Exhibit 99.3
PSU Agreement
Version 1
For Use from January 2007
Performance Stock Units Agreement
General Terms and Conditions
WHEREAS, the Company has adopted the Plan (as defined below), the terms of
which are hereby incorporated by reference and made a part of this Agreement;
and
WHEREAS, the Committee has determined that it would be in the best
interests of the Company and its stockholders to grant the performance stock
units (the "PSUs") provided for herein to the Participant pursuant to the Plan
and the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties agree as follows:
1. Definitions. Whenever the following terms are used in this Agreement, they
shall have the meanings set forth below. Capitalized terms not otherwise
defined herein shall have the same meanings as in the Plan.
a) "Cause" means, "Cause" as defined in an employment agreement between
the Company or any of its Affiliates and the Participant or, if not
defined therein or if there is no such agreement, "Cause" means (i)
Participant's continued failure substantially to perform such
Participant's duties (other than as a result of total or partial
incapacity due to physical or mental illness) for a period of ten (10)
days following written notice by the Company or any of its Affiliates
to the Participant of such failure, (ii) dishonesty in the performance
of the Participant's duties, (iii) Participant's conviction of, or
plea of nolo contendere to, a crime constituting (A) a felony under
the laws of the United States or any state thereof or (B) a
misdemeanor involving moral turpitude, (iv) Participant's
insubordination, willful malfeasance or willful misconduct in
connection with Participant's duties or any act or omission which is
injurious to the financial condition or business reputation of the
Company or any of its Affiliates, or (v) Participant's breach of any
non-competition, non-solicitation or confidentiality provisions to
which the Participant is subject. The determination of the Committee
as to the existence of "Cause" will be conclusive on the Participant
and the Company.
b) "Disability" means, "Disability" as defined in an employment agreement
between the Company or any of its Affiliates and the Participant or,
if not defined therein or if there shall be no such agreement,
"disability" of the Participant shall have the meaning ascribed to
such term in the Company's long-term disability plan or policy, as in
effect from time to time.
c) "Division Change in Control" means (i) a transfer by the Company or
any Affiliate of the Participant's Employment to a corporation,
company or other entity whose financial results are not consolidated
with those of the Company or (ii) a change in the ownership structure
of the Affiliate with which the Participant
has Employment such that the Affiliate's financial results are no
longer consolidated with those of the Company.
d) "Good Reason" means "Good Reason" as defined in an employment
agreement between the Company or any of its Affiliates and the
Participant or, if not defined therein, "Good Reason" means the
termination of the Participant's Employment by the Participant because
of a breach by the Company or any Affiliate of any employment
agreement to which the Participant is a party; provided, that "Good
Reason" will cease to exist for an event on the sixtieth (60th) day
following the later of its occurrence or the Participant's knowledge
thereof, unless the Participant has given the Company written notice
of his or her termination of employment for Good Reason prior to such
date.
e) "Participant" means an individual to whom PSUs have been awarded
pursuant to the Plan and shall have the same meaning as may be
assigned to the terms "Holder" or "Participant" in the Plan.
f) "Performance Level" means the level of performance achieved by the
Company during a measurement period (generally, the Performance
Period) based on the TSR Percentile for such period, which shall
determine the percentage of Target PSUs that will vest, as set forth
in the Notice of Grant of Performance Stock Units.
g) "Performance Period" means the period commencing and ending on the
dates set forth in the Notice of Grant of Performance Stock Units.
h) "Plan" means the equity plan maintained by the Company that is
specified in the Notice of Grant of Performance Stock Units, which has
been provided to the Participant separately and which accompanies and
forms a part of this Agreement, as such plan may be amended,
supplemented or modified from time to time.
i) "Retirement" means a termination of employment by the Participant (i)
following the attainment of age 55 with ten (10) or more years of
service as an employee or a director with the Company or any Affiliate
or (ii) pursuant to a retirement plan or early retirement program of
the Company or any Affiliate.
j) "Shares" means shares of Common Stock of the Company.
k) "Total Shareholder Return" or "TSR" means a company's total
shareholder return, calculated based on stock price appreciation
during a specified measurement period plus the value of dividends paid
on such stock during the measurement period (which shall be deemed to
have been reinvested in the underlying company's stock effective the
"ex-dividend" date based on the closing price for such company for
purposes of measuring TSR).
l) "TSR Percentile" means the percentile rank of the TSR for the Shares
during a specified measurement period (generally the Performance
Period) relative to the
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TSR for each of the companies in the S&P 500 Index (the "Index") at
the beginning and throughout such measurement period; provided,
however, that for purposes of measuring the TSR Percentile, (i) the
Index shall be deemed to include companies that were removed from the
S&P 500 Index during the measurement period but that continued during
the entire measurement period to have their shares listed on at least
one of the NYSE, NASDAQ, American Stock Exchange, Boston Stock
Exchange, Chicago Stock Exchange, National Stock Exchange (formerly
Cincinnati Stock Exchange), NYSE Arca (formerly known as the Pacific
Stock Exchange) or Philadelphia Stock Exchange; (ii) Time Warner Cable
Inc. shall not be considered to be part of the Index for measurement
purposes even if it is included in the S&P 500 Index during some or
all of the measurement period; and (iii) the beginning and ending TSR
values shall be calculated based on the average of the closing prices
of the applicable company's stock on the composite tape for the 30
trading days prior to and including the beginning or ending date, as
applicable, of the measurement period.
m) "Vesting Date" means the vesting date set forth in the Notice of Grant
of Performance Stock Units.
2. Grant of Performance Stock Units. The Company hereby grants to the
Participant (the "Award"), on the terms and conditions hereinafter set
forth, the target number of PSUs (the "Target PSUs") set forth on the
Notice of Grant of Performance Stock Units (the "Notice of Grant of
Performance Stock Units"). Each PSU represents the unfunded, unsecured
right of the Participant to receive a Share on the date(s) specified
herein, subject to achievement of the relevant performance criteria. The
Target PSUs represent the number of PSUs that will vest on the Vesting Date
if the Company achieves the "Target" Performance Level for the Performance
Period, and the Participant remains in Employment through the Vesting Date.
PSUs do not constitute issued and outstanding shares of Common Stock for
any corporate purposes and do not confer on the Participant any right to
vote on matters that are submitted to a vote of holders of Shares.
3. Dividend Equivalents and Retained Distributions. The Participant shall not
be entitled to receive any dividend equivalent payments and the PSUs shall
not otherwise be credited or adjusted to reflect any regular cash dividend
on the Shares that is paid while the PSUs are outstanding hereunder. If on
any date while PSUs are outstanding hereunder the Company shall pay any
dividend other than a regular cash dividend or make any other distribution
on the Shares, then, the Participant shall be credited with a bookkeeping
entry equivalent to such dividend or distribution for each Target PSU held
by the Participant on the record date for such dividend or distribution,
but the Company shall retain custody of all such dividends and
distributions (the "Retained Distributions")unless the Board has in its
sole discretion (and in a manner consistent with Section 19 of the Plan)
determined that an amount equivalent to such dividend or distribution shall
be paid currently to the Participant; provided, however, that if the
Retained Distribution relates to a dividend paid in Shares, the Participant
shall receive an additional amount of PSUs (i.e., by increasing the number
of Target PSUs) equal to the product of (I) the aggregate number of Target
PSUs held by the Participant pursuant to this Agreement through the related
dividend record date, multiplied by (II) the number of
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Shares (including any fraction thereof) payable as a dividend on a Share.
Retained Distributions will not bear interest and will be subject to the
same restrictions as the PSUs to which they relate. Notwithstanding
anything else contained in this paragraph 3, no payment of Retained
Distributions shall occur before the first date on which a payment could be
made without subjecting the Participant to tax under the provisions of
Section 409A of the Internal Revenue Code of 1986, as amended (the "Code").
4. Vesting and Delivery of Vested Securities.
a) Subject to the terms and provisions of the Plan and this Agreement, on
the Vesting Date, the Company shall issue or transfer to the
Participant the number of Shares corresponding to the Performance
Level achieved during the Performance Period and the Retained
Distributions, if any, covered by the Award. Except as otherwise
provided in paragraphs 5, 6 and 7, the vesting of such PSUs and any
Retained Distributions relating thereto shall occur only if the
Participant has continued in Employment of the Company or any of its
Affiliates on the Vesting Date and has continuously been so employed
since the Date of Grant (as defined in the Notice of Grant of
Performance Stock Units).
b) PSUs Extinguished. Upon each issuance or transfer of Shares in
accordance with this Agreement, a number of PSUs equal to the number
of Shares issued or transferred to the Participant shall be
extinguished and such number of PSUs will not be considered to be held
by the Participant for any purpose.
c) Final Issuance. Upon the final issuance or transfer of Shares and
Retained Distributions, if any, to the Participant pursuant to this
Agreement, in lieu of a fractional Share, the Participant shall
receive a cash payment equal to the Fair Market Value of such
fractional Share.
d) Section 409A. Notwithstanding anything else contained in this
Agreement, no Shares or Retained Distributions shall be issued or
transferred to a Participant before the first date on which a payment
could be made without subjecting the Participant to tax under the
provisions of Section 409A of the Code.
5. Termination of Employment.
(a) If the Participant's Employment with the Company and its Affiliates is
terminated by the Participant for any reason other than those
described in clauses (b) and (c) below prior to the Vesting Date, then
the PSUs covered by the Award and all Retained Distributions relating
thereto shall be completely forfeited on the date of any such
termination, unless otherwise provided in an employment agreement
between the Participant and the Company or an Affiliate.
(b) If the Participant's Employment terminates as a result of his or her
death prior to the end of the Performance Period, then the Company
shall immediately issue or transfer to the Participant's estate a pro
rata portion of the number of Shares
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underlying the PSUs that would have vested (if any) if the Performance
Period ended on the date of the Participant's death plus all Retained
Distributions relating thereto; provided, however, that in the event
such termination of Employment due to death occurs prior to the first
anniversary of the Date of Grant, then the pro rata number of PSUs
that vest shall be based on the number of Target PSUs, without regard
to the actual Performance Level achieved through such date. The pro
rata amount of PSUs that shall vest upon the Participant's death shall
be determined by multiplying
(x) the full number of PSUs covered by the Award that would vest
based on the actual Performance Level achieved through the date
of death (or, in the case of death prior to the first anniversary
of the Date of Grant, based on the number of Target PSUs) by;
(y) a fraction, the numerator of which shall be the number of days
from the Date of Grant through the date of the Participant's
death, and the denominator of which shall be the number of days
from the Date of Grant through the last day of the Performance
Period.
If the product of (x) and (y) results in a fractional share, such
fractional share shall be rounded to the next higher whole share.
The PSUs and any Retained Distributions related thereto that do not vest as
described above shall be completely forfeited.
(c) If the Participant's Employment is terminated by the Company and its
Affiliates for any reason other than for Cause or if the Participant
terminates Employment due to Good Reason, Retirement or Disability,
then the Participant shall remain entitled to receive a pro rata
portion of the PSUs that would otherwise vest (if any) on the Vesting
Date based on the actual Performance Level achieved for the full
Performance Period, and any Retained Distributions relating thereto,
and such pro rata portion of the PSUs shall become vested, and Shares
subject to such PSUs shall be issued or transferred to the Participant
on the Vesting Date as follows:
(x) the number of PSUs covered by the Award that would vest on the
Vesting Date (based on the actual Performance Level achieved for
the full Performance Period) multiplied by;
(y) a fraction, the numerator of which shall be the number of days
from the Date of Grant through the date of such termination, and
the denominator of which shall be the number of days from the
Date of Grant through the last day of the Performance Period.
If the product of (x) and (y) results in a fractional share, such
fractional share shall be rounded to the next higher whole share.
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The PSUs and any Retained Distributions related thereto that do not
vest as described above shall be completely forfeited following the
end of the Performance Period.
For purposes of this paragraph 5, a temporary leave of absence shall not
constitute a termination of Employment or a failure to be continuously
employed by the Company or any Affiliate regardless of the Participant's
payroll status during such leave of absence if such leave of absence is
approved in writing by the Company or any Affiliate. Notice of any such
approved leave of absence should be sent to the Company at One Time Xxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, attention: Director, Global Stock Plans
Administration, but such notice shall not be required for the leave of
absence to be considered approved.
In the event the Participant's Employment with the Company or any of its
Affiliates is terminated, the Participant shall have no claim against the
Company with respect to the PSUs and related Retained Distributions, if
any, other than as set forth in this paragraph 5, the provisions of this
paragraph 5 being the sole remedy of the Participant with respect thereto.
6. Acceleration of Vesting Date. Subject to paragraphs 4(d) and 7, in the
event a Change in Control or a Division Change in Control occurs prior to
the end of the Performance Period, the PSUs shall immediately vest and the
Participant shall receive immediate payment in respect thereof determined
as the sum of the following amounts:
(x) the number of PSUs covered by the Award that would have vested (if
any) if the Performance Period ended on the date of the Change in
Control or Division Change in Control (based on the actual Performance
Level achieved through the date of the Change in Control or Division
Change in Control) multiplied by a fraction, the numerator of which
shall be the number of days from the Date of Grant through the date of
such Change in Control or Division Change in Control, and the
denominator of which shall be the number of days from the Date of
Grant through the last day of the Performance Period;
(y) the number of Target PSUs multiplied by a fraction, the numerator of
which shall be the number of days from the date of such Change in
Control or Division Change in Control through the last day of the
Performance Period, and the denominator of which shall be the number
of days from the Date of Grant through the last day of the Performance
Period; and
(z) all related Retained Distributions.
If the sum of the amounts above would result in a fractional share, such
fractional share shall be rounded to the next higher whole share.
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7. Limitation on Acceleration. Notwithstanding any provision to the contrary
in the Plan or this Agreement, if the Payment (as hereinafter defined) due
to the Participant hereunder as a result of the acceleration of vesting of
the PSUs pursuant to paragraph 6 of this Agreement, either alone or
together with all other Payments received or to be received by the
Participant from the Company or any of its Affiliates (collectively, the
"Aggregate Payments"), or any portion thereof, would be subject to the
excise tax imposed by Section 4999 of the Code (or any successor thereto),
the following provisions shall apply:
a) If the net amount that would be retained by the Participant after all
taxes on the Aggregate Payments are paid would be greater than the net
amount that would be retained by the Participant after all taxes are
paid if the Aggregate Payments were limited to the largest amount that
would result in no portion of the Aggregate Payments being subject to
such excise tax, the Participant shall be entitled to receive the
Aggregate Payments.
b) If, however, the net amount that would be retained by the Participant
after all taxes were paid would be greater if the Aggregate Payments
were limited to the largest amount that would result in no portion of
the Aggregate Payments being subject to such excise tax, the Aggregate
Payments to which the Participant is entitled shall be reduced to such
largest amount.
The term "Payment" shall mean any transfer of property within the meaning
of Section 280G of the Code.
The determination of whether any reduction of Aggregate Payments is
required and the timing and method of any such required reduction in
Payments under this Agreement or in any such other Payments otherwise
payable by the Company or any of its Affiliates consistent with any such
required reduction, shall be made by the Participant, including whether any
portion of such reduction shall be applied against any cash or any shares
of stock of the Company or any other securities or property to which the
Participant would otherwise have been entitled under this Agreement or
under any such other Payments, and whether to waive the right to the
acceleration of the Payment due under this Agreement or any portion thereof
or under any such other Payments or portions thereof, and all such
determinations shall be conclusive and binding on the Company and its
Affiliates. To the extent that Payments hereunder or any such other
Payments are not paid as a consequence of the limitation contained in this
paragraph 7, then the PSUs and Retained Distributions related thereto (to
the extent not so accelerated) and such other Payments (to the extent not
vested) shall be deemed to remain outstanding and shall be subject to the
provisions hereof and of the Plan as if no acceleration or vesting had
occurred. Under such circumstances, if the Participant terminates
Employment for Good Reason or is terminated by the Company or any of its
Affiliates without Cause, the portion of PSUs affected by the limitation
under this paragraph 7 and Retained Distributions related thereto (to the
extent that they have not already become vested) shall become immediately
vested in their entirety upon such termination and Shares subject to the
PSUs shall be issued or transferred to the Participant, as soon as
practicable following
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such termination of Employment, subject to the provisions relating to
Section 4999 of the Code set forth herein.
The Company shall promptly pay, upon demand by the Participant, all legal
fees, court costs, fees of experts and other costs and expenses which the
Participant incurred in any actual, threatened or contemplated contest of
the Participant's interpretation of, or determination under, the provisions
of this paragraph 7.
8. Withholding Taxes. The Participant agrees that,
a) Obligation to Pay Withholding Taxes. Upon the vesting of any portion
of the Award of PSUs and the Retained Distributions relating thereto,
the Participant will be required to pay to the Company any applicable
Federal, state, local or foreign withholding tax due as a result of
such payment or vesting. The Company's obligation to deliver the
Shares subject to the PSUs or to pay any Retained Distributions shall
be subject to such payment. The Company and its Affiliates shall, to
the extent permitted by law, have the right to deduct from the Shares
issued in connection with the vesting of PSUs or the Retained
Distributions, as applicable, or any payment of any kind otherwise due
to the Participant any Federal, state, local or foreign withholding
taxes due with respect to such vesting or payment.
b) Payment of Taxes with Stock. Subject to the Committee's right to
disapprove any such election and require the Participant to pay the
required withholding tax in cash, the Participant shall have the right
to elect to pay the required withholding tax associated with a vesting
with Shares to be received upon vesting. Unless the Company shall
permit another valuation method to be elected by the Participant,
Shares used to pay any required withholding taxes shall be valued at
the average of the high and low sales price of a Share on the New York
Stock Exchange on the date the withholding tax becomes due
(hereinafter called the "Tax Date"). Notwithstanding anything herein
to the contrary, if a Participant who is required to pay the required
withholding tax in cash fails to do so within the time period
established by the Company, then the Participant shall be deemed to
have elected to pay such withholding taxes with Shares to be received
upon vesting. Elections must be made in conformity with conditions
established by the Committee from time to time.
c) Conditions to Payment of Taxes with Stock. Any election to pay
withholding taxes with stock must be made on or prior to the Tax Date
and will be irrevocable once made.
9. Changes in Capitalization and Government and Other Regulations. The Award
shall be subject to all of the terms and provisions as provided in this
Agreement and in the Plan, which are incorporated by reference herein and
made a part hereof, including, without limitation, the provisions of
Section 10 of the Plan (generally relating to
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adjustments to the number of Shares subject to the Award, upon certain
changes in capitalization and certain reorganizations and other
transactions).
10. Forfeiture. A breach of any of the foregoing restrictions or a breach of
any of the other restrictions, terms and conditions of the Plan or this
Agreement, with respect to any of the PSUs or any Retained Distributions
relating thereto, except as waived by the Board or the Committee, will
cause a forfeiture of such PSUs and any Retained Distributions relating
thereto.
11. Right of Company to Terminate Employment. Nothing contained in the Plan or
this Agreement shall confer on any Participant any right to continue in the
employ of the Company or any of its Affiliates and the Company and any such
Affiliate shall have the right to terminate the Employment of the
Participant at any such time, with or without Cause, notwithstanding the
fact that some or all of the PSUs and related Retained Distributions
covered by this Agreement may be forfeited as a result of such termination.
The granting of the PSUs under this Agreement shall not confer on the
Participant any right to any future Awards under the Plan.
12. Notices. Any notice which either party hereto may be required or permitted
to give the other shall be in writing and may be delivered personally or by
mail, postage prepaid, addressed to Time Warner Inc., at One Time Xxxxxx
Xxxxxx, Xxx Xxxx, XX 00000, Attention: Director, Global Stock Plans
Administration, and to the Participant at his or her address, as it is
shown on the records of the Company or its Affiliate, or in either case to
such other address as the Company or the Participant, as the case may be,
by notice to the other may designate in writing from time to time.
13. Interpretation and Amendments. The Board and the Committee (to the extent
delegated by the Board) have plenary authority to interpret this Agreement
and the Plan, to prescribe, amend and rescind rules relating thereto and to
make all other determinations in connection with the administration of the
Plan. The Board or the Committee may from time to time modify or amend this
Agreement in accordance with the provisions of the Plan, provided that no
such amendment shall adversely affect the rights of the Participant under
this Agreement without his or her consent.
14. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Company and its successors and assigns, and shall be
binding upon and inure to the benefit of the Participant and his or her
legatees, distributees and personal representatives.
15. Copy of the Plan. By entering into the Agreement, the Participant agrees
and acknowledges that he or she has received and read a copy of the Plan.
16. Governing Law. The Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to any
choice of law rules thereof which might apply the laws of any other
jurisdiction.
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17. Waiver of Jury Trial. To the extent not prohibited by applicable law which
cannot be waived, each party hereto hereby waives, and covenants that it
will not assert (whether as plaintiff, defendant or otherwise), any right
to trial by jury in any forum in respect of any suit, action, or other
proceeding arising out of or based upon this Agreement.
18. Submission to Jurisdiction; Service of Process. Each of the parties hereto
hereby irrevocably submits to the jurisdiction of the state courts of the
State of New York and the jurisdiction of the United States District Court
for the Southern District of New York for the purposes of any suit, action
or other proceeding arising out of or based upon this Agreement. Each of
the parties hereto to the extent permitted by applicable law hereby waives,
and agrees not to assert, by way of motion, as a defense, or otherwise, in
any such suit, action or proceeding brought in such courts, any claim that
it is not subject personally to the jurisdiction of the above-named courts,
that its property is exempt or immune from attachment or execution, that
such suit, action or proceeding in the above-referenced courts is brought
in an inconvenient forum, that the venue of such suit, action or
proceedings, is improper or that this Agreement may not be enforced in or
by such court. Each of the parties hereto hereby consents to service of
process by mail at its address to which notices are to be given pursuant to
paragraph 12 hereof.
19. Personal Data. The Company, the Participant's local employer and the local
employer's parent company or companies may hold, collect, use, process and
transfer, in electronic or other form, certain personal information about
the Participant for the exclusive purpose of implementing, administering
and managing the Participant's participation in the Plan. Participant
understands that the following personal information is required for the
above named purposes: his/her name, home address and telephone number,
office address (including department and employing entity) and telephone
number, e-mail address, date of birth, citizenship, country of residence at
the time of grant, work location country, system employee ID, employee
local ID, employment status (including international status code),
supervisor (if applicable), job code, title, salary, bonus target and
bonuses paid (if applicable), termination date and reason, tax payer's
identification number, tax equalization code, US Green Card holder status,
contract type (single/dual/multi), any shares of stock or directorships
held in the Company, details of all grants of PSUs (including number of
grants, grant dates, vesting type, vesting dates, and any other information
regarding PSUs that have been granted, canceled, vested, or forfeited) with
respect to the Participant, estimated tax withholding rate, brokerage
account number (if applicable), and brokerage fees (the "Data").
Participant understands that Data may be collected from the Participant
directly or, on Company's request, from Participant's local employer.
Participant understands that Data may be transferred to third parties
assisting the Company in the implementation, administration and management
of the Plan, including the brokers approved by the Company, the broker
selected by the Participant from among such Company-approved brokers (if
applicable), tax consultants and the Company's software providers (the
"Data Recipients"). Participant understands that some of these Data
Recipients may be located outside the Participant's country of residence,
and that the Data Recipient's country may have different data privacy laws
and protections than the Participant's country of residence. Participant
understands that the Data Recipients will receive, possess, use, retain and
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transfer the Data, in electronic or other form, for the purposes of
implementing, administering and managing the Participant's participation in
the Plan, including any requisite transfer of such Data as may be required
for the administration of the Plan and/or the subsequent holding of Shares
on the Participant's behalf by a broker or other third party with whom the
Participant may elect to deposit any Shares acquired pursuant to the Plan.
Participant understands that Data will be held only as long as necessary to
implement, administer and manage the Participant's participation in the
Plan. Participant understands that Data may also be made available to
public authorities as required by law, e.g., to the U.S. government.
Participant understands that the Participant may, at any time, review Data
and may provide updated Data or corrections to the Data by written notice
to the Company. Except to the extent the collection, use, processing or
transfer of Data is required by law, Participant may object to the
collection, use, processing or transfer of Data by contacting the Company
in writing. Participant understands that such objection may affect his/her
ability to participate in the Plan. Participant understands that he/she may
contact the Company's Stock Plan Administration to obtain more information
on the consequences of such objection.
