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54

EXHIBIT B

SPECIAL CONDITIONS:

(a) The Borrower shall offer for public sale at the same time, subject to
competitive bidding, its "North Carolina State of the University of North
Carolina at Raleigh Housing System Revenue Bonds of 1964, Series A,
B, C, and E" dated September 1, 1964, in the aggregate amount of
$7,005,000, and at the same or a later time, subject to competitive
bidding, its "North Carolina State of the University of North Carolina
at Raleigh Housing System Revenue Bonds of 1964, Series F" dated
September 1, 1964, in the principal amount of $2,200,000, deposit
the accrued interest received from such sale of such Bonds into the
"North Carolina State of the University of North Carolina at Raleigh
Housing System Revenue Bonds of 1964 Bond and interest Sinking Fund
Account" provided for by Special Condition (e) hereof and utilize the
principal proceeds as follows:

(1) The principal proceeds derived from the sale of the Series A
Bonds, together with the remaining unsold portion of such Series,
shall be used to effect a refunding of the Borrower's outstanding
"North Carolina State College of Agriculture and Engineering of
the University of North Carolina Dormitory Revenue Bonds - Series
1956," dated November 1, 1956, scheduled to mature from November
1, 1965, through November 1, 1996, totaling $1,804,000 in principal
amount and now held by the Government.

(2) The principal proceeds derived from the sale of any of the Series B
Bonds, together with the remaining unsold portion of such Series,
shall be used to effect a refunding of the Borrower's outstanding
"North Carolina State College Student Apartments Revenue Bonds"
dated September 1, 1958, scheduled to mature from September 1, 1965
through September 1, 1998, totaling $2,006,000 in principal
amount and now held by the Government.

(3) The principal proceeds derived from the sale of any of the Series C
Bonds, together with the remaining unsold portionof such Series,
shall be used to effect a refunding of the Borrower's outstanding
North Carolina State College Student Housing Revenue Bonds,
Series 1961," dated February 1, 1961, scheduled to mature from
February 1, 1965 through February 1, 2001, totaling $1,774,000
in principal amount and now held by the Government.

(4) The principal proceeds derived from the sale of any of the Series E
Bonds, together with the remaining unsold portion of such Series,
shall be used to effect a refunding of the Borrower's outstanding
North Carolina State College of Agriculture and Engineering of the
University of North Carolina, Dormitory Revenue Bonds - Series 1961,"
dated September 1, 1961, scheduled to mature from September 1,
1982 through September 1, 2001, totaling $1,361,000 in principal
amount and now held by the Government.

(5) The principal proceeds, $2,200,000, derived from the sale of the
Series F Bonds shall be deposited in the Construction Account of
Project No. CH-NC-99 (D) as herein provided for.

Notwithstanding the above provisions of this Condition, the aggregate
amount of the "North Carolina State of the University of North Carolina
at Raleigh Housing System Revenue Bonds of 1964" and of the individual
Series shall be reduced by the amounts of the Bonds, if any, which shall
have been retired prior to the actual consummation of the contemplated
exchange and sale; provided, however, that in such an event, the
retirement schedules, the bond numbers and the redemption provisions
of said individual Series of Bonds shall be revised to indicate such
lesser amount or amounts.