Exhibit
10.1


 


EXECUTION VERSION


 


AGREEMENT
AND  PLAN
OF  MERGER


 


This AGREEMENT AND PLAN OF MERGER, dated as of
October 21, 2004  (this “Agreement”),
is by and among (a) ERI/RES II LLC, a Massachusetts limited liability company (the
“RESI
II  Fund”), (b)
ERI/RES II MERGER SUB LIMITED PARTNERSHIP, a Maryland limited partnership (“Merger  Sub”), (c) WINTHROP
RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP, organized under the laws of the
State of Maryland (the “Partnership”), (d) ONE WINTHROP PROPERTIES, INC., a Massachusetts
corporation (as to itself and as the sole managing general partner of the Partnership
prior to the Effective Time, “One  Winthrop”) and LINNAEUS-HAWTHORNE ASSOCIATES
LIMITED PARTNERSHIP, organized under the laws of Massachusetts (as to itself and
as the sole non-managing general partner of the Partnership prior to the Effective
Time, “Linnaeus-Hawthorne”),
and (e) ERI/RES II GP LLC, a Massachusetts limited liability company (as the sole
general partner of the Partnership at and after the Effective Time the “ERG  Affiliate”).  All references herein to the “General Partner”
shall mean One Winthrop immediately prior to the consummation of the Merger, and
the ERG Affiliate at and immediately after the consummation of the Merger, in each
case in its capacity as the managing or sole general partner of the Partnership,
respectively.


 


WHEREAS, the parties
to this Agreement have agreed to consummate the business combination and other transactions
provided for herein, which each of the parties hereto deems to be advisable and
in the best interests of their respective partners or stockholders, as the case
may be;


 


WHEREAS, §10-208 of the
Maryland Revised Uniform Limited
Partnership Act (the “Act”) permits Maryland
limited partnerships to merge with other limited partnerships;


 


WHEREAS, Merger Sub and
the Partnership now desire to merge, following which the Partnership shall be the
surviving entity;


 


NOW  THEREFORE, in consideration
of the premises, and the mutual covenants and agreements herein contained, the parties
hereto agree as follows:


 


ARTICLE
I


 


THE  MERGER


 


1.01                           Surviving  Entity.  In accordance with the provisions of this Agreement
and the Act, at the Effective Time (as defined below), Merger Sub shall be merged
with and into the Partnership (the “Merger”), and the separate legal existence
of Merger Sub shall cease.  The Partnership
shall be the surviving entity in the Merger and shall continue its legal existence
under the laws of the State of Maryland under the name it possesses immediately
prior to the Effective Time (i.e., Winthrop Residential Associates II, A Limited
Partnership).


 





















 


1.02                           Effect  of  the  Merger.


 


(a)                                  Upon
the Effective Time, for all purposes of law, all of the rights, privileges and powers
of Merger Sub and the Partnership shall have merged, and all their property, real,
personal and mixed, and all the debts due on whatever account to any of them, as
well as all other things and other causes of action belonging to any of them, shall
be transferred to, vested in and devolve on the Partnership as the surviving entity
of the Merger, without further act or deed, and all claims, demands, property and
other interest shall be the property of the Partnership, and the title to all real
estate vested in either of Merger Sub or the Partnership shall not revert or be
in any way impaired by reason of the Merger, but shall be vested in the Partnership.


 


(b)                                 Upon
the Effective Time, all rights of creditors and all liens upon any property of either
of Merger Sub or the Partnership shall be preserved unimpaired, and all debts, liabilities
and duties of each of Merger Sub and the Partnership that have merged shall thenceforth
attach to the Partnership, and may be enforced against it as the surviving entity
to the same extent as if said debts, liabilities and duties had been incurred or
contracted by it.


 


1.03                           Additional  Actions.  If, at any time after the Effective Time, the
Partnership shall consider or be advised that any deeds, bills of sale, assignments,
assurances or any other actions or things are necessary or desirable to vest, perfect
or confirm of record or otherwise in the Partnership its right, title or interest
in, to or under any of the rights, properties or assets of Merger Sub acquired or
to be acquired by the Partnership as a result of, or in connection with, the Merger
or to otherwise carry out this Agreement, the ERG Affiliate shall and will be authorized
to execute and deliver, in the name and on behalf of Merger Sub and the Partnership
or otherwise, all such deeds, bills of sale, assignments and assurances and to take
and do, in the name and on behalf of Merger Sub and the Partnership or otherwise,
all such other actions and things as may be necessary or desirable to vest, perfect
or confirm any and all right, title and interest in, to and under such rights, properties
or assets in the Partnership or to otherwise carry out this Agreement.


 


1.04                           Effective  Time; Conditions.  In the event of, and as soon as is practicable
after, the satisfaction or waiver of the conditions set forth in Article VI
hereof, the parties hereto will cause the Merger to be consummated by filing, with
the State Department of Assessments and Taxation of Maryland (the “SDAT”), Articles
of Merger in substantially the form attached hereto as Exhibit  A (the time
of acceptance for record of such filing by the SDAT or such later time (not to exceed
thirty (30) days thereafter) as is specified in such Articles of Merger being the
“Effective
Time”)
under the Act.  Contemporaneously with the
filing referred to in this Section 1.04, a closing (the “Closing”) will
be held at 10:00 a.m.  (Eastern Time) at the
offices of Bingham McCutchen LLP, 150 Federal Street, Boston, Massachusetts 02110
or at such other time and location as the parties may establish for the purpose
of confirming all the foregoing.  The date
of the Closing is referred to as the “Closing  Date.”


 


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1.05                           Effect  on
Outstanding  Interests.


 


(a)                                  Partnership
Interests  in  Merger  Sub.  By virtue of the Merger, automatically and without
any action on the part of the holder thereof, (i) the limited partnership interest(s)
in Merger Sub outstanding immediately prior to the Effective Time shall be converted
into a number of Limited Partnership Units equal to the total number of Limited
Partnership Units outstanding at the Effective Time less the number of Limited Partnership
Units held at the Effective Time by the RESI II Fund and its Affiliates, after taking
into account the transactions described in the remainder of this Section 1.05
and (ii) general partnership interest(s) in Merger Sub outstanding immediately prior
to the Effective Time shall be converted into the same number of General Partnership
Units outstanding at the Effective Time less a number of General Partnership Units
equal to an aggregate ownership percentage of 0.2% of the Partnership, and the ERG
Affiliate shall be admitted as the sole General Partner of the Partnership at the
Effective Time.


 


(b)                                 Partnership  Interests
in  the  Partnership.


 


(i)                                     Limited  Partnership
Units. 
By virtue of the Merger, automatically and without any action on the part
of the holder thereof, each LimitedPartnership Unit outstanding immediatelyprior to the Effective Time, other than (x) Dissenting Units (as defined in Section 1.07
below) and (y) Limited Partnership Units held by the RESI II Fund or any of its
Affiliates, shall be cancelled and extinguished and be automatically converted into,
and become the right to receive, and each Eligible Limited Partner shall be entitled
to receive, subject to the requirements set forth in Section 1.08, from the
RESI II Fund or Merger Sub, an amount per unit in cash equal to the Limited Partnership
Unit Amount.


 


(ii)                                  General  Partnership
Units. 
Simultaneously with the Merger, automatically and without any action on the
part of the holder thereof, all of the General Partnership Units, whether managing
or non-managing, shall be converted into Special Limited Partnership Units in the
Partnership representing, initially, an aggregate of 0.2% of the Partnership.  It is the intent of the parties to, and the parties
shall, treat the conversion of the General Partner Units to Special Limited Partner
Units as a non-recognition transaction pursuant to Section 721(a) of the Code.  The parties shall execute any and all documents
and take all such further actions as may be reasonably necessary to cause the transaction
contemplated hereby to comply with such Section 721(a).


 


(iii)                               Termination
of
Rights.  After the Effective Time, holders of Limited Partnership
Units will cease to be, and will have no rights as, limited partners of the Partnership,
and such holders’ rights will consist only of, (A) in the case of Limited Partnership
Units other than Dissenting Units, the right to receive the consideration provided
for in this Section 1.05 in respect of such units, and (B) in the case of Dissenting
Units, the rights afforded to the holders thereof under the applicable provisions
of the Act.  Notwithstanding anything to the
contrary in this Agreement,


 


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after
the Effective Time, none of the Partnership, the RESI II Fund or the ERG Affiliate
shall be liable to any holders of Limited Partnership Units for any amount properly
paid to a public official pursuant to any applicable abandoned property, escheat
or similar law.


 


(c)                                  Limited  Partnership
Units  Owned
by  the  RESI  II  Fund.  Each
Limited Partnership Unit which is held of record immediately prior to the Effective
Time by the RESI II Fund or any of its Affiliates shall remain outstanding as Limited
Partnership Units in the Partnership, as it exists after the Effective Time, and
no payment of Merger Consideration shall be made with respect thereto.


 


(d)                                 Dissenting  Units.  The holders of Dissenting Units, if any, shall
be entitled to payment for such units only to the extent permitted by and in accordance
with the provisions of the Act; provided, however, that if, in accordance with the applicable
provisions of the Act, any holder of Dissenting Units shall forfeit such right to
payment of the fair value of such units, such holder shall be bound by the terms
of the Merger and such units shall thereupon be deemed to have been converted into
and to have become exchangeable for, as of the Effective Time, the right to receive
the Merger Consideration described in Section 1.05(b)(i) hereof (and the holder
of such units may be treated as an Eligible Limited Partner hereunder).


 


(e)                                  Tax  Treatment.  For federal income tax purposes, the parties to
this Agreement agree to treat the Merger Consideration paid to holders of Limited
Partnership Units as consideration paid by Merger Sub and/or the RESI II Fund to
purchase the Limited Partnership Units outstanding immediately prior to the Effective
Time, other than Limited Partnership Units held by the RESI II Fund (or its Affiliates)
or by persons who perfect their dissenters rights under Maryland law (and thereby
hold Dissenting Units) and who do not effectively withdraw or lose their dissenters
rights.


 


1.06                           Other  Transactions.


 


(a)                                  Immediately
at and after the consummation of the Merger, for purposes of clarification, the
ERG Affiliate shall be the sole general partner of the Partnership, and each Limited
Partner after the Effective Time, including the RESI II Fund, hereby consents thereto.


 


(b)                                 Promptly
after the Closing, the RESI II Fund shall cause its Affiliates to amend and restate
the Amended and Restated Agreement of Limited Partnership of the Partnership that
is in effect immediately prior to the Effective Time (the “Partnership
Agreement”)
to reflect, among other things, the transactions contemplated hereby and to include
provisions summarized on Exhibit  B
hereto relating to the rights and obligations of the Special Limited Partnership
Units, which provisions cannot be waived, modified or amended without the consent
of the holders of a majority of the Special Limited Partnership Units.


 


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(c)                                  Provided
that One Winthrop has complied with the obligations set forth in Section 5.01(d),
then immediately prior to the Effective Time, One Winthrop shall cause the Partnership
to satisfy, or otherwise set aside reserves to satisfy, all of its Liabilities and
thereafter shall distribute to the holders of Limited Partnership Units all of its
Excess Cash in accordance with Section 4.1 under the Partnership Agreement.


 


1.07                           Dissenting  Units.


 


(a)                                  Notwithstanding
any provision of this Agreement to the contrary, holders of Limited Partnership
Units which are entitled to dissenter’s rights in connection with the Merger under
the Act (collectively, “Dissenting  Units”) shall not be converted into or represent
the right to receive the Merger Consideration. 
Such holders shall be entitled to receive in cash payment of the fair value
of such Dissenting Units held by them in accordance with and as provided by the
provisions of the Act, except that all Dissenting Units held by holders who shall
have failed to perfect or who effectively shall have withdrawn or lost their rights
to the payment of fair value for such units under the Act shall thereupon be deemed
to have been converted into and to have become exchangeable for, as of the Effective
Time, the right to receive the Merger Consideration described in Section 1.05(b)(i),
without any interest thereon.


 


(b)                                 All
parties hereto shall give the RESI II Fund and the ERG Affiliate (i) prompt notice
of any demand for payment of fair value received by such party, the withdrawals
of any such demand, and any other instrument served pursuant to the Act and received
and (ii) the opportunity to participate in all negotiations and proceedings with
respect to demands for payment of fair value under the Act.  No party to this Agreement shall, except with
the prior written consent of the RESI II Fund, which shall not be unreasonably withheld,
make any payment with respect to any demands for payment of fair value or offer
to settle or settle any such demands; provided,  however,
that if the RESI II Fund withholds consent to a recommendation from the General
Partner or the Partnership for payment or settlement of any such demand, then the
RESI II Fund shall provide a written undertaking to indemnify and hold harmless
the Partnership and the General Partner from any and all amounts, including, but
not limited to, attorneys’ fees, which may be awarded to the holders of such Dissenting
Units in respect of such Dissenting Units, to the extent that the amount of such
award is in excess of the amount which the General Partner or Partnership had proposed
to pay or offer to pay to the holder of such Dissenting Units.


 


1.08                           Payment  of  Merger  Consideration.


 


(a)                                  Prior
to the Effective Time, the parties will designate a bank, trust company or other
entity reasonably satisfactory to the RESI II Fund to act as disbursing agent for
purposes of making the cash payments provided by this Agreement to holders of Limited
Partnership Units.  At or prior to the Effective
Time, the RESI II Fund or Merger Sub will deposit, or cause to be deposited, with
the disbursing agent immediately available funds in an aggregate amount necessary
to pay the Merger Consideration as to which all holders of Limited Partnership Units
(other


 


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than the RESI II Fund and its Affiliates and
the holders of Dissenting Units) are entitled to be paid.  The disbursing agent will, in accordance with
its instructions which shall be consistent with the terms set forth herein, deliver
to Eligible Limited Partners the Merger Consideration according to the procedure
summarized below.


 


(b)                                 Promptly
after the Effective Time, the disbursing agent shall mail to each holder of Limited
Partnership Units a notice and form of letter of transmittal and instructions to
advise each Eligible Limited Partner of the effectiveness of the Merger and the
procedures for obtaining the Merger Consideration, which letter of transmittal may
include a release of all claims that such holder may have against the Partnership,
the RESI II Fund (and its Affiliates) and One Winthrop (and its Affiliates) arising
in connection with the Partnership.  Upon
the surrender to the General Partner of such letter of transmittal, duly completed
and validly executed in accordance with the instructions thereto, and such other
documents as may be required pursuant to such instructions, such holder shall receive
the Merger Consideration, without any interest thereon; and the Limited Partnership
Units, to the extent certificated, shall be cancelled.  Each of the parties hereto (as may be appropriate
under the circumstances), and the disbursing agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement such
amounts as it is required to deduct and withhold with respect to the making of such
payment under the Code (including, without limitation under Code Section 1445
or Code Section 3406), or any provision of state, local or foreign tax law.  To the extent that amounts are so withheld, such
withheld amounts shall be treated for all purposes of this Agreement as having been
paid to such person in respect of which such deduction and withholding was made.  If any Merger Consideration is to be paid to a
Person other than the Person in whose name a Limited Partnership Unit is registered
with the Partnership, it shall be a condition to such payment that the Person requesting
such payment shall pay to the Partnership any transfer or other taxes required by
reason of the payment of such Merger Consideration to a Person other than that of
the registered holder of such Limited Partnership Unit, or such Person shall establish
to the satisfaction of the General Partner that such tax has been paid or is not
applicable.  Notwithstanding the foregoing,
no party hereto shall be liable to a holder of units for any Merger Consideration
delivered to a public official pursuant to applicable abandoned property, escheat
or similar laws.


 


(c)                                  The
RESI II Fund will cause the disbursing agent to promptly deliver the Merger Consideration
to each Eligible Limited Partner upon receipt from such Eligible Limited Partner
of the appropriately completed transmittal form.  Until a transmittal form is properly delivered,
an Eligible Limited Partner will not be entitled to payment of any Merger Consideration.  All costs and expenses of the disbursing agent
will be paid by the Partnership prior to the Merger.


 


(d)                                 At
and after the Effective Time, there shall be no transfers on the partnership books
of the Partnership of the units which were outstanding immediately prior to the
Effective Time (other than units held by the RESI II Fund or its Affiliates).


 


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(e)                                  The
provisions of this Section 1.08 shall also apply to Dissenting Units that lose
their status as such.


 


(f)                                    Seven
months after the Effective Time, upon request by the ERG Affiliate, the disbursing
agent will return to the RESI II Fund (or its designee) all Merger Consideration
in its possession relating to the transactions described in this Agreement and the
disbursing agent’s duties will then terminate. 
Eligible Limited Partners may thereafter deliver their transmittal forms
to the Partnership, in accordance with the procedures above, and receive their Merger
Consideration; provided, that, such funds shall
be required to be set aside for the payment of Merger Consideration only for a period
of two (2) years after the Effective Time, at which time the RESI II Fund (or its
designee) may take possession of such funds (and such funds shall cease to be Merger
Consideration hereunder), subject to applicable abandoned property, escheat or other
similar laws.  From and after the Effective
Time of the Merger, holders of Limited Partnership Units immediately prior to the
Effective Time will not have any rights as limited partners in the Partnership.


 


ARTICLE
II


 


THE  SURVIVING  ENTITY


 


2.01                           Certificate
of  Limited  Partnership.  At the Effective Time, the Certificate of Limited
Partnership of the Partnership, as in effect immediately prior to the Effective
Time, shall continue to be the Certificate of Limited Partnership of the Surviving
Entity and the Partnership Agreement, as in effect immediately prior to the Effective
Time, shall be the Limited Partnership Agreement of the Surviving Entity (as amended
and restated as contemplated by Section 1.06(b)).


 


2.02                           Purposes  of  Surviving  Entity.  As of the Effective Time, the purposes of the
Surviving Entity shall be as stated in the Partnership Agreement.


 


2.03                           General  Partner.  At and after the Effective Time, the
ERG Affiliate shall be the sole general partner of the Surviving Entity, subject
to the terms of the Partnership Agreement as amended and restated as contemplated
by Section 1.06(b).


 


ARTICLE
III


 


REPRESENTATIONS
AND  WARRANTIES  OF  THE  RESI  II  FUND


 


The RESI II Fund hereby represents and warrants to the Partnership and One
Winthrop as follows:


 


3.01                           Organization.


 


(a)                                  The
RESI II Fund is a limited liability company duly organized, validly existing and
in good standing under the laws of the Commonwealth of Massachusetts.  As of the Effective Time, Equity Resources Fund
XXII LLC, Equity Resource


 


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Arlington Fund
Limited Partnership, Equity Resource Brattle Fund Limited Partnership and Equity
Resource General Fund Limited Partnership will be the only members of the RESI II
Fund.


 


(b)                                 Merger
Sub is a limited partnership, duly organized, validly existing and in good standing
under the laws of the State of Maryland. 
From the date of its formation to the Closing Date, Merger Sub will not engage
in any material activities other than in connection with, or as contemplated by,
this Agreement.  Merger Sub has been or will
be formed solely for the purpose of effectuating the Merger.  As of the Effective Time, the RESI II Fund and
the ERG Affiliate will be the only partners of Merger Sub.


 


3.02                           Authority;  No  Violation.


 


(a)                                  The
RESI II Fund has all requisite power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby.  Merger Sub has all requisite power and authority
to execute and deliver this Agreement and to consummate the transactions contemplated
hereby.  The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly approved by the requisite partners of the RESI II Fund and Merger
Sub.  No other proceedings on the part of
the RESI II Fund or Merger Sub are necessary to consummate the transactions contemplated
by this Agreement.  This Agreement has been
duly and validly executed and delivered by the RESI II Fund and Merger Sub and (assuming
due authorization, execution and delivery by the Partnership, One Winthrop and Linnaeus-Hawthorne)
constitutes the valid and binding obligation of the RESI II Fund and Merger Sub,
enforceable against the RESI II Fund and Merger Sub in accordance with its terms,
except that enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors’ rights generally
and except that enforcement hereof may be subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law) and the availability of equitable remedies.


 


(b)                                 Neither
the execution and delivery by the RESI II Fund and Merger Sub of this Agreement,
nor the consummation by the RESI II Fund and Merger Sub of the transactions contemplated
hereby, nor compliance by the RESI II Fund and Merger Sub with any of the terms
or provisions hereof, will, assuming that the consents and approvals referred to
in Section 3.03 hereof are duly obtained, (i) violate any statute, code, ordinance,
rule, regulation, judgment, order, writ, decree or injunction applicable to the
RESI II Fund or Merger Sub or any of their respective properties or assets, or,
(ii) violate, conflict with, result in a breach of any provisions of, constitute
a default (or an event which, with notice or lapse of time, or both, would constitute
a default) under, result in the termination of, accelerate the performance required
by, or result in a right of termination or acceleration or the creation of any lien,
security interest, charge or other encumbrance upon any of the properties or assets
of the RESI II Fund or Merger Sub under, any of the terms, conditions or provisions
of (x) the certificate of


 


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limited partnership,
partnership agreement or other equivalent documents of the RESI II Fund or Merger
Sub, or (y) except as would not have a material adverse effect on RESI II Fund or
Merger Sub, their assets or their business, any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or obligation to which
the RESI II Fund or Merger Sub is a party thereto, or by which the RESI II Fund
or Merger Sub or any of their respective properties or assets may be bound or affected.


 


3.03                           Consents  and  Approvals.  Except for consents, waivers or approvals of,
notices to or filings or registrations with the SDAT under the Act, no consents,
waivers or approvals of, notices to or filings with any public body or authority
are necessary, and no consents or approvals of any third parties are necessary,
in connection with (i) the execution and delivery by the RESI II Fund and Merger
Sub of this Agreement, or (ii) the consummation by the RESI II Fund and Merger Sub
of the transactions contemplated by this Agreement, including the Merger.


 


3.04                           Legal  Proceedings.  There is no suit, action or proceeding pending
or, to the knowledge of the RESI II Fund, threatened, against the RESI II Fund or
Merger Sub or any other Affiliate of the RESI II Fund or challenging the validity
or propriety of the transactions contemplated by this Agreement, as to which there
is a reasonable possibility of an adverse determination and which, if adversely
determined, would, individually or in the aggregate, materially adversely affect
the RESI II Fund’s or Merger Sub’s ability to perform its obligations under this
Agreement.


 


3.05                           Broker’s  Fees.  Neither the RESI II Fund, Merger Sub nor any of
their respective partners, officers, directors, employees or agents has employed
any broker, finder or financial advisor or incurred any liability for any fees or
commissions in connection with any of the transactions contemplated by this Agreement.


 


3.06                           Financing.  The RESI II Fund has available to it sources of
capital and financing sufficient to fulfill its obligations under this Agreement
and to consummate all of the transactions contemplated hereby.


 


ARTICLE
IV


 


REPRESENTATIONS
AND  WARRANTIES  OF  THE  PARTNERSHIP,


ONE  WINTHROP,
AND  LINNAEUS-HAWTHORNE


 


Each of One Winthrop and Linnaeus-Hawthorne, jointly and severally, and
the Partnership (as to itself only), hereby represent and warrant to the RESI II
Fund as follows:


 


4.01                           Organization.


 


(a)                                  One
Winthrop is a corporation duly organized, validly existing and in good standing
under the laws of The Commonwealth of Massachusetts.  The Partnership is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Maryland.  Linnaeus-Hawthorne is a limited


 


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partnership duly organized and validly existing
under the laws of Massachusetts.  One Winthrop is the sole managing General
Partner, and Linnaeus-Hawthorne is the sole non-managing General Partner, of the
Partnership.


 


(b)                                 Each
of the Partnership, and to the knowledge of One Winthrop, each Local Limited Partnership
(as defined below), has all requisite power and authority to own, lease or operate
all of its properties and assets and to carry on its business as it is now being
conducted.  The Partnership is duly licensed
or qualified to do business in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and assets owned,
leased or operated by it makes such licensing or qualification necessary, except
where such failure to be licensed or qualified does not have a material adverse
effect on the Partnership or its assets or business (including its interests in
the Local Limited Partnerships.)


 


(c)                                  Schedule 4.01(c)
sets forth a complete and accurate list of (i) all Persons in which the Partnership
owns, or has the right to acquire, an interest, whether directly or indirectly,
setting forth the names (and jurisdictions of formation) of such Persons, a description
of the ownership interest thereof, and, to the knowledge of One Winthrop, the real
properties held by each such Persons (the Persons so identified on Schedule 4.01(c),
each, a “Local  Limited  Partnership” and, collectively, the
“Local  Limited  Partnerships”) and (ii) to the knowledge of
One Winthrop, the general partner(s) of each such Local Limited Partnership and
the interest held by such general partner(s). 
Except as set forth on Schedule 4.01(c), the Partnership does not own
any interest in, whether directly or indirectly, or in the form of equity or otherwise,
any other Person.  The Partnership holds its
interests in each of the Local Limited Partnership, free and clear of any and all
liens, encumbrances and other restrictions. 
To the knowledge of One Winthrop, the Limited Partnership Units were duly
authorized, validly issued, fully paid and non-assessable, and free and clear of
liens and encumbrances of any nature at the time of original issuance of such units.


 


4.02                           Partnership
Interests;
Capitalization.  Schedule 4.02 attached hereto sets forth
a list of all holders of General Partnership Units and a list of the holders of
record of Limited Partnership Units on and as of October 1, 2004 (collectively,
the “Partners”),
in each case indicating the type of Partner, the percentage partnership interest
in, and number of units of the Partnership held by such holder.  The persons listed as Partners are the only partners
of the Partnership as of the date hereof. 
A true and complete copy of the Partnership Agreement has been provided to
the RESI II Fund.  Except as set forth in
Schedule 4.02 attached hereto, to the knowledge of One Winthrop, no other Person,
other than the Partners, has of record, beneficially or otherwise, any ownership
interest, or right to acquire any ownership interest, whether directly or indirectly,
in the Partnership.  Except as described in
Schedule 4.02 attached hereto, the Partnership does not have and is not bound
by any outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the Partnership to issue, deliver or sell, or cause
to be issued, delivered or sold any partnership interest in the Partnership or any
securities convertible into, exchangeable for or representing the right to subscribe
for, purchase or otherwise receive any partnership interest in the Partnership or
obligating the Partnership to grant, extend or enter into any such


 


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subscriptions, options,
warrants, calls, commitments or agreements. 
There are no outstanding contractual obligations of the Partnership to repurchase,
redeem or otherwise acquire any partnership interest of the Partnership.


 


4.03                           Authority;  No  Violation.


 


(a)                                  Each
of the Partnership, One Winthrop, and Linnaeus-Hawthorne has all requisite power
and authority to enter into this Agreement and to perform its obligations hereunder
and, subject to obtaining Limited Partner Consent, to consummate the transactions
contemplated hereby.  The execution and delivery
of this Agreement by the Partnership, One Winthrop, and Linnaeus-Hawthorne, the
performance by each of them of their respective obligations hereunder, and the consummation
by each of them of the transactions contemplated hereby have been duly and validly
authorized by One Winthrop, and/or Linnaeus-Hawthorne, as the case may be, and no
other action on the part of the Partnership, One Winthrop or Linnaeus-Hawthorne
is necessary to authorize this Agreement or to consummate the transactions contemplated
hereby (other than, with respect to the Merger, obtaining Limited Partner Consent).  Each of the Partnership, One Winthrop, and Linnaeus-Hawthorne
has approved this Agreement and the transactions contemplated hereby.  This Agreement has been duly and validly executed
and delivered by each of the Partnership, One Winthrop, and Linnaeus-Hawthorne,
and (assuming due authorization, execution and delivery by the RESI II Fund and
Merger Sub) this Agreement constitutes the valid and binding obligations of each
such person, enforceable against such person in accordance with its terms, except
that enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors’ rights generally
and except that enforcement hereof may be subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law) and the availability of equitable remedies.


 


(b)                                 Neither
the execution and delivery of this Agreement by the Partnership, One Winthrop, or
Linnaeus-Hawthorne, nor the consummation by any of them of the transactions contemplated
hereby, nor compliance by any of them with any of the terms or provisions hereof,
will, assuming that the consents and approvals referred to in Section 4.04
are duly obtained, (i) violate any statute, code, ordinance, rule, regulation, license,
judgment, order, writ, decree or injunction applicable to any of them or any of
their respective properties or assets, or (ii) violate, conflict with, result in
a breach of any provisions of, constitute a default (or an event which, with notice
or lapse of time, or both, would constitute a default) under, result in the termination
of, accelerate the performance required by, or result in a right of termination
or acceleration or the creation of any lien, security interest, charge or other
encumbrance upon any of the properties or assets of any of them under, any of the
terms, conditions or provisions of (x) the Partnership Agreement, certificate of
partnership or other charter document of like nature of each of them, or (y) except
as would not have a material adverse effect on any of them, their assets or their
business, any note, bond, mortgage, indenture, deed of trust, license, lease, agreement,
or other


 


11





















 


instrument or obligation to which any of them
is a party thereto, or by which they or any of their respective properties or assets
(including the Local Limited Partnerships) may be bound or affected.


 


4.04                           Consents  and  Approvals.  Except for consents, waivers or approvals of,
notices to or filings or registrations with the SDAT under the Act, no consents,
waivers or approvals of, notices to or filings with any public body or authority
are necessary, and no consents or approvals of any third parties (which term does
not include the Partners) are necessary, in connection with (i) the execution and
delivery by the parties (other than the RESI II Fund or the ERG Affiliate) of this
Agreement or (ii) the consummation by the parties (other than the RESI II Fund or
the ERG Affiliate) of the transactions contemplated by this Agreement, including
the Merger.  The affirmative vote of holders
of a majority of the Limited Partnership Units and of holders of 100% of the General
Partnership Units are the only votes of the holders of any class or series of partnership
interests of the Partnership necessary under the terms of the Partnership Agreement
and the Act to approve this Agreement and the transactions contemplated hereby.


 


4.05                           Broker’s  Fees.  None of the Partnership, One Winthrop, or Linnaeus-Hawthorne,
nor any Affiliates of any of them, or their partners, officers, employees or agents,
has employed any broker, finder or financial advisor or incurred any liability for
any fees or commissions in connection with any of the transactions contemplated
by this Agreement.


 


4.06                           Legal  Proceedings.  There is no suit, action or proceeding pending
or, to the knowledge of One Winthrop, threatened, against the Partnership, One Winthrop,
Linnaeus-Hawthorne, or any of the Local Limited Partnerships, or challenging the
validity or propriety of the transactions contemplated by this Agreement, as to
which there is a reasonable probability of an adverse determination and which, if
adversely determined, would materially adversely affect any such Person’s ability
to perform its obligations under this Agreement.


 


4.07                           Ownership  of  Real  Property  and  Assets.  The Partnership has good and marketable title
to all of its assets and properties, whether real or personal, tangible or intangible.  Schedule 4.07 hereto sets forth, to the knowledge
of One Winthrop, a complete and accurate description of all real property owned
by the Local Limited Partnerships (the “Real  Property”), all of which will be owned by
such Local Limited Partnerships at and as of the Closing.  None of One Winthrop, the Partnership or Linnaeus-Hawthorne
has received any notice that either the whole or any portion of the Real Property
is to be condemned, requisitioned or otherwise taken by public authority.  To the knowledge of One Winthrop, except as set
forth on Schedule 4.07, each Local Limited Partnership holds good and clear
record and marketable fee simple title to the Real Property identified as being
owned by such Local Limited Partnership as set forth on Schedule 4.07, free
and clear of liens, encumbrances and other restrictions.  To the knowledge of One Winthrop, none of the
Local Limited Partnerships has made a general assignment for the benefit of creditors,
had an attachment, execution or other judicial seizure of any property interest
which remains in effect, become generally unable to meet its financial obligations
as they mature, nor admitted in writing its inability to pay its debts as they mature.


 


12





















 


4.08                           Wedgewood  Creek  Apartments.  The parcel of real property owned by Wedgewood
Creek Limited Partnership has been sold, the Partnership has received a distribution
from Wedgewood Creek Limited Partnership of the sale proceeds allocable to the Partnership
from such sale, and the Partnership has distributed such amounts to its Partners
in accordance with the terms of the Partnership Agreement.


 


4.09                           Hazardous  Substances.  To the knowledge of One Winthrop, and except as
otherwise disclosed to One Winthrop or the Partnership in written reports from the
Local Limited Partnerships to their limited partners, copies of which have been
provided to the RESI II Fund, (a) no Hazardous Materials (as hereinafter defined)
have been used, generated, stored at, in or under or disposed of at or from the
Real Property except in accordance with Environmental Laws (as hereinafter defined),
(b) no Hazardous Materials are present at, in or under the Real Property at levels
or in quantities in violation of, or that would require investigation or cleanup
under, any Environmental Law, (c) none of the Partnership, One Winthrop, Linnaeus-Hawthorne
or the LLP General Partner or any Affiliate of any of the foregoing has received
any notice of any violation of Environmental Laws or the presence or release of
Hazardous Materials on or from the Real Property, and (d) there are no underground
storage tanks located on the Real Property. 
As used herein, the term (i)  “Hazardous  Materials” shall
mean and include, but shall not be limited to, any petroleum product and all hazardous
or toxic substances, wastes or substances, any substances which because of their
quantities, concentration, chemical or active flammable, explosive, infectious or
other characteristics, constitute or may reasonably be expected to constitute or
contribute to, a danger or hazard to public health, safety or welfare or to the
environment, including, without limitation, any hazardous or toxic waste or substances
which are included under or regulated by (whether now existing or hereafter enacted
or promulgated, as they may be amended from time to time), the Environmental Laws,
and (ii)  “Environmental
Laws”
shall mean and include the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, the
Superfund Amendments and Reauthorization Act of 1986, the Federal Water Pollution
Control Act, the Solid Waste Disposal Act, as amended, the Federal Clean Water Act,
the Federal Clean Air Act, the Toxic Substances Control Act, and any state or local
statute, regulation, ordinance, order or decree relating to health, safety or the
environment.


 


4.10                           SEC  Documents.  Each of the filings made by the Partnership with
the Securities and Exchange Commission pursuant to and under the Exchange Act (collectively,
the “SEC
Documents”),
as of their respective filing dates, complied in all material respects with the
requirements of the Exchange Act or the Securities Act, as applicable, and none
of the SEC Documents contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading, as of their respective filing dates, except to the extent
such statements have been modified or superseded by later SEC Documents filed by
the Partnership.  The consolidated financial
statements contained in the Partnership’s Quarterly Report on Form 10-QSB for the
period ended March 31, 2004 (the “March 10-QSB”) are true and correct
in all material respects, and have been prepared in accordance with GAAP consistently
applied.  The balance sheet set forth in the
March 10-QSB fairly and accurately presents the financial condition of the
Partnership as


 


13





















 


of the date thereof,
and the statements of income, partners’ equity and cash flows set forth in the March 10-QSB
fairly and accurately present the results of operations of the Partnership for the
periods covered thereby.


 


4.11                           Tax  Status.  None of the Partnership or any of the Local Limited
Partnerships is, nor has any of them ever been, a “publicly
traded partnership” within the meaning of Section 7704 of the Code.


 


ARTICLE
V


 


COVENANTS  OF  THE  PARTIES


 


5.01                           Conduct  of  the  Partnership
and  the  General  Partner.  During the period from the date of this Agreement
to the earlier of the Effective Time or the date of termination of this Agreement,
and except as may be required or specifically permitted pursuant to this Agreement,
the Partnership shall (and One Winthrop shall cause the Partnership to):


 


(a)                                  conduct
its business only in the ordinary and usual course of business consistent with past
practices, which shall include without limitation (i) refraining from any of the
activities described in Section 5.01(b) below and (ii) not entering into any
transactions except in the ordinary and usual course of business consistent with
past practices, and (iii) complying with the following covenants:


 


(A)                              maintaining its partnership existence and good standing;


 


(B)                                using
all reasonable efforts to maintain in full force and effect insurance generally
comparable in amount and in scope of coverage to that now maintained by it; and


 


(C)                                complying
with and performing in all material respects its obligations and duties (y) under
contracts, leases and documents relating to or affecting its assets, properties
and business and (z) imposed upon it by all federal, state and local laws and all
rules, regulations and orders imposed by federal, state or local governmental authorities,
judicial orders, judgments, decrees and similar determinations;


 


(b)                                 except as expressly permitted by Section 5.02 hereof, not,
without the prior written consent of the RESI II Fund:


 


(i)                                     engage or participate in any material transaction or incur or
sustain any material obligation or liability except in the ordinary, regular and
usual course of its business consistent with past practices; or


 


(ii)                                  sell, lease, transfer, assign, encumber or otherwise dispose
of or enter into any material contract, agreement or understanding to lease, transfer,
assign, encumber or dispose of, any of the Real Property.


 


14





















 


(c)                                  promptly
notify the RESI II Fund of any emergency or other material change in the operations
of the Partnership’s assets or properties (including the properties held by the
Local Limited Partnerships) and of any governmental complaints, investigations or
hearings (or written communications indicating that the same may be contemplated);


 


(d)                                 not
make any distribution of proceeds received from a Local Limited Partnership relating
to a Capital Event or any other distributions of cash or proceeds, except as required
by Section 4.1 of the Partnership Agreement prior to the Effective Time;


 


(e)                                  not
propose, adopt or approve any amendments to the Partnership’s Certificate of Limited
Partnership or the Partnership Agreement or other organizational documents of the
Local Limited Partnerships except to the extent that such amendment would not have
an adverse effect on the value or operation of the Partnership from and after the
Effective Time, and not to enter into any new agreement, document or arrangements
or amend or modify any existing agreement, document or arrangement that would prohibit
or restrict the performance of the transactions contemplated by this Agreement;


 


(f)                                    not
admit any new partner except in connection with transfers of Limited Partnership
Units outstanding as of the date of this Agreement nor issue any new partnership
units (whether Limited Partnership Units or General Partnership Units);


 


(g)                                 not
grant, confer or award any options, warrants, conversion rights or other rights
not existing on the date hereof to acquire any partnership interest; and


 


(h)                                 not purchase, redeem or otherwise acquire any partnership interest.


 


Notwithstanding the foregoing, One Winthrop shall be permitted to cause
the Partnership to take any of the actions described in subclauses (b), (e), (f),
(g) or (h) of this Section 5.01 if One Winthrop determines in good faith, after
consultation with and receipt of advice from outside counsel, that it is necessary
to do so in order to comply with its fiduciary duties to partners under applicable
law; provided, that, prior to taking any such
actions, One Winthrop shall notify and consult with the RESI II Fund; provided, however,
that if the RESI II Fund objects to the taking of any such actions and One Winthrop
causes the Partnership to take any of such actions notwithstanding such objection,
the RESI II Fund shall be entitled to terminate this Agreement by delivering written
notice thereof to the General Partner and the Partnership.


 


5.02                           No  Solicitation.


 


(a)                                  During
the period from the date of this Agreement to the earlier of the Effective Time
or the date of termination of this Agreement, none of the Partnership, One Winthrop,
or Linnaeus-Hawthorne, nor any Affiliates of any of the foregoing,


 


15





















 


shall negotiate for, solicit, initiate, encourage
or enter into any agreement, arrangement or proposal with respect to, nor market
or advertise, the sale or transfer of any partnership interest in the Partnership
or all or any portion of the assets or properties of the Partnership (including
the assets and properties of the Local Limited Partnerships), or any merger or other
business combination of the Partnership (or any of the Local Limited Partnerships),
or any other similar transaction, to or with any entity other than the RESI II Fund
(and/or its Affiliates)  (any of the foregoing,
an “Acquisition
Proposal”),
or agree to or recommend any Acquisition Proposal.  Notwithstanding the foregoing or anything else
contained in this Agreement, so long as the Partnership, One Winthrop, and Linnaeus-Hawthorne
have not breached the obligation set forth in this Section 5.02, nothing contained
in this Agreement shall prevent the Partnership or One Winthrop from (i) participation
in ordinary course investor relations discussions not relating to an Acquisition
Proposal or (ii) entering into discussions or negotiations with any person or entity
in connection with an unsolicited bonafide written Acquisition Proposal if and only
to the extent that:


 


(i)                                     One
Winthrop determines in good faith, that such Acquisition Proposal is reasonably
capable of being completed on the terms proposed and would, if consummated, result
in a transaction more favorable than the transactions contemplated by this Agreement
(any such more favorable Acquisition Proposal, a “Superior  Transaction”)
and One Winthrop determines in good faith and after consultation with outside legal
counsel that such action is necessary in order to comply with its fiduciary duties
to partners under applicable law,


 


(ii)                                  prior
to entering into discussions or negotiations with such person or entity, the Partnership
or One Winthrop receives from such person or entity an executed confidentiality
agreement on terms customary for such a situation, and


 


(iii)                               prior
to recommending a Superior Transaction, One Winthrop provides the RESI II Fund at
least four (4) business days prior notice of its proposal to do so, during which
time the RESI II Fund may make, and in such event the Partnership and One Winthrop
shall consider, a counterproposal to such Superior Transaction, and One Winthrop
shall itself, and on behalf of the Partnership, cause the appropriate financial
and legal advisors to negotiate in good faith with the RESI II Fund with respect
to the terms and conditions of such counterproposal.  In the event that such counterproposal by the
RESI II Fund, if consummated, would result in a transaction more favorable than
a Superior Transaction, then One Winthrop, as the general partner and on behalf
of the Partnership, shall automatically be obligated promptly to accept and recommended
such counterproposal from the RESI II Fund, and the parties hereto shall continue
their efforts to consummate such transaction on the terms and conditions set forth
herein.


 


16





















 


(b)                                 One
Winthrop shall notify the RESI II Fund promptly after receipt by the Partnership
(or its advisors) of any Acquisition Proposal (or information related thereto),
or request for access to the properties, books or records of the Partnership by
any person or entity that is considering making, or has made, an Acquisition Proposal.  Such notice shall be made orally and in writing
and shall indicate in reasonable detail the identity of the offeror and the terms
and conditions of such proposal, inquiry or contact.  One Winthrop shall continue to keep the RESI II
Fund informed, on a current basis, of the status of any such discussions or negotiations
and the terms being discussed or negotiated.


 


(c)                                  One
Winthrop shall, and shall cause its representatives and agents to, immediately cease
any and all existing activities, discussions or negotiations with any parties conducted
heretofore of the nature described in this Section 5.02(a).  It is agreed that any violation of the restrictions
set forth in this Section 5.02 by any representative or Affiliates of the Partnership,
One Winthrop, or Linnaeus-Hawthorne, whether or not such person is purporting to
act on behalf of the Partnership or otherwise, shall be deemed to be a breach of
this Section 5.02 by One Winthrop and the Partnership.


 


5.03                           Limited  Partner  Consent.  In consultation with the RESI II Fund and Merger
Sub, One Winthrop will cause the Partnership to, as promptly as practicable after
the date hereof, take all steps necessary to seek, and use its reasonable efforts
to obtain, the consent of holders of Limited Partnership Units (the “Limited  Partners”) holding
at least a majority of the Limited Partnership Units, in accordance with the Act,
to the Merger, the terms and provisions of this Agreement, and the transactions
contemplated hereby (the “Limited  Partner  Consent”).  The RESI II
Fund and One Winthrop shall cooperate with each other in the preparation of all
documents to be delivered to the Limited Partners in connection with seeking and
obtaining the Limited Partner Consent.  Each
of the RESI II Fund, One Winthrop, and Linnaeus-Hawthorne shall vote, and shall
cause its Affiliates to vote, all Limited Partnership Units and General Partnership
Units held by each of them and their Affiliates in favor of this Agreement and the
Merger.


 


5.04                           Consents.  Each of the Partnership, One Winthrop, Linnaeus-Hawthorne,
Merger Sub and the RESI II Fund will cooperate with one another and use all reasonable
efforts to, as promptly as practicable, prepare all documentation, to effect all
filings and to obtain all permits, consents, approvals and authorizations of governmental
agencies and authorities and nongovernmental third parties which are necessary or
appropriate to consummate the transactions contemplated by this Agreement, including
without limitation, the consent of any mortgage lender to the Partnership (such
nongovernmental third party approvals hereinafter referred to as, “Third  Party  Consents”).


 


5.05                           Proxy  Solicitor.  At the request of the RESI II Fund, at any time
prior to the Closing, the Partnership shall retain a proxy solicitor (or other similar
service) chosen by the RESI II Fund at RESI II Fund’s sole discretion in order to
obtain the consents and approvals required to be obtained in order to consummate
the transactions contemplated by this Agreement.  The parties hereto shall coordinate all efforts
in connection with the activities of


 


17





















 


any such proxy solicitor.  The RESI II Fund shall be responsible for the
fees and expenses of any such proxy solicitor.


 


5.06                           Section  754  Elections.  At the direction of the RESI II Fund, (i) unless
such an election is already in effect, the parties shall cooperate to cause the
Partnership to make an election under Section 754 of the Code for the taxable
year of the Partnership that includes the Closing Date, and (ii) the parties shall
cooperate to cause the Partnership to make an election under Section 754 of
the Code for any taxable year of the Partnership ending after the Closing Date.  At the direction of RESI II Fund, (i) unless such
an election is already in effect, the parties and their Affiliates shall use commercially
reasonable efforts to cause each Local Limited Partnership to make an election under
Section 754 of the Code for the taxable year of the Local Limited Partnership
that includes the Closing Date, and (ii) the parties and their Affiliates shall
use commercially reasonable efforts to cause each Local Limited Partnership to make
an election under Section 754 of the Code for any taxable year of the Local
Limited Partnership ending after the Closing Date.  Except as directed by the RESI II Fund, no election
under Section 754 of the Code will be made by or on behalf of the Partnership
on or after the date hereof.  The Partnership
shall not revoke any election made under Section 754 of the Code in accordance
with this Section 5.06.  Except as directed
by the RESI II Fund, the parties and their Affiliates shall use commercially reasonable
efforts to ensure that no election under Section 754 of the Code will be made
by or on behalf of any Local Limited Partnership on or after the date hereof.  The parties and their Affiliates shall use commercially
reasonable efforts to ensure that no Local Partnership shall revoke any election
made under Section 754 of the Code in accordance with this Section 5.06.


 


5.07                           Further  Assurances.  Subject to the terms and conditions herein provided,
each of the parties hereto agrees to use all reasonable efforts to, as promptly
as practicable, take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and regulations
to consummate and make effective the transactions contemplated by this Agreement.  In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this Agreement,
the parties hereto shall use reasonable efforts to take all such necessary action.


 


ARTICLE
VI


 


CLOSING  CONDITIONS


 


6.01                           Conditions  to  Each  Party’s  Obligations.  The respective obligations of each party under
this Agreement shall be subject to the fulfillment at or prior to the Effective
Time of the following conditions, none of which may be waived:


 


(a)                                  Governmental  Consents.  All authorizations, consents, orders or approvals
of, declarations or filings with or notices to, and all expirations of waiting periods
imposed by, any governmental or regulatory authority or agency, which are necessary
for the consummation of the Merger, shall have been filed, occurred or been obtained
(all such authorizations, orders, declarations, approvals, filings, notices and
consents and the lapse of all such waiting periods being referred to as the “Requisite


 


18





















 


Regulatory  Approvals”),
and all such Requisite Regulatory Approvals shall be in full force and effect.


 


(b)                                 No  Injunctions
or  Restraints.  No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent jurisdiction
or other legal restraint or prohibition preventing the consummation of the Merger
or the other transactions contemplated by this Agreement shall be in effect.


 


(c)                                  Limited  Partner
Consent. 
Limited Partner Consent shall have been obtained.


 


6.02                           Conditions  to  the  Obligations
of  the  RESI  II  Fund.  The obligations of the RESI II Fund under this
Agreement shall be further subject to the satisfaction (or waiver by the RESI II
Fund), at or prior to the Effective Time, of the following conditions:


 


(a)                                  No  Change.  The business, assets or properties of the Partnership
(including the business, assets and properties of the Local Limited Partnerships)
shall not have been, and shall not be threatened to be, adversely affected in any
way as a result of fire, explosion, earthquake, disaster, labor trouble or dispute,
change in business organization, any action by the United States or any other governmental
authority, flood, drought, embargo, riot, civil disturbance, uprising, activity
of armed forces or act of God or public enemy. 
There shall not have occurred any material adverse change in the condition,
operations, business, prospects or assets of the Partnership (including the business,
assets and properties of the Local Limited Partnerships) or imposition of any laws,
rules or regulations which would materially adversely affect the condition (financial
or otherwise), operations, business, prospects or assets of the Partnership (including
the business, assets and properties of the Local Limited Partnerships).


 


(b)                                 Representations  and
Warranties; Performance
of  Obligations.  The obligations of the Partnership, One Winthrop,
and Linnaeus-Hawthorne required to be performed by each of them at or prior to the
Closing pursuant to the terms of this Agreement shall have been duly performed and
complied with in all material respects, and the representations and warranties of
the Partnership, One Winthrop, and Linnaeus-Hawthorne contained in this Agreement
shall be true and correct in all material respects as of the date of this Agreement
and as of the Effective Time as though made at and as of the Effective Time (except
as otherwise specifically contemplated by this Agreement, except as to any representation
or warranty which specifically relates to an earlier date).


 


(c)                                  Certificates. 
Each of One Winthrop, on behalf of itself and as the General Partner of the
Partnership, and Linnaeus-Hawthorne shall deliver a certificate, executed by an
officer or other authorized person, to the effect that the conditions set forth
in this Section 6.02 have been fulfilled, and the representations and warranties
set forth herein, are true and correct on and as of the Closing Date.


 


19





















 


(d)                                 Third-Party  Consents.  All Third Party Consents shall have been received,
obtained or made and shall be in full force and effect.


 


(e)                                  Securities  Law
Compliance. 
The RESI II Fund shall be satisfied that the Merger and the payment of the
Merger Consideration shall be conducted in material compliance with all applicable
federal and state securities laws.


 


(f)                                    Real  Property
Assets. 
All of the Local Limited Partnerships shall continue to own all of the Real
Property on and as of the Closing Date, no agreements or other arrangements for
the sale or transfer of such Real Property, that have not otherwise been consented
to by the RESI II Fund, shall be in effect on and as of the Closing Date, and there
shall have been no material adverse change in the Real Property or the financial
condition of the Local Limited Partnerships.


 


(g)                                 Other  Instruments.  In addition to the foregoing, on behalf of itself
and/or the Partnership, One Winthrop, and Linnaeus-Hawthorne will furnish the RESI
II Fund with such additional certificates, instruments or other documents in the
name or on behalf of the Partnership, or in its own name, including without limitation
certificates or correspondence of governmental agencies or authorities or nongovernmental
third parties, to evidence fulfillment of the conditions set forth in this Section 6.02
as the RESI II Fund may reasonably request.


 


6.03                           Conditions  to  the  Obligations
of  the  Partnership
and  the  General  Partner.  The obligations of the Partnership and One Winthrop
under this Agreement shall be further subject to the satisfaction (or waiver by
One Winthrop), at or prior to the Effective Time, of the following conditions:


 


(a)                                  Representations  and
Warranties; Performance
of  Obligations.  The obligations of the RESI II Fund and Merger
Sub required to be performed by each at or prior to the Closing pursuant to the
terms of this Agreement shall have been duly performed and complied with in all
material respects, and the representations and warranties of the RESI II Fund and
Merger Sub contained in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Effective Time as though
made at and as of the Effective Time (except as otherwise specifically contemplated
by this Agreement and except as to any representation or warranty which specifically
relates to an earlier date), and One Winthrop shall have received a certificate
to that effect signed by an officer of the RESI II Fund and Merger Sub.


 


(b)                                 Third-Party  Consents.  All Third Party Consents shall have been received,
obtained or made and shall be in full force and effect.


 


(c)                                  Other  Instruments.  In addition to the foregoing, the RESI II Fund
will furnish the Partnership and One Winthrop with such additional certificates,
instruments or other documents in the name or on behalf of the RESI II Fund, executed
by appropriate officers or others, including without limitation certificates or


 


20





















 


correspondence of governmental agencies or authorities
or nongovernmental third parties, to evidence fulfillment of the conditions set
forth in this Section 6.03 as the Partnership and One Winthrop may reasonably
request.


 


ARTICLE
VII


 


TERMINATION,  AMENDMENT  AND  WAIVER


 


7.01                           Termination.  This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval of this Agreement and the
transactions contemplated hereby by the Limited Partners:


 


(a)                                  by mutual consent of all of the parties to this Agreement in
a written instrument;


 


(b)                                 by
either the RESI II Fund and Merger Sub, on the one hand, or One Winthrop and the
Partnership, on the other hand, if any governmental authority that must grant a
Requisite Regulatory Approval has denied approval of the Merger and such denial
has become final and nonappealable or any governmental authority of competent jurisdiction
shall have issued a final nonappealable order permanently enjoining or otherwise
prohibiting the consummation of the transactions contemplated by this Agreement;


 


(c)                                  by
either the RESI II Fund and Merger Sub, on the one hand, or One Winthrop and the
Partnership, on the other hand (provided that the terminating party is not then
in material breach of any representation, warranty, covenant or other agreement
contained herein), in the event of a material breach by the other party of any representation,
warranty, covenant or other agreement contained herein which breach is not cured
after thirty (30) days written notice thereof is given to the party committing such
breach;


 


(d)                                 by
either the RESI II Fund and Merger Sub, on the one hand, or One Winthrop and the
Partnership, on the other hand, if the Limited Partner Consent has not been obtained
by December 29, 2004 (provided that the failure to obtain such Limited Partner
Consent is not attributable to a breach by any party hereto, for which the right
to terminate arises under subsection (c) above) or the Effective Time has not
occurred by December 29, 2004;


 


(e)                                  by the Partnership, if it determines to accept a Superior Transaction
in compliance with Section 5.02 hereof;


 


(f)                                    by the RESI II Fund in the event it exercises its right to terminate
pursuant to Section 5.01; or


 


(g)                                 by the RESI II Fund in the event of a breach by One Winthrop
(or the Partnership), Linnaeus-Hawthorne and/or their Affiliates of the covenants
in Section


 


21





















 


5.02 hereof (except for a single inadvertent breach which has not
adversely affected the consummation of the transactions set forth in this Agreement).


 


7.02                           Effect  of  Termination.  In the event of termination of this Agreement
by either the RESI II Fund or One Winthrop, as provided in Section 7.01, this
Agreement shall forthwith become void and have no effect, and none of the parties,
or any of their respective Affiliates, shall have any liability of any nature whatsoever
hereunder, or in connection with the transactions contemplated hereby, except that,
(a) no party hereto shall be relieved or released from any liabilities or damages
arising out of its breach of any provision of this Agreement, (b) in the case of
termination under Section 7.01(c) above, the terminating party shall be entitled
to recover from the non-terminating party all fees and expenses incurred in connection
with the transactions contemplated by this Agreement and (c) the provisions in this
Agreement that survive the termination of this Agreement shall remain in full force
and effect.  Notwithstanding any termination
of this Agreement, the provisions of this Section 7.02 relating to expenses
and no relief or release from liabilities or damages, the preservation of claims
and the provisions of Section 7.04 shall survive.


 


7.03                           Extension;  Waiver.  At any time prior to the Effective Time, the parties
hereto may, to the extent legally allowed, (a) extend the time for the performance
of any of the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any document
delivered pursuant hereto and (c) except for the closing conditions set forth in
Section 6.01(a), waive compliance with any of the agreements or conditions
contained herein.  Any agreement on the part
of a party hereto to any such extension or waiver shall be valid only if set forth
in a written instrument signed on behalf of such party, but such extension or waiver
or failure to insist on strict compliance with an obligation, covenant, agreement
or condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.


 


7.04                           Break-Up  Fee.  In the event that this Agreement is terminated
pursuant to Sections 7.01(e), 7.01(f) or 7.01(g) hereof, the Partnership and/or
One Winthrop shall pay to the RESI II Fund the sum of $375,000 in immediately available
funds.  The parties to this Agreement hereby
acknowledge and agree that the payment of the fee described in the foregoing sentence
shall constitute the sole and exclusive remedy with respect to the matters set forth
in the foregoing sentence.


 


ARTICLE
VIII


 


MISCELLANEOUS


 


8.01                           Nonsurvival
of  Representations,
Warranties
and  Agreements.  None of the representations, warranties, covenants
and agreements in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Effective Time, except for those covenants and agreements
which by their terms apply in whole or in part after the Effective Time.


 


22





















 


8.02                           Expenses.  Except as may otherwise be agreed to hereunder
or in other writing by the parties, all legal and other costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such costs and expenses.


 


8.03                           Notices.  All notices or other communications hereunder
shall be in writing and shall be deemed given if delivered personally or mailed
by prepaid registered or certified mail (return receipt requested) or by telecopy,
cable, telegram or telex addressed as follows:


 


	
  (a)

  	
  If to the RESI II Fund, Merger Sub

  	
   

  	
   

  
	
   

  	
  or ERG Affiliate, to:

  	
   

  	
   

  
	
   

  	
   

  	
  Equity Resources Group, Incorporated

  	
   

  
	
   

  	
   

  	
  44 Brattle Street

  	
   

  
	
   

  	
   

  	
  Boston, MA

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  Eggert Dagbjartsson

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with required copies to:

  	
  Bingham McCutchen LLP

  	
   

  
	
   

  	
   

  	
  150 Federal Street

  	
   

  
	
   

  	
   

  	
  Boston, MA 
  02110

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  Victor J. Paci, Esq.

  
	
   

  	
   

  	
   

  	
  Meerie M. Joung, Esq.

  
	
   

  	
   

  	
  Tel: 617-951-8000

  	
   

  
	
   

  	
   

  	
  Fax: 617-951-8736

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
  If to the Partnership, to:

  	
  Winthrop Residential Associates II

  	
   

  
	
   

  	
   

  	
  A Limited Partnership

  	
   

  
	
   

  	
   

  	
  7 Bulfinch Place, Suite 500

  	
   

  
	
   

  	
   

  	
  Boston, MA 02114-9507

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  Ms. Carolyn Tiffany

  
	
   

  	
   

  	
  Fax: 617-742-4643

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with required copies to:

  	
  Post Heymann & Koffler LLP

  	
   

  
	
   

  	
   

  	
  Two Jericho Plaza, Wing A

  	
   

  
	
   

  	
   

  	
  Suite 111

  	
   

  
	
   

  	
   

  	
  Jericho, NY 11753

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  David J. Heymann, Esq.

  
	
   

  	
   

  	
  Fax: 516-433-2777

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
  If to One Winthrop

  	
   

  	
   

  
	
   

  	
  or Linneaus-Hawthorne, to:

  	
  One Winthrop Properties, Inc.

  	
   

  
	
   

  	
   

  	
  7 Bulfinch Place, Suite 500

  	
   

  
	
   

  	
   

  	
  Boston, MA 02114-9507

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  Ms. Carolyn Tiffany

  
	
   

  	
   

  	
  Fax: 617-742-4643

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with required copies to:

  	
  Post Heymann & Koffler LLP

  	
   

  
						



 


23





















 


	
   

  	
   

  	
  Two Jericho Plaza, Wing A

  	
   

  
	
   

  	
   

  	
  Suite 111

  	
   

  
	
   

  	
   

  	
  Jericho, NY 11753

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  David J. Heymann, Esq.

  
	
   

  	
   

  	
  Fax: 516-433-2777

  	
   

  
					



 


or such other address as shall be furnished
in writing by any party, and any such notice or communication shall be deemed to
have been given as of the date so mailed.


 


8.04                           Counterparts.  This Agreement may be executed in counterparts,
all of which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same counterpart.


 


8.05                           Entire  Agreement.  This Agreement (including the documents and the
instruments referred to herein) constitutes the entire agreement and amends and
restates all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.


 


8.06                           Governing  Law.  This Agreement shall be governed and construed
in accordance with the laws of the State of Maryland, without regard to any applicable
conflicts of law principles.


 


8.07                           Severability.  In the event that any one or more provisions of
this Agreement shall for any reason be held invalid, illegal or unenforceable in
any respect, by any court of competent jurisdiction, such invalidity, illegality
or unenforceability shall not affect any other provisions of this Agreement and
the parties shall use their reasonable best efforts to substitute a valid, legal
and enforceable provision which, insofar as practicable, implements the original
purposes and intents of this Agreement.


 


8.08                           Assignment.  Neither this Agreement nor any of the rights,
interests or obligations shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
parties.  Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns.


 


8.09                           Specific  Performance.  The parties hereto agree that irreparable damage
would occur in the event that the provisions contained in this Agreement were not
performed in accordance with its specific terms or was otherwise breached.  It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions thereof in any court of the
United States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.


 


24





















 


8.10                           Definitions.  Except as otherwise provided herein or as otherwise
clearly required by the context, the following terms shall have the respective meanings
indicated when used in this Agreement:


 


“Affiliate” shall mean, with respect
to any Person, any other Person controlling, controlled by or under common control
with such Person and, with respect to the RESI II Fund, any Related Entities.  As used in this definition, “control”  (including, with its correlative meanings, “controlled
by” and “under common control with”) means the possession, directly or indirectly,
of power to direct or cause the direction of the management and policies of a Person
whether through the ownership of voting securities, by contract or otherwise.


 


“Capital  Event” shall mean the sale, financing, refinancing, condemnation, casualty
or other similar event of or involving a Real Property or the improvements located
thereon.


 


“Code” shall mean the Internal Revenue
Code of 1986, as amended, and the rules and regulations promulgated thereunder.


 


“Eligible  Limited  Partners” shall mean all
holders of record of Limited Partnership Units immediately prior to the Effective
Time, according to the books and records of the Transfer Agent, but excluding Persons
who are Affiliates of the RESI II Fund and Persons who hold Dissenting Units.


 


“Excess  Cash” shall mean all cash and cash equivalents of the Partnership after
deducting for (or reserving against) all Liabilities and after deducting any and
all cash relating to a Capital Event.


 


“Exchange  Act” shall mean the Securities Exchange Act of 1934, as amended and in
effect from time to time, and all of the rules and regulations promulgated thereunder.


 


“GAAP” shall mean United States generally
accepted accounting principles which are consistent with the principles promulgated
or adopted by the Financial Accounting Standards Board and its predecessors.


 


“General  Partnership  Unit(s)” shall mean units
of general partnership interest in the Partnership.


 


“Liabilities” shall mean all operating
liabilities of the applicable Person incurred in the ordinary course of business
including, without limitation, all taxes, payroll expenses, lease obligations, trade
accounts payable arising out of the operation of such Person’s business in the ordinary
course of business, and all professional fees and expenses payable by such Person,
in each case, which are unpaid as of the Effective Time.


 


“Limited  Partnership  Unit(s)” shall mean units
of limited partnership interest in the Partnership.


 


25





















 


“Limited  Partnership  Unit  Amount” shall mean the quotient obtained by dividing
(a) the product of (i) the Purchase Price and (ii) the percentage of liquidation
proceeds allocable for distribution to all holders of Limited Partnership Units
under the Partnership Agreement immediately prior to the Effective Time by (b) the
aggregate number of Limited Partnership Units outstanding immediately prior to the
Effective Time (including all units held by the RESI II Fund and its Affiliates
and Dissenting Units).


 


“Merger  Consideration” shall mean the amounts or other property, if any, that
any Person shall be entitled to receive as set forth in Section 1.05.


 


“Purchase  Price” shall mean $8,000,000.


 


“Person” shall mean any individual,
corporation, partnership, limited liability company, joint venture, association,
trust, unincorporated organization or other legal entity, or any governmental agency
or political subdivision thereof.


 


“Related  Entities” shall mean any entity for which any of the RESI II Fund, the
ERG Affiliate or any of their respective Affiliates serve as general partner and/or
investment advisor or in a similar capacity, and all mutual funds or other pooled
investment vehicles or entities under the control or management of any of the RESI
II Fund or the ERG Affiliate or the general partner or investment advisor thereof,
or any Affiliate of any of them, including the ERG Affiliate.


 


“Securities  Act” shall mean the Securities Act of 1933, as amended and in effect
from time to time, and all of the rules and regulations promulgated thereunder.


 


“Special  Limited  Partnership  Unit(s)” shall mean, after the Effective Time,
units of special limited partnership interests which shall have the rights and obligations
as described on Exhibit  B attached hereto.


 


“to  the  knowledge
of  One  Winthrop” shall mean the actual knowledge, after
reasonable inquiry and investigation, of Carolyn Tiffany and Kathleen Tullie.


 


“Transfer  Agent” shall mean Phoenix Resources, the Person retained in such capacity
by the Partnership.


 


8.11                           Indemnification.


 


(a)                                  After
the Effective Time, each of One Winthrop and Linnaeus-Hawthorne agrees, jointly
and severally, to indemnify, defend and hold harmless the RESI II Fund, ERG Affiliate
and the Partnership (and their respective directors, managers, officers, employees
and Affiliates)  (each, an “ERG  Indemnified
Party”) from and against any and all claims,
liabilities, losses, damages, costs and expenses, including without limitation the
reasonable fees and disbursements of counsel (collectively, the “Losses”), which any of such parties shall suffer
and which relate to or arise, directly or indirectly, out of (i) any breach by One
Winthrop or Linnaeus-Hawthorne of any representation, warranty or covenant made
by such Person in this


 


26





















 


Agreement or any other certificate or instrument delivered pursuant hereto,
or (ii) any action (or failure to act) of One Winthrop or Linnaeus-Hawthorne as
the General Partners of the Partnership prior to the Effective Time.


 


(b)                                 After
the Effective Time, each of the RESI II Fund and ERG Affiliate agrees, jointly and
severally, to indemnify, defend and hold harmless One Winthrop and Linnaeus-Hawthorne
(and their respective directors, managers, officers, employees and Affiliates)  (each, a “Winthrop
Indemnified  Party”)
from and against any and all Losses which any of such parties shall suffer and which
relate to or arise, directly or indirectly, out of (i) any breach by the RESI II
Fund or ERG Affiliate of any representation, warranty or covenant made by such Person
in this Agreement or any other certificate or instrument delivered pursuant hereto,
or (ii) any action (or failure to act) of ERG Affiliate as the General Partner of
the Partnership after the Effective Time.


 


(c)                                  If
any claim for indemnification hereunder relates to any action, suit, proceeding
or demand instituted against any Person entitled to indemnification hereunder (each
an “Indemnified  Party”) by a third party (a “Third
Party  Claim”),
then the Person from whom indemnification is sought (each an “Indemnifying  Party”)
shall be entitled to participate in the defense of such Third Party Claim after
receipt of notice of such claim from the Indemnified Party.  Within sixty (60) days after receipt of notice
of a particular matter from the Indemnified Party, the Indemnifying Party may assume
the defense of such Third Party Claim by providing the Indemnified Party with written
notice of its election to assume such defense. 
Notwithstanding the right of the Indemnified Party to retain its own counsel
as described below, the Indemnifying Party shall have the authority to negotiate, compromise and settle such Third Party Claim if and
only if the following conditions are satisfied:


 


(i)                                     the
Indemnifying Party shall have confirmed in writing that it is obligated hereunder
to indemnify the Indemnified Party with respect to such Third Party Claim; and


 


(ii)                                  the
Indemnifying Party shall not, without the consent of the Indemnified Party, consent
to the entry of any judgment or settle any such Third Party Claim unless the Indemnified
Party is unconditionally released from all liability in respect of such Third Party
Claim and the Indemnified Party receives assurances that there will be no continuing
restrictions on the business of the Indemnified Party with respect to such Third
Party Claim.


 


The Indemnified Party shall retain the right to employ its own counsel and
to participate in the defense of any Third Party Claim, the defense of which has
been assumed by the Indemnifying Party pursuant hereto, but the Indemnified Party
shall bear and shall be solely responsible for its own costs and expenses in connection
with such participation, unless (1) the Indemnified Party has been advised by counsel
that representation of the Indemnified Party and the Indemnifying Party by the same
counsel presents a conflict of interest under applicable standards of professional


 


27





















 


conduct, (2) the Indemnified Party has been advised by counsel that there
may be legal defenses available to it which are different from or in addition to
the defenses available to the Indemnifying Party, the Indemnifying Party is not
and has no plans to employ such different or additional defenses, and in the reasonable
judgment of such counsel it is advisable for the Indemnified Party to employ separate
counsel or (3) the Indemnifying Party has failed to prosecute such defense in good
faith.  Notwithstanding the foregoing, the
Indemnifying Party shall retain sole authority to negotiate,
compromise and settle such Third Party Claim subject to the conditions set forth
above.  In no event will the Indemnified Party
consent to the entry of any judgment or enter into any settlement with respect to
any Third Party Claim for which it seeks indemnification hereunder without the prior
written consent of the Indemnifying Party unless the Indemnifying Party shall have
failed to comply with the condition set forth in clause (i) above within 60 days
after receipt of notice of such claim from the Indemnified Party.


 


(d)                                 In
the event of any claims under this Section 8.11, the claimant shall advise
the party or parties who are required to provide indemnification therefor in writing
of the amount and circumstances surrounding such Claim.  With respect to liquidated claims, if within sixty
(60) days after providing written notice the other party has not contested such
claim in writing, the other party will pay the full amount thereof within thirty
(30) days after the expiration of such period, subject to the limitations set forth
above.


 


8.12                           Amendment.  Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto by an instrument in writing signed
on behalf of each of the parties hereto.


 


28





















 


IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be duly executed and delivered as a sealed instrument as of the date
first above written.


 


 


	
   

  	
  ERI/RES  II  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Eggert Dagbjartsson

  	
   

  
	
   

  	
   

  	
   

  	
  Eggert Dagbjartsson

  
	
   

  	
   

  	
   

  	
  Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ERI/RES  II  MERGER  SUB  LIMITED

  PARTNERSHIP

  
	
   

  	
  By:

  	
   

  	
  ERI/RES  II  GP  LLC,

  
	
   

  	
   

  	
   

  	
  Its  General  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  Equity Resource Investments, LLC,

  
	
   

  	
   

  	
   

  	
  Its sole Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Eggert Dagbjartsson

  	
   

  
	
   

  	
   

  	
   

  	
  Eggert Dagbjartsson

  
	
   

  	
   

  	
   

  	
  Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WINTHROP  RESIDENTIAL  ASSOCIATES

  II, A  LIMITED  PARTNERSHIP

  
	
   

  	
  By:

  	
   

  	
  One  Winthrop  Properties,  Inc.,

  
	
   

  	
   

  	
   

  	
  Its  General  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
        /s/ Carolyn
  Tiffany

  	
   

  
	
   

  	
  Name:   Carolyn Tiffany

  
	
   

  	
  Title:      Chief
  Operating Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ONE  WINTHROP  PROPERTIES,  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
        /s/ Carolyn
  Tiffany

  	
   

  
	
   

  	
  Name:   Carolyn Tiffany

  
	
   

  	
  Title:       Chief
  Operating Officer

  
						



 





















 


	
   

  	
  LINNAEUS-HAWTHORNE
  ASSOCIATES

  LIMITED  PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Carolyn Tiffany

  	
   

  
	
   

  	
  Name:

  	
   Carolyn Tiffany

  
	
   

  	
  Title:

  	
   Authorized Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ERI/RES  II  GP  LLC

  
	
   

  	
  By:

  	
   

  	
  Equity  Resource  Investments,  LLC,

  
	
   

  	
   

  	
   

  	
  Its  sole  Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Eggert Dagbjartsson

  	
   

  
	
   

  	
   

  	
   

  	
  Eggert Dagbjartsson

  
	
   

  	
   

  	
   

  	
  Manager

  
										



 





















 


EXHIBIT  A


 


Articles of Merger


 


of


 


ERI/RES II MERGER SUB LIMITED PARTNERSHIP


 


(a Maryland
limited partnership)


 


into


 


WINTHROP RESIDENTIAL ASSOCIATES
II, A LIMITED PARTNERSHIP


 


(a Maryland
limited partnership)


 


 


FIRST: 
ERI/RES II Merger Sub Limited Partnership and Winthrop Residential Associates
II, A Limited Partnership, being the limited partnerships which are parties to these
Articles of Merger, hereby agree to effect a merger (the “Merger”) of said limited
partnerships upon the terms and conditions set forth below.


 


SECOND:  The name of the limited partnership
to be merged into the successor limited partnership is ERI/RES II Merger Sub Limited
Partnership (the “Merging Partnership”), which is a limited partnership organized
in the State of Maryland under the provisions of the Maryland Revised Uniform Limited
Partnership Act.


 


THIRD:  The name of the successor limited partnership is
Winthrop Residential Associates II, A Limited Partnership (the “Surviving Partnership”),
which is a limited partnership organized in the State of Maryland under the provisions
of the Maryland Uniform Limited Partnership Act.


 


FOURTH:  The principal office of the Merging Partnership
in the State of Maryland is located in Baltimore City.  The Merging Partnership owns no interest in land
in the State of Maryland.


 


FIFTH:  The principal office of the Surviving Partnership
in the State of Maryland is located in Baltimore City.


 


SIXTH:  The Certificate of Limited Partnership of the Surviving
Partnership will be amended as set forth in Exhibit
A attached hereto in connection with
the Merger.


 


SEVENTH:  The percentages of partnership interest of each
class of partnership interest and the class of partners and the respective percentage
of partnership interests in each class of partnership interest of the Surviving
Partnership are as follows:


 


	
  General Partnership
  Interests

  	
   

  	
  5

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Limited Partnership
  Interests

  	
   

  	
  95

  	
  %

  



 





















 


EIGHTH: The percentages of partnership interest
of each class of partnership interest and the class of partners and the respective
percentage of partnership interests in each class of partnership interest of the
Merging Partnership are as follows:


 


	
  General Partnership
  Interests

  	
   

  	
  50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Limited Partnership
  Interests

  	
   

  	
  50

  	
  %

  



 


NINTH: At the effective time of the Merger, the
Merging Partnership shall be merged with and into the Surviving Partnership, the
separate existence of the Merging Partnership shall cease and the Merger shall have
the effects set forth in the Agreement and Plan of Merger, dated as of October 21,
2004 (the “Merger Agreement”), by and among ERI/RES II LLC, a Massachusetts limited
liability company (“RESI II Fund”), the Merging Partnership, the Surviving Partnership
and its General Partners and ERI/RES II GP LLC, a Massachusetts limited liability
company, and in Section 10-208 of the Maryland Revised Uniform Limited Partnership
Act.  Each limited partnership unit of the
Merging Partnership outstanding immediately prior to the effective time of the Merger
shall be automatically converted into one limited partnership unit of the Surviving
Partnership, subject to the terms of the Merger Agreement.  Each general partnership unit of the Merging Partnership
outstanding immediately prior to the effective time of the Merger shall be automatically
converted into one general partnership unit of the Surviving Partnership, subject
to the terms of the Merger Agreement, and shall be issued to ERI/RES II GP LLC,
a Massachusetts limited liability company. 
ERI/RES II GP LLC shall thereupon be admitted to the Surviving Partnership
as the sole general partner.  Each limited
partnership unit of the Surviving Partnership outstanding immediately prior to the
effective time of the Merger (other than units held by RESI II Fund or any of its
affiliates and units held by holders of limited partnership units who are entitled
to dissenters’ rights) shall be cancelled and automatically converted into the right
to receive the Limited Partnership Unit Amount (as defined in the Merger Agreement).  Each general partnership unit of the Surviving
Partnership outstanding immediately prior to the effective time of the Merger shall
be automatically converted into a Special Limited Partnership Unit (as defined in
the Merger Agreement) of the Surviving Partnership.


 


TENTH: The terms and conditions of the Merger
set forth herein were approved by the Merging Partnership in the manner and by the
vote required by its partnership agreement and the provisions of the Maryland Revised
Uniform Limited Partnership Act as follows:


 


The Merger and
the terms and conditions thereof were duly approved by the affirmative vote of the
sole general partner and the affirmative vote of the sole limited partner.


 


ELEVENTH: The Merger and the terms and conditions
thereof were approved by the Surviving Partnership in the manner and by the vote
required by its partnership agreement and the provisions of the Maryland Revised
Uniform Limited Partnership Act as follows:


 





















 


The Merger and
the terms and conditions thereof were duly approved by the affirmative vote all
of the general partners and the affirmative vote of a majority in interest of the
limited partners.


 


TWELFTH: The undersigned officer of the general
partner of the Surviving Partnership and the undersigned manager of the sole member
of the general partner of the Merging Partnership each acknowledges these Articles
of Merger to be the partnership act of the partnership on whose behalf he has signed,
and further, as to all matters or facts required to be verified under oath, each
acknowledges that, to the best of his knowledge, information and belief, these matters
and facts relating to the partnership on whose behalf he has signed are true in
all material respects and that this statement is made under the penalties for perjury.


 


 


[the  remainder  of
this  page  is  left  blank
intentionally]


 





















 


INWITNESS WHEREOF, these Articles of Merger have been duly executed by the parties this          day of,                              2004.


 


	
  Attest:

  	
  ERI/RES  II  MERGER
  SUB  LIMITED

  PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  ERI/RES  II GP LLC, its General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Equity Resource Investments, LLC, its sole

  
	
   

  	
   

  	
  Member

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   Eggert Dagbjartsson

  
	
   

  	
   

  	
   Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WINTHROP  RESIDENTIAL  ASSOCIATES  II,

  A  LIMITED  PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
  By: 

  	
    One  Winthrop Properties,Inc.,its General

  Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
										



 





















 


Exhibit  A


 


Certificate of Amendment of Certificate
of Limited Partnership of the Surviving Partnership


 





















 


EXHIBIT  B


 


Rights and Obligations of Special Limited
Partnership Units.


 


In connection with the conversion by One Winthrop
and Linneaus-Hawthorne of their General Partnership Units to Special Limited Partner
Units, the parties agree as follows:


 


(i)                                     any tax items of the
Partnership (including items of depreciation, amortization and gain or loss) that
are required to be specially allocated to the holders of the Special Limited Partnership
Units under Section 704(c) of the Code shall, notwithstanding anything to the
contrary in the Partnership Agreement, be allocated using the “traditional method”
provided in Treasury Regulation § 1.704-3(b)(1), taking into account the ceiling
rule, and the holders of the Special Limited Partnership Units shall not be specially
allocated any other tax items of the Partnership to “cure” the effects of the ceiling
rule as applied to the contribution;


 


(ii)                                  the Partnership shall
agree to notify the holders of the Special Limited Partnership Units prior to any
unscheduled reduction or repayment (including by way of a refinancing) of any Partnership
nonrecourse liabilities allocable to the holders of the Special Limited Partnership
Units that occurs on or before the third anniversary of the Effective Date, which
notice shall include a good faith estimate of the amount by which the amount of
the Partnership’s liabilities that such holder of Special Limited Partnership Units
may include in its tax basis pursuant to Section 1.752-3 of the Treasury Regulations
shall be reduced as the result thereof, and shall further agree that, upon receipt
of written notice from such holder of Special Limited Partnership Units, the Partnership
shall use reasonable efforts to make provision for such holder of Special Limited
Partnership Units to guaranty indebtedness of the Partnership so as to enable such
holder of Special Limited Partnership Units to increase its “economic risk of loss”  (within the meaning of Section 1.752-2 of
the Treasury Regulations) with respect to liabilities of the Partnership to the
extent of such reduction but minimize the economic risk of such guarantee to such
holder of Special Limited Partnership Units to the extent practicable (by, for example,
guaranteeing the “bottom” portion of the Partnership’s debt; provided, that this
covenant shall automatically expire on the third anniversary of the Effective Date).


 


(iii)                               The Special Limited Partnership
Units shall, initially, represent an aggregate of 0.2% of the equity interests in
the Partnership after the Effective Time.  After the RESI II Fund and its Affiliates have
received the amount of their capital contributions (including without limitation
amounts of cash used as merger consideration) back (for both limited partnership
and general partnership units or interests), together with a minimum rate of return
of 12% per annum, then the aggregate ownership percentage of the Special Limited
Partnership Units shall increase to 1% of the equity interests in the Partnership;
it being understood that if such return occurs as part of a distribution and there
is any excess, the increase in ownership percentage shall be applied to any such
excess;


 





















 


(iv)                              There shall be no other economic,
voting or other rights associated with the Special Limited Partnership Units except
as set forth in this Exhibit  B, or as otherwise agreed upon by the parties in an amended and
restated Partnership Agreement, to be entered into prior to the Merger and in effect
immediately after the Merger.  The Special
Limited Partnership Units shall be subject to the same (or similar obligations)
which may be reasonably imposed on other limited partners of the Partnership after
the Merger (and as set forth in an amended and restated Partnership Agreement).


 





















 


Schedule 4.01(c)


 


 


LOCAL LIMITED PARTNERSHIPS


 


	
  Local
  Limited
  Partnership

  	
   

  	
  State  of  Formation

  	
   

  	
  Partnership  Ownership  Interest

  	
   

  	
  General  Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Brookside, LTD.

  	
   

  	
  Alabama

  	
   

  	
  99%

  	
   

  	
  WFC Realty Co., Inc (1)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Crofton Village Associates Limited Partnership

  	
   

  	
  Maryland

  	
   

  	
  44%

  	
   

  	
  Dolben Crofton LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  First Investment Limited Partnership IX

  	
   

  	
  New Mexico

  	
   

  	
  90%

  	
   

  	
  FILP-IX, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Honeywood Associates

  	
   

  	
  Virginia

  	
   

  	
  95%

  	
   

  	
  Harry H. Hunt III

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sanford Landing Apartments, LTD.

  	
   

  	
  Florida

  	
   

  	
  99%

  	
   

  	
  Southeastern Capital Corp.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Southwest Parkway, LTD

  	
   

  	
  Texas

  	
   

  	
  99%

  	
   

  	
  WFC Realty Saugus (2)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Whisper Lake, Ltd.

  	
   

  	
  Florida

  	
   

  	
  99%

  	
   

  	
  Southeastern Capital Corp.

  



 










(1)                                  Transfer
of WFC Realty Co., Inc.’s interest in Brookside, LTD. is subject to a right of first
refusal in favor of Coordinated Services of Valdosta LLC.


 


(2)                                  WFC
Realty Saugus has contracted to transfer its interest in Southwest Parkway, LTD.
to AIMCO Properties, L.P.


 


See Schedule 4.07 for a list of Real Properties held by the Local Limited
Partnerships


 





















 


Schedule 4.02


 


LIST OF PARTNERS


 


 


See Attached


 


[ATTACHMENT INTENTIONALLY EXCLUDED]


 





















 


Schedule 4.07


 


REAL PROPERTIES; LIENS


 


 


	
  Local
  Limited
  Partnership

  	
   

  	
  Property  Name

  	
   

  	
  Property  Location

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Brookside, LTD.

  	
   

  	
  Brookside

  	
   

  	
  Sylacauga, AL

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Crofton Village Limited Partnership

  	
   

  	
  Crofton Village

  	
   

  	
  Crofton, MD

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  First Investment Limited Partnership IX

  	
   

  	
  Mountain Vista I

  

  Mountain Vista II

  

  Cibola Village

  	
   

  	
  Albuquerque, NM

  

  Albuquerque, NM

  

  Albuquerque, NM

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Honeywood Associates

  	
   

  	
  Honeywood

  	
   

  	
  Roanoke, VA

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sanford Landing Apartments, LTD.

  	
   

  	
  Sanford Landings

  	
   

  	
  Sanford, FL

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Southwest Parkway, LTD

  	
   

  	
  Parkway Villas

  	
   

  	
  Wichita Fall, TX

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Whisper Lake, Ltd.

  	
   

  	
  Whisper Lake

  	
   

  	
  Winter Park, FL

  



 


Liens


 


Those liens, encumbrances and other restrictions set forth in the financial
statements for the Local Limited Partnerships and/or the Partnership for the year
ended December 31, 2003, copies of which have been provided to the RESI II
Fund and as may be of record with the applicable land records office for such Real
Property


 


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