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(3) All unexpended or unencumbered funds and/or investments then on
deposit, or on hand to be deposited, in the "North Carolina State
College Dormitory Revenue Fund Account of 1961" and the "North
Carolina State College Existing Dormitories Pledged Revenues Fund
Account of 1961" provided for by Section 503 of the Resolution
under which the "North Carolina State College of Agriculture
and Engineering of the University of North Carolina, Dormitory
Revenue Bonds - Series 1961", dated September 1, 1961, being
refunded hereby, were issued.

(4) All subsequent rentals, charges, income and revenues arising
from the operation or ownership of the dormitory to be constructed
under Project CH-NC-99 (D); provided, however, in the event that
any portion of said dormitory becomes revenue-producing before the
provisions of Special Conditions (a) and (b) above have been complied
with, the Borrower shall covenant and agree to hold such revenues
in a special fund, separate and apart from all other funds, and to
deposit into the "Housing System of 1964 Revenue Fund Account, "
as soon as this Account is established, the balance remaining in said
special fund, after paying or making provision for the payment of the
necessary and reasonable current expenses of the dormitory between
the time that any portion of it becomes revenue-producing and the
establishment of the "Housing System of 1964 Revenue Fund Account. "

(5) All subsequent rentals, charges, income, lease rentals, and revenues
arising from the operation and ownership of the Housing System
established under the provisions of Special Condition (b) above
and from any other housing, together with necessary appurtenant
facilities, that may be voluntarily hereafter added to the Housing
System at future dates as additional security for the then out-
standing Bonds and/or for the issuance of additional parity bonds
for the purpose of financing, entirely or in part, the cost of
such additional facilities under the provisions of Special
Condition (i) and Special Condition (j) hereof.

The "Housing System of 1964 Revenue Fund Account" shall be held in the
custody of the Treasurer of the Borrower, separate and apart from all
other funds, in a bank which is a member of the Federal Deposit Insurance
Corporation, and shall be maintained so long as any of the Bonds are
outstanding.

Funds on deposit in the "Housing System of 1964 Revenue Fund Account"
shall be expended and used by the Treasurer of the Borrower only in the
manner and order specified below.

(d) The current expenses of the Housing System (except those current expenses
actually paid by lessees of any portion of said Housing System) shall be
payable, as a first charge, from the "Housing System of 1964 Revenue
Fund Account" as the same become due and payable.

Current expenses shall include all necessary operating expenses, current
maintenance charges, expenses of reasonable upkeep and repairs, properly
allocated share of charges for insurance, and all other expenses
incident to the operation of the Housing System, but shall exclude
depreciation, all general administrative expenses of the Borrower,
and the payments to be made into the "North Carolina State of the
University of North Carolina at Raleigh Housing System Revenue Bonds
of 1964 Repair and Replacement Reserve Account" pursuant to the
provisions of Special Condition (f) hereof.

It is provided, however, that nothing herein shall be construed to
prevent the Borrower from paying current expenses of the Housing System
from any other funds legally available to the Borrower for such purpose.

(e) The Borrower covenants and agrees, as soon as the provisions of Special
Condition (a) and (b) above have been complied with, to establish as a
trust fund, with the bank or trust company to be designated in the Bond
Resolution, and maintain, so long as any of the Bonds are outstanding, a
separate account or accounts, collectively called the "North Carolina
State of the University of North Carolina at Raleigh Housing System
Revenue Bonds of 1964 Bond and Interest Sinking Fund Account"
(hereinafter sometimes referred to as the "Housing System of 1964
Bond and Interest Sinking Fund Account") into which shall be deposited: