Attachment D

INSTRUCTIONS FOR COMPLETING FCC FORM 601

FCC Form 601: General Requirements

In completing the FCC Form 601 either electronically or manually, applicants are encouraged to use the format below in submitting the information required by our rules as exhibits. Although the suggested organizational approach is discretionary, submission of the materials in the manner described below should expedite the processing of the FCC Form 601.

Applicants bear full responsibility for submission of timely and complete FCC Form 601 applications. Applicants should read the instructions on the FCC Form 601 carefully and should consult the rules to ensure that, aside from the materials described below, all the information that is required under our rules is included with their FCC Form 601 applications. Incomplete or defective applications may be returned to the applicant. See 47 C.F.R. § 90.161(b)(6). Each applicant is responsible for the continuing accuracy and completeness of information furnished in a pending application. See 47 C.F.R. § 1.65.

An applicant that fails to submit the required FCC Form 601 application by 5:30 p.m. Eastern Standard Time on December 23, 1997, and fails to establish good cause for any late-filed submissions, shall be deemed to have defaulted and will be subject to the default payments set forth in 47 C.F.R. §§ 1.2104, 90.905.

Number of Forms To Be Filed

Electronic or manual filers applying for multiple licenses are not required to submit a separate application for each market if all filing requirements associated with the application are identical except for the market designator, channel block, and market name. Under these circumstances, applicants may submit one FCC Form 601 Main Form and Schedule B.

Frivolous Pleadings

Pursuant to 47 C.F.R. § 1.52, the Commission reminds parties to our proceedings and their attorneys that the Commission intends to fully use its authority to discourage and deter the filing of frivolous pleadings. See Public Notice, "Commission Taking Tough Measures Against Frivolous Pleadings," FCC 96-42 (rel. Feb. 9, 1996).

Organization of Application

Main Form

The FCC Form 601 Main Form should be completed in its entirety, except for Items 35 through 37, which do not apply. Note the following:

•	For Item 1 (Radio Service Code), enter YC.

•	For Item 2 (Application Purpose), enter NE for New.

•	For Item 3, enter N for N/A.

•	If you plan to file a request for a waiver or exception to the Commission's rules, enter Y in Item 6 and attach an exhibit that lists relevant rule section(s) and explains the circumstances.

•	If the Real Party in Interest differs from the applicant, the Taxpayer Identification Number entered in Item 12 must be registered with the FCC before Form 601 is filed.

Schedule B

On Schedule B, complete Items 1 through 3 for each market for which the applicant is filing. Note the following:

•	Complete Item 1 (Market Designator) with the BEA number of the market.

Note that the market codes have been changed from E001 through E175 to BEA001 through BEA175.

•	For Item 2 (Market Name), enter the market name.

•	For Item 3 (Channel Block), enter A, B, or C.

Electronic filers should note that the electronic filing software lists all market information for all markets that the applicant won in the auction. The applicant must select the markets it wants to include on the application.

Main Form-Related Exhibits

Any exhibits to be attached to an application in response to a question on the FCC Form 601 Main Form or on Schedule B should be identified as specified in the instructions to the FCC Form 601. Please attach those exhibits immediately behind the FCC Form 601 and the Schedule B.

Electronic filers should use the Attachment screen provided within the electronic filing software to submit these exhibits as uploaded files and should select the appropriate attachment type. The electronic filing software will accept a variety of file formats including Word, Word Perfect, Excel, Lotus, and ASCII text. See online help for a full list of acceptable file formats.

Rule-Related Exhibits

Any exhibits to be attached to an application as a result of our rule requirements should follow any FCC Form 601 Main Form or Schedule B exhibits. Please order and identify these exhibits as follows:

Title	Required From

Exhibit A:	Ownership	All Applicants

Exhibit B:	Foreign Ownership	If Applicable

Exhibit C:	Designated Entities	Designated Entity Applicants

Exhibit D:	Agreements & Other Instruments	If Applicable

Exhibit E:	Confidentiality Requests	If Applicable

Exhibit F:	Waiver Requests	If Applicable

As specified in the instructions to the FCC Form 601, each page of each exhibit must be identified with the number or letter of the exhibit, the number of the page of the exhibit, and the total number of pages of the exhibit.

Electronic filers should use the Attachment screen to upload each exhibit file and select the appropriate attachment type. The recommended titles listed above should be entered in the File Description field on the Attachment screen. The electronic filing software will accept a variety of file formats including Word, Word Perfect, Excel, Lotus, and ASCII text. See online help for a full list of acceptable file formats.

I. Applicant Identity and Ownership Information

Background

Section 90.123 of the Commission's rules requires each applicant to make full and complete disclosure with regard to the real party or parties in interest and as to all matters required to be disclosed by the application form.

Applicants should attach the information concerning the identity of the applicant (i.e., real party- or parties-in-interest) and ownership interests held in the applicant and in investors in the applicant. Each application shall be clear and complete in itself without cross reference to information previously filed. Please clearly label additional pages to indicate the Exhibit and Item number to which those pages relate.

EXHIBIT A: OWNERSHIP

Part 1: Direct Ownership

First, attach and label as "Exhibit A: Ownership" a document or series of documents that identifies all persons or entities that directly hold a five percent or more interest in the applicant. For each five percent interest holder listed, applicants should provide the following information:

Item (1) Name and address: Identify the name and address of the interest holder. If the interest holder is an individual, provide the name and address of that person, and indicate whether the interest holder is a partner, officer, director, or key manager (e.g., CEO, General Manager) of the applicant. If the interest holder is a corporation, provide the name and address of the corporate office and the name and title of an officer, director or authorized contact. If the interest holder is a partnership, provide the name and address of all partners, and the name, title and address of an authorized contact for the partnership.

Item (2) Principal Business: Describe the interest holder's principal business.

Item (3) Relationship to Other Interest Holder: Indicate whether the interest holder is related to any other five percent interest holder by blood or marriage, and provide the name of the related interest holder.

Item (4) Amount Held: Specify the amount held (e.g., number of shares of stock) for each type of interest specified.

Item (5) Type of Interest Held: Indicate whether the interest held is in the form of stocks, bonds, warrants, partnership, etc. If interests are held in stock, specify the class of stock and any voting rights associated with the stock. If the interests are held in a partnership, indicate whether the interests are limited or general partnership interests.

Item (6) Interests Held on Behalf of Others: If an interest is held in trust, or on behalf of another person or entity, identify the party for whom the interest is held.

Part 2: Indirect Ownership

Second, as part of "Exhibit A: Ownership" attach and label a document or series of documents that identifies all persons or entities that indirectly hold a five percent or more interest in the applicant. For each person or entity listed, provide the same information listed in Items (1)-(8) above as is requested for direct interests.

Electronic filers should select Attachment Type 'Ownership' and enter "Exhibit A: Ownership" in the File Description field on the Attachment screen.

EXHIBIT B: FOREIGN OWNERSHIP

If the applicant has responded "yes" to either Question 39, 40, 41, 42, or 43 on the FCC Form 601, attach and label as "Exhibit B: Foreign Ownership" a document that explains the circumstances regarding foreign ownership in the applicant. For every foreign owner, applicants should provide the following information:

Item (1) Percentage of Interest: Identify each foreign owner's percentage of ownership in the applicant.

Item (2) Country of Origin and Address: List each foreign owner's country of origin and principal place of business.

Electronic filers should select Attachment Type 'Ownership' and enter "Exhibit B: Foreign Ownership" in the File Description field on the Attachment screen.

EXHIBIT C: DESIGNATED ENTITIES

Pursuant to Section 90.910, small businesses and very small businesses are eligible for bidding credits of 25 percent and 35 percent respectively, to lower the cost of their winning bids. Small businesses and very small businesses are defined in Section 90.912. Applicants that are not claiming eligibility for bidding credits do not need to submit Exhibit C.

If applying for a bidding credit, attach and label as "Exhibit C: Designated Entities" a document or series of documents that identifies the gross revenues for three calendar or fiscal years preceding the filing of the applicant's FCC Form 175 based on audited financial statements. If the applicant does not have audited financial statements to document the gross revenues figures provided, it must provide a certification from its chief financial officer that the gross revenue figures indicated in its FCC Forms 175 and 601 applications are true, full, and accurate, and that the applicant does not have the audited financial statements that are otherwise required under our rules. See 47 C.F.R. § 90.912(c). Identify the applicant's claimed eligibility status and provide the requisite information demonstrating such status as indicated in the following instructions:

Small Businesses

Applicants claiming status as a small business must compute gross revenues in accordance with 47 C.F.R. § 90.912(b)(1) to demonstrate such status under our rules. A small business is an entity that, together with its affiliates and controlling principals, has average annual gross revenues that do not exceed $15 million for the preceding three years. Gross revenues for each year should be separately identified and followed by the computed average total gross revenues over those years. For purposes of determining whether an entity meets the $15 million definition, the gross revenues of the entity, its affiliates, and controlling principals shall be considered on a cumulative basis and aggregated. The status of the applicant as a minority-owned or women-owned business also is requested, but for statistical purposes only.

Very Small Businesses

Applicants claiming status as a very small business must compute gross revenues in accordance with 47 C.F.R. § 90.912(b)(2) to demonstrate such status under our rules. A very small business is an entity that, together with its affiliates and persons or entities that hold interests in such entity and their affiliates, has average annual gross revenues that are not more than $3 million for the preceding three years. Gross revenues for each year should be separately identified and followed by the computed average total gross revenues over those years. For purposes of determining whether an entity meets $3 million definition, the gross revenues of the entity, its affiliates, and controlling principals shall be considered on a cumulative basis and aggregated. The status of the applicant as a minority-owned or women-owned business also is requested, but for statistical purposes only.

Small Business & Very Small Business Consortia

Applicants that applied as small business consortia or very small business consortia as defined in 47 C.F.R. § 90.912(b)(1)-(2) must compute and indicate gross revenues as outlined above for each small or very small business in the consortium. That is, each business entity comprising the small or very small business consortia must qualify and show gross revenues separately. The gross revenues of each small or very small business shall not be aggregated. See 47 C.F.R. § 90.912(b)(3).

Electronic filers should select Attachment Type 'Ownership' and enter "Exhibit C: Designated Entities" in the File Description field on the Attachment screen.

II. Information Not Related to Identity or Ownership

The following exhibits provide places for the applicant to give the Commission information not related to the disclosure of the identity of the real party or parties in interest submitting an application or applications.

EXHIBIT D: AGREEMENTS & OTHER INSTRUMENTS

Applicants should attach and label as "Exhibit D: Agreements and Other Instruments" a detailed explanation of the terms and conditions and parties involved in any bidding consortia, joint ventures, partnerships or other agreements or arrangements into which the applicant has entered relating to the competitive bidding process prior to the time the bidding was completed. To comply with this requirement, applicants may either submit the agreements themselves or submit a detailed description of those agreements with proprietary information excluded. If applicants choose to submit the agreements, they can redact proprietary information or can seek confidentiality for those documents pursuant to Section 0.459 of the Commission's rules, 47 C.F.R. § 0.459 (see discussion of confidentiality requests under "Confidentiality Requests" below).

Electronic filers should select Attachment Type 'Other' and enter "Exhibit D: Agreements & Other Instruments" in the File Description field on the Attachment screen.

EXHIBIT E: CONFIDENTIALITY REQUESTS

Applicants should be aware that all information required by the Commission's rules in connection with applications to participate in spectrum auctions is necessary to determine the applicants' qualifications and, as such, will be available for public inspection. Required proprietary information may be redacted, and confidentiality may be sought pursuant to 47 C.F.R. § 0.459. Applicants requesting confidential treatment for any information required as a condition to participate in the auction must follow the procedures set out in 47 C.F.R. § 0.459.

If an applicant has sought confidential treatment of any information, it should attach and label as "Exhibit E: Confidentiality Requests" a statement which references the request; otherwise Exhibit E should be omitted. Because the required information bears on an applicant's qualifications, the Commission envisions that confidentiality requests will not be routinely granted. An applicant's request for confidentiality must include a demonstration that it would suffer substantial competitive harm from the public disclosure of the information in question.

Electronic filers should select Attachment Type 'Confidentiality' and enter "Exhibit E: Confidentiality Requests" in the File Description field on the Attachment screen.

Important:

All attachments will be available for public inspection unless the applicant has requested confidential treatment for each applicable attachment. Manual filers must clearly label each separate attachment for which they request confidential treatment in addition to providing Exhibit E. Electronic filers must select Attachment Type 'Confidentiality' for each attachment for which they request confidential treatment in addition to providing Exhibit E.

EXHIBIT F: WAIVER REQUESTS

In the event a winning bidder wishes to file a request for waiver, all such requests should be filed with the corresponding application as "Exhibit F: Waiver Requests." Waiver requests filed after the submission of the FCC Form 601 may result in a delay of the processing of the application. If a request for waiver is filed separately from the FCC Form 601, such request must reference the corresponding application.

Electronic filers should select Attachment Type 'Waiver' and enter "Exhibit F: Waiver Requests" in the File Description field on the Attachment screen.

Appendix to Attachment D

CODE OF FEDERAL REGULATIONS

TITLE 47--TELECOMMUNICATION

CHAPTER I--FEDERAL COMMUNICATIONS COMMISSION

SUBCHAPTER D--SAFETY AND SPECIAL RADIO SERVICES

PART 90--PRIVATE LAND MOBILE RADIO SERVICES

SUBPART V--COMPETITIVE BIDDING PROCEDURES FOR 800 MHZ SPECIALIZED MOBILE

RADIO SERVICE

§ 90.905 Withdrawal, default and disqualification payments.

(a) During the course of an auction conducted pursuant to § 90.902, the Commission will impose payments on bidders who withdraw high bids during the course of an auction, who default on payments due after an auction closes, or who are disqualified.

(b) Bid withdrawal prior to close of auction. A bidder who withdraws a high bid during the course of an auction will be subject to a payment equal to the difference between the amount bid and the amount of the winning bid the next time the license is offered by the Commission. No withdrawal payment would be assessed if the subsequent winning bid exceeds the withdrawn bid. This payment amount will be deducted from any upfront payments or down payments that the withdrawing bidder has deposited with the Commission.

(c) Default or disqualification after close of auction. If a high bidder defaults or is disqualified after the close of such an auction, the defaulting bidder will be subject to the payment in paragraph (b) of this section plus an additional monetary assessment equal to three (3) percent of the subsequent winning bid. If the subsequent winning bid exceeds the defaulting bidder's bid amount, the 3 percent payment will be calculated based on the defaulting bidder's bid amount. These amounts will be deducted from any upfront payments or down payments that the defaulting or disqualified bidder has deposited with the Commission. If the default occurs within five (5) business days after the bidding has closed, the Commission retains the discretion to offer the license to the second highest bidder at its final bid level, or if that bidder declines the offer, to offer the license to other bidders (in descending order of their bid amounts) at the final bid levels.

§ 90.907 Submission of upfront payments and down payments.

(a) Upfront Payments. Bidders in a 800 MHz SMR auction for Spectrum Blocks A through V will be required to submit an upfront payment prior to the start of the auction. The amount of the upfront payment for each license auctioned and the procedures for submitting it will be set forth by the Wireless Telecommunications Bureau in a Public Notice in accordance with § 1.2106 of this chapter.

(b) Down Payments. Winning bidders in a 800 MHz SMR auction for Spectrum Blocks A through V must submit a down payment to the Commission in an amount sufficient to bring their total deposits up to 20 percent of their winning bids within ten (10) business days after the auction closes. Winning bidders will be required to make full payment of the balance of their winning bids ten (10) business days after Public Notice announcing that the Commission is prepared to award the license.

§ 90.908 Long-form applications.

Each winning bidder will be required to submit a long-form application on FCC Form 600 within ten (10) business days after being notified by Public Notice that it is the winning bidder. Applications on FCC Form 600 shall be submitted pursuant to the procedures set forth in § 90.119 of this part and any associated Public Notices. Only auction winners (and rural telephone companies seeking partitioned licenses pursuant to agreements with auction winners under § 90.911) will be eligible to file applications on FCC Form 600 for initial 800 MHz SMR licenses in the event of mutual exclusivity between applicants filing FCC Form 175.

§ 90.909 License grant, denial, default, and disqualification.

(a) Except with respect to entities eligible for installment payments (see § 90.912) each winning bidder will be required to pay the balance of its winning bid in a lump sum payment within five (5) business days following Public Notice that the license is ready for grant. The Commission will grant the license within ten (10) business days after receipt of full and timely payment of the winning bid amount.

(b) A bidder who withdraws its bid subsequent to the close of bidding, defaults on a payment due, or is disqualified, will be subject to the payments specified in § 90.905 or § 1.2109 of this chapter, as applicable.

(c) EA licenses pursued through competitive bidding procedures will be granted pursuant to the requirements specified in § 90.166.

§ 90.910 Bidding credits.

(a) A winning bidder that qualifies as a very small business or a consortium of very small businesses, as defined in § 90.912(b)(2) and (b)(5), may use a bidding credit of 35 percent to lower the cost of its winning bid on Spectrum Blocks A through V. A winning bidder that qualifies as a small business or a consortium of small businesses, as defined in § 90.912(b)(1) or (b)(4), may use a bidding credit of 25 percent to lower the cost of its winning bid on Spectrum Blocks A through V.

(b) Unjust Enrichment

(1) If a small business or very small business (as defined in §§ 90.912(b)(1) and 90.912(b)(2), respectively) that utilizes a bidding credit under this section seeks to assign or transfer control of an authorization to an entity that is not a small business or very small business, or seeks to make any other change in ownership that would result in the licensee losing eligibility as a small business or very small business, the small business or very small business must seek Commission approval and reimburse the government for the difference between the amount of the bidding credit obtained by the licensee and the bidding credit for which the assignee, transferee, or licensee is eligible under this section as a condition of the approval of such assignment, transfer, or other ownership change.

(2) If a very small business (as defined in §§ 90.912(b)(2)) that utilizes a bidding credit under this section seeks to assign or transfer control of an authorization to a small business meeting the eligibility standards for a lower bidding credit, or seeks to make any other change in ownership that would result in the licensee qualifying for a lower bidding credit under this section, the licensee must seek Commission approval and reimburse the government for the difference between the amount of the bidding credit obtained by the licensee and the bidding credit for which the assignee, transferee, or licensee is eligible under this section as a condition of the approval of such assignment, transfer, or other ownership change.

(3) The amount of payments made pursuant to paragraphs (b)(1) and (b)(2) of this section will be reduced over time as follows: a transfer in the first two years of the license term will result in a forfeiture of 100 percent of the value of the bidding credit (or the difference between the bidding credit obtained by the original licensee and the bidding credit for which the post-transfer license is eligible); in year three of the license term the payment will be 75 percent; in year four the payment will be 50 percent; and in year five the payment will be 25 percent, after which there will be no assessment.

Sect. 90.911 Partitioned Licenses and Disaggregated Spectrum.

(a) Eligibility.

(1) Parties seeking approval for partitioning and disaggregation shall request an authorization for partial assignment of a license pursuant to § 90.153(c).

(b) Technical Standards.

(1) Partitioning. In the case of partitioning, requests for authorization for partial assignment of a license must include, as attachments, a description of the partitioned service area and a calculation of the population of the partitioned service area and the licensed geographic service area. The partitioned service area shall be defined by coordinate points at every 3 degrees along the partitioned service area unless an FCC recognized service area is utilized (i.e., Major Trading Area, Basic Trading Area, Metropolitan Service Area, Rural Service Area or Economic Area) or county lines are followed. The geographic coordinates must be specified in degrees, minutes, and seconds to the nearest second of latitude and longitude and must be based upon the 1927 North American Datum (NAD27). Applicants may supply geographical coordinates based on 1983 North American Datum (NAD83) in addition to those required (NAD27). In the case where an FCC recognized service area or county lines are utilized, applicants need only list the specific area(s) (through use of FCC designations or county names) that constitute the partitioned area.

(2) Disaggregation. Spectrum may be disaggregated in any amount.

(3) Combined Partitioning and Disaggregation. The Commission will consider requests for partial assignment of licenses that propose combinations of partitioning and disaggregation.

(c) Unjust Enrichment.

(1) Bidding Credits. Licensees that qualified under § 90.910 to use a bidding credit at auction that partition their licenses or disaggregate their spectrum to entities not meeting the eligibility standards for such a bidding credit, will be subject to the provisions concerning unjust enrichment as set forth in § 90.910(b).

(2) Apportioning Unjust Enrichment Payments. Unjust enrichment payments for partitioned license areas shall be calculated based upon the ratio of the population of the partitioned license area to the overall population of the license area and by utilizing the most recent census data. Unjust enrichment payments for disaggregated spectrum shall be calculated based upon the ratio of the amount of spectrum disaggregated to the amount of spectrum held by the licensee.

(d) License Term. The license term for a partitioned license area and for disaggregated spectrum shall be the remainder of the original licensee's license term as provided for in §§ 90.629(a), 90.665(a) or 90.685(a).

(e) Construction and Channel Usage Requirements - Incumbent Licensees. Parties seeking to acquire a partitioned license or disaggregated spectrum from an incumbent licensee will be required to construct and commence "service to subscribers" all facilities acquired through such transactions within the original construction deadline for each facility as set forth in §§ 90.629 and 90.683. Failure to meet the individual construction deadline will result in the automatic termination of the facility's authorization.

(f) Construction and Channel Usage Requirements - EA Licensees.

(1) Licensees in Channel Blocks A, B and C.

(i) Requirements for Partitioning.

(A) The partitionee may certify that it will satisfy the applicable construction requirements set forth in § 90.685(c) for the partitioned license area; or

(B) The original licensee may certify that it has or will meet the three and five year construction requirements set forth in § 90.685(c) for the entire market.

(C) Applications requesting partial assignments of license for partitioning must include a certification by each party as to which of the above options they select.

(D) Partitionees must submit supporting documents showing compliance with the respective construction requirements within the appropriate time frames set forth in § 90.685(c).

(E) Failure by any partitionee to meet its respective construction requirements will result in the automatic cancellation of the partitioned license without further Commission action.

(ii) Requirements for Disaggregation. Parties seeking authority to disaggregate spectrum from an EA licensee in Spectrum Blocks A, B and C must meet one of the following channel use requirements:

(A) The partitionee may certify that it will satisfy the channel usage requirements set forth in § 90.685(d) for the disaggregated spectrum; or

(B) The original licensee may certify that it has or will meet the channel usage requirements as set forth in § 90.685(d) for the entire spectrum block. In that case, the disaggregatee must only satisfy the requirements for "substantial service," as set forth in § 90.685(c), for the disaggregated spectrum within five years of the license grant.

(C) Applications requesting partial assignments of license for disaggregation must include a certification by each party as to which of the above options they select.

(D) Disaggregatees must submit supporting documents showing compliance with the respective channel usage requirements within the appropriate time frames set forth in § 90.685(c).

(E) Failure by any disaggregatee to meet its respective channel usage requirements will result in the automatic cancellation of the disaggregated license without further Commission action.

(2) Licensees in Channel Blocks D through V.

(i) Requirements for Partitioning. Parties seeking authority to partition an EA license must meet one of the following construction requirements:

(A) The partitionee may certify that it will satisfy the applicable construction requirements set forth in § 90.685(c) for the partitioned license area; or

(B) The original licensee may certify that it has or will meet the construction requirements set forth in § 90.685(c) for the entire market.

(C) Applications requesting partial assignments of license for partitioning must include a certification by each party as to which of the above options they select.

(D) Partitionees must submit supporting documents showing compliance with the respective construction requirements within the appropriate time frames set forth in § 90.685(c).

(E) Failure by any partitionee to meet its respective construction requirements will result in the automatic cancellation of the partitioned license without further Commission action.

(ii) Requirements for Disaggregation. Parties seeking authority to disaggregate must submit with their partial assignment application a certification signed by both parties stating which of the parties will be responsible for meeting the construction requirements for the market as set forth in § 90.685. Parties may agree to share responsibility for meeting the construction requirements. Parties that accept responsibility for meeting the construction requirements and later fail to do so will be subject to license forfeiture without further Commission action.

(g) Certification Concerning Relocation of Incumbent Licensees. Parties seeking approval of a partitioning or disaggregation agreement pursuant to this section must include a certification with their partial assignment of license application as to which party will be responsible for meeting the incumbent relocation requirements set forth at § 90.699 of our rules.

§ 90.912 Definitions.

(a) Scope. The definitions in this section apply to §§ 90.910 and 90.911, unless otherwise specified in those sections.

(b) Small Business; Very Small Business; Consortium of Small Businesses; Consortium of Very Small Businesses

(1) A small business is an entity that together with its affiliates and controlling principals, has average gross revenues that do not exceed $15 million for the three preceding years; or

(2) A very small business is an entity that together with its affiliates and controlling principals, has average gross revenues that do not exceed $3 million for the preceding three years.

(3) For purposes of determining whether an entity meets the $3 million or $15 million average annual gross revenues size standard set forth in paragraph (b)(1) of this section, the gross revenues of the entity, its affiliates, and controlling principals shall be considered on a cumulative basis and aggregated.

(4) A consortium of small business is a conglomerate organization formed as a joint venture between or among mutually-independent business firms, each of which individually satisfies the definition of a small business in paragraphs (b)(1) of this section. In a consortium of small businesses, each individual member must establish its eligibility as a small business, as defined in this section.

(5) A consortium of very small business is a conglomerate organization formed as a joint venture between or among mutually-independent business firms, each of which individually satisfies the definition of a very small business in paragraph (b)(2) of this section. In a consortium of small businesses, each individual member must establish its eligibility as a very small business, as defined in this section.

(c) Gross Revenues. Gross revenues shall mean all income received by an entity, whether earned or passive, before any deductions are made for costs of doing business (e.g., cost of goods sold). Gross revenues are evidenced by audited financial statements for the relevant number of calendar or fiscal years preceding the filing of the applicant's short-form application (FCC Form 175). If an entity was not in existence for all or part of the relevant period, gross revenues shall be evidenced by the audited financial statements of the entity's predecessor-in-interest or, if there is no identifiable predecessor-in-interest, unaudited financial statements certified by the applicant as accurate. When an applicant does not otherwise use audited financial statements, its gross revenues may be certified by its chief financial officer or its equivalent.

(d) Affiliate.

(1) Basis for Affiliation. An individual or entity is an affiliate of an applicant if such individual or entity:

(i) Directly or indirectly controls or has the power to control the applicant, or

(ii) Is directly or indirectly controlled by the applicant, or

(iii) Is directly or indirectly controlled by a third party or parties who also control or have the power to control the applicant, or

(iv) Has an ``identity of interest'' with the applicant.

(2) Nature of control in determining affiliation.

(i) Every business concern is considered to have one or more parties who directly or indirectly control or have the power to control it. Control may be affirmative or negative and it is immaterial whether it is exercised so long as the power to control exists.

Example for paragraph (d)(2)(i). An applicant owning 50 percent of the voting stock of another concern would have negative power to control such concern since such party can block any action of the other stockholders. Also, the bylaws of a corporation may permit a stockholder with less than 50 percent of the voting stock to block any actions taken by the other stockholders in the other entity. Affiliation exists when the applicant has the power to control a concern while at the same time another person, or persons, are in control of the concern at the will of the party or parties with the power of control.

(ii) Control can arise through stock ownership; occupancy of director, officer, or key employee positions; contractual or other business relations; or combinations of these and other factors. A key employee is an employee who, because of his/her position in the concern, has a critical influence in or substantive control over the operations or management of the concern.

(iii) Control can arise through management positions if the voting stock is so widely distributed that no effective control can be established.

Example for paragraph (d)(2)(iii). In a corporation where the officers and directors own various size blocks of stock totaling 40 percent of the corporation's voting stock, but no officer or director has a block sufficient to give him/her control or the power to control and the remaining 60 percent is widely distributed with no individual stockholder having a stock interest greater than 10 percent, management has the power to control. If persons with such management control of the other entity are controlling principals of the applicant, the other entity will be deemed an affiliate of the applicant.

(3) Identity of interest between and among persons.

Affiliation can arise between or among two or more persons with an identity of interest, such as members of the same family or persons with common investments. In determining if the applicant controls or is controlled by a concern, persons with an identity of interest will be treated as though they were one person.

(i) Spousal Affiliation. Both spouses are deemed to own or control or have the power to control interests owned or controlled by either of them, unless they are subject to a legal separation recognized by a court of competent jurisdiction in the United States.

(ii) Kinship Affiliation. Immediate family members will be presumed to own or control or have the power to control interests owned or controlled by other immediate family members. In this context ``immediate family member'' means father, mother, husband, wife, son, daughter, brother, sister, father- or mother-in-law, son- or daughter-in-law, brother- or sister-in-law, step-father or -mother, step-brother or -sister, step-son or -daughter, half-brother or -sister. This presumption may be rebutted by showing that:

(A) The family members are estranged,

(B) The family ties are remote, or

(C) The family members are not closely involved with each other in business matters.

Example for paragraph (d)(3)(ii). A owns a controlling interest in Corporation X. A's sister-in-law, B, has a controlling interest in an SMR application. Because A and B have a presumptive kinship affiliation, A's interest in Corporation X is attributable to B, and thus to the applicant, unless B rebuts the presumption with the necessary showing.

(4) Affiliation through stock ownership.

(i) An applicant is presumed to control or have the power to control a concern if he/she owns or controls or has the power to control 50 percent or more of its voting stock.

(ii) An applicant is presumed to control or have the power to control a concern even though he/she owns, controls, or has the power to control less than 50 percent of the concern's voting stock, if the block of stock he/she owns, controls, or has the power to control is large as compared with any other outstanding block of stock.

(iii) If two or more persons each owns, controls or has the power to control less than 50 percent of the voting stock of a concern, such minority holdings are equal or approximately equal in size, and the aggregate of these minority holdings is large as compared with any other stock holding, the presumption arises that each one of these persons individually controls or has the power to control the concern; however, such presumption may be rebutted by a showing that such control or power to control, in fact, does not exist.

(5) Affiliation arising under stock options, convertible debentures, and agreements to merge. Stock options, convertible debentures, and agreements to merge (including agreements in principle) are generally considered to have a present effect on the power to control the concern. Therefore, in making a size determination, such options, debentures, and agreements will generally be treated as though the rights held thereunder had been exercised. However, neither an affiliate nor an applicant can use such options and debentures to appear to terminate its control over another concern before it actually does so.

Example 1 for paragraph (d)(5). If company B holds an option to purchase a controlling interest in company A, who holds a controlling interest in an SMR application, the situation is treated as though company B had exercised its rights and had become owner of a controlling interest in company A. The gross revenues of company B must be taken into account in determining the size of the applicant.

Example 2 for paragraph (d)(5). If a large company, BigCo, holds 70% (70 of 100 outstanding shares) of the voting stock of company A, who holds a controlling interest in an SMR application, and gives a third party, SmallCo, an option to purchase 50 of the 70 shares owned by BigCo, BigCo will be deemed to be an affiliate of company A, and thus the applicant, until SmallCo actually exercises its options to purchase such shares. In order to prevent BigCo from circumventing the intent of the rule, which requires such options to be considered on a fully diluted basis, the option is not considered to have present effect in this case.

Example 3 for paragraph (d)(5). If company A has entered into an agreement to merge with company B in the future, the situation is treated as though the merger has taken place.

(6) Affiliation under voting trusts.

(i) Stock interests held in trust shall be deemed controlled by any person who holds or shares the power to vote such stock, to any person who has the sole power to sell such stock, and to any person who has the right to revoke the trust at will or to replace the trustee at will.

(ii) If a trustee has a familial, personal or extra-trust business relationship to the grantor or the beneficiary, the stock interests held in trust will be deemed controlled by the grantor or beneficiary, as appropriate.

(iii) If the primary purpose of a voting trust, or similar agreement, is to separate voting power from beneficial ownership of voting stock for the purpose of shifting control of or the power to control a concern in order that such concern or another concern may meet the Commission's size standards, such voting trust shall not be considered valid for this purpose regardless of whether it is or is not recognized within the appropriate jurisdiction.

(7) Affiliation through common management. Affiliation generally arises where officers, directors, or key employees serve as the majority or otherwise as the controlling element of the board of directors and/or the management of another entity.

(8) Affiliation through common facilities. Affiliation generally arises where one concern shares office space and/or employees and/or other facilities with another concern, particularly where such concerns are in the same or related industry or field of operations, or where such concerns were formerly affiliated, and through these sharing arrangements one concern has control, or potential control, of the other concern.

(9) Affiliation through contractual relationships. Affiliation generally arises where one concern is dependent upon another concern for contracts and business to such a degree that one concern has control, or potential control, of the other concern.

(10) Affiliation under joint venture arrangements.

(i) A joint venture for size determination purposes is an association of concerns and/or individuals, with interests in any degree or proportion, formed by contract, express or implied, to engage in and carry out a single, specific business venture for joint profit for which purpose they combine their efforts, property, money, skill and knowledge, but not on a continuing or permanent basis for conducting business generally. The determination whether an entity is a joint venture is based upon the facts of the business operation, regardless of how the business operation may be designated by the parties involved. An agreement to share profits/losses proportionate to each party's contribution to the business operation is a significant factor in determining whether the business operation is a joint venture.

(ii) The parties to a joint venture are considered to be affiliated with each other.

§ 90.913 Eligibility for small business status.

(a) Short-Form Applications: Certifications and Disclosure.

Each applicant for an EA license which qualifies as a small business or consortium of small businesses under §§ 90.912(b) or (c) shall append the following information as an exhibit to its short-form application (FCC Form 175):

(1) The identity of the applicant's affiliates and controlling principals, and, if a consortium of small businesses (or a consortium of very small businesses), the members of the joint venture; and

(2) The applicant's gross revenues, computed in accordance with § 90.912.

(b) Long-Form Applications: Certifications and Disclosure.

In addition to the requirements in subpart V of this part, each applicant submitting a long-form application for license(s) for Spectrum Blocks A through V and qualifying as a small business shall, in an exhibit to its long-form application:

(1) Disclose separately and in the aggregate the gross revenues, computed in accordance with § 90.912, for each of the following: the applicant, the applicant's affiliates, the applicant's controlling principals, and, if a consortium of small businesses (or consortium of very small businesses), the members of the joint venture;

(2) List and summarize all agreements or other instruments (with appropriate references to specific provisions in the text of such agreements and instruments) that support the applicant's eligibility as a small business, very small business, consortium of small businesses or consortium of very small businesses under §§ 90.910 and 90.912, including the establishment of de facto and de jure control; such agreements and instruments include articles of incorporation and bylaws, shareholder agreements, voting or other trust agreements, franchise agreements, and any other relevant agreements (including letters of intent), oral or written; and

(3) List and summarize any investor protection agreements, including rights of first refusal, supermajority clauses, options, veto rights, and rights to hire and fire employees and to appoint members to boards of directors or management committees.

(c) Records Maintenance. All winning bidders qualifying as small businesses or very small businesses, shall maintain at their principal place of business an updated file of ownership, revenue and asset information, including any document necessary to establish eligibility as a small business, very small business and/or consortium of small businesses (or consortium of very small businesses) under § 90.912. Licensees (and their successors in interest) shall maintain such files for the term of the license.

(d) Audits.

(1) Applicants and licensees claiming eligibility as a small business, very small business or consortium of small businesses (or consortium of very small businesses under §§ 90.910 and 90.912 shall be subject to audits by the Commission, using in-house and contract resources. Selection for audit may be random, on information, or on the basis of other factors.

(2) Consent to such audits is part of the certification included in the short-form application (FCC Form 175). Such consent shall include consent to the audit of the applicant's or licensee's books, documents and other material (including accounting procedures and practices) regardless of form or type, sufficient to confirm that such applicant's or licensee's representations are, and remain, accurate. Such consent shall include inspection at all reasonable times of the facilities, or parts thereof, engaged in providing and transacting business, or keeping records regarding licensed 800 MHz SMR service and shall also include consent to the interview of principals, employees, customers and suppliers of the applicant or licensee.

(3) Definitions. The terms affiliate, small business, very small business consortium of small businesses, consortium of very small businesses, and gross revenues used in this section are defined in § 90.912.