Item 1.01
Entry
into a Material Definitive Agreement.
The
Restructuring Transactions
On
February 14, 2017, GreeneStone Healthcare Corporation, a Colorado corporation (“GreeneStone” or the “Company”)
completed a series of transactions (referred to collectively as the “Restructuring Transactions”), including a share
purchase agreement (the “SPA”) whereby GreeneStone acquired the stock of the company holding the Muskoka healthcare
clinic real estate, an asset purchase agreement (the “APA”) and lease (the “Lease”) whereby the Company
sold all of the Muskoka clinic business assets and leased the clinic building to the buyer, and a real estate purchase agreement
and asset purchase agreement whereby GreeneStone purchased the real estate and business assets of a healthcare clinic in Florida
(the “Florida Purchase”).
The
Stock Purchase Agreement
Under
the SPA, the Company acquired 100% of the stock of Cranberry Cove Holdings Ltd. (“CCH”) from Leon Developments Ltd.
(“Leon Developments”), a company wholly owned by Shawn E. Leon, who is the President, CE, and CFO of GreeneStone (“Mr.
Leon”). CCH owns the real estate on which the Company’s rehabilitation clinic (“the Canadian Rehab Clinic”)
in Muskoka, Ontario is located. The total consideration paid by GreeneStone was CDN$3,300,000 (an appraised value of CDN$10,000,000
less the outstanding mortgage loan), which was funded by the assignment to Leon Developments of certain indebtedness owing to
GreeneStone in the amount of CDN$659,918, and the issuance of 60,000,000 shares of the Company’s common stock to Leon Developments,
valued at approximately US$0.033 per share (the “Shares”).
The
Asset Purchase Agreement and Lease
Under
the APA, the assets of the Canadian Rehab Clinic were sold by GreeneStone, through its subsidiary, GreeneStone Clinic Muskoka
Inc. (the “Rehab Clinic Subsidiary”), to Canadian Addiction Residential Treatment LP (the “Purchaser”),
for a total consideration of CDN$10,000,000, plus an additional performance payment of up to CDN$3,000,000 performance payment
to be received in 2019 if certain clinic performance metrics are met. The Purchaser completed the sale with cash proceeds to the
Company of CDN$10,000,000, of which CDN$1,500,000.00 will remain in escrow for up to two years to cover indemnities given by the
Company. Aside from using the proceeds of the Muskoka clinic asset sale to pay down significant tax debts and operational costs
of the Company, the Company also used the proceeds to fund the Florida Purchase.
Through
the APA, substantially all of the assets of the Rehab Clinic Subsidiary were sold, leaving GreeneStone with only the underlying
clinic real estate, which GreeneStone through its newly acquired subsidiary CCH concurrently leased to the Purchaser. The Lease
is a triple net lease and provides for a five (5) year primary term with three (3) five year renewal options, annual base rent
for the first year at CDN$420,000 with annual increases, an option to tenant to purchase the leased premises and certain first
refusal rights, all as set forth in the Lease filed herewith as Exhibit 10.3.
The
Florida Purchase
Immediately
after closing on the sale of its Muskoka clinic business, GreeneStone closed on the acquisition of the business and real estate
assets of Seastone addiction treatment center in Delray Beach, Florida pursuant to certain real estate and asset purchase agreements
described in and filed as exhibits to the May 17, 2016 Form 8K of the Company. This business will be operated through a newly
formed Florida limited liability company named Seastone Delray Healthcare LLC. The purchase price for the Seastone assets was
US$6,150,000 financed with a purchase money mortgage of US$3,000,000, a US$250,000 convertible promissory note from one of the
sellers of the assets (the “Note”), and US$2,900,000 cash.
The
Note issued is in the principal amount of USD$250,000.00, bears a 0% interest rate and matures twenty-four (24) months from the
date of issuance, on February 13, 2019, and gives the holder the right from time to time and at any time, to convert all or any
part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of the Company’s
common stock, subject to various other terms and conditions specified in the Note which is filed herewith as Exhibit 10.4.
The
foregoing description of the Restructuring Transactions does not purport to be complete and is qualified in its entirety by reference
to the underlying agreements of the Restructuring Transactions, including the SPA, APA, Lease and Note, copies of which are attached
hereto as Exhibits 10.1, 10.2, 10.3 and 10.4 respectively, and which are incorporated herein by reference. In addition, a copy
of the Company’s press release announcing the Restructuring Transactions is filed with this report as Exhibit 99.1, and
is incorporated herein by reference.