(a)  A  sum equal to the     interest accrued,   if any, on   the
          Series A Bonds from the date of the Series A Bonds to the date of
          delivery thereof shall be deposited in the Bond Fund Interest
          Account created and established pursuant to the terms of the Master
          Resolution and applied to the payment of the interest becoming due
          on the Series A Bonds on the first Interest Payment Date;

                (b) To the extent not otherwise provided, a sum in an amount
          equal to the lesser of the maximum annual debt service on the Series
          A Bonds or 125% of the average annual debt service on the Series A
          Bonds shall be deposited in the Reserve Account; and

                (c) The remaining balance thereof shall be transferred to the
           State Treasury of the Commonwealth of Kentucky for deposit in a
           separate and special account hereby created and established and
           designated as the "University of Kentucky Hospital Buildings Project
           - Series A Bond Proceeds Construction Account" (the "Series A
           Construction Account") as a part of the Construction Account created
           and established in the Master Resolution.

           Section 4.02. Payment of Bond Issuance Fees.

           From the proceeds of the Series A Bonds deposited in the Con-
struction  Account,   there  shall   be  paid   to  J J B   Hilliard,  W L   Lyons
Incorporated, as Financial Advisor to the Board, Coopers & Lybrand, as the
certified public accountant to the Board, and to Rubin & Hays, as Bond Counsel
to the Board, the contractual compensation which shall be then due and payable
to such Financial Advisor, the certified public accountant and Bond Counsel.
The balance of the monies then on deposit in the Series A Construction Account
shall be available for application to the costs of the Series A Hospital
Project for which the Series A Bonds have been authorized and may be used to
pay interest on the Series A Bonds until completion of the Series A Hospital
Project.

           Section 4.03. Disbursements from Series A Construction Account.

           The State Treasurer of the Commonwealth is hereby authorized and
requested to make disbursements from the Series A Construction Account accord-
ing to such disbursement procedures as may from time to time be provided, for
the purpose of paying the cost of the Series A Hospital Project in accordance
with the plans and specifications therefor, but only upon certification of the
responsible parties having supervision of the Project, as to each disbursement,
that the amount thereof has been duly earned by and is payable to the
designated party or parties for materials, services and/or labor furnished
pursuant  to a   proper contract   duly awarded   therefor.   Notwithstanding   the
foregoing,  disbursements  from  the   Series  A  Construction   Account  for  the
contractual sum due the Financial Advisor, the certified public accountant and
Bond Counsel to the Board for their professional services in connection with
the authorization, issuance, sale and delivery of the Series A Bonds shall be
subject to approval by only the Treasurer.



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