Amended And Restated Agreement

Amended and Restated Agreement










                         Amended And Restated Agreement

                            Of Limited Partnership Of

                              Byhalia Estates, L.P.








                                TABLE OF CONTENTS

                                                                            Page

I.       DEFINITIONS .............................................             2

         1.1      "Accountant" ...................................             2
         1.2      "Act" ..........................................             2
         1.3      "Actual Tax Credit".............................             2
         1.4      "Adjusted Capital Account Deficit" .............             2
         1.5      "Affiliate" ....................................             2
         1.6      "Agreement" or "Partnership Agreement"..........             2
         1.7      "Apartment Housing".............................             3
         1.8      "Assignee" .....................................             3
         1.9      "Bankruptcy" or "Bankrupt"......................             3
         1.10     "Break-even Operations".........................             3
         1.11     "Budget"........................................             3
         1.12     "Capital Account" ..............................             3
         1.13     "Capital Contribution" .........................             4
         1.14     "Cash Expenses".................................             4
         1.15     "Cash Receipts".................................             4
         1.16     "Code" .........................................             4
         1.17     "Completion of Construction"....................             5
         1.18     "Compliance Period".............................             5
         1.19     "Consent of the Special Limited Partner"........             5
         1.20     "Construction Budget"...........................             5
         1.21     "Construction Contract".........................             5
         1.22     "Construction Lender"...........................             5
         1.23     "Construction Loan" ............................             5
         1.24     "Contractor" ...................................             6
         1.25     "Debt Service Coverage".........................             6
         1.26     "Deferred Management Fee".......................             6
         1.27     "Developer".....................................             6
         1.28     "Development Fee" ..............................             6
         1.29     "Distributions" ................................             6
         1.30     "Fair Market Value" ............................             6
         1.31     "First Year Certificate" .......................             6
         1.32     "Force Majeure".................................             7
         1.33     "General Partner" ..............................             7
         1.34     "Gross Asset Value" ............................             7
         1.35     "Hazardous Substance"...........................             8
         1.36     "Improvements"..................................             8
         1.37     "In-Balance"....................................             8
         1.38     "Incentive Management Fee"......................             9
         1.39     "Income and Losses".............................             8
         1.40     "Construction Inspector"..........................          10
         1.41     "Insurance" ....................................            10
         1.42     "Insurance Company" ............................            11

                                       i


         1.43     "Interest" .....................................            11
         1.44     "Involuntary Withdrawal"........................            11
         1.45     "Land Acquisition Fee"..........................            11
         1.46     "LIHTC".........................................            11
         1.47     "Limited Partner"...............................            11
         1.48     "Management Agent"..............................            11
         1.49     "Management Agreement"..........................            12
         1.50     "Minimum Set-Aside Test"........................            12
         1.51     "Mortgage" or "Mortgage Loan"...................            12
         1.52     "Net Operating Income"..........................            12
         1.53     "Nonrecourse Deductions"........................            13
         1.54     "Nonrecourse Liability".........................            13
         1.55     "Operating Deficit" ............................            13
         1.56     "Operating Deficit Guarantee Period"............            13
         1.57     "Operating Loans"...............................            13
         1.58     "Original Limited Partner" .....................            13
         1.59     "Partner(s)" ...................................            13
         1.60     "Partner Nonrecourse Debt" .....................            13
         1.61     "Partner Nonrecourse Debt Minimum Gain" ........            13
         1.62     "Partner Nonrecourse Deductions" ...............            13
         1.63     "Partnership" ..................................            13
         1.64     "Partnership Minimum Gain" .....................            13
         1.65     "Permanent Mortgage Commencement" ..............            13
         1.66     "Person" .......................................            14
         1.67     "Plans and Specifications"......................            14
         1.68     "Project Documents" ............................            14
         1.69     "Projected Annual Tax Credits" .................            14
         1.70     "Projected Tax Credits" ........................            14
         1.71     "Qualified Tenants" ............................            14
         1.72     "Rent Restriction Test" ........................            14
         1.73     "Asset Management Fee"..........................            15
         1.74     "Revised Projected Tax Credits".................            15
         1.75     "Sale or Refinancing"...........................            15
         1.76     "Sale or Refinancing Proceeds" .................            15
         1.77     "Special Limited Partner".......................            15
         1.78     "State" ........................................            15
         1.79     "State Tax Credit Agency" ......................            15
         1.80     "Substitute Limited Partner" ...................            15
         1.81     "Syndication Fee"...............................            15
         1.82     "Tax Credit" ...................................            15
         1.83     "Tax Credit Compliance Fee" ....................            16
         1.84     "Tax Credit Conditions".........................            16
         1.85     "Tax Credit Period".............................            16
         1.86     "Title Policy"..................................            16
         1.87     "TRA 1986" .....................................            16
         1.88     "Treasury Regulations" .........................            16
         1.89     "Withdrawing" or "Withdrawal"...................            16

II.      NAME ....................................................            17

                                       ii


III.     PRINCIPAL EXECUTIVE OFFICE/AGENT FOR SERVICE ............            17

         3.1      Principal Executive Office .....................            17
         3.2      Agent for Service of Process ...................            17

IV.      PURPOSE .................................................            17

         4.1      Purpose of the Partnership.....................             17
         4.2      Authority of the Partnership...................             17

V.       TERM ....................................................            18

VI.      GENERAL PARTNER'S CONTRIBUTIONS AND LOANS................            18

         6.1      Capital Contribution of General Partner.........            18
         6.2      Construction Obligations........................            18
         6.3      Operating Obligations...........................            19
         6.4      Other General Partner Loans.....................            19

VII.     CAPITAL CONTRIBUTIONS OF LIMITED PARTNER
         AND SPECIAL LIMITED PARTNER...............................           20

         7.1      Original Limited Partner........................            20
         7.2      Capital Contribution of Limited Partner.........            20
         7.3      Repurchase of Limited Partner's Interest........            22
         7.4      Adjustment of Limited Partner's
                  Capital Contribution..........................              23
         7.5      Capital Contribution of Special Limited Partner.            25
         7.6      Return of Capital Contribution..................            26
         7.7      Liability of Limited Partner and Special
                  Limited Partner.................................            26

VIII. WORKING CAPITAL AND RESERVES ...............................            26

         8.1      Operating and Maintenance Account...............            26
         8.2      Tax and Insurance Account.......................            26
         8.3      Other Reserves..................................            27

IX.      MANAGEMENT AND CONTROL ..................................            27

         9.1      Power and Authority of General Partner .........            27
         9.2      Payments to the General Partners and Others ....            27
         9.3      Specific Powers of the General Partner .........            29
         9.4      Authority Requirements..........................            30
         9.5      Limitations on General Partner's
                  Power and Authority ............................            31
         9.6      Restrictions on Authority of General Partner....            32
         9.7      Duties of General Partner ......................            33
         9.8      Obligations to Repair and Rebuild Apartment
                  Housing.........................................            35
         9.9      Partnership Expenses ...........................            35

                                      iii


         9.10     General Partner Expenses .......................            36
         9.11     Other Business of Partners .....................            36
         9.12     Covenants, Representations and Warranties.......            36

X.       ALLOCATIONS OF INCOME, LOSSES AND CREDITS ...............            40

         10.1     General ........................................            40
         10.2     Allocations From Sale or Refinancing............            40
         10.3     Special Allocations.............................            41
         10.4     Curative Allocations............................            44
         10.5     Other Allocation Rules..........................            45
         10.6     Tax Allocations:  Code Section 704(c)...........            46
         10.7     Allocation Among Limited Partners...............            46
         10.8     Allocation Among General Partners ..............            46
         10.9     Modification of Allocations ....................            47

XI.      DISTRIBUTION ............................................            47

         11.1     Distribution of Net Operating Income ...........            47
         11.2     Distribution of Sale or Refinancing Proceeds....            47

XII.     TRANSFERS OF LIMITED PARTNER'S INTEREST
         IN THE PARTNERSHIP.......................................            48

         12.1     Assignment of Limited Partner's Interest .......            48
         12.2     Effective Date of Transfer .....................            49
         12.3     Invalid Assignment .............................            49
         12.4     Assignee's Rights to Allocations
                  and Distributions ..............................            49
         12.5     Substitution of Assignee as Limited Partner
                  or Special Limited Partner......................            49
         12.6     Death, Bankruptcy, Incompetency, etc.
          of a Limited Partner ...................................            50

XIII. WITHDRAWAL, REMOVAL AND REPLACEMENT OF GENERAL
      PARTNER ....................................................            50

         13.1     Withdrawal of General Partner ..................            50
         13.2     Removal of General Partner .....................            50
         13.3     Effects of a Withdrawal.........................            53
         13.4     Successor General Partner.......................            54
         13.5     Admission of Additional or Successor
                  General Partner ................................            55
         13.6     Transfer of Interest ...........................            55
         13.7     No Goodwill Value...............................            55

XIV.     BOOKS AND ACCOUNTS, REPORTS, TAX RETURNS,
         FISCAL YEAR AND BANKING .................................            56

         14.1     Books and Accounts .............................            56
         14.2     Accounting Reports .............................            57

                                       iv


         14.3     Other Reports ..................................            59
         14.4     Late Reports ...................................            60
         14.5     Annual Site Visits..............................            60
         14.6     Tax Returns.....................................            60
         14.7     Fiscal Year ....................................            60
         14.8     Banking ........................................            60
         14.9     Certificates and Elections .....................            60

XV.      DISSOLUTION, WINDING UP, TERMINATION AND
         LIQUIDATION OF THE PARTNERSHIP ..........................            61

         15.1     Dissolution of Partnership .....................            61
         15.2     Return of Capital Contribution upon
                  Dissolution ....................................            61
         15.3     Distributions of Assets ........................            61
         15.4     Deferral of Liquidation.........................            62
         15.5     Liquidation Statement ..........................            63
         15.6     Certificates of Dissolution; Certificate of
                  Cancellation of Certificate of Limited
                  Partnership ....................................            63

XVI.     AMENDMENTS ..............................................            63

XVII. MISCELLANEOUS ..............................................            64

         17.1     Voting Rights ..................................            64
         17.2     Meeting of Partnership .........................            64
         17.3     Notices ........................................            65
         17.4     Successors and Assigns .........................            65
         17.5     Recording of Certificate of Limited
                  Partnership. ...................................            65
         17.6     Amendment of Certificate of Limited
                  Partnership ....................................            65
         17.7     Counterparts ...................................            66
         17.8     Captions .......................................            66
         17.9     Saving Clause...................................            66
         17.10    Certain Provisions.............................             66
         17.11    Tax Matters Partners...........................             67
         17.12    Expiration of Compliance Period................             67
         17.13    Number and Gender .............................             68
         17.14    Entire Agreement ..............................             68
         17.15    Governing Law .................................             69
         17.16    Attorney's Fees ...............................             69
         17.17    Receipt of Correspondence .....................             69
         17.18    Security Interest and Right of Set-Off ........             69


EXHIBIT A - Legal Description...................... A-1
EXHIBIT B - Form of Legal Opinion.................. B-1  -  B-4
EXHIBIT C - Certification and Agreement............ C-1  -  C-4
EXHIBIT D - Form of Completion Certificate......... D-1

                                       v


EXHIBIT E - Accountant's Certificate............... E-1
EXHIBIT F - Contractor's Letter.....................F-1
EXHIBIT G - Depreciation Schedule...................G-1
EXHIBIT H - Report of Operations................... H-1  -  H-10

















                                       vi





                          Amended and Restated Articles
                            of Limited Partnership of
                              Byhalia Estates, L.P.



         This Amended and Restated Articles of Limited Partnership is being
entered into effective as of the date written below by and between SEMC, Inc.,
as the general partner (the "General Partner"), WNC Holding, LLC, a California
limited liability company as the limited partner (the "Limited Partner"), WNC
Housing, L.P., as the special limited partner (the "Special Limited Partner"),
and Michael Doran, as the withdrawing limited partner (the "Original Limited
Partner").

                                    RECITALS

         WHEREAS, Byhalia Estates, L.P., a Mississippi limited partnership (the
"Partnership") recorded a certificate of limited partnership with the
Mississippi Secretary of State. A partnership agreement dated June 5, 1998 was
entered into by and between the General Partner and the Original Limited Partner
(the "Original Partnership Agreement").

         WHEREAS, the Partners desire to enter into this Agreement to provide
for, among other things, (i) the continuation of the Partnership, (ii) the
admission of the Limited Partner and the Special Limited Partner as partners of
the Partnership, (iii) the liquidation of the Original Limited Partner's
Interest in the Partnership, (iv) the payment of Capital Contributions by the
Limited Partner and the Special Limited Partner to the Partnership, (v) the
allocation of Income, Losses, Tax Credits and distributions of Net Operating
Income and other cash funds of the Partnership among the Partners (vi) the
determination of the respective rights, obligations and interests of the
Partners to each other and to the Partnership, and (vii) certain other matters.

         WHEREAS, the Partners desire hereby to amend and restate the Original
Partnership Agreement.

         NOW, THEREFORE, in consideration of their mutual agreements herein set
forth, the Partners hereby agree to amend and restate the Original Partnership
Agreement in its entirety to provide as follows:


                                       1


                                    ARTICLE I

                                   DEFINITIONS

Section 1.1 "Accountant" shall mean Rodney LeBlanc of Pailet, Meunier and
LeBlanc, L.L.P., or such other firm of independent certified public accountants
as may be engaged for the Partnership by the General Partner with the Consent of
the Special Limited Partner. Notwithstanding any provision of this Agreement to
the contrary, the Special Limited Partner shall have the discretion to dismiss
the Accountant for cause if such Accountant fails to provide, or untimely
provides, or inaccurately provides, the information required in Section 14.2 or
14.3 of this Agreement.

Section 1.2 "Acquisition Committee Approval" shall mean the decision by the
acquisition committee of the Special Limited Partner, in its sole discretion, to
make the payment provided for under Section 7.2(b) and continue its
participation in the Partnership as herein provided rather than invoking the
provisions of Section 7.3(a).

Section 1.3 "Act" shall mean the laws of the State governing limited
partnerships, as now in effect and as the same may be amended from time to time.

Section 1.4 "Actual Tax Credit" shall mean as of any point in time, the total
amount of the LIHTC actually allocated by the Partnership to the Limited
Partner, representing 99.98% of the LIHTC actually received by the Partnership,
as shown on the applicable tax returns of the Partnership.

Section 1.5 "Adjusted Capital Account Deficit" shall mean with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant fiscal period, after giving effect to the following
adjustments:

         (a) credit to such Capital Account any amounts which such Partner is
obligated to restore or is deemed to be obligated to restore pursuant to the
penultimate sentences of Treasury Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and

         (b) debit to such Capital Account the items described in Sections
1.704-1(b)(2)(ii)(d)(4),  1.704-1(b)(2)(ii)(d)(5)  and 1.704-1(b)(2)(ii)(d)(6)
of the Treasury Regulations.

The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Treasury
Regulations and shall be interpreted consistently therewith.

                                       2


Section 1.6 "Affiliate" shall mean (a) any Person directly or indirectly
controlling, controlled by, or under common control with another Person; (b) any
Person owning or controlling 10% or more of the outstanding voting securities of
such other Person; (c) any officer, director, trustee, or partner of such other
Person; and (d) if such Person is an officer, director, trustee or general
partner, any other Person for which such Person acts in any such capacity.

Section 1.7 "Agreement" or "Partnership Agreement" shall mean this Amended and
Restated Articles of Limited Partnership, as it may be amended from time to
time. Words such as "herein," "hereinafter," "hereof," "hereto," "hereby" and
"hereunder," when used with reference to this Agreement, refers to this
Agreement as a whole, unless the context otherwise requires.

Section 1.8 "Apartment Housing" shall collectively mean the land in Byhalia,
Marshall County, Mississippi, as more fully described in Exhibit "A" attached
hereto and incorporated herein by this reference, and the Improvements.

Section 1.9 "Architect of Record" shall mean Mills & Mills, who shall be
responsible for architectural program development including design, construction
blueprint, project specifications manual, contract administrative services, and
project close-out procedures.

Section 1.10 "Asset Management Fee" shall have the meaning set forth in Section
9.2(d) hereof.

Section 1.11 "Assignee" shall mean a Person who has acquired all or a portion of
the Limited Partner's beneficial interest in the Partnership and has not become
a Substitute Limited Partner.

Section 1.12 "Bankruptcy" or "Bankrupt" shall mean the making of an assignment
for the benefit of creditors, becoming a party to any liquidation or dissolution
action or proceeding, the commencement of any bankruptcy, reorganization,
insolvency or other proceeding for the relief of financially distressed debtors,
or the appointment of a receiver, liquidator, custodian or trustee and, if any
of the same occur involuntarily, the same not being dismissed, stayed or
discharged within 90 days; or the entry of an order for relief under Title 11 of
the United States Code. A Partner shall be deemed Bankrupt if the Bankruptcy of
such Partner shall have occurred and be continuing.

Section 1.13 "Break-even Operations" shall mean at such time as the Partnership
has Cash Receipts equal to Cash Expenses, as determined by the Accountant and
approved by the Special Limited Partner. For purposes of this definition, any
one-time up-front fee paid to the Partnership from any source shall not be
included in Cash Receipts to calculate Break-even Operations. Moreover, in the
event any rent concession is granted for the rental of an apartment unit the
value of the rental concession shall be amortized over the term of the lease.

Section 1.14 "Budget" shall mean the annual operating Budget of the Partnership
as more fully described in Section 14.3 of this Agreement.


                                       3



Section 1.15 "Capital Account" shall mean, with respect to each Partner, the
account maintained for such Partner comprised of such Partner's Capital
Contribution as increased by allocations to such Partner of Partnership Income
(or items thereof) and any items in the nature of income or gain which are
specially allocated pursuant to Section 10.3 or 10.4 hereof, and decreased by
the amount of any Distributions made to such Partner, and allocations to such
Partner of Partnership Losses (or items thereof) and any items in the nature of
expenses or losses which are specially allocated pursuant to Section 10.3 or
10.4 hereof. In the event of any transfer of an interest in the Partnership in
accordance with the terms of this Agreement, the transferee shall succeed to the
Capital Account of the transferor to the extent it relates to the transferred
interest. The foregoing definition and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Treasury Regulation Section 1.704-1(b), as amended or any successor thereto, and
shall be interpreted and applied in a manner consistent with such Treasury
Regulation.

Section 1.16 "Capital Contribution" shall mean the total amount of money, or the
Gross Asset Value of property contributed to the Partnership, if any, by all the
Partners or any class of Partners or any one Partner as the case may be (or by a
predecessor-in-interest of such Partner or Partners), reduced by any such
capital which shall have been returned pursuant to Section 7.3, 7.4 or 7.6 of
this Agreement. A loan to the Partnership by a Partner shall not be considered a
Capital Contribution.

Section 1.17 "Cash Expenses" shall mean all cash operating obligations of the
Partnership (other than those covered by Insurance) in accordance with the
applicable Budget, including without limitation, the payment of the monthly
Mortgage payments, the Management Agent fees (which shall be deemed to include
that portion of such fees which is currently deferred and not paid), the funding
of reserves in accordance with Article VIII of this Agreement, advertising and
promotion, utilities, maintenance, repairs, Partner communications, legal,
telephone, any other expenses which may reasonably be expected to be paid in a
subsequent period but which on an accrual basis is allocable to the period in
question, such as Insurance, real estate taxes and audit, tax or accounting
expenses (excluding deductions for cost recovery of buildings; improvements and
personal property and amortization of any financing fees) and any seasonal
expenses (such as snow removal, the use of air conditioners in the middle of the
summer, or heaters in the middle of the winter) which may reasonably be expected
to be paid in a subsequent period shall be allocated equally per month over the
calendar year. Cash Expenses payable to Partners or Affiliates of Partners shall
be paid after Cash Expenses payable to third parties.

Section 1.18 "Cash Receipts" shall mean actual cash received on a cash basis by
the Partnership from operating revenues of the Partnership, including without
limitation rental income (but not any subsidy thereof from the General Partner
or an Affiliate thereof) and laundry income, but excluding prepayments, security
deposits, Capital Contributions, borrowings, lump-sum payment, any extraordinary
receipt of funds, and any income earned on investment of its funds.

Section 1.19 "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, or any successor statute.

                                       4



Section 1.20 "Completion of Construction" shall mean the date the Partnership
has received the required certificates of occupancy (or the local equivalent)
for all twenty-five (25) apartment units, or by the issuance of the inspecting
architect's certification, in a form substantially similar to the form attached
hereto as Exhibit "D" and incorporated herein by this reference, with respect to
completion of all the apartment units in the Apartment Housing. Notwithstanding,
Completion of Construction shall not be deemed to have occurred: if the
statutory time period for the filing of any liens by the Contractor,
subcontractors, material suppliers or any one else entitled to file a
construction lien has not lapsed; or if on such date any liens or other
encumbrances as to title to the Apartment Housing exist, other than the
Construction Loan.

Section 1.21 "Compliance  Period" shall mean the period set forth in Section 42
(i)(1) of the Code,  as amended,  or any successor statute.

Section 1.22 "Consent of the Special Limited Partner" shall mean the prior
written consent or approval of the Special Limited Partner.

Section 1.23 "Construction Budget" shall mean the agreed upon cost of
construction of the Improvements, including soft costs (which includes, but is
not limited to, financing charges, market study, Development Fee, architect
fees, etc.), based upon the Plans and Specifications. The final Construction
Budget is referenced in the Development, Construction and Operating Budget
Agreement entered into by and between the Partners the even date hereof. The
Development, Construction and Operating Budget Agreement shall: list all
subcontractors and material suppliers who will account for five percent or more
of the cost of construction of the Improvements; and show a trade payment
breakdown specifying the cost of each classification of construction
requirements pursuant to the Plans and Specifications.

Section 1.24 "Construction Contract" shall mean the construction contract
entered into between the Partnership and the Contractor pursuant to which the
Improvements are being constructed.

Section 1.25 "Construction Inspector" shall mean EMG, or any successor thereto
with the Consent of the Special Limited Partner. The Construction Inspector
shall make regular inspections of the construction site, but in no event less
than once a month, to confirm that construction of the Improvements are in
conformance with the Plans and Specifications. The Construction Inspector will
sign-off on all the draw requests made by the Contractor and provide the
documents specified in Section 14.3(a) of this Agreement. The Partnership shall
budget for, and pay the cost of, the Construction Inspector. If there is, at any
time, an identity of interest between the Partnership and the Construction
Inspector, or between the Contractor and the Construction Inspector, then the
General Partner will immediately relieve the Construction Inspector of any
inspecting duties. The General Partner shall dismiss the Construction Inspector
for cause if the Construction Inspector fails to detect, or fails to notify the
General Partner and Special Limited Partner within five business days of a draw
request, that: (a) the Construction Budget is not In-Balance; (b) a change
order; (c) any modification to the Plans and Specifications; or (d) any
modification to a construction line item from the approved Construction Budget
as specified in the Development, Construction and Operating Budget Agreement.

                                       5


Section 1.26 "Construction Lender" shall mean Citizens Bank or any successor
thereto.

Section 1.27 "Construction Loan" shall mean the loan obtained from Construction
Lender in the principal amount of $204,535 at an interest rate equal to 8.5% per
annum for a term of 12 months to provide funds for the acquisition, renovation
and/or construction and development of the Apartment Housing. Where the context
admits, the term "Construction Loan" shall include any deed, deed of trust,
note, security agreement, assumption agreement or other instrument executed by,
or on behalf of, the Partnership or General Partner in connection with the
Construction Loan.

Section 1.28 "Contractor" shall mean Southeastern  Management Company, Inc.,
which is the general construction  contractor for the Apartment Housing.

Section 1.29 "Debt Service Coverage" shall mean for the applicable period the
ratio between the Net Operating Income (excluding Mortgage payments) and the
debt service required to be paid on the Mortgage(s); as example, a 1.15 Debt
Service Coverage means that for every $1.00 of debt service required to be paid
there must be $1.15 of Net Operating Income available. A worksheet for the
calculation of Debt Service Coverage is found in the Report of Operations
attached hereto as Exhibit "G" and incorporated herein by this reference.

Section 1.30 "Deferred Management Fee" shall have the meaning set forth in
Section 9.2(c) hereof.

Section 1.31 "Developer" shall mean SEMC, Inc.

Section 1.32 "Development Fee" shall mean the fee payable to the Developer for
services incident to the development and construction of the Apartment Housing
in accordance with the Development Fee Agreement between the Partnership and the
Developer dated the even date herewith and incorporated herein by this
reference. Development activities do not include services for the acquisition of
the land or syndication activities.

Section 1.33 "Distributions" shall mean the total amount of money, or the Gross
Asset Value of property (net of liabilities securing such distributed property
that such Partner is considered to assume or take subject to under Section 752
of the Code), distributed to Partners with respect to their Interests in the
Partnership, but shall not include any payments to the General Partner or its
Affiliates for fees or other compensation as provided in this Agreement or any
guaranteed payment within the meaning of Section 707(c) of the Code, as amended,
or any successor thereto.

Section 1.34 "Fair Market Value" shall mean, with respect to any property, real
or personal, the price a ready, willing and able buyer would pay to a ready,
willing and able seller of the property, provided that such value is reasonably
agreed to between the parties in arm's-length negotiations and the parties have
sufficiently adverse interests.

                                       6



Section 1.35 "Financial Interest" shall mean the General Partner's capital
interest in the Partnership to be contributed and maintained pursuant to the
requirements of FmHA Instruction 1944-E, Section 1944.211(a)(13)(ii) or any
amendments thereto. Such Financial Interest shall not affect the Partners'
allocable share of the Profits, Losses, Tax Credits or Cash Flow From Operations
as set forth in this Agreement.

Section 1.36 "First Year Certificate" shall mean the certificate to be filed by
the General Partner with the Secretary of the Treasury as required by Code
Section 42(1)(1), as amended, or any successor thereto.

Section 1.37 "FmHA" shall mean the United States Department of Agriculture,
Rural Development (formerly Farmers Home Administration) or any successor
thereto.

Section 1.38 "FmHA Interest Credit Agreement" shall mean the Multiple Family
Housing Interest Credit and Rental Assistance Agreement (Form FmHA 1944-7 or any
successor thereof) between the FmHA and the Partnership whereby FmHA will
provide a monthly credit subsidy to the Partnership's Mortgage account when the
Partnership makes each monthly payment on the Mortgage.

Section 1.39 "FmHA Loan Agreement" shall mean the Loan Agreement for an RRH Loan
to a Limited Partnership Operating on a Limited Profit Basis (Form FmHA 1944-34
or any successor thereof) between the FmHA and the Partnership made in
consideration of the Mortgage Loan to the Partnership by the FmHA pursuant to
Section 515(b) of the Housing Act of 1949 to build a low to moderate income
apartment complex.

Section 1.40 "Force Majeure" shall mean any act of God, strike, lockout, or
other industrial disturbance, act of the public enemy, war, blockage, public
riot, fire, flood, explosion, governmental action, governmental delay, restraint
or inaction and any other cause or event, whether of the kind enumerated
specifically herein, or otherwise, which is not reasonably within the control of
a Partner to this Agreement claiming such suspension.

Section 1.41 "General Partner(s)" shall mean Semc, Inc., and such other Persons
as are admitted to the Partnership as additional or substitute General Partners
pursuant to this Agreement. If there is more than one General Partner of the
Partnership, the term "General Partner" shall be deemed to refer to such General
Partners and vice versa.

Section 1.42 "Gross Asset Value" shall mean with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:

         (a) the initial Gross Asset Value of any asset contributed by a Partner
to the Partnership shall be the Fair Market Value of such asset, as determined
by the contributing Partner and the General Partner, provided that, if the
contributing Partner is a General Partner, the determination of the Fair Market
Value of a contributed asset shall be determined by appraisal;

                                       7


         (b) the Gross Asset Values of all Partnership assets shall be adjusted
to equal their respective Fair Market Values, as determined by the General
Partner, as of the following times: (1) the acquisition of an additional
Interest in the Partnership by any new or existing Partner in exchange for more
than a de minimis Capital Contribution; (2) the distribution by the Partnership
to a Partner of more than a de minimis amount of Partnership property as
consideration for an Interest in the Partnership; and (3) the liquidation of the
Partnership within the meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(g); provided, however, that the adjustments pursuant to
clauses (1) and (2) above shall be made only with the Consent of the Special
Limited Partner and only if the General Partner reasonably determines that such
adjustments are necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership;

         (c) the Gross Asset Value of any Partnership asset distributed to any
Partner shall be adjusted to equal the Fair Market Value of such asset on the
date of distribution as determined by the distributee and the General Partner,
provided that, if the distributee is a General Partner, the determination of the
Fair Market Value of the distributed asset shall be determined by appraisal; and

         (d) the Gross Asset Values of Partnership assets shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m) and Section
10.3(g) hereof; provided however, that Gross Asset Values shall not be adjusted
pursuant to this Section 1.38(d) to the extent the General Partner determines
that an adjustment pursuant to Section 1.38(b) hereof is necessary or
appropriate in connection with a transaction that would otherwise result in an
adjustment pursuant to this Section 1.38(d).

         If the Gross Asset Value of an asset has been determined or adjusted
pursuant to Section 1.38(a), Section 1.38(b), or Section 1.38(d) hereof, such
Gross Asset Value shall thereafter be adjusted by the depreciation taken into
account with respect to such asset for purposes of computing Income and Losses.

Section 1.43 "Hazardous Substance" shall mean and include any substance,
material or waste, including asbestos, petroleum and petroleum products
(including crude oil), that is or becomes designated, classified or regulated as
"toxic" or "hazardous" or a "pollutant" or that is or becomes similarly
designated, classified or regulated, under any federal, state or local law,
regulation or ordinance including, without limitation, Compensation and
Liability Act of 1980, as amended, the Hazardous Materials Transportation Act,
as amended, the Resource Conservation and Recovery Act, as amended, and the
regulations adopted and publications promulgated pursuant thereto.

Section 1.44 "Improvements" shall mean the seven (7) buildings containing
twenty-five (25) apartment units and ancillary and appurtenant facilities
(including those intended for commercial use, if any,) being constructed for
families built in accordance with the Project Documents. It shall also include
all furnishings, equipment and personal property used in connection with the
operation thereof.


                                       8



Section 1.45 "In-Balance" shall mean, on any occasion, that the amount of the
undisbursed Construction Loan and undisbursed Limited Partner's Capital
Contribution are sufficient in the Limited Partner's reasonable judgment to pay,
through Completion of Construction and maturity of the Construction Loan, where
applicable, all of the following sums: (a) all costs of construction, marketing,
ownership, maintenance and leasing of the Apartment Housing units; and (b) all
interest and all other sums accruing or payable under the Construction Loan
documents.

Section 1.46 "Income and Losses" shall mean, for each fiscal year or other
period, an amount equal to the Partnership's taxable income or loss for such
year or period, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:

        (a) any income of the Partnership that is exempt from federal income tax
and not otherwise taken into account in computing Income or Losses pursuant to
this Section 1.42 shall be added to such taxable income or loss;

        (b) any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Regulation Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in
computing Income and Losses pursuant to this Section 1.42 shall be subtracted
from such taxable income or loss;

        (c) in the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to Section 1.38(a) or (b) hereof, the amount of such
adjustment shall be taken into account as gain or loss from the disposition of
such asset for purposes of computing Income and Losses;

        (d) gain or loss resulting from any disposition of Partnership assets
with respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the property disposed
of, notwithstanding that the adjusted tax basis of such property differs from
its Gross Asset Value;

        (e) in lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account depreciation for such fiscal year or other period,
computed as provided below; and

        (f) notwithstanding any other provision of this definition, any items
which are specially allocated pursuant to Sections 10.3 or 10.4 hereof shall not
otherwise be taken into account in computing Income or Losses.

         Depreciation for each fiscal year or other period shall be calculated
as follows: an amount equal to the depreciation, amortization, or other cost
recovery deduction allowable with respect to an asset for such year or other
period for federal income tax purposes, except that if the Gross Asset Value of
an asset differs from its adjusted basis for federal income tax purposes at the
beginning of such year or other period, depreciation shall be an amount which
bears the same ratio to such beginning Gross Asset Value as the federal income
tax depreciation, amortization, or other cost recovery deduction for such year
or other period bears to such beginning adjusted tax basis; provided, however,
if the federal income tax depreciation, amortization, or other cost recovery
deduction for such year is zero, depreciation shall be determined with reference
to such beginning Gross Asset Value using any reasonable method selected by the
General Partner.
                                       9


         For purposes of this Agreement, the term Income when used alone shall
include all items of income or revenue contemplated in this Section and the term
Losses when used alone shall include all items of loss or deductions
contemplated in this Section.

Section 1.47      "Insurance"         shall mean:
                   ---------

        (a) during construction, the Partnership will provide and maintain, or
cause the Contractor to provide and maintain, builder's risk insurance in an
amount equal to 100% of the insurable value of the Apartment Housing at the date
of completion; comprehensive general liability insurance with limits against
bodily injury of not less than $1,000,000 per occurrence and an aggregate of
$2,000,000 and against property damage of not less than $1,000,000; and worker's
compensation insurance, with statutory guidelines;

        (b) during operations the Partnership will provide and maintain business
interruption coverage covering actual sustained loss for 12 months; worker's
compensation; hazard coverage (including but not limited to fire, or other
casualty loss to any structure or building on the Apartment Housing in an amount
equal to the full replacement value of the damaged property without deducting
for depreciation); and comprehensive general liability coverage against
liability claims for bodily injury or property damage in the minimum amount of
$1,000,000 per occurrence and an aggregate of $2,000,000;

        (c)      all liability  coverage shall include an umbrella liability
coverage in a minimum amount of $1,000,000 per occurrence and an aggregate of
$1,000,000;

        (d)       all Insurance polices shall name the Partnership as the named
insured,  the Limited Partner as an additional insured, and WNC & Associates,
Inc. as the certificate holder;

        (e)       all Insurance  policies  shall  include a provision to notify
the insured,  the Limited  Partner and the  certificate holder prior to
cancellation;

        (f)       hazard coverage must include inflation and building or
ordinance endorsements;

        (g)       the minimum builder's risk coverage shall be in an amount
equal to the construction contract amount; and

        (h) the Contractor must also provide evidence of liability coverage
equal to $1,000,000 per occurrence with an aggregate of $2,000,000 and shall
name the Partnership as an additional insured and WNC & Associates, Inc., as
certificate holder.

                                       10



Section 1.48 "Insurance Company" shall mean any insurance company engaged by the
General Partner for the Partnership with the Consent of the Special Limited
Partner which Insurance Company shall have an A rating or better for financial
safety by A.M. Best or Standard & Poor's.

Section 1.49 "Interest" shall mean the entire ownership interest of a Partner in
the Partnership at any particular time, including the right of such Partner to
any and all benefits to which a Partner may be entitled hereunder and the
obligation of such Partner to comply with the terms of this Agreement.

Section 1.50 "Involuntary Withdrawal" shall mean any Withdrawal caused by the
death, adjudication of insanity or incompetence, Bankruptcy of a General
Partner, or the removal of a General Partner pursuant to Section 13.2 hereof.

Section 1.51 "Land Acquisition Fee" shall mean the fee payable to the General
Partner in an amount equal to $720 for the General Partner's services in
locating, negotiating and closing on the purchase of the real property upon
which the Improvements are, or will be, erected.

Section 1.52 "LIHTC" shall mean the low-income housing tax credit established by
TRA 1986 and which is provided for in Section 42 of the Code, as amended, or any
successor thereto.

Section 1.53 "Limited Partner" shall mean WNC Holding, LLC, a California limited
liability company, and such other Persons as are admitted to the Partnership as
additional or Substitute Limited Partners pursuant to this Agreement.

Section 1.54 "Management Agent" shall mean the property management company which
oversees the property management functions for the Apartment Housing and which
is on-site at the Apartment Housing. The initial Management Agent shall be
Southeastern Management Company, Inc.

Section 1.55 "Management Agreement" shall mean the agreement between the
Partnership and the Management Agent for property management services. The
management fee shall be in an amount approved by FmHA. Neither the Management
Agreement nor ancillary agreement shall provide for an initial rent-up fee, a
set-up fee, nor any other similar pre-management fee payable to the Management
Agent. The Management Agreement shall provide that it will be terminable at will
by the Partnership at anytime following the Withdrawal or removal of the General
Partner and, in any event, on any anniversary of the date of execution of the
Management Agreement, without payment or penalty for failure to renew the same.

Section 1.56 "Minimum Set-Aside Test" shall mean the 40-60 set-aside test
pursuant to Section 42(g), as amended and any successor thereto, of the Code
with respect to the percentage of apartment units in the Apartment Housing to be
occupied by tenants whose incomes are equal to or less than the required
percentage of the area median gross income.

                                       11



Section 1.57  "Mortgage" or "Mortgage Loan" shall mean the permanent nonrecourse
financing wherein the Partnership promises to pay: (a) USDA Rural Development or
its successor or assignee, the principal sum of $539,500, plus interest on the
principal at 6.780% per annum over a term of 30 years and amortized over 30
years; and (b) USDA Rural Development, or its successor or assignee, the
principal assumed sum of $204,535, plus on the principal at 6.75% per annum over
a term of 30 years and amortized over 30 years. Notwithstanding, because of an
interest credit subsidy agreement with FmHA the Partnership will pay an
effective interest rate equal to 1% per annum. Where the context admits, the
term "Mortgage" or "Mortgage Loan" shall include any mortgage, deed, deed of
trust, note, regulatory agreement, security agreement, assumption agreement or
other instrument executed in connection with the Mortgage which is binding on
the Partnership; and in case any Mortgage is replaced or supplemented by any
subsequent mortgage or mortgages, the Mortgage shall refer to any such
subsequent mortgage or mortgages. Prior to closing the Mortgage, the General
Partner shall provide to the Limited Partner a draft of the Mortgage documents
for review and approval. Based on the draft Mortgage documents, if the terms of
the Mortgage are not as specified above and the Special Limited Partner
determines that the Debt Service Coverage falls below 1.15 based on then current
Cash Expenses and Cash Receipts then the General Partner shall adjust the
principal loan amount and close on a Mortgage which will produce a 1.15 Debt
Service Coverage. The Mortgage funds shall be used to retire the Construction
Loan and if there are any funds remaining the Mortgage funds shall be used to
retire any outstanding hard construction costs including labor and materials.

Section 1.58 "Net Operating Income" shall mean the cash available for
Distribution on an annual basis, when Cash Receipts exceed Cash Expenses.

Section 1.59 "Nonrecourse Deductions" shall have the meaning given it in
Treasury Regulations Section 1.704-2(b)(1).

Section 1.60 "Nonrecourse Liability" shall have the meaning given it in Treasury
Regulations Section 1.704-2(b)(3).

Section 1.61 "Operating Deficit" shall mean, for the applicable period,
insufficient funds to pay operating costs when Cash Expenses exceed Cash
Receipts, as determined by the Accountant and approved by the Special Limited
Partner.

Section 1.62 "Operating Deficit Guarantee Period" shall mean the period
commencing with the execution of the Agreement and ending three years following
three consecutive months of Break-even Operations, provided the Partnership has
achieved Completion of Construction of the Apartment Housing.

Section 1.63 "Operating Loans" shall mean loans made by the General Partner to
the Partnership pursuant to Article VI of this Agreement, which loans do not
bear interest and are repayable only as provided in Article XI of this
Agreement.

Section 1.64 "Original Limited Partner" shall mean Michael Doran.


                                      12



Section 1.65 "Partner(s)" shall collectively mean the General Partner, the
Limited Partner and the Special Limited Partner or individually may mean any
Partner as the context dictates.

Section 1.66  "Partner Nonrecourse Debt" shall have the meaning set forth in
Section 1.704-2(b)(4) of the Treasury Regulations.

Section 1.67 "Partner Nonrecourse Debt Minimum Gain" shall mean an amount, with
respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain
that would result if such Partner Nonrecourse Debt were treated as a Nonrecourse
Liability, determined in accordance with Section 1.704-2(i)(3) of the Treasury
Regulations.

Section 1.68 "Partner Nonrecourse Deductions" shall have the meaning set forth
in Sections 1.704-2 (i)(1) and 1.704-2(i)(2) of the Treasury Regulations.

Section 1.69 "Partnership" shall mean the limited partnership continued under
this Agreement.

Section 1.70 "Partnership Minimum Gain" shall mean the amount determined in
accordance with the principles of Treasury Regulation Sections 1.704-2(b)(2) and
1.704-2(d).

Section 1.71 "Permanent Mortgage Commencement" shall mean the first date on
which all of the following have occurred: (a) the Construction Loan shall have
been repaid in full; (b) the Mortgage shall have closed and funded; and (c)
amortization of the Mortgage shall have commenced.

Section 1.72 "Person" shall collectively mean an individual, proprietorship,
trust, estate, partnership, joint venture, association, company, corporation or
other entity.

Section 1.73 "Plans and Specifications" shall mean the plans and specifications
for the construction of the Improvements which are approved by the local
city/county building department with jurisdiction over the construction of the
Improvements and which plans and specifications are referred to in the
Construction Contract. Any changes to the Plans and Specifications after
approval by the appropriate government building department, shall require the
Consent of the Special Limited Partner.

Section 1.74 "Project Documents" shall mean all documents relating to the
Construction Loan, Mortgage Loan and Construction Contract. It shall also
include all documents required by any governmental agency having jurisdiction
over the Apartment Housing in connection with the development, construction and
financing of the Apartment Housing, including but not limited to, the approved
Plans and Specifications for the development and construction of the Apartment
Housing.

                                       13



Section 1.75 "Projected Annual Tax Credits" shall mean LIHTC in the amount of
$18,918 for 2002, $34,926 per year for each of the years 2003 through 2011, and
$16,008 for 2012, which the General Partner has projected to be the total amount
of LIHTC which will be allocated to the Limited Partner by the Partnership,
constituting 99.98% of the aggregate amount of LIHTC of $349,330 to be available
to the Partnership.

Section 1.76 "Projected Tax Credits" shall mean LIHTC in the aggregate amount of
$349,330.

Section 1.77 "Qualified Tenants" shall mean any tenants who have incomes of 60%
(or such smaller percentage as the General Partner shall agree) or less of the
area median gross income, as adjusted for family size, so as to make the
Apartment Housing eligible for LIHTC.

Section 1.78 "Rent Restriction Test" shall mean the test pursuant to Section 42
of the Code whereby the gross rent charged to tenants of the low-income
apartment units in the Apartment Housing cannot exceed 30% of the qualifying
income levels of those units under Section 42.

Section 1.79 "Reporting Fee" shall have the meaning set forth in Section 9.2(d)
hereof.

Section 1.80 "Revised Projected Tax Credits" shall have the meaning set forth in
Section 7.4(a) hereof.

Section 1.81 "Sale or Refinancing" shall mean any of the following items or
transactions: a sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Partnership, a condemnation of or
casualty at the Apartment Housing or any part thereof, a claim against a title
insurance company, the refinancing or any Mortgage or other indebtedness of the
Partnership and any similar item or transaction; provided, however, that the
payment of Capital Contributions by the Partners shall not be included within
the meaning of the term "Sale or Refinancing."

Section 1.82 "Sale or Refinancing Proceeds" shall mean all cash receipts of the
Partnership arising from a Sale or Refinancing (including principal and interest
received on a debt obligation received as consideration in whole or in part, on
a Sale or Refinancing) less the amount paid or to be paid in connection with or
as an expense of such Sale or Refinancing, and with regard to damage recoveries
or insurance or condemnation proceeds, the amount paid or to be paid for
repairs, replacements or renewals resulting from damage to or partial
condemnation of the Apartment Housing.

Section 1.83 "Special Limited Partner" shall mean WNC Housing, L.P., a
California limited partnership, and such other Persons as are admitted to the
Partnership as additional or substitute Special Limited Partners pursuant to
this Agreement.

Section 1.84 "State" shall mean the State of Mississippi.

Section 1.85 "State Tax Credit Agency" shall mean the state agency of
Mississippi which has the responsibility and authorization to administer the
LIHTC program in Mississippi.
                                       14



Section 1.86 "Substitute Limited Partner" shall mean any Person who is admitted
to the Partnership as a Limited Partner pursuant to Section 12.5 or acquires the
Interest of the Limited Partner pursuant to Section 7.3 of this Agreement.

Section 1.87 "Syndication Fee" shall mean the fee payable to the General Partner
in an amount equal to $10,000 for the General Partner's services in forming the
Partnership, locating and approving the Limited Partner and Special Limited
Partner as the investors in the Partnership, negotiating and finalizing this
Partnership Agreement and for such other services referenced in Treasury
Regulation Section 1.709-2(B).

Section 1.88 "Tax Credit" shall mean any credit permitted under the Code or the
law of any state against the federal or a state income tax liability of any
Partner as a result of activities or expenditures of the Partnership including,
without limitation, LIHTC.

Section 1.89 "Tax Credit  Compliance  Fee" shall mean the fee payable to the
General Partner in accordance with Section 9.2(f) of this Agreement.

Section 1.90 "Tax Credit Conditions" shall mean, for the duration of the
Compliance Period, any and all restrictions including, but not limited to,
applicable federal, state and local laws, rules and regulations, which must be
complied with in order to qualify for the LIHTC or to avoid an event of
recapture in respect of the LIHTC.

Section 1.91 "Tax Credit Period" shall mean the ten year time period referenced
in Code Section 42(f)(1) over which the Projected Tax Credits are allocated to
the Partners. It is the intent of the Partners that the Projected Tax Credits
will be allocated during the Tax Credit Period and not a longer term.

Section 1.92 "Title Policy" shall mean the policy of insurance covering the fee
simple title to the Apartment Housing from a company approved by the Special
Limited Partner. The Title Policy shall be an ALTA owners title policy naming
the Partnership as insured and including a non-imputation and fairway
endorsement. The Title Policy shall also insure against rights-of-way,
easements, or claims of easements, not shown by public records. The Title Policy
shall be in an amount equal to the Construction Loan amount and the Limited
Partner's Capital Contribution.

Section 1.93 "TRA 1986" shall mean the Tax Reform Act of 1986.

Section 1.94 "Treasury Regulations" shall mean the Income Tax Regulations
promulgated under the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).

                                       15



Section 1.95 "Withdrawing" or "Withdrawal" (including the verb form "Withdraw"
and the adjectival forms "Withdrawing" and "Withdrawn") shall mean, as to a
General Partner, the occurrence of the death, adjudication of insanity or
incompetence, Bankruptcy of such Partner, the withdrawal, removal or retirement
from the Partnership of such Partner for any reason, including any sale, pledge,
encumbering, assignment or other transfer of all or any part of its General
Partner Interest and those situations when a General Partner may no longer
continue as a General Partner by reason of any law or pursuant to any terms of
this Agreement.


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                                       16





                                   ARTICLE II

                                      NAME

         The name of the Partnership shall be "Byhalia Estates, L.P."


                                   ARTICLE III

                  PRINCIPAL EXECUTIVE OFFICE/AGENT FOR SERVICE

         Section 3.1 Principal Executive Office. The principal executive office
of the Partnership is located at 2508 Highway 72, Glen, Mississippi 38846, or at
such other place or places within the State as the General Partner may hereafter
designate.

         Section 3.2   Agent for Service of Process.  The name of the agent for
service of process on the  Partnership  is Thomas D. Keenum, Sr., whose address
is 301-B West College Street, P.O. Box 418, Booneville, Mississippi 38829.


                                   ARTICLE IV

                                     PURPOSE

         Section 4.1 Purpose of the Partnership. The purpose of the Partnership
is to acquire, construct, own and operate the Apartment Housing in order to
provide, in part, Tax Credits to the Partners in accordance with the provisions
of the Code and the Treasury Regulations applicable to LIHTC and to sell the
Apartment Housing. The Partnership shall not engage in any business or activity
which is not incident to the attainment of such purpose.

         Section 4.2 Authority of the Partnership. In order to carry out its
purpose, the Partnership is empowered and authorized to do any and all acts and
things necessary, appropriate, proper, advisable or incidental to the
furtherance and accomplishment of its purpose, and for protection and benefit of
the Partnership, including but not limited to the following:

         (a)      acquire ownership of the real property referred to in Exhibit
"A" attached hereto;

         (b)      construct, renovate,  rehabilitate,  own, maintain and operate
the Apartment Housing in accordance with the Plans and Specifications;

         (c)      provide housing, subject to the Minimum Set-Aside Test and the
Rent Restriction Test and consistent with the requirements of the Project
Documents so long as any Project Documents remain in force;

                                       17


         (d)      maintain and operate the Apartment Housing, including hiring
the Management Agent (which Management Agent may be any of the Partners or an
Affiliate thereof) and entering into any agreement for the management of the
Apartment Housing during its rent-up and after its rent-up period in accordance
with this Agreement;

         (e)      enter into the Construction Loan and Mortgage;

         (f)      rent  dwelling  units in the  Apartment  Housing from time to
time,  in  accordance  with the  provisions of the Code applicable to LIHTC; and

         (g)      do any and all  other  acts and  things  necessary  or proper
in  furtherance  of the  Partnership  business  and in accordance with this
Agreement.


                                    ARTICLE V

                                      TERM

         The Partnership term commenced upon the filing of the Certificate of
Limited Partnership in the office of, and on the form prescribed by, the
Secretary of State of the State, and shall continue until December 31, 2053
unless terminated earlier in accordance with the provisions of this Agreement or
as otherwise provided by law.


                                   ARTICLE VI

                    GENERAL PARTNER'S CONTRIBUTIONS AND LOANS

         Section 6.1  Capital Contribution of General Partner. The General
Partner shall make a Capital  Contribution equal to $5.00.

         Section 6.2  Construction Obligations.

                  (a) The General Partner hereby guarantees a lien free
Completion of Construction of the Apartment Housing on or before June 1, 2002
("Completion Date") at a total development cost of not more than $1,006,035
("Development Budget"), which includes all hard and soft costs incident to the
acquisition, development and construction of the Apartment Housing in accordance
with the Construction Budget, the Construction Contract, the other Project
Documents and the Plans and Specifications. If the Development Budget exceeds
the sum of the Capital Contributions, the Mortgage amount as specified herein
and the Development Fee then the General Partner shall be responsible for and
shall be obligated to pay the difference thereof. Any advances by the General
Partner pursuant to the previous sentence shall not be repayable, shall not
change the Interest of any Partner in the Partnership and shall be considered a
guaranteed payment to the Partnership for cost overruns. If the Special Limited
Partner, in good faith, ascertains that the cost of completing the Improvements
in substantial accordance with the Plans and Specifications is greater than the
sum of (1) the then remaining undisbursed portion of the Capital Contributions;
(2) the then remaining undisbursed portion of the Mortgage amount as specified
herein; and (3) the then remaining undisbursed portion of the Development Fee;
then the Special Limited Partner may request the General Partner to advance
funds into a construction account in an amount required to complete the
Improvements and retire the Construction Loan.

                                       18


                  (b) In addition, if (1) the Improvements are not completed on
or before the Completion Date (which date may be extended in the events of Force
Majeure, but in no event longer than three months from the Completion Date); (2)
prior to completing the Improvements, there is an uncured default under or
termination of the Construction Loan, Mortgage Loan commitment, or other
material documents; or (3) a foreclosure action is commenced against the
Partnership, then at the Special Limited Partner's election, either the General
Partner will be removed from the Partnership and the Special Limited Partner
will be admitted as successor General Partner, all in accordance with Article
XIII hereof, or the General Partner will repurchase the Interest of the Limited
Partner and the Special Limited Partner for an amount equal to the amounts
theretofore paid by the Limited Partner and the Special Limited Partner, and the
Limited Partner and the Special Limited Partner shall have no further Interest
in the Partnership. If the Limited Partner elects to have the General Partner
repurchase the Interest of the Limited Partner then the repurchase shall occur
within 60 days after the General Partner receives written demand from the
Limited Partner.

         Section 6.3 Operating Obligations. From the date of this Agreement
through three consecutive months of Break-even Operations, the General Partner
will provide the necessary funds to pay Operating Deficits, which funds shall
not be repayable, shall not change the Interest of any Partner and shall be
considered a guaranteed payment to the Partnership for cost overruns. For the
balance of the Operating Deficit Guarantee Period the General Partner will
provide Operating Loans to pay any Operating Deficits. The aggregate maximum
amount of the Operating Loan(s) the General Partner will be obligated to lend
will be equal to one year's operating expenses (including debt and reserves)
approved by the General Partner and the Special Limited Partner. Each Operating
Loan shall be nonrecourse to the Partners, and shall be repayable out of 50% of
the available Net Operating Income or Sale or Refinancing Proceeds in accordance
with Article XI of this Agreement.

         Section 6.4 Other General Partner Loans. After expiration of the
Operating Deficit Guarantee Period, with the Consent of the Special Limited
Partner, the General Partner may loan to the Partnership any sums required by
the Partnership and not otherwise reasonably available to it. Any such loan
shall bear simple interest (not compounded) at the 10-year Treasury money market
rate in effect as of the day of the General Partner loan, or, if lesser, the
maximum legal rate. The maturity date and repayment schedule of any such loan
shall be as agreed to by the General Partner and the Special Limited Partner.
The terms of any such loan shall be evidenced by a written instrument. The
General Partner shall not charge a prepayment penalty on any such loan. Any loan
in contravention of this Section shall be deemed an invalid action taken by the
General Partner and such advance will be classified as a General Partner Capital
Contribution.

                                       19


                                   ARTICLE VII

                    CAPITAL CONTRIBUTIONS OF LIMITED PARTNER
                           AND SPECIAL LIMITED PARTNER

         Section 7.1 Original Limited Partner. The Original Limited Partner made
a Capital Contribution of $95. Effective as of the date of this Agreement, the
Original Limited Partner's Interest has been liquidated and the Partnership has
reacquired the Original Limited Partner's Interest in the Partnership. The
Original Limited Partner acknowledges that it has no further interest in the
Partnership as a limited partner as of the date of this Agreement, and has
released all claims, if any, against the Partnership arising out of its
participation as a limited partner.

         Section 7.2 Capital Contribution of Limited Partner. The Limited
Partner shall make a Capital Contribution in the amount of $244,507, as may be
adjusted in accordance with Section 7.4 of this Agreement, in cash on the dates
and subject to the conditions hereinafter set forth; provided, however, that if
the Limited Partner withholds the Acquisition Committee Approval before making
the payment described under subsection (b) of this Section 7.2, the Limited
Partner shall make no further Capital Contribution payments, and the General
Partner shall repurchase the Limited Partner's and Special Limited Partner's
Interest in the Partnership pursuant to Section 7.3(a).

         (a)   $122,241 shall be payable upon the Limited Partner's receipt and
approval of the following documents:

                  (1)      a legal opinion in a form  substantially  similar to
the form of opinion  attached hereto as Exhibit "B" and incorporated herein by
this reference;

                  (2)      a fully executed  Certification  and Agreement in the
form attached  hereto as Exhibit "C" and  incorporated herein by this reference;

                  (3)      a copy of the title commitment, (in a form and
substance satisfactory to the Special Limited Partner) constituting an agreement
by such title company to issue the Title Policy within fifteen working days. The
title commitment will show the Apartment Housing to be free from liens except
the Construction Loan and free from other exceptions not previously approved by
the Special Limited Partner;

                  (4)      Insurance required during construction;

                  (5)      a copy of the recorded grant deed (warranty deed);

                  (6)      fully executed Construction Loan closing documents;
and

                  (7)      the construction draw disbursement procedure.

                                       20


         (b) $61,121 shall be payable in monthly installments upon the Special
Limited Partner's receipt and approval of construction draws pursuant to the
Partnership's construction draw disbursement procedure upon the Acquisition
Committee Approval and the Limited Partner's receipt and approval of the
following documents:

                  (1)      lien free construction completion;

                  (2)      Completion of Construction as evidenced by the
Inspecting Architect's certification;

                  (3)      a certificate of occupancy (or equivalent  evidence
of local occupancy  approval if a permanent  certificate is not available) on
all the apartment units in the Apartment Housing;

                  (4)      a completion certification in a form substantially
similar to the form attached hereto as Exhibit "D" and incorporated herein by
this reference, indicating that the Improvements have been completed in
accordance with the Project Documents;

                  (5)      a letter from the Contractor in a form substantially
similar to the form attached hereto as Exhibit "F" and incorporated herein by
this reference stating that all amounts payable to the Contractor have been paid
in full and that the Partnership is not in violation of the Construction
Contract;

                  (6)      Insurance required during operations;

                  (7)      the  construction  documents  required  pursuant to
Section  14.3(a) of this  Agreement,  if not  previously provided to the Limited
Partner;

                  (8)      any documents  previously not provided to the Limited
Partner but required  pursuant to this Section 7.2 and Sections 14.3(a) and (b);
and

                  (9)      a determination by the Special Limited Partner that
construction financing is In-Balance.

         (c)      $30,560 shall be payable upon the Limited Partner's receipt
and approval of the following documents:

                  (1)      Mortgage Loan documents signed and the Mortgage
funded;

                  (2)      endorsement to the Title Policy dated no more than
ten days prior to the scheduled Capital Contribution providing an ALTA as-built
survey and confirming that there are no liens, claims or rights to a lien or
judgments filed against the property or the Apartment Housing during the time
period since the issuance of the Title Policy referenced above in Section
7.2(a);

                  (3)      the current rent roll evidencing a minimum 90% Tax
Credit Qualified occupancy and 90% actual occupancy for 90 consecutive days
immediately prior to funding;


                                       21


                  (4)      Debt Service Coverage of 1.15 for 90 consecutive days
immediately prior to funding;

                  (5)     copies of all initial tenant files including completed
applications, completed questionnaires or checklist of income and assets,
documentation of third party verification of income and assets, and income
certification forms (LIHTC specific) collected by the Management Agent, or
General Partner, verifying each tenant's eligibility pursuant to the Minimum
Set-Aside Test; and

                  (6)      Completion of Construction;

                  (7)      a construction closeout binder, which shall include,
but is not limited to, as-built drawings, all operating manuals, and all
manufacturing warranty agreements. In addition, the Contractor shall provide the
Partnership a one-year warranty on all parts, materials and work-quality;

                  (8)      any documents  previously not provided to the Limited
Partner but required  pursuant to this Section 7.2 and Sections 14.3(a) and (b);
and

                  (9)      copies of the executed lease agreement with the
tenants.

         (d)      $30,560 shall be payable upon the Limited Partner's receipt
and approval of the following documents:

                  (1)      a copy of the  declaration  of  restrictive
covenants/extended  use  agreement  entered  into  between  the Partnership and
the State Tax Credit Agency;

                  (2)      an audited construction cost certification (which
includes an itemized cost breakdown);

                  (3)      the Accountant's final Tax Credit certification in a
form substantially similar to the form attached hereto as Exhibit "E" and
incorporated herein by this reference;

                  (4)      copy of the first year tax return in which Tax
Credits are taken;

                  (5)      Internal Revenue Code Form 8609, or any successor
form; and

                  (6) any documents previously not provided to the Limited
Partner but required pursuant to this Section 7.2 and Sections 14.3(a) and (b).

         Section 7.3 Repurchase of Limited Partner's Interest. Within 60 days
after the General Partner receives written demand from the Limited Partner
and/or the Special Limited Partner, the Partnership shall repurchase the Limited
Partner's Interest and/or the Special Limited Partner's Interest in the
Partnership by refunding to it in cash the full amount of the Capital
Contribution which the Limited Partner and/or the Special Limited Partner has
theretofore made in the event that, for any reason, the Partnership shall fail
to:


                                       22


         (a)      the Limited Partner fails to grant the Acquisition Committee
Approval before making the payment described under Section 7.2(b), in which case
the Partnership shall, in addition to refunding the Capital Contribution, also
pay the Limited Partner and/or Special Limited Partner a predevelopment loan fee
equal to 8.5% interest on the amount of the refunded Capital Contribution;

         (b)      cause the Apartment Housing to be placed in service by June 1,
2002;

         (c)      achieve 100% occupancy of the Apartment Housing by Qualified
Tenants by August 1, 2002;

         (d)      obtain Permanent Mortgage Commencement by June 1, 2002;

         (e)      meet both the Minimum Set-Aside Test and the Rent Restriction
Test not later than December 31 of the first year the Partnership elects the
LIHTC to commence in accordance with the Code; or

         (f)      obtain a carryover allocation, within the meaning of Section
42 of the Code, from the State Tax Credit Agency on or before December 31, 2001.

         Section 7.4      Adjustment of Limited Partner's Capital Contribution.

         (a) The amount of the Limited Partner's and Special Limited Partner's
Capital Contribution was determined in part upon the amount of Tax Credits that
were expected to be available to the Partnership, and was based on the
assumption that the Partnership would be eligible to claim, in the aggregate,
the Projected Tax Credits. If the anticipated amount of Projected Tax Credits to
be allocated to the Limited Partner and Special Limited Partner as evidenced by
IRS Form 8609, Schedule A thereto, and the audited construction cost
certification provided to the Limited Partner and Special Limited Partner are
less than $349,295 (the new Tax Credit amount, if applicable, shall be referred
to as the "Revised Projected Tax Credits") then the Limited Partner's and
Special Limited Partner's Capital Contribution provided for in Section 7.2 and
Section 7.5 respectively shall be adjusted by the amount which will make the
total Capital Contribution to be paid by the Limited Partner and Special Limited
Partner to the Partnership equal to 70% of the Revised Projected Tax Credits so
anticipated to be allocated to the Limited Partner and Special Limited Partner.
If the Capital Contribution adjustment referenced in this Section 7.4(a) is a
reduction which is greater than the remaining Capital Contribution to be paid by
the Limited Partner and the Special Limited Partner then the General Partner
shall have ninety days from the date the General Partner receives notice from
either the Limited Partner or the Special Limited Partner to pay the shortfall.
If the Capital Contribution adjustment referenced in this Section 7.4(a) is an
increase then the Limited Partner and Special Limited Partner shall have ninety
days from the date the Limited Partner and Special Limited Partner have received
notice from the General Partner to pay the increase.

                                       23


         (b) The General Partner is required to use its best efforts to rent
100% of the Apartment Housing's apartment units to tenants who meet the Minimum
Set-Aside Test throughout the Compliance Period. If at the end of each calendar
year during the first five calendar years following the year in which the
Apartment Housing is placed in service, the Actual Tax Credit for any fiscal
year or portion thereof is or will be less than the Projected Annual Tax Credit,
or the Projected Annual Tax Credit as modified by Section 7.4(a) of this
Agreement if applicable (collectively the "Annual Tax Credit") (the "Annual
Credit Shortfall"), then the next Capital Contribution owed by the Limited
Partner shall be reduced by the Annual Credit Shortfall amount, and any portion
of such Annual Credit Shortfall in excess of such Capital Contribution shall be
applied to reduce succeeding Capital Contributions of the Limited Partner. If
the Annual Credit Shortfall is greater than the Limited Partner's remaining
Capital Contributions then the General Partner shall pay to the Limited Partner
the excess of the Annual Credit Shortfall over the remaining Capital
Contributions. The General Partner shall have ninety days to pay the Annual
Credit Shortfall from the date the General Partner receives notice from the
Limited Partner. The provisions of this Section 7.4(b) shall apply equally to
the Special Limited Partner in proportion to its Capital Contribution and
anticipated annual Tax Credit.

         (c) In the event that, for any reason, at any time after the first five
calendar years following the year in which the Apartment Housing is placed in
service, there is an Annual Credit Shortfall, then there shall be a reduction in
the General Partner's share of Net Operating Income in an amount equal to the
Annual Credit Shortfall and said amount shall be paid to the Limited Partner. In
the event there are not sufficient funds to pay the full Annual Credit Shortfall
to the Limited Partner at the time of the next Distribution of Net Operating
Income, then the unpaid Annual Credit Shortfall shall be repaid in the next year
in which sufficient monies are available from the General Partner's Net
Operating Income. In the event a Sale or Refinancing of the Apartment Housing
occurs prior to repayment in full of the Annual Credit Shortfall then the excess
will be paid in accordance with Section 11.2(b). The provisions of this Section
7.4(b) shall apply equally to the Special Limited Partner in proportion to its
Capital Contribution and anticipated annual Tax Credit.

         (d) The General Partner has represented, in part, that the Limited
Partner will receive Projected Annual Tax Credits of $18,918 in 2002 and $34,926
in 2003. In the event the 2002 and Actual Tax Credits are less than projected
then the Limited Partner's Capital Contribution shall be reduced by an amount
equal to 70% times the difference between the Projected Annual Tax Credits for
2002 and 2003 and the Actual Tax Credits for 2002 and 2003. If the 2002 and 2003
Actual Tax Credits are less than projected then the Special Limited Partner's
Capital Contribution shall be reduced following the same equation referenced in
the preceding sentence. If, at the time of determination thereof, the Capital
Contribution adjustment referenced in this Section 7.4(d) is greater than the
balance of the Limited Partner's or Special Limited Partner's Capital
Contribution payment which is then due, if any, then the excess amount shall be
paid by the General Partner to the Limited Partner and/or the Special Limited
Partner within ninety days of the General Partner receiving notice of the
reduction from the Limited Partners and/or the Special Limited Partner.

         (e) The Partners recognize and acknowledge that the Limited Partner and
the Special Limited Partner are making their Capital Contribution, in part, on
the expectation that the Projected Tax Credits are allocated to the Partners
over the Tax Credit Period. If the Projected Tax Credits are not allocated to
the Partners during the Tax Credit Period then the Limited Partner's and Special
Limited Partner's Capital Contribution shall be reduced by an amount agreed upon
by the Partners, in good faith, to provide the Limited Partner and the Special
Limited Partner with their anticipated internal rate of return.

                                       24


         (f) In the event there is: (1) a filing of a tax return by the
Partnership evidencing a reduction in the qualified basis of the Apartment
Housing causing a recapture of Tax Credits previously allocated to the Limited
Partner; (2) a reduction in the qualified basis of the Apartment Housing for
income tax purposes following an audit by the Internal Revenue Service (IRS)
resulting in a recapture of Tax Credits previously claimed; (3) a decision by
the United States Tax Court upholding the assessment of such deficiency against
the Partnership with respect to any Tax Credit previously claimed in connection
with the Apartment Housing, unless the Partnership shall timely appeal such
decision and the collection of such assessment shall be stayed pending the
disposition of such appeal; or (4) a decision of a court affirming such decision
upon such appeal then, in addition to any other payments to which the Limited
Partner and Special Limited Partner are entitled under the terms of this Section
7.4, the General Partner shall pay to the Limited Partner and the Special
Limited Partner the sum of (A) the income tax deficiency assessed against the
Limited Partner or Special Limited Partner as a result of the Tax Credit
recapture, (B) any interest and penalties imposed on the Limited Partner or
Special Limited Partner with respect to such deficiency, and (C) an amount
sufficient to pay any tax liability owed by the Limited Partner or Special
Limited Partner resulting from the receipt of the amounts specified in (A) and
(B).

         (g) The increase in the Capital Contribution of the Limited Partner and
the Special Limited Partner pursuant to Section 7.4(a) shall be subject to the
Limited Partner and Special Limited Partner having funds available to pay any
such increase at the time of its notification of such increase. For these
purposes, any funds theretofore previously earmarked by the Limited Partner or
Special Limited Partner to make other investments, or to be held as required
reserves, shall not be considered available for payment hereunder.

         Section 7.5 Capital Contribution of Special Limited Partner. The
Special Limited Partner shall make a Capital Contribution of $24 at the time of
the Limited Partner's Capital Contribution payment referenced in Section 7.2(a)
upon the same conditions. The Special Limited Partner shall be in a different
class from the Limited Partner and, except as otherwise expressly stated in this
Agreement, shall not participate in any rights allocable to or exercisable by
the Limited Partner under this Agreement.

         Section 7.6 Return of Capital Contribution. From time to time the
Partnership may have cash in excess of the amount required for the conduct of
the affairs of the Partnership, and the General Partner may, with the Consent of
the Special Limited Partner, determine that such cash should, in whole or in
part, be returned to the Partners, pro rata, in reduction of their Capital
Contribution. No such return shall be made unless all liabilities of the
Partnership (except those to Partners on account of amounts credited to them
pursuant to this Agreement) have been paid or there remain assets of the
Partnership sufficient, in the sole discretion of the General Partner, to pay
such liabilities.

                                       25


         Section 7.7 Liability of Limited Partner and Special Limited Partner.
The Limited Partner and Special Limited Partner shall not be liable for any of
the debts, liabilities, contracts or other obligations of the Partnership. The
Limited Partner and Special Limited Partner shall be liable only to make Capital
Contributions in the amounts and on the dates specified in this Agreement and,
except as otherwise expressly required hereunder, shall not be required to lend
any funds to the Partnership or, after their respective Capital Contributions
have been paid, to make any further Capital Contribution to the Partnership.


                                  ARTICLE VIII

                          WORKING CAPITAL AND RESERVES

         Section 8.1 Operating and Maintenance Account. The General Partner, on
behalf of the Partnership, shall establish an operating and maintenance account
and shall deposit thereinto, or provide a letter of credit, in an amount
required by the FmHA, to be used for initial operating capital as permitted or
required by applicable FmHA regulations. Said amount shall be reimbursed,
without interest, out of Apartment Housing funds as shall be authorized in
accordance with applicable FmHA regulations, and if not so reimbursed within
five years of the deposit, any amount remaining unreimbursed shall be forgiven
and shall constitute an ordinary and necessary business expense of the General
Partner as part consideration for the payment of the Development Fee.

         Section 8.2 Reserve for Replacements. The Partnership shall fund,
establish and maintain a reserve account in an amount required by the FmHA Loan
Agreement which funds shall be used in accordance with FmHA Regulation 7 CFR
Part 1930-C, or any successor thereof, as evidenced by the FmHA Loan Agreement.

         Section 8.3 Tax and Insurance Account. The General Partner, on behalf
of the Partnership, shall establish a tax and insurance account ("T & I
Account") for the purpose of making the requisite Insurance premium payments and
the real estate tax payments. The annual deposit to the T & I Account shall
equal the total annual Insurance payment and the total annual real estate tax
payment. Said amount shall be deposited monthly in equal installments.
Withdrawals from such account shall be made only for its intended purpose. Any
balance remaining in the account at the time of a sale of the Apartment Housing
shall be allocated and distributed equally between the General Partner and the
Limited Partner.






                                       26


         Section 8.4 Other Reserves. The General Partner, shall establish out of
funds available to the Partnership a reserve account sufficient in its sole
discretion to pay any unforeseen contingencies which might arise in connection
with the furtherance of the Partnership business including, but not limited to,
(a) any rent subsidy required to maintain rent levels in compliance with the
Code and applicable FmHA regulations; and (b) any real estate taxes, Insurance,
debt service or other payments for which other funds are not provided for
hereunder or otherwise expected to be available to the Partnership. The General
Partner shall not be liable for any good-faith estimate which it shall make in
connection with establishing or maintaining any such reserves nor shall the
General Partner be required to establish or maintain any such reserves if, in
its sole discretion, such reserves do not appear to be necessary.


                                   ARTICLE IX

                             MANAGEMENT AND CONTROL

         Section 9.1 Power and Authority of General Partner. Subject to the
Consent of the Special Limited Partner or the consent of the Limited Partner
where required by this Agreement, and subject to the other limitations and
restrictions included in this Agreement, the General Partner shall have complete
and exclusive control over the management of the Partnership business and
affairs, and shall have the right, power and authority, on behalf of the
Partnership, and in its name, to exercise all of the rights, powers and
authority of a partner of a partnership without limited partners. If there is
more than one General Partner, all acts, decisions or consents of the General
Partners shall require the concurrence of all of the General Partners. No
actions taken without the authorization of all the General Partners shall be
deemed valid actions taken by the General Partners pursuant to this Agreement.
No Limited Partner or Special Limited Partner (except one who may also be a
General Partner, and then only in its capacity as General Partner within the
scope of its authority hereunder) shall have any right to be active in the
management of the Partnership's business or investments or to exercise any
control thereover, nor have the right to bind the Partnership in any contract,
agreement, promise or undertaking, or to act in any way whatsoever with respect
to the control or conduct of the business of the Partnership, except as
otherwise specifically provided in this Agreement.

         Section 9.2      Payments to the General Partners and Others.


                  (a) The Partnership shall pay to the Developer a Development
Fee in the amount of $31,163 in accordance with the Development Fee Agreement
entered into by and between the Developer and the Partnership on the even date
hereof. The Development Fee Agreement provides, in part, that the Development
Fee shall first be paid from available proceeds in accordance with Section
9.2(b) of this Agreement and if not paid in full then the balance of the
Development Fee will be paid in accordance with Section 11.1 of this Agreement.

                                       27


                  (b) The Partnership shall utilize the proceeds from the
Capital Contributions paid pursuant to Section 7.2 and Section 7.5 of this
Agreement for development costs including, but not limited to, land costs, Land
Acquisition Fee, architectural fees, survey and engineering costs, financing
costs, loan fees, Syndication Fee, building materials and labor. If any Capital
Contribution proceeds are remaining after Completion of Construction and all
acquisition, development and construction costs, excluding the Development Fee,
are paid in full and the Construction Loan retired, then the remainder shall:
first be paid to the Developer in payment of the Development Fee; second be paid
to the General Partner as a reduction of the General Partner's Capital
Contribution; and any remaining Capital Contribution proceeds shall be paid to
the General Partner as a Partnership oversight fee.

                  (c) The Partnership shall pay to the Management Agent a
property management fee for the leasing and management of the Apartment Housing
in an amount in accordance with the Management Agreement. The term of the
Management Agreement shall not exceed one year, and the execution or renewal of
any Management Agreement shall be subject to the prior Consent of the Special
Limited Partner. If the Management Agent is an Affiliate of the General Partner
then commencing with the termination of the Operating Deficit Guarantee Period,
in any year in which the Apartment Housing has an Operating Deficit, 40% of the
management fee will be deferred ("Deferred Management Fee"). Deferred Management
Fees, if any, shall be paid to the Management Agent in accordance with Section
11.1 of this Agreement.

                           (1)      The General  Partner  shall,  upon receiving
any request of the Mortgage  Lender  requesting  such action, dismiss the
Management Agent as the entity responsible for management of the Apartment
Housing under the terms of the Management Agreement; or, the General Partner
shall dismiss the Management Agent at the request of the Special Limited
Partner.

                           (2)      The appointment of any successor  Management
Agent is subject to the Consent of the Special Limited Partner, which may only
be sought after the General Partner has provided the Special Limited Partner
with accurate and complete disclosure respecting the proposed Management Agent.

                  (d) The Partnership shall pay to the Limited Partner a fee
(the "Reporting Fee") commencing in 2003 equal to the greater of $1,500 or 15%
of the Net Operating Income but in no event less than $1,500 for the Limited
Partner's services in monitoring the operations of the Partnership and for
services in connection with the Partnership's accounting matters and assisting
with the preparation of tax returns and the reports required in Sections 14.2
and 14.3 of this Agreement. The Reporting Fee shall be payable within
seventy-five (75) days following each calendar year and shall be payable from
Net Operating Income in the manner and priority set forth in Section 11.1 of
this Agreement; provided, however, that if in any year Net Operating Income is
insufficient to pay the full $1,500, the unpaid portion thereof shall accrue and
be payable on a cumulative basis in the first year in which there is sufficient
Net Operating Income, as provided in Section 11.1, or sufficient Sale or
Refinancing Proceeds, as provided in Section 11.2.

                                       28


         (e) The Partnership shall pay to the General Partner through the
Compliance Period an annual Incentive Management Fee equal to 35% of remaining
cash flow commencing in 2003 for overseeing the marketing, lease-up and
continued occupancy of the Partnership's apartment units, obtaining and
monitoring the Mortgage Loan, maintaining the books and records of the
Partnership, selecting and supervising the Partnership's Accountants,
bookkeepers and other Persons required to prepare and audit the Partnership's
financial statements and tax returns, and preparing and disseminating reports on
the status of the Apartment Housing and the Partnership, all as required by
Article XIV of this Agreement. The Partners acknowledge that the Incentive
Management Fee is being paid as an inducement to the General Partner to operate
the Partnership efficiently, to maximize occupancy and to increase the Net
Operating Income. The Incentive Management Fee shall be payable from Net
Operating Income in the manner and priority set forth in Section 11.1 of this
Agreement upon completion and delivery of the annual audit pursuant to Section
14.2(a) of this Agreement. If the Incentive Management Fee is not paid in any
year it shall not accrue for payment in subsequent years.

         (f) The Partnership shall pay to the General Partner through the
Compliance Period an annual Tax Credit Compliance Fee equal to 35% of remaining
cash flow commencing in 2003 for the services of the General Partner in ensuring
compliance by the Partnership and the Apartment Housing with all Tax Credit
rules and regulations. The Tax Credit Compliance Fee shall be payable from Net
Operating Income in the manner and priority set forth in Section 11.1 of this
Agreement upon completion and delivery of the annual audit pursuant to Section
14.2(a) of this Agreement. If the Tax Credit Compliance Fee is not paid in any
year it shall not accrue for payment in subsequent years.

         (g) The Partnership shall pay to the Special Limited Partner an
engineering review fee ("Property Inspection Report") in an amount not to exceed
$3,500. This fee will be withheld from the capital contribution referenced in
Section 7.2(a) of this Agreement.

         (h) The Partnership shall pay to the Special Limited Partner a monthly
construction monitoring fee ("Construction Monitoring Fee") in an amount not to
exceed $950 per month, with a total projected cost of $5,700. The Construction
Monitoring Fee will be withheld from the capital contribution referenced in
Section 7.2(a) of this Agreement.

         Section 9.3     Specific Powers of the General  Partner. Subject to the
other  provisions of this  Agreement,  the General Partner, in the Partnership's
name and on its behalf, may:

         (a)      employ, contract and otherwise deal with, from time to time,
Persons whose services are necessary or appropriate in connection with
management and operation of the Partnership business, including, without
limitation, contractors, agents, brokers, Accountants and Management Agents
(provided that the selection of any Accountant or Management Agent has received
the Consent of the Special Limited Partner) and attorneys, on such terms as the
General Partner shall determine;

         (b)      pay as a Partnership expense any and all costs and expenses
associated with the formation, development, organization and operation of the
Partnership, including the expense of annual audits, tax returns and LIHTC
compliance;

         (c)      deposit,  withdraw,  invest,  pay,  retain and distribute the
 Partnership's  funds in a manner  consistent  with the provisions of this
Agreement;

         (d)      execute the Construction Loan and the Mortgage; and

                                       29


         (e)      execute, acknowledge and deliver any and all instruments to
effectuate any of the foregoing.

         Section 9.4     Authority Requirements.  During the Compliance Period,
the following provisions shall apply.

         (a)      Each of the provisions of this Agreement shall be subject to,
and the General Partner covenants to act in accordance with, the Tax Credit
Conditions and all applicable federal, state and local laws and regulations.

         (b)      The Tax Credit Conditions and all such laws and regulations,
as amended or supplemented, shall govern the rights and obligations of the
Partners, their heirs, executors, administrators, successor and assigns, and
they shall control as to any terms in this Agreement which are inconsistent
therewith, and any such inconsistent terms of this Agreement shall be
unenforceable by or against any of the Partners.

         (c)      Upon any dissolution of the Partnership or any transfer of the
Apartment Housing, no title or right to the possession and control of the
Apartment Housing and no right to collect rent therefrom shall pass to any
Person who is not, or does not become, bound by the Tax Credit Conditions in a
manner that, in the opinion of counsel to the Partnership, would avoid a
recapture of Tax Credits thereof on the part of the former owners.

         (d)      Any conveyance or transfer of title to all or any portion of
the Apartment Housing required or permitted under this Agreement shall in all
respects be subject to the Tax Credit Conditions and all conditions, approvals
or other requirements of the rules and regulations of any authority applicable
thereto.

         Section 9.5    Limitations on General Partner's Power and Authority.
Notwithstanding  the  provisions of this Article IX, the General Partner shall
not:

         (a)      except as required by Section 9.4, act in contravention of
this Agreement;

         (b)      act in any manner which would make it impossible to carry on
the ordinary business of the Partnership;

         (c)      confess a judgment against the Partnership;

         (d)      possess Partnership  property,  or assign the Partner's right
in specific  Partnership  property,  for other than the
exclusive benefit of the Partnership;

         (e)      admit a Person as a General Partner except as provided in this
Agreement;

         (f)      admit a Person as a Limited Partner except as provided in this
Agreement;

         (g)      violate any provision of the Mortgage;

                                       30


         (h)      cause the Apartment Housing apartment units to be rented to
anyone other than Qualified Tenants;

         (i)      violate the Minimum Set-Aside Test or the Rent Restriction
Test for the Apartment Housing;

         (j)      cause any recapture of the Tax Credits;

         (k)      permit any creditor who makes a nonrecourse loan to the
Partnership to have, or to acquire at any time as a result of making such loan,
any direct or indirect interest in the profits, income, capital or other
property of the Partnership, other than as a secured creditor;

         (l)      commingle funds of the Partnership with the funds of another
Person; or

         (m) take any action which requires the Consent of the Special Limited
Partner or the consent of the Limited Partner unless the General Partner has
received said Consent.

         Section 9.6    Restrictions  on Authority of General  Partner.  Without
the Consent of the Special Limited Partner the General Partner shall not:

         (a)      sell, exchange, lease or otherwise dispose of the Apartment
Housing;

         (b)      incur indebtedness other than the Construction Loan and
Mortgage Loan in the name of the Partnership;

         (c)      engage in any transaction not expressly contemplated by this
Agreement in which the General Partner has an actual or potential conflict of
interest with the Limited Partner or the Special Limited Partner;

         (d)      contract away the fiduciary duty owed to the Limited Partner
and the Special Limited Partner at common law;

         (e)      take any action which would cause the Apartment Housing to
fail to qualify, or which would cause a termination or discontinuance of the
qualification of the Apartment Housing, as a "qualified low income housing
project" under Section 42(g)(1) of the Code, as amended, or any successor
thereto, or which would cause the Limited Partner to fail to obtain the
Projected Tax Credits or which would cause the recapture of any LIHTC;

         (f)      make any expenditure of funds, or commit to make any such
expenditure, other than in response to an emergency, except as provided for in
the annual budget approved by the Special Limited Partner, as provided in
Section 14.3(i) hereof;

         (g)      cause the merger or other reorganization of the Partnership;

         (h)      dissolve the Partnership;

                                       31


         (i)      acquire any real or personal property (tangible or intangible)
in addition to the Apartment Housing the aggregate value of which shall exceed
$10,000 (other than easement or similar rights necessary or appropriate for the
operation of the Apartment Housing);

         (j)      become  personally  liable  on or in respect of, or guarantee,
the  Mortgage  or any  other  indebtedness  of the Partnership;

         (k)      pay any salary, fees or other compensation to a General
Partner or any Affiliate thereof, except as authorized by Section 9.2 and
Section 9.9 hereof or specifically provided for in this Agreement;

         (l)      terminate the services of the Accountant, Inspecting
Architect, Contractor or Management Agent, or terminate, amend or modify the
Construction Contract or any other Project Document, or grant any material
waiver or consent thereunder;

         (m)      cause the Partnership to redeem or repurchase all or any
portion of the Interest of a Partner;

         (n)      cause the Partnership to convert the Apartment Housing to
cooperative or condominium ownership;

         (o)      cause or permit the Partnership to make loans to the General
Partner or any Affiliate;

         (p)      bring or defend, pay, collect, compromise, arbitrate, resort
to legal action or otherwise adjust claims or demands of or against the
Partnership; or

         (q)      agree or consent to any changes in the Plans and
Specifications,  to any change  orders,  or to any of the terms and provisions
of the Construction Contract.

         Section 9.7   Duties of General Partner.  The General Partner agrees
that it shall at all times:

         (a)      diligently and faithfully  devote such of its time to the
business of the Partnership as may be necessary to properly conduct the affairs
of the Partnership;

         (b)      file and publish all certificates,  statements or other
instruments  required by law for the formation and operation of the Partnership
as a limited partnership in all appropriate jurisdictions;

         (c)      cause the Partnership to carry Insurance from an Insurance
Company;

         (d)      have a fiduciary responsibility for the safekeeping and use of
all funds and assets of the Partnership, whether or not in its immediate
possession or control and not employ or permit another to employ such funds or
assets in any manner except for the benefit of the Partnership;

                                       32


         (e)      use its best efforts so that all requirements shall be met
which are reasonably necessary to obtain or achieve (1) compliance with the
Minimum Set-Aside Test, the Rent Restriction Test, and any other requirements
necessary for the Apartment Housing to initially qualify, and to continue to
qualify, for LIHTC; (2) issuance of all necessary certificates of occupancy,
including all governmental approvals required to permit occupancy of all of the
apartment units in the Apartment Housing; (3) compliance with all provisions of
the Project Documents and (4) a reservation and allocation of LIHTC from the
State Tax Credit Agency;

         (f)      make inspections of the Apartment Housing and assure that the
Apartment Housing is in decent, safe, sanitary and good condition, repair and
working order, ordinary use and obsolescence excepted, and make or cause to be
made from time to time all necessary repairs thereto (including external and
structural repairs) and renewals and replacements thereof;

         (g)      pay, before the same shall become delinquent and before
penalties accrue thereon all Partnership taxes, assessments and other
governmental charges against the Partnership or its properties, and all of its
other liabilities, except to the extent and so long as the same are being
contested in good faith by appropriate proceedings in such manners as not to
cause any material adverse effect on the Partnership's property, financial
condition or business operations, with adequate reserves provided for such
payments;

         (h)      permit, and cause the Management Agent to permit, the Special
Limited Partner and its representatives: (1) to have access to the Apartment
Housing and personnel employed by the Partnership and by the Management Agent at
all times during normal business hours after reasonable notice; (2) to examine
all agreements, LIHTC compliance data and Plans and Specifications; and (3) to
make copies thereof;

         (i)      exercise good faith in all activities relating to the conduct
of the business of the Partnership, including the development, operation and
maintenance of the Apartment Housing, and shall take no action with respect to
the business and property of the Partnership which is not reasonably related to
the achievement of the purpose of the Partnership;

         (j)      make any Capital Contributions,  advances or loans required to
be made by the General Partner under the terms of this Agreement;

         (k)      establish and maintain all reserves required to be established
and maintained under the terms of this Agreement;

         (l)      cause the Management Agent to manage the Apartment Housing in
such a manner that the Apartment Housing will be eligible to receive LIHTC with
respect to 100% of the apartment units in the Apartment Housing. To that end,
the General Partner agrees, without limitation: (1) to make all elections
requested by the Special Limited Partner under Section 42 of the Code to allow
the Partnership or its Partners to claim the Tax Credit; (2) to file Form 8609
with respect to the Apartment Housing as required, for at least the duration of
the Compliance Period; (3) to operate the Apartment Housing and cause the
Management Agent to manage the Apartment Housing so as to comply with the
requirements of Section 42 of the Code, as amended, or any successor thereto,
including, but not limited to, Section 42(g) and Section 42(i)(3) of the Code,
as amended, or any successors thereto; (4) to make all certifications required
by Section 42(l) of the Code, as amended, or any successor thereto; and (5) to
operate the Apartment Housing and cause the Management Agent to manage the
Apartment Housing so as to comply with all other Tax Credit Conditions; and

                                       33


         (m)      perform such other acts as may be expressly required of it
under the terms of this Agreement.

         Section 9.8 Obligations to Repair and Rebuild Apartment Housing. With
the approval of any lender, if such approval is required, any Insurance proceeds
received by the Partnership due to fire or other casualty affecting the
Apartment Housing will be utilized to repair and rebuild the Apartment Housing
in satisfaction of the conditions contained in Section 42(j)(4) of the Code and
to the extent required by any lender. Any such proceeds received in respect of
such event occurring after the Compliance Period shall be so utilized or, if
permitted by the Project Documents and with the Consent of the Special Limited
Partner, shall be treated as Sale or Refinancing Proceeds.

         Section 9.9     Partnership Expenses.

         (a) All of the Partnership's expenses shall be billed directly to and
paid by the Partnership to the extent practicable. Reimbursements to the General
Partner, or any of its Affiliates, by the Partnership shall be allowed only for
the Partnership's Cash Expenses unless the General Partner is obligated to pay
the same as an Operating Deficit during the Operating Deficit Guarantee Period,
and subject to the limitations on the reimbursement of such expenses set forth
herein. For purposes of this Section, Cash Expenses shall include fees paid by
the Partnership to the General Partner or any Affiliate of the General Partner
permitted by this Agreement and the actual cost of goods, materials and
administrative services used for or by the Partnership, whether incurred by the
General Partner, an Affiliate of the General Partner or a nonaffiliated Person
in performing the foregoing functions. As used in the preceding sentence,
"actual cost of goods and materials" means the actual cost of goods and
materials used for or by the Partnership and obtained from entities which are
not Affiliates of the General Partner, and actual cost of administrative
services means the pro rata cost of personnel (as if such persons were employees
of the Partnership) associated therewith, but in no event to exceed the amount
which would be charged by nonaffiliated Persons for comparable goods and
services.

         (b) Reimbursement to the General Partner or any of its Affiliates of
operating cash expenses pursuant to Subsection (a) hereof shall be subject to
the following:

                  (1)      no such  reimbursement  shall be  permitted  for
services  for  which  the  General  Partner  or any of its Affiliates is
entitled to compensation by way of a separate fee; and

                                       34


                  (2)      no such reimbursement shall be made for (A) rent or
depreciation, utilities, capital equipment or other such administrative items,
and (B) salaries, fringe benefits, travel expenses and other administrative
items incurred or allocated to any "controlling person" of the General Partner
or any Affiliate of the General Partner. For the purposes of this Section
9.9(b)(2), "controlling person" includes, but is not limited to, any Person,
however titled, who performs functions for the General Partner or any Affiliate
of the General Partner similar to those of: (i) chairman or member of the board
of directors; (ii) executive management, such as president, vice president or
senior vice president, corporate secretary or treasurer; (iii) senior
management, such as the vice president of an operating division who reports
directly to executive management; or (iv) those holding 5% or more equity
interest in such General Partner or any such Affiliate of the General Partner or
a person having the power to direct or cause the direction of such General
Partner or any such Affiliate of the General Partner, whether through the
ownership of voting securities, by contract or otherwise.

         Section 9.10 General Partner Expenses. The General Partner or
Affiliates of the General Partner shall pay all Partnership expenses which are
not permitted to be reimbursed pursuant to Section 9.9 and all expenses which
are unrelated to the business of the Partnership.

         Section 9.11 Other Business of Partners. Any Partner may engage
independently or with others in other business ventures wholly unrelated to the
Partnership business of every nature and description, including, without
limitation, the acquisition, development, construction, operation and management
of real estate projects and developments of every type on their own behalf or on
behalf of other partnerships, joint ventures, corporations or other business
ventures formed by them or in which they may have an interest, including,
without limitation, business ventures similar to, related to or in direct or
indirect competition with the Apartment Housing. Neither the Partnership nor any
Partner shall have any right by virtue of this Agreement or the partnership
relationship created hereby in or to such other ventures or activities or to the
income or proceeds derived therefrom. Conversely, no Person shall have any
rights to Partnership assets, incomes or proceeds by virtue of such other
ventures or activities of any Partner.

         Section 9.12 Covenants, Representations and Warranties. The General
Partner covenants, represents and warrants that the following are presently
true, will be true at the time of each Capital Contribution payment made by the
Limited Partner and will be true during the term of this Agreement, to the
extent then applicable.

         (a)     The Partnership is a duly organized limited partnership validly
existing under the laws of the State and has complied with all filing
requirements necessary for the protection of the limited liability of the
Limited Partner and the Special Limited Partner.

         (b)     The Partnership Agreement and the Project Documents are in full
force and effect and neither the Partnership nor the General Partner is in
breach or violation of any provisions thereof.

         (c)    Improvements will be completed in a timely and workerlike manner
in accordance with all applicable requirements of all appropriate governmental
entities and the Plans and Specifications of the Apartment Housing.

         (d)     All conditions to the funding of the Construction Loan have
been met.

                                       35


         (e)     The Apartment Housing is being operated in accordance with
standards and procedures which are prudent and customary for the operation of
properties similar to the Apartment Housing.

         (f)     No Partner has or will have any personal liability with respect
to or has or will have personally guaranteed the payment of the Mortgage.

         (g)     The Partnership is in compliance with all construction and use
codes applicable to the Apartment Housing and is not in violation of any zoning,
environmental or similar regulations applicable to the Apartment Housing.

         (h)     All appropriate public utilities, including sanitary and storm
sewers, water, gas and electricity, are currently available and will be
operating properly for all units in the Apartment Housing at the time of first
occupancy and throughout the term of the Partnership.

         (i)     All roads necessary for the full utilization of the
Improvements have either been completed or the necessary rights of way therefore
have been acquired by the appropriate governmental authority or have been
dedicated to public use and accepted by said governmental authority.

         (j)      The Partnership has obtained Insurance written by an Insurance
Company.

         (k)      The Partnership owns the fee simple interest in the Apartment
Housing.

         (l)     The Construction Contract has been entered into between the
Partnership and the Contractor; no other consideration or fee shall be paid to
the Contractor other than amounts set forth in the Construction Contract.

         (m)     The Partnership will require the Accountant to depreciate the
Improvements over a year term. Site work shall be broken out separately from
Improvements and depreciated over 15 years using the cost recovery system,
mid-year 200% declining balance depreciation method. Landscaping and personal
property (cabinets, appliances, carpet and window coverings) shall be
depreciated over 5 years for regular tax or 9 years for alternative minimum tax.

         (n)     To the best of the General Partner's knowledge: (1) no
Hazardous Substance has been disposed of, or released to or from, or otherwise
now exists in, on, under or around, the Apartment Housing and (2) no aboveground
or underground storage tanks are now or have ever been located on or under the
Apartment Housing. The General Partner will not install or allow to be installed
any aboveground or underground storage tanks on the Apartment Housing. The
General Partner covenants that the Apartment Housing shall be kept free of
Hazardous Substance and shall not be used to generate, manufacture, refine,
transport, treat, store, handle, dispose of, transfer, produce or process
Hazardous Substance, except in connection with the normal maintenance and
operation of any portion of the Apartment Housing. The General Partner shall
comply, or cause there to be compliance, with all applicable Federal, state and
local laws, ordinances, rules and regulations with respect to Hazardous
Substance and shall keep, or cause to be kept, the Apartment Housing free and
clear of any liens imposed pursuant to such laws, ordinances, rules and
regulations. The General Partner must promptly notify the Limited Partner and
the Special Limited Partner in writing (3) if it knows, or suspects or believes
there may be any Hazardous Substance in or around any part of the Apartment
Housing, any Improvements constructed on the Apartment Housing, or the soil,
groundwater or soil vapor, (4) if the General Partner or the Partnership may be
subject to any threatened or pending investigation by any governmental agency
under any law, regulation or ordinance pertaining to any Hazardous Substance,
and (5) of any claim made or threatened by any Person, other than a governmental
agency, against the Partnership or General Partner arising out of or resulting
from any Hazardous Substance being present or released in, on or around any part
of the Apartment Housing.

                                       36


         (o)     The General Partner has not executed and will not execute any
agreements with provisions contradictory to, or in opposition to, the provisions
of this Agreement.

         (p)     The Partnership will allocate to the Limited Partner the
Projected Annual Tax Credits,  or the Revised  Projected Tax Credits, if
applicable.

         (q)     No charges, liens or encumbrances exist with respect to the
Apartment Housing other than those which are created or permitted by the Project
Documents or Mortgage or are noted or excepted in the Title Policy.

         (r)     The buildings on the Apartment Housing site constitute or shall
constitute a "qualified low-income housing project" as defined in Section 42(g)
of the Code, and as amplified by the Treasury Regulations thereunder. In this
connection, not later than December 31 of the first year in which the Partners
elect the LIHTC to commence in accordance with the Code, the Apartment Housing
will satisfy the Minimum Set-Aside Test.

         (s)     All accounts of the Partnership required to be maintained under
the terms of the Project Documents, including, without limitation, any reserves
in accordance with Article VIII hereof, are currently funded to required levels,
including levels required by any authority.

         (t)    The General Partner has not lent or otherwise advanced any funds
to the Partnership other than its Capital Contribution, or Operating Deficit
Loan, if applicable, and the Partnership has no unsatisfied obligation to make
any payments of any kind to the General Partner or any Affiliate thereof.


                                       37


         (u)      No event has occurred which constitutes a default under any of
the Project Documents.

         (v)     No event has occurred which has caused, and the General Partner
has not acted in any manner which will cause (1) the Partnership to be treated
for federal income tax purposes as an association taxable as a corporation, (2)
the Partnership to fail to qualify as a limited partnership under the Act, or
(3) the Limited Partner to be liable for Partnership obligations; provided
however, the General Partner shall not be in breach of this representation if
all or a portion of a Limited Partner's agreed upon Capital Contributions are
used to satisfy the Partnership's obligations to creditors of the Partnership
and such action by the General Partner is otherwise authorized under this
Agreement and; provided further, however, the General Partner shall not be in
breach of this representation if the action causing the Limited Partner to be
liable for the Partnership obligations is undertaken by the Limited Partner.

         (w)    No event or proceeding, including, but not limited to, any legal
actions or proceedings before any court, commission, administrative body or
other governmental authority, and acts of any governmental authority having
jurisdiction over the zoning or land use laws applicable to the Apartment
Housing, has occurred the continuing effect of which has: (1) materially or
adversely affected the operation of the Partnership or the Apartment Housing;
(2) materially or adversely affected the ability of the General Partner to
perform its obligations hereunder or under any other agreement with respect to
the Apartment Housing; or (3) prevented the completion of construction of the
Improvements in substantial conformity with the Project Documents, other than
legal proceedings which have been bonded against (or as to which other adequate
financial security has been issued) in a manner as to indemnify the Partnership
against loss; provided, however, the foregoing does not apply to matters of
general applicability which would adversely affect the Partnership, the General
Partner, Affiliates of the General Partner or the Apartment Housing only insofar
as they or any of them are part of the general public.

         (x)     Neither the Partnership nor the General Partner has any
liabilities, contingent or otherwise, which have not been disclosed in writing
to the Limited Partner and the Special Limited Partner and which in the
aggregate affect the ability of the Limited Partner to obtain the anticipated
benefits of its investment in the Partnership.

         (y)     Upon signing of the Construction Loan and receipt of the
Construction Lender's written start order, the General Partner will cause
construction of the Improvements to commence and thereafter will cause the
Contractor to diligently proceed with construction of the Improvements according
to the Plans and Specifications so that the Improvements can be completed by the
Completion Date.

         (z)    The General Partner will use its best efforts to ensure that any
architect retained by the Partnership or General Partner will have a policy of
professional liability insurance in an amount not less than $500,000, which
policy should remain in force for a period of at least two years after the
closing and funding of the Mortgage.

                                       38


         (aa)    The General Partner and/or an acceptable guarantor has and
shall maintain a net worth equal to at least $1,000,000 computed in accordance
with generally accepted accounting principles.

         (bb)    The Partnership's and General Partner's computer hardware and
software used to produce financial reports and tax return information are year
2000 compliant. To the best of the General Partner's knowledge after due inquiry
the Partnership's and General Partner's office machinery and equipment are year
2000 compliant; and the Management Agent's financial reporting systems and
office machinery and equipment are year 2000 compliant.

         The General Partner shall be liable to the Limited Partner for any
costs, damages, loss of profits, diminution in the value of its investment in
the Partnership, or other losses, of every nature and kind whatsoever, direct or
indirect, realized or incurred by the Limited Partner as a result of any
material breach of the representations and warranties set forth in this Section
9.12.


                                    ARTICLE X

                    ALLOCATIONS OF INCOME, LOSSES AND CREDITS

         Section 10.1 General. All items includable in the calculation of Income
or Loss not arising from a Sale or Refinancing, and all Tax Credits, shall be
allocated 99.98% to the Limited Partner, 0.01% to the Special Limited Partner,
and 0.01% to the General Partner.

         Section 10.2 Allocations From Sale or Refinancing. All Income and
Losses arising from a Sale or Refinancing shall be allocated between the
Partners as follows:

         (a)      As to Income:

                  (1)     first, an amount of Income equal to the aggregate
negative balances (if any) in the Capital Accounts of all Partners having
negative Capital Accounts (prior to taking into account the Sale or Refinancing
and the Distribution of the related Sale or Refinancing Proceeds, but after
giving effect to Distributions of Net Operating Income and allocations of other
Income and Losses pursuant to this Article X up to the date of the Sale or
Refinancing) shall be allocated to such Partners in proportion to their negative
Capital Account balances until all such Capital Accounts shall have zero
balances; and

                  (2)      the balance, if any, of such Income shall be
allocated  91% to the Limited  Partner and 9% to the General Partner.

         (b)     Losses shall be allocated 99.98% to the Limited Partner, 0.01%
to the Special Limited Partner, and 0.01% to the General Partner.

                                       39


         (c)     Notwithstanding the foregoing provisions of Section 10.2(a) and
(b), in no event shall any Losses be allocated to the Limited Partner or the
Special Limited Partner if and to the extent that such allocation would create
or increase an Adjusted Capital Account Deficit for the Limited Partner or the
Special Limited Partner. In the event an allocation of 99.98% or 0.01% of each
item includable in the calculation of Income or Loss not arising from a Sale or
Refinancing, would create or increase an Adjusted Capital Account Deficit for
the Limited Partner or the Special Limited Partner, respectively, then so much
of the items of deduction other than projected depreciation shall be allocated
to the General Partner instead of the Limited Partner or the Special Limited
Partner as is necessary to allow the Limited Partner or the Special Limited
Partner to be allocated 99.98% and 0.01%, respectively, of the items of Income
and Apartment Housing depreciation without creating or increasing an Adjusted
Capital Account Deficit for the Limited Partner or the Special Limited Partner,
it being the intent of the parties that the Limited Partner and the Special
Limited Partner always shall be allocated 99.98% and 0.01%, respectively, of the
items of Income not arising from a Sale or Refinancing and 99.98% and 0.01%,
respectively, of the Apartment Housing depreciation.

         Section 10.3   Special Allocations.  The following special allocations
shall be made in the following order.

         (a) Except as otherwise provided in Section 1.704-2(f) of the Treasury
Regulations, notwithstanding any other provisions of this Article X, if there is
a net decrease in Partnership Minimum Gain during any Partnership fiscal year,
each Partner shall be specially allocated items of Partnership income and gain
for such fiscal year (and, if necessary, subsequent fiscal years) in an amount
equal to such Person's share of the net decrease in Partnership Minimum Gain,
determined in accordance with Treasury Regulations Section 1.704-2(g).
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant thereto.
The items to be so allocated shall be determined in accordance with Section
1.704-2(f)(6) and 1.704-2(j)(2) of the Treasury Regulations. This Section
10.3(a) is intended to comply with the minimum gain chargeback requirement in
Section 1.704-2(f) of the Treasury Regulations and shall be interpreted
consistently therewith.

         (b) Except as otherwise provided in Section 1.704-2(i)(4) of the
Treasury Regulations, notwithstanding any other provision of this Article X, if
there is a net decrease in Partner Nonrecourse Debt Minimum Gain attributable to
a Partner Nonrecourse Debt during any Partnership fiscal year, each Person who
has a share of the Partner Nonrecourse Debt Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Section 1.704-2(i)(5) of
the Treasury Regulations, shall be specially allocated items of Partnership
income and gain for such fiscal year (and, if necessary, subsequent fiscal
years) in an amount equal to such Person's share of the net decrease in Partner
Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Treasury Regulations Section 1.704-2(i)(4).
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant thereto.
The items to be so allocated shall be determined in accordance with Sections
1.704-2(i)(4) and 1.704-2(j)(2) of the Treasury Regulations. This Section
10.3(b) is intended to comply with the minimum gain chargeback requirement in
Section 1.704-2(i)(4) of the Treasury Regulations and shall be interpreted
consistently therewith.

                                       40


         (c) In the event any Partner unexpectedly receives any adjustments,
allocations, or distributions described in Treasury Regulations Section
1.704-1(b)(2)(ii)(d)(4), Section 1.704-1(b)(2)(ii)(d)(5), or Section
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be specially
allocated to each such Partner in an amount and manner sufficient to eliminate,
to the extent required by the Treasury Regulations, the Adjusted Capital Account
Deficit of such Partner as quickly as possible, provided that an allocation
pursuant to this Section 10.3(c) shall be made if and only to the extent that
such Partner would have an Adjusted Capital Account Deficit after all other
allocations provided for in this Section 10.3 have been tentatively made as if
this Section 10.3(c) were not in the Agreement.

         (d) In the event any Partner has a deficit Capital Account at the end
of any Partnership fiscal year which is in excess of the sum of (i) the amount
such Partner is obligated to restore, and (ii) the amount such Partner is deemed
to be obligated to restore pursuant to the penultimate sentences of Treasury
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be
specially allocated items of Partnership income and gain in the amount of such
excess as quickly as possible, provided that an allocation pursuant to this
Section 10.3(d) shall be made if and only to the extent that such Partner would
have a deficit Capital Account in excess of such sum after all other allocations
provided for in this Section 10.3 have been tentatively made as if this Section
10.3(d) and Section 10.3(c) hereof were not in the Agreement.

         (e) Nonrecourse Deductions for any fiscal year shall be specially
allocated 99.98% to the Limited Partner, 0.01% to the Special Limited Partner,
and 0.01% to the General Partner.

         (f) Any Partner Nonrecourse Deductions for any fiscal year shall be
specially allocated to the Partner who bears the economic risk of loss with
respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable in accordance with Treasury Regulations Section
1.704-2(i)(1).

         (g) To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is
required, pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(2) or
Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital
Accounts as the result of a distribution to a Partner in complete liquidation of
his interest in the Partnership, the amount of such adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis) and such
gain or loss shall be specially allocated to the Partners in accordance with
their interests in the Partnership in the event that Treasury Regulations
Section 1.704-1 (b)(2)(iv)(m)(2) applies, or to the Partner to whom such
distribution was made in the event that Treasury Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.

         (h) To the extent the Partnership has taxable interest income with
respect to any promissory note pursuant to Section 483 or Section 1271 through
1288 of the Code:

                                       41


                  (1)  such  interest  income shall be  specially  allocated
to the Limited  Partner to whom such  promissory  note relates; and

                  (2)  the amount of such interest income shall be excluded from
the Capital Contributions credited to such Partner's Capital Account in
connection with payments of principal with respect to such promissory note.

         (i) In the event the adjusted tax basis of any investment tax credit
property that has been placed in service by the Partnership is increased
pursuant to Code Section 50(c), such increase shall be specially allocated among
the Partners (as an item in the nature of income or gain) in the same
proportions as the investment tax credit that is recaptured with respect to such
property is shared among the Partners.

         (j) Any reduction in the adjusted tax basis (or cost) of Partnership
investment tax credit property pursuant to Code Section 50(c) shall be specially
allocated among the Partners (as an item in the nature of expenses or losses) in
the same proportions as the basis (or cost) of such property is allocated
pursuant to Treasury Regulations Section 1.46-3(f)(2)(i).

         (k) Any income, gain, loss or deduction realized as a direct or
indirect result of the issuance of an interest in the Partnership by the
Partnership to a Partner (the "Issuance Items") shall be allocated among the
Partners so that, to the extent possible, the net amount of such Issuance Items,
together with all other allocations under this Agreement to each Partner, shall
be equal to the net amount that would have been allocated to each such Partner
if the Issuance Items had not been realized.

         (l) If any Partnership expenditure treated as a deduction on its
federal income tax return is disallowed as a deduction and treated as a
distribution pursuant to Section 731(a) of the Code, there shall be a special
allocation of gross income to the Partner deemed to have received such
distribution equal to the amount of such distribution.

         (m) The allocation to the General Partner of each material item of
Partnership income, loss, deduction or credit will not be less than 0.01% of
each such item at all times during the existence of the Partnership.

         (n) Interest deduction on the Partnership  indebtedness referred to in
Section 6.3 shall be allocated 100% to the General Partner.

         (o) In the event all or part of the Incentive Management Fee is
disallowed by the Internal Revenue Service, then any interest or income
chargeable to the Partnership for such disallowance shall be allocated to the
General Partner.

                                       42


         Section 10.4 Curative Allocations. The allocations set forth in
Sections 10.2(c), 10.3(a), 10.3(b), 10.3(c), 10.3(d), 10.3(e), 10.3(f), and
10.3(g) hereof (the "Regulatory Allocations") are intended to comply with
certain requirements of the Treasury Regulations. It is the intent of the
Partners that, to the extent possible, all Regulatory Allocations shall be
offset either with other Regulatory Allocations or with special allocations of
other items of Partnership income, gain, loss, or deduction pursuant to this
Section 10.4. Therefore, notwithstanding any other provision of this Article X
(other than the Regulatory Allocations), with the Consent of the Special Limited
Partner, the General Partner shall make such offsetting special allocations of
Partnership income, gain, loss, or deduction in whatever manner the General
Partner, with the Consent of the Special Limited Partner, determines appropriate
so that, after such offsetting allocations are made, each Partner's Capital
Account balance is, to the extent possible, equal to the Capital Account balance
such Partner would have had if the Regulatory Allocations were not part of the
Agreement and all Partnership items were allocated pursuant to Sections 10.1,
10.2(a), 10.2(b), 10.3(h), 10.3(i), 10.3(j), 10.3(k), 10.3(l), 10.3(m), 10.3(n)
and 10.5. In exercising its authority under this Section 10.4, the General
Partner shall take into account future Regulatory Allocations under Section
10.3(a) and 10.3(b) that, although not yet made, are likely to offset other
Regulatory Allocations previously made under Sections 10.3(e) and 10.3(f).

         Section 10.5      Other Allocation Rules.

         (a) The basis (or cost) of any Partnership investment tax credit
property shall be allocated among the Partners in accordance with Treasury
Regulations Section 1.46-3(f)(2)(i). All Tax Credits (other than the investment
tax credit) shall be allocated among the Partners in accordance with applicable
law. Consistent with the foregoing, the Partners intend that LIHTC will be
allocated 99.98% to the Limited Partner, 0.01% to the Special Limited Partner,
and 0.01% to the General Partner.

         (b) In the event Partnership investment tax credit property is disposed
of during any taxable year, profits for such taxable year (and, to the extent
such profits are insufficient, profits for subsequent taxable years) in an
amount equal to the excess, if any, of (1) the reduction in the adjusted tax
basis (or cost) of such property pursuant to Code Section 50(c), over (2) any
increase in the adjusted tax basis of such property pursuant to Code Section
50(c) caused by the disposition of such property, shall be excluded from the
profits allocated pursuant to Section 10.1 and Section 10.2(a) hereof and shall
instead be allocated among the Partners in proportion to their respective shares
of such excess, determined pursuant to Section 10.3(i) and 10.3(j) hereof. In
the event more than one item of such property is disposed of by the Partnership,
the foregoing sentence shall apply to such items in the order in which they are
disposed of by the Partnership, so the profits equal to the entire amount of
such excess with respect to the first such property disposed of shall be
allocated prior to any allocations with respect to the second such property
disposed of, and so forth.

         (c) For purposes of determining the Income, Losses, or any other items
allocable to any period, Income, Losses, and any such other items shall be
determined on a daily, monthly, or other basis, as determined by the General
Partner with the Consent of the Special Limited Partner, using any permissible
method under Code Section 706 and the Treasury Regulations thereunder.

         (d) Solely for purposes of determining a Partner's  proportionate share
of the "excess  nonrecourse  liabilities" of the Partnership within the meaning
of Treasury  Regulations  Section 1.752-3(a)(3),  the Partners'  interests in
Partnership profits are as follows:  Limited Partner: 99.98%; Special Limited
Partner: 0.01%; General Partner: 0.01%.

                                       43


         (e) To the extent permitted by Section 1.704-2(h)(3) of the Treasury
Regulations, the General Partner shall endeavor to treat Distributions as having
been made from the proceeds of a Nonrecourse Liability or a Partner Nonrecourse
Debt only to the extent that such Distributions would cause or increase an
Adjusted Capital Account Deficit for any Partner who is not a General Partner.

         (f) In the event that the deduction of all or a portion of any fee paid
or incurred out of Net Operating Income by the Partnership to a Partner or an
Affiliate of a Partner is disallowed for federal income tax purposes by the
Internal Revenue Service with respect to a taxable year of the Partnership, the
Partnership shall then allocate to such Partner an amount of gross income of the
Partnership for such year equal to the amount of such fee as to which the
deduction is disallowed.

         Section 10.6 Tax Allocations: Code Section 704(c). In accordance with
Code Section 704(c) and the Treasury Regulations thereunder, income, gain, loss,
and deduction with respect to any property contributed to the capital of the
Partnership shall, solely for tax purposes, be allocated among the Partners so
as to take account of any variation between the adjusted basis of such property
to the Partnership for federal income tax purposes and its initial Gross Asset
Value (computed in accordance with Section 1.38(a) hereof).

         In the event the Gross Asset Value of any Partnership asset is adjusted
pursuant to Section 1.38(b) hereof, subsequent allocations of income, gain,
loss, and deduction with respect to such asset shall take account of any
variation between the adjusted basis of such asset for federal income tax
purposes and its Gross Asset Value in the same manner as under Code Section
704(c) and the Treasury Regulations thereunder.

         Any elections or other decisions relating to such allocations shall be
made by the General Partner with the Consent of the Special Limited Partner in
any manner that reasonably reflects the purpose and intention of this Agreement.
Allocations pursuant to this Section 10.6 are solely for purposes of federal,
state, and local taxes and shall not affect, or in any way be taken into account
in computing, any Person's Capital Account or share of Income, Losses, other
items, or distributions pursuant to any provision of this Agreement.

         Section 10.7 Allocation Among Limited Partners. In the event that the
Interest of the Limited Partner hereunder is at any time held by more than one
Limited Partner all items which are specifically allocated to the Limited
Partner for any month pursuant to this Article X shall be apportioned among such
Persons according to the ratio of their respective profit-sharing interests in
the Partnership at the last day of such month.

         Section 10.8 Allocation Among General Partners. In the event that the
Interest of the General Partner hereunder is at any time held by more than one
General Partner all items which are specifically allocated to the General
Partner for any month pursuant to this Article X shall be apportioned among such
Persons in such percentages as may from time to time be determined by agreement
among them without amendment to this Agreement or consent of the Limited Partner
or Consent of the Special Limited Partner.

                                       44


         Section 10.9 Modification of Allocations. The provisions of Articles X
and XI and other provisions of this Agreement are intended to comply with
Treasury Regulations Section 1.704 and shall be interpreted and applied in a
manner consistent with such section of the Treasury Regulations. In the event
that the General Partner determines, in its sole discretion, that it is prudent
to modify the manner in which the Capital Accounts of the Partners, or any debit
or credit thereto, are computed in order to comply with such section of the
Treasury Regulations, the General Partner may make such modification, but only
with the Consent of the Special Limited Partner, to the minimum extent
necessary, to effect the plan of allocations and Distributions provided for
elsewhere in this Agreement. Further, the General Partner shall make any
appropriate modifications, but only with the Consent of the Special Limited
Partner, in the event it appears that unanticipated events (e.g., the existence
of a Partnership election pursuant to Code Section 754) might otherwise cause
this Agreement not to comply with Treasury Regulation Section 1.704.


                                   ARTICLE XI

                                  DISTRIBUTION

         Section 11.1 Distribution of Net Operating Income. Except as otherwise
provided, Net Operating Income for each fiscal year shall be distributed within
seventy-five (75) days following each calendar year and shall be applied in the
following order of priority:

         (a) to pay the Deferred Management Fee, if any;

         (b) to pay the current  Reporting  Fee and then to pay any accrued
Reporting  Fees which have not been paid in full from previous years;

         (c) to pay the Development Fee;

         (d) to pay the Operating Loans, if any, as referenced in Section
6.3 of this Agreement, limited to 50% of the Net Operating Income remaining
after reduction for the payments made pursuant to subsections (a) through (c) of
this Section 11.1; and

         (e) to pay the Incentive Management Fee;

         (f) to pay the Tax Credit Compliance Fee; and

         (g) the balance, 30% to the Limited Partner and 70% to the General
Partner.

                                       45


       Section 11.2   Distribution  of Sale or  Refinancing  Proceeds.  Sale or
Refinancing  Proceeds shall be distributed in the following order:

         (a) to the payment of the Mortgage and other matured debts and
liabilities of the Partnership, other than accrued payments, debts or other
liabilities owing to Partners or former Partners;

         (b) to any accrued payments, debts or other liabilities owing to the
Partners or former Partners, including, but not limited to, accrued Reporting
Fees and Operating Loans, to be paid prorata if necessary;

         (c) to the establishment of any reserves which the General Partner,
with the Consent of the Special Limited Partner, shall deem reasonably necessary
for contingent, unmatured or unforeseen liabilities or obligations of the
Partnership;

         (d) to the Limited Partner in an amount equal to its Capital
Contribution;

         (e) to the Special Limited Partner in an amount equal to its Capital
Contribution;

         (f) to the General Partner in an amount equal to its Capital
Contribution; and

         (g) thereafter, 30% to the Limited Partner and 70% to the General
Partner.


                                   ARTICLE XII

                              TRANSFERS OF LIMITED
                      PARTNER'S INTEREST IN THE PARTNERSHIP

         Section 12.1 Assignment of Limited Partner's Interest. The Limited
Partner and Special Limited Partner shall have the right to assign all or any
part of their respective Interests to any other Person, whether or not a
Partner, upon satisfaction of the following:

         (a) a written instrument in form and substance satisfactory to the
General Partner and its counsel, setting forth the name and address of the
proposed transferee, the nature and extent of the Interest which is proposed to
be transferred and the terms and conditions upon which the transfer is proposed
to be made, stating that the Assignee accepts and agrees to be bound by all of
the terms and provisions of this Agreement, and providing for the payment of all
reasonable expenses incurred by the Partnership in connection with such
assignment, including but not limited to the cost of preparing any necessary
amendment to this Agreement;

         (b) upon consent of the General Partner to such assignment, which
consent shall not be unreasonably withheld;

                                       46


         (c) upon receipt by the General Partner of the Assignee's written
representation that the Partnership Interest is to be acquired by the Assignee
for the Assignee's own account for long-term investment and not with a view
toward resale, fractionalization, division or distribution thereof; and

         (d) Notwithstanding any provision to the contrary, the Limited Partner
may assign its Interest to an Affiliate or assign its Interest to USbank or its
successors as collateral to secure a capital contribution loan without
satisfying the conditions of Sections 12.1(a) through (c) above.

         THE LIMITED PARTNERSHIP INTEREST AND THE SPECIAL LIMITED PARTNERSHIP
INTEREST DESCRIBED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AS AMENDED OR UNDER ANY STATE SECURITIES LAW. THESE INTERESTS MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER APPLICABLE FEDERAL AND
STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

         Section 12.2 Effective Date of Transfer. Any assignment of a Limited
Partner's Interest or Special Limited Partner's Interest pursuant to Section
12.1 shall become effective as of the last day of the calendar month in which
the last of the conditions to such assignment are satisfied.

         Section 12.3 Invalid Assignment. Any purported assignment of an
Interest of a Limited Partner or Special Limited Partner otherwise than in
accordance with Section 12.1 or Section 12.6 shall be of no effect as between
the Partnership and the purported assignee and shall be disregarded by the
General Partner in making allocations and Distributions hereunder.

         Section 12.4 Assignee's Rights to Allocations and Distributions. An
Assignee shall be entitled to receive allocations and Distributions from the
Partnership attributable to the Interest acquired by reason of any permitted
assignment from and after the first day of the calendar month of the transfer of
such Interest as provided in Section 12.2. The Partnership and the General
Partner shall be entitled to treat the assignor of such Partnership Interest as
the absolute owner thereof in all respects, and shall incur no liability for
allocations and Distributions made in good faith to such assignor, until such
time as the written instrument of assignment has been received by the
Partnership.

         Section 12.5  Substitution of Assignee as Limited Partner or Special
Limited Partner.

         (a) An Assignee shall not have the right to become a Substitute Limited
Partner or Substitute Special Limited Partner in place of his assignor unless
the written consent of the General Partner to such substitution shall have been
obtained, which consent, in the General Partner's absolute discretion, may be
withheld; except that an Assignee which is an Affiliate of the Limited Partner
or Special Limited Partner, or USbank or its successors, may become a Substitute
Limited Partner or Substitute Special Limited Partner without the consent of the
General Partner.

                                       47


         (b) A nonadmitted transferee of a Limited Partner's Interest or Special
Limited Partner's Interest in the Partnership shall only be entitled to receive
that share of allocations, Distributions and respect to the Interest
transferred, and shall have no right to obtain any information on account of the
Partnership's transactions, to inspect the Partnership's books and records or
have any other of the rights and privileges of a Limited Partner or Special
Limited Partner, provided, however, that the Partnership shall, if a transferee
and transferor jointly advise the General Partner in writing of a transfer of an
Interest in the Partnership, furnish the transferee with pertinent tax
information at the end of each fiscal year of the Partnership.

         (c) The General Partner may elect to treat a transferee of a
Partnership Interest who has not become a Substitute Limited Partner or
substitute Special Limited Partner as a Substitute Limited Partner or substitute
Special Limited Partner, as the case may be, in the place of its transferor
should the General Partner determine in its absolute discretion that such
treatment is in the best interest of the Partnership.

         Section 12.6 Death, Bankruptcy, Incompetency, etc. of a Limited
Partner. Upon the death, dissolution, adjudication of bankruptcy, or
adjudication of incompetency or insanity of a Limited Partner or Special Limited
Partner, such Partner's executors, administrators or legal representatives shall
have all the rights of a Limited Partner or Special Limited Partner, as the case
may be, for the purpose of settling or managing such Partner's estate, including
such power as such Partner possessed to constitute a successor as a transferee
of its Interest in the Partnership and to join with such transferee in making
the application to substitute such transferee as a Partner. However, such
executors, administrators or legal representatives will not have the right to
become Substitute Limited Partners or substitute Special Limited Partners in the
place of their respective predecessors-in-interest unless the General Partner
shall so consent.


                                  ARTICLE XIII

                     WITHDRAWAL, REMOVAL AND REPLACEMENT OF
                                 GENERAL PARTNER

         Section 13.1    Withdrawal of General Partner.

         (a) The General Partner may not Withdraw (other than as a result of an
Involuntary Withdrawal) without the Consent of the Special Limited Partner, and,
to the extent required, of FmHA. Withdrawal shall be conditioned upon the
agreement of the Special Limited Partner to be admitted as a successor General
Partner, or if the Special Limited Partner declines to be admitted as a
successor General Partner then on the agreement of one or more Persons who
satisfy the requirements of Section 13.5 of this Agreement to be admitted as
successor General Partner(s).

         (b) Each General Partner shall indemnify and hold harmless the
Partnership and all Partners from its Withdrawal in violation of Section 13.1(a)
hereof. Each General Partner shall be liable for damages to the Partnership
resulting from its Withdrawal in violation of Section 13.1(a).

         Section 13.2      Removal of General Partner.

         (a) The Special Limited Partner or the Limited Partner, or both of
them, may remove the General Partner for cause if such General Partner, its
officers or directors, if applicable, has:

                                       48


                  (1)  been subject to Bankruptcy;

                  (2)  committed  any  fraud,  willful  misconduct,  breach of
fiduciary  duty or other  negligent  conduct in the performance of its duties
under this Agreement;

                  (3)  been convicted of, or entered into a plea of guilty to,
a felony;

                  (4)  been disbarred from participating in any federal or state
housing program;

                  (5)  made personal use of Partnership funds or properties;

                  (6)  violated the terms of the Mortgage and such violation
prompts USDA Rural Development to issue a default letter or acceleration notice
to the Partnership or General Partner;

                  (7)  failed to provide any loan, advance, Capital Contribution
or any other payment to the Partnership, the Limited Partner or the Special
Limited Partner required under this Agreement;

                  (8)      breached any representation, warranty or covenant
contained in this Agreement;

                  (9)  caused the Projected Tax Credits to be allocated to the
Partners for a term longer than the Tax Credit Period unless the provisions of
Section 7.4(e) of this Agreement apply;

                  (10) failed to provide,  or to cause to be provided,  the
construction  monitoring  documents required in Section 14.3(a) of this
Agreement;

                  (11) violated any federal or state tax law which causes a
recapture of LIHTC;

                  (12) violated the terms of the Construction Loan and such
violation prompts Citizens Bank to issue a default letter or acceleration notice
to the Partnership or General Partner;

                  (13) allowed the construction budget to be out-of-balance;

                  (14) failed to obtain the consent of a Partner where such
consent is required pursuant to this Agreement;

                  (15) failed to place the Apartment Housing in service by
June 1, 2002;

                  (16) failed to achieve 100% occupancy of the Apartment Housing
by August 1, 2002;

                  (17) failed to obtain Permanent Mortgage Commencement by
June 1, 2002; or

                  (18) failed during any consecutive six-month period during the
Compliance Period to rent 85% or more of the total apartment units in the
Apartment Housing to Qualified Tenants; notwithstanding, if such failure is the
result of Force Majeure or if such failure is cured within 120 days after the
end of the six-month period, then this removal provision shall not apply.

                                       49


         (b) Written notice of the removal for cause of the General Partner
("Removal Notice") shall set forth the reasons for removal and shall be served
by the Special Limited Partner or the Limited Partner, or both of them, upon the
General Partner either by mail, or by personal service. If Section 13.2(a)(2),
(6), (7) or (8) is the basis for the removal for cause, then the General Partner
shall have thirty days from receipt of the Removal Notice in which to cure the
removal condition; except that in regard to the Mortgage the cure period shall
be the sooner of thirty days or ten days prior to the expiration of the cure
period referenced in the loan documents, if any. If the condition for the
removal for cause is not cured within the thirty day cure period then the
General Partner's removal shall become effective on the first day following the
expiration of the cure period, or, thirty-one days from the General Partner's
receipt of the Removal Notice. If the removal for cause is for a condition
referenced in Sections 13.2(a)(1), (3), (4), (5), (9), (10), (11) or (12) then
the removal shall become effective upon the General Partner's receipt of the
Removal Notice. Upon the General Partner's removal, the General Partner shall
deliver to the Special Limited Partner within five business days of the
termination of the cure period, or five business days of the Removal Notice all
Partnership books and records including all bank signature cards and an
authorization to change the signature on the signature cards from the General
Partner to the Special Limited Partner, or a successor general partner so
nominated by the Limited Partner and Special Limited Partner. The Partner's
recognize and acknowledge that if the General Partner fails to provide the
Partnership books and records upon the General Partner's removal then the
remaining Partners may suffer irreparable injury. Therefore, in the event the
General Partner does not adhere to the provisions of this Section 13.2(b), and
in addition to other rights or remedies which may be provided by law and equity
or this Agreement, the Limited Partner and/or Special Limited Partner shall have
the right to specific performance to compel the General Partner to perform its
obligation under this Section and the Limited Partner and/or Special Limited
Partner may bring such action, and other actions to enforce the removal, by way
of temporary and/or permanent injunctive relief.

         Section 13.3 Effects of a Withdrawal. In the event of a Withdrawal, the
entire Interest of the Withdrawing General Partner shall immediately and
automatically terminate on the effective date of such Withdrawal, and such
General Partner shall immediately cease to be a General Partner, shall have no
further right to participate in the management or operation of the Partnership
or the Apartment Housing or to receive any allocations or Distributions from the
Partnership or any other funds or assets of the Partnership, except as
specifically set forth below. In the event of a Withdrawal, any or all executory
contracts, including but not limited to the Management Agreement, between the
Partnership and the Withdrawing General Partner or its Affiliates may be
terminated by the Partnership, with the Consent of the Special Limited Partner,
upon written notice to the party so terminated. Furthermore, notwithstanding
such Withdrawal, the Withdrawing General Partner shall be and shall remain,
liable as a General Partner for all liabilities and obligations incurred by the
Partnership or by the General Partner prior to the effective date of the
Withdrawal, or which may arise upon such Withdrawal. Any remaining Partner shall
have all other rights and remedies against the Withdrawing General Partner as
provided by law or under this Agreement. The General Partner agrees that in the
event of its Withdrawal it will indemnify and hold the Limited Partner and the
Special Limited Partner harmless from and against all losses, costs and expenses
incurred in connection with the Withdrawal, including, without limitation, all
legal fees and other expenses of the Limited Partner and the Special Limited
Partner in connection with the transaction. The following additional provisions
shall apply in the event of a Withdrawal.

                                       50


         (a) In the event of a Withdrawal which is not an Involuntary
Withdrawal, or an Involuntary Withdrawal in accordance with Section 13.2(a), the
Withdrawing General Partner shall have no further right to receive any future
allocations or Distributions from the Partnership or any other funds or assets
of the Partnership, nor shall it be entitled to receive or to be paid by the
Partnership any further payments of fees (including fees which have been earned
but are unpaid) or to be repaid any outstanding advances or loans made by it to
the Partnership or to be paid any amount for its former Interest. From and after
the effective date of such Withdrawal, the former rights of the Withdrawing
General Partner to receive or to be paid such allocations, Distributions, funds,
assets, fees or repayments shall be assigned to the other General Partner or
General Partners (which may include the Special Limited Partner), or if there is
no other general partner of the Partnership at that time, to the Special Limited
Partner.

         (b) In the event of an Involuntary Withdrawal, except as provided in
the preceding paragraph or in Section 13.3(b)(2) below, the Withdrawing General
Partner shall have no further right to receive any future allocations or
Distributions from the Partnership or any other funds or assets of the
Partnership, provided that accrued and payable fees (i.e., fees earned but
unpaid as of the date of Withdrawal) owed to the Withdrawing General Partner,
and any outstanding loans of the Withdrawing General Partner to the Partnership,
shall be paid to the Withdrawing General Partner in the manner and at the times
such fees and loans would have been paid had the Withdrawing General Partner not
Withdrawn. The Interest of the General Partner shall be purchased as follows.

                  (1) If the Involuntary Withdrawal does not arise from removal
for cause under Section 13.2(a) hereof, and if the Partnership is to be
continued with one or more remaining or successor General Partner(s), the
Partnership, with the Consent of the Special Limited Partner, may, but is not
obligated to, purchase the Interest of the Withdrawing General Partner in
Partnership allocations, Distributions and capital. The purchase price of such
Interest shall be its Fair Market Value as determined by agreement between the
Withdrawing General Partner and the Special Limited Partner, or, if they cannot
agree, by arbitration in accordance with the then current rules of the American
Arbitration Association. The cost of such arbitration shall be borne equally by
the Withdrawing General Partner and the Partnership. The purchase price shall be
paid by the Partnership by delivering to the General Partner or its
representative the Partnership's non-interest bearing unsecured promissory note
payable, if at all, upon liquidation of the Partnership in accordance with
Section 11.2(b). The note shall also provide that the Partnership may prepay all
or any part thereof without penalty.

                  (2) If the Involuntary Withdrawal does not arise from removal
for cause under Section 13.2(a) hereof, and if the Partnership is to be
continued with one or more remaining or successor General Partner(s), and if the
Partnership does not purchase the Interest of the Withdrawing General Partner in
Partnership allocations, Distributions and capital, then the Withdrawing General
Partner shall retain its Interest in such items, but such Interest shall be held
as a special limited partner.

                                       51


         (c) Notwithstanding the provisions of Section 13.3(b), if the
Involuntary Withdrawal arises from removal for cause as set forth in Section
13.2(a) hereof, the Withdrawn General Partner shall have no further right to
receive any future allocations or Distributions from the Partnership or any
other funds or assets of the Partnership, nor shall it be entitled to receive or
to be paid by the Partnership or any Partners or successor partners, any further
payments of fees (including fees which have been earned but remain unpaid) or to
be repaid any outstanding advances or loans made by it to the Partnership.

         Section 13.4 Successor General Partner. Upon the occurrence of an event
giving rise to a Withdrawal of a General Partner, any remaining General Partner,
or, if there be no remaining General Partner, the Withdrawing General Partner or
its legal representative, shall promptly notify the Special Limited Partner of
such Withdrawal (the "Withdrawal Notice"). Whether or not the Withdrawal Notice
shall have been sent as provided herein, the Special Limited Partner shall have
the right to become a successor General Partner (and to become the successor
managing General Partner if the Withdrawing General Partner was previously the
managing General Partner). In order to effectuate the provisions of this Section
13.4 and the continuance of the Partnership, the Withdrawal of a General Partner
shall not be effective until the expiration of 120 days from the date on which
occurred the event giving rise to the Withdrawal, unless the Special Limited
Partner shall have elected to become a successor General Partner as provided
herein prior to expiration of such 120-day period, whereupon the Withdrawal of
the General Partner shall be deemed effective upon the notification of all the
other Partners by the Special Limited Partner of such election.

         Section 13.5 Admission of Additional or Successor General Partner. No
Person shall be admitted as an additional or successor General Partner unless
(a) such Person shall have agreed to become a General Partner by a written
instrument which shall include the acceptance and adoption of this Agreement;
(b) the Consent of the Special Limited Partner to the admission of such Person
as a substitute General Partner, which consent may be withheld in the discretion
of the Special Limited Partner, shall have been given; and (c) such Person shall
have executed and acknowledged any other instruments which the Special Limited
Partner shall reasonably deem necessary or appropriate to affect the admission
of such Person as a substitute General Partner. If the foregoing conditions are
satisfied, this Agreement shall be amended in accordance with the provisions of
the Act, and all other steps shall be taken which are reasonably necessary to
effect the Withdrawal of the Withdrawing General Partner and the substitution of
the successor General Partner. Nothing contained herein shall reduce the Limited
Partner's Interest or the Special Limited Partner's Interest in the Partnership.

         Section 13.6 Transfer of Interest. Except as otherwise provided herein,
the General Partner may not Withdraw from the Partnership, or enter into any
agreement as the result of which any Person shall acquire an Interest in the
Partnership, without the Consent of the Special Limited Partner.

         Section 13.7 No Goodwill Value. At no time during continuation of the
Partnership shall any value ever be placed on the Partnership name, or the right
to its use, or to the goodwill appertaining to the Partnership or its business,
either as among the Partners or for the purpose of determining the value of any
Interest, nor shall the legal representatives of any Partner have any right to
claim any such value. In the event of a termination and dissolution of the
Partnership as provided in this Agreement, neither the Partnership name, nor the
right to its use, nor the same goodwill, if any, shall be considered as an asset
of the Partnership, and no valuation shall be put thereon for the purpose of
liquidation or distribution, or for any other purpose whatsoever.

                                       52


                                   ARTICLE XIV

                          BOOKS AND ACCOUNTS, REPORTS,
                      TAX RETURNS, FISCAL YEAR AND BANKING

         Section 14.1    Books and Accounts.

         (a) The General Partner shall cause the Partnership to keep and
maintain at its principal executive office full and complete books and records
which shall include each of the following:

                  (1) a current list of the full name and last known business or
residence address of each Partner set forth in alphabetical order together with
the Capital Contribution and the share in Income and Losses of each Partner;

                  (2) a copy of the Certificate of Limited Partnership and all
certificates of amendment thereto, together with executed copies of any powers
of attorney pursuant to which any certificate has been executed;

                  (3) copies of the Partnership's  federal,  state and local
income tax information  returns and reports,  if any, for the six most recent
taxable years;

                  (4) copies of the original of this Agreement and all
amendments thereto;

                  (5) financial statements of the Partnership for the six most
recent fiscal years;

                  (6) the Partnership's books and records for at least the
current and past three fiscal years; and

                  (7) in regard to the first tenants to occupy the apartment
units in the Apartment Housing, copies of all tenant files including completed
applications, completed questionnaires or checklist of income and assets,
documentation of third party verification of income and assets, and income
certification forms (LIHTC specific).

         (b) Upon the request of the Limited Partner, the General Partner shall
promptly deliver to the Limited Partner, at the expense of the Partnership, a
copy of the information set forth in Section 14.1(a) above. The Limited Partner
shall have the right upon reasonable request and during normal business hours to
inspect and copy any of the foregoing, or any of the other books and records of
the Partnership or the Apartment Housing, at its own expense.

                                       53


         Section 14.2      Accounting Reports.

         (a) By February 20 of each calendar year the General Partner shall
provide to the Limited Partner and the Special Limited Partner all tax
information necessary for the preparation of their federal and state income tax
returns and other tax returns with regard to the jurisdiction(s) in which the
Partnership is formed and in which the Apartment Housing is located.

         (b) By March 1 of each calendar year the General Partner shall send to
the Limited Partner and the Special Limited Partner: (1) a balance sheet as of
the end of such fiscal year and statements of income, Partners' equity and
changes in cash flow for such fiscal year prepared in accordance with generally
accepted accounting principles and accompanied by an auditor's report containing
an opinion of the Partnership's Accountants; (2) a report (which need not be
audited) of any Distributions made at any time during the fiscal year,
separately identifying Distributions from Net Operating Income for the fiscal
year, Net Operating Income for prior years, Sale or Refinancing Proceeds, and
reserves; and (3) a report setting forth the amount of all fees and other
compensation and Distributions and reimbursed expenses paid by the Partnership
for the fiscal year to the General Partner or Affiliates of the General Partner
and the services performed in consideration therefor, which report shall be
verified by the Partnership's Accountants, with the method of verification to
include, at a minimum, a review of the time records of individual employees, the
costs of whose services were reimbursed, and a review of the specific nature of
the work performed by each such employee, all in accordance with generally
accepted auditing standards and, accordingly, including such tests of the
accounting records and such other auditing procedures as the Accountants
consider appropriate in the circumstances.

         (c) Within 60 days after the end of each fiscal quarter in which a Sale
or Refinancing of the Apartment Housing occurs, the General Partner shall send
to the Limited Partner and the Special Limited Partner a report as to the nature
of the Sale or Refinancing and as to the Income and Losses for tax purposes and
proceeds arising from the Sale or Refinancing.

         Section 14.3  Other Reports.  The General  Partner shall provide to the
Limited  Partner and the Special  Limited  Partner the following reports:

         (a) during construction, on a regular basis, but in no event less than
once a month, a copy of the Inspecting Architect's report and other construction
reports including, but not limited to, (1) the name of each person performing
work on the Improvements or providing materials for the Improvements, the work
performed or materials supplied by said person and the code number corresponding
to the line item in the Construction Budget which the person will be paid, (2)
an original AIA Document G702, or similar form acceptable to the Special Limited
Partner, (3) if not included in the Inspecting Architect's report or the AIA
Document G702, a line item break-down of the Construction Budget (which shall
include, description of work to be performed or materials to be supplied; total
dollar amount of the work or materials; dollar amount of work previously
completed and paid or materials supplied and paid; dollar amount of work or
materials to be paid per the current disbursement request; dollar amount of
materials stored; total dollar amount of work completed and stored as of the
current disbursement date; percentage of completion; dollar amount of work or
materials needed to complete the line item; and retainage), (4) a reconciliation
of the sources and uses to determine that the Construction Budget is in balance
and there are sufficient funds to complete the construction of the Improvements,
and (5) copies of lien releases, or waivers, from the Contractor and all
sub-contractors or material suppliers who were paid the previous month;

                                       54


         (b) during the rent-up phase, and continuing until the end of the first
six-month period during which the Apartment Housing has a sustained occupancy of
95% or better, by the twentieth day of each month within such period a copy of
the previous month's rent roll (through the last day of the month) and a tenant
LIHTC compliance worksheet similar to the monthly initial tenant certification
worksheet included in Exhibit "G" attached hereto and incorporated herein by
this reference;

         (c) a quarterly tax credit compliance report similar to the worksheet
included in Exhibit "G" due on or before April 30 of each year for the first
quarter, July 31 of each year for the second quarter, October 31 of each year
for the third quarter and January 31 of each year for the fourth quarter. In
order to verify the reliability of the information being provided on the
compliance report the Limited Partner may request a small sampling of tenant
files to be provided. The sampling will include, but not be limited to, copies
of tenant applications, certifications and third party verifications used to
qualify tenants. If any inaccuracies are found to exist on the tax credit
compliance report or any items of noncompliance are discovered then the sampling
will be expanded as determined by the Limited Partner;

         (d) a quarterly report on operations, in the form attached hereto as
Exhibit "G", due on or before April 30 of each year for the first quarter of
operations, July 31 of each year for the second quarter of operations, October
31 of each year for the third quarter of operations and January 31 of each year
for the fourth quarter of operations which shall include, but is not limited to,
an unaudited income statement showing all activity in the reserve accounts
required to be maintained pursuant to Section VIII of this Agreement, statement
of income and expenses, balance sheet, rent roll as of the end of each calendar
quarter of each year, and third party verification of current utility allowance;

         (e) by September 15 of each year, an estimate of LIHTC for that year;

         (f) if the Apartment Housing receives a reservation of LIHTC in one
year but will not complete the construction and rent-up until a later year, an
audited cost certification together with the Accountant's work papers verifying
that the Partnership has expended the requisite 10% of the reasonably expected
cost basis to meet the carryover test provisions of Section 42 of the Code. Such
certification shall be provided to the Limited Partner and Special Limited
Partner by December 31 of the year during which the reservation was received.
Furthermore, if materials and supplies are purchased to meet the 10% requirement
then the General Partner shall provide to the Limited Partner an opinion of
counsel that title to the materials and supplies pass to the Partnership and
that the Partnership bears the risk of loss of the materials and supplies;

         (g) during the Compliance Period, no later than the day any such
certification is filed, copies of any certifications which the Partnership must
furnish to federal or state governmental authorities administering the Tax
Credit program including, but not limited to, copies of all annual tenant
recertifications required under Section 42 of the Code;

                                       55


         (h) by the annual renewal date each and every year, an executed
original or certified copy of each and every Insurance policy or certificate
required by the terms of this Agreement;

         (i) by the payment date of the real estate  property taxes each and
every year  verification  that the same has been paid in full;

         (j) on or before March 15th of each calendar  year, a copy of the
General  Partner's  updated  financial  statement as of December 31 of the
previous year;

         (k) on or before November 1 of each calendar year, a copy of the
following year's proposed operating budget. Each such Budget shall contain all
the anticipated Cash Expenses of the Partnership. Such Budget shall only be
adopted with the Consent of the Special Limited Partner; and

         (l) notice of the occurrence, or of the likelihood of occurrence, of
any event which has had a material adverse effect upon the Apartment Housing or
the Partnership, including, but not limited to, any breach of any of the
representations and warranties set forth in Section 9.12 of this Agreement, and
any inability of the Partnership to meet its cash obligations as they become
payable, within ten days after the occurrence of such event.

         Section 14.4 Late Reports. If the General Partner does not fulfill its
obligations under Section 14.2 and Section 14.3 within the time periods set
forth therein, the General Partner, using its own funds, shall pay as damages
the sum of $100 per week (plus interest at the rate established by Section 6.3
of this Agreement) to the Limited Partner until such obligations shall have been
fulfilled. If the General Partner shall so fail to pay, the General Partner and
its Affiliates shall forthwith cease to be entitled to any fees hereunder (other
than the Development Fee) and/or to the payment of any Net Operating Income or
Sale or Refinancing Proceeds to which the General Partner may otherwise be
entitled hereunder. Payments of fees and Distributions shall be restored only
upon payment of such damages in full.

         Section 14.5 Annual Site Visits. On an annual basis a representative of
the Limited Partner, at the Limited Partner's expense, will conduct a site visit
which will include, in part, an inspection of the property, a review of the
office and tenant files and an interview with the property manager. The Limited
Partner may, in its sole discretion, cancel all or any part of the annual site
visit.

         Section 14.6 Tax Returns. The General Partner shall cause income tax
returns for the Partnership to be prepared and timely filed with the appropriate
federal, state and local taxing authorities.

         Section 14.7 Fiscal Year. The fiscal year of the Partnership shall be
the calendar year or such other period as may be approved by the Internal
Revenue Service for federal income tax purposes.

                                       56


         Section 14.8 Banking. All funds of the Partnership shall be deposited
in a separate bank account or accounts as shall be determined by the General
Partner with the Consent of the Special Limited Partner. All withdrawals
therefrom shall be made upon checks signed by the General Partner or by any
person authorized to do so by the General Partner. The General Partner shall
provide to any Partner who requests same the name and address of the financial
institution, the account number and other relevant information regarding any
Partnership bank account.

         Section 14.9  Certificates and Elections.

         (a) The General Partner shall file the First Year Certificate within 90
days following the close of the taxable year during which Completion of
Construction occurs and thereafter shall timely file any certificates which the
Partnership must furnish to federal or state governmental authorities
administering the Tax Credit programs under Section 42 of the Code.

         (b) The General Partner, with the Consent of the Special Limited
Partner, may, but is not required to, cause the Partnership to make or revoke
the election referred to in Section 754 of the Code, as amended, or any similar
provisions enacted in lieu thereof.


                                   ARTICLE XV

                      DISSOLUTION, WINDING UP, TERMINATION
                       AND LIQUIDATION OF THE PARTNERSHIP

         Section 15.1   Dissolution of Partnership. The Partnership shall be
dissolved  upon the  expiration of its term or the earlier occurrence of any of
the following events.

         (a) The effective date of the Withdrawal or removal of the General
Partner, unless (1) at the time there is at least one other General Partner
(which may be the Special Limited Partner if it elects to serve as successor
General Partner under Section 13.4 hereof) who will continue as General Partner,
or (2) within 120 days after the occurrence of any such event the Limited
Partner elects to continue the business of the Partnership.









                                       57


         (b) The sale of the Apartment Housing and the receipt in cash of the
full amount of the proceeds of such sale.

         Notwithstanding the foregoing, however, in no event shall the
Partnership terminate prior to the expiration of its term if such termination
would result in a violation of the Mortgage or any other agreement with or rule
or regulation of Rural Development (FmHA)/USDA, to which the Partnership is
subject.

         Section 15.2 Return of Capital Contribution upon Dissolution. Except as
provided in Sections 7.3 and 7.4 of this Agreement, which provide for a
reduction or refund of the Limited Partner's Capital Contribution under certain
circumstances, and which shall represent the personal obligation of the General
Partner, as well as the obligation of the Partnership, each Partner shall look
solely to the assets of the Partnership for all Distributions with respect to
the Partnership (including the return of its Capital Contribution) and shall
have no recourse therefor (upon dissolution or otherwise) against any General
Partner. No Partner shall have any right to demand property other than money
upon dissolution and termination of the Partnership, and the Partnership is
prohibited from such a distribution of property absent the Consent of the
Special Limited Partner.

         Section 15.3 Distribution of Assets. Upon a dissolution of the
Partnership, the General Partner (or, if there is no General Partner then
remaining, such other Person(s) designated as the liquidator of the Partnership
by the Limited Partner or by the court in a judicial dissolution) shall take
full account of the Partnership assets and liabilities and shall liquidate the
assets as promptly as is consistent with obtaining the fair value thereof.

         (a) Upon dissolution and termination, after payment of, or adequate
provision for, the debts and obligations of the Partnership pursuant to Section
11.2(a) through and including 11.2(c), the remaining assets of the Partnership
shall be distributed to the Partners in accordance with the positive balances in
their Capital Accounts, after taking into account all allocations under Article
X hereof.

         (b) In the event that a General Partner has a deficit balance in its
Capital Account following the Liquidation of the Partnership or its interest, as
determined after taking into account all Capital Account adjustments for the
Partnership taxable year in which such Liquidation occurs, such General Partner
shall pay to the Partnership the amount necessary to restore such deficit
balance to zero in compliance with Treasury Regulation Section
1.704-1(b)(2)(ii)(b)(3).

                  (1) The deficit reduction amount shall be paid by the General
Partner by the end of such taxable year (or, if later, within 90 days after the
date of Liquidation) and shall, upon Liquidation of the Partnership, be paid to
creditors of the Partnership or distributed to other Partners in accordance with
their positive Capital Account balances.

                                       58


         (c)  With respect to assets distributed in kind to the Partners in
Liquidation or otherwise:

                  (1) unrealized appreciation or unrealized depreciation in the
values of such assets shall be deemed to be Income and Losses realized by the
Partnership immediately prior to the Liquidation or other Distribution event;
and

                  (2) such Income and Losses shall be allocated to the Partners
in accordance with Section 10.2 hereof, and any property so distributed shall be
treated as a Distribution of an amount in cash equal to the excess of such Fair
Market Value over the outstanding principal balance of and accrued interest on
any debt by which the property is encumbered.

         (d) For the purposes of Section 15.3(c), "unrealized appreciation" or
"unrealized depreciation" shall mean the difference between the Fair Market
Value of such assets, taking into account the Fair Market Value of the
associated financing but subject to Section 7701(g) of the Code, and the asset's
Gross Asset Value. Section 15.3(c) is merely intended to provide a rule for
allocating unrealized Income and Losses upon Liquidation or other Distribution
event, and nothing contained in Section 15.3(c) or elsewhere in this Agreement
is intended to treat or cause such Distributions to be treated as sales for
value. The Fair Market Value of such assets shall be determined by an
independent appraiser to be selected by the General Partner.

         Section 15.4 Deferral of Liquidation. If at the time of liquidation the
General Partner or other liquidator shall determine that an immediate sale of
part or all of the Partnership assets could cause undue loss to the Partners,
the liquidator may, in order to avoid loss, but only with the Consent of the
Special Limited Partner, either defer liquidation and retain all or a portion of
the assets or distribute all or a portion of the assets to the Partners in kind.
In the event that the liquidator elects to distribute such assets in kind, the
assets shall first be assigned a value (by appraisal by an independent
appraiser) and the unrealized appreciation or depreciation in value of the
assets shall be allocated to the Partners' Capital Accounts, as if such assets
had been sold, in the manner described in Section 10.2, and such assets shall
then be distributed to the Partners as provided herein. In applying the
preceding sentence, the Apartment Housing shall not be assigned a value less
than the unamortized principal balance of any loan secured thereby.

         Section 15.5 Liquidation Statement. Each of the Partners shall be
furnished with a statement prepared or caused to be prepared by the General
Partner or other liquidator, which shall set forth the assets and liabilities of
the Partnership as of the date of complete liquidation. Upon compliance with the
distribution plan as outlined in Sections 15.3 and 15.4, the Limited Partner and
Special Limited Partner shall cease to be such and the General Partner shall
execute, acknowledge and cause to be filed those certificates referenced in
Section 15.6.

         Section 15.6  Certificates of Dissolution; Certificate of Cancellation
of Certificate of Limited Partnership.

         (a) Upon the dissolution of the Partnership, the General Partner shall
cause to be filed in the office of, and on a form prescribed by the Secretary of
State of the State, a certificate of dissolution. The certificate of dissolution
shall set forth the Partnership's name, the Secretary of State's file number for
the Partnership, the event causing the Partnership's dissolution and the date of
the dissolution.

                                       59


         (b) Upon the completion of the winding up of the Partnership's affairs,
the General Partner shall cause to be filed in the office of, and on a form
prescribed by, the Secretary of State of the State, a certificate of
cancellation of the Certificate of Limited Partnership. The certificate of
cancellation of the Certificate of Limited Partnership shall set forth the
Partnership's name, the Secretary of State's file number for the Partnership,
and any other information which the General Partner determines to include
therein.


                                   ARTICLE XVI

                                   AMENDMENTS

         This Agreement may be amended by a unanimous consent of the Partners
after a meeting of the Partners, which meeting shall be held after proper notice
as provided in Section 17.2 of this Agreement,. For purposes of this Article
XVI, a Partner shall grant its consent to a proposed amendment unless such
Partner reasonably determines that the proposed amendment is adverse to the
Partner's Interest.


                                  ARTICLE XVII

                                  MISCELLANEOUS

          Section 17.1   Voting Rights.

         (a) The Limited Partner shall have no right to vote upon any matters
affecting the Partnership, except as provided in this Agreement. At a meeting of
the Partnership, the Limited Partner may vote:

                  (1)      to approve or disapprove the Sale or Refinancing of
the Apartment Housing;

                  (2)      to remove the General Partner and elect a substitute
General Partner as provided in this Agreement;

                  (3)      to elect a successor General Partner upon the
Withdrawal of the General Partner;

                  (4)      to approve or disapprove the dissolution of the
Partnership;

                  (5)      subject to the provisions of Article XVI hereof, to
amend this Agreement; or

                  (6)      to approve or disapprove the refinancing of the
Mortgage.

                                       60


         (b) On any matter where the Limited Partner has the right to vote,
votes may only be cast at a duly called meeting of the Partnership or through
written action without a meeting.

         (c) The Special Limited Partner shall have the right to consent to
those actions or inactions of the Partnership and/or General Partner as
otherwise set forth in this Agreement, and the General Partner is prohibited
from any action or inaction requiring such consent unless such consent has been
obtained.

         Section 17.2 Meeting of Partnership. Meetings of the Partnership may be
noticed either (a) at any time by the General Partner; or (b) by any Partner
with an Interest greater than 20% of the Income and Losses. The notice for a
meeting shall specify the purpose of such meeting, and the time and the place of
such meeting (which shall be by telephone conference or at the principal place
of business of the Partnership). Any Partner calling a Partners meeting shall
provide written notice to all Partners. The meeting shall not be held less than
15 days nor more than 30 days from the Partners' receipt of the notice. All
meetings and actions of the Limited Partner shall be governed in all respects,
including matters relating to notice, quorum, adjournment, proxies, record dates
and actions without a meeting, by the applicable provisions of the Act, as it
shall be amended from time to time.

         Section 17.3 Notices. Any notice given pursuant to this Agreement may
be served personally on the Partner to be notified, or may be mailed, first
class postage prepaid, to the following address, or to such other address as a
party may from time to time designate in writing:



         To the General Partner:            SEMC, Inc.
                                            2508 Hwy 72
                                            Glen, Mississippi 38846

         To the Limited Partner:            WNC Holding, LLC
                                            c/o WNC & Associates, Inc.
                                            3158 Redhill Ave., Suite 120
                                            Costa Mesa, CA 92626-3416

         To the Special
         Limited Partner:                   WNC Housing, L.P.
                                            3158 Redhill Ave., Suite 120
                                            Costa Mesa, CA 92626-3416


                                       61


         Section 17.4 Successors and Assigns. All the terms and conditions of
this Agreement shall be binding upon and inure to the benefit of the successors
and assigns of the Partners.

         Section 17.5 FmHA Regulations. Notwithstanding any other provisions of
this Agreement, the following will take precedence:

         (a) The Partnership is authorized to execute any documents required by
FmHA in connection with the FmHA Loan Agreement. The General Partner hereby
covenants to act in accordance with the Project Documents. Any incoming General
Partner shall, as a condition of receiving a Partnership interest, agree to be
bound by the Project Documents, and all other documents executed in connection
with the FmHA Loan Agreement to the same extent and on the same terms as any
other General Partner. Upon any dissolution, no title or right to possession and
control of the Project, and no right to collect the rents therefrom, shall pass
to any Person who is not bound in a manner consistent with Section 515 of the
Housing Act and the rules and regulations thereunder.

         (b) In the event that any provision of this Agreement in any way tends
to contradict, modify or in any way change the terms of the Project Documents or
any other agreement related to the Project entered into, or to be entered into,
by or on behalf of the Partnership with FmHA, the terms of the Project Documents
or such other agreements with FmHA shall prevail and govern.

         (c) Any amendment or revision of this Agreement, transfer of a
Partnership interest or other action requiring approval shall be subject to the
written approval of FmHA, if such approval is required, and any amendment
without the prior written approval of FmHA shall be subject to later amendment
to comply with the requirements of FmHA; provided, however, that no such
approval of FmHA shall be required for any amendment of this Agreement the sole
purpose of which is to provide for the admission of additional or substituted
limited partners so long as any such additional or substituted limited partner
so admitted shall own in the aggregate less than a 10% limited partner interest
in the Partnership.

         (d) Any conveyance or transfer of title to all or any portion of the
Project required or permitted under this Agreement shall in all respects be
subject to all conditions, approvals and other requirements of FmHA rules and
regulations applicable thereto.

         (e) The General Partner will at all times maintain the FmHA required
Financial Interest in the Partnership.

         The foregoing paragraphs (a), (b), (c), (d), and (e) will automatically
become void and of no further force and effect with respect to FmHA at such time
as the Mortgage is no longer being provided by FmHA.

                                       62


         Section 17.6 Recording of Certificate of Limited Partnership. If the
General Partner should deem it advisable to do so, the Partnership shall record
in the office of the County Recorder of the county in which the principal place
of business of the Partnership is located a certified copy of the Certificate of
Limited Partnership, or any amendment thereto, after such Certificate or
amendment has been filed with the Secretary of State of the State.

         Section 17.7    Amendment of Certificate of Limited Partnership.

         (a) The General Partner shall cause to be filed, within 30 days after
the happening of any of the following events, an amendment to the Certificate of
Limited Partnership reflecting the occurrence of any of the following.

                  (1) A change in the name of the Partnership.

                  (2) A change in the street address of the Partnership's
principal executive office.

                  (3) A change in the address, or the Withdrawal, of a General
Partner, or a change in the address of the agent for service of process, or
appointment of a new agent for service of process.

                  (4) The admission of a General Partner and that Partner's
address.

                  (5) The discovery by the General Partner of any false or
erroneous material statement contained in the Certificate of Limited Partnership
or any amendment thereto.

         (b) The Certificate of Limited Partnership may also be amended in
conformity with this Agreement at any time in any other respect that the General
Partner determines.

         (c) The General Partner shall cause the Certificate of Limited
Partnership to be amended, when required or permitted as aforesaid, by filing a
certificate of amendment thereto in the office of, and on a form prescribed by,
the Secretary of State of the State. The certificate of amendment shall set
forth the Partnership's name, the Secretary of State's file number for the
Partnership and the text of the amendment.

         Section 17.8 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, and said
counterparts shall constitute but one and the same instrument which may
sufficiently be evidenced by one counterpart.

         Section 17.9 Captions. Captions to and headings of the Articles,
Sections and subsections of this Agreement are solely for the conveniences of
the Partners, are not a part of this Agreement, and shall not be used for the
interpretation or determination of the validity of this Agreement or any
provision hereof.

         Section 17.10 Saving Clause. If any provision of this Agreement, or the
application of such provision to any Person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to Persons or circumstances other than those as to which it is held invalid,
shall not be affected thereby.

                                       63


         Section 17.11 Certain Provisions. If the operation of any provision of
this Agreement would contravene the provisions of applicable law, or would
result in the imposition of general liability on any Limited Partner or Special
Limited Partner, such provisions shall be void and ineffectual.

         Section 17.12 Tax Matters Partner. All the Partners hereby agree that
the General Partner shall be the "Tax Matters Partner" pursuant to the Code and
in connection with any audit of the federal income tax returns of the
Partnership.

         (a) The Tax Matters Partner shall furnish to each Partner notice and
information with respect to the following: closing conference with an examining
agent; proposed adjustments, rights of appeal, and requirements for filing a
protest; time and place of any appeals conference; acceptance by the Internal
Revenue Service of any settlement offer; consent to the extension of the period
of limitation with respect to all Partners; filing of a request for
administrative adjustment on behalf of the Partnership; filing by the Tax
Matters Partner or any other Partner of any petition for judicial review; filing
of any appeal with respect to any judicial determination; and a final judicial
redetermination.

         (b) If the Tax Matters Partner shall determine to litigate any
administrative determination relating to federal income tax matters, then the
Tax Matters Partner shall litigate such matter in such court as the Tax Matters
Partner shall decide in its sole discretion.

         (c) In discharging its duties and responsibilities, the Tax Matters
Partner shall act as a fiduciary (1) to the Limited Partner (to the exclusion of
the other Partners) insofar as tax matters related to the Tax Credits are
concerned, and (2) to all of the Partners in other respects.

         (d) The Partners consent and agree that in connection with any audit of
the Partnership, or if the Tax Matters Partner withdraws from the Partnership or
the Tax Matters Partner becomes Bankrupt, then the Special Limited Partner may
become, in its sole discretion, a special general partner, and become the Tax
Matters Partner. The Limited Partner will make no claim against the Partnership
in respect of any action or omission by the Tax Matters Partner during such time
as the Special Limited Partner acts as the Tax Matters Partner.

         Section 17.13     Expiration of Compliance Period.

         (a) Notwithstanding any provision hereof to the contrary (other than
this Section 17.13), the Special Limited Partner shall have the right at any
time after the beginning of the last year of the Compliance Period to require,
by written notice to the General Partner, that the General Partner promptly
submit a written request to the applicable State Tax Credit Agency pursuant to
Section 42(h) of the Code (or any successor provision) that such agency endeavor
to locate within one year from the date of such written request a purchaser for
the Apartment Housing who will continue to operate the Apartment Housing as a
qualified low income property, at a purchase price that is not less than the
minimum amount set forth in Section 42(h)(6) of the Code (or any successor
provision). In the event that the State Tax Credit Agency obtains an offer
satisfying the conditions of the preceding sentence, the General Partner shall
promptly notify the Special Limited Partner in writing with respect to the terms
and conditions of such offer, and, if the Special Limited Partner notifies the
General Partner that such offer should be accepted, the General Partner shall
cause the Partnership promptly to accept such offer and to proceed to sell the
Apartment Housing pursuant to such offer.

                                       64


         (b) Notwithstanding any other provision of this Agreement to the
contrary, the Special Limited Partner shall have the right at any time after the
end of the Compliance Period to require, by written notice to the General
Partner (the "Required Sale Notice"), that the General Partner promptly use its
best efforts to obtain a buyer for the Apartment Housing on the most favorable
terms then available. The General Partner shall submit the terms of any proposed
sale to the Special Limited Partner for its approval in the manner set forth in
Section 17.13(a) hereof. If the General Partner shall fail to so obtain a buyer
for the Apartment Housing within six months of receipt of the Required Sale
Notice or if the Consent of the Special Limited Partner in its sole discretion
shall be withheld to any proposed sale, then the Special Limited Partner shall
have the right at any time thereafter to obtain a buyer for the Apartment
Housing on terms acceptable to the Special Limited Partner (but not less
favorable to the Partnership than any proposed sale previously rejected by the
Special Limited Partner). In the event that the Special Limited Partner so
obtains a buyer, it shall notify the General Partner in writing with respect to
the terms and conditions of the proposed sale and the General Partner shall
cause the Partnership promptly to sell the Apartment Housing to such buyer.

         (c) A sale of the Apartment Housing prior to the end of the Compliance
Period may only take place if the conditions of Section 42(j)(6) of the Code (or
any successor provision) will be satisfied upon such sale by having the
purchaser of the Apartment Housing post the required bond on behalf of the
Partnership.

         Section 17.14 Number and Gender. All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, neuter, singular or
plural as the identity of the Person or Persons may require.

         Section 17.15 Entire Agreement. This Agreement constitutes the entire
understanding between the parties with respect to the subject matter hereof and
all prior understandings and agreements between the parties, written or oral,
respecting this transaction are merged in this Agreement.

         Section 17.16 Governing Law. This Agreement and its application shall
be governed by the laws of the State.

         Section 17.17 Attorney's Fees. If a suit or action is instituted in
connection with an alleged breach of any provision of this Agreement, the
prevailing party shall be entitled to recover, in addition to costs, such sums
as the court may adjudge reasonable as attorney's fees, including fees on any
appeal.

                                       65


         Section 17.18 Receipt of Correspondence. The Partners agree that the
General Partner shall send to the Limited Partner and the Special Limited
Partner within five days of receipt a copy of any correspondence relative to the
Apartment Housing's noncompliance with the Mortgage, relative to the Apartment
Housing's noncompliance with the Tax Credit rules or regulations, relative to
the acceleration of the Mortgage and/or relative to the disposition of the
Apartment Housing.

         Section 17.19 Security Interest and Right of Set-Off. As security for
the performance of the respective obligations to which any Partner may be
subject under this Agreement, the Partnership shall have (and each Partner
hereby grants to the Partnership) a security interest in their respective
Interests of such Partner in all funds distributable to said Partner to the
extent of the amount of such obligation.

                  [Remainder of page intentionally left blank.]















                                       66



         IN WITNESS WHEREOF, this Amended and Restated Articles of Limited
Partnership of Byhalia Estates, L.P., a Mississippi limited partnership, is made
and entered into as of the 8th day of November, 2001.


                                    GENERAL PARTNER

                                    Semc, Inc.

                                    By:
                                             /s/ SCOTTY R. LITTLE
                                             Scotty R. Little,
                                             President


                                    WITHDRAWING ORIGINAL LIMITED PARTNER

                                    /s/ MICHAEL DORAN
                                    Michael Doran


                                    LIMITED PARTNER

                                    WNC Holding, LLC

                                    By:     WNC & Associates, Inc.,
                                            Managing Member

                                            By:      /s/ DAVID N. SHAFER
                                                     David N. Shafer,
                                                     Executive Vice President

                                    SPECIAL LIMITED PARTNER

                                    WNC Housing, L.P.

                                    By:     WNC & Associates, Inc.,
                                            General Partner

                                            By:      /s/ DAVID N. SHAFER
                                                     David N. Shafer,
                                                     Executive Vice President




                                       67



                       EXHIBIT A TO PARTNERSHIP AGREEMENT

                                LEGAL DESCRIPTION

Being 3.0 acre tract being part of lot 7, peaceful Acres Subdivision, shown in
plat of record in Plat Book 3, pages 131 & 132, in the Chancery Clerk's office,
Holly Springs, Marshall County Mississippi, and lying and being situated in the
Northeast Quarter of Section 2, Township 3-South, Range 5-West, said county and
state, being more particularly described as follows:

Beginning at the Northwest  corner of the  Northeast  Quarter of Section 2,
township 3-South, range 5-West, Marshall County Mississippi and thence run South
0 deg. 12 min. West along the west line of said  Subdivision,  30 ft. to a point
in the south line of Stonewall Road; thence South 89 deg. 51 min. East along the
south line of said road 1260.86 ft. to a point,  said point being the  northeast
corner  of Lot 8 of said  Subdivision  and being  the true  point of  beginning;
thence  continuing  South 89 deg. 51 min. East along the south line of Stonewall
Road,  being the north line of lot 7, a distance  of 248.13 ft. to the west line
of lot 6; thence run South 0 deg. 29 min. 10 sec.  West along the line  dividing
Lots 6 & 7 a distance of 524.30 ft. to a point; thence run North 89 deg. 51 min.
West a distance  of 249.35 ft. to a point in the east line of Lot 8;  thence run
North 0 deg. 37 min. 09 sec.  East along the line dividing Lots 7 & 8 a distance
of 535.39 ft. to the point og beginning, containing 3.0 acres.













                                      A-1


                       EXHIBIT B TO PARTNERSHIP AGREEMENT
                              FORM OF LEGAL OPINION

WNC Holding, LLC
c/o WNC & Associates, Inc.
3158 Redhill Avenue, Suite 120
Costa Mesa, California 92626

RE:      Byhalia Estates, L.P.

Ladies and Gentlemen:

         You have requested our opinion with respect to certain matters in
connection with the investment by WNC Holding, LLC, a California limited
liability company (the "Limited Partner") in Byhalia Estates, L.P. (the
"Partnership"), a Mississippi limited partnership formed to own, develop,
(construct/-rehabilitate) finance and operate an apartment complex for
low-income persons (the "Apartment Complex") in Byhalia, Marshall County,
Mississippi. The general partner of the Partnership is Semc, Inc. (the "General
Partner").

         In rendering the opinions stated below, we have examined and relied
upon the following:

     (i)      [Certificate of Limited Partnership];

     (ii)     [Agreement of Limited Partnership] (the "Partnership Agreement");

     (iii)    A preliminary reservation letter from [State
              Allocating Agency] (the "State Agency") dated
              _________, 199___ conditionally awarding
              $_______________ in Federal tax credits annually for
              each of ten years and $_______________ in California
              tax credits annually for each of four years for the
              Apartment Complex; and

     (iv)     Such other  documents,  records and instruments as we have deemed
              necessary in order to enable us to render the opinions referred to
              in this letter.

         For purposes of rendering the opinions stated below we have assumed
that, in those cases in which we have not been involved directly in the
preparation, execution or the filing of a document, that (a) the document
reviewed by us is an original document, or a true and accurate copy of the
original document, and has not been subsequently amended, (b) the signatures on
each original document are genuine, and (c) each party who executed the document
had proper authority and capacity.

Based on the foregoing we are of the opinion that:

         (a) ________________________, one of the General Partners, is a
[corporation/partnership] duly formed and validly existing under the laws of the
State of _____________________ and has full power and authority to enter into
and perform its obligations under the Partnership Agreement.
_____________________, one of the other General Partners, is a
[corporation/partnership] duly formed and validly existing under the laws of the
State of __________________ and has full power and authority to enter into and
perform its obligations under the Partnership Agreement.


                                      B-1

[[WNCs_Partnership_Name]]
c/o WNC & Associates, Inc.
______________, 199__
Page 2

         (b) The Partnership is a limited partnership duly formed and validly
existing under the laws of the State of Mississippi.

         (c) The Partnership is validly existing under and subject to the laws
of Mississippi with full power and authority to own, develop,
[construct/rehabilitate], finance and operate the Apartment Complex and to
otherwise conduct business under the Partnership Agreement.

         (d) Execution of the Partnership Agreement by the General Partner(s)
has been duly and validly authorized by or on behalf of the General Partner(s)
and, having been executed and delivered in accordance with its terms, the
Partnership Agreement constitutes the valid and binding agreement of the General
Partner(s), enforceable in accordance with its terms.

         (e) The execution and delivery of the Partnership Agreement by the
General Partner(s) does not conflict with and will not result in a breach of any
of the terms, provisions or conditions of any agreement or instrument known to
counsel to which any of the General Partner(s) or the Partnership is a party or
by which any of them may be bound, or any order, rule, or regulation to be
applicable to any of such parties of any court or governmental body or
administrative agency having jurisdiction over any of such parties or over the
property.

         (f) To the best of counsel's knowledge, after due inquiry, there is no
litigation or governmental proceeding pending or threatened against, or
involving the Apartment Complex, the Partnership or any General Partner which
would materially adversely affect the condition (financial or otherwise) or
business of the Apartment Complex, the Partnership or any of the Partners of the
Partnership.

         (g) The Limited Partner and the Special Limited Partner have been
admitted to the Partnership as limited partners of the Partnership under
__________ law and are entitled to all of the rights of limited partners under
the Partnership Agreement. Except as described in the Partnership Agreement, no
person is a partner of or has any legal or equitable interest in the
Partnership, and all former partners of record or known to counsel have validly
withdrawn from the Partnership and have released any claims against the
Partnership arising out of their participation as partners therein.

         (h) Liability of the Limited Partner for obligations of the Partnership
is limited to the amount of the Limited Partner's capital contributions required
by the Partnership Agreement.

         (i) Neither the General Partner(s) of the Partnership nor the Limited
Partner nor the Special Limited Partner will have any liability for the Mortgage
represented thereby (as those terms are defined in the Partnership Agreement,
and the lender of the Mortgage Loan will look only to its security in the
Apartment Complex for repayment of the Mortgage Loan.

         (j) The Partnership owns a fee simple interest in the Apartment
Complex.


                                      B-2

[[WNCs_Partnership_Name]]
c/o WNC & Associates, Inc.
______________, 199__
Page 3

         (k) To the best of our actual knowledge and belief, after due inquiry,
the Partnership has obtained all consents, permissions, licenses, approvals, or
orders required by all applicable governmental or regulatory agencies for the
development, [construction/rehabilitation] and operation of the Apartment
Complex, and the Apartment Complex conforms to all applicable Federal, state and
local land use, zoning, health, building and safety laws, ordinances, rules and
regulations.

         (l) The Apartment Complex has obtained a preliminary reservation of low
income housing tax credits ("LIHTC") from the State Agency. The final allocation
of the LIHTC and ultimately eligibility of the Apartment Complex for such final
allocation are subject to a series of requirements which must be met, performed
or achieved at various times prior to and after such final allocation. Assuming
all such requirements are met, performed or achieved at the time or times
provided by applicable laws and regulations, the Apartment Complex will qualify
for LIHTC.

         All of the opinions set forth above are qualified to the extent that
the validity of any provision of any agreement may be subject to or affected by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally. We do not express any opinion as to
the availability of any equitable or specific remedy upon any breach of any of
the covenants, warranties or other provisions contained in any agreement. We
have not examined, and we express no opinion with respect to, the applicability
of, or liability under, any Federal, state or local law, ordinance or regulation
governing or pertaining to environmental matters, hazardous wastes, toxic
substances or the like.

         We express no opinion as to any matter except those set forth above.
These opinions are rendered for use by the Limited Partner and its legal counsel
which will rely on this opinion in connection with federal income tax opinions
to be rendered by that firm. This opinion may not be delivered to or relied upon
by any other person or entity without our express written consent.

Sincerely,




- --------------------









                                      B-3



                       EXHIBIT C TO PARTNERSHIP AGREEMENT

                           CERTIFICATION AND AGREEMENT

         CERTIFICATION AND AGREEMENT made as of the date written below by
[[PshipPartnership]], a [[Apart_State]] limited partnership (the "Partnership");
[[General_Partner_Company_Name]], [[Developer_Company_Name]] and
[[GP3_General_Partner_Company_Name]] (collectively referred to as the "General
Partner"); and [[Original_Limited_Partners_Name]] (collectively referred to as
the "Original Limited Partner") for the benefit of [[WNCs_Partnership_Name]], a
California limited partnership (the "Investment Partnership"), and WNC &
Associates, Inc. ("WNC").

         WHEREAS, the Partnership proposes to admit the Investment Partnership
as a limited partner thereof pursuant to an Amended and Restated Agreement of
Limited Partnership of the Partnership (the "Partnership Agreement"), in
accordance with which the Investment Partnership will make substantial capital
contributions to the Partnership; and

         WHEREAS, the Investment Partnership and WNC have relied upon certain
information and representations described herein in evaluating the merits of
investment by the Investment Partnership in the Partnership;

         NOW, THEREFORE, to induce the Investment Partnership to enter into the
Partnership Agreement and become a limited partner of the Partnership, and for
$1.00 and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Partnership, the General Partner and the
Original Limited Partner hereby agree as follows for the benefit of the
Investment Partnership and WNC.

         1.       Representations,  Warranties and Covenants of the Partnership,
                  the General Partner and the Original Limited Partner

         The Partnership, the General Partner and the Original Limited Partner
jointly and severally represent, warrant and certify to the Investment
Partnership and WNC that, with respect to the Partnership, as of the date
hereof:

                  1.1 The Partnership is duly organized and in good standing as
a limited partnership pursuant to the laws of the state of its formation with
full power and authority to own its apartment complex (the "Apartment Complex")
and conduct its business; the Partnership, the General Partner and the Original
Limited Partner have the power and authority to enter into and perform this
Certification and Agreement; the execution and delivery of this Certification
and Agreement by the Partnership, the General Partner and the Original Limited
Partner have been duly and validly authorized by all necessary action; the
execution and delivery of this Certification and Agreement, the fulfillment of
its terms and consummation of the transactions contemplated hereunder do not and

                                      C-1



will not conflict with or result in a violation, breach or termination of or
constitute a default under (or would not result in such a conflict, violation,
breach, termination or default with the giving of notice or passage of time or
both) any other agreement, indenture or instrument by which the Partnership or
any General Partner or Original Limited Partner is bound or any law, regulation,
judgment, decree or order applicable to the Partnership or any General Partner
or Original Limited Partner or any of their respective properties; this
Certification and Agreement constitutes the valid and binding agreement of the
Partnership, the General Partner and the Original Limited Partner, enforceable
against each of them in accordance with its terms.

                  1.2 The General Partner has delivered to the Investment
Partnership, WNC or their affiliates all documents and information which would
be material to a prudent investor in deciding whether to invest in the
Partnership. All factual information provided to the Investment Partnership, WNC
or their affiliates either in writing or orally, did not, at the time given, and
does not, on the date hereof, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances under which
they are made.

                  1.3 Each of the  representations  and warranties contained in
the  Partnership  Agreement is true and correct as of the date hereof.

                  1.4 Each of the covenants and agreements of the Partnership
and the General Partner contained in the Partnership Agreement has been duly
performed to the extent that performance of any covenant or agreement is
required on or prior to the date hereof.

                  1.5 All conditions to admission of the Investment Partnership
as the investment limited partner of the Partnership contained in the
Partnership Agreement have been satisfied.

                  1.6 No default has occurred and is continuing under the
Partnership Agreement or any of the Project Documents (as such term is defined
in the Partnership Agreement) for the Partnership.

                  1.7 The  Partnership  will  allocate to the Limited  Partner
the Projected  Annual Tax Credits,  or the Revised Projected Tax Credits, if
applicable.

                  1.8 The General Partner agrees to take all actions necessary
to claim the Projected Tax Credit, including, without limitation, the filing of
Form(s) 8609 with the Internal Revenue Service.

                                      C-2


                  1.9 No person or entity other than the Partnership holds any
equity interest in the Apartment Complex.

                  1.10 The Partnership has the sole responsibility to pay all
maintenance and operating costs, including all taxes levied and all insurance
costs, attributable to the Apartment Complex.

                  1.11 The Partnership, except to the extent it is protected by
insurance and excluding any risk borne by lenders, bears the sole risk of loss
if the Apartment Complex is destroyed or condemned or there is a diminution in
the value of the Apartment Complex.

                  1.12 No person or entity except the Partnership has the right
to any proceeds, after payment of all indebtedness, from the sale, refinancing,
or leasing of the Apartment Complex.

                  1.13 No General Partner is related in any manner to the
Investment Partnership, nor is any General Partner acting as an agent of the
Investment Partnership.

                  1.14 No event  has  occurred  which  would  have a  material
adverse  change to the  Limited  Partner's investment.

         2.       Miscellaneous

                  2.1 This Certification and Agreement is made solely for the
benefit of the Investment Partnership and WNC, and their respective successors
and assignees, and no other person shall acquire or have any right under or by
virtue of this Agreement.

                  2.2 This Certification and Agreement may be executed in
several counterparts, each of which shall be deemed to be an original, all of
which together shall constitute one and the same instrument.

                  2.3 Capitalized terms used but not defined in this
Certification Agreement shall have the meanings given to them in the Partnership
Agreement.

         IN WITNESS WHEREOF, this Certificate and Agreement is made and entered
into as of the day of ____________, 2000.


PARTNERSHIP

[[PshipPartnership]]

                                      C-3



By:
         -------------------------
        [[General_Partner_Company_Name]],
         General Partner

By:
         -------------------------
        [[Developer_Company_Name]],
         General Partner

By:
         -------------------------
         [[GP3_General_Partner_Company_Name]],
         General Partner



GENERAL PARTNER

By:
         --------------------------------------------
        [[General_Partner_Company_Name]]


        [[Developer_Company_Name]]


        [[GP3_General_Partner_Company_Name]]



ORIGINAL LIMITED PARTNER


By:
         -------------------------
        [[Original_Limited_Partners_Name]]







                                      C-4



                       EXHIBIT D TO PARTNERSHIP AGREEMENT

                         FORM OF COMPLETION CERTIFICATE

            (to be used when construction [rehabilitation] completed)


                             COMPLETION CERTIFICATE


The undersigned, an architect duly licensed and registered in the State of
[[Apart_State]], has reviewed the final working plans and detailed
specifications for [[PshipPartnership]], a [[Apart_State]] limited partnership
(the "Partnership") in connection with the construction [rehabilitation] of
improvements on certain real property located in [[Apart_City]],
[[Apart_County]], [[Apart_State]]
 (the "Improvements").

The undersigned hereby certifies (i) that the Improvements have been completed
in accordance with the aforesaid plans and specifications, (ii) that a permanent
certificate of occupancy and all other permits required for the continued use
and occupancy of the Improvements have been issued with respect thereto by the
governmental agencies having jurisdiction thereof, (iii) that the Improvements
are in compliance with all requirements and restrictions of all governmental
authorities having jurisdiction over the Improvements, including, without
limitation, all applicable zoning, building, environmental, fire, and health
ordinances, rules and regulations and (iv) that all contractors, subcontractors
and workmen who worked on the Improvements have been paid in full except for
normal retainages and amounts in dispute.


- -----------------------------------
Apartment Housing Architect

Date:  ____________________________


Confirmed by:


- -----------------------------------
General Partner

Date:  ____________________________





                                      D-1



                          EXHIBIT E TO THE PARTNERSHIP

                           [ACCOUNTANT'S CERTIFICATE]
                            [Accountant's Letterhead]

_______________, 200____


[[WNCs_Partnership_Name]]
c/o WNC & Associates, Inc.
3158 Redhill Ave., Suite 120
Costa Mesa, California 92626

RE:  Partnership
     Certification as to Amount
     of Eligible Tax Credit Base

Gentlemen:

In connection with the acquisition by [[WNCs_Partnership_Name]] (the "Limited
Partner") of a limited partnership interest in [[PshipPartnership]], a
[[Apart_State]] limited partnership (the "Partnership") which owns a certain
parcel of land located in [[Apart_City]], [[Apart_County]] County,
[[Apart_State]] and improvements thereon (the "Apartment Housing"), the Limited
Partner has requested our certification as to the amount of low-income housing
tax credits ("Tax Credits") available with respect to the Apartment Housing
under Section 42 of the Internal Revenue Code of 1986, as amended (the "Code").
Based upon our review of [the financial information provided by the Partnership]
of the Partnership, we are prepared to file the Federal information tax return
of the Partnership claiming annual Tax Credits in the amount of
$_______________, which amount is based on an eligible basis (as defined in
Section 42(d) of the Code) of the Apartment Housing of $________________, a
qualified basis (as defined in Section 42(c) of the Code) of the Apartment
Housing of $_________________ and an applicable percentage (as defined in
Section 42(b) of the Code) of _____%.

Sincerely,


- -------------------------









                                      E-1



                     EXHIBIT F TO THE PARTNERSHIP AGREEMENT

                           [CONTRACTOR'S CERTIFICATE]
                            [Contractor's Letterhead]

_______________, 200____

[[WNCs_Partnership_Name]]
c/o WNC & Associates, Inc.
3158 Redhill Avenue
Suite 120
Costa Mesa, California 92626

Re:[[PshipPartnership]]

Dear Ladies and Gentlemen:

The undersigned [[General_Contractor_Company_Name]], (hereinafter referred to as
"Contractor"), has furnished or has contracted to furnish labor, services and/or
materials (hereinafter collectively referred to as the "Work") in connection
with the improvement of certain real property known as __________________
located in [[Apart_City]], [[Apart_County]] County, [[Apart_State]] (hereinafter
known as the "Apartment Housing").

Contractor makes the following representations and warranties regarding Work at
the Apartment Housing.

o    Work on said Apartment Housing has been performed and completed in
     accordance with the plans and specifications for the Apartment Housing.

o    Contractor acknowledges that all amounts owed pursuant to the contract for
     Work performed for [[PshipPartnership]] is paid in full.

o    Contractor acknowledges that [[PshipPartnership]] is not in violation with
     terms and conditions of the contractual documents related to the Apartment
     Housing.

o Contractor warrants that all parties who have supplied Work for improvement of
the Apartment Housing have been paid in full.

o Contractor acknowledges the contract to be paid in full and releases any lien
or right to lien against the above property.

The undersigned has personal knowledge of the matters stated herein and is
authorized and fully qualified to execute this document on behalf of the
Contractor.
                                (NAME OF COMPANY)

                                      F-1


                  By:_________________________________________

                 Title:________________________________________











                                      F-2


                     EXHIBIT G TO THE PARTNERSHIP AGREEMENT

                              DEPRECIATION SCHEDULE

Real Property: Use Modified Accelerated Cost Recovery System ("MACRS") 27.5 year
straight-line depreciation using the mid month convention or use MACRS
AlternativeDepreciation System ("ADS") 40 year straight-line depreciation if
required pursuant to the Agreement. Real Property includes buildings and
building improvements.

Personal property: Use 5-year recovery period using mid-year 200% declining
balance, if it relates to residential real estate or use MACRS Alternative
Depreciation System ("ADS") 12 year straight-line depreciation if required
pursuant to the Agreement. Personal property related to commercial space must
use a 7-year recovery period using mid year 200% declining balance.

The following costs have a 5-year recovery period:
o        Removable appliances (not central climate control system equipment or
         water heaters)
o        Draperies, blinds and shades, if they would be reusable if removed
o        Carpeting, if its removal would not destroy the underlying floor
o        Vinyl flooring, if its removal would be easy and not destroy the
         underlying floor
o        Common area furnishings
o        Photocopy equipment
o        Calculators, adding machines
o        Typewriters
o        Computers
o        Wall coverings, if their removal would not destroy the underlying wall
o        Exit signs
o        Security systems (not fire protection system, sprinkler system, smoke
         detectors, or fire escapes)
o        Outdoor security lighting (not parking lot lighting)
o        Fire extinguishers
o        Decorative lighting and sconces (not light fixtures for central
         lighting)
o        Outdoor decorative lighting, such as that lighting signs
o        Telephone systems
o        Corridor handrails (not bathroom or stairway)
o        Raised floors to accommodate wirings in computer rooms

The following costs have a 7-year recovery period with a mid year 200% declining
balance:



                                      G-1



o        Office furnishings
o        Cabinets and shelving
o        Bulletin boards
o        Conference or meeting room movable partitions

A percentage of the development fee is also allowed in personal property. The
percentage is calculated by taking the ratio of personal property cost,
excluding development fee, to total development costs and multiplying the
development fee by the calculated ratio.

Land improvements Cost Recovery - Use 15-year recovery period using mid-year
150% declining balance or use MACRS Alternative Depreciation System ("ADS") 20
year straight-line depreciation if required pursuant to the Agreement. The
following costs have a 15-year recovery period. Items allowed in this section
are costs attributable to excavation, grading, and removing soil necessary to
the proper setting of buildings. Other costs allowable in this section are as
follows:

o        Roads and sidewalks
o        Concrete work (curb and gutter)
o        Fencing
o        Landscaping (including, but not limited to, trees and shrubs) around
         the building  which would be destroyed if the building were replaced
o        Decorative walls which are part of the landscaping
o        Parking lot (resurfacing it later is deducted as an expense)
o        Initial parking lot striping (restriping it later is deducted as an
         expense)
o        Street lights and signs
o        Signs which identify the property or provide directions
o        Parking lot lighting (not outdoor security lighting)
o        Playground equipment
o        Basketball court and backboard
o        Tennis courts
o        Swimming pools
o        Jogging trails
o        Flag pole
o        Wastewater treatment plant and lift station to handle raw sewage
o        Interest expense capitalized and related to any of the above costs
o        The prorata portion of the general contractor/construction company
         profit, overhead, and general requirements and conditions allocable to
         items with a 15-year cost recovery period
o        The prorata portion of the developer fee, profit and overhead allocable
         to items with a 15-year cost recovery period

                                      G-2



Recovery of costs of sanitary sewer system and water utility/distribution
system, including the sewer system outside the buildings - the following costs
have a 20-year recovery period - 150% declining balance mid-year convention.

o        Fire hydrants
o        Manhole rings and covers
o        Watermeter
o        Gate valves
o        Flushing hydrants
o        Cast iron fittings
o        Valve boxes
o        Air release valves
o        Tapping sleeves
o        PVC water pipe (outside)
o        PVC sewer pipe (outside)
o        PVC sewer fittings













                                      G-3



                     EXHIBIT H TO THE PARTNERSHIP AGREEMENT
                              REPORT OF OPERATIONS

QUARTER ENDED:  ____________________, 200__

- -------------------------------------       -----------------------------------
LOCAL PARTNERSHIP:
- -------------------------------------       -----------------------------------

- -------------------------------------       -----------------------------------
GENERAL PARTNER:
- -------------------------------------       -----------------------------------
- -------------------------------------       -----------------------------------
FIRM NAME:
- -------------------------------------       -----------------------------------
- -------------------------------------       -----------------------------------
ADDRESS:
- -------------------------------------       -----------------------------------
- -------------------------------------       -----------------------------------
CITY, STATE, ZIP:
- -------------------------------------       -----------------------------------
- -------------------------------------       -----------------------------------
PHONE:
- -------------------------------------       -----------------------------------

- -------------------------------------       -----------------------------------
PROPERTY NAME:
- -------------------------------------       -----------------------------------
- -------------------------------------       -----------------------------------
ADDRESS:
- -------------------------------------       -----------------------------------
- -------------------------------------       -----------------------------------
CITY, STATE, ZIP:
                                            -----------------------------------
- -------------------------------------       -----------------------------------
RESIDENT MANAGER:
- -------------------------------------       -----------------------------------
- -------------------------------------       -----------------------------------
PHONE:
- -------------------------------------       -----------------------------------

- -------------------------------------       -----------------------------------
ACCOUNTANT:
- -------------------------------------       -----------------------------------
- -------------------------------------       -----------------------------------
FIRM:
- -------------------------------------       -----------------------------------
- -------------------------------------       -----------------------------------
ADDRESS:
- -------------------------------------       -----------------------------------
- -------------------------------------       -----------------------------------
CITY, STATE, ZIP:
- -------------------------------------       -----------------------------------
- -------------------------------------       -----------------------------------
PHONE:
- -------------------------------------       -----------------------------------

- ------------------------------------        -----------------------------------
MANAGEMENT COMPANY
- -------------------------------------       -----------------------------------
- -------------------------------------       -----------------------------------
ADDRESS:
- -------------------------------------       -----------------------------------
- -------------------------------------       -----------------------------------
CITY, STATE, ZIP:
- -------------------------------------       -----------------------------------
- -------------------------------------       -----------------------------------
PHONE:
- -------------------------------------       -----------------------------------
- -------------------------------------       -----------------------------------
CONTACT:
- -------------------------------------       -----------------------------------

- -------------------------------------------------------------------------------

                          (6) OCCUPANCY INFORMATION

A. Number of Apartment Units_____ Number of RA Units_____
                                                Number of Section 8 Tenants ____


B. Occupancy for the Quarter has: Increased ____ Decreased_____
                                                         Remained the Same _____



C. Number of:  Move-Ins ______   Move-Outs __________   % of Occupancy ______


D. Average length of tenant residency:   1-6 months ______   6-12 months ______

                                         1-3 years  ______   Over 4 years_____

E. Number of Basic rent qualified applicants on waiting list:  ________

F. If the  apartments  are less than 90% occupied,  please  explain why and
describe what efforts are being made to lease-up remaining units.

 ___________________________________________________________________________

G. On site manager:   Full Time__________  Part Time____________.

   If part-time, the number of hours per week_____________.



                                       H-1

                             OPERATIONAL INFORMATION

                Rent Schedule and Increases from Previous Quarter

                       Number     Monthly Rent       Rent Increases    Effective
                       of Units   Basic / Market    Amount    Percent    Date

1 Bedroom              ________   ______________    _________________  ________

2 Bedroom              ________   ______________    _________________  ________

3 Bedroom              ________   ______________    _________________  ________


                              PROPOSED MAINTENANCE

                                       Completed        Funded by
   Type                Description        or          Operations or     Amount
                                        Planned         Reserves
- ------------------------------------------------------------------------------
Interior Painting
- ------------------------------------------------------------------------------
Exterior Painting
- ------------------------------------------------------------------------------
Siding
- ------------------------------------------------------------------------------
Roofing
- ------------------------------------------------------------------------------
Drainage
- ------------------------------------------------------------------------------
Paving
- ------------------------------------------------------------------------------
Landscaping
- ------------------------------------------------------------------------------
Playground
- ------------------------------------------------------------------------------
Community Room
- ------------------------------------------------------------------------------
Laundry Room
- ------------------------------------------------------------------------------
Common Areas
- ------------------------------------------------------------------------------
Carpet
- ------------------------------------------------------------------------------
Appliances
- ------------------------------------------------------------------------------
Lighting
- ------------------------------------------------------------------------------
Other
- ------------------------------------------------------------------------------

- ------------------------------------------------------------------------------

Please describe in detail any major repairs:

- ------------------------------------------------------------------------------

- ------------------------------------------------------------------------------

- ------------------------------------------------------------------------------

                                       H-2


                              CONDITION OF PROPERTY

THE OVERALL APPEARANCE OF THE BUILDING(S) IS:

Excellent                  Good                     Fair                Bad


THE OVERALL APPEARANCE OF THE GROUNDS IS:

Excellent                  Good                     Fair                 Bad


                               EXTERIOR CONDITION
(Please Check Appropriate Box)
- ------------------------------------------------------------------------------
Type of Condition        Excellent       Good          Fair    Problems/Comments
- ------------------------------------------------------------------------------
Signage
- -------------------------------------------------------------------------------
Parking Lots
- -------------------------------------------------------------------------------
Office/Storage
- -------------------------------------------------------------------------------
Equipment
- -------------------------------------------------------------------------------
Community Building
- -------------------------------------------------------------------------------
Laundry Room
- -------------------------------------------------------------------------------
Benches/Playground
- -------------------------------------------------------------------------------
Lawns, Plantings
- -------------------------------------------------------------------------------
Drainage, Erosion
- -------------------------------------------------------------------------------
Carports
- -------------------------------------------------------------------------------
Fences
- -------------------------------------------------------------------------------
Walks/Steps/Guardrails
- -------------------------------------------------------------------------------
Lighting
- -------------------------------------------------------------------------------
Painting
- -------------------------------------------------------------------------------
Walls/Foundation
- -------------------------------------------------------------------------------
Roof/Flashing/Vents
- -------------------------------------------------------------------------------
Gutters/Splashblocks
- -------------------------------------------------------------------------------
Balconies/Patios
- -------------------------------------------------------------------------------
Doors Windows/Screens
- -------------------------------------------------------------------------------
Elevators
- -------------------------------------------------------------------------------


                               INTERIOR CONDITION
- -------------------------------------------------------------------------------
Stairs
- -------------------------------------------------------------------------------
Flooring
- -------------------------------------------------------------------------------
Doors/Cabinets/Hardware
- -------------------------------------------------------------------------------
Drapes/Blinds
- -------------------------------------------------------------------------------
Interior Painting
- -------------------------------------------------------------------------------
Refrig/Stoves/Sinks
- -------------------------------------------------------------------------------
Bathroom/Tubs/Showers
    Toilets
- -------------------------------------------------------------------------------

                                       H-3


                                FINANCIAL STATUS

A.     Replacement Reserve is:   Fully-funded     Under-funded      Amount
       (complete attached schedule)
       Tax/Insurance Escrow is:  Fully-funded     Under-funded      Amount
       (complete attached schedule)
       Property is operating at a:    Surplus      Deficit          Amount

       If deficit, General Partner funding?        Yes     No       Amount

       Mortgage Payments are:   On Schedule        Delinquent       Amount

       Are the taxes current?          Yes         No
       (please provide copy of paid tax bill)
       Is the insurance current?       Yes         No        Renewal Date
       (please provide copy of yearly renewal)

B.     Please note and explain any significant changes in the following:

       Administrative Expense       Increase        Decrease         Amount

       ------------------------------------------------------------------------

       ------------------------------------------------------------------------

       Repairs/Maintenance Expense  Increase        Decrease         Amount

       ------------------------------------------------------------------------

       ------------------------------------------------------------------------

       Utility Expense              Increase        Decrease         Amount

       ------------------------------------------------------------------------

       ------------------------------------------------------------------------

       Taxes/Insurance Expense      Increase        Decrease         Amount

       ------------------------------------------------------------------------

       ------------------------------------------------------------------------


C.     Do you anticipate making a return to owner distribution?   Yes      No


       Explanation:
       ------------------------------------------------------------------------

       ------------------------------------------------------------------------

D.     Please explain in detail any change in the financial condition:

       ------------------------------------------------------------------------

       ------------------------------------------------------------------------
E.     Any insurance claims files?  Yes______   No______
       If yes, please explain:
       ------------------------------------------------------------------------

       ------------------------------------------------------------------------

                                       H-4


                              SCHEDULE OF RESERVES

                            Replacement    Tax & Insurance    Other      Total


Beginning Balance:        -----------       ----------       -------    -------
Deposits:

       ----------         -----------       ----------       -------    -------

       ----------         -----------       ----------       -------    -------

       ----------         -----------       ----------       -------    -------

Total Deposits            -----------       ----------       -------    -------

Authorized Disbursements: -----------       ----------       -------    -------
       Description:

       ---------         -----------        ----------       -------    -------

       ---------         -----------        ----------       -------    -------

       ---------         -----------        ----------       -------    -------

       ---------         -----------        ----------       -------    -------

       ---------         -----------        ----------       -------    -------

       ---------         -----------        ----------       -------    -------

Total Disbursements:     -----------        ----------       --------    ------

Ending Balance: (1)      -----------        ----------       --------    ------

Required Balance:        -----------        ----------       --------    ------

Over/under funding:      -----------        ----------       --------    ------



Prepared By:                                        Date:
- -------------------------------------------------------------------------------
Firm:                                               Telephone:
- -------------------------------------------------------------------------------

Reminder: Please include the following documents:

              1. Completed Report of Operations
              2. Balance Sheet
              3. Statement of Income & Expenses
              4. Rent roll for quarter ending
              5. Tax Credit Compliance Report



                                       H-5


                          INITIAL TENANT CERTIFICATIONS
                       Partnership Name:-------------------

Fund: -------------------   Tax Credit Set-Asides Information:   Loan/Regulatory
Property Name: ----------   [ ] 20/50 or [  ] 40/60 Election     Set-Asides:
Address: ----------------   Does the 51% average apply?
         ----------------   [  ] Y [  ] N
         ----------------   Deeper Set-Aside __% @ 50% AMI
County:  ----------------


[ ] Multi-Family   [ ] Elderly           Management Company:--------------------
- ----Number of Apartment Units            Contact Person:------------------------
- ----Number of Exempt Units               Phone #:-------------------------------
- ----LIHTC Apartment Housing #

- -----------------------------------------------------------------------------
                                                                Gross
Unit  First Time   Move-in    # of                       # in   Income  Move-In
 #   Tenant Name    Date     Bdrms   Sq.Ft.   Set-Aside  Unit   Move-In  Limits
- -------------------------------------------------------------------------------
      BIN #        Certificate of Occupancy Date:
- -----------------------------------------------------------------------------

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------

     BIN #          Certificate of Occupancy Date:
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
     BIN #           Certificate of Occupancy Date:
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------






                          INITIAL TENANT CERTIFICATIONS
                       Partnership Name:-------------------
(CONTINUED)

Tenant                                                               Tenant
Income       Income         Asset      Unit  Less Rent   Tenant      Utility
Qualified Verification  Verification   Rent   Subsidy   Payment     Allowance

- -------------------------------------------------------------------------------
YES
- -------------------------------------------------------------------------------
YES
- -------------------------------------------------------------------------------
YES
- -------------------------------------------------------------------------------
YES
- -------------------------------------------------------------------------------
YES
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
YES
- -------------------------------------------------------------------------------
YES
- -------------------------------------------------------------------------------
YES
- -------------------------------------------------------------------------------
YES
- -------------------------------------------------------------------------------
YES
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
YES
- -------------------------------------------------------------------------------
YES
- -------------------------------------------------------------------------------
YES
- -------------------------------------------------------------------------------
YES
- -------------------------------------------------------------------------------
YES
- -------------------------------------------------------------------------------




                          INITIAL TENANT CERTIFICATIONS
                       Partnership Name:-------------------
(CONTINUED)

     Tenant                   Tenant            Overall
Gross     Maximum             Rent              Tenant
Rent      Rent                Qualified         Eligible

- -------------------------------------------------------------------------------
                              YES               YES
- -------------------------------------------------------------------------------
                              YES               YES
- -------------------------------------------------------------------------------
                              YES               YES
- -------------------------------------------------------------------------------
                              YES               YES
- -------------------------------------------------------------------------------
                              YES               YES
- -------------------------------------------------------------------------------
                              YES               YES
- -------------------------------------------------------------------------------
                              YES               YES
- -------------------------------------------------------------------------------
                              YES               YES
- -------------------------------------------------------------------------------
                              YES               YES
- -------------------------------------------------------------------------------
                              YES               YES
- -------------------------------------------------------------------------------
                              YES               YES
- -------------------------------------------------------------------------------
                              YES               YES
- -------------------------------------------------------------------------------
                              YES               YES
- -------------------------------------------------------------------------------
                              YES               YES
- -------------------------------------------------------------------------------


                                       H-6


                     QUARTERLY TAX CREDIT COMPLIANCE REPORT
                      Property Name:----------------------


Quarter Ending: ---------   Tax Credit Set-Asides Information:   Loan/Regulatory
                            [ ] 20/50 or [  ] 40/60 Election     Set-Asides:
Address: ----------------   Does the 51% average apply?
         ----------------   [  ] Y [  ] N
         ----------------   Deeper Set-Aside __(List Details)
County:  ----------------

                       Allocation:              Management Company:-------------
                       Pre-1990 (Rent based on                     -------------
                         number of persons)     Contact Person:    -------------
[ ] Multi-Family       Elected to change
[ ] Elderly              # Bedrooms             Phone #:           -------------
- ---Number of           Post-1989 (Based on
   Apartment Units       number of Bedroom)     Fax #:             -------------
- ---Number of                                    Prepared by:       -------------
   Exempt Units
- ---LIHTC Apartment Housing #
- -----------------------------------------------------------------------------
                                                          Gross    Annual
Unit   Tenant    Move-in   # Of     Inc.   Set-  # in     Annual   Income
 #     Name      Date      Bdrms     %    Aside  Unit     Income   Limits
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------







                     QUARTERLY TAX CREDIT COMPLIANCE REPORT
                      Property Name:----------------------
(CONTINUED)


Annual   Tenant                                   Less
Recert.  Income      Income     Assets    Unit    Rent     Tenant
Date    Qualified   Verified   Verified   Rent   Subsidy   Payment

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------


                     QUARTERLY TAX CREDIT COMPLIANCE REPORT
                      Property Name:----------------------
(CONTINUED)


        Tenant              Tenant     Overall
Utility   Gross   Maximum    Rent       Tenat
Allow.    Rent    Rent    Qualified    Eligible

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

                                       H-7


                       TENANT TAX CREDIT COMPLIANCE AUDIT
                         Document Transmittal Checklist

Unit Number          Property Name                                   Date


Tenant Name                                               Completed By:


Initial [  ]        Annual [  ]
  Check Box for Type of Certification         Management Company


                                                   This Section For WNC Use Only
Check Documents Being Sent
                                                      Received.  Reviewed
___Internal Checklist or worksheet                    [   ]      [  ] ----------
___Initial - Rental Application/Rental Agreement      [   ]      [  ] ----------
___Initial - Questionnaire of Income/Assets           [   ]      [  ] ----------
___Recertification - Questionnaire of Income/Assets   [   ]      [  ] ----------
___Recertification - Addendum to Lease                [   ]      [  ] ----------
___Employment Verification                            [   ]      [  ] ----------
___Employment Termination Verification                [   ]      [  ] ----------
___Military  Verification                             [   ]      [  ] ----------
___Verification of Welfare Benefits                   [   ]      [  ] ----------
___Verification of Social Security Benefits           [   ]      [  ] ----------
___Verification of Disability Benefits                [   ]      [  ] ----------
___Unemployment Verification                          [   ]      [  ] ----------
___Verification of Unemployment Compensation          [   ]      [  ] ----------
___Verification Worksmen Compensation                 [   ]      [  ] ----------
___Retirement/Annuities Verification                  [   ]      [  ] ----------
___Verification of Veterans Pension                   [   ]      [  ] ----------
___Verification of Child Support                      [   ]      [  ] ----------
___Verification of Alimony Support                    [   ]      [  ] ----------
___Disposed of Assets Last 2 years                    [   ]      [  ] ----------
___Real Estate                                        [   ]      [  ] ----------
___Investment                                         [   ]      [  ] ----------
___Assets Verifications (savings, stocks etc.)        [   ]      [  ] ----------
___Trusts/with Current Tax Return                     [   ]      [  ] ----------
___Lump Sum Settlements                               [   ]      [  ] ----------
___Notarized Affidavit of Support                     [   ]      [  ] ----------
___Certification of Handicap                          [   ]      [  ] ----------
___Notarized Self-Employed-Tax Return                 [   ]      [  ] ----------
___Notarized statement of no income                   [   ]      [  ] ----------
___Tenant Certification                               [   ]      [  ] ----------





                          This Section For WNC Use Only

         YES  NO
         [  ] [  ]   Are all required forms completed?
         [  ] [  ]   Are all required forms dated?
         [  ] [  ]   Did the Manager and Tenant sign all documents?
         [  ] [  ]   Third party verification of income completed?
         [  ] [  ]   Third party verification of assets completed?
         [  ] [  ]   Are verifications completed for all members 18 years and
                     over?
         [  ] [  ]   Did all the members of the household 18 yrs. and
         [  ] [  ]   over sign all documents?
         [  ] [  ]   Is lease completed with a minimum of six months/ SRO
                     monthly?
         [  ] [  ]   Addendum completed?
         [  ] [  ]   Tenant Certification completed?
         [  ] [  ]   Are all members of the household full-time students?
         [  ] [  ]   Is utility allowance correct?
         [  ] [  ]   Is correct income limit being used?
         [  ] [  ]   Is correct rent limit being used?

                    For tenants with no income

         [  ] [  ]   Was notarized statement of no income obtained with tax
                     return?
         [  ] [  ]   or Were all sources verified (AFDC, Unemployment,
                     Soc. Sec., Disability)?










                                       H-8


                        TAX CREDIT COMPLIANCE MONITORING:
                              ANNUAL CERTIFICATION
         As General Partner of [[PshipPartnership]], I hereby certify as to the
following:

     1.    [[PshipPartnership]]owns    a[[Apart_Number_of_Units]]unit    project
("Apartment Housing") in[[Apart_City]],  [[Apart_County]] County,[[Apart_State]]
...

     2. An annual income certification (including supporting  documentation) has
been  received  from each tenant.  The income  certification  reflects  that the
tenant's income meets the income limitation  applicable to the Apartment Housing
pursuant to Section 42(g)(1) of the Internal Revenue Code ("Code").

     3. The Apartment  Housing  satisfies  the  requirements  of the  applicable
minimum set aside test as defined in Section 42(g)(1) of the Code.

     4. Each unit within the Apartment  Housing is rent restricted as defined in
Section 42(g)(2)of the Code.

     5. Each unit in the  Apartment  Housing is available for use by the general
public and not for use on a transient basis.

     6. Each  building in the  Apartment  Housing is suitable  for  occupancy in
accordance with local health, safety, and building codes.

     7.  During the  preceding  calendar  year,  there had been no change in the
eligible  basis,  as defined in Section 42(d)of the Code, of any building within
the Apartment Housing.

     8.  All  common  area  facilities  included  in the  eligible  basis of the
Apartment  Complex are provided to the tenants on a comparable  basis  without a
separate fee to any tenant in the Apartment Housing.

     9. During the preceding  calendar year when a unit in the Apartment Housing
became vacant  reasonable  attempts were made to rent that unit to tenants whose
incomes met the income  limitation  applicable to the Apartment Housing pursuant
to  Section  42(g)(1)  of the Code and while  that  unit was  vacant no units of
comparable  or smaller size were rented to tenants whose income did not meet the
income  limitation  applicable  to the  Apartment  Housing  pursuant  to Section
42(g)(1) of the Code.

     10. If the income of a tenant in a unit  increased  above the limit allowed
in Section 42  (g)(2)(D)(ii),  then the next  available  unit of  comparable  or
smaller  size was  rented to tenants  whose  incomes  met the income  limitation
applicable to the Apartment Housing pursuant to Section 42(g)(1) of the Code.

IN VERIFICATION OF THE FOREGOING ENCLOSED HEREWITH IS A COPY OF THE ANNUAL
INCOME CERTIFICATION RECEIVED FROM EACH TENANT IN THE PROJECT. UPON REQUEST I
WILL PROVIDE COPIES OF ALL DOCUMENTATION RECEIVED FROM THE TENANT TO SUPPORT
THAT CERTIFICATION.

         I declare under penalty of perjury under the law of the State of
[[Apart_State]] that the foregoing is true and correct.


         Executed this     day of            at              ,                 .
                       ---        ----------    -------------  -----------------



- ------------------------------------


                                      H-9


                      Calculation of Debt Service Coverage


                                      Month 1        Month 2       Month 3
                                    ------------   ------------  ------------

           INCOME

  Gross Potential Rent
  Other Income
  Vacancy Loss                      ------------   ------------  ------------
  Adjusted Gross Income             ------------   ------------  ------------

      OPERATING EXPENSES

  Utilities
  Maintenance
  Management Fee
  Administration
  Insurance
  Real Estate Taxes
  Other Expenses                    ------------   ------------  ------------
  Total Operating Expenses          ------------   ------------  ------------

  Net Operating Income (1)
  Accrual adjustments for:
              R/E Taxes
              Insurance
              Tax/ Accounting
              Other
  Replacement Reserves
                                    ------------   ------------  ------------
  Income for DSC Calculation        ============   ============  ============

  Stabilized Debt Service
                                    ------------   ------------  ------------

  Debt Service Coverage (2)
                                    ------------   ------------  ------------

Please submit this form along with the following supporting documentation:
Monthly Financial Reports (income statement, balance sheet, general ledger and
   rent rolls)
Operating Budget
Copies of bank statements.

(1) This number should reconcile easily with the monthly financial statements.

(2) The ratio between the Income for DSC calculation and Stabilized Debt
Service. As example, a 1.15 DSC means that for every $1.00 of Stabilized Debt
Service required to be paid there must be $1.15 of Net operating Income
available.


                                      H-10



                            DEVELOPMENT FEE AGREEMENT


         This Development Fee Agreement ("Agreement"), is entered into as of the
date written below by and between [[Name_of_Person_or_Entity_to_Whom_the_Dev]]
("Developer") and [[PshipPartnership]], a [[Apart_State]] limited partnership
("Owner"). Developer and Owner collectively may be referred to as the "Parties"
or individually may be referred to as a "Party".

                                    RECITALS

         A. Owner has acquired the real property located in [[Apart_City]],
[[Apart_County]] County, [[Apart_State]], as more particularly described in
Exhibit A attached hereto and incorporated herein (the "Real Property").

         B. Owner intends to develop on the Real Property a
[[Apart_Number_of_Units]] unit low-income rental housing complex and other
related improvements, which is intended to qualify for federal low-income
housing tax credits (the "Apartment Housing").

         C. Prior to the date of this Agreement Developer has performed
substantial development services with respect to the Apartment Housing as
specified in Section 2.3 of this Agreement. Developer has also agreed to oversee
the development of the Apartment Housing until all construction work is
completed and to provide certain services relating thereto. The Parties
recognize and acknowledge that the Developer is, and has been, an independent
contractor in all services rendered to, and to be rendered to, the Owner
pursuant to this Development Fee Agreement.

         D. Owner desires to commit its existing development agreement with
Developer into writing through this Development Fee Agreement for Developer's
services to manage, oversee, and complete development of the Apartment Housing.
Developer desires to commit its existing development agreement with Owner into
writing through this Development Fee Agreement and Developer is willing to
assign all development rights to the Apartment Housing to Owner, to undertake
performance of such development services, and to fulfill all obligations of the
Developer set forth in this Agreement, in consideration of Owner's restated
promise to pay to Developer the fee specified in this Agreement.

         NOW THEREFORE, in consideration of the foregoing recitals and the
mutual promises and undertakings in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Owner and Developer agree as follows.

                                       1


                                    SECTION I
                               CERTAIN DEFINITIONS

         As used in this Agreement, the following terms shall, when capitalized,
have the following meanings:

         "Code" means the Internal Revenue Code of 1986, as amended.

         "Construction Documents" means the contract documents between the Owner
and the Construction Lender pertaining to construction of the Apartment Housing.

         "Construction Lender" means [[Construction_Lender_Company_Name]], which
has committed to make a loan to finance construction of the Apartment Housing.

         "Construction Loan" means the loan to finance construction of the
Apartment Housing, made to Owner by the Construction Lender.

         "Contractor" means[[General_Contractor_Company_Name]].

         "Department" means the [[Apart_State]] agency responsible for the
reservation and allocation of Tax Credits.

         "Development Fee" means the fee for development services described in
Section 2 of this Agreement.

         "Partnership Agreement" shall mean the Amended and Restated Agreement
of Limited Partnership of [[PshipPartnership]], a [[Apart_State]] limited
partnership.

         "Tax Credits" means the low-income housing tax credits found in Section
42 of the Code, and all rules, regulations, rulings, notices and other
promulgations thereunder.

                                    SECTION 2
                     ENGAGEMENT OF DEVELOPER; FEE; SERVICES

         2.1 Engagement; Term. Owner hereby confirms the engagement of Developer
to act as developer of the Apartment Housing, and to perform the various
covenants and obligations of the Developer under this Agreement. Developer
hereby confirms and accepts such engagement and agrees to perform fully and
timely each and every one of its obligations under this Agreement. The term of
such engagement shall commence on the date hereof and subject to the pre-payment
provisions of Section 3 shall expire on December 31, 2012.

         2.2 Development Fee. In consideration of Developer's prior activities
and Developer's agreement to provide development services during the term of
this Agreement, Owner agrees to pay the Developer a Development Fee in the
amount of [[Development_Fee]] ("Development Fee"). The Development Fee shall be
payable in accordance with Section 3 of this Agreement.

                                       2


         2.3      Development Services.

         (a)      Prior Services.  Owner acknowledges that Developer has, prior
to the date hereof,  performed substantial  development services relating to the
Apartment Housing.  Such services (the "Prior Services") have included the
following.

                  (1)      Services Rendered Prior to 10% Carryover.

                           (A)      Developer has  identified a Contractor  and
recommended  to the Owner to enter into a construction contract with the
Contractor for the building of the Apartment Housing.

                           (B)      Developer has: estimated the cost of
construction;  determined the construction period;  prepared a monthly-estimated
construction chart reflecting the construction services required each month; and
prepared a preliminary construction budget.

                           (C)      Developer  has  reviewed  the plans and
specifications  for  compliance  with design  criteria and construction
contracts.

                           (D)      Developer  has  identified an architect and
recommended  to the Owner to execute an  architectural contract for the planning
and design of the Apartment Housing.

                           (E)      Developer  has placed its own  capital  at
risk in  anticipation  of the  Apartment  Housing  being constructed, leased and
Tax Credits awarded.

                  (2)      Other Prior Services.

                           (A)      Developer has identified and recommended to
Owner a Construction  Lender to obtain the Construction Loan.

                           (B)      Developer  has  negotiated  and  conferred
with an insurance  carrier to provide a builder's  risk policy during
construction.

         (b) Future Services. Developer shall monitor construction of the
Apartment Housing for Owner and shall provide Owner with information requiring
Owner's intervention to resolve construction issues. Owner shall allow Developer
full access to the Apartment Housing during the construction period. Developer
and Developer's agents shall perform their work in a manner that minimizes
interference with the management and operation of the Apartment Housing.

                                       3


                  (1)      Developer shall exert its best efforts to ensure that
the Contractor performs its obligations under the Construction Documents in a
diligent and timely manner.

                  (2)      Developer shall monitor pre-construction conferences
and review pre-construction documents, including drawings, specifications,
contracts, and schedules.

                  (3)      Developer shall identify construction issues and
inform Owner of the same.

                  (4)      Developer shall review subcontract bids received by
the Contractor and make a recommendation to the Owner.

                  (5)      Developer shall monitor field order and change order
procedures and inform the Owner.

                  (6)      Developer shall attend construction progress meetings
at the Apartment Housing site to monitor construction progress and report to the
Owner the outcome of that meeting.

                  (7)      Developer shall review the Contractor's monthly pay
applications.

                  (8)      Developer shall monitor the Contractor's progress
with respect to the approved Apartment Housing schedule and keep the Owner
informed of all pertinent Apartment Housing issues and construction progress.

                  (9)      Developer shall advise Owner with respect to
relations with engineers,  architects,  and other  construction professionals.

                  (10) Developer shall maintain relations with the City of
[[Apart_City]] and other governmental authorities having jurisdiction over
development of the Apartment Housing and inform the Owner of any construction or
building issues.

         (c) Assignment of Development Rights. Developer hereby assigns to Owner
all rights to the development of the Apartment Housing, including but not
limited to, all tangible and intangible rights arising with respect to the name
[[PshipPartnership]], the design of the Apartment Housing, the plans and
specifications for the Apartment Housing and all rights arising under the
agreements with Apartment Housing architects, engineers and other Apartment
Housing design and construction professionals.

                                       4


                                    SECTION 3
                            DEVELOPMENT FEE PAYMENTS

         3.1 Services Rendered Prior to December 31,
[[Year_of_Reservation_when_Carryover_Cert_]]. The Parties acknowledge and agree
that Developer has earned the sum of
$[[Amount_of_Development_Fee_Earned_on_the_]] for services rendered prior to
December 31, [[Year_of_Reservation_when_Carryover_Cert_]], that said amount is
reasonable in relation to the work performed, is fully earned as of that date
and said amount shall be paid in any event notwithstanding the termination of
this Agreement. The Parties further acknowledge and agree that the Owner has
accrued the Development Fee of $[[Amount_of_Development_Fee_Earned_on_the_]],
under its method of accounting, and has reported the Development Fee expense on
its [[Year_of_Reservation_when_Carryover_Cert_]] income tax return.

         3.2 Payment of Development Fee. The Development Fee shall be paid to
the Developer from capital contribution payments received by the Owner in
accordance with Section 9.2(b) of the Partnership Agreement. If the Development
Fee is not paid in full in accordance with Section 9.2(b) of the Partnership
Agreement then the balance of the Development Fee shall be paid from available
net operating income in accordance with the terms of Section 11.1 of the
Partnership Agreement, but in no event later than December 31, 2013. Also, if
the Development Fee is not paid in full in accordance with Section 9.2(b) of the
Partnership Agreement then the unpaid portion shall accrue interest at a rate
equal to the 5-year Treasury money market rate in effect as of the date of the
last capital contribution payment referenced in Section 7.2(b) of the
Partnership Agreement.

         3.3 Accrual of Development Fee. The Development Fee shall be earned no
later than the end of the tax credit period referenced in Section 42(f)(1) of
the Code. Once any portion of the Development Fee has been earned, it shall be
payable by the Partnership in all events.

                                    SECTION 4
                                   TERMINATION

         Neither Party to this Agreement shall have the right to terminate this
Agreement prior to the expiration of the term without cause. Owner may terminate
this Agreement without further liability, for cause, which shall mean any one of
the following:

         (a) a material breach by Developer of its obligations under this
Agreement that is not cured within thirty (30) days after notice thereof (or, as
to any non-monetary obligations that is not reasonably capable of cure within 30
days, and provided that cure is commenced within 10 days of notice and
diligently pursued thereafter to completion, within such time as may reasonably
be necessary to complete such cure);

         (b) a fraudulent or intentionally incorrect report by Developer to
Owner with respect to the Apartment Housing; or

         (c) any intentional misconduct or gross negligence by Developer with
respect to its duties under this Contract.

                                       5


         Upon proper termination of this Agreement by Owner pursuant to this
Section 4, all rights of Developer to receive unearned Development Fees pursuant
to this Agreement with respect to services not yet performed shall terminate.
Developer shall receive the full Development Fee for Prior Services and shall
receive a portion of the Development Fee for Future Services based on the
percentage of Completion of Construction of the Apartment Housing at the time of
termination. Nothing in this Section 4 shall be deemed to prevent Owner from
bringing an action against Developer to recover fully all damages resulting from
any of the causes set forth in paragraphs (a), (b) or (c) above, or to prevent
Owner from contending in any action or proceeding that the Future Services were
not earned by Developer.

                                    SECTION 5
                               GENERAL PROVISIONS

         5.1 Notices. Notices required or permitted to be given under this
Agreement shall be in writing sent by registered or certified mail, postage
prepaid, return receipt requested, to the Parties at the following addresses, or
such other address as is designated in writing by the Party, the date of
registry thereof, or the date of certification receipt therefor being deemed the
date of such notice; provided, however, that any written communication
containing such information sent to a Party actually received by a Party shall
constitute notice for all purposes of this Agreement.

If to Developer:                   [[Developer_Company_Name]]
                                   r18

If to Owner:                       [[PshipPartnership]]
                                   [[Address_for_Executive_Office]]

         5.2  Interpretation.
              --------------

         (a) Headings. The section headings in this Agreement are included for
convenience only; they do not give full notice of the terms of any portion of
this Agreement and are not relevant to the interpretation of any provision of
this Agreement.

         (b) Relationship of the Parties. Neither Party hereto shall be deemed
an agent, partner, joint venturer, or related entity of the other by reason of
this Agreement and as such neither Party may enter into contracts or agreements
which bind the other Party.

         (c) Governing Law. The Parties intend that this Agreement shall be
governed by and construed in accordance with the laws of the state of
[[Apart_State]] applicable to contracts made and wholly performed within
[[Apart_State]] by persons domiciled in [[Apart_State]].

         (d) Severability. Any provision of this Agreement that is deemed
invalid or unenforceable shall be ineffective to the extent of such invalidity
or unenforceability, without rendering invalid or unenforceable the remaining
provisions of this Agreement.

                                       6


         5.3 Integration; Amendment. This Agreement constitutes the entire
agreement of the Parties relating to the subject matter hereof. There are no
promises, terms, conditions, obligations, or warranties other than those
contained herein. This Agreement supersedes all prior communications,
representations, or agreements, verbal or written, among the Parties relating to
the subject matter hereof. This Agreement may not be amended except in writing.

         5.4 Attorney' Fees. If any suit or action arising out of or related to
this Agreement is brought by any Party to any such document, the prevailing
Party shall be entitled to recover the costs and fees (including without
limitation reasonable attorneys' fees and costs of experts and consultants,
copying, courier and telecommunication costs, and deposition costs and all other
costs of discovery) incurred by such Party in such suit or action, including
without limitation to any post-trial or appellate proceeding.

         5.5 Binding  Effect.  This Agreement  shall bind and inure to the
benefit of, and be  enforceable  by, the Parties hereto and their respective
successors, heirs, and permitted assigns.

         5.6 Assignment. Neither Party may assign this Agreement without the
consent of the other Party. No assignment shall relieve any Party of liability
under this Agreement unless agreed in writing to the contrary.

         5.7 Third-Party Beneficiary Rights. No person not a Party to this
Agreement is an intended beneficiary of this Agreement, and no person not a
Party to this Agreement shall have any right to enforce any term of this
Agreement. Notwithstanding the Parties acknowledge that
[[WNCs_Partnership_Name]] shall have the right to enforce any term of this
Agreement.

         5.8 Related Parties. The Parties acknowledge that the Owner and
Developer are related parties under Code Section 267 and that Owner is an
accrual basis taxpayer. As such, the Parties agree and consent that each and
every year during the term of this Agreement that Owner accrues any or all of
the principal and/or interest of the Development Fee that the Developer (whether
or not an accrual basis taxpayer) will include an equal amount in Developer's
income tax return for that year.

         5.9 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement binding
on all the Parties, notwithstanding that all Parties are not signatories to the
same counterpart.

                                       7


         5.10 Further Assurances. Each Party agrees, at the request of the other
Party, at any time and from time to time after the date hereof, to execute and
deliver all such further documents, and to take and forbear from all such
action, as may be reasonably necessary or appropriate in order more effectively
to perfect the transfers or rights contemplated herein or otherwise to confirm
or carry out the provisions of this Agreement.

         5.11 Mandatory Arbitration. Any person enforcing this Agreement may
require that all disputes, claims, counterclaims, and defenses ("Claims")
relating in any way to this Agreement or any transaction of which this Agreement
is a part (the "Transaction"), be settled by binding arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration Association
and Title 9 of the U.S. Code. All claims will be subject to the statutes of
limitation applicable if they were litigated.

         If arbitration occurs, one neutral arbitrator will decide all issues
unless either Party's Claim is $100,000.00 or more, in which case three neutral
arbitrators will decide all issues. All arbitrators will be active
[[Apart_State]] State Bar members in good standing. In addition to all other
powers, the arbitrator(s) shall have the exclusive right to determine all issues
of arbitrability. Judgment on any arbitration award may be entered in any court
with jurisdiction.

         If either Party institutes any judicial proceeding relating to the
Transaction, such action shall not be a waiver of the right to submit any Claim
to arbitration. In addition, both Parties have the right before, during, and
after any arbitration to exercise any of the following remedies, in any order or
concurrently: (i) setoff, (ii) self-help repossession, (iii) judicial or
non-judicial foreclosure against real or personal property collateral, (iv)
provisional remedies, including injunction, appointment of receiver, attachment,
claim and delivery, and replevin.

         This arbitration clause cannot be modified or waived by either Party
except in a writing that refers to this arbitration clause and is signed by both
Parties.

         IN WITNESS WHEREOF, the Parties have caused this Development Fee
Agreement to be executed as of ___________________, 2000.


DEVELOPER:                         [[Developer_Company_Name]]

                                    By:     ____________________________



OWNER:                    [[PshipPartnership]]

                                    By:     _____________________________






                                       8




                                    EXHIBIT A


Being 3.0 acre tract being part of lot 7, peaceful Acres Subdivision, shown in
plat of record in Plat Book 3, pages 131 & 132, in the Chancery Clerk's office,
Holly Springs, Marshall County Mississippi, and lying and being situated in the
Northeast Quarter of Section 2, Township 3-South, Range 5-West, said county and
state, being more particularly described as follows:

Beginning at the Northwest  corner of the  Northeast  Quarter of Section 2,
township 3-South, range 5-West, Marshall County Mississippi and thence run South
0 deg. 12 min. West along the west line of said  Subdivision,  30 ft. to a point
in the south line of Stonewall Road; thence South 89 deg. 51 min. East along the
south line of said road 1260.86 ft. to a point,  said point being the  northeast
corner  of Lot 8 of said  Subdivision  and being  the true  point of  beginning;
thence  continuing  South 89 deg. 51 min. East along the south line of Stonewall
Road,  being the north line of lot 7, a distance  of 248.13 ft. to the west line
of lot 6; thence run South 0 deg. 29 min. 10 sec.  West along the line  dividing
Lots 6 & 7 a distance of 524.30 ft. to a point; thence run North 89 deg. 51 min.
West a distance  of 249.35 ft. to a point in the east line of Lot 8;  thence run
North 0 deg. 37 min. 09 sec.  East along the line dividing Lots 7 & 8 a distance
of 535.39 ft. to the point og beginning, containing 3.0 acres.






                                       1



                               GUARANTY AGREEMENT


         FOR VALUE RECEIVED, the receipt and sufficiency of which is hereby
acknowledged, and in consideration of the agreement of
[[Name_of_Person_or_Entity_to_Whom_the_Dev]], (the "Developer") to permit
deferral of the [[Development_Fee]] due from [[PshipPartnership]] a
[[Apart_State]] limited partnership ("Debtor") to the Developer, the undersigned
Guarantor(s), hereby unconditionally guarantees the full and prompt payment when
due, whether by acceleration or otherwise of that certain Developer Fee from
Debtor to the Developer, evidenced by the Development Fee Agreement dated the
even date herewith, and incorporated herein by this reference. The foregoing
described debt is referred to hereinafter as the "Liabilities" or "Liability."

         The undersigned further agree to pay all expenses paid or incurred by
the Debtor or Developer in endeavoring to collect the Liabilities, or any part
thereof, and in enforcing the Liabilities or this Guaranty Agreement (including
reasonable attorneys' fees if collected or enforced by law or through an
attorney-at-law). The undersigned hereby represents and warrants that the
extension of credit or other financial accommodations by the Developer to Debtor
will be to the interest and advantage of the undersigned, and acknowledges that
this Guaranty Agreement is a substantial inducement to the Developer to extend
credit to Debtor and that the Developer would not otherwise extend credit to
Debtor.

         Debtor or Developer may, from time to time, without notice to or
consent of the undersigned, (a) retain or obtain a security interest in any
property to secure any of the Liabilities or any obligation hereunder, (b)
retain or obtain the primary or secondary liability of any party or parties, in
addition to the undersigned, with respect to any of the Liabilities and (c)
resort to the undersigned for payment of any of the Liabilities, whether or not
the Debtor or Developer shall have resorted to any property securing any of the
Liabilities or any obligation hereunder or shall have preceded against any other
party primarily or secondarily liable on any of the Liabilities.

         Debtor and Developer must mutually agree to (a) extend or renew for any
period this Agreement (whether or not longer than the original period) or alter
any of the Liabilities, (b) release or compromise any Liability of the
undersigned hereunder or any Liability of any other party or parties primarily
or secondarily liable on any of the Liabilities, or (c) release, compromise or
subordinate its title or security interest, or any part thereof, if any, in all
or any property now or hereafter securing any of the Liabilities or any
obligation hereunder, and permit any substitution or exchange for any such
property.

                                       1


         The undersigned hereby expressly waives: (a) notice of the existence or
creation of all or any of the Liabilities, (b) notice of any amendment or
modification of any of the instruments or documents evidencing or securing the
Liabilities, (c) presentment, demand, notice of dishonor and protest, (d) all
diligence in collection or protection of or realization upon the Liabilities or
any thereof, any obligation hereunder, or any security for any of the foregoing,
and (e) the right to require the Developer to proceed against Debtor on any of
the Liabilities, though nothing herein shall prevent the Developer from
proceeding against Debtor on any of the Liabilities.

         In the event any payment of Debtor to the Developer is held to
constitute a preference under the bankruptcy laws, or if for any other reason
the Developer is required to refund such payment or pay the amount thereof to
any other party, such payment by Debtor to the Developer shall not constitute a
release of Guarantor from any Liability hereunder, but Guarantor agrees to pay
such amount to the Developer upon demand and this Guaranty shall continue to be
effective or shall be reinstated, as the case may be, to the extent of any such
payment or payments.

         No delay or failure on the part of the Developer in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise by the Developer of any right or remedy shall preclude other or future
exercise thereof or the exercise of any other right or remedy. No action of the
Developer permitted hereunder shall in any way impair or affect this Guaranty
Agreement. For the purpose of this Guaranty Agreement, the Liabilities of Debtor
to the Developer are guaranteed notwithstanding any right or power of Debtor or
anyone else to assert any claim or defense as to the invalidity or
unenforceability of any such obligation, and no such claim or defense shall
impair or affect the obligations of the undersigned hereunder.

         Any payment from Guarantor directly to Developer in accordance with
this Agreement shall be classified and booked as a non-refundable cost overrun
payment from Guarantor to Debtor in consideration of this Guaranty Agreement and
then a payment by Debtor to Developer in consideration of the Development Fee
Agreement.

         This Guaranty Agreement shall be binding upon the undersigned, and upon
the legal representatives, heirs, successors and assigns of the undersigned, and
may be enforced against them by the Debtor or Developer or their legal
representatives, heirs, successors and assigns.

         This Guaranty Agreement has been made and delivered in the state of
[[Apart_State]] and shall be construed and governed under [[Apart_State]] law.

                                       2


         Whenever possible, each provision of the Guaranty Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty Agreement shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition of invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty Agreement.

         Whenever the singular or plural number, masculine or feminine or neuter
is used herein, it shall equally include the other where applicable. In the
event this Guaranty Agreement is executed by more than one guarantor, this
Guaranty Agreement and the obligations hereunder are the joint and several
obligation of all the undersigned.

         Guarantor consents to the jurisdiction of the courts in the State of
[[Apart_State]] and/or to the jurisdiction and venue of any United States
District Court in the State of [[Apart_State]] having jurisdiction over any
action or judicial proceeding brought to enforce, construe or interpret this
Guaranty. Guarantor agrees to stipulate in any such proceeding that this
Guaranty is to be considered for all purposes to have been executed and
delivered within the geographical boundaries of the State of [[Apart_State]],
even if it was, in fact, executed and delivered elsewhere.

     IN WITNESS  WHEREOF,  the  undersigned  have hereunto  caused this Guaranty
Agreement to be executed as of _______________________, 2000.

Signed, sealed and delivered                                  GUARANTOR:
                                                              ---------
in the presence of:

- ----------------------------
Witness
                                        --------------------------
____________________________            [[Name_of_Guarantor_of_Development_Fee]]
Notary Public
My Commission Expires:
                                        Address for Guarantor:
                                         -------------------------
____________________________             [[Guarantors_Street_Address]],
(NOTARY SEAL)                            [[Guarantors_City]]
                                         [[Guarantors_State[[]]Guarantors_Zip]]



                                       3



                     DEVELOPMENT, CONSTRUCTION AND OPERATING
                                BUDGET AGREEMENT


         This Development, Construction and Operating Budget Agreement
("Agreement") is entered into as of the date written below by and between
Byhalia Estates, L.P., a Mississippi limited Partnership ("Owner"), Semc, Inc.
("General Partner"), WNC Holding, LLC, a California limited liability company
("Limited Partner") and WNC Housing, L.P., a California limited Partnership
("Special Limited Partner"). Owner, General Partner, Limited Partner and Special
Limited Partner collectively may be referred to as the "Parties" or individually
may be referred to as a "Party".

                                    RECITALS

         A. Owner has acquired land in Byhalia, Marshall County, Mississippi
(the "Real Property").

         B. Owner intends to develop on the Real Property a twenty-five (25)
unit low-income rental housing complex and other related improvements for
families, which is intended to qualify for federal low-income housing tax
credits (the "Apartment Housing").

         C. On the even date herewith a partnership agreement for Byhalia
Estates, L.P. ("Partnership Agreement") was entered into by and between Semc,
Inc. as the general partner ("General Partner"), WNC Holding, LLC as the limited
partner and WNC Housing, L.P. as the special limited partner (the "Special
Limited Partner") (the Partnership Agreement is incorporated herein by this
reference as if the same were reproduced in full and any capitalized terms not
defined in this Agreement shall have the meaning as defined in the Partnership
Agreement).

         D. In determining whether to be admitted into Byhalia Estates, L.P. and
contribute funds to the development of the Apartment Housing, the Limited
Partner and Special Limited Partner performed a due diligence review. Part of
the due diligence review included an analysis of the available sources of funds
to develop the Apartment Housing, the cost of construction, the anticipated
revenues associated with the rental of the Apartment Housing units and the
expenses required to operate the Apartment Housing.

         E.  The  Parties  recognize and acknowledge that the final construction
cost  determination  involves substantial negotiations with lenders, contractors
and governmental authorities.

         F.  The Parties recognize and acknowledge that a final operating budget
involves  substantial  negotiations with lenders and governmental authorities.

         G. Limited Partner's and Special Limited Partner's decision to execute
the Partnership Agreement is based, in part, on their acceptance of the sources
of funds available to develop the Apartment Housing, the cost of construction to
build the Apartment Housing and the operating budget necessary to provide a
positive Debt Service Coverage.

                                       1


         Now Therefore, in consideration of the foregoing recitals which are a
part of this Agreement, the mutual promises and undertakings in this Agreement,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties agree as follows.

         1. Source of Funds. Attached hereto as Exhibit "A" and incorporated
herein by this reference is the Apartment Housing Source of Funds. The Source of
Funds have been specified in the Partnership Agreement as the Construction Loan,
the Mortgage, the Capital Contribution of the General Partner, the Capital
Contribution of the Limited Partner and the Capital Contribution of the Special
Limited Partner. Unless expressly permitted in the Partnership Agreement,
Consent of the Special Limited Partner is required for any change to the Source
of Funds.

         2. Development  Budget. Attached hereto as Exhibit "B" and incorporated
herein by this reference is the  Development Budget in an amount equal to
$1,006,035.  Owner  acknowledges  and represents that the attached  Development
Budget includes the total costs and expenses to acquire, develop and construct
the Real Property and the Apartment Housing.

         3. Construction Proforma. Attached hereto as Exhibit "C" and
incorporated herein by this reference is the Construction Proforma. Owner
acknowledges and represents that the attached Construction Proforma has been
reviewed by and approved by the Construction Lender, Mortgage lender if
applicable and any governmental authorities if applicable. The Construction
Proforma contains a list, by name, of all subcontractors and material suppliers
who will account for five percent or more of the cost of construction of the
Apartment Housing. Also included is a trade payment breakdown specifying the
cost of each classification of construction requirements pursuant to Plans and
Specifications and the other Project Documents. In accordance with the
Partnership Agreement, if the construction costs exceed the sum of the Capital
Contributions, the proceeds of the Mortgage and the Development Fee then the
General Partner shall be responsible for and shall be obligated to pay such
deficiencies.

         4. Operating Proforma. Attached hereto as Exhibit "D" and  incorporated
herein by this reference is the Operating Proforma. Owner acknowledges and
represents  that  the  attached  Operating  Proforma  has been  reviewed  by and
approved  by the Construction Lender, the Mortgage lender and any governmental
authorities if applicable.

         5. Notices. Any notice given pursuant to this Agreement may be served
personally on the Party to be notified,  or may be mailed,  first class postage
prepaid,  to the following address, or to such other address as a Party may from
time to time designate in writing:

         To the General Partner:    SEMC, Inc.
                                    2508 Hwy 72
                                    Glen, Mississippi 38846

         To the Limited Partner:    WNC Holding, LLC
                                    c/o WNC & Associates, Inc.
                                    3158 Redhill Ave., Suite 120
                                    Costa Mesa, CA 92626-3416


                                       2


         To the Special
         Limited Partner:           WNC Housing, L.P.
                                    3158 Redhill Ave., Suite 120
                                    Costa Mesa, CA 92626-3416

         6. Successors  and  Assigns.  All the terms and  conditions  of this
Agreement  shall be binding  upon and inure to the benefit of the successors and
assigns of the Parties.

         7. Counterparts.  This  Agreement  may be  executed  in one or more
counterparts,  each of  which  shall be  deemed  an original,  and said
counterparts  shall  constitute  but one and the same  instrument  which  may
sufficiently  be  evidenced  by one counterpart.

         8. Captions.  Captions  to and  headings  of the  Sections  of this
Agreement  are solely for the  conveniences  of the Parties,  are not a part of
this  Agreement,  and shall not be used for the  interpretation or determination
of the validity of this Agreement or any provision hereof.

         9. Saving Clause. If any provision of this Agreement, or the
application of such provision to any Person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to Persons or circumstances other than those as to which it is held invalid,
shall not be affected thereby.

         10. Governing Law.  This Agreement and its application shall be
governed by the laws of Mississippi.

         11. Attorney's Fees. If a suit or action is instituted in connection
with an alleged breach of any provision of this Agreement, the prevailing Party
shall be entitled to recover, in addition to costs, such sums as the court may
adjudge reasonable as attorney's fees, including fees on any appeal.


                  [Remainder of page intentionally left blank.]







                                       3




         In Witness Whereof, this Development, Construction and Operating Budget
Agreement is made and entered into as of _________, 2001.

                                    GENERAL PARTNER

                                    SEMC, Inc.

                                    By:
                                            ----------------------------------
                                            Scotty R. Little,
                                            President

                                    LIMITED PARTNER

                                    WNC Holding, LLC

                                    By:     WNC & Associates, Inc.,
                                            Managing Member

                                            By:      _________________________
                                                     David N. Shafer,
                                                     Executive Vice President

                                    SPECIAL LIMITED PARTNER

                                    WNC Housing, L.P.

                                    By:     WNC & Associates, Inc.,
                                            General Partner

                                            By:      _________________________
                                                     David N. Shafer,
                                                     Executive Vice President












                                       4




                                    EXHIBIT A

           TO DEVELOPMENT, CONSTRUCTION AND OPERATING BUDGET AGREEMENT

                                 SOURCE OF FUNDS


















                                       A




                                    EXHIBIT B

           TO DEVELOPMENT, CONSTRUCTION AND OPERATING BUDGET AGREEMENT

                               DEVELOPMENT BUDGET


















                                       B




                                    EXHIBIT C

           TO DEVELOPMENT, CONSTRUCTION AND OPERATING BUDGET AGREEMENT

                              CONSTRUCTION PROFORMA



















                                       C






                                    EXHIBIT D

           TO DEVELOPMENT, CONSTRUCTION AND OPERATING BUDGET AGREEMENT

                               OPERATING PROFORMA

















                                       D