Document:

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                                  EXHIBIT (10-1)

        THE PROCTER & GAMBLE 2001 STOCK AND INCENTIVE COMPENSATION PLAN
   (AS ADJUSTED FOR STOCK SPLIT ON MAY 21, 2004 AND AMENDED ON MARCH 8, 2005)

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 (except for terminations
            of employment resulting from Retirement or Special Separation), 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.

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      (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 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. The Committee is authorized
to suspend or terminate any outstanding stock option or stock appreciation right
for actions taken by a Participant prior to termination of employment if the
Committee determines the Participant has acted significantly contrary to the
best interests of the Company or its subsidiaries.

      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.

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      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.

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      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.

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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, 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
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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

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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
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                        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.

<PAGE>

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.

<PAGE>

                             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

<PAGE>

      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 fiscal year ended
            June 30, 2004;

<PAGE>

      2.    The Company's Quarterly Report on Form 10-Q for the quarters ended
            September 30, 2004 and December 31, 2004; 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. Chris B. Walther, Assistant Secretary, The Procter & Gamble
Company, One Procter & Gamble Plaza, Cincinnati, Ohio 45202, (513) 983-7854.<PAGE>
                                 EXHIBIT (10-2)

THE PROCTER & GAMBLE FUTURE SHARES PLAN

ARTICLE 1. ESTABLISHMENT, OBJECTIVES, AND DURATION

      1.1 ESTABLISHMENT OF THE PLAN. The Procter & Gamble Company, an Ohio
corporation (hereinafter referred to as the "Company"), hereby establishes a
worldwide stock option plan to be known as "The Procter & Gamble Future Shares
Plan" (hereinafter referred to as the "Plan"), as set forth herein.

      1.2 PURPOSE. The purpose of the Plan is to advance the interests of the
Company by giving substantially all employees a stake in the Company's future
growth and success, to increase employee focus on the Company's stock price, to
strengthen the alignment of interests between employees and the Company's
shareholders through the increased ownership of shares of the Company's common
stock, and to encourage employees to remain in the employ of the Company and its
Affiliates.

      1.3 DURATION OF THE PLAN. The Plan shall become effective as of October
14, 1997 (the "Effective Date"). The Plan shall terminate on October 13, 2007.
No Award may be granted after the termination date of the Plan, but Awards
theretofore granted shall continue in force beyond that date pursuant to their
terms.

ARTICLE 2. DEFINITIONS

      Whenever used in the Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word
shall be capitalized:

      2.1   "AFFILIATE" means any entity in which the Company has an ownership
            interest of fifty percent (50%) or more.

      2.2   "AWARD" means a grant of an Option, a Modified Option, an SAR, or a
            Modified SAR under the Plan.

      2.3   "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the
            Company.

      2.4   "CODE" means the Internal Revenue Code of 1986 and the regulations
            thereunder, as amended from time to time.

      2.5   "COMMITTEE" means the Compensation Committee of the Board or such
            other committee appointed by the Board to administer the Plan.

      2.6   "COMMON STOCK" means the common stock, without par value, of the
            Company.

      2.7   "COMPANY" means The Procter & Gamble Company, an Ohio corporation,
            and any successor thereto.

      2.8   "DISABILITY" or "DISABLED" shall mean qualifying for benefits under
            a long-term disability pay plan maintained by the Company or any
            Affiliate, or as required by or

<PAGE>

            available under applicable local law, or in the absence of any such
            plan or local law, as determined by the Committee.

      2.9   "EMPLOYEE" means a full- or part-time employee on the regular
            payroll of the Company or any Affiliate as of the Grant Date of an
            Award. For purposes of this definition, "on the regular payroll"
            shall mean paid through the payroll department of the Company or an
            Affiliate (or, if there is no such payroll department, classified as
            a regular employee on the Company's or Affiliate's employment
            records), and shall exclude individuals classified by the Company or
            Affiliate as intermittent or temporary, or as independent
            contractors, regardless of how such person may be classified by any
            federal, state, or local, domestic or foreign, government agency or
            instrumentality thereof, or court. An individual whose only
            relationship to the Company or an Affiliate is that of a temporary
            employee (except regular employees on temporary assignment from
            another unit) or leased employee (as defined in Section 414(n)(2) of
            the Code) shall not be an Employee unless determined otherwise by
            the Committee at its sole discretion. The determination of whether
            an individual is an "employee on the regular payroll" shall be made
            solely according to the method of paying the individual for
            services, and such determination shall be within the discretion of
            the Committee.

      2.10  "FAIR MARKET VALUE" means, unless determined otherwise by the
            Committee, the average of the high and low prices of a share of
            Common Stock on the New York Stock Exchange on the date of
            measurement as determined by the Committee, and if there were no
            trades on such date, on the day on which a trade occurred next
            preceding such date, or as otherwise determined by the Committee.

      2.11  "GRANT DATE" means such date, as determined by the Committee, upon
            which Awards are granted to Participants pursuant to the terms of
            this Plan.

      2.12  "MODIFIED OPTION" means an Option that must be exercised on the
            fifth anniversary of the Grant Date or forfeited.

      2.13  "MODIFIED SAR" means an SAR that must be exercised on the fifth
            anniversary of the Grant Date or forfeited.

      2.14  "OPTION" means a right to purchase a specified number of shares of
            Common Stock at the Option Price, which is not intended to qualify
            under Code Section 422 as an Incentive Stock Option, except as
            otherwise provided in Section 6.1(k).

      2.15  "OPTION PRICE" means the price at which a share of Common Stock may
            be purchased by a Participant pursuant to an Option or a Modified
            Option.

      2.16  "PARTICIPANT" means an Employee who has been selected by the
            Committee in its sole discretion to receive an Award or who has
            outstanding an Award granted under the Plan.

<PAGE>

      2.17  "RETIREMENT" means, strictly for purposes of this Plan, the
            termination of employment on or after the date the Participant has
            attained age fifty-five (55), except as otherwise determined by the
            Committee.

      2.18  "SAR" means an Award pursuant to which the Participant receives a
            right to a cash settlement payment upon exercise equal to the excess
            of the Fair Market Value of one share of Common Stock on the date of
            exercise over the Fair Market Value of one share of Common Stock on
            the Grant Date of the SAR, multiplied by the number of SARs granted.

      2.19  "SPECIAL SEPARATION" means any termination of employment, except a
            termination for cause or a voluntary resignation that is not
            initiated or encouraged by the Company, that occurs prior to the
            time a recipient is eligible to retire.

      2.20  "SPREAD VALUE" means the excess of the Fair Market Value of one
            share of Common Stock on the date of exercise over the Fair Market
            Value of one share of Common Stock on the Grant Date, multiplied by
            the number of shares of Common Stock underlying the Award.

ARTICLE 3. ADMINISTRATION

      The Plan and all Awards granted pursuant thereto shall be administered by
the Compensation Committee of the Board. The Committee may, from time to time,
adopt rules and regulations for carrying out the provisions and purposes of the
Plan. The Committee, in its absolute discretion, shall have the power to
interpret and construe the Plan; provided, however, that the Committee may
designate persons other than members of the Committee to carry out such
responsibilities of the Committee under the Plan as it may deem appropriate. Any
interpretation of construction of any provision of this Plan by the Committee
shall be final and conclusive upon all parties. No member of the Committee or
the Board shall be liable for any action or determination made hereunder in good
faith.

ARTICLE 4. SHARES SUBJECT TO THE PLAN

      4.1 NUMBER OF SHARES AVAILABLE FOR OPTIONS. The number of shares of Common
Stock available with respect to all Awards granted under the Plan shall not
exceed thirty-four million (34,000,000) in the aggregate, subject to adjustment
under Section 4.2 herein. The shares of Common Stock subject to the Plan shall
consist of either authorized but unissued shares or treasury shares, as
determined by the Committee. Notwithstanding any terms or conditions contained
herein, the shares to be delivered by the Company upon exercise of an Award by a
Participant located in Italy shall be authorized but unissued shares.

      4.2 CHANGES IN CAPITALIZATION. 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 shareholders, appropriate adjustments and changes shall be made by
the Committee to the extent necessary to prevent dilution or enlargement of
rights under the Plan in (a) the aggregate number of shares of Common Stock
subject to the Plan; (b) the number of shares of Common Stock for which Awards
may be granted or awarded to any Participant; (c) the

<PAGE>

number of shares and the Option Price per share of all shares of Common Stock
subject to outstanding Options or Modified Options, as applicable; (d) the
number of SARs or Modified SARs subject to an Award and the Fair Market Value of
a share of Common Stock for purposes of determining the cash settlement payment
on exercise of an SAR or Modified SAR, as applicable; and (e) such other
provisions of the Plan as may be necessary and equitable to carry out the
foregoing purposes.

ARTICLE 5. ELIGIBILITY AND PARTICIPATION

      An Award may be granted by the Committee, in its discretion, to an
Employee who is actively employed by the Company or any Affiliate on the Grant
Date. The granting of Awards under the terms of this Plan is made at the sole
discretion of the Committee and does not entitle a Participant to receive future
Awards. The adoption of this Plan shall not be deemed to give any Participant
any right to be granted an Award, except to the extent as may be determined by
the Committee.

ARTICLE 6. AWARDS

      6.1 AWARDS. The Award to each Participant under the Plan shall consist of
either Options, Modified Options, SARs, or Modified SARs. The Committee shall
determine (i) the number of shares of Common Stock to be covered by each Award;
(ii) the terms and conditions of the Awards (including, but not limited to,
restrictions upon the Awards, when Awards are first exercisable and the period
of exercise, conditions of their exercise, requirements regarding payment of the
exercise price, withholding requirements and restrictions on the shares of
Common Stock issuable upon the exercise thereof); and (iii) the form of the
instruments necessary or advisable in the administration of the Awards.

      (a)   TERM OF AWARD. The term of each Award shall be no more than ten (10)
      years from the Grant Date, except as provided in Section 6.1(k).

      (b)   OPTION PRICE. With respect to an Option or Modified Option, the
      Option Price shall be not less than the Fair Market Value of the Common
      Stock on the Grant Date.

      (c)   EXERCISE AND LIMITATIONS ON EXERCISE. Except as otherwise provided
      for herein, if a Participant has been in the continuous employ of the
      Company through the fifth anniversary of the Grant Date, at any time on or
      after the fifth anniversary of the Grant Date, but in no event later than
      the tenth anniversary of the Grant Date (except as provided in Section
      6.1(k)), the Participant may exercise the Award, and purchase the number
      of shares of Common Stock covered by the Option (or Modified Option if the
      Award is exercised on the fifth anniversary of the Grant Date), or receive
      the cash settlement payment with respect to the SAR (or Modified SAR if
      the Award is exercised on the fifth anniversary of the Grant Date), as
      applicable. An Award must be exercised for the full number of shares of
      Common Stock covered by the Option or Modified Option, or for the entire
      cash settlement payment with respect to the SAR or Modified SAR, as
      applicable. Notwithstanding the foregoing, stock options and stock
      appreciation rights granted hereunder shall vest immediately upon a
      "Change in Control." A "Change in Control" shall mean the occurrence of
      any of the following:

                  (i) 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

<PAGE>

      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
      Section 6.1(c), 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);

                  (ii) The individuals who, as of July 11, 2000 are members of
      the Board (the "Incumbent Board"), cea se 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 this 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

                  (iii) The consummation of:

                        (A) 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:

                              (1) 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;

                              (2) 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
<PAGE>

                              (3) 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 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;

                        (b) A complete liquidation or dissolution of the
      Company; or

                        (c) 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.

      (d)   TERMINATION OF EMPLOYMENT GENERALLY.

            (i) If a Participant's employment is terminated on or after the
      fifth anniversary of the Grant Date, for any reason other than death,
      Disability, Retirement, or Special Separation the Award shall be
      exercisable only for thirty (30) calendar days following such termination,
      and only to the extent such Award was exercisable on the date of such
      termination, except as may be otherwise determined by the Committee. In no
      event, however, may an Award be exercised more than ten (10) years after
      the Grant Date, except as provided in Section 6.1(k). If a Participant's
      employment is terminated prior to the fifth anniversary of the Grant Date,
      for any reason other than death, Disability, Retirement, or Special
      Separation, each Award granted to such Participant shall be immediately
      canceled and the Participant shall forfeit the Award upon such termination
      of employment.

            (ii) Neither the Company nor the Committee shall have any obligation
      to notify a Participant of the expiration of an Award.

            (iii) Unless the Committee shall determine otherwise, a Participant
      employed by an Affiliate or business unit of the Company that is sold or
      otherwise divested from the

<PAGE>

      Company shall be considered to have his or her employment terminated as of
      the effective date of the divestiture.

      (e)   TERMINATION OF EMPLOYMENT DUE TO DISABILITY OR RETIREMENT.

            (i) If prior to the fifth anniversary of the Grant Date a
      Participant's employment is terminated due to Disability or Retirement,
      the Award may be exercised on or after the fifth anniversary of the Grant
      Date, but in no event may such an Award be exercised more than ten (10)
      years after the Grant Date, except as provided in Section 6.1(k). If a
      Participant's employment is terminated due to Disability or Retirement on
      or after the fifth anniversary of the Grant Date, the Award may be
      exercised, to the extent such Award was exercisable on the date of such
      termination, within the remaining period of the Award.

            (ii) Notwithstanding the above and except for Participants located
      in Italy, the Committee reserves the discretionary ability to substitute
      an immediate cash payment equal to the Spread Value of the Award in full
      satisfaction of the Award, in the event of a termination of employment due
      to Disability or Retirement to the extent such payment is permitted by
      law.

      (f)   TERMINATION OF EMPLOYMENT DUE TO SPECIAL SEPARATION.

            (i) If a Participant's employment is terminated due to Special
      Separation (except for Participants located in Italy), the Participant
      will receive an immediate cash payment equal to the Spread Value of the
      Award in full satisfaction of the Award, to the extent permitted by law.

            (ii) Notwithstanding the above, the Committee reserves the
      discretionary ability to waive the above cash payment provision and: (1)
      for terminations of employment due to Special Separation prior to the
      fifth anniversary of the Grant Date, specify that the Award may be
      exercised on or after the fifth anniversary of the Grant Date, but in no
      event may such an Award be exercised more than ten (10) years after the
      Grant Date, except as provided in Section 6.1(k); and (2) for terminations
      of employment due to Special Separation on or after the fifth anniversary
      of the Grant Date, specify that the Award may be exercised, to the extent
      such Award was exercisable on the date of such termination, within the
      remaining period of the Award.

      (g)   DEATH OF A PARTICIPANT. Upon the death of a Participant, while an
      Award is still outstanding, regardless of whether the Award is or is not
      exercisable, a cash payment equal to the Spread Value of the Award, as of
      the date of the Participant's death, shall be paid as soon as
      administratively practicable to the Participant's estate, in full
      satisfaction of the Award. Notwithstanding the above, upon the death of a
      Participant located in Italy, the outstanding Award granted to such
      Participant shall be (i) immediately canceled if the death occurs prior to
      the fifth anniversary of the Grant Date, or (ii) exercisable by the
      executors, administrators or heirs of the deceased Participant only for
      six (6) months following such death if the death occurs on or after the
      fifth anniversary of the Grant Date.

<PAGE>

      (h)   NONTRANSFERABILITY. Awards are not transferable and may only be
      exercised by the Participant.

      (i)   EXERCISE; NOTICE THEREOF. Awards shall be exercised by delivering
      written notice of intention to exercise the Award, pursuant to such terms
      and conditions as may be determined by the Committee. The Committee shall
      have the authority to establish procedures under any or all methods of
      exercise, including the designation of the brokerage firm or firms through
      which exercises may be effected, which need not be the same for each grant
      or for each Participant. The Committee shall have the authority to change
      without notice any method of exercise for any reason whatsoever,
      notwithstanding the fact that the method of exercise had been available to
      Participants in the past.

      (j)   RIGHTS AS SHAREHOLDER. A Participant shall have none of the rights
      of a shareholder with respect to shares of Common Stock covered by any
      Award until the Participant becomes the record holder of such shares as
      determined by the records of the Company's transfer agent.

      (k)   ADDITIONAL TERMS. With respect to any Award, the Committee may, in
      its discretion: (i) determine which Affiliates will be covered by the
      Plan; (ii) determine which Employees are eligible to participate in the
      Plan; (iii) modify or restrict any of the terms and conditions of any
      Awards including but not limited to extending the term of an Award beyond
      ten (10) years; (iv) modify or restrict exercise procedures and any other
      Plan procedures; (v) establish local country plans as subplans to this
      Plan, each of which may be attached as an Appendix hereto; and (vi) take
      any action, before or after an Award is made, which it deems advisable to
      obtain or comply with any necessary local government regulatory exemptions
      or approvals; provided that the Committee may not take any action
      hereunder which would (1) increase the number of shares of Common Stock
      covered by the Plan; or (2) violate any securities law, the Code, or any
      governing statute.

      (l)   STOCK APPRECIATION RIGHTS. The Committee may grant SARs or Modified
      SARs, as applicable, in lieu of Options or Modified Options under the
      Plan.

      6.2   REFUSAL OF AWARD. Any Participant may refuse the grant of an Award
by notifying the Committee of his or her refusal in writing in a form and
pursuant to procedures to be determined by the Committee.

ARTICLE 7. GENERAL PROVISIONS

      7.1   NO ADDITIONAL RIGHTS. Nothing in the Plan shall interfere with or
limit in any way the right of the Company to terminate any Participant's
employment at any time, or confer upon any Participant any right to continue in
the employ of the Company. No Employee shall have the right to be selected to
receive an Award under this Plan or having been so selected, to be selected to
receive a future Award. Neither the Award nor any benefits arising under this
Plan shall constitute part of a Participant's employment contract with the
Company or any Affiliate, and accordingly, this Plan and the benefits hereunder
may be terminated at any time in the sole and exclusive discretion of the
Committee without giving rise to liability on the part of the Company or any
Affiliate for severance payments.

<PAGE>

      7.2   NO EFFECT ON OTHER BENEFITS. The receipt of Awards under the Plan
shall have no effect on any benefits and obligations to which a Participant may
be entitled from the Company or any Affiliate, under another plan or otherwise,
or preclude a Participant from receiving any such benefits.

      7.3   BINDING EFFECT. Any decision made or action taken by the Company,
the Board, or by the Committee arising out of or in connection with the
construction, administration, interpretation, and effect of the Plan shall be
conclusive and binding upon all persons, including the Company, its
shareholders, Employees, Participants, and their estates and beneficiaries.

      7.4   INALIENABILITY OF BENEFITS AND INTEREST. No benefit payable under,
or interest in, the Plan shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any
such attempted action shall be void and no such benefits or interest shall be in
any manner liable for or subject to debts, liabilities, engagements, or torts of
any Participant or beneficiary.

      7.5   REQUIREMENTS OF LAW. The granting of Awards and the issuance of
shares of Common Stock under the Plan shall be subject to all applicable laws,
rules, and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.

      7.6   GOVERNING LAW. To the extent not preempted by federal law, the Plan
and all agreements hereunder shall be construed in accordance with and governed
by the laws of the state of Ohio.

      7.7   WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, to require an Affiliate to deduct or withhold, or to require
a Participant to remit to the Company or an Affiliate, an amount sufficient to
satisfy federal, state, and local taxes, domestic or foreign, required by law or
regulation to be withheld with respect to any taxable event arising as a result
of this Plan.

      7.8   AMENDMENTS. Subject to the terms of the Plan, the Committee may at
any time and from time to time alter, amend, suspend, or terminate the Plan in
whole or in part.

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