Exhibit 10.1


 


LETTER AGREEMENT


 


January 16, 2015


 


Sentinel RE Investment Holdings LP


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


9 West 57th Street, Suite 4200


New York, NY 10019


Attention: Billy Butcher and General Counsel


 


Re: Issuance of Series B Convertible Preferred
Units and Change of Control


 


Ladies and Gentlemen:


 


Reference is hereby made to that certain Purchase
Agreement, as amended by that Amendment Agreement, dated February 10, 2014, that Second Amendment Agreement, dated April 8, 2014,
and that Third Amendment Agreement, dated December 22, 2014 (the “Third Amendment”) (collectively, the “Purchase
Agreement”) by and among Sentinel RE Investment Holdings LP, a Delaware limited partnership (the “Investor”),
Sentio Healthcare Properties, Inc., a corporation organized under the laws of the State of Maryland (the “Company”),
and Sentio Healthcare Properties OP, L.P., a Delaware limited partnership (the “Partnership,” and together with
the Company, the “Sentio Parties”). Capitalized terms not otherwise defined herein shall have the respective
meanings assigned to such terms in the Purchase Agreement.


 


Whereas, if the Partnership were to issue all
Series B Convertible Preferred Units, as calculated pursuant to Section 2.2 of the Purchase Agreement, for the Exercised Put Amount
related to the Construction Loan Put Exercise, the Investor would beneficially own greater than 49% of the outstanding partnership
interest of the Partnership, triggering certain “change-of-control” provisions in the Sentio Parties’ loan documents,
which, without consents from the lenders thereto, would cause the Sentio Parties to be in default under such loan documents. Although
the Sentio Parties are currently pursuing such requisite lender consents, the Sentio Parties do not anticipate receiving all required
consents prior to the Closing of the Construction Loan Put Exercise and thus wish to divide the issuance of the Series B Convertible
Preferred Units for the Construction Loan Put Exercise into two issuances.


 


In consideration of the mutual agreements and
covenants contained herein, for the reasons discussed above and for other good and value consideration, the receipt and sufficiency
of which is hereby acknowledged, the Sentio Parties and the Investor hereby agree as follows:


 




    	 



    	 



    

 


1.          Issuance
of Series B Convertible Preferred Units. Notwithstanding anything to the contrary in the Purchase Agreement, upon the Closing
of the Construction Loan Put Exercise, the Partnership will issue to the Investor that number of Series B Convertible Preferred
Units that would cause the Investor’s ownership interest in the Partnership to be 48.9% (such number of Series B Convertible
Preferred Units hereafter referred to as the “First Issuance”). The balance of the Series B Convertible Preferred
Units issuable upon the Closing of the Construction Loan Put Exercise pursuant to the Third Amendment (which amount will equal
the difference between (i) the securities calculated pursuant to Section 2.2 of the Purchase Agreement for the Construction Loan
Put Exercise (the “Full Issuance”) and (ii) the First Issuance) will then be issued upon the earlier to occur
of the following: (a) receipt of all lender consents listed on Schedule A attached hereto, (b) four months following the
Closing of the Construction Loan Put Exercise, subject to one or more extensions beyond such four-month period exercisable by the
Investor in its discretion upon ten days’ notice to the Sentio Parties, (c) upon a Liquidation Event (as defined in the Investor
Rights Agreement), (d) at the Investor’s election, a sale of a material amount of the assets of the Company or the Partnership,
(e) at the Investor’s election, a sale or issuance of any equity in the Company or the Partnership other than (X) sales by
holders of the stock of the Company in the ordinary course or (Y) issuances pursuant to the Purchase Agreement and (f) at the Investor’s
election, the listing of securities of the Company or the Partnership on a nationally recognized stock exchange. For all other
purposes under the Purchase Agreement, as well as the Investor Rights Agreement and the Partnership Agreement (each as defined
in the Purchase Agreement), including the receipt by the Investor of distributions payable on the Series B Convertible Preferred
Units under Section 9.2(d)(iii)(F) of the Partnership Agreement (which shall be accrued until they are paid to the Investor at
the time of the Full Issuance), the Investor shall be treated as having been issued the Full Issuance as of the date of the Closing;
provided that the Investor shall have only the voting rights relating to the securities the Investor actually beneficially
owns; provided further that nothing herein shall be deemed to amend or modify Sections 9.2(d)(iii)(A) and 9.2(d)(iv)(D) of the
Partnership Agreement. Notwithstanding anything to the contrary in the Purchase Agreement, the Investor Rights Agreement, the Partnership
Agreement or this Letter Agreement, in no event shall the Investor be required, without its prior written consent, to invest in
the Company in excess of $15,500,000 in the aggregate from the date of the First Issuance unless the Investor has received the
Full Issuance. The Sentio Parties and the Investor agree that upon receipt of copies of the loan documents evidencing the loan
encumbering the property known as Buffalo Crossing (the “Buffalo Crossing Loan”), Schedule A attached
hereto shall be amended to reflect whether lender consent is required with respect to the Buffalo Crossing Loan.


 


2.          Ratification.
The Purchase Agreement and this Letter Agreement shall remain in full force and effect and are hereby ratified and confirmed in
all respects.


 


3.          Governing
Law. This Letter Agreement will be governed by and construed in accordance with the internal procedural and substantive laws
of the State of New York, without giving effect to the choice of law provisions of such state that would cause the application
of the laws of any other jurisdiction.


 


4.          Counterparts.
This Letter Agreement may be executed in counterparts (including by facsimile or other electronic transmission), all of which will
be considered one and the same agreement and will become effective when one or more counterparts have been signed by each of the
parties and delivered to the other parties (including by facsimile or other electronic transmission).


 


[SIGNATURE PAGE FOLLOWS]


 




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If the foregoing meets with your approval, please
indicate your acceptance of this Letter Agreement by countersigning a copy of this agreement in the space indicated below.


 


	 	Very truly yours,
	 	 
	 	Sentio Healthcare Properties, Inc.
	 	 
	 	By:	/s/ John Mark Ramsey
	 	Name: John Mark Ramsey
	 	Title: President and Chief Executive Officer
	 	 
	 	Sentio Healthcare Properties OP, L.P.
	 	 
	 	By:	Sentio Healthcare Properties, Inc., its
	 	 	general partner
	 	 
	 	By:	/s/ John Mark Ramsey
	 	Name: John Mark Ramsey
	 	Title: President and Chief Executive Officer


 


	Agreed to and accepted:	 
	Sentinel RE Investment Holdings LP	 
	 	 
	By: 	Sentinel RE Investment Holdings GP, as general partner 	 
	 	 
	By:	/s/ Billy Butcher	 
	Name:  Billy Butcher	 
	Title:  Vice President	 
	 	 	 


 






    	 



    	 



    

 


SCHEDULE A


 


Lender Consents


 


Lender Consent Required:


 


		1.	Rome



		2.	Global/Dallas



		3.	Hedgecoxe



		4.	Caruth Haven



		5.	Oaks Bradenton



		6.	Greentree



		7.	Forestview



		8.	Floral Vale



		9.	Chattanooga



		10.	Amber Glen



		11.	Mill Creek



		12.	Hudson Creek



		13.	Sugar Creek



		14.	Buffalo Crossing



 


Lender Consent Not Required:


 


		1.	Oakleaf Portfolio



		2.	Bryan MOB



		3.	Blue Springs/Parkway



 


Conditional: Lender consent is not required provided
that the applicable condition set forth below is satisfied at the time of the Full Issuance. If the applicable condition is not
satisfied at the time of the Full Issuance, lender consent is required.


 


	Loan	 	Condition
	Standish Village 	 	Compliance with the provisions of Section 7 of Exhibit B to that certain Senior Housing Loan and Security Agreement dated December 6, 2013
	St. Andrews Village	 	Compliance with the provisions of Section 7 of Exhibit B to that certain Multifamily Loan and Security Agreement – Seniors Housing dated August 19, 2014
	Woodbury Mews	 	The satisfaction of the carve outs to a change of control scenario set forth in the definition of “Change of Control”, including, but not limited to, the “Take Out/Management Criteria”. 
	MVI, Live Oak, Wildewood, Gables-Hudson	 	The Partnership or another entity satisfactory to the administrative agent of the loan provides a carve out guaranty to such agent in favor of the lenders under the loan along with notice of such transfer prior to the Full Issuance on substantially the same form as the guaranty executed by the Company in connection with the origination of the  loan. 
	Sumter Place	 	The Partnership or another entity satisfactory to the administrative agent of the loan provides a carve out guaranty to such agent in favor of the lenders under the loan along with notice of such transfer prior to the Full Issuance on substantially the same form as the guaranty executed by the Company in connection with the origination of the loan. 
	Allentown	 	Borrower provides the applicable lender with notice of such transfer within ten (10) business days thereof.
	Court at Hilliard, Compass 1 and Compass 2 	 	Receipt of approval from HUD for each Form 2530 filed with HUD respect to (i) Investor’s potential ownership of over 50% of the shares of the Company and (ii) each member of the Board appointed by Investor.