Exhibit 10.3

THIRD AMENDMENT
TO AMENDED AND RESTATED AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP
OF
ARKANSAS CITY APARTMENTS, LIMITED PARTNERSHIP

This Third Amendment to Amended and Restated Agreement and Certificate of
Limited Partnership of ARKANSAS CITY APARTMENTS, LIMITED PARTNERSHIP (this
“Amendment”), is dated for reference purposes only January 1st, 2012, by and
between DAVID B. GIBSON III, an individual (the “Operating General Partner”),
and O.L. PURYEAR AND SONS CONSTRUCTION CO., INC., an Arkansas corporation
(“OLP”, together with the Operating General Partner, collectively, the “General
Partner”); REAL ESTATE ASSOCICATES LIMITED VII, a California limited partnership
(the “Withdrawing Limited Partner”); and SOUTHLAND PROPERTIES, INC., an Arkansas
corporation (the “Incoming Limited Partner” and together with the General
Partner and the Withdrawing Limited Partner, each a “Party” and any two or more,
as the context requires, collectively, the “Parties”), with reference to the
following:

A.         ARKANSAS CITY APARTMENTS, LIMITED PARTNERSHIP (the “Partnership”) was
formed as a limited partnership under the laws of the State of Arkansas and is
being governed pursuant to an Amended and Restated Agreement and Certificate of
Limited Partnership, dated as of May 7, 1984, as amended by (i) the First
Amendment to Amended and Restated Agreement and Certificate of Limited
Partnership, dated May 21, 1987, effective as of May 7, 1984 and (ii) the Second
Amendment of Amended and Restated Agreement and Certificate of Limited
Partnership dated March 10, 1988 (collectively, the “Partnership Agreement”).

B.         The Parties desire to enter into this Amendment to provide for, among
other things (i) the withdrawal of the Withdrawing Limited Partner from the
Partnership as the Limited Partner of the Partnership, (ii) the admission of the
Incoming Limited Partner into the Partnership as the Limited Partner, and (iii)
other amendments to the Partnership Agreement.

NOW, THEREFORE, in consideration of the covenants and agreements hereinafter set
forth, and for such other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the Parties agree that the Partnership
Agreement is amended as follows:

1.                  Capitalized terms not defined in this Amendment shall have
the meanings set forth in the Partnership Agreement.

2.                  Effective as of the date that the Withdrawing Limited
Partner has received the sum of $1,500.00 from the Operating General Partner
and/or the Incoming Limited Partner (the “Effective Date”), which payment the
Withdrawing Limited Partner acknowledges shall be treated as a direct
acquisition of the “Interest” (as that term is defined below) and in full
satisfaction of all obligations and liabilities due the Withdrawing Limited
Partner in connection with or in any manner arising out of the Partnership, the
Project or any other assets owned by the Partnership:

(a)               The Withdrawing Limited Partner withdraws from the Partnership
and acknowledges that it has no further interest therein and its entire interest
in the Partnership, including, but not limited to, its right to and/or interests
in all Cash From Operations, Net Refinancing Cash, Cash from Disposition or
Partial Disposition and other Partnership distributions, other Partnership funds
and assets, and any reimbursements of expenses, repayments of any loans made by
the Withdrawing Limited Partner or any Affiliate to the Partnership
(collectively, the “Interest”), is transferred to the Incoming Limited Partner;

(b)               The Incoming Limited Partner is admitted into the Partnership
as the Limited Partner; all Profits and Losses, Cash From Operations, Net
Refinancing Cash, Cash from Disposition or Partial Disposition and other
Partnership assets allocated or to be distributed to the Limited Partner shall
be allocated or distributed, as appropriate, to the Incoming Limited Partner;
and the Incoming Limited Partner assumes and agrees to perform all of the
obligations of the Limited Partner under the Partnership Agreement.

3.                  Notwithstanding the withdrawal of the Withdrawing Limited
Partner, each of the other Partners elects to continue the business of the
Partnership.

4.                  The defined term “Limited Partner” is deleted in its
entirety and replaced with the following:

“Limited Partner” means Southland Properties, Inc., an Arkansas corporation, or
its successors and assigns.

5.                  The address for the Limited Partner in Section 13.2.2 of the
Partnership Agreement is deleted in its entirety and replaced with the
following:

Southland Properties, Inc.

710 Meador Drive

Dumas, Arkansas 71639

6.                  As a material inducement to the Withdrawing Limited Partner
entering into this Amendment, the General Partner represents and warrants to the
Withdrawing Limited Partner that the following are true and correct:

(a)               The Partnership at all times has been and continues to be a
limited partnership duly organized, validly existing and in good standing under
the laws governing limited partnerships, as adopted in the state of its
formation. The Partnership has taken all requisite action in order to conduct
lawfully its business in the state in which the Project is situated, and is not
qualified or licensed to do business and is not required to be so qualified or
licensed in any other jurisdiction. The Partnership has the full power and
authority to carry on its business, including without limitation, to own, lease
and operate the Project.

(b)               (i) The execution and delivery of this Amendment by the
General Partner and the performance of the transactions contemplated herein have
been duly authorized by all requisite corporate and partnership proceedings, and
(ii) assuming the due and proper execution and delivery by the Withdrawing
Limited Partner, this Amendment is binding upon and enforceable against the
General Partner in accordance with its terms.

(c)               The Partnership has obtained all necessary consents and
approvals for the transactions contemplated by this Agreement, including, but
not limited to, the consent of the holders of all Mortgages and all Governmental
Agencies.

7.                  As a material inducement to the Withdrawing Limited Partner
entering into this Amendment, the Incoming Limited Partner hereby represents and
warrants to the Withdrawing Limited Partner that the following are true and
correct :

(a)               The execution and delivery of this Amendment by the Incoming
Limited Partner and the performance of the transactions contemplated herein have
been duly authorized by all requisite corporate and partnership proceedings.

(b)               Assuming the due and proper execution and delivery by the
Withdrawing Limited Partner, this Amendment is binding upon and enforceable
against the Incoming Limited Partner in accordance with its terms.

(c)               No proceeding before any federal, state, municipal or other
governmental department, commission, board or agency is pending against the
Incoming Limited Partner or, to the knowledge of the Incoming Limited Partner,
threatened against the Incoming Limited Partner pursuant to which an unfavorable
judgment would restrain, prohibit, invalidate, set aside, rescind, prevent or
make unlawful this Amendment or the transactions contemplated hereunder, nor
does the Incoming Limited Partner know of any reason to believe any such
proceeding will be instituted.

(d)               The Incoming Limited Partner has incurred no obligation or
liability, contingent or otherwise, for brokerage or finders’ fees or agents’
commissions or other similar payment in connection with this Amendment.

(e)               The Incoming Limited Partner is aware of the restrictions on
transfer or encumbrance of the Interest under the Partnership Agreement, as well
as the transfer restrictions imposed by the Securities Act of 1933, as amended,
and applicable state securities laws (the “Securities Laws”).  The Incoming
Limited Partner is able to bear the economic risk of its investment in the
Interest, is aware that it must hold the Interest for an indefinite period and
that the Interest has not been registered under the applicable Securities Laws
and may not be sold or otherwise transferred unless permitted by the terms of
the Partnership Agreement and the Interest is registered, or an exemption from
the registration requirements is available with respect thereto, under the
Securities Laws.  The Incoming Limited Partner is acquiring the Interest for its
own account and not with a view to resell, transfer or otherwise dispose
thereof.

(f)                 The Incoming Limited Partner is an Affiliate of the OLP, a
General Partner and, knows, therefore, at least as much about the Partnership as
the Withdrawing Limited Partner. The Incoming Limited Partner is experienced in
financial transactions such as ownership of the Interest and understands the
business and operations of the Partnership and its ownership and operation of
the Project.  The Incoming Limited Partner has had an opportunity to ask
questions about and seek information about the Interest, the Partnership and the
Project, and has not relied upon any express or implied representations or
warranties from the Withdrawing Limited Partner with regard to the Interest, the
Partnership or the Project, except as expressly provided herein.

8.                  As a material inducement to the General Partner and the
Incoming Limited Partner entering into this Amendment, the Withdrawing Limited
Partner represents and warrants that the following are true and correct:

(a)               The Withdrawing Limited Partner has at all times been and
continues to be duly organized, validly existing and in good standing under the
laws governing limited partnerships, as adopted in the state of its formation.

(b)               The Incoming Limited Partner shall acquire the Interest free
of any rights or claims thereto by any other party claiming by, through or under
the Withdrawing Limited Partner.

(c)               The execution and delivery of this Amendment by the
Withdrawing Limited Partner and the performance of the transactions contemplated
herein have been duly authorized by all requisite corporate and partnership
proceedings and, assuming the due and proper execution and delivery by the
General Partner and the Incoming Limited Partner, this Amendment is binding upon
and enforceable against the Withdrawing Limited Partner in accordance with its
terms.

(d)               To the Withdrawing Limited Partner’s knowledge, there is no
litigation, action, proceeding, investigation or claim pending or threatened
against or involving the Interest, or which questions the validity of this
Amendment, and, to the Withdrawing Limited Partner’s knowledge, there is no fact
or circumstance which could give rise to any such litigation, action,
proceeding, investigation or claim.

9.                  The representations and warranties set forth above in
paragraphs 6, 7, and 8 are true and correct as of the Effective Date and shall
survive the withdrawal of the Withdrawing Limited Partner from and the admission
of the Incoming Limited Partner into the Partnership as herein contemplated.

10.              Notwithstanding the withdrawal of the Withdrawing Limited
Partner, the General Partner acknowledges that from and after the Effective Date
matters may arise that relate back to events that occurred prior to the
Effective Date (for purposes of illustration and not limitation, audits by the
IRS).  The General Partner agrees that as to such matters (i) the General
Partner shall conduct itself in a manner which is consistent with the
obligations it had as the General Partner immediately prior to the Effective
Date and, accordingly, recognize all of the corresponding rights of the
Withdrawing Limited Partner as if the Withdrawing Limited Partner had not
withdrawn from the Partnership as provided in this Amendment and (ii) that
nothing herein shall relieve the General Partner from such pre-existing
obligations. Without limiting the generality of the foregoing, the General
Partner shall:

(a)               file on behalf of the Partnership for the current Fiscal Year
a United States Partnership Return of Income and such other tax returns and
other documents from time to time as may be required by the federal government
or by any state or any subdivision thereof within the time(s) prescribed by law
for such filings;

(b)               deliver to the Withdrawing Limited Partner within forty-five
(45) days after the end of the current Fiscal Year such tax information,
including, without limitation, a copy of Schedule K-1, as shall be reasonably
necessary for inclusion by the Withdrawing Limited Partner in its federal income
tax returns and required state income tax and other tax returns; and

(c)               deliver to the Withdrawing Limited Partner the current Fiscal
Year certified financial statement of the Partnership as required pursuant to
the terms of Section 11.7 of the Partnership Agreement.

If the General Partner shall fail, for any reason, to prepare and/or deliver to
the Withdrawing Limited Partner any of the returns or other information required
by this paragraph 10, the Withdrawing Limited Partner shall have the right to
cause such returns and other information prepared at the sole cost and expense
of the General Partner, plus an administrative fee payable to the Withdrawing
Limited Partner in an amount equal to fifteen percent (15%) of the actual
out-of-pocket costs incurred by the Withdrawing Limited Partner to have such
returns and information prepared. In furtherance of the foregoing, the
Withdrawing Limited Partner and its duly authorized representatives shall have
the right to inspect and copy such portions of the Partnership’s books of
account which are necessary or appropriate for the preparation of such returns
and information; provided, however, it is expressly understood and agreed by the
Withdrawing Limited Partner that such access is solely for the purpose of
preparing such returns or other information that the General Partner failed to
prepare and/or deliver as herein provided, and shall not be deemed to grant the
Withdrawing Limited Partner any other rights with respect to the Partnership
and/or the operation of its business.

11.              Without limiting the generality of the provisions of paragraph
10,

(a)               Within five (5) calendar days after the sending or the receipt
of any correspondence or communication relating to the Partnership to or from
the IRS which could affect the Withdrawing Limited Partner, the General Partner
who is the “tax matters partner” (as that term is defined in the Code) of the
Partnership (the “Tax Matters Partner”), shall promptly forward to the
Withdrawing Limited Partner a photocopy of all such correspondence or
communication(s).

(b)               The Tax Matters Partner, shall not, with respect to any matter
which could affect the Withdrawing Limited Partner, take any of the following
actions without the prior written consent or approval of the Withdrawing Limited
Partner:

(i)                  Extend the statute of limitations for assessing or
computing any tax liability against the Partnership (or the amount or character
of any Partnership tax items);

(ii)                Settle any audit with the IRS concerning the adjustment or
readjustment of any partnership item(s) (within the meaning of Section
6231(a)(3) of the Code);

(iii)               File a request for an administrative adjustment with the IRS
at any time or file a petition for judicial review with respect to any such
request;

(iv)              Initiate or settle any judicial review or action concerning
the amount or character of any partnership tax item(s) (within the meaning of
Section 6231(a)(3) of the Code); or

(v)                Intervene in any action brought by any other Partner for
judicial review of a final adjustment.

12.              In the event of any Partnership level proceeding instituted by
the IRS pursuant to Sections 6221 through 6233 of the Code which could affect
the Withdrawing Limited Partner, the Tax Matters Partner shall consult with the
Withdrawing Limited Partner regarding the nature and content of all action and
defense to be taken by the Partnership in response to such proceeding. The Tax
Matters Partner also shall consult with the Withdrawing Limited Partner
regarding the nature and content of any proceeding pursuant to Sections 6221
through 6233 of the Code instituted by or on behalf of the Partnership
(including the decision to institute proceedings, whether administrative or
judicial, and whether in response to a previous IRS proceeding against the
Partnership or otherwise).

13.              The General Partner approves the withdrawal of the Withdrawing
Limited Partner and confirms that there are no unsatisfied conditions or
obligations of the Withdrawing Limited Partner under the Partnership Agreement
with respect thereto.

14.              All of the provisions of this Amendment shall survive the
withdrawal of the Withdrawing Limited Partner from the Partnership.

15.              Except as amended by this Amendment, the Partnership Agreement
remains in full force and effect without change.

16.              This Amendment may be executed in counterparts and may be
executed by facsimile, each of which shall be deemed to be effective and all of
which when taken together, shall constitute one instrument.

17.              Each provision of this Amendment shall be considered separate
and if for any reason any provision or provisions herein are determined to be
invalid or contrary to any existing or future law, such invalidity shall not
impair the operation of or affect those portions of this Amendment which are
valid, such provision or provisions shall be deemed void and of no effect.

18.              The Parties shall execute and deliver such further instruments
and do such further acts and things as may be reasonably required to carry out
the intent and purposes of this Amendment.

 

 

[Signatures on following page(s)]

 

EXECUTED to be effective as of the Effective Date.

 

GENERAL PARTNER:

/s/David B. Gibson, III

 

DAVID B. GIBSON, III, an Individual

 

 

 

O. L. PURYEAR AND SONS CONSTRUCTION

 

CO., INC., an Arkansas corporation

 

 

 

By:  /s/Glynn A. Puryear

 

    Name:  Glynn a. Puryear

 

    Title:  President

 

 

 

 

INCOMING LIMITED PARTNER:

SOUTHLAND PROPERTIES, INC., an

 

Arkansas corporation

 

 

 

By:  /s/Annette Cowen

 

    Name:  Annette Cowen

 

    Title:  President

 

 

 

 

WITHDRAWING LIMITED PARTNER:

REAL ESTATE ASSOCIATES LIMITED VII,

 

a California limited partnership

 

 

 

 

 

By:  NATIONAL PARTNERSHIP INVESTMENTS,

 

LLC,

 

a California limited liability company,

 

its corporate general partner

 

 

 

By:  BETHESDA HOLDINGS I, LLC

 

a Delaware limited liability company,

 

its member

 

 

 

By:  AIMCO/BETHESDA HOLDINGS, INC.,

 

a Delaware corporation,

 

its member

 

 

 

By:  /s/John Bezzant

 

    Name:  John Bezzant

 

    Title:  Executive Vice President

 

  

 

 

 

 

 

[SIGNATURE PAGE-ARKANSAS CITY APARTMENTS]