Item 1.01 Entry into a Material Definitive Agreement.





Asset Purchase Agreement

On November 25, 2019, AdvanSource Biomaterials Corporation, a Delaware corporation (the "Company"), and Mitsubishi Chemical Performance Polymers, Inc., a Delaware corporation ("Buyer"), entered into an Asset Purchase Agreement (the "Purchase Agreement"), pursuant to which the Company agreed to sell substantially all of its assets to Buyer on the terms and subject to the conditions set forth in the Purchase Agreement (the "Asset Sale"). As consideration for the Asset Sale, Buyer has agreed to pay the Company $7.25 million.

Representations and Warranties

The Purchase Agreement contains customary representations and warranties by each of Buyer and the Company. Many of the representations and warranties are subject to qualifications and limitations agreed to by the parties in connection with negotiating the terms of the Purchase Agreement or to information provided pursuant to certain disclosure schedules to the Purchase Agreement. The representations and warranties made by the parties do not survive the closing of the Asset Sale (the "Closing") and there are no indemnification rights for another party's breach.





Covenants of the Parties

Each party has agreed to use its commercially reasonable efforts to cause the various conditions to Closing to be satisfied as soon as practicable after the date of the Purchase Agreement to effect the Closing. The Purchase Agreement also contains certain customary covenants by each of the parties during the period between the signing of the Purchase Agreement and the earlier of the Closing or the termination of the Purchase Agreement in accordance with its terms (the "Interim Period").

The Purchase Agreement and the consummation of the transactions contemplated thereby require that the Company receive the requisite approval from the Company's stockholders. The Company agreed, as soon as reasonably practicable after the date of the Purchase Agreement, to convene a special meeting of the Company's stockholders to approve the Purchase Agreement, the transactions contemplated thereby and related matters and to prepare, with the cooperation and consultation of Buyer, and file with the Securities and Exchange Commission (the "SEC") a proxy statement for the purpose of soliciting proxies from the stockholders of the Company at the special meeting of the stockholders.

The Company agreed not to directly or indirectly solicit, initiate or knowingly take any action to facilitate or encourage the submission of any alternative takeover proposal or any proposal that could reasonably be expected to lead to an alternative takeover proposal, or enter into any agreement in principle, letter of intent, term sheet, acquisition agreement, merger agreement, option agreement relating to an alternative takeover proposal during the Interim Period; provided that, prior to obtaining the requisite approval from the Company's stockholders, the Company's board of directors may (i) engage in discussions or negotiations with a third-party with respect to an unsolicited alternative takeover proposal that its board of directors determines in good faith (after consultation with its financial advisor and its outside legal counsel) constitutes or is reasonably likely to lead to a superior proposal, and (ii) following the receipt of a superior proposal, make an Adverse Recommendation Change (defined below) and the Company may furnish non-public information relating to the Company to such third-party.

The Company agreed that its board of directors would recommend that the Company's stockholders vote in favor of the adoption of the Asset Sale and that it would not change or withdraw such recommendation or enter into an alternative acquisition agreement unless, prior to receiving the approval of the Company's stockholders, the Company (i) receives an unsolicited alternative takeover proposal that it determines in good faith to be superior to the transactions contemplated by the Purchase Agreement and that the failure to take such action would reasonably be expected to be inconsistent with the board of director's fiduciary duties, or (ii) experiences a material intervening event, circumstance, change or condition occurs or arises with respect to the Company after the date of the Purchase Agreement that was not reasonably foreseeable or known by the Company's board of directors as of the date of the Purchase Agreement and does not relate to another acquisition proposal or transaction. In case of either of the foregoing, the Company's board of directors is entitled to change its recommendation prior to the special meeting of the Company's stockholders (an "Adverse Recommendation Change"). Prior to such Adverse Recommendation Change, if requested by Buyer, Buyer shall have a five (5) business day period to negotiate modifications to the Purchase Agreement with the Company in order to obviate the need for the Adverse Recommendation Change.





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Conditions to Consummation of the Asset Sale

The obligations of the parties to consummate the Asset Sale is subject to various conditions, including the following mutual conditions of the parties unless waived: (i) no order being enacted by a government authority preventing or prohibiting the transactions contemplated by the Purchase Agreement; (ii) no litigation pending before a governmental authority preventing or prohibiting the transactions contemplated by the Purchase Agreement and (iii) the approval of the Purchase Agreement and the transactions contemplated thereby and related matters by the requisite vote of the Company's stockholders.

In addition, unless waived by the Company, the obligation of the Company to consummate the Asset Sale is subject to the satisfaction of the following Closing conditions, in addition to the delivery of customary certificates and other Closing deliveries:

? The representations and warranties of Buyer being true and correct as of the

date of the Purchase Agreement and as of the Closing (with certain

representations subject to a material adverse effect qualifier); and

? Buyer having performed and complied in all material respects with its covenants

and agreements under the Purchase Agreement required to be performed or

complied with on or prior the date of the Closing.

Unless waived by Buyer, the obligation of Buyer to consummate the transactions is subject to the satisfaction of the following Closing conditions, in addition to the delivery of customary certificates and other Closing deliveries:

? The representations and warranties of the Company being true and correct as of

the date of the Purchase Agreement and as of the Closing (with certain

representations subject to a material adverse effect qualifier);

? The Company having performed and complied in all material respects with its

covenants and obligations under the Purchase Agreement required to be performed

or complied with on or prior to the date of the Closing; and

? The absence of any material adverse effect with respect to the Company since

the date of the Purchase Agreement which remains continuing and uncured.






Termination

The Purchase Agreement may be terminated under certain customary and limited circumstances at any time prior to the Closing, including:

? by written mutual agreement of the Company and Buyer;

? by either the Company or Buyer by written notice to the other party in the


    event that:

? there shall be any applicable law that makes consummation of the Purchase

Agreement illegal or otherwise prohibited;

? any governmental authority shall have issued a governmental order restraining

or enjoining the Purchase Agreement, and such governmental order shall have

become final and non-appealable;

? the closing shall not have occurred by March 31, 2020 (the "Outside Date");

provided that the right to terminate the Purchase Agreement due to the Outside

Date shall not be available to any party whose failure to perform or comply

with any of the covenants, agreements or conditions in the Purchase Agreement

has been the primary cause of, or the primary factor that resulted in, the

failure of the Closing to be consummated by the Outside Date; or

? if the requisite approval from the Company's stockholders shall not have been

obtained at the special meeting duly convened therefor or at any adjournment or

postponement thereof at which a vote to approve the transactions contemplated

by the Purchase Agreement was taken; provided that the Company shall not be

permitted to terminate the Purchase Agreement due to a failure to obtain the

requisite approval from the Company's stockholders, if such failure to is

proximately caused by any action or failure to act of the Company that

constitutes a breach of the Purchase Agreement.






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 ? by the Company:

? by written notice to Buyer if the Company is not then in material breach of any

provision of the Purchase Agreement and there has been a breach, inaccuracy in

or failure to perform any representation, warranty, covenant or agreement made

by Buyer pursuant to the Purchase Agreement that would give rise to the failure

of any of the Closing conditions specified in the Purchase Agreement and such

breach, inaccuracy or failure has not been cured by Buyer within fifteen (15)

business days of Buyer's receipt of written notice of such breach from the


   Company; or

? by written notice to Buyer, at any time prior to receiving the requisite

approval from the Company's stockholders, if (i) (x) the Company has received a

Superior Proposal and the board of directors of the Company authorized the

Company to enter into an Alternative Acquisition Agreement to consummate a

transaction contemplated by that Superior Proposal or (y) the board made an

Adverse Recommendation Change as a result of an Intervening Event, and (ii) the

Company has complied in all material respects with certain terms in the

Purchase Agreement with respect to such Superior Proposal.




 ? by Buyer:

? by written notice to the Company if Buyer is not then in material breach of any

provision of the Purchase Agreement and there has been a breach, inaccuracy in

or failure to perform any representation, warranty, covenant or agreement made

by the Company pursuant to the Purchase Agreement that would give rise to the

failure of any of the Closing conditions specified in the Purchase Agreement

and such breach, inaccuracy or failure has not been cured by the Company within

fifteen (15) business days of the Company's receipt of written notice of such


   breach from Buyer; or

? by written notice to the Company, if at any time the board of directors of the

Company (or a committee thereof) has effected an Adverse Recommendation Change.




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If the Purchase Agreement is terminated, all further obligations of the parties under the Purchase Agreement will terminate and be of no further force and effect (except that certain obligations related to confidentiality, termination and certain general provisions will continue in effect).

The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Voting and Support Agreements

In connection with the Asset Sale, certain officers and the directors of the Company who are also stockholders entered into Voting and Support Agreements (each a "Voting Agreement"). Under the Voting Agreements, the stockholders agree to vote all of their shares of the Company's common stock in favor of the Purchase Agreement and related transactions and to otherwise take certain other actions in support of the Purchase Agreement and related transactions and refrain from taking actions that would adversely affect such stockholder's ability to perform its obligations under the Voting Agreement. The Voting Agreements prevent transfers of the Company's common stock held by the stockholder party thereto between the date of the Voting Agreement and the date of the Company's special meeting of stockholders, except for certain permitted transfers.

The foregoing description of the Voting Agreement does not purport to be complete and is qualified in its entirety by reference to the form of Voting Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.





(d) Exhibits



Exhibit
Number                                  Description
2.1†*       Asset Purchase Agreement, dated November 25, 2019, by and between
          AdvanSource Biomaterials Corporation and Mitsubishi Chemical Performance
          Polymers, Inc.
10.1        Form of Voting and Support Agreement




  † Certain schedules and exhibits to the Agreement have been omitted pursuant to
    Item 601(b)(2) of Regulation S-K. The Company hereby agrees to furnish
    supplementally a copy of any omitted schedule and/or exhibit to the SEC upon
    request.
  * Certain sensitive financial, commercial and strategic information relating to
    the Company has been redacted in the marked portions of the exhibit.




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