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Iv. Yield and Yield Restriction 4.1 Yield with Respect to the 1994 Bonds. 4.1.1 In General. For purposes of this Tax Certificate, yield is calculated as set forth in Code Section 148(b) and Treasury Regulations Sections 1 .148-4 and 1.148-5. Thus, yield generally means that discount rate which when used in computing the present value of all unconditionally payable payments representing principal and interest with respect to an obligation and the cost of qualified guarantees (if any) paid and to be paid with respect to such obligation produces an amount equal to the issue price of the obligation. The yield on the 1994 Bonds shall be determined on an aggregate basis by treating all payments of principal and interest with respect to the 1994 Bonds as if paid with respect to a single obligation issued on the Closing Date for an amount equal to the issue price of the 1994 Bonds. The City and the Authority certify that the issue price of the 1994 Bonds is equal to the amount of the Issue Price Proceeds, which issue price represents the price at which the 1994 Bonds were sold to the first buyers of the 1994 Bonds (excluding bond houses, brokers and other intermediaries) as represented by the Underwriters in Exhibit A hereto. The interest rate with respect to certain of the 1994 Bonds is variable. Accordingly, the yield of the 1994 Bonds can not be computed at this time. 4.1.2 Qualified Guarantee. For purposes of the yield calculation described in Section 4.1.1 above, the amount paid for the Guarantee has been treated as a qualified guarantee on the 1994 Bonds, because the present value of the amounts paid for the Guarantee is less than the present value of the expected reduction in the interest cost as a result of the Guarantee based on the advice of the Underwriters (as set forth in Exhibit A) and the Guarantor (as set forth in Exhibit B). 4.1.3 Qualified Hedging Transaction. Pursuant to Treasury Regulations Section 1.148-4(h)(1),for purposes of the yield calculation described in Section 4.1.1 above,payments made or received by the City or the Authority with respect to the ARS and the IRS shall be taken into account. Such treatment is based on the following representations, certifications, and covenants: . (i) the ARS are hedges entered into primarily to reduce the City's and the Authority's risk of interest rate changes with respect to the IRS; the IRS are hedges entered into primarily to reduce the City's and the Authority's risk of interest rate changes with respect to the ARS; (ii) the ARS do not contain a significant investment element because payments with respect to the ARS correspond exactly in time and amount to the interest payments with respect to the IRS; the IRS do not contain a significant investment element because payments with respect to the IRS correspond exactly in time and amount to the interest payments with respect to the ARS; the ARS provide a hedge for all of the IRS; the IRS provide a hedge for all of the ARS; (iv) changes in value of the ARS and the IRS will be based exclusively on interest rate changes; (v) the ARS do not hedge an amount larger than the City's and the Authority's risk with respect to the IRS; the IRS do not hedge an amount larger than the City's and the Authority's risk with respect to the ARS; LA1-69477.4 1