Document:

Exhibit 10.18

 

RESTRICTED COMMON STOCK AGREEMENT

 

RESTRICTED
COMMON STOCK AGREEMENT (this “Agreement”) made as of November 6, 2009
(the “Effective
Date”), by and between STR Holdings, Inc., a Delaware corporation
(the “Company”),
and [              ]
(the “Holder”).

 

WHEREAS, STR Holdings LLC (“Old
LLC”) entered into that certain Incentive Unit Grant Agreement with the Holder
dated as of June 15, 2007 (the “Grant Agreement”), whereby Old LLC granted
incentive units of Old LLC to the Holder;

 

WHEREAS, on the date hereof,
Old LLC will enter into a corporate reorganization, whereby the unitholders of
Old LLC will become unitholders of STR Holdings (New) LLC (“New LLC”);

 

WHEREAS, pursuant to that
certain Plan of Conversion by New LLC, dated as of November 6, 2009 (the “Plan
of Conversion”), New LLC filed with the Secretary of State of the State of
Delaware a certificate of conversion converting New LLC into the Company and
automatically converting the membership interests of New LLC into shares of
common stock, par value $0.01 per share (“Common Stock”), of the Company;

 

WHEREAS, due to the
conversion of New LLC into the Company, any unvested incentive units of Old LLC
granted pursuant to the Grant Agreement and converted in the corporate
reorganization into unvested incentive units of New LLC shall be converted from
unvested incentive units of New LLC into Restricted Shares (as defined below)
subject to the terms and conditions herein;

 

WHEREAS, in consideration of
the mutual covenants contained herein, the receipt and sufficiency of which are
hereby acknowledged; and

 

WHEREAS, certain capitalized
terms used herein are defined in Section 6 hereof.

 

NOW, THEREFORE, the parties
hereto agree as follows:

 

1.             Restricted Shares.  Subject to the terms and conditions of this
Agreement and pursuant to the Plan of Conversion, the Company hereby issues to
the Holder [        ] shares of Common
Stock (the “Restricted Shares”), of which [        ]
shares of Restricted Shares shall be Time Vesting Restricted Shares (as defined
below) and [        ] shares of
Restricted Shares shall be Performance Vesting Restricted Shares (as defined
below).

 

2.             Holder Representations and
Warranties.

 

(a)           As an inducement to the
Company to issue the Restricted Shares to the Holder and as a condition
thereto, the Holder represents, acknowledges and agrees (as applicable) that
this Agreement constitutes the legal, valid and binding obligation of the
Holder, enforceable against the Holder in accordance with its terms, except to
the extent the enforceability thereof may be limited by bankruptcy laws,
insolvency laws, moratorium laws or other laws affecting creditors’ rights
generally or by general equitable principles, and the execution, delivery and
performance of this Agreement by the Holder does not and will not conflict
with, violate or cause a breach of any agreement, contract or instrument to
which the Holder is a party or any judgment, order or decree to which the
Holder is subject.

 

(b)           In addition, the Holder
represents, acknowledges and agrees (as applicable) that:

 

 

(i)         (x) the Restricted
Shares have not been registered under the Securities Act, (y) the
Restricted Shares are restricted securities under the Securities Act and (z) the
Restricted Shares may not be resold or transferred unless they are first
registered under the Securities Act or unless an exemption from such
registration is available;

 

(ii)        the Holder hereby makes the
representations and warranties set forth in Exhibit A hereto; and

 

(iii)       the Company may, but shall
not be obligated to, register or qualify the issuance, or the resale, of any of
the Restricted Shares under the Securities Act or any other applicable law.

 

3.             Vesting of Shares.

 

(a)           All Restricted Shares shall
initially be unvested and shall be subject to forfeiture to the Company
pursuant to this Agreement.  At such time
as a Restricted Share vests in accordance with this Section 3, it shall no
longer be a Restricted Share and shall not be subject to forfeiture.

 

(b)           Time Vesting. [        ]
of the Restricted Shares shall
vest based on the passage of time (“Time Vesting Restricted Shares”).

 

(i)         Vesting Schedule.  Subject to Sections 3(b)(ii) and
3(b)(iii)(1) and to the Holder’s continued employment with the Company on
each vesting date, the Time Vesting Restricted Shares shall vest in equal 1/32
installments as of the last day of each of the 32 calendar months following the
Effective Date, which for the sake of clarity means November 30, 2009.

 

(ii)        Acceleration upon Change of
Control.  Upon the occurrence of a Change
of Control, all then unvested Time Vesting Restricted Shares shall immediately
vest in full, subject to Section 3(b)(iii).

 

(iii)       Termination.

 

(1)           Upon termination of employment by the Holder for
Good Reason or by the Company without Cause, the unvested Time Vesting
Restricted Shares that would have vested had the Holder been employed for an
additional twelve (12) months from the date of termination of employment shall
vest immediately upon such date of termination. 
All remaining Time Vested Restricted Shares shall be forfeited.

 

(2)           Upon the termination of the Holder’s employment for
any reason other than pursuant to clause (iii)(1) above, all unvested Time
Vesting Restricted Shares shall be forfeited.

 

(c)           Performance Vesting. [        ]
of the Restricted Shares shall vest based on the Company attaining the
following performance criteria (“Performance Vesting Restricted Shares”).

 

(i)         Vesting Schedule.  Subject to Section 3(c)(ii) and to
the Holder’s continued employment with the Company on each vesting date, the
Performance Vesting Restricted Shares shall vest in three (3) equal
installments following the three successive Fiscal Years, beginning with the
Fiscal Year ending on December 31, 2009 (for the 2009 Fiscal Year) if the
Equity Valuation, measured as of the end of such Fiscal Year, is no less than
the Performance Target for such Fiscal Year. 
If the Performance Target for any of the first two Fiscal Years referred
to 

 

2

 

above is not attained, the Yearly Amount for
the previous unvested Fiscal Year which is not then vested (or, if the Yearly
Amount for the previous Fiscal Year has vested, then the Yearly Amount for the
prior unvested Fiscal Year) shall become vested and exercisable at the end of the
first Fiscal Year thereafter in which the Equity Valuation for such Fiscal Year
is no less than the Performance Target for such Fiscal Year.  For purposes of illustration of the previous
sentence, if the Performance Target is not achieved for the 2009 and 2010
Fiscal Years but is achieved for the 2011 Fiscal Year, in 2011, the Yearly
Amounts for both 2010 and 2011 would become vested.

 

(ii)        Acceleration upon Change of
Control.  Upon the occurrence of a
Change of Control, all then unvested Performance Vesting Restricted Shares
shall immediately vest in full, so long as the Holder is employed with the
Company on the date of the Change of Control.

 

(iii)       Termination.  Upon the termination of employment of the
Holder for any reason, the unvested Performance Vesting Restricted Shares shall
be forfeited.

 

4.             Legend.

 

(a)           Each certificate
representing Restricted Shares shall bear each of the following legends.

 

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED WITHOUT REGISTRATION UNDER
THE SECURITIES ACT OR STATE SECURITIES LAWS OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.”

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
OR EXCHANGED UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION OR EXCHANGE COMPLIES WITH THE PROVISIONS OF THE REGISTRATION
RIGHTS AGREEMENT AND THE RESTRICTED COMMON STOCK AGREEMENT, EACH AS AMENDED
FROM TIME TO TIME, BETWEEN OR AMONG THE COMPANY AND THE INVESTORS PARTY
THERETO.  IN ADDITION TO RESTRICTIONS ON
TRANSFER, THE RESTRICTED COMMON STOCK AGREEMENT PROVIDES FOR THE VESTING OF THE
SHARES ACCORDING TO THE SPECIFIC PROVISIONS OF THE RESTRICTED COMMON STOCK
AGREEMENT.  COPIES OF THE REGISTRATION
RIGHTS AGREEMENT AND THE RESTRICTED COMMON STOCK AGREEMENT ARE ON FILE WITH THE
COMPANY.”

 

(b)           The certificates shall also
bear any legend required by any applicable state securities law.

 

(c)           The certificates shall be
deposited by the Holder, together with a stock power endorsed in blank, with
the Company, to be held in escrow during any restriction period.

 

5.             Restrictions on Transfer and
Conversion.

 

(a)           The Company and the Holder
acknowledge and agree that the Restricted Shares are subject to and restricted
by this Agreement.  Once vested, the
Restricted Shares shall no longer be 

 

3

 

restricted by the terms of
this Agreement but shall be subject to the restrictions set forth in the
Registration Rights Agreement and the Securities Act.

 

(b)           The Restricted Shares shall
only be transferable to Permitted Transferees of the Holder.  Any attempt to Transfer any of the Restricted
Shares to Persons other than Permitted Transferees of the Holder shall be null
and void and have no force or effect, and the Company shall not, and shall
cause any transfer agent not to, give any effect in such entity’s share records
to such attempted Transfer.

 

(c)           The Holder acknowledges that
the transfer restrictions contained in this Agreement are reasonable and in the
best interests of the Company.  The
Holder understands that this Agreement contains forfeiture provisions in
respect of the Restricted Shares in favor of the Company or its designee upon
the Holder’s termination of employment.

 

6.             Definitions.

 

The following terms shall
have the meanings ascribed below:

 

“Affiliate” of any Person
means any Person that directly, or indirectly through one or more
intermediaries, Controls, is Controlled by or is under common Control with such
Person.

 

“Cause” means “cause” as
defined in the Holder’s employment agreement with the Company or any of its subsidiaries.

 

“Change of Control” means:

 

(i)            the sale (in one transaction
or a series of transactions) of all or substantially all of the assets of the
Company to a third party other than any of the Existing Stockholders or any of
their respective Affiliates;

 

(ii)           a sale or issuance (in one
transaction or a series of transactions) of any securities resulting in more
than 50% of the voting power of the Company being held by a “person” or “group”
(as such terms are used in the Exchange Act) that does not include any of the
Existing Stockholders or any of their respective Affiliates;

 

(iii)          a merger or consolidation of
the Company with or into another Person if following such merger or
consolidation, more than 50% of the voting power of the Company is held by a “person”
or “group” (as such terms are used in the Exchange Act) that does not include
any of the Existing Stockholders or any of their respective Affiliates; or

 

(iv)          the sale or Transfer by the
DLJMB Stockholders to a prospective purchaser (other than a Permitted
Transferee) of fifty percent (50%) or more of their original beneficial
ownership of the Company.

 

“Control” and “Controlled”
mean the possession, directly or indirectly, of the 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.

 

“Consolidated EBITDA” means
Consolidated EBITDA as defined pursuant to that certain Credit Agreement, dated
as of June 15, 2007, by and between the Company, STR Acquisition, Inc.
the Lenders (as defined therein) and Credit Suisse, Cayman Islands Branch, as
it may be amended or restated from time to time.

 

4

 

“Consolidated Net Debt”
means (i) any Indebtedness of the Company and its subsidiaries minus (ii) the
Company’s and its subsidiaries’ cash on hand and in banks, and any liquid
investments readily convertible to cash, excluding any cash held in escrow or
otherwise restricted.

 

“DLJMB Stockholders” means
DLJ Merchant Banking Partners IV, L.P., DLJMB Offshore Partners IV, L.P., DLJ
Merchant Banking Partners IV (Pacific), L.P. and MBP IV Plan Investors, L.P.,
DLJ Merchant Banking Partners IV (Co-Investments), L.P., together with any
Permitted Transferees thereof.

 

“Equity Valuation” means,
with respect to a particular Fiscal Year, (i) the product of (A) ten (10) and
(B) the Consolidated EBITDA for such Fiscal Year, less (ii) Consolidated
Net Debt as of the end of such Fiscal Year.

 

“Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.

 

“Existing Stockholders”
means each of the Stockholders other than the Management Stockholders.

 

“Fiscal Year” means the
twelve month period ending on the last day of each calendar year.

 

“Good Reason” means “good
reason” as defined in the Holder’s employment agreement with the Company or any
of its subsidiaries.

 

“Indebtedness” means,
without duplication, the sum of:  (i) all
principal and accrued (but unpaid) interest owing by the Company and its
subsidiaries for debt for borrowed money owed to any third party (specifically
excluding intercompany debt between the Company and any of its subsidiaries and
any subsidiary of the Company and another subsidiary of the Company); plus (ii) all
obligations of the Company and its subsidiaries under leases that have been
recorded as capital leases under GAAP; plus (iii) indebtedness of any
person other than the Company or any of its subsidiaries that is guaranteed by
the Company or any of its subsidiaries.

 

“Initial Public Offering”
means the underwritten initial public offering of Common Stock of the Company
pursuant to an effective registration statement filed under the Securities Act.

 

“Management Stockholder”
means any Stockholder who is an employee of the Company or any of its
subsidiaries.  In no event shall any
DLJMB Stockholder be deemed to be a Management Stockholder.

 

“Other Stockholder” means
each of the Stockholders other than the DLJMB Stockholders, the Management
Stockholders and the Whitney Stockholders.

 

“Performance Target” means
the Equity Valuation target for each Fiscal Year as set forth on Schedule I
hereto with respect to Performance Vesting Restricted Shares.

 

“Permitted Transferees”
means (i) in the case of any DLJMB Stockholder, (A) any other DLJMB
Stockholder, (B), any actual or prospective shareholder, member or general or
limited partner of any DLJMB Stockholder (a “DLJMB Partner”), and any
corporation, partnership, limited liability company, or other entity that is an
Affiliate of any DLJMB Partner (collectively, “DLJMB Affiliates”), (C) any
managing director, general partner, director, limited partner, officer or
employee of any DLJMB 

 

5

 

Stockholder or any DLJMB
Affiliate, or any spouse, lineal descendant, sibling, parent, heir, executor,
administrator, testamentary trustee, legatee or beneficiary of any of the
foregoing persons described in this clause (C) (collectively, “DLJMB
Associates”) or (D) any trust the beneficiaries of which, or any
corporation, limited liability company or partnership the stockholders, members
or general or limited partners of which, include only such DLJMB Stockholders,
DLJMB Affiliates, DLJMB Associates, their spouses or other lineal descendants;

 

(ii)           in the case of any Other
Stockholder, (A) any entity that is an Affiliate of such Other
Stockholder, (B) any actual or prospective shareholder, member or general
or limited partner of any such Other Stockholder, and any corporation, partnership,
limited liability company, or other entity that is an Affiliate of any such
Other Stockholder, (C) any spouse, lineal descendant, sibling, parent,
heir, executor, administrator, testamentary trustee, legatee or beneficiary of
such Other Stockholder, or (D) a trust that is for the exclusive benefit
of such Other Stockholder or its Permitted Transferees under clause (B) above;

 

(iii)          in the case of any Whitney
Stockholders, any other Whitney Stockholder; and

 

(iv)          in the case of any
Management Stockholder, (A) any spouse, lineal descendant, sibling,
parent, heir, executor, administrator, testamentary trustee, legatee or
beneficiary of the Holder, (B) a trust that is for the exclusive benefit
of the Holder or the transferees listed in (A) above or (C) a limited
liability company or corporation, all of the outstanding capital stock or
membership interests of which is of record and beneficially owned by the Holder
or any of those Persons in clause (A) above.

 

“Person” means any
individual or any general partnership, limited partnership, limited liability
company, corporation, joint venture, trust, business trust, cooperative,
association or other entity and, where the context so permits, the legal
representatives, successors in interest and permitted assigns of such Person.

 

“Registration Rights
Agreement” means the Registration Rights Agreement, dated as of November 6, 2009, among the
Company and certain stockholders of the Company, as amended, modified or
supplemented from time to time.

 

“Restricted Share Permitted
Transferees” means (i) any spouse, lineal descendant, sibling, parent,
heir, executor, administrator, testamentary trustee, legatee or beneficiary of
the Holder, (ii) a trust that is for the exclusive benefit of the Holder
or its Restricted Share Permitted Transferees under clause (i) above or (iii) a
limited liability company or corporation, all of the outstanding capital stock
or membership interests of which is of record and beneficially owned by the
Holder or any of those Persons in clause (i) above.

 

“Securities Act” means the Securities
Act of 1933, as amended, or any successor federal law then in force.

 

“Stockholder” means each
Person who held Common Stock of the Company prior to the Initial Public
Offering together with any Permitted Transferees thereof, so long as such
Person or Permitted Transferee thereof holds such Common Stock.

 

“Transfer” means the sale, transfer,
assignment, pledge or other disposal (whether with or without consideration and
whether voluntarily or involuntarily or by operation of law) of any Restricted
Shares.

 

6

 

“Whitney Stockholder” means
Prairie Fire Trust, Michael R. Stone, Michael R. Stone 2008 GRAT, MRS Trust,
Harrington Sound, LLC and Paul Vigano.

 

“Yearly Amount” means the
number of Performance Vesting Restricted Shares divided by three (3).

 

7.             General Provisions.

 

(a)           Notices.  Any notification required by the terms of
this Agreement shall be given in writing and shall be deemed effective upon
personal delivery or within three (3) days of deposit with the United
States Postal Service, by registered or certified mail, with postage and fees
prepaid.  A notice shall be addressed to
the Company at its principal executive office and to the Holder at the address
that he or she most recently provided to the Company.

 

(b)           Survival of Representations,
Warranties and Agreements.  All
representations, warranties and agreements contained herein shall survive
indefinitely, including following termination of this Agreement or of the
Holder’s employment with the Company.

 

(c)           Entire Agreement.  This Agreement and the Registration Rights
Agreement shall constitute the entire contract between the parties hereto with
regard to the subject matter hereof. 
They supersede any other agreements, representations or understandings
(whether oral or written and whether express or implied) which relate to the
subject matter hereof.

 

(d)           Waiver.  No waiver of any breach or condition of this
Agreement shall be deemed to be a waiver of any other or subsequent breach or
condition whether of like or different nature.

 

(e)           Successors and Assigns.  The provisions of this Agreement shall inure
to the benefit of, and be binding upon, the Company and its successors and
assigns and upon the Holder, the Holder’s assigns and the legal
representatives, heirs and legatees of the Holder’s estate, whether or not any
such person shall have become a party to this Agreement and have agreed in
writing to be joined herein and be bound by the terms hereof.

 

(f)            Choice of Law; Jurisdiction;
Waiver of Jury Trial.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF DELAWARE WITHOUT REGARD TO CONFLICTS OF LAWS.

 

SUBJECT TO THE TERMS OF THIS
AGREEMENT, THE PARTIES AGREE THAT ANY AND ALL ACTIONS ARISING UNDER OR IN
RESPECT OF THIS AGREEMENT SHALL BE LITIGATED IN THE FEDERAL OR STATE COURTS IN
DELAWARE.  BY EXECUTING AND DELIVERING
THIS AGREEMENT, EACH PARTY IRREVOCABLY SUBMITS TO THE PERSONAL JURISDICTION OF
SUCH COURTS FOR ITSELF, HIMSELF, OR HERSELF AND IN RESPECT OF ITS, HIS OR HER
PROPERTY WITH RESPECT TO SUCH ACTION. 
EACH PARTY AGREES THAT VENUE WOULD BE PROPER IN ANY OF SUCH COURTS, AND
HEREBY WAIVES ANY OBJECTION THAT ANY SUCH COURT IS AN IMPROPER OR INCONVENIENT
FORUM FOR THE RESOLUTION OF ANY SUCH ACTION.

 

EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

 

7

 

(g)           Amendment.  The Board of Directors of the Company, or the
Compensation Committee thereof, may amend or alter this Agreement and the
Restricted Shares issued hereunder at any time; provided that, no such
amendment or alteration shall be made without the consent of the Holder if such
action would materially diminish any of the rights of the Holder under this Agreement
or with respect to the Restricted Shares.

 

(h)           Employment Rights.  Neither this Agreement nor any of its
provisions is intended to confer or should be construed as conferring any
rights on the Holder to continued employment with the Company or any rights of
employment for a fixed term.  No contract
of employment, express or implied, is created hereby and nothing contained
herein shall be construed as creating a joint venture, partnership, agency or
other enterprise between the parties.

 

(i)            No Waiver; Modifications in
Writing.  No waiver of or consent to any
departure from any provision of this Agreement shall be effective unless signed
in writing by the party entitled to the benefit thereof; provided, however,
that the Company may amend, modify or terminate the terms of the Restricted
Shares in accordance with the terms in the Company’s Certificate of
Incorporation.

 

(j)            Severability. The provisions of this Agreement are severable and if any one or more
provisions are determined to be illegal or otherwise unenforceable, in whole or
in part, the remaining provisions shall nevertheless be binding and
enforceable.

 

(k)           Signature in Counterparts.  This Agreement may be signed in counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.

 

[SIGNATURE PAGE
FOLLOWS]

 

8

 

IN WITNESS WHEREOF, the
parties hereto have executed this Restricted Common Stock Agreement as of the
date first written above.

 

 

	
   

  	
  STR HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title

  
	
   

  	
   

  
	
   

  	
  HOLDER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [                ]

  

 

9

 

EXHIBIT A

 

Investment Representations and Warranties

 

The Holder hereby represents
and warrants to the Company that:

 

1.             The Restricted
Shares received by him will be held by him for investment only for his own
account, not as a nominee or agent, and not with a view to the sale or
distribution of any part thereof in violation of applicable U.S. federal or
state or foreign securities laws.  The Holder has no current
intention of selling, granting participation in or otherwise distributing the
Restricted Shares in violation of applicable U.S. federal or state or foreign
securities laws.  The Holder does not have
any contract, undertaking, agreement or arrangement with any person or entity
to sell, transfer or grant participation to such person or entity, or to any
third person or entity, with respect to any of the Restricted Shares, in each
case, in violation of applicable U.S. federal or state or foreign securities
laws.

 

2.             The Holder understands
that the Restricted Shares have not been registered under the Securities Act or
any applicable U.S. federal, state or foreign securities laws, and that the Restricted
Shares are being issued in reliance on an exemption from registration, which
exemption depends upon, among other things, the bona fide nature of the
investment intent and the accuracy of the Holder’s
representations as expressed herein.

 

3.             The Holder has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of his owning the Restricted Shares.  The Holder is a
sophisticated investor, has relied upon independent investigations made by the Holder and, to the
extent believed by the Holder to be appropriate, the Holder’s
representatives, including the Holder’s own
professional, tax and other advisors, and is making an independent decision to
invest in the Restricted Shares.  The Holder has been
furnished with such documents, materials and information that the Holder deems
necessary or appropriate concerning the terms and conditions of the
transactions contemplated by the Agreement and the Holder’s holding of
the Restricted Shares and for evaluating an investment in the Company, and the Holder has read
carefully such documents, materials and information and understands and has
evaluated the types of risks involved with holding the Restricted Shares.  The Holder has not relied
upon any representations or other information (whether oral or written) from
the Company or its stockholders, directors, officers or affiliates, or from any
other person or entity, in connection with his investment in the Restricted
Shares.  The Holder acknowledges
that the Company has not given any assurances with respect to the tax
consequences of the ownership and disposition of the Restricted Shares.

 

4.             The Holder understands
that no U.S. federal or state or foreign agency has passed upon the Restricted
Shares or upon the Company, or upon the accuracy, validity or completeness of
any documentation provided to the Holder in connection
with the transactions contemplated by the Agreement, nor has any such agency
made any finding or determination as to holding the Restricted Shares.

 

5.             The Holder understands
that there are substantial restrictions on the transferability of the
Restricted Shares and that on the date of the Agreement and for an indefinite
period thereafter there will be no public market for the Restricted Shares and,
accordingly, it may not be possible for the Holder to liquidate
his investment in case of emergency, if at all. 
In addition, the Holder understands that the
Agreement contains substantial restrictions on the 

 

A-1

 

transferability
of the Restricted Shares and provide that, in the event that the conditions
relating to the transfer of any Restricted Shares in such document have not
been satisfied, the holder shall not transfer any such Restricted Shares, and
unless otherwise specified the Company will not recognize the transfer of any
such Restricted Shares on its books and records or issue any share certificates
representing any such Restricted Shares, and any purported transfer not in
accordance with the terms of the Agreement shall be void.  As such, Holder understands
that: a restrictive legend or legends in a form to be set forth in the
Agreement will be placed on the certificates representing the Restricted
Shares; a notation will be made in the appropriate records of the Company
indicating that each of the Restricted Shares are subject to restrictions on
transfer and, if the Company should at some time in the future engage the
services of a securities transfer agent, appropriate stop-transfer instructions
will be issued to such transfer agent with respect to the Restricted Shares;
and the Holder will sell, transfer or otherwise dispose of the
Restricted Shares only in a manner consistent with the Holder’s
representations set forth herein and then only in accordance with the
Agreement.

 

6.             The Holder understands
that (i) the Restricted Shares may not be sold, transferred or otherwise
disposed of without registration under the Securities Act or an exemption
therefrom, (ii) the Restricted Shares have not been registered under the
Securities Act; (iii) the Restricted Shares must be held indefinitely and
he must continue to bear the economic risk of holding the Restricted Shares
unless such shares are subsequently registered under the Securities Act or an
exemption from such registration is available; (iv) the Holder is prepared to
bear the economic risk of holding the Restricted Shares for an indefinite
period of time; (v) it is not anticipated that there will be any public
market for the Restricted Shares; (vi) the Restricted Shares are
characterized as “restricted securities” under the U.S. federal securities
laws; and (vii) the Restricted Shares may not be sold, transferred or
otherwise disposed of except in compliance with federal, state and local law.

 

7.             The Holder understands
that an investment in the Restricted Shares is not recommended for investors
who have any need for a current return on this investment or who cannot bear
the risk of losing their entire investment. 
In that regard, the Holder understands that his
holding the Restricted Shares involves a high degree of risk of loss.  The Holder acknowledges
that: (i) he has adequate means of providing for his current needs and
possible personal contingencies and has no need for liquidity in this investment;
(ii) his commitment to investments which are not readily marketable is not
disproportionate to his net worth; and (iii) his holding the Restricted
Shares will not cause his overall financial commitments to become excessive.

 

8.             The Holder is/is not
(circle one) an “accredited investor,” as such term is defined in Rule 501
of the Securities Act.

 

 

SCHEDULE I

 

Restricted
Stock Performance Target Calculation

 

	
   

  	
   

  	
  2009

  	
   

  	
  2010

  	
   

  	
  2011

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Adjusted EBITDA

  	
   

  	
  $

  	
  66.6

  	
   

  	
  $

  	
  82.3

  	
   

  	
  $

  	
  103.5

  	
   

  
	
  EV / EBITDA Multiple

  	
   

  	
  10.0x

  	
   

  	
  10.0x

  	
   

  	
  10.0x

  	
   

  
	
  Enterprise Value

  	
   

  	
  $

  	
  665.6

  	
   

  	
  $

  	
  823.1

  	
   

  	
  $

  	
  1,034.5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Less: Net Debt on Balance Sheet

  	
   

  	
  (235.9

  	
  )

  	
  (225.9

  	
  )

  	
  (206.4

  	
  )

  
	
  Value of Common Equity

  	
   

  	
  $

  	
  429.8

  	
   

  	
  $

  	
  597.3

  	
   

  	
  $

  	
  828.1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Performance Threshold

  	
   

  	
  85.0

  	
  %

  	
  85.0

  	
  %

  	
  85.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Performance Target

  	
   

  	
  $

  	
  365.3

  	
   

  	
  $

  	
  507.7

  	
   

  	
  $

  	
  703.8Exhibit 10.9

 

Execution Copy

 

 

MEMBERSHIP INTEREST REDEMPTION AND SALE AGREEMENT

 

BETWEEN

 

Wakefield
Capital, LLC;

 

NRFC Wakefield
Holding Company, LLC and

 

NorthStar
Healthcare Investors, Inc.

 

AND

 

Chain Bridge
Capital LLC;

 

Wakefield
Capital Management, Inc.;

 

Midwest Care
Holdings LLC and

 

The Individuals
Listed on the Signature Page of this Agreement

 

Dated as of December 3, 2009

 

 

TABLE OF CONTENTS

 

ARTICLE ONE

REDEMPTION OF CHAIN BRIDGE COMMON INTERESTS

 

	
  1.1

  	
  Redemption Consideration

  	
  1

  
	
  1.2

  	
  Final Closing

  	
  6

  
	
  1.3

  	
  Amendment to the Operating Agreement

  	
  6

  
	
  1.4

  	
  Amendment to the Management Agreement

  	
  6

  
	
  1.5

  	
  Assignment of Interests in Wakefield,
  Stirling & Co

  	
  7

  
	
  1.6

  	
  Termination of Management Agreement and Sale of
  Membership Interests of Midwest Care Holdco TRS I LLC.

  	
  7

  
	
  1.7

  	
  Amendment to Notes

  	
  8

  
	
  1.8

  	
  Reduction of Principal Balance of Notes

  	
  8

  
	
  1.9

  	
  Resignation of Edward P. Nordberg, Jr. From the
  Board of Directors of the Company

  	
  9

  
	
  1.10

  	
  Dissolution of Investment Committee

  	
  9

  
	
  1.11

  	
  Election of Nordberg to the Board of Directors of
  NorthStar Healthcare

  	
  9

  
	
  1.12

  	
  Wakefield name

  	
  9

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE
  TWO

  	
   

  
	
   

  	
  CHAIN
  BRIDGE’S REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Organization; Capacity; Power

  	
  10

  
	
  2.2

  	
  Authorization of Agreements; Authority

  	
  10

  
	
  2.3

  	
  Governmental Filings and Authorizations

  	
  11

  
	
  2.4

  	
  Contravention

  	
  11

  
	
  2.5

  	
  Title to Chain Bridge Common Interests

  	
  11

  
	
  2.6

  	
  Chain Bridge Litigation

  	
  11

  
	
  2.7

  	
  Solvency

  	
  12

  
	
  2.8

  	
  Investment Intent; Adequacy of Information

  	
  12

  
	
  2.9

  	
  No Material Misstatements or Omissions

  	
  12

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE
  THREE

  	
   

  
	
   

  	
  MIDWEST
  HOLDING’S REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Organization; Capacity; Power

  	
  13

  
	
  3.2

  	
  Authorization of Agreements; Enforceability

  	
  13

  
	
  3.3

  	
  Governmental Filings and Authorizations

  	
  14

  
	
  3.4

  	
  Contravention

  	
  14

  
	
  3.5

  	
  Title to Midwest Care Interests

  	
  14

  
	
  3.6

  	
  Midwest Holdings Litigation

  	
  14

  
	
  3.7

  	
  Solvency

  	
  15

  

 

i

 

	
  3.8

  	
  Investment Intent; Adequacy of Information

  	
  15

  
	
  3.9

  	
  Financial Statements of Midwest Care

  	
  16

  
	
  3.10

  	
  No Material Misstatements or Omissions

  	
  16

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE FOUR

  	
   

  
	
   

  	
  MANAGER’S
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Organization; Capacity; Power

  	
  16

  
	
  4.2

  	
  Authorization of Agreements; Enforceability

  	
  17

  
	
  4.3

  	
  Governmental Filings and Authorizations

  	
  17

  
	
  4.4

  	
  Contravention

  	
  17

  
	
  4.5

  	
  Manager Litigation

  	
  17

  
	
  4.6

  	
  Financial Statements of the Company

  	
  18

  
	
  4.7

  	
  No Material Misstatements or Omissions

  	
  18

  
	
  4.8

  	
  Title to the Wakefield, Stirling Interests

  	
  18

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE
  FIVE

  	
   

  
	
   

  	
  COMPANY’S
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Organization; Power

  	
  19

  
	
  5.2

  	
  Authorization of Agreements; Enforceability

  	
  19

  
	
  5.3

  	
  No Contravention

  	
  19

  
	
  5.4

  	
  Company Litigation

  	
  20

  
	
  5.5

  	
  Governmental Filings and Authorizations

  	
  20

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE
  SIX

  	
   

  
	
   

  	
  NORTHSTAR’S
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Organization; Power

  	
  20

  
	
  6.2

  	
  Authorization of Agreements; Enforceability

  	
  21

  
	
  6.3

  	
  No Contravention

  	
  21

  
	
  6.4

  	
  NorthStar Litigation

  	
  21

  
	
  6.5

  	
  Governmental Filings and Authorizations

  	
  21

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE
  SEVEN

  	
   

  
	
   

  	
  NORTHSTAR
  HEALTHCARE’S REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Organization; Power

  	
  22

  
	
  7.2

  	
  Authorization of Agreements; Enforceability

  	
  22

  
	
  7.3

  	
  No Contravention

  	
  22

  
	
  7.4

  	
  NorthStar Healthcare Litigation

  	
  23

  
	
  7.5

  	
  Governmental Filings and Authorizations

  	
  23

  

 

ii

 

	
   

  	
  ARTICLE
  EIGHT

  	
   

  
	
   

  	
  INDIVIDUAL
  PARTIES’ REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Power

  	
  23

  
	
  8.2

  	
  Enforceability

  	
  24

  
	
  8.3

  	
  No Contravention

  	
  24

  
	
  8.4

  	
  Litigation

  	
  24

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE
  NINE

  	
   

  
	
   

  	
  RESTRICTIONS
  ON SOLICITATION

  	
   

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Interference with or Diversion of Business

  	
  24

  
	
  9.2

  	
  Interference with or Diversion of Employees

  	
  25

  
	
  9.3

  	
  Non-Disparagement

  	
  25

  
	
  9.4

  	
  Reasonable Restrictions; Consideration

  	
  25

  
	
  9.5

  	
  Severability

  	
  25

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE
  TEN

  	
   

  
	
   

  	
  CERTAIN
  TAX MATTERS

  	
   

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Representations and Warranties

  	
  26

  
	
  10.2

  	
  Foreign Persons

  	
  26

  
	
  10.3

  	
  Transfer Taxes

  	
  27

  
	
  10.4

  	
  Cooperation

  	
  27

  
	
  10.5

  	
  Tax Characterization

  	
  27

  
	
  10.6

  	
  Survival

  	
  27

  
	
   

  	
  ARTICLE
  ELEVEN

  	
   

  
	
   

  	
  CERTAIN
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  11.1

  	
  Third Party Consents

  	
  28

  
	
  11.2

  	
  Sale or Transfer of Property Consideration

  	
  28

  
	
  11.3

  	
  Assistance in Completing the NorthStar Healthcare
  IPO

  	
  29

  
	
  11.4

  	
  Employment Negotiations and Agreements

  	
  29

  
	
  11.5

  	
  Notice of Certain Developments

  	
  30

  
	
  11.6

  	
  Bring-down Certificates

  	
  32

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE
  TWELVE

  	
   

  
	
   

  	
  MISCELLANEOUS
  PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  12.1

  	
  Governing Law

  	
  34

  
	
  12.2

  	
  Forum for Disputes; Service Of Process

  	
  34

  
	
  12.3

  	
  Non-Disclosure of Agreement

  	
  34

  
	
  12.4

  	
  Entire Agreement and Amendment

  	
  35

  

 

iii

 

	
  12.5

  	
  Headings and Captions

  	
  35

  
	
  12.6

  	
  Interpretation and Construction

  	
  35

  
	
  12.7

  	
  Severability

  	
  36

  
	
  12.8

  	
  Counterparts and Facsimile Signatures

  	
  36

  
	
  12.9

  	
  Time of the Essence

  	
  36

  
	
  12.10

  	
  Assignment and Successors

  	
  37

  
	
  12.11

  	
  Parties in Interest

  	
  37

  
	
  12.12

  	
  Expenses

  	
  37

  
	
  12.13

  	
  Notices

  	
  37

  
	
  12.14

  	
  Withholding Taxes

  	
  38

  
	
  12.15

  	
  Waiver of Jury Trial

  	
  38

  
	
  12.16

  	
  Survival of Representations and Warranties

  	
  38

  

 

	
  Appendix A:

  	
  Definitions

  
	
   

  	
   

  
	
  Schedule A:

  	
  List of Required Filings and Authorizations

  
	
   

  	
   

  
	
  Exhibit A:

  	
  Form of Assignment Agreement for the Chain Bridge Common
  Interests

  
	
   

  	
   

  
	
  Exhibit B:

  	
  Form of Amendment No. 1 to the Operating Agreement

  
	
   

  	
   

  
	
  Exhibit C:

  	
  Form of Amendment No. 1 to the Management Agreement

  
	
   

  	
   

  
	
  Exhibit D:

  	
  Form of Assignment and Assumption Agreement for the Wakefield,
  Sterling Interests

  
	
   

  	
   

  
	
  Exhibit E:

  	
  Form of Assignment and Assumption Agreement for the Midwest Care
  Interests

  
	
   

  	
   

  
	
  Exhibit F:

  	
  Nordberg Resignation Letter

  
	
   

  	
   

  
	
  Exhibit G:

  	
  Form of Mutual Release

  
	
   

  	
   

  
	
  Exhibit H:

  	
  Form of Guarantee

  

 

iv

 

MEMBERSHIP INTEREST REDEMPTION AND SALE AGREEMENT

 

This
Membership Interest Redemption and Sale Agreement (the “Agreement”),
dated as of December 3, 2009, is between Wakefield Capital, LLC, a
Delaware limited liability company (the “Company”), NRFC Wakefield
Holding Company, LLC, a Delaware limited liability company (“NorthStar”),
NorthStar Healthcare Investors, Inc., a Maryland corporation (“NorthStar
Healthcare”), Chain Bridge Capital LLC, a Maryland
limited liability company (“Chain Bridge”), Wakefield Capital
Management, Inc., a Delaware corporation (the “Manager”), Midwest
Care Holdings LLC, a Delaware limited liability company (“Midwest Holdings”),
and the individuals listed on the signature page of this Agreement (the “Individual
Parties”).  The Company, NorthStar, NorthStar Healthcare, Chain Bridge, the
Manager, Midwest Holdings and the Individual Parties are referred to
collectively as the “Parties.”

 

Appendix A to this
Agreement contains certain definitions and cross-references to terms defined in
the body of the Agreement.

 

The Parties acknowledge the adequacy of the
consideration provided to each through their respective representations,
warranties, conditions, rights and promises contained in this Agreement.  The Parties, intending to be legally bound,
agree as provided below.

 

ARTICLE ONE

REDEMPTION OF CHAIN BRIDGE COMMON INTERESTS

 

The Company will redeem from Chain Bridge the
Chain Bridge Common Interests on the terms provided below.

 

1.1                               Redemption
Consideration.

 

(a)                                 Consideration.  The consideration for the redemption of the
Chain Bridge Common Interests consists of the following: (1) a cash
payment equal to two million dollars ($2,000,000) (the “Cash Consideration”)
payable on the date of this Agreement (the “Initial Closing Date”), plus
(2) one of the following:

 

(i)                             all of the
limited liability company interests (the “Golden Pond LLC Interests”) of
CBC-Winter Park LLC, a Delaware limited liability company (“Golden Pond”),
upon the refinancing, under Section 1.1(b)(ii)(A), or repayment,
under Section 1.1(b)(ii)(B), of the then outstanding principal
amount of any Indebtedness allocated to Golden Pond (the “GP Indebtedness”)
pursuant to Schedule 3.2(a) of that certain Loan Agreement, dated August 31,
2005, by and among General Electric Capital Corporation (“GE”) and the
other parties thereto, as amended (Loan No: 07-0004211) 

 

 

(the “GE Facility”), subject to the
Company and Chain Bridge obtaining all required Consents for such transfer,
including lender consents;

 

(ii)                          if the GP
Indebtedness has not been refinanced or repaid by Chain Bridge, or all the
required Consents for such repayment or refinancing of the GP Indebtedness as
described above are not obtained by the Company or Chain Bridge, by March 31,
2010 and no IPO Notice (as defined herein) has been delivered to Chain Bridge
by such date, the proceeds of the sale, under Section 1.1(b)(ii)(D),
(net of all Transaction Costs and the GP Indebtedness) of the Golden Pond LLC
Interests (the “Golden Pond Proceeds”);

 

(iii)                       after the
NorthStar Golden Pond Distribution Date (as defined herein), the NorthStar
Golden Pond Sale Proceeds (as defined herein); or

 

(iv)                      after a
Casualty Event, to the extent that funds exist in the Escrow Account, any and
all funds in the Escrow Account and the Golden Pond LLC Interests.

 

The consideration described in Sections
1.1(a)(i), (ii), (iii) or (iv), as applicable,
shall hereinafter be referred to as the “Property Consideration”, and
together with the Cash Consideration, the “Redemption Consideration”.

 

Pursuant to the transfer or sale of the
Golden Pond LLC Interests as described in Sections 1.1(a)(i) or (ii) (the
“Golden Pond Transaction”), (i) the Company will be obligated to
pay the sum of the Make Whole Breakage Amount (as such term is defined in the
GE Facility) and the difference between (A) the release price for the GP
Indebtedness (calculated in accordance with Section 2.10(b) of the GE
Facility) and (B) the GP Indebtedness (the “GP Release Price”) and (ii) Chain
Bridge will be obligated to pay the GP Indebtedness and any fees and expenses
required to be paid to refinance the GP Indebtedness. In the event that the
Golden Pond LLC Interests are disposed of in accordance with Section 1.1(a)(iii),
the costs, fees and expenses shall be paid as set forth in Section 1.1(b)(ii)(C).
Any Taxes due relating to the refinancing or repayment of the GP Indebtedness
shall be paid in accordance with Section 10.3.

 

After the Initial Closing
Date, the Company shall as soon as reasonably practicable establish an escrow
account (the “Escrow Account”) with Wells Fargo Bank, National
Association (the “Escrow Agent”) pursuant to which it will deposit on a
monthly basis beginning on the Initial Closing Date and continuing until the
Final Closing Date (as defined herein) the difference between (i) all
revenue earned by the Company with respect to the assets of Golden Pond and (ii) all
expenses incurred by the Company with respect to the assets of Golden Pond,
including debt service costs; provided, however,
that the Company may withdraw from the Escrow Account amounts necessary to
cover liabilities of Golden Pond, including capital expenditures and
operational shortfalls regarding the assets of Golden Pond.  If the Final Closing Date is determined
pursuant to Section 1.2(i) or (ii), the Company will cause the
Escrow Agent

 

2

 

to pay to Chain Bridge all amounts held in
the Escrow Account as of such date. If the Final Closing Date is determined
pursuant to Section 1.2(iii), the Company will cause the Escrow
Agent to pay all amounts held in the Escrow Account as of such date to the
Company.

 

During the period beginning
on the Initial Closing Date and ending on the Final Closing Date, Chain Bridge
shall indemnify and hold harmless each of the Company, NorthStar, NorthStar
Healthcare and their directors, officers, employees and Affiliates against any
and all losses, Liabilities, Claims, damages and expenses whatsoever as
incurred resulting from the operation of the business of Golden Pond; provided, however, that such indemnity obligation with
respect to a claim by GE regarding the GE Facility shall be capped at the value
of the assets of Golden Pond less the GP Indebtedness; provided,
further, however, that any claim by GE arising from any Retained
Liabilities (as such term is defined in the Agreement of Principals by and
between the Company and GE, dated January 12, 2007) shall not be capped; provided, further, however, that amounts to pay any such
indemnifiable losses, Liabilities, Claims, damages and expenses shall first be
paid out of funds held in the Escrow Account and if such amounts are not
sufficient to satisfy such indemnity obligation, then Chain Bridge will pay the
balance of such indemnity obligation.  To
the extent a third party makes any payment to the Company, NorthStar, NorthStar
Healthcare or any of their directors, officers, employees or Affiliates in
respect of losses, Liabilities, Claims, damages or expenses whatsoever as
incurred resulting from the operation of the business of Golden Pond, such
payment will reduce the amount payable hereunder by Chain Bridge.  If the Company, NorthStar, NorthStar
Healthcare or any of their directors, officers, employees or Affiliates has any
reimbursement or indemnification rights or claims that it may pursue against
third parties in respect of losses, Liabilities, Claims, damages or expenses
whatsoever as incurred resulting from the operation of the business of Golden
Pond, the indemnified party shall assign those rights or claims to Chain Bridge.  In the event that a casualty occurs to the
assets of Golden Pond and GE elects not to apply the insurance proceeds to
restoration and uses such insurance proceeds to repay the GP Indebtedness,  any excess insurance proceeds from the
applicable insurance policy(ies) shall be deposited in the Escrow Account (a “Casualty
Event”).

 

The Company shall indemnify
and hold harmless Chain Bridge and its directors, officers, employees and
Affiliates against any and all losses, Liabilities, Claims, damages and expenses
whatsoever as incurred resulting from (i) any default by the Company on
the GE Facility Indebtedness, (ii) the failure to satisfy any covenants in
that certain Membership Interest Designation of the Series A Convertible
Preferred Membership Interests, dated July 9, 2008, by and among the
Company, Inland American Real Estate Trust, a Maryland corporation (“Inland”),
NorthStar and Chain Bridge (the “Membership Interest Designation”) and (iii) the
failure to obtain any required Consents from Inland, except for any Consent
related to Section 11(e) of the Membership Interest Designation
required to be obtained by Chain Bridge pursuant to Section 1(b)(ii)(D).

 

3

 

(b)                                 Payment.

 

(i)                             Cash
Consideration. The Company will pay the Cash Consideration to a
single account designated by Chain Bridge in writing on the Initial Closing
Date.  Upon payment of the Cash
Consideration, the Company will reduce the capital account of Chain Bridge by
two million dollars ($2,000,000).

 

(ii)                          Property
Consideration.  The Company
will deliver the Property Consideration to Chain Bridge in one of the following
methods:

 

(A)                               If all required
Consents for the refinancing of the GP Indebtedness are obtained by the Company
or Chain Bridge at any time after the date hereof and prior to the NorthStar
Golden Pond Distribution Date, then within five Business Days from the receipt
of the final required Consent, the Company shall deliver to Chain Bridge
certificates representing the Golden Pond LLC Interests duly endorsed (or
accompanied by duly executed stock powers) for transfer to Chain Bridge, with
all transfer stamps required by Law affixed to them.

 

(B)                               Beginning on January 1,
2010, NorthStar, NorthStar Healthcare or the Company may deliver a notice (the “IPO
Notice”) to Chain Bridge stating the date on which either NorthStar,
NorthStar Healthcare or the Company, as the case may be, believes in good faith
will be the start date for the road show for the initial public offering of
NorthStar Healthcare (the “NorthStar Healthcare IPO”); provided, however, that the IPO Notice
shall be delivered at least 30 days prior to the anticipated start date of the
roadshow for the NorthStar Healthcare IPO (the “IPO Notice Receipt Date”).  If the GP Indebtedness has not been
refinanced by Chain Bridge, or all required Consents for the transfer of the
Golden Pond LLC Interests are not obtained by the Company or Chain Bridge, by
the IPO Notice Receipt Date, then Chain Bridge may pay to the Company (or, if
requested by the Company, directly to GE) on or before the 15th day following the IPO Notice Receipt Date, an
amount equal to the GP Indebtedness.  
Upon the payment by Chain Bridge to the Company pursuant to this Section 1.1(b)(ii)(B),
the Company shall pay the Release Price plus the Make Whole Breakage Amount to
GE as soon as practicable thereafter (the “GP Indebtedness Repayment Date”).  If Chain Bridge pays the GP Indebtedness
directly to GE as described in this Section 1.1(b)(ii)(B), the
Company shall pay to GE the Make Whole Breakage Amount and the GP Release
Price.  As soon as reasonably practicable
following GE’s release of the GE Facility Liens on Golden Pond, the Company
shall deliver to Chain Bridge certificates representing the Golden Pond LLC
Interests duly endorsed (or accompanied by duly 

 

4

 

executed stock powers) for transfer to Chain
Bridge, with all transfer stamps required by Law affixed to them.

 

(C)                               If Chain Bridge
has not paid the Company or GE, as the case may be, the amounts described in Section 1.1(b)(ii)(B) by
the 15th day after the IPO Notice Receipt Date, then
NorthStar may, at its option, contribute to the Company in cash the Release
Price plus the Make Whole Breakage Amount, less any funds held in the Escrow
Account.  On the date the Company
receives such cash contribution (the “NorthStar Golden Pond Distribution
Date”), the Company shall pay to GE the Release Price plus the Make Whole
Breakage Amount and distribute the Golden Pond LLC Interests to NorthStar.
Chain Bridge hereby agrees that it shall have no right to receive any portion
of such distribution pursuant to the Chain Bridge Common Interests.  Beginning on the NorthStar Golden Pond
Distribution Date, NorthStar shall use commercially reasonable efforts to sell
the Golden Pond LLC Interests in an arm’s length transaction with a third
party.  Within five (5) Business
Days from such date on which the Golden Pond LLC Interests have been sold by
NorthStar in accordance with provisions of this Section 1.1(b)(ii)(C),
NorthStar shall transfer the proceeds from such sale (net of all Transaction
Costs, the Release Price and the Make Whole Breakage Amount) less one million
dollars ($1,000,000) to Chain Bridge (the “NorthStar Golden Pond Sale Proceeds”).  The sale shall be completed no later than six
months after the NorthStar Golden Pond Distribution Date unless Chain Bridge
agrees to an extension of this date.  If
NorthStar elects not to take the Golden Pond LLC Interests as described above,
then the Company shall retain the Golden Pond LLC Interests by making a cash
payment to Chain Bridge equal to $4.2 million, with such payment also referred
to herein as the NorthStar Golden Pond Sale Proceeds.  The date on which this payment of $4.2
million in cash is made to Chain Bridge shall also be referred to herein as the
NorthStar Golden Pond Distribution Date. 
NorthStar shall exercise its option to take the Golden Pond LLC
Interests, or in the alternative, the Company shall make the cash payment to
Chain Bridge pursuant to this Section 1.1(b)(ii)(C), within 30 days
after the IPO Notice Receipt Date.

 

(D)                                If the GP
Indebtedness has not been refinanced or repaid by Chain Bridge or all required
Consents for the transfer of the Golden Pond LLC Interests are not obtained by
the Company or Chain Bridge by March 31, 2010 and no IPO Notice has been
delivered to Chain Bridge by such date, then during the period (the “Golden
Pond Sale Period”) beginning on April 1, 2010 and ending on the IPO
Notice Receipt Date, Chain Bridge shall have the right, and the Company shall
permit Chain Bridge, in addition to continuing to attempt to refinance or repay
the GP 

 

5

 

Indebtedness, to attempt to sell the Golden
Pond LLC Interests on the Company’s behalf in accordance with the provisions of
Section 11.2.  Within five (5) Business
Days from such date on which the Golden Pond LLC Interests have been sold in
accordance with the provisions of Section 11.2, the Company shall
distribute the Golden Pond Proceeds to a single account designated by Chain
Bridge in writing; provided, however,
that if the proposed gross proceeds from the sale of the Golden Pond LLC
Interests are less than $10,466,783.92, Chain Bridge, with the cooperation of the
Company, will obtain the consent of Inland, prior to the closing of such sale
in accordance with Section 11(e) of the Membership Interest
Designation.

 

(E)                                Promptly after
a Casualty Event, the Escrow Agent will deliver any and all funds in the Escrow
Account and the Golden Pond LLC Interests to Chain Bridge (the “Casualty
Event Date”).

 

1.2                               Final Closing.  The redemption of the Chain Bridge Common
Interests shall take place at a closing (the “Final Closing”) to be held
on either (i) the closing date of the Golden Pond Transaction, (ii) the
GP Indebtedness Repayment Date, (iii) the NorthStar Golden Pond
Distribution Date or (iv) the Casualty Event Date (the “Final Closing
Date”), either by telephone or confirmed by letter or wire as the Company
and Chain Bridge shall agree, or conducted in person, at such place as the
Company and Chain Bridge shall agree.  On
the Initial Closing Date, (i) Chain Bridge shall execute and deliver an
assignment agreement substantially in the form of Exhibit A hereto
assigning the Chain Bridge Common Interests to the Company to Bryan Cave LLP to
be held in escrow until the Escrow Account is established, at which point Bryan
Cave LLP shall release such document to the Escrow Agent, and such document
will be held in escrow in the Escrow Account and (ii) all Parties to the
Mutual Releases substantially in the form of Exhibit G hereto shall
execute and deliver such Mutual Releases to Bryan Cave LLP to be held in escrow
until the Escrow Account is established, at which point Bryan Cave LLP shall
release such documents to the Escrow Agent, and such documents will be held in
escrow in the Escrow Account. On the Final Closing Date, the assignment
agreement shall be released from the Escrow Account and delivered to the
Company.  On each of their effective
dates, the Mutual Releases shall be released from the Escrow Account and
delivered to the appropriate parties.

 

1.3                               Amendment to
the Operating Agreement. Effective on the Initial Closing Date, the
Company, NorthStar and Chain Bridge shall enter into an amendment (“Amendment
No. 1 to the Operating Agreement”) to that certain Amended and
Restated Limited Liability Company Agreement, dated as of July 9, 2008, by
and among the Company, NorthStar and Chain Bridge (as amended, the “Operating
Agreement”) substantially in the form of Exhibit B hereto.

 

1.4                               Amendment to
the Management Agreement. 
Effective on the Initial Closing Date, the Company and the Manager will
enter into an amendment to that certain Management Agreement (“Amendment No. 1
to the Management Agreement”), dated as of May 18, 2006, by 

 

6

 

and between the Company and the Manager (as amended, the “Management
Agreement”) substantially in the form of Exhibit C hereto.

 

1.5                               Assignment of Interests
in Wakefield, Stirling & Co.  On the Initial Closing Date, the Manager will
transfer to the Company all of the Manager’s limited liability company
interests (the “Wakefield, Stirling Interests”) and the Company will
accept from the Manager in Wakefield, Stirling & Co., L.L.C., a
Delaware limited liability company (“Wakefield, Stirling”), by executing
and delivering to the Company an assignment and assumption agreement
substantially in the form of Exhibit D hereto.

 

1.6                               Termination of
Management Agreement and Sale of Membership Interests of Midwest Care Holdco
TRS I LLC.

 

(a)                                 If the closing
date of the NorthStar Healthcare IPO occurs on or before March 31, 2010,
NorthStar Healthcare shall, on such closing date, issue to Midwest Holdings in
a private placement transaction that number of shares of common stock of
NorthStar Healthcare, valued at the price per share of the shares sold in the
NorthStar Healthcare IPO, with an aggregate value equal to one million dollars
($1,000,000) (the “NorthStar Healthcare Common Stock”).  If the NorthStar Healthcare IPO has not
closed on or before March 31, 2010, NorthStar Healthcare or the Company,
or any successor entity, shall make a cash payment after such date but on or
before April 7, 2010 to Midwest Holdings in an amount equal to one million
dollars ($1,000,000); provided, however, that either NorthStar Healthcare or the
Company, or any successor entity, may delay such payment until May 7, 2010
if NorthStar Healthcare is still in the process of completing the NorthStar
Healthcare IPO on April 7, 2010.

 

(b)                                 Upon the
receipt by Midwest Holdings of the consideration described in Section 1.6(a) (the
“Midwest Consideration”), the following will occur.

 

(i)                             The Company
will have the option to terminate the Management Agreement, and such
termination will not trigger the payment of the Termination Fee (as such term
is defined in the Management Agreement); and

 

(ii)                          Midwest
Holdings will transfer to the Company and the Company will accept from Midwest
Holdings, all of Midwest Holding’s membership interests (the “Midwest Care
Interests”) in Midwest Care Holdco TRS I LLC, a Delaware limited liability
company (“Midwest Care”), by executing and delivering to the Company an
assignment and assumption agreement substantially in the form of Exhibit E
hereto.

 

Notwithstanding any other provision of this
Agreement, the Management Agreement will, without the requirement of any
additional written notice to the Manager, terminate upon the closing of the
NorthStar Healthcare IPO, and the termination upon the closing of the NorthStar
Healthcare IPO or pursuant to the option described in Section 1.6(b)(i) will
not trigger payment of the Termination Fee (as such term is defined in the
Management Agreement).

 

7

 

1.7                               Amendment to
Notes.  As soon as reasonably
practicable following the Initial Closing Date, the promissory notes of each of
Donald C. Tomasso (“Tomasso”), Timothy P. O’ Brien (“O’Brien”)
and Robert A. Sweet (“Sweet”) dated as of August 31, 2006 and
issued to Chain Bridge (the “Notes”) shall be amended as of the Initial
Closing Date to reflect the following amendments:

 

(a)                                  clause (ii) in
the first paragraph of each Note shall be deleted and replaced with the
following language:  (ii) December 31,
2010 (the “Maturity Date”);

 

(b)                                 the following
sentence shall be added to the end of the first paragraph:

 

Notwithstanding any other provision of this
Note, this Note shall be cancelled and the issuer’s membership interest in
Chain Bridge Capital LLC, Midwest Care Holdings LLC and their stock in the
Manager shall be redeemed on the Chain Bridge Interests Redemption Date (as
such term is defined in the Membership Interest Redemption and Sale Agreement,
dated December 3, 2009, by and among Wakefield Capital, LLC, NRFC
Wakefield Holding Company, LLC and NorthStar Healthcare Investors, Inc.,
on the one hand, and Chain Bridge Capital LLC, Wakefield Capital Management, Inc.,
Midwest Care Holdings LLC and the individuals listed on the signature page thereto,
on the other hand); provided, however
that such redemption and cancellation shall not occur prior to January 1,
2010.

 

(c)                                  clause (c) in
the sixth paragraph of each Note shall be deleted in its entirety and replaced
with the following language: “reserved”.

 

The Pledge and Security Agreements securing
each of the Notes shall at the same time be amended to refer to the Notes, “as
subsequently amended”.

 

1.8                               Reduction of
Principal Balance of Notes.  The portion of the Redemption Consideration
and the Midwest Consideration allocable to each of Tomasso, O’Brien and Sweet
pursuant to their membership interests in Chain Bridge (except for that
allocable to Sweet’s Initial CB Interest) and Midwest Holdings, as applicable,
shall be applied to reduce the principal balance of each of their respective
Notes when such consideration is received. 
Additionally, the portion of the distribution declared by the Company in
August 2009 that is allocable to the Chain Bridge membership interests
held by each of Tomasso, O’Brien and Sweet shall be applied to reduce the
principal balance of each of their respective Notes. In order to provide
clarity as to the meaning of this Section 1.8, notwithstanding anything to
the contrary set forth herein, except for certain distributions with respect to
Sweet’s Initial CB Interest as described in Section 11.4(c) hereof,
none of Tomasso, O’Brien or Sweet shall receive any distributions after the
date hereof (regardless of when the right to such distributions may have
arisen) with respect their interests in Chain Bridge or Midwest Holdings, or
with respect to their stock in the Manager, in excess of the outstanding
amounts owed under their respective Notes, including accrued interest thereon.

 

8

 

1.9                               Resignation of
Edward P. Nordberg, Jr. From the Board of Directors of the Company.  Effective as of the Initial Closing Date,
Edward P. Nordberg, Jr. (“Nordberg”) shall resign from the board of
directors of the Company by submitting an executed resignation letter to the
board of directors of the Company substantially in the form of Exhibit F
hereto.  On the Final Closing Date, each
of Nordberg, on the one hand, and the Company, NorthStar and NorthStar
Healthcare, on the other hand, shall execute and deliver to the other a mutual
release agreement (the “Mutual Release”) substantially in the form of Exhibit G
hereto; provided, however, that
the Mutual Release shall provide that the respective indemnity obligations of
the Company, NorthStar, any successor entity to either, on the one hand, and
Nordberg, on the other hand, under the Management Agreement and the Operating
Agreement, as applicable, shall continue to apply in accordance with the terms
thereof.  The Company, NorthStar and
NorthStar Healthcare also agree to execute and deliver to each of Daniel L.
Willison Jr. (“Willison”) and Sean P. Murphy (“Murphy”) Mutual
Releases substantially in the form of Exhibit G hereto, subject to
Willison’s and Murphy’s execution and delivery of a counterpart to such Mutual
Release to the Company, NorthStar and NorthStar Healthcare.

 

1.10                        Dissolution of
Investment Committee.  Effective
as of the Initial Closing Date, the Investment Committee of the Board of
Directors of the Company will be dissolved.

 

1.11                        Election of Nordberg
to the Board of Directors of NorthStar Healthcare.  Prior to the closing of the NorthStar
Healthcare IPO, the Board of Directors of NorthStar Healthcare (the “Board”)
intends to invite Nordberg to join the Board. 
Should Nordberg accept such invitation and agree to be nominated, then
the Board, or a committee thereof, shall nominate Nordberg to the Board,
NorthStar Healthcare shall convene a meeting of the stockholders of NorthStar
Healthcare for the purpose of electing Nordberg to the Board and at such
stockholder meeting, NorthStar shall vote all of its shares of common stock of
NorthStar Healthcare in favor of electing Nordberg to the Board.

 

1.12                        Wakefield name.  On the Final Closing Date, Chain Bridge shall
be entitled to all ownership interests in, and use of, the “Wakefield” name and
the Company and Chain Bridge shall execute documentation necessary to
effectuate such transfer and ownership of all such rights.  The Company shall promptly amend its
certificate of formation to change its name after the Final Closing Date to
delete the term “Wakefield” and shall not further use the term “Wakefield”;  provided,
however, that the Company shall not be required to make any other
filings or amend or otherwise modify any agreement to which it is currently a
party to remove the name “Wakefield” from such agreement.

 

1.13                        Mutual Releases.    Upon the date that is 60 days after the
later of (i) the Final Closing Date, (ii) the termination date of the
Management Agreement or (iii) the completion of the annual audit of the
consolidated financial statements of the Company as of and for the year ended December 31,
2009, the Company, NorthStar and NorthStar Healthcare, on the one hand, and
Chain Bridge and the Manager, on the other hand, shall execute and deliver to
each other a Mutual Release substantially in the form of Exhibit G
hereto (substituting Chain Bridge and the

 

9

 

Manager for Nordberg, as applicable) with the
following additional language added to the end of Section 2 of such Mutual
Release:

 

“Notwithstanding
anything to the contrary in this Release, this Release shall not relate to any
claims, demands, suits, actions or causes of action arising from Section 16
of the Management Agreement”

 

ARTICLE
TWO

CHAIN BRIDGE’S REPRESENTATIONS AND WARRANTIES

 

Chain
Bridge represents and warrants to the Company, NorthStar and NorthStar
Healthcare as stated in this Article.

 

2.1           Organization; Capacity;
Power.

 

(a)           Chain Bridge has provided to
the Company correct and complete copies of its Organizational Documents as
currently in effect;

 

(b)           Chain Bridge is duly
organized, validly existing and in good standing under the Laws of the State of
Maryland;

 

(c)           Chain Bridge is duly
qualified, licensed or registered as a foreign Entity in each jurisdiction in
which either the ownership or use of the assets and properties owned or used by
it, or the nature of the activities conducted by it, requires such
qualification, licensure or registration; and

 

(d)           Chain Bridge has full
limited liability company power and authority to own or use the properties and
assets that it purports to own or use and to conduct its business, and to
execute, deliver and perform its obligations under this Agreement and any other
Transaction Agreement to which it is or is to become a party, and to consummate
the Contemplated Transactions.

 

2.2           Authorization of Agreements;
Authority.

 

(a)           Authorization.  Chain Bridge has duly authorized the
execution, delivery and performance of this Agreement and each other
Transaction Agreement to which Chain Bridge is or is to become a party and the
consummation of the Contemplated Transactions.

 

(b)           Enforceability.  This Agreement, assuming the due execution
and delivery of it by the Parties other than Chain Bridge, is the valid and
binding obligation of Chain Bridge, enforceable in accordance with its terms,
except as enforceability might be limited by bankruptcy, insolvency, reorganization,
moratorium and similar Laws affecting creditors’ rights 

 

10

 

generally or limitations on
the availability of equitable remedies. 
Each other Transaction Agreement to which Chain Bridge is or is to
become a party, when executed and delivered by Chain Bridge, and assuming the
due authorization, execution and delivery of that Transaction Agreement by the
other parties to that agreement, will constitute the valid and binding
obligation of Chain Bridge, enforceable against Chain Bridge in accordance with
its terms, except as enforceability might be limited by bankruptcy, insolvency,
reorganization, moratorium and similar Laws affecting creditors’ rights
generally or limitations on the availability of equitable remedies.

 

2.3           Governmental Filings and
Authorizations.  Except for
such Filings that have already been made and Authorizations that have already
been obtained, in connection with the execution and delivery of this Agreement
by Chain Bridge, or the performance by Chain Bridge of any of its obligations
in this Agreement or any other Transaction Agreement to which Chain Bridge is
or is to become a party, Chain Bridge is not required (a) to make any
Filing with any Governmental Authority, or (b) to obtain any
Authorization.

 

2.4           Contravention.  The execution and delivery by Chain Bridge of
this Agreement and each other Transaction Agreement to which Chain Bridge is or
is to become a party, the performance by Chain Bridge of its obligations under
this Agreement and the other Transaction Agreements, and the consummation of
the Contemplated Transactions, do not and will not:

 

(a)           violate any provision of its
Organizational Documents;

 

(b)           violate any Law,
Authorization or Order to which Chain Bridge or any of its respective
properties or assets is subject, or give any Governmental Authority or other
Person the right to challenge any of the Contemplated Transactions; or

 

(c)           result in the imposition or
creation of any Encumbrance upon the Chain Bridge Common Interests.

 

2.5           Title to Chain Bridge Common
Interests.  Chain
Bridge is the sole holder of record and beneficial owner of the Chain Bridge
Common Interests, free of any Encumbrance. 
Chain Bridge is not a party to any option, warrant, purchase right or
other Contract (other than this Agreement) that could require it to sell or
otherwise dispose of, or grant any interest in, any of the Chain Bridge Common
Interests.  Chain Bridge is not a party
to any voting trust, proxy or other Contract with respect to the voting of the
Chain Bridge Common Interests.  On the
Final Closing Date, the Company will acquire full legal and beneficial
ownership of all of the Chain Bridge Common Interests free of any Encumbrance
(other than Encumbrances created by or arising through the Company).

 

2.6           Chain Bridge Litigation.  No Proceeding or Order is pending and no
Claim has been made (and, to the Knowledge of Chain Bridge, no Claim,
Proceeding or Order has been threatened) against or affecting Chain Bridge (a) under
any bankruptcy or insolvency Law, (b) that seeks injunctive or other
relief in connection with this Agreement or (c) that reasonably could be
expected to adversely affect (i)  Chain Bridge’s performance under this
Agreement or 

 

11

 

any other Transaction
Agreement to which Chain Bridge or any of its Affiliates is or is to become a
party or (ii) the consummation of any of the Contemplated
Transactions.  Chain Bridge has no
Knowledge of any facts, circumstances, events or actions that could reasonably
be expected to give rise to any Claim by Chain Bridge or its principals,
members or employees against either the Company, NorthStar or NorthStar
Healthcare.

 

2.7           Solvency.  Chain Bridge is solvent for all purposes
under federal bankruptcy and applicable state fraudulent transfer and
fraudulent conveyance Laws.  Chain Bridge’s
sale of the Chain Bridge Common Interests as provided by this Agreement will
not render Chain Bridge insolvent and does not constitute a fraudulent transfer
or conveyance under such Laws.

 

2.8           Investment Intent; Adequacy
of Information.

 

(a)           Chain Bridge:

 

(i)          understands
that the Golden Pond LLC Interests have not been, and will not be, registered
under the Securities Act or under any state securities laws and is being
offered and sold in reliance upon federal and state exemptions for transactions
not involving a public offering;

 

(ii)         understands
that the Golden Pond LLC Interests will be “restricted
securities” within the meaning of the Securities Act and its related
regulations, including requirements that might impose a holding period during
which disposition of the Golden
Pond LLC Interests could be limited;

 

(iii)        is acquiring
the Golden Pond LLC Interests  solely for its
own account for investment purposes and not with a view to the distribution of
the Golden Pond LLC Interests within the meaning of Section 2(11) of the
Securities Act;

 

(iv)       is a sophisticated investor
with knowledge and experience in business and financial matters generally, as
well as with respect to the business of Golden Pond;

 

(v)        has received
certain information concerning Golden Pond and has had the opportunity to
obtain additional information as desired in order to evaluate the merits and
the risks inherent in holding the Golden
Pond LLC Interests; and

 

(vi)       is able to bear the economic
risk and lack of liquidity inherent in holding the Golden
Pond LLC Interests, and is an Accredited Investor.

 

2.9           No Material Misstatements or
Omissions.  All
information provided by Chain Bridge to NorthStar, NorthStar Healthcare and the
Company in connection with the Contemplated Transactions is, or was at the time
of receipt of such information by NorthStar, NorthStar Healthcare or the
Company, as applicable, complete and accurate in all material respects and does
not or did not contain any untrue statement of material fact or omit to state
any 

 

12

 

material fact necessary in
order to make the statements and information contained therein not misleading.

 

ARTICLE
THREE

MIDWEST HOLDING’S REPRESENTATIONS AND WARRANTIES

 

Midwest
Holdings represents and warrants to the Company, NorthStar and NorthStar
Healthcare as stated in this Article.

 

3.1           Organization; Capacity;
Power.

 

(a)           Midwest Holdings has provided
to the Company correct and complete copies of its Organizational Documents as
currently in effect;

 

(b)           Midwest Holdings is duly
organized, validly existing and in good standing under the Laws of the State of
Delaware;

 

(c)           Midwest Holdings is duly
qualified, licensed or registered as a foreign Entity in each jurisdiction in
which either the ownership or use of the assets and properties owned or used by
it, or the nature of the activities conducted by it, requires such
qualification, licensure or registration; and

 

(d)           Midwest Holdings has full
limited liability company power and authority to own or use the properties and
assets that it purports to own or use and to conduct its business, and to
execute, deliver and perform its obligations under this Agreement and any other
Transaction Agreement to which it is or is to become a party, and to consummate
the Contemplated Transactions.

 

3.2           Authorization of Agreements;
Enforceability.

 

(a)           Authorization.  Midwest Holdings has duly authorized the
execution, delivery and performance of this Agreement and each other
Transaction Agreement to which Midwest Holdings is or is to become a party and
the consummation of the Contemplated Transactions.

 

(b)           Enforceability.  This Agreement, assuming the due execution and
delivery of it by the Parties other than the Midwest Holdings, is the valid and
binding obligation of Midwest Holdings, enforceable in accordance with its
terms, except as enforceability might be limited by bankruptcy, insolvency,
reorganization, moratorium and similar Laws affecting creditors’ rights
generally or limitations on the availability of equitable remedies.  Each other Transaction Agreement to which
Midwest Holdings is or is to become a party, when executed 

 

13

 

and delivered by Midwest
Holdings, and assuming the due authorization, execution and delivery of that
Transaction Agreement by the other parties to that agreement, will constitute
the valid and binding obligation of Midwest Holdings, enforceable against
Midwest Holdings in accordance with its terms, except as enforceability might
be limited by bankruptcy, insolvency, reorganization, moratorium and similar
Laws affecting creditors’ rights generally or limitations on the availability
of equitable remedies.

 

3.3           Governmental Filings and
Authorizations.  Except as
set forth in Schedule A and for such Filings that have already been made
and Authorizations that have already been obtained, in connection with the
execution and delivery of this Agreement by Midwest Holdings, or the
performance by Midwest Holdings of any of the its obligations in this Agreement
or any other Transaction Agreement to which Midwest Holdings is or is to become
a party, Midwest Holdings is not required (a) to make any Filing with any
Governmental Authority, or (b) to obtain any Authorization.

 

3.4           Contravention.  The execution and delivery by Midwest
Holdings of this Agreement and each other Transaction Agreement to which
Midwest Holdings is or is to become a party, the performance by Midwest
Holdings of its obligations under this Agreement and the other Transaction
Agreements, and the consummation of the Contemplated Transactions, do not and
will not:

 

(a)           violate any provision of its
Organizational Documents;

 

(b)           violate any Law,
Authorization or Order to which Midwest Holdings or any of its respective
properties or assets is subject, or give any Governmental Authority or other
Person the right to challenge any of the Contemplated Transactions; or

 

(c)           result in the imposition or
creation of any Encumbrance upon the Midwest Care Interests.

 

3.5           Title to Midwest Care
Interests.  Midwest
Holdings is the sole holder of record and beneficial owner of the Midwest Care
Interests, free of any Encumbrance. 
Midwest Holdings is not a party to any option, warrant, purchase right
or other Contract (other than this Agreement) that could require it to sell or
otherwise dispose of, or grant any interest in, any of the Midwest Care
Interests.  Midwest Holdings is not a
party to any voting trust, proxy or other Contract with respect to the voting
of any Midwest Care Interests.  Upon the
Midwest Closing, the Company will acquire full legal and beneficial ownership
of all of the Midwest Care Interests free of any Encumbrance (other than Encumbrances
created by or arising through the Company).

 

3.6           Midwest Holdings Litigation.  No Proceeding or Order is pending and no
Claim has been made (and, to the Knowledge of Midwest Holdings, no Proceeding,
Order or Claim has been threatened) against or affecting Midwest Holdings (a) under
any bankruptcy or insolvency Law that (b) seeks injunctive or other relief
in connection with this Agreement or (c) reasonably could be expected to
adversely affect (i) Midwest Holding’s performance under this Agreement or
any other Transaction Agreement to which Midwest Holdings or any of its
Affiliates is or is to 

 

14

 

become a party or (ii) the
consummation of any of the Contemplated Transactions. Midwest Holdings has no Knowledge
of any facts, circumstances, events or actions that could reasonably be
expected to give rise to any Claim by Midwest Holdings or its principals,
members or employees against either the Company, NorthStar or NorthStar
Healthcare.

 

3.7           Solvency.  Midwest Holdings is solvent for all purposes
under federal bankruptcy and applicable state fraudulent transfer and
fraudulent conveyance Laws.  Midwest
Holding’s sale of the Midwest Care Interests as provided by this Agreement will
not render Midwest Holdings insolvent and does not constitute a fraudulent
transfer or conveyance under such Laws.

 

3.8           Investment Intent; Adequacy
of Information.

 

(a)           Midwest Holdings:

 

(i)          understands
that the NorthStar Healthcare Common Stock has not been, and will not be, registered
under the Securities Act or under any state securities laws and is being
offered and sold in reliance upon federal and state exemptions for transactions
not involving a public offering;

 

(ii)         understands
that the NorthStar Healthcare Common Stock will be “restricted
securities” within the meaning of the Securities Act and its related
regulations, including requirements that might impose a holding period during
which disposition of the NorthStar
Healthcare Common Stock could be limited;

 

(iii)        is acquiring
the NorthStar Healthcare Common Stock
solely for its own account for investment purposes and not with a view
to the distribution of NorthStar Healthcare Common Stock within the meaning of Section 2(11)
of the Securities Act;

 

(iv)       is a sophisticated investor
with knowledge and experience in business and financial matters generally, as
well as with respect to the business of NorthStar Healthcare;

 

(v)        has received
certain information concerning NorthStar Healthcare and has had the opportunity
to obtain additional information as desired in order to evaluate the merits and
the risks inherent in holding the North
Star Healthcare Common Stock; and

 

(vi)       is able to bear the economic
risk and lack of liquidity inherent in holding the NorthStar
Healthcare Common Stock, and is an Accredited Investor.

 

15

 

3.9           Financial Statements of
Midwest Care.

 

(a)           Midwest Holdings has
provided to the Company and NorthStar accurate and complete copies of the
unaudited consolidated financial statements of Midwest Care consisting of a
consolidated balance sheet dated as of September 30, 2009 and the
consolidated statements of income, changes in stockholders’ equity and cash
flows for the nine month period then ended, including the notes thereto (the “Midwest
Care Financial Statements”).

 

(b)           The Midwest Care Financial
Statements were prepared from the books and records of Midwest Care and its
Subsidiaries.  Transactions reflected in
the Midwest Care Financial Statements were actual and bona fide.  To the Knowledge of Midwest Holdings, the
Midwest Care Financial Statements fairly present, in all material respects, the
financial condition of Midwest Care as of September 30, 2009 and the
results of operations, changes in stockholders’ equity and cash flows of
Midwest Care for the nine month period then ended.

 

3.10         No Material Misstatements or
Omissions.  All
information provided by Midwest Holdings to NorthStar, NorthStar Healthcare and
the Company in connection with the Contemplated Transactions is, or was at the
time of receipt of such information by NorthStar, NorthStar Healthcare or the
Company, as applicable, complete and accurate in all material respects and does
not or did not contain any untrue statement of material fact or omit to state
any material fact necessary in order to make the statements and information
contained therein not misleading.

 

ARTICLE
FOUR

MANAGER’S REPRESENTATIONS AND WARRANTIES

 

Manager
represents and warrants to the Company, NorthStar and NorthStar Healthcare as
stated in this Article.

 

4.1           Organization; Capacity;
Power.

 

(a)           the Manager has provided to
the Company correct and complete copies of its Organizational Documents as
currently in effect;

 

(b)           the Manager is duly
organized, validly existing and in good standing under the Laws of the State of
Maryland;

 

(c)           the Manager is duly
qualified, licensed or registered as a foreign Entity in each jurisdiction in
which either the ownership or use of the assets and properties owned or used by
it, or the nature of the activities conducted by it, requires such
qualification, licensure or registration; and

 

16

 

(d)           Manager has full corporate
power and authority to own or use the properties and assets that it purports to
own or use and to conduct its business, and to execute, deliver and perform its
obligations under this Agreement, any Transaction Agreement to which it is or
is to become a party and to consummate the Contemplated Transactions.

 

4.2           Authorization of Agreements;
Enforceability.

 

(a)           Authorization.  The Manager has duly authorized the
execution, delivery and performance of this Agreement and each other
Transaction Agreement to which Manager is or is to become a party and the
consummation of the Contemplated Transactions.

 

(b)           Enforceability.  This Agreement, assuming the due execution
and delivery of it by the Parties other than the Manager, is the valid and
binding obligation of the Manager, enforceable in accordance with its terms,
except as enforceability might be limited by bankruptcy, insolvency,
reorganization, moratorium and similar Laws affecting creditors’ rights
generally or limitations on the availability of equitable remedies.  Each other Transaction Agreement to which the
Manager is or is to become a party, when executed and delivered by the Manager,
and assuming the due authorization, execution and delivery of that Transaction
Agreement by the other parties to that agreement, will constitute the valid and
binding obligation of the Manager, enforceable against the Manager in
accordance with its terms, except as enforceability might be limited by
bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting
creditors’ rights generally or limitations on the availability of equitable
remedies.

 

4.3           Governmental Filings and
Authorizations.  Except for
such Filings that have already been made and Authorizations that have already
been obtained, in connection with the execution and delivery of this Agreement
by the Manager, or the performance by the Manager of any of its obligations in
this Agreement and any Transaction Agreement to which it is or is to become a
party, the Manager is not required (a) to make any Filing with any
Governmental Authority, or (b) to obtain any Authorization.

 

4.4           Contravention.  The execution and delivery by the Manager of
this Agreement,  any Transaction
Agreement to which it is or is to become a party, the performance by the
Manager of its obligations under this Agreement, and any Transaction Agreement
and the consummation of the Contemplated Transactions, do not and will not:

 

(a)           violate any provision of its
Organizational Documents; or

 

(b)           violate any Law,
Authorization or Order to which it or any of its respective properties or
assets is subject, or give any Governmental Authority or other Person the right
to challenge any of the Contemplated Transactions.

 

4.5           Manager Litigation.  No Proceeding or Order is pending and no
Claim has been made (and, to the Knowledge of the Manager, no Claim, Proceeding
or Order has been threatened) against or affecting the Manager (a) under
any bankruptcy or insolvency Law, 

 

17

 

(b) that seeks
injunctive or other relief in connection with this Agreement or (c) that
reasonably could be expected to adversely affect (i) the Manager’s
performance under this Agreement or any Transaction Agreement to which the
Manager or any of its Affiliates is or is to become a party or (ii) the
consummation of any of the Contemplated Transactions. The Manager has no
Knowledge of any facts, circumstances, events or actions that could reasonably
be expected to give rise to any Claim by the Manager or its directors, officers
or employees against either the Company, NorthStar or NorthStar Healthcare.

 

4.6           Financial Statements of the
Company.

 

(a)           The Manager has provided to
the Company and NorthStar accurate and complete copies of the unaudited
consolidated financial statements of the Company consisting of a consolidated
balance sheet dated as of September 30, 2009  and the consolidated statements of income,
changes in stockholders’ equity, and cash flows for the nine month period then
ended, including the notes thereto (the “Financial Statements”).

 

(b)           The Financial Statements
were prepared from the books and records of the Company and its
Subsidiaries.  Transactions reflected in
the Financial Statements were actual and bona fide.  The Financial Statements were prepared in
accordance with GAAP and fairly present, in all material respects, the
financial condition of the Company as of September 30, 2009 and the
results of operations, changes in stockholders’ equity and cash flows of the
Company for the nine month period then ended.

 

4.7           No Material Misstatements or
Omissions.  All
information provided by the Manager to NorthStar, NorthStar Healthcare and the
Company in connection with the Contemplated Transactions is, or was at the time
of receipt of such information by NorthStar, NorthStar Healthcare or the
Company, as applicable, complete and accurate in all material respects and does
not or did not contain any untrue statement of material fact or omit to state
any material fact necessary in order to make the statements and information
contained therein not misleading.

 

4.8           Title to the Wakefield,
Stirling Interests.  The Manager
is the sole holder of record and beneficial owner of the Wakefield, Stirling
Interests, free of any Encumbrance.  The
Manager is not a party to any option, warrant, purchase right or other Contract
(other than this Agreement) that could require it to sell or otherwise dispose
of, or grant any interest in, any of the Wakefield, Stirling Interests.  The Manager is not a party to any voting
trust, proxy or other Contract with respect to the voting of the Wakefield,
Stirling Interests.  On the Initial
Closing Date, the Company will acquire full legal and beneficial ownership of
all of the Wakefield, Stirling Interests free of any Encumbrance (other than
Encumbrances created by or arising through the Company).

 

18

 

ARTICLE FIVE

COMPANY’S REPRESENTATIONS AND WARRANTIES

 

The Company represents and warrants to
Chain Bridge, the Manager and Midwest Holdings as set forth in this Article.

 

5.1           Organization;
Power.  The Company is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware.  The
Company has full limited liability company power and authority necessary to
own, lease and operate its properties and assets and to conduct its business as
currently conducted, to execute, deliver and perform its obligations under this
Agreement and each other Transaction Agreement to which the Company is or is to
become a party pursuant to this Agreement and to consummate the Contemplated
Transactions, in accordance with all requirements applicable to the Company
under its Organizational Documents and applicable Laws.

 

5.2           Authorization
of Agreements; Enforceability.

 

(a)           Authorization.  The Company has duly authorized the
execution, delivery and performance of this Agreement and each other
Transaction Agreement to which the Company is or is to become a party and the
consummation of the Contemplated Transactions.

 

(b)           Enforceability.  This Agreement, assuming the due execution
and delivery of it by the Parties other than the Company, is the valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as enforceability might be limited by bankruptcy, insolvency,
reorganization, moratorium and similar Laws affecting creditors’ rights
generally or limitations on the availability of equitable remedies.  Each other Transaction Agreement to which the
Company is or is to become a party, when executed and delivered by the Company,
and assuming the due authorization, execution and delivery of that Transaction
Agreement by the other parties to that agreement, will constitute the valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforceability might be limited by bankruptcy,
insolvency, reorganization, moratorium and similar Laws affecting creditors’
rights generally or limitations on the availability of equitable remedies.

 

5.3           No Contravention.  The Company’s execution and delivery of this
Agreement, and of each other Transaction Agreement to which the Company is or
is to become a party, the Company’s performance of its obligations under this
Agreement and the other Transaction Agreements and the consummation of the
Contemplated Transactions do not and will not:

 

(a)           violate any provision of the
Organizational Documents of the Company; or

 

19

 

(b)           violate any Law, Authorization or Order to which the
Company or any of its properties or assets is subject, or give any Governmental
Authority or other Person the right to challenge any Contemplated Transaction.

 

5.4           Company Litigation.  No Proceeding or Order is pending, and no
Claim has been made (and, to the Knowledge of the Company, no Proceeding, Order
or Claim has been threatened) against or affecting the Company (a) under
any bankruptcy or insolvency Law (b) that seeks injunctive or other relief
in connection with this Agreement, or (c) that reasonably could be
expected to adversely affect (i) the Company’s performance under this
Agreement or any other Transaction Agreement to which the Company or any of its
Affiliates is or is to become a party or (ii) the consummation of the
Contemplated Transactions.  The Company
has no knowledge of any facts, circumstances, events or actions that could
reasonably be expected to give rise to any Claim by the Company or its principals,
members or employees against either Chain Bridge, Midwest Holdings or the
Manager.

 

5.5           Governmental Filings and Authorizations.  Except as set forth in Schedule A and
such Filings that have already been made and Authorizations that have already
been obtained, in connection with the execution and delivery of this Agreement
by the Company, or the performance by the Company of any of its obligations in
this Agreement or any other Transaction Agreement to which it is or is to
become a party, the Company is not required (a) to make any Filing with
any Governmental Authority other than pursuant to Section 1.12, or (b) to
obtain any Authorization.

 

ARTICLE SIX

NORTHSTAR’S REPRESENTATIONS AND WARRANTIES

 

NorthStar
represents and warrants to Chain Bridge, the Manager and Midwest Holdings as
set forth in this Article.

 

6.1           Organization;
Power.  NorthStar is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware. 
NorthStar has full limited liability company power and authority
necessary to conduct its business as currently conducted, to execute, deliver
and perform its obligations under this Agreement and each other Transaction
Agreement to which NorthStar is or is to become a party pursuant to this
Agreement and to consummate the Contemplated Transactions, in accordance with
all requirements applicable to NorthStar under its Organizational Documents and
applicable Laws.

 

20

 

6.2           Authorization of
Agreements; Enforceability.

 

(a)           Authorization.  NorthStar has duly authorized the execution,
delivery and performance of this Agreement and each other Transaction Agreement
to which NorthStar is or is to become a party and the consummation of the
Contemplated Transactions.

 

(b)           Enforceability.  This Agreement, assuming the due execution
and delivery of it by the Parties other than NorthStar, is the valid and
binding obligation of NorthStar, enforceable in accordance with its terms,
except as enforceability might be limited by bankruptcy, insolvency,
reorganization, moratorium and similar Laws affecting creditors’ rights
generally or limitations on the availability of equitable remedies.  Each other Transaction Agreement to which
NorthStar is or is to become a party, when executed and delivered by NorthStar,
and assuming the due authorization, execution and delivery of that Transaction
Agreement by the other parties to that agreement, will constitute the valid and
binding obligation of NorthStar, enforceable against NorthStar in accordance
with its terms, except as enforceability might be limited by bankruptcy,
insolvency, reorganization, moratorium and similar Laws affecting creditors’
rights generally or limitations on the availability of equitable remedies.

 

6.3           No Contravention.  NorthStar’s execution and delivery of this
Agreement, and of each other Transaction Agreement to which NorthStar is or is
to become a party, NorthStar’s performance of its obligations under this
Agreement and the other Transaction Agreements and the consummation of the
Contemplated Transactions do not and will not:

 

(a)           violate any provision of the Organizational
Documents of NorthStar; or

 

(b)           violate any Law, Authorization or Order to which
NorthStar or any of its properties or assets is subject, or give any Governmental
Authority or other Person the right to challenge any Contemplated Transaction.

 

6.4           NorthStar Litigation.  No Proceeding or Order is pending, and no
Claim has been made (and, to the Knowledge of NorthStar, no Proceeding, Order
or Claim has been threatened) against or affecting NorthStar (a) under any
bankruptcy or insolvency Law (b) that seeks injunctive or other
relief in connection with this Agreement, or (c) that reasonably could be
expected to adversely affect (i) NorthStar’s performance under this
Agreement or any other Transaction Agreement to which NorthStar or any of its
Affiliates is or is to become a party or (ii) the consummation of the
Contemplated Transactions.  NorthStar has
no Knowledge of any facts, circumstances, events or actions that could
reasonably be expected to give rise to any Claim by NorthStar or its
principals, members or employees against Chain Bridge, Midwest Holdings or the
Manager.

 

6.5           Governmental Filings and Authorizations.  With the exception of such Filings that have
already been made and Authorizations that have already been obtained, in
connection with the execution and delivery of this Agreement by NorthStar, or
the performance by NorthStar of any of its obligations under this Agreement or
any other Transaction Agreement to which it is or 

 

21

 

is to become a party, NorthStar is not required (a) to make any
Filing with any Governmental Authority, or (b) obtain any Authorization.

 

ARTICLE SEVEN

NORTHSTAR HEALTHCARE’S REPRESENTATIONS AND WARRANTIES

 

NorthStar
Healthcare represents and warrants to Chain Bridge, the Manager and Midwest
Holdings as set forth in this Article.

 

7.1           Organization;
Power.  NorthStar Healthcare is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Maryland.  NorthStar
Healthcare has full corporate power and authority necessary to own, lease and
operate its properties and assets and to conduct its business as currently
conducted, to execute, deliver and perform its obligations under this Agreement
and each other Transaction Agreement to which NorthStar Healthcare is or is to
become a party pursuant to this Agreement and to consummate the Contemplated
Transactions, in accordance with all requirements applicable to NorthStar
Healthcare under its Organizational Documents and applicable Laws.

 

7.2           Authorization of
Agreements; Enforceability.

 

(a)           Authorization.  NorthStar Healthcare has duly authorized the
execution, delivery and performance of this Agreement and each other
Transaction Agreement to which NorthStar Healthcare is or is to become a party
and the consummation of the Contemplated Transactions.

 

(b)           Enforceability.  This Agreement, assuming the due execution
and delivery of it by the Parties other than NorthStar Healthcare, is the valid
and binding obligation of NorthStar Healthcare, enforceable in accordance with
its terms, except as enforceability might be limited by bankruptcy, insolvency,
reorganization, moratorium and similar Laws affecting creditors’ rights
generally or limitations on the availability of equitable remedies.  Each other Transaction Agreement to which
NorthStar Healthcare is or is to become a party, when executed and delivered by
NorthStar Healthcare, and assuming the due authorization, execution and
delivery of that Transaction Agreement by the other parties to that agreement,
will constitute the valid and binding obligation of NorthStar Healthcare,
enforceable against NorthStar Healthcare in accordance with its terms, except
as enforceability might be limited by bankruptcy, insolvency, reorganization,
moratorium and similar Laws affecting creditors’ rights generally or
limitations on the availability of equitable remedies.

 

7.3           No Contravention.  NorthStar Healthcare’s execution and delivery
of this Agreement, and of each other Transaction Agreement to which NorthStar
Healthcare is or is to become a party, NorthStar Healthcare’s performance of
its obligations under this Agreement and 

 

22

 

the other Transaction Agreements and the consummation of the
Contemplated Transactions do not and will not:

 

(a)           violate any provision of the Organizational
Documents of NorthStar Healthcare; or

 

(b)           violate any Law, Authorization or Order to which
NorthStar Healthcare or any of its properties or assets is subject, or give any
Governmental Authority or other Person the right to challenge any Contemplated
Transaction.

 

7.4           NorthStar Healthcare Litigation.  No Proceeding or Order is pending, and no
Claim has been made (and, to the Knowledge of NorthStar Healthcare, no
Proceeding, Order or Claim has been threatened) against or affecting NorthStar
Healthcare (a) under any bankruptcy or insolvency Law (b) that seeks
injunctive or other relief in connection with this Agreement, or (c) that
reasonably could be expected to adversely affect (i) NorthStar Healthcare’s
performance under this Agreement or any other Transaction Agreement to which
NorthStar Healthcare or any of its Affiliates is or is to become a party or (ii) the
consummation of the Contemplated Transactions. 
NorthStar Healthcare has no Knowledge of any facts, circumstances,
events or actions that could reasonably be expected to give rise to any Claim
by NorthStar Healthcare or its principals, members or employees against Chain
Bridge, the Manager or Midwest Care.

 

7.5           Governmental Filings and Authorizations.  Except for (i) any action requiring the
approval of the Board and (ii) such Filings that have already been made
and Authorizations which have already been obtained, in connection with the
execution and delivery of this Agreement by NorthStar Healthcare, or the
performance by NorthStar Healthcare of any of its obligations in this Agreement
or any other Transaction Agreement to which it is or is to become a party,
NorthStar Healthcare is not required (a) to make any Filing with any
Governmental Authority, or (b) to obtain any Authorizations.

 

ARTICLE EIGHT

INDIVIDUAL PARTIES’ REPRESENTATIONS AND WARRANTIES

 

Each
Individual Party represents and warrants to the Company, NorthStar and
NorthStar Healthcare as set forth in this Article:

 

8.1             Power.  Such Individual Party has the capacity to
execute, deliver and perform its obligations under this Agreement and each
other Transaction Agreement to which such Individual Party is or is to become a
party pursuant to this Agreement and to consummate the Contemplated
Transactions, in accordance with all requirements applicable to such Individual
Party under applicable Laws.

 

23

 

8.2           Enforceability.  This Agreement, assuming the due execution
and delivery of it by the Parties other than such Individual Party, is the
valid and binding obligation of such Individual Party, enforceable in
accordance with its terms, except as enforceability might be limited by
bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting
creditors’ rights generally or limitations on the availability of equitable
remedies.  Each other Transaction
Agreement to which such Individual Party is or is to become a party, when
executed and delivered by such Individual Party, and assuming the due
authorization, execution and delivery of that Transaction Agreement by the
other parties to that agreement, will constitute the valid and binding
obligation of such Individual Party, enforceable against such Individual Party
in accordance with its terms, except as enforceability might be limited by
bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting
creditors’ rights generally or limitations on the availability of equitable
remedies.

 

8.3           No Contravention.  Such Individual Party’s execution and
delivery of this Agreement, and of each other Transaction Agreement to which
such Individual Party is or is to become a party, such Individual Party’s
performance of its obligations under this Agreement and the other Transaction
Agreements and the consummation of the Contemplated Transactions do not and
will not violate any Law, Authorization or Order to which such Individual Party
is subject, or give any Governmental Authority or other Person the right to
challenge any Contemplated Transaction.

 

8.4           Litigation.  No Proceeding or Order is pending, and no
Claim has been made (and, to the Knowledge of such Individual Party, no
Proceeding, Order or Claim has been threatened) against or affecting such
Individual Party (a) under any bankruptcy or insolvency Law (b) that
seeks injunctive or other relief in connection with this Agreement, or (c) reasonably
could be expected to adversely affect (i) such Individual Party’s
performance under this Agreement or any other Transaction Agreement to which
such Individual Party is or is to become a party or (ii) the consummation
of the Contemplated Transactions. Such Individual Party has no Knowledge of any
facts, circumstances, events or actions that could reasonably be expected to
give rise to any Claim against the Company, NorthStar or NorthStar Healthcare.

 

ARTICLE NINE

RESTRICTIONS ON SOLICITATION

 

9.1           Interference with or Diversion of Business.  Commencing on the Initial Closing Date and
ending on the first anniversary of the effective date of the termination of the
Management Agreement (the “Restriction Period”), neither Chain Bridge,
the Manager, Midwest Holdings, any of their directors, officers, members or
Affiliates, nor any Individual Party will directly or indirectly solicit or
entice, or attempt to solicit or entice, any Person that manages or operates
the Company’s assets for the purposes of persuading such Person not to provide business
or services to or, diverting such Person’s business or services from, the
Company or any 

 

24

 

of its Affiliates or their successors;
provided, however, that this Section 9.1 shall not apply to
Strategic Properties Management, Inc.

 

9.2           Interference with or Diversion of Employees.  During the Restriction Period, neither Chain
Bridge, the Manager, Midwest Holdings, any of their directors, officers,
members or Affiliates, nor any Individual Party will directly or indirectly
interfere with, or solicit the employment or engagement of services of, any
individual serving as an employee of the Company, NorthStar or any of their
Affiliates or their successors, or attempt to induce the individual to
terminate employment; provided, however,
that this prohibition will not apply to any employee (i) that has not been
solicited by Chain Bridge, the Manager, Midwest Holdings or any of their
directors, officers, members or Affiliates or (ii) that has only been
solicited through general advertising.

 

9.3           Non-Disparagement.  During the Restriction Period, the Parties
agree that they will not take any action or make any comment which impugns,
defames, disparages, criticizes, negatively characterizes or casts in an
unfavorable light, any other Party. 
Nothing herein shall be construed to prohibit or limit a Party’s right
to communicate internally and with its counsel and auditors about another Party
for and to the extent necessary for its legitimate business purposes.

 

9.4           Reasonable Restrictions; Consideration.  Chain Bridge, the Manager, Midwest Holdings
and each Individual Party acknowledge that:

 

(a)           the term of the Restriction Period and all other
restrictions contained in this Article are reasonable and necessary to protect
the legitimate interests of the Company following the Initial Closing Date; and

 

(b)           the agreements and acknowledgments of the Parties in
this Article constitute a material inducement to the Company to enter into
this Agreement and consummate the Contemplated Transactions and that without
these provisions the Company would not have entered into this Agreement.

 

9.5           Severability.  If any restriction in this Article is
adjudicated to exceed limitations permitted by applicable Law in any
jurisdiction, then the offending restriction is reformed in that jurisdiction
to the maximum temporal, geographic, product, service or other limitation
permitted by applicable Law. The invalidity or unenforceability of any
obligation in this Article in one jurisdiction does not invalidate or
render unenforceable the obligation in any other jurisdiction.  The obligations of the Individual Parties
contained in this Article are severable and distinct obligations, and will
not be affected by the Company’s failure to comply with any of its obligations
after the Initial Closing Date under the Agreement or any other Transaction
Agreement.

 

25

 

ARTICLE TEN

CERTAIN TAX MATTERS

 

10.1         Representations and Warranties.  The Manager and Midwest Holdings (but only to
the extent related to Midwest Care and its Subsidiaries) represent and warrant
to the Company, NorthStar and NorthStar Healthcare as set forth in the Section 10.1:

 

(a)           To the Knowledge of the Manager and Midwest Holdings
(but only to the extent related to Midwest Care and its Subsidiaries): (i) the
Company, Midwest Care and their Subsidiaries have filed all Tax Returns
required to have been filed, and all information set forth in such Tax Returns
is correct and complete in all material respects, (ii) each of the
Company, Midwest Care and each of their Subsidiaries has paid all Taxes due and
payable by it, and (iii) there are no unpaid Taxes due and payable by the
Company, Midwest Care or any of their Subsidiaries or by any other Person that
are or could become an Encumbrance on any property or asset of, or otherwise
adversely affect the business, operations or financial condition of, the
Company, Midwest Care or any of their Subsidiaries.

 

(b)           Each of the Company, Midwest Care and their
Subsidiaries is in compliance in all material respects with, and the Company,
Midwest Care and each of their Subsidiaries records contain all information and
documents (including properly completed IRS Forms W-9) necessary to comply
with, all applicable Tax information reporting and Tax withholding
requirements.

 

(c)           To the Knowledge of the Manager and Midwest Holdings
(but only to the extent related to Midwest Care and its Subsidiaries), the
Financial Statements and the Midwest Care Financial Statements reflect in all
material respects, as of their dates, the Tax liabilities of the Company,
Midwest Care and their Subsidiaries, as applicable, for all periods ending on
or before such dates, and the books and records of the Company, Midwest Care
and their Subsidiaries, reflect in all material respects all liabilities for
Taxes for all periods after the date of the Financial Statements or the Midwest
Care Financial Statements, as applicable.

 

(d)           Neither the Company, Midwest Care nor any of their
Subsidiaries has granted (nor is it subject to) any currently effective waiver
of the period of limitations for the assessment or collection of any Tax.  No unpaid Tax deficiency has been asserted in
writing against or with respect to the Company, Midwest Care or any of their
Subsidiaries, and to the Knowledge of the Manager and Midwest Care, no other
unpaid tax deficiency has been asserted against or with respect to the Company,
Midwest Care or any of their Subsidiaries. 
There is no pending Proceeding, or deficiency or refund litigation, with
respect to any Taxes of the Company, Midwest Care or any of their Subsidiaries.

 

10.2         Foreign Persons.

 

(a)           Chain Bridge represents to the Company that it is
not a “foreign person”  for purposes of Section 1445
of the Code.

 

26

 

(b)           Midwest Holdings represents to the Company that is
not a “foreign person”  for purposes of Section 1445
of the Code.

 

10.3         Transfer Taxes.  The Company will pay all sales, transfer
(including real estate transfer), recording, deed, stamp, registration,
documentary, conveyancing, franchise, property, notarial, grantor or grantee
Taxes in connection with (i) the redemption of, and payment for, the Chain
Bridge Common Interests and (ii) the sale of, and payment for, the Golden
Pond LLC Interests, regardless of whether such taxes are imposed on the
Company.   Chain Bridge will pay all
sales, transfer (including real estate transfer), recording, deed, stamp,
registration, documentary, conveyancing, franchise, property, notarial, grantor
or grantee Taxes in connection with the refinancing of any Indebtedness
associated with the assets of Golden Pond, regardless of whether such taxes are
imposed on Chain Bridge.  The Company
will pay all sales, transfer (including real estate transfer), recording, deed,
stamp, registration, documentary, conveyancing, franchise, property, notarial,
grantor or grantee Taxes in connection with the sale of, and payment for, the
Midwest Care Interests, regardless of whether such Taxes are imposed on the
Company.  The Parties will provide such
documentation and take such other actions as may be necessary to minimize the
amount of any such Taxes.

 

10.4         Cooperation.  The Parties will cooperate with the each
other to the extent necessary in connection with the filing of any Tax Return
relating to the Contemplated Transactions, including the provision of
reasonably requested information relates to Taxes.

 

10.5         Tax Characterization.  The Parties agree to treat for all federal,
state, and local income tax purposes (i) the payment of the
Redemption Consideration as one or more liquidating distributions to Chain
Bridge under Section 736(b) of the Code in respect of the redemption
of the Chain Bridge Common Interests and (ii) the payment of the
consideration described in Section 1.7 as payment exchange for the
Midwest Care Interests.  Chain Bridge
shall not treat or report the cancellation of the Notes as causing Tomasso, O’Brien
or Sweet to recognize cancellation of indebtedness income for federal, state or
local income tax purposes.  Chain Bridge
agrees that, for purposes of Subchapter K of the Code, it will treat any
liabilities of the Company guaranteed by each of Tomasso, O’Brien and Sweet
pursuant to the Bottom Guarantee (as defined herein) as allocated to each such
individual, in accordance with Treasury Regulations section 1.752-2(i), until
the Final Closing Date.

 

10.6         Survival.  Notwithstanding any other provision of this
Agreement, the representation, warranties, and covenants and obligations set
forth in this Article Ten shall survive until 60 days following the
expiration of the applicable statute of limitations with respect to the
underlying Tax claim (including any valid extensions).

 

27

 

ARTICLE ELEVEN

CERTAIN COVENANTS

 

11.1         Third Party Consents.  Each of the Company, NorthStar and Chain
Bridge shall use its commercially reasonable efforts to obtain each required
Consent pursuant to Section 1.1 and any other consent that may be
required in connection with the Contemplated Transactions.  Chain Bridge shall use its commercially
reasonable efforts to refinance or repay the GP Indebtedness as soon as
reasonably practicable following the Initial Closing Date.

 

11.2         Sale or Transfer of Property Consideration.

 

(a)           Prior to the NorthStar Golden Pond Distribution
Date, without the prior written consent of Chain Bridge, the Company shall not
sell, transfer or otherwise dispose of, or pledge or otherwise encumber, any of
the Golden Pond LLC Interests.  Prior to
the Final Closing Date, Chain Bridge shall not sell, transfer or otherwise
dispose of, or pledge or otherwise encumber, any of the Chain Bridge Common
Interests or the Midwest Care Interests.

 

(b)           The Company shall be under no obligation to solicit
offers to purchase or otherwise attempt to sell the Golden Pond LLC Interests; provided, however, that during the Golden Pond Sale Period,
Chain Bridge shall have the right to, and shall be permitted by the Company to,
attempt to sell the Golden Pond LLC Interests on the Company’s behalf and in
connection therewith to (i) hire any broker reasonably acceptable to the
Company and (ii) control the process by which the Golden Pond LLC
Interests will be sold.  If Golden Pond
is sold pursuant to Section 1.1(b)(ii)(D), Chain Bridge agrees to
pay all Transaction Costs, which the Parties agree will be paid from the
proceeds of such sale and netted against the Golden Pond Proceeds before
delivery to Chain Bridge.   Upon the
receipt of an offer to purchase the Golden Pond LLC Interests that is
reasonably acceptable to Chain Bridge and the Company, if Golden Pond is sold
pursuant to Section 1.1(b)(ii)(D), the Company shall use its
commercially reasonable efforts to cooperate with Chain Bridge to effectuate
such sale, including executing an agreement for such sale on commercially
reasonable terms and distributing the Golden Pond Proceeds.

 

28

 

11.3         Assistance in Completing the NorthStar Healthcare
IPO and the Company’s and Midwest Care’s 2009 Audit and Tax Returns.  Upon the request of NorthStar Healthcare,
NorthStar or any of their Affiliates, Chain Bridge and the Manager shall use
their commercially reasonable efforts to assist NorthStar Healthcare and
NorthStar (i) in completing the NorthStar Healthcare IPO, including
providing NorthStar Healthcare, NorthStar and their Affiliates with access to
all documents and files (electronic or otherwise) and access to Tomasso, O’Brien
and Sweet and any other employees of Chain Bridge, and (ii) in completing
the tax returns for any tax year ending on or before December 31, 2009 and
the audit of the Company’s and Midwest Care’s financial statements for the year
ending December 31, 2009.  NorthStar
Healthcare and NorthStar shall reimburse Chain Bridge and the Manager for any
reasonable out-of-pocket costs and expense incurred by either in providing such
assistance.  Notwithstanding any
provision in the Management Agreement, NorthStar shall direct any action of the
Company in relation to the completion of the NorthStar Healthcare IPO.

 

11.4         Employment Negotiations and Agreements.

 

(a)           NorthStar and any of its Affiliates shall be allowed
to engage in employment negotiations, enter into employment agreements with, or
hire, each of Tomasso, O’Brien and Sweet and Chain Bridge shall not prohibit or
otherwise impede such negotiations or the entering into of such employment
agreement and shall grant any consents, waivers or releases necessary to enable
NorthStar or any of its Affiliates to enter in employment negotiations or
employment contracts with any or all of Tomasso, O’Brien or Sweet, including
the termination of any employment or other employment-related agreement between
Chain Bridge, the Manager or any of their Affiliates, on the one hand, and any
of Tomasso, O’Brien or Sweet, on the other hand, (the “Chain Bridge
Employment Agreements”) and the termination of any non-competition or
non-solicitation agreements between Chain Bridge, the Manager or any of their
Affiliates, on the one hand, and any of Tomasso, O’Brien or Sweet, on the other
hand (the “Chain Bridge Non-Competition Agreements”).  Chain Bridge, the Manager and their
Affiliates hereby release the Company, NorthStar, NorthStar Healthcare and any
of their Affiliates from any and all Claims, losses, Liabilities, damages and
expenses arising from the hiring of Tomasso, O’Brien and Sweet and the
termination of the Chain Bridge Employment Agreements and the Chain Bridge Non
Competition Agreements.

 

(b)           On the date that NorthStar or one of its Affiliates
hires Tomasso, O’Brien and Sweet, each of Chain Bridge, the Manager and their
Affiliates, on the one hand, and O’Brien, Tomasso and Sweet, on the other hand,
shall execute and deliver to the other the Mutual Release substantially in the
form of Exhibit G hereto (substituting the former for the Company,
NorthStar and NorthStar Healthcare and each of Tomasso, O’Brien and Sweet for
Nordberg as applicable, and the operating agreement of Chain Bridge for the
Operating Agreement and excluding any reference to the Management Agreement).

 

(c)           Each of Tomasso, O’Brien and Sweet may remain as
members of Chain Bridge and Midwest Holdings and stockholders of the Manager
until their interests are redeemed as follows: (a) Chain Bridge, Midwest
Holdings and the Manager shall redeem from Tomasso,

 

29

 

O’Brien and
Sweet their membership interests in Chain Bridge (excluding Sweet’s Initial CB
Interest) and Midwest Holdings, as applicable, and their stock in the Manager,
for an aggregate amount equal to one dollar ($1) plus an amount equal to any
positive balance of the respective Chain Bridge capital accounts of Tomasso, O’Brien
or Sweet (excluding, however, any positive balance in Sweet’s capital account
relating to his Initial CB Interest) after taking into account all transactions
occurring on or prior to the redemption date, (b) Chain Bridge shall redeem
Sweet’s Initial CB Interest for an amount equal to 2% of the Redemption
Consideration, as such value is agreed to by Sweet and Chain Bridge; and (c) such
redemptions shall be effected on the Final Closing Date pursuant to a
cancellation and redemption agreement the form of which is to be reasonably
acceptable to all parties; provided, however,
that if the Final Closing Date occurs prior to January 1, 2010, such redemption
and cancellation shall occur effective as of January 1, 2010, and provided, further, however that the redemption and
cancellation shall occur no later than December 31, 2010 (the “Chain Bridge
Interests Redemption Date”) .On the Chain Bridge Interests Redemption Date,
all the Notes shall be cancelled.  Each
of Tomasso, O’Brien and Sweet shall have the option to enter into the guarantee
of certain liabilities of the Company substantially in the form of Exhibit H
hereto (the “Bottom Guarantee”) on the Initial Closing Date.

 

(d)                                 If
NorthStar or any of its Affiliates enters into an employment agreement with
Tomasso pursuant to Section 11.4(a), such employment agreement shall not
prohibit Tomasso from serving as a member of the board of directors or a
similar governing body of Chain Bridge or any other Entity controlled by
Nordberg.

 

(e)                                  Beginning
on the effective date of the earlier of (A) the termination of the consulting
arrangement between Tomasso and the Manager or (B) the termination of the
employment of either O’Brien or Sweet with the Manager until the later of (A) March
31, 2010 or (B) the closing date of the NorthStar Healthcare IPO, Tomasso, O’Brien
and Sweet shall have the right to use their current office space and maintain
all records and personal effects and shall have access to Chain Bridge’s
computer hardware and software and telephone systems to conduct business on
behalf of NorthStar, NorthStar Healthcare and the Company.

 

11.5                           Notice
of Certain Developments.

 

(a)                                  Notice
of Events.  Each of Chain Bridge, the
Manager, Midwest Holdings and the Individual Parties will give to the Company,
NorthStar and NorthStar Healthcare prompt written notice when either Chain
Bridge, the Manager, Midwest Holdings or any Individual Party obtains Knowledge
that a representation and warranty made by Chain Bridge, the Manager, Midwest
Holdings or any Individual Party, as the case may be, in this Agreement was not
true when made, or obtains Knowledge of any of the following:

 

(i)                             the occurrence of any
event or the existence of any circumstance that would be reasonably likely to
cause any representation of Chain Bridge, the Manager, Midwest Holdings or any
Individual Party, as the case may be, contained in this Agreement to be
inaccurate or warranty to be breached if such 

 

30

 

representation were made, or the warranty were effective, at the time
of such event or circumstance;

 

(ii)                          the breach of any obligation
of Chain Bridge, the Manager, Midwest Holdings or any Individual Party, as the
case may be, in this Agreement;

 

(iii)                       the receipt by any of Chain
Bridge, the Manager, Midwest Holdings or any Individual Party of a notice or
other communication from a Person alleging that the Consent or Authorization of
that Person is or may be required in connection with this Agreement or any of
the Contemplated Transactions;

 

(iv)                      the receipt by any of Chain
Bridge, the Manager, Midwest Holdings or any Individual Party of a notice or
other communication from any Governmental Authority in connection with this
Agreement or any of the Contemplated Transactions, or concerning a violation of
Law or of any Authorization or Order relevant to this Agreement or to any
Contemplated Transaction;

 

(v)                         the initiation or threat of
initiation of any Proceeding by any Person that, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to this
Agreement in order for each of those representations and warranties to be
accurate; or

 

(vi)                      the occurrence of any Material
Adverse Change or any event or circumstance that along or in combination with
other events or circumstances, could result in a Material Adverse Change.

 

(b)                                 Notice
of Events.  Each of the Company,
NorthStar and NorthStar Healthcare will give to Chain Bridge, the Manager and
the Individual Parties prompt written notice when any of the Company, NorthStar
or NorthStar Healthcare obtains Knowledge that a representation and warranty
made by the Company, NorthStar or NorthStar Healthcare, as the case may be, in
this Agreement was not true when made, or obtains Knowledge of any of the
following:

 

(i)                             the occurrence of any
event or the existence of any circumstance that would be reasonably likely to
cause any representation of the Company, NorthStar or NorthStar Healthcare, as
the case may be, contained in this Agreement to be inaccurate or warranty to be
breached if such representation were made, or the warranty were effective, at
the time of such event or circumstance;

 

(ii)                          the breach of any obligation
of the Company, NorthStar or NorthStar Healthcare, as the case may be, in this
Agreement;

 

(iii)                       the receipt by any of the
Company, NorthStar or NorthStar Healthcare of a notice or other communication
from a Person alleging that the Consent 

 

31

 

or Authorization of that Person is or may be required in connection
with this Agreement or any of the Contemplated Transactions;

 

(iv)                      the receipt by any of the
Company, NorthStar or NorthStar Healthcare of a notice or other communication
from any Governmental Authority in connection with this Agreement or any of the
Contemplated Transactions, or concerning a violation of Law or of any
Authorization or Order relevant to this Agreement or to any Contemplated
Transaction; or

 

(v)                         the initiation or threat of
initiation of any Proceeding by any Person that, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to this
Agreement in order for each of those representations and warranties to be
accurate.

 

11.6                           Bring-down
Certificates.

 

(a)                                  Upon
the receipt by NorthStar Healthcare of the Midwest Care Interests described in Section
1.6(b) (the “Midwest Care Interest Receipt Date”), (i) each of the
Manager and Midwest Holdings shall deliver to the Company, NorthStar and NorthStar
Healthcare a certificate of its Chief Executive Officer and Chief Financial
Officer, dated as of the Midwest Care Interest Receipt Date, as to the accuracy
of the representations and warranties of each of the Manager and Midwest
Holdings set forth in this Agreement and as to the performance by each of the
Manager and Midwest Holdings of all of its obligations hereunder to be
performed on or prior to the Midwest Care Interest Receipt Date, and (ii) each
of the Company, NorthStar and NorthStar Healthcare shall deliver to the Manager
and Midwest Holdings a certificate of its Chief Executive Officer and Chief
Financial Officer, dated as of the Midwest Care Interest Receipt Date, as to
the accuracy of the representations and warranties of each of the Company,
NorthStar and NorthStar Healthcare set forth in this Agreement and as to the
performance by each of the Company, NorthStar and NorthStar Healthcare of all
of its obligations hereunder to be performed on or prior to the Midwest Care
Interest Receipt Date.

 

(b)                                 On
the Midwest Care Interest Receipt Date (i) each Individual Party shall deliver
to the Company, NorthStar and NorthStar Healthcare a certificate signed by such
Individual Party, dated as of the Midwest Care Interest Receipt Date, as to the
accuracy of the representations and warranties of such Individual Party set
forth in this Agreement and as to the performance by of such Individual Party
of all of its obligations hereunder to be performed on or prior to the Midwest
Care Interest Receipt Date, and (ii) each of the Company, NorthStar and
NorthStar Healthcare shall deliver to the Individual Parties a certificate of
its Chief Executive Officer and Chief Financial Officer, dated as of the
Midwest Care Interest Receipt Date, as to the accuracy of the representations
and warranties of each of the Company, NorthStar and NorthStar Healthcare set
forth in this Agreement and as to the performance by each of the Company,
NorthStar and NorthStar Healthcare of all of its obligations hereunder to be
performed on or prior to the Midwest Care Interest Receipt Date.

 

32

 

(c)                                  
Upon the closing date of the Golden Pond Transaction as described in Section 1.1(a)
(the “Golden Pond Transaction Closing Date”), (i) each of the Manager
and Chain Bridge shall deliver to the Company, NorthStar and NorthStar
Healthcare a certificate of its Chief Executive Officer and Chief Financial
Officer, dated as of the Golden Pond Transaction Closing Date, as to the
accuracy of the representations and warranties of each of the Manager and Chain
Bridge set forth in this Agreement and as to the performance by each of the
Manager and Chain Bridge of all of its obligations hereunder to be performed on
or prior to the Golden Pond Transaction Closing Date, and (ii) each of the
Company, NorthStar and NorthStar Healthcare shall deliver to the Manager and
Chain Bridge a certificate of its Chief Executive Officer and Chief Financial
Officer, dated as of the Golden Pond Transaction Closing Date, as to the
accuracy of the representations and warranties of each of the Company,
NorthStar and NorthStar Healthcare set forth in this Agreement and as to the
performance by each of the Company, NorthStar and NorthStar Healthcare of all
of its obligations hereunder to be performed on or prior to the Golden Pond
Transaction Closing Date.

 

(d)                                 On
the GP Indebtedness Repayment Date, (i) each of the Manager and Chain Bridge
shall deliver to the Company, NorthStar and NorthStar Healthcare a certificate
of its Chief Executive Officer and Chief Financial Officer, dated as of the GP
Indebtedness Repayment Date, as to the accuracy of the representations and
warranties of each of the Manager and Chain Bridge set forth in this Agreement
and as to the performance by each of the Manager and Chain Bridge of all of its
obligations hereunder to be performed on or prior to the GP Indebtedness
Repayment Date, and (ii) each of the Company, NorthStar and NorthStar
Healthcare shall deliver to the Manager and Chain Bridge a certificate of its
Chief Executive Officer and Chief Financial Officer, dated as of the GP
Indebtedness Repayment Date, as to the accuracy of the representations and
warranties of each of the Company, NorthStar and NorthStar Healthcare set forth
in this Agreement and as to the performance by each of the Company, NorthStar
and NorthStar Healthcare of all of its obligations hereunder to be performed on
or prior to the GP Indebtedness Repayment Date.

 

(e)                                  On
the NorthStar Golden Pond Distribution Date and the Casualty Event Date, (i) each
of the Manager and Chain Bridge shall deliver to the Company, NorthStar and
NorthStar Healthcare a certificate of its Chief Executive Officer and Chief
Financial Officer, dated as of the NorthStar Golden Pond Distribution Date, as
to the accuracy of the representations and warranties of each of the Manager
and Chain Bridge set forth in this Agreement and as to the performance by each
of the Manager and Chain Bridge of all of its obligations hereunder to be
performed on or prior to the NorthStar Golden Pond Distribution Date and the
Casualty Event Date and (ii) each of the Company, NorthStar and NorthStar
Healthcare shall deliver to the Manager and Chain Bridge a certificate of its
Chief Executive Officer and Chief Financial Officer, dated as of the NorthStar
Golden Pond Distribution Date and the Casualty Event Date, as to the accuracy
of the representations and warranties of each of the Company, NorthStar and
NorthStar Healthcare set forth in this Agreement and as to the performance by
each of the Company, NorthStar and NorthStar Healthcare of all of its
obligations hereunder to be performed on or prior to the NorthStar Golden Pond
Distribution Date and the Casualty Event Date.

 

33

 

ARTICLE TWELVE

 

MISCELLANEOUS
PROVISIONS

 

12.1                           Governing
Law.  This Agreement, the Transaction
Agreements and the Contemplated Transactions, and all disputes between any of
the Parties under or relating to this Agreement, the Transaction Agreements or
the circumstances of their negotiation and execution, whether a Party seeks
relief in equity or under contract, tort, statute or otherwise, are to be
governed by and determined under the laws of the State of New York, without
reference to principles of conflict of laws, or any successor provision.

 

12.2                           Forum
for Disputes; Service Of Process.

 

(a)                                  Exclusive
Forum.  Any Proceeding a Party brings
under or relating to this Agreement, any Transaction Agreement or any
Contemplated Transaction, including the rights, duties or liabilities of the
Parties directly or indirectly arising from or relating to this Agreement, the
Transaction Agreements or the circumstances of their negotiation and execution,
whether the claim arises under contract, tort, statute or otherwise (a “Subject
Claim”) must be brought only before any federal court sitting in the
Borough of Manhattan of the City of New York, unless that court does not have
jurisdiction over the Subject Claim, in which case the Proceeding must be
brought in any New York state court sitting in that Borough (the “Designated
Forum”).

 

(b)                                 Personal
Jurisdiction.  Each Party (i) irrevocably
submits to the personal jurisdiction of any state or federal court sitting in
the State of New York, as well as to the jurisdiction of all courts to which an
appeal may be taken from such courts, with respect to all Subject Claims, (ii) irrevocably
waives and will not assert any right to have a Subject Claim dismissed or
transferred because of the inconvenience of the forum, and (iii) will not deny
or challenge that the courts identified in this Section 12.2 have personal
jurisdiction over the Party with respect to a Subject Claim, or that the Party’s
property is exempt or immune from attachment or execution.

 

(c)                                  Service.  Process in any Proceeding involving a Subject
Claim may be served on a Party anywhere in the world.  To the fullest extent permitted by applicable
Law, service of process may be made on a Party by prepaid U.S. certified mail
addressed to the Party at its effective address under Section 12.13, and a
certified mailing receipt validated by the United States Postal Service will
constitute conclusive evidence of valid service.  To the fullest extent permitted by applicable
Law, service made pursuant to this Section 12.2(c) will have the same legal
force and effect as if process was served upon such Party personally within the
State of New York.

 

12.3                           Non-Disclosure
of Agreement.  The Parties agree to
keep any and all matters relating to this Agreement, including its existence,
terms and the negotiations and circumstances which led to this Agreement,
confidential such that they will not disclose such matters to any person or
Entity at any time; provided, however,
that any Party may disclose such matters to (i) any of its officers, directors,
partners, owners, agents, auditors, representatives and employees 

 

34

 

(and their
respective advisors), (ii) any prospective purchaser of any Party’s (except an
Individual Party’s) business in order to comply with such Parties disclosure
obligations to or due diligence requests by any prospective purchaser of its
business, (iii) through press releases or filings with the Securities and
Exchange Commission in order to comply with its public company reporting and disclosure
obligations (including, without limitation, any filings in connection with the
NorthStar Healthcare IPO), (iv) any party to the extent required by Law (v) to
any party as may be reasonably necessary in connection with obtaining consents
required to consummate the Contemplated Transactions; and (vi) to any party as
may be reasonably necessary in connection with efforts by Chain Bridge, the
Manager and their Affiliates to raise capital for continuing operations.

 

12.4                           Entire
Agreement and Amendment.

 

(a)                                  Prior
Agreements.  This Agreement
(including its exhibits, appendices and schedules), and the other documents
delivered pursuant to this Agreement (including the other Transaction
Agreements) constitute a complete and exclusive statement of the agreement
between the Parties with respect to its subject matter, and supersede all other
prior agreements, arrangements or understandings by or between the Parties,
written or oral, express or implied, with respect to the subject matter of this
Agreement.

 

(b)                                 Amendments.  This Agreement may not be amended except by a
written agreement executed by all Parties that by its terms is specifically
identified as an amendment.

 

12.5                           Headings
and Captions.  The headings and
captions used in this Agreement are for convenience only.  They do not constitute a part of this
Agreement and are not to be given effect in the construction or interpretation
of this Agreement.  They are not deemed
to limit, characterize or in any way affect any provision of this Agreement,
and all provisions of this Agreement will be enforced and construed as if no
heading or caption had been used.

 

12.6                           Interpretation
and Construction.

 

(a)                                  Independent
Provisions.  Each of the provisions
of this Agreement is independent of all other provisions, and the provisions of
one should not be read to limit any other, except where a provision expressly
states that it is the exclusive provision as to its subject matter.

 

(b)                                 Usages.

 

(i)                             All accounting terms used
in this Agreement will have the meanings ascribed to them under GAAP unless
otherwise provided.

 

(ii)                          Whenever the term “include”
or “including” is used in this Agreement in connection with a listing of items,
that listing is illustrative only and is not a limitation on the general scope
of the classification, or as an exclusive listing of the items within the
general scope.

 

35

 

(iii)                       The terms “hereof,” “herein” and
“hereunder” and terms of similar import will refer to this Agreement as a whole
and not to any particular provision of this Agreement.

 

(iv)                      Article, section, clause,
subsection, exhibit, appendix and schedule references contained in this
Agreement are references to articles, sections, clauses, subsections, exhibits,
appendices and schedules of or to this Agreement, unless otherwise specified.

 

(v)                         Each defined term used in this
Agreement has a comparable meaning when used in its plural or singular
form.  Each gender-specific term used in
this Agreement has a comparable meaning whether used in a masculine, feminine
or gender-neutral form.

 

(vi)                      Any amount stated in this
Agreement in “Dollars” or by reference to the “$” symbol means United States
dollars.

 

(vii)                   A reference to “U. S.” or “United
States” means the United States of America.

 

(c)                                  Joint
Preparation; Interpretation.  Each
Party acknowledges having been represented and advised by independent counsel
of its choice throughout all negotiations that have preceded the execution of
this Agreement.  Each Party and its
counsel cooperated in the drafting and preparation of this Agreement.  Accordingly, any rule of Law or any legal
decision that would require interpretation of any ambiguous, vague or
conflicting term in this Agreement against the drafter should not apply and is
expressly waived.  In addition, this
Agreement is to be interpreted and construed without reference to or
application of the so-called “forthright negotiator principle.”

 

12.7                           Severability.  Any provision of this Agreement that is held
by a court of competent jurisdiction or other Governmental Authority to be
invalid, void or unenforceable in any situation or in any jurisdiction will not
affect the validity or enforceability of the remaining provisions or the
validity or enforceability of the offending provision in any other situation or
in any other jurisdiction.  Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or
unenforceable.

 

12.8                           Counterparts
and Facsimile Signatures.  This
Agreement may be executed in any number of counterparts, each of which will be
deemed to be an original but all of which together will constitute one and the
same agreement.  Counterpart signature pages
and facsimile signatures are effective, and it is not necessary that the
signatures of all Parties be on the same page.

 

12.9                           Time
of the Essence.  With regard to all
dates and time periods referred to in this Agreement, time is of the essence.

 

36

 

12.10                     Assignment
and Successors.  No Party may assign
any of its rights or delegate any of its obligations under this Agreement, by
operation of Law or otherwise, without the prior written consent of the other
Parties, except that the Company, NorthStar or NorthStar Healthcare may assign
any of its rights and delegate any of its obligations under this Agreement
without the consent of any other Party to (a) any of its Affiliates and (b) to
any purchaser of a substantial part of the assets of the Company, NorthStar or
NorthStar Healthcare or assets used in a line of business to which the
businesses of the Company, NorthStar or NorthStar Healthcare relate.  Without the consent of all other Parties, no
such assignment will relieve the Company, NorthStar or NorthStar Healthcare of
its obligations under this Agreement if the assignee does not perform the
obligations.  The Company, NorthStar or
NorthStar Healthcare also may collaterally assign its rights under this
Agreement to any Person that provides credit or credit support to the Company,
NorthStar, NorthStar Healthcare or any of their Affiliates, or as security for
any other obligation or undertaking of the Company, NorthStar, NorthStar
Healthcare or any of their Affiliates.  Any
purported assignment or delegation contrary to this Section 12.10 will be void.

 

12.11                     Parties
in Interest.  This Agreement is
binding upon and inures solely to the benefit of each Party and its successors
and permitted assigns.  Nothing in this
Agreement confers upon any other Person any right or remedy of any nature
whatsoever.  No Person, by virtue of this
Agreement, is entitled to employment by the Company or its Affiliates.

 

12.12                     Expenses.

 

(a)                                  General.  Except as otherwise expressly provided in
this Agreement, each Party will bear its respective expenses incurred in
connection with the negotiation, preparation, execution and performance of this
Agreement, the Transaction Agreements and the Contemplated Transactions,
including all fees and expenses of their representatives and advisors.

 

12.13                     Notices.

 

(a)                                  Methods.  A notice, disclosure, demand or other
communication to a Party that is required or permitted under this Agreement
must be in writing and will be deemed to have been given (i) on the date
established by the sender as the date of personal delivery to the recipient, (ii)
on the date delivered to the recipient by a private courier as established by
the sender by evidence obtained from the courier, (iii) subject to Section 12.13(b),
on the date sent by facsimile or by other electronic means, and (iv) on the
fourth Business Day after mailing when sent to the recipient at such Party’s
address set forth below by registered or certified U.S. mail, with postage
prepaid and return receipt requested and returned.  If more than one method of sending a notice
is used, the effective date of notice will be the earliest date provided by the
application of the rules in this Section.

 

(b)                                 Electronic
Transmissions.  Notices sent by
facsimile transmission or other electronic means will be effective on the date
specified in Section 12.13(a) if the sender also delivers the notice by private
courier (costs prepaid, and with evidence of delivery returned by the courier)
on the next Business Day after the electronic transmission took place, unless
the recipient acknowledged in writing that the electronic notice was received
on the transmission 

 

37

 

date (such
acknowledgement includes an electronic facsimile or electronic mail message
sent by the recipient but does not include an automatic machine-generated
confirmation).

 

(c)                                  Addresses.  Notices to a Party must be sent to the Party
at its address specified and to the attention of the person by notice sent in
accordance with this Section 12.13 to the other Parties from time to
time.

 

12.14                     Withholding
Taxes.  Subject to the Company’s
responsibility for payment of certain Taxes under Section 10.3, the
Company may deduct and withhold from the payments of the Redemption
Consideration and the consideration described in Section 1.5(a) any
stock transfer taxes and other amounts required to be withheld under the Code
or any other Law pertaining to Taxes; provided, however, that in the event any
such withholding may be avoided upon the provision of an exemption certificate
or comparable form, then Chain Bridge and/or Midwest Holdings, as the case may
be, shall be permitted to deliver at closing to the Company a properly executed
certificate or form in order to legally avoid the application of any such
withholding tax to the Redemption Consideration.  A party withholding any payment will remit
the withheld amount to the appropriate Governmental Authority in a timely
manner.  A withheld amount that is
remitted to the applicable Governmental Authority will be treated for all
purposes of this Agreement as having been a payment of the Redemption
Consideration to the Party entitled to the payment from which such deduction
and withholding was made.

 

12.15                     Waiver
of Jury Trial.  ANY CONTROVERSY THAT
MIGHT ARISE RELATING TO THIS AGREEMENT OR THE CONTEMPLATED TRANSACTIONS IS
LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES.  CONSEQUENTLY, EACH PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY OF ANY SUBJECT CLAIM (AS DEFINED
IN SECTION 12.2).  EACH PARTY CERTIFIES
THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT IN THE EVENT OF LITIGATION THE OTHER
PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER, (B) THE PARTY UNDERSTANDS
AND HAS CONSIDERED THE IMPLICATIONS OF THE WAIVER, (C) THE PARTY MAKES THE
WAIVER KNOWINGLY AND VOLUNTARILY, AND (D) THE PARTY AND EACH OTHER PARTY HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION. 
Any Party may file an original counterpart or a copy of this Agreement
with any court as written and conclusive evidence of the consent of each Party
to the waiver of its right to trial by jury.

 

12.16                     Survival
of Representations and Warranties. 
Notwithstanding any other provision of this Agreement and except for the
representations and warranties set forth in Sections 2.5 and 3.5,
which shall survive indefinitely, the representations and warranties set forth
in Articles Two through Eight of this Agreement will survive until the later of
(i) March 31, 2010 or (ii) 60 days after the completion of the annual audit of
the consolidated financial statements of the Company as of and for the year
ended December 31, 2009.

 

38

 

[SIGNATURE PAGES FOLLOW]

 

39

 

IN WITNESS OF
THE FOREGOING, each Party executes this Agreement as of the date first written
above, by the Party’s duly authorized officer.

 

	
  WAKEFIELD
  CAPITAL, LLC

  	
   

  	
  NRFC
  WAKEFIELD HOLDING COMPANY, LLC

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Richard
  K. McCready

  	
   

  	
  By:

  	
  /s/ Richard
  K. McCready

  
	
   

  	
   

  	
   

  
	
   

  	
  Its: 

  	
  Chief
  Operating Officer and Executive 

  	
   

  	
   

  	
  Its: 

  	
  Chief
  Operating Officer and Executive 

  
	
   

  	
   

  	
  Vice
  President

  	
   

  	
   

  	
   

  	
  Vice
  President

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CHAIN BRIDGE
  CAPITAL LLC

  	
   

  	
  NORTHSTAR
  HEALTHCARE INVESTORS, INC.

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Sean P.
  Murphy

  	
   

  	
  By:

  	
  /s/ Richard
  K. McCready

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Partner

  	
   

  	
   

  	
  Its:

  	
  Chief
  Operating Officer and Executive 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Vice
  President

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WAKEFIELD
  CAPITAL MANAGEMENT, INC.

  	
   

  	
  EDWARD P.
  NORDBERG, JR

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/ Edward
  P. Nordberg, Jr.

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Sean P.
  Murphy

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  TIMOTHY P.
  O’BRIEN

  
	
   

  	
  Its:

  	
  President

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  /s/ Timothy
  P. O’Brien

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  DANIEL L.
  WILLISON, JR.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  MIDWEST CARE HOLDINGS LLC

  	
   

  	
  /s/ Daniel
  L. Willison, Jr.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SEAN P.
  MURPHY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Sean P.
  Murphy

  	
   

  	
  /s/ Sean P.
  Murphy

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Chief
  Executive Officer

  	
   

  	
   

  
									

 

SIGNATURE PAGE TO MEMBERSHIP INTEREST REDEMPTION AND SALE AGREEMENT

 

 

	
  ROBERT A. SWEET 

  	
   

  	
  DONALD C.
  TOMASSO

  
	
   

  	
   

  	
   

  
	
  /s/ Robert A. Sweet

  	
   

  	
  /s/ Donald
  C. Tomasso

  

 

SIGNATURE PAGE TO MEMBERSHIP INTEREST REDEMPTION AND SALE AGREEMENT

 

 

Appendix A

 

DEFINITIONS

 

“Accredited
Investor” is used
as defined in Regulation D promulgated under the Securities Act.

 

“Affiliate” means, with
respect to a specified Person, each other Person that directly or indirectly
Controls, is Controlled by, or is under common Control with that Person.

 

“Agreement” is defined
in the Preamble.

 

“Amendment No. 1 to
Management Agreement” is defined in Section 1.4.

 

“Amendment No. 1 to
Operating Agreement” is defined in Section 1.3.

 

“Authorization” means any approval,
authorization, certificate, concession, consent, exemption, franchise, grant of
authority, license, Order, permission, permit, qualification, ratification,
registration, waiver or variance, of or from any Governmental Authority or
required by or available under any Law.

 

“Board” is defined in Section 1.11.

 

“Bottom Guarantee” is defined in Section
11.4(c).

 

“Business
Day” means any day other than (a) a Saturday or a Sunday or (b) a day on
which banks are required or authorized by Law to be closed in the City of New
York.

 

“Cash
Consideration” is defined in Section 1.1(a).

 

“Casualty Event” is
defined in Section 1.1(a).

 

“Casualty Event Date” is
defined in Section 1.1(b)(ii)(E).

 

“Chain Bridge” is
defined in the Preamble.

 

“Chain
Bridge Common Interests” means all of the membership interests of the
Company held by Chain Bridge.

 

“Chain
Bridge Employment Agreements” is defined in Section 11.4(a).

 

“Chain Bridge
Non-Competition Agreements” is defined in Section 11.4(a).

 

“Chain Bridge Interests
Redemption Date” is defined in Section 11.4(c).

 

“Claim” means any claim, demand or
assertion made in writing by any Person (except for those included in the
definition of Proceeding).

 

A-1

 

“Code” means the Internal Revenue
Code of 1986, as amended.

 

“Company” is
defined in the Preamble.

 

“Consent” means any approval, consent,
license, permission or waiver of any Person other than a Governmental
Authority.

 

“Contemplated Transactions” means the
transactions contemplated by this Agreement or any other Transaction Agreement.

 

“Contract” means
any agreement, contract, obligation, promise, commitment or undertaking,
whether written or oral, express or implied, that is legally binding.

 

“Designated Forum”
is defined in Section 12.2(a).

 

“Encumbrance” means
any security interest, mortgage, pledge, lien, charge, restriction on the use
of property or the use or exercise of a right, or other encumbrance.

 

“Entity” means,
except for Governmental Authorities, (a) any corporation, partnership, joint
venture, limited liability company, business trust or other business entity, (b)
any association, unincorporated business or other organization, (c) trust and (d)
any other organization having legal status as an entity under Law.

 

“Escrow Account” is
defined in Section 1.1(a).

 

“Escrow Agent” is
defined in Section 1.1(a).

 

“Filing” means any
filing or registration with, or a written notice to, a Governmental Authority.

 

“Final Closing” is
defined in Section 1.2.

 

“Final Closing Date”
is defined in Section 1.2.

 

“Financial Statements”
is defined in Section 4.6(a).

 

“GAAP” means United States
generally accepted accounting principles as in effect at the time
to which the related reference to such principles pertains.

 

“GE” is defined in Section 1.1(a)(i).

 

“GE Facility” is defined in Section
1.1(a)(i).

 

“GE Facility Liens” means those
certain recorded liens of mortgages securing debt financing provided by General
Electric Capital Corporation upon the real estate assets referenced in GE Loan No.
07-0004211.

 

A-2

 

“Golden Pond” is defined in Section
1.1(a)(i).

 

“Golden Pond LLC Interests” is defined
in Section 1.1(a)(i).

 

“Golden Pond Proceeds” is defined in Section
1.1(a)(ii).

 

“Golden Pond Sale Period” is defined
in Section 1.1(b)(ii)(D).

 

“Golden Pond Transaction” is defined
in Section 1.1(a).

 

“Golden Pond Transaction Closing Date”  is defined in Section 11.6(c).

 

“Governmental Authority”
means (a) any body exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government,
including any governmental agency, department, board, commission or other
instrumentality, whether national, territorial, federal, state, provincial,
local, supranational or other authority, (b) any organization of multiple
nations, or (c) any tribunal, court or arbitrator of competent jurisdiction.

 

“GP Indebtedness” is defined in Section
1.1(a)(i).

 

“GP Indebtedness Repayment Date” is
defined in Section 1.1(b)(ii)(B).

 

“GP Release Price” is defined in Section
1.1(a).

 

“Indebtedness”
means any of the following (without duplication):

 

(a) indebtedness for
borrowed money;

 

(b) obligations evidenced
by notes, bonds, debentures or similar instruments;

 

(c) obligations to pay the
deferred purchase price of property or services (except trade accounts payable,
amounts owed to employees and other current Liabilities arising in the ordinary
course of business that are not more than 90 days past due);

 

(d) payment obligations
under conditional sale agreements or title retention agreements;

 

(e) obligations as lessee
under capitalized leases (or leases that, under GAAP, should be recorded as
capital leases);

 

(f) obligations,
contingent or otherwise, under acceptance credit, letters of credit (and related
reimbursement agreements) or similar facilities;

 

(g) the net liability under interest rate, currency or commodity
derivatives or hedging transactions;

 

A-3

 

(h) any indebtedness (including the types specified in (a) through (g) of
this definition) that a Person guarantees or with respect to which a Person
otherwise assures a creditor against loss;

 

(i) any
indebtedness secured by an Encumbrance on the Person’s assets, even if that
Person has not assumed or become liable for the payment of that indebtedness;
and

 

(j) all
accrued interest,
premiums, penalties and other fees or charges payable in connection with any of
the foregoing.

 

“Individual Parties”
is defined in the Preamble.

 

“Initial CB Interest”
shall mean that initial membership interest of Sweet in Chain Bridge for which
Sweet contributed cash or other property (not including the Note), which
currently corresponds to a 2 % membership interest.

 

“Initial Closing Date”
is defined in Section 1.1(a).

 

“Inland” is defined
in Section 1.1(a).

 

“IPO Notice” is
defined in Section 1.1(b)(ii)(B).

 

“IPO Notice Receipt
Date” is defined in Section 1.1(b)(ii)(B).

 

“IRS” means the
Internal Revenue Service of the United States.

 

“Knowledge” means the
actual knowledge of each of the following, as applicable: (a) as to Chain
Bridge, the Manager and Midwest Holdings, their directors or officers (except
for O’Brien, Tomasso and Sweet), (b) the Company, NorthStar, NorthStar
Healthcare, their directors and officers, or (c) the other Persons to which a
reference to Knowledge is made in this Agreement.

 

“Law” means (a)
any constitution applicable to, and any statute, treaty, rule, regulation,
ordinance, or requirement of any kind of, any Governmental Authority, (b) principles
of common law, and (c) any Order.

 

“Liability” means any liability or
obligation of whatever kind or nature, whether known or unknown, asserted or
unasserted, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, or due or to become due.

 

“Management Agreement”
is defined in Section 1.4.

 

“Manager” is defined in
the Preamble.

 

A-4

 

“Material Adverse Change” means any materially adverse change
other than and regardless of whether foreseeable at the date of this Agreement,
in the business, assets, financial condition or results of operations of
Midwest Holdings and Midwest Care Holdco TRS I LLC.

 

“Membership Interest Designation” is defined in Section 1.1(a).

 

“Midwest Care” is
defined in Section 1.6(b)(ii).

 

“Midwest Care Financial
Statements” is defined in Section 3.9(a).

 

“Midwest Care Interests”
is defined in Section 1.6(b)(ii).

 

“Midwest Care Interests
Receipt Date” is defined in Section 11.6(a).

 

“Midwest Closing” shall
mean the consummation of the transactions described in Sections 1.6(a) and (b).

 

“Midwest Consideration”
is defined in Section 1.6(b).

 

“Midwest Holdings” is
defined in the Preamble.

 

“Murphy” is defined in Section
1.9.

 

“Mutual Release” is
defined in Section 1.9.

 

“Nordberg” is defined in
Section 1.9.

 

“NorthStar” is defined
in the Preamble.

 

“NorthStar Golden Pond
Distribution Date” is defined in Section 1.1(b)(ii)(C).

 

“NorthStar Golden Pond Sale
Proceeds” is defined in Section 1.1(b)(ii)(C).

 

“NorthStar Healthcare” is
defined in the Preamble.

 

“NorthStar Healthcare Common
Stock” is defined in Section 1.6(a).

 

“NorthStar Healthcare IPO”
is defined in Section 1.1(b)(ii)(B).

 

“Notes” is defined in Section
1.7.

 

“O’Brien” is
defined in Section 1.7.

 

“Operating Agreement”
is defined in Section 1.3.

 

A-5

 

“Order” means any decree, injunction,
judgment, order, ruling, writ, assessment or arbitration award of a
Governmental Authority, arbitrator or arbitral body, commission or self-regulatory
organization, whether arising from a Proceeding or applicable Law.

 

“Organizational
Documents” means each of the following, as amended and as applicable:  (a) the articles or certificate
of incorporation and the bylaws of a corporation; (b) the partnership agreement
and any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; and (d) the operating agreement (or limited liability company agreement)
and certificate of organization or formation of a limited liability company.

 

“Parties” is defined in the
Preamble.

 

“Person” means an individual, an
Entity or a Governmental Authority.

 

“Proceeding” means any action, claim,
audit or other inquiry, hearing, investigation, suit or other charge or
proceeding (whether civil, criminal, administrative, investigative, formal or
informal) by or before any Governmental Authority or before an arbitrator or
arbitral body or mediator.

 

“Property Consideration” is defined in
Section 1.1(a).

 

“Redemption Consideration” is defined
in Section 1.1(a).

 

“Restriction Period”
is defined in Section 9.1.

 

“Securities Act” means the
Securities Act of 1933, as amended.

 

“Subject Claim” is
defined in Section 12.2(a).

 

“Subsidiary” means any Entity that is
controlled, directly or indirectly, by another Person.

 

“Sweet” is defined in Section 1.7.

 

“Taxes” means taxes, levies, imposts,
duties, assessments, charges, unemployment insurance payments and all
withholdings imposed or required to be collected by or paid over to any
Governmental Authority, including any interest, penalties, or additions imposed
in respect of the foregoing, or in respect of any failure to comply with any
requirement regarding tax returns.

 

“Tax Returns” means any return,
declaration, report, claim for refund, or information return or statement
related to Taxes, including any schedule or attachment thereto, and including
any amendment thereof.

 

“Tomasso” is
defined in Section 1.7.

 

A-6

 

“Transaction Agreements”
means this Agreement and the other agreements contemplated in connection with
the consummation of the Contemplated Transactions, including those whose forms
are attached as exhibits to this Agreement.

 

“Transaction Costs”
means all transaction costs payable to third parties with respect to any Golden
Pond Transaction, including brokerage, legal and accounting fees, excluding
Taxes.

 

“Wakefield, Stirling”
is defined in Section 1.5.

 

“Wakefield, Stirling Interests”
is defined in Section 1.5.

 

“Willison” is
defined in Section 1.9.

 

A-7

 

Schedule A

 

California — Update LIC Form 309
prior to the effective date of any change of ownership or control of Midwest
Care Holdco TRS I LLC including, without limitation, the transactions
contemplated in Section 1.6 of the Agreement (a “Potential Control Change”).

 

Georgia — Provide notice letter
prior to the effective date of a Potential Control Change.  Provide additional notice letter shortly
after the effective date of a Potential Control Change.

 

Illinois — Provide notice
letter prior to the effective date of a Potential Control Change.

 

Nebraska — Provide notice
letter prior to the effective date of a Potential Control Change.

 

Oklahoma — Provide Form 953-B
on or prior to the Initial Closing Date and update Form 953-B on or prior to
the effective date of a Potential Control Change.

 

Tennessee — Provide notice
letter within thirty (30) days after the effective date of a Potential Control
Change.

 

Texas — Amend information on
the applicable licensure form prior to the Initial Closing Date and again prior
to the effective date of a Potential Control Change.

 

A-1

 

Exhibit A

 

Form of Assignment Agreement

 

Chain
Bridge Capital LLC, a Maryland limited liability company (“Assignor”),
for good and valuable consideration paid to the Assignor by Wakefield Capital,
LLC, a Delaware limited liability company (“Assignee”), pursuant to the
Membership Interest Redemption and Sale Agreement, dated as of December 3,
2009, by and among Assignor, Assignee and the other signatories thereto (the “Agreement”),
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, does hereby sell, assign, transfer, convey and deliver
to the Assignee, its successors and assigns, good and indefeasible title to the
Chain Bridge Common Interests, free and clear of all liens, encumbrances,
security interests, prior assignments, voting agreements, conditions,
restrictions, pledges, claims, and other matters affecting title thereto.  Assignee does hereby accept the foregoing
assignment.

 

Capitalized
terms used but not defined herein shall have the respective meanings ascribed
to them in the Agreement.

 

IN
WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to be
signed by a duly authorized officer of each, this      day
of            ,               .

 

	
   

  	
  ASSIGNOR:

  
	
   

  	
   

  
	
   

  	
  CHAIN BRIDGE CAPITAL LLC,
  a

  
	
   

  	
  Maryland limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ASSIGNEE:

  
	
   

  	
   

  
	
   

  	
  WAKEFIELD CAPITAL, LLC, a

  
	
   

  	
  Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

A-1

 

Exhibit B

 

FIRST
AMENDMENT TO AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

 

This FIRST AMENDMENT to the
Amended and Restated Limited Liability Company Agreement, dated as of July 9,
2008 (the “Operating Agreement”), of Wakefield Capital, LLC, a Delaware limited
liability company (the “Company”), by and between NRFC Wakefield Holding
Company, LLC, a Delaware limited liability company (the “NorthStar Member”),
and Chain Bridge Capital LLC, a Delaware limited liability company (the “Chain
Bridge Member”), is made and entered into and effective as of December 3,
2009 (hereinafter referred to as this “First Amendment”).  Capitalized terms and references used herein
and not otherwise defined below shall have the respective meanings ascribed to
them in the Operating Agreement.

 

Background

 

WHEREAS, NorthStar Member
and Chain Bridge Member are parties to the Operating Agreement; and

 

WHEREAS, NorthStar Member
and Chain Bridge Member have also entered into that certain Membership Interest
Redemption and Sale Agreement, dated as of the date hereof, by and among the
Company, the NorthStar Member, NorthStar Healthcare Investors, Inc., the
Chain Bridge Member, Wakefield Capital Management, Inc., Midwest Care
Holdings LLC and the individuals listed on the signature page of such
agreement (the “Redemption Agreement”), pursuant to which all of the Chain
Bridge Member’s Interests shall be redeemed; and

 

WHEREAS, NorthStar Member
and Chain Bridge Member desire to amend the terms of the Operating Agreement as
provided in this First Amendment;

 

Agreement

 

NOW, THEREFORE, in
consideration of the premises and the mutual agreements set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, NorthStar Member and Chain Bridge Member do hereby
agree as follows:

 

(1)                                  The NorthStar Member and the
Chain Bridge Member hereby consent to all of the transactions contemplated by
the Redemption Agreement and waive any breach or violation of the Operating
Agreement that may be caused by the execution and performance of the Redemption
Agreement or the consummation of the transactions contemplated therein.

 

(2)                                  Upon the consummation of the
redemption of the Interests of the Chain Bridge Member in accordance with the
Redemption Agreement, the Chain Bridge Member shall be deemed to have withdrawn
as a member of the Company.

 

B-1

 

(3)                                  Notwithstanding anything to
the contrary contained in the Operating Agreement, from and after the date hereof,
the Chain Bridge Member shall no longer have the right to appoint any member to
the Board of Directors and shall waive all of its rights under the Operating
Agreement, including its right to vote its Interests or grant approvals or
consents except in furtherance of the transactions contemplated in the
Redemption Agreement.  If at any time
such waiver of rights is deemed unenforceable for any reason, the Chain Bridge
Member shall be deemed to have granted the NorthStar Member an irrevocable
proxy to vote the Chain Bridge Member’s Interests beginning on the date hereof.

 

(4)  A new Section 3.4(j) shall
be added to the Operating Agreement as follows:

 

(j) Notwithstanding
anything to the contrary in this Section 3.4, no Profit, Loss or other
item of income, gain, loss, deduction, or credit shall be allocated to the
Chain Bridge Member on or after December 3, 2009.

 

(5)  The following
language shall be added to the end of the last sentence of Section 3.5(b) of
the Operating Agreement:

 

; provided, however, that beginning on December 3,
2009, Chain Bridge Member shall not be entitled to receive any distributions of
the LLC’s Net Cash Flow.

 

(6)  Section 3.5(d) of
the Operating Agreement is hereby deleted and replaced with the following
language:

 

(d) On
and after December 3, 2009, distributions of Net Cash Flow shall be made
only to the NorthStar Member.

 

(7) Section 3.5(e) of
the Operating Agreement is hereby deleted in its entirety.

 

(8)  The first sentence
of Section 4.1 of the Operating Agreement shall be deleted and replaced
with the following language:

 

Except
for actions and determinations that pursuant to this Agreement or applicable
law can be taken or made only with the consent of the NorthStar Member or as
may be otherwise provided in the Investor Agreement, the business and affairs
of the LLC shall be directed and controlled by the Board of Directors.

 

(9) Section 4.9 of
the Operating Agreement is hereby deleted and replaced with the following
language:

 

The
following actions of the Board of Directors may only be taken with the
unanimous approval of the Board of Directors (or, in the alternative, with the
approval of the NorthStar Member):

 

B-2

 

(i)   any material transaction with a Related
Person of any Member;

 

(ii) 
any amendment to the provisions of this Agreement; or

 

(iii) 
declaring the LLC Bankrupt.

 

(10) Section 6.6 shall be deleted
in its entirety.

 

(11) Section 8.1(a) shall be
deleted and replaced with the following language:

 

the execution by the
NorthStar Member of a written consent to dissolution;

 

(12) Section 8.1(c) shall be
deleted and replaced with the following language:

 

the Bankruptcy of NorthStar
Member.

 

(13) The second sentence of Section 8.2
shall be deleted and replaced with the following language:

 

After providing for LLC
liabilities and claims of creditors, assets and properties of the LLC shall be
distributed (i) first, to the Chain Bridge Member in an amount equal to
any payments owed to the Chain Bridge Member pursuant to the Membership
Interest and Sale Agreement, dated as of December 3, 2009, by and among
the LLC, the NorthStar Member, NorthStar Healthcare Investors, Inc., the
ChainBridge Member, Wakefield Capital Management, Inc., Midwest Care
Holdings LLC and the individuals listed on the signature page of such
agreement and (ii) thereafter, to the NorthStar Member; provided,
that if any assets are to be distributed in kind, they will be valued at their
Fair Market Value before the distribution.

 

(14) A new Section 4.10
shall be added as follows:

 

Notwithstanding anything to
the contrary contained in this First Amendment or the Operating Agreement, the
NorthStar Member agrees that, for so long as the Chain Bridge Member remains a
Member of the Company, the NorthStar Member will not, and it will not permit
the Board of Directors of the Company, to amend the Operating Agreement without
the written consent of the Chain Bridge Member, unless such amendment does not
adversely affect the rights of the Chain Bridge Member.

 

The Operating Agreement is amended only as
expressly modified by this First Amendment. 
Except as expressly modified by this First Amendment, the terms of the
Operating Agreement remain in full force and effect, and the Operating
Agreement is hereby ratified and confirmed by NorthStar Member and Chain Bridge
Member in all respects.

 

B-3

 

IN WITNESS WHEREOF,
NorthStar Member and Chain Bridge Member have executed this First Amendment as
of the date first written above.

 

	
   

  	
  NRFC WAKEFIELD HOLDING
  COMPANY, LLC

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  CHAIN BRIDGE CAPITAL LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

B-4

 

Exhibit C

 

FIRST
AMENDMENT TO MANAGEMENT AGREEMENT

 

This FIRST AMENDMENT to the
Management Agreement, dated as of May 18, 2006 (the “Management
Agreement”), by and among Wakefield Capital, LLC, a Delaware limited
liability company (the “Company”), for itself and on behalf of its
subsidiaries as the same may exist from time to time, and Wakefield Capital
Management, Inc., a Delaware corporation (together with its permitted
assignees, the “Manager”), is made and entered into and effective as of December 3,
2009 (hereinafter referred to as this “First Amendment”).  Capitalized terms and references used herein
and not otherwise defined below shall have the respective meanings ascribed to
them in the Management Agreement.

 

Background

 

WHEREAS, the Company and the
Manager are parties to the Management Agreement pursuant to which the Manager
has agreed to provide services to the Company; and

 

WHEREAS, the Company and the
Manager desire to amend the terms of the Management Agreement as provided in
this First Amendment.

 

Agreement

 

NOW, THEREFORE, in
consideration of the premises and the mutual agreements set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and the Manager do hereby agree as
follows:

 

(1)  Section 8(c) of
the Management Agreement is hereby deleted and replaced with the following:

 

Beginning
on the effective date of the earlier of (i) the termination of the
consulting arrangement between Donald C. Tomasso and the Manager or (ii) the
termination of the employment of either, Timothy O’Brien and Robert A. Sweet
with the Manager, the Management Fee shall be in arrears for each month, an
amount equal to one-twelfth of one percent of the daily weighted average amount
of Equity for such month.

 

(2)  Sections 3(a) and
3(b) of the Management Agreement are hereby deleted in their entirety.

 

(3)  The following
language shall be added to the end of the last sentence in the last paragraph
of Section 9 of the Management Agreement.

 

C-1

 

Notwithstanding
anything to the contrary in this Agreement, from the date of this First
Amendment until the termination of this Agreement, NorthStar shall have the
right to consent to any expenditure of the Company in excess of $5,000.

 

The Management Agreement is
amended only as expressly modified by this First Amendment.  Except as expressly modified by this First
Amendment, the terms of the Management Agreement remain in full force and
effect, and the Management Agreement is hereby ratified and confirmed by the
Company and the Manager in all respects.

 

IN WITNESS WHEREOF, the
Company and the Manager have executed this First Amendment as of the date first
written above.

 

	
   

  	
  WAKEFIELD CAPITAL
  MANAGEMENT, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WAKEFIELD CAPITAL, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

C-2

 

Exhibit D

 

Form of  Assignment and Assumption Agreement

 

Wakefield
Capital Management, Inc., a Maryland corporation (“Assignor”), for
good and valuable consideration paid to the Assignor by Wakefield Capital, LLC,
a Delaware limited liability company (“Assignee”), and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, does hereby sell, assign, transfer, convey and deliver to the
Assignee, its successors and assigns, good and indefeasible title to Assignor’s
limited liability company interests (the “Ownership Interests”) in Wakefield,
Stirling & Co., L.L.C., a Delaware limited liability company, free and
clear of all liens, encumbrances, security interests, prior assignments, voting
agreements, conditions, restrictions, pledges, claims, and other matters
affecting title thereto.  Assignee does
hereby accept the foregoing assignment and assumes and agrees to be responsible
for all liabilities and obligations from and after the date hereof relating to
the Ownership Interests.

 

IN
WITNESS WHEREOF, the parties hereto have caused this Assignment and Assumption
Agreement to be signed by a duly authorized officer of each, this 1st day of
December, 2009.

 

	
   

  	
  ASSIGNOR:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Wakefield Capital
  Management, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ASSIGNEE:

  
	
   

  	
   

  	
   

  
	
   

  	
  Wakefield Capital, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

D-1

 

Exhibit E

 

Form of
Assignment and Assumption Agreement

 

Midwest
Care Holdings LLC, a Delaware limited liability company, (“Assignor”),
for good and valuable consideration paid to the Assignor by Wakefield Capital,
LLC, a Delaware limited liability company (“Assignee”), and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, does hereby sell, assign, transfer, convey and deliver to the
Assignee, its successors and assigns, good and indefeasible title to Assignor’s
ownership interests (the “Ownership Interests”) in Midwest Care Holdco TRS I
LLC, a Delaware limited liability company, free and clear of all liens,
encumbrances, security interests, prior assignments, voting agreements,
conditions, restrictions, pledges, claims, and other matters affecting title
thereto.  Assignee does hereby accept the
foregoing assignment and assumes and agrees to be responsible for all
liabilities and obligations from and after the date hereof relating to the
Ownership Interests.

 

IN
WITNESS WHEREOF, the parties hereto have caused this Assignment and Assumption
Agreement to be signed by a duly authorized officer of each, this            
day of                   ,
2010.

 

	
   

  	
  ASSIGNOR:

  
	
   

  	
   

  
	
   

  	
  Midwest Care Holdings LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ASSIGNEE:

  
	
   

  	
   

  	
   

  
	
   

  	
  Wakefield Capital, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

E-1

 

Exhibit F

 

Form of
Nordberg Resignation Letter

 

To:                              Board of
Directors of Wakefield Capital, LLC

 

I, Edward P. Nordberg,
hereby resign as a director of Wakefield Capital, LLC, effective as of 12:01 p.m.
(Eastern Time) on December l, 2009.

 

 

Dated this 1st day of December, 2009.

 

 

	
   

  	
   

  
	
   

  	
  Edward P. Nordberg

  

 

F-1

 

Exhibit G

 

FORM OF
MUTUAL RELEASE AGREEMENT

 

MUTUAL
RELEASE AGREEMENT,
dated as of December l, 2009 (this “Release”), by and among Edward P.
Nordberg (“Nordberg”) on the one hand, and
NRFC Wakefield Holding Company, LLC, a Delaware limited liability company (“NorthStar”), Wakefield Capital, LLC, a Delaware limited
liability company (“Wakefield”),
and NorthStar Healthcare Investors, Inc., a Maryland corporation (“NorthStar Healthcare”), on the other hand, are collectively
referred to in this Agreement as the “Parties” and
individually as a “Party”.  Capitalized terms used but not defined herein
shall have the respective meanings ascribed to them in the Membership Interest
Redemption and Sale Agreement, dated as of December l, 2009, by and among
NorthStar, Wakefield, NorthStar Healthcare and the other signatories thereto.

 

WHEREAS,  the Parties are parties to that certain Membership
Interest Redemption and Sale Agreement (the “Membership
Interest Redemption and Sale Agreement”), dated December l,
2009, by and among Wakefield, NorthStar and NorthStar Healthcare, on the one
hand, and Chain Bridge Capital, LLC, Wakefield Capital Management, Inc.,
Midwest Care Holdings LLC and the individuals listed on the signature page thereto,
on the other hand.

 

WHEREAS, pursuant to the Membership Interest
Redemption and Sale Agreement, Nordberg, NorthStar, Wakefield and NorthStar
Healthcare agreed to enter into the Release.

 

NOW,
THEREFORE, in
consideration of the promises set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
each of the Parties hereby agree as follows:

 

Section 1                Release
by Nordberg.  Nordberg irrevocably,
completely and forever discharges and releases NorthStar, Wakefield, NorthStar
Healthcare and each of their respective parents, subsidiaries, affiliates,
shareholders, members, officers, directors, employees, agents, attorneys,
predecessors, successors, assigns and representatives (the “NorthStar  Released  Parties”) from any and all claims, demands, suits, actions
and causes of action occurring, or that are alleged to have occurred, from the
beginning of time through the date of this Release not involving acts or
omissions constituting fraud or intentional criminal misconduct; provided, however, that this Release shall not relate to
any claims, demands, suits actions or causes of action arising from the
Membership Interest Redemption and Sale Agreement.  The phrase “all claims” means all existing
demands, claims and causes of action, known or unknown, pending or threatened,
and for all existing known and unknown damages and remedies.  Under this definition, “all claims” includes,
but is not limited to, all claims, demands, lawsuits, debts, accounts,
covenants, agreements, liabilities, obligations, losses, costs, fees, expenses,
remedies, fines, penalties, sanctions and causes of action of any nature,
whether in contract or in tort, or 

 

G-1

 

based
upon common law, or arising under or by virtue of any judicial decision,
statute or regulation, for past, present, known, and unknown injuries, property
or economic damage, and all other losses and damages of any kind, including but
not limited to the following:  all actual
damages; all exemplary and punitive damages; all penalties of any kind,
including without limitation any tax liabilities or penalties; all declaratory
and/or injunctive relief; consequential damages; and prejudgment and
postjudgment interest, costs and attorneys’ fees.  This definition further includes, but is not
limited to, all damages, all remedies, and all claims, demands, and causes of
action that are now recognized by law or that may be created or recognized in
the future in any manner, including without limitation by statute, regulation,
or judicial decision.

 

Section 2                NorthStar,
Wakefield and NorthStar Healthcare irrevocably, completely and forever
discharge and release Nordberg (Nordberg and the NorthStar Released Parties
shall collectively be referred to as the “Released  Parties”) from any and all claims, demands, suits, actions
and causes of action occurring, or that are alleged to have occurred, from the
beginning of time through the date of this Release not involving acts or
omissions constituting fraud or intentional criminal misconduct; provided, however, that this Release shall not relate to any
claims, demands, suits actions or causes of action arising from the Membership
Interest Redemption and Sale Agreement. 
The phrase “all claims” means all existing demands, claims and causes of
action, known or unknown, pending or threatened, and for all existing known and
unknown damages and remedies.  Under this
definition, “all claims” includes, but is not limited to, all claims, demands,
lawsuits, debts, accounts, covenants, agreements, liabilities, obligations,
losses, costs, fees, expenses, remedies, fines, penalties, sanctions and causes
of action of any nature, whether in contract or in tort, or based upon common
law, or arising under or by virtue of any judicial decision, statute or
regulation, for past, present, known, and unknown injuries, property or
economic damage, and all other losses and damages of any kind, including but
not limited to the following:  all actual
damages; all exemplary and punitive damages; all penalties of any kind,
including without limitation any tax liabilities or penalties; all declaratory
and/or injunctive relief; consequential damages; and prejudgment and
postjudgment interest, costs and attorneys’ fees.  This definition further includes, but is not
limited to, all damages, all remedies, and all claims, demands, and causes of
action that are now recognized by law or that may be created or recognized in
the future in any manner, including without limitation by statute, regulation,
or judicial decision.

 

Section 3                Existing
Indemnity Agreements. 
Notwithstanding anything in this Release to the contrary, Nordberg, on
the one hand, and NorthStar, Wakefield and NorthStar Healthcare, on the other
hand, shall continue to benefit from any and all indemnification provisions,
and shall continue to indemnify the other parties as set forth in such
indemnification provisions, contained in the Management Agreement and the
Operating Agreement prior to the date of this Release.  If at any time Nordberg, NorthStar, Wakefield
or NorthStar Healthcare attempts to enforce any of the indemnification
provisions contained in the Management Agreement or the Operating Agreement,
this Release shall not prevent the indemnifying party from contesting the
applicability of any such indemnification provision in such circumstance or
from bringing any counter claim or cross claim arising from or related to the
claim for indemnification or the claims for which such party is seeking
indemnification.

 

G-2

 

Section 4                Representations
and Warranties.  As an inducement to
each of the other Parties to enter into this Release, each Party hereby
represents and warrants, to the extent applicable, as of the date hereof to
each other Party that: (a) it is validly existing under the laws of the
jurisdiction in which it was duly organized; (b) it has all requisite
legal and corporate power to execute and deliver this Release and to carry out
and perform its obligations under the terms of this Release; (c) its
execution and delivery of this Release have been duly authorized by all
necessary action on its part and that the officer, representative or other
agent executing and delivering this Release on its behalf has the power and
authority to do so and to bind it to the terms and conditions of this Release; (d) this
Release constitutes a legal, valid and binding obligation of such Party,
enforceable against such Party in accordance with the terms hereof; (e) each
Party acknowledges that it will derive a substantial direct and/or indirect
benefit from the transactions contemplated by this Release, and that such
direct and/or indirect benefit constitutes adequate consideration for the
releases that such Party has granted pursuant to this Release; and (f) each
Party acknowledges that each of the representations and warranties contained in
this Section 4 constitutes a material inducement for the other
Parties to enter into this Release and consummate the transactions contemplated
hereby.

 

Section 5                Further
Assurances.  Each of the Parties
shall execute and deliver all such further documents and instruments and do all
acts and things as may be required to carry out the full intent and purpose of
this Release.

 

Section 6                No
Assignment of Claims.  Each of the
Parties hereby represents and warrants to each other Party that it or any of
its respective parents, subsidiaries, affiliates, shareholders, members,
officers, directors, employees, agents, attorneys, predecessors, successors,
assigns or representatives has not assigned or transferred, or purported to
assign or transfer, to any person, firm, partnership, corporation or entity
whatsoever, any rights, rights to indemnification, causes of action, suits,
debts, dues, sums of money, accounts, attorneys’ fees, costs, expenses,
reckonings, liens, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, damages, judgments,
executions, claims, demands or liability released pursuant to this Release.  Each of the Parties hereby agrees to
indemnify, defend and hold harmless each of the other Parties from and against
any such claims, damages or liabilities in any way arising from, connected with
or related to any such assignment or transfer or purported assignment or
transfer.

 

Section 7                Confidentiality.  From and after the date hereof, each of the
Parties shall and shall cause its respective affiliates to, use all reasonable
efforts to keep confidential and not disclose to any person, the terms of this
Release unless compelled by act of law or governmental authority or in
connection with formal legal proceedings.

 

Section 8                Entire
Agreement; Amendment.  This Release
constitutes the entire agreement of the Parties with respect to the subject
matter hereof, and supersedes all prior discussions, agreements and
understandings of the Parties with respect to such subject matter.  This Release shall not be amended,
supplemented, rescinded or otherwise modified, nor may any 

 

G-3

 

provision
hereof be waived or terminated, except by a written instrument signed by all of
the Parties.

 

Section 9                Governing
Law.  This Release shall be governed
by, and construed in accordance with, the laws of the State of New York without
giving effect to its conflicts of laws principles (other than Section 5-1401
of the General Obligations Law of the State of New York).

 

Section 10              Counterparts.  This Release may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which, taken together, shall constitute one and the same
agreement.  Delivery of an executed
counterpart of a signature page to this Release by facsimile or electronic
mail shall be effective as delivery of a manually executed counterpart.

 

Section 11              Attorneys’
Fees.  The prevailing Party in any
dispute under this Release shall be entitled to recover all costs and
reasonable attorneys’ fees incurred by such party in such dispute, whether suit
be brought or not, including, but not limited to all costs and reasonable
attorneys’ fees in any trial, appellate or bankruptcy proceedings.

 

Section 12              Invalidity.  If any provision in this Release is held to
be invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Release will remain in full force and effect.  Any provision of this Release, held invalid
or unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.

 

Section 13              Waivers
and Remedies.  The waiver by any of
the Parties of any other Party’s prompt and complete performance, or breach or
violation, of any provision of this Release shall not operate nor be construed
as a waiver of any subsequent breach or violation, and the failure of any of the
Parties to exercise any right or remedy that it may possess hereunder shall not
operate nor be construed as a bar to the exercise of such right or remedy by
such Party upon the occurrence of any subsequent breach or violation.

 

Section 14              Notices.
All notices and other communications given or made pursuant to this Release
shall be given or made in the same manner and to the same addresses as provided
in Section 12.14 of the Membership Interest Redemption and Sale Agreement.

 

Section 15              Continuing
Effect. Except as expressly provided herein, the Membership Interest
Redemption and Sale Agreement and all instruments and documents executed and
delivered pursuant thereto and in connection therewith shall continue in full
force and effect in accordance with their respective terms.

 

[signature page follows]

 

G-4

 

IN
WITNESS WHEREOF,
each of the Parties have caused this Release to be executed and delivered as of
the date first written above.

 

	
   

  	
  EDWARD P. NORDBERG

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NRFC
  WAKEFIELD HOLDING COMPANY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  WAKEFIELD
  CAPITAL, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  NORTHSTAR
  HEALTHCARE INVESTORS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

G-5

 

Exhibit H

 

FORM OF
GUARANTEE

 

This Guarantee is made and
entered into as of the 1st day of December 2009, by the persons listed on Exhibit A  annexed hereto (the “Guarantors”) for the benefit of the
Lender set forth on Exhibit B annexed
hereto and made a part hereof (the “Lender,”
which term shall include any person or entity who hereafter holds the Note (as
defined below) in accordance with the terms thereof).

 

RECITALS

 

WHEREAS, the Lender has
loaned to the borrower set forth on Exhibit B
(the “Borrower”) the amount set forth
opposite such Lender’s name on Exhibit B,
which loan (i) is evidenced by the promissory note described on Exhibit C hereto (the “Note”),  (ii) has
a current outstanding balance in the amount set forth on Exhibit B
annexed hereto, and (iii) is secured by a mortgage or deed of trust on the
collateral described on Exhibit D
annexed hereto (the “Deed of Trust,”
with the property and other assets securing such Deed of Trust referred to as
the “Collateral”);

 

WHEREAS, the Borrower is
either Wakefield Capital, LLC, a Delaware limited liability company (the “Company”), or a subsidiary of the
Company;

 

WHEREAS, the Guarantors are
members in Chain Bridge Capital LLC, a Maryland limited liability company (“Chain Bridge”), which is a member
in the Company (references to the Guarantors’ interests in the Company include
any direct or indirect interests in the Company); and

 

WHEREAS, the Guarantors are
executing and delivering this Guarantee to guarantee a portion of the Borrower’s
payments with respect to the Note, subject to and otherwise in accordance with
the terms and conditions hereinafter set forth.

 

NOW THEREFORE, in consideration of the foregoing recitals
and facts and other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, each of the Guarantors hereby
agree as follows:

 

1.             Guarantee and Performance of Payment.

 

(a)           The Guarantors hereby irrevocably and unconditionally
guarantee the collection by the Lender of, and hereby agree to pay to the Lender
upon demand (following (1) foreclosure of the Deed of Trust, exercise of
the powers of sale thereunder and/or acceptance by the Lender of a deed to the
Collateral in lieu of foreclosure, and (2) the exhaustion of the exercise
of any and all remedies available to the Lender against the Borrower,
including, without limitation, realizing upon the assets of the Borrower other
than the Collateral against which the Lender may have recourse), an amount
equal to the excess, if any, of the Guaranteed Amount set forth on Exhibit B over the Lender
Proceeds (as hereinafter defined) (which excess is referred to as the “Aggregate
Guarantee Liability”).  The amounts
payable by each Guarantor in respect of the guarantee obligations hereunder
shall be in the same proportion as the dollar amounts listed next 

 

H-1

 

to such Guarantor’s name on Exhibit A attached hereto
bears to the total Guaranteed Amount set forth on Exhibit A, provided that,
notwithstanding anything to the contrary contained in this Guarantee, each
Guarantor’s aggregate obligation under this Guarantee shall be limited to the
dollar amount set forth on Exhibit A
attached hereto next to such Guarantor’s name. 
The Guarantors’ obligations as set forth in this paragraph 1(a) are
hereinafter referred to as the “Guaranteed Obligations.”

 

(b)           For the purposes of this Guarantee, the term “Lender Proceeds” shall mean the
aggregate of (i) the Foreclosure Proceeds (as hereinafter defined) plus (ii) all
amounts collected by the Lender from the Borrower (other than payments of
principal, interest or other amounts required to be paid by the Borrower to
Lender under the terms of the Note that are paid by the Borrower to the Lender
at a time when no default has occurred under the Note and is continuing) or
realized by the Lender from the sale of assets of the Borrower other than the
Collateral.

 

(c)           For the purposes of this Guarantee, the term “Foreclosure Proceeds” shall have
the applicable meaning set forth below with respect to the Collateral:

 

1.             If at least one bona fide
third party unrelated to the Lender (and including, without limitation, any of
the Guarantors) bids for such Collateral at a sale thereof, conducted upon
foreclosure of the related Deed of Trust or exercise of the power of sale
thereunder, Foreclosure Proceeds shall mean the highest amount bid for such
Collateral by the party that acquires title thereto (directly or through a
nominee) at or pursuant to such sale. 
For the purposes of determining such highest bid, amounts bid for the
Collateral by the Lender shall be taken into account notwithstanding the fact
that such bids may constitute credit bids which offset against the amount due
to the Lender under the Note.

 

2.             If there is no such
unrelated third-party at such sale of the Collateral so that the only bidder at
such sale is the Lender or its designee, the Foreclosure Proceeds shall be
deemed to be fair market value (the “Fair Market Value”)
of the Collateral as of the date of the foreclosure sale, as such Fair Market
Value shall be mutually agreed upon by the Lender and the Guarantor or
determined pursuant to subparagraph 1(d).

 

3.             If the Lender receives and
accepts a deed to the Collateral in lieu of foreclosure in partial satisfaction
of the Borrower’s obligations under the Note, the Foreclosure Proceeds shall be
deemed to be the Fair Market Value of such Collateral as of the date of
delivery of the deed-in-lieu of foreclosure, as such Fair Market Value shall be
mutually agreed upon by the Lender and the Guarantor or determined pursuant to
subparagraph 1(d).

 

(d)           Fair Market Value of the Collateral (or any item thereof)
shall be the price at which a willing seller not compelled to sell would sell
such Collateral, and a willing buyer not compelled to buy would purchase such
Collateral, free and clear of all mortgages but subject to all leases and
reciprocal easements and operating agreements. 
If the Lender and the Guarantor 

 

H-2

 

are unable to agree upon the Fair Market
Value of any Collateral in accordance with subparagraphs 1(c)2. or 3. above, as
applicable, within twenty (20) days after the date of the foreclosure sale or
the delivery of the deed-in-lieu of foreclosure, as applicable, relating to such
Collateral, either party may have the Fair Market Value of such Collateral
determined by appraisal by appointing an appraiser having the qualifications
set forth below to determine the same and by notifying the other party of such
appointment within twenty (20) days after the expiration of such twenty (20)
day period.  If the other party shall
fail to notify the first party, within twenty (20) days after its receipt of
notice of the appointment by the first party, of the appointment by the other
party of an appraiser having the qualifications set forth below, the appraiser
appointed by the first party shall alone make the determination of such Fair
Market Value.  Appraisers appointed by
the parties shall be members of the Appraisal Institute (MAI) and shall have at
least ten years’ experience in the valuation of properties similar to the
Collateral being valued in the greater metropolitan area in which such
Collateral is located.  If each party
shall appoint an appraiser having the aforesaid qualifications and if such
appraisers cannot, within thirty (30) days after the appointment of the second
appraiser, agree upon the determination hereinabove required, then they shall
select a third appraiser which third appraiser shall have the aforesaid
qualifications, and if they fail so to do within forty (40) days after the
appointment of the second appraiser they shall notify the parties hereto, and
either party shall thereafter have the right, on notice to the other, to apply
for the appointment of a third appraiser to the chapter of the American
Arbitration Association or its successor organization located in the
metropolitan area in which the Collateral is located or to which the Collateral
is proximate or if no such chapter is located in such metropolitan area, in the
metropolitan area closest to the Collateral in which such a chapter is
located.  Each appraiser shall render its
decision as to the Fair Market Value of the Collateral in question within
thirty (30) days after the appointment of the third appraiser and shall furnish
a copy thereof to the Lender and the Guarantor. 
The Fair Market Value of the Collateral shall then be calculated as the
average of (i) the Fair Market Value determined by the third appraiser and
(ii) whichever of the Fair Market Values determined by the first two
appraisers is closer to the Fair Market Value determined by the third
appraiser; provided, however,
that if the Fair Market Value determined by the third appraiser is higher or
lower than both Fair Market Values determined by the first two appraisers, such
Fair Market Value determined by the third appraiser shall be disregarded and
the Fair Market Value of the Collateral shall then be calculated as the average
of the Fair Market Value determined by the first two appraisers.  The Fair Market Value of a Property, as so
determined, shall be binding and conclusive upon the Lender and the Guarantors.
Guarantors shall bear the cost of its own appraiser and, subject to
subparagraph 1(e), shall bear all reasonable costs of appointing, and the
expenses of, any other appraiser appointed pursuant to this subparagraph
(1)(d).

 

(e)           Notwithstanding anything in the preceding subparagraphs of
this paragraph 1, (i) in no event shall the aggregate amount required
to be paid pursuant to this Guarantee by the Guarantors as a group with respect
to all defaults under the Note and the Deed of Trust securing the obligations
thereunder exceed the Guaranteed Amount set forth on Exhibit B
hereto, and (ii) the aggregate obligation of each Guarantor hereunder
with respect to the Guaranteed Obligation shall be limited to the lesser of (I) the
product of (w) the Individual Guarantee Percentage for such Guarantor set
forth on Exhibit A  hereto
multiplied by (x) the Guaranteed Amount, or (II) the product of (y) such
Guarantor’s Individual Guarantee Percentage multiplied by (z) the
Aggregate Guarantee Liability.

 

H-3

 

(f)            In confirmation of the foregoing, and without limitation,
the Lender must first exhaust all of its rights and remedies against all
property of the Borrower as to which the Lender has (or may have) a right of
recourse, including, without limitation, the institution and prosecution to
completion of appropriate foreclosure proceedings under the Deed of Trust, before
exercising any right or remedy or making any claim, under this Guarantee.

 

(g)           The obligations under this Guarantee shall be personal to
each Guarantor and shall not be affected by any transfer of all or any part of
a Guarantor’s interests in the Company; provided, however, that if a Guarantor
has disposed of all of its direct or indirect equity interests in the Company,
the obligations of such Guarantor under this Guarantee shall terminate 12
months after the date of such disposition (the “Termination Date”) provided (i) the
Guarantor notifies the Lender that it is terminating its obligations under this
Guarantee as of the Termination Date and (ii) the fair market value of the
Collateral exceeds the outstanding balance of the Note, including accrued and
unpaid interest, as of the Termination Date. 
Further, no Guarantor shall have the right to recover from the Borrower
any amounts such Guarantor pays pursuant to this Guarantee (except and only to
the extent that the amount paid to the Lender by such Guarantor exceeds the
amount required to be paid by such Guarantor under the terms of this
Guarantee).

 

(h)           The obligations of a Guarantor hereunder shall terminate
with respect to such Guarantor one week after the death of such Guarantor if,
as a result of the death of such Guarantor, all property held by the Guarantor
on the date of death would have a basis for federal income tax purposes equal
to the fair market value of such property on such date (unless a later date
were to be elected by the executor of the Guarantor’s estate in accordance with
the applicable provisions of the Internal Revenue Code).

 

(i)            Notwithstanding anything else in this Guarantee, the
obligations of each Guarantor shall terminate 12 months after the date of the
distribution of the Property Consideration by the Company to Chain Bridge, as
described in Section 1.1 of that certain Membership Interest Redemption
and Sale Agreement by and among the Company, NRFC Wakefield Holding Company,
LLC, NorthStar Healthcare Investors, Inc., Chain Bridge, Wakefield Capital
Management, Inc., Midwest Care Holdings LLC, the Guarantors, Daniel L.
Willison, Jr., Sean P. Murphy, and Edward P. Nordberg, Jr., dated
contemporaneously herewith.

 

2.             Intent to Benefit Lender.  This Guarantee is expressly for the benefit
of the Lender.  The Guarantors intend
that the Lender shall have the right to enforce the obligations of the
Guarantors hereunder separately and independently of the Borrower, subject to
the provisions of paragraph 1 hereof, without any requirement whatsoever of
resort by the Lender to any other party. 
The Lender’s rights to enforce the obligations of the Guarantors
hereunder are material elements of this Guarantee.  This Guarantee shall not be modified, amended
or terminated (other than as specifically provided herein) without the written
consent of the Lender.  The Borrower
shall furnish a copy of this Guarantee to the Lender contemporaneously with its
execution.

 

3.             Waivers. 
Each Guarantor intends to bear the ultimate economic responsibility for
the payment hereof of the Guaranteed Obligations to the extent set forth in
Paragraph 1 above.  Pursuant to such
intent:

 

H-4

 

(a)           Except as expressly set forth in Paragraph 1 above, each
Guarantor expressly waives any right (pursuant to any law, rule, arrangement or
relationship) to compel the Lender, or any subsequent holder of the Note or any
beneficiary of the Deed of Trust to sue or enforce payment thereof or pursue
any other remedy in the power of the Borrower, the Lender or any subsequent
holder of the Note or any beneficiary of the Deed of Trust whatsoever, and
failure of the Borrower or the Lender or any subsequent holder of the Note or
any beneficiary of the Deed of Trust to do so shall not exonerate, release or
discharge a Guarantor from its absolute unconditional obligations under this
Guarantee.  Each Guarantor hereby binds
and obligates itself, and its permitted successors and assignees, for
performance of the Guaranteed Obligations according to the terms hereof,
whether or not the Guaranteed Obligations or any portion thereof are valid now
or hereafter enforceable against the Borrower or shall have been incurred in
compliance with any of the conditions applicable thereto, subject, however, in
all respects to the Guarantee Limit and the other limitations set forth in
paragraph 1.

 

(b)           Each Guarantor expressly waives any right (pursuant to any
law, rule, arrangement, or relationship) to compel any other person (including,
but not limited to, the Borrower, the Company, any subsidiary of the Company or
the Borrower, or any other member or affiliate of the Company or the Borrower)
to reimburse or indemnify such Guarantor for all or any portion of amounts paid
by such Guarantor pursuant to this Guarantee to the extent such amounts do not
exceed the amounts required to be paid by such Guarantor pursuant to paragraph
1 hereof (taking into account the limitations set forth therein).

 

(c)           Except as expressly set forth in Paragraph 1 above, if and
only to the extent that the Borrower has made similar waivers under the Note or
the Deed of Trust, each Guarantor expressly waives:  (i) the defense of the statute of
limitations in any action hereunder or for the collection or performance of the
Note or the Deed of Trust; (ii) any defense that may arise by reason
of:  the incapacity, or lack of authority
of the Borrower, the revocation or repudiation hereof by such Guarantor, the
revocation or repudiation of the Note or the Deed of Trust by the Borrower, the
failure of the Lender to file or enforce a claim against the estate (either in
administration, bankruptcy or any other proceeding) of the Borrower; the
unenforceability in whole or in part of the Note, the Deed of Trust or any
other document or instrument related thereto; the Lender’s election, in any
proceeding by or against the Borrower under the federal Bankruptcy Code, of the
application of Section 1111(b)(2) of the federal Bankruptcy Code; or
any borrowing or grant of a security interest under Section 364 of the
federal Bankruptcy Code; (iii) presentment, demand for payment, protest,
notice of discharge, notice of acceptance of this Guarantee or occurrence of,
or any default in connection with, the Note or the Deed of Trust, and
indulgences and notices of any other kind whatsoever, including, without
limitation, notice of the disposition of any collateral for the Note; (iv) any
defense based upon an election of remedies (including, if available, an
election to proceed by non-judicial foreclosure) or other action or omission by
the Lender or any other person or entity which destroys or otherwise impairs
any indemnification, contribution or subrogation rights of such Guarantor or
the right of such Guarantor, if any, to proceed against the Borrower for
reimbursement, or any combination thereof; (v) subject to Paragraph 4
below, any defense based upon any taking, modification or release of any
collateral or guarantees for the Note, or any failure to create or perfect any
security interest in, or the taking of or failure to take any other action with
respect to any collateral securing payment or performance of the Note; (vi) any
rights

 

H-5

 

or defenses based upon any right to offset or
claimed offset by such Guarantor against any indebtedness or obligation now or
hereafter owed to such Guarantor by the Borrower; or (vii) any rights or
defenses based upon any rights or defenses of the Borrower to the Note or the
Deed of Trust (including, without limitation, the failure or value of
consideration, any statute of limitations, accord and satisfaction, and the
insolvency of the Borrower); it being intended, except as expressly set forth
in Paragraph 1 above, that such Guarantor shall remain liable hereunder, to the
extent set forth herein, notwithstanding any act, omission or thing which might
otherwise operate as a legal or equitable discharge of any of such Guarantor or
of the Borrower.

 

4.                                       Amendment of
Note and Deed of Trust. 
Without in any manner limiting the generality of the foregoing, the
Lender or any subsequent holder of the Note or beneficiary of the Deed of Trust
may, from time to time, without notice to or consent of the Guarantors, agree
to any amendment, waiver, modification or alteration of the Note or the Deed of
Trust relating to the Borrower and its rights and obligations thereunder
(including, without limitation, renewal, waiver or variation of the maturity of
the indebtedness evidenced by the Note, increase or reduction of the rate of
interest payable under the Note, release, substitution or addition of any
Guarantor or endorser and acceptance or release of any security for the Note),
it being understood and agreed by the Lender, however, that the Guarantor’s
obligations hereunder are subject, in all events, to the limitations set forth
in Paragraph 1; provided that upon any material
change to the Note or the Deed of Trust, including, without limitation, the
maturity date or the interest rate of the Note, or upon any release or
substitution of any Collateral securing the Note, within thirty (30) days of
any Guarantor’s receipt of actual notice of such event, subject to the
following sentence, such Guarantor may elect to terminate such Guarantor’s
obligations under this Guarantee by written notice to the Lender.  Such termination shall take effect on the
31st day following such actual notice, provided  that no default under the Guaranteed Obligation has occurred
and is then continuing.

 

5.                                       Termination of
Guarantee.  Subject to
Paragraph 4, this Guarantee is irrevocable as to any and all of the Guaranteed
Obligations.

 

6.                                       Independent
Obligations.  Except as
expressly set forth in Paragraph 1, the obligations of each Guarantor hereunder
are independent of the obligations of the Borrower, and a separate action or
actions may be brought by a Lender against the Guarantors, whether or not
actions are brought against the Borrower. 
Each Guarantor expressly waives any and all rights of subrogation,
reimbursement, indemnity, exoneration, contribution or any other claim which
such Guarantor may now or hereafter have against the Borrower, or any other
person directly or contingently liable for the payment or performance of the
Note and the Deed of Trust arising from the existence or performance of this
Guarantee (including, but not limited to, the Company or any other member of
the Company) (except and only to the extent that a Guarantor makes a payment to
the Lender in excess of the amount required to be paid under paragraph 1 and
the limitations set forth therein).

 

7.                                       Understanding
With Respect to Waivers.  Each
Guarantor warrants and represents that each of the waivers set forth above are
made with full knowledge of their significance and consequences, and that under
the circumstances, the waivers are reasonable and not contrary to 

 

H-6

 

public policy or law.  If any of said waivers are determined to be
contrary to any applicable law or public policy, such waiver shall be effective
only to the maximum extent permitted by law.

 

8.                                       No Assignment.  No Guarantor shall be entitled to assign his
or her rights or obligations under this Guarantee to any other person without
the written consent of the Lender.

 

9.                                       Entire
Agreement.  The parties
agree that this Guarantee contains the entire understanding and agreement
between them with respect to the subject matter hereof and cannot be amended,
modified or superseded, except by an agreement in writing signed by the
parties.

 

10.                                 Notices.  Any notice given pursuant to this Guarantee
shall be in writing and shall be deemed given when delivered personally, or
sent by registered or certified mail, postage prepaid, as follows:

 

If to the Company:

 

Wakefield
Capital, LLC.

2
Wisconsin Circle, Suite 540

Chevy
Chase, Maryland  20815

Attention:  Chief Executive Officer

Facsimile:
(       )        -        

 

 

With a
copy to:

 

NorthStar Realty Finance Corp.

399 Park Avenue, 18th Floor

New York, New York  1002

Attention:  General Counsel

(212) 202-4103

 

or to such other address with respect to
which notice is subsequently provided in the manner set forth above; and

 

If to a Guarantor, to the
address set forth on Exhibit A
hereto, or to such other address with respect to which notice is subsequently
provided in the manner set forth above.

 

11.                                 Applicable Law.  This Guarantee shall be governed by,
interpreted under and construed in accordance with the laws of the State of New York without reference to
its choice of law provisions.

 

12.                                 Consent to
Jurisdiction; Enforceability

 

(a)  This Guarantee and
the duties and obligations of the parties hereto shall be enforceable against
each Guarantor in the courts of the State
of New York.  For such purpose,
each Guarantor hereby irrevocably submits to the nonexclusive jurisdiction of
such courts and 

 

H-7

 

agrees that all claims in respect of this
Guarantee may be heard and determined in any of such courts.

 

(b)  Each Guarantor
hereby irrevocably agrees that a final judgment of any of the courts specified
above in any action or proceeding relating to this Guarantee shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.

 

13.                                 Condition of
Borrower.  Each
Guarantor is fully aware of the financial condition of the Borrower and is
executing and delivering this Guarantee based solely upon its own independent
investigation of all matters pertinent hereto and is not relying in any manner
upon any representation or statement of the Lender or the Borrower.  Each Guarantor represents and warrants that
it is in a position to obtain, and hereby assumes full responsibility for
obtaining, any additional information concerning the Borrower’s financial
conditions and any other matter pertinent hereto as it may desire, and it is
not relying upon or expecting the Lender to furnish to it any information now
or hereafter in the Lender’s possession concerning the same.  By executing this Guarantee, each Guarantor
knowingly accepts the full range of risks encompassed within a contract of this
type, which risks it acknowledges.

 

14.                                 Expenses.                                           Each Guarantor
agrees that, promptly after receiving Lender’s notice therefor, such Guarantor
shall reimburse Lender, subject to the limitation set forth in subparagraph 1(e) and
to the extent that such reimbursement is not made by Borrower, for all
reasonable expenses (including, without limitation, reasonable attorneys fees
and disbursements) incurred by Lender in connection with the collection of the
Guaranteed Obligations or any portion thereof or with the enforcement of this
Guarantee.

 

H-8

 

IN WITNESS WHEREOF, the
undersigned Guarantors set forth on Exhibit A
hereto have executed this Guarantee as of the date first set forth above.

 

 

	
   

  	
  GUARANTORS SET FORTH ON

  
	
   

  	
  EXHIBIT A HERETO:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Donald C. Tomasso

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Robert A. Sweet

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Timothy P. O’Brien

  

 

 

Exhibit A to Guarantee

 

 

	
  Name and
  Address of Member Guarantors

  	
   

  	
  Guaranteed Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Guarantors, as a group

  	
   

  	
  $

  	
   

  	
   

  
					

 

 

	
   

  	
   

  	
  Individual

  
	
   

  	
   

  	
  Guarantee

  
	
  Individual Guarantors:

  	
   

  	
  Percentage

  
	
   

  	
   

  	
   

  
	
  Donald
  C. Tomasso

  	
   

  	
                %

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Robert
  A. Sweet

  	
   

  	
                %

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Timothy
  P. O’Brien

  	
   

  	
                %

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

H-11

 

Exhibit B to Guarantee

 

	
  Name of Lender

  	
   

  	
  Name of Borrower

  	
   

  	
  Date of and

  Principal Amount

  of Loan

  	
   

  	
  Debt Balance as of

     /   /   

  	
   

  	
  Guaranteed

  Amount

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

Exhibit C to Guarantee

 

Copy of
Note

 

 

Exhibit D to Guarantee

 

Identification
of Deed of Trust and

 

Brief
Summary Description of Collateral

 

H-1

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