Item
1.01 Entry into a Material Definitive Agreement.
As previously reported, on January 16, 2019,
Attis Ethanol Fulton, LLC (the “Purchaser”), an indirect wholly-owned subsidiary of Attis Industries Inc. (the “Company”),
entered into that certain Asset Purchase Agreement (the “Purchase Agreement”) with Sunoco Retail LLC (the “Seller”),
pursuant to which the Purchaser has agreed to acquire from the Seller certain assets of the Seller related to the Seller’s
ethanol production facility, including real property, intellectual property and other assets related to the ethanol production
business (collectively, the “Purchased Assets”) contingent upon a financing.
On May 31, 2019 (the “Closing Date”),
the Purchaser entered into the Second Amended and Restated Asset Purchase Agreement (the “Restated APA”) with the
Seller. The Restated APA contains customary representations, warranties and covenants and the closing occurred upon satisfaction
of customary closing conditions.
In consideration for the Purchased Assets,
(i) Purchaser will pay Seller $20,000,000 in cash (the “Cash Payment”) with $13,500,000 paid to the Seller by the Closing
Date and the remaining amount payable 30 days from the Closing Date, or later, subject to certain adjustments as set forth in the
Restated APA; (ii) Purchaser shall pay Seller an amount equal to the value of the raw materials inventory at the Facility (as defined
in the Restated APA) on the six (6) month anniversary of Closing Date; and (iii) on the six (6) month anniversary of Closing Date,
Purchaser shall pay Seller an amount equal to the value of the finished goods inventory at the Facility as of the closing.
On the Closing Date, Attis Biofuels, LLC,
an indirect subsidiary of the Company, the Company, Jeffrey S. Cosman, Chief Executive Officer of the Company,
and Highscore Capital LLC (“Highscore”), entered into a Loan and Security Agreement (the “Loan and Security
Agreement”) whereby the Seller issued to Highscore, a secured promissory note (the “Note”) in the principal
amount of $15,000,000. The Note is secured by a mortgage in the amount of $15,000,000 on the real property purchased as part of
the Purchased Assets. The interest on the Loan and Security Agreement is payable as follows: (i) on June 30, 2019, an amount equal
to three and one-half percent (3 ½%) of the outstanding principal balance, plus $1,075,000.00; and (ii) on July 5, 2019
and on the Friday of each succeeding week until the outstanding amount on the Loan and Security Agreement shall have been paid
in full $250,000. The Loan and Security Agreement and the Note contain customary events of default, representations, warranties
and covenants.
Additionally, the Company issued to Highscore
a warrant (the “Warrant”) to purchase 550,000 shares of the Company’s common stock. The Warrant is exercisable
beginning on November 30, 2019, at the price of $2.85 per share, subject to adjustment, expiring five years from the initial exercise
date. On or after July 29, 2019, if the Company is not listed on a national securities exchange following the first anniversary
of the date of issuance of the Warrant, if Highscore has not then exercised the Warrant in full on or prior to such date, at Highscore’s
option (such option being the “Put Right”), in lieu of exercising Highscore’s, the Company shall repurchase
from Highscore the Warrant, at $1.00 per share. Subsequent to the Company’s effective registration of certain securities
pursuant to, and to the extent of, its obligations under certain Registration Rights Agreements previously entered into by the
Company, Highscore has the right to demand in writing that the Company prepare and file with the U.S. Securities and Exchange
Commission (the “SEC”) a Registration Statement on Form S-1 or such other Registration Statement as the Company then
qualifies to use (other than on Form S-8 or S-4), as determined by the Company in its sole discretion, to effect a registration
of the shares of common stock underlying the Warrant covering the resale of such shares. The Company will utilize commercially
reasonable efforts to prepare and file such Registration Statement with the SEC within one hundred twenty (120) days after such
demand.
In connection with the Purchase Agreement,
the Company delivered a guaranty (the “Guaranty”) in favor of the Seller to guarantee the payment and performance
of all obligations, liabilities and indemnities of Purchaser. Additionally, in connection with the Restated APA, Sunoco LLC and
Purchaser entered into an Assignment and Assumption Agreement (the “Assignment”) whereby Sunoco LLC assigned to the
Purchaser certain contracts of the Sunoco LLC’s affiliates.
The above descriptions of the Purchase Agreement,
Restated APA, Warrant, Guaranty, Loan and Security Agreement, Assignment and Assumption Agreement, Subordination Agreement and
Note do not purport to be complete and are qualified in their entirety by reference to such documents filed as Exhibits 2.1, 2.2,
4.1, 10.1, 10.2, 10.3, 10.4 and 10.5 respectively, hereto.
On June 3, 2019 and June 4, 2019 the Company issued two press releases announcing the closing of the purchase of the Purchase
Assets. Copies of the press releases are filed hereto as Exhibits 99.1 and 99.2 and are incorporated herein by reference.