Exhibit 10.22
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") effective as of July 22,
1999, is entered into on this 27th day of September 1999 by and between AirGate
PCS, Inc., a Delaware corporation (the "Company"), and Xxxxx X. Xxxxxxx
("Executive") for the period of four years through July 22, 2003.
RECITALS
A. Executive has been employed by the Company as the VicePresident of
Engineering and Network Operations.
B. Executive currently beneficially owns an indirect interest in the
capital stock of the Company.
C. The Company filed on May 24, 1999 a registration statement with the
Securities and Exchange Commission to undertake an initial public
offering of the capital stock of the Company (the "IPO") that will
reduce the Executive's current ownership interest in the Company.
D. The Company and SprintCom, Inc. ("Sprint PCS") have entered into the
Sprint PCS Management Agreement (the "Management Agreement") dated July
22, 1998. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Management Agreement.
E. As an inducement to the Company entering into the Management
Agreement, Executive agreed to certain retention of ownership
restrictions, restrictions on other business interests (the "Primary
Business Restriction") and certain restrictions on his employment.
Executive and the Company acknowledge that the promises and restrictive
covenants Executive is providing in this Agreement are necessary to the
Company's protection of its legitimate interests in connection with the
Management Agreement. Accordingly, Executive and the Company agree to
enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements herein set forth, the parties hereto agree as follows:
1. Duties and Scope of Employment. The Company shall employ the Executive
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as Vice President of Engineering and Network Operations for the Company
reporting to the Chief Executive Officer. The Executive shall render such
business and professional services in the performance of his duties consistent
with Executive's position within the Company and as the Company's Chief
Executive Officer or Board of Directors may reasonably request from time to
time.
2. Employee Benefits. Executive shall be eligible for (i) all employee
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benefit plans and policies currently and hereafter maintained by the Company for
its employees of comparable positions, subject to the terms and conditions of
such plans and policies, and (ii) such other employee benefits as are set
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forth in this Agreement.
3. At-Will Employment. Executive and the Company understand and
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acknowledge that Executive's employment with the Company constitutes "at-will"
employment. Executive and the Company acknowledge that this employment
relationship may be terminated at any time, upon four weeks written notice to
the other party (or immediate notice if termination is for cause pursuant to
Section 4(g)), with or without cause or for any or no cause, at the option
either of the Company or Executive.
4. Compensation.
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(a) Base Salary. While employed by the Company pursuant to this
Agreement, the Company shall pay the Executive as compensation for his services
a base salary at the annualized rate of $96,000.00 (the "Base Salary"). Upon
completion of the IPO and concurrent bond financing that generates proceeds to
the Company of at least $215 Million, Executive's salary will be adjusted to
$139,000.00 paid effective as of July 15, 1999. The Base Salary shall be
adjusted annually to increase the Executive's Base Salary by the greater of (i)
the Consumer Price Index for all urban consumers, U.S. City Average, All Items;
or (ii) 5%. Such salary shall be paid periodically in accordance with normal
Company payroll practices and subject to the usual, required withholding and
deductions. Executive understands and agrees that neither his job performance
nor promotions, commendations, bonuses or the like from the Company give rise to
or in any way serve as the basis for modification, amendment, waiver, or
extension, by implication or otherwise, of this Agreement.
(b) Bonuses. In addition to Executive's Base Salary, Executive shall be
eligible to receive an annual bonus (the "Bonus") at a level generally
established in the industry for the Executive's position and in the target range
of 35% of Executive's Base Salary then in effect, as determined by the Board (in
its sole discretion) in consultation with Executive, and according to the terms
of any applicable Company executive bonus plans. The Bonus shall be payable in
accordance with the Company's normal practices and policies.
(c) Stock Option. Executive shall be eligible to participate in the
Company's stock option plan at the level established for the position held by
the Executive and in accordance with the Company's stock option plan,
irrespective of his ownership interest in the Company predating the date of this
Agreement. The Company has awarded to the Executive an option to purchase stock
for a total number of 75,000 shares as of the effective date of the stock option
plan and pursuant to its terms.
(d) Annual Benefits Program. Executive shall be eligible to participate
in an executive benefit/perquisite program as established by the Company at the
level of a senior executive and for a minimum aggregate annual benefit equal to
$10,000. In addition, Executive will be provided health, dental, disability and
life insurance for him and his family under Company policies.
(e) Termination of Employment. If the Company terminates the
Executive's employment, the Company shall continue until July 22, 2003 to pay
the Executive (1) his Base Salary with an annual adjustment equal to the greater
of (A) the Consumer Price Index for all urban consumers, U.S. City Average, All
Items; or (B) 5%; plus (2) an annual bonus at a rate of 20% of Executive's Base
Salary
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(the "Salary Continuation") unless or until:
(i) Executive voluntarily terminates his employment with
the Company; or
(ii) the Company terminates the Executive or the Salary
Continuation for cause pursuant to Section 4(g) of this
Agreement; or
(iii) the Primary Business Restriction expires, is eliminated
or is waived by Sprint PCS.
Notwithstanding the foregoing, if the Company terminates Executive's employment
without cause and the requirements of Section 4(e)(iii) are met at that time or
thereafter, Executive shall receive six months Base Salary at the rate in effect
on the date of termination (but in no event beyond July 22, 2003). Executive
shall be entitled to stock options to the extent provided pursuant to the terms
of the Company's stock option plan as an employee under the stock option plan
for the duration of the period of payment of Salary Continuation. The Executive
shall also continue to receive health, dental, disability and life insurance
under the Company's policies so long as the Company continues to pay his Salary
Continuation.
(f) Continued Employment Obligations. So long as the Company continues to
pay Salary Continuation, Executive agrees to perform such duties as the Company
reasonably requests from time to time, subject to the direction and control of
the Company. Therefore, notwithstanding Executive's termination of employment
with respect to the capacity in which Executive was then serving, Executive
shall continue in his status as an employee of the Company so long as the Salary
Continuation is paid.
(g) Termination for Cause. The Company may terminate Executive's
employment or the Salary Continuation for cause if the Executive is found to
have violated the requirements set forth in Section 8, Section 9(b) or Section
9(c) of this Agreement. If the Executive's employment or the Salary Continuation
is terminated pursuant to this Section 4(g), the Executive shall not be entitled
to any additional compensation or benefits thereafter.
(h) Termination by Reason of Death. If Executive's employment terminates
by reason of death, or if Executive dies while receiving Salary Continuation,
the Company shall pay to Executive's legal representative Salary Continuation
for the twelve (12) month period following death (but in no event beyond July
22, 2003). Except as provided in this Section 4(h) or as required by law, Salary
Continuation and all other compensation and benefits provided hereunder shall
cease at death.
5. Expenses. The Company will pay or reimburse Executive for reasonable
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travel, entertainment or other expenses incurred by Executive in the furtherance
of or in connection with the performance of Executive's duties hereunder in
accordance with the Company's established policies.
6. Assignment. This Agreement shall be binding upon and inure to the
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benefit of (a) the heirs, executors and legal representatives of Executive upon
Executive's death or incapacity, and (b) any
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successor or assign of the Company. Any such successor of the Company shall be
deemed substituted for the Company under the terms of this Agreement for all
purposes. As used herein, "successor" shall include any person, firm,
corporation or other business entity which at any time, whether by purchase,
merger or otherwise, directly or indirectly acquires all or substantially all of
the assets or business of the Company. None of the rights of Executive to
receive any form of compensation payable pursuant to this Agreement shall be
assignable or transferable except through a testamentary disposition or by the
laws of descent and distribution upon the death of Executive. Any attempted
assignment, transfer, conveyance or other disposition (other than as aforesaid)
of any interest in the rights of Executive to receive any form of compensation
hereunder shall be null and void.
7. Notices. All notices, requests, demands and other communications
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called for hereunder shall be in writing and shall be deemed given if delivered
personally or via overnight delivery with proof of receipt or three (3) days
after being mailed by registered or certified mail, return receipt requested,
prepaid and addressed to the parties or their successors in interest at the
following addresses, or at such other addresses as the parties may designate by
written notice:
If to the Company:
AirGate PCS, Inc.
Xxxxxx Tower
000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Board of Directors
If to Executive:
Xxxxx X. Xxxxxxx
0000 Xxxx Xxxxx Xxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
8. Ownership Interest Restrictions.
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(a) Retention of Ownership Interest. Pursuant to Section 13 of
Addendum II and Addendum III to the Management Agreement ("Addendum II" and
"Addendum III" respectfully), Executive agrees that Executive shall not sell,
transfer (except as otherwise provided in subsection (b) below), assign, gift or
pledge any of Executive's equity or voting interest in any of the entities
listed in Schedule 13 to Addendum II ("Schedule 13") until July 22, 2003 except
for those shares granted to Executive pursuant to the terms of the Company's
stock option plan and such other equity and voting interests that are not within
the scope of Addendum II and Schedule 13.
(b) Permitted Transfers. Notwithstanding the provisions of Section
8(a), Executive shall be permitted to execute the following transfers:
(i) a transfer of a direct or indirect ownership interest
in a Schedule 13 Company to Executive's spouse,
child, adopted child, stepchild, grandchild, parent
or sibling, or to a trust established for the benefit
of any of the foregoing, provided that Executive
retains control of the voting rights associated with
the ownership
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interest and remains bound by the terms of Addendum
II;
(ii) a transfer upon the death of Executive, provided that
such transfer is to one of the Principals named in
Addendum II or to a person who agrees to be bound by
the requirements of Addendum II; or
(iii) a transfer of up to a maximum of thirty percent (30%)
of Executive's equity interest in the entities listed
in Schedule 13 after July 22, 2001.
(c) Invalid Transfers. Executive acknowledges that his failure to
comply with the ownership restrictions set forth in this Section 8 could be
treated as a material default of the Management Agreement by Sprint PCS and
result in irreparable harm to the Company. Executive agrees to maintain his
ownership interests in compliance with the requirements of this Agreement and
the Management Agreement and further agrees that any attempted transfer of his
ownership interests in violation of the requirements of this Agreement or the
Management Agreement shall be invalid and void and agrees that a legend to this
effect will be placed on any certificates or other evidence of such ownership
interests. Executive further agrees to indemnify and hold harmless the Company
and other shareholders of the Company from and against any and all liabilities,
damages, penalties, costs and expenses (including reasonable attorney's fees)
suffered or incurred by reason of Executive's noncompliance and breach of this
Section and to release the Company from any claims relating to termination of
his employment or Salary Continuation and other benefits pursuant to Section 4
of this Agreement. Executive acknowledges that the foregoing indemnity could
amount to tens of millions of dollars. The foregoing indemnity shall not be the
Company's or other shareholders' exclusive remedy in the event of such
noncompliance or breach, such indemnity being cumulative and not in limitation
of any and all other remedies at law or in equity. Any indemnity paid by the
Executive to the Company shall not release or waive any claims that the Company
may have against the Executive.
9. Restrictions on Employment.
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(a) Use and Disclosure of Confidential Information. During the period
of two (2) years after Executive's employment has terminated for any reason
whatsoever (or, in the case of trade secrets, for so long as the information in
question remains a trade secret) and during any period Executive is employed by
Employer, Executive shall not, without the prior written consent of the Company,
directly or indirectly, divulge, disclose or publish to any person or entity, or
reproduce or use in any way, except only as required for the benefit of the
Company, any Confidential Information (as defined herein). Upon the Company's
request and, in any event, upon the termination of Executive's employment with
the Company for any reason whatsoever, Executive shall immediately return any
reproductions of Confidential Information to the Company. For purposes of this
Agreement, "Confidential Information" means any trade secrets and any
information relating to the Company's business that is competitively sensitive
and not generally known by the public, including processes, policies,
procedures, techniques, designs, drawings, know-how, show-how, technical
information, technology, specifications, products, computer programs (including
computer programs developed, improved or modified by Executive for or on behalf
of the Company for use in the Company's business), algorithms, systems, methods
of operation, order entry forms, price lists, customer lists, customer
information, solicitation leads, marketing research data, marketing and
advertising materials and methods and manuals and forms, all of which pertain to
the Company's business. Confidential
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Information does not include any information which (i) is available in published
print or otherwise known to the public, unless published or made known as a
result of acts or omissions of Executive, or (ii) is lawfully obtained by
Executive in writing from a third party who did not acquire such confidential
information or trade secret, directly or indirectly, from Executive or the
Company.
(b) Primary Business Restriction. Pursuant to Section 14(a) of Addendum II,
Executive agrees that prior to July 22, 2003, unless the Primary Business
Restriction expires or is eliminated or waived by Sprint PCS, Executive shall
not have a primary business other than his involvement with the Company,
regardless of whether he is currently employed by the Company. Executive
acknowledges that his failure to comply with the restrictions set forth in this
Section 9(b) could be treated as a material default of the Management Agreement
by Sprint PCS and result in irreparable harm to the Company. Executive further
agrees to indemnify and hold harmless the Company and other shareholders of the
Company from and against any and all liabilities, damages, penalties, costs and
expenses (including reasonable attorney's fees) suffered or incurred by reason
of Executive's non-compliance and breach of this Section and agrees to release
the Company from any claims relating to termination of his employment or Salary
Continuation and other benefits pursuant to Section 4 of this Agreement.
Executive acknowledges that the foregoing indemnity could amount to tens of
millions of dollars. The foregoing indemnity shall not be the Company's or other
shareholders' exclusive remedy in the event of such noncompliance or breach,
such indemnity being cumulative and not in limitation of any and all other
remedies at law or in equity. Any indemnity paid by Executive to the Company
shall not release or waive any claim that the Company may have against the
Executive.
(c) Covenant Not to Compete (the "Covenant Not to Compete"). In addition to
the requirements set forth in Section 9(b), during Executive's employment with
the Company and for a period of eighteen (18) months after Executive's
employment is terminated (excluding any period for which Salary Continuation is
paid), Executive shall not, directly, indirectly, for himself or on behalf of or
in conjunction with any other person, firm or entity.
(i) engage in the wireless telecommunications business (the
"Business") anywhere within the Service Area as defined in
Addendum I of the Management Agreement (the "Territory").
(ii) initiate any action to solicit in competition with the Business
of the Company or to divert or attempt to divert from the Company
the Business of any person, firm or entity for which the Company
provided services in connection with the Business at any time
during the period of twenty four (24) months immediately
preceding the time of such solicitation, diversion or attempt to
divert and with whom Executive had material contact in the course
of Executive's employment with the Company; or
(iii) hire for any other employer any employee of the Company or cause
any employee of the Company to leave his employment in order to
work for another.
Executive acknowledges that the Company has conducted and expects to
conduct its business throughout the Territory and that the Company expects that
during the aforesaid period, the Company will continue to expand its Business
throughout the Territory and that this expectation is realistic; that Executive
shall be engaged in the Company's business in his capacity with respect to the
Company's
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activities throughout the Territory; and that because of Executive's association
with the Company, the Company's business would be seriously and irreparably
harmed if Executive were to compete with the Company in the manner prohibited
above.
(d) Change of Control. The restrictions set forth in Section 8 hereof
(entitled "Ownership Interest Restrictions"), and the obligation of Executive to
comply with the Primary Business Restriction (but not the restrictions set forth
in Section 9(a) and 9(c) hereof), shall lapse immediately if at least one-third
(1/3) of the persons who are corporate officers of Sprint and/or Sprint PCS
immediately before an Applicable Change of Control terminate their employment
for any reason within one year following an Applicable Change of Control. For
purposes of this Agreement, (i) "Change of Control" shall have the meaning set
forth in Section 17.15.3(e) of the Management Agreement, and (ii) "Applicable
Change of Control" shall mean a Change of Control of Sprint or Sprint PCS (other
than the Change of Control between Sprint Enterprises, L.P., TCI Telephony
Services, Inc., Comcast Telephony Services and Cox Telephony Partnership, Sprint
Spectrum L.P., SprintCom. Inc., PhillieCo Partners I, L.P., and Xxx
Communications PCS, L.P.).
(e) Injunction; Attorneys' Fees; Setoff. As any breach by Executive of any
of the covenants contained in this Agreement (including this Section 9) would
result in irreparable injury to the Company, and as the damages arising out of
any such breach would be difficult to ascertain, Executive agrees that, in
addition to all other remedies provided by law or in equity, the Company shall
be entitled to an injunction against any such breach, whether actual or
contemplated. If the Company takes any action at law or in equity to enforce its
rights under this Agreement, then in addition to any other relief to which the
Company may be entitled, the Company shall be entitled to reasonable attorneys'
fees, costs and necessary expenses incurred in connection therewith. The Company
shall be entitled to set off against any compensation and other payments of any
kind owed to Executive any amounts owing to the Company as a result of a breach
of this Agreement or otherwise.
10. Termination. If the Company does not complete its financing, including but
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not limited to, completion of the IPO, a high yield debt offering and closing of
a senior debt facility by October 31, 1999, or if the Management Agreement is
terminated by Sprint PCS, Executive (if Executive is not then in breach of this
Agreement) may terminate this Agreement.
11. Entire Agreement. This Agreement and the documents referenced herein
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represent the entire agreement and understanding between the Company and
Executive concerning the subject matter hereof, and supersede and replace any
and all prior agreements and understandings concerning such subject matter.
12. Arbitration and Equitable Relief.
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(a) To the extent permitted by applicable law, Executive agrees that any
dispute or controversy arising out of, relating to, or in connection with this
Agreement, or the interpretation, validity, construction, performance, breach or
termination thereof shall be settled by arbitration to be held in Xxxxxx County,
Georgia, in accordance with the National Rules for the Resolution of Employment
Disputes then in effect of the American Arbitration Association (the "Rules").
The arbitrator may grant injunctions or other relief in such dispute or
controversy. The decision of the arbitrator shall be final, conclusive and
binding on the parties to the arbitration. Judgment may be entered on the
arbitrator's
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decision in any court having jurisdiction.
(b) The arbitrator shall apply Georgia law to the merits of any dispute or
claim, without reference to rules of conflict of law. Subject to Section 12(a),
Executive hereby expressly consents to the personal jurisdiction of the state
and federal courts located in Georgia for any action or proceeding arising from
or relating to this Agreement and/or relating to any arbitration in which the
parties are participants.
(c) Executive understands that nothing in Section 12 modifies Executive's
at-will status. Subject to Section 3, either the Company or Executive can
terminate the employment relationship at any time, with or without cause.
(d) EXECUTIVE HAS READ AND UNDERSTANDS SECTION 12, WHICH DISCUSSES
ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EXECUTIVE
AGREES TO SUBMIT ANY FUTURE CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION
WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE,
BREACH, OR TERMINATION THEREOF TO BINDING ARBITRATION, AND THAT THIS ARBITRATION
CLAUSE CONSTITUTES A WAIVER OF EXECUTIVE'S RIGHT TO A JURY TRIAL AND RELATES TO
THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE
RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, THE FOLLOWING CLAIMS:
(i) ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH
OF CONTRACT, BOTH EXPRESS OR IMPLIED; BREACH OF THE COVENANT OF
GOOD FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT
OR INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR
INTENTIONAL MISREPRESENTATION; NEGLIGENT OR INTENTIONAL
INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND
DEFAMATION.
(ii) ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR
MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF
THE CIVIL RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE
AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE AMERICANS WITH
DISABILITIES ACT OF 1990, AND THE FAIR LABOR STANDARDS ACT;
(iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS
RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.
(e) Notwithstanding any provision herein to the contrary, this Section 12
shall not apply to any dispute or controversy arising under Section 9 (entitled
"Restrictions on Employment") or the interpretation, validity, construction,
performance, breach or termination thereof.
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13. Severability. In the event that any provision hereof becomes or is declared
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by a court of competent jurisdiction to be illegal, unenforceable or void, this
Agreement shall continue in full force and effect without said provision.
14. No Oral Modification, Cancellation or Discharge. This Agreement may only be
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amended, canceled or discharged in writing signed by Executive and the Company.
15. Withholding. The Company shall be entitled to deduct or withhold, or cause
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to be deducted or withheld, from payment any amount of withholding taxes or
other amounts required by law with respect to payments made to Executive in
connection with his employment hereunder.
16. Governing Law. This Agreement shall be governed by the laws of the State of
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Georgia.
17. Acknowledgment. Executive acknowledges that he has had the opportunity to
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discuss this matter with and obtain advice from his private attorney, has had
sufficient time to, and has carefully read and fully understands all the
provisions of this Agreement, and is knowingly and voluntarily entering into
this Agreement.
18. Gender. Wherever the context requires, the masculine or feminine gender
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shall include the other gender, and the singular shall include the plural and
vice versa.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
respective dates set forth below.
COMPANY:
AIRGATE PCS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
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Name/Title: President and CEO
Date: September 27, 1999
EXECUTIVE: /s/ Xxxxx X. Xxxxxxx
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Date: September 27, 1999
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