ESCROW AGREEMENT



          THIS ESCROW AGREEMENT, dated as of February 1, 1994, by
and between the BOARD OF TRUSTEES OF UNIVERSITY OF KENTUCKY, a body
corporate and public educational institution of higher learning of
the Commonwealth of Kentucky (the "Board"), and FARMERS BANK &
CAPITAL TRUST COMPANY, Frankfort, Kentucky, a state banking
corporation organized and existing under and by virtue of the laws
of the Commonwealth of Kentucky, with its principal trust office
located in Frankfort, Kentucky 40602 (the "Trustee Escrow Agent"),

                       W I T N E S S E T H :

          WHEREAS, pursuant to the Trust Indenture dated June 1,
1965, between the Board and the Trustee Escrow Agent, the Board has
created and established an issue of Housing and Dining System
Revenue Bonds (the "Bonds"), and authorized the issuance by the
Board of said Bonds in one or more series pursuant to Supplemental
Trust Indentures pursuant to which such series of Bonds are issued
on a parity as to security and source of payment with all other
series of Bonds; and

          WHEREAS, the Board has previously authorized, sold,
issued and has outstanding prior issues of Bonds designated
"University of Kentucky Housing and Dining System Revenue Bonds,
Series B, Series C, Series D, Series E, Series F, Series G, Series
I, Series J, Series K, and Series L" (the Series M Bonds having
been authorized and sold but not yet delivered); and

          WHEREAS, there are presently outstanding $1,440,000 of
the Series J Bonds, dated December 1, 1978, bearing interest at
rates ranging from 6.00% to 6.40%, and scheduled to mature on
June 1 in each of the respective years 1994 through 2008, and
$2,885,000 of Series L Bonds, dated June 1, 1986, bearing interest
at rates ranging from 6.15% to 7.00%, and scheduled to mature on
June 1 in each of the respective years 1994 through 2006; and

          WHEREAS, because of favorable interest rates currently
available in the marketplace, the Board has determined that
$1,385,000 of the outstanding Series J Bonds scheduled to mature on
June 1, 1995 through June 1, 2008, should be refunded and called
for redemption on June 1, 1994, at a redemption price of 1021% of
the principal amount to be redeemed, and that $2,405,000 of the
outstanding Series L Bonds scheduled to mature on June 1, 1997
through June 1, 2006, should be refunded and called for redemption
on June 1, 1996, at a redemption price of 103% of the principal
amount redeemed, at substantial savings in debt service to the
University; and

           WHEREAS, by resolution adopted on January 25, 1994,
approving the Sixth Supplemental Trust Indenture (the "Sixth
Supplemental Indenture"), the Board authorized the issuance of
$          of "Housing and Dining System Refunding Revenue Bonds,