Sec. 22.937  Demonstration of financial qualifications.

    Except as provided in paragraphs (g) and (h) of this section, each 
applicant for a new cellular system must demonstrate that it has, at the 
time the application is filed, either a separate market-specific firm 
financial commitment or available financial resources sufficient to 
construct and operate for

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one year the proposed cellular system. Each application of reassignment 
of license or consent to transfer of control must demonstrate the 
financial ability of the proposed assignee or transferee to acquire and 
operate the facilities.
    (a) Estimated costs. The demonstration required by this section must 
include a realistic and prudent estimate of the costs of construction, 
operating and other initial expenses for one year.
    (b) Source of financing. The firm financial commitment must be 
obtained from a state or federally chartered bank or savings and loan 
association, another recognized financial institution, or the financial 
arm of a capital equipment supplier. The firm financial commitment may 
be contingent upon the applicant's obtaining an authorization.
    (c) Lender's statement. The firm financial commitment must contain a 
statement that:
    (1) The lender has examined the financial condition of the 
applicant, including audited financial statements if applicable, and has 
determined that the applicant is creditworthy;
    (2) The lender has examined the financial viability of each proposal 
for which the applicant intends to use the commitment;
    (3) The lender is committed to providing a sum certain to the 
particular applicant;
    (4) The lender's willingness to enter into the commitment is based 
solely on its relationship with the applicant; and,
    (5) The commitment is not in any way guaranteed by any entity other 
than the applicant.
    (d) Showings of financial resources. Applicants relying upon 
personal or internal financial resources must submit the following:
    (1) Audited financial statements, certified within one year of the 
date of the cellular application, that show the availability of 
sufficient net current assets to construct and operate for one year the 
proposed cellular system;
    (2) A balance sheet current within 60 days of the date of filing 
that shows the continued availability of sufficient net current assets 
to construct and operate for one year the proposed cellular system; and,
    (3) A certification by the applicant or an officer of the applicant 
organization attesting to the validity of the unaudited balance sheet.
    (e) Parent corporation financing. Applicants relying upon financing 
obtained from parent corporations must submit the showings listed in 
paragraph (d) of this section as the information pertains to the parent 
corporation.
    (f) Notice upon default. In addition to the disclosures required by 
paragraph (c) of this section, any loan or other credit arrangement 
providing for a chattel mortgage or secured interest in any proposed 
cellular system must include a provision for a minimum of ten (10) days 
prior written notification to the licensee, and to the FCC, before any 
such equipment may be repossessed under default provision of the 
agreement.
    (g) Competing applications in cellular renewal proceedings. Initial 
cellular applications that are competing against a cellular renewal 
application are subject to the rules in this paragraph instead of the 
rules in paragraphs (a) through (f) of this section.
    (1) Any applicant filing a competing application against a cellular 
renewal application must demonstrate, at the time it files its 
application, that it has either:
    (i) A firm financial commitment, an irrevocable letter of credit or 
performance bond in the amount of its realistic and prudent estimated 
costs of construction and any other expenses to be incurred during the 
first year of operating its proposed system (the irrevocable letter of 
credit or performance bond must be from the type of financial 
institution described in paragraph (g)(3) of this section); or,
    (ii) Available resources, as defined in paragraph (g)(4) of this 
section, necessary to construct and operate its proposed cellular system 
for one year.
    (2) The firm financial commitment may be contingent on the applicant 
obtaining an authorization. The applicant must also list all of its 
realistic and prudent estimated costs of construction and any other 
expenses to be incurred during the first year of operating its proposed 
system.

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    (3) The firm financial commitment required above shall be obtained 
from a state or federally chartered bank or savings and loan 
association, another recognized financial institution, or the financial 
arm of a capital equipment supplier; shall specify the terms of the loan 
or other form of credit arrangement, including the amount to be 
borrowed, the interest to be paid, the amount of the commitment fee and 
the fact that it has been paid, the terms of repayment and any 
collateral required; and shall contain a statement:
    (i) That the lender has examined the financial conditions of the 
applicant, including audited financial statements where applicable, and 
has determined that the applicant is creditworthy;
    (ii) That the lender has examined the financial viability of the 
proposal for which the applicant intends to use the commitment;
    (iii) That the lender is committed to providing a sum certain to the 
particular applicant;
    (iv) That the lender's willingness to enter into the commitment is 
based solely on its relationship with the applicant; and,
    (v) That the commitment is not in any way guaranteed by an entity 
other than the applicant.
    (4) Applicants intended to rely on personal or internal resources 
must submit:
    (i) Audited financial statements certified within one year of the 
date of the cellular application, indicating the availability of 
sufficient net current assets to construct and operate the proposed 
cellular system for one year;
    (ii) A balance sheet current within 60 days of the date of filing 
its application that clearly shows the continued availability of 
sufficient net current assets to construct and operate the proposed 
cellular system for one year; and,
    (iii) A certification by the applicant or an officer of the 
applicant organization attesting to the validity of the unaudited 
balance sheet.
    (5) Applicant intending to rely upon financing obtained through a 
parent corporation must submit the information required by paragraph 
(g)(4) of this section, as the information pertains to the parent 
corporation.
    (6) As an alternative to relying upon a firm financial commitment, 
an irrevocable letter of credit, or a performance bond from a financial 
institution as described in paragraph (g)(3) of this section, an 
applicant may state that it has placed in an escrow account sufficient 
cash to meet its construction and first-year operating expenses. Such a 
statement must specify the amount of cash, the escrow account number and 
the financial institution where the escrow account is located.
    (7) Any competing application filed against the renewal application 
of an incumbent cellular licensee that does not demonstrate, at the time 
it is initially filed, that the competing applicant has sufficient funds 
to construct and operate for one year its proposed cellular system will 
be dismissed.
    (h) Exemptions. Any licensee applying for an unserved area adjacent 
to its existing cellular system, to integrate such area into the 
existing system, is exempt from the financial demonstration requirements 
of this section. In addition, modification applications and pro forma 
assignment and transfer of control applications are exempt from the 
financial demonstration requirements of this section.