ANNEX D



                    OPINION OF COUNSEL TO STATE AGENCY




                        [Date of Delivery of Financing Agreement]





Commonwealth of Kentucky
State Property and Buildings Commission
Frankfort, Kentucky

Commonwealth of Kentucky
Finance and Administration Cabinet
Frankfort, Kentucky

Kentucky Asset/Liability Commission
Frankfort, Kentucky

Peck, Shaffer & Williams LLP
Covington, Kentucky

Gentlemen:

             I am general counsel for the University of Kentucky (the "State Agency"), and in
such capacity, am familiar with its organization, statutory authority, regulations (if any),
agreements and resolutions, all as in effect on the date hereof.

             I have examined an executed copy of the Financing/Lease Agreement (the
"Financing Agreement") among the State Agency, the Kentucky Asset/Liability Commission (the
"Commission"), the Finance and Administration Cabinet of the Commonwealth of Kentucky (the
"Cabinet") and the Commonwealth of Kentucky State Property and Buildings Commission
("SPBC") relating to the issuance of Kentucky Asset/Liability Commission Project Notes, 1998
Agency Fund Series (the "Notes") under the terms of the Indenture. I have also examined the
original photostatic or certified copies of such records of the State Agency and other documents
and materials, and have made such inquiries, as I have deemed relevant and necessary.

             Based upon the foregoing, I am of the opinion that:

      (1)   The State Agency is an agency of the Commonwealth, duly organized and validly
existing under the laws of the Commonwealth and constitutes a "State Agency" within the
meaning of Sections 56.440, et seq. and 56.860, et seq. of the Kentucky Revised Statutes.
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