Exhibit 10.1


 





MERGER CONSIDERATION ALLOCATION AGREEMENT


 


This Merger Consideration
Allocation Agreement (this “Agreement”) is made and entered into as of May 3, 2017 by and among Sentio Healthcare
Properties, Inc., a Maryland corporation (the “Company”), Sentio Healthcare Properties OP, L.P., a Delaware
limited partnership (the “Operating Partnership”), Sentinel RE Investment Holdings LP, a Delaware limited partnership
(the “Investor”), Sentio Investments, LLC, a Florida limited liability company (the “Advisor”),
and, solely with respect to Section 3, Section 5, Section 6, Section 7, and Section 10, KAREP
Master JV LLC, a Delaware limited liability company (“Parent”).


 


RECITALS


 


WHEREAS, the Company, the
Operating Partnership, Parent, KAREP Acquisitions Vehicle, LLC and Advisor, solely in its capacity as stockholders’ representative,
intend to enter into that certain Agreement and Plan of Merger to be dated as of the date hereof (the “Merger Agreement”),
pursuant to which the Company will be merged with and into Merger Sub (as defined in the Merger Agreement), with Merger Sub being
the surviving entity and each share of Company Common Stock (as defined in the Merger Agreement) and Company Preferred Stock (as
defined in the Merger Agreement) issued and outstanding immediately prior to the Effective Time (as defined in the Merger Agreement)
will be converted into the right to receive the applicable Merger Consideration (as defined in the Merger Agreement) upon the terms
and conditions set forth in the Merger Agreement. Any capitalized term not otherwise defined herein shall have the meaning given
such term in the Merger Agreement.


 


WHEREAS, the Company and
the Advisor are party to that certain Advisory Agreement dated as of January 1, 2013 (as amended by that certain Transition to
Internal Management Agreement (as amended by those certain Amendments No. 1, No. 2, No. 3 and No. 4 to Transition to Internal Management
Agreement), collectively the “Advisory Agreement”), pursuant to which the Advisor would be entitled to certain
payments as a result of the transactions contemplated by the Merger Agreement and the termination of the Advisory Agreement.


 


WHEREAS, the Investor and
the Company are parties to that certain Second Amended and Restated Limited Partnership Agreement of the Operating Partnership
dated as of August 5, 2013 (as amended on December 22, 2014 and August 31, 2016, the “Partnership Agreement”).
Pursuant to the Merger Agreement it is contemplated that the OP Series B Preferred Units will be treated as provided herein, notwithstanding
anything contained in the Partnership Agreement or any other agreement to which the Investor is a party.


 


WHEREAS, in connection
with the determination of the Aggregate Merger Consideration and ultimately, the Common Merger Consideration, the parties hereto
desire to (a) confirm the amounts that the Investor will receive as consideration for all of its outstanding OP Series B Preferred
Units and agree upon how such units will be redeemed, (b) confirm the amounts that the Investor will receive as consideration for
all of its outstanding Company Preferred Stock, (c) confirm the amounts the Advisor will be entitled to receive in connection with
the consummation of the Merger (the “Promote Payment”) and the amount as a result of the termination of the
Advisory Agreement (the “Advisor Termination Payment” and together with the Promote Payment the “Advisory
Agreement Payment Amount”) and (d) confirm the allocation of the contingent value rights (each a “CVR”
and collectively, the “CVRs”) among the holders of Company Common Stock, Investor and the Advisor.


 




     


     


    

 


WHEREAS, in connection
with the transactions contemplated by the Merger Agreement, on or prior to the Calculation Date, the Company and Parent will agree
upon the Aggregate Cash Merger Consideration, which amount will be between $382,407,161 and $398,407,161 (the “Cash Consideration
Range”) per the terms of Section 2.1 of the Merger Agreement (subject to possible increases to the range per the terms
of the last proviso of Section 2.1(a) of the Merger Agreement).


 


WHEREAS, in connection
with the transactions contemplated by the Merger Agreement, the ultimate aggregate value of the CVRs will be between $0 and $8,760,000
(the “CVR Consideration”) per the terms of the Merger Agreement, the Indemnity Escrow Agreement and the Contingent
Value Rights Agreement (subject to possible increases to the range per the terms of Section 2.1(a) of the Merger Agreement).


 


NOW, THEREFORE, in consideration
of the mutual covenants and agreements contained in this Agreement and subject to the conditions herein contained, and intending
to be legally bound hereby, the parties hereto agree as follows:


 


AGREEMENT


 


1.          Allocation
of the Aggregate Cash Merger Consideration. Attached hereto as Exhibit A is a sample calculation of the Aggregate Cash
OP Series B Preferred Units Consideration, the aggregate Common Cash Merger Consideration payable with respect to all shares of
Company Common Stock entitled thereto, the Aggregate Preferred Merger Consideration payable with respect to all shares of Company
Preferred Stock entitled thereto, and the Promote Payment, each based on the Initial Estimated Closing Date for the calculation
of the Aggregate Cash Merger Consideration and the high and low end of the Cash Consideration Range. In addition, Exhibit A
sets forth the amount by which each of the foregoing changes on a monthly basis for later Estimated Closing Dates.


 


2.          Allocation
of the CVR Consideration. Attached hereto as Exhibit B is the calculation setting forth the percentage allocation among
the OP Series B Preferred Units, the Company Common Stock and the Advisor of the CVR Consideration. Holders of Company Common Stock
shall receive one CVR for each share of Company Common Stock, and the Investor and the Advisor shall receive the corresponding
numbers of CVRs that will give effect to the percentage allocation of CVRs among the OP Series B Preferred Units, the Company Common
Stock and the Advisor.


 




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3.          Treatment
of OP Series B Preferred Units and Company Preferred Stock.


 


(a)          Redemption.
Notwithstanding anything contained in the Partnership Agreement or any other agreement to which the Investor is a party, conditioned
upon the occurrence of the Merger, the parties agree that the Operating Partnership shall, and Parent and Merger Sub shall cause
the Operating Partnership to, redeem all of the issued and outstanding OP Series B Preferred Units effective as of immediately
following the Effective Time for the Aggregate OP Series B Preferred Units Consideration as defined below in subsection (b). No
further notice of the redemption shall be required to be delivered by the Operating Partnership and the Investor waives any notice
requirements for a redemption of the OP Series B Preferred Units to which the Investor may otherwise be entitled. Furthermore,
the Investor agrees that notwithstanding any right the Investor may have in the Partnership Agreement or otherwise to convert the
OP Series B Preferred Units to Company Common Stock, the Investor agrees that it will not exercise such right for so long as this
Agreement remains in effect.


 


(b)          Aggregate
OP Series B Preferred Units Consideration. Notwithstanding anything contained in the Partnership Agreement or any other agreement
to which the Investor is a party, Parent, the Company, the Operating Partnership, the Advisor and the Investor hereby agree that
the “Aggregate Cash OP Series B Preferred Units Consideration” payable upon the redemption of the OP Series B Preferred
Units, subject to the final determination of the Aggregate Cash Merger Consideration pursuant to Section 2.1 of the Merger Agreement
(based on the Cash Consideration Range) is between $216,355,482 and $226,054,788 based on the Initial Estimated Closing Date (subject
to possible increases to the range per the terms of the last proviso of Section 2.1(a) of the Merger Agreement). Notwithstanding
anything contained in the Partnership Agreement or any other agreement to which the Investor is a party, Parent, the Company, the
Operating Partnership, the Advisor and the Investor hereby agree that upon determination of the Aggregate Cash Merger Consideration
pursuant to Section 2.1 of the Merger Agreement, the Aggregate Cash OP Series B Preferred Units Consideration shall be determined
based on the sample calculation set forth on Exhibit A using the final Estimated Closing Date as determined pursuant to
the Merger Agreement. In addition, upon the Effective Time, Parent, the Company, the Operating Partnership, the Advisor and the
Investor agree that the Investor shall be entitled to 57.78% of the aggregate number of CVRs to be issued. The aggregate number
of CVRs issued to the Investor in respect of the OP Series B Preferred Units together with the Aggregate Cash OP Series B Unit
Consideration is the “Aggregate OP Series B Unit Consideration.” Notwithstanding anything in the foregoing to the contrary,
distributions on the OP Series B Preferred Units shall continue to be made until the Closing Date, including payment thereof on
a daily basis for the period between the date of the last regularly paid quarterly distribution and the Closing Date, in accordance
with the Partnership Agreement and in accordance with Section 5.1(c) and the last paragraph of Section 5.1 of the Merger Agreement.


 


(c)          Company
Preferred Stock. The Investor is the only holder of Company Preferred Stock. Parent, the Company, the Operating Partnership,
the Advisor and the Investor hereby agree to the treatment of all of the issued and outstanding Company Preferred Stock in accordance
with Section 2.2(b) of the Merger Agreement. The Company shall continue to declare and pay dividends on the Company Preferred Stock
in accordance with the terms thereof, and the Company shall declare and pay immediately prior to the Effective Time a dividend
for the period from the most recent dividend payment date for the Company Preferred Stock to the date of the Closing Date in accordance
with Section 5.1(c) and the last paragraph of Section 5.1 of the Merger Agreement.


 




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4.          Payments
to the Advisor. Notwithstanding anything contained in the Advisory Agreement, or any other agreement pursuant to which the
Company, the Operating Partnership, the Advisor and the Investor are parties, the Company, the Operating Partnership, the Advisor
and the Investor agree that the Promote Payment, subject to the final determination of the Aggregate Cash Merger Consideration
pursuant to Section 2.1 of the Merger Agreement (based on the Cash Consideration Range) is between
$4,697,186 and $5,483,061 based on the Initial Estimated Closing Date (subject to possible increases to the range per the
terms of the last proviso of Section 2.1(a) of the Merger Agreement). The Company, the Operating Partnership, the Advisor and the
Investor agree that upon final determination of the Aggregate Cash Merger Consideration in accordance with Section 2.1 of the Merger
Agreement, the amount of the Promote Payment shall be determined based on the sample calculation on Exhibit A using the
final Estimated Closing Date as determined pursuant to the Merger Agreement. Furthermore, the Company, the Operating Partnership,
the Advisor and the Investor agree that the Advisor is entitled to 4.22% of the aggregate number of CVRs to be issued. In addition,
the Company, the Operating Partnership, the Advisor and the Investor agree that upon the Effective Time and as a result of the
termination of the Advisory Agreement, the Advisor Termination Payment shall be fixed based on the Estimated Closing Date agreed
to by the parties pursuant to Section 2.1 of the Merger Agreement, which amount shall be determined in accordance with the sample
calculation set forth on Exhibit C. Notwithstanding the foregoing, prior to the termination of the Advisory Agreement, the
Advisor shall continue to be entitled to receive all amounts payable under the Advisory Agreement through the Effective Time.


 


5.          Funding
of the Aggregate OP Series B Preferred Units Consideration. Prior to the Effective Time, Parent shall deposit with the Paying
Agent cash in immediately available funds in an amount equal to the Aggregate Cash OP Series B Preferred Units Consideration in
accordance with Section 2.4 of the Merger Agreement. Such amount will be deemed to have been contributed by the Company to the
Operating Partnership, and used by the Operating Partnership to redeem the OP Series B Preferred Units in accordance with Section
3(a). Immediately after the Effective Time, Parent and Merger Sub shall cause (i) the Paying Agent to pay the Investor the
Aggregate Cash OP Series B Preferred Units Consideration to the account designated by the Investor and (ii) the Rights Agent to
deliver to the Investor the aggregate number of CVRs as set forth in Section 3(b).


 


6.          Termination
of Certain Related Party Agreements. The Company, the Operating Partnership and the Investor hereby agree that effective as
of the Effective Time each of the Securities Purchase Agreement, dated as of February 10, 2013, among the Company, the Operating
Partnership and the Investor, as amended and the Investor Rights Agreement, dated as of February 10, 2013, among the Investor,
the Company and the Operating Partnership, as amended (the “IRA”), shall each be terminated and shall have no
further force or effect, and no party thereto shall have any liability or obligation thereunder as of the Effective Time. The Company
and the Advisor hereby agree that effective as of the Effective Time the Advisory Agreement shall be terminated and shall have
no further force or effect, and no party thereto shall have any liability or obligation thereunder as of the Effective Time.


 


		7.	Representations and Warranties.



 


		(a)	The Company. The Company hereby represents and warrants
that:



 




    	 	4	 



     


    

 


		(i)	The Company is a corporation duly organized, validly existing
and in good standing under the Laws of Maryland and has the requisite corporate power and authority to conduct its business as
now being conducted.



 


		(ii)	The Company has all necessary corporate power and authority
to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby.



 


		(iii)	The execution, delivery and performance by the Company
of this Agreement, and the consummation by it of the transactions contemplated hereby, have been duly and validly authorized by
the Company Board and no other corporate action on the part of the Company is necessary to authorize the execution and delivery
by the Company of this Agreement, and the consummation by it of the transactions contemplated hereby.



 


		(iv)	This Agreement has been duly executed and delivered by
the Company and, assuming due and valid authorization, execution and delivery hereof by the other parties hereto, is a valid and
binding obligation of the Company enforceable against the Company in accordance with its terms, except that the enforcement hereof
may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or hereafter in effect, relating
to creditors’ rights generally and (b) general principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at Law) (collectively, the “Enforceability Exceptions”).



 


		(b)	The Operating Partnership. The Operating Partnership
hereby represents and warrants that:



 


		(i)	The Operating Partnership is a limited partnership duly
organized, validly existing and in good standing under the Laws of Delaware and has the requisite power and authority to conduct
its business as now being conducted.



 


		(ii)	The Operating Partnership has all necessary power and authority
to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby.



 


		(iii)	The execution, delivery and performance by the Operating
Partnership of this Agreement, and the consummation by it of the transactions contemplated hereby, have been duly and validly
authorized and no other action on the part of the Operating Partnership is necessary to authorize the execution and delivery by
the Operating Partnership of this Agreement, and the consummation by it of the transactions contemplated hereby.



 




    	 	5	 



     


    

 


		(iv)	This Agreement has been duly executed and delivered by
the Operating Partnership and, assuming due and valid authorization, execution and delivery hereof by the other parties hereto,
is a valid and binding obligation of the Operating Partnership enforceable against the Operating Partnership in accordance with
its terms, except that the enforcement hereof may be limited by the Enforceability Exceptions.



 


		(v)	The Operating Partnership is not entering into this Agreement
with the intent to hinder, delay or defraud either present or future creditors. Immediately after giving effect to the redemption
of the OP Series B Preferred Units and the other transactions contemplated hereby and payment of all related fees and expenses,
the Operating Partnership will be Solvent. For purposes of this clause (v), the term “Solvent” with respect to the
Operating Partnership means that, as of any date of determination, (x) the amount of the fair saleable value of the assets
of the Operating Partnership and its Subsidiaries, taken as a whole, exceeds, as of such date, the sum of (i) the value of all
liabilities of the Operating Partnership and its Subsidiaries, taken as a whole, including contingent and other liabilities, as
of such date, as such quoted terms are generally determined in accordance with the applicable federal Laws governing determinations
of the solvency of debtors, and (ii) the amount that will be required to pay the probable liabilities of the Operating Partnership
and its Subsidiaries, taken as a whole on its existing debts (including contingent liabilities) as such debts become absolute
and matured; (y) the Operating Partnership will not have, as of such date, an unreasonably small amount of capital for the operation
of the business in which it is engaged or proposed to be engaged by Parent following such date; and (z) the Operating Partnership
will be able to pay its liabilities, including contingent and other liabilities, as they mature.



 


		(c)	The Investor. The Investor hereby represents and
warrants that:



 


		(i)	The Investor is a limited partnership duly organized, validly
existing and in good standing under the Laws of Delaware and has the requisite power and authority to conduct its business as
now being conducted.



 


		(ii)	The Investor has all necessary power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby.



 


		(iii)	The execution, delivery and performance by the Investor
of this Agreement, and the consummation by it of the transactions contemplated hereby, have been duly and validly authorized and
no other action on the part of the Investor is necessary to authorize the execution and delivery by the Investor of this Agreement,
and the consummation by it of the transactions contemplated hereby.



 




    	 	6	 



     


    

 


		(iv)	This Agreement has been duly executed and delivered by
the Investor and, assuming due and valid authorization, execution and delivery hereof by the other parties hereto, is a valid
and binding obligation of the Investor enforceable against the Investor in accordance with its terms, except that the enforcement
hereof may be limited by the Enforceability Exceptions.



 


		(d)	The Advisor. The Advisor hereby represents and warrants
that:



 


		(i)	The Advisor is a limited liability company duly organized,
validly existing and in good standing under the Laws of Florida and has the requisite power and authority to conduct its business
as now being conducted.



 


		(ii)	The Advisor has all necessary power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby.



 


		(iii)	The execution, delivery and performance by the Advisor
of this Agreement, and the consummation by it of the transactions contemplated hereby, have been duly and validly authorized and
no other action on the part of the Advisor is necessary to authorize the execution and delivery by the Advisor of this Agreement,
and the consummation by it of the transactions contemplated hereby.



 


		(iv)	This Agreement has been duly executed and delivered by
the Advisor and, assuming due and valid authorization, execution and delivery hereof by the other parties hereto, is a valid and
binding obligation of the Advisor enforceable against the Advisor in accordance with its terms, except that the enforcement hereof
may be limited by the Enforceability Exceptions.



 


		(e)	Parent. Parent hereby represents and warrants that:



 


		(i)	Parent is a limited liability company duly organized, validly
existing and in good standing under the Laws of Delaware and has the requisite power and authority to conduct its business as
now being conducted.



 


		(ii)	Parent has all necessary power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby.



 


		(iii)	The execution, delivery and performance by Parent of this
Agreement, and the consummation by it of the transactions contemplated hereby, have been duly and validly authorized by the governing
body of Parent and no other action on the part of Parent is necessary to authorize the execution and delivery by Parent of this
Agreement, and the consummation by it of the transactions contemplated hereby.



 


		(iv)	This Agreement has been duly executed and delivered by
Parent and, assuming due and valid authorization, execution and delivery hereof by the other parties hereto, is a valid and binding
obligation of Parent enforceable against Parent in accordance with its terms, except that the enforcement hereof may be limited
by the Enforceability Exceptions.



 




    	 	7	 



     


    

 


8.          Covenants.


 


(a)          Transfer
of OP Series B Preferred Units. Absent the prior written consent of the other parties hereto, the Investor hereby agrees that,
from the date hereof until the termination of this Agreement, it shall not offer, sell, transfer, assign, tender in any tender
or exchange offer, pledge, encumber, loan, hypothecate or similarly dispose of (by merger, by testamentary disposition, by operation
of law or otherwise) (a “Transfer”) or convert any OP Series B Preferred Units, unless prior to the effectiveness
of any such Transfer, the transferee executes a joinder to this Agreement pursuant to which such transferee agrees in writing to
become a party to this Agreement and be subject to the terms hereof and otherwise become a party for all purposes of this Agreement
and notice of such Transfer is delivered to the other parties pursuant to Section 10(d).


 


(b)          Consent
to Merger Agreement. Pursuant to the Partnership Agreement and IRA, the Investor hereby consents to the transactions contemplated
by the Merger Agreement for all purposes thereunder and agrees to the treatment of the OP Series B Preferred Units as contemplated
herein and therein.


 


(c)          Further
Assurances. The parties agree to use commercially reasonable efforts to execute and deliver, or cause to be executed and delivered,
any additional documents, instruments and assurances and to take, or cause to be taken, all actions that may be reasonably necessary
or appropriate to effectuate the provisions of this Agreement, including entering into any amendments to the Partnership Agreement
or the Advisory Agreement.


 


9.          Termination.
This Agreement shall terminate automatically without any further action of the parties upon the termination of the Merger Agreement.


 


10.         Miscellaneous
Provisions.


 


(a)          Amendment.
This Agreement may be amended, modified and supplemented by written agreement of all the parties hereto; provided, that Parent’s
consent shall only be required to the extent that the amendment relates to Section 3, Section 5, Section 6,
Section 7, or Section 10.


 


(b)          Counterparts.
This Agreement may be executed manually or by facsimile by the parties, in any number of counterparts, each of which shall be considered
one and the same agreement and shall become effective when a counterpart hereof shall have been signed by each of the parties and
delivered to the other parties hereto.


 


(c)          Severability.
If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by rule of Law or public policy,
all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic
or legal substance of the Merger and the transactions contemplated hereby are not affected in any manner adverse to the applicable
party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties
shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible
in an acceptable manner to the end that the Merger and the transactions contemplated hereby are fulfilled to the extent possible.


 




    	 	8	 



     


    

 


(d)          Notices.
All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally (notice deemed
given upon receipt), telecopied (notice deemed given upon confirmation of receipt) or sent by a nationally recognized overnight
courier service, such as Federal Express (notice deemed given upon receipt of proof of delivery), to the parties at the following
addresses (or at such other address for a party as shall be specified by like notice):


 


if to Parent, to:


 


c/o KAREP Acquisitions, LLC

1 Town Center Road, Suite 300

Boca Raton, FL 33486

Attention: David Selznick and Russell Reiter

Facsimile: (561) 300-6290


 


with a copy to:



Hogan Lovells US LLP

555 13th Street NW

Washington, DC 20004


Attention: Stuart Barr

Facsimile: (202) 637-5910


 


if to the Company or the Operating Partnership, to:


 


Sentio Healthcare Properties, Inc.


c/o Sentio Investments, LLC


189 S Orange Ave, Suite 1700


Orlando, FL. 32801

Attention: John Mark Ramsey

Facsimile: (407) 999-5210


 


with copies to:


 


Latham & Watkins LLP


355 South Grand Avenue


Los Angeles, California 90071-1560


Attention: Julian Kleindorfer


David Wheeler


Facsimile: (213) 891-8763


 




    	 	9	 



     


    

 


if to the Investor:


 


Sentinel RE Investment Holdings, L.P.


 c/o Kohlberg Kravis Roberts & Co. L.P.


 9 West 57th Street, Suite 4200


 New York, NY 10019


 Attention: Billy Butcher and General Counsel


 Facsimile: (212) 750-0003


 


With copies to:


 


Simpson Thacher & Bartlett LLP


 425 Lexington Avenue


 New York, New York 10017


 Attention: Gary I. Horowitz


 Facsimile: (212) 455-2502


 


if to the Advisor:


 


Sentio Investments, LLC


189 S Orange Ave, Suite 1700


Orlando, FL. 32801

Attention: John Mark Ramsey

Facsimile: (407) 999-5210


 


with copies to:


 


Foley & Lardner LLP


111 North Orange Avenue, Suite 1800


Orlando, FL 32801-2386

Attention: Matthew E. Jassak

Facsimile: mjassak@foley.com


 


		(e)	Governing Law; Jurisdiction



. 


		(i)	This Agreement, and all claims or causes of actions (whether
at Law, in contract or in tort) that may be based upon, arise out of or related to this Agreement or the negotiation, execution
or performance of this Agreement, shall be governed by, and construed in accordance with, the Laws of the State of Maryland without
giving effect to conflicts of laws principles (whether of the State of Maryland or any other jurisdiction that would cause the
application of the Laws of any jurisdiction other than the State of Maryland).



 




    	 	10	 



     


    

 


		(ii)	All Legal Proceedings and proceedings arising out of or
relating to this Agreement shall be heard and determined exclusively in any Maryland state or federal court. Each of the parties
hereby irrevocably and unconditionally (a) submits to the exclusive jurisdiction of any Maryland state or federal court,
for the purpose of any Legal Proceeding arising out of or relating to this Agreement or any ancillary agreement related hereto
brought by any party, (b) agrees not to commence any such action or proceeding except in such courts, (c) agrees that
any claim in respect of any such action or proceeding may be heard and determined in any Maryland state or federal court, (d) waives,
to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of
venue of any such action or proceeding, and (e) waives, to the fullest extent permitted by Law, the defense of an inconvenient
forum to the maintenance of such action or proceeding. Each of the parties agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided
by Law. Each party irrevocably consents to service of process in the manner provided for notices in Section 10(d). Nothing
in this Agreement will affect the right of any party to serve process in any other manner permitted by Law.



 


(f)          Waiver
of Jury Trial. EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION
HEREWITH OR THE MERGER AND OTHER TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH
WAIVERS, (C) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10(f).


 


(g)          Assignment.
This Agreement shall not be assigned or delegated by any of the parties hereto (whether by operation of Law or otherwise) without
the prior written consent of the other parties hereto, except this Agreement shall be assignable without any consent to a permitted
transferee under Section 8(a). Any assignment in violation of this Section 10(g) shall be null and void. Subject
to the preceding sentence, but without relieving any party hereto of any obligation hereunder, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns.


 




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(h)          Specific
Performance. Parent agrees that, in the event that Parent does not perform the provisions of this Agreement in accordance with
its specified terms or otherwise breach such provisions, irreparable damage would occur, for which monetary damages, even if available,
may not be an adequate remedy. Parent agrees that if the Closing occurs, the Investor shall be entitled to an injunction, specific
performance or other equitable relief to cause the redemption of the OP Series B Preferred Units in accordance with Section
3. Such remedy shall not be deemed to be the exclusive remedy for breach of Agreement but shall be in addition to all other
remedies available at law or equity to the Investor. Parent agrees that it will not oppose the granting of an injunction, specific
performance and other equitable relief as provided herein on the basis that (x) the Investor has an adequate remedy at law or (y)
an award of specific performance is not an appropriate remedy for any reason at law or equity. The Investor, in seeking specific
performance, shall not be required to provide any bond or other security in connection with any such order or injunction


 


(i)          Entire
Agreement. This Agreement, together with the Merger Agreement, constitute the entire agreement among the Parties with respect
to the subject matter hereof and thereof and supersede all other prior agreements and understandings, both written and oral, among
the Parties or any of them with respect to the subject matter hereof and thereof.


 


[SIGNATURE PAGE FOLLOWS]


 




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IN WITNESS WHEREOF, the
Advisor, the Company, the Operating Partnership, the Investor, and Parent have caused this Agreement to be signed by their duly
authorized representatives as of the date first written above.


 


	 	SENTIO INVESTMENTS, LLC
	 	 	 
	 	By:	/s/  John Mark Ramsey
	 	 	Name: John Mark Ramsey
	 	 	Title: Manager
	 	 	 
	 	SENTIO HEALTHCARE PROPERTIES, INC.
	 	 	 
	 	By:	/s/  John Mark Ramsey
	 	 	Name:  John Mark Ramsey
	 	 	Title: Chief Executive Officer and President
	 	 	 
	 	SENTIO HEALTHCARE PROPERTIES OP, L.P.
	 	 	 
	 	By:	Sentio Healthcare Properties, Inc.,
	 	 	its general partner
	 	 	 
	 	By:	/s/   John Mark Ramsey
	 	 	Name:   John Mark Ramsey
	 	 	Title: Chief Executive Officer and President



 


[Signature Page to Merger Consideration Allocation Agreement]


 






     


     


    

 


	 	SENTINEL RE INVESTMENT HOLDINGS LP
	 	 	 
	 	By:	Sentinel RE Investment Holdings GP LLC,
	 	 	its general partner
	 	 	 
	 	By:	KKR REPA AIV-1 LP., managing member
	 	 	 
	 	By:	KKR Associates REPA L.P., its general 
	 	 	partner
	 	 	 
	 	By:	KKR REPA GP LLC, its general partner 
	 	 	 
	 	By:	/s/  David Sorkin
	 	 	Name: David Sorkin
	 	 	Title: Secretary



 


[Signature Page to Merger Consideration Allocation Agreement]


 






     


     


    

 


	 	KAREP MASTER JV, LLC
	 	 	 
	 	By:	/s/ S. David Selznick
	 	 	Name: S. David Selznick
	 	 	Title: Vice President


 


[Signature Page to Merger Consideration Allocation Agreement]


 




     


     


    

 


EXHIBIT A





 


	Aggregate Cash Merger Consideration Allocation ("ACMC")	Exhibit A


 





	 	 	 	 	 	 	ACMC Range	 
	 	 	 	 	Initial ACMC	 	Low	 	High	 
	Aggregate Cash Merger Consideration	 	(A)+(B)+(C)	 	$390,407,161	 	$382,407,161	 	$398,407,161	 
	Add back: Promote Payment	 	 	 	$5,090,124	 	4,697,186	 	5,483,061	 
	Aggregate Consideration	 	 	 	$395,497,285	 	$387,104,347	 	$403,890,222	 
	Distribution Catch Up to OP Common Units (a)	 	 	 	($12,573,815	)	(12,573,815	)	(12,573,815	)
	OP Series A Capital	 	 	 	($100,000	)	(100,000	)	(100,000	)
	Series A Accrued Distributions	 	 	 	$0	 	-	 	-	 
	Proceeds Available for Distribution Pro Rata	 	 	 	$382,823,470	 	$374,430,532	 	$391,216,407	 







 


Pro Rata Distributions: OP Common Units and OP Series B Preferred
Units


 





	 	 	Capital	 	Contribution	 	 	 	Relative
    Unit	 	 	 	 	 	 	 
	 	 	Contribution	 	per
    Unit	 	#
    Units	 	Percentages	 	 	 	 	 	 	 
	OP
    Common Units	 	$115,665,030	 	$10.00	 	11,566,503	*	42.22%	 	$161,618,335	 	$158,075,050	 	$165,161,619	 
	OP
    Series B Preferred Units	 	158,626,000	 	$10.02	 	15,830,938	 	57.78%	 	$221,205,135	 	216,355,482	 	226,054,788	 
	 	 	$274,291,030	 	 	 	27,397,441	 	100.00%	 	$382,823,470	 	$374,430,532	 	$391,216,407	 
	 	 	*
    includes 20,000 LP common units held by REIT	 	 	 	 	 	 	 







 





Common Cash Merger Consideration







 





	Proceeds Allocated Based on Pro Rata Units	 	 	 	 	 	$161,618,335	 	$158,075,050	 	$165,161,619	 
	Distribution Catch Up to OP Common Units	 	 	 	 	 	$12,573,815	 	12,573,815	 	12,573,815	 
	Less: Promote Payment	 	 	 	 	 	($5,090,124	)	(4,697,186	)	(5,483,061	)
	Common Cash Merger Consideration	 	Shares O/S	 	(A)	 	$169,102,026	 	$165,951,679	 	$172,252,373	 
	Common Cash Merger Consideration per Share	 	11,546,503	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	$14.65	 	$14.37	 	$14.92	 
	 	 	Collar Per Share Impact	 	 	 	 	 	($0.27	)	$0.27	 
	Aggregate Cash OP Series B Preferred Unit Consideration (KKR)	 	 	 	 	 	 	 	 	 	 	 
	Proceeds Allocated Based on Pro Rata Units	 	 	 	 	 	$221,205,135	 	$216,355,482	 	$226,054,788	 
	Aggregate Cash OP Series B Preferred Unit Consideration	 	 	 	(B)	 	$221,205,135	 	$216,355,482	 	$226,054,788	 
	Preferred Merger Consideration (KKR)	 	 	 	 	 	 	 	 	 	 	 
	OP Series A Capital	 	 	 	 	 	$100,000	 	100,000	 	100,000	 
	Preferred Merger Consideration	 	 	 	(C)	 	$100,000	 	100,000	 	100,000	 







 


(a) Through Initial Estimated Closing Date (July 31,
2017). To be updated through revised Estimated Closing Date.


 




     


     


    

  


	Promote Payment	Exhibit A (Continued)


 





	I	 	Consideration to Legacy Common Shares	 	 	 	ACMC	 	Collar-Low	 	Collar-High	 
	 	 	Proceeds Allocated Based on Pro Rata Units	 	 	 	$161,618,335	 	$158,075,050	 	$165,161,619	 
	 	 	Distribution Catch Up to OP Common Units	 	 	 	12,573,815	 	12,573,815	 	12,573,815	 
	 	 	Sub-Total: Equity Value Available to Common Stock	 	 	 	$174,192,150	 	$170,648,865	 	$177,735,434	 
	 	 	Company Common Stock Shares Outstanding	 	 	 	11,546,503	 	11,546,503	 	11,546,503	 
	 	 	Equity Value Per Share Available to Company Common Stock	 	 	 	$15.0861	 	$14.78	 	$15.39	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Legacy Common Shares	 	 	 	12,804,644	 	12,804,644	 	12,804,644	 
	 	 	X  Equity Value Per Share Available to Company Common Stock	 	 	 	X $15.09	 	X $14.78	 	X $15.39	 
	 	 	 	 	A	 	$193,172,640	 	$189,243,268	 	$197,102,011	 
	 	 	Aggregate Distributions Paid to Company Common Stock (a)	 	B	 	45,643,359	 	45,643,359	 	45,643,359	 
	 	 	Total	 	A+B	 	$238,815,999	 	$234,886,627	 	$242,745,370	 
	 	 	 	 	 	 	 	 	 	 	 	 
	II	 	Threshold	 	 	 	 	 	 	 	 	 
	 	 	Company Common Stock Shares Outstanding	 	 	 	11,546,503	 	11,546,503	 	11,546,503	 
	 	 	X Invested Capital per Common Share	 	 	 	X $10.00	 	X $10.00	 	X $10.00	 
	 	 	 	 	C	 	$115,465,030	 	$115,465,030	 	$115,465,030	 
	 	 	Plus: KKR Capital Used in Redemption	 	D	 	8,726,000	 	8,726,000	 	8,726,000	 
	 	 	7% Stockholder Return (a)	 	 	 	63,723,734	 	63,723,734	 	63,723,734	 
	 	 	Total Threshold	 	C+D+E	 	$187,914,764	 	$187,914,764	 	$187,914,764	 
	 	 	 	 	 	 	 	 	 	 	 	 
	III	 	Promote Payment	 	 	 	 	 	 	 	 	 
	 	 	Difference Between I and II	 	 	 	$50,901,235	 	$46,971,863	 	$54,830,606	 
	 	 	Promote Payment %	 	 	 	X 10.0%	 	X 10.0%	 	X 10.0%	 
	 	 	Promote Payment	 	 	 	$5,090,124	 	$4,697,186	 	$5,483,061	 







 


(a) Through July 31, 2017.


 




     


     


    

  


	Aggregate Cash Merger Consideration Allocation ("ACMC"): Estimated Monthly Impact Post 7/31/17 (a)	Exhibit A (Cont)


 








	 	 	Pro Forma	Pro Forma	Change	 
	Aggregate Cash Merger Consideration	 	7/31/17 ACMC	8/31/17 ACMC	8/31 vs 7/31	 
	(A)+(B)	$390,407,161	$390,805,947	$398,786	 
	Add back: Promote Payment	 	5,090,124	5,104,397	14,273	 
	Aggregate Consideration	 	$395,497,285	$395,910,344	$413,059	 
	Distribution Catch Up to OP Common Units (b)	 	(12,573,815)	(12,795,093)	(221,278)	 
	OP Series A Capital	 	(100,000)	(100,000)	-	 
	Series A Accrued Distributions	 	-	-	-	 
	Proceeds Available for Distribution Pro Rata	 	$382,823,470	$383,015,251	$191,781	 







 


Pro Rata Distributions: OP Common Units and OP Series B Preferred
Units


 








	 	Capital
    Contribution	Contribution
    per Unit	#
    Units	Relative
    Unit Percentages	 	 	 	 
	OP
    Common Units	$115,665,030	$10.00	11,566,503  *	42.22%	$161,618,335	$161,699,300	$80,965	 
	OP
    Series B Preferred Units	158,626,000	$10.02	15,830,938	57.78%	221,205,135	221,315,951	110,816	 
	 	$274,291,030	 	 	27,397,441	100.00%	$382,823,470	$383,015,251	$191,781	 
	 	* includes 20,000 LP
    common units held by REIT	 	 







 





	Common Cash Merger Consideration	 	 	 	 	 
	Proceeds Allocated Based on Pro Rata Units	 	 	$161,618,335	$161,699,300	$80,965
	Distribution Catch Up to OP Common Units	 	 	12,573,815	12,795,093	221,278
	Less: Promote Payment	 	 	(5,090,124)	(5,104,397)	(14,273)
	Common Cash Merger Consideration	Shares O/S	(A)	$169,102,026	$169,389,996	$287,970
	Common Cash Merger Consideration per Share	11,546,503	 	 	 	 
	 	 	 	$14.65	$14.67	$0.02
	Aggregate Cash OP Series B Preferred Unit Consideration (KKR)	 	 	 	 	 
	Proceeds Allocated Based on Pro Rata Units	 	 	$221,205,135	$221,315,951	$110,816
	Aggregate Cash OP Series B Preferred Unit Consideration	 	(B)	$221,205,135	$221,315,951	$110,816
	Preferred Merger Consideration (KKR)	 	 	 	 	 
	OP Series A Capital	 	 	100,000	100,000	-
	Preferred Merger Consideration	 	(C)	100,000	100,000	-




  


 






(a)  Based
on net cash flow projection from Advisor (estimated at $92K per month) and average debt amortization for period Aug-Dec (actual
monthly amortization per month does not vary materially) 


(b)  Through
pro forma closing date of Aug 31, 2017. Actual amount dependent on agreed to revised Estimated Closing Date. 


 




     


     


    

 


	Aggregate Cash Merger Allocation as of 7/31/17 at Million Dollar Increments with Collar	Exhibit A (Continued)


 
















	 	 	Collar Low	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	ACMC	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Collar High
	Aggregate Consideration	 	$387,104,347	 	$388,153,465	 	$389,202,582	 	$390,251,699	 	$391,300,816	 	$392,349,933	 	$393,399,050	 	$394,448,167	 	$395,497,285	 	$396,546,402	 	$397,595,519	 	$398,644,636	 	$399,693,753	 	$400,742,870	 	$401,791,987	 	$402,841,105	 	$403,890,222
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Promote Payment	 	(4,697,186)	 	($4,746,304)	 	($4,795,421)	 	($4,844,538)	 	($4,893,655)	 	($4,942,772)	 	($4,991,889)	 	($5,041,006)	 	($5,090,124)	 	($5,139,241)	 	($5,188,358)	 	($5,237,475)	 	($5,286,592)	 	($5,335,709)	 	($5,384,826)	 	($5,433,944)	 	($5,483,061)
	Aggregate Cash Merger Consideration	 	$382,407,161	 	$383,407,161	 	$384,407,161	 	$385,407,161	 	$386,407,161	 	$387,407,161	 	$388,407,161	 	$389,407,161	 	$390,407,161	 	$391,407,161	 	$392,407,161	 	$393,407,161	 	$394,407,161	 	$395,407,161	 	$396,407,161	 	$397,407,161	 	$398,407,161
	Aggregate Cash OP Series B Preferred Unit Consideration	 	$216,355,482	 	$216,961,689	 	$217,567,896	 	$218,174,102	 	$218,780,309	 	$219,386,515	 	$219,992,722	 	$220,598,928	 	$221,205,135	 	$221,811,342	 	$222,417,548	 	$223,023,755	 	$223,629,961	 	$224,236,168	 	$224,842,374	 	$225,448,581	 	$226,054,788
	Preferred Merger Consideration	 	100,000	 	100,000	 	100,000	 	100,000	 	100,000	 	100,000	 	100,000	 	100,000	 	100,000	 	100,000	 	100,000	 	100,000	 	100,000	 	100,000	 	100,000	 	100,000	 	100,000
	Common Cash Merger Consideration	 	165,951,679	 	166,345,472	 	166,739,265	 	167,133,059	 	167,526,852	 	167,920,646	 	168,314,439	 	168,708,233	 	169,102,026	 	169,495,819	 	169,889,613	 	170,283,406	 	170,677,200	 	171,070,993	 	171,464,787	 	171,858,580	 	172,252,373
	 	 	$382,407,161	 	$383,407,161	 	$384,407,161	 	$385,407,161	 	$386,407,161	 	$387,407,161	 	$388,407,161	 	$389,407,161	 	$390,407,161	 	$391,407,161	 	$392,407,161	 	$393,407,161	 	$394,407,161	 	$395,407,161	 	$396,407,161	 	$397,407,161	 	$398,407,161
	Promote Payment	 	$4,697,186	 	$4,746,304	 	$4,795,421	 	$4,844,538	 	$4,893,655	 	$4,942,772	 	$4,991,889	 	$5,041,006	 	$5,090,124	 	$5,139,241	 	$5,188,358	 	$5,237,475	 	$5,286,592	 	$5,335,709	 	$5,384,826	 	$5,433,944	 	$5,483,061


 


 




     


     


    

  


	Contingent Value Right ("CVR") Allocation (i.e. Indemnity Escrow and Representative Fund)	Exhibit B


 








	 	At	At Cash Consideration Range	 
	Assumed Maximum Indemnity Escrow / Representative Fund Amount (a)	Initial ACMC	Low	High	 
	$8,760,000	$8,760,000	$8,760,000	 







 





	Company Common Stock Incremental Share of CVR	 	 	 	 
	Pro Rata Unit Allocation Applicable to OP Common Units	42.22%	42.22%	42.22%	 
	Adjustment for Advisor Promote Payment (1-10% Advisor Promote)	x 90.00%	x 90.00%	x 90.00%	 
	Incremental Company Common Stock CVR Allocation Percentage	38.00%	38.00%	38.00%	 
	Estimated Maximum CVR Dollars Allocable to Company Common Stock	$3,328,424	$3,328,424	$3,328,424	 
	Common Cash Merger Consideration	169,102,026	165,951,679	172,252,373	 
	Estimated Potential Total Proceeds to Common Shareholders	$172,430,450	$169,280,103	$175,580,797	 
	Potential Total Per Shr	$14.93	$14.66	$15.21	 
	OP Series B Preferred Units Incremental Share of CVR	 	 	 	 
	Incremental OP Series B Preferred Units CVR Allocation Percentage	57.78%	57.78%	57.78%	 
	Estimated Maximum CVR Dollars Allocable to OP Series B Preferred Units	$5,061,751	$5,061,751	$5,061,751	 
	Advisor Incremental Share of CVR / Representative Fund	 	 	 	 
	Incremental Company Common Stock CVR Allocation Percentage	42.22%	42.22%	42.22%	 
	x Advisor Promote (10%)	x 10.00%	x 10.00%	x 10.00%	 
	Incremental Advisor Share CVR Allocation	4.22%	4.22%	4.22%	 
	Estimated Maximum CVR Dollars Allocable to Advisor	$369,825	$369,825	$369,825	 







(a) Amounts remaining in Representative Fund and Indemnity
Escrow will be distributed via CVR. Illustrative example above assumes full Indemnity Fund return (before any possible adjustment
for the Company's Bryan interest) and use of Representative Fund limited to the $240,000 administrative fee.


 


CVR Issuance


 





	 	Common Shares	CVRs	Pro Rata	 CVR per Share
	Company Common Stock	11,546,503	11,546,503	38.00%	1.000
	OP Series B Preferred Units	15,830,938	17,559,516	57.78%	1.109
	Advisor	N/A	1,282,945	4.22%	 
	 	 	30,388,964	 	 







 




     


     


    

  


	Advisory Agreement Payment	Exhibit C


 





	 	ACMC	Collar-Low	Collar-High
	Promote Payment	$5,090,124	$4,697,186	$5,483,061
	Strategic Alternative Fee	3,000,000	3,000,000	3,000,000
	Total: Advisory Agreement Payment	$8,090,124	$7,697,186	$8,483,061