EXHIBIT (10-6)
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, 2002