Letter of Intent

 

December 29, 2015

 

Mr. Michael Bruneau

Aurora Recovery Centre LP

20024 Lakeside Road,

Gimli, Manitoba

 

Dear Michael:

 

RE: GreeneStone Healthcare Corporation (through a Nominee Company) asset
purchase from Aurora Recovery Centre LP

 

This Letter of Intent (“LOI”), if accepted, will constitute the basis for a
formal Agreement of Purchase and Sale between Greenestone Healthcare Corporation
in Trust for a Company to be incorporated ("GSGIMLI") as purchaser and Aurora
Recovery Centre LP (“ALP") as seller in which said agreement is to be executed
prior to the expiry of the conditional period set out in Paragraph 13 herein
(the “Agreement”).

 

1.GSGIMLI is prepared to acquire all of ALP's right, title and interest to its
business assets, a minimum of $1,000,000 in cash and real property namely the
two Gimli properties more particularly described in Schedule A (the
“Properties”). Without limiting the generality of the foregoing the assets shall
include all interest in the equipment, chattels, supplies, leasehold
improvements, patients, patient files, intellectual property, referral sources
and undeveloped opportunities together with goodwill (the "Assets").

2.As consideration GreeneStone and GSGIMLI will pay up to $12,500,000 for the
purchase of the Assets. GSGIMLI will assume total debts of $8,500,000 consisting
of a first mortgage of $4,000,000 and a second mortgage of $4,500,000.
GreeneStone will issue 60,000,000 shares as additional consideration for the
Assets which at the time of the signing of this agreement was valued at
$4,000,000. GreeneStone shall have no more than 160,000,000 shares outstanding
immediately prior to closing. In addition, GreeneStone combined with its wholly
owned subsidiary GreeneStone Clinic Muskoka Inc. ("GCMI"), shall have no less
than $1,000,000 in cash and a maximum of short term liabilities equal to or less
than the short term assets excluding cash immediately prior to closing. The
fixed assets of GreeneStone and GCMI combined shall include the Bala, Ontario
property at 3571 Muskoka Road 169 and all of the assets required to conduct the
business at this location and the combined long term liabilities shall not
exceed $8,500,000. The transaction shares shall carry rights to participate on a
pro-rata basis, in any new equity issuances by GreeneStone, over and above the
shares that will be outstanding at the time of closing, for a period of two
years.

3.ALP will designate 20,000,000 of the 60,000,000 shares it receives to be held
in escrow provided the following performance requirements are met. The earnings
excluding depreciation and amortization of GSGIMLI shall not, in the aggregate
for the first twenty four months of operations, exceed a loss of $1,000,000. The
escrow shares will be released upon the earlier of 24 months of operations with
losses not to exceed $1,000,000 as described above or upon the event that the
aggregate earnings excluding depreciation and amortization reaches $500,000.

4.The first mortgage shall be for a term of three years from the date of the
closing of this transaction, be fully open, bearing interest equal to the first
mortgage on the GreeneStone property but not exceeding 5.4% per annum, and shall
contain provisions preventing GSGIMLI from distributing any funds outside of
GSGIMLI for any purpose other than regular operating expenditures or payments on
behalf of the principal and interest of the first mortgage.

5.The second mortgage shall be for a term of three years from the date of the
closing of this transaction, be fully open, bearing interest at 5% per annum,
and shall contain provisions preventing GSGIMLI from distributing any funds
outside of GSGIMLI for any purpose other than regular operating expenditures or
payments on behalf of the principal and interest of the first mortgage and
second mortgage.

6.All employees of ALP shall be terminated prior to the closing of the
transaction. It is assumed that any employees or contracted professionals the
GCGIMLI wishes to employ will sign new employment or consulting agreements
excluding any carry forward of liability from previous employment with ALP.

7.There shall be no other liabilities other than those listed in this letter of
Intent or those listed below that shall be required to be assumed by GCGIMLI for
the execution of the business plan.

8.Notwithstanding that the ALP shall be selling its assets, it is required to
continue to audit its financial statements and it will be a requirement of the
proposed transaction that the ALP audited statements will be required to be
submitted to regulatory bodies in Canada and the United States.

9.ALP will represent and warrant that there shall be no liability with respect
to the Properties and the representations and warranties shall also be
guaranteed by the mortgage debt and the escrow shares up until the escrow period
is over. There shall be an offset allowed to be applied to the escrow equity for
the mitigation of any misrepresentations. These representations and warranties
shall include a bona fide appraisal of the property and environmental audit of
the property.

10.ALP and its shareholders shall be subject to standard non-competition and
non-solicitation clauses.

11.The General Partner of ALP shall be required to submit to GreeneStone its
plan of distribution of the proceeds of the proposed transaction and shall be
required to obtain any approvals required by its by-laws to the proposed
transaction and the distribution of the proceeds prior to January 31, 2016.

12.ALP will indemnify GreeneStone and any of its affiliates in accordance with
Schedule A hereto, which Schedule forms part of the Agreement and the
consideration for which is the entering into of the Agreement. Such indemnity
(the “Indemnity”) shall be executed and delivered to GreeneStone on the
execution of this LOI and shall be in addition to, and not substitution for, any
liability which ALP or any other party may have to GreeneStone or other parties
may have apart from the Indemnity.

13.The expected Closing Date is February 28, 2016 or another date as mutually
agreed to by the parties hereto. In consideration of the expenditure of time,
effort and money to be undertaken by GreeneStone following the acceptance of
this LOI by the ALP partners (collectively, the “Vendors”), ALP partners agree
that from and after the date hereof until the earlier of (a) the closing of the
proposed transaction; (b) the date upon which GreeneStone notifies the ALP
partners in writing that it no longer intends to pursue the proposed
transaction; and (c) January 31, 2016 (the “Exclusivity Period”), they will not,
and shall not permit, to the extent to which it or they have control or to the
extent legally possible, any officer, director, shareholder, affiliate, agent,
representative or other person acting on its or their behalf to, directly or
indirectly, continue, entertain, solicit or enter into any discussions, offers,
agreements or negotiations with any other person (whether solicited or
unsolicited), with respect to any transaction of purchase and sale similar to
the proposed transaction outlined in the LOI and shall suspend any existing
activities or discussions with any parties other than GreeneStone and its
representatives relating to a similar transaction unless such activities are
contemplated by this LOI. ALP partners agree to forthwith advise GreeneStone of
the details and to provide copies of any offers for the Company (by way of
assets, shares or otherwise) received during the Exclusivity Period.

14.The Parties agree to work together after the signing of this LOI to prepare a
business plan for the operation of the treatment centre in Gimli. This process
will help to determine how ALP will operate until closing. The business plan
will specify what type of resources will be required to operate the facility and
the budget for those resources for at least the first twelve months after
closing.

15.This letter sets out our intentions as to the principal terms and conditions
upon which the proposed transaction would be completed and, except as set out in
this paragraph and paragraph 13, is not a legally binding obligation of any of
the parties. The parties will have no obligation to close the proposed
transaction until all relevant legal agreements have been executed and delivered
and all other condition precedents have been completed to their satisfaction.
The binding definitive agreement shall be entered into no later than January 31,
2016 at which time this letter of intent shall no longer be in effect.

 

Sincerely,

 

GreeneStone Healthcare Corporation

GreeneStone Clinic Muskoka Inc.

 

/s/Shawn E. Leon

Shawn Leon, President

 

Accepted this __29th___ day of December, 2015

Aurora Recovery Center LP

 

/s/Michael Bruneau

Per: Michael Bruneau

 

Aurora Recovery Center GP Ltd.

 

/s/Michael Bruneau

Per: Michael Bruneau

 

SCHEDULE A

 

PROPERTY DETAILS

 

1.20024 Lakeside Road, RM of Gimli, Manitoba. Lot size 27.16 Acres    Legal
Description (in brief) Lots 2 & 3 Block 4 Plan 29639 WLTO

 

2.228 Municipal Drive, Gimli, Manitoba. Lot size 54,776 square feet.   Legal
Description (in brief) Lots 8 & 9 Block 7 Plan 23733 WLTO

 

 

SCHEDULE B

 

INDEMNITY

 

Promptly after receipt of notice of the commencement of any third-party legal
proceeding against an Indemnified Party or after the discovery of facts, on
which an Indemnified Party intends to base a request for indemnification
hereunder, such an Indemnified Party will notify the Company (the “Indemnitor”)
in writing of the commencement thereof or of such a discovery. An Indemnified
Party’s failure to provide such notice in a prompt manner does not relieve
Indemnitor of any liability it may have to any Indemnified Party, but in no
event shall Indemnitor be liable for any losses that result directly from a
delay in providing such notice. At the request of the Indemnitor, an Indemnified
Party will permit the Indemnitor and their counsel (which Indemnified Party
shall find reasonably satisfactory) to assume control of the defense of any
third-party claim, at Indemnitor’s sole cost and expense, that is reasonably
likely to give rise to an indemnification claim hereunder.

 

If control of the defense is assumed by the Indemnitor, the Indemnitor
throughout the course thereof will provide copies of all relevant documentation
to an Indemnified Party , will keep an Indemnified Party advised of the progress
thereof and will discuss with an Indemnified Party all significant actions
proposed. An Indemnified Party may employ, at any time, separate counsel to
represent it; provided, that such an Indemnified Party is solely responsible for
the costs and expenses of any such separate counsel.

 

Notwithstanding the foregoing, an Indemnified Party shall have the right, at the
Indemnitor’s expense, to employ counsel of such Indemnified Party’s choice, in
respect of the defence of any action, suit, proceeding, claim or investigation
(collectively, “Claim”) if: (i) the employment of such counsel has been
authorized by the Indemnitor; (ii) the Indemnitor has not assumed the defence
and employed counsel therefore within a reasonable time after receiving notice
of such Claim; or (iii) the Indemnified Party reasonably believes that (a) there
may be legal defences available to the Indemnified Party which are different
from or in addition to those available to the Indemnitor, (b) there is a
conflict of interest between the Indemnitor and the Indemnified Party or the
subject matter of the Claim or (c) such Claim involves, or could have a material
effect on, any material matter beyond the scope of the indemnification
obligations of the Indemnitor.

 

No admission of liability and no settlement of any Claim shall be made without
the consent of the Indemnified Parties affected, such consent not to be
unreasonably withheld. The Indemnitor shall not be liable for any settlement of
any Claim made without its consent(such consent not to be unreasonably
withheld), unless (a) such Claim is one for which the Indemnified Party gave the
Indemnitor notice and the Indemnitor fails to assume the defense or (b) such
settlement (i) includes an unconditional release of the Indemnitor from all
liability arising out of such Claim and (ii) does not contain any admission or
statement suggesting any wrongdoing or liability on behalf of the Indemnitor.

 

The indemnity and contribution obligations of the Indemnitor shall be in
addition to any liability which the Indemnitor may otherwise have, and shall be
binding upon and enure to the benefit of any successors, assigns, heirs and
personal representatives of the Indemnitor and the Indemnified Parties. The
foregoing provisions shall survive the completion of the Transaction or any
termination of the LOI.

 

Aurora Recovery Center LP

 

/s/ Michael Bruneau

Per: Michael Bruneau

 

Aurora Recovery Center GP Ltd.