Document:

EXHIBIT 4.5

                       NASTECH PHARMACEUTICAL COMPANY INC.
                       2000 NONQUALIFIED STOCK OPTION PLAN

                    NONQUALIFIED STOCK OPTION GRANT AGREEMENT

      This Grant Agreement (the "Agreement") is entered into this ____ day of
______________, 200__, by and between Nastech Pharmaceutical Company Inc (the
"Corporation"), a Delaware Corporation, and __________________ ("Grantee").

                                    ARTICLE 1
                                 GRANT OF OPTION

      Section 1.1 Grant of Options. Subject to the provisions of the Agreement,
and pursuant to the provisions of the Nastech Pharmaceutical Company Inc 2000
Nonqualified Stock Option Plan (the "Plan"), Corporation hereby grants to
Grantee, as of the Grant Date specified in Attachment A, a Nonqualified Stock
Option (the "Option") to purchase all or any part of the number and class of
shares of Common Stock set forth on Attachment A at the exercise price per share
("Option Price") set forth on Attachment A.

      Section 1.2 Term of Options. Unless the Option granted pursuant to Section
1.1 terminates earlier pursuant to other provisions of the Agreement, including
the expiration date specified in Attachment A, the Option shall expire on the
expiration date set forth on Attachment A hereto, but in no event later than the
tenth (10th) anniversary of its Grant Date.

                                    ARTICLE 2
                                     VESTING

      Section 2.1 Vesting Schedule. Unless the Option has earlier terminated
pursuant to the provisions of the Agreement, Grantee shall become vested on the
dates specified on Attachment A in a portion of the Option with respect to a
percentage or number of the underlying shares in accordance with the vesting
schedule specified on Attachment A; provided that Grantee shall have been in the
continuous employ of or affiliation (as a director) with the Corporation from
the Grant Date through any such date.

                                    ARTICLE 3
                               EXERCISE OF OPTION

      Section 3.1 Exercisability of Option. No portion of the Option granted to
Grantee shall be exercisable by Grantee prior to the time such portion of the
Option has vested.

      Section 3.2 Manner of Exercise. The Option may be exercised, in whole or
in part, by delivering written notice to the Committee or any designee of the
Committee in the form attached hereto as Attachment B or in such other form as
the Committee may require from time to time. Such notice shall specify the
number of shares of Common Stock subject to the Option as to which the Option is
being exercised, and shall be accompanied by full payment of the Option Price of
the shares of Common Stock as to which the Option is being exercised. Payment of
the Option Price shall be made in cash (or cash equivalents acceptable to the
Committee in the Committee's discretion). In the Committee's sole and absolute
discretion, the Committee may authorize payment of the Option Price to be made,
in whole or in part, by such other means as the Committee may prescribe. The
Option may be exercised only in multiples of whole shares and no partial shares
shall be issued. Notwithstanding anything to the contrary herein, the minimum
number of shares that may be purchased upon an exercise of the Option is the
lesser of 100 shares or the number of shares subject to the vested portion of
the Option.

      Section 3.3 Issuance of Shares and Payment of Cash upon Exercise. Upon
exercise of the Option, in whole or in part, in accordance with the terms of the
Agreement and upon payment of the Option Price for
<PAGE>

the shares of Common Stock as to which the Option is exercised, the Corporation
shall issue to Grantee or, in the event of Grantee's death, to Grantee's
executor, personal representative or the person to whom the Option shall have
been transferred by will or the laws of descent and distribution, as the case
may be, the number of shares of Common Stock so paid for, in the form of fully
paid and nonassessable Common Stock. The stock certificates for any shares of
Common Stock issued hereunder shall, unless such shares are registered or an
exemption from registration is available under applicable federal and state law,
bear a legend restricting transferability of such shares.

                                    ARTICLE 4
                            TERMINATION OF EMPLOYMENT

      Section 4.1 Unvested Portion. Unless the Option has earlier terminated
pursuant to the provisions of this Agreement, the unvested portion of the Option
shall terminate upon termination of Grantee's employment or affiliation (as a
director) with the Corporation for any reason.

      Section 4.2 Termination of Employment or Affiliation for Reason Other Than
Death or Disability. Unless the Option has earlier terminated pursuant to the
provisions of this Agreement, the Option granted to Grantee shall terminate in
its entirety, regardless of whether the Option is vested in whole or in part,
ninety (90) days after the date Grantee is no longer employed by, nor affiliated
(as a director) with, the Corporation for any reason other than Grantee's death
or Disability.

      Section 4.3 Upon Grantee's Death. Unless the Option has earlier terminated
pursuant to the provisions of the Agreement, upon Grantee's death, Grantee's
executor, personal representative or the person to whom the Option shall have
been transferred by will or the laws of descent and distribution, as the case
may be, may exercise all or any part of the vested portion of the Option,
provided such exercise occurs within twelve (12) months after the date Grantee
dies, but not later than the end of the stated term of the Option.

      Section 4.4 Termination of Employment or Affiliation by Reason of
Disability. Unless the Option has earlier terminated pursuant to the provisions
of the Agreement, in the event that Grantee ceases, by reason of Disability, to
be an employee of or affiliated (as a director) with the Corporation, the vested
portion of the Option may be exercised in whole or in part at any time within
twelve (12) months after the date of Disability, but not later than the end of
the stated term of the Option. For purposes of this Agreement, Disability shall
be as defined in Code Section 22(e)(3) and shall be determined by the Committee,
with its determination on the matter being final and binding.

                                    ARTICLE 5
                                  MISCELLANEOUS

      Section 5.1 Non-Guarantee of Employment. Nothing in the Plan or the
Agreement shall be construed as a contract of employment between the Corporation
(or an affiliate) and Grantee, or as a contractual right of Grantee to continue
in the employ of the Corporation or an affiliate, or as a limitation of the
right of the Corporation or an affiliate to discharge Grantee at any time.

      Section 5.2 No Rights of Stockholder. Grantee shall not have any of the
rights of a stockholder with respect to the shares of Common Stock that may be
issued upon the exercise of the Option until such shares of Common Stock have
been issued to him upon the due exercise of the Option.

      Section 5.3 Withholding of Taxes. The Corporation or any affiliate shall
have the right to deduct from any compensation or any other payment of any kind
(including withholding the issuance of shares of Common Stock) due Grantee the
amount of any federal, state or local taxes required by law to be withheld as
the result of the exercise of the Option; provided, however, that the value of
the shares of Common Stock withheld may not exceed the statutory minimum
withholding amount required by law. In lieu of such deduction, the Committee may
require Grantee to make a cash payment to the Corporation or an affiliate equal
to the amount required to be withheld. If Grantee does not make such payment
when
<PAGE>

requested, the Corporation may refuse to issue any Common Stock certificate
under the Plan until arrangements satisfactory to the Committee for such payment
have been made.

      Section 5.4 Nontransferability of Option. The Option shall be
nontransferable other than by will or the laws of descent and distribution.
During the lifetime of Grantee, the Option may be exercised only by Grantee or,
during the period Grantee is under a legal disability, by Grantee's guardian or
legal representative.

      Section 5.5 Agreement Subject to Charter and Bylaws. This Agreement is
subject to the Charter and Bylaws of the Corporation, and any applicable Federal
or state laws, rules or regulations, including without limitation, the laws,
rules, and regulations of the Commonwealth of Delaware.

      Section 5.6 Gender. As used herein, the masculine shall include the
feminine as the circumstances may require.

      Section 5.7 Headings. The headings in the Agreement are for reference
purposes only and shall not affect the meaning or interpretation of the
Agreement.

      Section 5.8 Notices. All notices and other communications made or given
pursuant to the Agreement shall be in writing and shall be sufficiently made or
given if hand delivered or mailed by certified mail, addressed to Grantee at the
address contained in the records of the Corporation, or addressed to the
Committee, care of the Corporation for the attention of its Secretary at its
principal office or, if the receiving party consents in advance, transmitted and
received via telecopy or via such other electronic transmission mechanism as may
be available to the parties.

      Section 5.9 Entire Agreement; Modification. The Agreement contains the
entire agreement between the parties with respect to the subject matter
contained herein and may not be modified, except as provided in the Plan or in a
written document signed by each of the parties hereto.

      Section 5.10 Conformity with Plan. This Agreement is intended to conform
in all respects with, and is subject to all applicable provisions of, the Plan,
which is incorporated herein by reference. Unless stated otherwise herein,
capitalized terms in this Agreement shall have the same meaning as defined in
the Plan. Inconsistencies between this Agreement and the Plan shall be resolved
in accordance with the terms of the Plan. In the event of any ambiguity in the
Agreement or any matters as to which the Agreement is silent, the Plan shall
govern including, without limitation, the provisions thereof pursuant to which
the Committee has the power, among others, to (i) interpret the Plan and Grant
Agreements related thereto, (ii) prescribe, amend and rescind rules and
regulations relating to the Plan, and (iii) make all other determinations deemed
necessary or advisable for the administration of the Plan. The Grantee
acknowledges by signing this Agreement that he or she has received and reviewed
a copy of the Plan.

<PAGE>

      IN WITNESS WHEREOF, the parties have executed the Agreement as of the date
first above written.

ATTEST                                  NASTECH PHARMACEUTICAL COMPANY INC.

                                        By:
-----------------------------------        -------------------------------------

WITNESS:                                GRANTEE

-----------------------------------     ----------------------------------------
<PAGE>

                                  ATTACHMENT A

Stock Option Granted to______________________.

Type of Option:                                    Nonqualified
                                    --------------------------------------------

Grant Date:
                                    --------------------------------------------

Number and Class
of Shares:
                                    --------------------------------------------

Exercise Price Per Share:
                                    --------------------------------------------
                                    Insert a price which is at least 100% of the
                                    Fair Market Value on the Grant Date

Expiration Date:
                                    --------------------------------------------

Vesting Schedule:

1.                                of the shares subject to the Option shall be
   ----------------------------   vested on the first anniversary of the Grant
   [Insert percent or fraction]   Date; and an additional

2.                                of the shares subject to the Option shall be
   ----------------------------   vested on each succeeding anniversary of the
   [Insert percent or fraction]   Grant Date.

                                  NASTECH PHARMACEUTICAL COMPANY INC.

                                  By:
                                     -------------------------------------------

                                  GRANTEE

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

<PAGE>

                           ATTACHMENT B EXERCISE FORM

                         (Name and Address of Optionee)

Nastech Pharmaceutical Company Inc

Gentlemen:

      1. Exercise of Stock Option. I hereby exercise the Nonqualified Stock
Option (the "Stock Option") granted to me on ____________________, 200__, by
Nastech Pharmaceutical Company Inc (the "Corporation"), subject to all the terms
and provisions thereof and of the Nastech Pharmaceutical Company Inc 2000
Nonqualified Stock Option Plan (the "Plan"), and notify you of my desire to
purchase ____________ shares (the "Shares") of Common Stock of the Corporation
at a price of $___________ per share pursuant to the exercise of said Stock
Option. I understand that the exercise date shall be the date that the Company
receives the full payment of the exercise price of the Stock Option.

      2. Tax Withholding. I understand that I must submit upon demand from the
Corporation an amount in cash or cash equivalents sufficient to satisfy any
federal, state or local tax withholding applicable to this Stock Option
exercise, in addition to the purchase price enclosed, or make such other
arrangements for such tax withholding that are satisfactory to the Corporation,
in its sole discretion, in order for this exercise to be effective.

      3. Investment Covenant. I represent and agree that as a condition of this
Option, the shares of Common Stock of the Corporation that I acquire under this
option will be purchased for investment and not with a view toward distribution
or resale, unless counsel for the Company is then of the opinion that such a
representation is not required under the Securities Act of 1933, as amended, or
any other applicable law, regulation or rule of any government agency.

Total Amount Enclosed: $__________ (including $________ for tax withholding)

Date:
     --------------------     ------------------------------------
                              (Optionee)

                              Received by Nastech Pharmaceutical Company Inc

                              On:                         , 20
                                 -------------------------    ----

                              By:
                                 ---------------------------------Amended And Restated Agreement

                            Of Limited Partnership Of

                             Red Oaks Estates, L.P.

<PAGE>

                                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".......................................3
         1.14     "Cash Expenses"..............................................4
         1.15     "Cash Receipts"..............................................4
         1.16     "Code".......................................................4
         1.17     "Completion of Construction".................................4
         1.18     "Compliance Period"..........................................4
         1.19     "Consent of the Special Limited Partner" ....................4
         1.20     "Construction Budget"........................................4
         1.21     "Construction Contract"......................................5
         1.22     "Construction Lender"........................................5
         1.23     "Construction Loan"..........................................5
         1.24     "Contractor".................................................5
         1.25     "Debt Service Coverage"......................................5
         1.26     "Deferred ManagementFee".....................................5
         1.27     "Developer"..................................................5
         1.28     "Development Fee"............................................5
         1.29     "Distributions"..............................................5
         1.30     "Fair Market Value"..........................................6
         1.31     "Financial Interest".........................................6
         1.32     "First Year Certificate".....................................6
         1.33     "FmHA".......................................................6
         1.34     "FmHA Interest Credit Agreement" ............................6
         1.35     "FmHA Loan Agreement"........................................6
         1.36     "Force Majeure"..............................................6
         1.37     "GeneralPartner".............................................6
         1.38     "Gross Asset Value"..........................................7
         1.39     "Hazardous Substance"........................................7
         1.40     "Improvements"...............................................8

                                       i
<PAGE>

         1.41     "In-Balance".................................................8
         1.42     "Income and Losses"..........................................8
         1.43     "Inspecting Architect".......................................9
         1.44     "Insurance"..................................................9
         1.45     "Insurance Company".........................................10
         1.46     "Interest"..................................................10
         1.47     "Involuntary Withdrawal"....................................10
         1.48     "Land Acquisition Fee"......................................10
         1.49     "LIHTC".....................................................10
         1.50     "Limited Partner"...........................................10
         1.51     "Management Agent"..........................................10
         1.52     "Management Agreement"......................................11
         1.53     "Minimum Set-Aside Test"....................................11
         1.54     "Mortgage" or "Mortgage Loan"...............................11
         1.55     "Net Operating Income"......................................11
         1.56     "Nonrecourse Deductions"....................................11
         1.57     "Nonrecourse Liability".....................................12
         1.58     "Operating Deficit".........................................12
         1.59     "Operating Deficit Guarantee Period"........................12
         1.60     "Operating Loans"...........................................12
         1.61     "Original Limited Partner"..................................12
         1.62     "Partner(s)"................................................12
         1.63     "Partner Nonrecourse Debt"..................................12
         1.64     "Partner Nonrecourse Debt Minimum Gain" ....................12
         1.65     "Partner Nonrecourse Deductions"............................12
         1.66     "Partnership"...............................................12
         1.67     "Partnership Minimum Gain"..................................12
         1.68     "Permanent Mortgage Commencement" ..........................12
         1.69     "Person"....................................................12
         1.70     "Plans and Specifications"..................................13
         1.71     "Project Documents".........................................13
         1.72     "Projected Annual Tax Credits"..............................13
         1.73     "Projected Tax Credits".....................................13
         1.74     "Rent Restriction Test".....................................13
         1.75     "Reporting Fee".............................................13
         1.76     "Revised Projected Tax Credits".............................13
         1.77     "Sale or Refinancing".......................................13
         1.78     "Sale or Refinancing Proceeds"..............................13
         1.79     "Special Limited Partner"...................................14
         1.80     "State".....................................................14
         1.81     "State Tax Credit Agency"...................................14
         1.82     "Substitute Limited Partner"................................14
         1.83     "Syndication Fee"...........................................14
         1.84     "Tax Credit"................................................14
         1.85     "Tax Credit Conditions".....................................14
         1.86     "Tax Credit Period".........................................14
         1.87     "Title Policy"..............................................14
         1.88     "TRA 1986"..................................................14
         1.89     "Treasury Regulations"......................................15

                                       ii
<PAGE>

         1.90     "Withdrawing" or "Withdrawal"...............................15

II.      NAME.................................................................15

III.     PRINCIPAL EXECUTIVE OFFICE/AGENT FOR SERVICE ........................15

         3.1      Principal Executive Office..................................15
         3.2      Agent for Service of Process................................15

IV.      PURPOSE..............................................................15

         4.1      Purpose of the Partnership..................................15
         4.2      Authority of thePartnership.................................15

V.       TERM.................................................................16

VI.      GENERAL PARTNER'S CONTRIBUTIONS AND LOANS............................16

         6.1      Capital Contribution of General Partner.....................16
         6.2      Construction Obligations....................................17
         6.3      Operating Obligations.......................................17
         6.4      Other General Partner Loans.................................18

VII.     CAPITAL CONTRIBUTIONS OF LIMITED PARTNER
         AND SPECIAL LIMITED PARTNER..........................................18

         7.1      Original Limited Partner....................................18
         7.2      Capital Contribution of Limited Partner.....................18
         7.3      Repurchase of Limited Partner's Interest....................20
         7.4      Adjustment of Limited Partner's Capital Contribution........21
         7.5      Capital Contribution of Special Limited Partner.............23
         7.6      Return of Capital Contribution..............................23
         7.7      Liability of Limited Partner and Special
                  Limited Partner.............................................23

VIII. WORKING CAPITAL AND RESERVES ...........................................23

         8.1      Operating and Maintenance Account...........................23
         8.2      Reserve for Replacements....................................24
         8.3      Tax and Insurance Account...................................24
         8.4      Other Reserves..............................................24

IX.      MANAGEMENT AND CONTROL ..............................................24

         9.1      Power and Authority of General Partner .....................24
         9.2      Payments to the General Partners and Others.................25
         9.3      Specific Powers of the General Partner .....................26
         9.4      Authority Requirements......................................26

                                      iii
<PAGE>

         9.5      Limitations on General Partner's Power and Authority........27
         9.6      Restrictions on Authority of General Partner................28
         9.7      Duties of General Partner...................................29
         9.8      Obligations to Repair and Rebuild Apartment Housing.........31
         9.9      Partnership Expenses........................................31
         9.10     General Partner Expenses....................................32
         9.11     Other Business of Partners..................................32
         9.12     Covenants, Representations and Warranties...................32

X.       ALLOCATIONS OF INCOME, LOSSES AND CREDITS............................36

         10.1     General.....................................................36
36
         10.2     Allocations From Sale or Refinancing........................36
         10.3     Special Allocations.........................................36
         10.4     Curative Allocations........................................39
         10.5     Other Allocation Rules......................................40
         10.6     Tax Allocations:  Code Section 704(c).......................41
         10.7     Allocation Among Limited Partners...........................41
         10.8     Allocation Among General Partners ..........................41
         10.9     Modification of Allocations.................................41

XI.      DISTRIBUTION.........................................................42

         11.1     Distribution of Net Operating Income .......................42
         11.2     Distribution of Sale or Refinancing Proceeds ...............42

XII.     TRANSFERS OF LIMITED PARTNER'S INTEREST
         IN THE PARTNERSHIP...................................................43

         12.1     Assignment of Limited Partner's Interest....................43
         12.2     Effective Date of Transfer..................................43
         12.3     Invalid Assignment..........................................43
         12.4     Assignee's Rights to Allocations and Distributions..........44
         12.5     Substitution of Assignee as Limited Partner
                  or Special Limited Partner..................................44
         12.6     Death, Bankruptcy, Incompetency, etc.
                  of a Limited Partner........................................44

XIII.    WITHDRAWAL, REMOVAL AND REPLACEMENT OF GENERAL
         PARTNER..............................................................45

         13.1     Withdrawal of General Partner...............................45
         13.2     Removal of General Partner..................................45
         13.3     Effects of a Withdrawal.....................................46
         13.4     Successor General Partner...................................48
         13.5     Admission of Additional or Successor General Partner........48

                                       iv
<PAGE>

         13.6     Transfer of Interest........................................49
         13.7     No Goodwill Value...........................................49

XIV.     BOOKS AND ACCOUNTS, REPORTS, TAX RETURNS,
         FISCAL YEAR AND BANKING .............................................49

         14.1     Books and Accounts..........................................49
         14.2     Accounting Reports..........................................50
         14.3     Other Reports...............................................50
         14.4     Late Reports................................................52
         14.5     Annual Site Visits..........................................53
         14.6     Tax Returns.................................................53
         14.7     Fiscal Year.................................................53
         14.8     Banking.....................................................53
         14.9     Certificates and Elections..................................53

XV.      DISSOLUTION, WINDING UP, TERMINATION AND
         LIQUIDATION OF THE PARTNERSHIP ......................................53

         15.1     Dissolution of Partnership..................................53
         15.2     Return of Capital Contribution upon
                  Dissolution.................................................54
         15.3     Distributions of Assets.....................................54
         15.4     Deferral of Liquidation.....................................55
         15.5     Liquidation Statement.......................................55
         15.6     Certificates of Dissolution; Certificate of
                  Cancellation of Certificate of Limited
                  Partnership.................................................55

XVI.     AMENDMENTS...........................................................56

XVII.    MISCELLANEOUS........................................................56

         17.1     Voting Rights...............................................56
         17.2     Meeting of Partnership......................................57
         17.3     Notices.....................................................57

                                       v
<PAGE>

         17.4     Successors and Assigns......................................57
         17.5     FmHARegulations.............................................57
         17.6     Recording of Certificate of Limited
                  Partnership.................................................58
         17.7     Amendment of Certificate of Limited
                  Partnership.................................................58
         17.8     Counterparts................................................59
         17.9     Captions....................................................59
         17.10    Saving Clause...............................................59
         17.11    Certain Provisions..........................................59
         17.12    Tax Matters Partners........................................59
         17.13    Expiration of Compliance Period.............................60
         17.14    Number and Gender...........................................61
         17.15    Entire Agreement............................................61
         17.16    Governing Law...............................................61
         17.17    Attorney's Fees.............................................61
         17.18    Receipt of Correspondence...................................61
         17.19    Security Interest and Right of Set-Off......................61

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

                                       vi
<PAGE>

                          Amended and Restated Articles
                            of Limited Partnership of
                             Red Oaks 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 Housing Tax Credit Fund VI,
L.P.,  Series 7, a California  limited  partnership 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, Red Oaks Estates, L.P., a Mississippi limited partnership (the
"Partnership")   recorded  a  certificate  of  limited   partnership   with  the
Mississippi  Secretary of State on June 10, 1998. 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:

<PAGE>

                                    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  "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 1.3 "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 1.4 "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.

     Section 1.5  "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 1.6 "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.

                                       2
<PAGE>

     Section 1.7 "Apartment  Housing" shall  collectively mean the approximately
3.2569 acres of land in Holly Springs,  Marshall  County,  Mississippi,  as more
fully described in Exhibit "A" attached hereto and  incorporated  herein by this
reference, and the Improvements.

     Section  1.8  "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  1.9  "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  1.10  "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  1.11  "Budget"  shall  mean the  annual  operating  Budget  of the
Partnership as more fully described in Section 14.3 of this Agreement.

     Section 1.12 "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 1.13 "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.

                                       3
<PAGE>

     Section 1.14 "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  1.15 "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  1.16  "Code"  shall mean the  Internal  Revenue  Code of 1986,  as
amended from time to time, or any successor statute.

     Section  1.17  "Completion  of  Construction"   shall  mean  the  date  the
Partnership  has received the required  certificates  of occupancy (or the local
equivalent)  for all 24 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 1.18 "Compliance Period" shall mean the period set forth in Section
42 (i)(1) of the Code, as amended, or any successor statute.

     Section 1.19 "Consent of the Special Limited  Partner" shall mean the prior
written consent or approval of the Special Limited Partner.

     Section  1.20  "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

                                       4
<PAGE>

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 1.21 "Construction  Contract" shall mean the construction  contract
dated  March 22,  1999 in the  amount of  $317,300,  entered  into  between  the
Partnership  and the  Contractor  pursuant to which the  Improvements  are being
constructed.

     Section 1.22 "Construction Lender" shall mean BancorpSouth or any successor
thereto.

     Section  1.23  "Construction  Loan"  shall  mean  the  loan  obtained  from
Construction  Lender in the  principal  amount of $215,460  at an interest  rate
equal to 9.5%  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 1.24 "Contractor" shall mean Southeastern Management Company, Inc.,
which is the general construction contractor for the Apartment Housing.

     Section 1.25 "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 1.10 Debt
Service  Coverage means that for every $1.00 of debt service required to be paid
there must be $1.10 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 1.26 "Deferred  Management Fee" shall have the meaning set forth in
Section 9.2(c) hereof.

     Section 1.27 "Developer" shall mean Southeastern Management Company, Inc.

     Section 1.28  "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 1.29  "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 1.30 "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

                                       5
<PAGE>

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.

     Section 1.31 "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  1.32 "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 1.33 "FmHA" shall mean the United States Department of Agriculture,
Rural  Development  (formerly  Farmers  Home  Administration)  or any  successor
thereto.

     Section  1.34 "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 1.35 "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 1.36 "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 1.37 "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 1.38 "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;

                                       6
<PAGE>

         (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 1.39  "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 1.40  "Improvements"  shall mean the five (5) buildings  containing
twenty-four  (24)  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.

     Section 1.41 "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,

                                       7
<PAGE>

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 1.42 "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.

                                       8
<PAGE>

         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 1.43 "Inspecting  Architect"  shall mean Mills & Mills  Architects,
PC. The Inspecting  Architect shall make regular inspections of the construction
site, but in no event less than once a month,  to confirm that  construction  of
the  Improvements  is in  conformance  with the  Plans and  Specifications.  The
Inspecting  Architect  will  sign-off  on all  the  draw  requests  made  by the
Contractor  and  provide  the  documents  specified  in  Section  14.3  of  this
Agreement.  If there  comes into being any  identity  of  interest  between  the
Partnership  and the  Inspecting  Architect,  or between the  Contractor and the
Inspecting  Architect,  then the General  Partner will  immediately  relieve the
Inspecting Architect of any inspecting duties.

     Section 1.44 "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.

                                       9
<PAGE>

     Section 1.45 "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  1.46  "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 1.47  "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  1.48 "Land  Acquisition  Fee"  shall  mean the fee  payable to the
General Partner in an amount equal to $1,466 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  1.49  "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 1.50 "Limited  Partner"  shall mean WNC Housing Tax Credit Fund VI,
L.P., Series 7, a California limited partnership,  and such other Persons as are
admitted  to the  Partnership  as  additional  or  Substitute  Limited  Partners
pursuant to this Agreement.

     Section 1.51 "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 1.52 "Management  Agreement"  shall mean the agreement  between the
Partnership  and the  Management  Agent for property  management  services.  The
management  fee shall  equal  $19,051.  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 1.53 "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.

     Section  1.54  "Mortgage"  or  "Mortgage  Loan"  shall  mean the  permanent
nonrecourse  financing wherein the Partnership  promises to pay: (a) FmHA or its
successor or assignee,  the  principal  sum of  $215,460,  plus  interest on the
principal  at 6.75% per  annum  over a term of 30 years  and  amortized  over 37
years; and (b) FmHA, or its successor or assignee,  the principal assumed sum of

                                       10
<PAGE>

$520,200,  plus on the  principal at 6.75% per annum over a term of 30 years and
amortized over 37 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 1.10 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 1.10 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  1.55 "Net  Operating  Income"  shall mean the cash  available  for
Distribution on an annual basis, when Cash Receipts exceed Cash Expenses.

     Section 1.56  "Nonrecourse  Deductions"  shall have the meaning given it in
Treasury Regulations Section 1.704-2(b)(1).

     Section 1.57  "Nonrecourse  Liability"  shall have the meaning  given it in
Treasury Regulations Section 1.704-2(b)(3).

     Section 1.58  "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 1.59  "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 1.60 "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 1.61 "Original Limited Partner" shall mean Michael Doran.

     Section 1.62 "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.

                                       11
<PAGE>

     Section 1.63 "Partner Nonrecourse Debt" shall have the meaning set forth in
Section 1.704-2(b)(4) of the Treasury Regulations.

     Section 1.64 "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 1.65 "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 1.66  "Partnership"  shall mean the limited  partnership  continued
under this Agreement.

     Section 1.67 "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 1.68 "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   1.69   "Person"   shall    collectively   mean   an   individual,
proprietorship, trust, estate, partnership, joint venture, association, company,
corporation or other entity.

     Section  1.70  "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 1.71 "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.

     Section 1.72 "Projected  Annual Tax Credits" shall mean LIHTC in the amount
of $5,676 for 2000,  $34,056 per year for each of the years 2001  through  2009,
and $28,380 for 2010,  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 $340,630 to
be available to the Partnership.

     Section  1.73  "Projected  Tax Credits"  shall mean LIHTC in the  aggregate
amount of $340,630.

                                       12
<PAGE>

     Section  1.74  "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  1.75  "Reporting  Fee" shall have the meaning set forth in Section
9.2(d) hereof.

     Section 1.76  "Revised  Projected  Tax Credits"  shall have the meaning set
forth in Section 7.4(a) hereof.

     Section 1.77 "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 1.78 "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 1.79  "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 1.80 "State" shall mean the State of Mississippi.

     Section  1.81  "State Tax  Credit  Agency"  shall mean the state  agency of
Mississippi  which has the  responsibility  and  authorization to administer the
LIHTC program in Mississippi.

     Section  1.82  "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  1.83  "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 1.84 "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.

                                       13
<PAGE>

     Section 1.85 "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  1.86 "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 1.87 "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 1.88 "TRA 1986" shall mean the Tax Reform Act of 1986.

     Section 1.89 "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).

     Section  1.90  "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.

                                   ARTICLE II

                                      NAME

         The name of the Partnership shall be "Red Oaks 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 745 U.S.  Highway 17, Holly Springs,  Mississippi
38638,  or at such other place or places within the State as the General Partner
may hereafter designate.

                                       14
<PAGE>

     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-BW
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;

         (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.

                                       15
<PAGE>

                                    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, 2055
unless terminated earlier in accordance with the provisions of this Agreement or
as otherwise provided by law.

                                       16
<PAGE>

                                   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 an amount required by FmHA.

     Section 6.2 Construction Obligations.

                  (a)  The  General  Partner  hereby   guarantees  a  lien  free
Completion of Construction of the Apartment Housing on or before October 1, 2000
("Completion  Date") at a total  development  cost of not more  than  $1,021,610
("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.

                  (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.

                                       17
<PAGE>

     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.

                                   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 $100.  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 $245,205,  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.

          (a)  $122,602  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 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);

                                       18
<PAGE>

                  (6) Construction Loan closing; and

                  (7) Construction costs, sources and uses, and operating
budget.

         (b) $61,301  shall be payable  upon the  Limited  Partner's receipt and
approval  of the  following documents:

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

                  (2) 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;

                  (3) 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;

                  (4) 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;

                  (5)      Insurance required during operations; and

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

         (c) $30,651  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 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;

                  (4) achievement by the project of a Debt Service coverage of
1.10 for 90 consecutive days;

                  (5) copies of all initial  tenant  files  including  completed
applications,  completed  questionnaires  or  checklist  of income  and  assets,

                                       19
<PAGE>

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) copies of the executed lease agreements with the tenants.

         (d) $30,651  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) Internal Revenue Code Form 8609, or any successor form;
and

                  (5) 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:

         (a) cause the Apartment Housing to be placed in service by November 1,
2000;

         (b) achieve 90%  occupancy of the Apartment  Housing by  satisfying the
Minimum  Set-Aside  Test by February 1, 2001;

         (c)      obtain Permanent Mortgage Commencement by February 1, 2001;

         (d) 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

         (e) obtain a carryover allocation,  within the meaning of Section 42 of
the Code, from the State Tax Credit Agency on or before December 31, 1999.

     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

                                       20
<PAGE>

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 $340,596 (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 72% 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.

         (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

                                       21
<PAGE>

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 $5,676 in 2000 and $34,056
in 2001.  In the event the 2000 and Actual Tax Credits  are less than  projected
then the Limited  Partner's Capital  Contribution  shall be reduced by an amount
equal to 72% times the difference  between the Projected  Annual Tax Credits for
2000 and 2001 and the Actual Tax Credits for 2000 and 2001. If the 2000 and 2001
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.

         (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

                                       22
<PAGE>

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 $25 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.

     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.

                                       23
<PAGE>

     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.

     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 $47,986 in accordance with  the Development Fee Agreement  entered
into by and between the Developer and the  Partnership  on the even date hereof.

                                       24
<PAGE>

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.

           (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  2000  equal  to  15%  of  the  Net  Operating
Income  but in no event  greater  than 50% of the  allowable  return of owner as
determined by FmHA regulations 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

                                       25
<PAGE>

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 15%, 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.

     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

         (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

                                       26
<PAGE>

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;

         (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;

                                       27
<PAGE>

         (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;

         (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;

                                       28
<PAGE>

         (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;

         (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

                                       29
<PAGE>

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

         (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,

                                       30
<PAGE>

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

                  (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.

                                       31
<PAGE>

     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.

         (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.

                                       32
<PAGE>

         (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.

         (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

                                       33
<PAGE>

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.

         (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.

                                       34
<PAGE>

         (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.

         (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)

                                       35
<PAGE>

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.

         (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

                                       36
<PAGE>

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.

         (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

                                       37
<PAGE>

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:

                  (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.

                                       38
<PAGE>

     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

                                       39
<PAGE>

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%.

         (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

                                       40
<PAGE>

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.

     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) the balance, 99% to the Limited Partner and 1% to the General
Partner.

     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;

                                       41
<PAGE>

         (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 pay the General Partner an amount equal to its Capital
Contribution;

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

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

         (f) thereafter, 91% to the Limited Partner and 9% 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;

         (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 Southern
California Bank 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

                                       42
<PAGE>

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 Southern  California Bank or its successors,  may
become a  Substitute  Limited  Partner or  Substitute  Special  Limited  Partner
without the consent of the General Partner.

         (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 the return of Capital Contribution
to which its transferor  would  otherwise have been entitled with 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.

                                       43
<PAGE>

     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:

                  (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;

                                       44
<PAGE>

                  (6) violated the terms of the Mortgage  and such  violation
prompts FmHA 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; or

                  (12) failed during any six-month  period during the Compliance
Period  to cause at least  85% of the  total  apartment  units in the  Apartment
Housing to qualify for LIHTC, unless such failure is the result of Force Majeure
or unless such failure is cured  within 120 days after the end of the  six-month
period.

         (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

                                       45
<PAGE>

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.

         (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.

                                       46
<PAGE>

                  (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.

         (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

                                       47
<PAGE>

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.

                                   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;

                                       48
<PAGE>

                  (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.

         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.

                                       49
<PAGE>

     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;

         (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;

                                       50
<PAGE>

         (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;

         (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.

                                       51
<PAGE>

     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.

     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.

                                       52
<PAGE>

         (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.

         (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.

         (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

                                       53
<PAGE>

                  (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.

         (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

                                       54
<PAGE>

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.

         (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.

                                       55
<PAGE>

     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.
                                  1100 B Hwy 72 West
                                  Corinth, Mississippi 38834

    To the Limited Partner:       WNC Housing Tax Credit Fund VI, L.P., Series 7
                                  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

     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.

                                       56
<PAGE>

         (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.

     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.

                                       57
<PAGE>

                  (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.

     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.

                                       58
<PAGE>

         (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.

         (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

                                       59
<PAGE>

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.

     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.

                                       60
<PAGE>

         IN WITNESS  WHEREOF,  this  Amended  and  Restated  Articles of Limited
Partnership of Red Oaks Estates,  L.P., a Mississippi  limited  partnership,  is
made and entered into as of the 26th day of April, 2000.

                             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 Housing Tax Credit fund VI, L.P., Series 7

                             By:     WNC & Associates, Inc.,
                                     General Partner

                                     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

                                       61
<PAGE>

                       EXHIBIT A TO PARTNERSHIP AGREEMENT

                                LEGAL DESCRIPTION

A part of the Southwest  Quarter of Section 25, Township 3 South,  Range 3 West,
Marshall County,  Mississippi,  described as follows: Beginning at the Southeast
Corner of the Southwest  Quarter of Section 25, Township 3 South,  Range 3 West,
thence run West 158.8 feet;  thence  North 0 degrees 18 minutes 46 seconds  East
428.95 feet to an iron pin on the South  Right-of-Way  line of old Highway  #78;
thence  North 60 degrees 11 minutes  West along the South  Right-of-Way  line of
Said  Highway  175.24 feet to the true point of  beginning;  thence run South 30
degrees 0 minutes  West 35 feet;  thence  South 0 degrees  18 minutes 46 seconds
West 115 feet; thence run West 25 feet; thence run South 0 degrees 18 minutes 46
seconds W 220 ft;  thence  West 60 feet;  thence  South 32 degrees 27 minutes 56
seconds West 67.31 feet; thence West 175 feet; thence North 0 degrees 18 minutes
46 seconds  East 601 feet to the South  Right-of-Way  line of old  Highway  #78;
thence  South 60 degrees 11 minutes  East along the South  Right-of-Way  line of
said  Highway  360 feet to the  point of  beginning,  containing  3.2569  acres,
according to the survey of Robert A. Scott, Registered Mississippi  Professional
Engineer.

                                      A-1
<PAGE>

                       EXHIBIT B TO PARTNERSHIP AGREEMENT

                              FORM OF LEGAL OPINION

WNC Housing Tax Credit Fund VI, L.P., Series 7
c/o WNC & Associates, Inc.
3158 Redhill Avenue, Suite 120
Costa Mesa, California 92626

RE:      Red Oaks Estates, L.P.

Ladies and Gentlemen:

         You have  requested  our  opinion  with  respect to certain  matters in
connection  with the investment by WNC Housing Tax Credit Fund VI, L.P.,  Series
7, a California limited partnership (the "Limited Partner") in Red Oaks 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 Holly Springs,  Marshall County
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.

                                      B-1
<PAGE>
WNC Housing Tax Credit Fund VI, L.P., Series 7
c/o WNC & Associates, Inc.
-----------------, 2000
Page 2

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) 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.

                                      B-2
<PAGE>
WNC Housing Tax Credit Fund VI, L.P., Series 7
c/o WNC & Associates, Inc.
-----------------, 2000
Page 3

         (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.

         (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.

                                      B-3
<PAGE>
WNC Housing Tax Credit Fund VI, L.P., Series 7
c/o WNC & Associates, Inc.
-----------------, 2000
Page 4

         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-4
<PAGE>

                       EXHIBIT C TO PARTNERSHIP AGREEMENT

                           CERTIFICATION AND AGREEMENT

         CERTIFICATION AND AGREEMENT made as  of the  date written  below by Red
Oaks Estates, L.P., a Mississippi limited partnership (the "Partnership"); Semc,
Inc. (the "General Partner"); and Michael Doran (the "Original Limited Partner")
for the benefit of WNC Housing Tax Credit  Fund VI, L.P., Series 7, 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  Articles 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
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

                                      C-1
<PAGE>

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.

                  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.

                                      C-2
<PAGE>

                  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.

         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

Red Oaks Estates, L.P.

By:    SEMC, Inc.,
       General Partner

        By: ----------------------
            Scotty R. Little,
            President

GENERAL PARTNER

SEMC, Inc.

By: --------------------------
    Scotty R. Little,
    President

ORIGINAL LIMITED PARTNER

---------------------------
Michael Doran

                                      C-3
<PAGE>

                       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
Mississippi,  has reviewed the final working  plans and detailed  specifications
for  Red  Oaks  Estates,   L.P.,  a   Mississippi   limited   partnership   (the
"Partnership")   in  connection  with  the  construction   [rehabilitation]   of
improvements on certain real property located in Holly Springs, Marshall County,
Mississippi (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
<PAGE>

                          EXHIBIT E TO THE PARTNERSHIP

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

_______________, 2000

WNC Housing Tax Credit Fund VI, L.P., Series 7
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 (the  "Limited  Partner") of a limited
partnership   interest  in  Red  Oaks  Estates,   L.P.,  a  Mississippi  limited
partnership (the  "Partnership")  which owns a certain parcel of land located in
Holly  Springs,  Marshall  County,  Mississippi  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
<PAGE>

                     EXHIBIT F TO THE PARTNERSHIP AGREEMENT

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

_______________, 2000

WNC Housing Tax Credit Fund VI, L.P., Series 7
c/o WNC & Associates, Inc.
3158 Redhill Avenue, Suite 120
Costa Mesa, California 92626

Re: Red Oaks Estates, L.P.

Dear Ladies and Gentlemen:

The undersigned  Southeastern Management Company, Inc., (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  Holly  Springs,  Marshall  County,  Mississippi
(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 Red Oaks Estates, L.P. is paid in full.

o    Contractor  acknowledges  that Red Oaks  Estates,  L.P. 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)

                                 By:_______________________________________

                                 Title:____________________________________

                                      F-1
<PAGE>

                          EXHIBIT G TO THE PARTNERSHIP
                              REPORT OF OPERATIONS
                 QUARTER ENDED:____________________________,199X

-------------------------------------       -----------------------------------
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:
-------------------------------------       -----------------------------------

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

                              OCCUPANCY INFORMATION

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

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

<PAGE>

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_____________.

                                      G-1
<PAGE>

                             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:

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

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

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

                                      G-2
<PAGE>

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

                                      G-3
<PAGE>

                                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:
       ------------------------------------------------------------------------

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

                                      G-4
<PAGE>

                              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:      -----------        ----------       --------    ------

(1) Must agree with amount shown on the balance sheet.

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

                                      G-5
<PAGE>

                          INITIAL TENANT CERTIFICATIONS
                                 PARTNERSHIP NAME

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

County:
                                                    Management Company

[ ] Multi-Family                                    Contact Person:
[ ] Elderly

  24 Number of Units                                Phone #

     Number of Exempt
     Units
LIHTC Project#

-----------------------------------------------------------------------------
                                                                Gross   Move-In
Unit  First Time   Move-In  No. of                      No. in Income   Income
No.   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:
-------------------------------------------------------------------------------

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

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

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

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

<PAGE>

                          INITIAL TENANT CERTIFICATIONS
                                PARTNERSHIP NAME
(CONTINUED)

Tenant                                                            Tenant
Income       Income         Asset      Unit   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
-------------------------------------------------------------------------------

<PAGE>

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

                                G-6
<PAGE>

                     QUARTERLY TAX CREDIT COMPLIANCE REPORT
                                  PROPERTY NAME

Quarter Ending: Tax Credit Set-Asides Information:  Loan/Regulatory Set-Asides:
                [  ] 20/50 or [  ] 40/60 Election
                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:
           Elected to change No. Bedrm
           Post-1989 (Based on number of Bedroom)

[  ] Multi-Family  [  ] Elderly                         Phone No.

      Number of Units
      Number of Exempt Units                            Fax No.
                                                        Prepared by:

LIHTC Project#
-----------------------------------------------------------------------------
                                                          Gross    Annual
Unit   Tenant    Move-In   No. Of   Inc.   Set-  No. In   Annual   Income
No.    Name      Date      Bdrms    Pct.  Aside  Unit     Income   Limits
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

<PAGE>

                     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

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<PAGE>

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

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

                                  G-7
<PAGE>

                       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 yrs.
___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 yrs. 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)?

                                      G-8

<PAGE>

                        TAX CREDIT COMPLIANCE MONITORING:
                              ANNUAL CERTIFICATION

     As General  Partner of Red Oaks Estates,  L.P., I hereby  certify as to the
following:

     1. Red Oaks Estates,  L.P. owns a 24 unit project ("Apartment  Housing") in
Holly Springs, Marshall County County, Mississippi

     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
Mississippi that the foregoing is true and correct.

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

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

                                      G-9
<PAGE>

                      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 1.10 DSC  means that for  every $1.00 of  Stabilized
     Debt Service  required  to be  paid  there  must be  $1.10 of Net Operating
     Income available.

                                      G-10
<PAGE>

                            DEVELOPMENT FEE AGREEMENT

         This Development Fee Agreement ("Agreement"), is entered into as of the
date  written  below  by  and  between  Southeastern  Management  Company,  Inc.
("Developer")  and Red Oaks  Estates,  L.P., a Mississippi  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 Holly  Springs,
Marshall  County,  Mississippi,  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  twenty-four  (24)
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.

                                    SECTION I
                               CERTAIN DEFINITIONS

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

                                       1
<PAGE>

         "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 BancorpSouth, 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 Southeastern Management Company, Inc.

         "Department"   means  the  Mississippi   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 Articles of
Limited   Partnership  of  Red  Oaks  Estates,   L.P.,  a  Mississippi   limited
partnership,   which  Partnership  Agreement  is  incorporated  herein  by  this
reference.  Any terms  capitalized but not defined herein shall have the meaning
ascribed in the Partnership Agreement.

         "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, 2011.

     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
$47,986.  The  Development  Fee shall be payable in accordance with Section 3 of
this Agreement.

                                       2
<PAGE>

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

                  (2)  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.

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

                  (4)  Developer has  established a central  control file of all
design,  engineering and development  documents,  including contracts, plans and
specifications.

                  (5)  Developer  has   negotiated  and  conferred  with  public
authorities  relating  to  traffic  control,  flood  control  and other  matters
affecting the development of the Apartment Housing.

                  (6) Developer has  negotiated  and conferred with an architect
and  recommended  to the Owner to  execute  an  architectural  contract  for the
planning and design of the Apartment Housing.

                  (7) Developer  has created, refined and analyzed the financial
projections  for  the Apartment Housing.

                  (8) Developer has negotiated,  conferred,  and worked with the
Apartment   Housing   architects,   engineers  and  Contractor  with  regard  to
preparation,  refinement,  and finalization of the plans and  specifications for
the Apartment Housing, and projected construction schedules and costs.

                  (9) Developer   has   negotiated  and   conferred   with   the
Construction  Lender to obtain the Construction Loan.

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

         (b) Future Services.  Developer hereby agrees to perform  the following
development  services for and as an agent of Owner.

                                       3
<PAGE>

                  (1)  Construction  and  Development  Matters.  Developer shall
oversee  construction of the Apartment Housing on Owner's behalf, as provided in
this Section 2.3(b)(1). 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.

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

                           (B) Developer  shall   participate  in   and  provide
assistance  with  regard  to pre-construction  conferences and  pre-construction
documents,  including drawings,  specifications,  contracts, and schedules.

                           (C) Developer  shall    review    all    Construction
Documents,  identify  construction issues and participate in the  resolution  of
such issues.

                           (D) Developer  shall review and  approve  subcontract
bids received by the Contractor.

                           (E) Developer  shall  establish and administer  field
order  and  change  order procedures.

                           (F) Developer shall coordinate performance of Owner's
obligations  under  the  construction phase for the Apartment Housing, including
the preparation of draw requests.

                           (G) Developer   shall  attend  construction  progress
meetings at the Apartment Housing site  to  monitor  construction  progress  and
advise Owner and the Contractor with respect to the resolution  of  construction
issues.

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

                           (I) 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.

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

                           (K) Developer  shall  be  available   for   immediate
response in critical situations arising during the construction of the Apartment
Housing.

                           (L) Developer shall  coordinate  relations  with  the
City of Holly Springs and other  governmental  authorities  having  jurisdiction
over development of the Apartment Housing.

                                       4
<PAGE>

                  (2) Tax  Credit  Matters.  From the date  hereof  through  the
completion of construction of the Apartment Housing, the Developer shall provide
the following services to Owner with regard to the Tax Credits which services do
not constitute the rendering of legal or tax advice:

                           (A) Developer shall consult  with  and  advise  Owner
concerning  construction  issues that could affect the amount of Tax Credits for
which the  Apartment  Housing is eligible.

                           (B) Developer shall consult  with  and  advise  Owner
with respect to the  requirements of  the  Department  as  they  relate  to  the
construction and development of the Apartment Housing.

                           (C) Developer  shall  monitor  construction  progress
with respect to the Apartment Housing schedule agreed to with the Department, if
any.

         (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
Red Oaks  Estates,  L.P.,  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.

                                    SECTION 3
                            DEVELOPMENT FEE PAYMENTS

         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 21, 2009.  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.

                                    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

                                       5
<PAGE>

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.

         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:           Southeastern Management Company, Inc.
                           2508 Highway 72
                           Glen, Mississippi 38846

If to Owner:               Red Oaks Estates, L.P.
                           745 U.S. Highway 17
                           Holly Springs, Mississippi 38638

         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.

                                       6
<PAGE>

         (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
Mississippi applicable to contracts made and wholly performed within Mississippi
by persons domiciled in Mississippi.

         (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.

         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's 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 WNC Housing Tax Credit
Fund VI,  L.P.,  Series  7 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.

                                       7
<PAGE>

         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.

         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  Mississippi
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:             Southeastern Management Company, Inc.

                       By:     ____________________________
                               Michael Doran,
                               Vice President

                                       8
<PAGE>

OWNER:                 Red Oaks Estates, L.P.

                       By:     SEMC, Inc.,
                               General Partner

                               By: -------------------------
                                   Scotty R. Little,
                                   President

                                       9
<PAGE>

                               EXHIBIT A

A part of the Southwest  Quarter of Section 25, Township 3 South,  Range 3 West,
Marshall County,  Mississippi,  described as follows: Beginning at the Southeast
Corner of the Southwest  Quarter of Section 25, Township 3 South,  Range 3 West,
thence run West 158.8 feet;  thence  North 0 degrees 18 minutes 46 seconds  East
428.95 feet to an iron pin on the South  Right-of-Way  line of old Highway  #78;
thence  North 60 degrees 11 minutes  West along the South  Right-of-Way  line of
Said  Highway  175.24 feet to the true point of  beginning;  thence run South 30
degrees 0 minutes  West 35 feet;  thence  South 0 degrees  18 minutes 46 seconds
West 115 feet; thence run West 25 feet; thence run South 0 degrees 18 minutes 46
seconds W 220 ft;  thence  West 60 feet;  thence  South 32 degrees 27 minutes 56
seconds West 67.31 feet; thence West 175 feet; thence North 0 degrees 18 minutes
46 seconds  East 601 feet to the South  Right-of-Way  line of old  Highway  #78;
thence  South 60 degrees 11 minutes  East along the South  Right-of-Way  line of
said  Highway  360 feet to the  point of  beginning,  containing  3.2569  acres,
according to the survey of Robert A. Scott, Registered Mississippi  Professional
Engineer.

<PAGE>

                               GUARANTY AGREEMENT

         FOR VALUE  RECEIVED,  the  receipt and  sufficiency  of which is hereby
acknowledged,  and in consideration of the agreement of Southeastern  Management
Company,  Inc. (the  "Developer") to permit deferral of the $47,986 due from Red
Oaks  Estates,  L.P.  a  Mississippi  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,

         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

                                       1
<PAGE>

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
Mississippi and shall be construed and governed under Mississippi law.

         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
Mississippi  and/or to the  jurisdiction and venue of any United States District
Court in the  State of  Mississippi  having  jurisdiction  over  any  action  or

                                       2
<PAGE>

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  Mississippi,  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
                                                     --------------------------
____________________________                         Bobby Little
Notary Public
My Commission Expires:
                                                     Address for Guarantor:

____________________________                         1100 B. Highway 72 W.
(NOTARY SEAL)                                        Corinth, Mississippi 38834

                                       3
<PAGE>

                     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 Red
Oaks Estates,  L.P., a Mississippi  limited  Partnership  ("Owner"),  Semc, Inc.
("General  Partner"),  WNC  Housing  Tax  Credit  Fund  VI,  L.P.,  Series  7, a
California  limited  Partnership  ("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  3.2569 acres of land in Holly  Springs, Marshall
County,  Mississippi  (the "Real Property").

         B. Owner  intends to develop on the Real  Property a  twenty-four  (24)
unit  low-income  rental  housing  complex and other  related  improvements  for
family,  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 Red Oaks
Estates,  L.P.  ("Partnership  Agreement") was entered into by and between Semc,
Inc. as the general partner ("General Partner"), WNC Housing Tax Credit Fund VI,
L.P.,  Series 7 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 Red Oaks 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

                                       1
<PAGE>

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.

         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
$1,086,950.  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.
                                  1100 B Hwy 72 West
                                  Corinth, Mississippi 38834

                                       2
<PAGE>

       To the Limited Partner:    WNC Housing Tax Credit Fund VI, L.P., Series 7
                                  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

         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.

         In Witness Whereof, this Development, Construction and Operating Budget
Agreement is made and entered into as of _________, 2000.

                                 GENERAL PARTNER

                                 Semc, Inc.

                                 By: --------------------------
                                     Scotty R. Little,
                                     President

                                    3
<PAGE>

                                 LIMITED PARTNER

                                 WNC Housing Tax Credit Fund VI, L.P., Series 7

                                 By:   WNC & Associates, Inc.,
                                       General Partner

                                       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
<PAGE>

                                    EXHIBIT A

           TO DEVELOPMENT, CONSTRUCTION AND OPERATING BUDGET AGREEMENT

                                 SOURCE OF FUNDS

                                       A
<PAGE>

                                    EXHIBIT B

           TO DEVELOPMENT, CONSTRUCTION AND OPERATING BUDGET AGREEMENT

                               DEVELOPMENT BUDGET

                                      B
<PAGE>

                                    EXHIBIT C

           TO DEVELOPMENT, CONSTRUCTION AND OPERATING BUDGET AGREEMENT

                              CONSTRUCTION PROFORMA

                                      C
<PAGE>

                                    EXHIBIT D

           TO DEVELOPMENT, CONSTRUCTION AND OPERATING BUDGET AGREEMENT

                               OPERATING PROFORMA

                                      D

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00015-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00015-of-00352.parquet"}]]