Exhibit 10-1 - 10-Q JAS 2006


    
      

        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);

                


        

        


        
          	 	
                  (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.

        


        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 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.

        


        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).

                


        

        


        
          	 	
                  (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 Special Separation, 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.

                


        

        


        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.

        


        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 to the Chief Executive and
          the
          Company’s other four highest paid executive officers (as reported in the
          Company’s proxy statement pursuant to Regulation S-K, Item 402(a)(3)) under
          Article J, Paragraph 1 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 modify these criteria, however, at
                    all times the
                    criterion must be valid performance criterion for purposes of
                    Section
                    162(m) of the Internal Revenue Code of 1986, as amended (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 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 

         

        (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.

        


        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.

        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. 

        


        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 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.

        


        


        


        


        


        


        


        


        


        


        


        


        


        


        


        


        


        


        


        


        


        


        


        


        


        


        


        2001
          stock plan.doc