Item 1.01
Entry into a Material Definitive Agreement.
On May
17, 2016 GreenStone Healthcare Corporation, a Colorado corporation (“GreenStone”), through its wholly owned subsidiary
Seastone Delray Healthcare, LLC, a Florida limited liability company (“Seastone Subsidiary” and, together with GreeneStone
and the Andrews Subsidiary (defined below), the “Company”), entered into an Asset Purchase Agreement (the “Purchase
Agreement”), and a Management Services Agreement (the “Management Agreement” and together with the Purchase
Agreement and the RE Contract (defined below), the “Transaction”), with Seastone of Delray, LLC, a Florida limited
liability company (“Seastone Delray”).
Pursuant
to the terms of the Purchase Agreement, the Company will purchase Seastone Delray’s business, which is primarily the practice
of providing addiction treatment health care services (the “Business”), and substantially all the assets used in connection
with the Business and other assets in which Seastone Delray has any right, title or interest, except those certain assets specifically
excluded in the Purchase Agreement. The Company has a 30-day due diligence period to assess the desire to purchase Seastone
Delray (the “Due Diligence Period”).
Pursuant
to the terms of the Management Agreement, the Company has the right to operate Seastone Delray’s Business for 90 days commencing
on June 15, 2016 or earlier if the Company waives the Due Diligence Period (the “Management Period”). During the Management
Period, the Company is entitled to the revenues from the Business and will pay Seastone Delray $20,000 per month to cover certain
costs related to the Business, which shall increase to $28,000 per month if the Management Agreement is extended beyond 90 days.
The Management Agreement may be terminated by either party if the Purchase Agreement does not close by September 15, 2016.
Also on May 17, 2016, the Company
entered into a commercial real estate contract (the “RE Contract”) with Seastone Condominiums of Delray, LLC and
810 Andrews, LLC, both Florida limited liability companies (together, the “RE Sellers”). Pursuant to the RE
Contract and in connection with the Transaction, the Company will acquire certain real property,
and, prior to the closing, intends to assign the RE Contract to Delray Andrews RE, LLC, a Florida limited liability company
and a wholly-owned subsidiary of the Company (“Andrews Subsidiary”). There is a 15-day due diligence period
related to the RE Contract.
The purchase
price for the Transaction is $6,150,000, which is being funded by a purchase money first mortgage in the amount
of $3,000,000 at 5% per annum payable at $15,000 per month for three years; and $3,150,000 in cash. The Company has deposited
$60,000 in escrow.
The closing
of the Transaction is anticipated to be September 15, 2016 and is contingent upon (i) the Company obtaining the requisite licenses
from the appropriate governmental agencies for the operation Seastone Delray’s Business; and (ii) the Purchase Agreement
closing simultaneously with the RE Contract.