Tasker plans $8 million financing, which requires amending its 6% convertibles due 2010

By Devika Patel

Knoxville, Tenn., Aug. 13 - Tasker Products Corp. said in an 8-K filed Wednesday with the Securities And Exchange Commission that it has entered into an agreement with an agent to raise up to $8 million in a private placement, the terms of which are still under negotiation.

The financing will also require that the company amend its agreement with the holders of its 6% secured convertible notes due Sept. 27, 2010 and its 6% secured convertible notes due Dec. 20, 2010.

The company hopes to raise up to $6 million through a placement, which includes bridge loans, and an additional $2 million through a receivables-based revolving financing.

The revolving financing and the bridge loans will be senior to the convertibles.

The holders have waived conversion price adjustments in connection with the financing, in favor of a new conversion price.

In the event that the conversion price for the notes expected to be issued in the financing is greater than or equal to $0.04 per share, the new conversion price of the convertibles will be reduced to $0.044 per share.

If the conversion price for the notes expected to be issued in the financing is less than $0.04 per share, the new conversion price of the convertibles will be reduced to a conversion price that equals the product of the conversion price of the new notes multiplied by 1.1.

The convertibles' maturity dates will be extended by six months.

The holders have waived face value and strike price adjustments for the warrants that were issued with the convertibles. The adjustments would otherwise be made to the warrants in connection with the financing. Instead, the holders wish to keep the same number of warrants with a new exercise price.

In the event that the exercise price of the warrants expected to be issued in the financing equals or exceeds $0.07 per share, the new exercise price for the convertibles' warrants will remain at, or be reduced to, $0.07 per share.

If the exercise price of the warrants expected to be issued in the financing is, or should become, less than $0.07 per share, the new exercise price for the convertibles' warrants will be reduced by an amount equal to the product of the exercise price of the new warrants multiplied by 1.2.

The convertibles investors waived immediate registration rights, including piggy back registration rights, and participation rights for the financing.

The convertibles' amendment provisions were changed to permit each holder to consent to the amendment of its convertible note without affecting other convertible notes and to permit amendment of all convertible notes upon the consent of at least 95% of the then outstanding convertible notes and amendment of all related warrants upon the consent of holders of warrants exercisable for at least 95% of shares issuable upon exercise of all warrants.

Tasker is a chemical company based in Danbury, Conn.

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