SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) April 23, 1999
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AvTel Communications, Inc.
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(Exact name of registrant as specified in its charter)
Commission File No. 0-27580
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Delaware 87-0378021
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
501 Bath Street, Santa Barbara, California 93101
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 805-884-6300
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(Former Name or Former Address, if changed since last report)
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INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 5. OTHER EVENTS
Private Equity Line of Credit Agreement
On April 23, 1999, the Registrant entered into a Private Equity Line of
Credit Agreement (the "Equity Agreement") with Cambois Finance, Inc., a British
Virgin Islands corporation (the "Investor"). Pursuant to the Equity Agreement,
the Investor, subject to certain significant conditions, agreed to purchase up
to $13,500,000 of the Registrant's Common Stock (the "Common Stock") over three
years, as, when and if shares are put to the Investor by the Registrant. The
actual number of shares that may be issued by the Registrant under the Equity
Agreement is limited to 2,103,939 shares, unless and until the Registrant
obtains approval of the Equity Agreement from its stockholders pursuant to the
applicable corporate governance rules of The Nasdaq Stock Market.
The Registrant's ability to require the Investor to purchase Common
Stock is subject to a number of significant conditions, including the continued
effectiveness of the Registration Statement described below. There can be no
assurance that the Investor will be able to purchase Common Stock when and as
required by the Registrant under the Equity Agreement.
The Registrant may put shares to the Investor in amounts ranging from
$75,000 up to $2,000,000 (varying with the Common Stock's trading price and
volume) every 15 trading days. The purchase price for the shares put to the
Investor will be 89% of the lowest closing bid price for the Common Stock on The
Nasdaq SmallCap Market during the five trading days preceding the delivery of
the put notice to the Investor by the Registrant. The Registrant may not put
shares to the Investor unless the lowest closing bid price during such five
trading day period is in excess of $2.25 per share. The closing bid price for
the Common Stock on April 30, 1999, was $5.625 per share.
In connection with the Equity Agreement, the Registrant and the
Investor entered into a Registration Rights Agreement (the "Registration Rights
Agreement") that requires the Registrant to file, and obtain and maintain the
effectiveness of, a Registration Statement on Form S-1 with the Commission in
order to register the sale and public resale of shares of the Common Stock
acquired by the Investor under the Equity Agreement (the "Registration
Statement"). The Investor will be named as an underwriter in such Registration
Statement. The Investor will also be subject to certain restrictions on short
selling of the Common Stock and certain "blackout" periods on its ability to
resell Common Stock under the Registration Statement. If the Registration
Statement has not been declared effective by October 30, 1999, the Investor's
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obligation to purchase Common Stock under the Equity Agreement shall terminate,
and the Registrant will be required to pay the Investor $25,000 in liquidated
damages.
The Registrant has issued 3,000 shares of Common Stock to Trinity
Capital Advisors, Inc. and is required to pay four percent of all proceeds
actually received by the Registrant under the Equity Agreement to Trinity
Capital Advisors, Inc. as compensation for arranging the transactions set forth
in the Equity Agreement.
Copies of the Equity Agreement and the Registration Rights Agreement
are attached as exhibits to this Current Report on Form 8-K and are incorporated
herein by this reference.
Appointment of Chief Financial Officer
Effective May 1, 1999, Michael Ussery, CPA, became the Registrant's
Chief Financial Officer.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
C. EXHIBITS.
Exhibit 10.1 Private Equity Line of Credit Agreement dated as of April 23,
1999, between the Registrant and Cambois Finance, Inc.
Exhibit 10.2 Registration Rights Agreement dated as of April 23, 1999,
between the Registrant and Cambois Finance, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
AVTEL COMMUNICATIONS, INC.
By: /S/ ANTHONY E. PAPA
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Anthony E. Papa
Chief Executive Officer
Date: May 3, 1999
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EXHIBIT INDEX
Exhibit 10.1 Private Equity Line of Credit Agreement dated as
of April 23, 1999, between the Registrant and Cambois
Finance, Inc.
Exhibit 10.2 Registration Rights Agreement dated as of April
23, 1999, between the Registrant and Cambois Finance,
Inc.