014 through 2016, the percentage distribution will be 19.5%. For Fiscal Year 2017 and future Fiscal Years, the percentage distribution will be 17.2%.

Allocation of Highway User Revenues. Pursuant to legislation enacted by the General Assembly at its 2011 Session (Chapter 397), which became effective on July 1, 2011, the total Highway User Revenues will be allocated as follows:

Fiscal Year 2012: 79.8% to the Department (less a one-time $40,000,000 distribution to the Revenue Stabilization Account), 11.3% to the General Fund, and the balance to pay allocations to the counties, municipalities and Baltimore City.

Fiscal Year 2013: 90% to the Department and the balance to pay allocations to the counties, municipalities and Baltimore City.

Fiscal year 2014 and Fiscal Years thereafter: 90.4% to the Department and the balance to pay

allocations to the counties, municipalities and Baltimore City. Motor Vehicle Titling Tax. The net receipts of the 6% tax that are not Highway User Revenues are credited to a separate account in the Transportation Trust Fund. Sales and Use Tax Revenues. Effective July 1, 1999, the Department receives 20% of 45% of the Sales and Use Tax revenues on short-term vehicle rentals.

Operating Revenues. Revenues of the Transportation Trust Fund are produced by operations of the Maryland Port, the MTA and the MAA. Aviation revenues include landing fees, rents and user fees, PFCs (as defined below), rental car customer facility charges, public parking and passenger-oriented concessions. Under legislation enacted in the 2008 Session of the General Assembly, the MTA must recover from fares and other operating revenues at least 35% of the total operating costs for the MTA’s bus, light rail and Metro railway services in the Baltimore Region and all MARC passenger railroad services provided under contracts with CSX and Amtrak. For Fiscal Year 2011, estimated, the bus, light rail and subway systems combined achieved a 28% fare box recovery. The MARC fare box recovery for Fiscal Year 2012, estimated, is 57%.

Other Revenues. All other revenues include other taxes, fees, charges, and revenues of every kind collected or received by, paid or appropriated to, or to be credited to the Transportation Trust Fund for the Department in the exercise of its rights, powers, duties, obligations or functions.

18

Federal Aid Moving Ahead for Progress in the 21st Century Act (MAP-21), signed by the President on July 6, 2012, authorized federal funding for highways and transit for a two-year period, federal fiscal years 2013 and 2014, at federal fiscal year 2012 spending levels. The 2013-2018 CTP is based on the spending levels and contract authority under MAP-21, which expires on September 30, 2014. In Fiscal Year 2012, the Department received approximately 92% of the federal Obligation Authority (“OA”) and a similar level is expected for Fiscal Year 2013. For planning purposes, the 2013-2018 draft CTP assumes that the Department will receive 85% of OA for Fiscal Year 2013 and 80% of OA for each of Fiscal Years 2014-2018.

Under MAP-21, the Department receives federal aid for the highway program, primarily for the National Highway System, primary, secondary and urban systems, bridge replacement, highway safety and congestion mitigation/air quality improvement.

The Federal Transit Administration provides transit operating and capital assistance for bus, metro, light rail and rail commuter. Federal grants are also provided for rural areas as well as elderly and handicapped persons.

Federal entitlement and discretionary funding for airport projects are provided by the FAA through the Airport Improvement Program.

The major federal fund receipts for the capital program in Fiscal Year 2011 were $614,437,179. Projected receipts for Fiscal Year 2012 are $725,667,908 (unaudited).

In addition, the State is utilizing $638 million of formula funds under the American Recovery and Reinvestment Act of 2009 (“ARRA”) for various transportation projects. Of this total, $414 million is being utilized for highway projects and $152 million for transit projects. The remaining $72 million is being utilized by WMATA for additional transit work in the State. On the highway side, the State is utilizing $317 million for State highway projects and the remaining $97 million was made available to counties and Baltimore City for local highway projects. On the transit side, the State will utilize $108.5 million for State transit projects and $43.5 million was made available to local transit operators for local transit projects.

In addition to the formula distribution, Maryland has gained additional funding from discretionary grants made pursuant to ARRA. The MAA has received a grant for $15 million for Pier C/D apron rehabilitation at BWI. The MPA has received $1.3 million in a Port Security Grant. The MTA has received $0.5 million in a Transit Investment in Greenhouse Gas and Energy Reduction grant for a fire suppression system upgrade and two High-Speed Intercity Passenger Rail grants for a total of $69.4 million in design funds to examine the replacement of the Baltimore & Potomac rail tunnel, upgrading the BWI MARC/Amtrak station and adding an additional track in the area. Lastly, in cooperation with the Metropolitan Washington Council of Governments, the SHA and the MTA received $14.8 million to construct the Takoma/Langley Park Transit Center and make bus priority improvements on various roadways in metropolitan Washington.

The following table shows a condensed summary of the fund balances of the Department for fiscal years 2007 through 2011.

19

Department of Transportation Fund Balances Fiscal Years 2007-2011

($ in thousands)

2007 2008 2009 2010 2011 Revenues ......................................... $3,501,115 $3,341,196 $3,403,513 $3,506,266 $3,641,368 Expenditures ................................... 3,670,657 3,769,682 3,622,653 3,785,271 3,646,568 Excess (deficiency) of revenues over expenditures .............................

(169,542)

(428,486)

(219,140)

(279,005)

(5,200)

Net other sources (uses) of financial resources ...........................

111,077

249,319

404,740

280,002

0(a)

Excess (deficiency) of revenues over expenditures and net other sources (uses) of financial resources ..........................................

(58,465)

(179,167)

185,600

997

(5,200) Fund balance, July 1 ........................ 387,883 329,418 150,251 335,851 336,848 Fund balance, June 30 ...................... $ 329,418 $150,251 $335,851 $336,848 $331,648

____ Note: The Department of Transportation Special Revenue and Debt Service Funds account for substantially all of the financial activities of the Transportation Trust

Fund. The Maryland Transportation Authority is not part of the Transportation Trust Fund. The above summary was prepared from the audited financial statements of the Department which are prepared in accordance with Generally Accepted Accounting Principles.

(a) The Department did not sell bonds or enter into other long term financing in fiscal year 2011.

Consolidated Transportation Bonds

In accordance with certain provisions of the Transportation Article of the Annotated Code of Maryland, as amended as of June 30, 2012, the aggregate principal amount of Consolidated Transportation Bonds that may be outstanding is $2,600,000,000. In addition, provisions of Maryland law provide for the General Assembly to establish in the budget for any Fiscal Year a maximum outstanding aggregate amount of these bonds as of June 30 of the respective fiscal year that does not exceed $2,600,000,000. For Fiscal Year 2012, the aggregate limit was $1,888,995,000. As of June 30, 2012, the principal amount of all outstanding Consolidated Transportation Bonds was $1,562,630,000.

Additional Information Incorporated by Reference

Certain financial information of the Department is on file with the Municipal Securities Rulemaking Board through the Electronic Municipal Market Access System (EMMA) and included by reference in this Official Statement, all as more fully described in Appendix B of this Official Statement. Investors are encouraged to review such information to make an informed investment decision.

THE MARYLAND TRANSPORTATION AUTHORITY

Financings

The Authority, of which the Secretary of Transportation is Chairman, is responsible for the administration of the various toll revenue facilities. The Authority’s financial transactions are accounted for in a separate special enterprise fund and are not included in the Transportation Trust Fund. However, under the terms of the Trust Agreement and in accordance with legislation enacted by the General Assembly in 1978, moneys not needed for obligations of the Authority may subsequently be transferred to the Transportation Trust Fund to be used as appropriated by the General Assembly for any lawful purpose unless prohibited by any applicable resolution or trust agreement of the Authority. Such transfer may be made only upon the recommendation of the Secretary and after the approval of the Board of Public Works. The last such transfer was made in 2007.

20

In addition to its existing transportation facilities projects, the Authority may authorize the acquisition, financing, or construction of any other projects for transportation facilities, including vehicle parking, highway, airport, port, rail and transit facilities. The Authority is empowered to finance the cost of transportation facilities projects by the issuance and sale of revenue bonds, notes, or other obligations.

The Aviation Safety and Capacity Expansion Act of 1990 (P.L. 101-508) (the “1990 Act”) allows public agencies controlling certain commercial service airports (those with regularly scheduled service and enplaning 2,500 or more passengers annually) to charge each eligible enplaning passenger using the airport a passenger facility charge (a “PFC”). Since the inception of the PFC program at BWI in 1992, MAA has received Federal Aviation Administration approval to impose PFCs for 32 projects totaling $1,053 million in nine applications.

In connection with the approved PFCs, the Authority previously issued its $162,580,000 Special Obligation Revenue Bonds, Series 1994-A (Qualified Airport Bonds) and Special Obligation Revenue Bonds, Series 1994-B (Governmental Purpose Bonds) (the “Series 1994 PFC Bonds”) secured by a pledge of the PFCs. The Series 1994 PFC Bonds were redeemed in June 2003. In December 2003, the Authority issued its Passenger Facility Revenue Bonds, Series 2003A in the aggregate principal amount of $69,700,000 (the “Series 2003A PFC Bonds”) to finance additional projects. The Series 2003A PFC Bonds are scheduled to finally mature on July 1, 2013. In April 2012, the Authority issued its Passenger Facility Charge Revenue Bonds, Series 2012A in the aggregate principal amount of $50,905,000 (the “Series 2012A PFC Bonds”) to finance a portion of the costs of constructing a passenger connector hallway between the secured side of Concourses B and C, improvements to Concourse C and expansion and relocation of passenger screening lanes at BWI. Additional revenue bonds of the Authority secured by PFCs are expected to be sold in November 2012.

The Department transfers the PFC revenues to a trustee for the Authority and will do so as long as any Authority-issued PFC-secured indebtedness remains outstanding. PFCs not required for debt service on the Series 2003A PFC Bonds and the Series 2012A PFC Bonds remain with the trustee in an account to be used for PFC pay-as-you-go projects. While the Series 2003A PFC Bonds and the Series 2012A PFC Bonds are outstanding, the MAA may submit additional PFC applications for additional projects or amendments.

In March 2002, the Authority issued $264,075,000 Airport Revenue Parking Bonds (“2002 Parking Bonds”) for BWI projects including a multi-level parking garage, major roadway, curbside, terminal, pedestrian access and major upgrading of the BWI central utility plant. In April 2012, the Authority issued $190,560,000 Airport Parking Revenue Refunding Bonds to refund the outstanding balance of the 2002 Parking Bonds. All parking revenue payable to the MAA and deposited with a trustee by the contractors managing and operating the parking facilities at BWI are pledged for payment of principal and interest on these bonds. Parking revenue in excess of the required annual principal and interest are transferred to the MAA. The outstanding principal balance of the bonds as of June 30, 2012 is $190,560,000.

In June 2002, the Authority issued $117,345,000 BWI Airport Consolidated Rental Car Facility Bonds to finance the costs of acquisition, construction and equipping a new consolidated rental car facility. The principal and interest on these bonds are payable from customer facility charges (“CFCs”) collected by the rental car companies from each rental car customer. The CFCs are pledged for payment of the principal and interest on these bonds and are deposited by the rental car companies with a trustee. CFC revenue in excess of the required annual principal and interest are transferred to an account with the trustee for future facility improvements and bus maintenance and replacement. The outstanding principal balance of the bonds as of June 30, 2012 is $101,440,000.

In addition, the Authority financed a $20 million Masonville Automobile Handling Facility for the MPA. An agreement between the Authority and the MPA provides for annual payments, including interest, over a 20-year period. The outstanding principal balance of the bonds as of June 30, 2012 is $10,601,445. The final maturity is June 30, 2029.

21

THE STATE OF MARYLAND

State Government

Legislature

The State has a bicameral legislature, the General Assembly, composed of the Senate with 47 members and the House of Delegates with 141 members. The State is divided into 47 legislative districts, each with one senator and three delegates. All members of the General Assembly are elected for four-year terms. The General Assembly meets annually for a 90-day session beginning on the second Wednesday in January. This regular session may be extended by the General Assembly or the Governor, or the Governor may call special sessions, but no extended or special session may last for longer than 30 days except for the purpose of enacting the annual budget for the State (the “Budget”).

Executive Branch

The Executive Branch includes four constitutional officers elected by the voters on a statewide basis for four-year terms: the Governor, the Lieutenant Governor, the Comptroller, and the Attorney General. The Treasurer is also a constitutional officer, appointed upon a joint ballot of the Senate and the House of Delegates for a four-year term.

The Governor is the chief executive officer of the State. The Lieutenant Governor has such duties as are delegated to him by the Governor, which may include any and all powers and duties of the Governor, and may serve as Acting Governor during the absence or incapacity of the Governor. The Attorney General is legal counsel to the Governor, the General Assembly, and all departments and units of the State government except the Public Service Commission and certain authorities. Together, the Comptroller and the Treasurer constitute the Treasury Department. The Comptroller is required to exercise general superintendence over the fiscal affairs of the State, to prepare plans for the improvement and management of revenue and support of public credit, to keep the accounts of the State and its agencies, to prescribe the form of completing and stating these accounts, and to superintend and enforce the collection of all taxes and revenue. The Treasurer maintains custody of all deposits of State monies, invests the State’s surplus funds, maintains custody of all securities, and is responsible for all disbursements of State funds, including payment of principal and interest on State debt. Acting on behalf of the Board of Public Works, the Treasurer manages the State’s general obligation debt program, including all matters relating to the issuance and oversight of general obligation bonds.

Principal Departments

The executive functions of State government are organized into 20 major departments, 19 of which are headed by a Secretary appointed by the Governor with the advice and consent of the Senate. The State Department of Education is headed by the State Board of Education, the members of which are appointed by the Governor for overlapping five-year terms, and the State Superintendent of Schools, who is appointed by the State Board of Education for a four-year term.

Judiciary

The Judiciary, a separate branch of government established in the State Constitution, includes two courts of appellate jurisdiction. The Court of Appeals, originally created by the State Constitution of 1776, is the State’s highest court; today this court’s appellate jurisdiction is almost entirely discretionary. The Court of Special Appeals was established in 1966 as an intermediate appeals court having statewide jurisdiction; almost all initial civil and criminal appeals are now included in the jurisdiction of this court.

The Circuit Courts, which function as trial courts of general jurisdiction, are the common law and equity courts of record exercising original jurisdiction within the State, and handle the major civil and the more serious criminal matters. A Circuit Court sits in each county and in Baltimore City. The District Court of Maryland,

22

created in 1970, is divided into 12 geographic districts throughout the State, and exercises limited civil and criminal jurisdiction.

Board of Public Works

The Governor, Comptroller, and Treasurer are the members of the Board of Public Works. The Constitution of Maryland, Article XII, Section 2, provides that a majority of the Board of Public Works shall be competent to act. A constitutional body, the Board of Public Works supervises the expenditure of all funds obtained by State general obligation bond issues and all funds appropriated for capital improvements other than roads, bridges, and highways. The Board of Public Works must review and approve all contracts for such capital expenditures after review by the legislatively authorized control agency, principally, the Department, the Department of General Services, the Department of Budget and Management, or the University System of Maryland. The Board of Public Works considers, acts upon, and authorizes all issues of State general obligation bonds, fixes the rate of the State property tax required for debt service, and administers, through the Interagency Committee on School Construction, the State program for payments to the counties and Baltimore City for public school construction.

State Finances

Budgetary System

Under the Maryland Constitution, Article III, §52, the Governor is responsible for the preparation and introduction of the State’s annual budget. The Governor is required by the Constitution to submit a balanced budget, and in preparing the budget, the Governor is statutorily required to use revenue estimates reported by the Board of Revenue Estimates, whose members are the Comptroller, the Treasurer and the Secretary of Budget and Management, or explain the use of different estimates. Except for the General Assembly’s own budget and the Judiciary’s budget, the General Assembly cannot increase the Governor’s proposed budget, but may only reduce it.

Passage of the State’s budget is constitutionally prioritized. The General Assembly meets annually for 90

days, beginning the second Wednesday of each January. If the budget has not been enacted seven days before the end of session (the 83rd day), the Constitution requires that the Governor issue a proclamation extending the session. If the budget has not been enacted by the 90th day, the General Assembly cannot consider any matter except the budget. This places the normal budget deadline in early April, almost three months before the start of the next fiscal year. In the past 50 years, the latest date of budget adoption was in 1992 on the 94th day of the session.

During the 2012 Legislative Session, the General Assembly enacted a fiscal year 2013 Budget on the 90th day of the session that provided for $512.3 million of reductions in expenditures in the event the General Assembly failed to enact certain revenue enhancements and certain reductions in other expenditures, which it subsequently failed to enact during the Regular Session. The General Assembly then met in the First Special Session of 2012 in May 2012 and enacted legislation to both enhance revenues and reduce other expenditures, and thus restore the $512.3 million in contingent reductions in the 2013 Budget.

Although laws enacted by the General Assembly are generally subject to referendum, the power of referendum is subject to express limitations, and does not extend to the State budget. The effective date of the State budget cannot be delayed by referendum. Maryland does not require supermajorities to increase taxes or enact the budget. A simple majority is required for passage of all bills.

The Governor submits to the General Assembly, shortly after the beginning of its annual session, a budget containing a complete plan of proposed expenditures and estimated revenues for the ensuing fiscal year, together with a statement showing: (1) the revenues and expenditures for the preceding fiscal year; (2) the current assets, liabilities, reserves, and surplus or deficit of the State; (3) the debts and funds of the State; (4) an estimate of the State’s financial condition as of the beginning and end of the preceding fiscal year; and (5) any explanation the Governor may desire to make as to the important features of the budget and any suggestions as to methods for reduction or increase of the State’s revenue. The budget is required to include a total for all appropriations and all estimated revenues; total appropriations may not exceed the estimated revenues, either as submitted by the Governor or as enacted by the General Assembly. The Constitution requires the Governor to include appropriations for certain

23

matters, including specifically an appropriation to pay and discharge the principal and interest of the debt of the State in conformity with Article III, §34 of the Constitution and all laws enacted pursuant thereto.

The Governor also is required to include in his annual budget sufficient appropriations to fund programs for which specific statutory spending levels or rates have been established by the General Assembly at a preceding session. With the submission of the budget for the ensuing year, the Governor also presents to the General Assembly any deficiency appropriations that he may deem necessary to supplement the current year’s appropriations in light of current conditions. By law the Governor has the power, with the approval of the Board of Public Works, to reduce by not more than 25% any appropriation that he may deem unnecessary, except appropriations for the payment of interest and the retirement of State debt, the legislature, the public schools, the judiciary, the salaries of public officers during their terms of office, and the salaries of non-temporary employees in the State Personnel Management System (except in accordance with statutory provisions).

The General Assembly is prohibited by the Constitution from amending the budget to affect certain specified provisions, including the obligations or debt of the State under Article III, §34 of the Constitution. Except for these specified provisions, the General Assembly may amend the budget to increase or decrease appropriations relating to the legislative and judicial branches but it may only strike out or reduce executive branch appropriations submitted by the Governor. The General Assembly must enact a balanced budget. After the enactment of the budget, and not before, the General Assembly is permitted to enact supplementary appropriations but may not enact any supplementary appropriation unless embodied in a separate bill that is limited to a single object or purpose and provides the revenue necessary to pay the appropriation by a tax to be levied and collected under the terms of the bill.

State expenditures are made pursuant to the appropriations in the annual budget, as amended from time to time by budget amendment. The various units of State government may, with the Governor’s approval, amend the appropriations for particular programs in their individual budgets funded from the General Fund, provided they do not exceed their total general fund appropriations as contained in the annual budget. Additionally, appropriations for programs funded in whole or in part from funds other than the General Fund may permit expenditures in excess of original appropriations to the extent that revenues from the particular non-General Fund sources exceed original budget estimates and the additional expenditures are approved by the Governor.

The Department of Budget and Management is headed by a Secretary who assists the Governor in the preparation and administration of the Budget and constitutes a statutorily created department that currently employs approximately 308 persons.

The Department of Legislative Services provides full-time professional assistance to all committees and subcommittees of the General Assembly including those involved with budget, taxation and fiscal matters. The Department also conducts research into fiscal and policy issues. The Office of Legislative Audits is part of the Department and is required by law to examine and report on the books and accounts of all agencies of State government at least every three years.

The Spending Affordability Committee consists of certain designated officers of the General Assembly and other members as may be appointed by the President of the Senate and the Speaker of the House of Delegates. Each year the Committee must submit a report to the Legislative Policy Committee of the General Assembly and to the Governor recommending the level of State spending, the level of new debt authorization, the level of State personnel, and the use of any anticipated surplus.

State Revenues

The State’s revenue estimates are based upon projections by the Board of Revenue Estimates, composed of the Comptroller, the Treasurer, and the Secretary of Budget and Management. The Board studies the findings and recommendations of the Bureau of Revenue Estimates, a statutory State agency administratively under the Comptroller, that reviews the findings and recommendations of other agencies responsible for economic monitoring and revenue administration, and reports the estimates of revenue to the Governor for submission to the General Assembly in connection with the Budget.

24

In its report issued each December, the Board of Revenue Estimates presents revised revenue estimates for the current fiscal year (based upon current economic factors and legislative changes), and revenue estimates for the next succeeding fiscal year, upon which that fiscal year’s budget is based. The revised estimate for the current year is made seven months before the end of that fiscal year, while the budget estimate for the next succeeding fiscal year is made 19 months before the end of that fiscal year. The estimates are reviewed in March, prior to final action on the budget by the General Assembly, and any appropriate adjustments to the estimates are made at that time. The following table shows the accuracy of General Fund revenue estimates for the 2008 through 2012 fiscal years.

Historic General Fund Revenue Estimates and Actual Collections ($ in millions)

Fiscal Actual Original Estimate Final Estimate Year Collections Amount % (a) Amount % (a) 2008 ................................ $13,545.6 $13,452.8 100.69% $13,616.8 99.48% 2009 ................................ 12,892.6 14,743.1 87.45 13,240.5 97.37 2010 ................................. 12,560.1 13,738.3 91.42 12,382.7 101.43 2011 ................................. 13,537.4 12,666.3 106.88 13,219.5 102.40 2012 (unaudited) .............. 14,257.8 13,597.8 104.85 14,028.2 101.64

______ (a) Actual collections as a percentage of estimates.

Receipts from the State property tax, all of which are devoted to debt service on general obligation bonds and which provided approximately 90% of the current revenues available for general obligation bond debt service payment in fiscal year 2011, are credited to a separate account known as the Annuity Bond Fund. The Board of Public Works is required annually to fix the property tax rate by May 1, after the end of the regular legislative session, in an amount sufficient to pay all debt service for the ensuing fiscal year on general obligation bonds after taking account of the amounts and sources of funds provided in the budget for that fiscal year, which begins July 1. The Commission on State Debt (consisting of the Treasurer, the Comptroller, the Secretary of Budget and Management, the Secretary of Transportation, the Director of the State Department of Assessments and Taxation, and one individual appointed by the Governor and not otherwise affiliated with State government) makes an original estimate approximately three months before July 1 of the year to which the property tax rate will apply and a revised estimate approximately nine months after that date. The following table portrays the accuracy of estimates of State property tax revenue in fiscal years 2007 through 2011.

State Property Tax Revenue Estimates ($ in millions)

Fiscal Year

Property Tax Rate (a)

Actual Collections

Original Estimate Amount % (b)

Final Estimate Amount % (b)

2007 ............. 11.2¢ $552.7 $547.5 100.95% $552.1 100.09% 2008 ............. 11.2 625.7 619.4 101.02 642.0 97.47 2009 ............. 11.2 698.6 691.2 101.07 700.9 99.67 2010 (c) ........ 11.2 758.9 751.2 101.03 762.4 99.54 2011 ............. 11.2 798.3 790.4 100.99 801.1 99.65

___________ (a) The property tax rate is per $100 of assessed valuation. (b) Actual collections as a percentage of estimates. (c) Actual collections in fiscal year 2010 include $16.0 million in revenues due in fiscal year 2010 but collected in fiscal year 2011.

General fund revenues and State property tax revenues (once the rates and structures are set) are entirely independent of the expenditures from the funds into which they flow, thus accurate forecasting is important. On the other hand, the vast majority of federal funds are received under matching programs or State administered programs where receipts vary directly with expenditures or expenditures are directly controlled by receipts.

25

Fiscal Year 2007-2011 GAAP General Fund Results of Operations The GAAP General Fund is that fund from which all general costs of State government are paid and to which taxes and other revenues not specifically directed by law to be deposited in separate funds are recorded in accordance with Generally Accepted Accounting Principles (“GAAP”). The following table presents the comparative statement of revenues, expenditures, and changes in fund balances in the GAAP General Fund for fiscal years ended June 30, 2007 through June 30, 2011. The State’s audited financial statements for fiscal year 2012 are expected to be released in December 2012.

GAAP General Fund Comparative Statement of Revenues, Expenditures and Changes in Fund Balance

Fiscal Years 2007-2011 ($ in thousands)

2007 2008 2009 2010 2011

Revenues (a): Income taxes ................................................................................................... $ 7,325,181 $ 7,868,899 $ 7,156,297 $6,957,811 $7,639,285 Sales and use taxes ......................................................................................... 3,447,896 3,748,933 3,851,752 3,754,326 3,896,876 Other taxes ...................................................................................................... 1,687,223 1,816,652 1,554,732 1,542,180 1,598,321 Other licenses and fees ................................................................................... 782,712 651,079 686,806 682,756 683,289 Charges for services ........................................................................................ 642,801 732,103 830,038 1,220,226 1,446,815 Interest and other investment income ............................................................. 292,262 296,636 154,895 119,635 20,768 Federal revenue ............................................................................................... 5,624,412 5,846,077 7,005,387 8,581,125 9,159,668 Other ............................................................................................................... 206,076 188,575 358,044 395,238 293,164

Total revenues ........................................................................................ 20,008,563 21,148,954 21,597,951 23,253,297 24,738,186 Expenditures (a):

General government ....................................................................................... 715,676 727,569 754,317 754,139 770,805 Health and mental hygiene ............................................................................. 7,252,117 7,536,747 8,286,032 9,040,549 9,441,903 Education ....................................................................................................... 7,151,741 7,997,946 8,289,393 8,539,556 8,854,150 Human resources ............................................................................................ 1,643,078 1,761,284 2,061,959 2,291,347 2,420,789 Public Safety ................................................................................................... 1,790,595 1,835,652 1,824,595 1,773,141 1,873,921 Judicial ............................................................................................................ 527,618 556,056 585,778 556,908 577,333 Labor, licensing and regulation ...................................................................... 164,255 166,848 182,751 226,118 246,700 Natural resources and recreation .................................................................... 177,553 188,675 205,876 184,342 182,229 Housing and community development 228,105 244,581 244,208 315,630 368,857 Environment ................................................................................................... 92,460 95,918 106,307 110,092 107,457 Agriculture ...................................................................................................... 101,252 147,494 142,804 92,954 80,770 Business and economic development ............................................................. 65,774 94,503 90,892 74,578 79,284 Intergovernmental ........................................................................................... 503,014 408,208 354,617 336,703 329,094

Total expenditures ................................................................................... 20,413,238 21,761,481 23,129,529 24,296,057 25,333,292 Excess (deficiency) of revenues over expenditures ................................ (404,675) (612,527) (1,531,578) (1,042,760) (595,106)

Other sources (uses) of financial resources: Capital leases .................................................................................................. 50,575 31,185 27,945 15,472 19,633 Housing Bonds issued .................................................................................... 0 0 0 0 100 Operating transfers in ..................................................................................... 613,148 648,718 602,745 1,276,702 1,116,961 Operating transfers out ................................................................................... (532,635) (440,755) (474,778) (510,244) (451,070)

Net other sources (uses) of financial resources ...................................... 131,088 239,148 155,912 781,930 685,624 Net change in fund balances ........................................................................... (273,587) (373,379) (1,375,666) (260,830) 90,518

Fund balances at the beginning of the year ............................................................ 3,532,554 3,258,967 2,885,588 1,509,922 1,249,092 Fund balances, June 30 ........................................................................................... $ 3,258,967 $ 2,885,588 $1,509,922 $1,249,092 $1,339,610

Fund balance as % of revenues .............................................................................. 16.3% 13.6% 7.0% 5.4% 5.4%

_________ (a) The budgetary system's principal departures from the modified accrual basis, i.e., GAAP, are with the classification of the State's budgetary funds and the timing of

certain revenues and expenditures.

General Fund 2012 Budget

2012 Budget. On April 8, 2011, the General Assembly enacted the budget for fiscal year 2012 (the “2012 Budget”). The 2012 Budget included $14,748.7 million in spending for, among other things: (1) $6,095.6 million in aid to local governments; (2) $4,013.8 million to support public health services in the Department of Health and Mental Hygiene, including $2,551.8 million for the Medicaid Program; and (3) $62.5 million in supplementary appropriations, supported by the increase in the sales tax on alcohol, for public school construction and services to developmentally disabled individuals. The 2012 Budget also included deficiency appropriations of $127.3 million for fiscal year 2011, including $85.6 million to the Department of Health and Mental Hygiene primarily for

26

Medicaid, $33.5 million to the State Department of Education for child care subsidies, local aid and student assessments, and $3.4 million to the Department of Juvenile Services for various operating expenses.

As part of the fiscal year 2012 Budget plan, the General Assembly enacted the Budget Reconciliation and Financing Act of 2011 (the “2011 Act”) which authorized various funding changes resulting in increased general fund revenues and decreased general fund appropriations.

The 2011 Act and other revenue adjustments and legislative actions increased fiscal year 2012 revenues by $312.3 million, including $84.8 million from increasing the sales tax on alcohol, $59.1 million in additional income tax and sales tax collections as a result of federal tax changes, $24.0 million in federal retiree drug subsidies, $25.4 million from linking renewals of vehicle registrations to the payment of tax liabilities, $20.2 million in sales and motor fuel tax diversions from the Chesapeake Bay 2010 Fund, and $18.8 million from maintaining existing payments to businesses for sales tax collections. The 2011 Act also redistributed certain revenues shared by the General Fund and the Transportation Trust Fund. The General Fund share of the sales tax increased by $212.4 million, while the share of Highway User Revenues decreased by $150.9 million for a net increase to the General Fund of $61.6 million.

The 2011 Act authorized transfers to the General Fund in fiscal year 2012 of $36.4 million, including $10.0 million from the Real Property Records Improvement Fund, $8.6 million from the Voluntary Separation Program savings in various special funds, $4.1 million from the Injured Worker’s Insurance Fund, $4.0 million from the Maryland Automobile Insurance Fund, $2.0 million from the State Insurance Trust Fund, and $9.7 million from other various special fund balances. The 2011 Act also authorized transfers to the General Fund totaling $191.3 million from various capital-related special funds, including $94.5 million in transfer tax revenues and $90.0 million from the Bay Restoration Fund.

Reductions authorized in the 2011 Act included $12.1 million in aid to education to maintain State support for primary and secondary education at the fiscal year 2011 level, $124.4 million in aid to education as a result of prefunding fiscal year 2012 support in fiscal year 2011, $104.0 million in savings from retirement reforms, $42.1 million for various cost saving actions in the Department of Health and Mental Hygiene, $34.8 million from shifting a share of the cost of property valuation to local governments, and $13.9 million in savings from retiree prescription drug benefits.

The 2012 Budget included $1.5 billion in contributions to the Maryland State Retirement and Pension System consistent with the corridor funding methodology prescribed by statute. The 2011 Act authorized reforms that are projected to produce $295.2 million in fiscal year 2012 savings due to increased employee contributions and reduced future retirement benefits and their associated liabilities. Pursuant to the 2011 Act, the 2012 Budget allocated $120.0 million of the pension reform savings to budget relief through a reduction in employer contributions to the Teachers’ and Employees’ Pension Systems and reinvested the remaining $175.2 million in those systems. The $120.0 million in budgetary savings included $104.0 million in general funds and $16.0 million in special and federal funds.

The 2011 Act also provided that for future fiscal years the State’s contributions to each system shall include an additional amount reflecting the difference between the State’s required contribution under the corridor funding method for that fiscal year and the amount that would have been required had pension reforms not been enacted. For fiscal year 2013, State contributions to the system will be reduced by $120.0 million and the amount of savings estimated to be reinvested in the system will be $192.4 million. Beginning in fiscal year 2014 all savings from the 2011 Act pension reforms, up to an annual cap of $300.0 million, will be invested in the Teachers’ and Employees’ Pension Systems.

The 2012 Budget included funds for full employee salaries and did not include any furloughs or temporary salary reductions. The 2012 Budget also did not include funds for any employee cost of living adjustment, merit increases, or the statutory match for contributions to deferred compensation but did include $39.2 million for a one-time $750.00 bonus for most employees.

The 2012 Budget included $15.0 million to the Dedicated Purpose Account of the State Reserve Fund for distribution to the Prince George’s County Health System. The 2011 Act directed $40.0 million in transportation

27

related revenues to the Revenue Stabilization Account of the State Reserve Fund. The balance in the Revenue Stabilization Account is estimated to equal $681.5 million or 5.0% of general fund revenues as estimated by the Board of Revenue Estimates in December 2010. No transfers from the State Reserve Fund to the General Fund were planned in fiscal year 2012.

The 2012 Budget funded debt service for the State’s general obligation bonds with $867.3 million in special funds, primarily from State property tax revenues and $11.1 million in federal funds reflecting the interest subsidy on current outstanding ARRA Bonds. The projected amount of State property tax revenues reflects a property tax rate of 11.2 cents (per $100 of taxable assessed value), a rate unchanged from fiscal year 2011.

The enacted 2012 Budget estimated that the general fund balance on a budgetary basis at June 30, 2012 would be $56.4 million. In addition, the balance in the Revenue Stabilization Account of the State Reserve Fund was estimated to be $681.5 million at June 30, 2012, equal to 5.0% of estimated general fund revenues.

Subsequent Events. General fund revenues and fund transfers realized in the State’s fiscal year ended June 30, 2011 were $320.2 million above estimates and general fund reversions on a budgetary basis were $23.8 million above estimates, resulting in a $990.1 million general fund balance on a budgetary basis.

At its September 21, 2011 meeting, the Board of Revenue Estimates increased the fiscal year 2012 general fund revenue estimate by $195.0 million, but subsequently reduced the estimate by $49.9 million and $80.1 million at its December 9, 2011 and March 7, 2012 meetings, respectively.

The enacted fiscal year 2013 Budget included $53.0 million in fiscal year 2012 revenue adjustments and deficiency appropriations for fiscal year 2012 totaling $191.7 million. The deficiencies included $121.0 million for the State Department of Education to reflect reduced projections for video lottery terminal revenue used to support education aid to local school systems.

Based on the events and actions discussed above, the fiscal year 2013 Budget estimates that the general fund balance on a budgetary basis at June 30, 2012 would equal $320.3 million.

The State announced on August 30, 2012 that general fund revenues on a budgetary basis realized in the State’s fiscal year ended June 30, 2012, were $229.7 million or 1.6% above estimates and transfers to the General Fund were $0.9 million above estimates. General fund expenditures on a budgetary basis were $0.3 million below estimates, resulting in a $551.2 million general fund balance on a budgetary basis.


28

General Fund Revenues and Appropriations – Budgetary Basis Fiscal Years 2011-2012

($ in millions)

2011 Actual

2012 Original Budget

2012 Estimate (a)

General Fund Revenues Income Taxes ............................................................................. $7,214.7 $7,310.6 $7,578.2Sales and Use Taxes .................................................................. 3,656.0 4,164.1 4,018.5Lottery ....................................................................................... 499.4 503.9 502.7Franchises, Excises, Licenses, Fees ........................................... 2,167.3 1,931.4 1,928.7

Total ................................................................................... $13,537.4 $13,910.0 $14,028.1 General Fund Appropriations Public Education ........................................................................ $6,662.2 $7,233.2 $7,396.7Human Resources ...................................................................... 555.0 564.1 602.0Public Health ............................................................................. 3,235.6 4,028.8 3,944.2Public Safety, State Police, and Juvenile Services .................... 1,496.5 1,589.6 1,625.2Capital Funding ......................................................................... 0.8 47.5 47.5State Reserve Fund – Revenue Stabilization

& Dedicated Purpose Accounts .......................................... 15.0 15.0 15.0Administrative and Other ......................................................... 1,315.7 1,270.5 1,305.1

Total ................................................................................... $13,280.8 $14,748.7 $14,935.7

General Fund Balance – Budgetary Basis Fiscal Years 2011-2012

($ in millions) 2011 2012 Actual Estimate (a)

Balance Beginning of Year (a) .................................................. $344.0 $990.1 Increases: Revenues...................................................................... 13,537.4 14,028.1 Transfer from Revenue Stabilization Account ............ 0.0 0.0

Reimbursements from Tax Credit Reserves ................ 13.1 12.0 Transfer from other funds ............................................ 333.9 225.7 13,884.4 14,265.7 Decreases: Appropriations ............................................................. 13,280.8 14,935.7 Reversion of Prior Year Encumbrances ....................... (42.6) - 13,238.3 14,935.7 Balance End of Year (b) ............................................................ $990.1 $320.3 ___________ (a) Estimated revenues include revenues recommended to the Governor by the Board of Revenue Estimates in March 2012 and revenue adjustments incorporated in

the fiscal year 2013 Budget. Estimated appropriations are based on the 2012 Budget as enacted and include deficiency appropriations of $191.7 million and are net of estimated reversions of $37.1 million.

(b) Fund balance does not include amounts reserved for the State Reserve Fund or encumbrances. *Totals may not add due to rounding.

General Fund 2013 Budget

2013 Budget. The Governor of Maryland must, by law, submit a balanced budget for legislative review. In order to develop a balanced fiscal year 2013 Budget (“2013 Budget”), the Governor also submitted the State and Local Revenue and Financing Act of 2012 (the “2012 Revenue Act”) and the Budget Reconciliation and Financing Act of 2012 (the “2012 Act”). The 2012 Revenue Act includes provisions to increase revenues to the State General

29

Fund and to special funds. The 2012 Act authorizes various funding and statutory changes to support the 2013 Budget.

The General Assembly enacted the 2013 Budget on April 9, 2012. However, the General Assembly was unable to reach consensus on certain outstanding issues, including a proposed expansion of gambling in Maryland, and did not enact either the 2012 Act or the 2012 Revenue Act during the 2012 Legislative Session. The failure to enact those two pieces of legislation automatically precipitated $512.2 million of expenditure reductions in the 2013 Budget. These contingent reductions included, among other reductions: (1) $286.1 million in reductions to primary, secondary, and higher education; (2) $52.3 million from grants to local government; (3) $50.0 million by reducing State agency budgets by 8 percent; (4) $33.8 million for eliminating a 2 percent cost of living adjustment for State employees; (5) $30.0 million from eliminating 500 permanent positions statewide; and (6) $15.0 million from increasing the State employee contribution for health insurance costs.

Following the conclusion of the 2012 Legislative Session, it was determined that enacted legislation was insufficient to authorize approximately $75.9 million of the contingent reductions affecting State support for primary and secondary education. This determination reduced the total amount of the contingent reductions to $436.3 million and created an apparent fiscal year 2013 Budget imbalance of approximately $71.0 million.

The Governor called the General Assembly to meet in the First Special Session of 2012 on May 14, 2012. On May 16, 2012, the General Assembly enacted amended versions of both the 2012 Act and 2012 Revenue Act, the passage of which increased revenues, reduced expenditures, and created the Budget Restoration Fund (“BRF”), a new special fund that will be used to restore the above-described contingent reductions in the 2013 Budget.

Exclusive of BRF spending, the 2013 Budget includes $14,593.0 million in spending for, among other things: (1) funds to the State’s retirement and pension systems consistent with the corridor funding methodology prescribed by statute; (2) $5,902.4 million in aid to local governments from general funds; (3) $3,890.4 million to support public health services in the Department of Health and Mental Hygiene, including $2,389.7 million for the Medicaid Program; (4) $0.7 million for capital projects; and (5) $27.8 million for the State Reserve Fund.

General fund revenues in the 2013 Budget increase by $86.1 million. The largest single increase is a $39.0 million increase to reflect revenue on economic activity resulting from extending the federal payroll tax cut. Other adjustments include $9.5 million in admissions and amusement taxes from electronic bingo, $9.1 million in settlements from pharmaceutical companies, and $8.0 million in unclaimed property revenues.

The 2013 Budget also includes $227.6 million in reductions authorized by the 2012 Act. The largest reductions include $136.6 million from sharing local teachers’ retirement costs with local school boards, $40.0 million in favorable Medicaid spending trends, and $10.0 million from allocating additional Cigarette Restitution Funds to Medicaid.

The 2013 Budget also includes $191.7 million in deficiency appropriations for fiscal year 2012, the largest of which included: (1) $121.0 million for the State Department of Education to reflect reduced projections for video lottery terminal revenue used to support education aid to local school systems; (2) $54.5 million for the State Department of Education and the Department of Human Resources to reflect reduced projections for the Temporary Assistance for Needy Families federal grant; and (3) $18.0 million for the State Department of Education to provide funding for the development and scoring of school assessments.

The 2013 Budget includes $1.4 billion in total fund contributions to the Maryland State Retirement and Pension System consistent with the corridor funding methodology prescribed by statute. The contribution amount includes funding in accordance with the corridor method and an additional $190.8 million pursuant to the 2011 Act. The additional amount reflects the difference between the State’s required contribution under the corridor funding method for fiscal year 2013 and the amount that would have been required had the 2011 pension reforms not been enacted, less $120.0 million.

The 2013 Budget funds debt service on the State’s general obligation bonds with $910.5 million in special funds, primarily from State property tax revenues and $12.0 million in federal funds reflecting the interest subsidy

30

on current outstanding American Recovery and Reinvestment Act of 2009 (“ARRA”) Bonds. The projected amount of State property tax revenues reflects a property tax rate of 11.2 cents (per $100 of taxable assessed value), a rate unchanged from fiscal year 2012.

The 2013 Budget includes $27.8 million to the Revenue Stabilization Account of the State Reserve Fund. The balance in the Revenue Stabilization Account is estimated to equal $713.5 million or 5.0% of estimated general fund revenues.

It is estimated that the general fund balance on a budgetary basis at June 30, 2013 will be $200.4 million.

In addition, the 2012 Act authorizes $433.5 million in additional revenues and fund transfers that will be deposited into the BRF and directs $430.3 million in expenditures from the BRF. Any unexpended funds remaining in the BRF at the end of fiscal year 2013 will revert to the General Fund. The revenues deposited into and the expenditures funded by the BRF would normally be assigned to the General Fund. Revenues that are ongoing will be deposited into the General Fund starting in FY 2014.

The $433.5 million in revenues and transfers to the BRF provided by the 2012 Act include: (1) a $247.3 million increase from additional income tax revenues derived from increasing income tax rates and limiting certain personal exemptions for high earners; (2) an $8.8 million increase in lottery revenues from maintaining the current commission for lottery agents; (3) $8.0 million in motor fuel taxes; (4) a $7.4 million increase in corporate income taxes from the elimination of a credit for telecommunications companies; and (5) a $5.0 million increase from taxes on certain tobacco products. Additionally, the BRF received $157.0 million in transfers including, among others, (1) a $96.8 million transfer from transfer tax revenues and (2) a $50.0 million payment from the Injured Worker’s Insurance Fund.

Subsequent Events. The State announced on August 30, 2012 that general fund revenues on a budgetary basis realized in the State’s fiscal year ended June 30, 2012, were $229.7 million or 1.6% above estimates and transfers to the General Fund were $0.9 million above estimates. General fund expenditures on a budgetary basis were $0.3 million below estimates, resulting in a $551.2 million general fund balance on a budgetary basis.

On September 17, 2012 the Bureau of Revenue Estimates released their revised estimates showing that general fund revenue for the fiscal year ending on June 30, 2013 would be $180.6 million greater than it was previously estimated. The estimates also included $7.6 million in downward adjustments resulting from legislation enacted during the 2012 first and 2012 second special sessions that were not previously included.

The revenue increase, along with the better than estimated revenue collection from the fiscal year that ended June 30, 2012 as well as the $7.6 million adjustments, result in an estimated general fund balance of $604.2 million for the fiscal year ending on June 30, 2013.

Interim General Fund Revenues and Expenditures

The State does not issue, nor does it have procedures in effect that provide interim financial statements; however, the Office of the Comptroller has compiled the following summary data with respect to the revenues and expenditures of the General Fund for the fiscal years ended June 30, 2011 and 2012 (unaudited). The General Fund is that fund from which all general costs of State government are paid and to which taxes and other revenues not specifically directed by law to be deposited in separate funds are recorded. Approximately 40.4% of revenues were accounted for in the General Fund in fiscal year 2011, and 42.9% of all revenues in fiscal year 2012. The presentation of these data does not purport to be, and should not be construed as, an interim Statement of General Fund Revenues, Expenditures, and Surplus; however, adjustments have been made to present the revenues on a basis reasonably comparable to the table of operating revenues included above under “State Finances – State Revenues” above.

General Fund Revenues. The following presents a summary of general fund revenues on a budgetary basis by major categories for the nine months ended March 31, 2011 and 2012.

31

General Fund Revenues ($ in millions)

Fiscal Year 2011 (a)

Amount

Fiscal Year 2012 (a) Amount (unaudited)

Income Taxes (b) .................................... $7,214.7 $7,761.2Sales and Use Taxes (b) .......................... 3,656.0 4,039.3Motor Vehicle User Taxes, Fees (c) ....... 382.1 191.7Property, Franchise, Excise Taxes .......... 1,150.2 1,150.5Sundry Fees, Licenses, Charges, Etc. ..... 1,066.2 1,052.8Federal .................................................... 68.2 62.3

Total ........................................................ $13,537.4 $14,257.8____________

(a) Fiscal year 2011 and 2012 represents actual revenues for the full fiscal year. (b) Income taxes and sales and use taxes reflect amounts actually received from July through June, excluding amounts received in that period allocable to the

preceding fiscal year. (c) These revenues include existing transportation-related taxes whose distributions were changed for fiscal years 2010 through 2012 in the fiscal year 2011 Budget

approved by the General Assembly during the 2010 session and later modified in fiscal year 2012 Budget approved by the General Assembly during the 2011 session.

*Totals may not add due to rounding.

General Fund Expenditures. The following presents a summary of general fund expenditures on a budgetary basis by major category for the twelve months ended June 30, 2011 and 2012 (see note (a)):

General Fund Expenditures ($ in millions)

Twelve Months Ended June 30 Fiscal Year 2011 Fiscal Year 2012

Amount% of FY Actual Expenditures (b)

Amount

% of FY Budget Expenditures (b)

Public Education ............................................ $6,666.6 100.0% $7,386.9 99.7%Human Resources .......................................... 555.3 100.0 604.4 100.0Public Health ................................................. 3,244.1 100.0 3,974.3 99.8Public Safety .................................................. 1,419.1 100.0 1,544.4 100.0Administrative & Other ................................. 1,356.9 100.0 1,370.0 99.6Capital Funding (c) ....................................... 0.0 0.0 47.5 100.0State Reserve Fund - Dedicated Purpose

Account .................................................... 15.0 100.0 15.0

100.0

Total ............................................................... $13,257.0 100.0% $14,942.5 99.8%

___________ (a) The State's accounting procedures do not require recording encumbrances (i.e., commitments evidenced by purchase orders or contracts) for financial reporting

purposes except at the end of each fiscal year. At June 30, 2011 and 2012, General Fund encumbrances charged to expenditures for the fiscal years ended totaled $78.9 million and $71.7 million, respectively. The Office of the Comptroller has no reason to believe that the current patterns of commitments are not in conformity with historical practices.

(b) For fiscal year 2011, represents the percentage of actual expenditures for the full fiscal year; for fiscal year 2012, represents the percentage of fiscal year 2012 budget expenditures.

(c) Capital Funding is appropriated in the General Fund and transferred to the Capital Projects Fund at the beginning of the fiscal year. * Totals may not add due to rounding.

Federal Stimulus Funding

The American Recovery and Reinvestment Act of 2009 (“ARRA”) provides support to States by funding infrastructure, education programs and human services programs by providing discretionary and targeted funding. The table titled Impact of ARRA on Maryland shows that ARRA has provided $4.8 billion in funding to the State of Maryland in fiscal years 2009 through 2013.

Over this time period, ARRA grants to Maryland have provided $605.3 million for educational programs, $839.6 million for infrastructure programs, and $514.3 million for other programs. These funds have provided

32

additional federal support and have not supplanted general funds. It was also estimated that ARRA would provide $101.8 million in direct grants distributed to local governments and aid organizations that were not appropriated in the State budget.

Funds Supporting State General Fund Commitments

ARRA’s most significant impact for Maryland was the $2.8 billion to support State general fund commitments. These funds supported Medicaid, education, and discretionary State spending. The funds were used in the place of general funds to sustain State funding from fiscal years 2009 to 2011.

Medicaid funds totaled $1,914.4 million and were available from October 2008 through the end of December 2010. A portion of the funds are attributable to a 6.2% increase in the State’s Federal Medical Assistance Percentage.


33

Impact of ARRA on Maryland

Fiscal Years 2009 through 2013 ($ in Millions)

Program

FY 2009

FY 2010

FY 2011

FY 2012 Estimate

FY 2013 Estimate

Estimated Total

Award Supporting State General Fund Commitments Fiscal Stabilization – Education $0.0 $297.3 $422.3 $0.0 $0.0 $719.6 Fiscal Stabilization – Discretionary 1.5 79.6 79.0 0.0 0.0 160.1 Medicaid 443.5 785.8 685.0 0.0 0.0 1,914.3 Subtotal 445.0 1,162.7 1,186.3 0.0 0.0 2,794.0

Education Grants Appropriated in the State Budget Special Education 0.0 214.1 15.2 0.0 0.0 229.3 Title I 0.0 130.7 0.0 0.0 0.0 130.7 Race to the Top 0.0 0.0 133.3 43.9 37.2 214.4 Education Technology 0.0 8.1 0.2 0.0 0.0 8.3 School Improvement Program 0.0 0.2 13.2 0.3 0.0 13.7 Vocational Rehabilitation 0.8 5.3 1.8 0.0 0.0 7.9 Head Start 0.0 0.0 0.0 0.3 0.6 1.0 Subtotal 0.8 358.4 163.8 44.5 37.8 605.3

Infrastructure Appropriated in the State Budget Highways 15.0 155.8 165.9 46.8 4.6 388.1 Transit Capital 0.0 42.4 53.7 48.0 6.9 151.0 Aviation Capital 0.0 6.5 8.5 0.0 0.0 15.0 High Speed Rail 0.0 0.0 9.9 16.0 20.0 45.9 Tax Credit Assistance Program (HOME) 0.0 31.7 2.0 0.0 0.0 33.7 Section 1602 Monetization 0.0 77.2 0.0 0.0 0.0 77.2 Broadband Technology 0.0 0.0 9.5 43.8 51.7 105.0 Clean Water 0.0 19.1 0.7 0.4 0.0 20.2 Drinking Water 0.0 3.4 0.1 0.1 0.0 3.6 Subtotal 15.0 336.1 250.3 155.1 83.2 839.7

Other Grants Appropriated in the State Budget State Energy Programs 0.0 19.3 25.5 9.0 0.0 53.8 Energy Efficiency and Conservation Block Grant 0.0 5.7 32.3 10.9 1.3 50.2 Weatherization 6.5 52.3 3.8 0.8 0.0 63.4 Community Services Block Grant 0.0 13.7 0.1 0.0 0.0 13.8 Homelessness Prevention 0.0 5.4 0.0 0.0 0.0 5.4 Community Development Block Grant 0.0 2.1 0.0 0.0 0.0 2.1 Foster Care 7.2 7.1 4.0 0.0 0.0 18.3 Food Assistance 33.4 3.9 0.0 0.0 0.0 37.3 Temporary Assistance for Needy Families 16.1 32.8 16.2 0.0 0.0 65.1 Ind. Living, Homeless Educ. & Work Study 0.0 1.6 0.1 0.0 0.0 1.7 Child Care & Development Block Grant 4.4 18.2 0.0 0.0 0.0 22.6 Child Support Enforcement 14.1 12.2 4.1 0.0 0.0 30.4 UI/Workforce Inv./Dislocated Workers 1.8 17.1 19.6 10.2 5.2 53.9 Preventative Health BG/Immunization 0.0 1.3 2.0 1.6 0.0 4.9 Health Information Technology 1.0 0.6 2.6 3.3 2.8 10.3 Byrne Grants/Public Safety Grants 0.1 8.8 17.3 10.9 0.9 38.0 Federal Subsidy on Build America Bonds 0.0 0.9 9.2 11.5 12.0 33.6 Other Grants 0.3 3.3 3.1 2.4 0.3 9.4 Subtotal 84.9 206.3 139.9 60.6 22.5 514.2 Total State Grants $545.7 $2,063.5 $1,740.3 $260.2 $143.5 $4,753.2 Source: Department of Budget and Management. * Totals may not add due to rounding.

State Fiscal Stabilization Fund. The table below shows that ARRA provided $879.8 million to Maryland in Fiscal Stabilization funds. The legislation required that 81.8%, or $719.7 million, support education programs. The education funds had to be used first to restore elementary and secondary school reductions to fiscal year 2008 spending levels. Since Maryland increased spending, this requirement did not apply. Remaining funds were required to be used to support State formula increases in fiscal years 2010 and 2011 for elementary and secondary education or to restore reductions made to State higher education funding below fiscal years 2008 or 2009 levels. The State applied these funds to support elementary and secondary education increases. Expenditures totaled $297.3 million in fiscal year 2010 and $422.3 million in fiscal year 2011.

34

Finally, ARRA permitted 18.2% of the Fiscal Stabilization funds to support general government services. These discretionary funds totaled $160.1 million, of which $1.5 million was spent in fiscal year 2009, $79.6 million was spent in fiscal year 2010 and the remaining $79.0 million was spent in fiscal year 2011.

ARRA – Federal Stabilization Spending by Program Fiscal Years 2009-2011

($ in Millions)

Program FY 2009

FY 2010

FY 2011

Total

Fiscal Stabilization – Education $0.0 $297.3 $422.3 $719.7 Fiscal Stabilization – Discretionary Maryland State Police 0.0 19.9 19.9 39.7 Department of Juvenile Services 0.0 4.5 4.5 9.0 Department of Human Resources 1.5 1.5 1.5 4.5

Department of Public Safety and Correctional Services 0.0 53.7 53.2 106.9 Subtotal 1.5 79.6 79.1 160.1 Total Fiscal Stabilization $1.5 $376.9 $501.4 $879.8

_________ * Totals may not add due to rounding.

Fiscal Year 2007-2011 General Fund Budget vs. Actual The following statement presents a comparison of budget versus actual revenues, expenditures and encumbrances and changes in fund balance in the State’s General Fund using the budgetary basis of accounting for each of the past five fiscal years ended June 30.


35

Statutory General Fund Comparative Statement of Revenues, Expenditures and Encumbrances and Changes in Fund Balance

Budget and Actual Fiscal Years 2007 to 2011 ($ in thousands)

2007 2008 2009 2010 2011

Budget Actual Budget Actual Budget Actual Budget Actual Budget Actual

Revenues:

Income taxes ................................................................. $ 7,167,363 $ 7,268,949 $7,545,165 $7,491,807 $7,363,803 $7,027,897 $6,600,565 $6,888,949 $6,948,129 $7,214,730

Sales and use taxes ......................................................... 3,457,229 3,420,149 3,691,717 3,675,263 3,610,951 3,620,431 3,473,936 3,528,960 3,672,461 3,656,044

Other taxes ..................................................................... 956,817 961,416 1,083,077 1,100,788 1,113,177 1,056,124 1,010,987 1,034,718 1,070,967 1,092,339

Licenses and fees ........................................................... 212,457 209,504 205,284 205,314 190,969 207,169 202,944 204,963 194,493 205,355

Charges for services ....................................................... 294,546 306,806 308,532 299,709 290,861 298,377 291,250 271,923 309,663 328,717

Interest and other investment income ............................ 172,795 260,708 122,585 234,289 103,000 113,607 35,000 64,759 54,000 71,373

Other .............................................................................. 588,371 1,477,980 601,428 837,322 547,693 878,185 598,114 705,211 909,316 617,711

Total revenues (a) ................................................... 12,849,578 13,905,512 13,557,788 13,844,492 13,220,454 13,201,790 12,212,796 12,699,483 13,159,029 13,186,269

Expenditures and encumbrances by major function:

Payments of revenue to civil divisions of the State ....... 145,033 144,794 149,512 149,218 120,760 120,760 124,011 124,011 121,436 121,436

Public debt ..................................................................... - - 29,349 29,349 - - - - - -

Legislative ...................................................................... 69,128 68,156 72,258 70,838 76,397 73,650 76,403 71,590 75,608 74,859

Judicial review and legal ............................................... 432,829 429,676 457,197 453,810 485,384 477,529 479,558 469,861 473,670 473,259

Executive and administrative control ............................ 278,878 276,634 195,834 193,466 254,130 248,094 200,473 197,325 207,190 205,771

Financial and revenue administration ............................ 182,851 179,001 185,550 180,191 179,818 178,792 197,695 196,070 209,357 207,804

Budget and management ................................................ 65,860 62,537 31,546 28,611 38,839 36,165 38,328 37,062 42,810 41,505

General services ............................................................. 59,815 58,814 58,062 58,062 55,284 55,284 51,284 51,209 52,253 52,010

Natural resources and recreation ................................... 75,692 75,387 76,856 76,476 57,855 57,718 45,351 45,250 43,569 43,484

Agriculture ..................................................................... 30,292 30,021 34,392 33,710 29,155 28,884 25,236 25,236 27,328 27,300

Health, hospitals and mental hygiene ............................ 3,588,004 3,588,003 3,671,920 3,651,019 3,373,973 3,362,742 2,985,071 2,962,979 3,235,721 3,235,650

Human resources ........................................................... 569,924 569,924 575,743 575,743 589,585 589,215 607,269 607,266 554,971 554,971

Labor, licensing and regulation ..................................... 16,004 15,728 15,880 15,440 12,829 12,743 33,235 33,235 32,463 32,234

Public safety and correctional services .......................... 1,034,310 1,033,397 1,034,831 1,034,830 1,076,908 1,076,861 1,008,610 1,007,312 1,004,664 1,003,798

Public education ............................................................. 6,201,859 6,197,845 7,014,660 7,007,355 7,246,594 7,242,123 6,977,056 6,973,769 6,673,314 6,662,181

Housing and community development .......................... 46,132 45,621 13,701 13,688 9,411 9,401 4,231 4,231 3,940 3,469

Business and economic development ............................ 103,205 103,086 95,708 95,670 81,198 80,788 62,702 62,701 70,233 69,848

Environment .................................................................. 50,835 50,340 44,527 44,471 44,951 44,941 35,500 35,500 32,731 32,731

Juvenile services ............................................................ 238,791 238,520 267,188 266,734 267,002 266,941 260,637 260,636 257,516 257,514

State police ..................................................................... 245,559 245,559 247,375 246,745 180,461 178,772 164,082 162,112 166,175 166,018

State reserve fund .......................................................... 791,382 791,382 262,795 262,795 211,543 211,543 114,948 114,948 15,000 15,000

Reversions:

Current year reversions ............................................... (20,000) - (30,000) - (30,000) - (63,680) - (30,000) -

Prior year reversions ................................................... - (29,971) - (49,268) - (44,216) - (13,672) - (42,584)

Total expenditures and encumbrances .................... 14,206,383 14,174,454 14,504,884 14,438,953 14,362,077 14,308,730 13,428,000 13,428,631 13,269,949 13,238,258

Changes in encumbrances during fiscal year .................... - (51,543) - 26,735 - 42,998 - 39,241 - 18,537

Total expenditures .................................................. 14,206,383 14,122,911 14,504,884 14,465,688 14,362,077 14,351,728 13,428,000 13,467,872 13,269,949 13,256,795

Excess of revenues over (under) expenditures ....... (1,356,805) (217,399) (947,096) (621,196) (1,141,623) (1,149,938) (1,215,204) (768,389) (110,920) (70,526)

Other sources (uses) of financial resources:

Operating transfers in (out) ............................................ - (23,798) - (72,596) - 688,515 - 898,877 - 712,634 Excess of revenues over (under) expenditures and

other sources of financial resources ....................... (1,356,805) (241,197) (947,096) (693,792) (1,141,623) (461,423) (1,215,204) 130,488 (110,920) 642,108

Fund balances at the beginning of the year ...................... 2,322,049 2,322,049 2,080,852 2,080,852 1,387,060 1,387,060 925,637 925,637 1,056,125 1,056,125

Fund balances, June 30 (b) ............................................... $ 965,244 $ 2,080,852 $ 1,133,756 $ 1,387,060 $ 245,437 $ 925,637 $ (289,567)

$ 1,056,125 $945,205 $1,698,233

_________ (a) This amount differs from the total general fund revenues noted in the “General Fund Revenues and Appropriations – Budgetary Basis” schedule due to the different treatment of transfers, including the transfer of

revenues from the State Reserve Fund. (b) Includes balances for the State Reserve Fund and encumbrances.

General Fund Outlook

The 2013 Budget, adjusted for the results of the fiscal year ended June 30, 2012, as well as increased revenues estimated a general fund balance on a budgetary basis at June 30, 2013 of $604.2 million. The Department of Budget and Management forecasts that expenditures will exceed available revenues in future years but the size of

36

the gap has been reduced due to expenditure reductions included in the 2012 Act and in the 2013 Budget, which together reduce the State’s structural budget imbalance in fiscal year 2013 to an estimated $548.0 million from an estimated $1.1 billion. After the Bureau of Revenue Estimates released its updated estimates for the fiscal year ending on June 30, 2013, the Department of Budget and Management revised its general fund outlook. The Department of Budget and Management estimates future general fund shortfalls between $60.0 million and $506.0 million for fiscal years 2014 through 2017. The Governor must submit and the Legislature must enact a balanced budget. See “State Finances – Budgetary System” above. As with all future projections, assumptions and estimates may prove to be inaccurate and may be changed in the future based on future financial conditions and results.

Additional Information Incorporated by Reference

Certain financial information of the State is on file with the Municipal Securities Rulemaking Board through the Electronic Municipal Market Access System (EMMA) and included by reference in this Official Statement, all as more fully described in Appendix A of this Official Statement. Investors are encouraged to review such information to make an informed investment decision.

CERTAIN RISKS OF OWNERSHIP OF THE 2012 SERIES BONDS

The following risks adversely affect the ability of the Issuer to pay the principal of, premium, if any, or interest on, the 2012 Series Bonds.

Failure to Appropriate

The primary source of funds for payment of the 2012 Series Bonds is the MAA’s payment of Rentals. Rentals are payable from MAA funds budgeted and appropriated therefor by the General Assembly in each successive Fiscal Year. The General Assembly is not obligated under the Lease to make any appropriation, or to make a sufficient appropriation, to pay Rentals in any Fiscal Year. A failure to appropriate amounts sufficient to pay all Rentals coming due during the next ensuing Fiscal Year would not constitute an Event of Default; provided, however, that such a failure would constitute a Failure to Appropriate.

While the appropriate officers of the MAA are directed, pursuant to the Lease, to include in successive annual budget proposals items for all Rentals coming due during the ensuing Fiscal Year and to use their best efforts to secure the timely approval and appropriation of Rentals by the General Assembly prior to the beginning of each ensuing Fiscal Year during the Term of the Lease, there is no assurance that the General Assembly will appropriate money sufficient to pay Rentals in each ensuing Fiscal Year until maturity of the 2012 Series Bonds. The likelihood of any future appropriation is dependent upon factors beyond the control of the Issuer, the officers of the Department, the MAA and the Owners of the 2012 Series Bonds, including, without limitation, (i) the continuing need of the MAA for the Facility, (ii) the continuing sufficiency of the Facility for the evolving, and perhaps increasing, needs of the MAA, (iii) the financial condition of the Department and the State and (iv) demographic and economic conditions which would affect the need for the Facility and the financial condition of the Department. It is the intention of the Department that the amounts payable under the Lease, including Rentals, will be made from funds in the Transportation Trust Fund. See “THE DEPARTMENT OF TRANSPORTATION – Transportation Trust Fund” herein.

In the event of a Failure to Appropriate, the MAA would not be obligated to make any Rental payment beyond those accruing during the then current Fiscal Year. The Trustee is required to take those remedies available to it under the Lease (as set forth in Appendix C – “SUMMARIES OF THE LEASE AND THE TRUST INDENTURE – The Lease – Term of Lease; Failure to Appropriate”). See “Uncertainty of Remedies” below.

THE REMEDIES AVAILABLE TO THE ISSUER AND THE TRUSTEE IN THE EVENT OF A FAILURE TO APPROPRIATE ARE LIMITED AND DO NOT INCLUDE THE RIGHT TO INSTITUTE LEGAL PROCEEDINGS TO COMPEL PAYMENT OF ANY RENTALS FOR WHICH THERE IS NOT AN

37

APPROPRIATION NOR MAY THE ISSUER OR THE TRUSTEE SEEK A JUDGMENT AGAINST THE DEPARTMENT OR THE MAA. A FAILURE TO APPROPRIATE IS NOT AN EVENT OF DEFAULT.

Uncertainty of Remedies

The enforceability of the 2012 Series Bonds, the Lease and the Trust Indenture may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar law affecting the enforcement of creditors’ rights generally or by the availability of equitable remedies. Lack of sufficient legal precedent prevents prediction of the extent to which such equitable relief might be available to the MAA or the circumstances in which such equitable relief may be granted.

TAX MATTERS

State and Local Tax Exemption

In the opinion of McGuireWoods LLP, Baltimore, Maryland, Bond Counsel, the 2012 Series Bonds and the interest thereon are exempt from State, municipal and local taxation under existing law, but Bond Counsel expresses no opinion with respect to estate or inheritance taxes, or any other taxes not levied directly on the 2012 Series Bonds or the interest thereon.

Interest on the 2012 Series Bonds may be subject to state or local income taxes in jurisdictions other than the State of Maryland under applicable state or local tax laws. All purchasers of the 2012 Series Bonds should consult their tax advisors regarding the taxable status of the 2012 Series Bonds in a particular state or local jurisdiction other than the State of Maryland.

The proposed form of Bond Counsel’s approving opinion is attached hereto as Appendix D.

Federal Law

Interest on the 2012 Series Bonds is not excludable from the gross income of the Owners of the 2012 Series Bonds for purposes of federal income taxation.

LEGAL MATTERS

Legal matters incident to the authorization, issuance and validity of the 2012 Series Bonds are subject to the approving opinion of McGuireWoods LLP, Baltimore, Maryland, Bond Counsel. Certain legal matters will be passed on for the MAA by Louisa H. Goldstein, Assistant Attorney General, Counsel to the MAA.

LITIGATION

There is no action, suit, proceeding, inquiry or investigation at law or in equity or before any court, public board or body pending or, to the knowledge of the Issuer, threatened (or any meritorious basis for such an action, suit, proceeding, inquiry or investigation) at the date of this Official Statement to restrain or enjoin the issuance, sale, execution or delivery of the 2012 Series Bonds or any proceedings of the Issuer taken with respect thereto, or wherein an unfavorable decision, ruling or finding (i) would adversely affect the transactions contemplated for use in the consummation of the transactions contemplated by this Official Statement or (ii) would materially adversely affect the financial condition or operations of the Project. There is no litigation now pending or threatened against the Issuer, of which the Issuer has knowledge which in any manner questions the right of the Issuer to enter into or perform its obligations under the Trust Indenture.

There is no litigation pending or, to the knowledge of the Department and the MAA, threatened against or affecting the Department or the MAA or to the best knowledge of the Department and the MAA, any basis therefor, (i) contesting the existence of the Department or the MAA, the title of the officers of the Department or the MAA executing documents to their respective offices, or challenging the right or authority of the Department or the MAA to lease of the Facility with an option to purchase from the Issuer, or (ii) wherein an unfavorable decision, ruling or

38

finding would materially adversely affect the contemplated transactions or which, in any way, would adversely affect the validity or enforceability of any of the documents.

SALE AT COMPETITIVE BIDDING

The 2012 Series Bonds were offered for sale by the Issuer at competitive bidding on October 17, 2012, in accordance with the official Notice of Sale (the form of which is attached as Appendix E.) The interest rates shown on the cover page of this Official Statement are the interest rates to the Issuer resulting from the award of the 2012 Series Bonds at the competitive bidding. The prices shown on the cover page of this Official Statement are based on information supplied to the Issuer by the successful bidder for the 2012 Series Bonds. Any other information concerning the terms of reoffering of the 2012 Series Bonds, if any, including yields or prices, should be obtained from the successful bidder therefor and not from the Issuer.

VERIFICATION OF MATHEMATICAL COMPUTATIONS

Upon the delivery of the 2012 Series Bonds, The Arbitrage Group, Inc. will deliver to the Issuer its report on the arithmetical accuracy of certain computations relating to the sufficiency of forecasted net cash flow from the Federal Securities held by the Escrow Deposit Agent, together with any initial cash deposit, to pay when due the principal of and interest on the 2003 Series Bonds to and including the date on which such 2003 Series Bonds are redeemed.

RATINGS

Standard & Poor’s Ratings Services, a division of The McGraw Hill Companies and Moody’s Investors Service, Inc. have assigned the 2012 Series Bonds the ratings of “AA+” and “Aa1”, respectively. Each such rating reflects only the view of the rating agency providing such rating. An explanation of the significance of the rating may be obtained from the rating agency furnishing it. Generally, rating agencies base ratings on information and materials furnished to them and on their own investigations, studies and assumptions. A rating is not a recommendation to buy, sell or hold securities. The ratings of the 2012 Series Bonds represent a judgment as to the likelihood of timely payment of the 2012 Series Bonds according to their terms but does not address the likelihood of redemption or other payments of the 2012 Series Bonds prior to maturity. There can be no assurance that such ratings will remain in effect for any given period of time or that they may not be lowered, suspended or withdrawn entirely if, in the judgment of the rating agencies, circumstances so warrant. Any such downward change in or suspension or withdrawal of such ratings may have an adverse effect on the market price and the marketability of the 2012 Series Bonds.

FINANCIAL ADVISOR

The Issuer has retained Wye River Group, Incorporated, Annapolis, Maryland (the “Financial Advisor”) in connection with the preparation of the Issuer’s financing plan for the refunding of the 2003 Series Bonds and with respect to the authorization of the issuance of the 2012 Series Bonds. The Financial Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume responsibility for the accuracy, completeness, or fairness of the information contained in this Official Statement.

CONTINUING DISCLOSURE

The Department on behalf of the State and itself will undertake in a Continuing Disclosure Agreement (the “Continuing Disclosure Agreement”) to comply with the provisions of Rule 15c2-12 (the “Rule”), promulgated by the Securities and Exchange Commission (the “SEC”), by providing certain annual financial information and operating data and event notices required by the Rule. Such information is to be filed with the Municipal Securities Rulemaking Board (the “MSRB”) through the Electronic Municipal Market Access System (EMMA). Such undertaking requires the Department to provide only limited information at specified times.

Potential purchasers should note that certain of the events listed in Section 4 of the Continuing Disclosure Agreement have been included for purposes of compliance with Rule 15c2-12 but are not relevant for the 2012 Series Bonds.

39

Investors and other interested parties may contact the MSRB for additional information concerning its services. The Department makes no representation as to the scope of the services provided to the secondary market by MSRB or as to the cost for the provision of such services by the MSRB.

Failure by the Department to comply with the continuing disclosure obligations in the Continuing

Disclosure Agreement will not be an “Event of Default” under the Lease or under the Trust Indenture, and the sole and exclusive remedy for such failure shall be an action brought by or on behalf of the holders of the 2012 Series Bonds to compel specific performance of the Department’s continuing disclosure obligations, as described above.

In the event of any failure of the Department to provide the required continuing disclosure, any holder of a 2012 Series Bond may bring an action seeking specific performance of the Department’s obligations to provide continuing disclosure. No assurance can be given as to the outcome of any such proceeding.

The proposed form of Continuing Disclosure Agreement is attached hereto as Appendix F.

MISCELLANEOUS

The references herein to the Act, the Resolution, the Lease, the Trust Indenture, the 2012 Series Bonds, and other materials are brief descriptions of certain provisions thereof. Such references do not purport to be comprehensive and, for full and complete statements of such provisions, reference is made to such instruments, documents and other materials, copies of which are on file at the corporate trust office of the Trustee in Baltimore, Maryland.

The information contained in this Official Statement has been compiled or prepared from information obtained from the Issuer, the Department, and other sources deemed to be reliable and while not guaranteed as to completeness or accuracy is believed to be correct as of the date of this Official Statement. Any statements involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact.


(Signature Page to Official Statement)

The execution and distribution of this Official Statement have been duly authorized by the Issuer.

MARYLAND ECONOMIC DEVELOPMENT CORPORATION By: Robert C. Brennan, Executive Director

APPROVED:

DEPARTMENT OF TRANSPORTATION OF MARYLAND by order of Darrell B. Mobley Acting Secretary of Transportation

MARYLAND AVIATION ADMINISTRATION by order of Paul J. Wiedefeld Executive Director


A-1

APPENDIX A

INFORMATION WITH RESPECT TO THE STATE OF MARYLAND INCLUDED BY REFERENCE

Certain financial information with respect to the State of Maryland, including its comprehensive financial statements for the fiscal year ended June 30, 2011, is on file with the Electronic Municipal Market Access System (EMMA) of the Municipal Securities Rulemaking Board (“MSRB”) and is included in this Official Statement by reference. Such information is available under CUSIP number 574192 (State of Maryland). The MSRB maintains a web site for EMMA. The address of that site is http://www.emma.msrb.org. It is expected that the comprehensive financial statements for the State of Maryland for the fiscal year ended June 30, 2012 will be filed with EMMA by March 2013.

Any statement contained in a document included or deemed to be included by reference herein shall be

deemed to be modified or superseded for purposes of this Official Statement to the extent that a statement made herein or in any other subsequently filed document which also is or is deemed to be included by reference herein modified or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Official Statement.

The Issuer, the State, the underwriter for the 2012 Series Bonds and the Department make no representation

as to the scope of services provided by the MSRB or as to the cost for the provision of such services by the MSRB.

B-1

APPENDIX B

INFORMATION WITH RESPECT TO DEPARTMENT OF TRANSPORTATION OF MARYLAND INCLUDED BY REFERENCE

Certain financial information with respect to the Department of Transportation of Maryland, including its

comprehensive financial statements for the fiscal year ended June 30, 2011, is on file with the Electronic Municipal Market Access System (EMMA) of the Municipal Securities Rulemaking Board (“MSRB”) and is included in this Official Statement by reference. Such information is available under CUSIP number 574204 (Maryland Department of Transportation). The MSRB maintains a web site for EMMA. The address of that site is http://www.emma.msrb.org. It is expected that the comprehensive financial statements for the Department of Transportation of Maryland for the fiscal year ended June 30, 2012 will be filed with EMMA by March 2013.

Any statement contained in a document included or deemed to be included by reference herein shall be

deemed to be modified or superseded for purposes of this Official Statement to the extent that a statement made herein or in any other subsequently filed document which also is or is deemed to be included by reference herein modified or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Official Statement.

The Issuer, the State, the underwriter for the 2012 Series Bonds and the Department make no representation

as to the scope of services provided by the MSRB or as to the cost for the provision of such services by the MSRB.

C-1

APPENDIX C

SUMMARIES OF THE LEASE AND THE TRUST INDENTURE

TABLE OF CONTENTS

Page

CERTAIN DEFINITIONS ......................................................................................................................................... C-2 THE LEASE ................................................................................................................................................................ C-9

Term of Lease; Failure to Appropriate ................................................................................................................. C-9 Maintenance and Use of Facility ........................................................................................................................... C-9 Maintenance of Facility ......................................................................................................................................... C-9 Taxes and Governmental and Utility Charges ....................................................................................................... C-9 Insurance ............................................................................................................................................................. C-10 Casualty and Condemnation; Proceeds ............................................................................................................... C-10 Events of Default ................................................................................................................................................. C-11 Remedies on Default ........................................................................................................................................... C-12

THE TRUST INDENTURE ..................................................................................................................................... C-14 Flow of Funds...................................................................................................................................................... C-14

Funds and Accounts ........................................................................................................................................ C-14 Bond Fund ...................................................................................................................................................... C-14 2003 Redemption Fund ................................................................................................................................... C-14 Insurance and Condemnation Fund ................................................................................................................ C-15 Administration Expenses Fund ....................................................................................................................... C-15

Additional Bonds ................................................................................................................................................. C-15 Investments ......................................................................................................................................................... C-15 Events of Default ................................................................................................................................................. C-16 Acceleration; Other Remedies ............................................................................................................................. C-16 Termination of Proceedings ................................................................................................................................ C-16 Rights of Owners to Direct Proceedings ............................................................................................................. C-17 Remedies Vested in Trustee ................................................................................................................................ C-17 Application of Moneys ........................................................................................................................................ C-17 Modification of Trust Indenture .......................................................................................................................... C-18

Amendments to Trust Indenture Not Requiring Consent of Owners ............................................................... C-18 Amendments to Trust Indenture Requiring Consent of Owners ...................................................................... C-19

Defeasance and Discharge of Lien ...................................................................................................................... C-19 The Trustee .......................................................................................................................................................... C-20 Removal of Trustee and Appointment of Successor Trustee .............................................................................. C-21

C-2

CERTAIN DEFINITIONS

Certain terms used in the Lease and the Trust Indenture are defined below; and, unless otherwise defined herein or the context clearly indicates otherwise, when and if such terms are used in this Official Statement they shall have the meanings ascribed to them below.

“Acquisition” or “acquisition” means, when used in regard to the Facility and any Additional Facilities, and shall include, where applicable, and without limitation, the acquisition, design, construction, inspection, construction management, equipping, furnishing, development, rehabilitation, remodeling, extension, and permanent improvement of the Facility and any Additional Facilities, and shall also include any reimbursement of expenditures previously incurred in connection therewith.

“Additional Bonds” means Bonds that may be issued under the Trust Indenture.

“Additional Facilities” means any project undertaken by the Issuer for the MAA that is financed or refinanced pursuant to the Act and the Trust Indenture by the Issuer through the issuance of Additional Bonds, including, without limitation, land, easements, rights of way, leaseholds and other interests in real property and any improvement, addition or betterment to the Property.

“Additional Rentals” means, to the extent that proceeds of the Bonds are insufficient, the amount of any cost or expense required to be paid with respect to or in connection with the acquisition, design, construction, construction management, construction inspection, equipping and financing of the Facility, the refunding of the outstanding Prior Bonds and the ownership of the Facility and the leasing of the Facility to the MAA, including (without limitation), consultants’ fees, accounting fees, legal fees and other expenses relating to any litigation involving the Facility (except to the extent that the Issuer is otherwise indemnified therefor pursuant to another provision of the Lease), costs of insurance acquired by Issuer pursuant to the Lease and any deductibles thereunder and the costs of making or collecting on insurance claims, costs of permits, charges by governmental authorities, and amounts paid pursuant to any declaration or covenants, and all indemnification obligations of the MAA to any person or persons resulting from or growing out of such acquisition, construction, financing, ownership and leasing, and any sales taxes.

“Administration Expenses” means the respective fees and charges of the Trustee, the Paying Agent and the Registrar for services rendered and expenses incurred (including attorneys’ fees) under the Documents.

“Base Rentals” means the basic payments payable by the MAA pursuant to the provisions of the Lease during the Term which are payable in consideration of the right of the MAA to use the Facility during the Term. Base Rentals shall be payable by the MAA to the Trustee, as assignee of the Issuer, in the amounts and at the times during the Term set forth in the Lease.

“Bond Counsel” means McGuireWoods LLP or any other Independent Counsel satisfactory to the Issuer that regularly renders opinions with general acceptance in the municipal bond market and that is familiar with the transactions contemplated under the Trust Indenture.

“Bond Payment Date” means any Interest Payment Date and any other date on which the principal of, premium (if any) or interest on the Bonds is to be paid to the Owners thereof, whether at maturity thereof, or by acceleration of maturity or after notice of redemption or prepayment or otherwise.

“Bondholder” or “Bondholders” or “Holder of Bonds” or “Holders of Bonds” or “Holder” or “Holders” or “Owner of Bonds” or “Owners of Bonds” or “Owner” or “Owners” means the registered owner of any registered Bond.

“Bonds” (or singularly, a “Bond”) means one or more of the 2012 Series Bonds, together with any Additional Bonds.

C-3

“Business Day” or “business day” means a day other than a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized or required by law to be closed in the State of Maryland.

“Casualty” means any damage, destruction or other injury, in whole or in part, to the Project, whether by fire or any other agent of destruction.

“Closing Date” means the date of the initial authentication and delivery of the 2012 Series Bonds.

“Code” means the Internal Revenue Code of 1986, as amended. Each reference to a section of the Code shall be deemed to include the United States Treasury Regulations in effect or proposed from time to time with respect thereto and applicable to the Bonds or the use of the proceeds thereof.

“Condemnation” means any taking of title, of use, or of any other property interest under the exercise of the power of eminent domain, by any governmental body or by any person or act under governmental authority.

“Costs of Issuance” means all fees, costs and expenses incurred in connection with the issuance of the Bonds, including (without limitation) the Issuer’s Annual Fee payable on the Closing Date.

“Documents” means and shall include (without limitation) the Bonds, the Trust Indenture, the Lease, the Ground Lease, and any and all other documents which the Issuer or the MAA have executed and delivered, or may hereafter execute and deliver, to evidence or secure the Issuer’s Obligations or the MAA’s Obligations, or any part thereof, or in connection therewith, and any and all Supplements thereto.

“Event of Default” means any of those events defined as Events of Default by the Lease and the Trust Indenture.

“Facility Purchase Price” means, as of any given date, the amount the MAA must pay on such date to acquire, by special warranty deed or other appropriate conveyance, ownership of the Facility, which amount shall be equal to the sum of (a) the amount necessary to deposit with the Trustee to provide for the discharge or defeasance of the Bonds (including any redemption premium), (b) an amount equal to the sum of the remaining Additional Rentals due at the time of settlement, and (c) all due and unpaid fees and expenses of the Issuer and the Trustee.

“Failure to Appropriate” means the failure of the General Assembly to budget and appropriate or the failure of the Governor to approve or the failure of the State to make available from some other source, amounts sufficient to pay all Rentals coming due under the Lease during the next ensuing Fiscal Year as of 5:00 p.m. prevailing local time of the Trustee on the last day of the then current Fiscal Year.

“Fiscal Year” means the period between July 1 and June 30 of each year or such other fiscal year of the MAA as the MAA may establish from time to time, upon notice to the Issuer and the Trustee.

“Fitch” means Fitch IBCA, Inc., its successors and assigns, and, if such entity shall for any reason no longer perform the functions of a securities rating agency, “Fitch” shall be deemed to refer to any other nationally recognized securities rating agency designated by the Issuer.

“Government Obligations” means direct obligations of, or obligations the full and timely payment of the principal of and interest on which is unconditionally guaranteed by, the United States of America.

“Impositions” means all insurance premiums required by the Lease, all taxes, including, without limitation, sales and use taxes (but excluding, except as hereinafter provided, income, franchise, profits and gross receipt taxes), assessments (including, without limitation, all assessments for public improvements or benefits), water and sewer rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges or costs of any nature whatsoever, in each case whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every character (including all interest and penalties thereon), which at any time during or in respect of the Term may be assessed against, levied upon, confirmed or imposed on, or in respect of, or be a lien upon (a) the Facility or any part thereof or any estate, right or interest therein, (b) any occupancy, use or possession

C-4

of, or activity conducted on, the Facility or any part thereof, (c) any Base Rentals or Additional Rentals or other sum reserved or payable by the MAA under the Lease, or (d) the Lease or the Issuer. Notwithstanding the foregoing provisions, the term “Impositions” shall exclude (i) franchise, capital stock or similar taxes, if any, of the MAA and assessments, levies and liens arising therefrom; (ii) transfer, income, profits or other taxes, if any, of the MAA, determined on the basis of its net income or net revenues, and assessments, levies and liens arising therefrom; and (iii) excise, gross receipts or gross income taxes imposed upon or measured by Base Rentals, Additional Rentals or other sums payable by the MAA pursuant to the Lease, unless the taxes referred to in clauses (i) and (ii) above are in lieu of or a substitute for any other tax or assessment upon or with respect to the Facility or any increases therein which, if such other tax or assessment were in effect, would be payable by the Issuer. As of the Closing Date, no property taxes are assessed or levied by Anne Arundel County or any other governmental authority on the Facility.

“Independent Counsel” means an Independent Person duly admitted to practice law before the highest court of the State.

“Independent Person” means a person designated by the MAA and approved by the Issuer and the Trustee, and not an employee of the MAA.

“Interest Payment Date” means June 1 and December 1 of each year commencing June 1, 2013.

“Issuer’s Annual Fee” means (a) with respect to the 2012 Series Bonds, the annual fee payable in advance to be paid to the Issuer in an amount equal to $50,000 on the Closing Date and $25,000 payable in advance on each April 3 thereafter and (b) with respect to any Additional Bonds, the fees payable to the Issuer by the MAA at such times and in such amounts as shall be set forth in the Supplement to the Trust Indenture authorizing the issuance of such Additional Bonds. No refund of the Issuer’s Annual Fee will be made in the event that Bonds mature or are redeemed, accelerated or otherwise paid prior to the end of any 12-month period for which the Issuer’s Annual Fee has been paid. The MAA shall pay the Issuer’s Annual Fee from the MAA’s own funds; provided, however, that the Issuer’s Annual Fee payable on the Closing Date shall be paid from proceeds of the 2012 Series Bonds from the Costs of Issuance Account.

“Issuer’s Obligations” means the limited obligations of the Issuer under the Documents to (a) pay or cause to be paid the principal of, premium (if any), and interest on the Bonds, when and as the same become due and payable (whether at the stated maturity thereof, or by acceleration of maturity or after notice or redemption or otherwise), (b) pay, or cause to be paid all other payments (if any) required by the Documents to be paid by the Issuer, and (c) timely perform, observe and comply with all of the terms, covenants, conditions, stipulations, and agreements, express or implied, which the Issuer is required by the Documents to perform and observe.

“Lease Revenues” means all receipts, revenues, rentals, service charges, user fees, concession fees and other charges, received by, or on behalf of, the MAA derived from or attributable to the Facility, including, without limitation, revenues derived from the ownership, leasing or operation of the Facility, and all rights to receive any of the foregoing, whether in the form of accounts receivable, contract rights, general intangibles or other rights, and the proceeds of such rights, whether now owned or held or hereafter acquired.

“MAA’s Obligations” means the obligations of the MAA under the Documents to (a) pay Base Rentals sufficient in amount to cover the principal of, premium, if any, and interest on the Bonds as required by the Lease, when and as the same shall become due and payable (whether at the stated maturity thereof, or by acceleration of maturity or after notice of redemption or otherwise), (b) pay all Additional Rentals due and owing to the Issuer or otherwise as required by the Lease when and as the same shall become due and payable, (c) pay all other payments required by the Documents to be paid by the MAA to the Issuer, to the Trustee or to others, including Administration Expenses, when and as the same shall become due and payable, and (d) timely perform, observe and comply with all of the terms, covenants, conditions, stipulations, and agreements, express or implied, which the MAA is required by any of the Documents to perform or observe.

“Mail” means mail by first-class postage to Owners. Any notice to Owners given by mail shall be deemed given and received when deposited by the Trustee into the United States mail, postage prepaid. In case, by reason of suspension of regular mail service or by reason of any other cause, it shall be impracticable to give such notice by

C-5

Mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose under the Trust Indenture or the Lease.

“Moody’s” means Moody’s Investors Service, Inc., a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, and, if such corporation shall for any reason no longer perform the functions of a securities rating agency, “Moody’s” shall be deemed to refer to any other nationally recognized rating agency designated by the Issuer.

“Net Casualty Proceeds” means the gross proceeds from insurance, including all payments, proceeds, settlements or any other compensation including any interest thereon (and the right to receive the same) received by reason of any Casualty remaining after payment of all expenses (including reasonable attorneys’ fees) incurred in the collection of such gross proceeds.

“Net Condemnation Proceeds” means the gross proceeds received by reason of any payment made as a result of a Condemnation remaining after payment of all expenses (including reasonable attorneys’ fees) incurred in the collection of such gross proceeds.

“Net Proceeds” means, collectively, Net Casualty Proceeds and Net Condemnation Proceeds.

“Outstanding,” “outstanding” or “Bonds Outstanding” means, when used in reference to the Bonds, all Bonds which have been duly authenticated and delivered by the Trustee under the Trust Indenture, except:

(a) Bonds which have been cancelled by the Trustee or which have been delivered to the Trustee for cancellation;

(b) Bonds for the payment or redemption of which cash funds or securities, as provided in the Trust Indenture, shall have been theretofore deposited with the Trustee (whether upon or prior to the maturity or redemption date of any such Bonds); and

(c) Bonds in lieu of which others have been authenticated under Article II of the Trust Indenture.

“Paying Agent” means the Trustee, or any successor Paying Agent appointed under the Trust Indenture.

“Person” or “person” means any natural person, firm, association, corporation, company, trust, partnership, public body or other entity.

“Prior Indenture” means the Trust Indenture dated as of April 1, 2003 between Maryland Economic Development Corporation and the Prior Trustee relating to the 2003 Series Bonds.

“Prior Trustee” means Manufacturers and Traders Trust Company, as successor trustee for the 2003 Series Bonds.

“Qualified Investments” include:

(a) Government Obligations;

(b) obligations of the following federal agencies so long as such obligations are backed by the full faith and credit of the United States of America: (i) U.S. Export Import Bank (Eximbank), (ii) Rural Economic Community Development Administration, (iii) Federal Financing Bank, (iv) General Services Administration, (v) U.S. Maritime Administration, (vi) U.S. Department of Housing and Urban Development, (vii) Small Business Administration, (viii) Government National Mortgage Association (GNMA), (ix) Federal Housing Administration and (x) Farm Credit System Financial Assistance Corporation;

C-6

(c) negotiable or nonnegotiable certificates of deposit issued by, and time deposits with, commercial banks, trust companies or savings and loan associations (including the Trustee) which have a rating on their short-term certificates of deposit on the date of purchase in the highest short-term rating category of at least two of the Rating Agencies, and secured, for the benefit of the Trustee, by lodging with a bank or trust company, acting as agent for the Trustee, as collateral security, Government Obligations having a market value not less than the amount of such deposit;

(d) repurchase agreements for Government Obligations or for such securities as are described in clause (b) above or clause (e) below, which are entered into by the Trustee with (i) banks, trust companies or dealers in government bonds which report to, trade with and are recognized as primary dealers by a Federal Reserve Bank, or (ii) financial institutions, insurance companies, or financial services firms, and in either such case, (A) are rated within the two highest rating categories (without regard to qualification, numerical or otherwise) of at least two of the Rating Agencies at the time of entry into such repurchase agreements, or (B) whose payment obligations under such repurchase agreements are guaranteed by parent entities or other third parties which are rated within the two highest rating categories (without regard to qualification, numerical or otherwise) of at least two of the Rating Agencies; which Government Obligations or securities described in clause (b) above or in clause (e) below: (1) have a fair market value equal to at least 102% of the amount of the related repurchase obligations, and (2) are transferred to the Trustee by physical delivery, or to a third party custodian acceptable to the Trustee by physical delivery, or by an entry made on the records of the issuer of such Government Obligations or such securities;

(e) direct obligations of any of the following federal agencies which obligations are not fully guaranteed by the full faith and credit of the United States of America: (i) Senior debt obligations rated in the highest long-term rating category (without regard to qualification, numerical or otherwise) by at least two Rating Agencies issued by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC); and (ii) senior debt obligations of the Federal Home Loan Bank System;

(f) commercial paper which is rated at the time of purchase in the highest short-term rating category (without regard to qualification, numerical or otherwise) of at least two Rating Agencies and which maturities not more than 270 days after the date of purchase;

(g) U.S. dollar denominated deposit accounts, federal funds and bankers’ acceptances with domestic commercial banks which either (i) have a rating on their short-term certificates of deposit on the date of purchase in the highest short-term rating category (without regard to qualification, numerical or otherwise) of at least two Rating Agencies, or (ii) are collateralized with direct obligations of the United States of America at 102% valued daily. All such certificates must mature no more than 360 days after the date of purchase. (Ratings on holding companies are not considered as the rating of the bank);

(h) investments in (i) money market funds subject to SEC Rule 2a-7 and rated in the highest short-term rating category (without regard to qualification, numerical or otherwise) of at least two Rating Agencies and (ii) public sector investment pools operated pursuant to SEC Rule 2a-7 in which the Issuer’s deposit shall not exceed 5% of the aggregate pool balance at any time and such pool is rated in the highest short-term rating category (without regard to qualification, numerical or otherwise) of at least two Rating Agencies, including any fund for which the Trustee or an affiliate of the Trustee serves as an investment advisor, administrator, shareholder servicing agent, custodian or subcustodian, notwithstanding that (A) the Trustee or an affiliate of the Trustee charges and collects fees and expenses from such funds for services rendered (provided that such charges, fees and expenses are on terms consistent with terms negotiated at arm’s length) and (B) the Trustee charges and collects fees and expenses for services rendered, pursuant to the Trust Indenture;

(i) pre-refunded municipal obligations defined as follows: any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice: (i) which are rated, based on an irrevocable escrow account or fund (the “escrow”), in the highest long-term rating category

C-7

(without regard to qualification, numerical or otherwise) of a Rating Agency, or (ii) (A) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash and/or direct obligations of the United States of America, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (B) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant or verification agent, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates specified in the irrevocable instructions referred to above, as appropriate;

(j) general obligations or slates with a short-term rating in the highest rating category (without regard to qualification, numerical or otherwise) and a long-term rating in one of the two highest rating categories (without regard to qualification, numerical or otherwise) of at least two Rating Agencies. In the event such obligations are variable rate obligations, the interest rate on such obligations must be reset not less frequently than annually;

(k) investment agreements, the provider of which is rated in one of the two highest rating categories (without regard to qualification, numerical or otherwise) by two Rating Agencies under which the provider agrees to periodically deliver, on a delivery versus payment basis, such securities as are described in clauses (a), (b) and (e) above; and

(l) investment agreements issued by any financial institution, insurance company or financial services firm (i) that maintains a rating in one of the two highest rating categories (without regard to qualification, numerical or otherwise) from a Rating Agency, or (ii) whose payment obligations under such investment agreements are guaranteed by parent entities or other third parties that maintain a rating in one of the two highest rating categories (without regard to qualification, numerical or otherwise) from a Rating Agency, or (iii) whose obligations under such investment agreements are collateralized by obligations described in clauses (a), (b), (c), (d), (f) or (j) above and which are delivered to the Trustee, or registered in the name of the Trustee, or are supported by a safekeeping receipt issued by a depository satisfactory to the Trustee, or are held (including by book entries) by a third party custodian acceptable to the Trustee, provided that such investment agreements described in this clause (iii) must provide that the value of such obligations collateralizing such investment agreements shall be maintained at a current market value (determined not more frequently than weekly) of not less than 102% of the aggregate amount of the obligations of such financial institution, insurance company or financial services firm; provided, however, that any investment agreement, at the time it is entered into, must meet and comply with the requirements of either clause (i) or clause (ii) above.

“Rating Agency” means each of Moody’s, Fitch and S&P.

“Record Date” means the fifteenth (15th) day of the calendar month preceding each Interest Payment Date and in the case of the payment of any defaulted interest, the fifth (5th) day before such payment; provided, however, that if any such day is not a Business Day, the Record Date shall be the Business Day immediately preceding such day.

“Registrar” or “Bond Registrar” means the Trustee, or any successor Registrar appointed under the Trust Indenture.

“Rentals” means, collectively, Base Rentals and Additional Rentals.

“Reserved Rights of the Issuer” means (a) the right of the Issuer (in its corporate capacity as Issuer) to receive notices, reports or other information, make determinations and grant approvals under the Documents; (b) the right of the Issuer to receive the Issuer’s Annual Fee and the right of the Issuer to indemnification and the payment or reimbursement of Administration Expenses of the Issuer; and (c) all rights of the Issuer in connection with any amendment to or modification of the Documents.

C-8

“Resolution” means the Resolution adopted by the Board of Directors of the Issuer on August 20, 2012 pertaining to the 2012 Series Bonds.

“Revenues” means (a) all Rentals paid by the MAA to the Trustee or otherwise pursuant to the Lease, (b) the proceeds of the Bonds and all amounts from time to time on deposit in the funds and accounts established by the Trust Indenture (except for the amounts on deposit in the Rebate Fund or the Administration Expenses Fund), (c) all Net Casualty Proceeds resulting from the occurrence of a Casualty to the Project, (d) all Net Condemnation Proceeds deposited in the Insurance and Condemnation Fund pursuant to the Lease, and (e) all other revenues derived from the Lease or from the exercise of remedies thereunder. Revenues shall not include the Administration Expenses or Impositions.

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw Hill Companies, its successors and their assigns, and, if such entity shall for any reason no longer perform the functions of a securities rating agency, “S&P” shall be deemed to refer to any other nationally recognized securities rating agency designated by the Issuer.

“State” means the State of Maryland, its successors and assigns under the Lease.

“Supplement” or “Supplements” means any and all extensions, renewals, modifications, amendments, supplements and substitutions.

“Tax Exempt Bond” or “Tax Exempt Bonds” means any Additional Bond or Additional Bonds with respect to which the Issuer and the Trustee have received an opinion of Bond Counsel to the effect that the interest thereon is excludible from gross income for federal income tax purposes.

“Term” means the term of the Lease, as described in this Appendix C under the heading “THE LEASE – Term of Lease.”

“Trust Estate” shall have the meaning given that term in the granting clauses of the Trust Indenture, provided, however, that the term “Trust Estate” does not include Reserved Rights of the Issuer.

“Trustee” means Manufacturers and Traders Trust Company, a New York banking corporation having a corporate trust office in Baltimore, Maryland, and its successor or successors in the trust created by the Trust Indenture.


C-9

THE LEASE

The following summary of certain provisions of the Lease is qualified in its entirety by reference to the Lease.

Term of Lease; Failure to Appropriate

The Lease shall remain in full force and effect from April 3, 2003 to December 1, 2030 or until the occurrence of one or more of the following events, whichever is earlier:

(a) the date of the conveyance to the MAA of title to the Facility, following payment of the Facility Purchase Price; or

(b) the election to terminate the Lease following an Event of Default.

Upon a Failure to Appropriate, the Trustee may take only those actions set forth under the caption “Remedies on Default” below.

Maintenance and Use of Facility

The MAA at its sole cost and expense, will keep and maintain the Facility, including any altered, rebuilt, additional or substituted buildings, structures and parts of the Project, in good repair and appearance, except for ordinary wear and tear, and will with reasonable promptness make all structural and nonstructural, foreseen and unforeseen, and ordinary and extraordinary changes and repairs of every kind and nature which may be required to be made upon or in connection with the Facility, or any part thereof in order to keep and maintain the Facility in such good repair and appearance. All repairs, replacements and renewals shall be at least equal in quality to the original work and all replacements shall have a value and useful life at least equal to the value and remaining estimated useful life of the item being replaced, and be suitable for a use which is the same or similar to that of the item being replaced. The Issuer shall not be required to maintain, repair or rebuild, or to make any alteration to the Facility, or any part thereof, in any way, and the MAA expressly waives the right to make repairs at the expense of the Issuer, notwithstanding the fact that such right may be provided for in any Law in effect at the time of the execution and delivery of the Lease or which may thereafter be enacted.

The MAA shall not use or occupy the Facility or permit the same to be used or occupied contrary to any applicable Law; or in any manner which would cause structural injury to the Facility or which would cause the value or the usefulness of the Facility or any part thereof to diminish (ordinary wear and tear for its business excepted); or which would (a) constitute a public or private nuisance, or waste, (b) make void or voidable any insurance then in force with respect to any of the Facility, or (c) make it difficult or impossible to obtain fire or other insurance which the MAA is required to furnish under the Lease. The MAA shall observe and comply with all conditions and requirements necessary to preserve and extend any and all rights, licenses, permits, privileges, franchises and concessions which are applicable to the Facility. The MAA will, in its use of and its operations upon the Facility (or any part thereof) and the public ways abutting the same, comply with all applicable laws affecting the Facility and the occupancy, operation or use thereof.

Modification of Facility

Except by application of Net Proceeds pursuant to the Lease, no alterations, modifications, or attachments to the Project costing in excess of $5,000,000 shall be made without the approval of the Issuer which approval shall not be unreasonably withheld. All alterations, modifications or attachments to the Facility shall become part of the Facility.

Taxes and Governmental and Utility Charges

The MAA shall cause the payment of, as the same respectively become due, subject to reasonable rights to defer and contest the applicability of any such charge (and as to which the Issuer agrees to join and assist, at no

C-10

expense or liability to the Issuer), all Impositions that may at any time be lawfully assessed or levied against or with respect to the Facility, together with any interest or penalty thereon, as well as all utility and other charges incurred in the operation, maintenance, use, occupancy and upkeep of the Facility; provided, however, that, with respect to any Impositions that may lawfully be paid in installments over a period of years, the MAA shall be obligated to pay only such installments as are accrued during such time as the Lease is in effect. Within thirty (30) days after written demand by the Issuer, the MAA agrees to furnish to the Issuer proof of the payment to the Trustee of the amount of all Impositions payable by the MAA.

Insurance

Until the earlier to occur of (a) expiration of the Term and (b) title is conveyed to the MAA, the MAA shall cause hazard insurance or self-insurance (by means of a self-insurance fund set aside and maintained for that purpose) to be carried and maintained with respect to the Facility in an amount equal to the greater of (i) the principal amount of the Bonds at the time Outstanding and (ii) the full replacement value of the Facility.

Casualty and Condemnation; Proceeds

If at any time prior to the end of the Term, the Facility or any part thereof is damaged, as a result of either a Casualty or a Condemnation either temporarily or permanently, the MAA shall be obligated to continue to pay the amounts specified in the Lease.

Net Casualty Proceeds resulting from any damage to the Project shall be paid into the Insurance and Condemnation Fund and applied to one of the following purposes:

(a) Upon the written direction of the Issuer, to the redemption of the Bonds, as described under the heading “DESCRIPTION OF THE 2012 SERIES BONDS – Redemption Prior to Maturity – Special Mandatory Redemption” in the forepart of this Official Statement; or

(b) To the restoration of that portion of the Project which was damaged, and/or the acquisition by the Issuer of other improvements, by construction or otherwise, suitable for the MAA’s operations of the Project (which improvements shall be acquired by the Issuer and located on the Property).

In the event that, and to the extent that, the Net Casualty Proceeds are to be applied to the restoration of the Project, the following conditions must be met and complied with:

(a) The Net Casualty Proceeds and, if deemed necessary by the Issuer, additional deposits made by the MAA which may be necessary to restore the Project to its condition immediately prior to the damage, shall be deposited into the Insurance and Condemnation Fund to be held by the Trustee and may be invested by the Trustee upon the written direction of the Issuer in Qualified Investments which mature not later than such times as shall be necessary to provide money when needed to pay such costs of repair or replacement;

(b) The MAA (as agent for the Issuer if the Issuer then consents) will proceed promptly to restore that part of the Project so damaged, to substantially the same condition as existed prior to such damage, with such changes, alterations and modifications (including the substitution and addition of other property) as may be desired by the MAA and approved by the Issuer as will not impair the operating unity or productive capacity or the character of the Project;

(c) The Issuer and the MAA, acting upon mutual consent, shall cause withdrawals to be made from the Insurance and Condemnation Fund to pay the costs of such restoration, either on completion thereof or as the work progresses;

(d) Net Casualty Proceeds in the Insurance and Condemnation Fund, shall be disbursed only upon delivery to the Trustee of a requisition therefor;

C-11

(e) Any balance of the Net Casualty Proceeds remaining after the payment of all of the costs of any restoration or acquisition of additional property shall be applied to the redemption of the Bonds as described under the heading “DESCRIPTION OF THE 2012 SERIES BONDS – Redemption Prior to Maturity – Special Mandatory Redemption” in the forepart of this Official Statement;

(f) The Lease shall continue in full force and effect;

(g) All restoration shall be conducted under the supervision of architects and engineers of the MAA approved by the Issuer. If necessary, the services of architects or engineers may be paid from the requisition of such moneys from the Insurance and Condemnation Fund. The general contractor shall: (i) be selected by mutual consent of the Issuer and the MAA and paid from moneys in the Insurance and Condemnation Fund as shall be approved by the Issuer and the MAA, (ii) have executed a fixed price contract, and (iii) work in consultation with the engineers of the MAA;

(h) The contractor or contractors performing the restoration work shall have obtained payment and performance bonds naming the Trustee, the Issuer and the MAA, as their respective interests may appear, as obligees; and

(i) All moneys held in the Insurance and Condemnation Fund shall constitute a part of the security for the Bonds.

During such time as a balance remains unpaid on either Additional Rentals or Base Rentals, the Issuer (except in an Event of Default or in the event of a Failure to Appropriate) shall appear in and prosecute any action or proceeding relating to any Condemnation or any partial Condemnation, or sale in lieu of Condemnation, and shall settle or compromise any claim in connection therewith. Upon the occurrence of an Event of Default or a Failure to Appropriate, the Trustee shall be authorized to appear in and prosecute any action or proceeding relating to a Condemnation of the Facility.

Net Condemnation Proceeds shall be paid into the Insurance and Condemnation Fund.

Net Condemnation Proceeds paid into the Insurance and Condemnation Fund shall be applied by the Trustee either for the Redemption of the Bonds as described under the heading “DESCRIPTION OF THE 2012 SERIES BONDS – Redemption Prior to Maturity – Special Mandatory Redemption” in the forepart of this Official Statement or for the acquisition by the MAA (as agent for the Issuer) of other land for the MAA’s operation of the Project.

In the event of a Condemnation which, in the opinion of the appraiser involved in such Condemnation, destroys the essential use and purpose of the Facility to function as an airport facility, the Net Condemnation Proceeds resulting therefrom shall be applied to the redemption of the Bonds.

The Issuer and the MAA mutually shall determine whether any Net Condemnation Proceeds which are paid into the Insurance and Condemnation Fund shall be applied for the acquisition of additional land; provided, however, that the MAA may within the first six months subsequent to the occurrence of such damage elect to apply any Net Casualty Proceeds to replacement of the Project which was damaged when no Event of Default or Failure to Appropriate has occurred and is continuing under the Lease, and, in the sole opinion of the Issuer, such replacement will not result in any decrease in value or other impairment to the Project and the funds available for any restoration or replacement are sufficient to pay the costs of such restoration or replacement. If the MAA does not make such election within such six months, such Net Casualty Proceeds shall be applied to the redemption of the Bonds.

Events of Default

The following are “Events of Default” under the Lease:

(a) Failure by the MAA to pay any Rentals when due for any reason other than a Failure to Appropriate or to pay any other payment required to be paid under the Lease, in either case at the time

C-12

specified and expiration of a grace period of fifteen (15) days; provided, however, that payments with respect to taxes and other governmental charges shall be subject to the MAA’s rights to defer and contest; or

(b) Failure by the MAA to observe and perform any covenant, condition or agreement on its part to be observed or performed, other than as referred to in paragraph (a) above, for a period of thirty (30) days after written notice to the MAA by the Trustee specifying such failure and requesting that it be remedied, unless the Trustee shall agree in writing to an extension of such time prior to its expiration; provided, however, that if the failure stated in the notice cannot be corrected within the applicable period, the Trustee shall not unreasonably withhold its consent to an extension of such time if corrective action is instituted by the MAA within the applicable period and diligently pursued until the default is corrected; or

(c) Any representation or warranty by the MAA contained in the Lease or in any Document, certificate, report or opinion (including legal opinions), or in any other information furnished by the MAA in connection with the Lease shall prove to be untrue or incorrect in any material respect when made; or

(d) An Act of Bankruptcy occurs;

(e) An event of default occurs under the Trust Indenture; or

(f) The MAA abandons the Facility.

Remedies on Default

Whenever any Event of Default described under the heading “Events of Default” above by paragraph (a), (d), (e) or (f) thereunder shall occur and be continuing, the Trustee shall have the right, without any further demand or notice, to take any one or any combination of the following remedial steps:

(a) Terminate the Lease and direct the MAA to transfer the Lease Revenues to the Trustee, without any court order or other process of law until the Bondholders have received all amounts payable to them on account of the failure to pay Base Rentals.

Lease Revenues transferred to the Trustee in each month following a Failure to Appropriate or an Event of Default shall be applied in the following manner:

FIRST, to pay all proper and reasonable costs and expenses associated with the collection of the Lease Revenues;

SECOND, to the payment to the persons entitled thereto of the unpaid principal of and interest on any Outstanding Bonds that shall have become due and payable, in the order of their due dates and, if the amount available shall not be sufficient to pay in full the principal of and interest on such Bonds due and payable on any particular date, together with such interest, then first to the payment of such interest, ratably, according to the amount of interest due on such date, and then to the payment of such principal, ratably, according to the amount of principal due on such date, to the persons entitled thereto, without any discrimination or preferences, except as to any difference in the respective rates of interest specified in such Bonds;

THIRD, to the payment of the interest on and the principal of the Outstanding Bonds becoming due and payable in such month; and

FOURTH, any balance remaining on the last day of each month after the foregoing payments shall be paid to the MAA.

Whenever moneys are to be applied by the Trustee pursuant to the Lease, such moneys shall be applied by the Trustee at such times, and from time to time, as the Trustee may determine, having due

C-13

regard to the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future.

(b) Institute appropriate legal proceedings to require the MAA to observe, comply with, and perform its obligations under the Lease.


C-14

THE TRUST INDENTURE

The following summary of certain provisions of the Trust Indenture is qualified in its entirety by reference to the Trust Indenture.

Flow of Funds

Funds and Accounts

The following trust funds established with the Trustee comprise a part of the Trust Estate:

(a) A Bond Fund and created and established therein a Principal Account and an Interest Account;

(b) A 2003 Redemption Fund and created and established therein a Costs of Issuance Account;

(c) An Insurance and Condemnation Fund; and

(d) An Additional Rentals Fund.

There is also established an Administration Expenses Fund with the Trustee which does not comprise the Trust Estate.

Bond Fund

There shall be deposited into the Principal Account of the Bond Fund (a) Base Rentals made by the MAA pursuant to the Lease in respect of principal on the Bonds and (b) all other moneys received by the Trustee under and pursuant to any of the provisions of the Lease, or the Trust Indenture which are required or permitted, or which are accompanied by directions from the MAA or the Issuer, to be paid into the Principal Account of the Bond Fund.

There shall be deposited into the Interest Account of the Bond Fund (a) Base Rentals made by the MAA pursuant to the Lease in respect of interest on the Bonds, (b) any moneys transferred from the Costs of Issuance Account, (c) any moneys transferred from the 2003 Redemption Fund, and (d) all other moneys received by the Trustee under and pursuant to any of the provisions of the Lease or the Trust Indenture which are required or permitted, or which are accompanied by directions from the MAA or the Issuer, to be paid into the Interest Account of the Bond Fund.

Except to the extent that the Trustee or the Issuer, its agents or employees, may be entitled to moneys therein for expenses or for indemnification or reimbursement, moneys in the Bond Fund shall be used solely for the payment of the principal of, interest and premium, if any, on the Bonds and for the redemption of the Bonds at or prior to maturity.

2003 Redemption Fund

The Trustee, on the Closing Date, shall transfer moneys from the 2003 Redemption Fund to the Prior Trustee for deposit into the escrow fund created under the Prior Indenture to defease the Outstanding 2003 Series Bonds, to be applied as provided in the Escrow Deposit Agreement. Any amounts remaining in the 2003 Redemption Fund after December 1, 2012 shall be deposited into the Interest Account and used to pay interest on the 2012 Series Bonds.

Moneys on deposit in the Costs of Issuance Account shall be disbursed by the Trustee upon the written direction of the Issuer to pay the Costs of Issuance. Any moneys remaining in the Costs of Issuance Account six months after the Closing Date shall be transferred by the Trustee to the Interest Account and used to pay interest on the 2012 Series Bonds.

C-15

Insurance and Condemnation Fund

Net Casualty Proceeds and Net Condemnation Proceeds allocable to the Insurance and Condemnation Fund pursuant to the Lease shall be deposited immediately upon their receipt by the Trustee in the Insurance and Condemnation Fund. Moneys in the Insurance and Condemnation Fund shall be applied by the Trustee in accordance with and subject to the Lease for the following purposes: (a) disbursement of Net Casualty Proceeds to or at the direction of the MAA in accordance with duly executed requisitions to pay the costs of restoration of the Project; (b) disbursement of Net Condemnation Proceeds for the acquisition by the MAA of other lands; (c) if the MAA shall not elect to repair or replace any lost, damaged, destroyed or taken property for which such moneys were received within six (6) months of such loss, damage, destruction or taking, transfer to the Principal Account of the Bond Fund to be applied to the mandatory redemption of Bonds; or (d) if the MAA shall elect to prepay the Facility Purchase Price upon the insufficiency of Net Proceeds, transfer to the Principal Account of the Bond Fund to be applied to the redemption of Bonds.

Administration Expenses Fund

Payment for Administration Expenses received by the Trustee from the MAA shall be deposited in the Administration Expenses Fund, invested pending transfer, and disbursed by the Trustee in accordance with such written instructions as an authorized representative of the Issuer from time to time may provide.

Additional Bonds

So long as the Lease is in effect and no Event of Default shall have occurred and be continuing under the Lease or the Trust Indenture, one or more series of Additional Bonds on a parity with the Bonds may be issued for the following purposes: (a) refunding or advance refunding any Outstanding Bonds; (b) obtaining funds to finance the acquisition of Additional Facilities and (c) obtaining funds to finance the completion of the Project and any Additional Facilities.

Notwithstanding satisfaction of other conditions to the issuance of Additional Bonds contained in the Indenture, no such issuance may occur should any Event of Default (or any event which, after all applicable notice or grace periods have passed, would constitute an Event of Default or a Failure to Appropriate) have occurred and be continuing unless such default shall be cured upon such issuance.

Investments

Moneys held by the Trustee under the Trust Indenture shall be invested upon written order of the Issuer by the Trustee in Qualified Investments. Such investments shall be registered in the name of the Trustee and held by the Trustee. The Trustee may purchase or sell to itself or any affiliate, as principal or agent, investments authorized by the Trust Indenture. Such investments and reinvestments shall be made giving full consideration for the time at which funds are required to be available. The Trustee may act as purchaser or agent in the making or disposing of any investment.

For the purpose of determining the amount on deposit in any fund or account created by the Trust Indenture, all Qualified Investments credited to such fund or account shall be valued at the current market value. The Trustee may sell at the best price obtainable, or present for redemption, any Qualified Investment so purchased by the Trustee, whenever it shall be necessary in order to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such Qualified Investment is credited, and the Trustee shall not be liable or responsible for any loss resulting from such investment.

Interest earned, profits realized or losses suffered by reason of the investment of any fund or account created by the Trust Indenture shall be credited to or deposited in the fund or account for which such investment shall have been made.

C-16

Events of Default

The following are Events of Default under the Trust Indenture:

(a) the occurrence of an Event of Default under the Lease; or

(b) the failure to pay to the Bondholders the principal of, redemption premium, if any, and the interest on any Bonds when due, except following a Failure to Appropriate; or

(c) the Issuer fails to duly and promptly perform, comply with, or observe any covenant, condition, agreement or provision other than as specified in clause (b) above contained in the Bonds or in the Trust Indenture on the part of the Issuer to be performed, and such failure shall continue for a period of thirty (30) days after written notice specifying such failure and requiring the same to be remedied shall have been given to the Issuer and the MAA by the Trustee, which notice may be given by the Trustee in its discretion and shall be given the written request of the Holders of not less than a majority in principal amount of the Bonds then Outstanding; provided, however, that if such default be such that it cannot be corrected within thirty (30) days, it shall not be an Event of Default if in the opinion of the Trustee, the Issuer or the MAA is taking appropriate corrective action to cure such failure and if such failure will not impair the security for the Bonds.

Acceleration; Other Remedies

If an Event of Default shall occur, the Trustee may, and upon written request of the Issuer and the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding shall, declare the principal of all Bonds then Outstanding to be immediately due and payable by notice in writing to that effect delivered to the Issuer and the MAA, and upon such declaration, but subject to the State’s right to fail to appropriate, such principal, together with interest accrued thereon, shall become immediately due and payable at the place of payment provided therein.

Upon the happening of any Event of Default in connection with which the Trustee may act or is required to act, then and in every such case the Trustee in its discretion may, and upon the written request of the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding and receipt of indemnity to its satisfaction, shall (in addition to its right or duty to accelerate):

(a) by mandamus, or other suit, action or proceeding at law or in equity, enforce all rights of the Owners, and require the Issuer or the MAA to carry out any agreements with or for the benefit of the Owners and to perform its or their duties under the Act and the Documents;

(b) bring suit against the MAA upon the Lease;

(c) bring suit upon the Bonds;

(d) by action or suit in equity enjoin any acts or things which may be unlawful or in violation of the rights of the Owners;

(e) intervene in proceedings involving the rights of the Issuer, the Trustee or the Bondholders; or

(f) exercise of any other rights or remedies now or hereafter existing at law or in equity including, without limitation, the rights and remedies of the Trustee as assignee of the Lease.

Termination of Proceedings

In case any proceeding taken by the Trustee on account of any default shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, then and in every such case, the

C-17

Issuer, the Trustee, the Owners, and the MAA shall be restored to their former positions and rights under the Trust Indenture, respectively, and all rights, remedies and powers of the Trustee shall continue as though no such proceeding had been taken.

Rights of Owners to Direct Proceedings

No Owner of any of the Bonds shall have any right to institute any suit, action or proceeding in equity or at law for the execution of any trust under the Trust Indenture, or any other remedy thereunder or on the Bonds, unless (a) such Owner previously shall have given to the Trustee written notice of an Event of Default as provided in the Trust Indenture and unless also the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding shall have made written request of the Trustee to do so, after the right to exercise such powers or rights of action, as the case may be, shall have accrued, and shall have afforded the Trustee a reasonable opportunity either to proceed to exercise the powers hereinabove set forth, or to institute such action, suit or proceeding in its or their name, and (b) there also shall have been offered to the Trustee security and indemnity satisfactory to it against the costs, expenses and liabilities to be incurred therein or thereby, and the Trustee shall not have complied with such request within a reasonable time. Any such notification, request and offer of indemnity are, in every such case, at the option of the Trustee, conditions precedent to the execution of the trusts of the Trust Indenture or for any other remedy thereunder, other than acceleration of the Bonds; it being understood and intended that no one or more Owners of the Bonds thereby secured shall have any right in any manner whatever by its or their action to affect, disturb or prejudice the security of the Trust Indenture, or to enforce any right thereunder or under the Bonds, except in the manner provided in the Trust Indenture and for the equal benefit of all Owners of Outstanding Bonds. Nothing in the Trust Indenture contained will, however, affect or impair the right of any Owner of Bonds to enforce the payment of the principal of, and interest on, any Bond at and after the maturity thereof, or the obligation of the Issuer to pay the principal of and interest and premium, if any, on each of the Bonds issued under the Trust Indenture to the respective Owners of the Bonds at the time, place, from the source and in the manner therein and in such Bonds expressed.

Remedies Vested in Trustee

All rights of action under the Trust Indenture or under any of the Bonds secured thereby which are enforceable by the Trustee may be enforced by it without the possession of any of the Bonds, or the production thereof at the trial or other proceedings relative thereto, and any such suit, action or proceeding instituted by the Trustee shall be brought in its name for the equal and ratable benefit of the Bondholders, subject to the provisions of the Trust Indenture.

Application of Moneys

All moneys received by the Trustee in pursuit of its remedies under the Trust Indenture following an Event of Default, after payment of the cost and expenses of the proceedings resulting in the collection of such moneys and of the expenses, liabilities and advances incurred or made by the Issuer or the Trustee, and any compensation or expenses (including counsel fees) due and owing to the Trustee, the Registrar and the Paying Agent, shall be deposited in the Bond Fund and all moneys in the Bond Fund shall be applied as follows:

First - To the payment to the persons entitled thereto of all payments of interest then due on the Bonds, in the order of the due date of the payments of such interest and, if the amount available shall not be sufficient to pay in full any particular interest payment, then to the payment ratably, according to the amounts due on such interest payment, to the persons entitled thereto, without any discrimination or privilege except as to any difference in the respective rates of interest specified in the Bonds;

Second - To the payment to the persons entitled thereto of the principal of the Bonds which shall have become due (other than Bonds, or any portion thereof, called for redemption for the payment of which moneys are held pursuant to the provisions of the Indenture) or which shall have been declared due and payable, in the order of their due dates, with interest on such Bonds from the respective dates upon which the unpaid principal became due and, if the amount available shall not be sufficient to pay in full principal due on any particular date, together with such interest, then to the payment ratably, according to the amount of principal due on such date, to the persons entitled thereto without any discrimination or privilege;

C-18

Third - To the payment to the persons entitled thereto of all other of the Issuer’s Obligations and the MAA’s Obligations (if any remain outstanding), and, if the amount available shall not be sufficient to pay such obligations in full, then to the payment ratably, according to the amounts then due, to the persons entitled thereto without discrimination or privilege;

Fourth - To the payment of the Issuer of all Additional Rentals then due, and thereafter of such other amounts as may be owing to the Issuer under the Documents; and

Fifth - The remainder, if any, shall be paid over to the MAA, its successors or assigns, or whoever may be lawfully entitled to receive the same, or as a court of competent jurisdiction may direct.

Whenever moneys are to be applied pursuant to the foregoing provisions, such moneys shall be applied at such times, and from time to time, as the Trustee shall determine, having due regard to the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Trustee shall apply such funds, it shall fix the date (which shall be an Interest Payment Date unless it shall deem another date more suitable) upon which such application is to be made, and upon such date interest on the amounts or principal to be paid on such dates shall cease to accrue. The Trustee shall give such notice by Mail of the deposit with it of any such moneys and of the fixing of any such date, and shall not be required to make payment to the Owner of any Bond until such Bond shall be presented to the Trustee for appropriate endorsement or for cancellation if fully paid.

Modification of Trust Indenture

Copies of any modification of or amendment to the Trust Indenture or any other Document shall be sent to Fitch (if Fitch is then providing a rating on any of the Bonds), S&P (if S&P is then providing a rating on any of the Bonds), and Moody’s (if Moody’s is then providing a rating on any of the Bonds).

Amendments to Trust Indenture Not Requiring Consent of Owners

The Issuer may, without the consent of owners, enter into agreements supplemental to the Trust Indenture as follows:

(a) to cure any formal defect, omission, inconsistency or ambiguity in the Trust Indenture, provided that no such action shall adversely affect the interests of the MAA or the rights of Owners of the Bonds;

(b) to add to the covenants and agreements of the Issuer in the Trust Indenture other covenants or agreements, or to surrender any right or power reserved or conferred upon the Issuer, and which shall not adversely affect the interests of the Owners of the Bonds;

(c) to confirm, as further assurance, any pledge of or lien on the Trust Estate or on any other moneys, securities or funds subject to the lien of the Trust Indenture:

(d) to comply with the requirements of the Trust Indenture Act of 1939, as from time to time amended;

(e) to modify, alter, amend or supplement the Trust Indenture in any other respect which is not materially adverse to the Owners of the Bonds;

(f) to provide for the issuance of certificated Bonds or Bonds in Book-Entry Form;

(g) to permit the qualification of the Trust Indenture or any Supplement to the Trust Indenture under any federal statute now or hereafter in effect or under any state blue sky law and, in connection therewith, to add to the Trust Indenture or any such Supplement such other terms, conditions

C-19

and provisions as may be permitted or required by such federal statute or state blue sky law, if any such Supplement has no materially adverse effect upon Holders of the Bonds;

(h) to obtain or to maintain any ratings on the Bonds from any nationally recognized securities rating agency, if any such Supplement to the Trust Indenture has no material adverse effect upon Holders of the Bonds;

(i) to make any other change in the Trust Indenture that the Trustee determines shall not prejudice in any material respect the rights of the holders of the Bonds Outstanding at the date as of which such change shall become effective;

(j) to preserve the excludability from gross income for federal income tax purposes of the interest paid on any Tax-Exempt Bonds theretofore issued; and

(k) to provide for the issuance of Additional Bonds.

Amendments to Trust Indenture Requiring Consent of Owners

Subject to the terms and provisions contained in the Trust Indenture and not otherwise, the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding shall have the right, from time to time, to consent to and approve the execution and delivery by the Issuer and the Trustee of any agreement supplemental to the Trust Indenture as shall be deemed necessary or desirable by the Issuer and the Trustee for the purposes of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in the Trust Indenture; provided, however, that, unless approved in writing by the Owners of all of the Bonds then Outstanding, nothing shall permit, or be construed as permitting, (a) a change in the terms of redemption or maturity of the principal of or the interest on any Outstanding Bond, or a reduction in the principal amount or redemption price of any Outstanding Bond or the rate of interest thereon, or (b) the creation of a claim or lien upon, or a pledge or assignment of, the Trust Estate ranking prior to or on a parity with the claim, lien, assignment or pledge created by the Trust Indenture, or the release of the Trust Estate or any part thereof, or (c) a preference or priority of any Bond or Bonds over any other Bond or Bonds, or (d) a reduction in the aggregate principal amount of the Bonds required for any action or consent by Owners set forth in the Trust Indenture, including (without limitation) that required for consent to such supplemental agreements.

If at any time the Issuer and the Trustee shall determine to enter into any supplemental agreement for any of the purposes of the Trust Indenture requiring the consent of Owners of the Bonds then Outstanding, the Trustee shall cause written notice of the proposed supplemental agreement to be given by Mail to all Owners of the Bonds; provided, however, that failure to give such notice by mailing, or any defect therein, shall not affect the validity of any proceedings pursuant to the Trust Indenture.

If the Owners of not less than the percentage of Bonds required by the Trust Indenture shall have consented to and approved the supplemental agreement, no Owner of any Bond shall have any right to object to such supplemental agreement, or to object to any of the terms and provisions contained therein or the operation thereof, or in any manner to question the propriety thereof, or to enjoin or restrain the Issuer or the Trustee from entering into the same or from taking any action pursuant to the provisions thereof.

Defeasance and Discharge of Lien

If the Issuer shall pay or cause to be paid the principal or redemption price of and interest on all of the Bonds, then the pledge of the Trust Estate and all other rights granted by the Trust Indenture to the Trustee or the Bondholders shall be discharged and satisfied. In such event, and, so long as there shall have occurred no Event of Default which is uncured and continuing, the Trustee without any request required shall pay or deliver all moneys, securities, funds and all other property held by it pursuant to the Trust Indenture that are not required for the payment or redemption of Bonds not theretofore surrendered for such payment or redemption to the MAA or to such officer, board or body as may then be entitled by law to receive the same.

C-20

All Outstanding Bonds shall, prior to the maturity or redemption dates thereof, be deemed to have been paid within the meaning and with the effect expressed above if (a) in case any of such Bonds are to be redeemed on any date prior to maturity the Issuer (or the MAA on behalf of the Issuer) shall have given to the Trustee irrevocable instructions to give notice of redemption of such Bonds on such date as provided in the Trust Indenture, (b) there shall have been deposited with the Trustee (i) cash, (ii) non-callable direct obligations of the United States of America (“Treasuries”), (iii) evidences of ownership of proportionate interests in future interest and principal payments on Treasuries held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying Treasuries are not available to any person claiming through the custodian or to whom the custodian may be obligated, (iv) pre-refunded municipal obligations rated “AAA” and “Aaa” by S&P and Moody’s, respectively or (v) securities eligible for “AAA” defeasance under then existing criteria of S&P or any combination thereof, which shall be sufficient without reinvestment, to pay when due the principal and interest and premium, if any, due and to become due on such Bonds on and prior to the redemption date or maturity thereof, as the case may be, (c) there shall have been delivered to the Trustee an opinion of Bond Counsel to the effect that such Bonds be deemed to have been paid and are no longer Outstanding, and (d) in the event such Bonds are not by their terms subject to redemption within the next succeeding sixty (60) days, the Issuer (or the MAA on behalf of the Issuer) shall have given the Trustee, in form satisfactory to it, irrevocable instructions to give, as soon as practicable in the same manner as a notice of redemption is given pursuant to the Trust Indenture, a notice to the Owners of such Bonds that the required deposit has been made with the Trustee and that such Bonds are deemed to have been paid and stating such maturity or redemption dates upon which moneys are to be available for the payment of the principal and premium, if any, and interest on such Bonds; provided that, in any event, if any such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given in accordance with the requirements of the Trust Indenture or provision satisfactory to the Trustee shall have been made for the giving of such notice. Neither the securities or moneys so deposited with the Trustee, nor principal or interest payments on any such securities, shall be withdrawn or used for any purpose other than, and shall be held in trust for, the payment of the principal of and interest and premium, if any, on such Bonds.

The Trustee

The Trustee shall not be answerable for the exercise of any discretion or power under the Trust Indenture or for anything whatsoever in connection with the trust created thereby, except only for its own negligence or willful misconduct.

The Trustee shall be protected and shall incur no liability in acting or proceeding, or in not acting or not proceeding, in good faith upon any resolution, order, notice (including telephonic notice), telegram, telex, facsimile transmission, request, consent, waiver, certificate, statement, affidavit, voucher, bond, requisition or other paper or document which it shall in good faith believe to be genuine and to have been passed or signed by the proper board, body or person or to have been prepared and furnished pursuant to any of the provisions of the Trust Indenture or the Lease, or upon the written opinion of any attorney (who may be an attorney for the Issuer or the MAA), engineer, accountant or other expert believed by the Trustee to be qualified in relation to the subject matter, and the Trustee shall be under no duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument, but may accept and rely upon the same as conclusive evidence of the truth and accuracy of such statements.

The Trustee, in its individual capacity, may in good faith buy, sell, own, hold and deal in any of the Bonds issued under the Trust Indenture, and may join in any action which any Owner may be entitled to take with like effect as if it did not act as Trustee. The Trustee, in its individual capacity, either as principal or agent, may also engage in or be interested in any financial or other transaction with the Issuer or the MAA, and may act as depositary, trustee or agent for any committee or body of Owners secured by the Trust Indenture or other obligations of the Issuer or the MAA as freely as if it did not act in any capacity under the Trust Indenture.

The Trustee may resign and be discharged of the trusts created by the Trust Indenture by executing an instrument in writing resigning such trust and specifying the date when such resignation shall take effect, and filing the same with the Issuer, and with the MAA, the Registrar, the Paying Agent, not less than forty-five (45) days before the date specified in such instrument when such resignation shall take effect, and by giving notice of such

C-21

resignation by Mail, not less than three weeks prior to such resignation date, to all Owners of Bonds. Such resignation shall not take effect until the appointment of a successor Trustee.

Removal of Trustee and Appointment of Successor Trustee

The Trustee may be removed at any time by (a) the holders of a majority of the Outstanding Bonds by an instrument or concurrent instruments in writing signed and acknowledged by such holders or by their attorneys-in-fact duly authorized and delivered to the Issuer and the Trustee, and (b) the Issuer so long as no Event of Default shall have occurred and be continuing, by an instrument in writing signed by the Authorized Issuer Representative and delivered to the Trustee. The Trustee may also be removed at any time for any breach of trust or for acting or proceeding in violation of, or for failing to act or proceed in accordance with, any provision of the Trust Indenture with respect to the duties and obligations of the Trustee by any court of competent jurisdiction upon the application of the Issuer or of the Holders of not less than ten percent (10%) of the Outstanding Bonds.

In case at any time the Trustee is removed, or is dissolved, or if its property or affairs are taken under the control of any state or federal court or administrative body because of insolvency or bankruptcy, or for any other reason, then a vacancy shall forthwith and ipso facto exist in the office of Trustee and a successor may be appointed, and in case at any time the Trustee resigns, then a successor may be appointed, by filing with the Issuer, the MAA, the Registrar and the Paying Agent an instrument in writing, executed by the Owners of not less than a majority in aggregate principal amount of Bonds then Outstanding. Unless an Event of Default shall have occurred and be continuing, any successor Trustee must be approved by the MAA, which approval will not be unreasonably withheld.


D-1

APPENDIX D

PROPOSED FORM OF APPROVING OPINION OF BOND COUNSEL

October __, 2012

Maryland Economic Development Corporation Baltimore, Maryland

$199,555,000 Maryland Economic Development Corporation


2012 Series (Taxable)

Ladies and Gentlemen: We have served as Bond Counsel in connection with the issuance and sale by Maryland

Economic Development Corporation (the “Issuer”) of its Lease Revenue Refunding Bonds (Maryland Aviation Administration Facilities), 2012 Series (Taxable), dated the date hereof, in the aggregate principal amount of $199,555,000 (the “Bonds”). The Bonds have been issued pursuant to (a) Section 10-101 et seq. of the Economic Development Article of the Annotated Code of Maryland, as amended (the “Act”), (b) the Bond Resolution adopted by the Board of Directors of the Issuer on August 20, 2012 (the “Resolution”) and (c) the terms of the Trust Indenture, dated as of October 1, 2012 (the “Indenture”), between the Issuer and Manufacturers and Traders Trust Company, as trustee (the “Trustee”). Unless otherwise defined, each capitalized term used in this opinion shall have the meaning set forth in the Indenture.

We have examined the Constitution of Maryland and the laws of both the United States and the State of Maryland (the “State”) including, without limitation, the Internal Revenue Code of 1986, as amended (the “Code”) and the Act, the Resolution and other documents of the Issuer as we deem necessary to render this opinion. Without undertaking to verify the same by independent investigation, we have relied as to questions of fact material to this opinion upon the representations and covenants of the Issuer contained in the Indenture, the Lease and the Ground Lease (collectively, the “Bond Documents”) and other related documents, the certified proceedings and other certifications of public officials furnished to us, the representations and covenants of the Maryland Aviation Administration (“MAA”) in the Lease and the Ground Lease and certifications furnished to us by or on behalf of MAA. We have assumed that all signatures on documents, certificates and instruments examined by us are genuine, all documents, certificates and instruments submitted to us as originals are authentic and all documents, certificates and instruments submitted to us as copies conform to the originals. In addition, we have assumed that all documents, certificates and instruments relating to this financing have been duly authorized, executed and delivered by all of their parties other than the Issuer, and we have further assumed the due organization, existence and powers of such other parties other than the Issuer.

Under the Lease, MAA has agreed to make payments to the Issuer, and the Issuer has assigned all such payments and any other revenues under the Lease (collectively, the “Revenues”) to the Trustee to be used to pay the principal of, premium, if any, and interest on the Bonds. All rights of the Issuer under the

D-2

Lease (except for the Issuer’s rights to indemnification, to receive certain direct payments to be made to the Issuer and to receive notices) are pledged and assigned by the Issuer as security for the Bonds.

Reference is made to the opinion of even date hereof of Louisa H. Goldstein, Esquire, Assistant Attorney General and Counsel to MAA, with respect to the organization of MAA, the power of MAA to enter into and perform its obligations under the Bond Documents and other related documents to which MAA is a party, and the authorization, execution, delivery and enforceability of the Bond Documents and such other documents by and against MAA.

Based on the foregoing, we are of the opinion that:

1. The Issuer is a body politic and corporate and a public instrumentality of the State of Maryland and has the power to enter into the Bond Documents and other related documents to which it is a party, to perform the agreements on its part contained in the Bond Documents and other related documents to which it is a party, to issue the Bonds and to apply the proceeds from the issuance and sale of the Bonds as set forth in the Indenture.

2. The Bonds have been duly authorized and executed in accordance with the Indenture and the Act and when authenticated and delivered by the Trustee will be valid and binding limited obligations of the Issuer payable solely from the Revenues and other property specifically pledged for such purpose under the Indenture.

By the terms of the Act and the Resolution, the Bonds and the interest thereon are limited obligations of the Issuer, the principal of, premium, if any, and interest on which are payable solely from the Revenues and from any other moneys made available to the Issuer for such purpose. Neither the State nor any political subdivision of the State, including the Issuer, shall be obligated to pay the principal of, premium, if any, and interest on the Bonds except from the Revenues and any other moneys made available for such purpose. Neither the full faith and credit nor the taxing power of the State or any political subdivision of the State is pledged to the payment of the principal of, premium, if any, and interest on the Bonds. The issuance of the Bonds is not directly or indirectly or contingently an obligation, moral or otherwise, of the State or any political subdivision of the State to levy or pledge any form of taxation whatever therefor or to make any appropriation for their payment. The Issuer has no taxing power.

3. The Bond Documents and other related documents to which the Issuer is a party have been duly authorized, executed and delivered by the Issuer and constitute valid and binding obligations of the Issuer, enforceable against the Issuer in accordance with their terms.

4. By the terms of the Act, the principal of and interest payable on the Bonds, their transfer, and any income derived therefrom, including any profit made in the sale or transfer thereof, shall be exempt from taxation by the State of Maryland and by the counties and municipalities of the State, but the Act does not expressly extend this exemption to estate or inheritance taxes or any other taxes not levied or assessed directly on the Bonds, the interest thereon, their transfer or the income therefrom.

The enforceability of the Bonds and the related documents is subject to bankruptcy, insolvency, reorganization, moratorium and similar laws now or hereafter in effect affecting creditors’ rights, and is also subject to the exercise of judicial discretion in accordance with general principles of equity.

The opinions expressed herein are limited to the laws of the United States and the State of Maryland, and we do not express any opinion concerning any other law.

D-3

Our services as Bond Counsel have been limited to rendering the foregoing opinion based on our review of such legal proceedings as we deem necessary to approve the validity of the Bonds. The foregoing opinion is in no respect an opinion as to the Issuer’s or MAA’s business or financial resources or their ability to provide for the payment of the Bonds or the accuracy or completeness of any information that anyone may have relied upon in making the decision to purchase the Bonds.

Very truly yours,

E-1

APPENDIX E

NOTICE OF SALE

$199,325,000* MARYLAND ECONOMIC DEVELOPMENT CORPORATION


2012 Series (Taxable)

Dated October 5, 2012

Electronic bids only via PARITY will be received until 11:30 a.m., local Baltimore, Maryland time on Wednesday, October 17, 2012 (the “Bid Date”), by the Maryland Economic Development Corporation (the “Issuer”) at the offices of the Issuer’s Financial Advisor, Wye River Group, Incorporated, located at 522 Chesapeake Avenue, Annapolis, Maryland 21403, for the purchase of the above-described bonds of the Issuer (the “Bonds”), aggregating $199,325,000* (the “Preliminary Aggregate Principal Amount”), all dated the date of delivery. Capitalized terms not defined herein shall have the respective meanings ascribed to them in the Preliminary Official Statement referred to below.

The Bonds will be subject to principal amortization either through serial maturities or sinking fund redemptions or a combination thereof on June 1 in the years and in the amounts set forth below (the “Maturity Schedule”), subject to the adjustments described below (each a “Preliminary Principal Amount”).

Maturity or Sinking Fund

Payment Date (June 1)

Maturity or Sinking Fund Payment

Amount*

Maturity or Sinking Fund Payment Date

(June 1)

Maturity or Sinking Fund Payment

Amount* 2013 $11,980,000 2022 $10,285,000 2014 9,860,000 2023 10,580,000 2015 9,920,000 2024 10,900,000 2016 10,030,000 2025 11,265,000 2017 10,165,000 2026 11,650,000 2018 10,330,000 2027 12,060,000 2019 10,535,000 2028 12,495,000 2020 10,775,000 2029 12,990,000 2021 10,010,000 2030 13,495,000

Bidders may provide that all of the Bonds be issued as serial bonds or may provide that any two or more

consecutive annual principal amounts be combined into one or more term bonds. Any number of term bonds may be designated, but each term bond must bear a single rate of interest. Within one hour of the award of the Bonds, the successful bidder must notify the Issuer of the serial and the term bond designations. If the successful bidder designates certain consecutive principal amounts to be combined into one or more term bonds, each such term bond shall be subject to mandatory sinking fund redemption commencing on June 1 of the first year which has been combined to form such term bond and continuing on June 1 in each year thereafter until the stated maturity date of such term bond. The amount redeemed in any year shall be equal to the amount otherwise maturing as a serial bond for such year set forth above as adjusted in accordance with the provisions described below in “Bid Specifications.”

The Issuer will not consider and will reject any proposal for the purchase of fewer than all of the Bonds for which a proposal is made.

The Bonds shall be issued only in fully registered form without coupons. One bond representing each

maturity will be issued to and registered in the name of Cede & Co., as nominee of The Depository Trust Company,

* Preliminary, subject to adjustment as provided herein.

E-2

New York, New York (“DTC”), as registered owner of the Bonds and each such bond certificate shall be immobilized in the custody of DTC. DTC will act as securities depository for the Bonds. Individual purchases will be made in book-entry form only, in the principal amount of $5,000 or any integral multiple thereof. Purchasers will not receive physical delivery of certificates representing their interest in the Bonds purchased. The winning bidder, as a condition to delivery of the Bonds, will be required to deposit the bond certificates, representing each maturity, with DTC. The Bonds will bear interest payable on June 1, 2013 and semiannually thereafter on December 1 and June 1, until maturity or redemption. Interest will be paid to the persons in whose names the Bonds are registered on the registration books maintained by the Registrar on the Record Date, which is the fifteenth day of the month immediately preceding the month in which each such interest payment date occurs, by check mailed to each such person’s address as it appears on such bond registration books.

Redemption

Special Mandatory Redemption. The Bonds shall be redeemed in whole or in part at any time at a redemption price equal to the principal amount thereof, plus accrued interest to the date fixed for redemption, from the amounts deposited in the Principal Account of the Bond Fund from (i) Net Proceeds of insurance or condemnation not required or requested in accordance with the Lease either to rebuild or modify the Project after the damage or destruction of the Project or to prepay Additional Rentals or to acquire additional land after condemnation of the Facility, or (ii) Net Proceeds of insurance or condemnation and such additional funds as may be provided by the Maryland Aviation Administration (the “MAA”) to prepay the Facility Purchase Price if MAA chooses to redeem the Bonds in the case where the Net Proceeds are insufficient to pay in full the cost of any repair, restoration, modification or improvement of the Facility in accordance with the Lease, such redemption to be made as soon as practicable after monies are available.

Optional Redemption. The Bonds shall be subject to optional redemption prior to maturity by the Issuer at the written direction of the MAA in whole or in part on June 1, 2022, or at any time thereafter, at the redemption price of 100% of the principal amount thereof, plus accrued interest to the date fixed for redemption.

If fewer than all the Bonds are redeemed, the Issuer, with the consent of the MAA if it is not then in default under the Lease, shall select the particular series and maturities of the Bonds or portions thereof to be redeemed. If fewer than all of the Bonds of any one maturity shall be called for redemption, then the Trustee shall select the particular Bonds or portions thereof to be redeemed from such maturity by lot or in such manner as the Trustee in its discretion may deem proper.

Bid Submissions

BIDDERS MUST SUBMIT BIDS VIA PARITY

Electronic bids will be received via PARITY, in the manner described below, until 11:30 a.m. local Baltimore, Maryland time, on Wednesday, October 17, 2012.

Bids shall be submitted electronically via PARITY pursuant to this Notice of Sale until 11:30 a.m., local Baltimore, Maryland time, but no bid will be received after the time for receiving bids specified above. To the extent any instructions or directions set forth in PARITY conflict with this Notice of Sale, the terms of this Notice of Sale shall control. For further information about PARITY, potential bidders may contact PARITY at (212) 849-5021.

Disclaimer

Each prospective electronic bidder shall be solely responsible to register to bid via PARITY as described above. Each qualified prospective electronic bidder shall be solely responsible to make necessary arrangements to access PARITY for the purposes of submitting its bid in a timely manner and in compliance with the requirements of this Notice of Sale. Neither the Issuer nor PARITY shall have any duty or obligation to provide or assure access to PARITY to any prospective bidder, and neither the Issuer nor PARITY shall be responsible for a bidder’s failure to register to bid or for proper operation of, or have any liability for any delays or interruptions of, or any damages caused by, PARITY. The Issuer is using PARITY as a communication mechanism, and not as the Issuer’s agent, to

E-3

conduct the electronic bidding for the Bonds. The Issuer is not bound by any advice and determination of PARITY to the effect that any particular bid complies with the terms of this Notice of Sale and in particular the “Bid Specifications” hereinafter set forth. All costs and expenses incurred by prospective bidders in connection with their registration and submission of bids via PARITY are the sole responsibility of the bidders; and the Issuer is not responsible, directly or indirectly, for any of such costs or expenses. If a prospective bidder encounters any difficulty in submitting, modifying or withdrawing a bid for the Bonds, the bidder should telephone PARITY at (212) 849-5021 and notify the Issuer’s Financial Advisor, Wye River Group, Incorporated, by telephone at (410) 267-8811.

Electronic Bidding Procedures

Electronic bids must be submitted for the purchase of the Bonds (all or none) via PARITY. Bids will be communicated electronically to the Issuer until 11:30 a.m., local Baltimore, Maryland time, on October 17, 2012. Prior to that time, a prospective bidder may (1) submit the proposed terms of its bid via PARITY, (2) modify the proposed terms of its bid, in which event the proposed terms as last modified will (unless the bid is withdrawn as described herein) constitute its bid for the Bonds, or (3) withdraw its proposed bid. Once the bids are communicated electronically via PARITY to the Issuer, each bid will constitute an irrevocable offer to purchase the Bonds on the terms therein provided. For purposes of the electronic bidding process, the time as maintained on PARITY shall constitute the official time. For information purposes only, bidders are requested to state in their bids the true interest cost to the Issuer, as described under “Bid Specifications” below, represented by the rate or rates of interest and the bid price specified in their respective bids.

Bid Specifications

ANY BIDS FOR FEWER THAN ALL OF THE BONDS SHALL BE REJECTED BY THE ISSUER. THE ISSUER RESERVES THE RIGHT TO REJECT ANY AND ALL BIDS.

Bidders shall state in their proposals the rate or rates of interest to be paid on the Bonds in multiples of one-eighth (1/8), one-twentieth (1/20) or one-one hundredth (1/100) of one percent (1%), and each proposal shall be based and submitted on the rate or rates stated therein. Bidders may specify more than one rate of interest to be borne by the Bonds, but the difference between the highest and lowest rates named may not exceed four percent (4%). Bidders may not specify more than one rate of interest for the Bonds of any single maturity. A zero rate may not be named for any maturity. The Bonds in aggregate must be bid at not less than 99.25% of the par value thereof. The Bonds will be awarded to the bidder offering the lowest true interest cost for all Bonds in any legally acceptable proposal. The lowest true interest cost will be determined by doubling the semiannual interest rate, compounded semiannually, necessary to discount the debt service payments from the payment dates to the date of the Bonds and to the amount bid, not including interest accrued to the date of delivery. Where the proposals of two or more bidders result in the same lowest true interest cost, the Bonds may be apportioned between such bidders, but the Issuer shall have the right to award all of the Bonds to one bidder. The right is reserved to the Issuer to reject any or all proposals and to waive any irregularity or informality in any proposal. The Issuer’s judgment shall be final and binding upon all bidders with respect to the form and adequacy of any bid received and as to its conformity to the terms of this Notice of Sale. All bids remain firm until final award is made.

Good Faith Deposit

The successful bidder for the Bonds shall be required to submit a good faith deposit (the “Good Faith Deposit”) in the amount of $1,000,000 payable to the order of the Issuer in the form of a wire transfer in federal funds as instructed by the Issuer’s Financial Advisor, Wye River Group, Incorporated. The successful bidder shall submit the Good Faith Deposit not more than two hours after verbal award is made. The successful bidder shall provide, as soon as it is available, evidence of wire transfer by providing the Issuer with the federal funds reference number. If the Good Faith Deposit is not received within the time period specified above, the bid of the successful bidder may be rejected, and the Issuer may direct the next lowest bidder to submit a Good Faith Deposit and thereafter may award the sale of the Bonds to such bidder. If the successful bidder fails to comply with the Good Faith Deposit requirement as described herein, that bidder nonetheless shall be obligated to pay to the Issuer the sum of $1,000,000 as liquidated damages due to the failure of the successful bidder to timely deposit the Good Faith Deposit. If the successful bidder fails to comply with the terms of its bid, the Good Faith Deposit may be retained by

E-4

the Issuer as full liquidated damages; otherwise the amount thereof will be applied to the purchase price of the Bonds at the time of delivery. No interest on the Good Faith Deposit will accrue to the successful bidder.

Procedures for Sale and Principal Amount Changes

The Preliminary Aggregate Principal Amount of the Bonds and the Preliminary Principal Amount of each maturity of the Bonds as set forth in this Notice of Sale (collectively, the “Preliminary Amounts”) are expected to be revised before the receipt and review of bids for their purchase. The Revised Aggregate Principal Amount of the Bonds and the Revised Principal Amount of each maturity (collectively, the “Revised Amounts”) will be published on TM3 not later than 9:30 a.m., local Baltimore, Maryland time on the Bid Date. In the event that no revisions are made or that such revisions are not published on TM3 by 9:30 a.m., local Baltimore, Maryland time on the Bid Date, the Preliminary Amounts will constitute the Revised Amounts. Bidders shall submit bids based on the Revised Amounts and the Revised Amounts will be used to compare bids and select a winning bidder.

The Initial Reoffering Prices, among other things, will be used by the Issuer to calculate the Final Aggregate Principal Amount of Bonds and the Final Principal Amount of each maturity (collectively, the “Final Amounts”). THE ISSUER EXPECTS THAT THE REVISED AMOUNTS OF THE BONDS WILL BE CHANGED AS NECESSARY TO EFFECT THE GREATEST ECONOMIC ADVANTAGE, BUT WILL NOT DECREASE OR INCREASE THE AGGREGATE PRINCIPAL AMOUNT OF BONDS FROM THE AMOUNT BID UPON OR CHANGE THE PRINCIPAL AMOUNT OF ANY MATURITY BY MORE THAN 15%. THE SUCCESSFUL BIDDER MAY NOT WITHDRAW ITS BID OR CHANGE THE INTEREST RATES BID AS A RESULT OF ANY CHANGES MADE TO THE REVISED AMOUNTS WITHIN THESE LIMITS. The dollar amount bid by the successful bidder will be adjusted to reflect any adjustments in the aggregate principal amount and individual maturity amounts of the Bonds. Such adjusted bid price will reflect changes in the dollar amount of the underwriters’ discount and original issue discount/premium, if any, but will not change the underwriters’ discount, per $1,000 of par amount of the Bonds from the underwriters’ discount that would have been received based on the purchase price in the winning bid and the initial public offering prices. The interest rates specified by the successful bidder for each maturity in its bid for the Bonds will not change. The Final Amounts of Bonds will be communicated to the successful bidder by 3:30 p.m., local Baltimore, Maryland time on the Bid Date.

It is noted that the Issuer has the right to award the Bonds by private negotiation at any time and may determine to exercise such right either before bids are submitted in response to this Notice of Sale or in the event that all bids are rejected. The Issuer may so negotiate with, and make such award to, any person, including bidders hereunder.

Legal Opinion

The Bonds will be issued and sold subject to approval as to legality by McGuireWoods LLP, Bond Counsel. Copies of the legal opinion, substantially in the form included in the Preliminary Official Statement referred to below, will be delivered, upon request, to the purchaser or purchasers of the Bonds, without charge.

Continuing Disclosure

In order to assist bidders in complying with SEC Rule 15c2-l2(b)(5), the Department of Transportation of Maryland will execute and deliver a continuing disclosure agreement on or before the date of issuance of the Bonds pursuant to which it will undertake to provide certain information annually and notices of certain events. A description of this agreement is set forth in the Preliminary Official Statement and also will be set forth in the Official Statement.

Official Statement

Not later than seven (7) business days after the award of the Bonds to the successful bidder on the day of sale, the Issuer will authorize an Official Statement, which is expected to be substantially in the form of the Preliminary Official Statement referred to below. If so requested by the purchaser or purchasers at or before the close of business on the date of the sale, the Issuer will include in the Official Statement such pricing and other

E-5

information with respect to the terms of the reoffering of the Bonds by the successful bidder (“Reoffering Information”), if any, as may be specified and furnished in writing by Statement will include the interest rates on the Bonds resulting from the bid of the successful bidder and the other statements with respect to reoffering contained in the Preliminary Official Statement. The successful bidder shall be responsible to the Issuer and its officials for the Reoffering Information, and for all decisions made by such bidder with respect to the use or omission of the Reoffering Information in any reoffering of the Bonds, including the presentation or exclusion of any Reoffering Information in any documents, including the Official Statement. The successful bidder will also be furnished, without cost, with up to 100 copies of the Official Statement (and any amendments or supplements thereto).

Delivery of the Bonds

Delivery of the Bonds, without expense, will be made by the Issuer to the purchaser or purchasers on or about October 31, 2012, or as soon as practicable thereafter, in New York, New York or at such other location as shall be mutually acceptable to the Issuer and the purchasers, and, thereupon, said purchaser or purchasers will be required to accept delivery of the Bonds purchased and pay, in Federal funds, the balance of the purchase price due. The Bonds will be accompanied by the customary closing documents, including a no-litigation certificate, effective as of the date of delivery, stating that there is no pending litigation affecting the validity of any of the Bonds.

When delivered, the Bonds shall be duly executed and authenticated and registered in the name of Cede & Co., as nominee of DTC, as registered owner of the Bonds.

It is anticipated that CUSIP identification numbers will be printed on the Bonds, but neither the failure to print such number on any Bond nor any error with respect thereto shall constitute cause for failure or refusal by the successful bidder to accept delivery of and pay for the Bonds in accordance with the terms of this Notice of Sale.

Right to Change the Notice of Sale and to Postpone Offering

NOTE: The Issuer may revise this Notice of Sale by written notice available to prospective bidders at the place of sale at the time for submission of bids or by publishing notice of any revisions on TM3 at or before the time for submission of bids. Any bid submitted shall be in accordance with, and incorporate by reference, this Notice of Sale including any revisions made pursuant to this paragraph.

The Issuer reserves the right to postpone, from time to time, the date established for the receipt of bids. Any such postponement will be announced by TM3 by notice given not later than 1:00 p.m., local Baltimore, Maryland time, on the last business day prior to any announced date for receipt of bids. If any date fixed for the receipt of bids and the sale of the Bonds is postponed, any Alternative Sale Date will be announced via TM3 at least 48 hours prior to such Alternative Sale Date. In addition, the Issuer reserves the right, on the date established for the receipt of bids, to reject all bids and establish a subsequent Alternative Sale Date. If all bids are rejected and an Alternative Sale Date for receipt of bids established, notice of the Alternative Sale Date will be announced via TM3 not less than 48 hours prior to such Alternative Sale Date. On any such Alternative Sale Date, any bidder may submit a bid for the purchase of the Bonds in conformity in all respects with the provisions of this Notice of Sale except for the date of sale and except for the changes announced by TM3 at the time the sale date and time are announced.

Additional Information

Additional information concerning the Department of Transportation of Maryland, the Bonds and a description of the security therefor is contained in the Preliminary Official Statement, to which prospective bidders are directed. The Preliminary Official Statement is provided for information purposes only and is not a part of this Notice of Sale. Such Preliminary Official Statement is deemed final by the Issuer as of its date for purposes of SEC Rule 15c2-12, but is subject to revision, amendment and completion of the Official Statement referred to above. The Preliminary Official Statement and this Notice of Sale will be made available via www.i-dealprospectus.com. For additional information, contact PARITY at (212) 849-5021.

E-6

Copies of the Preliminary Official Statement, together with this Notice of Sale, may be obtained from the Executive Director of the Issuer, 100 North Charles Street, Suite 630, Baltimore, Maryland 21201, (410) 625-0051 or from the Issuer’s Financial Advisor, Wye River Group, Incorporated, 522 Chesapeake Avenue, Annapolis, Maryland 21403, (410) 267-8811.

THE RIGHT IS RESERVED TO REJECT ANY AND ALL BIDS.

F-1

APPENDIX F

PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT

CONTINUING DISCLOSURE AGREEMENT

This CONTINUING DISCLOSURE AGREEMENT (the “Disclosure Agreement”) is executed and delivered by the Department of Transportation of Maryland (the “Department”) in connection with the issuance of $199,555,000 Maryland Economic Development Corporation Lease Revenue Refunding Bonds (Maryland Aviation Administration Facilities), 2012 Series (Taxable) (the “Bonds”). The Bonds are being issued pursuant to a Trust Indenture dated as of October 1, 2012 by and between Maryland Economic Development Corporation and Manufacturers and Traders Trust Company. The Department, intending to be legally bound hereby and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, does hereby covenant and agree as follows:

Section 1. Purpose of the Disclosure Agreement.

This Disclosure Agreement is being executed and delivered by the Department for the benefit of the owners and beneficial owners of the Bonds and in order to assist the Participating Underwriters in complying with Securities and Exchange Commission Rule 15c2-12(b)(5). The Department’s obligations hereunder shall be limited to those required by written undertaking pursuant to the Rule.

Section 2. Definitions.

In addition to the definitions set forth above, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:

“Continuing Disclosure Service” shall mean the continuing disclosure service established by the Municipal Securities Rulemaking Board known as the Electronic Municipal Market Access System (“EMMA”).

“Listed Events” shall mean any of the events listed in Section 4(a) of this Disclosure Agreement.

“Participating Underwriters” shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with the offering of the Bonds.

“Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

Section 3. Provision of Annual Financial Information, Operating Data and Audited Information.

(a) The Department on behalf of the State of Maryland (the “State”) and itself shall provide or cause to be provided to the Continuing Disclosure Service annual financial information and operating data as set forth in Schedule A to this Disclosure Agreement, such information and data to be updated as of the end of the preceding fiscal year and made available within 275 days after the end of the Department’s fiscal year, commencing with the fiscal year ending June 30, 2012.

(b) The Department on behalf of the State and itself shall provide to the Continuing Disclosure Service their respective annual audited financial statements for the State and the Department, such information to be made available within 275 days after the end of the fiscal year for the State and the Department, commencing with the fiscal year ending June 30, 2012, unless the audited financial statements are not available on or before such date, in which event said financial statements will be provided promptly when and if available. In the event that audited financial statements are not available within 275 days after the end of the fiscal year of the State and the

F-2

Department (commencing with the fiscal year ending June 30, 2012), the Department will provide unaudited financial statements within said time period.

(c) Except as otherwise set forth in this paragraph (c), the presentation of the financial information referred to in paragraph (a) and in paragraph (b) shall be made in accordance with the same accounting principles as utilized in connection with the presentation of applicable comparable financial information included in the final official statement for the Bonds.

(i) The Department may make changes to the presentation of the financial information required in paragraph (a) and paragraph (b) necessitated by changes in Generally Accepted Accounting Principles;

(ii) The Department may otherwise modify the presentation of the financial information required herein, provided that this Disclosure Agreement is amended in accordance with Section 6 hereof.

(d) If the Department is unable to provide the annual financial information and operating data within the applicable time periods specified in (a) and (b) above, the Department shall send in a timely manner a notice of such failure to the Continuing Disclosure Service.

Section 4. Reporting of Significant Events.

The Department shall provide or cause to be provided to the Continuing Disclosure Service notice of the occurrence of any of the following events with respect to the Bonds within ten business days of such occurrence:

(a) principal and interest payment delinquencies;

(b) non-payment related defaults, if material;

(c) unscheduled draws on debt service reserves reflecting financial difficulties;

(d) unscheduled draws on credit enhancements reflecting financial difficulties;

(e) substitution of credit or liquidity providers, or their failure to perform;

(f) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the Bonds;

(g) modifications to rights of Bond Holders, if material;

(h) bond calls, if material, and tender offers;

(i) defeasances;

(j) release, substitution, or sale of property securing repayment of the Bonds, if material; and

(k) rating changes;

(l) Bankruptcy, insolvency, receivership or similar event of the obligated person; For the purposes of the event identified in this clause (l), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction

F-3

over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person;

(m) the consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of an obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and

(n) appointment of a successor or additional trustee or the change of name of a trustee, if material.

Section 5. Method of Reporting; Termination of Reporting Obligation.

(a) All of the information provided to the Continuing Disclosure Service hereunder shall be accompanied by identifying information in electronic format as prescribed by the Municipal Securities Rulemaking Board.

(b) The Department’s obligations under this Disclosure Agreement shall terminate upon the payment in full of all of the Bonds either at their maturity or by early redemption. In addition, the Department may terminate its obligations under this Disclosure Agreement if and when the Department no longer remains an obligated person with respect to the Bonds within the meaning of the Rule.

Section 6. Amendment.

The Department on behalf of the State and itself may provide further or additional assurances that will become part of the Department’s obligations under the Disclosure Agreement. In addition, this Disclosure Agreement may be amended by the Department in its discretion provided that (i) the amendment may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of the Department as the obligated person with respect to the Bonds, or type of business conducted; (ii) the Disclosure Agreement, as amended, would have complied with the requirements of the Rule at the time of the issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (iii) the amendment does not materially impair the interests of holders of the Bonds, as determined by counsel selected by the Department that is expert in federal securities law matters. The reasons for the Department agreeing to provide any further or additional assurances or for any amendment and the impact of the change in the type of operating data or financial information being provided will be explained in information provided with the annual financial information containing the additional or amended operating data or financial information.

Section 7. Additional Information.

Nothing in this Disclosure Agreement shall be deemed to prevent the Department from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any disclosure made pursuant to Section 4(a) or (b) hereof or notice of occurrence of a Listed Event in addition to that which is required by this Disclosure Agreement. If the Department chooses to include any information in any disclosure made pursuant to Section 4(a) or (b) hereof or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Department shall have no obligation under this Disclosure Agreement to update such information or include it in any future disclosure made pursuant to Section 4(a) or (b) hereof or notice of occurrence of a Listed Event.

F-4

Section 8. Law of Maryland.

This Disclosure Agreement, and any claim made with respect to the performance by the Department of its obligations hereunder, shall be governed by, subject to, and construed according to the laws of the State of Maryland or federal law.

Section 9. Limitation of Forum.

Any suit or other proceeding seeking redress with regard to any claimed failure by the Department to perform its obligations under this Disclosure Agreement must be filed in the Circuit Court for Anne Arundel County, Maryland.

Section 10. Limitation on Remedies.

The Department shall be given written notice at the address set forth below of any claimed failure by the Department to perform its obligations under the Disclosure Agreement, and the Department shall be given 45 days to remedy any such claimed failure. Any suit or other proceeding seeking further redress with regard to any such claimed failure by the Department shall be limited to specific performance as the adequate and exclusive remedy available in connection with such action. Written notice to the Department shall be given to the Secretary of Transportation, P.O. Box 548, 7201 Corporate Center Drive, Hanover, Maryland 21076, with a copy to the Director, Office of Finance, Maryland Department of Transportation, P.O. Box 548, 7201 Corporate Center Drive, Hanover, Maryland 21076, or at such alternate address as shall be specified by the Department with disclosures made pursuant to Section 4(a) or 4(b) hereof or a notice of occurrence of a Listed Event.

Section 11. Relationship to Bonds.

The Disclosure Agreement constitutes an undertaking by the Department that is independent of the Department’s obligations with respect to the Bonds; any breach or default by the Department under this Disclosure Agreement shall not constitute or give rise to a breach or default under the Bonds.

Section 12. Beneficiaries.

This Disclosure Agreement shall inure solely to the benefit of the owners and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity.


F-5

IN WITNESS WHEREOF this Continuing Disclosure Agreement is being executed by the Secretary of Transportation on behalf of the Department as of this ____ day of October, 2012.

DEPARTMENT OF TRANSPORTATION OF MARYLAND

By:__________________________________________ Darrell B. Mobley Acting Secretary of Transportation

F-6

SCHEDULE A

STATE OF MARYLAND FINANCIAL STATEMENTS:

(1) Schedule of Ratio of Outstanding Debt by Type.

(2) Summary of State Revenues and Expenditures.

(3) Summary of Government Fund Balances (includes General Fund Balances and Special Funds like the Transportation Trust Fund).

(4) Summary of State Reserve Fund.

(5) Revenues, Expenditures and Changes in Fund Balances- Budget and Actual.

(6) Description of material litigation, if any, based on the accountant’s report contained in the Comprehensive Annual Financial Report.

DEPARTMENT OF TRANSPORTATION OF MARYLAND FINANCIAL STATEMENTS:

(1) Summary of Revenues, Expenditures, Other Sources and Uses of Financial Resources, and changes in Fund Balances.