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)
August 4, 1997
CAI WIRELESS SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Connecticut 0-22888 06-1324691
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
18 Corporate Woods Blvd., Albany, NY 12211
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (518) 462-2632
(Former name or former address, if changed since last report)
Item 5 - OTHER EVENTS
On August 4, 1997, CAI Wireless Systems, Inc. (the "Company")
secured access to digitally-compressed programming for its subscription
television business through an affiliation agreement (the "Affiliation
Agreement") with TelQuest Satellite Services LLC ("Satellite Services").
Pursuant to the terms of the Affiliation Agreement, the Company will receive
digital video programming for any of its markets in which it may elect to
launch a digital subscription television business. The Satellite Services
signal will initially be a C-Band satellite signal transmitted to the Company's
MMDS headends from the TelStar 5 Satellite successfully launched and deployed
by Loral Skynet in July. Satellite Services also plans to offer a direct-to-
home ("DTH") digital video programming service commencing in 1998. Upon launch
of such service, the Company will have an opportunity to market and sell the
Satellite Services DTH product along with the Company's headend service in the
Company's markets. The Company has the right to be the exclusive provider of
Satellite Services programming in each of its markets, subject to the payment
of certain minimum fees in certain circumstances and meeting certain
performance standards. The Company expects to use the Satellite Services
programming in Boston this fall in connection with the launch of the Boston
digital subscription television service.
The Satellite Services headend service will eliminate the need for CAI
to construct and operate a digital compression center in each of the markets in
which it decides to launch a digital subscription television service. As the
Company planned the build-out of its systems in fulfillment of its obligations
to Bell Atlantic Corporation ("Bell Atlantic") and NYNEX Corporation ("NYNEX")
under the Business Relationship Agreement (the "BR Agreement") among the
Company, Bell Atlantic and NYNEX, it did not contemplate the need to secure
digitally-compressed video programming as the Company was only required to
provide the MMDS transport system to Bell Atlantic and NYNEX under the BR
Agreement, and not any programming services. Under the BR Agreement, Bell
Atlantic and NYNEX would provide the programming for transmission over the
Company's facilities. With the decision by Bell Atlantic and NYNEX to abandon
their plans to utilize the Company's digital MMDS facilities to broadcast Bell
Atlantic/NYNEX programming in December 1996, the Company needed an alternative
programming solution for any market in which it decided to launch a digital
subscription television system. The Company believes that the use of Satellite
Service's national headend service is a substantially more cost-efficient means
of obtaining digitally-compressed video programming at this time than the
construction and operation of a digital compression center in each of the
markets in which it elects to launch digital subscription television services.
Satellite Services was formed as a joint venture among the Company, CS
Wireless Systems, Inc. and TelQuest Communications, Inc. ("Communications"), an
entity in which Jared E. Abbruzzese, Chairman and Chief Executive Officer of the
Company, is the majority stockholder. Satellite Services was created to develop
and operate satellite systems utilizing C-band and Ku-band satellite capacity to
provide digitally-compressed video programming to MMDS and hard-wire cable
operators and other users through headend and DTH services. Satellite Services
expects to begin providing headend services this fall via its national uplink
facility being constructed in Hawley, PA. In connection with the formation of
Satellite Services, CAI agreed to contribute $2,500,000 in cash and lease to
Satellite Services $2,500,000 of equipment at a nominal rental amount under a
five-year renewable lease in exchange for a minority interest in Satellite
Services. Upon the achievement of certain benchmarks, Satellite Services is
required to purchase the equipment from the Company at not less than its
then-current fair market value. The cash portion of the contribution is payable
in installments, the first of which was paid on August 4, 1997 in the amount of
$711,744, and included principal and accrued interest from an investment by the
Company in Communications in March 1997. The balance of the cash portion will
be payable in four equal quarterly installments of $447,064 beginning on
September 1, 1997.
Item 7 - FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
C. Exhibits
Exhibit No. Exhibit Description Page
99.1 MMDS Affiliation Agreement 5
(Confidential treatment has been
requested with respect to portions
of this Exhibit.)
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.
Signature Title Date
/s/ James P. Ashman Executive Vice President, Chief August 26, 1997
James P. Ashman Financial Officer and Director
(Principal Financial Officer)