ARTICLE IV
            COMPLIANCE WITH FEDERAL ARBITRAGE REQUIREMENTS;
                THE REVENUE FUND; DEBT SERVICE RESERVE FUND


       Section 4.1. Compliance with Requirements of Internal Revenue Code. In order to
assure purchasers of the Series R Bonds that interest thereon will continue to be exempt from all
Federal and Kentucky income taxation (subject to certain exceptions set out below), the Board
covenants to and with the owners of Series R Bonds that (1) the Board will take all actions
necessary to comply with the provisions of the Code, (2) the Board will take no actions which
will violate any of the provisions of the Code, or would cause the Series R Bonds to become
"private activity bonds" within the meaning of the Code, and (3) none of the proceeds of the
Series R Bonds will be used for any purpose which would cause the interest on the Series R
Bonds to become subject to Federal income taxation.

       Neither the University nor the Trustee shall take any action at any time which will cause
the interest on the Bonds to become subject to Federal income taxation, and, without limiting the
foregoing, it is covenanted for the benefit of the owners of such Bonds that no use of the
proceeds of the Series R Bonds will be made at any time which, if such use had been reasonably
expected on the date of issue of such bonds, would have caused them to be "arbitrage bonds."
This covenant shall impose an obligation to comply with the requirements of Section 148 of the
Code, and the applicable regulations thereunder. The word "proceeds" as used herein shall have
the meaning which it has under such section of the Code and such regulations and shall include
all moneys on deposit in all Funds provided for herein and all Funds established in connection
with the Project and the Bonds. Without limiting the generality of the foregoing, in no event
shall moneys be deposited in any accounts created hereunder or invested pursuant to the
provisions hereof if such deposit or investment shall cause any Bond to be an "arbitrage bond"
within the meaning of Section 148 of the Code.

       The Board certifies that on the basis of the facts, expectations, and circumstances
(including covenants of the Board) in existence on the date of adoption of this Series R
Resolution it is not expected that the proceeds of the Series R Bonds will be used in a manner
that will cause such obligations to be "arbitrage bonds." The Chairman and the Treasurer of the
Board are hereby jointly and severally designated and charged by the Board and the University
with the responsibility for issuing the Series R Bonds and are hereby designated as the officers of
the Board and the University to execute (by either of them) the ("no arbitrage") certification
required by Section 1.103-13(a)(2)(ii) and any other provisions of the Treasury Regulations, and
such certification shall set forth such facts, expectations and circumstances, which may be in
brief and summary terms, and shall state that to the best of his knowledge and belief that are no
other facts, expectations, or circumstances that would materially change such expectation that the
proceeds of the issue of Bonds herein authorized will not be used in a manner that would cause
same to be "arbitrage bonds." If, under any valid provisions of law hereafter enacted, the interest
paid by the Board on the Bonds should excludable from the gross income of a recipient thereof
for Federal income tax purposes without regard to compliance with the provisions of Section 148
of the Code, then the University shall not be required to comply with such provisions of the
Code.

       Without limiting the generality of the foregoing, the Board agrees that there shall be paid
from time to time all amounts required to be rebated to the United States pursuant to Section
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