EXHIBIT 10.1
(PROCTER & GAMBLE LOGO) [l31232al3123202.gif]

 
The Procter & Gamble Company
Executive Offices
1 Procter & Gamble Plaza, Cincinnati, Ohio 45202-3315
October 10, 2006

To:   Participants in The Procter & Gamble 2001 Stock and Incentive Compensation
Plan

     This document provides a copy of The Procter & Gamble 2001 Stock and
Incentive Compensation Plan followed by important Additional Information. Please
save this with your stock option materials.
Very truly yours,
James J. Johnson
Secretary
This document constitutes part of a prospectus covering securities that have
been registered under the Securities Act of 1933.
(P&G LOGO) [l31232al3123203.gif]Rewards of Leadership

 

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THE PROCTER & GAMBLE 2001 STOCK AND INCENTIVE COMPENSATION PLAN
(as adjusted for stock split on May 21, 2004 and amended on October 10, 2006)
ARTICLE A — Purpose.
     The purposes of The Procter & Gamble 2001 Stock and Incentive Compensation
Plan (the “Plan”) are to strengthen the alignment of interests between those
employees of The Procter & Gamble Company (the “Company”) and its subsidiaries
who are largely responsible for the success of the business (the “Participants”)
and the Company’s shareholders through ownership behavior and the increased
ownership of shares of the Company’s common stock (the “Common Stock”), and to
encourage the Participants to remain in the employ of the Company and its
subsidiaries. This will be accomplished through the granting of options to
purchase shares of Common Stock, the granting of performance related awards, the
payment of a portion of the Participants’ remuneration in shares of Common
Stock, the granting of deferred awards related to the increase in the price of
Common Stock, and the granting of restricted stock units (“RSUs”) or other
awards that are related to the price of Common Stock.
ARTICLE B — Administration.
     1. The Plan shall be administered by the Compensation Committee (the
“Committee”) of the Board of Directors of the Company (the “Board”), or such
other committee as may be designated by the Board. The Committee shall consist
of not fewer than three (3) members of the Board who are “Non-Employee
Directors” as defined in Rule 16b-3 under the Securities Exchange Act of 1934,
as amended (the “1934 Act”), or any successor rule or definition adopted by the
Securities and Exchange Commission, to be appointed by the Board from time to
time and to serve at the discretion of the Board. The Committee may establish
such regulations, provisions, and procedures within the terms of the Plan as, in
its opinion, may be advisable for the administration and operation of the Plan,
and may designate the Secretary of the Company or other employees of the Company
to assist the Committee in the administration and operation of the Plan and may
grant authority to such persons to execute documents on behalf of the Committee.
The Committee shall report to the Board on the administration of the Plan not
less than once each year.
     2. Subject to the express provisions of the Plan, the Committee shall have
authority: to grant nonstatutory and incentive stock options; to grant stock
appreciation rights either freestanding or in tandem with simultaneously granted
stock options; to grant Performance Awards (as defined in Article J); to award a
portion of a Participant’s remuneration in shares of Common Stock subject to
such conditions or restrictions, if any, as the Committee may determine; to
award RSUs or other awards that are related to the price of Common Stock; to
determine all the terms and provisions of the respective stock option, stock
appreciation right, stock award, RSU, or other award agreements including
setting the dates when each stock option or stock appreciation right or part
thereof may be exercised and determining the conditions and restrictions, if
any, of any shares of Common Stock acquired through the exercise of any stock
option; to provide for special terms for any stock options, stock appreciation
rights, stock awards, RSUs or other awards granted to Participants who are
foreign nationals or who are employed by the Company or any of its subsidiaries
outside of the United States of America in order to fairly accommodate for
differences in local law, tax policy or custom and to approve such supplements
to or amendments, restatements or alternative versions of the Plan as the
Committee may consider necessary or appropriate for such purposes (without
affecting the terms of the Plan for any other purpose); and to make all other
determinations it deems necessary or advisable for administering the Plan. In
addition, at the time of grant the Committee shall have the further authority
to:

  (a)   waive the provisions of Article F, Paragraph 1(a);

 

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  (b)   waive the provisions of Article F, Paragraph 1(b);     (c)   waive the
provisions of Article G, Paragraph 4(a), 4(b) and 4(c); and     (d)   impose
conditions in lieu of those set forth in Article G, Paragraphs 4 through 7, for
nonstatutory stock options, stock appreciation rights, stock awards, RSUs, or
Performance Awards which do not increase or extend the rights of the
Participant.

ARTICLE C — Participation.
     The Committee shall select as Participants those employees of the Company
and its subsidiaries who, in the opinion of the Committee, have demonstrated a
capacity for contributing in a substantial manner to the success of such
companies.
ARTICLE D — Limitation on Number of Shares Available Under the Plan.
     1. Unless otherwise authorized by the shareholders and subject to
Paragraph 2 of this Article D, the maximum aggregate number of shares available
for award under the Plan shall be one hundred ninety million (190,000,000)
shares. Any of the authorized shares may be used for any of the types of awards
described in the Plan, except that no more than fifteen percent (15%) of the
authorized shares may be awarded as restricted or unrestricted stock.
     2. In addition to the shares authorized for award by Paragraph 1 of this
Article, the following shares may be awarded under the Plan:
          (a) shares that were authorized to be awarded under The Procter &
Gamble 1992 Stock Plan (the “1992 Plan”), but that were not awarded under the
1992 Plan;
          (b) shares awarded under the Plan or the 1992 Plan that are
subsequently forfeited in accordance with the Plan or the 1992 Plan,
respectively;
          (c) shares tendered by a Participant in payment of all or part of the
exercise price of a stock option awarded under the Plan or the 1992 Plan;
          (d) shares tendered by or withheld from a Participant in satisfaction
of withholding tax obligations with respect to a stock option awarded under the
Plan or the 1992 Plan.
ARTICLE E — Shares Subject to Use Under the Plan.
     1. The shares to be delivered by the Company upon exercise of stock options
or stock appreciation rights shall be determined by the Board and may consist,
in whole or in part, of authorized but unissued shares or treasury shares. In
the case of redemption of stock appreciation rights by one of the Company’s
subsidiaries, such shares shall be shares acquired by that subsidiary.
     2. For purposes of the Plan, restricted or unrestricted stock awarded or
issued following redemption of RSUs under the terms of the Plan shall be
authorized but unissued shares, treasury shares, or shares acquired in the open
market by the Company or a subsidiary, as determined by the Board.

 

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ARTICLE F — Stock Options and Stock Appreciation Rights.
     1. In addition to such other conditions as may be established by the
Committee, in consideration of the granting of stock options or stock
appreciation rights under the terms of the Plan, each Participant agrees as
follows:

  (a)   The right to exercise any stock option or stock appreciation right shall
be conditional upon certification by the Participant at time of exercise that
the Participant intends to remain in the employ of the Company or one of its
subsidiaries for at least one (1) year following the date of the exercise of the
stock option or stock appreciation right (provided that termination of
employment due to Retirement or Special Separation shall not constitute a breach
of such certification), and,     (b)   In order to better protect the goodwill
of the Company and its subsidiaries and to prevent the disclosure of the
Company’s or its subsidiaries’ trade secrets and confidential information and
thereby help insure the long-term success of the business, the Participant,
without prior written consent of the Company, will not engage in any activity or
provide any services, whether as a director, manager, supervisor, employee,
adviser, consultant or otherwise, for a period of three (3) years following the
date of the Participant’s termination of employment with the Company, in
connection with the manufacture, development, advertising, promotion, or sale of
any product which is the same as or similar to or competitive with any products
of the Company or its subsidiaries (including both existing products as well as
products known to the Participant, as a consequence of the Participant’s
employment with the Company or one of its subsidiaries, to be in development):

  (1)   with respect to which the Participant’s work has been directly concerned
at any time during the two (2) years preceding termination of employment with
the Company or one of its subsidiaries or     (2)   with respect to which during
that period of time the Participant, as a consequence of the Participant’s job
performance and duties, acquired knowledge of trade secrets or other
confidential information of the Company or its subsidiaries.

      For purposes of this paragraph, it shall be conclusively presumed that
Participants have knowledge of information they were directly exposed to through
actual receipt or review of memos or documents containing such information, or
through actual attendance at meetings at which such information was discussed or
disclosed.     (c)   The provisions of this Article are not in lieu of, but are
in addition to the continuing obligation of the Participant (which Participant
hereby acknowledges) to not use or disclose the Company’s or its subsidiaries’
trade secrets and confidential information known to the Participant until any
particular trade secret or confidential information become generally known
(through no fault of the Participant), whereupon the restriction on use and
disclosure shall cease as to that item. Information regarding products in
development, in test marketing or being marketed or promoted in a discrete
geographic region, which information the Company or one of its subsidiaries is
considering for broader use, shall not be deemed generally known until such
broader use is actually commercially implemented. As used in this Article,
“generally known” means known throughout the domestic U. S. industry or, in the
case of Participants who have job responsibilities outside of the United States,
the appropriate foreign country or countries’ industry. As used in this Article,
“trade secrets and other confidential information” also includes personnel
knowledge about a manager, or managers, of the Company or its subsidiaries
gained in the course of Participant’s

 

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      employment with the Company or its subsidiaries (including personnel
ratings or rankings, manager or peer evaluations, performance records, special
skills or abilities, compensation, work and development plans, training, nature
of specific project and work assignments, or specialties developed as a result
of such assignments) which directly or indirectly affords the Participant a
confidential basis to solicit, encourage, or participate in soliciting any
manager, or managers, of the Company or any subsidiary to terminate his or her
relationship with the Company or that subsidiary.     (d)   By acceptance of any
offered stock option or stock appreciation rights granted under the terms of the
Plan, the Participant acknowledges that if the Participant were, without
authority, to use or disclose the Company’s or any of its subsidiaries’ trade
secrets or confidential information or threaten to do so, the Company or one of
its subsidiaries would be entitled to injunctive and other appropriate relief to
prevent the Participant from doing so. The Participant acknowledges that the
harm caused to the Company by the breach or anticipated breach of this Article
is by its nature irreparable because, among other things, it is not readily
susceptible of proof as to the monetary harm that would ensue. The Participant
consents that any interim or final equitable relief entered by a court of
competent jurisdiction shall, at the request of the Company or one of its
subsidiaries, be entered on consent and enforced by any court having
jurisdiction over the Participant, without prejudice to any rights either party
may have to appeal from the proceedings which resulted in any grant of such
relief.     (e)   If any of the provisions contained in this Article F shall for
any reason, whether by application of existing law or law which may develop
after the Participant’s acceptance of an offer of the granting of stock
appreciation rights or stock options, be determined by a court of competent
jurisdiction to be overly broad as to scope of activity, duration, or territory,
the Participant agrees to join the Company or any of its subsidiaries in
requesting such court to construe such provision by limiting or reducing it so
as to be enforceable to the extent compatible with then applicable law. If any
one or more of the terms, provisions, covenants, or restrictions of this Article
shall be determined by a court of competent jurisdiction to be invalid, void or
unenforceable, then the remainder of the terms, provisions, covenants, and
restrictions of this Article shall remain in full force and effect and shall in
no way be affected, impaired, or invalidated.

     2. The fact that a Participant has been granted a stock option or a stock
appreciation right under the Plan shall not limit the right of the employer to
terminate the Participant’s employment at any time.
          Because a main purpose of the Plan is to strengthen the alignment of
interests between employees of the Company (including all subsidiaries) and its
shareholders to ensure the continued success of the Company, the Committee is
authorized to suspend or terminate any outstanding stock option or stock
appreciation right of a Participant if the Committee determines the Participant
has acted significantly contrary to the best interests of the Company or its
subsidiaries. For purposes of this paragraph, an action taken “significantly
contrary to the best interests of the Company or its subsidiaries” includes
without limitation any action taken or threatened by the Participant that the
Committee determines has, or is reasonably likely to have, a significant adverse
impact on the reputation, goodwill, stability, operation, personnel retention
and management, or business of the Company or any subsidiary. This paragraph is
in addition to any remedy the Company or a subsidiary may have at law or in
equity, including without limitation injunctive and other appropriate relief.
     3. The maximum number of shares with respect to which stock options or
stock appreciation rights may be granted to any Participant in any calendar year
shall not exceed 2,000,000 shares.

 

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     4. The aggregate fair market value (determined at the time when the
incentive stock option is exercisable for the first time by a Participant during
any calendar year) of the shares for which any Participant may be granted
incentive stock options under the Plan and all other stock option plans of the
Company and its subsidiaries in any calendar year shall not exceed $100,000 (or
such other amount as reflected in the limits imposed by Section 422(d) of the
Internal Revenue Code of 1986, as it may be amended from time to time).
     5. If the Committee grants incentive stock options, all such stock options
shall contain such provisions as permit them to qualify as “incentive stock
options” within the meaning of Section 422 of the Internal Revenue Code of 1986,
as may be amended from time to time.
     6. With respect to stock options granted in tandem with stock appreciation
rights, the exercise of either such stock options or such stock appreciation
rights will result in the simultaneous cancellation of the same number of tandem
stock appreciation rights or stock options, as the case may be.
     7. The exercise price for all stock options and stock appreciation rights
shall be established by the Committee at the time of their grant and shall be
not less than one hundred percent (100%) of the fair market value of the Common
Stock on the date of grant.
     8. Unless otherwise authorized by the shareholders of the Company, neither
the Board nor the Committee shall authorize the amendment of any outstanding
stock option or stock appreciation right to reduce the exercise price.
     9. No stock option or stock appreciation right shall be cancelled and
replaced with awards having a lower exercise price without the prior approval of
the shareholders of the Company. This Article F, Paragraph 9 is intended to
prohibit the repricing of “underwater” stock options and stock appreciation
rights and shall not be construed to prohibit the adjustments permitted under
Article K of the Plan.
     10. The Committee may require any Participant to accept any stock options
or stock appreciation rights by means of electronic signature.
ARTICLE G — Exercise of Stock Options and Stock Appreciation Rights.
     1. All stock options and stock appreciation rights granted hereunder shall
have a maximum life of no more than ten (10) years from the date of grant.
     2. No stock options or stock appreciation rights shall be exercisable
within one (1) year from their date of grant, except in the case of the death of
the Participant.
     3. Unless a transfer has been duly authorized by the Committee pursuant to
Article G, Paragraph 6 of the Plan, during the lifetime of the Participant,
stock options and stock appreciation rights may be exercised only by the
Participant personally, or, in the event of the legal incompetence of the
Participant, by the Participant’s duly appointed legal guardian.
     4. In the event that a Participant ceases to be an employee of the Company
or any of its subsidiaries while holding an unexercised stock option or stock
appreciation right:

  (a)   Any unexercisable portions thereof are then void, except in the case of:
(1) death of the Participant; (2) Retirement or Special Separation that occurs
more than six months from the date the options were granted; or (3) any option
as to which the Committee has waived, at the time of grant, the provisions of
this Article G, Paragraph 4(a).

 

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  (b)   Any exercisable portions thereof are then void, except in the case of:
(1) death of the Participant; (2) Retirement or Special Separation; or (3) any
option as to which the Committee has waived, at the time of grant, the
provisions of this Article G, Paragraph 4(b).     (c)   In the case of a Special
Separation which occurs prior to October 2, 2007, any stock option or stock
appreciation right must be exercised within the time specified in the original
grant or five (5) years from the date of Special Separation, whichever is
shorter. For a Special Separation which occurs on or after October 2, 2007, any
stock option or stock appreciation right must be exercised within the time
specified in the original grant.

     5. In the case of the death of a Participant, the persons to whom the stock
options or stock appreciation rights have been transferred by will or the laws
of descent and distribution shall have the privilege of exercising remaining
stock options, stock appreciation rights or parts thereof, whether or not
exercisable on the date of death of such Participant, at any time prior to the
expiration date of the stock options or stock appreciation rights.
     6. Stock options and stock appreciation rights are not transferable other
than by will or by the laws of descent and distribution. For the purpose of
exercising stock options or stock appreciation rights after the death of the
Participant, the duly appointed executors and administrators of the estate of
the deceased Participant shall have the same rights with respect to the stock
options and stock appreciation rights as legatees or distributees would have
after distribution to them from the Participant’s estate. Notwithstanding the
foregoing, the Committee may authorize the transfer of stock options and stock
appreciation rights upon such terms and conditions as the Committee may require.
Such transfer shall become effective only upon the Committee’s complete
satisfaction that the proposed transferee has strictly complied with such terms
and conditions, and both the original Participant and the transferee shall be
subject to the same terms and conditions hereunder as the original Participant.
     7. Upon the exercise of stock appreciation rights, the Participant shall be
entitled to receive a redemption differential for each such stock appreciation
right which shall be the difference between the then fair market value of one
share of Common Stock and the exercise price of one stock appreciation right
then being exercised. In the case of the redemption of stock appreciation rights
by a subsidiary of the Company not located in the United States, the redemption
differential shall be calculated in United States dollars and converted to the
appropriate local currency on the exercise date. As determined by the Committee,
the redemption differential may be paid in cash, Common Stock to be valued at
its fair market value on the date of exercise, any other mode of payment deemed
appropriate by the Committee or any combination thereof.
     8. Time spent on leave of absence shall be considered as employment for the
purposes of the Plan. Leave of absence means any period of time away from work
granted to any employee by his or her employer because of illness, injury, or
other reasons satisfactory to the employer.
     9. The Company reserves the right from time to time to suspend the exercise
of any stock option or stock appreciation right where such suspension is deemed
by the Company as necessary or appropriate for corporate purposes. No such
suspension shall extend the life of the stock option or stock appreciation right
beyond its expiration date, and in no event will there be a suspension in the
five (5) calendar days immediately preceding the expiration date.
     10. The Committee may require any Participant to exercise any stock options
or stock appreciation rights by means of electronic signature.
ARTICLE H — Payment for Stock Options and Tax Withholding.

 

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     Upon the exercise of a stock option, payment in full of the exercise price
shall be made by the Participant. As determined by the Committee, the stock
option exercise price may be paid by the Participant either in cash, shares of
Common Stock valued at their fair market value on the date of exercise, a
combination thereof, or such other method as determined by the Committee. In
addition to payment of the exercise price, the Committee may authorize the
Company to charge a reasonable administrative fee for the exercise of any stock
option. Furthermore, to the extent the Company is required to withhold federal,
state, local or foreign taxes in connection with any Participant’s stock option
exercise, the Committee may require the Participant to make such arrangements as
the Company may deem necessary for the payment of such taxes required to be
withheld (including, without limitation, relinquishment of a portion of such
stock options or relinquishment of a portion of the proceeds received by the
Participant in a simultaneous exercise and sale of stock during a “cashless”
exercise). In no event, however, shall the Committee be permitted to require
payment from a Participant in excess of the maximum required tax withholding
rates.
ARTICLE I — Grant of Unrestricted Stock, Restricted Stock or RSUs.
     The Committee may grant Common Stock or RSUs to Participants under the Plan
subject to such conditions or restrictions, if any, as the Committee may
determine. To the extent the Company is required to withhold federal, state,
local or foreign taxes in connection with the lapse of restrictions on any
Participant’s shares of Common Stock, the Committee may require the Participant
to make such arrangements as the Company may deem necessary for the payment of
such taxes required to be withheld (including, without limitation,
relinquishment of a portion of such shares of Common Stock). In no event,
however, shall the Committee be permitted to require payment from a Participant
in excess of the maximum required tax withholding rates.
ARTICLE J — Performance Related Awards.
     1. The Committee, in its discretion, may establish performance goals for
selected Participants and authorize the granting of cash, stock options, stock
appreciation rights, Common Stock, RSUs or other awards that are related to the
price of Common Stock, other property, or any combination thereof (“Performance
Awards”) to such Participants upon achievement of such established performance
goals during a specified time period (the “Performance Period”). The Committee,
in its discretion, shall determine the Participants eligible for Performance
Awards, the performance goals to be achieved during each Performance Period, the
amount of any Performance Awards to be paid, and the method of payment for any
Performance Awards. Performance Awards may be granted either alone or in
addition to other grants made under the Plan.
     2. Notwithstanding the foregoing, any Performance Awards granted under
Article J, Paragraph 1 to any Participant subject to the restrictions set forth
in Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”)
shall comply with all of the following requirements:
     (a) Each grant shall specify the specific performance objectives (the
“Performance Objectives”) which, if achieved, will result in payment or early
payment of the Performance Award. The Performance Objectives may be described in
terms of Company-wide objectives that are related to the individual Participant
or objectives that are related to a subsidiary, division, department, region,
function or business unit of the Company in which the Participant is employed,
and may consist of one or more or any combination of the following criteria:
stock price, market share, sales revenue, cash flow, earnings per share, return
on equity, total shareholder return, gross margin, stock price growth measures,
operating total shareholder return, net earnings or net income (before or after
taxes), return on assets or capital, earnings (before or after interest, taxes,
depreciation and/or amortization), operating margin, acquisition integration
metrics, economic value added, and/or costs. The Performance Objectives may be
made relative to the performance of other corporations. The Committee, in its
discretion, may change or

 

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modify these criteria, however, at all times the criterion must be valid
performance criterion for purposes of Section 162(m) of the Code. The Committee
may not change the criteria or Performance Objectives for any Performance Period
that has already been approved by the Committee. The Committee may cancel a
Performance Period or replace a Performance Period with a new Performance
Period, provided that any such cancellation or replacement shall not cause the
Performance Award to fail to meet the requirements of Section 162(m) of the
Code.
     (b) Each grant shall specify the minimum level of achievement required by
the Participant relative to the Performance Objectives to qualify for a
Performance Award. In doing so, the grant shall establish a formula for
determining the percentage of the Performance Award to be awarded if performance
is at or above the minimum level, but falls short of full achievement of the
specified Performance Objectives. Each grant may also establish a formula for
determining an additional award above and beyond the Performance Award to be
granted to the Participant if performance is at or above the specified
Performance Objectives. Such additional award shall also be established as a
percentage of the Performance Award. The Committee may decrease a Performance
Award as determined by the Performance Objectives, but in no case may the
Committee increase any Performance Award as determined by the Performance
Objectives.
     (c) The maximum Performance Award that may be granted to any Participant
for any one-year Performance Period shall not exceed $20,000,000 or 800,000
shares of Common Stock (the “Annual Maximum”). The maximum Performance Award
that may be granted to any Participant for a Performance Period greater than one
year shall not exceed the Annual Maximum multiplied by the number of full years
in the Performance Period.
ARTICLE K — Adjustments.
     In the event of any future reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger, consolidation, rights offering,
share exchange, reclassification, distribution, spin-off or other change
affecting the corporate structure, capitalization or Common Stock of the Company
occuring after the date of approval of the Plan by the Company’s shareholders,
(i) the amount of shares authorized to be issued under the Plan and (ii) the
number of shares and/or the exercise prices covered by outstanding stock
options, stock appreciation rights or RSUs shall be adjusted appropriately and
equitably to prevent dilution or enlargement of rights under the Plan. Following
any such change, the term “Common Stock” shall be deemed to refer to such class
of shares or other securities as may be applicable.
ARTICLE L — Additional Provisions and Definitions.
     1. The Board may, at any time, repeal the Plan or may amend it except that
no such amendment may amend this paragraph, increase the total aggregate number
of shares subject to the Plan, reduce the price at which stock options or stock
appreciation rights may be granted or exercised, alter the class of employees
eligible to receive stock options, or increase the percentage of shares
authorized to be transferred as restricted or unrestricted stock. Participants
and the Company shall be bound by any such amendments as of their effective
dates, but if any outstanding stock options or stock appreciation rights are
materially affected adversely, notice thereof shall be given to the Participants
holding such stock options and stock appreciation rights and such amendments
shall not be applicable without such Participant’s written consent. If the Plan
is repealed in its entirety, all theretofore granted unexercised stock options
or stock appreciation rights shall continue to be exercisable in accordance with
their terms and shares subject to conditions or restrictions granted pursuant to
the Plan shall continue to be subject to such conditions or restrictions.
     2. In the case of a Participant who is an employee of a subsidiary of the
Company, performance under the Plan, including the granting of shares of the
Company, may be by the subsidiary. Nothing in

 

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the Plan shall affect the right of the Company or any subsidiary to terminate
the employment of any employee with or without cause. None of the Participants,
either individually or as a group, and no beneficiary, transferee or other
person claiming under or through any Participant, shall have any right, title,
or interest in any shares of the Company purchased or reserved for the purpose
of the Plan except as to such shares, if any, as shall have been granted or
transferred to him or her. Nothing in the Plan shall preclude the awarding or
granting of shares of the Company to employees under any other plan or
arrangement now or hereafter in effect.
     3. “Subsidiary” means any company in which more than fifty percent (50%) of
the total combined voting power of all classes of stock is owned, directly or
indirectly, by the Company or, if the company does not issue stock, more than
fifty percent (50%) of the total combined ownership interest is owned, directly
or indirectly, by the Company. In addition, the Board may designate for
participation in the Plan as a “subsidiary,” except for the granting of
incentive stock options, those additional companies affiliated with the Company
in which the Company’s direct or indirect stock ownership is fifty percent (50%)
or less of the total combined voting power of all classes of such company’s
stock, or, if the company does not issue stock, the Company’s direct or indirect
ownership is fifty percent (50%) or less of the company’s total combined
ownership interest.
     4. Notwithstanding anything to the contrary in the Plan, stock options and
stock appreciation rights granted hereunder shall vest immediately and any
conditions or restrictions on Common Stock shall lapse upon a “Change in
Control.” A “Change in Control” shall mean the occurrence of any of the
following:

  (a)   An acquisition (other than directly from the Company) of any voting
securities of the Company (the “Voting Securities”) by any “Person” (as the term
person is used for purposes of Section 13(d) or 14(d) of the Exchange Act),
immediately after which such Person has “Beneficial Ownership” (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent
(20%) or more of the then outstanding shares or the combined voting power of the
Company’s then outstanding Voting Securities; provided, however, in determining
whether a Change in Control has occurred pursuant to this Paragraph 4(a), shares
or Voting Securities which are acquired in a “Non-Control Acquisition” (as
hereinafter defined) shall not constitute an acquisition which would cause a
Change in Control. A “Non-Control Acquisition” shall mean an acquisition by (i)
an employee benefit plan (or a trust forming a part thereof) maintained by
(A) the Company or (B) any corporation or other Person of which a majority of
its voting power or its voting equity securities or equity interest is owned,
directly or indirectly, by the Company (for purposes of this definition, a
“Related Entity”), (ii) the Company or any Related Entity, or (iii) any Person
in connection with a “Non-Control Transaction” (as hereinafter defined);     (b)
  The individuals who, as of July 10, 2001 are members of the Board (the
“Incumbent Board”), cease for any reason to constitute at least half of the
members of the Board; or, following a Merger (as hereinafter defined) which
results in a Parent Corporation (as hereinafter defined), the board of directors
of the ultimate Parent Corporation; provided, however, that if the election, or
nomination for election by the Company’s common stockholders, of any new
director was approved by a vote of at least two-thirds of the Incumbent Board,
such new director shall, for purposes of the Plan, be considered as a member of
the Incumbent Board; provided further, however, that no individual shall be
considered a member of the Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened “Election Contest” (as
described in Rule 14a-11 promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board (a “Proxy Contest”) including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy Contest; or

 

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  (c)   The consummation of:

  (i)   A merger, consolidation or reorganization with or into the Company or in
which securities of the Company are issued (a “Merger”), unless such Merger is a
“Non-Control Transaction.” A “Non-Control Transaction” shall mean a Merger
where:

  (A)   the stockholders of the Company, immediately before such Merger own
directly or indirectly immediately following such Merger at least fifty percent
(50%) of the combined voting power of the outstanding voting securities of
(x) the corporation resulting from such Merger (the “Surviving Corporation”) if
fifty percent (50%) or more of the combined voting power of the then outstanding
voting securities of the Surviving Corporation is not Beneficially Owned,
directly or indirectly by another Person (a “Parent Corporation”), or (y) if
there is one or more Parent Corporations, the ultimate Parent Corporation;    
(B)   the individuals who were members of the Incumbent Board immediately prior
to the execution of the agreement providing for such Merger constitute at least
half of the members of the board of directors of (x) the Surviving Corporation,
if there is no Parent Corporation, or (y) if there is one or more Parent
Corporations, the ultimate Parent Corporation; and     (C)   no Person other
than (1) the Company, (2) any Related Entity, (3) any employee benefit plan (or
any trust forming a part thereof) that, immediately prior to such Merger was
maintained by the Company or any Related Entity, or (4) any Person who,
immediately prior to such merger, consolidation or reorganization had Beneficial
Ownership of twenty percent (20%) or more of the then outstanding Voting
Securities or shares, has Beneficial Ownership of twenty percent (20%) or more
of the combined voting power of the outstanding voting securities or common
stock of (x) the Surviving Corporation if there is no Parent Corporation, or
(y) if there is one or more Parent Corporations, the ultimate Parent
Corporation;

  (ii)   A complete liquidation or dissolution of the Company; or     (iii)  
The sale or other disposition of all or substantially all of the assets of the
Company to any Person (other than a transfer to a Related Entity or under
conditions that would constitute a Non-Control Transaction with the disposition
of assets being regarded as a Merger for this purpose or the distribution to the
Company’s stockholders of the stock of a Related Entity or any other assets).

          Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any Person (the “Subject Person”) acquired Beneficial
Ownership of more than the permitted amount of the then outstanding shares or
Voting Securities as a result of the acquisition of shares or Voting Securities
by the Company which, by reducing the number of shares or Voting Securities then
outstanding, increases the proportional number of shares Beneficially Owned by
the Subject Persons, provided that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of shares or
Voting Securities by the Company, and after such share acquisition by the
Company, the Subject Person becomes the Beneficial Owner of any additional
shares or Voting Securities which increases the percentage of the then
outstanding shares or Voting Securities Beneficially Owned by the Subject
Person, then a Change in Control shall occur.

 

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     5. The term “Special Separation” shall mean any termination of employment
that occurs prior to the time a Participant is eligible to retire, except a
termination for cause or a voluntary resignation that is not initiated or
encouraged by the Company.
     6. The term “Retirement” shall mean: (a) retirement in accordance with the
provisions of any appropriate retirement plan of the Company or any of its
subsidiaries; or (b) termination of employment under the permanent disability
provision of any retirement plan of the Company or any of its subsidiaries.
ARTICLE M — Consent.
     Every Participant who receives a stock option, stock appreciation right,
RSU, or grant of shares pursuant to the Plan shall be bound by the terms and
provisions of the Plan and of the stock option, stock appreciation right, RSU,
or grant of shares agreement referable thereto, and the acceptance of any stock
option, stock appreciation right, RSU, or grant of shares pursuant to the Plan
shall constitute a binding agreement between the Participant and the Company and
its subsidiaries and any successors in interest to any of them. Every Person who
receives a stock option, stock appreciation right, RSU, or grant of shares from
a Participant pursuant to the Plan shall, in addition to such terms and
conditions as the Committee may require upon such grant, be bound by the terms
and provisions of the Plan and of the stock option, stock appreciation right,
RSU, or grant of shares agreement referable thereto, and the acceptance of any
stock option, stock appreciation right, RSU, or grant of shares by such Person
shall constitute a binding agreement between such Person and the Company and its
subsidiaries and any successors in interest to any of them. The Plan shall be
governed by and construed in accordance with the laws of the State of Ohio,
United States of America.
ARTICLE N — Purchase of Shares or Stock Options.
     The Committee may authorize any Participant to convert cash compensation
otherwise payable to such Participant into stock options or shares of Common
Stock under the Plan upon such terms and conditions as the Committee, in its
discretion, shall determine. Notwithstanding the foregoing, in any such
conversion the shares of Common Stock shall be valued at no less than one
hundred percent (100%) of their fair market value.
ARTICLE O — Duration of Plan.
     The Plan will terminate on July 10, 2011 unless a different termination
date is fixed by the shareholders or by action of the Board of Directors, but no
such termination shall affect the prior rights under the Plan of the Company (or
any subsidiary) or of anyone to whom stock options or stock appreciation rights
were granted prior thereto or to whom shares or RSUs have been transferred prior
to such termination.

 

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ADDITIONAL INFORMATION

1.   Shares Awarded as a Portion of Remuneration

     Any shares of Common Stock of the Company awarded as a portion of a
participant’s remuneration shall be valued at not less than one hundred percent
(100%) of the fair market value of the Company’s Common Stock on the date of the
award. These shares may be subject to such conditions or restrictions as the
Committee may determine, including a requirement that the participant remain in
the employ of the Company or one of its subsidiaries for a set period of time,
or until retirement. Failure to abide by any applicable restriction will result
in forfeiture of the shares.

2.   U.S. Tax Effects

     Incentive Stock Options
     With regard to tax effects which may accrue to the optionee, counsel
advises that if the optionee has continuously been an employee from the time an
option has been granted until at least three months before it is exercised,
under existing law no taxable income results to the optionee from the exercise
of an incentive stock option at the time of exercise. However, the spread at
exercise is an “adjustment” item for alternative minimum tax purposes.
     Any gain realized on the sale or other disposition of stock acquired on
exercise of an incentive stock option is considered as long-term capital gain
for tax purposes if the stock has been held more than two years after the date
the option was granted and more than one year after the date of exercise of the
option. If the stock is disposed of within one year after exercise, the lesser
of any gain on such disposition or the spread at exercise (i.e., the excess of
the fair market value of the stock on the date of exercise over the option
price) is treated as ordinary income, and any appreciation after the date of
exercise is considered long-term or short-term capital gain to the optionee
depending on the holding period prior to sale. However, the spread at exercise
(even if greater than the gain on the disposition) is treated as ordinary income
if the disposition is one on which a loss, if sustained, is not recognized—e.g.,
a gift, a “wash” sale or a sale to a related party. The amount of ordinary
income recognized by the optionee is treated as a tax deductible expense to the
Company. No other amount relative to an incentive stock option is a tax
deductible expense to the Company.
     Nonstatutory Stock Options
     With regard to tax effects which may accrue to the optionee, counsel
advises that under existing tax law gain taxable as ordinary income to the
optionee is deemed to be realized at the date of exercise of the option, the
gain on each share being the difference between the market price on the date of
exercise and the option price. This amount is treated as a tax deductible
expense to the Company at the time of the exercise of the option. Any
appreciation in the value of the stock after the date of exercise is considered
a long-term or short-term capital gain to the optionee depending on whether or
not the stock was held for the appropriate holding period prior to sale.
     Stock Appreciation Rights
     With regard to tax effects which may accrue to the recipient, counsel
advises that “United States persons,” as defined in the Internal Revenue Code of
1986 (the “I.R.C.”), must recognize ordinary income as of the date of exercise
equal to the amount paid to the recipient, i.e., the difference between the
grant price and the value of the shares on the date of exercise.

 

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     Shares Awarded as a Portion of Remuneration
     With regard to tax effects which may accrue to the recipient, counsel
advises that “United States persons” as defined in the Internal Revenue Code of
1986 (the “I.R.C.”), must recognize ordinary income in the first taxable year in
which the recipient’s rights to the stock are transferable or are not subject to
a substantial risk of forfeiture, whichever is applicable. Recipients who are
“United States persons” may also elect to include the income in their tax
returns for the taxable year in which they receive the shares by filing an
election to do so with the appropriate office of the Internal Revenue Service
within 30 days of the date the shares are transferred to them.
     The amount includable in income is the fair market value of the shares as
of the day the shares are transferable or not subject to a substantial risk of
forfeiture, whichever is applicable; if the recipient has elected to include the
income in the year in which the shares are received, the amount of income
includable is the fair market value of the shares at the time of transfer.
     For non-United States persons, the time when income is realized, its
measurement and its taxation, will depend on the laws of the particular
countries in which the recipients are residents and/or citizens at the time of
transfer or when the shares are first transferable and not subject to a
substantial risk of forfeiture, as the case may be. “United States persons” who
receive shares awarded as a portion of remuneration may also have tax
consequences with respect to the receipt of shares or the expiration of
restrictions or substantial risk of forfeiture on such shares under the laws of
the particular country other than the United States of which such person is a
resident or citizen.
     Notwithstanding the above advice received by the Company, it is each
individual recipient’s responsibility to check with his or her personal tax
adviser as to the tax effects and proper handling of stock options, stock
appreciation rights, restricted stock units and Common Stock acquired. The above
advice relates specifically to the U.S. consequences of stock options, stock
appreciation rights and Common Stock acquired, including the U.S. consequences
to “United States persons” whether or not resident in the U.S. In addition to
U.S. tax consequences, for all persons who are not U.S. residents, the time when
income, if any, is realized, the measurement of such income and its taxation
will also depend on the laws of the particular country other than the U.S. of
which such persons are resident and/or citizens at the time of grant or the time
of exercise, as the case may be.
     The Plan is not subject to the qualification requirements of Section 401(a)
of the I.R.C.

3.   Employee Retirement Income Security Act of 1974

     The Plan is not subject to the provisions of the Employee Retirement Income
Security Act of 1974 (“ERISA”), as amended.

4.   Incorporation of Certain Documents by Reference

     The following documents filed by the Company with the Securities and
Exchange Commission (File No. 1-434) pursuant to the 1934 Act are incorporated
into this document by reference:

  1.   The Company’s Annual Report on Form 10-K for the most recent fiscal year
ended June 30;     2.   The Company’s Quarterly Report on Form 10-Q for the most
recent quarter(s); and     3.   All other documents filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of
this Prospectus and prior to the filing of a post-effective

 

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      amendment which indicates that all securities offered have been sold or
which deregisters all securities then remaining unsold.

     The Company will provide without charge to each participant in the Plan,
upon oral or written request, a copy of any or all of these documents other than
exhibits to such documents, unless such exhibits are specifically incorporated
by reference into such documents. In addition, the Company will provide without
charge to such participants a copy of the Company’s most recent annual report to
shareholders, proxy statement, and other communications distributed generally to
security holders of the Company. Requests for such copies should be directed to
Mr. Jay A. Ernst, Manager, Shareholder Services, The Procter & Gamble Company,
P.O. Box 5572, Cincinnati, Ohio 45201, (513) 983-3413.

5.   Additional Information

     Additional information about the Plan and its administrators may be
obtained from Mr. E.J. Wunsch, Assistant Secretary, The Procter & Gamble
Company, One Procter & Gamble Plaza, Cincinnati, Ohio 45202, (513) 983-4370.

 

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Appendix 1
(P&G LOGO) [l31232al3123201.gif]
 
[GRANT_DATE]                    [GLOBALID]
[FIRST_NAME] [MIDDLE_NAME] [LAST_NAME]]
Subject: NON-STATUTORY STOCK OPTION SERIES 08-AA
In recognition of your contributions to the future success of the business, The
Procter & Gamble Company (“Company”) hereby grants to you an option to purchase
shares of Procter & Gamble Common Stock as follows:

     
Grant Value:
  $[DELIVERED_GRANT_VALUE]
Option Price per Share:
  $[STOCK_PRCE]
Number of Shares:
  [SHARES]
Date of Grant:
  [GRANT_DATE]
Expiration of Option:
  [EXPIRATION_DATE]
Option Vest Date:
  100% after [VEST_DATE]
Acceptance Deadline:
  [ACCEPTANCE_DATE]

This stock option is granted in accordance with and subject to the terms of The
Procter & Gamble 2001 Stock and Incentive Compensation Plan (including any
applicable sub-plan) (the “Plan”), the Regulations of the Compensation and
Leadership Development Committee of the Board of Directors (“Committee”), and
the Exercise Instructions in place as may be revised from time to time.
You may access, download and/or print the terms, or any portion thereof, of the
Plan by activating this hyperlink: The Procter & Gamble 2001 Stock and Incentive
Compensation Plan. Specific portions of the Plan are also hyperlinked below for
your ease in reviewing. Nonetheless, if you would prefer to receive a paper copy
of The Procter & Gamble 2001 Stock and Incentive Compensation Plan, please send
a written request via email to Execcomp.IM@pg.com. Please understand that you
will continue to receive future Plan materials and information via electronic
mail even though you may have requested a paper copy.
The option is not transferable other than by will or the laws of descent and
distribution and is exercisable during your life only by you. This option will
become void upon any separation (including retirement) from the Company or any
of its subsidiaries within 6 months of the grant date. This option may also
become void upon separation from the Company or any of its subsidiaries at any
time later than 6 months after the grant date (see Article G, paragraph 4 of the
Plan). For the purposes of this option, separation from the Company or any of
its subsidiaries and termination of employment will be effective as of the date
that you are no longer actively employed and will not be extended by any notice
period required under local law.

 

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Please note that when the issue or transfer of the Common Stock covered by this
option may, in the opinion of the Company, conflict or be inconsistent with any
applicable law or regulation of any governmental agency, the Company reserves
the right to refuse to issue or transfer said Common Stock and that any
outstanding options may be suspended or terminated if you engage in actions that
are significantly contrary to the best interests of the Company or any of its
subsidiaries.
This option to purchase shares of Common Stock of the Company is subject to the
Employee Acknowledgement and Consent Form below and to the terms of the Plan,
with which you acknowledge you are familiar by accepting this award, including
the non-compete provision and other terms of Article F. The option is also
subject to and bound by the actions of the Compensation and Leadership
Development Committee and of the Company’s Board of Directors. This option grant
and the Plan together constitute an agreement between the Company and you in
accordance with the terms thereof and hereof, and no other understandings and/or
agreements have been entered by you with the Company regarding this specific
stock option grant. Any legal action related to this option, including
Article F, may be brought in any federal or state court located in Hamilton
County, Ohio, USA, and you hereby agree to accept the jurisdiction of these
courts and consent to service of process from said courts solely for legal
actions related to this option grant.
Under IRS standards of professional practice, certain tax advice must meet
requirements as to form and substance. To assure compliance with these
standards, we disclose to you that this communication is not intended or written
to be used, and cannot be used, for the purpose of avoiding penalties or
promoting, marketing, or recommending to another party any transaction or matter
addressed herein.
THE PROCTER & GAMBLE COMPANY
James J. Johnson
Secretary for the Compensation and Leadership
Development Committee
ATTACHMENTS
To Accept Your Stock Option
Read and check each of the boxes below:

o     I have read, understand and
agree to be bound by each of:    the terms of this letter; The Procter & Gamble
2001 Stock and Incentive Compensation Plan; and the Employee Acknowledgement and
Consent Form (below).

o    I accept the stock option grant detailed above. (To accept this option, you
must also check the box above.)

To Reject Your Stock Option
Read and check the box below:

 

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o    I have read and understand the terms noted above. I do not agree to be
bound by these terms, and hereby reject the stock option grant detailed above.  
    (GRAPHIC) [l31232al3123205.gif]

Employee Acknowledgement and Consent Form
I understand that I am eligible to receive a grant of stock options or
restricted stock units (“RSUs”) under The Procter & Gamble 2001 Stock and
Incentive Compensation Plan or The Gillette Company 2004 Long Term Incentive
Plan (together, referred to as the “Plans”).
Data Privacy
I hereby explicitly and unambiguously consent to the collection, use and
transfer, in electronic or other form, of my personal data as described in this
document by and among, as applicable, my employer (“Employer”) and The Procter &
Gamble Company and its subsidiaries and affiliates (“P&G”) for the exclusive
purpose of implementing, administering and managing my participation in the
Plans.
I understand that P&G and my Employer hold certain personal information about
me, including, but not limited to, my name, home address and telephone number,
date of birth, social insurance number or other identification number, salary,
nationality, job title, any shares of stock or directorships held in P&G,
details of all options or RSUs or any other entitlement to shares of stock
awarded, canceled, exercised, vested, unvested or outstanding in my favor, for
the purpose of implementing, administering and managing the Plans (“Data”). I
understand that Data may be transferred to any third parties assisting in the
implementation, administration and management of the Plans, that these
recipients may be located in my country or elsewhere, and that the recipient’s
country may have different data privacy laws and protections than my country. I
understand that I may request a list with the names and addresses of any
potential recipients of the Data by contacting my local human resources
representative. I authorize the recipients to receive, possess, use, retain and
transfer the Data, in electronic or other form, for the purposes of
implementing, administering and managing my participation in the Plans,
including any requisite transfer of such Data as may be required to a broker or
other third party with whom I may elect to deposit any shares of stock acquired
upon exercise of the option or settlement of the RSU. I understand that Data
will be held only as long as is necessary to implement, administer and manage my
participation in the Plans. I understand that I may, at any time, view Data,
request additional information about the storage and processing of Data, require
any necessary amendments to Data or refuse or withdraw the consents herein, in
any case without cost, by contacting in writing my local human resources
representative. I understand, however, that refusing or withdrawing my consent
may affect my ability to participate in the Plans. For more information on the
consequences of my refusal to consent or withdrawal of consent, I understand
that I may contact my local human resources representative.
Nature of Grant
By completing this form and accepting the grant of the stock options or RSUs
evidenced hereby, I acknowledge that: i) the Plans are established voluntarily
by The Procter & Gamble Company, it is discretionary in nature and it may be
amended, suspended or terminated at any time; ii) the grant of options or RSUs
under the Plans is voluntary and occasional and does not create any contractual
or other right to receive future grants of options or RSUs, or benefits in lieu
of options or RSUs, even if options or RSUs have been granted repeatedly in the
past; iii) all decisions with respect to future grants of options or RSUs, if
any, will be at the sole discretion of P&G; iv) my participation in the Plans is
voluntary; v) the option or RSU is an extraordinary item and not part of normal
or expected compensation or salary for any purposes including, but not limited
to, calculating any termination, severance, resignation, redundancy, end of
service payments, bonuses, long-service awards, pension or retirement benefits
or similar payments; vi) in the event that my employer is not P&G, the grant of
options or RSUs will not be interpreted to form an employment relationship with
P&G; and furthermore, the grant of options or RSUs will not be interpreted to
form an employment contract with my Employer; vii) the future value of the
shares purchased under the Plans is unknown and cannot be predicted with
certainty, may increase or decrease in value, even below the exercise price and,
if the underlying shares do not increase in value, the option will have no
value; iix) my participation in the Plans shall not create a right to further
employment with my

 

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Employer and shall not interfere with the ability of my Employer to terminate my
employment relationship at any time, with or without cause; ix) and no claim or
entitlement to compensation or damages arises from the termination of the option
or RSU or the diminution in value of the option or RSU or shares purchased and I
irrevocably release P&G and my Employer from any such claim that may arise.
Responsibility for Taxes
Regardless of any action P&G or my Employer takes with respect to any or all
income tax, social insurance, payroll tax, payment on account or other
tax-related withholding (“Tax-Related Items”), I acknowledge that the ultimate
liability for all Tax-Related Items is and remains my responsibility and that
P&G and/or my Employer (1) make no representations or undertakings regarding the
treatment of any Tax-Related Items in connection with any aspect of the option
or RSU grant, including the grant, vesting or exercise of the option, settlement
of the shares from the RSU, the subsequent sale of shares acquired and the
receipt of any dividends or the potential impact of current or future tax
legislation in any jurisdiction; and (2) do not commit to structure the terms of
the grant or any aspect of the option or RSU to reduce or eliminate my liability
for Tax-Related Items.
Prior to exercise of the option or settlement of the shares from the RSU, I
shall pay or make adequate arrangements satisfactory to P&G and/or my Employer
to satisfy all withholding and payment on account obligations of P&G and/or my
Employer. In this regard, I authorize P&G and/or my Employer to withhold all
applicable Tax-Related Items from my wages or other cash compensation paid to me
by P&G and/or my Employer or from proceeds of the sale of the shares.
Alternatively, or in addition, if permissible under local law, P&G may (1) sell
or arrange for the sale of shares that I acquire to meet the withholding
obligation for Tax-Related Items, and/or (2) withhold in shares, provided that
P&G only withholds the amount of shares necessary to satisfy the minimum
withholding amount. Finally, I shall pay to P&G or my Employer any amount of
Tax-Related Items that P&G or my Employer may be required to withhold as a
result of my participation in the Plan or my purchase of shares that cannot be
satisfied by the means previously described. P&G may refuse to honor the
exercise and refuse to deliver the shares if I fail to comply with my
obligations in connection with the Tax-Related Items as described in this
section.

 

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Appendix 2   Form RTD

[INSERT DATE]
[INSERT NAME]
Subject:     Award of Restricted Stock Units
This is to advise you that The Procter & Gamble Company, an Ohio corporation, is
awarding you with Restricted Stock Units, on the dates and in the amounts listed
below, pursuant to The Procter & Gamble 2001 Stock and Incentive Compensation
Plan, and subject to the attached Statement of Terms and Conditions Form RTD.

         
 
  Grant Date:   [INSERT DATE OF GRANT]
 
  Forfeiture Date:   [INSERT DATE FORFEITURE ENDS]
 
  Original Settlement Date:   [INSERT DATE RSUs BECOME SHARES]
 
  Number of Restricted Stock Units:   [INSERT NUMBER GRANTED]

Paragraph 3(a) of Statement of Terms and Conditions Form RTD [is/is not] waived.
As you will see from the Statement of Terms and Conditions Form RTD, under
certain circumstances you may agree with The Procter & Gamble Company to delay
the settlement of your Restricted Stock Units beyond the Original Settlement
Date. You may want to consult your personal tax advisor before making a decision
about this matter.

            THE PROCTER & GAMBLE COMPANY

James J. Johnson, Secretary
For the Compensation Committee
   

o   I hereby accept the Award of Restricted Stock Units set forth above in
accordance with and subject to the terms of The Procter & Gamble 2001 Stock and
Incentive Compensation Plan and the attached Statement of Terms and Conditions
for Restricted Stock Units, with which I am familiar. I agree that the Award of
Restricted Stock Units, The Procter & Gamble 2001 Stock and Incentive
Compensation Plan, and the attached Statement of Terms and Conditions for
Restricted Stock Units together constitute an agreement between the Company and
me in accordance with the terms thereof and hereof, and I further agree that any
legal action related to this Award of Restricted Stock Units may be brought in
any federal or state court located in Hamilton County, Ohio, USA, and I hereby
accept the jurisdiction of these courts and consent to service of process from
said courts solely for legal actions related to this Award of Restricted Stock
Units.   o   I hereby reject the Award of Restricted Stock Units set forth
above.

         
 
       
 
       
Date
  Signature   P&G E-mail Address

 

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THE PROCTER & GAMBLE COMPANY
STATEMENT OF TERMS AND CONDITIONS FOR RESTRICTED STOCK UNITS
THE PROCTER & GAMBLE 2001 STOCK AND INCENTIVE COMPENSATION PLAN
     The Restricted Stock Units awarded to you as set forth in the letter you
received from the Company (your “Award Letter”), and your ownership thereof, are
subject to the following terms and conditions.
1. Definitions.
     For purposes of this Statement of Terms and Conditions for Restricted Stock
Units (“Terms and Conditions”), all capitalized terms not defined in these Terms
and Conditions will have the meanings described in The Procter & Gamble 2001
Stock and Incentive Compensation Plan (the “Plan”), and the following terms will
have the following meanings.
(a) “Agreed Settlement Date” has the meaning described in Section 2(c);
(b) “Data” has the meaning described in Section 10;
(c) “Disability” means termination of employment under the permanent disability
provision of any retirement plan of Procter & Gamble;
(d) “Dividend Equivalents” has the meaning described in Section 4;
(e) “Forfeiture Date” is the date identified as such in your Award Letter;
(f) “Forfeiture Period” means the period from the Grant Date until the
Forfeiture Date.
(g) “Grant Date” means the date a Restricted Stock Unit was awarded to you, as
identified in your Award Letter;
(h) “Original Settlement Date” is the date identified as such in your Award
Letter, as adjusted, if applicable, by Section 2;
(i) “Post-Forfeiture Period” means the period from the Forfeiture Date until the
later of the Original Settlement Date or the Agreed Settlement Date;
(j) “Procter & Gamble” means the Company and/or its Subsidiaries;
(k) “Restricted Stock Unit” means an unfunded, unsecured promise by the Company,
in accordance with these Terms and Conditions and the provisions of the Plan, to
issue to you one share of Common Stock on the later of the Original Settlement
Date or the Agreed Settlement Date.
2. Transfer and Restrictions.
(a) Neither Restricted Stock Units nor your interest in them may be sold,
exchanged, transferred, pledged, hypothecated, given or otherwise disposed of by
you at any time, except by will or by the laws of descent and distribution. Any
attempted transfer of a Restricted Stock Unit, whether voluntary or involuntary
on your part, will result in the

 

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immediate forfeiture to the Company, and cancellation, of the Restricted Stock
Unit (including all rights to Dividend Equivalents).
(b) During the Forfeiture Period, your Restricted Stock Units (including all
rights to receive Dividend Equivalents) will be forfeited and cancelled if you
leave your employment with Procter & Gamble for any reason, except due to:
(i) your Disability; (ii) your retirement in accordance with the provisions of
any appropriate retirement plan of Procter & Gamble; or (iii) in certain
circumstances, your Special Separation. In the event of your Disability during
the Forfeiture Period, unless otherwise agreed to in writing by the Company,
your Original Settlement Date will automatically and immediately become, without
any further action by you or the Company, the date of your Disability. In the
event of your retirement in accordance with the provisions of any appropriate
retirement plan of Procter & Gamble during the Forfeiture Period, you will
retain your Restricted Stock Units subject to the Plan and these Terms and
Conditions. In the event of your Special Separation during the Forfeiture
Period, your Restricted Stock Units will be forfeited and cancelled unless
otherwise agreed to in writing by the Company.
(c) At any time at least one calendar year prior to the Original Settlement
Date, you and the Company may agree to postpone the date on which you are
entitled to receive one share of Common Stock for each Restricted Stock Unit you
hold, according to the deferral terms in place at the time, and provided the new
date (the “Agreed Settlement Date”) is at least five years from the Original
Settlement Date. During the Post-Forfeiture Period, if you leave your employment
with Procter & Gamble for any reason other than: (i) Disability; (ii) Special
Separation; or (iii) retirement in accordance with the provisions of any
appropriate retirement plan of Procter & Gamble, your Original Settlement Date
or Agreed Settlement Date, as applicable, will automatically and immediately
become, without any further action by you or the Company, the date of your
termination of employment. In the event of your Disability or Special Separation
during the Post-Forfeiture period, unless otherwise agreed to in writing by the
Company, your Original Settlement Date or Agreed Settlement Date, as applicable,
will automatically and immediately become, without any further action by you or
the Company, the date of your Disability or Special Separation, as applicable.
In the event of your retirement in accordance with the provisions of any
appropriate retirement plan of Procter & Gamble during the Post-Forfeiture
Period, you will retain your Restricted Stock Units subject to the Plan and
these Terms and Conditions.
(d) Upon your death or the occurrence of a Change in Control at any time while
you hold Restricted Stock Units and/or Dividend Equivalents, your Original
Settlement Date or Agreed Settlement Date, as applicable, will automatically and
immediately become, without any further action by you or the Company, the date
of your death or of the Change in Control, as applicable.
(e) From time to time, the Company and/or the Committee may establish procedures
with which you must comply in order to accept an award of Restricted Stock
Units, to agree to an Agreed Settlement Date, or to settle your Restricted Stock
Units, including requiring you to do so by means of electronic signature, or
charging you an administrative fee for doing so.
(f) Once your Restricted Stock Units have been settled by delivery to you of an
equivalent number of shares of Common Stock, the Restricted Stock Units will
have no further value, force or effect and you will cease to receive Dividend
Equivalents associated with the Restricted Stock Units.

 

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3. Confidentiality and Non-Competition
(a) In order to better protect the goodwill of Procter & Gamble and to prevent
the disclosure of Procter & Gamble’s trade secrets and confidential information,
and thereby help ensure the long-term success of Procter & Gamble’s business, in
consideration of your being awarded Restricted Stock Units, you (without prior
written consent of Procter & Gamble), will not engage in any activity or provide
any services, whether as a director, manager, supervisor, employee, advisor,
consultant or otherwise, for a period of three (3) years following the date your
employment with Procter & Gamble is terminated in connection with the
manufacture, development, advertising, promotion, or sale of any product which
is the same as or similar to or competitive with any products of Procter &
Gamble (including both existing products as well as products known to you, as a
consequence of your employment with Procter & Gamble, to be in development):
(i) with respect to which your work has been directly concerned at any time
during the two (2) years preceding the termination of your employment with
Procter & Gamble; or
(ii) with respect to which, during the two (2) years preceding the termination
of your employment with Procter & Gamble, you, as a consequence of your job
performance and duties, acquired knowledge of trade secrets or other
confidential information of Procter & Gamble.
For purposes of this Section 3(a), it will be conclusively presumed that you
have knowledge of information you were directly exposed to through actual
receipt or review of memoranda or documents containing such information, or
through attendance at meetings at which such information was discussed or
disclosed.
(b) The provisions of Section 3(a) are not in lieu of, but are in addition to
your continuing obligation (which you acknowledge by accepting an award of
Restricted Stock Units) to not use or disclose Procter & Gamble’s trade secrets
or confidential information known to you until any particular trade secret or
confidential information becomes generally known (through no fault of yours). As
used in this Section 3(b), “generally known” means known throughout the domestic
United States industry or, if you have job responsibilities partially or
entirely outside of the United States, the appropriate domestic United States
and/or appropriate foreign country or countries’ industry(ies). Information
regarding products in development, in test marketing, or being marketed or
promoted in a discrete geographic region, which information Procter & Gamble is
considering for broader use, will not be deemed to be “generally known” until
such broader use is actually commercially implemented. As used in this Section,
“trade secrets or other confidential information” also includes personnel
knowledge about a manager, or managers, of Procter & Gamble or its subsidiaries
gained in the course of your employment with Procter & Gamble or its
subsidiaries (including personnel ratings or rankings, manager or peer
evaluations, performance records, special skills or abilities, compensation,
work and development plans, training, nature of specific project and work
assignments, or specialties developed as a result of such assignments) which
directly or indirectly affords you a confidential basis to solicit, encourage,
or participate in soliciting any manager, or managers, of Procter & Gamble or
any subsidiary to terminate his or her relationship with Procter & Gamble or
that subsidiary.
(c) By accepting an award of Restricted Stock Units, you agree that, if you
were, without authority, to use or disclose Procter & Gamble’s trade secrets or
confidential information or threaten to do so, Procter & Gamble would be
entitled to injunctive and other appropriate relief to prevent you from doing
so. You further agree that the harm caused to Procter & Gamble by the breach or
anticipated breach of this Section 3(c) is,

 

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by its nature, irreparable because, among other things, it is not readily
susceptible of proof as to the monetary harm that would ensue. You agree that
any interim or final equitable relief entered by a court of competent
jurisdiction will, at the request of Procter & Gamble, be entered on consent and
enforced by any court having jurisdiction over you, without prejudice to any
rights you or Procter & Gamble may have to appeal from the proceedings which
resulted in any grant of such relief.
(d) If any of the provisions contained in Sections 3(a) through (c) are for any
reason, whether by application of existing law or law which may develop after
your acceptance of an award of Restricted Stock Units, determined by a court of
competent jurisdiction to be overly broad as to scope of activity, duration, or
territory, then by accepting an award of Restricted Stock Units you agree to
join Procter & Gamble in requesting such court to construe such provision by
limiting or reducing it so as to be enforceable to the extent compatible with
then-applicable law. If any one or more of the provisions contained in Section
3(a) through (c) are determined by a court of competent jurisdiction to be
invalid, void or unenforceable, then the remainder of the provisions will remain
in full force and effect and will not be affected, impaired or invalidated in
any way.
4. Dividend Equivalents.
     As a holder of Restricted Stock Units, during the period from the Grant
Date until the Original Settlement Date or the Agreed Settlement Date, whichever
is later, each time a cash dividend or other cash distribution is paid with
respect to Common Stock, you will receive additional Restricted Stock Units
(“Dividend Equivalents”). The number of such additional Restricted Stock Units
will be determined as follows: multiply the number of Restricted Stock Units
currently held by the per share amount of the cash dividend or other cash
distribution on the Common Stock, and then divide the result by the price of the
Common Stock on the date of the dividend or distribution. These Dividend
Equivalent Restricted Stock Units will be subject to the same terms and
conditions as the original Restricted Stock Units that gave rise to them,
including forfeiture and settlement terms, except that if there is a fractional
number of Dividend Equivalent Restricted Stock Units on the date they are to be
settled, you will receive one share of Common Stock for the fractional Dividend
Equivalent Restricted Stock Units.
5. Voting and Other Shareholder Rights.
     A Restricted Stock Unit is not a share of Common Stock, and thus you are
not entitled to any voting, dividend or other rights as a shareholder of the
Company with respect to the Restricted Stock Units you hold.
6. Adjustments in Case of Stock Dividends, Stock Splits, Etc.
     In the event of a future reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger, consolidation, rights offering,
share exchange, reclassification, distribution, spin-off, or other change
affecting the corporate structure, capitalization or Common Stock, the number of
Restricted Stock Units you hold will be adjusted appropriately and equitably to
prevent dilution or enlargement of your rights.
7. Tax Withholding.
     To the extent Procter & Gamble is required to withhold federal, state,
local or foreign taxes in connection with your Restricted Stock Units or
Dividend Equivalents, the Committee may require you to make such arrangements as
Procter & Gamble may deem appropriate for the payment of such taxes required to
be withheld, including without limitation, relinquishment of some of the shares
of Common Stock that would otherwise be given to you. However,

 

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regardless of any action taken by Procter & Gamble with respect to any income
tax, social insurance, payroll tax, or other tax, by accepting a Restricted
Stock Unit or Dividend Equivalent, you acknowledge that the ultimate liability
for any such tax owed by you is and remains your responsibility, and that
Procter & Gamble makes no representations about the tax treatment of your
Restricted Stock Units or Dividend Equivalents, and does not commit to structure
any aspect of the Restricted Stock Units or Dividend Equivalents to reduce or
eliminate your tax liability.
8. Suspension Periods and Termination.
     The Company reserves the right from time to time to temporarily suspend
your right to settle your Restricted Stock Units for shares of Common Stock
where such suspension is deemed by the Company as necessary or appropriate.
9. Procter & Gamble Right to Terminate Employment and Other Remedies.
(a) Nothing in these Terms and Conditions, or the fact that you have been
awarded Restricted Stock Units, affects in any way the right or power of Procter
& Gamble to terminate your employment at any time for any reason, with or
without cause, or precludes Procter & Gamble from taking any action or enforcing
any remedy available to it with respect to any action or conduct on your part.
Without limiting the previous sentence, the Committee may, for example, suspend
or terminate any outstanding Restricted Stock Units for actions taken by you if
the Committee determines that you have acted significantly contrary to the best
interests of Procter & Gamble or its subsidiaries. For purposes of this
paragraph, an action taken “significantly contrary to the best interests of
Procter & Gamble or its subsidiaries” includes without limitation any action
taken or threatened by you that the Committee determines has, or is reasonably
likely to have, a significant adverse impact on the reputation, goodwill,
stability, operation, personnel retention and management, or business of Procter
& Gamble or any subsidiary. This paragraph is in addition to any remedy Procter
& Gamble or a subsidiary may have at law or in equity, including without
limitation injunctive and other appropriate relief.
(b) By accepting a Restricted Stock Unit, you acknowledge that: (i) the Plan is
established voluntarily by The Procter & Gamble Company, is discretionary in
nature, and may be amended, suspended or terminated at any time; (ii) the award
of Restricted Stock Units is voluntary and occasional and does not create any
contractual or other right to receive future awards of Restricted Stock Units,
or benefits in lieu of Restricted Stock Units, even if Restricted Stock Units
have been awarded repeatedly in the past; (iii) all decisions with respect to
future Restricted Stock Unit awards, if any, will be at the sole discretion of
the Company; (iv) your participation in the Plan is voluntary; (v) Restricted
Stock Units are an extraordinary item and not part of normal or expected
compensation or salary for any purpose, including without limitation calculating
any termination, severance, resignation, redundancy, or end-of-service payments,
bonuses, long-service awards, pension or retirement benefits or similar
payments; (vi) in the event that your employer is not the Company, the award of
Restricted Stock Units will not be interpreted to form an employment
relationship with the Company; and, furthermore, the award of Restricted Stock
Units will not be interpreted to form an employment contract with any Procter &
Gamble entity; (vii) the future value of Common Stock is unknown and cannot be
predicted with certainty; and (viii) no claim or entitlement to compensation or
damages arises from termination or forfeiture of Restricted Stock Units, or
diminution in value of Restricted Stock Units or Common Stock received in
settlement thereof, and you irrevocably release Procter & Gamble from any such
claim that may arise.

 

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10. Data Privacy.
     By accepting a Restricted Stock Unit, you explicitly and unambiguously
consent to the collection, use and transfer, in electronic or other form, of
your personal data as described in this document by and among, as applicable,
any Procter & Gamble entity or third party for the purpose of implementing,
administering and managing your participation in the Plan. You understand that
Procter & Gamble holds certain personal information about you, including without
limitation your name, home address and telephone number, date of birth, social
insurance number or other identification number, salary, nationality, job title,
any shares of stock or directorships held in a Procter & Gamble entity, details
of all options, Restricted Stock Units, or any other entitlement to shares of
stock awarded, canceled, exercised, vested, unvested or outstanding in your
favor, for the purpose of implementing, administering and managing the Plan
(“Data”). You understand that Data may be transferred to any third parties
assisting in the implementation, administration and management of the Plan, that
these recipients may be located in your country or elsewhere, and that the
recipient’s country may have different data privacy laws and protections than
your country. You understand that you may request a list with the names and
addresses of any potential recipients of Data by contacting your local human
resources representative. You authorize the recipients to receive, possess, use,
retain and transfer the Data, in electronic or other form, for the purposes of
implementing, administering and managing your participation in the Plan,
including any requisite transfer of such Data to any broker or other third party
with whom you may elect to deposit any shares of Common Stock in connection with
the settlement of your Restricted Stock Units. You understand that Data will be
held only as long as is necessary to implement, administer and manage your
participation in the plan. You understand that you may, at any time, view Data,
request additional information about the storage and processing of Data, require
any necessary amendments to Data, or refuse or withdraw the consents contained
in this paragraph, in any case without cost, by contacting in writing your local
human resources representative. You understand, however, that refusing or
withdrawing your consent may affect your ability to participate in the Plan. For
more information on the consequences of your refusal to consent or withdrawal of
consent, you understand that you may contact your local human resources
representative.
11. Notices.
(a) Any notice to Procter & Gamble that is required or appropriate with respect
to Restricted Stock Units held by you must be in writing and addressed to:
The Procter & Gamble Company
ATTN: Corporate Secretary’s Office
P.O. Box 599
Cincinnati, OH 45201
or such other address as Procter & Gamble may from time to time provide to you
in writing.
(b) Any notice to you that is required or appropriate with respect to Restricted
Stock Units held or to be awarded to you will be provided to you in written or
electronic form at any physical or electronic mail address for you that is on
file with Procter & Gamble.
12. Successors and Assigns.
     These Terms and Conditions are binding on, and inure to the benefit of,
(a) The Procter & Gamble Company and its successors and assigns; and (b) you
and, if applicable, the representative of your estate.

 

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13. Governing Law.
     The validity, interpretation, performance and enforcement of these Terms
and Conditions, the Plan and your Restricted Stock Units will be governed by the
laws of the State of Ohio, U.S.A. without giving effect to any other
jurisdiction’s conflicts of law principles. With respect to any dispute
concerning these Terms and Conditions, the Plan and your Restricted Stock Units,
you consent to the exclusive jurisdiction of the federal or state courts located
in Hamilton County, Ohio, U.S.A.
14. The Plan.
     All Restricted Stock Units awarded to you have been awarded under the Plan.
Certain provisions of the Plan may have been repeated or emphasized in these
Terms and Conditions; however, all terms of the Plan apply to you and your
Restricted Stock Units whether or not they have been called out in these Terms
and Conditions.
15. Effect of These Terms and Conditions.
     These Terms and Conditions and the terms of the Plan, which are
incorporated herein by reference, describe the contractual rights awarded to you
in the form of Restricted Stock Units, and the obligations imposed on you in
connection with those rights. No right exists with respect to Restricted Stock
Units except as described in these Terms and Conditions and the Plan.

 

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          Appendix 3       Form RTD-A                    

                    [INSERT DATE]
[INSERT NAME]

Subject: Award of Restricted Stock Units

This is to advise you that The Procter & Gamble Company, an Ohio corporation, is
awarding you with Restricted Stock Units, on the dates and in the amounts listed
below, pursuant to The Procter & Gamble 2001 Stock and Incentive Compensation
Plan, and subject to the attached Statement of Terms and Conditions Form RTD-A.

         
 
  Grant Date:   [INSERT DATE OF GRANT]
 
  Forfeiture Date:   [INSERT DATE FORFEITURE ENDS]
 
  Original Settlement Date:   [INSERT DATE RSUs BECOME SHARES]
 
  Number of Restricted Stock Units:   [INSERT NUMBER GRANTED]

Paragraph 3(a) of Statement of Terms and Conditions Form RTD-A [is/is not]
waived.
As you will see from the Statement of Terms and Conditions Form RTD-A, under
certain circumstances you may agree with The Procter & Gamble Company to delay
the settlement of your Restricted Stock Units beyond the Original Settlement
Date. You may want to consult your personal tax advisor before making a decision
about this matter.

            THE PROCTER & GAMBLE COMPANY
            James J. Johnson, Secretary      For the Compensation Committee     

o    I hereby accept the Award of Restricted Stock Units set forth above in
accordance with and subject to the terms of The Procter & Gamble 2001 Stock and
Incentive Compensation Plan and the attached Statement of Terms and Conditions
for Restricted Stock Units, with which I am familiar. I agree that the Award of
Restricted Stock Units, The Procter & Gamble 2001 Stock and Incentive
Compensation Plan, and the attached Statement of Terms and Conditions for
Restricted Stock Units together constitute an agreement between the Company and
me in accordance with the terms thereof and hereof, and I further agree that any
legal action related to this Award of Restricted Stock Units may be brought in
any federal or state court located in Hamilton County, Ohio, USA, and I hereby
accept the jurisdiction of these courts and consent to service of process from
said courts solely for legal actions related to this Award of Restricted Stock
Units.   o    I hereby reject the Award of Restricted Stock Units set forth
above.

                   
 
Date  
 
Signature  
 
P&G E-mail Address

 

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THE PROCTER & GAMBLE COMPANY
STATEMENT OF TERMS AND CONDITIONS FOR RESTRICTED STOCK UNITS
THE PROCTER & GAMBLE 2001 STOCK AND INCENTIVE COMPENSATION PLAN
     The Restricted Stock Units awarded to you as set forth in the letter you
received from the Company (your “Award Letter”), and your ownership thereof, are
subject to the following terms and conditions.
1. Definitions.
For purposes of this Statement of Terms and Conditions for Restricted Stock
Units (“Terms and Conditions”), all capitalized terms not defined in these Terms
and Conditions will have the meanings described in The Procter & Gamble 2001
Stock and Incentive Compensation Plan (the “Plan”), and the following terms will
have the following meanings.
(a) “Agreed Settlement Date” has the meaning described in Section 2(c);
(b) “Data” has the meaning described in Section 10;
(c) “Disability” means termination of employment under the permanent disability
provision of any retirement plan of Procter & Gamble;
(d) “Dividend Equivalents” has the meaning described in Section 4;
(e) “Forfeiture Date” is the date identified as such in your Award Letter;
(f) “Forfeiture Period” means the period from the Grant Date until the
Forfeiture Date.
(g) “Grant Date” means the date a Restricted Stock Unit was awarded to you, as
identified in your Award Letter;
(h) “Original Settlement Date” is the date identified as such in your Award
Letter, as adjusted, if applicable, by Section 2;
(i) “Post-Forfeiture Period” means the period from the Forfeiture Date until the
later of the Original Settlement Date or the Agreed Settlement Date;
(j) “Procter & Gamble” means the Company and/or its Subsidiaries;
(k) “Restricted Stock Unit” means an unfunded, unsecured promise by the Company,
in accordance with these Terms and Conditions and the provisions of the Plan, to
issue to you one share of Common Stock on the later of the Original Settlement
Date or the Agreed Settlement Date.
2. Transfer and Restrictions.
(a) Neither Restricted Stock Units nor your interest in them may be sold,
exchanged, transferred, pledged, hypothecated, given or otherwise disposed of by
you at any time, except by will or by the laws of descent and distribution. Any
attempted transfer of a Restricted Stock Unit, whether voluntary or involuntary
on your part, will result in the

 

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immediate forfeiture to the Company, and cancellation, of the Restricted Stock
Unit (including all rights to Dividend Equivalents).
(b) During the Forfeiture Period, your Restricted Stock Units (including all
rights to receive Dividend Equivalents) will be forfeited and cancelled if you
leave your employment with Procter & Gamble for any reason, except due to:
(i) your Disability, or (ii) in certain circumstances, your Special Separation.
In the event of your Disability during the Forfeiture Period, unless otherwise
agreed to in writing by the Company, your Original Settlement Date will
automatically and immediately become, without any further action by you or the
Company, the date of your Disability. In the event of your Special Separation
during the Forfeiture Period, your Restricted Stock Units will be forfeited and
cancelled unless otherwise agreed to in writing by the Company.
(c) At any time at least one calendar year prior to the Original Settlement
Date, you and the Company may agree to postpone the date on which you are
entitled to receive one share of Common Stock for each Restricted Stock Unit you
hold, according to the deferral terms in place at the time, and provided the new
date (the “Agreed Settlement Date”) is at least five years from the Original
Settlement Date. During the Post-Forfeiture Period, if you leave your employment
with Procter & Gamble for any reason other than: (i) Disability; (ii) Special
Separation; or (iii) retirement in accordance with the provisions of any
appropriate retirement plan of Procter & Gamble, your Original Settlement Date
or Agreed Settlement Date, as applicable, will automatically and immediately
become, without any further action by you or the Company, the date of your
termination of employment. In the event of your Disability or Special Separation
during the Post-Forfeiture period, unless otherwise agreed to in writing by the
Company, your Original Settlement Date or Agreed Settlement Date, as applicable,
will automatically and immediately become, without any further action by you or
the Company, the date of your Disability or Special Separation, as applicable.
In the event of your retirement in accordance with the provisions of any
appropriate retirement plan of Procter & Gamble during the Post-Forfeiture
Period, you will retain your Restricted Stock Units subject to the Plan and
these Terms and Conditions.
(d) Upon your death or the occurrence of a Change in Control at any time while
you hold Restricted Stock Units and/or Dividend Equivalents, your Original
Settlement Date or Agreed Settlement Date, as applicable, will automatically and
immediately become, without any further action by you or the Company, the date
of your death or of the Change in Control, as applicable.
(e) From time to time, the Company and/or the Committee may establish procedures
with which you must comply in order to accept an award of Restricted Stock
Units, to agree to an Agreed Settlement Date, or to settle your Restricted Stock
Units, including requiring you to do so by means of electronic signature, or
charging you an administrative fee for doing so.
(f) Once your Restricted Stock Units have been settled by delivery to you of an
equivalent number of shares of Common Stock, the Restricted Stock Units will
have no further value, force or effect and you will cease to receive Dividend
Equivalents associated with the Restricted Stock Units.

 

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3. Confidentiality and Non-Competition
(a) In order to better protect the goodwill of Procter & Gamble and to prevent
the disclosure of Procter & Gamble’s trade secrets and confidential information,
and thereby help ensure the long-term success of Procter & Gamble’s business, in
consideration of your being awarded Restricted Stock Units, you (without prior
written consent of Procter & Gamble), will not engage in any activity or provide
any services, whether as a director, manager, supervisor, employee, advisor,
consultant or otherwise, for a period of three (3) years following the date your
employment with Procter & Gamble is terminated in connection with the
manufacture, development, advertising, promotion, or sale of any product which
is the same as or similar to or competitive with any products of Procter &
Gamble (including both existing products as well as products known to you, as a
consequence of your employment with Procter & Gamble, to be in development):
(i) with respect to which your work has been directly concerned at any time
during the two (2) years preceding the termination of your employment with
Procter & Gamble; or
(ii) with respect to which, during the two (2) years preceding the termination
of your employment with Procter & Gamble, you, as a consequence of your job
performance and duties, acquired knowledge of trade secrets or other
confidential information of Procter & Gamble.
For purposes of this Section 3(a), it will be conclusively presumed that you
have knowledge of information you were directly exposed to through actual
receipt or review of memoranda or documents containing such information, or
through attendance at meetings at which such information was discussed or
disclosed.
(b) The provisions of Section 3(a) are not in lieu of, but are in addition to
your continuing obligation (which you acknowledge by accepting an award of
Restricted Stock Units) to not use or disclose Procter & Gamble’s trade secrets
or confidential information known to you until any particular trade secret or
confidential information becomes generally known (through no fault of yours). As
used in this Section 3(b), “generally known” means known throughout the domestic
United States industry or, if you have job responsibilities partially or
entirely outside of the United States, the appropriate domestic United States
and/or appropriate foreign country or countries’ industry(ies). Information
regarding products in development, in test marketing, or being marketed or
promoted in a discrete geographic region, which information Procter & Gamble is
considering for broader use, will not be deemed to be “generally known” until
such broader use is actually commercially implemented. As used in this Section,
“trade secrets or other confidential information” also includes personnel
knowledge about a manager, or managers, of Procter & Gamble or its subsidiaries
gained in the course of your employment with Procter & Gamble or its
subsidiaries (including personnel ratings or rankings, manager or peer
evaluations, performance records, special skills or abilities, compensation,
work and development plans, training, nature of specific project and work
assignments, or specialties developed as a result of such assignments) which
directly or indirectly affords you a confidential basis to solicit, encourage,
or participate in soliciting any manager, or managers, of Procter & Gamble or
any subsidiary to terminate his or her relationship with Procter & Gamble or
that subsidiary.
(c) By accepting an award of Restricted Stock Units, you agree that, if you
were, without authority, to use or disclose Procter & Gamble’s trade secrets or
confidential information or threaten to do so, Procter & Gamble would be
entitled to injunctive and other appropriate relief to prevent you from doing
so. You further agree that the harm caused to Procter & Gamble by the breach or
anticipated breach of this Section 3(c) is,

 

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by its nature, irreparable because, among other things, it is not readily
susceptible of proof as to the monetary harm that would ensue. You agree that
any interim or final equitable relief entered by a court of competent
jurisdiction will, at the request of Procter & Gamble, be entered on consent and
enforced by any court having jurisdiction over you, without prejudice to any
rights you or Procter & Gamble may have to appeal from the proceedings which
resulted in any grant of such relief.
(d) If any of the provisions contained in Sections 3(a) through (c) are for any
reason, whether by application of existing law or law which may develop after
your acceptance of an award of Restricted Stock Units, determined by a court of
competent jurisdiction to be overly broad as to scope of activity, duration, or
territory, then by accepting an award of Restricted Stock Units you agree to
join Procter & Gamble in requesting such court to construe such provision by
limiting or reducing it so as to be enforceable to the extent compatible with
then-applicable law. If any one or more of the provisions contained in Section
3(a) through (c) are determined by a court of competent jurisdiction to be
invalid, void or unenforceable, then the remainder of the provisions will remain
in full force and effect and will not be affected, impaired or invalidated in
any way.
4. Dividend Equivalents.
     As a holder of Restricted Stock Units, during the period from the Grant
Date until the Original Settlement Date or the Agreed Settlement Date, whichever
is later, each time a cash dividend or other cash distribution is paid with
respect to Common Stock, you will receive additional Restricted Stock Units
(“Dividend Equivalents”). The number of such additional Restricted Stock Units
will be determined as follows: multiply the number of Restricted Stock Units
currently held by the per share amount of the cash dividend or other cash
distribution on the Common Stock, and then divide the result by the price of the
Common Stock on the date of the dividend or distribution. These Dividend
Equivalent Restricted Stock Units will be subject to the same terms and
conditions as the original Restricted Stock Units that gave rise to them,
including forfeiture and settlement terms, except that if there is a fractional
number of Dividend Equivalent Restricted Stock Units on the date they are to be
settled, you will receive one share of Common Stock for the fractional Dividend
Equivalent Restricted Stock Units.
5. Voting and Other Shareholder Rights.
     A Restricted Stock Unit is not a share of Common Stock, and thus you are
not entitled to any voting, dividend or other rights as a shareholder of the
Company with respect to the Restricted Stock Units you hold.
6. Adjustments in Case of Stock Dividends, Stock Splits, Etc.
     In the event of a future reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger, consolidation, rights offering,
share exchange, reclassification, distribution, spin-off, or other change
affecting the corporate structure, capitalization or Common Stock, the number of
Restricted Stock Units you hold will be adjusted appropriately and equitably to
prevent dilution or enlargement of your rights.
7. Tax Withholding.
     To the extent Procter & Gamble is required to withhold federal, state,
local or foreign taxes in connection with your Restricted Stock Units or
Dividend Equivalents, the Committee may require you to make such arrangements as
Procter & Gamble may deem appropriate for the payment of such taxes required to
be withheld, including without limitation, relinquishment of some of the shares
of Common Stock that would otherwise be given to you. However,

 

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regardless of any action taken by Procter & Gamble with respect to any income
tax, social insurance, payroll tax, or other tax, by accepting a Restricted
Stock Unit or Dividend Equivalent, you acknowledge that the ultimate liability
for any such tax owed by you is and remains your responsibility, and that
Procter & Gamble makes no representations about the tax treatment of your
Restricted Stock Units or Dividend Equivalents, and does not commit to structure
any aspect of the Restricted Stock Units or Dividend Equivalents to reduce or
eliminate your tax liability.
8. Suspension Periods and Termination.
     The Company reserves the right from time to time to temporarily suspend
your right to settle your Restricted Stock Units for shares of Common Stock
where such suspension is deemed by the Company as necessary or appropriate.
9. Procter & Gamble Right to Terminate Employment and Other Remedies.
(a) Nothing in these Terms and Conditions, or the fact that you have been
awarded Restricted Stock Units, affects in any way the right or power of Procter
& Gamble to terminate your employment at any time for any reason, with or
without cause, or precludes Procter & Gamble from taking any action or enforcing
any remedy available to it with respect to any action or conduct on your part.
Without limiting the previous sentence, the Committee may, for example, suspend
or terminate any outstanding Restricted Stock Units for actions taken by you if
the Committee determines that you have acted significantly contrary to the best
interests of Procter & Gamble or its subsidiaries. For purposes of this
paragraph, an action taken “significantly contrary to the best interests of
Procter & Gamble or its subsidiaries” includes without limitation any action
taken or threatened by you that the Committee determines has, or is reasonably
likely to have, a significant adverse impact on the reputation, goodwill,
stability, operation, personnel retention and management, or business of Procter
& Gamble or any subsidiary. This paragraph is in addition to any remedy Procter
& Gamble or a subsidiary may have at law or in equity, including without
limitation injunctive and other appropriate relief.
(b) By accepting a Restricted Stock Unit, you acknowledge that: (i) the Plan is
established voluntarily by The Procter & Gamble Company, is discretionary in
nature, and may be amended, suspended or terminated at any time; (ii) the award
of Restricted Stock Units is voluntary and occasional and does not create any
contractual or other right to receive future awards of Restricted Stock Units,
or benefits in lieu of Restricted Stock Units, even if Restricted Stock Units
have been awarded repeatedly in the past; (iii) all decisions with respect to
future Restricted Stock Unit awards, if any, will be at the sole discretion of
the Company; (iv) your participation in the Plan is voluntary; (v) Restricted
Stock Units are an extraordinary item and not part of normal or expected
compensation or salary for any purpose, including without limitation calculating
any termination, severance, resignation, redundancy, or end-of-service payments,
bonuses, long-service awards, pension or retirement benefits or similar
payments; (vi) in the event that your employer is not the Company, the award of
Restricted Stock Units will not be interpreted to form an employment
relationship with the Company; and, furthermore, the award of Restricted Stock
Units will not be interpreted to form an employment contract with any Procter &
Gamble entity; (vii) the future value of Common Stock is unknown and cannot be
predicted with certainty; and (viii) no claim or entitlement to compensation or
damages arises from termination or forfeiture of Restricted Stock Units, or
diminution in value of Restricted Stock Units or Common Stock received in
settlement thereof, and you irrevocably release Procter & Gamble from any such
claim that may arise.

 

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10. Data Privacy.
     By accepting a Restricted Stock Unit, you explicitly and unambiguously
consent to the collection, use and transfer, in electronic or other form, of
your personal data as described in this document by and among, as applicable,
any Procter & Gamble entity or third party for the purpose of implementing,
administering and managing your participation in the Plan. You understand that
Procter & Gamble holds certain personal information about you, including without
limitation your name, home address and telephone number, date of birth, social
insurance number or other identification number, salary, nationality, job title,
any shares of stock or directorships held in a Procter & Gamble entity, details
of all options, Restricted Stock Units, or any other entitlement to shares of
stock awarded, canceled, exercised, vested, unvested or outstanding in your
favor, for the purpose of implementing, administering and managing the Plan
(“Data”). You understand that Data may be transferred to any third parties
assisting in the implementation, administration and management of the Plan, that
these recipients may be located in your country or elsewhere, and that the
recipient’s country may have different data privacy laws and protections than
your country. You understand that you may request a list with the names and
addresses of any potential recipients of Data by contacting your local human
resources representative. You authorize the recipients to receive, possess, use,
retain and transfer the Data, in electronic or other form, for the purposes of
implementing, administering and managing your participation in the Plan,
including any requisite transfer of such Data to any broker or other third party
with whom you may elect to deposit any shares of Common Stock in connection with
the settlement of your Restricted Stock Units. You understand that Data will be
held only as long as is necessary to implement, administer and manage your
participation in the plan. You understand that you may, at any time, view Data,
request additional information about the storage and processing of Data, require
any necessary amendments to Data, or refuse or withdraw the consents contained
in this paragraph, in any case without cost, by contacting in writing your local
human resources representative. You understand, however, that refusing or
withdrawing your consent may affect your ability to participate in the Plan. For
more information on the consequences of your refusal to consent or withdrawal of
consent, you understand that you may contact your local human resources
representative.
11. Notices.
     (a) Any notice to Procter & Gamble that is required or appropriate with
respect to Restricted Stock Units held by you must be in writing and addressed
to:

         
 
       
 
  The Procter & Gamble Company    
 
  ATTN: Corporate Secretary’s Office    
 
  P.O. Box 599    
 
  Cincinnati, OH 45201    

or such other address as Procter & Gamble may from time to time provide to you
in writing.
(b) Any notice to you that is required or appropriate with respect to Restricted
Stock Units held or to be awarded to you will be provided to you in written or
electronic form at any physical or electronic mail address for you that is on
file with Procter & Gamble.
12. Successors and Assigns.
     These Terms and Conditions are binding on, and inure to the benefit of,
(a) The Procter & Gamble Company and its successors and assigns; and (b) you
and, if applicable, the representative of your estate.

 

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13. Governing Law.
     The validity, interpretation, performance and enforcement of these Terms
and Conditions, the Plan and your Restricted Stock Units will be governed by the
laws of the State of Ohio, U.S.A. without giving effect to any other
jurisdiction’s conflicts of law principles. With respect to any dispute
concerning these Terms and Conditions, the Plan and your Restricted Stock Units,
you consent to the exclusive jurisdiction of the federal or state courts located
in Hamilton County, Ohio, U.S.A.
14. The Plan.
     All Restricted Stock Units awarded to you have been awarded under the Plan.
Certain provisions of the Plan may have been repeated or emphasized in these
Terms and Conditions; however, all terms of the Plan apply to you and your
Restricted Stock Units whether or not they have been called out in these Terms
and Conditions.
15. Effect of These Terms and Conditions.
     These Terms and Conditions and the terms of the Plan, which are
incorporated herein by reference, describe the contractual rights awarded to you
in the form of Restricted Stock Units, and the obligations imposed on you in
connection with those rights. No right exists with respect to Restricted Stock
Units except as described in these Terms and Conditions and the Plan.

 

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Appendix 4
      Form RTN   
 
       
 
       
 
  [INSERT DATE]    

[INSERT NAME]
Subject:   Award of Restricted Stock Units
This is to advise you that The Procter & Gamble Company, an Ohio corporation, is
awarding you with Restricted Stock Units, on the dates and in the amounts listed
below, pursuant to The Procter & Gamble 2001 Stock and Incentive Compensation
Plan, and subject to the attached Statement of Terms and Conditions Form RTN.

         
 
  Grant Date:   [INSERT DATE OF GRANT]
 
  Forfeiture Date:   [INSERT DATE FORFEITURE ENDS]
 
  Original Settlement Date:   [INSERT DATE RSUs BECOME SHARES]
 
  Number of Restricted Stock Units:   [INSERT NUMBER GRANTED]

Paragraph 3(a) of Statement of Terms and Conditions Form RTN [is/is not] waived.

         
 
      THE PROCTER & GAMBLE COMPANY
 
       
 
       
 
      James J. Johnson, Secretary
 
      For the Compensation Committee

o   I hereby accept the Award of Restricted Stock Units set forth above in
accordance with and subject to the terms of The Procter & Gamble 2001 Stock and
Incentive Compensation Plan and the attached Statement of Terms and Conditions
for Restricted Stock Units, with which I am familiar. I agree that the Award of
Restricted Stock Units, The Procter & Gamble 2001 Stock and Incentive
Compensation Plan, and the attached Statement of Terms and Conditions for
Restricted Stock Units together constitute an agreement between the Company and
me in accordance with the terms thereof and hereof, and I further agree that any
legal action related to this Award of Restricted Stock Units may be brought in
any federal or state court located in Hamilton County, Ohio, USA, and I hereby
accept the jurisdiction of these courts and consent to service of process from
said courts solely for legal actions related to this Award of Restricted Stock
Units.   o   I hereby reject the Award of Restricted Stock Units set forth
above.

         
 
       
 
       
Date
  Signature   P&G E-mail Address

 

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THE PROCTER & GAMBLE COMPANY
STATEMENT OF TERMS AND CONDITIONS FOR RESTRICTED STOCK UNITS
THE PROCTER & GAMBLE 2001 STOCK AND INCENTIVE COMPENSATION PLAN
     The Restricted Stock Units awarded to you as set forth in the letter you
received from the Company (your “Award Letter”), and your ownership thereof, are
subject to the following terms and conditions.
1. Definitions.
     For purposes of this Statement of Terms and Conditions for Restricted Stock
Units (“Terms and Conditions”), all capitalized terms not defined in these Terms
and Conditions will have the meanings described in The Procter & Gamble 2001
Stock and Incentive Compensation Plan (the “Plan”), and the following terms will
have the following meanings.
(a) “Data” has the meaning described in Section 10;
(b) “Disability” means termination of employment under the permanent disability
provision of any retirement plan of Procter & Gamble;
(c) “Dividend Equivalents” has the meaning described in Section 4;
(d) “Forfeiture Date” is the date identified as such in your Award Letter;
(e) “Forfeiture Period” means the period from the Grant Date until the
Forfeiture Date.
(f) “Grant Date” means the date a Restricted Stock Unit was awarded to you, as
identified in your Award Letter;
(g) “Original Settlement Date” is the date identified as such in your Award
Letter, as adjusted, if applicable, by Section 2;
(h) “Post-Forfeiture Period” means the period from the Forfeiture Date until the
Original Settlement Date;
(i) “Procter & Gamble” means the Company and/or its Subsidiaries;
(j) “Restricted Stock Unit” means an unfunded, unsecured promise by the Company,
in accordance with these Terms and Conditions and the provisions of the Plan, to
issue to you one share of Common Stock on the Original Settlement Date.
2. Transfer and Restrictions.
(a) Neither Restricted Stock Units nor your interest in them may be sold,
exchanged, transferred, pledged, hypothecated, given or otherwise disposed of by
you at any time, except by will or by the laws of descent and distribution. Any
attempted transfer of a Restricted Stock Unit, whether voluntary or involuntary
on your part, will result in the immediate forfeiture to the Company, and
cancellation, of the Restricted Stock Unit (including all rights to receive
Dividend Equivalents).

 

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(b) During the Forfeiture Period, your Restricted Stock Units (including all
rights to receive Dividend Equivalents) will be forfeited and cancelled if you
leave your employment with Procter & Gamble for any reason, except due to:
(i) your Disability; or (ii) in certain circumstances, your Special Separation.
In the event of your Disability during the Forfeiture Period, unless otherwise
agreed to in writing by the Company, your Original Settlement Date will
automatically and immediately become, without any further action by you or the
Company, the date of your Disability. In the event of your Special Separation
during the Forfeiture Period, your Restricted Stock Units will be forfeited and
cancelled unless otherwise agreed to in writing by the Company.
(c) During the Post-Forfeiture Period, if you leave your employment with Procter
& Gamble for any reason other than: (i) Disability; (ii) Special Separation; or
(iii) retirement in accordance with the provisions of any appropriate retirement
plan of Procter & Gamble, your Original Settlement Date will automatically and
immediately become, without any further action by you or the Company, the date
of your termination of employment. In the event of your Disability or Special
Separation during the Post-Forfeiture Period, unless otherwise agreed to in
writing by the Company, your Original Settlement Date will automatically and
immediately become, without any further action by you or the Company, the date
of your Disability or Special Separation, as applicable. In the event of your
retirement in accordance with the provisions of any appropriate retirement plan
of Procter & Gamble during the Post-Forfeiture Period, you will retain your
Restricted Stock Units subject to the Plan and these Terms and Conditions.
(d) Upon your death or the occurrence of a Change in Control at any time while
you hold Restricted Stock Units and/or Dividend Equivalents, your Original
Settlement Date will automatically and immediately become, without any further
action by you or the Company, the date of your death or of the Change in
Control, as applicable.
(e) From time to time, the Company and/or the Committee may establish procedures
with which you must comply in order to accept an award of Restricted Stock
Units, or to settle your Restricted Stock Units, including requiring you to do
so by means of electronic signature, or charging you an administrative fee for
doing so.
(f) Once your Restricted Stock Units have been settled by delivery to you of an
equivalent number of shares of Common Stock, the Restricted Stock Units will
have no further value, force or effect and you will cease to receive Dividend
Equivalents associated with the Restricted Stock Units.
3. Confidentiality and Non-Competition
(a) In order to better protect the goodwill of Procter & Gamble and to prevent
the disclosure of Procter & Gamble’s trade secrets and confidential information,
and thereby help ensure the long-term success of Procter & Gamble’s business, in
consideration of your being awarded Restricted Stock Units, you (without prior
written consent of Procter & Gamble), will not engage in any activity or provide
any services, whether as a director, manager, supervisor, employee, advisor,
consultant or otherwise, for a period of three (3) years following the date your
employment with Procter & Gamble is terminated in connection with the
manufacture, development, advertising, promotion, or sale of any product which
is the same as or similar to or competitive with any products of Procter &
Gamble (including both existing products as well as products known to you, as a
consequence of your employment with Procter & Gamble, to be in development):

 

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(i) with respect to which your work has been directly concerned at any time
during the two (2) years preceding the termination of your employment with
Procter & Gamble; or
(ii) with respect to which, during the two (2) years preceding the termination
of your employment with Procter & Gamble, you, as a consequence of your job
performance and duties, acquired knowledge of trade secrets or other
confidential information of Procter & Gamble.
For purposes of this Section 3(a), it will be conclusively presumed that you
have knowledge of information you were directly exposed to through actual
receipt or review of memoranda or documents containing such information, or
through attendance at meetings at which such information was discussed or
disclosed.
(b) The provisions of Section 3(a) are not in lieu of, but are in addition to
your continuing obligation (which you acknowledge by accepting an award of
Restricted Stock Units) to not use or disclose Procter & Gamble’s trade secrets
or confidential information known to you until any particular trade secret or
confidential information becomes generally known (through no fault of yours). As
used in this Section 3(b), “generally known” means known throughout the domestic
United States industry or, if you have job responsibilities partially or
entirely outside of the United States, the appropriate domestic United States
and/or appropriate foreign country or countries’ industry(ies). Information
regarding products in development, in test marketing, or being marketed or
promoted in a discrete geographic region, which information Procter & Gamble is
considering for broader use, will not be deemed to be “generally known” until
such broader use is actually commercially implemented. As used in this Section,
“trade secrets or other confidential information” also includes personnel
knowledge about a manager, or managers, of Procter & Gamble or its subsidiaries
gained in the course of your employment with Procter & Gamble or its
subsidiaries (including personnel ratings or rankings, manager or peer
evaluations, performance records, special skills or abilities, compensation,
work and development plans, training, nature of specific project and work
assignments, or specialties developed as a result of such assignments) which
directly or indirectly affords you a confidential basis to solicit, encourage,
or participate in soliciting any manager, or managers, of Procter & Gamble or
any subsidiary to terminate his or her relationship with Procter & Gamble or
that subsidiary.
(c) By accepting an award of Restricted Stock Units, you agree that, if you
were, without authority, to use or disclose Procter & Gamble’s trade secrets or
confidential information or threaten to do so, Procter & Gamble would be
entitled to injunctive and other appropriate relief to prevent you from doing
so. You further agree that the harm caused to Procter & Gamble by the breach or
anticipated breach of this Section 3(c) is, by its nature, irreparable because,
among other things, it is not readily susceptible of proof as to the monetary
harm that would ensue. You agree that any interim or final equitable relief
entered by a court of competent jurisdiction will, at the request of Procter &
Gamble, be entered on consent and enforced by any court having jurisdiction over
you, without prejudice to any rights you or Procter & Gamble may have to appeal
from the proceedings which resulted in any grant of such relief.
(d) If any of the provisions contained in Sections 3(a) through (c) are for any
reason, whether by application of existing law or law which may develop after
your acceptance of an award of Restricted Stock Units, determined by a court of
competent jurisdiction to be overly broad as to scope of activity, duration, or
territory, then by accepting an award of Restricted Stock Units you agree to
join Procter & Gamble in requesting such court to construe such provision by
limiting or reducing it so as to be enforceable to the extent compatible with
then-applicable law. If any one or more of the provisions contained in

 

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Section 3(a) through (c) are determined by a court of competent jurisdiction to
be invalid, void or unenforceable, then the remainder of the provisions will
remain in full force and effect and will not be affected, impaired or
invalidated in any way.
4. Dividend Equivalents.
     As a holder of Restricted Stock Units, during the period from the Grant
Date until the Original Settlement Date, each time a cash dividend or other cash
distribution is paid with respect to Common Stock, you will receive additional
Restricted Stock Units (“Dividend Equivalents”). The number of such additional
Restricted Stock Units will be determined as follows: multiply the number of
Restricted Stock Units currently held by the per share amount of the cash
dividend or other cash distribution on the Common Stock, and then divide the
result by the price of the Common Stock on the date of the dividend or
distribution. These Dividend Equivalent Restricted Stock Units will be subject
to the same terms and conditions as the original Restricted Stock Units that
gave rise to them, including forfeiture and settlement terms, except that if
there is a fractional number of Dividend Equivalent Restricted Stock Units on
the date they are to be settled, you will receive one share of Common Stock for
the fractional Dividend Equivalent Restricted Stock Units.
5. Voting and Other Shareholder Rights.
     A Restricted Stock Unit is not a share of Common Stock, and thus you are
not entitled to any voting, dividend or other rights as a shareholder of the
Company with respect to the Restricted Stock Units you hold.
6. Adjustments in Case of Stock Dividends, Stock Splits, Etc.
     In the event of a future reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger, consolidation, rights offering,
share exchange, reclassification, distribution, spin-off, or other change
affecting the corporate structure, capitalization or Common Stock, the number of
Restricted Stock Units you hold will be adjusted appropriately and equitably to
prevent dilution or enlargement of your rights.
7. Tax Withholding.
     To the extent Procter & Gamble is required to withhold federal, state,
local or foreign taxes in connection with your Restricted Stock Units or
Dividend Equivalents, the Committee may require you to make such arrangements as
Procter & Gamble may deem appropriate for the payment of such taxes required to
be withheld, including without limitation, relinquishment of some of the shares
of Common Stock that would otherwise be given to you. However, regardless of any
action taken by Procter & Gamble with respect to any income tax, social
insurance, payroll tax, or other tax, by accepting a Restricted Stock Unit or
Dividend Equivalent, you acknowledge that the ultimate liability for any such
tax owed by you is and remains your responsibility, and that Procter & Gamble
makes no representations about the tax treatment of your Restricted Stock Units
or Dividend Equivalents, and does not commit to structure any aspect of the
Restricted Stock Units or Dividend Equivalents to reduce or eliminate your tax
liability.
8. Suspension Periods and Termination.
     The Company reserves the right from time to time to temporarily suspend
your right to settle your Restricted Stock Units for shares of Common Stock
where such suspension is deemed by the Company as necessary or appropriate.

 

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9. Procter & Gamble Right to Terminate Employment and Other Remedies.
(a) Nothing in these Terms and Conditions, or the fact that you have been
awarded Restricted Stock Units, affects in any way the right or power of Procter
& Gamble to terminate your employment at any time for any reason, with or
without cause, or precludes Procter & Gamble from taking any action or enforcing
any remedy available to it with respect to any action or conduct on your part.
Without limiting the previous sentence, the Committee may, for example, suspend
or terminate any outstanding Restricted Stock Units for actions taken by you if
the Committee determines that you have acted significantly contrary to the best
interests of Procter & Gamble or its subsidiaries. For purposes of this
paragraph, an action taken “significantly contrary to the best interests of
Procter & Gamble or its subsidiaries” includes without limitation any action
taken or threatened by you that the Committee determines has, or is reasonably
likely to have, a significant adverse impact on the reputation, goodwill,
stability, operation, personnel retention and management, or business of Procter
& Gamble or any subsidiary. This paragraph is in addition to any remedy Procter
& Gamble or a subsidiary may have at law or in equity, including without
limitation injunctive and other appropriate relief.
(b) By accepting a Restricted Stock Unit, you acknowledge that: (i) the Plan is
established voluntarily by The Procter & Gamble Company, is discretionary in
nature, and may be amended, suspended or terminated at any time; (ii) the award
of Restricted Stock Units is voluntary and occasional and does not create any
contractual or other right to receive future awards of Restricted Stock Units,
or benefits in lieu of Restricted Stock Units, even if Restricted Stock Units
have been awarded repeatedly in the past; (iii) all decisions with respect to
future Restricted Stock Unit awards, if any, will be at the sole discretion of
the Company; (iv) your participation in the Plan is voluntary; (v) Restricted
Stock Units are an extraordinary item and not part of normal or expected
compensation or salary for any purpose, including without limitation calculating
any termination, severance, resignation, redundancy, or end-of-service payments,
bonuses, long-service awards, pension or retirement benefits or similar
payments; (vi) in the event that your employer is not the Company, the award of
Restricted Stock Units will not be interpreted to form an employment
relationship with the Company; and, furthermore, the award of Restricted Stock
Units will not be interpreted to form an employment contract with any Procter &
Gamble entity; (vii) the future value of Common Stock is unknown and cannot be
predicted with certainty; and (viii) no claim or entitlement to compensation or
damages arises from termination or forfeiture of Restricted Stock Units, or
diminution in value of Restricted Stock Units or Common Stock received in
settlement thereof, and you irrevocably release Procter & Gamble from any such
claim that may arise.
10. Data Privacy.
     By accepting a Restricted Stock Unit, you explicitly and unambiguously
consent to the collection, use and transfer, in electronic or other form, of
your personal data as described in this document by and among, as applicable,
any Procter & Gamble entity or third party for the purpose of implementing,
administering and managing your participation in the Plan. You understand that
Procter & Gamble holds certain personal information about you, including without
limitation your name, home address and telephone number, date of birth, social
insurance number or other identification number, salary, nationality, job title,
any shares of stock or directorships held in a Procter & Gamble entity, details
of all options, Restricted Stock Units, or any other entitlement to shares of
stock awarded, canceled, exercised, vested, unvested or outstanding in your
favor, for the purpose of implementing, administering and managing the Plan
(“Data”). You understand that Data may be transferred to any third parties
assisting in the implementation, administration and management of the Plan, that
these recipients may be

 

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located in your country or elsewhere, and that the recipient’s country may have
different data privacy laws and protections than your country. You understand
that you may request a list with the names and addresses of any potential
recipients of Data by contacting your local human resources representative. You
authorize the recipients to receive, possess, use, retain and transfer the Data,
in electronic or other form, for the purposes of implementing, administering and
managing your participation in the Plan, including any requisite transfer of
such Data to any broker or other third party with whom you may elect to deposit
any shares of Common Stock in connection with the settlement of your Restricted
Stock Units. You understand that Data will be held only as long as is necessary
to implement, administer and manage your participation in the plan. You
understand that you may, at any time, view Data, request additional information
about the storage and processing of Data, require any necessary amendments to
Data, or refuse or withdraw the consents contained in this paragraph, in any
case without cost, by contacting in writing your local human resources
representative. You understand, however, that refusing or withdrawing your
consent may affect your ability to participate in the Plan. For more information
on the consequences of your refusal to consent or withdrawal of consent, you
understand that you may contact your local human resources representative.
11. Notices.
(a) Any notice to Procter & Gamble that is required or appropriate with respect
to Restricted Stock Units held by you must be in writing and addressed to:

     
 
  The Procter & Gamble Company
 
  ATTN: Corporate Secretary’s Office
 
  P.O. Box 599
 
  Cincinnati, OH 45201

or such other address as Procter & Gamble may from time to time provide to you
in writing.
(b) Any notice to you that is required or appropriate with respect to Restricted
Stock Units held or to be awarded to you will be provided to you in written or
electronic form at any physical or electronic mail address for you that is on
file with Procter & Gamble.
12. Successors and Assigns.
     These Terms and Conditions are binding on, and inure to the benefit of,
(a) the Company and its successors and assigns; and (b) you and, if applicable,
the representative of your estate.
13. Governing Law.
     The validity, interpretation, performance and enforcement of these Terms
and Conditions, the Plan and your Restricted Stock Units will be governed by the
laws of the State of Ohio, U.S.A. without giving effect to any other
jurisdiction’s conflicts of law principles. With respect to any dispute
concerning these Terms and Conditions, the Plan and your Restricted Stock Units,
you consent to the exclusive jurisdiction of the federal or state courts located
in Hamilton County, Ohio, U.S.A.
14. The Plan.
     All Restricted Stock Units awarded to you have been awarded under the Plan.
Certain provisions of the Plan may have been repeated or emphasized in these
Terms and Conditions;

 

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however, all terms of the Plan apply to you and your Restricted Stock Units
whether or not they have been called out in these Terms and Conditions.
15. Effect of These Terms and Conditions.
     These Terms and Conditions and the terms of the Plan, which are
incorporated herein by reference, describe the contractual rights awarded to you
in the form of Restricted Stock Units, and the obligations imposed on you in
connection with those rights. No right exists with respect to Restricted Stock
Units except as described in these Terms and Conditions and the Plan.

 

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Appendix 5   Form RTN2

[INSERT DATE]
[INSERT NAME]
Subject: Award of Restricted Stock Units
This is to advise you that The Procter & Gamble Company, an Ohio corporation, is
awarding you with Restricted Stock Units, on the dates and in the amounts listed
below, pursuant to The Procter & Gamble 2001 Stock and Incentive Compensation
Plan, and subject to the attached Statement of Terms and Conditions Form RTN2.

     
Grant Date:
  [INSERT DATE OF GRANT]
Forfeiture Date:
  [INSERT DATE FORFEITURE ENDS]
Original Settlement Date:
  [INSERT DATE RSUs BECOME SHARES]
Number of Restricted Stock Units:
  [INSERT NUMBER GRANTED]

Paragraph 3(a) of Statement of Terms and Conditions Form RTN2 [is/is not]
waived.
THE PROCTER & GAMBLE COMPANY

James J. Johnson, Secretary
For the Compensation Committee

o   I hereby accept the Award of Restricted Stock Units set forth above in
accordance with and subject to the terms of The Procter & Gamble 2001 Stock and
Incentive Compensation Plan and the attached Statement of Terms and Conditions
for Restricted Stock Units, with which I am familiar. I agree that the Award of
Restricted Stock Units, The Procter & Gamble 2001 Stock and Incentive
Compensation Plan, and the attached Statement of Terms and Conditions for
Restricted Stock Units together constitute an agreement between the Company and
me in accordance with the terms thereof and hereof, and I further agree that any
legal action related to this Award of Restricted Stock Units may be brought in
any federal or state court located in Hamilton County, Ohio, USA, and I hereby
accept the jurisdiction of these courts and consent to service of process from
said courts solely for legal actions related to this Award of Restricted Stock
Units.   o   I hereby reject the Award of Restricted Stock Units set forth
above.

                   
 
Date  
 
Signature  
 
P&G E-mail Address

 

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THE PROCTER & GAMBLE COMPANY
STATEMENT OF TERMS AND CONDITIONS FOR RESTRICTED STOCK UNITS
THE PROCTER & GAMBLE 2001 STOCK AND INCENTIVE COMPENSATION PLAN
     The Restricted Stock Units awarded to you as set forth in the letter you
received from the Company (your “Award Letter”), and your ownership thereof, are
subject to the following terms and conditions.
1. Definitions.
     For purposes of this Statement of Terms and Conditions for Restricted Stock
Units (“Terms and Conditions”), all capitalized terms not defined in these Terms
and Conditions will have the meanings described in The Procter & Gamble 2001
Stock and Incentive Compensation Plan (the “Plan”), and the following terms will
have the following meanings.
(a) “Data” has the meaning described in Section 9;
(b) “Disability” means termination of employment under the permanent disability
provision of any retirement plan of Procter & Gamble;
(c) “Forfeiture Date” is the date identified as such in your Award Letter;
(d) “Forfeiture Period” means the period from the Grant Date until the
Forfeiture Date.
(e) “Grant Date” means the date a Restricted Stock Unit was awarded to you, as
identified in your Award Letter;
(f) “Original Settlement Date” is the date identified as such in your Award
Letter, as adjusted, if applicable, by Section 2;
(g) “Post-Forfeiture Period” means the period from the Forfeiture Date until the
Original Settlement Date;
(h) “Procter & Gamble” means the Company and/or its Subsidiaries;
(i) “Restricted Stock Unit” means an unfunded, unsecured promise by the Company,
in accordance with these Terms and Conditions and the provisions of the Plan, to
issue to you one share of Common Stock on the Original Settlement Date.
2. Transfer and Restrictions.
(a) Neither Restricted Stock Units nor your interest in them may be sold,
exchanged, transferred, pledged, hypothecated, given or otherwise disposed of by
you at any time, except by will or by the laws of descent and distribution. Any
attempted transfer of a Restricted Stock Unit, whether voluntary or involuntary
on your part, will result in the immediate forfeiture to the Company, and
cancellation, of the Restricted Stock Unit.
(b) During the Forfeiture Period, your Restricted Stock Units will be forfeited
and cancelled if you leave your employment with Procter & Gamble for any reason,
except due to: (i) your Disability; or (ii) in certain circumstances, your
Special Separation. In

 

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the event of your Disability during the Forfeiture Period, unless otherwise
agreed to in writing by the Company, your Original Settlement Date will
automatically and immediately become, without any further action by you or the
Company, the date of your Disability. In the event of your Special Separation
during the Forfeiture Period, your Restricted Stock Units will be forfeited and
cancelled unless otherwise agreed to in writing by the Company.
(c) During the Post-Forfeiture Period, if you leave your employment with Procter
& Gamble for any reason other than: (i) Disability; (ii) Special Separation; or
(iii) retirement in accordance with the provisions of any appropriate retirement
plan of Procter & Gamble, your Original Settlement Date will automatically and
immediately become, without any further action by you or the Company, the date
of your termination of employment. In the event of your Disability or Special
Separation during the Post-Forfeiture Period, unless otherwise agreed to in
writing by the Company, your Original Settlement Date will automatically and
immediately become, without any further action by you or the Company, the date
of your Disability or Special Separation, as applicable. In the event of your
retirement in accordance with the provisions of any appropriate retirement plan
of Procter & Gamble during the Post-Forfeiture Period, you will retain your
Restricted Stock Units subject to the Plan and these Terms and Conditions.
(d) Upon your death or the occurrence of a Change in Control at any time while
you hold Restricted Stock Units, your Original Settlement Date will
automatically and immediately become, without any further action by you or the
Company, the date of your death or of the Change in Control, as applicable.
(e) From time to time, the Company and/or the Committee may establish procedures
with which you must comply in order to accept an award of Restricted Stock
Units, or to settle your Restricted Stock Units, including requiring you to do
so by means of electronic signature, or charging you an administrative fee for
doing so.
(f) Once your Restricted Stock Units have been settled by delivery to you of an
equivalent number of shares of Common Stock, the Restricted Stock Units will
have no further value, force or effect.
3. Confidentiality and Non-Competition
(a) In order to better protect the goodwill of Procter & Gamble and to prevent
the disclosure of Procter & Gamble’s trade secrets and confidential information,
and thereby help ensure the long-term success of Procter & Gamble’s business, in
consideration of your being awarded Restricted Stock Units, you (without prior
written consent of Procter & Gamble), will not engage in any activity or provide
any services, whether as a director, manager, supervisor, employee, advisor,
consultant or otherwise, for a period of three (3) years following the date your
employment with Procter & Gamble is terminated in connection with the
manufacture, development, advertising, promotion, or sale of any product which
is the same as or similar to or competitive with any products of Procter &
Gamble (including both existing products as well as products known to you, as a
consequence of your employment with Procter & Gamble, to be in development):
(i) with respect to which your work has been directly concerned at any time
during the two (2) years preceding the termination of your employment with
Procter & Gamble; or
(ii) with respect to which, during the two (2) years preceding the termination
of your employment with Procter & Gamble, you, as a consequence of your job

 

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performance and duties, acquired knowledge of trade secrets or other
confidential information of Procter & Gamble.
For purposes of this Section 3(a), it will be conclusively presumed that you
have knowledge of information you were directly exposed to through actual
receipt or review of memoranda or documents containing such information, or
through attendance at meetings at which such information was discussed or
disclosed.
(b) The provisions of Section 3(a) are not in lieu of, but are in addition to
your continuing obligation (which you acknowledge by accepting an award of
Restricted Stock Units) to not use or disclose Procter & Gamble’s trade secrets
or confidential information known to you until any particular trade secret or
confidential information becomes generally known (through no fault of yours). As
used in this Section 3(b), “generally known” means known throughout the domestic
United States industry or, if you have job responsibilities partially or
entirely outside of the United States, the appropriate domestic United States
and/or appropriate foreign country or countries’ industry(ies). Information
regarding products in development, in test marketing, or being marketed or
promoted in a discrete geographic region, which information Procter & Gamble is
considering for broader use, will not be deemed to be “generally known” until
such broader use is actually commercially implemented. As used in this Section,
“trade secrets or other confidential information” also includes personnel
knowledge about a manager, or managers, of Procter & Gamble or its subsidiaries
gained in the course of your employment with Procter & Gamble or its
subsidiaries (including personnel ratings or rankings, manager or peer
evaluations, performance records, special skills or abilities, compensation,
work and development plans, training, nature of specific project and work
assignments, or specialties developed as a result of such assignments) which
directly or indirectly affords you a confidential basis to solicit, encourage,
or participate in soliciting any manager, or managers, of Procter & Gamble or
any subsidiary to terminate his or her relationship with Procter & Gamble or
that subsidiary.
(c) By accepting an award of Restricted Stock Units, you agree that, if you
were, without authority, to use or disclose Procter & Gamble’s trade secrets or
confidential information or threaten to do so, Procter & Gamble would be
entitled to injunctive and other appropriate relief to prevent you from doing
so. You further agree that the harm caused to Procter & Gamble by the breach or
anticipated breach of this Section 3(c) is, by its nature, irreparable because,
among other things, it is not readily susceptible of proof as to the monetary
harm that would ensue. You agree that any interim or final equitable relief
entered by a court of competent jurisdiction will, at the request of Procter &
Gamble, be entered on consent and enforced by any court having jurisdiction over
you, without prejudice to any rights you or Procter & Gamble may have to appeal
from the proceedings which resulted in any grant of such relief.
(d) If any of the provisions contained in Sections 3(a) through (c) are for any
reason, whether by application of existing law or law which may develop after
your acceptance of an award of Restricted Stock Units, determined by a court of
competent jurisdiction to be overly broad as to scope of activity, duration, or
territory, then by accepting an award of Restricted Stock Units you agree to
join Procter & Gamble in requesting such court to construe such provision by
limiting or reducing it so as to be enforceable to the extent compatible with
then-applicable law. If any one or more of the provisions contained in Section
3(a) through (c) are determined by a court of competent jurisdiction to be
invalid, void or unenforceable, then the remainder of the provisions will remain
in full force and effect and will not be affected, impaired or invalidated in
any way.

 

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4. Voting and Other Shareholder Rights.
     A Restricted Stock Unit is not a share of Common Stock, and thus you are
not entitled to any voting, dividend or other rights as a shareholder of the
Company with respect to the Restricted Stock Units you hold.
5. Adjustments in Case of Stock Splits, Etc.
     In the event of a future reorganization, recapitalization, stock split,
combination of shares, merger, consolidation, rights offering, share exchange,
reclassification, distribution, spin-off, or other change affecting the
corporate structure, capitalization or Common Stock, the number of Restricted
Stock Units you hold will be adjusted appropriately and equitably to prevent
dilution or enlargement of your rights.
6. Tax Withholding.
     To the extent Procter & Gamble is required to withhold federal, state,
local or foreign taxes in connection with your Restricted Stock Units, the
Committee may require you to make such arrangements as Procter & Gamble may deem
appropriate for the payment of such taxes required to be withheld, including
without limitation, relinquishment of some of the shares of Common Stock that
would otherwise be given to you. However, regardless of any action taken by
Procter & Gamble with respect to any income tax, social insurance, payroll tax,
or other tax, by accepting a Restricted Stock Unit, you acknowledge that the
ultimate liability for any such tax owed by you is and remains your
responsibility, and that Procter & Gamble makes no representations about the tax
treatment of your Restricted Stock Units, and does not commit to structure any
aspect of the Restricted Stock Units to reduce or eliminate your tax liability.
7. Suspension Periods and Termination.
     The Company reserves the right from time to time to temporarily suspend
your right to settle your Restricted Stock Units for shares of Common Stock
where such suspension is deemed by the Company as necessary or appropriate.
8. Procter & Gamble Right to Terminate Employment and Other Remedies.
(a) Nothing in these Terms and Conditions, or the fact that you have been
awarded Restricted Stock Units, affects in any way the right or power of Procter
& Gamble to terminate your employment at any time for any reason, with or
without cause, or precludes Procter & Gamble from taking any action or enforcing
any remedy available to it with respect to any action or conduct on your part.
Without limiting the previous sentence, the Committee may, for example, suspend
or terminate any outstanding Restricted Stock Units for actions taken by you if
the Committee determines that you have acted significantly contrary to the best
interests of Procter & Gamble or its subsidiaries. For purposes of this
paragraph, an action taken “significantly contrary to the best interests of
Procter & Gamble or its subsidiaries” includes without limitation any action
taken or threatened by you that the Committee determines has, or is reasonably
likely to have, a significant adverse impact on the reputation, goodwill,
stability, operation, personnel retention and management, or business of Procter
& Gamble or any subsidiary. This paragraph is in addition to any remedy Procter
& Gamble or a subsidiary may have at law or in equity, including without
limitation injunctive and other appropriate relief.
(b) By accepting a Restricted Stock Unit, you acknowledge that: (i) the Plan is
established voluntarily by The Procter & Gamble Company, is discretionary in
nature,

 

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and may be amended, suspended or terminated at any time; (ii) the award of
Restricted Stock Units is voluntary and occasional and does not create any
contractual or other right to receive future awards of Restricted Stock Units,
or benefits in lieu of Restricted Stock Units, even if Restricted Stock Units
have been awarded repeatedly in the past; (iii) all decisions with respect to
future Restricted Stock Unit awards, if any, will be at the sole discretion of
the Company; (iv) your participation in the Plan is voluntary; (v) Restricted
Stock Units are an extraordinary item and not part of normal or expected
compensation or salary for any purpose, including without limitation calculating
any termination, severance, resignation, redundancy, or end-of-service payments,
bonuses, long-service awards, pension or retirement benefits or similar
payments; (vi) in the event that your employer is not the Company, the award of
Restricted Stock Units will not be interpreted to form an employment
relationship with the Company; and, furthermore, the award of Restricted Stock
Units will not be interpreted to form an employment contract with any Procter &
Gamble entity; (vii) the future value of Common Stock is unknown and cannot be
predicted with certainty; and (viii) no claim or entitlement to compensation or
damages arises from termination or forfeiture of Restricted Stock Units, or
diminution in value of Restricted Stock Units or Common Stock received in
settlement thereof, and you irrevocably release Procter & Gamble from any such
claim that may arise.
9. Data Privacy.
     By accepting a Restricted Stock Unit, you explicitly and unambiguously
consent to the collection, use and transfer, in electronic or other form, of
your personal data as described in this document by and among, as applicable,
any Procter & Gamble entity or third party for the purpose of implementing,
administering and managing your participation in the Plan. You understand that
Procter & Gamble holds certain personal information about you, including without
limitation your name, home address and telephone number, date of birth, social
insurance number or other identification number, salary, nationality, job title,
any shares of stock or directorships held in a Procter & Gamble entity, details
of all options, Restricted Stock Units, or any other entitlement to shares of
stock awarded, canceled, exercised, vested, unvested or outstanding in your
favor, for the purpose of implementing, administering and managing the Plan
(“Data”). You understand that Data may be transferred to any third parties
assisting in the implementation, administration and management of the Plan, that
these recipients may be located in your country or elsewhere, and that the
recipient’s country may have different data privacy laws and protections than
your country. You understand that you may request a list with the names and
addresses of any potential recipients of Data by contacting your local human
resources representative. You authorize the recipients to receive, possess, use,
retain and transfer the Data, in electronic or other form, for the purposes of
implementing, administering and managing your participation in the Plan,
including any requisite transfer of such Data to any broker or other third party
with whom you may elect to deposit any shares of Common Stock in connection with
the settlement of your Restricted Stock Units. You understand that Data will be
held only as long as is necessary to implement, administer and manage your
participation in the plan. You understand that you may, at any time, view Data,
request additional information about the storage and processing of Data, require
any necessary amendments to Data, or refuse or withdraw the consents contained
in this paragraph, in any case without cost, by contacting in writing your local
human resources representative. You understand, however, that refusing or
withdrawing your consent may affect your ability to participate in the Plan. For
more information on the consequences of your refusal to consent or withdrawal of
consent, you understand that you may contact your local human resources
representative.
10. Notices.
(a) Any notice to Procter & Gamble that is required or appropriate with respect
to Restricted Stock Units held by you must be in writing and addressed to:

 

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The Procter & Gamble Company
ATTN: Corporate Secretary’s Office
P.O. Box 599
Cincinnati, OH 45201
or such other address as Procter & Gamble may from time to time provide to you
in writing.
(b) Any notice to you that is required or appropriate with respect to Restricted
Stock Units held or to be awarded to you will be provided to you in written or
electronic form at any physical or electronic mail address for you that is on
file with Procter & Gamble.
11. Successors and Assigns.
     These Terms and Conditions are binding on, and inure to the benefit of,
(a) the Company and its successors and assigns; and (b) you and, if applicable,
the representative of your estate.
12. Governing Law.
     The validity, interpretation, performance and enforcement of these Terms
and Conditions, the Plan and your Restricted Stock Units will be governed by the
laws of the State of Ohio, U.S.A. without giving effect to any other
jurisdiction’s conflicts of law principles. With respect to any dispute
concerning these Terms and Conditions, the Plan and your Restricted Stock Units,
you consent to the exclusive jurisdiction of the federal or state courts located
in Hamilton County, Ohio, U.S.A.
13. The Plan.
     All Restricted Stock Units awarded to you have been awarded under the Plan.
Certain provisions of the Plan may have been repeated or emphasized in these
Terms and Conditions; however, all terms of the Plan apply to you and your
Restricted Stock Units whether or not they have been called out in these Terms
and Conditions.
14. Effect of These Terms and Conditions.
     These Terms and Conditions and the terms of the Plan, which are
incorporated herein by reference, describe the contractual rights awarded to you
in the form of Restricted Stock Units, and the obligations imposed on you in
connection with those rights. No right exists with respect to Restricted Stock
Units except as described in these Terms and Conditions and the Plan.

 

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Appendix 6
      Form OPN
 
       
 
  [INSERT DATE]    

[INSERT NAME]
Subject: Award of Restricted Stock Units
This is to advise you that The Procter & Gamble Company, an Ohio corporation, is
awarding you with Restricted Stock Units, on the dates and in the amounts listed
below, pursuant to The Procter & Gamble 2001 Stock and Incentive Compensation
Plan, and subject to the attached Statement of Terms and Conditions Form OPN.

         
Grant Date:
  [INSERT DATE OF GRANT]  
Original Settlement Date:
  [INSERT DATE RSUs BECOME SHARES]  
Number of Restricted Stock Units:
  [INSERT NUMBER GRANTED]

Paragraph 3(a) of Statement of Terms and Conditions Form OPN [is/is not] waived.
As you will see from the Statement of Terms and Conditions Form OPN, under
certain circumstances you may agree with The Procter & Gamble Company to delay
the settlement of your Restricted Stock Units beyond the Original Settlement
Date. You may want to consult your personal tax advisor before making a decision
about this matter.

            THE PROCTER & GAMBLE COMPANY

James J. Johnson, Secretary
For the Compensation Committee
   

o   I hereby accept the Award of Restricted Stock Units set forth above in
accordance with and subject to the terms of The Procter & Gamble 2001 Stock and
Incentive Compensation Plan and the attached Statement of Terms and Conditions
for Restricted Stock Units, with which I am familiar. I agree that the Award of
Restricted Stock Units, The Procter & Gamble 2001 Stock and Incentive
Compensation Plan, and the attached Statement of Terms and Conditions for
Restricted Stock Units together constitute an agreement between the Company and
me in accordance with the terms thereof and hereof, and I further agree that any
legal action related to this Award of Restricted Stock Units may be brought in
any federal or state court located in Hamilton County, Ohio, USA, and I hereby
accept the jurisdiction of these courts and consent to service of process from
said courts solely for legal actions related to this Award of Restricted Stock
Units.   o   I hereby reject the Award of Restricted Stock Units set forth
above.

             
 
           
 
           
Date
  Signature   P&G E-mail Address    

 

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THE PROCTER & GAMBLE COMPANY
STATEMENT OF TERMS AND CONDITIONS FOR RESTRICTED STOCK UNITS
THE PROCTER & GAMBLE 2001 STOCK AND INCENTIVE COMPENSATION PLAN
     The Restricted Stock Units awarded to you as set forth in the letter you
received from the Company (your “Award Letter”), and your ownership thereof, are
subject to the following terms and conditions.

1.   Definitions.

     For purposes of this Statement of Terms and Conditions for Restricted Stock
Units (“Terms and Conditions”), all capitalized terms not defined in these Terms
and Conditions will have the meanings described in The Procter & Gamble 2001
Stock and Incentive Compensation Plan (the “Plan”), and the following terms will
have the following meanings.
(a) “Agreed Settlement Date” has the meaning described in Section 2(b);
(b) “Data” has the meaning described in Section 10;
(c) “Disability” means termination of employment under the permanent disability
provision of any retirement plan of Procter & Gamble;
(d) “Dividend Equivalents” has the meaning described in Section 4;
(e) “Grant Date” means the date a Restricted Stock Unit was awarded to you, as
identified in your Award Letter;
(f) “Original Settlement Date” is the date identified as such in your Award
Letter, as adjusted, if applicable, by Section 2;
(g) “Procter & Gamble” means the Company and/or its Subsidiaries;
(h) “Restricted Stock Unit” means an unfunded, unsecured promise by the Company,
in accordance with these Terms and Conditions and the provisions of the Plan, to
issue to you one share of Common Stock on the later of the Original Settlement
Date or the Agreed Settlement Date.
(i) “Settlement Period” means the period from the Grant Date until the later of
the Original Settlement Date or the Agreed Settlement Date.

2.   Transfer and Restrictions.

(a) Neither Restricted Stock Units nor your interest in them may be sold,
exchanged, transferred, pledged, hypothecated, given or otherwise disposed of by
you at any time, except by will or by the laws of descent and distribution. Any
attempted transfer of a Restricted Stock Unit, whether voluntary or involuntary
on your part, will result in the immediate forfeiture to the Company, and
cancellation, of the Restricted Stock Unit (including all rights to Dividend
Equivalents).
(b) At any time at least one calendar year prior to the Original Settlement
Date, you and the Company may agree to postpone the date on which you are
entitled to receive

 

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one share of Common Stock for each Restricted Stock Unit you hold, according to
the deferral terms in place at the time, and provided the new date (the “Agreed
Settlement Date”) is at least five years from the Original Settlement Date.
During the Settlement Period, if you leave your employment with Procter & Gamble
for any reason other than: (i) Disability; (ii) Special Separation; or
(iii) retirement in accordance with the provisions of any appropriate retirement
plan of Procter & Gamble, your Original Settlement Date or Agreed Settlement
Date, as applicable, will automatically and immediately become, without any
further action by you or the Company, the date of your termination of
employment. In the event of your Disability or Special Separation during the
Settlement Period, unless otherwise agreed to in writing by the Company, your
Original Settlement Date or Agreed Settlement Date, as applicable, will
automatically and immediately become, without any further action by you or the
Company, the date of your Disability or Special Separation, as applicable. In
the event of your retirement in accordance with the provisions of any
appropriate retirement plan of Procter & Gamble during the Settlement Period,
you will retain your Restricted Stock Units subject to the Plan and these Terms
and Conditions.
(c) Upon your death or the occurrence of a Change in Control at any time while
you hold Restricted Stock Units and/or Dividend Equivalents, your Original
Settlement Date or Agreed Settlement Date, as applicable, will automatically and
immediately become, without any further action by you or the Company, the date
of your death or of the Change in Control, as applicable.
(d) From time to time, the Company and/or the Committee may establish procedures
with which you must comply in order to accept an award of Restricted Stock
Units, to agree to an Agreed Settlement Date, or to settle your Restricted Stock
Units, including requiring you to do so by means of electronic signature, or
charging you an administrative fee for doing so.
(e) Once your Restricted Stock Units have been settled by delivery to you of an
equivalent number of shares of Common Stock, the Restricted Stock Units will
have no further value, force or effect and you will cease to receive Dividend
Equivalents associated with the Restricted Stock Units.

3.   Confidentiality and Non-Competition

(a) In order to better protect the goodwill of Procter & Gamble and to prevent
the disclosure of Procter & Gamble’s trade secrets and confidential information,
and thereby help ensure the long-term success of Procter & Gamble’s business, in
consideration of your being awarded Restricted Stock Units, you (without prior
written consent of Procter & Gamble), will not engage in any activity or provide
any services, whether as a director, manager, supervisor, employee, advisor,
consultant or otherwise, for a period of three (3) years following the date your
employment with Procter & Gamble is terminated in connection with the
manufacture, development, advertising, promotion, or sale of any product which
is the same as or similar to or competitive with any products of Procter &
Gamble (including both existing products as well as products known to you, as a
consequence of your employment with Procter & Gamble, to be in development):
(i) with respect to which your work has been directly concerned at any time
during the two (2) years preceding the termination of your employment with
Procter & Gamble; or
(ii) with respect to which, during the two (2) years preceding the termination
of your employment with Procter & Gamble, you, as a consequence of your job

 

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performance and duties, acquired knowledge of trade secrets or other
confidential information of Procter & Gamble.
For purposes of this Section 3(a), it will be conclusively presumed that you
have knowledge of information you were directly exposed to through actual
receipt or review of memoranda or documents containing such information, or
through attendance at meetings at which such information was discussed or
disclosed.
(b) The provisions of Section 3(a) are not in lieu of, but are in addition to
your continuing obligation (which you acknowledge by accepting an award of
Restricted Stock Units) to not use or disclose Procter & Gamble’s trade secrets
or confidential information known to you until any particular trade secret or
confidential information becomes generally known (through no fault of yours). As
used in this Section 3(b), “generally known” means known throughout the domestic
United States industry or, if you have job responsibilities partially or
entirely outside of the United States, the appropriate domestic United States
and/or appropriate foreign country or countries’ industry(ies). Information
regarding products in development, in test marketing, or being marketed or
promoted in a discrete geographic region, which information Procter & Gamble is
considering for broader use, will not be deemed to be “generally known” until
such broader use is actually commercially implemented. As used in this Section,
“trade secrets or other confidential information” also includes personnel
knowledge about a manager, or managers, of Procter & Gamble or its subsidiaries
gained in the course of your employment with Procter & Gamble or its
subsidiaries (including personnel ratings or rankings, manager or peer
evaluations, performance records, special skills or abilities, compensation,
work and development plans, training, nature of specific project and work
assignments, or specialties developed as a result of such assignments) which
directly or indirectly affords you a confidential basis to solicit, encourage,
or participate in soliciting any manager, or managers, of Procter & Gamble or
any subsidiary to terminate his or her relationship with Procter & Gamble or
that subsidiary.
(c) By accepting an award of Restricted Stock Units, you agree that, if you
were, without authority, to use or disclose Procter & Gamble’s trade secrets or
confidential information or threaten to do so, Procter & Gamble would be
entitled to injunctive and other appropriate relief to prevent you from doing
so. You further agree that the harm caused to Procter & Gamble by the breach or
anticipated breach of this Section 3(c) is, by its nature, irreparable because,
among other things, it is not readily susceptible of proof as to the monetary
harm that would ensue. You agree that any interim or final equitable relief
entered by a court of competent jurisdiction will, at the request of Procter &
Gamble, be entered on consent and enforced by any court having jurisdiction over
you, without prejudice to any rights you or Procter & Gamble may have to appeal
from the proceedings which resulted in any grant of such relief.
(d) If any of the provisions contained in Sections 3(a) through (c) are for any
reason, whether by application of existing law or law which may develop after
your acceptance of an award of Restricted Stock Units, determined by a court of
competent jurisdiction to be overly broad as to scope of activity, duration, or
territory, then by accepting an award of Restricted Stock Units you agree to
join Procter & Gamble in requesting such court to construe such provision by
limiting or reducing it so as to be enforceable to the extent compatible with
then-applicable law. If any one or more of the provisions contained in Section
3(a) through (c) are determined by a court of competent jurisdiction to be
invalid, void or unenforceable, then the remainder of the provisions will remain
in full force and effect and will not be affected, impaired or invalidated in
any way.

 

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4. Dividend Equivalents.
     As a holder of Restricted Stock Units, during the Settlement period, each
time a cash dividend or other cash distribution is paid with respect to Common
Stock, you will receive additional Restricted Stock Units (“Dividend
Equivalents”). The number of such additional Restricted Stock Units will be
determined as follows: multiply the number of Restricted Stock Units currently
held by the per share amount of the cash dividend or other cash distribution on
the Common Stock, and then divide the result by the price of the Common Stock on
the date of the dividend or distribution. These Dividend Equivalent Restricted
Stock Units will be subject to the same terms and conditions as the original
Restricted Stock Units that gave rise to them, including forfeiture and
settlement terms, except that if there is a fractional number of Dividend
Equivalent Restricted Stock Units on the date they are to be settled, you will
receive one share of Common Stock for the fractional Dividend Equivalent
Restricted Stock Units.
5. Voting and Other Shareholder Rights.
     A Restricted Stock Unit is not a share of Common Stock, and thus you are
not entitled to any voting, dividend or other rights as a shareholder of the
Company with respect to the Restricted Stock Units you hold.
6. Adjustments in Case of Stock Dividends, Stock Splits, Etc.
     In the event of a future reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger, consolidation, rights offering,
share exchange, reclassification, distribution, spin-off, or other change
affecting the corporate structure, capitalization or Common Stock, the number of
Restricted Stock Units you hold will be adjusted appropriately and equitably to
prevent dilution or enlargement of your rights.
7. Tax Withholding.
     To the extent Procter & Gamble is required to withhold federal, state,
local or foreign taxes in connection with your Restricted Stock Units or
Dividend Equivalents, the Committee may require you to make such arrangements as
Procter & Gamble may deem appropriate for the payment of such taxes required to
be withheld, including without limitation, relinquishment of some of the shares
of Common Stock that would otherwise be given to you. However, regardless of any
action taken by Procter & Gamble with respect to any income tax, social
insurance, payroll tax, or other tax, by accepting a Restricted Stock Unit or
Dividend Equivalent, you acknowledge that the ultimate liability for any such
tax owed by you is and remains your responsibility, and that Procter & Gamble
makes no representations about the tax treatment of your Restricted Stock Units
or Dividend Equivalents, and does not commit to structure any aspect of the
Restricted Stock Units or Dividend Equivalents to reduce or eliminate your tax
liability.
8. Suspension Periods and Termination.
     The Company reserves the right from time to time to temporarily suspend
your right to settle your Restricted Stock Units for shares of Common Stock
where such suspension is deemed by the Company as necessary or appropriate.
9. Procter & Gamble Right to Terminate Employment and Other Remedies.
(a) Nothing in these Terms and Conditions, or the fact that you have been
awarded Restricted Stock Units, affects in any way the right or power of Procter
& Gamble to terminate your employment at any time for any reason, with or
without cause, or

 

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precludes Procter & Gamble from taking any action or enforcing any remedy
available to it with respect to any action or conduct on your part. Without
limiting the previous sentence, the Committee may, for example, suspend or
terminate any outstanding Restricted Stock Units for actions taken by you if the
Committee determines that you have acted significantly contrary to the best
interests of Procter & Gamble or its subsidiaries. For purposes of this
paragraph, an action taken “significantly contrary to the best interests of
Procter & Gamble or its subsidiaries” includes without limitation any action
taken or threatened by you that the Committee determines has, or is reasonably
likely to have, a significant adverse impact on the reputation, goodwill,
stability, operation, personnel retention and management, or business of Procter
& Gamble or any subsidiary. This paragraph is in addition to any remedy Procter
& Gamble or a subsidiary may have at law or in equity, including without
limitation injunctive and other appropriate relief.
(b) By accepting a Restricted Stock Unit, you acknowledge that: (i) the Plan is
established voluntarily by the Company, is discretionary in nature, and may be
amended, suspended or terminated at any time; (ii) the award of Restricted Stock
Units is voluntary and occasional and does not create any contractual or other
right to receive future awards of Restricted Stock Units, or benefits in lieu of
Restricted Stock Units, even if Restricted Stock Units have been awarded
repeatedly in the past; (iii) all decisions with respect to future Restricted
Stock Unit awards, if any, will be at the sole discretion of the Company; (iv)
your participation in the Plan is voluntary; (v) Restricted Stock Units are an
extraordinary item and not part of normal or expected compensation or salary for
any purpose, including without limitation calculating any termination,
severance, resignation, redundancy, or end-of-service payments, bonuses,
long-service awards, pension or retirement benefits or similar payments; (vi) in
the event that your employer is not the Company, the award of Restricted Stock
Units will not be interpreted to form an employment relationship with the
Company; and, furthermore, the award of Restricted Stock Units will not be
interpreted to form an employment contract with any Procter & Gamble entity;
(vii) the future value of Common Stock is unknown and cannot be predicted with
certainty; and (viii) no claim or entitlement to compensation or damages arises
from termination or forfeiture of Restricted Stock Units, or diminution in value
of Restricted Stock Units or Common Stock received in settlement thereof, and
you irrevocably release Procter & Gamble from any such claim that may arise.
10. Data Privacy.
     By accepting a Restricted Stock Unit, you explicitly and unambiguously
consent to the collection, use and transfer, in electronic or other form, of
your personal data as described in this document by and among, as applicable,
any Procter & Gamble entity or third party for the purpose of implementing,
administering and managing your participation in the Plan. You understand that
Procter & Gamble holds certain personal information about you, including without
limitation your name, home address and telephone number, date of birth, social
insurance number or other identification number, salary, nationality, job title,
any shares of stock or directorships held in a Procter & Gamble entity, details
of all options, Restricted Stock Units, or any other entitlement to shares of
stock awarded, canceled, exercised, vested, unvested or outstanding in your
favor, for the purpose of implementing, administering and managing the Plan
(“Data”). You understand that Data may be transferred to any third parties
assisting in the implementation, administration and management of the Plan, that
these recipients may be located in your country or elsewhere, and that the
recipient’s country may have different data privacy laws and protections than
your country. You understand that you may request a list with the names and
addresses of any potential recipients of Data by contacting your local human
resources representative. You authorize the recipients to 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 your participation in the Plan,
including any requisite transfer of such Data to any broker or other third party
with whom you may elect to deposit any shares of Common Stock in connection with
the settlement of your Restricted Stock Units. You understand that Data will be
held only as long as is necessary to implement, administer and manage your
participation in the plan. You understand that you may, at any time, view Data,
request additional information about the storage and processing of Data, require
any necessary amendments to Data, or refuse or withdraw the consents contained
in this paragraph, in any case without cost, by contacting in writing your local
human resources representative. You understand, however, that refusing or
withdrawing your consent may affect your ability to participate in the Plan. For
more information on the consequences of your refusal to consent or withdrawal of
consent, you understand that you may contact your local human resources
representative.
11. Notices.
(a) Any notice to Procter & Gamble that is required or appropriate with respect
to Restricted Stock Units held by you must be in writing and addressed to:
The Procter & Gamble Company
ATTN: Corporate Secretary’s Office
P.O. Box 599
Cincinnati, OH 45201
or such other address as Procter & Gamble may from time to time provide to you
in writing.
(b) Any notice to you that is required or appropriate with respect to Restricted
Stock Units held or to be awarded to you will be provided to you in written or
electronic form at any physical or electronic mail address for you that is on
file with Procter & Gamble.
12. Successors and Assigns.
     These Terms and Conditions are binding on, and inure to the benefit of,
(a) the Company and its successors and assigns; and (b) you and, if applicable,
the representative of your estate.
13. Governing Law.
     The validity, interpretation, performance and enforcements of these Terms
and Conditions, the Plan and your Restricted Stock Units will be governed by the
laws of the State of Ohio, U.S.A. without giving effect to any other
jurisdiction’s conflicts of law principles. With respect to any dispute
concerning these Terms and Conditions, the Plan and your Restricted Stock Units,
you consent to the exclusive jurisdiction of the federal or state courts located
in Hamilton County, Ohio, U.S.A.
14. The Plan.
     All Restricted Stock Units awarded to you have been awarded under the Plan.
Certain provisions of the Plan may have been repeated or emphasized in these
Terms and Conditions; however, all terms of the Plan apply to you and your
Restricted Stock Units whether or not they have been called out in these Terms
and Conditions.

 

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15. Effect of These Terms and Conditions.
     These Terms and Conditions and the terms of the Plan, which are
incorporated herein by reference, describe the contractual rights awarded to you
in the form of Restricted Stock Units, and the obligations imposed on you in
connection with those rights. No right exists with respect to Restricted Stock
Units except as described in these Terms and Conditions and the Plan.

 

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Appendix 7       Form KM

[INSERT DATE]
[INSERT NAME]

     
Subject:
  Award of Restricted Stock Units

This is to advise you that The Procter & Gamble Company, an Ohio corporation, is
awarding you with Restricted Stock Units, on the dates and in the amounts listed
below, pursuant to The Procter & Gamble 2001 Stock and Incentive Compensation
Plan, and subject to the attached Statement of Terms and Conditions Form KM.

         
 
  Grant Date:   [INSERT DATE OF GRANT]
 
  Forfeiture Date:   [INSERT DATE FORFEITURE ENDS]
 
  Original Settlement Date:   [INSERT DATE RSUs BECOME SHARES]
 
  Number of Restricted Stock Units:   [INSERT NUMBER GRANTED]
 
       
 
      THE PROCTER & GAMBLE COMPANY
 
       
 
      James J. Johnson, Secretary
 
      For the Compensation Committee

o   I hereby accept the Award of Restricted Stock Units set forth above in
accordance with and subject to the terms of The Procter & Gamble 2001 Stock and
Incentive Compensation Plan and the attached Statement of Terms and Conditions
for Restricted Stock Units, with which I am familiar. I agree that the Award of
Restricted Stock Units, The Procter & Gamble 2001 Stock and Incentive
Compensation Plan, and the attached Statement of Terms and Conditions for
Restricted Stock Units together constitute an agreement between the Company and
me in accordance with the terms thereof and hereof, and I further agree that any
legal action related to this Award of Restricted Stock Units may be brought in
any federal or state court located in Hamilton County, Ohio, USA, and I hereby
accept the jurisdiction of these courts and consent to service of process from
said courts solely for legal actions related to this Award of Restricted Stock
Units.   o   I hereby reject the Award of Restricted Stock Units set forth
above.

         
 
       
 
       
Date
  Signature   P&G E-mail Address

 

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THE PROCTER & GAMBLE COMPANY
STATEMENT OF TERMS AND CONDITIONS FOR KEY MANAGER RESTRICTED STOCK UNITS
THE PROCTER & GAMBLE 2001 STOCK AND INCENTIVE COMPENSATION PLAN
     The Restricted Stock Units awarded to you as set forth in the letter you
received from the Company (your “Award Letter”), and your ownership thereof, are
subject to the following terms and conditions.
1. Definitions.
     For purposes of this Statement of Terms and Conditions for Restricted Stock
Units (“Terms and Conditions”), all capitalized terms not defined in these Terms
and Conditions will have the meanings described in The Procter & Gamble 2001
Stock and Incentive Compensation Plan (the “Plan”), and the following terms will
have the following meanings.
(a) “Data” has the meaning described in Section 9;
(b) “Forfeiture Date” is the date identified as such in your Award Letter;
(c) “Forfeiture Period” means the period from the Grant Date until the
Forfeiture Date.
(d) “Grant Date” means the date a Restricted Stock Unit was awarded to you, as
identified in your Award Letter;
(e) “Original Settlement Date” is the date identified as such in your Award
Letter, as adjusted, if applicable, by Section 2;
(f) “Procter & Gamble” means the Company and/or its Subsidiaries;
(g) “Restricted Stock Unit” means an unfunded, unsecured promise by the Company,
in accordance with these Terms and Conditions and the provisions of the Plan, to
issue to you one share of Common Stock on the Original Settlement Date.
2. Transfer and Restrictions.
(a) Neither Restricted Stock Units nor your interest in them may be sold,
exchanged, transferred, pledged, hypothecated, given or otherwise disposed of by
you at any time, except by will or by the laws of descent and distribution. Any
attempted transfer of a Restricted Stock Unit, whether voluntary or involuntary
on your part, will result in the immediate forfeiture to the Company, and
cancellation, of the Restricted Stock Unit.
(b) During the Forfeiture Period, your Restricted Stock Units will be forfeited
and cancelled if you leave your employment with Procter & Gamble for any reason,
except due to: (i) Retirement in accordance with the provisions of any
appropriate Retirement plan of Procter & Gamble that occurs more than six months
from the Grant Date; or (ii) Special Separation that occurs more than six months
from the Grant Date. In the event of your Retirement or Special Separation that
occurs more than six months from the Grant Date, you will retain your Restricted
Stock Units subject to the Plan and these terms and conditions.

 

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(c) Upon your death or the occurrence of a Change in Control at any time while
you hold Restricted Stock Units, your Original Settlement Date will
automatically and immediately become, without any further action by you or the
Company, the date of your death or of the Change in Control, as applicable.
(d) From time to time, the Company and/or the Committee may establish procedures
with which you must comply in order to accept an award of Restricted Stock
Units, or to settle your Restricted Stock Units, including requiring you to do
so by means of electronic signature, or charging you an administrative fee for
doing so.
(e) Once your Restricted Stock Units have been settled by delivery to you of an
equivalent number of shares of Common Stock, the Restricted Stock Units will
have no further value, force or effect.
3. Confidentiality and Non-Competition
(a) In order to better protect the goodwill of Procter & Gamble and to prevent
the disclosure of Procter & Gamble’s trade secrets and confidential information,
and thereby help ensure the long-term success of Procter & Gamble’s business, in
consideration of your being awarded Restricted Stock Units, you (without prior
written consent of Procter & Gamble), will not engage in any activity or provide
any services, whether as a director, manager, supervisor, employee, advisor,
consultant or otherwise, for a period of three (3) years following the date your
employment with Procter & Gamble is terminated in connection with the
manufacture, development, advertising, promotion, or sale of any product which
is the same as or similar to or competitive with any products of Procter &
Gamble (including both existing products as well as products known to you, as a
consequence of your employment with Procter & Gamble, to be in development):
(i) with respect to which your work has been directly concerned at any time
during the two (2) years preceding the termination of your employment with
Procter & Gamble; or
(ii) with respect to which, during the two (2) years preceding the termination
of your employment with Procter & Gamble, you, as a consequence of your job
performance and duties, acquired knowledge of trade secrets or other
confidential information of Procter & Gamble.
For purposes of this Section 3(a), it will be conclusively presumed that you
have knowledge of information you were directly exposed to through actual
receipt or review of memoranda or documents containing such information, or
through attendance at meetings at which such information was discussed or
disclosed.
(b) The provisions of Section 3(a) are not in lieu of, but are in addition to
your continuing obligation (which you acknowledge by accepting an award of
Restricted Stock Units) to not use or disclose Procter & Gamble’s trade secrets
or confidential information known to you until any particular trade secret or
confidential information becomes generally known (through no fault of yours). As
used in this Section 3(b), “generally known” means known throughout the domestic
United States industry or, if you have job responsibilities partially or
entirely outside of the United States, the appropriate domestic United States
and/or appropriate foreign country or countries’ industry(ies). Information
regarding products in development, in test marketing, or being marketed or
promoted in a discrete geographic region, which information Procter & Gamble is
considering for broader use, will not be deemed to be “generally known” until
such broader use is actually commercially implemented. As used in this Section,
“trade secrets or other

 

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confidential information” also includes personnel knowledge about a manager, or
managers, of Procter & Gamble or its subsidiaries gained in the course of your
employment with Procter & Gamble or its subsidiaries (including personnel
ratings or rankings, manager or peer evaluations, performance records, special
skills or abilities, compensation, work and development plans, training, nature
of specific project and work assignments, or specialties developed as a result
of such assignments) which directly or indirectly affords you a confidential
basis to solicit, encourage, or participate in soliciting any manager, or
managers, of Procter & Gamble or any subsidiary to terminate his or her
relationship with Procter & Gamble or that subsidiary.
(c) By accepting an award of Restricted Stock Units, you agree that, if you
were, without authority, to use or disclose Procter & Gamble’s trade secrets or
confidential information or threaten to do so, Procter & Gamble would be
entitled to injunctive and other appropriate relief to prevent you from doing
so. You further agree that the harm caused to Procter & Gamble by the breach or
anticipated breach of this Section 3(c) is, by its nature, irreparable because,
among other things, it is not readily susceptible of proof as to the monetary
harm that would ensue. You agree that any interim or final equitable relief
entered by a court of competent jurisdiction will, at the request of Procter &
Gamble, be entered on consent and enforced by any court having jurisdiction over
you, without prejudice to any rights you or Procter & Gamble may have to appeal
from the proceedings which resulted in any grant of such relief.
(d) If any of the provisions contained in Sections 3(a) through (c) are for any
reason, whether by application of existing law or law which may develop after
your acceptance of an award of Restricted Stock Units, determined by a court of
competent jurisdiction to be overly broad as to scope of activity, duration, or
territory, then by accepting an award of Restricted Stock Units you agree to
join Procter & Gamble in requesting such court to construe such provision by
limiting or reducing it so as to be enforceable to the extent compatible with
then-applicable law. If any one or more of the provisions contained in Section
3(a) through (c) are determined by a court of competent jurisdiction to be
invalid, void or unenforceable, then the remainder of the provisions will remain
in full force and effect and will not be affected, impaired or invalidated in
any way.
4. Voting and Other Shareholder Rights.
     A Restricted Stock Unit is not a share of Common Stock, and thus you are
not entitled to any voting, dividend or other rights as a shareholder of the
Company with respect to the Restricted Stock Units you hold.
5. Adjustments in Case of Stock Splits, Etc.
     In the event of a future reorganization, recapitalization, stock split,
combination of shares, merger, consolidation, rights offering, share exchange,
reclassification, distribution, spin-off, or other change affecting the
corporate structure, capitalization or Common Stock, the number of Restricted
Stock Units you hold will be adjusted appropriately and equitably to prevent
dilution or enlargement of your rights.
6. Tax Withholding.
     To the extent Procter & Gamble is required to withhold federal, state,
local or foreign taxes in connection with your Restricted Stock Units, the
Committee may require you to make such arrangements as Procter & Gamble may deem
appropriate for the payment of such taxes required to be withheld, including
without limitation, relinquishment of some of the shares of Common Stock that
would otherwise be given to you. However, regardless of any action taken

 

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by Procter & Gamble with respect to any income tax, social insurance, payroll
tax, or other tax, by accepting a Restricted Stock Unit, you acknowledge that
the ultimate liability for any such tax owed by you is and remains your
responsibility, and that Procter & Gamble makes no representations about the tax
treatment of your Restricted Stock Units, and does not commit to structure any
aspect of the Restricted Stock Units to reduce or eliminate your tax liability.
7. Suspension Periods and Termination.
     The Company reserves the right from time to time to temporarily suspend
your right to settle your Restricted Stock Units for shares of Common Stock
where such suspension is deemed by the Company as necessary or appropriate.
8. Procter & Gamble Right to Terminate Employment and Other Remedies.
(a) Nothing in these Terms and Conditions, or the fact that you have been
awarded Restricted Stock Units, affects in any way the right or power of Procter
& Gamble to terminate your employment at any time for any reason, with or
without cause, or precludes Procter & Gamble from taking any action or enforcing
any remedy available to it with respect to any action or conduct on your part.
Without limiting the previous sentence, the Committee may, for example, suspend
or terminate any outstanding Restricted Stock Units for actions taken by you if
the Committee determines that you have acted significantly contrary to the best
interests of Procter & Gamble or its subsidiaries. For purposes of this
paragraph, an action taken “significantly contrary to the best interests of
Procter & Gamble or its subsidiaries” includes without limitation any action
taken or threatened by you that the Committee determines has, or is reasonably
likely to have, a significant adverse impact on the reputation, goodwill,
stability, operation, personnel retention and management, or business of Procter
& Gamble or any subsidiary. This paragraph is in addition to any remedy Procter
& Gamble or a subsidiary may have at law or in equity, including without
limitation injunctive and other appropriate relief.
(b) By accepting a Restricted Stock Unit, you acknowledge that: (i) the Plan is
established voluntarily by The Procter & Gamble Company, is discretionary in
nature, and may be amended, suspended or terminated at any time; (ii) the award
of Restricted Stock Units is voluntary and occasional and does not create any
contractual or other right to receive future awards of Restricted Stock Units,
or benefits in lieu of Restricted Stock Units, even if Restricted Stock Units
have been awarded repeatedly in the past; (iii) all decisions with respect to
future Restricted Stock Unit awards, if any, will be at the sole discretion of
the Company; (iv) your participation in the Plan is voluntary; (v) Restricted
Stock Units are an extraordinary item and not part of normal or expected
compensation or salary for any purpose, including without limitation calculating
any termination, severance, resignation, redundancy, or end-of-service payments,
bonuses, long-service awards, pension or retirement benefits or similar
payments; (vi) in the event that your employer is not the Company, the award of
Restricted Stock Units will not be interpreted to form an employment
relationship with the Company; and, furthermore, the award of Restricted Stock
Units will not be interpreted to form an employment contract with any Procter &
Gamble entity; (vii) the future value of Common Stock is unknown and cannot be
predicted with certainty; and (viii) no claim or entitlement to compensation or
damages arises from termination or forfeiture of Restricted Stock Units, or
diminution in value of Restricted Stock Units or Common Stock received in
settlement thereof, and you irrevocably release Procter & Gamble from any such
claim that may arise.
9. Data Privacy.

 

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     By accepting a Restricted Stock Unit, you explicitly and unambiguously
consent to the collection, use and transfer, in electronic or other form, of
your personal data as described in this document by and among, as applicable,
any Procter & Gamble entity or third party for the purpose of implementing,
administering and managing your participation in the Plan. You understand that
Procter & Gamble holds certain personal information about you, including without
limitation your name, home address and telephone number, date of birth, social
insurance number or other identification number, salary, nationality, job title,
any shares of stock or directorships held in a Procter & Gamble entity, details
of all options, Restricted Stock Units, or any other entitlement to shares of
stock awarded, canceled, exercised, vested, unvested or outstanding in your
favor, for the purpose of implementing, administering and managing the Plan
(“Data”). You understand that Data may be transferred to any third parties
assisting in the implementation, administration and management of the Plan, that
these recipients may be located in your country or elsewhere, and that the
recipient’s country may have different data privacy laws and protections than
your country. You understand that you may request a list with the names and
addresses of any potential recipients of Data by contacting your local human
resources representative. You authorize the recipients to receive, possess, use,
retain and transfer the Data, in electronic or other form, for the purposes of
implementing, administering and managing your participation in the Plan,
including any requisite transfer of such Data to any broker or other third party
with whom you may elect to deposit any shares of Common Stock in connection with
the settlement of your Restricted Stock Units. You understand that Data will be
held only as long as is necessary to implement, administer and manage your
participation in the plan. You understand that you may, at any time, view Data,
request additional information about the storage and processing of Data, require
any necessary amendments to Data, or refuse or withdraw the consents contained
in this paragraph, in any case without cost, by contacting in writing your local
human resources representative. You understand, however, that refusing or
withdrawing your consent may affect your ability to participate in the Plan. For
more information on the consequences of your refusal to consent or withdrawal of
consent, you understand that you may contact your local human resources
representative.
10. Notices.
(a) Any notice to Procter & Gamble that is required or appropriate with respect
to Restricted Stock Units held by you must be in writing and addressed to:
The Procter & Gamble Company
ATTN: Corporate Secretary’s Office
P.O. Box 599
Cincinnati, OH 45201
or such other address as Procter & Gamble may from time to time provide to you
in writing.
(b) Any notice to you that is required or appropriate with respect to Restricted
Stock Units held or to be awarded to you will be provided to you in written or
electronic form at any physical or electronic mail address for you that is on
file with Procter & Gamble.
11. Successors and Assigns.
     These Terms and Conditions are binding on, and inure to the benefit of,
(a) the Company and its successors and assigns; and (b) you and, if applicable,
the representative of your estate.
12. Governing Law.

 

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     The validity, interpretation, performance and enforcement of these Terms
and Conditions, the Plan and your Restricted Stock Units will be governed by the
laws of the State of Ohio, U.S.A. without giving effect to any other
jurisdiction’s conflicts of law principles. With respect to any dispute
concerning these Terms and Conditions, the Plan and your Restricted Stock Units,
you consent to the exclusive jurisdiction of the federal or state courts located
in Hamilton County, Ohio, U.S.A.
13. The Plan.
     All Restricted Stock Units awarded to you have been awarded under the Plan.
Certain provisions of the Plan may have been repeated or emphasized in these
Terms and Conditions; however, all terms of the Plan apply to you and your
Restricted Stock Units whether or not they have been called out in these Terms
and Conditions.
14. Effect of These Terms and Conditions.
     These Terms and Conditions and the terms of the Plan, which are
incorporated herein by reference, describe the contractual rights awarded to you
in the form of Restricted Stock Units, and the obligations imposed on you in
connection with those rights. No right exists with respect to Restricted Stock
Units except as described in these Terms and Conditions and the Plan.

 

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Appendix 8   Form KMG

     [INSERT DATE]
[INSERT NAME]

Subject:   Award of Restricted Stock Units

This is to advise you that The Procter & Gamble Company, an Ohio corporation, is
awarding you with Restricted Stock Units, on the dates and in the amounts listed
below, pursuant to The Gillette Company 2004 Long-Term Incentive Plan, and
subject to the attached Statement of Terms and Conditions Form KMG.

     
Grant Date:
  [INSERT DATE OF GRANT]
Forfeiture Date:
  [INSERT DATE FORFEITURE ENDS]
Original Settlement Date:
  [INSERT DATE RSUs BECOME SHARES]
Number of Restricted Stock Units:
  [INSERT NUMBER GRANTED]
 
   
 
  THE PROCTER & GAMBLE COMPANY
 
   
 
  James J. Johnson, Secretary For the Compensation Committee

o   I hereby accept the Award of Restricted Stock Units set forth above in
accordance with and subject to the terms of The Gillette Company 2004 Long-Term
Incentive Plan and the attached Statement of Terms and Conditions for Restricted
Stock Units, with which I am familiar. I agree that the Award of Restricted
Stock Units, The Gillette Company 2004 Long-Term Incentive Plan, and the
attached Statement of Terms and Conditions for Restricted Stock Units together
constitute an agreement between the Company and me in accordance with the terms
thereof and hereof, and I further agree that any legal action related to this
Award of Restricted Stock Units may be brought in any federal or state court
located in Hamilton County, Ohio, USA, and I hereby accept the jurisdiction of
these courts and consent to service of process from said courts solely for legal
actions related to this Award of Restricted Stock Units.   o   I hereby reject
the Award of Restricted Stock Units set forth above.

         
 
       
Date
  Signature   P&G E-mail Address

 

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THE PROCTER & GAMBLE COMPANY
STATEMENT OF TERMS AND CONDITIONS FOR KEY MANAGER RESTRICTED STOCK UNITS
THE GILLETTE COMPANY 2004 LONG-TERM INCENTIVE PLAN
     The Restricted Stock Units awarded to you as set forth in the letter you
received from the Company (your “Award Letter”), and your ownership thereof, are
subject to the following terms and conditions.
1. Definitions.
     For purposes of this Statement of Terms and Conditions for Restricted Stock
Units (“Terms and Conditions”), all capitalized terms not defined in these Terms
and Conditions will have the meanings described in The Gillette Company 2004
Long-Term Incentive Plan (the “Plan”), and the following terms will have the
following meanings.
(a) “Data” has the meaning described in Section 9;
(b) “Forfeiture Date” is the date identified as such in your Award Letter;
(c) “Forfeiture Period” means the period from the Grant Date until the
Forfeiture Date.
(d) “Grant Date” means the date a Restricted Stock Unit was awarded to you, as
identified in your Award Letter;
(e) “Original Settlement Date” is the date identified as such in your Award
Letter, as adjusted, if applicable, by Section 2;
(f) “Procter & Gamble” means the Company and/or its Subsidiaries;
(g) “Restricted Stock Unit” means an unfunded, unsecured promise by the Company,
in accordance with these Terms and Conditions and the provisions of the Plan, to
issue to you one share of Common Stock on the Original Settlement Date.
2. Transfer and Restrictions.
(a) Neither Restricted Stock Units nor your interest in them may be sold,
exchanged, transferred, pledged, hypothecated, given or otherwise disposed of by
you at any time, except by will or by the laws of descent and distribution. Any
attempted transfer of a Restricted Stock Unit, whether voluntary or involuntary
on your part, will result in the immediate forfeiture to the Company, and
cancellation, of the Restricted Stock Unit.
(b) During the Forfeiture Period, your Restricted Stock Units will be forfeited
and cancelled if you leave your employment with Procter & Gamble for any reason,
except due to: (i) Retirement in accordance with the provisions of any
appropriate Retirement plan of Procter & Gamble that occurs more than six months
from the Grant Date; or (ii) Special Separation that occurs more than six months
from the Grant Date. In the event of your Retirement or Special Separation that
occurs more than six months from the Grant Date, you will retain your Restricted
Stock Units subject to the Plan and these terms and conditions.

 

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(c) Upon your death or the occurrence of a Change in Control at any time while
you hold Restricted Stock Units, your Original Settlement Date will
automatically and immediately become, without any further action by you or the
Company, the date of your death or of the Change in Control, as applicable.
(d) From time to time, the Company and/or the Committee may establish procedures
with which you must comply in order to accept an award of Restricted Stock
Units, or to settle your Restricted Stock Units, including requiring you to do
so by means of electronic signature, or charging you an administrative fee for
doing so.
(e) Once your Restricted Stock Units have been settled by delivery to you of an
equivalent number of shares of Common Stock, the Restricted Stock Units will
have no further value, force or effect.
3. Confidentiality and Non-Competition
(a) In order to better protect the goodwill of Procter & Gamble and to prevent
the disclosure of Procter & Gamble’s trade secrets and confidential information,
and thereby help ensure the long-term success of Procter & Gamble’s business, in
consideration of your being awarded Restricted Stock Units, you (without prior
written consent of Procter & Gamble), will not engage in any activity or provide
any services, whether as a director, manager, supervisor, employee, advisor,
consultant or otherwise, for a period of three (3) years following the date your
employment with Procter & Gamble is terminated in connection with the
manufacture, development, advertising, promotion, or sale of any product which
is the same as or similar to or competitive with any products of Procter &
Gamble (including both existing products as well as products known to you, as a
consequence of your employment with Procter & Gamble, to be in development):
(i) with respect to which your work has been directly concerned at any time
during the two (2) years preceding the termination of your employment with
Procter & Gamble; or
(ii) with respect to which, during the two (2) years preceding the termination
of your employment with Procter & Gamble, you, as a consequence of your job
performance and duties, acquired knowledge of trade secrets or other
confidential information of Procter & Gamble.
For purposes of this Section 3(a), it will be conclusively presumed that you
have knowledge of information you were directly exposed to through actual
receipt or review of memoranda or documents containing such information, or
through attendance at meetings at which such information was discussed or
disclosed.
(b) The provisions of Section 3(a) are not in lieu of, but are in addition to
your continuing obligation (which you acknowledge by accepting an award of
Restricted Stock Units) to not use or disclose Procter & Gamble’s trade secrets
or confidential information known to you until any particular trade secret or
confidential information becomes generally known (through no fault of yours). As
used in this Section 3(b), “generally known” means known throughout the domestic
United States industry or, if you have job responsibilities partially or
entirely outside of the United States, the appropriate domestic United States
and/or appropriate foreign country or countries’ industry(ies). Information
regarding products in development, in test marketing, or being marketed or
promoted in a discrete geographic region, which information Procter & Gamble is
considering for broader use, will not be deemed to be “generally known” until
such broader use is actually commercially implemented. As used in this Section,
“trade secrets or other

 

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confidential information” also includes personnel knowledge about a manager, or
managers, of Procter & Gamble or its subsidiaries gained in the course of your
employment with Procter & Gamble or its subsidiaries (including personnel
ratings or rankings, manager or peer evaluations, performance records, special
skills or abilities, compensation, work and development plans, training, nature
of specific project and work assignments, or specialties developed as a result
of such assignments) which directly or indirectly affords you a confidential
basis to solicit, encourage, or participate in soliciting any manager, or
managers, of Procter & Gamble or any subsidiary to terminate his or her
relationship with Procter & Gamble or that subsidiary.
(c) By accepting an award of Restricted Stock Units, you agree that, if you
were, without authority, to use or disclose Procter & Gamble’s trade secrets or
confidential information or threaten to do so, Procter & Gamble would be
entitled to injunctive and other appropriate relief to prevent you from doing
so. You further agree that the harm caused to Procter & Gamble by the breach or
anticipated breach of this Section 3(c) is, by its nature, irreparable because,
among other things, it is not readily susceptible of proof as to the monetary
harm that would ensue. You agree that any interim or final equitable relief
entered by a court of competent jurisdiction will, at the request of Procter &
Gamble, be entered on consent and enforced by any court having jurisdiction over
you, without prejudice to any rights you or Procter & Gamble may have to appeal
from the proceedings which resulted in any grant of such relief.
(d) If any of the provisions contained in Sections 3(a) through (c) are for any
reason, whether by application of existing law or law which may develop after
your acceptance of an award of Restricted Stock Units, determined by a court of
competent jurisdiction to be overly broad as to scope of activity, duration, or
territory, then by accepting an award of Restricted Stock Units you agree to
join Procter & Gamble in requesting such court to construe such provision by
limiting or reducing it so as to be enforceable to the extent compatible with
then-applicable law. If any one or more of the provisions contained in Section
3(a) through (c) are determined by a court of competent jurisdiction to be
invalid, void or unenforceable, then the remainder of the provisions will remain
in full force and effect and will not be affected, impaired or invalidated in
any way.
4. Voting and Other Shareholder Rights.
     A Restricted Stock Unit is not a share of Common Stock, and thus you are
not entitled to any voting, dividend or other rights as a shareholder of the
Company with respect to the Restricted Stock Units you hold.
5. Adjustments in Case of Stock Splits, Etc.
     In the event of a future reorganization, recapitalization, stock split,
combination of shares, merger, consolidation, rights offering, share exchange,
reclassification, distribution, spin-off, or other change affecting the
corporate structure, capitalization or Common Stock, the number of Restricted
Stock Units you hold will be adjusted appropriately and equitably to prevent
dilution or enlargement of your rights.
6. Tax Withholding.
     To the extent Procter & Gamble is required to withhold federal, state,
local or foreign taxes in connection with your Restricted Stock Units, the
Committee may require you to make such arrangements as Procter & Gamble may deem
appropriate for the payment of such taxes required to be withheld, including
without limitation, relinquishment of some of the shares of Common Stock that
would otherwise be given to you. However, regardless of any action taken

 

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by Procter & Gamble with respect to any income tax, social insurance, payroll
tax, or other tax, by accepting a Restricted Stock Unit, you acknowledge that
the ultimate liability for any such tax owed by you is and remains your
responsibility, and that Procter & Gamble makes no representations about the tax
treatment of your Restricted Stock Units, and does not commit to structure any
aspect of the Restricted Stock Units to reduce or eliminate your tax liability.
7. Suspension Periods and Termination.
     The Company reserves the right from time to time to temporarily suspend
your right to settle your Restricted Stock Units for shares of Common Stock
where such suspension is deemed by the Company as necessary or appropriate.
8. Procter & Gamble Right to Terminate Employment and Other Remedies.
(a) Nothing in these Terms and Conditions, or the fact that you have been
awarded Restricted Stock Units, affects in any way the right or power of Procter
& Gamble to terminate your employment at any time for any reason, with or
without cause, or precludes Procter & Gamble from taking any action or enforcing
any remedy available to it with respect to any action or conduct on your part.
Without limiting the previous sentence, the Committee may, for example, suspend
or terminate any outstanding Restricted Stock Units for actions taken by you if
the Committee determines that you have acted significantly contrary to the best
interests of Procter & Gamble or its subsidiaries. For purposes of this
paragraph, an action taken “significantly contrary to the best interests of
Procter & Gamble or its subsidiaries” includes without limitation any action
taken or threatened by you that the Committee determines has, or is reasonably
likely to have, a significant adverse impact on the reputation, goodwill,
stability, operation, personnel retention and management, or business of Procter
& Gamble or any subsidiary. This paragraph is in addition to any remedy Procter
& Gamble or a subsidiary may have at law or in equity, including without
limitation injunctive and other appropriate relief.
(b) By accepting a Restricted Stock Unit, you acknowledge that: (i) the Plan is
established voluntarily by The Procter & Gamble Company, is discretionary in
nature, and may be amended, suspended or terminated at any time; (ii) the award
of Restricted Stock Units is voluntary and occasional and does not create any
contractual or other right to receive future awards of Restricted Stock Units,
or benefits in lieu of Restricted Stock Units, even if Restricted Stock Units
have been awarded repeatedly in the past; (iii) all decisions with respect to
future Restricted Stock Unit awards, if any, will be at the sole discretion of
the Company; (iv) your participation in the Plan is voluntary; (v) Restricted
Stock Units are an extraordinary item and not part of normal or expected
compensation or salary for any purpose, including without limitation calculating
any termination, severance, resignation, redundancy, or end-of-service payments,
bonuses, long-service awards, pension or retirement benefits or similar
payments; (vi) in the event that your employer is not the Company, the award of
Restricted Stock Units will not be interpreted to form an employment
relationship with the Company; and, furthermore, the award of Restricted Stock
Units will not be interpreted to form an employment contract with any Procter &
Gamble entity; (vii) the future value of Common Stock is unknown and cannot be
predicted with certainty; and (viii) no claim or entitlement to compensation or
damages arises from termination or forfeiture of Restricted Stock Units, or
diminution in value of Restricted Stock Units or Common Stock received in
settlement thereof, and you irrevocably release Procter & Gamble from any such
claim that may arise.
9. Data Privacy.

 

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     By accepting a Restricted Stock Unit, you explicitly and unambiguously
consent to the collection, use and transfer, in electronic or other form, of
your personal data as described in this document by and among, as applicable,
any Procter & Gamble entity or third party for the purpose of implementing,
administering and managing your participation in the Plan. You understand that
Procter & Gamble holds certain personal information about you, including without
limitation your name, home address and telephone number, date of birth, social
insurance number or other identification number, salary, nationality, job title,
any shares of stock or directorships held in a Procter & Gamble entity, details
of all options, Restricted Stock Units, or any other entitlement to shares of
stock awarded, canceled, exercised, vested, unvested or outstanding in your
favor, for the purpose of implementing, administering and managing the Plan
(“Data”). You understand that Data may be transferred to any third parties
assisting in the implementation, administration and management of the Plan, that
these recipients may be located in your country or elsewhere, and that the
recipient’s country may have different data privacy laws and protections than
your country. You understand that you may request a list with the names and
addresses of any potential recipients of Data by contacting your local human
resources representative. You authorize the recipients to receive, possess, use,
retain and transfer the Data, in electronic or other form, for the purposes of
implementing, administering and managing your participation in the Plan,
including any requisite transfer of such Data to any broker or other third party
with whom you may elect to deposit any shares of Common Stock in connection with
the settlement of your Restricted Stock Units. You understand that Data will be
held only as long as is necessary to implement, administer and manage your
participation in the plan. You understand that you may, at any time, view Data,
request additional information about the storage and processing of Data, require
any necessary amendments to Data, or refuse or withdraw the consents contained
in this paragraph, in any case without cost, by contacting in writing your local
human resources representative. You understand, however, that refusing or
withdrawing your consent may affect your ability to participate in the Plan. For
more information on the consequences of your refusal to consent or withdrawal of
consent, you understand that you may contact your local human resources
representative.
10. Notices.
(a) Any notice to Procter & Gamble that is required or appropriate with respect
to Restricted Stock Units held by you must be in writing and addressed to:
The Procter & Gamble Company
ATTN: Corporate Secretary’s Office
P.O. Box 599
Cincinnati, OH 45201
or such other address as Procter & Gamble may from time to time provide to you
in writing.
(b) Any notice to you that is required or appropriate with respect to Restricted
Stock Units held or to be awarded to you will be provided to you in written or
electronic form at any physical or electronic mail address for you that is on
file with Procter & Gamble.
11. Successors and Assigns.
     These Terms and Conditions are binding on, and inure to the benefit of,
(a) the Company and its successors and assigns; and (b) you and, if applicable,
the representative of your estate.

 

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12. Governing Law.
     The validity, interpretation, performance and enforcement of these Terms
and Conditions, the Plan and your Restricted Stock Units will be governed by the
laws of the State of Ohio, U.S.A. without giving effect to any other
jurisdiction’s conflicts of law principles. With respect to any dispute
concerning these Terms and Conditions, the Plan and your Restricted Stock Units,
you consent to the exclusive jurisdiction of the federal or state courts located
in Hamilton County, Ohio, U.S.A.
13. The Plan.
     All Restricted Stock Units awarded to you have been awarded under the Plan.
Certain provisions of the Plan may have been repeated or emphasized in these
Terms and Conditions; however, all terms of the Plan apply to you and your
Restricted Stock Units whether or not they have been called out in these Terms
and Conditions.
14. Effect of These Terms and Conditions.
     These Terms and Conditions and the terms of the Plan, which are
incorporated herein by reference, describe the contractual rights awarded to you
in the form of Restricted Stock Units, and the obligations imposed on you in
connection with those rights. No right exists with respect to Restricted Stock
Units except as described in these Terms and Conditions and the Plan.

 

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Appendix 9   Form KMW

[INSERT DATE]
[INSERT NAME]
Subject: Award of Restricted Stock Units
This is to advise you that The Procter & Gamble Company, an Ohio corporation, is
awarding you with Restricted Stock Units, on the dates and in the amounts listed
below, pursuant to The Procter & Gamble 2001 Stock and Incentive Compensation
Plan, and subject to the attached Statement of Terms and Conditions Form KMW.

         
 
  Grant Date:   [INSERT DATE OF GRANT]
 
  Forfeiture Date:   [INSERT DATE FORFEITURE ENDS]
 
  Original Settlement Date:   [INSERT DATE RSUs BECOME SHARES]
 
  Number of Restricted Stock Units:   [INSERT NUMBER GRANTED]
 
       
 
      THE PROCTER & GAMBLE COMPANY
 
       
 
       
 
      James J. Johnson, Secretary
 
      For the Compensation Committee

o   I hereby accept the Award of Restricted Stock Units set forth above in
accordance with and subject to the terms of The Procter & Gamble 2001 Stock and
Incentive Compensation Plan and the attached Statement of Terms and Conditions
for Restricted Stock Units, with which I am familiar. I agree that the Award of
Restricted Stock Units, The Procter & Gamble 2001 Stock and Incentive
Compensation Plan, and the attached Statement of Terms and Conditions for
Restricted Stock Units together constitute an agreement between the Company and
me in accordance with the terms thereof and hereof, and I further agree that any
legal action related to this Award of Restricted Stock Units may be brought in
any federal or state court located in Hamilton County, Ohio, USA, and I hereby
accept the jurisdiction of these courts and consent to service of process from
said courts solely for legal actions related to this Award of Restricted Stock
Units.   o   I hereby reject the Award of Restricted Stock Units set forth
above.

         
 
       
 
       
Date
  Signature   P&G E-mail Address

 

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THE PROCTER & GAMBLE COMPANY
STATEMENT OF TERMS AND CONDITIONS FOR KEY MANAGER RESTRICTED STOCK UNITS
THE PROCTER & GAMBLE 2001 STOCK AND INCENTIVE COMPENSATION PLAN
     The Restricted Stock Units awarded to you as set forth in the letter you
received from the Company (your “Award Letter”), and your ownership thereof, are
subject to the following terms and conditions.
1. Definitions.
     For purposes of this Statement of Terms and Conditions for Restricted Stock
Units (“Terms and Conditions”), all capitalized terms not defined in these Terms
and Conditions will have the meanings described in The Procter & Gamble 2001
Stock and Incentive Compensation Plan (the “Plan”), and the following terms will
have the following meanings.
(a) “Data” has the meaning described in Section 9;
(b) “Forfeiture Date” is the date identified as such in your Award Letter;
(c) “Forfeiture Period” means the period from the Grant Date until the
Forfeiture Date.
(d) “Grant Date” means the date a Restricted Stock Unit was awarded to you, as
identified in your Award Letter;
(e) “Original Settlement Date” is the date identified as such in your Award
Letter, as adjusted, if applicable, by Section 2;
(f) “Procter & Gamble” means the Company and/or its Subsidiaries;
(g) “Restricted Stock Unit” means an unfunded, unsecured promise by the Company,
in accordance with these Terms and Conditions and the provisions of the Plan, to
issue to you one share of Common Stock on the Original Settlement Date.
2. Transfer and Restrictions.
(a) Neither Restricted Stock Units nor your interest in them may be sold,
exchanged, transferred, pledged, hypothecated, given or otherwise disposed of by
you at any time, except by will or by the laws of descent and distribution. Any
attempted transfer of a Restricted Stock Unit, whether voluntary or involuntary
on your part, will result in the immediate forfeiture to the Company, and
cancellation, of the Restricted Stock Unit.
(b) During the Forfeiture Period, your Restricted Stock Units will be forfeited
and cancelled if you leave your employment with Procter & Gamble for any reason,
except due to: (i) Retirement in accordance with the provisions of any
appropriate Retirement plan of Procter & Gamble; or (ii) Special Separation. In
the event of your Retirement or Special Separation, you will retain your
Restricted Stock Units subject to the Plan and these terms and conditions.

 

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(c) Upon your death or the occurrence of a Change in Control at any time while
you hold Restricted Stock Units, your Original Settlement Date will
automatically and immediately become, without any further action by you or the
Company, the date of your death or of the Change in Control, as applicable.
(d) From time to time, the Company and/or the Committee may establish procedures
with which you must comply in order to accept an award of Restricted Stock
Units, or to settle your Restricted Stock Units, including requiring you to do
so by means of electronic signature, or charging you an administrative fee for
doing so.
(e) Once your Restricted Stock Units have been settled by delivery to you of an
equivalent number of shares of Common Stock, the Restricted Stock Units will
have no further value, force or effect.
3. Confidentiality and Non-Competition
(a) In order to better protect the goodwill of Procter & Gamble and to prevent
the disclosure of Procter & Gamble’s trade secrets and confidential information,
and thereby help ensure the long-term success of Procter & Gamble’s business, in
consideration of your being awarded Restricted Stock Units, you (without prior
written consent of Procter & Gamble), will not engage in any activity or provide
any services, whether as a director, manager, supervisor, employee, advisor,
consultant or otherwise, for a period of three (3) years following the date your
employment with Procter & Gamble is terminated in connection with the
manufacture, development, advertising, promotion, or sale of any product which
is the same as or similar to or competitive with any products of Procter &
Gamble (including both existing products as well as products known to you, as a
consequence of your employment with Procter & Gamble, to be in development):
(i) with respect to which your work has been directly concerned at any time
during the two (2) years preceding the termination of your employment with
Procter & Gamble; or
(ii) with respect to which, during the two (2) years preceding the termination
of your employment with Procter & Gamble, you, as a consequence of your job
performance and duties, acquired knowledge of trade secrets or other
confidential information of Procter & Gamble.
For purposes of this Section 3(a), it will be conclusively presumed that you
have knowledge of information you were directly exposed to through actual
receipt or review of memoranda or documents containing such information, or
through attendance at meetings at which such information was discussed or
disclosed.
(b) The provisions of Section 3(a) are not in lieu of, but are in addition to
your continuing obligation (which you acknowledge by accepting an award of
Restricted Stock Units) to not use or disclose Procter & Gamble’s trade secrets
or confidential information known to you until any particular trade secret or
confidential information becomes generally known (through no fault of yours). As
used in this Section 3(b), “generally known” means known throughout the domestic
United States industry or, if you have job responsibilities partially or
entirely outside of the United States, the appropriate domestic United States
and/or appropriate foreign country or countries’ industry(ies). Information
regarding products in development, in test marketing, or being marketed or
promoted in a discrete geographic region, which information Procter & Gamble is
considering for broader use, will not be deemed to be “generally known” until
such broader use is actually commercially implemented. As used in this Section,
“trade secrets or other confidential information” also includes personnel
knowledge about a manager, or

 

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managers, of Procter & Gamble or its subsidiaries gained in the course of your
employment with Procter & Gamble or its subsidiaries (including personnel
ratings or rankings, manager or peer evaluations, performance records, special
skills or abilities, compensation, work and development plans, training, nature
of specific project and work assignments, or specialties developed as a result
of such assignments) which directly or indirectly affords you a confidential
basis to solicit, encourage, or participate in soliciting any manager, or
managers, of Procter & Gamble or any subsidiary to terminate his or her
relationship with Procter & Gamble or that subsidiary.
(c) By accepting an award of Restricted Stock Units, you agree that, if you
were, without authority, to use or disclose Procter & Gamble’s trade secrets or
confidential information or threaten to do so, Procter & Gamble would be
entitled to injunctive and other appropriate relief to prevent you from doing
so. You further agree that the harm caused to Procter & Gamble by the breach or
anticipated breach of this Section 3(c) is, by its nature, irreparable because,
among other things, it is not readily susceptible of proof as to the monetary
harm that would ensue. You agree that any interim or final equitable relief
entered by a court of competent jurisdiction will, at the request of Procter &
Gamble, be entered on consent and enforced by any court having jurisdiction over
you, without prejudice to any rights you or Procter & Gamble may have to appeal
from the proceedings which resulted in any grant of such relief.
(d) If any of the provisions contained in Sections 3(a) through (c) are for any
reason, whether by application of existing law or law which may develop after
your acceptance of an award of Restricted Stock Units, determined by a court of
competent jurisdiction to be overly broad as to scope of activity, duration, or
territory, then by accepting an award of Restricted Stock Units you agree to
join Procter & Gamble in requesting such court to construe such provision by
limiting or reducing it so as to be enforceable to the extent compatible with
then-applicable law. If any one or more of the provisions contained in Section
3(a) through (c) are determined by a court of competent jurisdiction to be
invalid, void or unenforceable, then the remainder of the provisions will remain
in full force and effect and will not be affected, impaired or invalidated in
any way.
4. Voting and Other Shareholder Rights.
     A Restricted Stock Unit is not a share of Common Stock, and thus you are
not entitled to any voting, dividend or other rights as a shareholder of the
Company with respect to the Restricted Stock Units you hold.
5. Adjustments in Case of Stock Splits, Etc.
     In the event of a future reorganization, recapitalization, stock split,
combination of shares, merger, consolidation, rights offering, share exchange,
reclassification, distribution, spin-off, or other change affecting the
corporate structure, capitalization or Common Stock, the number of Restricted
Stock Units you hold will be adjusted appropriately and equitably to prevent
dilution or enlargement of your rights.
6. Tax Withholding.
     To the extent Procter & Gamble is required to withhold federal, state,
local or foreign taxes in connection with your Restricted Stock Units, the
Committee may require you to make such arrangements as Procter & Gamble may deem
appropriate for the payment of such taxes required to be withheld, including
without limitation, relinquishment of some of the shares of Common Stock that
would otherwise be given to you. However, regardless of any action taken by
Procter & Gamble with respect to any income tax, social insurance, payroll tax,
or other tax,

 

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by accepting a Restricted Stock Unit, you acknowledge that the ultimate
liability for any such tax owed by you is and remains your responsibility, and
that Procter & Gamble makes no representations about the tax treatment of your
Restricted Stock Units, and does not commit to structure any aspect of the
Restricted Stock Units to reduce or eliminate your tax liability.
7. Suspension Periods and Termination.
     The Company reserves the right from time to time to temporarily suspend
your right to settle your Restricted Stock Units for shares of Common Stock
where such suspension is deemed by the Company as necessary or appropriate.
8. Procter & Gamble Right to Terminate Employment and Other Remedies.
(a) Nothing in these Terms and Conditions, or the fact that you have been
awarded Restricted Stock Units, affects in any way the right or power of Procter
& Gamble to terminate your employment at any time for any reason, with or
without cause, or precludes Procter & Gamble from taking any action or enforcing
any remedy available to it with respect to any action or conduct on your part.
Without limiting the previous sentence, the Committee may, for example, suspend
or terminate any outstanding Restricted Stock Units for actions taken by you if
the Committee determines that you have acted significantly contrary to the best
interests of Procter & Gamble or its subsidiaries. For purposes of this
paragraph, an action taken “significantly contrary to the best interests of
Procter & Gamble or its subsidiaries” includes without limitation any action
taken or threatened by you that the Committee determines has, or is reasonably
likely to have, a significant adverse impact on the reputation, goodwill,
stability, operation, personnel retention and management, or business of Procter
& Gamble or any subsidiary. This paragraph is in addition to any remedy Procter
& Gamble or a subsidiary may have at law or in equity, including without
limitation injunctive and other appropriate relief.
(b) By accepting a Restricted Stock Unit, you acknowledge that: (i) the Plan is
established voluntarily by The Procter & Gamble Company, is discretionary in
nature, and may be amended, suspended or terminated at any time; (ii) the award
of Restricted Stock Units is voluntary and occasional and does not create any
contractual or other right to receive future awards of Restricted Stock Units,
or benefits in lieu of Restricted Stock Units, even if Restricted Stock Units
have been awarded repeatedly in the past; (iii) all decisions with respect to
future Restricted Stock Unit awards, if any, will be at the sole discretion of
the Company; (iv) your participation in the Plan is voluntary; (v) Restricted
Stock Units are an extraordinary item and not part of normal or expected
compensation or salary for any purpose, including without limitation calculating
any termination, severance, resignation, redundancy, or end-of-service payments,
bonuses, long-service awards, pension or retirement benefits or similar
payments; (vi) in the event that your employer is not the Company, the award of
Restricted Stock Units will not be interpreted to form an employment
relationship with the Company; and, furthermore, the award of Restricted Stock
Units will not be interpreted to form an employment contract with any Procter &
Gamble entity; (vii) the future value of Common Stock is unknown and cannot be
predicted with certainty; and (viii) no claim or entitlement to compensation or
damages arises from termination or forfeiture of Restricted Stock Units, or
diminution in value of Restricted Stock Units or Common Stock received in
settlement thereof, and you irrevocably release Procter & Gamble from any such
claim that may arise.
9. Data Privacy.

 

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     By accepting a Restricted Stock Unit, you explicitly and unambiguously
consent to the collection, use and transfer, in electronic or other form, of
your personal data as described in this document by and among, as applicable,
any Procter & Gamble entity or third party for the purpose of implementing,
administering and managing your participation in the Plan. You understand that
Procter & Gamble holds certain personal information about you, including without
limitation your name, home address and telephone number, date of birth, social
insurance number or other identification number, salary, nationality, job title,
any shares of stock or directorships held in a Procter & Gamble entity, details
of all options, Restricted Stock Units, or any other entitlement to shares of
stock awarded, canceled, exercised, vested, unvested or outstanding in your
favor, for the purpose of implementing, administering and managing the Plan
(“Data”). You understand that Data may be transferred to any third parties
assisting in the implementation, administration and management of the Plan, that
these recipients may be located in your country or elsewhere, and that the
recipient’s country may have different data privacy laws and protections than
your country. You understand that you may request a list with the names and
addresses of any potential recipients of Data by contacting your local human
resources representative. You authorize the recipients to receive, possess, use,
retain and transfer the Data, in electronic or other form, for the purposes of
implementing, administering and managing your participation in the Plan,
including any requisite transfer of such Data to any broker or other third party
with whom you may elect to deposit any shares of Common Stock in connection with
the settlement of your Restricted Stock Units. You understand that Data will be
held only as long as is necessary to implement, administer and manage your
participation in the plan. You understand that you may, at any time, view Data,
request additional information about the storage and processing of Data, require
any necessary amendments to Data, or refuse or withdraw the consents contained
in this paragraph, in any case without cost, by contacting in writing your local
human resources representative. You understand, however, that refusing or
withdrawing your consent may affect your ability to participate in the Plan. For
more information on the consequences of your refusal to consent or withdrawal of
consent, you understand that you may contact your local human resources
representative.
10. Notices.
(a) Any notice to Procter & Gamble that is required or appropriate with respect
to Restricted Stock Units held by you must be in writing and addressed to:
The Procter & Gamble Company
ATTN: Corporate Secretary’s Office
P.O. Box 599
Cincinnati, OH 45201
or such other address as Procter & Gamble may from time to time provide to you
in writing.
(b) Any notice to you that is required or appropriate with respect to Restricted
Stock Units held or to be awarded to you will be provided to you in written or
electronic form at any physical or electronic mail address for you that is on
file with Procter & Gamble.
11. Successors and Assigns.
     These Terms and Conditions are binding on, and inure to the benefit of,
(a) the Company and its successors and assigns; and (b) you and, if applicable,
the representative of your estate.
12. Governing Law.

 

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     The validity, interpretation, performance and enforcement of these Terms
and Conditions, the Plan and your Restricted Stock Units will be governed by the
laws of the State of Ohio, U.S.A. without giving effect to any other
jurisdiction’s conflicts of law principles. With respect to any dispute
concerning these Terms and Conditions, the Plan and your Restricted Stock Units,
you consent to the exclusive jurisdiction of the federal or state courts located
in Hamilton County, Ohio, U.S.A.
13. The Plan.
     All Restricted Stock Units awarded to you have been awarded under the Plan.
Certain provisions of the Plan may have been repeated or emphasized in these
Terms and Conditions; however, all terms of the Plan apply to you and your
Restricted Stock Units whether or not they have been called out in these Terms
and Conditions.
14. Effect of These Terms and Conditions.
     These Terms and Conditions and the terms of the Plan, which are
incorporated herein by reference, describe the contractual rights awarded to you
in the form of Restricted Stock Units, and the obligations imposed on you in
connection with those rights. No right exists with respect to Restricted Stock
Units except as described in these Terms and Conditions and the Plan.

 

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Appendix 10   BOD

[INSERT DATE]
[INSERT NAME]
Subject: Award of Restricted Stock Units
This is to advise you that The Procter & Gamble Company, an Ohio corporation, is
awarding you with Restricted Stock Units, on the dates and in the amounts listed
below, pursuant to The Procter & Gamble 2003 Non-Employee Directors’ Stock Plan,
and subject to the attached Statement of Terms and Conditions Form RSU.

         
 
  Grant Date:   [INSERT DATE OF GRANT]
 
  Forfeiture Date:   [INSERT DATE FORFEITURE ENDS]
 
  Original Settlement Date:   [INSERT DATE RSUs BECOME SHARES]
 
  Number of Restricted Stock Units:   [INSERT NUMBER GRANTED]

As you will see from the Statement of Terms and Conditions Form RSU, under
certain circumstances you may agree with The Procter & Gamble Company to delay
the settlement of your Restricted Stock Units beyond the Original Settlement
Date. You may want to consult your personal tax advisor before making a decision
about this matter.
THE PROCTER & GAMBLE COMPANY
James J. Johnson, Secretary
For the Compensation Committee

 

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THE PROCTER & GAMBLE COMPANY
STATEMENT OF TERMS AND CONDITIONS FOR RESTRICTED STOCK UNITS
THE PROCTER & GAMBLE 2003 NON-EMPLOYEE DIRECTORS’ STOCK PLAN
     The Restricted Stock Units awarded to you as set forth in the letter you
received from the Company (your “Award Letter”), and your ownership thereof, are
subject to the following terms and conditions.

1.   Definitions.

     For purposes of this Statement of Terms and Conditions for Restricted Stock
Units (“Terms and Conditions”), all capitalized terms not defined in these Terms
and Conditions will have the meanings described in The Procter & Gamble 2003
Non-Employee Directors’ Stock Plan (the “Plan”), and the following terms will
have the following meanings.
(a) “Agreed Settlement Date” has the meaning described in Section 2(c);
(b) “Data” has the meaning described in Section 8;
(c) “Dividend Equivalents” has the meaning described in Section 3;
(d) “Forfeiture Date” is the date identified as such in your Award Letter;
(e) “Forfeiture Period” means the period from the Grant Date until the
Forfeiture Date.
(f) “Grant Date” means the date a Restricted Stock Unit was awarded to you, as
identified in your Award Letter;
(g) “Original Settlement Date” is the date identified as such in your Award
Letter, as adjusted, if applicable, by Section 2;
(h) “Post-Forfeiture Period” means the period from the Forfeiture Date until the
later of the Original Settlement Date or the Agreed Settlement Date;
(i) “Procter & Gamble” means the Company and/or its Subsidiaries;
(j) “Restricted Stock Unit” means an unfunded, unsecured promise by the Company,
in accordance with these Terms and Conditions and the provisions of the Plan, to
issue to you one share of Common Stock on the later of the Original Settlement
Date or the Agreed Settlement Date.

2.   Transfer and Restrictions.

(a) Neither Restricted Stock Units nor your interest in them may be sold,
exchanged, transferred, pledged, hypothecated, given or otherwise disposed of by
you at any time, except by will or by the laws of descent and distribution. Any
attempted transfer of a Restricted Stock Unit, whether voluntary or involuntary
on your part, will result in the immediate forfeiture to the Company, and
cancellation, of the Restricted Stock Unit (including all rights to receive
Dividend Equivalents).

 

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(b) During the Forfeiture Period, your Restricted Stock Units (including all
rights to receive Dividend Equivalents) will be forfeited and cancelled if you
leave your position as a Director of the Company for any reason, except due to
your: (i) disability; (ii) retirement after attaining the age of sixty-nine
(69); (iii) resignation following retirement from your principal employer in
good standing under the terms or your principal employer’s retirement plan; or
(iv) resignation for reasons of antitrust laws or the Company’s conflict of
interest, corporate governance or continued service policies. In the event of
your disability during the Forfeiture Period, unless otherwise agreed to in
writing by the Company, your Original Settlement Date shall automatically and
immediately become, without any further action by you or the Company, the date
of your disability. In the event of any of the other above exceptions occurring,
you will retain your Restricted Stock Units subject to the Plan and these Terms
and Conditions.
(c) At any time at least one calendar year prior to the Original Settlement
Date, you and the Company may agree to postpone the date on which you are
entitled to receive one share of Common Stock for each Restricted Stock Unit you
hold until January 15th of any later year (the “Agreed Settlement Date”). During
the Post-Forfeiture Period, you will retain your Restricted Stock Units subject
to the Plan and these Terms and Conditions if you leave your position as a
Director for any reason, except due to your disability. In the event of your
disability during the Post-Forfeiture Period, unless otherwise agreed to in
writing by the Company, your Original Settlement Date or Agreed Settlement Date,
as applicable, shall automatically and immediately become, without any further
action by you or the Company, the date of your disability.
(d) Upon your death or the occurrence of a Change in Control at any time while
you hold Restricted Stock Units and/or Dividend Equivalents, your Original
Settlement Date or Agreed Settlement Date, as applicable, will automatically and
immediately become, without any further action by you or the Company, the date
of your death or of the Change in Control, as applicable.
(e) From time to time, the Company and/or the Committee may establish procedures
with which you must comply in order to accept an award of Restricted Stock
Units, to agree to an Agreed Settlement Date, or to settle your Restricted Stock
Units, including requiring you to do so by means of electronic signature, or
charging you an administrative fee for doing so.
(f) Once your Restricted Stock Units have been settled by delivery to you of an
equivalent number of shares of Common Stock, the Restricted Stock Units will
have no further value, force or effect and you will cease to receive Dividend
Equivalents associated with the Restricted Stock Units.

3.   Dividend Equivalents.

     As a holder of Restricted Stock Units, during the period from the Grant
Date until the Original Settlement Date or the Agreed Settlement Date, whichever
is later, each time a cash dividend or other cash distribution is paid with
respect to Common Stock, you will receive additional Restricted Stock Units
(“Dividend Equivalents”). The number of such additional Restricted Stock Units
will be determined as follows: multiply the number of Restricted Stock Units
currently held by the per share amount of the cash dividend or other cash
distribution on the Common Stock, and then divide the result by the price of the
Common Stock on the date of the dividend or distribution. These Dividend
Equivalent Restricted Stock Units will be subject to the same terms and
conditions as the original Restricted Stock Units that gave rise to them,

 

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

 

including forfeiture and settlement terms, except that if there is a fractional
number of Dividend Equivalent Restricted Stock Units on the date they are to be
settled, you will receive one share of Common Stock for the fractional Dividend
Equivalent Restricted Stock Units.

4.   Voting and Other Shareholder Rights.

     A Restricted Stock Unit is not a share of Common Stock, and thus you are
not entitled to any voting, dividend or other rights as a shareholder of the
Company with respect to the Restricted Stock Units you hold.

5.   Adjustments in Case of Stock Dividends, Stock Splits, Etc.

     In the event of a future reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger, consolidation, rights offering,
share exchange, reclassification, distribution, spin-off, or other change
affecting the corporate structure, capitalization or Common Stock, the number of
Restricted Stock Units you hold will be adjusted appropriately and equitably to
prevent dilution or enlargement of your rights.

6.   Tax Withholding.

     To the extent Procter & Gamble is required to withhold federal, state,
local or foreign taxes in connection with your Restricted Stock Units or
Dividend Equivalents, the Committee may require you to make such arrangements as
Procter & Gamble may deem appropriate for the payment of such taxes required to
be withheld, including without limitation, relinquishment of some of the shares
of Common Stock that would otherwise be given to you. However, regardless of any
action taken by Procter & Gamble with respect to any income tax, social
insurance, payroll tax, or other tax, by accepting a Restricted Stock Unit or
Dividend Equivalent, you acknowledge that the ultimate liability for any such
tax owed by you is and remains your responsibility, and that Procter & Gamble
makes no representations about the tax treatment of your Restricted Stock Units
or Dividend Equivalents, and does not commit to structure any aspect of the
Restricted Stock Units or Dividend Equivalents to reduce or eliminate your tax
liability.

7.   Suspension Periods and Termination.

     The Company reserves the right from time to time to temporarily suspend
your right to settle your Restricted Stock Units for shares of Common Stock
where such suspension is deemed by the Company as necessary or appropriate.

8.   Data Privacy.

     By accepting a Restricted Stock Unit, you explicitly and unambiguously
consent to the collection, use and transfer, in electronic or other form, of
your personal data as described in this document by and among, as applicable,
any Procter & Gamble entity or third party for the purpose of implementing,
administering and managing your participation in the Plan. You understand that
Procter & Gamble holds certain personal information about you, including without
limitation your name, home address and telephone number, date of birth, social
insurance number or other identification number, salary, nationality, job title,
any shares of stock or directorships held in a Procter & Gamble entity, details
of all options, Restricted Stock Units, or any other entitlement to shares of
stock awarded, canceled, exercised, vested, unvested or outstanding in your
favor, for the purpose of implementing, administering and managing the Plan
(“Data”). You understand that Data may be transferred to any third parties
assisting in the implementation, administration and management of the Plan, that
these recipients may be

 

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located in your country or elsewhere, and that the recipient’s country may have
different data privacy laws and protections than your country. You understand
that you may request a list with the names and addresses of any potential
recipients of Data by contacting your local human resources representative. You
authorize the recipients to receive, possess, use, retain and transfer the Data,
in electronic or other form, for the purposes of implementing, administering and
managing your participation in the Plan, including any requisite transfer of
such Data to any broker or other third party with whom you may elect to deposit
any shares of Common Stock in connection with the settlement of your Restricted
Stock Units. You understand that Data will be held only as long as is necessary
to implement, administer and manage your participation in the plan. You
understand that you may, at any time, view Data, request additional information
about the storage and processing of Data, require any necessary amendments to
Data, or refuse or withdraw the consents contained in this paragraph, in any
case without cost, by contacting in writing your local human resources
representative. You understand, however, that refusing or withdrawing your
consent may affect your ability to participate in the Plan. For more information
on the consequences of your refusal to consent or withdrawal of consent, you
understand that you may contact your local human resources representative.

9.   Notices.

(a) Any notice to Procter & Gamble that is required or appropriate with respect
to Restricted Stock Units held by you must be in writing and addressed to:
The Procter & Gamble Company
ATTN: Corporate Secretary’s Office
P.O. Box 599
Cincinnati, OH 45201
or such other address as Procter & Gamble may from time to time provide to you
in writing.
(b) Any notice to you that is required or appropriate with respect to Restricted
Stock Units held or to be awarded to you will be provided to you in written or
electronic form at any physical or electronic mail address for you that is on
file with Procter & Gamble.

10.   Successors and Assigns.

     These Terms and Conditions are binding on, and inure to the benefit of,
(a) The Procter & Gamble Company and its successors and assigns; and (b) you
and, if applicable, the representative of your estate.

11.   Governing Law.

     The validity, interpretation, performance and enforcements of these Terms
and Conditions, the Plan and your Restricted Stock Units will be governed by the
laws of the State of Ohio, U.S.A. without giving effect to any other
jurisdiction’s conflicts of law principles. With respect to any dispute
concerning these Terms and Conditions, the Plan and your Restricted Stock Units,
you consent to the exclusive jurisdiction of the federal or state courts located
in Hamilton County, Ohio, U.S.A.

12.   The Plan.

     All Restricted Stock Units awarded to you have been awarded under the Plan.
Certain provisions of the Plan may have been repeated or emphasized in these
Terms and Conditions;

 

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however, all terms of the Plan apply to you and your Restricted Stock Units
whether or not they have been called out in these Terms and Conditions.

13.   Effect of These Terms and Conditions.

     These Terms and Conditions and the terms of the Plan, which are
incorporated herein by reference, describe the contractual rights awarded to you
in the form of Restricted Stock Units, and the obligations imposed on you in
connection with those rights. No right exists with respect to Restricted Stock
Units except as described in these Terms and Conditions and the Plan.

 

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Appendix 11
Payment Preference Materials for Key Manager Awards
[DATE]
[NAME]
Subject : Payment Form Elections for STAR, BGP and Key Manager Awards
Your choices for the awards are:
February [YEAR] Key Manager Long-Term Incentive Award

  •   Stock Options     •   Restricted Stock Units (RSUs) (0%, 25% or 50%)

September [YEAR] STAR Award

  •   Cash     •   Stock Options     •   Restricted Stock Units (for BGP
participants only)— no forfeiture provision     •   Deferred Compensation (for
BGP participants only)

September [YEAR] BGP Award

  •   Three-Year Restricted Stock Units (50% of award required in this form)    
•   Cash, Restricted Stock Units — no forfeiture provision, or Deferred
Compensation (50% of award subject to this election)

Attached you will find an election form to be returned to [NAME]. Please note
Form A now includes the Senior Executive Officer Recoupment Policy.
It is strongly recommended that you consult legal/tax/financial advisors to
determine the appropriate award form(s) for your personal situation.
While your selection will be given consideration, it is not binding on the
Company until approved by the Compensation and Leadership Development Committee
of the Board of Directors. IF YOU MISS THE [DATE] DEADLINE, CURRENT LAWS
REQUIRED US TO DEFAULT YOUR AWARDS. The Key Manager Stock Option grant will
default to 100% stock options; the STAR award will default to 100% cash; and the
BGP award will default to 50% 3-year RSUs and 50% cash.
GLOBAL EXECUTIVE COMPENSATION

 

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Payment Preference Materials for Key Manager Awards
[YEAR] EXECUTIVE COMPENSATION AWARD FORM PREFERENCES

  •   You must be an active employee as of [DATE] to receive any non-cash award
    •   All elections are irrevocable after [DATE]

[YEAR] Key Manager Long-Term Incentive Award Payable [DATE] [YEAR]

             
Stock Options
    — %    
Restricted Stock Units (RSUs)
    —
(maximum of 50%) %   Shares will deliver 100% in [YEARS] years ([DATE], [YEAR]).
Key Manager RSUs have no dividend equivalents and no deferral past 5 years.
Total
    100 %    

[YEAR] STAR Award Payable [DATE] [YEAR]

             
Cash
    — %    
Stock Options
    — %    
Restricted Stock Units (RSUs)
    — %   ________ (Select year you want
 
          shares delivered, e.g. [YEAR],
 
          or one year after retirement.)
Deferred Compensation
    — %    
Total
    100 %    

[YEAR] BGP Award Payable [DATE] [YEAR] (Complete for remaining 50%)

             
3-Year Restricted Stock Units (RSUs) (If you leave the Company within 3 years of
grant for reasons other than retirement, you forfeit these units.)
    50
(required) %   _________ (Select year you want shares delivered, e.g. [three
years after grant date, any year later than three years after grant date, or one
year after retirement]
Restricted Stock Units (RSUs)
    — %   _________ (Select year you want shares delivered, e.g., [YEAR], or one
year after retirement)
Cash
    — %    
Deferred Compensation
    — %    
Total
    100 %    

PLEASE NOTE: Any election by you to delay the settlement date of your RSUs does
not in any way alter or amend the terms of The Procter & Gamble Stock and
Incentive Compensation Plan and/or the Statement of Terms and Conditions for
Restricted Stock Units pursuant to which the subject RSUs were granted.
Your signature below indicates your agreement that any awards granted or paid
pursuant to the STAR and/or BGP programs will be subject to the terms of the
Senior Executive Officer Recoupment Policy. This Policy provides that in the
event of a significant restatement of financial results, if compensation paid
pursuant to STAR and/or BGP would have been lower based on restated results, the
Compensation and Leadership Development Committee may seek to recoup from the
senior executive officers some or all of the compensation paid pursuant to STAR
and/or BGP. A copy of the policy is available from [NAME].

                 
 
                    Signature)           (Date)

Return form to [NAME].