Document:

EX-10.5

EXHIBIT (10-5)

The Procter & Gamble 1993 Non-Employee Directors’ Stock Plan

 

 

THE PROCTER & GAMBLE 1993 NON-EMPLOYEE DIRECTORS’

STOCK PLAN

(as amended September 10, 2002)

ARTICLE A — Purpose.

     The purpose of The Procter & Gamble 1993 Non-Employee Directors’ Stock Plan (hereinafter
referred to as the “Plan”) is to strengthen the alignment of interests between non-employee
Directors (hereinafter referred to as “Participants”) and the shareholders of The Procter & Gamble
Company (hereinafter referred to as the “Company”) through the increased ownership of shares of
the Company’s Common Stock. This will be accomplished by allowing Participants to elect
voluntarily to convert a portion or all of their cash fees for services as a Director into Common
Stock, by granting Participants a fixed value of shares of Common Stock restricted until
retirement (hereinafter referred to as “Retirement Shares”) and by granting Participants
non-qualified options to purchase shares of Common Stock (hereinafter referred to as “Stock
Options”).

ARTICLE B — Administration.

     1. The Plan shall be administered by the Compensation Committee
(hereinafter referred to as the “Committee”) of the Board of Directors of the Company
(hereinafter referred to as the “Board”), or such other committee as may be designated by
the Board. The Committee shall consist of not less 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, 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.

     2. It shall be the duty of the Committee to administer this Plan in accordance
with its provisions and to make such recommendations of amendments or otherwise as it
deems necessary or appropriate. A decision by a majority of the Committee shall govern
all actions of the Committee.

     3. Subject to the express provisions of this Plan, the Committee shall have
authority to allow Participants the right to elect to receive fees for services as a director
in
either cash or an equivalent amount of whole shares of Common Stock of the Company,
or partly in cash and partly in whole shares of the Common Stock of the Company,
subject to such conditions or restrictions, if any, as the Committee may determine. The
Committee also has the authority to make all other determinations it deems necessary or
advisable for administering this Plan.

     4. The Committee may establish from time to time such regulations,
provisions, and procedures within the terms of this Plan as, in its opinion, may be
advisable in the administration of this Plan.

 

 

     5. The Committee may designate the Secretary of the Company or other employees of the Company
to assist the Committee in the administration of this Plan and may grant authority to such persons
to execute documents on behalf of the Committee.

ARTICLE C — Participation.

     Participation in the Plan shall be limited to all non-employee Directors of the Company.

ARTICLE D — Limitation on Number of Shares for the Plan.

     The total number of shares of Common Stock of the Company that may be awarded each year shall
not exceed 50,000 shares.

ARTICLE E — Shares Subject to Use Under the Plan.

     Shares of Common Stock to be awarded under the terms of this Plan shall be treasury shares.

ARTICLE F — Retirement Shares

1. On the first business day in January, each Participant shall receive Retirement
Shares with a fair market value of $45,000 on the date of grant.

2. All shares awarded under this Article shall be valued as set forth in Article I.

ARTICLE G — Stock Options.

     1. The Committee may, from time to time, grant Participants a Stock Option
to purchase shares of Common Stock having an exercise price of one hundred percent
(100%) of the fair market value of the Common Stock on the date of the grant.

     2. The Stock Options shall have a term of ten (10) years from the date of
grant, subject to earlier termination as provided herein, and shall be exercisable 100%
three (3) years from the date of grant, except in the case of death, in which case the Stock
Options shall be immediately exercisable.

     3. Stock Options are not transferable other than by will or by the laws of
descent and distribution. Legatees, distributees and duly appointed executors and
administrators of the estate of a deceased Participant shall have the right to exercise such
Stock Options at any time prior to the expiration date of the Stock Options.

     4. If a Participant ceases to be a Director while holding unexercised Stock
Options, such stock options are then void, except in the case of (i) death, (ii) disability,

 

 

(iii) retirement at the end of a term, (iv) retirement after attaining the age of sixty-nine (69),
(v) resignation from the Board following the Participant’s retirement from a principal employer
under the terms of an appropriate retirement plan or (vi) resignation from the Board for reasons of
the antitrust laws or the conflict of interest, corporate governance or continued service policies.

     5. Upon the exercise of a Stock Option, payment in full of the exercise price shall be made
by the Participant. The exercise price may be paid for by the Participant either in cash, shares
of the Common Stock of the Company to be valued at their fair market value on the date of
exercise, or a combination thereof.

ARTICLE H — 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 and stock appreciation rights 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 I — Transfer of Shares.

     1. The Committee may transfer Common Stock of the Company under the
Plan subject to such conditions or restrictions, if any, as the Committee may determine.
The conditions and restrictions may vary from time to time and may be set forth in
agreements between the Company and the Participant or in the awards of stock to them,
all as the Committee determines.

     2. The shares awarded shall be valued at the average of the high and low
quotations for Common Stock of the Company on the New York Stock Exchange on the
day of the transfer to a Participant. All shares awarded shall be full shares, rounded up to
the nearest whole share.

ARTICLE J — Additional Provisions.

     1. The Board may, at any time, repeal this Plan or may amend it from time to time except
that no such amendment may amend this paragraph, increase the annual aggregate number of shares
subject to this Plan, or alter the persons eligible to participate in this Plan. The Participants
and the Company shall be bound by any such amendments as of their effective dates, but if any
outstanding awards are affected, notice thereof shall be given to the holders of such awards and
such amendments shall not be applicable to

 

 

such holder without his or her written consent. If this Plan is repealed in its entirety, all
theretofore awarded shares subject to conditions or restrictions transferred pursuant to this Plan
shall continue to be subject to such conditions or restrictions.

     2. Every recipient of shares pursuant to this Plan shall be bound by the terms and provisions
of this Plan and of the transfer of shares agreement referable thereto, and the acceptance of any
transfer of shares pursuant to this Plan shall constitute a binding agreement between the
recipient and the Company.

     3. Notwithstanding anything to the contrary in the this 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 Section 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 11, 2000 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 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
	 
	 	(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 Mergerconstitute 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.

ARTICLE K — Duration of Plan.

     This Plan shall be effective as of January 1, 1994. This Plan will terminate on December 31,
2003 unless a different termination date is fixed by the shareholders or by action of the Board but
no such termination shall affect the prior rights under this Plan of the Company or of anyone to
whom shares have been transferred prior to such termination.

Plan adopted November 9, 1993

Plan approved by shareholders on October 11, 1994

Plan Amended January 10, 1995

Plan Amended June 11, 1996

Adjusted for August 22, 1997 stock split

Plan amended January 12, 1999

Plan amended July 11, 2000

Plan amended December 12, 2000

Plan amended December 11, 2001

Plan amended September 10, 2002EX-10.6

EXHIBIT (10-6)

The Procter & Gamble 1992 Stock Plan (Belgian Version)

 

 

The Procter & Gamble Company

Executive Offices

1 Procter & Gamble Plaza, Cincinnati, Ohio 45202-3315

December 11, 2001

To:        Participants in The Procter & Gamble 1992 Stock Plan (Belgian Version)

     This document provides a copy of The Procter & Gamble 1992 Stock Plan (Belgian Version)
followed by important Additional Information. Please save this with your stock option materials.

Very truly yours,

Terry L. Overbey

Secretary            

This document constitutes part of a prospectus covering securities that have been registered
under the Securities Act of 1933.

 

 

THE PROCTER & GAMBLE 1992 STOCK PLAN (BELGIAN VERSION)

(as amended December 11, 2001)

1,000,000 Shares of Common Stock of The Procter & Gamble Company

and

1,000,000 Options to Purchase Common Stock of The Procter & Gamble Company

ARTICLE A — Purpose.

     The purpose of The Procter & Gamble 1992 Stock Plan (Belgian Version) (hereinafter referred to
as the “Plan”) is to encourage those employees of The Procter & Gamble Company (hereinafter
referred to as the “Company”) and its subsidiaries who are largely responsible for the long-term
success and development of the business 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 those employees to remain in the employ of the Company and its
subsidiaries. This will be accomplished through the granting or sale to employees of options to
purchase shares of the Common Stock of the Company, payment of a portion of the employees’
remuneration in shares of the Common Stock, and the granting to them by the Company and a
subsidiary, if appropriate, of deferred awards related to the increase in the price of the Common
Stock of the Company as provided by the terms and conditions set forth in the Plan.

ARTICLE B — Administration.

     1. The Plan shall be administered by the Compensation Committee (hereinafter referred to as
the “Committee”) of the Board of Directors of the Company (hereinafter referred to as the
“Board”), or
such other committee as may be designated by the Board. The Committee shall consist of not
less than
three (3) members of the Board who are neither officers nor employees, or members of the Board
who
are “Non-Employee Directors” as defined in Rule 16b-3 under the Securities Exchange Act of
1934, as
amended (hereinafter referred to as 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.

     2. It shall be the duty of the Committee to administer this Plan in accordance with its
provisions, to report thereon not less than once each year to the Board and to make
such
recommendations of amendments or otherwise as it deem necessary or appropriate. A decision
by a
majority of the Committee shall govern all actions of the Committee.

     3. Subject to the express provisions of this Plan, the Committee shall have authority: to
grant or
offer for sale nonstatutory and incentive stock options; to grant to recipients stock
appreciation rights
either freestanding, in tandem with simultaneously granted or sold stock options, or in
parallel with
simultaneously granted or sold stock options; to award a portion of a recipient’s remuneration
in shares
of Common Stock of the Company subject to such conditions or restrictions, if any, as the
Committee
may determine; to determine all the terms and provisions of the respective stock option, stock
appreciation right, and stock 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; and
to make
all other determinations it deems necessary or advisable for administering this Plan;
provided, however,
the Committee shall have the further authority at time of grant to:

	 	(a)	 	waive the provisions of Article F, paragraph l(a);
	 
	 	(b)	 	waive the provisions of Article F, paragraph l(b);
	 
	 	(c)	 	waive the provisions of Article G, paragraph 4(a) and (b); and

 

 

	 	(d)	 	impose conditions in lieu of those set forth in Article G, paragraphs 4 through 7,
for nonstatutory stock options, stock appreciation rights, and stock award grants which
do not increase or extend the rights of the recipient,

to take into consideration the differences, limitations, and requirements of non-United States
laws or conditions including tax regulations, exchange controls or investment restrictions,
possible unenforceability of any part of this Plan, or other matters deemed appropriate by it.

     4. The Committee may establish from time to time such regulations, provisions, and procedures
within the terms of this Plan as, in its opinion, may be advisable in the administration of
this Plan.

     5. The Committee may designate the Secretary of the Company or other employees of the
Company to assist the Committee in the administration of this Plan and may grant authority to
such
persons to execute documents on behalf of the Committee.

ARTICLE C — Participation.

     The Committee shall select 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 and shall determine the number of shares of the Common Stock of the
Company to be transferred under this Plan subject to such conditions or restrictions as the
Committee may determine and the number of shares with respect to which stock options or stock
appreciation rights will be granted or sold. The Committee may consult with the Chief Executive,
but nevertheless the Committee has the full authority to act, and the Committee’s actions shall be
final.

ARTICLE D — Limitation on Number of Shares for the Plan.

     1. Unless otherwise authorized by the shareholders, the maximum aggregate number of shares
available for award under this Plan for each calendar year the Plan is in effect, when
combined with the
maximum aggregate number of shares available for award under The Procter & Gamble 1992 Stock
Plan
in such calendar year, shall be one percent (1%) of the total issued shares of Common Stock of
the
Company as of June 30 of the immediately preceding fiscal year.

     2. Any of the authorized shares may be used in respect of any of the types of awards described
in this Plan, except that no more than twenty-five percent (25%) of the authorized shares in
any calendar
year may be issued as restricted or unrestricted stock and no more than 1,000,000 of the authorized shares during the term of the Plan may be issued as incentive stock options.

     3. Any authorized shares not used in a calendar year shall be available for awards under this
Plan in succeeding calendar years.

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 either authorized but unissued shares or treasury shares, as
determined by the
Board. 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 this Plan, restricted or unrestricted stock awarded under the terms of this
Plan shall be authorized but unissued shares, treasury shares, or shares acquired for purposes
of the Plan
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 or sale of stock options or stock appreciation rights under the terms
of this Plan, the recipient agrees as follows:

	 	(a)	 	The right to exercise any stock option or stock appreciation right shall be
conditional upon
certification by the recipient at time of exercise that the recipient intends to remain
in the
employ of the Company or one of its subsidiaries (except in cases of retirement,
disability or
Special Separation as defined in section 6 of Article G) for at least one (1) year
following the
date of the exercise of the stock option or stock appreciation right, 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 it subsidiaries’ trade secrets and confidential
information and
thereby help insure the long-term success of the business, the recipient, 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 recipient’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 recipient, as a consequence of the recipient’s employment with the Company or one of
its
subsidiaries, to be in development):

	 	(1)	 	with respect to which the recipient’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 recipient, as a
consequence of the
recipient’s job performance and duties, acquired knowledge of trade secrets or
other
confidential information of the Company or its subsidiaries.

	 	 	 	For purposes of this section, it shall be conclusively presumed that recipients 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 recipient (which recipient hereby acknowledges) to not use or disclose
the
Company’s or its subsidiaries’ trade secrets and confidential information known to the
recipient until any particular trade secret or confidential information become generally
known (through no fault of the recipient), 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 recipients who have job responsibilities outside of the United States, the
appropriate foreign country or countries’ industry.
	 
	 	(d)	 	By acceptance of any offered stock option or stock appreciation rights granted or
sold under
the terms of this Plan, the recipient acknowledges that if the recipient 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 recipient from
doing so.

 

 

	 	 	 	The recipient 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 recipient 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 recipient,
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 recipient’s
acceptance of an offer of the granting or sale 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 recipient 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 an employee has been granted or sold a stock option or a stock appreciation
right under this Plan shall not limit the right of the employer to terminate the recipient’s
employment at
any time. The Committee is authorized to suspend or terminate any outstanding stock option or
stock
appreciation right for actions taken prior to termination of employment if the Committee
determines the
recipient has acted significantly contrary to the best interests of the Company.

     3. More than one stock option or stock appreciation right may be granted or sold to any
employee under this Plan but the maximum number of shares with respect to which stock options
or
stock appreciation rights may be granted or sold to any employee in any calendar year shall
not exceed
five percent (5%) of the number of shares which can be issued or transferred annually
hereunder, when
combined with the maximum aggregate number of shares available for award under The Procter &
Gamble 1992 Stock Plan in such calendar year.

     4. The aggregate fair market value (determined at the time when the incentive stock option is
exercisable for the first time by an employee during any calendar year) of the shares for
which any
employee may be granted or sold incentive stock options under this 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 or sells 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 or sold in tandem with or parallel to 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 or parallel 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 or, in the case of stock options to be sold, at the
time of offer of
such stock options for sale, and shall be not less than one hundred percent (100%) of the fair
market
value of the Common Stock of the Company on such date.

ARTICLE G — Exercise of Stock Options and Stock Appreciation Rights.

 

 

     1. All stock options and stock appreciation rights granted or sold hereunder shall have a
maximum life of no more than fifteen (15) years from the date of grant or, in the case of
stock options to
be sold, from the date of the offer of such options for sale.

     2. No stock options or stock appreciation rights shall be exercisable within one (1) year from
their date of grant or, in the case of stock options to be sold, from the date of the offer of
such options for
sale, except in the case of the death of the recipient.

     3. During the lifetime of the recipient, stock options and stock appreciation rights may be
exercised only by the recipient personally, or, in the event of the legal incompetence of the
recipient, by
the recipient’s duly appointed legal guardian.

     4. In case a recipient of stock options or stock appreciation rights 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
recipient; (2) any Special Separation (as defined in section 6 of this Article G) that
occurs
more than six months from the date the options were granted or, in the case of stock
options
to be sold, from the date of the offer of such options for sale; or (3) any option as to
which
the Committee has waived, at the time of grant or, in the case of stock options to be
sold, at
the time of the offer of such options for sale, the provisions of this Article G,
paragraph 4(a)
pursuant to the authority granted by Article B, paragraph 3.
	 
	 	(b)	 	Any exercisable portions thereof are then void, except in the case of death,
retirement in
accordance with the provisions of any appropriate profit sharing or retirement plan of
the
Company or any of its subsidiaries, Special Separation (as defined in section 6 of this
Article
G) of the recipient, or any option as to which the Committee has waived, at the time of
grant
or, in the case of stock options to be sold, at the time of offer of such options for
sale, the
provisions of this Article G, paragraph 4(b) pursuant to the authority granted by
Article B,
paragraph 3.

     5. In the case of the death of a recipient of stock options or stock appreciation rights while
an
employee of the Company or any of its subsidiaries, 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 employee, at any time prior to the expiration date of
the stock
options or stock appreciation rights.

     6. Termination of employment under the permanent disability provision of any appropriate
profit sharing or retirement plan of the Company or any of its subsidiaries shall be deemed
the same as
retirement. 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. The death of a recipient of stock options or stock
appreciation rights
subsequent to retirement or Special Separation shall not render exercisable stock options or
stock
appreciation rights which were unexercisable at the time of the retirement or Special
Separation. The
persons to whom the exercisable stock options or stock appreciation rights have been
transferred by will
or the laws of descent and distribution shall have the privilege of exercising such remaining
stock
options, stock appreciation rights or parts thereof, at any time prior to the expiration date
of the stock
options or stock appreciation rights.

     7. Stock options and stock appreciation rights are not transferable other than by will or by
the
laws of descent and distribution and they may not be assigned or hypothecated. For the
purpose of
exercising stock options or stock appreciation rights after the death of the recipient, the
duly appointed
executors and administrators of the estate of the deceased recipient 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 recipient’s estate.

     8. Upon the exercise of stock appreciation rights, the recipient 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 the Common Stock of the Company 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
of the
Company 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. The number of shares with
respect to
which stock appreciation rights are being exercised shall not be available for granting or
selling future
stock options or stock appreciation rights under this Plan.

     9. The Committee may, in its sole discretion, permit a stock option which is being exercised
either (a) by an optionee whose retirement is imminent or who has retired or (b) after the
death of the
optionee, to be surrendered, in lieu of exercise, for an amount equal to the difference
between the stock
option exercise price and the fair market value of shares of the Common Stock of the Company
on the
day the stock option is surrendered, payment to be made in shares of the Company’s Common
Stock
which are subject to this Plan valued at their fair market value on such date, cash, or a
combination
thereof, in such proportion and upon such terms and conditions as shall be determined by the
Committee.
The difference between the number of shares subject to stock options so surrendered and the
number of shares, if any, issued upon such surrender shall represent shares which shall not be available
for granting
or selling future stock options under this Plan.

     10. Time spent on leave of absence shall be considered as employment for the purposes of this
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.

     11. 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 it 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.

ARTICLE H — Payment for Stock Options.

     Upon the exercise of a stock option, payment in full of the exercise price shall be made by
the optionee. As determined by the Committee, the stock option exercise price may be paid for by
the optionee either in cash, shares of the Common Stock of the Company to be valued at their fair
market value on the date of exercise, a combination thereof, or such other method as determined
by the Committee.

ARTICLE I — Transfer of Shares.

     1. The Committee may transfer Common Stock of the Company under the Plan subject to such
conditions or restrictions, if any, as the Committee may determine. The conditions and
restrictions may vary from time to time and with respect to particular employees or group of
employees and may be set forth in agreements between the Company and the employee or in the
awards of stock to them, all as the Committee determines. It is contemplated that the conditions
and restrictions established by the Committee will be consistent with the objectives of this Plan
and may be of the following types. In giving these examples, it is not intended to restrict the
Committee’s authority to impose other restrictions or conditions, or to waive restrictions or
conditions under circumstances deemed by the Committee to be appropriate and not contrary to the
best interests of the Company.

 

 

	 	(a)	 	Restrictions
	 
	 	 	 	The employee will not be able to sell, pledge, or dispose of the shares during a
specified period except in accordance with the agreement or award. Such restrictions
will lapse either after a period of, for example, five years, or in fifteen or fewer
annual installments following retirement or termination of employment, as the Committee
from time to time may determine. However, upon the transfer of shares subject to
restrictions, an employee will have all incidents of ownership in the shares, including
the right to dividends (unless otherwise restricted by the Committee), to vote the shares, and to make gifts of them to family members (still subject to the restrictions).
	 
	 	(b)	 	Lapse of Restrictions
	 
	 	 	 	In order to have the restrictions lapse, an employee may be required to continue in the
employ of the Company or a subsidiary for a prescribed period of time. Exemption from
this requirement may be prescribed in the case of death, disability, or retirement, or
as otherwise prescribed by the Committee.

ARTICLE J — 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 and stock appreciation
rights 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 K — Additional Provisions.

     1. The Board may, at any time, repeal this Plan or may amend it from time to time. The
recipient of awards under this Plan 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
affected, notice
thereof shall be given to the holders of such stock options and stock appreciation rights and
such
amendments shall not be applicable to such holder without his or her written consent. If
this Plan is
repealed in its entirety, all theretofore granted or sold unexercised stock options or stock
appreciation
rights shall continue to be exercisable in accordance with their terms and shares subject to
conditions or
restrictions transferred pursuant to this Plan shall continue to be subject to such conditions
or restrictions.

     2. In the case of an employee of a subsidiary company, performance under this Plan, including
the transfer of shares of the Company, may be by the subsidiary. Nothing in this 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 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 this Plan except as to such shares, if any,
as shall have
been granted, sold or transferred to him or her. Nothing in this Plan shall preclude the
issuance, sale or
transfer 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 greater than fifty percent (50%) of the total
combined voting power of all classes of stock is owned, directly or indirectly, by the
Company. In
addition, the Board may designate for participation in this Plan as a “subsidiary,” except for
the granting
or selling of incentive stock options, those additional companies affiliated with the Company
in which
the Company’s direct or indirect stock ownership is less than fifty percent (50%) of the total
combined
voting power of all classes of such company’s stock.

 

 

ARTICLE L — Consent.

     Every recipient of a stock option, stock appreciation right, or transfer of shares pursuant to
this Plan shall be bound by the terms and provisions of this Plan and of the stock option, stock
appreciation right, or transfer of shares agreement referable thereto, and the acceptance of any
stock option, stock appreciation right, or transfer of shares pursuant to this Plan shall
constitute a binding agreement between the recipient and the Company and its subsidiaries and any
successors in interest to any of them. This Plan shall be governed by and construed in accordance
with the laws of the State of Ohio, United States of America.

ARTICLE M — Duration of Plan.

     This Plan will terminate on July 14, 2002 unless a different termination date is fixed by
action of the Board of Directors, but no such termination shall affect the prior rights under this
Plan of the Company (or any subsidiary) or of anyone to whom stock options or stock appreciation
rights were granted or sold prior thereto or to whom shares have been transferred prior to such
termination.

 

 

ADDITIONAL INFORMATION

1. Stock Options Offered for Purchase

     Stock options may be offered for purchase at a price of one dollar ($U.S. 1.00) per option
(the “Purchased Stock Options”). Participants must pay for any Purchased Stock Option within sixty
(60) days after the date of acceptance established by the Committee for such Purchased Stock Option
by delivering cash or a check to the Company or its applicable subsidiary. Each Purchased Stock
Option represents the right to acquire one share of Common Stock upon the exercise of such
Purchased Stock Option. The number of stock options, whether Purchased Stock Options or otherwise,
issued by the Company and outstanding as of January 31, 1997 is 30,884,517. The Purchased Stock
Options are not listed on an exchange. For such Purchased Stock
Options, the Committee, pursuant to
authority granted by Article B, paragraph 3 of the Plan, has waived the conditions and restrictions
of paragraphs 4(a) and (b) of Article G as follows: the Purchased Stock Options will remain
exercisable for up to one (1) month following any termination of employment; provided that if
termination of employment occurs as a result of death, retirement or Special Separation, the stock
option will remain exercisable for its full term until its date of expiration.

     There is no guarantee that the price of the Common Stock will exceed the exercise price of
any Purchased Stock Option, in which case such Purchased Stock Option would have no value.

2. 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.

3. U.S. Tax Treatment for U.S. Persons

     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 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 sale 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.

4. 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.

5. 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, 2001;
	 
	 	2.	 	The Company’s Quarterly Reports on Form 10-Q for the quarter ended September
30,
2001;
	 
	 	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. James C.
Ashely, Manager, Shareholder Services, The Procter & Gamble Company, P.O. Box 5572, Cincinnati,
Ohio 45201, (513) 983-3413.

6. Additional Information

     Additional information about the Plan and its administrators may be obtained from Mr. Terry
L. Overbey, Secretary, The Procter & Gamble Company, One Procter & Gamble Plaza, Cincinnati, Ohio
45202, (513) 983-4463.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}]]