Sec. 24.320  Definitions.

    (a) Scope. The definitions in this section apply to Secs. 24.309-
24.315 of this subpart, unless otherwise specified in those sections.
    (b) Small Business; Consortium of Small Businesses.
    (1) A small business is an entity that:
    (i) Together with its affiliates has average annual gross revenues 
that are not more than $40 million for the preceding three calendar 
years;
    (ii) Has no attributable investor or affiliate that has a personal 
net worth of $40 million or more;
    (iii) Has a control group all of whose members and affiliates are 
considered in determining whether the entity meets the $40 million 
annual gross revenues and personal net worth standards; and
    (iv) Such control group holds 50.1 percent of the entity's voting 
interest, if a corporation, and at least 25 percent of the entity's 
equity on a fully diluted basis, except that a business owned by members 
of minority groups and/or women (as defined in paragraph (c) of this 
section) may also qualify as a small business if a control group that is 
100 percent composed of members of minority groups and/or women holds 
50.1 percent of the entity's voting interests, if a corporation, and 
50.1 percent of the entity's total equity on a fully diluted basis and 
no single other investor holds more than 49.9 percent of passive equity 
in the entity.
    (2) Attribution and Aggregation of Gross Revenues and Personal Net 
Worth.
    (i) Except as specified in paragraphs (b)(1) (iii) and (iv), the 
gross revenues of the applicant (or licensee) and its affiliates, and 
other persons that hold interests in the applicant (or licensee) and 
their affiliates shall be considered on a cumulative basis and 
aggregated for purposes of determining whether the applicant (or 
licensee) is a small business.
    (ii) The personal net worth of individual applicants (or licensees) 
and other persons that hold interests in the applicant (or licensee), 
and their affiliates, if less than $40 million, shall not be considered 
for purposes of determining whether the applicant (or licensee) is 
eligible to bid as a small business.
    (iii) Where an applicant (or licensee) is a consortium of small 
businesses, the gross revenues of each small business shall not be 
aggregated.
    (iv) The gross revenues and personal net worth of a person that 
holds an interest in the applicant (or licensee) shall not be considered 
so long as:
    (A) Such person holds no more than 25 percent of the applicant's (or 
licensee's) passive equity and is not a member of the applicant's or 
control group; and
    (B) The applicant has a control group that owns at least 25 percent 
of the applicant's total equity and, if a corporation, holds at least 
50.1 percent of the applicant's voting interests.
    (v) The gross revenues, total assets and personal net worth of a 
person that holds an interest in the applicant shall not be considered 
so long as:
    (A) Such person holds no more than 49.9 percent of the applicant's 
(or licensee's) passive equity and is not a member of the applicant's 
control group; and
    (B) The applicant has a control group that consists entirely of 
members of minority groups and/or women and that owns at least 50.1 
percent of the applicant's total equity and, if a corporation, at least 
50.1 percent of the applicant's voting interests.
    (3) A small business corsortium is a conglomerate organization 
formed as a joint venture between mutually-independent business firms, 
each of which individually satisfies the definition of a small business.


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    Note to paragraph (b): Ownership interests shall be calculated on a 
fully diluted basis; all agreements such as warrants, stock options and 
convertible debentures will generally be treated as if the rights 
thereunder already have been fully exercised, except that such 
agreements may not be used to appear to terminate or divest ownership 
interests before they actually do so.

    (c) Business Owned by Members of Minority Groups and/or Women. A 
business owned by members of minority groups and/or women is an entity:
    (1) That has a control group composed 100 percent of members of 
minority groups and/or women who are United States Citizens, and
    (2) Such control group owns and holds 50.1 percent of the voting 
interests, if a corporation, and
    (i) Owns and holds 50.1 percent of the total equity in the entity, 
provided that all other investors hold passive interests; or
    (ii) Holds 25 percent of the total equity in the entity, provided 
that no single other investor holds more than 25 percent passive equity 
interests in the entity. In a partnership, all general partners must be 
members of minority groups and/or women. Ownership interests shall be 
calculated on a fully diluted basis; all agreements such as warrants, 
stock options and convertible debentures will generally be treated as if 
the rights thereunder already have been fully exercised, except that 
such agreements may not be used to appear to terminate or divest 
ownership interests before they actually do so.
    (d) 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), as evidenced by 
audited quarterly financial statements for the relevant period.
    (e) Members of Minority Groups. Members of minority groups include 
Blacks, Hispanics, American Indians, Alaskan Natives, Asians and Pacific 
Islanders.
    (f) Members of Minority Groups. Members of minority groups includes 
individuals of African American, Hispanic-surnamed, American Eskimo, 
Aleut, American Indian and Asian American extraction.
    (g) Passive Equity. Passive equity shall mean:
    (1) For corporations, non-voting stock or stock that includes no 
more than fifteen percent of the voting equity;
    (2) For partnerships, joint ventures and other non-corporate 
entities, limited partnership interests and similar interests that do 
not afford the power to exercise control of the entity.
    (h) Control Group. A control group is an entity, or a group of 
individuals or entities, that possess de jure control and de facto 
control of an applicant or licensee, and as to which the applicant's or 
licensee's charters, articles of incorporation, bylaws, agreements and 
any other relevant documents (and amendments thereto) provide:
    (1) That the entity and/or its members own unconditionally at least 
50.1 percent of the total voting interests of a corporation;
    (2) That the entity and/or its members receive at least 50.1 percent 
of the annual distribution of any dividends paid on the voting stock of 
a corporation;
    (3) That, in the event of dissolution or liquidation of a 
corporation, the entity and/or its members are entitled to receive 100 
percent of the value of each share of stock in its possession and a 
percentage of the retained earnings of the concern that is equivalent to 
the amount of equity held in the corporation; and
    (4) That the entity and/or its members have the right to receive 
dividends, profits and regular and liquidating distributions from the 
business in proportion to its interest in the total equity of the 
applicant or licensee.

    Note to paragraph (h): Voting control does not always assure de 
facto control, such as, for example, when the voting stock of the 
control group is widely dispersed (see, e.g., Sec. 24.720(e)(2)(iii)).

    (i) Affiliate. Determinations regarding whether an individual or 
entity will be considered an affiliate of:
    (1) An applicant or
    (2) A person holding an attributable interest in an applicant under 
paragraph (b)(2) will be made pursuant to

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the general affiliation rules set forth in Sec. 24.710(l).
[59 1997 FR 44071 , Aug. 26, 1994, as amended at  62 FR 27511 , May 20, 1997]

    Editorial Note: At  62 FR 27511 , May 20, 1997, Sec. 24.320(e) was 
revised to read as set forth in the text.

   Subpart G--Interim Application, Licensing and Processing Rules for 
                             Narrowband PCS

    Source:   59 FR 26749 , May 24, 1994, unless otherwise noted.