WNC HOUSING TAX CREDIT FUND V LP SERIES 3
8-K, 1997-04-24
OPERATORS OF APARTMENT BUILDINGS
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                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


                                    FORM 8-K

                                 CURRENT REPORT



Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


Date of Report (Date of earliest event reported):     April 10, 1997


                 WNC HOUSING  TAX CREDIT  FUND V, L.P.,  SERIES 3 
             (Exact name of registrant as specified in its charter)


      California                        0-21895                 33-6163848
(State or other jurisdiction        (Commission                (IRS Employer
 of incorporation)                   File Number)           Identification No.)


        3158 Redhill Avenue, Suite 120, Costa Mesa, California  92626
             (Address of principal executive offices) (Zip Code)


Registrant's telephone number, including area code:  (714) 662-5565


                                 N/A
          Former name or former address, if changed since last report)


<PAGE>


Item 2.  Acquisition or Disposition of Assets

         WNC Housing Tax Credit Fund V, L.P., Series 3 ("SERIES 3") has acquired
a Local Limited Partnership Interest in Broadway Apartments, Limited Partnership
("BROADWAY"  or the "Local  Limited  Partnership").  BROADWAY  owns The Broadway
Apartments (the "Apartment Complex") in Hobbs, New Mexico.

         The  following  tables  contain  information  concerning  the Apartment
Complex and the Local Limited Partnership identified herein:

<TABLE>

                                                                                                          LOCAL
                                                                                                          LIMITED        YEAR
                                     ESTIMATED                                                PERMANENT   PARTNERSHIP'S  CREDITS
            PROJECT                  CONSTRUC-    ESTIMATED                                   MORTGAGE    ANTICIPATED    TO BE
LOCAL       NAME AND                 TION         DEVELOPMENT COST   NUMBER OF     BASIC      LOAN        AGGREGATE      FIRST
LIMITED     NUMBER OF   LOCATION OF  COMPLETION   (INCLUDING         APARTMENT     MONTHLY    PRINCIPAL   TAX CREDITS    AVAIL-
PARTNERSHIP BUILDINGS   PROPERTY     DATE         LAND COST)         UNITS         RENTS      AMOUNT      (1)            ABLE


<S>                                                <C>                <C>           <C>        <C>          <C>           <C> 
BROADWAY     The         Hobbs (Lea   November     $3,586,000         30 1BR        $255-$314  $1,256,000   $3,613,990    1998
             Broadway    County),     1997                            units         $304-$375  BOA(1)
             Apartments  New Mexico                                   16 2BR units  $348-$430
                                                                      32 3BR units
             5
             buildings




<FN>
(1)      Low Income Housing Credits are available over a 10-year period. For the
         year in which the credit first becomes available, SERIES 3 will receive
         only that  percentage  of the annual  credit which  corresponds  to the
         number of months  during  which  SERIES 3 was a limited  partner of the
         Local Limited  Partnership,  and during which the Apartment Complex was
         completed and in service.

(2)      Bank of America ("BOA") will provide the mortgage loan for a term of 15
         years at an annual interest rate equal to the 15-year FHLB-CIP plus 225
         basis points.  Principal and interest will be payable annually based on
         a 30-year amortization  schedule.  Outstanding principal will be due on
         maturity.
</FN>
</TABLE>

Hobbs  (population  30,000)  is in the  southeastern  corner  of New  Mexico  on
Interstate Highway 62/180 near the Texas border.

<TABLE>


                                                                               SHARING                      ESTIMATED
                                                                               RATIOS:         SERIES's     ACQUISITION
                                                                               ALLOCATIONS     3            FEES PAYABLE
LOCAL           LOCAL                                             SHARING      (4) AND         CAPITAL      TO FUND
LIMITED         GENERAL            PROPERTY        DEVELOPMENT    RATIOS:      SALE OR         CONTRIBUTION MANAGER
PARTNERSHIP     PARTNER            MANAGER (1)     FEE (2)        CASH   FLOW  REFINANCING     (6)
                                                                  (3)          PROCEEDS (5)

<S>                                                <C>                         <C>             <C>          <C>     
BROADWAY        Trianon -          Trianon         $439,652       WNC:         99/1            $2,003,595   $200,000
                Broadway, LLC      Development                    Greater      50/50
                                   Corporation                    of 15% or
                                                                  $5,000
                                                                  LGP:
                                                                  $5,000
                                                                  plus 40% of
                                                                  the balance
                                                                  The
                                                                  balance:
                                                                  50/50



<FN>
(1) The maximum annual  management fee payable to the property manager generally
is  determined  pursuant to lender  regulations.  The Local  General  Partner is
authorized to employ either itself or one of its  affiliates,  or a third party,
as property manager for leasing and management of the Apartment  Complex so long
as the fee therefor  does not exceed the amount  authorized  and approved by the
lender for the Apartment Complex.

(2)  The  Local  Limited  Partnership  will  pay its  Local  General  Partner  a
development  fee  in  the  amount  set  forth,  for  services  incident  to  the
development and construction of the Apartment  Complex,  which services include:
negotiating  the  financing  commitments  for the  Apartment  Complex;  securing
necessary  approvals and permits for the  development  and  construction  of the
Apartment Complex; and obtaining allocations of Low Income Housing Credits. This
payment will be made in  installments  after receipt of each  installment of the
capital contributions made by SERIES 3.

ee/work/134.edg                                       2
<PAGE>

(3)  Reflects  the amount of the net cash flow from  operations,  if any,  to be
distributed  to SERIES 3 ("WNC") and the Local  General  Partner  ("LGP") of the
Local Limited Partnership for each year of operations.  Generally, to the extent
that  the  specific  dollar  amounts  which  are to be paid to WNC are not  paid
annually,  they will accrue and be paid from sale or refinancing  proceeds as an
obligation of the Local Limited Partnership.

(4) Subject to certain special allocations,  reflects the respective  percentage
interests in profits,  losses and Low Income Housing Credits of SERIES 3 and the
Local General Partner.

(5) Reflects the percentage  interests of SERIES 3 and the Local General Partner
in any net cash proceeds  from sale or  refinancing  of the  Apartment  Complex,
after  payment  of  the  mortgage  loan  and  other  Local  Limited  Partnership
obligations (see, e.g., note 3), and the following,  in the order set forth: the
capital  contributions  of SERIES 3; and the capital  contribution  of the Local
General Partner.

(6)  SERIES  3  will  make  its  capital  contributions  to  the  Local  Limited
Partnership  in  stages,  with each  contribution  due when  certain  conditions
regarding  construction  or  operations  of  the  Apartment  Complex  have  been
fulfilled.
</FN>
</TABLE>




                                       3
<PAGE>


Item 7.  Financial Statements and Exhibits

         a.       Financial Statements of Businesses Acquired.

                  Inapplicable.

         b.       Proforma Financial Information

                  Proforma   Financial    Information   will   be   filed   upon
availability.

         c.       Exhibits

                  10.1     Amended and Restated Agreement of Limited  
                           Partnership of Broadway  Apartments,  Limited
                           Partnership


                                       4
<PAGE>


                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                  WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3

Date:  April 21, 1997                       By:    WNC &  Associates, Inc.,
                                                   General Partner

                                                   By: /s/ JOHN B. LESTER, JR.
                                                          John B. Lester, Jr.,
                                                          President

                                       5
<PAGE>

                                INDEX TO EXHIBITS


Exhibit
Number            Exhibit

10.1              Amended and Restated Agreement of Limited Partnership of 
                  Broadway Apartments, Limited Partnership


                                       6
<PAGE>





                              AMENDED AND RESTATED

                       AGREEMENT OF LIMITED PARTNERSHIP OF

                    BROADWAY APARTMENTS, LIMITED PARTNERSHIP

<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"..........   3
         1.7      "Assignee" .....................................   3
         1.8      "Bankruptcy" or "Bankrupt"......................   3
         1.9      "Capital Account" ..............................   3
         1.10     "Capital Contribution" .........................   3
         1.11     "Cash Flow From Operations" ....................   4
         1.12     "Code" .........................................   4
         1.13     "Completion of Construction"....................   4
         1.14     "Compliance Period".............................   4
         1.15     "Consent of the Limited Partner"................   4
         1.16     "Construction Contract".........................   4
         1.17     "Construction Loan" ............................   4
         1.18     "Contractor" ...................................   5
         1.19     "Debt Service Coverage".........................   5
         1.20     "Deferred Management Fee".......................   5
         1.21     "Developer".....................................   5
         1.22     "Development Fee" ..............................   5
         1.23     "Distributions" ................................   6
         1.24     "Fair Market Value" ............................   6
         1.25     "First Year Certificate" .......................   6
         1.26     "Force Majeure".................................   6
         1.27     "General Partner" ..............................   6
         1.28     "Gross Asset Value" ............................   6
         1.29     "Hazardous Substance"...........................   7
         1.30     "Improvements"..................................   8
         1.31     "Incentive Management Fee"......................   8
         1.32     "Income and Losses".............................   8
         1.33     "Insurance".....................................   9
         1.34     "Insurance Company".............................   9
         1.35     "Interest" .....................................   9
         1.36     "Involuntary Withdrawal"........................   9
         1.37     "LIHTC"..........................................  9
         1.38     "Limited Partner"...............................   9
         1.39     "Management Agent"..............................   10
         1.40     "Management Agreement"..........................   10
         1.41     "Managing General Partner"......................   10
         1.42     "Minimum Set-Aside Test"........................   10
         1.43     "Mortgage" or "Mortgage Loan"...................   10
         1.44     "Mortgage Note".................................   10

                                       i
<PAGE>

         1.45     "Nonrecourse Deductions"........................   10
         1.46     "Nonrecourse Liability".........................   10
         1.47     "Operating Deficit" ............................   10
         1.48     "Operating Deficit Guarantee Period"............   11
         1.49     "Operating Loans"...............................   11
         1.50     "Original Limited Partner" .....................   11
         1.51     "Partner(s)" ...................................   11
         1.52     "Partner Nonrecourse Debt" .....................   11
         1.53     "Partner Nonrecourse Debt Minimum Gain" ........   11
         1.54     "Partner Nonrecourse Deductions" ...............   11
         1.55     "Partnership" ..................................   11
         1.56     "Partnership Minimum Gain" .....................   11
         1.57     "Permanent Mortgage Commencement" ..............   11
         1.58     "Person" .......................................   12
         1.59     "Project" ......................................   12
         1.60     "Project Documents" ............................   12
         1.61     "Projected Annual Tax Credits" .................   12
         1.62     "Projected Tax Credits" ........................   12
         1.63     "Qualified Tenants" ............................   12
         1.64     "Reference Rate"................................   12
         1.65     "Rent Restriction Test" ........................   12
         1.66     "Reporting Fee".................................   12
         1.67     "Revised Projected Tax Credits".................   12
         1.68     "Sale or Refinancing"...........................   13
         1.69     "Sale or Refinancing Proceeds" .................   13
         1.70     "State" ........................................   13
         1.71     "State Tax Credit Agency" ......................   13
         1.72     "Substitute Limited Partner" ...................   13
         1.73     "Tax Credit" ...................................   13
         1.74     "Tax Credit Conditions".........................   13
         1.75     "TRA 1986" .....................................   13
         1.76     "Treasury Regulations" .........................   13
         1.77 "Withdrawing" or "Withdrawal"...................       14

II.      NAME ................................................       14

III.     PRINCIPAL EXECUTIVE OFFICE/AGENT FOR SERVICE ........       14

         3.1      Principal Executive Office .....................   14
         3.2      Agent for Service of Process ...................   14

IV.      PURPOSE .............................................       14

V.       TERM ................................................       15

VI.      GENERAL PARTNER'S CONTRIBUTIONS AND LOANS............       15

         6.1      Capital Contribution of General Partner.........   15
         6.2      Construction and Operating Obligations;
                    General Partner Loans.........................   15
         6.3      Other General Partner Loans.....................   16


                                       ii
<PAGE>

VII.     CAPITAL CONTRIBUTIONS OF LIMITED PARTNER.............       16

         7.1      Original Limited Partner........................   16
         7.2      Capital Contribution of Limited Partner.........   17
         7.3      Repurchase of Limited Partner's Interest........   19
         7.4      Reduction of Limited Partner's
                    Capital Contribution..........................   19
         7.5      Return of Capital Contribution..................   21
         7.6      Liability of Limited Partner....................   21

VIII.    WORKING CAPITAL AND RESERVES ............................   22

         8.1      Operation and Maintenance Reserve and
                  Replacement Reserve Account.....................   22
         8.2      Other Reserves..................................   22

IX.      MANAGEMENT AND CONTROL ..............................       22

         9.1      Power and Authority of General Partner .........   22
         9.2      Payments to the General Partners and Others ....   23
         9.3      Specific Powers of the General Partner .........   25
         9.4      Authority Requirements..........................   26
         9.5      Limitations on General Partner's
                    Power and Authority ..........................   26
         9.6      Restrictions on Authority of General Partner....   27
         9.7      Duties of General Partner ......................   28
         9.8      Partnership Expenses ...........................   30
         9.9      General Partner Expenses .......................   31
         9.10     Other Business of Partners .....................   31
         9.11     Covenants, Representations and Warranties.......   31

X.       ALLOCATIONS OF INCOME, LOSSES AND CREDITS ...............   35

         10.1     General ........................................   35
         10.2     Allocations From Sale or Refinancing............   35
         10.3     Special Allocations.............................   36
         10.4     Curative Allocations............................   39
         10.5     Other Allocation Rules..........................   39
         10.6     Tax Allocations:  Code Section 704(c)...........   40
         10.7     Allocation Among Limited Partners...............   41
         10.8     Allocation Among General Partners ..............   41
         10.9     Modification of Allocations ....................   41

XI.      DISTRIBUTION ............................................   41

         11.1     Distribution of Cash Flow From Operations ......   41
         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

<PAGE>

         12.3     Invalid Assignment .............................   43
         12.4     Assignee's Rights to Allocations
                    and Distributions ............................   44
         12.5     Substitution of Assignee as 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 ..............................   49
         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 ..................................   51
         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 ......................       54

         15.1     Dissolution of Partnership .....................   54
         15.2     Return of Capital Contribution upon
                    Dissolution ..................................   54
         15.3     Distributions of Assets ........................   54
         15.4     Deferral of Liquidation.........................   55
         15.5     Liquidation of Statement .......................   56
         15.6     Certificates of Dissolution; Certificate of
                    Cancellation of Certificate of Limited
                    Partnership ..................................   56

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

XVII.    MISCELLANEOUS ......................................        57

         17.1     Voting Rights ..................................   57
         17.2     Meeting of Partnership .........................   57
         17.3     Notices ........................................   58
         17.4     Successors and Assigns .........................   58

                                       iv
<PAGE>

         17.5     Recording of Certificate of Limited
                  Partnership. ...................................   58
         17.6     Amendment of Certificate of Limited
                  Partnership ....................................   58
         17.7     Counterparts ...................................   59
         17.8     Captions .......................................   59
         17.9     Saving Clause...................................   59
         17.10 Tax Matters Partners...........................       59
         17.11 Expiration of Compliance Period................       60
         17.12 Number and Gender .............................       61
         17.13 Entire Agreement ..............................       61
         17.14 Governing Law .................................       61
         17.15 Attorney's Fees ...............................       61
         17.16 Receipt of Correspondence .....................       61
         17.17 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 - General Partner Certification.......... D-1  -  D-5
EXHIBIT E - Form of Completion Certificate......... E-1
EXHIBIT F - Accountant's Certificate............... F-1
EXHIBIT G - Report of Operations................... G-1  -  G-10

DEVELOPMENT FEE AGREEMENT
GUARANTY AGREEMENT



                                       v
<PAGE>



                         AMENDED AND RESTATED AGREEMENT
                            OF LIMITED PARTNERSHIP OF
                    BROADWAY APARTMENTS, LIMITED PARTNERSHIP


         THIS AMENDED AND RESTATED  AGREEMENT  OF LIMITED  PARTNERSHIP  is being
entered  into   effective   as  of  the  date  written   below  by  and  between
TRIANON-BROADWAY,  LLC, a New Mexico  Limited  Liability  Company as the general
partner (the "General Partner and WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3,
a California limited partnership,  as the limited partner (the "Limited Partner)
and TRIANON DEVELOPMENT CORPORATION, a California corporation as the withdrawing
limited partner (the "Original Limited Partner").

                                    RECITALS

         WHEREAS,  on November 30, 1995, a partnership  agreement (the "Original
Partnership  Agreement")  for  BROADWAY  APARTMENTS,  LIMITED  PARTNERSHIP  (the
"Partnership")  was  entered  into  by  and  between  the  Trianon   Development
Corporation and Foundation for Social Resources,  Inc., as the General Partners,
and TRIANON DEVELOPMENT CORPORATION as the limited partner.

         WHEREAS,  a certificate of Limited  Partnership  was filed with the New
Mexico  Secretary of State on November 30, 1995. An Amendment to  Certificate of
Limited Partnership was filed with the New Mexico Secretary of State on December
5, 1995.  An  additional  Certificate  of  Amendment to  Certificate  of Limited
Partnership  was executed by Trianon  Development  Corporation on March 20, 1996
and filed with the New Mexico Secretary of State on April 1, 1996

         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 as a partner of the  Partnership,  (iii) the
liquidation of Trianon Development  Corporation's  general partner's Interest in
the Partnership, (iv) the liquidation of Foundation for Social Resources, Inc.'s
general  partner's  Interest  in the  Partnership,  (v) the  liquidation  of the
Original  Limited  Partner's  Interest in the  Partnership,  (vi) the payment of
Capital  Contributions  by the  Limited  Partner to the  Partnership,  (vii) the
allocation of Income,  Losses,  Tax Credits and  distributions of Cash Flow From
Operations and other cash funds of the Partnership among the Partners (viii) the
respective  rights,  obligations and interests of the Partners to each other and
to the Partnership, and (ix) certain other matters.

         WHEREAS,  the Limited  Partner and the General Partner desire hereby to
amend and restate the Original Partnership Agreement.

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

                                       1
<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

         Section 1.1 "Accountant"  shall mean Richard Suarez,  Jr.,  C.P.A.,  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 Limited
Partner.  Notwithstanding  any provision of this Agreement to the contrary,  the
Limited  Partner  shall have the  discretion  to dismiss the  Accountant  if the
Accountant  fails to provide timely reports in accordance with this Agreement or
fails to accurately reflect the Partnership's financial position.

         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% 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 Agreement of Limited Partnership, as it may be amended from


                                       2
<PAGE>

time  to  time.  Words  such as  "herein,"  "hereinafter,"  "hereof,"  "hereto,"
"hereby" and "hereunder," when used with reference to this Agreement,  refers to
this Agreement as a whole, unless the context otherwise requires.

         Section 1.7  "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  1.8  "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 1.9 "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  1.10  "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 of such capital which shall have been returned  pursuant to Section 7.3, 7.4
or 7.5 of this  Agreement.  A loan to the  Partnership by a Partner shall not be
considered a Capital Contribution.

                                       3
<PAGE>

         Section 1.11 "Cash Flow From Operations" shall mean gross receipts (not
including any subsidy for rental income from the General Partner or an Affiliate
thereof,  prepayments of rent,  security  deposits and interest  thereon (unless
non-refundable  or  forfeited),  Capital  Contributions,   Sale  or  Refinancing
Proceeds or proceeds of Partnership  borrowings)  from  Partnership  operations,
determined on a cash basis,  less debt  payments,  capital  expenditures  to the
extent not paid from  borrowings  or  reserves,  amounts  set aside as  reserves
pursuant  to Article  VIII and  operating  expenses  associated  with rental and
maintenance  of the  Project;  but  excluding  deductions  for cost  recovery of
buildings, improvements and personal property, and amortization of any financing
fees.

         Section 1.12 "Code" shall mean the  Internal  Revenue Code of 1986,  as
amended from time to time, or any successor statute.

         Section 1.13 "Completion of Construction"  shall mean the completion of
construction  of the  Project  substantially  in  accordance  with  the  Project
Documents in order to obtain the  required  certificates  of  occupancy  (or the
local equivalent) for all seventy-eight (78) apartment units as evidenced by the
issuance of the  certificate  of occupancy  by the  governmental  agency  having
jurisdiction  over the Project or by the issuance of the inspecting  architect's
certification,  in a form  substantially  similar  to that  attached  hereto  as
Exhibit "E". The  construction  shall be completed in good  workmanlike  manner,
free and clear of all mechanic's,  materialmen's or similar liens, and all other
expenses and costs,  including  but not limited to costs of  financing,  must be
paid with respect to the Project through completion.

         Section  1.14  "Compliance  Period"  shall mean the period set forth in
Section 42 (i)(1) of the Code, as amended, or any successor statute.

     Section 1.15 "Consent of the Limited  Partner" shall mean the prior written
consent or approval of the Limited Partner.

         Section  1.16  "Construction  Contract"  shall  mean  the  construction
contract in the amount of $2,695,996,  entered into between the  Partnership and
the Contractor pursuant to which the Project is being constructed.

         Section 1.17 "Construction Loan" shall mean the loan obtained from Bank
of America,  Federal  Savings Bank in the  principal  amount of $1,698,355 at an
interest rate equal to Bank of America National Trust and Savings  Association's
Reference  Rate plus 1  percentage  point per year for a term of 14 months after
recordation  of the Deed of Trust  securing the loan, but no later than June 30,
1998,  to provide funds for the  construction  and  development  of the Project.
Where the context admits, the term  "Construction  Loan" shall include any deed,
deed  of  trust,  note,  security  agreement,   assumption  agreement  or  other
instrument executed in connection with the Construction Loan which is binding on
the Partnership.



                                       4
<PAGE>

     Section 1.18 "Contractor" shall mean Banes General Contractors,  Inc. which
is the general construction contractor for the Project.

         Section 1.19 "Debt Service  Coverage"  shall mean the ratio between the
net  operating  income  and  the  debt  service  required  to  be  paid  on  the
Mortgage(s); as example, a 1.15 Debt Service Coverage means that for every $1.00
of debt service  required to be paid there must be $1.15 of net operating income
available.  For purposes of this  definition net operating  income is the actual
receipt on a cash basis by the  Partnership  of revenues from  operations of the
Partnership,  including, without limitation,  rental income (but not any subsidy
thereof  from the  General  Partner  or an  Affiliate  thereof),  but  excluding
prepayments,  security  deposits and interest thereon (unless  non-refundable or
forfeited),  less all cash operating  obligations of the Partnership (other than
those covered by insurance) in accordance with the applicable  budget adopted by
the  Partnership  in  accordance  with Section  14.3(j) of this  Agreement  (the
"Budget"),  including,  without limitation, the payment of Management Agent fees
(which  shall be deemed to include  that  portion of such fees which is deferred
and not currently  paid) and the funding of reserves in accordance  with Article
VIII of this Agreement, and a reserve for all taxes or payments in lieu of taxes
and  any  other  expenses  which  may  reasonably  be  expected  to be paid in a
subsequent  period but which on an accrual  basis are allocable to the period in
question, such as insurance premiums, audit, tax or accounting expenses. Without
limiting the generality of the foregoing,  the Partnership's  gross revenues for
purposes of this Section shall not include  Capital  Contributions,  borrowings,
any lump-sum  payment or any other  extraordinary  receipt of funds thereby,  or
interest  or any other  income  earned on  investment  of its funds,  and unless
otherwise  provided  in  a  Budget,  the  cash  operating   obligations  of  the
Partnership  shall be deemed to include  real estate taxes for the period at the
fully assessed rate. A worksheet for the calculation of Debt Service Coverage is
found in the  Report  of  Operations  exhibit  attached  to this  Agreement  and
incorporated herein by this reference.

     Section 1.20 "Deferred  Management Fee" shall have the meaning set forth in
Section 9.2(c) hereof.

         Section 1.21 "Developer" shall mean Trianon Development Corporation.

         Section 1.22  "Development Fee" shall mean the fee payable to
the Developer pursuant to Section 9.2(a) of this Agreement for services incident
to the  development  and  construction  of the  Project in  accordance  with the
Development  Fee Agreement  between the  Partnership and the Developer dated the
even date herewith and incorporated herein by this reference.



                                       5
<PAGE>

         Section 1.23  "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  1.24 "Fair  Market  Value"  shall  mean,  with  respect to any
property,  real or personal, the price a ready, willing and able buyer would pay
to a ready, willing and able seller of the property, provided that such value is
reasonably  agreed to between the parties in arm's-length  negotiations  and the
parties have sufficiently adverse interests.

         Section 1.25 "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  1.26  "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 1.27 "General Partner" shall mean TRIANON-BROADWAY,  LLC, a New
Mexico  Limited  Liability  Company  and shall  mean such  other  Persons as are
admitted  to the  Partnership  as  additional  or  substitute  General  Partners
pursuant to this Agreement.

         Section  1.28 "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;

         (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


                                       6
<PAGE>

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  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  1.28(d) to the extent the General  Partner  determines
that  an  adjustment   pursuant  to  Section  1.28(b)  hereof  is  necessary  or
appropriate in connection with a transaction  that would otherwise  result in an
adjustment pursuant to this Section 1.28(d).

         If the Gross  Asset Value of an asset has been  determined  or adjusted
pursuant to Section 1.28(a),  Section 1.28(b),  or Section 1.28(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  1.29  "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  1.30  "Improvements"  shall mean the  seventy-eight  (78) unit
apartment  complex which the  Partnership  intends to develop and construct in a
good and  workmanlike  manner  substantially  in  accordance  with the plans and
specifications and Project Documents.



                                       7
<PAGE>

     Section 1.31 "Incentive Management Fee" shall have the meaning set forth in
Section 9.2(e) hereof. 

         Section  1.32 "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 1.32 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 1.32 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  1.28(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  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


                                       8
<PAGE>

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.

         Section 1.33 "Insurance"  shall mean casualty  coverage,  including but
not limited to, fire or other  casualty loss to any structure or building on the
Project in an amount equal to the full replacement value of the damaged property
without  deduction  for  depreciation;   shall  include   comprehensive  general
liability coverage against liability claims for bodily injury or property damage
arising out of Project  operations in an amount equal to  $2,000,000;  and shall
include an umbrella  liability  coverage  in an amount  equal to  $1,000,000  to
protect  against  claims in excess of the limits of the other  primary  policies
required herein.  All Insurance policies shall provide that they are not subject
to cancellation  without 30 days prior written notice to the Limited Partner and
shall not contain any co-insurance provisions.

         Section  1.34  "Insurance  Company"  shall mean any  insurance  company
engaged by the  General  Partner  for the  Partnership  with the  Consent of the
Limited  Partner  which  Insurance  Company shall have an A rating or better for
financial safety by A.M. Best or Standard & Poor's.

         Section 1.35 "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 1.36  "Involuntary  Withdrawal"  means any Withdrawal caused by
the death, adjudication of insanity or incompetence,  or Bankruptcy of a General
Partner, or the removal of a General Partner pursuant to Section 13.2 hereof.

         Section  1.37  "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 1.38 "Limited  Partner"  shall mean WNC HOUSING TAX CREDIT FUND
V, L.P., SERIES 3, 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 1.39  "Management  Agent"  shall mean the  property  management
company  which  oversees the property  management  functions for the Project and


                                       9
<PAGE>

which is on-site at the Project.  The initial  Management Agent shall be Trianon
Development  Corporation,  a California corporation,  formerly known as Mariners
Enterprise, Inc.

         Section 1.40 "Management  Agreement"  shall mean the agreement  between
the Partnership and the Management Agent for property management services.

         Section 1.41 "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 Project to be
occupied  by  tenants  whose  incomes  are  equal to or less  than the  required
percentage of the area median gross income. Notwithstanding, the General Partner
has  agreed  that 50% of the  apartment  units  will be rented to  tenants  with
incomes of 50% or less of the area median income, adjusted for family size.

         Section 1.42  "Mortgage"  or  "Mortgage  Loan" shall mean any source of
permanent financing of the Project by a qualified  commercial lender (as defined
in Section 42 of the Code)  evidencing the  indebtedness  of the Partnership and
encumbering  the  Project.  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 Note 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.

         Section 1.43 "Mortgage Note" shall mean the nonrecourse promissory note
whereby the Partnership  promises to pay Bank of America,  Federal Savings Bank,
or its successor or assignee, the principal sum of $1,256,000,  plus interest on
the principal based on a 15-year  FHLB-CIP plus 225 base points per annum over a
term of 15 years and amortized over 30 years.

         Section 1.44  "Nonrecourse  Deductions" shall have the meaning given it
in Treasury Regulations Section 1.704-2(b)(1).

         Section 1.45 "Nonrecourse Liability" shall have the meaning given it in
Treasury Regulations Section 1.704-2(b)(3).

         Section  1.46  "Operating  Deficit"  shall mean for any fiscal year the
total amount by which the sum of the Partnership's  operating  expenses (defined
solely as the expenses incurred in connection with the operation and maintenance
of the Project),  debt service on the Mortgage Loan and other  Partnership  debt
and required  additions to Partnership  reserves in accordance with Article VIII
of this  Agreement,  exceeds  the  cash  revenues  received  in  respect  of the
operation  of the Project for such  fiscal year (not  including  any subsidy for
rental income from the General Partner or an Affiliate  thereof,  prepayments of
rent,  security deposits and interest thereon,  Capital  Contributions,  Sale or
Refinancing Proceeds or proceeds of Partnership borrowings).



                                       10
<PAGE>

         Section 1.47 "Operating Deficit Guarantee Period" shall mean the period
commencing  with the date of this  Agreement  and ending  five  years  following
Completion of Construction.

         Section  1.48  "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 1.49 "Original Limited Partner" shall mean TRIANON  DEVELOPMENT
CORPORATION, a California corporation.

         Section 1.50 "Partner(s)"  shall  collectively mean the General Partner
and/or the Limited Partner.

         Section  1.51  "Partner  Nonrecourse  Debt"  shall have the meaning set
forth in Section 1.704-2(b)(4) of the Treasury Regulations.

         Section 1.52  "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 1.53 "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 1.54 "Partnership" shall mean the limited partnership continued
under this Agreement.

         Section  1.55   "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 1.56  "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;  and (b) the closing of the Mortgage  shall have
occurred and amortization of the Mortgage shall have commenced.

         Section 1.57 "Person" shall mean an individual,  proprietorship, trust,
estate, partnership,  joint venture, association,  company, corporation or other
entity.

         Section 1.58 "Project" shall  collectively  mean the  approximately 3.9
acres of land in Hobbs,  Lea County,  New  Mexico,  as more fully  described  in
Exhibit "A" attached hereto and incorporated  herein by this reference,  and the
Improvements.



                                       11
<PAGE>

         Section 1.59 "Project  Documents"  shall mean and include all documents
delivered to or required by the  Construction  Loan and Mortgage Loan and/or any
governmental  agency having jurisdiction over the Project in connection with the
development,  construction  and  financing  of the  Project,  including  but not
limited  to, the  approved  plans and  specifications  for the  development  and
construction of the Project.

         Section 1.60  "Projected  Annual Tax  Credits"  shall mean LIHTC in the
amount of $357,785  per year for each of the years 1998  through  2007 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% of the
aggregate  amount of LIHTC of  $3,613,990  to be available  to the  Partnership;
provided,  however,  that if the Actual Tax Credit for 1998 is greater  (or less
than) $357,785, the Projected Tax Credit for the year 2008 shall be increased by
an amount  equal to the  amount by which the  Actual Tax Credit for 1997 is less
than $357,785.

     Section  1.61  "Projected  Tax Credits"  shall mean LIHTC in the  aggregate
amount of $3,613,990. 

         Section  1.62  "Qualified  Tenants"  shall  mean any  tenants  who have
incomes of 60% or less of the area median gross  income,  as adjusted for family
size, so as to make the Project eligible for LIHTC.

         Section 1.63 "Reference Rate" shall mean the per annum rate of interest
publicly announced from time to time by Bank of America National Trust & Savings
Association at San Francisco, California as its reference rate.

         Section 1.64 "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 Project must not exceed 30% of the applicable
income standards.

     Section  1.65  "Reporting  Fee" shall have the meaning set forth in Section
9.2(d) hereof. 

     Section 1.66  "Revised  Projected  Tax Credits"  shall have the meaning set
forth in Section 7.4(a) hereof. 

         Section  1.67 "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
recovery of insurance  proceeds by the  Partnership  on account of a casualty at
the Project or any part thereof, a claim against a title insurance company,  the
refinancing or any Mortgage Note 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."



                                       12
<PAGE>

         Section  1.68  "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 Project.

         Section 1.69 "State" shall mean the State of New Mexico.

         Section 1.70 "State Tax Credit  Agency"  shall mean the state agency of
New Mexico which has the  responsibility  and  authorization  to administer  the
LIHTC program in New Mexico.

         Section 1.71 "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 1.72 "Tax  Credit"  shall mean any credit  permitted  under the
Code or the law of any state against the federal or a state income tax liability
of any Partner as a result of  activities  or  expenditures  of the  Partnership
including, without limitation, LIHTC.

         Section 1.73 "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 1.74 "TRA 1986" shall mean the Tax Reform Act of 1986.

         Section  1.75  "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 1.76  "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,  or Bankruptcy of such Partner,  or 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.


                                       13
<PAGE>

                                   ARTICLE II

                                      NAME

     The  name  of  the  Partnership  shall  be  "BROADWAY  APARTMENTS,  LIMITED
PARTNERSHIP."

                                   ARTICLE III

                  PRINCIPAL EXECUTIVE OFFICE/AGENT FOR SERVICE

         Section 3.1 Principal  Executive Office. The principal executive office
of the Partnership is located at 4695 MacArthur Court, Suite 830, Newport Beach,
California  92660,  or at such  other  place or places  within  the State as the
General Partner may hereafter designate.

     Section  3.2 Agent for  Service  of  Process.  The  office and the name and
address of the agent for service of process  required by Section 54-2-5 N.M.S.A.
1978 are Capitol Document Services, Inc., 601 Tijeras Avenue, N.W., Albuquerque,
New Mexico 87102.


                                   ARTICLE IV

                                     PURPOSE

         The  purpose  of the  Partnership  is to  acquire,  construct,  own and
operate the Project 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 Project. The Partnership shall not engage in
any  business  or  activity  which is not  incident  to the  attainment  of such
purpose.


                                    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, and shall continue until December 31, 2050 unless terminated
earlier in  accordance  with the  provisions  of this  Agreement or as otherwise
provided by law.




                                       14
<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  in the amount required in accordance
with the Construction Loan and Mortgage Loan.

     Section 6.2 Construction and Operating Obligations; General Partner Loans.

         (a) The General  Partner  shall cause  Completion of  Construction  and
shall equip the Project or cause the same to be equipped  with all necessary and
appropriate  fixtures,  equipment and articles of personal  property,  including
refrigerators and ranges.  If costs and expenses  necessary to effect Completion
of Construction exceed the sum of the Capital  Contributions and the proceeds of
the Mortgage  Note, the General  Partner shall be  responsible  for and shall be
obligated to pay such deficiencies.  Any such advances shall not be reimbursable
or otherwise  change the Interest of any Partner in the Partnership but shall be
considered  a cost  overrun  and  not be  repayable.  In  addition,  if (1)  the
Improvements  are not completed on or before  December 1, 1997 (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 or Mortgage Loan commitment;  or (3) a foreclosure  action
is commenced against the Partnership,  then at the Limited  Partner's  election,
either the General  Partner will be removed from the Partnership and the Limited
Partner, or an assignee,  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 for an amount equal to the amounts  theretofore
paid by the  Limited  Partner,  and the  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 90 days after the General Partner  receives written demand from the
Limited Partner. In reference to clauses (2) and (3) of this Section 6.2(a), the
General  Partner shall have 60 days to cure following the receipt of notice from
the Lender for the  Construction  Loan or  Mortgage  or notice  from the Limited
Partner.  During said period the General Partner may cure the condition(s) which
caused the notice to be sent.  During such period the Limited  Partner will take
no further  action to remove the General  Partner or cause a  repurchase  of the
Limited Partner's Interest.

         (b) During the Operating Deficit Guarantee Period, the General Partner,
as  required  from  time to time,  shall  provide  Operating  Loans  in  amounts
necessary  to  cover  any  Operating  Deficits.  Each  Operating  Loan  shall be
nonrecourse  to the Partners and shall be repayable  out of 50% of the available


                                       15
<PAGE>

Cash Flow From  Operations  or from Sale or  Refinancing  Proceeds in accordance
with Article XI of this  Agreement.  In the event the General Partner shall fail
to make any Operating  Loans required by this Section  6.2(b),  the  Partnership
shall  withhold  those funds  otherwise  payable to the  General  Partner or its
Affiliates  pursuant to Section 9.2  ("General  Partner  Funds") and utilize the
withheld funds to meet the obligations of the General  Partner  pursuant to this
Section  6.2(b);  any  such use of  General  Partner  Funds  will be  deemed  an
Operating  Loan of the  General  Partner  repayable  to the  General  Partner as
aforesaid.  Such use of General Partner Funds shall also constitute  payment and
satisfaction  of amounts  payable to the General  Partner or Affiliates  thereof
pursuant to Section  9.2, and the  obligation  of the  Partnership  to make such
payments to the General Partner or its Affiliates  pursuant to Section 9.2 shall
therefore be deemed satisfied.

         Section  6.3 Other  General  Partner  Loans.  After  expiration  of the
Operating Deficit Guarantee Period, with the Consent of the Limited Partner, the
General Partner may loan to the Partnership any sums required by the Partnership
and not  otherwise  reasonably  available  to it.  Notwithstanding,  the General
Partner may loan up to $2,500 per calendar year to the  Partnership  without the
Consent of the Limited  Partner.  Any such loan shall bear simple  interest (not
compounded)  at the rate of 2% per  annum  above  the then  prevailing  prime or
reference  rate  charged  by Bank of  America  N.T.  & S.A.,  Main  Office,  San
Francisco,  California, 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 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


         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 $2,003,595, as may be


                                       16
<PAGE>

adjusted in accordance with Section 7.4 of this Agreement,  in cash on the dates
and subject to the conditions hereinafter set forth:

     (a) The  obligation  of the Limited  Partner to pay the  aforesaid  Capital
Contribution shall be subject to the satisfaction of the following conditions:

                  (1) prior to the initial  payment of the Capital  Contribution
only,  the  issuance to the Limited  Partner of an opinion of the  Partnership's
legal counsel,  in a form substantially  similar to the form of opinion attached
hereto as Exhibit "B" and incorporated herein by this reference;

                  (2) prior to the initial  payment of the Capital  Contribution
only, the General  Partner shall deliver to the Limited Partner a fully executed
Certification  and  Agreement  in the form  attached  hereto as Exhibit  "C" and
incorporated herein by this reference;

                  (3) prior to the due date of each  installment of such Capital
Contribution except the first payment,  the General Partner shall deliver to the
Limited  Partner a fully  executed  General  Partner  Certification  in the form
attached hereto as Exhibit "D" and incorporated herein by this reference, to the
effect that all of the  representations  and  warranties set forth in Article IX
are accurate in all material respects;

                  (4) prior to the Capital  Contribution  payment  referenced in
Section  7.2(b)(3) the General  Partner  shall deliver to the Limited  Partner a
copy of the certificate of occupancy (or equivalent  evidence of local occupancy
approval) on all the  apartment  units in the Project and a copy of the recorded
grant deed (warranty deed);

                  (5) prior to the Capital  Contribution  payment  referenced in
Section  7.2(b)(4),  the General  Partner shall deliver to the Limited Partner a
copy of an ALTA Owner's Title Insurance Policy, copies of all Mortgage Notes and
Mortgage Loan  documents  required by Bank of America,  Federal  Savings Bank to
close the Mortgage and disburse the Mortgage proceeds to the Partnership;

                  (6) prior to the Capital  Contribution  payment  referenced in
Section  7.2(b)(4) the General  Partner shall deliver to the Limited Partner the
current  rent roll,  copies of all  initial  tenant  files  including  completed
applications,  completed  questionnaires  or  checklist  of income  and  assets,
documentation  of  third  party  verification  of  income  and  assets,   income
certification forms (LIHTC specific) and executed lease agreements  collected by
the  Management   Agent,  or  the  General  Partner,   verifying  each  tenant's
eligibility as a Qualified Tenant;

                  (7) prior to each Capital  Contribution  payment referenced in
Section  7.2(b)(1)  through and including  7.2(b)(3)  the General  Partner shall
deliver to the Limited Partner copies of all inspecting architect's  application


                                       17
<PAGE>

and certificate of payment (AIA Document G702, or similar form acceptable to the
Limited  Partner),  all  Construction  Loan  draw  requests  and a  copy  of the
construction schedule and any updates to the construction schedule;

                  (8) prior to the Capital  Contribution  payment  referenced in
Section  7.2(b)(5) the General  Partner  shall deliver to the Limited  Partner a
copy of the Declaration of Restrictive  Covenants/Extended Use Agreement entered
into  between  the  Partnership  and the State Tax  Credit  Agency,  an  audited
construction  cost  certification  with an  itemized  cost  breakdown,  Internal
Revenue Code Form 8609, or any successor  form and any documents  previously not
provided to the Limited Partner but required pursuant to this Section 7.2(a) and
Sections 14.3(a), (b) and (c).

         (b)  Provided  the  conditions  of Section  7.2(a) of this  Partnership
Agreement  have been met, the Limited  Partner shall make the following  Capital
Contributions:

     (1) $1,120,815 shall be payable upon admittance of the Limited Partner into
the Partnership, provided the conditions of Section 7.2(a) have been met;

                  (2)  $279,075   shall  be  payable  upon  50%   Completion  of
Construction as evidenced by the inspecting  architect's  certification  and the
construction  draw request,  provided the conditions of Section 7.2(a) have been
met;

                  (3)  $303,705   shall  be  payable  upon  95%   Completion  of
Construction as evidenced by the inspecting  architect's  certification  and the
construction  draw request,  provided the conditions of Section 7.2(a) have been
met;

                  (4) $100,000 shall be payable upon  Completion of Construction
as evidenced by the inspecting architect's certification in a form substantially
similar to the form attached here as Exhibit "E" and incorporated herein by this
reference,  the issuance of a permanent  certificate of occupancy (or equivalent
evidence of local occupancy approval) for all units and receipt of a letter from
the Contractor  stating all amounts  payable to the Contractor have been paid in
full or bonded and that the Partnership is not in violation of the  construction
contract, provided the conditions of Section 7.2(a) have been met;

                  (5)  $150,000  shall be  payable  upon  the  date the  Project
maintains a debt  coverage  ratio of 1.15 for a period of 120 days,  the Limited
Partner's  receipt  of,  and  review  of,  tenant  income  verification  data to
determine that 100% of the units in the Project  qualify under Section 42 of the
Code,  delivery to the Limited Partner of the Accountant's final Tax Credit cost
certification  in a form  substantially  similar  to the form  attached  here as
Exhibit  "F" and  incorporated  herein  by this  reference,  setting  forth  the
Project's  eligible  basis  and the  amount  of the Tax  Credits  to  which  the


                                       18
<PAGE>

Partnership is entitled,  and delivery to the Limited  Partner copies of a fully
executed set of permanent mortgage documents, provided the conditions of Section
7.2(a) have been met; and

                  (6) $50,000  shall be payable  after all the above  conditions
have been met and delivery to the Limited Partner of IRS Form 8609 and the first
year tax return in which Tax  Credits  are taken,  provided  the  conditions  of
Section 7.2(a) have been met.

         Section 7.3 Repurchase of Limited  Partner's  Interest.  Within 90 days
after the General Partner receives written demand from the Limited Partner,  the
Partnership shall repurchase the Limited  Partner's  Interest in the Partnership
by refunding to it in cash the full amount of the Capital Contribution which the
Limited  Partner has  theretofore  made in the event that,  for any reason,  the
Partnership shall fail to:

     (a) receive an  allocation of LIHTC no later than the close of the calendar
year during which the Project is placed in service;

     (b) cause the Project to be placed in service by December 31, 1997;

     (c) achieve 90% occupancy of the Project by Qualified  Tenants by April 30,
1998;

     (d) obtain Permanent  Mortgage  Commencement by June 30, 1998 or such later
date extended by Bank of America;

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

         Section 7.4 Reduction of Limited Partner's Capital Contribution.

         (a) If the  anticipated  amount of Tax Credits to be  allocated  to the
Limited  Partner as evidenced by IRS Form 8609, and Schedule A thereto,  and the
audited construction cost certification  provided to the Limited Partner is less
than $3,577,850 (the "Revised Projected Tax Credits") then the Limited Partner's
Capital Contribution  provided for in Section 7.2 shall be reduced by the amount
which will make the total Capital Contribution to be paid by the Limited Partner
to the  Partnership  equal  to  56% of the  Revised  Projected  Tax  Credits  so
anticipated to be allocated to the Limited Partner.

     (b) The General Partner is required to use its best efforts to rent 100% of
the Project's  apartment  units to Qualified  Tenants  throughout the Compliance
Period.  If at any time during the first five calendar years  following the year


                                       19
<PAGE>

in which the Project 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 Revised  Projected  Tax Credit  calculated  on an annual basis  ("Revised
Projected Annual Tax Credit"),  if applicable,  then, unless the shortfall shall
have previously been addressed under Section 7.4(a), the amount of the reduction
shall be applied to the next Capital  Contribution  owed by the Limited Partner,
if any, and any portion of such reduction in excess of such Capital Contribution
shall be applied  to reduce  succeeding  Capital  Contributions  of the  Limited
Partner,  if  any.  If,  at the  time  of  determination  thereof,  the  Capital
Contribution  reduction  referenced in Section 7.4(a) and/or this Section 7.4(b)
is  greater  than the  balance of the  Limited  Partner's  Capital  Contribution
payments which is then due, if any ("Reduction  Shortfall"),  then the amount of
the  Reduction  Shortfall  shall be paid by the  General  Partner to the Limited
Partner  within  ninety  days of the  General  Partner  receiving  notice of the
Reduction Shortfall from the Limited Partner.

         (c) In the event that, for any reason, at any time after the first five
calendar years following the year in which the Project is placed in service, the
amount of the Actual Tax Credit is less than the Projected Annual Tax Credit, or
the Revised  Projected  Annual Tax Credit,  if  applicable,  (the "Annual Credit
Shortfall"), then, unless the Annual Credit Shortfall shall have previously been
addressed under Section 7.4(a) or Section 7.4(b),  there shall be a reduction in
the General  Partner's  share of Cash Flow From Operations in an amount equal to
the Annual Credit Shortfall and said amount instead 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
Cash Flow From  Operations,  then the Limited Partner shall be treated as having
made a constructive  advance to the Partnership in an amount equal to the Annual
Credit Shortfall (a "Credit Shortfall Loan"), which shall be deemed to have been
made on January 1 of the year in which the Annual Credit Shortfall arises.  Each
Credit  Shortfall Loan shall bear simple interest (not compounded) from the date
on which such loan is deemed to have been made under this Section  7.4(c) at the
rate  equal  to the  10-year  Treasury  money  rate at the  time  of the  Credit
Shortfall Loan, or, if lesser,  the maximum legal rate applicable to such loans.
Credit  Shortfall  Loans or any portion thereof shall be repaid in the next year
in which  sufficient  monies are available from the General  Partner's Cash Flow
From Operations,  with interest payable prior to principal.  In the event a Sale
or  Refinancing  of the Project  occurs prior to repayment in full of the Credit
Shortfall Loan then the excess will be paid in accordance with Section 11.2(b).

         (d) In the event there is a  reduction  in the  qualified  basis of the
Project  for income tax  purposes  following  an audit by the  Internal  Revenue
Service (IRS),  and any review and/or appeals rights  afforded the  Partnership,
resulting in a recapture of Tax Credits  previously  claimed and such  recapture
was not due to an action of the Limited Partner, whether directly or indirectly,


                                       20
<PAGE>

then, in addition to any other payments to which the Limited Partner is entitled
under the terms of this Section 7.4 the General Partner shall pay to the Limited
Partner the sum of (1) the deficiency  assessed against the Limited Partner as a
result of the Tax Credit  recapture,  (2) any interest and penalties  imposed on
the  Limited  Partner  with  respect  to  such  deficiency,  and  (3) an  amount
sufficient to pay any tax liability owed by the Limited  Partner  resulting from
the receipt of the amounts  specified  in (1) and (2).  Notwithstanding,  if the
reduction in basis is due to an IRS determination that the allocation provisions
in Article X of this  Agreement  do not permit the  allocation  as  contemplated
herein then the provisions of this Section 7.4(d) shall not apply.

         Section  7.5  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 Limited  Partner,  determine that such cash should,  in whole or in part, be
returned to the Limited  Partner in  reduction of its Capital  Contribution.  No
such return shall be made unless all  recourse  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 7.6 Liability of Limited Partner. The Limited Partner shall not
be liable for any of the debts,  liabilities,  contracts or other obligations of
the Partnership unless otherwise specified in the Act. The 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  Reserve and Replacement  Reserve
Account.  The Partnership  shall establish an operating and maintenance  reserve
account and a replacement  reserve account and shall deposit thereinto an annual
amount  equal to 1% of the total  indebtedness  to be  funded in twelve  monthly
installments  per  residential  unit per year  commencing with the Completion of
Construction for the purpose of repairs,  maintenance and capital repairs.  Said
deposit shall be made monthly in equal  installments.  Any balance  remaining in
these  accounts at the time of a sale of the Project  shall be first used to pay
any unpaid  Development Fee in accordance with the Development Fee Agreement and
the balance  shall be  allocated  and  distributed  equally  between the General
Partner and the Limited Partner.



                                       21
<PAGE>

         Section 8.2 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 Tax
Credit  Conditions;  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
receipt of 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.  No  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  $439,652.  The  Development  Fee shall  first be paid from  available
proceeds in accordance  with Section  9.2(b) of this Agreement and any Cash Flow
From Operations  through Completion of Construction and if not paid in full then
paid in accordance with the Development Fee Agreement.

         (b) Notwithstanding the preceding, the Partnership shall retain the sum
of $2,003,595 from the Capital  Contributions paid pursuant to Section 7.2(b) of
this Agreement to be used for supplemental  development costs including, but not
limited  to, land  costs,  architectural  fees,  survey and  engineering  costs,


                                       22
<PAGE>

financing  costs,  loan  fees,  building  materials  and  labor,  but the amount
retained  shall  in  no  event  be  greater  than  the  difference  between  the
Construction  Loan and the Mortgage Loan. If any such funds are remaining  after
Completion of Construction and all  construction  costs are paid in full and the
Construction Loan retired, then the remainder shall first be paid to the General
Partner in an amount equal to any unpaid  Development  Fee and the  balance,  if
any,  shall  be  paid to the  General  Partner  as a  reduction  of the  General
Partner's Capital Contribution and/or an incentive rent-up fee.

         (c) The  Partnership  shall  pay to the  Management  Agent  a  property
management  fee for the  leasing and  management  of the Project in an amount in
accordance with the Management  Agreement.  The term of the Management Agreement
shall not  exceed  one year.  If the  Management  Agent is an  Affiliate  of the
General Partner then  commencing  with the termination of the Operating  Deficit
Guarantee Period  referenced in Section 6.2(b), in any year in which the Project
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  solely in  accordance  with and to the  extent  permitted  by
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  Project  under  the  terms  of the
Management Agreement; or, the General Partner shall dismiss the Management Agent
at the request of the Limited Partner for cause which shall mean:

     (A) the failure to timely or accurately  provide the information  needed to
complete the reports required by Section 14.2 and 14.3 herein;

     (B) the rental of apartment units to non-Qualified Tenants; and

     (C) the vacancy rate at the Project is 12% or greater for three consecutive
months, excluding a reasonable rent-up period.

                  (2) The  appointment  of any  successor  Management  Agent  is
subject to the Consent of the Limited  Partner,  which will not be  unreasonably
withheld,  and which may only be sought  after the General  Partner has provided
the Limited  Partner  accurate and complete  disclosure  respecting the proposed
Management Agent.

                  (3) The  Partners  consent and agree that all initial  tenants
must be approved and accepted by the  Management  Agent,  General  Partner and a
third party retained by the Limited  Partner.  The Management Agent shall submit
all tenant files to the Limited  Partner's agent  including,  but not limited to
copies of tenant applications, certifications and third party verifications. The
Limited  Partner's  agent shall have 48 hours to review the  completed  file and
approve or  disapprove  of the  applicant as a tenant.  Approval or  disapproval
shall be made strictly on the basis of Tax Credit compliance.



                                       23
<PAGE>

         (d)  The  Partnership  shall  pay to the  Limited  Partner  a fee  (the
"Reporting  Fee")  commencing  in  1998  equal  to  15% of the  Cash  Flow  From
Operations but in no event less than $5,000 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 Cash Flow From Operations
in the  manner  and  priority  set  forth  in  Section  11.1 of this  Agreement;
provided, however, that if in any year Cash Flow From Operations is insufficient
to pay the full $5,000, the unpaid portion thereof shall accrue without interest
and be  payable  on a  cumulative  basis in the  first  year in  which  there is
sufficient Cash Flow From Operations, as provided in Section 11.1, or sufficient
Sale or Refinancing Proceeds, as provided in Section 11.2.

         (e) The  Partnership  shall pay to the  General  Partner  an  Incentive
Management  Fee  equal to 40% of the  available  Cash Flow  From  Operations  in
accordance  with  Section  11.1 of this  Agreement  for each  fiscal year of the
Partnership  commencing in 1998 for services  incident to the  administration of
the business and affairs of the Partnership,  which services shall include,  but
not limited to, maintaining the books and records of the Partnership,  selecting
and supervising  the  Partnership's  Accountants,  bookkeepers and other Persons
required to prepare and audit the  Partnership's  financial  statements  and tax
returns,  and preparing and  disseminating  reports on the status of the Project
and the  Partnership,  all as  required by Article  XIV of this  Agreement.  The
Incentive  Management  Fee  shall  be  payable  within  seventy-five  (75)  days
following each calendar year and shall be payable from Cash Flow From Operations
in the  manner  and  priority  set  forth  in  Section  11.1.  If the  Incentive
Management  Fee is not paid in any year it  shall  not  accrue  for  payment  in
subsequent years.

         Section 9.3 Specific Powers of the General Partner.

         Subject to the other provisions of this Agreement,  the General Partner
shall have the following powers:

         (a) In the  Partnership's  name and on its behalf,  the General Partner
may hold,  sell,  transfer,  lease or otherwise deal with any real,  personal or
mixed property,  interest therein or appurtenance thereto in accordance with the
purpose of this Agreement as indicated in Article IV hereto;

         (b) In the  Partnership's  name and on its behalf,  the General Partner
may employ,  contract and otherwise deal with, from time to time,  Persons whose
services  are  necessary  or  appropriate  in  connection  with  management  and


                                       24
<PAGE>

operation  of  the  Partnership   business,   including,   without   limitation,
contractors,  agents, brokers,  Accountants and Management Agents (provided that
the  selection of any  Management  Agent has received the Consent of the Limited
Partner) and attorneys, on such terms as the General Partner shall determine;

         (c) In the  Partnership's  name and on its behalf,  the General Partner
may bring or defend, pay, collect, compromise, arbitrate, resort to legal action
or otherwise adjust claims or demands of or against the Partnership;

         (d) In the  Partnership's  name and on its behalf,  the General Partner
may 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;

         (e) In the  Partnership's  name and on its behalf,  the General Partner
may deposit,  withdraw,  invest,  pay,  retain and distribute the  Partnership's
funds in a manner consistent with the provisions of this Agreement;

         (f) In the Partnership's name and on its behalf, the General Partner is
authorized  to execute  the Construction Loan and the Mortgage;

         (g) The General Partner may require in any or all Partnership contracts
that the General  Partner shall not have any personal  liability  thereunder but
that the  Person  contracting  with the  Partnership  shall  look  solely to the
Partnership and its assets for satisfaction;

         (h) In the Partnership's name and on its behalf, the General Partner 
may execute,  acknowledge and deliver any and all instruments to effectuate any 
of the foregoing; and

         (i) The General  Partner  shall operate the Project and shall cause the
Management Agent to manage the Project in such a manner that the Project will be
eligible to receive  LIHTC with  respect to 100% of the  apartment  units in the
Project. To that end, the General Partner agrees,  without  limitation,  to make
all elections  requested by the Limited  Partner under Section 42 of the Code to
allow the Partnership or its Partners to claim the Tax Credit, to file Form 8609
with  respect  to the  Project as  required,  for at least the  duration  of the
Compliance  Period to operate  the  Project  and cause the  Management  Agent to
manage the  Project 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,  to make all  certifications  required by Section 42(l) of the Code, as
amended,  or any  successor  thereto,  and to operate  the Project and cause the
Management Agent to manage the Project so as to comply with all other Tax Credit
Conditions.

                                       25
<PAGE>

     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
Project,  no title or right to the  possession and control of the Project and no
right to collect rent therefrom shall pass to any Person who is not, or does not
become,  bound by the Tax Credit  Conditions in a manner that, in the opinion of
counsel to the Partnership,  would not avoid a recapture  thereof on the part of
the former owners; and

         (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 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 Loan or Mortgage Note;



                                       26
<PAGE>

     (h) Cause the  Project  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
Project;

     (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  Limited  Partner
unless the General Partner has received the Consent of the Limited Partner.

         Section 9.6 Restrictions on Authority of General  Partner.  Without the
Consent of the  Limited  Partner  which will not be  unreasonably  withheld  the
General Partner shall:

     (a) Sell, exchange, lease or otherwise dispose of the Project;

     (b) Incur  indebtedness  other than the Construction Loan and Mortgage Loan
in the  name of the  Partnership,  other  than  in the  ordinary  course  of the
Partnership's business;

     (c) Contract away the fiduciary duty owed to the Limited  Partner at common
law;

     (d) Take any action  which would  cause the Project to fail to qualify,  or
which would cause a termination or  discontinuance  of the  qualification of the
Project,  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;

     (e) 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 as provided in Section 14.3(i) hereof;

     (f) Cause the merger or other reorganization of the Partnership; or

     (g) Dissolve the Partnership except as provided in this Agreement.



                                       27
<PAGE>


     Section 9.7 Duties of the 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 Project 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
Project;  (3) compliance with all provisions of the Project  Documents and (4) a
reservation and allocation of LIHTC from the Agency;

     (f) Use its best efforts to keep the Project and Project dwelling units, 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;



                                       28
<PAGE>

     (h) Permit,  and cause the Management Agent to permit,  the Limited Partner
and its  representatives to have access to the Project and personnel employed by
the Partnership and by the Management Agent who are concerned with management of
the Project at all reasonable  times during normal business hours and to examine
all agreements,  LIHTC compliance data and plans and  specifications and deliver
copies  thereof and such  reports as may  reasonably  be required by the Limited
Partner.  The General  Partner shall provide the Limited  Partner with copies of
all  correspondence,  notices and reports sent pursuant to or received under the
Project  Documents or any authority with respect to the Project at the time such
correspondence,  notices or reports  are sent or  received,  copies of all other
correspondence of substantial  importance which a prudent investor would wish to
examine in connection  with the transaction at the time such  correspondence  is
sent or  received,  and all reports  required by Article XIV within the required
time periods set forth therein.

     (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  Project,  and it 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) Comply with each and every  covenant,  representation  and warranty set
forth in Section 9.11; and

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

         Section 9.8 Partnership Expenses.

         (a) All of the  Partnership's  expenses shall be billed directly to and
paid by the Partnership to the extent reasonably practicable.  Reimbursements to
the General Partner or any of its Affiliates by the Partnership shall be allowed
only  for  the  Partnership's   operating  cash  expenses  and  subject  to  the
limitations on the  reimbursement of such expenses set forth herein.  As used in
this Section 9.8 the term  "operating cash expenses" shall mean, with respect to
any  fiscal  period,  the  amount  of  cash  disbursed  by the  Partnership  for
Partnership  business in that period in the ordinary  course of business for the
payment of its operating expenses,  including but not limited to as expenses for
advertising  and  promotion,  management,  utilities,  repair  and  maintenance,
Insurance,   Partner   communications,   legal,   accounting,   statistical  and
bookkeeping  services,  use of computing  or  accounting  equipment,  travel and


                                       29
<PAGE>

telephone expenses,  salaries and direct expenses of Partnership employees while
engaged in Partnership  business,  and any other operational and  administrative
expenses  necessary  for  the  prudent  operation  of the  Partnership.  Without
limiting the  generality  of the  foregoing,  "operating  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  9.8(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 9.9 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 9.8 and all expenses  which are
unrelated to the business of the Partnership.



                                       30
<PAGE>

         Section  9.10  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 Project.  Neither the Partnership nor any Partner
shall have any right by virtue of this Agreement or the partnership relationship
created  hereby in or to such other  ventures or  activities or to the income or
proceeds  derived  therefrom.  Conversely,  no Person  shall  have any rights to
Partnership  assets,  incomes or  proceeds  by virtue of such other  ventures or
activities of any Partner.

         Section 9.11 Covenants,  Representations  and  Warranties.  The General
Partner  covenants,  represents  and warrants  that the  following are presently
true, or as the case may be, 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.

         (b) The Partnership  Agreement and the applicable 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 workmanlike  manner
in  accordance  with all  applicable  requirements  of the  Mortgage  Loan,  all
applicable   requirements   of  all   appropriate   governmental   entities  and
substantially  in accordance  with the plans and  specifications  of the Project
that  have  been or shall be  hereafter  approved  by Bank of  America,  Federal
Savings Bank, if required,  and all applicable  governmental  entities,  as such
plans and  specifications  may be changed from time to time with the approval of
Bank of America,  Federal Savings Bank and any applicable governmental entities,
if such approval shall be required.

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

         (e) Additional  Improvements on the Project, if any, shall be completed
substantially   in  conformity   with  the  Project   Documents  and  any  other
requirements necessary to obtain Completion of Construction.



                                       31
<PAGE>

         (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  Project  and  is not  in  violation  of any  zoning,
environmental or similar regulations applicable to the Project.

         (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 Project at the time of first  occupancy
and generally throughout the term of the Partnership.

         (i) The Project has obtained,  or will obtain before Permanent Mortgage
Commencement,  and  will  maintain  throughout  the  term  of  this  Partnership
Insurance written by an Insurance Company.

         (j)      The Partnership owns the fee simple interest in the Project.

         (k) 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.

         (l) A builder's risk insurance policy in favor of the Partnership is in
full force and effect and will remain in full force and effect until  Completion
of Construction.

         (m) Except as  otherwise  disclosed  to the Limited  Partner in writing
prior to the execution of this Agreement,  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 Project and (2) no
aboveground or underground storage tanks are now or have ever been located on or
under the Project. The General Partner will not install or allow to be installed
any aboveground or underground storage tanks on the Project. The General Partner
covenants  that the Project shall be kept free of Hazardous  Materials and shall
not be used to generate,  manufacture,  refine, transport, treat, store, handle,
dispose  of,  transfer,  produce  or  process  Hazardous  Materials,  except  in
connection  with the normal  maintenance  and  operation  of any  portion of the
Project. 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  Materials  and shall keep,  or cause to be kept,  the
Project free and clear of any liens imposed  pursuant to such laws,  ordinances,
rules and  regulations.  The General  Partner shall promptly  notify the 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  Project,  any  Improvements
constructed on the Project,  or the soil,  groundwater or soil vapor, (4) if the


                                       32
<PAGE>

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 Project.

         (n) To the best of its  knowledge and belief,  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.

         (o) To the best of its knowledge, the Partnership will allocate to the
Limited  Partner  the Projected Annual Tax Credits.

         (p) To the best of its actual knowledge and belief,  after due inquiry,
no charges,  liens or encumbrances  exist with respect to the Project other than
those which are created or permitted by the Project Documents or Mortgage or are
noted or excepted in the title policy for the Project.

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

         (r) The General Partner has not lent or otherwise advanced any funds to
the Partnership  other than its Capital  Contribution and the Partnership has no
unsatisfied  obligation to make any payments of any kind to the General  Partner
or any Affiliate  thereof,  except as may be provided in accordance with Section
6.2 or 6.3 of this Agreement.

         (s) To the best of its  knowledge  and  belief,  no event has  occurred
which constitutes a default under any of the Project Documents.

         (t) To the best of its  knowledge  and  belief,  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


                                       33
<PAGE>

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.

         (u) No legal  actions or  proceedings  before  any  court,  commission,
administrative  body  or  other  governmental  authority,  and/or  acts  of  any
governmental  authority  having  jurisdiction  over the  zoning or land use laws
applicable to the Project, have occurred the continuing effect of which has: (1)
materially  and  adversely  affected  the  operation of the  Partnership  or the
Project;  (2)  materially  and  adversely  affected  the  ability of the General
Partner to perform its  obligations  hereunder or under any other agreement with
respect to the Project;  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 Project only insofar as they
or any of them are part of the general public.

         (v)  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 which in the aggregate  materially affect the ability
of the Limited Partner to obtain the  anticipated  benefits of its investment in
the Partnership.

         (w) The General  Partner has and shall maintain a net worth equal to at
least  $500,000  computed  in  accordance  with  generally  accepted  accounting
principles.

         The  General  Partner  shall be liable to the  Limited  Partner for any
costs,  damages,  loss of profits,  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 9.11.

                                    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% to the Limited Partner and 1% 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:


                                       34
<PAGE>


         (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 Cash Flow From  Operations and allocations of other Income and
Losses  pursuant  to this  Article X up to the date of the Sale or  Refinancing)
shall be allocated to such  Partners in  proportion  to their  negative  Capital
Account balances until all such Capital Accounts shall have zero balances; and

     (2)  Second,  an  amount of  Income  sufficient  to  increase  the  Limited
Partner's  positive  Capital Account balance to its Capital  Contribution and to
increase the Limited  Partner's  positive  Capital  Account balance to an amount
equal to its Capital Contribution, shall be allocated to the Limited Partner;

     (3) Third, an amount of Income sufficient to increase the General Partner's
positive Capital Account balance to an amount equal to its Capital Contribution;
and

     (4) The  balance,  if any, of such  Income  shall be  allocated  50% to the
Limited Partner and 50% to the General Partner.

         (b)      As to Losses:

     (1) an amount of Losses equal to the aggregate  positive  balances (if any)
in the Capital  Accounts of all Partners having positive 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 Cash Flow From  Operations and  allocations of Income and Losses  pursuant to
Section  10.1 up to the date of the Sale or  Refinancing)  shall be allocated to
such Partners in proportion to their positive Capital Account balances until all
such Capital Accounts shall have zero balances; and

     (2) the balance of any such Losses  shall be  allocated  99% to the Limited
Partner and 1% 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 if and to
the extent that such  allocation  would  create or increase an Adjusted  Capital
Account  Deficit for the Limited  Partner.  In the event an allocation of 99% 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  then so much of the items of  deduction  other
than projected depreciation shall be allocated to the General Partner instead of
the Limited Partner as is necessary to allow the Limited Partner to be allocated
99% of the  items  of  Income  and  Project  depreciation  without  creating  or
increasing an Adjusted Capital Account Deficit for the Limited Partner, it being
the intent of the parties that the Limited Partner always shall be allocated 99%
of the items of Income not  arising  from a Sale or  Refinancing  and 99% of the
Project depreciation.



                                       35
<PAGE>

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

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

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

         (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


                                       36
<PAGE>

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% to the Limited Partner and 1% to the General Partner.

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

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

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



                                       37
<PAGE>

                  (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 1% 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.

         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


                                       38
<PAGE>

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  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 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% to the Limited Partner and 1% to the General Partner.

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

     (c) For  purposes of  determining  the Income,  Losses,  or any other items
allocable  to any  period,  Income,  Losses,  and any such other  items shall be
determined  on a daily,  monthly,  or other basis,  as determined by the General


                                       39
<PAGE>

Partner with the Consent of the 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%,  and the General
Partner: 1%.

     (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.

         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 1.25(a) hereof).

         In the event the Gross Asset Value of any Partnership asset is adjusted
pursuant to Section  1.25(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 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.



                                       40
<PAGE>

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

         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  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  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 Cash Flow From Operations.  Cash Flow From
Operations 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, but in no event shall this
payment exceed 50% of the Cash Flow From Operations;

     (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 in  accordance  with the  Development  Fee
Agreement;

     (d) To the General Partner a noncumulative Distribution equal to $5,000;

     (e) To pay the Operating  Loans, if any, as referenced in Section 6.2(b) of
this Agreement,  limited to 50% of the Cash Flow From Operations remaining after
reduction for the payments made pursuant to subsections  (a) through (d) of this
Section 11.1;



                                       41
<PAGE>

     (f) To pay the Incentive  Management Fee equal to 40% of the Cash Flow From
Operations   remaining  after  reduction  for  the  payments  made  pursuant  to
subsections (a) through (e) of this Section 11.1; and

     (g) To the Limited  Partner in an amount equal to 50% of the remaining Cash
Flow From Operations and to the General Partner in an amount equal to 50% of the
remaining Cash Flow From Operations.

     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  Note and  other  matured  debts  and
liabilities  of the  Partnership,  other than accrued  payments,  debts or other
liabilities owing to Partners or former Partners;

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

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

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

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

     (f) Thereafter, 50% to the Limited Partner and 50% 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  shall not have the right to assign all or any part of its  Interest  to
any other Person, whether or not a Partner,  except upon satisfaction of each of
the following:

     (a) By 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


                                       42
<PAGE>

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 shall not
be unreasonably withheld; and

     (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.

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

         Section 12.2  Effective  Date of Transfer.  Any assignment of a Limited
Partner's  Interest  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  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  following  the
month which ends with the  effective  date 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.

         (a) An Assignee shall not have the right to become a Substitute 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.



                                       43
<PAGE>

         (b) A  nonadmitted  transferee of a 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,  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  as a
Substitute  Limited  Partner as the case may be, in the place of its  transferor
should the  General  Partner  determine  in its  absolute  discretion  that such
treatment is in the best interest of the Partnership.

         Section  12.6  Death,  Bankruptcy,  Incompetency,  etc.  of  a  Limited
Partner.   Upon  the  death,   dissolution,   adjudication  of  bankruptcy,   or
adjudication  of  incompetency  or insanity of a Limited  Partner such Partner's
executors,  administrators or legal representatives shall have all the rights of
a Limited Partner 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  in  the  place  of  their  respective
predecessors-in-interest  except in  accordance  with the  provisions of Section
12.5

                                  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 Limited Partner, and, to the
extent  required,  of Bank of America,  Federal  Savings  Bank and the State Tax
Credit Agency. Withdrawal shall be conditioned upon 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).



                                       44
<PAGE>

         Section 13.2 Removal of General Partner.

         (a)      The Limited Partner may remove the General Partner:

                  (1)      For cause if such General Partner has:

                           (A)      Been subject to an event of Bankruptcy;

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

                           (C)     Been convicted of, or entered into a plea of
guilty to, a felony;

                           (D)      Made personal use of Partnership funds or 
properties;

                           (E)      Violated the terms of the Mortgage  Note, 
and such violation prompts Bank of America,  Federal Savings Bank to issue a
default letter or acceleration  notice to the Partnership or General Partner;

                           (F)      Failed to provide any loan, advance, 
Capital Contribution or any other payment to the Partnership required under this
Agreement;

                           (G)      Failed to obtain the Consent of the Limited
Partner prior to any decision,  act or omission under circumstances where this 
Agreement requires that such consent be obtained;

                           (H)      Breached any representation,  warranty or
covenant contained in this Agreement, or failed to perform any other action 
which may be required by this Agreement;

                           (I)      Violated  any federal or state tax law which
causes a 5% or greater  recapture of LIHTC; or

                           (J)      Failed during any six-month  period  during
the  Compliance  Period to cause at least 85% of the total  apartment  units in 
the  Project 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.

                  (2)      As provided in Section 6.2(a) hereof.

         (b) Notwithstanding any provision of Section 13.2(a), written notice of
the removal for cause of the  General  Partner  shall be served upon the General
Partner either by certified or by registered mail, return receipt requested,  or
by personal  service.  Such notice  shall be served upon the General  Partner in


                                       45
<PAGE>

conjunction  with a meeting of the Partners in  accordance  with Section 17.2 of
this  Agreement.  With  the  Limited  Partner's  approval,  which  shall  not be
unreasonably  withheld, the General Partner shall have a reasonable time to cure
any  default  which is of its  nature  not  susceptible  to cure  within 30 days
provided  that  curative  action  is  commenced  promptly  upon  notice  and  is
diligently pursued to completion within 60 days.

         (c) Upon  receipt of such  notice of removal  for  cause,  the  General
Partner shall cause an accounting to be prepared  covering the  transactions  of
the  Partnership  from the end of the  previous  fiscal year through the date of
receipt  of such  notice,  and  thereafter  it  shall  not  sell or  dispose  of
Partnership assets under any circumstances. The accounting shall be completed by
the  effective  date  of the  removal  and  shall  be in  sufficient  detail  to
accurately  and fully  reflect  the  earnings  or losses  for the period and the
financial  condition of the  Partnership.  If the General Partner fails to cause
the accounting to be prepared within 30 days of receipt of the notice of removal
for cause then the Limited Partner may cause the accounting to be prepared.  The
expenses of the accounting shall be borne by the General Partner.

         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  Project  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 within 30 days after such Withdrawal.

    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  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 in
connection with the transaction.



                                       46
<PAGE>

         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,  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 Limited
Partner),  or if there is no other general  partner of the  Partnership  at that
time, to the Limited Partner.

         (b) In the event of an  Involuntary  Withdrawal,  except as provided in
Section 13.3(b)(3) below, the Withdrawing  General Partner shall have no further
right to receive any future allocations or Distributions from the Partnership or
any other funds or assets of the Partnership,  provided that accrued and payable
fees  (i.e.,  fees earned but unpaid as of the date of  Withdrawal)  owed to the
Withdrawing  General  Partner,  and any  outstanding  loans  of the  Withdrawing
General Partner to the  Partnership,  shall be paid to the  Withdrawing  General
Partner in the manner and at the times such fees and loans  would have been paid
had the Withdrawing  General Partner not Withdrawn.  The Interest of the General
Partner shall be purchased as follows:

                  (1) If the  Involuntary  Withdrawal  arises  from  removal for
cause as set forth in Section  13.2(a)  hereof,  the Withdrawn  General  Partner
shall be entitled to receive as its sole  compensation  for its  Interest in the
Partnership an amount equal to its positive  Capital Account balance  determined
as of the effective date of the removal,  if any,  payable upon the  dissolution
and  termination  of  the  Partnership  after  all  of the  Partners  have  been
distributed the positive balances in their Capital Accounts.

                  (2) If the Involuntary  Withdrawal does not arise from removal
for cause under Sections 13.2(a) or (b) 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 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 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


                                       47
<PAGE>

representative the Partnership's  non-interest bearing unsecured promissory note
payable,  if at all,  from the  General  Partner's  share of the Cash  Flow From
Operations in  accordance  with Section 11.1 herein and if not paid in full then
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.

                  (3) If the Involuntary  Withdrawal does not arise from removal
for cause under Sections 13.2(a) or (b) 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.

         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 Limited  Partner of such
Withdrawal (the "Withdrawal Notice"). Whether or not the Withdrawal Notice shall
have been sent as provided  herein,  the Limited Partner shall have the right to
become a successor  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
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 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  Limited  Partner to the  admission  of such Person as a
substitute  General Partner,  which consent may be withheld in the discretion of
the  Limited  Partner,  shall have been given;  and (c) such  Person  shall have
executed and acknowledged any other  instruments which the 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 in the Partnership.



                                       48
<PAGE>

         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  become  interested  in the
Partnership, without the Consent of the 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;

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

                                       49
<PAGE>

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

         (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 Project at its own expense.

         Section 14.2 Accounting Reports.

         (a) By March 1 of each calendar year the General  Partner shall provide
to the 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 Project
is located.

         (b) By March 1 of each calendar year the General  Partner shall send to
the 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
Cash Flow From  Operations  for the fiscal year,  Cash Flow From  Operations for
prior years, Sale or Refinancing  Proceeds,  and reserves;  (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;  (4) a copy  of the  Project's  rent  roll  for the  most  recent
calendar quarter;  (5) a statement signed by the General Partner  indicating the
number of apartment  units which are occupied by  Qualified  Tenants;  and (6) a
report of the significant activities of the Partnership during the year.

         (c) Within 60 days after the end of each fiscal quarter in which a Sale
or  Refinancing  of the Project  occurs,  the General  Partner shall send to the
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.



                                       50
<PAGE>


     Section  14.3 Other  Reports.  The  General  Partner  shall  provide to the
Limited Partner:

         (a)  During  the  period  of  construction,   a  copy  of  the  initial
construction schedule and any updates to the construction  schedule,  and by the
tenth day of each month a copy of the previous  month's  Construction  Loan draw
request and the inspecting architect's  application and certification of payment
(AIA Document G702, or similar form acceptable to the Limited Partner);

         (b) During the rent-up phase, and continuing until the end of the first
six-month  period  during which the Project has a sustained  occupancy of 95% or
better, by the tenth 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)  By September 15 of each year, an estimate of LIHTC for that year;

         (e)  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  any Tax
Credit  program  including,  but not  limited  to,  copies of all annual  tenant
recertifications required under Section 42 of the Code;

         (f) 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


                                       51
<PAGE>

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;

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

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

         (i) On or  before  December  15 of each  calendar  year,  a copy of the
following year's proposed  operating  budget.  Each such budget shall contain an
amount required for reserves in accordance with Article VIII and for the payment
of real estate taxes, insurance, debt service and other payments; and

         (j) Notice of the  occurrence,  or of the likelihood of occurrence,  of
any event  which has had a  material  adverse  effect  upon the  Project  or the
Partnership,   including,  but  not  limited  to,  any  breach  of  any  of  the
representations and warranties set forth in Section 9.11 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  Sections  14.2(a) and (b) 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.  Such damages  shall be paid  forthwith by the General  Partner,  and
failure to so pay shall  constitute  a material  default of the General  Partner
hereunder and cause for removal under Section 13.2 hereof.  In addition,  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 Cash Flow From Operations or Sale
or Refinancing  Proceeds to which the General  Partner may otherwise be entitled
hereunder.  Payments  of fees and  Distributions  shall be  restored  only  upon
payment of such damages in full.

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

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



                                       52
<PAGE>

         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.  All  withdrawals  therefrom  shall be made upon  checks  signed by the
General Partner or by any person authorized to do so by the General Partner. The
General  Partner  shall  provide to any Partner who  requests  same the name and
address of the  financial  institution,  the account  number and other  relevant
information regarding any Partnership bank account.

         Section 14.9 Certificates and Elections.

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

         (b)  The  General  Partner  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  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; or

         (b) The sale of the Project 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 Note or any other  agreement with or


                                       53
<PAGE>

rule or  regulation  of Bank of  America,  Federal  Savings  Bank to  which  the
Partnership is subject.

         Section 15.2 Return of Capital Contribution upon Dissolution. Except as
provided in Sections  7.3, 7.4 and 7.6 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.

         Section  15.3  Distributions  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's  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).

         The deficit  make-up shall be paid by the General Partner by the end of
such taxable year 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. Notwithstanding, if the Limited Partner
has  become  successor  General  Partner,  it shall not be  responsible  for any
deficit  balance in its Capital  Account  which arose during the time the former
General Partner served as General Partner.

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



                                       54
<PAGE>

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

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

         (d) For the purposes of Section 15.3(c),  "unrealized  appreciation" or
"unrealized  depreciation"  shall mean the  difference  between  the Fair Market
Value  of such  assets,  taking  into  account  the  Fair  Market  Value  of the
associated  financing  but  subject  to  Section  7701(g)  of the Code,  and the
Partnership's  adjusted basis in such assets for book purposes.  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 with the Consent of the Limited 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
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  Project  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
shall cease to be such and the General  Partner shall execute,  acknowledge  and
cause to be filed those certificates referenced in Section 15.6.



                                       55
<PAGE>


     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
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 at any time by the Limited Partner.  This
Agreement  may not be amended by the General  Partner  absent the Consent of the
Limited Partner.  Notwithstanding  the foregoing,  no amendment shall change the
Partnership to a general partnership;  extend the term of the Partnership beyond
the date  provided for in this  Agreement;  modify the limited  liability of the
Limited Partner;  allow the Limited Partner to take control of the Partnership's
business  within the meaning of the Act;  reduce or defer the realization of any
Partner's  interest  in  allocations,  Distributions,  capital  or  compensation
hereunder, or increase any Partner's obligations hereunder,  without the consent
of the Partner so affected; or change the provisions of this Article XVI.

                                  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. Notwithstanding
the foregoing,  the Limited Partner may,  without the concurrence of the General
Partner:

                                       56
<PAGE>

     (1) Approve or  disapprove,  but,  except as otherwise  expressly  provided
herein, not initiate, the Sale or Refinancing of the Project;

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

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

     (4)  Approve  or  disapprove,  but not  initiate,  the  dissolution  of the
Partnership; or

     (5) Subject to the provisions of Article XVI hereof, amend this Agreement.

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

         Section 17.2 Meeting of Partnership. Meetings of the Partnership may be
called  either (a) at any time by the General  Partner;  or (b) upon the General
Partner's  receipt of a written or facsimile  request  from the Limited  Partner
setting forth the purpose of such meeting.  Within ten days after receipt of the
Limited  Partner's  written or  facsimile  request  for a meeting,  the  General
Partner  shall provide all Partners  with written  notice of the meeting  (which
shall be by telephone  conference,  or at the principal place of business of the
Partnership or such other location referenced in the notice) to be held not less
than 15 days nor more than 30 days after  receipt of such  written or  facsimile
request from the Limited Partner,  which notice shall specify the time and place
of such  meeting  and the purpose or purposes  thereof.  If the General  Partner
fails to provide the written notice of the meeting within ten days after receipt
of the Limited Partner's request to hold a meeting, then the Limited Partner may
provide the  written  notice of the meeting to all the  Partners,  which  notice
shall  specify  the time and place of such  meeting  and the purpose or purposes
thereof.  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.


                                       57
<PAGE>



         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:    TRIANON-BROADWAY, LLC, a New Mexico
                                    Limited Liability Company  
                                    4695 MacArthur Court, Suite 830,
                                    Newport Beach, California   92660

         To the Limited Partner:    WNC HOUSING TAX CREDIT FUND V, L.P., 
                                    SERIES 3
                                    c/o WNC & ASSOCIATES, INC.
                                    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 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 17.6 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 thereof:

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

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

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

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



                                       58
<PAGE>

     (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 of New Mexico.  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 17.7  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.

         Section  17.8  Captions.  Captions  to and  headings  of the  Articles,
Sections and  subsections 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.

         Section 17.9 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.

         Section 17.10 Tax Matters Partners.  All the Partners hereby agree that
WNC Housing, L.P. shall be the "Tax Matters Partner", if it accepts, pursuant to
the Code and in connection  with any audit of the Federal  income tax returns of
the Partnership;  provided,  however, that if the Limited Partner shall withdraw
from the Partnership or become Bankrupt, the General Partner shall thereafter be
the "Tax  Matters  Partner".  If the Tax  Matters  Partner  shall  determine  to
litigate  any  administrative  determination  relating  to  federal  income  tax
matters,  it shall litigate such matter in such court as the Tax Matters Partner
shall  decide  in  its  sole   discretion.   In   discharging   its  duties  and
responsibilities,  the Tax Matters  Partner  shall act as a fiduciary (i) to the
Limited Partner (to the exclusion of the other Partners)  insofar as tax matters
related to the Tax Credits  are  concerned,  and (ii) to all of the  Partners in
other respects.



                                       59
<PAGE>


         Section 17.11  Expiration of Compliance Period.

         (a)  Notwithstanding  any provision  hereof to the contrary (other than
this Section 17.11),  the 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
Project who will  continue  to operate  the  Project 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 Limited
Partner in writing with respect to the terms and conditions of such offer,  and,
if the 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 Project pursuant to such offer.

         (b)  Notwithstanding  any  other  provision  of this  Agreement  to the
contrary,  the 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 Project on the most  favorable  terms then  available.
The General  Partner  shall submit the terms of any proposed sale to the Limited
Partner for its approval in the manner set forth in Section 17.11(a) hereof.  If
the General  Partner shall fail to so obtain a buyer for the Project  within six
months of receipt of the  Required  Sale Notice or if the Consent of the Limited
Partner in its sole discretion  shall be withheld to any proposed sale, then the
Limited  Partner  shall have the right at any time during the next six months to
obtain a buyer for the Project on terms  acceptable to the Limited  Partner (but
not less favorable to the Partnership than any proposed sale previously rejected
by the  Limited  Partner).  In the event that the  Limited  Partner so obtains a
buyer,  it shall notify the General Partner in writing with respect to the terms
and  conditions  of the proposed  sale and the General  Partner  shall cause the
Partnership  promptly to sell the Project to such buyer.  If the Limited Partner
does not locate a buyer in the  applicable  six month  period then the  Partners
shall cooperate to locate a buyer for the Project.

         (c) A sale of the Project 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 Project post the required bond on behalf of the Partnership.



                                       60
<PAGE>


         Section  17.12  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  17.13  Entire  Agreement.  This  Agreement  together  with all
Exhibits 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 17.14  Governing Law. This Agreement and its application shall 
be governed by the laws of the State.

         Section  17.15  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 17.16 Receipt of  Correspondence.  The Partners  agree that the
General Partner shall send to the Limited  Partner a copy of any  correspondence
relative to the Project's  noncompliance with the Mortgage Note, relative to the
acceleration  of the Mortgage  Note and/or  relative to the  disposition  of the
Project.

         Section 17.17 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 all funds distributable
to said Partner to the extent of the amount of such obligation.



                                       61
<PAGE>



         IN WITNESS  WHEREOF,  this  Amended and  Restated  Agreement of Limited
Partnership of BROADWAY APARTMENTS,  LIMITED  PARTNERSHIP,  a New Mexico limited
partnership, is made and entered into as of the 10th day of April, 1997.

                                    GENERAL PARTNER

                                    TRIANON-BROADWAY, LLC, a New Mexico Limited
                                    Liability Company

                                    By:     TRIANON DEVELOPMENT CORPORATION, a
                                            California corporation, Member


                                            By: /s/ Lester G. Day
                                                Lester G. Day,
                                                President

                                    By:   FOUNDATION FOR SOCIAL RESOURCES, INC.,
                                          a Delaware non-profit corporation, 
                                          Member

                                          By:  /s/ William W. Hirsch
                                               William W. Hirsch,
                                               President

                                    WITHDRAWING GENERAL PARTNER

                                    Trianon Development Corporation,
                                    a California corporation

                                    By:  /s/ Lester G. Day
                                         Lester G. Day,
                                         President


                                    Foundation for Social Resources, Inc., a
                                    Delaware non-profit corporation


                                    By:  /s/ William W. Hirsch
                                         William W. Hirsch,
                                         President

                                    WITHDRAWING ORIGINAL LIMITED PARTNER

                                    TRIANON DEVELOPMENT CORPORATION, 
                                    a California corporation


                                    By:     /s/ Lester G. Day
                                            Lester G. Day,
                                            President

Signatures continued on the next page...

                                       62
<PAGE>


                                    LIMITED PARTNER

                                    WNC HOUSING TAX CREDIT FUND V, L.P., 
                                    SERIES 3, a California limited partnership

                                    By:     WNC & ASSOCIATES, INC.,
                                            a California corporation
                                            General Partner


                                            By:      /s/ John B. Lester, Jr.
                                                     John B. Lester, Jr.,
                                                     President



                                       63
<PAGE>


                       EXHIBIT A TO PARTNERSHIP AGREEMENT

                                LEGAL DESCRIPTION

A tract of land located in the Northeast  Quarter of the Southwest Quarter (NE/4
SW/4) of Section 35, Township 18 South, Range 38 East, N.M.P.M., Lea County, New
Mexico described as:

     Beginning  at a 1-1/4" axle at the  Northwest  corner of this tract,  which
lies East  1320.0  feet and  South,  361.5 feet from the West 1/4 corner of said
Section 35;  thence S 89 degrees 38' 50" East 298.63 feet to a 1/2" rebar,  said
point also being the  Northwest  corner of that certain  tract of land deeded to
Gopalbhai B. Desai,  et al, by deed dated August 18, 1992,  and recorded in Book
485 Page 307 Deed Records,  Lea County, New Mexico;  thence S 00 degrees 08' 02"
West,  along most  Westerly  line of said Desai,  et al,  tract,  a t 298.5 feet
passing  the  Northwest  corner  of that  certain  tract of land  deeded to W.P.
Wilkerson and Billie P. Wilkerson,  husband and wife, by deed dated December 14,
1989, and recorded in Book 458, Page 451, Deed Records,  Lea County, New Mexico,
and continuing  along the West line of said Wilkerson tract in all a distance of
681.03  feet to a 1/2"  rebar with PVC cap marked  "King  6541",  a point on the
North  line of  Broadway  Street,  and also being the  Southwest  corner of said
Wilkerson tract;  thence S 81 degrees 46' 33" West, along the North line of said
Broadway  Street,  150.58 feet to a 1/2" rebar with PVC cap marked  "King 6541",
said point also being the Southeast  corner of that certain tract of land deeded
to Creamland Dairies,  Inc., by deed dated October 2, 1989, and recorded in Book
456, Page 696, Deed Records, Lea County, New Mexico;  thence N 0 degrees 00' 00"
East, along the East line of said Creamland  tract,  278.12 feet to a 1/2" rebar
with PVC cap marked "King 6541",  said point also being the Northeast  corner of
said Creamland  tract;  thence N 89 degrees 53' 45" West along the North line of
said Creamland  tract 149.87 feet to a spike nail, said point also being a point
in the West line of the NE/4 SW/4 of said  Section  35;  thence N 00 degrees 15'
02" East  along  the West line of said NE/4  SW/4,  426.02  feet to the point of
beginning.



                                      A-1
<PAGE>

                       EXHIBIT B TO PARTNERSHIP AGREEMENT

                              FORM OF LEGAL OPINION



WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3 
c/o WNC & Associates, Inc.
3158 Redhill Avenue, Suite 120
Costa Mesa, California  92626

RE:      BROADWAY APARTMENTS, LIMITED PARTNERSHIP

Ladies and Gentlemen:

         You have  requested  our  opinion  with  respect to certain  matters in
connection with the investment by WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3,
a California limited partnership (the "Limited Partner") in BROADWAY APARTMENTS,
LIMITED PARTNERSHIP (the "Partnership"), a New Mexico limited partnership formed
to own,  develop,  (construct/-rehabilitate)  finance and  operate an  apartment
complex for low-income  persons (the "Apartment  Complex") in Hobbs, Lea County,
New Mexico. The general partner(s) of the Partnership (is/are) TRIANON-BROADWAY,
LLC, a New Mexico Limited Liability Company.

         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>

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 New Mexico.

         (c) The  Partnership is validly  existing under and subject to the laws
of   New   Mexico   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  has been  admitted  to the  Partnership  as a
limited partner of the Partnership  under __________ law and are entitled to all
of the rights of limited  partners under the  Partnership  Agreement.  Except as


                                      B-2
<PAGE>

described  in the  Partnership  Agreement,  no person is a partner of or has any
legal or  equitable  interest  in the  Partnership,  and all former  partners of
record or known to counsel have validly  withdrawn from the Partnership and have
released any claims against the Partnership  arising out of their  participation
as partners therein.

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

         (i) Neither the General  Partner(s) of the  Partnership nor the Limited
Partner  will have any  liability  for the Mortgage  Note or the  Mortgage  Loan
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) The nonprofit General Partner: (i) is described in paragraph (3) or
(4) of  Section  501(c) and is exempt  from tax under  Section  501(a);  (ii) is
determined  by the State Agency not to be  affiliated  with or  controlled  by a
for-profit organization; and (iii) one of the exempt purposes of such non-profit
General Partner includes the fostering of low income housing.

         (l) The  non-profit  General  Partner owns an interest in the Apartment
Complex (directly or through a partnership) and materially  participates [within
the meaning of Section 469(h)] in the development and operation of the Apartment
Complex throughout the tax credit compliance period.

         (m) The  non-profit  General  Partner  satisfies the  requirements  and
conditions  of California  Revenue and Taxation  Code Sections  214(g) and 214.8
and, provided such  requirements and conditions are maintained,  the Partnership
shall be  entitled  to a property  tax  exemption  within  the  meaning of those
Sections.

         (n) 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.



                                      B-3
<PAGE>

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

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

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

Sincerely,




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




                                      B-4
<PAGE>

                       EXHIBIT C TO PARTNERSHIP AGREEMENT

                           CERTIFICATION AND AGREEMENT

         CERTIFICATION  AND  AGREEMENT  made as of the  date  written  below  by
BROADWAY APARTMENTS,  LIMITED PARTNERSHIP, a New Mexico limited partnership (the
"Partnership");  TRIANON-BROADWAY,  LLC, a New Mexico Limited  Liability Company
(the  "General  Partner");  and TRIANON  DEVELOPMENT  CORPORATION,  a California
corporation (the "Original  Limited Partner") for the benefit of WNC HOUSING TAX
CREDIT FUND V, L.P., SERIES 3, a California limited partnership (the "Investment
Partnership"), and WNC & ASSOCIATES, INC. ("WNC").

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

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

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

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

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

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


                                      C-1
<PAGE>

breach,  termination  or default with the giving of notice or passage of time or
both) any other  agreement,  indenture or instrument by which the Partnership or
any General Partner or Original Limited Partner is bound or any law, regulation,
judgment,  decree or order  applicable to the Partnership or any General Partner
or  Original  Limited  Partner  or  any of  their  respective  properties;  this
Certification  and Agreement  constitutes the valid and binding agreement of the
Partnership,  the General Partner and the Original Limited Partner,  enforceable
against each of them in accordance with its terms.

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

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

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

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

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

                  1.7 The Partnership will allocate to the Limited Partner the 
Projected  Annual Tax Credits.

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

                                      C-2
<PAGE>

                  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.

         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.



                                      C-3
<PAGE>



         IN WITNESS WHEREOF,  this Certificate and Agreement is made and entered
          into as of the day of , 1997.

PARTNERSHIP

BROADWAY APARTMENTS, LIMITED PARTNERSHIP

TRIANON-BROADWAY, LLC, a New Mexico Limited Liability Company, General Partner

By:      TRIANON DEVELOPMENT CORPORATION, a California corporation, 
         Member

         By:      _________________________
                  Lester G. Day,
                  President

By:      FOUNDATION FOR SOCIAL RESOURCES, INC., a Delaware non-profit 
         corporation, Member

         By:     __________________________
                 William W. Hirsch,
                 President

GENERAL PARTNER

TRIANON-BROADWAY, LLC, a New Mexico Limited Liability Company


By:      TRIANON DEVELOPMENT CORPORATION, a California corporation, Member

         By:      _____________________
                  Lester G. Day,
                  President

By:      FOUNDATION FOR SOCIAL RESOURCES, INC., a Delaware non-profit 
         corporation, Member


         By:      _________________________
                  William W. Hirsch,
                  President

ORIGINAL LIMITED PARTNER

TRIANON DEVELOPMENT CORPORATION, a California corporation

By:      ________________________
         Lester G. Day,
         President




                                      C-4
<PAGE>

                     EXHIBIT D TO THE PARTNERSHIP AGREEMENT

                          GENERAL PARTNER CERTIFICATION

         This General Partner  Certification  is being issued to WNC HOUSING TAX
CREDIT FUND V, L.P., SERIES 3 ("Limited  Partner") by  TRIANON-BROADWAY,  LLC, a
New  Mexico  Limited  Liability  Company  (the  General  Partner")  of  BROADWAY
APARTMENTS,    LIMITED   PARTNERSHIP,   a   New   Mexico   limited   partnership
("Partnership")  in  accordance  with  Section 7.2 of the  Amended and  Restated
Agreement of Limited Partnership of the Partnership ("Partnership Agreement").

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

         WHEREAS, the Limited Partner is scheduled to make a Capital 
Contribution to the Partnership;

         WHEREAS,  the  Partnership  Agreement  requires the General  Partner to
issue this Certification prior to the Limited Partner's payment; and

         WHEREAS,  the  Limited  Partner  shall  rely on this  Certification  in
evaluating the continued merits of its investment in the Partnership;

         NOW,  THEREFORE,  to induce the Limited  Partner to make its  scheduled
Capital  Contribution to the  Partnership,  the General  Partner  represents and
warrants to the Limited  Partner that the following are true, or as the case may
be, will be true as of the date written below:

         (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.

         (b) The Partnership  Agreement and the applicable 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 workmanlike  manner
in  accordance  with all  applicable  requirements  of the  Mortgage  Loan,  all
applicable   requirements   of  all   appropriate   governmental   entities  and
substantially  in accordance  with the plans and  specifications  of the Project
that  have  been or shall be  hereafter  approved  by Bank of  America,  Federal
Savings Bank, if required,  and all applicable  governmental  entities,  as such


                                      D-1
<PAGE>

plans and  specifications  may be changed from time to time with the approval of
Bank of America,  Federal Savings Bank and any applicable governmental entities,
if such approval shall be required.

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

         (e) Additional  Improvements on the Project, if any, shall be completed
substantially   in  conformity   with  the  Project   Documents  and  any  other
requirements necessary to obtain Completion of Construction.

         (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  Project  and  is not  in  violation  of any  zoning,
environmental or similar regulations applicable to the Project.

         (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 Project at the time of first  occupancy
and generally throughout the term of the Partnership.

         (i) The Project has obtained,  or will obtain before Permanent Mortgage
Commencement,  and  will  maintain  throughout  the  term  of  this  Partnership
Insurance written by an Insurance Company.

         (j)      The Partnership owns the fee simple interest in the Project.

         (k) 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.

         (l) A builder's risk insurance  policy in favor of the Partnership will
be and is in full force and effect until Completion of Construction.

         (m) Except as  otherwise  disclosed  to the Limited  Partner in writing
prior to the execution of the Partnership Agreement,  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
Project and (2) no aboveground or underground storage tanks are now or have ever
been  located on or under the Project.  The General  Partner will not install or


                                      D-2
<PAGE>

allow to be  installed  any  aboveground  or  underground  storage  tanks on the
Project.  The General  Partner  covenants that the Project shall be kept free of
Hazardous  Materials  and shall not be used to  generate,  manufacture,  refine,
transport,  treat,  store,  handle,  dispose  of,  transfer,  produce or process
Hazardous  Materials,  except in  connection  with the  normal  maintenance  and
operation of any portion of the project.  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 Materials and shall
keep,  or cause to be kept,  the  Project  free and clear of any  liens  imposed
pursuant to such laws,  ordinances,  rules and regulations.  The General Partner
shall  promptly  notify  the  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  Project,  any  Improvements  constructed  on the  Project,  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 Project.

         (n) To the best of its  knowledge and belief,  the General  Partner has
not executed and will not execute any agreements with  provisions  contradictory
to, or in opposition to, the provisions of the Partnership Agreement.

         (o) The Partnership will allocate to the Limited Partner the Projected 
Annual Tax Credits.

         (p) To the best of its actual  knowledge and belief,  after due inquiry
no charges or  encumbrances  exist with respect to the Project  other than those
which are created or permitted by the Project Documents or are noted or excepted
in the title policy for the Project.

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

         (r) The General Partner has not lent or otherwise advanced any funds to
the Partnership  other than its Capital  Contribution and the Partnership has no
unsatisfied  obligation to make any payments of any kind to the General  Partner
or any Affiliate  thereof,  except as may be provided in accordance with Section
6.2 or 6.3 of this Partnership Agreement.



                                      D-3
<PAGE>

         (s) To the best of its  knowledge  and  belief,  no event has  occurred
which constitutes a material default under any of the Project Documents.

         (t) To the best of its  knowledge  and  belief,  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.

         (u) No legal  actions or  proceedings  before  any  court,  commission,
administrative  body  or  other  governmental  authority,  and/or  acts  of  any
governmental  authority  having  jurisdiction  over the  zoning or land use laws
applicable to the Project, have occurred the continuing effect of which has: (1)
materially  and  adversely  affected  the  operation of the  Partnership  or the
Project;  (2)  materially  and  adversely  affected  the  ability of the General
Partner to perform its  obligations  hereunder or under any other agreement with
respect to the Project;  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 Project only insofar as they
or any of them are part of the general public.

         (v)  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 which in the aggregate  materially affect the ability
of the Limited Partner to obtain the  anticipated  benefits of its investment in
the Partnership.

         (w) The General  Partner has and shall maintain a net worth equal to at
least  $500,000  computed  in  accordance  with  generally  accepted  accounting
principles.



                                      D-4
<PAGE>

         IN  WITNESS  WHEREOF,  the  undersigned  have set  their  hands to this
General Partner Certification this _____ day of ______________ 1997.

GENERAL PARTNER


TRIANON-BROADWAY, LLC, a New Mexico Limited Liability Company

By:      TRIANON DEVELOPMENT CORPORATION, a California corporation,
         Member


         By:      _______________________
                  Lester G. Day,
                  President

By:      FOUNDATION FOR SOCIAL RESOURCES, INC., a Delaware non-profit  
         corporation, Member

         By:      _______________________
                  Michael Hirsch,
                  President






                                      D-5
<PAGE>


                       EXHIBIT E 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 New
Mexico,  has  prepared  final  working  plans and  detailed  specifications  for
BROADWAY APARTMENTS,  LIMITED PARTNERSHIP, a New Mexico limited partnership (the
"Partnership"),  between  WNC  HOUSING  TAX  CREDIT  FUND V,  L.P.,  SERIES 3, a
California  limited  partnership  ("Limited  Partner")  and the  Partnership  in
connection  with the  construction  [rehabilitation]  of improvements on certain
real property located in Hobbs, Lea County, New Mexico (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.



- -----------------------------------
Project Architect

Date:  ____________________________



Confirmed by:


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

Date:  ____________________________



                                      E-1

<PAGE>



                       EXHIBIT F TO PARTNERSHIP AGREEMENT

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



_______________, 199____


WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3 
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 WNC  HOUSING  TAX CREDIT FUND V, L.P.,
SERIES 3 (the "Limited Partner") of a limited  partnership  interest in BROADWAY
APARTMENTS,   LIMITED  PARTNERSHIP,   a  New  Mexico  limited  partnership  (the
"Partnership") which owns a certain parcel of land located in Hobbs, Lea County,
New Mexico and  improvements  thereon (the  "Project"),  the Limited Partner has
requested our  certification as to the amount of low-income  housing tax credits
("Tax  Credits")  available  with respect to the Project 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
Project of $________________,  a qualified basis (as defined in Section 42(c) of
the Code) of the Project of $_________________  and an applicable percentage (as
defined in Section 42(b) of the Code) of _____%.

Sincerely,


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


                                      F-1
<PAGE>

                              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 _____
                                        

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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


                                   
<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 MESA VERDE APARTMENTS,  LIMITED PARTNERSHIP, I hereby
certify as to the following:

     1. MESA VERDE APARTMENTS,  LIMITED PARTNERSHIP owns a one hundred forty-two
(142) unit project ("Project") in Roswell, Chaves County, New Mexico.

     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 Project pursuant
to Section 42(g)(1) of the Internal Revenue Code ("Code").

     3. The Project  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 Project is rent  restricted  as defined in Section
42(g)(2)of the Code.

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

     6. Each  building in the Project 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 Project.

     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 Project.

     9. During the  preceding  calendar  year when a unit in the Project  became
vacant reasonable  attempts were made to rent that unit to tenants whose incomes
met the income limitation applicable to the Project 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 Project 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 Project 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 New Mexico
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 1.15 DSC means that for every $1.00 of Stabilized 
     Debt Service required to be paid there must be $1.15 of Net Operating 
     Income available.


                                      G-10

<PAGE>


                            DEVELOPMENT FEE AGREEMENT

         This DEVELOPMENT FEE AGREEMENT ("Agreement"), is entered into as of the
date  written  below by and between  Lester G. Day  ("Developer")  and  BROADWAY
APARTMENTS,  LIMITED  PARTNERSHIP,  a New Mexico 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 Hobbs,  Lea County,
New Mexico,  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 seventy-eight (78) 
unit low-income rental housing complex and other related improvements,  which is
intended to qualify for federal low-income housing tax credits (the "Project").

         C.  Prior  to the  date  of  this  Agreement  Developer  has  performed
substantial  development  services  with  respect to the Project as specified in
Section  2.3 of this  Agreement.  Developer  has  also  agreed  to  oversee  the
development  of the Project  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 Project.  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 Project to Owner,  to undertake  performance  of such
development services,  and to fulfill all obligations of the Developer set forth
in this  Agreement,  in  consideration  of  Owner's  restated  promise to pay to
Developer the fee specified in this Agreement.

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


                                       1
<PAGE>




                                    SECTION I
                               CERTAIN DEFINITIONS

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

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

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

         "Construction  Lender"  means Bank of America,  Federal  Savings  Bank,
which has committed to make a loan to finance construction of the Project.

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

         "Contractor" means Crestline Building Corporation.

         "Department"   means  the  New  Mexico  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.

         "Permanent  Loan Funding Date" means the date on which the loan between
Owner and Bank of  America,  Federal  Savings  Bank is closed  and  funded;  all
construction  costs are paid in full and the  Construction  Loan repaid in full;
and the issuance of a certificate of occupancy by the governmental agency having
jurisdiction over the Project.

         "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 Project,  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, 2005.

         2.2 Development Fee. In  consideration of Developer's  prior activities
and agreement to provide development  services during the term of this Agreement
and the assignment of all  development  rights for the Project,  Owner agrees to
pay the Developer a Development  Fee in the amount of $206,471.  The Development
Fee shall be payable in  accordance  with  Section 3 of this  Agreement.  In the


                                       2
<PAGE>

event the owner refinances the Real Property prior to the termination of this
Agreement and the  Development Fee has not been paid in full, then any refinance
proceeds in excess of repayment of the  Permanent  Loan and any and all fees and
costs  associated  with the refinancing of the Real Property shall first be used
by the Owner to pay any  outstanding  Development  Fee and  second to be used in
accordance  with the Amended and Restated  Agreement of Limited  Partnership  of
Broadway Apartments, Limited Partnership, a New Mexico limited partnership.

         2.3      Development Services.

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

     (1) Services Rendered Prior to December 31, 1996.

     (A)  Developer  has located,  negotiated  and closed on the purchase of the
Real Property.

     (B) Developer has made an application for Tax Credits to the Department.

     (C) Developer has  negotiated,  conferred and worked with the Department to
obtain a reservation of Tax Credits for the Owner on the Project.

     (D) Developer has  negotiated,  conferred and worked with the Department to
obtain an allocation of Tax Credits for the Owner on the Project.

     (E) Developer has negotiated and conferred with the environmental  engineer
to provide a full environmental evaluation of the Real Property.

     (F) Developer has negotiated and conferred with a market analyst to provide
a full market feasibility study of the Project.

     (G) Developer has negotiated,  conferred and caused the Owner to execute an
architectural contract for the planning and design of the Project.

     (2) Other Prior Services.

     (A) Developer has created,  refined and analyzed the financial  projections
for the Project.

     (B)  Developer  has  negotiated,  conferred,  and worked  with the  Project
architects, engineers and Contractor with regard to preparation, refinement, and


                                       3
<PAGE>

finalization  of the plans and  specifications  for the Project,  and  projected
construction schedules and costs.

     (C)  Developer  has applied for zoning  approvals,  land use  approvals and
development permits necessary for the Project, and has conferred and worked with
the City of Hobbs  planning and building  agencies with regard to such approvals
and permits.

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

     (E) 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:

                           (1)  Construction  and  Development  Matters.  
Developer  shall oversee  construction  of the Project on Owner's  behalf,  as 
provided in this Section 2.3(b)(1). Owner shall allow Developer full access to 
the Project 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 Project.

                                    (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  attend   construction
progress  meetings  at the Project  site to monitor  construction  progress  and
advise Owner and the Contractor with respect to the resolution of construction 
issues.

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

                                    (F) Developer shall monitor the Contractor's
progress  with  respect  to the  approved  Project  schedule  and keep the Owner


                                       4
<PAGE>

informed of all pertinent Project issues and construction progress.

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

                                    (H)   Developer   shall  be  available   for
immediate response in critical situations arising during the construction of the
Project.

                                    (I)  Developer  shall  coordinate  relations
with the City of Hobbs and other governmental  authorities  having  jurisdiction
over development of the Project.

                           (2)      Tax Credit  Matters.  From the date hereof 
through the completion of  construction  of the Project,  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 Project 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 Project.

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

                                    (D)  Developer shall coordinate and 
participate in any conferences with the Department relating to the Project and 
construction matters.

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


                                       5
<PAGE>


                                    SECTION 3
                            DEVELOPMENT FEE PAYMENTS

         3.1  Services   Rendered  Prior  to  December  31,  1995.  The  Parties
acknowledge  and agree that  Developer  has earned  the sum of  $__________  for
services  rendered prior to December 31, 1995, that said amount is reasonable in
relation to the work performed,  is fully earned as of that date and said amount
shall be paid in any event  notwithstanding  the  termination of this Agreement.
The  Parties  further  acknowledge  and agree  that the Owner  has  accrued  the
Development Fee of $__________, under its method of accounting, and has reported
the  Development  Fee  expense on its 1995  income  tax  return.  The  Developer
represents  and warrants  that  Developer  has reported the  Development  Fee of
$__________ on Developer's 1995 income tax return.

         3.2 Payment of Development  Fee. To the extent not previously paid, for
Development  services  performed and to be performed under this  Agreement,  the
Owner shall pay the Developer the  Development Fee on the Permanent Loan Funding
Date. If the Development Fee is not paid in full upon the Permanent Loan Funding
Date  then the  Development  Fee  shall be paid  from  available  Cash Flow From
Operations  in  accordance  with the terms of Section  11.1 of the  Amended  and
Restated  Agreement  of Limited  Partnership  for BROADWAY  APARTMENTS,  LIMITED
PARTNERSHIP,  a New Mexico limited  partnership  (said agreement is incorporated
herein by this reference) but in no event later than December 31, 2003.

                                    SECTION 4
                                   TERMINATION

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

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

                  (b)  A fraudulent or intentionally incorrect report by 
Developer to Owner with respect to the Project; 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


                                       6
<PAGE>

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 Project 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:           Lester G. Day
                           4695 MacArthur Court, Suite 830
                           Newport Beach, California  92660

If to Owner:               BROADWAY APARTMENTS, LIMITED PARTNERSHIP
                           4695 MacArthur Court, Suite 830
                           Newport Beach, California 92660


         5.2  Interpretation.

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

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

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

                                       7
<PAGE>

                  (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'  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.

         5.8  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.

         5.9 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.

                                       8
<PAGE>

         5.10  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 New Mexico
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.


                                       9
<PAGE>


         IN WITNESS  WHEREOF,  the  Parties  have caused  this  Development  Fee
Agreement to be executed as of ________________________, 1997.

DEVELOPER:       TRIANON-BROADWAY, LLC, a New Mexico             
                 Limited Liability Company

                         By:      TRIANON DEVELOPMENT CORPORATION, a
                                  California corporation, Member

                                  By: ______________________________
                                      Lester G. Day,
                                      President

                         By:      FOUNDATION OF SOCIAL RESOURCES,
                                  INC., a Delaware non-profit
                                  corporation, Member

                                  By:  ______________________________
                                       William W. Hirsch,
                                       President

OWNER:                              BROADWAY APARTMENTS, LIMITED PARTNERSHIP

                                    TRIANON DEVELOPMENT CORPORATION


                                     By:      _____________________________
                                              Lester G. Day,
                                              President

                                    FOUNDATION FOR SOCIAL RESOURCES, INC.


                                    By:      _____________________________
                                             William W. Hirsch,
                                             President


                                       10
<PAGE>

                                    EXHIBIT A

                                LEGAL DESCRIPTION

     A tract of land located in the Northeast  Quarter of the Southwest  Quarter
(NE/4  SW/4) of Section  35,  Township 18 South,  Range 38 East,  N.M.P.M.,  Lea
County, New Mexico described as:

     Beginning  at a 1-1/4" axel at the  Northwest  corner of this tract,  which
lies East  1320.0  feet and  South,  361.5 feet from the West 1/4 corner of said
Section 35;  thence S 89 degrees 38' 50" East 298.63 feet to a 1/2" rebar,  said
point also being the  Northwest  corner of that certain  tract of land deeded to
Gopalbhai B. Desai,  et al, by deed dated August 18, 1992,  and recorded in Book
485 Page 307 Deed Records,  Lea County, New Mexico;  thence S 00 degrees 08' 02"
West,  along most  Westerly  line of said Desai,  et al,  tract,  a t 298.5 feet
passing  the  Northwest  corner  of that  certain  tract of land  deeded to W.P.
Wilkerson and Billie P. Wilkerson,  husband and wife, by deed dated December 14,
1989, and recorded in Book 458, Page 451, Deed Records,  Lea County, New Mexico,
and continuing  along the West line of said Wilkerson tract in all a distance of
681.03  feet to a 1/2"  rebar with PVC cap marked  "King  6541",  a point on the
North  line of  Broadway  Street,  and also being the  Southwest  corner of said
Wilkerson tract;  thence S 81 degrees 46' 33" West, along the North line of said
Broadway  Street,  150.58 feet to a 1/2" rebar with PVC cap marked  "King 6541",
said point also being the Southeast  corner of that certain tract of land deeded
to Creamland Dairies,  Inc., by deed dated October 2, 1989, and recorded in Book
456, Page 696, Deed Records, Lea County, New Mexico;  thence N 0 degrees 00' 00"
East, along the East line of said Creamland  tract,  278.12 feet to a 1/2" rebar
with PVC cap marked "King 6541",  said point also being the Northeast  corner of
said Creamland  tract;  thence N 89 degrees 53' 45" West along the North line of
said Creamland  tract 149.87 feet to a spike nail, said point also being a point
in the West line of the NE/4 SW/4 of said  Section  35;  thence N 00 degrees 15'
02" East  along  the West line of said NE/4  SW/4,  426.02  feet to the point of
beginning.


<PAGE>

                                GUARANTY AGREEMENT


         FOR VALUE  RECEIVED,  the  receipt and  sufficiency  of which is hereby
acknowledged,  and in  consideration  of the  agreement  of Lester G. Day,  (the
"Developer")  to permit  deferral of the $206,471 due from BROADWAY  APARTMENTS,
LIMITED  PARTNERSHIP  a  New  Mexico  limited  partnership   ("Debtor")  to  the
Developer,  the undersigned  Guarantor(s),  hereby unconditionally  guaranty 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 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  represent  and  warrant  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 acknowledge 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.

         The 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, (c) extend or renew for any
period  (whether  or not longer  than the  original  period) or alter any of the
Liabilities,  (d)  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,  (e)  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,  and  (f)  resort  to  the  undersigned  for  payment  of  any  of the
Liabilities,  whether or not the  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.

         The undersigned  hereby expressly waive: (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.

         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.

         This Guaranty Agreement shall be binding upon the undersigned, and upon
the legal representatives, heirs, successors and assigns of the undersigned.

         This Guaranty Agreement has been made and delivered in the state of New
Mexico and shall be construed and governed under New Mexico 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 the undersigned.

         Guarantor  consents to the  jurisdiction  of the courts in the State of
New Mexico and/or to the  jurisdiction  and venue of any United States  District


                                       2
<PAGE>

Court in the State of New Mexico having jurisdiction over any action or judicial
proceeding  brought to enforce,  construe or interpret this Guaranty.  Guarantor
agrees  to  stipulate  in  any  such  proceeding  that  this  Guaranty  is to be
considered  for all  purposes to have been  executed  and  delivered  within the
geographical boundaries of the State of New Mexico, 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 _____________________, 1997.

Signed, sealed and delivered                  GUARANTOR:
in the presence of:

- ----------------------------
Witness
                                              --------------------------
____________________________                  Lester G. Day
Notary Public
My Commission Expires:
                                              Address for Guarantor:
- ----------------------------
                                              4695 MacArthur Court, Suite 830
                                              Newport Beach, California 92660
         (NOTARY SEAL)





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