Exhibit 10.9

 

FIRST AMENDMENT
TO AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP
OF
VALLEY OAKS SENIOR HOUSING ASSOCIATES

 

This First Amendment to Agreement and Certificate of Limited Partnership of
Valley Oaks Senior Housing Associates (this "Amendment"), is dated for reference
purposes only as of August 22, 2011, by and between Patrick R. Sabelhaus, and
individual ("PRS"), and Kristen Otto, an individual (and together with PRS,
individually and collectively, the "Operating General Partner"), Real Estate
Associates Limited VI, a California limited partnership (the "Withdrawing
Limited Partner"); and Patrick R. Sabelhaus, an individual, Kristen Otto, an
individual (each, an "Incoming Limited Partner" and, collectively, the "Incoming
Limited Partners" together with the Operating General Partner and the
Withdrawing Limited Partner, each a "Party" and any two or more, as the context
requires, collectively, the "Parties"), with reference to the following:

 

A.       Valley Oaks Senior Housing Associates (the "Partnership") was formed as
a limited partnership under the laws of the State of California and is being
governed pursuant to an Agreement and Certificate of Limited Partnership, dated
as of September 12, 1983 (the "Partnership Agreement").

 

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

 

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

 

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

 

2.       Effective as of the date that the Withdrawing Limited Partner has
received the sum of $50,000.00 from the Incoming Limited Partners (the
"Effective Date"), which payment the Withdrawing Limited Partner acknowledges
shall be treated as a direct acquisition of the "Interest" (as that term is
defined below) and in full satisfaction of all obligations and liabilities due
the Withdrawing Limited Partner in connection with or in any manner arising out
of the Partnership, the Project or any other assets owned by the Partnership;
provided, however, if the Effective Date has not occurred or before August 24,
2011, then notwithstanding anything herein contained to the contrary, this
Amendment shall be of no force or effect:

 

(a)      The entire interest of the Withdrawing Limited Partner in the
Partnership, including, but not limited to, its right to and/or interests in all
Cash From Operations, Net Refinancing Cash, Cash from Disposition or Partial
Disposition and other Partnership distributions, other Partnership funds and
assets, and any reimbursements of expenses, repayments of any loans made by the
Withdrawing Limited Partner or any Affiliate to the Partnership (the
"Interest"), is transferred to each of the Incoming Limited Partners in equal
shares;

 

(b)      Each Incoming Limited Partner is admitted into the Partnership as the
Limited Partner; fifty percent (50%) of all Profits and Losses, Cash From
Operations, Net Refinancing Cash, Cash from Disposition or Partial Disposition
and other Partnership assets allocated or to be distributed to the Limited
Partner shall be allocated or distributed, as appropriate, to each Incoming
Limited Partner; and the Incoming Limited Partner assumes and agrees to perform
all of the obligations of the Limited Partner under the Partnership Agreement.

 

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

The defined term "Limited Partner" is deleted in its entirety and replaced with
the following:

 

"Limited Partner" means, collectively, Patrick R. Sabelhaus, or his successors
and assigns, and Kristen Otto, or his successors and assigns.

 

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

 

Patrick R Sabelhaus

1006 Fourth Street, Sixth Floor

Sacramento, CA 95814

 

and

 

Kristen Otto

891 Commons Drive

Sacramento, CA 95825

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(c)      Such Incoming Limited Partner has obtained all necessary third-party
consents to the transactions contemplated by this Amendment, including, but not
limited to, any required consent of the holders of all Mortgages and all
Governmental Agencies.

 

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

 

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

 

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

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

 

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

 

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

 

(b)      The Withdrawing Limited Partner is the owner of the Interest and the
Interest is not subject to any lien, pledge or encumbrance of any nature
whatsoever and the Incoming Limited Partners shall acquire the same free of any
rights or claims thereto by any other party claiming by, through or under the
Withdrawing Limited Partner.

 

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

 

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

         

9.       The representations and warranties set forth above in paragraphs 0, 7,
and 8 are true and correct as of the Effective Date and shall survive the
withdrawal of the Withdrawing Limited Partner from and the admission of the
Incoming Limited Partners into the Partnership as herein contemplated.

 

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

 

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

 

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

 

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

 

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

 

11.     Without limiting the Operating Generality of the provisions of paragraph
10,

 

(a)      Within five (5) calendar days after the sending or the receipt of any
correspondence or communication relating to the Partnership to or from the IRS
which could affect the Withdrawing Limited Partner,

 

(b)      , as the "tax matters partner" (as that term is defined in the Code) of
the Partnership (the "Tax Matters Partner"), shall promptly forward to the
Withdrawing Limited Partner a photocopy of all such correspondence or
communication(s).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

 

 

 

[Signatures on following page(s)]

            EXECUTED to be effective as of the Effective Date.

 

 

GENERAL PARTNER:                                            /S/PATRICK R.
SABELHAUS

                                                                        PATRICK
R. SABELHAUS

 

                                                                       
/S/KRISTEN OTTO

                                                                        KRISTEN
OTTO

 

LIMITED PARTNER:                                             /S/PATRICK R.
SABELHAUS

                                                                        PATRICK
R. SABELHAUS

 

                                                                       
/S/KRISTEN OTTO

                                                                        KRISTEN
OTTO

 

WITHDRAWING LIMITED PARTNER:                      REAL ESTATE ASSOCIATES LIMITED
VI,

                                                                        a
California limited partnership

 

                                                                        By  
National Partnership Investments Corp.,

                                                                              a
California corporation,

                                                                             
General Partner

 

                                                                             
By  /s/Derek J. Hart

                                                                                   
Name:  Derek J. Hart

                                                                                   
Title:  Senior Vice President