[Federal Register Volume 67, Number 67 (Monday, April 8, 2002)]
[Rules and Regulations]
[Pages 16647-16651]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-7793]


=======================================================================
-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 1

[WT Docket No. 97-82; FCC 02-34]


Competitive Bidding Procedures

AGENCY: Federal Communications Commission.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: In this document the Commission declines to adopt a total 
assets test as part of its determination of small business eligibility 
in the context of spectrum auctions deciding that the potential benefit 
from such a test does not justify the difficulty of its use. Instead, 
the Commission will continue to rely on the gross revenues test already 
employed. The Commission adopts exceptions to the controlling interest 
standard's fully diluted requirements for ``rights of first refusal'' 
and ``put'' options. The two exceptions are consistent with the 
Commission's underlying goal of assuring that the decision of whether 
and when to transfer a license won by a designated entity rests with 
those in control of the designated entity. In addition, the Commission 
clarifies that mutually exclusive contingent ownership interests are to 
be considered fully diluted only in the possible combinations in which 
those interests can be exercised by their holder(s). This clarification 
offers a common sense approach to evaluating ownership interests that 
could not possibly be given simultaneous or successive effect.

DATES: Effective May 8, 2002.

FOR FURTHER INFORMATION CONTACT: Audrey Bashkin of the Auctions and 
Industry Analysis Division at (202) 418-0660.

SUPPLEMENTARY INFORMATION: This is a summary of an Eighth Report and 
Order in WT Docket No. 97-82, adopted on February 8, 2002 and released 
on February 13, 2002. The full text of this document is available for 
public inspection and copying during regular business hours at the FCC 
Reference Information Center, Portals II, 445 12th Street, SW, Room CY-
A257, Washington, DC, 20554. This document may also be purchased from 
the Commission's duplicating contractor, Qualex International, Portals 
II, 445 12th Street, SW, Room CY-B402, Washington, DC, 20554, telephone 
202-863-2893, facsimile 202-863-2898, or via e-mail [email protected].

I. Introduction

    1. In the Eighth Report and Order, the Commission addresses the 
proposals and tentative conclusions of the Part 1 Fourth Further Notice 
of Proposed Rule Making, 65 FR 52401 (August 29, 2000). In the Part 1 
Fourth Further Notice of Proposed Rule Making, the Commission sought 
comment on whether to incorporate a total assets component into its 
ownership attribution rule for determining which entities are eligible 
for small business provisions in competitive bidding proceedings. The 
Commission also proposed three exceptions to the requirement in its 
competitive bidding attribution rule that certain ownership interests 
be counted on a ``fully diluted'' basis. For the reasons explained 
further, the Commission declines to adopt a total assets test as part 
of our determination of small business eligibility; however, the 
Commission adopts two of the proposed exceptions to the attribution 
rule and clarifies its rules regarding the third.

II. Total Assets Test

A. Background

    2. Historically, the Commission has defined small businesses 
according to a gross revenues test for purposes of ascertaining 
eligibility for a small business bidding credit. In the Part 1 Third 
Report and Order, 63 FR 770 (January 7, 1998), the Commission adopted a 
gross revenues test as its general standard for measuring the size of 
an entity for competitive bidding purposes, in part because such a 
standard provides ``an accurate, equitable, and easily ascertainable 
measure of business size.'' In conjunction with a gross revenues test, 
the Commission currently employs a total assets test to evaluate the 
eligibility of applicants to acquire broadband Personal Communications 
Services (PCS) C and F block licenses made available in ``closed'' 
(entrepreneur-only) bidding. In the Part 1 Fourth Further Notice of 
Proposed Rule Making, the Commission sought comment on whether the use 
of a total assets test, in conjunction with the gross revenues measure 
already employed, would enhance Commission determinations of small 
business status.

B. Discussion

    3. The Commission declines to expand its definition of small 
business to include a total assets test for purposes of determining 
small business bidding credit eligibility. Commenters favoring the 
inclusion of a total assets test suggest that it could serve to prevent 
low-revenue but asset-rich businesses from taking advantage of small 
business programs. However, others argue that a total assets test might 
disqualify small entities by setting an asset limit that is too low or 
by attributing assets that are not readily available to these entities 
for auction purposes. The Commission's attribution rules already 
prevent many asset-rich applicants from taking advantage of the 
Commission's small business benefits, because, to the extent that their 
assets, or those of their controlling interests and affiliates, produce 
revenues, those revenues must be attributed to the applicant. Moreover, 
the Commission's experience in using a total assets test to determine C 
and F block entrepreneur eligibility indicates that the test adds 
complexity to business size determinations without producing a 
commensurate benefit. In broadband PCS Auctions No. 5, 10, 11, and 22, 
in which all C and F block bidders were required to meet a total assets 
test as well as a gross revenues test to establish entrepreneur 
eligibility, more than 95 percent of those bidders also met the more 
stringent gross revenues test required for small business bidding 
credit eligibility. Thus, in practice, having a total assets test for 
the C and F blocks has not made a significant difference in defining 
the qualified applicant population. At the same time, employing a total 
assets test carries administrative costs for the Commission and for 
applicants and raises difficult valuation issues. As the Commission 
observed in its decision not to establish a total assets test for Local 
Multipoint Distribution Service business size determinations, 
``[a]ssets, being potentially fluid and subject to inconsistent 
valuation (e.g., intangibles) are generally much less ascertainable 
than gross revenues * * *.'' The Commission believes that the potential 
benefit provided by a total assets test does not outweigh the valuation 
difficulties and the administrative costs the test would impose. 
Moreover, the Commission is reluctant to impose an additional 
regulatory burden on auction applicants at a time when it is striving 
to streamline Commission processes. For these reasons, the Commission 
will

[[Page 16648]]

not implement a total assets test for small business eligibility 
determinations.

III. Attribution Issues

A. Rights of First Refusal and Put Options

i. Background
    4. In the Part 1 Fifth Report and Order, 65 FR 52323 (August 29, 
2000), the Commission adopted the controlling interest standard of 
Sec. 1.2110 as its general attribution rule for all future auctions. 
For purposes of calculating equity held in an applicant or licensee, 
the controlling interest standard treats certain ownership agreements, 
such as warrants, stock options, convertible debentures, and agreements 
to merge, as already having been ``fully diluted,'' i.e., fully 
exercised. Under the broadband PCS attribution rule, the Commission 
established two exceptions to the fully diluted requirement, one for 
``rights of first refusal'' and the other for ``put'' options. Under 
the exceptions, neither type of interest was attributed until its 
actual exercise. No similar exception was ever allowed for ``call'' 
options. The Commission explained in the context of the prior broadband 
PCS attribution rules that ``calls'' vest an impermissible degree of 
control in the applicant's (or licensee's) so-called noncontrolling 
investors, because ``calls'' can be used to force a designated entity 
to sell its ownership interests. In the Part 1 Fourth Further Notice of 
Proposed Rule Making, the Commission sought comment on whether to 
incorporate into its part 1 general competitive bidding rules 
exceptions to the fully diluted requirement for ``rights of first 
refusal'' and ``put'' options.
ii. Discussion
    5. The Commission will adopt exceptions to the controlling interest 
standard's fully diluted requirements for ``rights of first refusal'' 
and ``put'' options. The two exceptions are consistent with the 
Commission's underlying goal of assuring that the decision of whether 
and when to transfer a license won by a designated entity rests with 
those in control of the designated entity. In deciding not to treat 
``rights of first refusal'' as exercised when calculating ownership 
interests in the context of broadband PCS C and F block applications, 
the Commission reasoned that ``[r]ights of first refusal differ from 
other types of options because they cannot be exercised unless there is 
a proposed sale to a third party'' and that, even then, ``it will still 
be the designated entity's decision as to whether to sell the 
business.'' The Commission used the same reasoning for ``put'' options, 
explaining that ``[p]ut options held by the designated entity leave the 
ownership decision in the designated entity's control and do not force 
an unwanted sale upon the designated entity.'' The Commission believes 
that its earlier reasoning is generally applicable under its part 1 
rules.
    6. The Commission makes clear, however, that, while ``rights of 
first refusal'' and ``put'' options will not be factored in for 
purposes of determining de jure control, it will continue to look at 
whether these ownership interests in combination with other terms to an 
agreement deprive an otherwise qualified designated entity of de facto 
control of an applicant or licensee. As the Commission stated in the 
Competitive Bidding Fifth Memorandum Opinion and Order with regard to 
broadband PCS, it will look at the totality of circumstances in each 
particular case.

B. Mutually Exclusive Contingent Ownership Interests

i. Background
    7. Under the Commission's previous broadband PCS attribution rule, 
an interpretation of the fully diluted requirement was applied to 
contingent ownership interests that were mutually exclusive by their 
terms. Under this interpretation, if an ownership interest by its terms 
was mutually exclusive of one or more other ownership interests, the 
various ownership interests were treated as having been fully exercised 
only in the possible combinations in which they could be exercised by 
their holder(s). In the Part 1 Fourth Further Notice of Proposed Rule 
Making, the Commission tentatively concluded that the policy underlying 
its part 1 attribution rule did not require it to consider all existing 
stock conversion rights as having been fully exercised simultaneously 
in a case where the various conversion rights are mutually exclusive by 
their terms. The Commission sought comment on adopting this 
interpretation as an exception to its part 1 general competitive 
bidding rules.
ii. Discussion
    8. Rather than adopt an additional exception to the fully diluted 
requirement, the Commission clarifies that the interpretation that was 
applied in the broadband PCS context for contingent ownership interests 
that are mutually exclusive by their terms is generally applicable 
under its part 1 rules. This clarification offers a common sense 
approach to evaluating ownership interests that could not possibly be 
given simultaneous or successive effect. Under the clarification, 
ownership interests that by their terms are capable of being exercised 
simultaneously or successively will continue to be treated as if the 
rights thereunder had been fully exercised. Ownership interests that 
are mutually exclusive by their terms will be considered to be fully 
diluted only in the possible combinations in which they could be 
exercised by their holder(s). Thus, in calculating the equity held in 
an applicant or licensee, the Commission will consider the various 
combinations of stock options or conversion rights that could possibly 
be exercised by an investor. For each combination, the ownership 
interests will be considered to have been fully exercised, and each 
combination will be reviewed for its effect on control of the applicant 
or licensee. The Commission will consider one contingent ownership 
interest to be mutually exclusive of another only if contractual 
language specifies that both interests cannot be held simultaneously as 
present ownership interests.

IV. Procedural Matters and Ordering Clauses

    9. As required by the Regulatory Flexibility Act, 5 U.S.C. 604, the 
Commission has prepared a Final Regulatory Flexibility Analysis.
    10. Pursuant to sections 4(i), 5(b), 5(c)(1), 309(r), and 309(j) of 
the Communications Act of 1934, as amended, 47 USC 154(i), 155(b), 
156(c)(1), 303(r), and 309(j), the Eighth Report and Order is hereby 
adopted, and Sec. 1.2110 of the Commission's rules, 47 CFR 1.2110, is 
amended as set forth, and becomes effective May 8, 2002.
    11. The Commission's Consumer Information Bureau, Reference 
Information Center, shall send a copy of the Eighth Report and Order, 
including the Final Regulatory Flexibility Analysis, to the Chief 
Counsel for Advocacy of the Small Business Administration.

V. Final Regulatory Flexibility Analysis

    12. As required by the Regulatory Flexibility Act (RFA), an Initial 
Regulatory Flexibility Analysis (IRFA) was incorporated into the notice 
section of the Fourth Further Notice of Proposed Rule Making in WT 
Docket No. 97-82. The Commission sought written public comment on the 
proposals in the Fourth Further Notice of Proposed Rule Making, 
including comment on the IRFA.

[[Page 16649]]

A. Need for, and Objectives of, the Eighth Report and Order

    13. The Eighth Report and Order resolves the proposals and 
tentative conclusions of the Fourth Further Notice of Proposed Rule 
Making concerning application of the controlling interest standard in 
determining eligibility for small business provisions in all services 
governed by our part 1 rules. As stated in the Fourth Further Notice of 
Proposed Rule Making, the Commission's objective is to ensure that its 
small business provisions are available only to bona fide small 
businesses. Accordingly, the Commission sought comment in the Fourth 
Further Notice of Proposed Rule Making on whether to incorporate a 
total assets component into its ownership attribution rule for 
determining which entities are eligible for small business provisions 
in competitive bidding proceedings. In the Eighth Report and Order, the 
Commission declines to incorporate a total assets test into its 
determinations of small business eligibility, deciding that the 
potential benefit from such a test does not justify the difficulty of 
its use. Instead, the Commission will continue to rely on the gross 
revenues test already employed. The Commission, however, adopts two 
exceptions to its ownership attribution rule requiring that certain 
ownership agreements, such as warrants and stock options, be treated as 
already having been ``fully diluted'' (i.e., fully exercised) for 
purposes of determining small business eligibility in the competitive 
bidding context. The Commission determines that these two exceptions--
for ``rights of first refusal'' and ``put'' options--are consistent 
with its goal that the competitive bidding attribution rules ensure 
that control of an applicant is held by eligible entities while 
allowing investment in the applicant by entities that do not meet the 
size restrictions in Commission rules. The Commission also decides to 
clarify its part 1 rules regarding application of the fully diluted 
requirement to contingent ownership interests that are mutually 
exclusive by their terms. Under this clarification, if an ownership 
interest by its terms is mutually exclusive of one or more other 
ownership interests, the various ownership interests are treated as 
having been fully exercised only in the possible combinations in which 
they could be exercised by their holder(s). The Commission determines 
that this clarification offers a common sense approach to evaluating 
ownership interests that could not possibly be given simultaneous or 
successive effect.

B. Summary of Significant Issues Raised by Public Comments in Response 
to the IRFA

    14. No comments directly addressed the IRFA; however, all four 
comments addressed a single small business issue--whether the 
Commission should incorporate a total assets component into its 
ownership attribution rule for determining which entities are eligible 
for small business provisions in competitive bidding proceedings. 
Commenters favoring the inclusion of a total assets test suggest that 
it could serve to prevent low-revenue but asset-rich businesses from 
taking advantage of small business programs. However, others argue that 
a total assets test might disqualify small entities by setting an asset 
limit that is too low or by attributing assets that are not readily 
available to these entities for auction purposes. While the Commission 
believes that both arguments have merit, it also believes that its 
attribution rules effectively prevent most asset-rich applicants from 
taking advantage of its small business benefits. The Commission's 
attribution rules already prevent many asset-rich applicants from 
taking advantage of its small business benefits, because, to the extent 
that their assets, or those of their controlling interests and 
affiliates, produce revenues, those revenues must be attributed to the 
applicant. Moreover, the Commission's experience in using a total 
assets test to determine C and F block entrepreneur eligibility 
indicates that the test adds complexity to business size determinations 
without producing a commensurate benefit. In broadband PCS Auctions No. 
5, 10, 11, and 22, in which all C and F block bidders were required to 
meet a total assets test as well as a gross revenues test to establish 
entrepreneur eligibility, more than 95 percent of those bidders also 
met the more stringent gross revenues test required for small business 
bidding credit eligibility. Thus, in practice, having a total assets 
test for the C and F blocks has not made a significant difference in 
defining the qualified applicant population. At the same time, 
employing a total assets test carries administrative costs for the 
Commission and for applicants and raises difficult valuation issues. 
The Commission believes that the potential benefit provided by a total 
assets test does not outweigh the valuation difficulties and the 
administrative costs the test would impose. Moreover, the Commission is 
reluctant to impose an additional regulatory burden on spectrum auction 
applicants at a time when it is striving to deregulate and streamline 
Commission processes. For these reasons, the Commission will not 
implement a total assets test for small business eligibility 
determinations.

C. Description and Estimate of the Number of Small Entities to Which 
the Proposed Rules Will Apply

    15. The RFA directs agencies to provide a description of and, where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rules, if adopted. The RFA generally defines 
the term ``small entity'' as having the same meaning as the terms 
``small organization,'' ``small business,'' and ``small governmental 
jurisdiction.'' The term ``small business'' has the same meaning as the 
term ``small business concern'' under the Small Business Act. A small 
business concern is one which: (1) is independently owned and operated; 
(2) is not dominant in its field of operation; and (3) satisfies any 
additional criteria established by the SBA. According to SBA reporting 
data, there were 4.44 million small business firms nationwide in 1992. 
A small organization is generally ``any not-for-profit enterprise which 
is independently owned and operated and is not dominant in its field.'' 
Nationwide, as of 1992, there were approximately 275,801 small 
organizations. ``Small governmental jurisdiction'' generally means 
``governments of cities, counties, towns, townships, villages, school 
districts, or special districts, with a population of less than 
50,000.'' As of 1992, there were approximately 85,006 such 
jurisdictions in the United States. This number includes 38,978 
counties, cities, and towns; of these, 37,566, or 96 percent, have 
populations of fewer than 50,000. The Census Bureau estimates that this 
ratio is approximately accurate for all governmental entities. Thus, of 
the 85,006 governmental entities, the Commission estimates that 81,600 
(91 percent) are small entities.
    16. The amendments to Sec. 1.2110 adopted in the Eighth Report and 
Order will apply to all entities that apply to participate in 
Commission auctions, including small entities. The number of entities 
that may apply to participate in future Commission auctions is unknown. 
The number of small businesses that have participated in prior auctions 
has varied. In all of our auctions held to date except for the auctions 
for broadcast licenses, 1,513 out of a total of 1,881 qualified bidders 
have been small businesses as that term has been defined under rules 
adopted

[[Page 16650]]

by the Commission for specific services. Given these statistics, the 
Commission expects that, in the future, a large percentage of 
participants in our auctions program generally will continue to be 
small businesses; although, there may not be a large percentage in 
every auction.

D. Description of Reporting, Recordkeeping, and Other Compliance 
Requirements

    17. The rule changes established in the Eighth Report and Order do 
not alter reporting, recordkeeping, or other compliance requirements.

E. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered

    18. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed approach, 
which may include the following four alternatives (among others): (i) 
the establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (ii) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for small entities; 
(iii) the use of performance, rather than design, standards; and (iv) 
an exemption from coverage of the rule or any part thereof for small 
entities. In the Eighth Report and Order, the Commission considers the 
following issues, all of which concern how best to apply the 
Commission's ownership attribution rule in order to determine which 
entities are eligible for small business provisions in competitive 
bidding proceedings.
    19. Total assets test. The Commission generally employs a gross 
revenues test to measure the size of an entity for competitive bidding 
purposes. In the Eighth Report and Order, the Commission declines to 
add a total assets component to the existing gross revenues test in 
order to determine small business eligibility. While some commenters 
contend that the addition of a total assets test might help prevent 
low-revenue but asset-rich businesses from taking advantage of small 
business programs, others argue that including a total assets test 
might disqualify small entities by setting an asset limit that is too 
low or by attributing assets that are not readily available to these 
entities for auction purposes. In addition to a gross revenues test, 
the Commission currently employs a total assets test to evaluate the 
eligibility of applicants to acquire broadband Personal Communications 
Services (PCS) C and F block licenses made available in ``closed'' 
(entrepreneur-only) bidding. The Commission's experience in using a 
total assets test for C and F block entrepreneur eligibility 
determinations suggests that the potential benefit derived from a total 
assets test is insufficient to justify the difficulty involved in its 
implementation. In broadband PCS Auctions No. 5, 10, 11, and 22, in 
which all C and F block bidders were required to meet a total assets 
test as well as a gross revenues test to establish entrepreneur 
eligibility, more than 95 percent of those bidders also met the more 
stringent gross revenues test required for small business bidding 
credit eligibility. Thus, in practice, having a total assets test for 
the C and F blocks has not made a significant difference in defining 
the qualified applicant population. At the same time, employing a total 
assets test carries administrative costs for the Commission and for 
applicants and raises difficult valuation issues. The Commission 
believes that the potential benefit provided by a total assets test 
does not outweigh the valuation difficulties and the administrative 
costs the test would impose.
    20. Attribution exceptions for ``rights of first refusal'' and 
``put'' options. The Commission adopts exceptions to the controlling 
interest standard's fully diluted requirements for ``rights of first 
refusal'' and ``put'' options. The two exceptions are consistent with 
the Commission's underlying goal of assuring that the decision of 
whether and when to transfer a license won by a designated entity rests 
with those in control of the designated entity. Adoption of these 
exceptions should help the Commission realize its goal of widening the 
opportunities for small businesses in the spectrum auction program.
    21. Attribution clarification for mutually exclusive contingent 
ownership interests. The Commission clarifies that the interpretation 
that was applied in the broadband PCS context for contingent ownership 
agreements that are mutually exclusive by their terms is generally 
applicable under its part 1 rules. Under the clarification, ownership 
interests that by their terms are capable of being exercised 
simultaneously or successively will continue to be treated as if the 
rights thereunder had been fully exercised. Ownership interests that 
are mutually exclusive by their terms will be considered to be fully 
diluted only in the possible combinations in which they could be 
exercised by their holder(s). Applying this clarification provides a 
common sense approach to evaluating ownership interests that could not 
possibly be given simultaneous or successive effect and should further 
help the Commission realize its goal of widening the opportunities for 
small businesses in the spectrum auction program.

F. Report to Congress

    22. The Commission will send a copy of the Eighth Report and Order, 
including this FRFA, in a report to Congress pursuant to the Small 
Business Regulatory Enforcement Fairness Act of 1996. In addition, the 
Commission will send a copy of the Eighth Report and Order, including 
the FRFA, to the Chief Counsel for Advocacy of the Small Business 
Administration.

List of Subjects in 47 CFR Part 1

    Communications common carriers, Reporting and recordkeeping 
requirements.

Federal Communications Commission.
William F. Caton,
Acting Secretary

Rule Changes

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR part 1 as follows:

PART 1--PRACTICE AND PROCEDURE

    1. The authority citation for part 1 continues to read as follows:

    Authority: 47 U.S.C. 151, 154(i), 154(j), 155, 225, 303(r), 309 
and 325(e).

    2. Section 1.2110 is amended by revising paragraph (c)(2)(ii)(A), 
the text of paragraph (c)(5)(v) preceding the examples, and example 1 
to paragraph (c)(5)(v) and by adding a note to paragraph (c)(5)(v) 
following the examples to read as follows:


Sec. 1.2110  Designated entities.

* * * * *
    (c) * * *
    (2) * * *
    (ii) * * *
    (A) Fully diluted requirement. (1) Except as set forth in paragraph 
(c)(2)(ii)(A)(2) of this section, 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.
    (2) Rights of first refusal and put options shall not be calculated 
on a fully diluted basis for purposes of determining de jure control; 
however, rights of first refusal and put options shall be calculated on 
a fully diluted

[[Page 16651]]

basis if such ownership interests, in combination with other terms to 
an agreement, deprive an otherwise qualified applicant or licensee of 
de facto control.

    Note to Paragraph (c)(2)(ii)(A): Mutually exclusive contingent 
ownership interests, i.e., one or more ownership interests that, by 
their terms, are mutually exclusive of one or more other ownership 
interests, shall be calculated as having been fully exercised only 
in the possible combinations in which they can be exercised by their 
holder(s). A contingent ownership interest is mutually exclusive of 
another only if contractual language specifies that both interests 
cannot be held simultaneously as present ownership interests.

* * * * *
    (5) * * *
    (v) Affiliation arising under stock options, convertible 
debentures, and agreements to merge. Except as set forth in paragraph 
(c)(2)(ii)(A)(2) of this section, 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 are generally treated as though the 
rights held thereunder had been exercised. However, an affiliate cannot 
use such options and debentures to appear to terminate its control over 
another concern before it actually does so.
    Example 1 to paragraph (c)(5)(v). If company B holds an option to 
purchase a controlling interest in company A, who holds an attributable 
interest in a PCS 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.
* * * * *

    Note to Paragraph (c)(5)(v): Mutually exclusive contingent 
ownership interests, i.e., one or more ownership interests that, by 
their terms, are mutually exclusive of one or more other ownership 
interests, shall be calculated as having been fully exercised only 
in the possible combinations in which they can be exercised by their 
holder(s). A contingent ownership interest is mutually exclusive of 
another only if contractual language specifies that both interests 
cannot be held simultaneously as present ownership interests.

* * * * *
[FR Doc. 02-7793 Filed 4-5-02; 8:45 am]
BILLING CODE 6712-01-P