EXHIBIT (10-1)
The Procter & Gamble 2001 Stock and Incentive Compensation Plan,
and related correspondence and terms and conditions
THE PROCTER & GAMBLE 2001 STOCK AND INCENTIVE COMPENSATION PLAN
(AS APPROVED BY THE SHAREHOLDERS ON OCTOBER 9, 2001 AND
AMENDED DECEMBER 10, 2002)
ARTICLE A -- PURPOSE.
The purposes of The Procter & Gamble 2001 Stock and Incentive
Compensation Plan (the "Plan") are to strengthen the alignment of interests
between those employees of The Procter & Gamble Company (the "Company") and its
subsidiaries who are largely responsible for the success of the business (the
"Participants") and the Company's shareholders through ownership behavior and
the increased ownership of shares of the Company's common stock (the "Common
Stock"), and to encourage the Participants to remain in the employ of the
Company and its subsidiaries. This will be accomplished through the granting of
options to purchase shares of Common Stock, the granting of performance related
awards, the payment of a portion of the Participants' remuneration in shares of
Common Stock, the granting of deferred awards related to the increase in the
price of Common Stock, and the granting of restricted stock units ("RSUs") or
other awards that are related to the price of Common Stock.
ARTICLE B -- ADMINISTRATION.
1. The Plan shall be administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Company (the "Board"), or such
other committee as may be designated by the Board. The Committee shall consist
of not fewer than three (3) members of the Board who are "Non-Employee
Directors" as defined in Rule 16b-3 under the Securities Exchange Act of 1934,
as amended (the "1934 Act"), or any successor rule or definition adopted by the
Securities and Exchange Commission, to be appointed by the Board from time to
time and to serve at the discretion of the Board. The Committee may establish
such regulations, provisions, and procedures within the terms of the Plan as, in
its opinion, may be advisable for the administration and operation of the Plan,
and may designate the Secretary of the Company or other employees of the Company
to assist the Committee in the administration and operation of the Plan and may
grant authority to such persons to execute documents on behalf of the Committee.
The Committee shall report to the Board on the administration of the Plan not
less than once each year.
2. Subject to the express provisions of the Plan, the Committee shall
have authority: to grant nonstatutory and incentive stock options; to grant
stock appreciation rights either freestanding or in tandem with simultaneously
granted stock options; to grant Performance Awards (as defined in Article J); to
award a portion of a Participant's remuneration in shares of Common Stock
subject to such conditions or restrictions, if any, as the Committee may
determine; to award RSUs or other awards that are related to the price of Common
Stock; to determine all the terms and provisions of the respective stock option,
stock appreciation right, stock award, RSU, or other award agreements including
setting the dates when each stock option or stock appreciation right or part
thereof may be exercised and determining the conditions and restrictions, if
any, of any shares of Common Stock acquired through the exercise of any stock
option; to provide for special terms for any stock options, stock appreciation
rights, stock awards, RSUs or other awards granted to Participants who are
foreign nationals or who are employed by the Company or any of its subsidiaries
outside of the United States of America in order to fairly accommodate for
differences in local law, tax policy or custom and to approve such supplements
to or amendments, restatements or alternative versions of the Plan as the
Committee may consider necessary or appropriate for such purposes (without
affecting the terms of the Plan for any other purpose); and to make all other
determinations it deems necessary or advisable for administering the Plan. In
addition, at the time of grant the Committee shall have the further authority
to:
(a) waive the provisions of Article F, Paragraph 1(a);
(b) waive the provisions of Article F, Paragraph 1(b);
(c) waive the provisions of Article G, Paragraph 4(a), 4(b) and 4(c);
and
(d) impose conditions in lieu of those set forth in Article G,
Paragraphs 4 through 7, for nonstatutory stock options, stock
appreciation rights, stock awards, 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 ninety-five million 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
under the terms of the Plan shall be authorized but unissued shares, treasury
shares, or shares acquired in the open market by the Company or a subsidiary, as
determined by the Board.
ARTICLE F -- STOCK OPTIONS AND STOCK APPRECIATION RIGHTS.
1. In addition to such other conditions as may be established by the
Committee, in consideration of the granting of stock options or stock
appreciation rights under the terms of the Plan, each Participant agrees as
follows:
(a) The right to exercise any stock option or stock appreciation right
shall be conditional upon certification by the Participant at time
of exercise that the Participant intends to remain in the employ
of the Company or one of its subsidiaries for at least one (1)
year following the date of the exercise of the stock option or
stock appreciation right (provided that termination of employment
due to Retirement or Special Separation shall not constitute a
breach of such certification), and,
(b) In order to better protect the goodwill of the Company and its
subsidiaries and to prevent the disclosure of the Company's or its
subsidiaries' trade secrets and confidential information and
thereby help insure the long-term success of the business, the
Participant, without prior written consent of the Company, will
not engage in any activity or provide any services, whether as a
director, manager, supervisor, employee, adviser, consultant or
otherwise, for a period of three (3) years following the date of
the Participant's termination of employment with the Company
(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.
(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 1,000,000 shares.
4. The aggregate fair market value (determined at the time when the
incentive stock option is exercisable for the first time by a Participant during
any calendar year) of the shares for which any Participant may be granted
incentive stock options under the Plan and all other stock option plans of the
Company and its subsidiaries in any calendar year shall not exceed $100,000 (or
such other amount as reflected in the limits imposed by Section 422(d) of the
Internal Revenue Code of 1986, as it may be amended from time to time).
5. If the Committee grants incentive stock options, all such stock
options shall contain such provisions as permit them to qualify as "incentive
stock options" within the meaning of Section 422 of the Internal Revenue Code of
1986, as may be amended from time to time.
6. With respect to stock options granted in tandem with stock
appreciation rights, the exercise of either such stock options or such stock
appreciation rights will result in the simultaneous cancellation of the same
number of tandem stock appreciation rights or stock options, as the case may be.
7. The exercise price for all stock options and stock appreciation
rights shall be established by the Committee at the time of their grant and
shall be not less than one hundred percent (100%) of the fair market value of
the Common Stock on the date of grant.
8. Unless otherwise authorized by the shareholders of the Company,
neither the Board nor the Committee shall authorize the amendment of any
outstanding stock option or stock appreciation right to reduce the exercise
price.
9. No stock option or stock appreciation right shall be cancelled and
replaced with awards having a lower exercise price without the prior approval of
the shareholders of the Company. This Article F, Paragraph 9 is intended to
prohibit the repricing of "underwater" stock options and stock appreciation
rights and shall not be construed to prohibit the adjustments permitted under
Article J of the Plan.
10. The Committee may require any Participant to accept any stock
options or stock appreciation rights by means of electronic signature.
ARTICLE G -- EXERCISE OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS.
1. All stock options and stock appreciation rights granted hereunder
shall have a maximum life of no more than ten (10) years from the date of grant.
2. No stock options or stock appreciation rights shall be exercisable
within one (1) year from their date of grant, except in the case of the death of
the Participant.
3. Unless a transfer has been duly authorized by the Committee pursuant
to Article G, Paragraph 6 of the Plan, during the lifetime of the Participant,
stock options and stock appreciation rights may be exercised only by the
Participant personally, or, in the event of the legal incompetence of the
Participant, by the Participant's duly appointed legal guardian.
4. In the event that a Participant ceases to be an employee of the
Company or any of its subsidiaries while holding an unexercised stock option or
stock appreciation right:
(a) Any unexercisable portions thereof are then void, except in the
case of: (1) death of the Participant; (2) Retirement or Special
Separation that occurs more than six months from the date the
options were granted; or (3) any option as to which the Committee
has waived, at the time of grant, the provisions of this Article
G, Paragraph 4(a).
(b) Any exercisable portions thereof are then void, except in the case
of: (1) death of the Participant; (2) Retirement or Special
Separation; or (3) any option as to which the Committee has
waived, at the time of grant, the provisions of this Article G,
Paragraph 4(b).
(c) In the case of Special Separation, any stock option or stock
appreciation right must be exercised within the time specified in
the original grant or five (5) years from the date of Special
Separation, whichever is shorter.
5. In the case of the death of a Participant, the persons to whom the
stock options or stock appreciation rights have been transferred by will or the
laws of descent and distribution shall have the privilege of exercising
remaining stock options, stock appreciation rights or parts thereof, whether or
not exercisable on the date of death of such Participant, at any time prior to
the expiration date of the stock options or stock appreciation rights.
6. Stock options and stock appreciation rights are not transferable
other than by will or by the laws of descent and distribution. For the purpose
of exercising stock options or stock appreciation rights after the death of the
Participant, the duly appointed executors and administrators of the estate of
the deceased Participant shall have the same rights with respect to the stock
options and stock appreciation rights as legatees or distributees would have
after distribution to them from the Participant's estate. Notwithstanding the
foregoing, the Committee may authorize the transfer of stock options and stock
appreciation rights upon such terms and conditions as the Committee may require.
Such transfer shall become effective only upon the Committee's complete
satisfaction that the proposed transferee has strictly complied with such terms
and conditions, and both the original Participant and the transferee shall be
subject to the same terms and conditions hereunder as the original Participant.
7. Upon the exercise of stock appreciation rights, the Participant
shall be entitled to receive a redemption differential for each such stock
appreciation right which shall be the difference between the then fair market
value of one share of Common Stock and the exercise price of one stock
appreciation right then being exercised. In the case of the redemption of stock
appreciation rights by a subsidiary of the Company not located in the United
States, the redemption differential shall be calculated in United States dollars
and converted to the appropriate local currency on the exercise date. As
determined by the Committee, the redemption differential may be paid in cash,
Common Stock to be valued at its fair market value on the date of exercise, any
other mode of payment deemed appropriate by the Committee or any combination
thereof.
8. Time spent on leave of absence shall be considered as employment for
the purposes of the Plan. Leave of absence means any period of time away from
work granted to any employee by his or her employer because of illness, injury,
or other reasons satisfactory to the employer.
9. The Company reserves the right from time to time to suspend the
exercise of any stock option or stock appreciation right where such suspension
is deemed by the Company as necessary or appropriate for corporate purposes. No
such suspension shall extend the life of the stock option or stock appreciation
right beyond its expiration date, and in no event will there be a suspension in
the five (5) calendar days immediately preceding the expiration date.
10. The Committee may require any Participant to exercise any stock
options or stock appreciation rights by means of electronic signature.
ARTICLE H -- PAYMENT FOR STOCK OPTIONS AND TAX WITHHOLDING.
Upon the exercise of a stock option, payment in full of the exercise
price shall be made by the Participant. As determined by the Committee, the
stock option exercise price may be paid by the Participant either in cash,
shares of Common Stock valued at their fair market value on the date of
exercise, a combination thereof, or such other method as determined by the
Committee. In addition to payment of the exercise price, the Committee may
authorize the Company to charge a reasonable administrative fee for the exercise
of any stock option. Furthermore, to the extent the Company is required to
withhold federal, state, local or foreign taxes in connection with any
Participant's stock option exercise, the Committee may require the Participant
to make such arrangements as the Company may deem necessary for the payment of
such taxes required to be withheld (including, without limitation,
relinquishment of a portion of such stock options or relinquishment of a portion
of the proceeds received by the Participant in a simultaneous exercise and sale
of stock during a "cashless" exercise). In no event, however, shall the
Committee be permitted to require payment from a Participant in excess of the
maximum required tax withholding rates.
ARTICLE I -- GRANT OF UNRESTRICTED OR RESTRICTED STOCK.
The Committee may grant Common Stock 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
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
400,000 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 occurring 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 L -- ADDITIONAL PROVISIONS AND DEFINITIONS.
1. The Board may, at any time, repeal the Plan or may amend it except
that no such amendment may amend this paragraph, increase the total aggregate
number of shares subject to the Plan, reduce the price at which stock options or
stock appreciation rights may be granted or exercised, alter the class of
employees eligible to receive stock options, or increase the percentage of
shares authorized to be transferred as restricted or unrestricted stock.
Participants and the Company shall be bound by any such amendments as of their
effective dates, but if any outstanding stock options or stock appreciation
rights are materially affected adversely, notice thereof shall be given to the
Participants holding such stock options and stock appreciation rights and such
amendments shall not be applicable without such Participant's written consent.
If the Plan is repealed in its entirety, all theretofore granted unexercised
stock options or stock appreciation rights shall continue to be exercisable in
accordance with their terms and shares subject to conditions or restrictions
granted pursuant to the Plan shall continue to be subject to such conditions or
restrictions.
2. In the case of a Participant who is an employee of a subsidiary of
the Company, performance under the Plan, including the granting of shares of the
Company, may be by the subsidiary. Nothing in the Plan shall affect the right of
the Company or any subsidiary to terminate the employment of any employee with
or without cause. None of the Participants, either individually or as a group,
and no beneficiary, transferee or other person claiming under or through any
Participant, shall have any right, title, or interest in any shares of the
Company purchased or reserved for the purpose of the Plan except as to such
shares, if any, as shall have been granted or transferred to him or her. Nothing
in the Plan shall preclude the awarding or granting of shares of the Company to
employees under any other plan or arrangement now or hereafter in effect.
3. "Subsidiary" means any company in which more than fifty percent
(50%) of the total combined voting power of all classes of stock is owned,
directly or indirectly, by the Company or, if the company does not issue stock,
more than fifty percent (50%) of the total combined ownership interest is owned,
directly or indirectly, by the Company. In addition, the Board may designate for
participation in
the Plan as a "subsidiary," except for the granting of incentive stock options,
those additional companies affiliated with the Company in which the Company's
direct or indirect stock ownership is fifty percent (50%) or less of the total
combined voting power of all classes of such company's stock, or, if the company
does not issue stock, the Company's direct or indirect ownership is fifty
percent (50%) or less of the company's total combined ownership interest.
4. Notwithstanding anything to the contrary in the Plan, stock options
and stock appreciation rights granted hereunder shall vest immediately and any
conditions or restrictions on Common Stock shall lapse upon a "Change in
Control." A "Change in Control" shall mean the occurrence of any of the
following:
(a) An acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities") by any
"Person" (as the term person is used for purposes of Section 13(d)
or 14(d) of the Exchange Act), immediately after which such Person
has "Beneficial Ownership" (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of twenty percent (20%) or
more of the then outstanding shares or the combined voting power
of the Company's then outstanding Voting Securities; provided,
however, in determining whether a Change in Control has occurred
pursuant to this Paragraph 4(a), shares or Voting Securities which
are acquired in a "Non-Control Acquisition" (as hereinafter
defined) shall not constitute an acquisition which would cause a
Change in Control. A "Non-Control Acquisition" shall mean an
acquisition by (i) an employee benefit plan (or a trust forming a
part thereof) maintained by (A) the Company or (B) any corporation
or other Person of which a majority of its voting power or its
voting equity securities or equity interest is owned, directly or
indirectly, by the Company (for purposes of this definition, a
"Related Entity"), (ii) the Company or any Related Entity, or
(iii) any Person in connection with a "Non-Control Transaction"
(as hereinafter defined);
(b) The individuals who, as of July 10, 2001 are members of the Board
(the "Incumbent Board"), cease for any reason to constitute at
least half of the members of the Board; or, following a Merger (as
hereinafter defined) which results in a Parent Corporation (as
hereinafter defined), the board of directors of the ultimate
Parent Corporation; provided, however, that if the election, or
nomination for election by the Company's common stockholders, of
any new director was approved by a vote of at least two-thirds of
the Incumbent Board, such new director shall, for purposes of the
Plan, be considered as a member of the Incumbent Board; provided
further, however, that no individual shall be considered a member
of the Incumbent Board if such individual initially assumed office
as a result of either an actual or threatened "Election Contest"
(as described in Rule 14a-11 promulgated under the Exchange Act)
or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board (a "Proxy
Contest") including by reason of any agreement intended to avoid
or settle any Election Contest or Proxy Contest; or
(c) The consummation of:
(i) A merger, consolidation or reorganization with or into the
Company or in which securities of the Company are issued (a
"Merger"), unless such Merger is a "Non-Control Transaction."
A "Non-Control Transaction" shall mean a Merger where:
(A) the stockholders of the Company, immediately before such
Merger own directly or indirectly immediately following
such Merger at least fifty percent (50%) of the combined
voting power of the outstanding voting securities of (x)
the corporation resulting from such Merger (the
"Surviving Corporation") if fifty
percent (50%) or more of the combined voting power of
the then outstanding voting securities of the Surviving
Corporation is not Beneficially Owned, directly or
indirectly by another Person (a "Parent Corporation"),
or (y) if there is one or more Parent Corporations, the
ultimate Parent Corporation;
(B) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement
providing for such Merger constitute at least half of
the members of the board of directors of (x) the
Surviving Corporation, if there is no Parent
Corporation, or (y) if there is one or more Parent
Corporations, the ultimate Parent Corporation; and
(C) no Person other than (1) the Company, (2) any Related
Entity, (3) any employee benefit plan (or any trust
forming a part thereof) that, immediately prior to such
Merger was maintained by the Company or any Related
Entity, or (4) any Person who, immediately prior to such
merger, consolidation or reorganization had Beneficial
Ownership of twenty percent (20%) or more of the then
outstanding Voting Securities or shares, has Beneficial
Ownership of twenty percent (20%) or more of the
combined voting power of the outstanding voting
securities or common stock of (x) the Surviving
Corporation if there is no Parent Corporation, or (y) if
there is one or more Parent Corporations, the ultimate
Parent Corporation;
(ii) A complete liquidation or dissolution of the Company; or
(iii) The sale or other disposition of all or substantially all of
the assets of the Company to any Person (other than a
transfer to a Related Entity or under conditions that would
constitute a Non-Control Transaction with the disposition of
assets being regarded as a Merger for this purpose or the
distribution to the Company's stockholders of the stock of a
Related Entity or any other assets).
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the then outstanding shares or
Voting Securities as a result of the acquisition of shares or Voting Securities
by the Company which, by reducing the number of shares or Voting Securities then
outstanding, increases the proportional number of shares Beneficially Owned by
the Subject Persons, provided that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of shares or
Voting Securities by the Company, and after such share acquisition by the
Company, the Subject Person becomes the Beneficial Owner of any additional
shares or Voting Securities which increases the percentage of the then
outstanding shares or Voting Securities Beneficially Owned by the Subject
Person, then a Change in Control shall occur.
5. The term "Special Separation" shall mean any termination of
employment that occurs prior to the time a Participant is eligible to retire,
except a termination for cause or a voluntary resignation that is not initiated
or encouraged by the Company.
6. The term "Retirement" shall mean: (a) retirement in accordance with
the provisions of any appropriate retirement plan of the Company or any of its
subsidiaries; or (b) termination of employment under the permanent disability
provision of any retirement plan of the Company or any of its subsidiaries.
ARTICLE M -- CONSENT.
Every Participant who receives a stock option, stock appreciation
right, 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, or
grant of shares agreement referable thereto, and the acceptance of any stock
option, stock appreciation right, 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, 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, or
grant of shares agreement referable thereto, and the acceptance of any stock
option, stock appreciation right, 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 have been transferred prior to such
termination.
ADDITIONAL INFORMATION
1. SHARES AWARDED AS A PORTION OF REMUNERATION
Any shares of Common Stock of the Company awarded as a portion of a
participant's remuneration shall be valued at not less than one hundred percent
(100%) of the fair market value of the Company's Common Stock on the date of the
award. These shares may be subject to such conditions or restrictions as the
Committee may determine, including a requirement that the participant remain in
the employ of the Company or one of its subsidiaries for a set period of time,
or until retirement. Failure to abide by any applicable restriction will result
in forfeiture of the shares.
2. U.S. TAX EFFECTS
INCENTIVE STOCK OPTIONS
With regard to tax effects which may accrue to the optionee,
counsel advises that if the optionee has continuously been an employee
from the time an option has been granted until at least three months
before it is exercised, under existing law no taxable income results to
the optionee from the exercise of an incentive stock option at the time
of exercise. However, the spread at exercise is an "adjustment" item
for alternative minimum tax purposes.
Any gain realized on the sale or other disposition of stock
acquired on exercise of an incentive stock option is considered as
long-term capital gain for tax purposes if the stock has been held more
than two years after the date the option was granted and more than one
year after the date of exercise of the option. If the stock is disposed
of within one year after exercise, the lesser of any gain on such
disposition or the spread at exercise (i.e., the excess of the fair
market value of the stock on the date of exercise over the option
price) is treated as ordinary income, and any appreciation after the
date of exercise is considered long-term or short-term capital gain to
the optionee depending on the holding period prior to sale. However,
the spread at exercise (even if greater than the gain on the
disposition) is treated as ordinary income if the disposition is one on
which a loss, if sustained, is not recognized--e.g., a gift, a "wash"
sale or a sale to a related party. The amount of ordinary income
recognized by the optionee is treated as a tax deductible expense to
the Company. No other amount relative to an incentive stock option is a
tax deductible expense to the Company.
NONSTATUTORY STOCK OPTIONS
With regard to tax effects which may accrue to the optionee,
counsel advises that under existing tax law gain taxable as ordinary
income to the optionee is deemed to be realized at the date of exercise
of the option, the gain on each share being the difference between the
market price on the date of exercise and the option price. This amount
is treated as a tax deductible expense to the Company at the time of
the exercise of the option. Any appreciation in the value of the stock
after the date of exercise is considered a long-term or short-term
capital gain to the optionee depending on whether or not the stock was
held for the appropriate holding period prior to sale.
STOCK APPRECIATION RIGHTS
With regard to tax effects which may accrue to the recipient,
counsel advises that "United States persons," as defined in the
Internal Revenue Code of 1986 (the "I.R.C."), must
recognize ordinary income as of the date of exercise equal to the
amount paid to the recipient, i.e., the difference between the grant
price and the value of the shares on the date of exercise.
SHARES AWARDED AS A PORTION OF REMUNERATION
With regard to tax effects which may accrue to the recipient,
counsel advises that "United States persons" as defined in the Internal
Revenue Code of 1986 (the "I.R.C."), must recognize ordinary income in
the first taxable year in which the recipient's rights to the stock are
transferable or are not subject to a substantial risk of forfeiture,
whichever is applicable. Recipients who are "United States persons" may
also elect to include the income in their tax returns for the taxable
year in which they receive the shares by filing an election to do so
with the appropriate office of the Internal Revenue Service within 30
days of the date the shares are transferred to them.
The amount includable in income is the fair market value of
the shares as of the day the shares are transferable or not subject to
a substantial risk of forfeiture, whichever is applicable; if the
recipient has elected to include the income in the year in which the
shares are received, the amount of income includable is the fair market
value of the shares at the time of transfer.
For non-United States persons, the time when income is
realized, its measurement and its taxation, will depend on the laws of
the particular countries in which the recipients are residents and/or
citizens at the time of transfer or when the shares are first
transferable and not subject to a substantial risk of forfeiture, as
the case may be. "United States persons" who receive shares awarded as
a portion of remuneration may also have tax consequences with respect
to the receipt of shares or the expiration of restrictions or
substantial risk of forfeiture on such shares under the laws of the
particular country other than the United States of which such person is
a resident or citizen.
Notwithstanding the above advice received by the Company, it is each
individual recipient's responsibility to check with his or her personal tax
adviser as to the tax effects and proper handling of stock options, stock
appreciation rights 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, 2002;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2002; 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. James C. Ashley, 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 Ms. Sharon E. Abrams, Secretary, The Procter & Gamble Company, One
Procter & Gamble Plaza, Cincinnati, Ohio 45202, (513) 983-7854.
[PROCTER & GAMBLE LOGO]
[GRANT_DATE] [GLOBALID]
[FIRST_NAME] [MIDDLE_NAME] [LAST_NAME]]
Subject: NON-STATUTORY STOCK OPTION SERIES 04-AA-2
In recognition of your contributions to the future success of the
business, the Company hereby grants you an option to purchase, in
accordance with and subject to the terms of The Procter & Gamble 2001
Stock and Incentive Compensation Plan, the Regulations of the Compensation
Committee of the Board of Directors and the Exercise Instructions in place
from time to time, shares of Procter & Gamble Common Stock as follows:
Grant Value: $[DELIVERED_GRANT_VALUE]
Option Price per Share: $[STOCK_PRCE]
Number of Shares: [SHARES]
Date of Grant: [GRANT_DATE]
Expiration of Option: [DATE]
Option Vest Date: 100% after [DATE]
Acceptance Deadline: [DATE]
The option is not transferable other than by will or the laws of descent
and distribution and is exercisable during your life only by you. This
option may become void upon separation from the Company or any of its
subsidiaries (see Article G, paragraph 4 of the Plan). For the purposes of
this option, separation from the Company or any of its subsidiaries and
termination of employment will be effective as of the date that you are no
longer actively employed and will not be extended by any notice period
required under local law.
Please note that when the issue or transfer of the Common Stock covered by
this option may, in the opinion of the Company, conflict or be
inconsistent with any applicable law or regulation of any governmental
agency, the Company reserves the right to refuse to issue or transfer said
Common Stock and that any outstanding options may be suspended or
terminated if you engage in actions that are significantly contrary to the
best interests of the Company or any of its subsidiaries.
THE PROCTER & GAMBLE COMPANY
[ ] I hereby accept the Employee Acknowledgement and Consent Form set forth
on the reverse of this letter and I hereby accept the above option to
purchase shares of the Common Stock of the Company in accordance with and
subject to the terms of The Procter & Gamble 2001 Stock and Incentive
Compensation Plan, with which I am familiar, including the non-compete
provision and other terms of Article F, and agree that this option and The
Procter & Gamble 2001 Stock and Incentive Compensation Plan together
constitute an agreement between the Company and me in accordance with the
terms thereof and hereof, and I further agree that any legal action
related to this option, including Article F, may be brought in any federal
or state court located in Hamilton County, Ohio, USA, and I hereby accept
the jurisdiction of these courts and consent to service of process from
said courts solely for legal actions related to this option grant.
[ ] I hereby reject the above option to purchase shares of the Common Stock of
the Company.
------------------- ---------------------------------
Date Optionee Signature
EMPLOYEE ACKNOWLEDGEMENT AND CONSENT FORM
I understand that I am eligible to receive a grant of stock options under The
Procter & Gamble 2001 Stock and Incentive Compensation Plan (the "Plan").
Data Privacy
I hereby explicitly and unambiguously consent to the collection, use and
transfer, in electronic or other form, of my personal data as described in this
document by and among, as applicable, my employer ("Employer") and The Procter &
Gamble Company and its subsidiaries and affiliates ("P&G") for the exclusive
purpose of implementing, administering and managing my participation in the
Plan.
I understand that P&G and my Employer hold certain personal information about
me, including, but not limited to, my name, home address and telephone number,
date of birth, social insurance number or other identification number, salary,
nationality, job title, any shares of stock or directorships held in P&G,
details of all options or any other entitlement to shares of stock awarded,
canceled, exercised, vested, unvested or outstanding in my favor, for the
purpose of implementing, administering and managing the Plan ("Data"). I
understand that Data may be transferred to any third parties assisting in the
implementation, administration and management of the Plan, that these recipients
may be located in my country or elsewhere, and that the recipient's country may
have different data privacy laws and protections than my country. I understand
that I may request a list with the names and addresses of any potential
recipients of the Data by contacting my local human resources representative. I
authorize the recipients to receive, possess, use, retain and transfer the Data,
in electronic or other form, for the purposes of implementing, administering and
managing my participation in the Plan, including any requisite transfer of such
Data as may be required to a broker or other third party with whom I may elect
to deposit any shares of stock acquired upon exercise of the option. I
understand that Data will be held only as long as is necessary to implement,
administer and manage my participation in the Plan. I understand that I may, at
any time, view Data, request additional information about the storage and
processing of Data, require any necessary amendments to Data or refuse or
withdraw the consents herein, in any case without cost, by contacting in writing
my local human resources representative. I understand, however, that refusing or
withdrawing my consent may affect my ability to participate in the Plan. For
more information on the consequences of my refusal to consent or withdrawal of
consent, I understand that I may contact my local human resources
representative.
Nature of Grant
By completing this form and accepting the grant of the stock option evidenced
hereby, I acknowledge that: i) the Plan is established voluntarily by The
Procter & Gamble Company, it is discretionary in nature and it may be amended,
suspended or terminated at any time; ii) the grant of options under the Plan is
voluntary and occasional and does not create any contractual or other right to
receive future grants of options, or benefits in lieu of options, even if
options have been granted repeatedly in the past; iii) all decisions with
respect to future grants of options, if any, will be at the sole discretion of
P&G; iv) my participation in the Plan is voluntary; v) the option is an
extraordinary item and not part of normal or expected compensation or salary for
any purposes including, but not limited to, calculating any termination,
severance, resignation, redundancy, end of service payments, bonuses,
long-service awards, pension or retirement benefits or similar payments; vi) in
the event that my employer is not P&G, the grant of options will not be
interpreted to form an employment relationship with P&G; and furthermore, the
grant of options will not be interpreted to form an employment contract with my
Employer; vii) the future value of the shares purchased under the Plan is
unknown and cannot be predicted with certainty, may increase or decrease in
value, even below the exercise price and, if the underlying shares do not
increase in value, the option will have no value; iix) my participation in the
Plan shall not create a right to further employment with my Employer and shall
not interfere with the ability of my Employer to terminate my employment
relationship at any time, with or without cause; ix) and no claim or entitlement
to compensation or damages arises from the termination of the option or the
diminution in value of the option or shares purchased and I irrevocably release
P&G and my Employer from any such claim that may arise.
Responsibility for Taxes
Regardless of any action P&G or my Employer takes with respect to any or all
income tax, social insurance, payroll tax, payment on account or other
tax-related withholding ("Tax-Related Items"), I acknowledge that the ultimate
liability for all Tax-Related Items is and remains my responsibility and that
P&G and/or my Employer (1) make no representations or undertakings regarding the
treatment of any Tax-Related Items in connection with any aspect of the option
grant, including the grant, vesting or exercise of the option, the subsequent
sale of shares acquired pursuant to such exercise and the receipt of any
dividends; and (2) do not commit to structure the terms of the grant or any
aspect of the option to reduce or eliminate my liability for Tax-Related Items.
Prior to exercise of the option, I shall pay or make adequate arrangements
satisfactory to P&G and/or my Employer to satisfy all withholding and payment on
account obligations of P&G and/or my Employer. In this regard, I authorize P&G
and/or my Employer to withhold all applicable Tax-Related Items from my wages or
other cash compensation paid to me by P&G and/or my Employer or from proceeds of
the sale of the shares. Alternatively, or in addition, if permissible under
local law, P&G may (1) sell or arrange for the sale of shares that I acquire to
meet the withholding obligation for Tax-Related Items, and/or (2) withhold in
shares, provided that P&G only withholds the amount of shares necessary to
satisfy the minimum withholding amount. Finally, I shall pay to P&G or my
Employer any amount of Tax-Related Items that P&G or my Employer may be required
to withhold as a result of my participation in the Plan or my purchase of shares
that cannot be satisfied by the means previously described. P&G may refuse to
honor the exercise and refuse to deliver the shares if I fail to comply with my
obligations in connection with the Tax-Related Items as described in this
section.
[date]
[name]
SUBJECT: AWARD OF RESTRICTED STOCK UNITS
This is to advise you that The Procter & Gamble Company, an Ohio corporation is
awarding you with Restricted Stock Units, on the dates and in the amounts listed
below, pursuant to The Procter & Gamble 2001 Stock and Incentive Compensation
Plan, and subject to the attached Statement of Terms and Conditions Form RTN.
Grant Date: [date]
Forfeiture Date: [date]
Original Settlement Date: [date]
Number of Restricted Stock Units: [number]
THE PROCTER & GAMBLE COMPANY
[ ] I hereby accept the Award of Restricted Stock Units set forth above in
accordance with and subject to the terms of The Procter & Gamble 2001
Stock and Incentive Compensation Plan and the attached Statement of Terms
and Conditions for Restricted Stock Units, with which I am familiar. I
agree that the Award of Restricted Stock Units, The Procter & Gamble 2001
Stock and Incentive Compensation Plan, and the attached Statement of Terms
and Conditions for Restricted Stock Units together constitute an agreement
between the Company and me in accordance with the terms thereof and
hereof, and I further agree that any legal action related to this Award of
Restricted Stock Units may be brought in any federal or state court
located in Hamilton County, Ohio, USA, and I hereby accept the
jurisdiction of these courts and consent to service of process from said
courts solely for legal actions related to this Award of Restricted Stock
Units.
[ ] I hereby reject the Award of Restricted Stock Units set forth above.
- ---------------- ------------------------------------
Date Signature
FORM RTN
THE PROCTER & GAMBLE COMPANY
STATEMENT OF TERMS AND CONDITIONS FOR RESTRICTED STOCK UNITS
THE PROCTER & GAMBLE 2001 STOCK AND INCENTIVE COMPENSATION PLAN
The Restricted Stock Units awarded to you as set forth in the letter you
received from the Company (your "Award Letter"), and your ownership thereof, are
subject to the following terms and conditions.
1. DEFINITIONS.
For purposes of this Statement of Terms and Conditions for Restricted
Stock Units ("Terms and Conditions"), all capitalized terms not defined in these
Terms and Conditions will have the meanings described in The Procter & Gamble
2001 Stock and Incentive Compensation Plan (the "Plan"), and the following terms
will have the following meanings.
(a) "DATA" has the meaning described in Section 10;
(b) "DISABILITY" means termination of employment under the permanent
disability provision of any retirement plan of Procter & Gamble;
(c) "DIVIDEND EQUIVALENTS" has the meaning described in Section 4;
(d) "FORFEITURE DATE" is the date identified as such in your Award Letter;
(e) "FORFEITURE PERIOD" means the period from the Grant Date until the
Forfeiture Date.
(f) "GRANT DATE" means the date a Restricted Stock Unit was awarded to
you, as identified in your Award Letter;
(g) "ORIGINAL SETTLEMENT DATE" is the date identified as such in your
Award Letter, as adjusted, if applicable, by Section 2;
(h) "POST-FORFEITURE PERIOD" means the period from the Forfeiture Date
until the Original Settlement Date;
(i) "PROCTER & GAMBLE" means the Company and/or its Subsidiaries;
(j) "RESTRICTED STOCK UNIT" means an unfunded, unsecured promise by the
Company, in accordance with these Terms and Conditions and the provisions
of the Plan, to issue to you one share of Common Stock on the Original
Settlement Date.
2. TRANSFER AND RESTRICTIONS.
(a) Neither Restricted Stock Units nor your interest in them may be sold,
exchanged, transferred, pledged, hypothecated, given or otherwise disposed
of by you at any time, except by will or by the laws of descent and
distribution. Any attempted transfer of a Restricted Stock Unit, whether
voluntary or involuntary on your part, will result in the immediate
forfeiture to the Company, and cancellation, of the Restricted Stock Unit
(including all rights to receive Dividend Equivalents).
(b) During the Forfeiture Period, your Restricted Stock Units (including
all rights to receive Dividend Equivalents) will be forfeited and
cancelled if you leave your employment with Procter & Gamble for any
reason, except due to: (i) your Disability; or (ii) in certain
circumstances, your Special Separation. In the event of your Disability
during the Forfeiture Period, unless otherwise agreed to in writing by the
Company, your Original Settlement Date will automatically and immediately
become, without any further action by you or the Company, the date of your
Disability. In the event of your Special Separation during the Forfeiture
Period, your Restricted Stock Units will be forfeited and cancelled unless
otherwise agreed to in writing by the Company.
(c) During the Post-Forfeiture Period, if you leave your employment with
Procter & Gamble for any reason other than: (i) Disability; (ii) Special
Separation; or (iii) retirement in accordance with the provisions of any
appropriate retirement plan of Procter & Gamble, your Original Settlement
Date will automatically and immediately become, without any further action
by you or the Company, the date of your termination of employment. In the
event of your Disability or Special Separation during the Post-Forfeiture
Period, unless otherwise agreed to in writing by the Company, your
Original Settlement Date will automatically and immediately become,
without any further action by you or the Company, the date of your
Disability or Special Separation, as applicable. In the event of your
retirement in accordance with the provisions of any appropriate retirement
plan of Procter & Gamble during the Post-Forfeiture Period, you will
retain your Restricted Stock Units subject to the Plan and these Terms and
Conditions.
(d) Upon your death or the occurrence of a Change in Control at any time
while you hold Restricted Stock Units and/or Dividend Equivalents, your
Original Settlement Date will automatically and immediately become,
without any further action by you or the Company, the date of your death
or of the Change in Control, as applicable.
(e) From time to time, the Company and/or the Committee may establish
procedures with which you must comply in order to accept an award of
Restricted Stock Units, or to settle your Restricted Stock Units,
including requiring you to do so by means of electronic signature, or
charging you an administrative fee for doing so.
(f) Once your Restricted Stock Units have been settled by delivery to you
of an equivalent number of shares of Common Stock, the Restricted Stock
Units will have no further value, force or effect and you will cease to
receive Dividend Equivalents associated with the Restricted Stock Units.
3. CONFIDENTIALITY AND NON-COMPETITION
(a) In order to better protect the goodwill of Procter & Gamble and to
prevent the disclosure of Procter & Gamble's trade secrets and
confidential information, and thereby help ensure the long-term success of
Procter & Gamble's business, in consideration of your being awarded
Restricted Stock Units, you (without prior written consent of Procter &
Gamble), will not engage in any activity or provide any services, whether
as a director, manager, supervisor, employee, advisor, consultant or
otherwise, for a period of three (3) years following the date your
employment with Procter & Gamble is terminated (except for terminations
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
Procter & Gamble (including both existing products as well as products
known to you, as a consequence of your employment with Procter & Gamble,
to be in development):
(i) with respect to which your work has been directly concerned at
any time during the two (2) years preceding the termination of your
employment with Procter & Gamble; or
(ii) with respect to which, during the two (2) years preceding the
termination of your employment with Procter & Gamble, you, as a
consequence of your job performance and duties, acquired knowledge
of trade secrets or other confidential information of Procter &
Gamble.
For purposes of this Section 3(a), it will be conclusively presumed that
you have knowledge of information you were directly exposed to through
actual receipt or review of memoranda or documents containing such
information, or through attendance at meetings at which such information
was discussed or disclosed.
(b) The provisions of Section 3(a) are not in lieu of, but are in addition
to your continuing obligation (which you acknowledge by accepting an award
of Restricted Stock Units) to not use or disclose Procter & Gamble's trade
secrets or confidential information known to you until any particular
trade secret or confidential information becomes generally known (through
no fault of yours). As used in this Section 3(b), "generally known" means
known throughout the domestic United States industry or, if you have job
responsibilities partially or entirely outside of the United States, the
appropriate domestic United States and/or appropriate foreign country or
countries' industry(ies). Information regarding products in development,
in test marketing, or being marketed or promoted in a discrete geographic
region, which information Procter & Gamble is considering for broader use,
will not be deemed to be "generally known" until such broader use is
actually commercially implemented.
(c) By accepting an award of Restricted Stock Units, you agree that, if
you were, without authority, to use or disclose Procter & Gamble's trade
secrets or confidential information or threaten to do so, Procter & Gamble
would be entitled to injunctive and other appropriate relief to prevent
you from doing so. You further agree that the harm caused to Procter &
Gamble by the breach or anticipated breach of this Section 3(c) is, by its
nature, irreparable because, among other things, it is not readily
susceptible of proof as to the monetary harm that would ensue. You agree
that any interim or final equitable relief entered by a court of competent
jurisdiction will, at the request of Procter & Gamble, be entered on
consent and enforced by any court having jurisdiction over you, without
prejudice to any rights you or Procter & Gamble may have to appeal from
the proceedings which resulted in any grant of such relief.
(d) If any of the provisions contained in Sections 3(a) through (c) are
for any reason, whether by application of existing law or law which may
develop after your acceptance of an award of Restricted Stock Units,
determined by a court of competent jurisdiction to be overly broad as to
scope of activity, duration, or territory, then by accepting an award of
Restricted Stock Units you agree to join Procter & Gamble in requesting
such court to construe such provision by limiting or reducing it so as to
be enforceable to the extent compatible with then-applicable law. If any
one or more of the provisions contained in Section 3(a) through (c) are
determined by a court of competent jurisdiction to be invalid, void or
unenforceable, then the remainder of the provisions will remain in full
force and effect and will not be affected, impaired or invalidated in any
way.
4. DIVIDEND EQUIVALENTS.
As a holder of Restricted Stock Units, during the period from the Grant
Date until the Original Settlement Date, each time a cash dividend or other cash
distribution is paid with respect to Common Stock, you will receive additional
Restricted Stock Units ("Dividend Equivalents"). The number of such additional
Restricted Stock Units will be determined as follows: multiply the number of
Restricted Stock Units currently held by the per share amount of the cash
dividend or other cash distribution on the Common Stock, and then divide the
result by the price of the Common Stock on the date of the dividend or
distribution. These Dividend Equivalent Restricted Stock Units will be subject
to the same terms and conditions as the original Restricted Stock Units that
gave rise to them, including forfeiture and settlement terms, except that if
there is a fractional number of Dividend Equivalent Restricted Stock Units on
the
date they are to be settled, you will receive one share of Common Stock for the
fractional Dividend Equivalent Restricted Stock Units.
5. VOTING AND OTHER SHAREHOLDER RIGHTS.
A Restricted Stock Unit is not a share of Common Stock, and thus you are
not entitled to any voting, dividend or other rights as a shareholder of the
Company with respect to the Restricted Stock Units you hold.
6. ADJUSTMENTS IN CASE OF STOCK DIVIDENDS, STOCK SPLITS, ETC.
In the event of a future reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger, consolidation, rights offering,
share exchange, reclassification, distribution, spin-off, or other change
affecting the corporate structure, capitalization or Common Stock, the number of
Restricted Stock Units you hold will be adjusted appropriately and equitably to
prevent dilution or enlargement of your rights.
7. TAX WITHHOLDING.
To the extent Procter & Gamble is required to withhold federal, state,
local or foreign taxes in connection with your Restricted Stock Units or
Dividend Equivalents, the Committee may require you to make such arrangements as
Procter & Gamble may deem appropriate for the payment of such taxes required to
be withheld, including without limitation, relinquishment of some of the shares
of Common Stock that would otherwise be given to you. However, regardless of any
action taken by Procter & Gamble with respect to any income tax, social
insurance, payroll tax, or other tax, by accepting a Restricted Stock Unit or
Dividend Equivalent, you acknowledge that the ultimate liability for any such
tax owed by you is and remains your responsibility, and that Procter & Gamble
makes no representations about the tax treatment of your Restricted Stock Units
or Dividend Equivalents, and does not commit to structure any aspect of the
Restricted Stock Units or Dividend Equivalents to reduce or eliminate your tax
liability.
8. SUSPENSION PERIODS AND TERMINATION.
The Company reserves the right from time to time to temporarily suspend
your right to settle your Restricted Stock Units for shares of Common Stock
where such suspension is deemed by the Company as necessary or appropriate.
9. PROCTER & GAMBLE RIGHT TO TERMINATE EMPLOYMENT AND OTHER REMEDIES.
(a) Nothing in these Terms and Conditions, or the fact that you have been
awarded Restricted Stock Units, affects in any way the right or power of
Procter & Gamble to terminate your employment at any time for any reason,
with or without cause, or precludes Procter & Gamble from taking any
action or enforcing any remedy available to it with respect to any action
or conduct on your part. Without limiting the previous sentence, the
Committee may, for example, suspend or terminate any outstanding
Restricted Stock Units for actions taken by you prior to the termination
of your employment if the Committee determines that you have acted
significantly contrary to the best interests of Procter & Gamble.
(b) By accepting a Restricted Stock Unit, you acknowledge that: (i) the
Plan is established voluntarily by The Procter & Gamble Company, is
discretionary in nature, and may be amended, suspended or terminated at
any time; (ii) the award of Restricted Stock Units is voluntary and
occasional and does not create any contractual or other right to receive
future awards of Restricted Stock Units, or benefits in lieu of Restricted
Stock Units, even if Restricted Stock Units have been awarded repeatedly
in the past; (iii) all decisions with respect to future Restricted Stock
Unit awards, if any, will be at the sole discretion of the Company; (iv)
your participation in
the Plan is voluntary; (v) Restricted Stock Units are an extraordinary
item and not part of normal or expected compensation or salary for any
purpose, including without limitation calculating any termination,
severance, resignation, redundancy, or end-of-service payments, bonuses,
long-service awards, pension or retirement benefits or similar payments;
(vi) in the event that your employer is not the Company, the award of
Restricted Stock Units will not be interpreted to form an employment
relationship with the Company; and, furthermore, the award of Restricted
Stock Units will not be interpreted to form an employment contract with
any Procter & Gamble entity; (vii) the future value of Common Stock is
unknown and cannot be predicted with certainty; and (viii) no claim or
entitlement to compensation or damages arises from termination or
forfeiture of Restricted Stock Units, or diminution in value of Restricted
Stock Units or Common Stock received in settlement thereof, and you
irrevocably release Procter & Gamble from any such claim that may arise.
10. DATA PRIVACY.
By accepting a Restricted Stock Unit, you explicitly and unambiguously
consent to the collection, use and transfer, in electronic or other form, of
your personal data as described in this document by and among, as applicable,
any Procter & Gamble entity or third party for the purpose of implementing,
administering and managing your participation in the Plan. You understand that
Procter & Gamble holds certain personal information about you, including without
limitation your name, home address and telephone number, date of birth, social
insurance number or other identification number, salary, nationality, job title,
any shares of stock or directorships held in a Procter & Gamble entity, details
of all options, Restricted Stock Units, or any other entitlement to shares of
stock awarded, canceled, exercised, vested, unvested or outstanding in your
favor, for the purpose of implementing, administering and managing the Plan
("Data"). You understand that Data may be transferred to any third parties
assisting in the implementation, administration and management of the Plan, that
these recipients may be located in your country or elsewhere, and that the
recipient's country may have different data privacy laws and protections than
your country. You understand that you may request a list with the names and
addresses of any potential recipients of Data by contacting your local human
resources representative. You authorize the recipients to receive, possess, use,
retain and transfer the Data, in electronic or other form, for the purposes of
implementing, administering and managing your participation in the Plan,
including any requisite transfer of such Data to any broker or other third party
with whom you may elect to deposit any shares of Common Stock in connection with
the settlement of your Restricted Stock Units. You understand that Data will be
held only as long as is necessary to implement, administer and manage your
participation in the plan. You understand that you may, at any time, view Data,
request additional information about the storage and processing of Data, require
any necessary amendments to Data, or refuse or withdraw the consents contained
in this paragraph, in any case without cost, by contacting in writing your local
human resources representative. You understand, however, that refusing or
withdrawing your consent may affect your ability to participate in the Plan. For
more information on the consequences of your refusal to consent or withdrawal of
consent, you understand that you may contact your local human resources
representative.
11. NOTICES.
(a) Any notice to Procter & Gamble that is required or appropriate with
respect to Restricted Stock Units held by you must be in writing and
addressed to:
The Procter & Gamble Company
ATTN: Corporate Secretary's Office
P.O. Box 599
Cincinnati, OH 45201
or such other address as Procter & Gamble may from time to time provide to
you in writing.
(b) Any notice to you that is required or appropriate with respect to
Restricted Stock Units held or to be awarded to you will be provided to
you in written or electronic form at any physical or electronic mail
address for you that is on file with Procter & Gamble.
12. SUCCESSORS AND ASSIGNS.
These Terms and Conditions are binding on, and inure to the benefit of,
(a) the Company and its successors and assigns; and (b) you and, if applicable,
the representative of your estate.
13. GOVERNING LAW.
The validity, interpretation, performance and enforcement of these Terms
and Conditions, the Plan and your Restricted Stock Units will be governed by the
laws of the State of Ohio, U.S.A. without giving effect to any other
jurisdiction's conflicts of law principles. With respect to any dispute
concerning these Terms and Conditions, the Plan and your Restricted Stock Units,
you consent to the exclusive jurisdiction of the federal or state courts located
in Hamilton County, Ohio, U.S.A.
14. THE PLAN.
All Restricted Stock Units awarded to you have been awarded under the
Plan. Certain provisions of the Plan may have been repeated or emphasized in
these Terms and Conditions; however, all terms of the Plan apply to you and your
Restricted Stock Units whether or not they have been called out in these Terms
and Conditions.
15. EFFECT OF THESE TERMS AND CONDITIONS.
These Terms and Conditions and the terms of the Plan, which are
incorporated herein by reference, describe the contractual rights awarded to you
in the form of Restricted Stock Units, and the obligations imposed on you in
connection with those rights. No right exists with respect to Restricted Stock
Units except as described in these Terms and Conditions and the Plan.
[INSERT DATE]
[INSERT NAME]
SUBJECT: AWARD OF RESTRICTED STOCK UNITS
This is to advise you that The Procter & Gamble Company, an Ohio corporation, is
awarding you with Restricted Stock Units, on the dates and in the amounts listed
below, pursuant to The Procter & Gamble 2001 Stock and Incentive Compensation
Plan, and subject to the attached Statement of Terms and Conditions Form RTD.
Grant Date: [DATE]
Forfeiture Date: [DATE]
Original Settlement Date: [DATE]
Number of Restricted Stock Units: [AMOUNT]
Paragraph 3(a) of Statement of Terms and Conditions Form RTD [is/is not] waived.
As you will see from the Statement of Terms and Conditions Form RTD, under
certain circumstances you may agree with The Procter & Gamble Company to delay
the settlement of your Restricted Stock Units beyond the Original Settlement
Date. You may want to consult your personal tax advisor before making a decision
about this matter.
[ ] I hereby accept the Award of Restricted Stock Units set forth above in
accordance with and subject to the terms of The Procter & Gamble 2001
Stock and Incentive Compensation Plan and the attached Statement of Terms
and Conditions for Restricted Stock Units, with which I am familiar. I
agree that the Award of Restricted Stock Units, The Procter & Gamble 2001
Stock and Incentive Compensation Plan, and the attached Statement of Terms
and Conditions for Restricted Stock Units together constitute an agreement
between the Company and me in accordance with the terms thereof and
hereof, and I further agree that any legal action related to this Award of
Restricted Stock Units may be brought in any federal or state court
located in Hamilton County, Ohio, USA, and I hereby accept the
jurisdiction of these courts and consent to service of process from said
courts solely for legal actions related to this Award of Restricted Stock
Units.
[ ] I hereby reject the Award of Restricted Stock Units set forth above.
- ------------------- -----------------------------------------------
Date Signature
FORM RTD
THE PROCTER & GAMBLE COMPANY
STATEMENT OF TERMS AND CONDITIONS FOR RESTRICTED STOCK UNITS
THE PROCTER & GAMBLE 2001 STOCK AND INCENTIVE COMPENSATION PLAN
The Restricted Stock Units awarded to you as set forth in the letter you
received from the Company (your "Award Letter"), and your ownership thereof, are
subject to the following terms and conditions.
1. DEFINITIONS.
For purposes of this Statement of Terms and Conditions for Restricted
Stock Units ("Terms and Conditions"), all capitalized terms not defined in these
Terms and Conditions will have the meanings described in The Procter & Gamble
2001 Stock and Incentive Compensation Plan (the "Plan"), and the following terms
will have the following meanings.
(a) "AGREED SETTLEMENT DATE" has the meaning described in Section 2(c);
(b) "DATA" has the meaning described in Section 10;
(c) "DISABILITY" means termination of employment under the permanent
disability provision of any retirement plan of Procter & Gamble;
(d) "DIVIDEND EQUIVALENTS" has the meaning described in Section 4;
(e) "FORFEITURE DATE" is the date identified as such in your Award Letter;
(f) "FORFEITURE PERIOD" means the period from the Grant Date until the
Forfeiture Date.
(g) "GRANT DATE" means the date a Restricted Stock Unit was awarded to
you, as identified in your Award Letter;
(h) "ORIGINAL SETTLEMENT DATE" is the date identified as such in your
Award Letter, as adjusted, if applicable, by Section 2;
(i) "POST-FORFEITURE PERIOD" means the period from the Forfeiture Date
until the later of the Original Settlement Date or the Agreed Settlement
Date;
(j) "PROCTER & GAMBLE" means the Company and/or its Subsidiaries;
(k) "RESTRICTED STOCK UNIT" means an unfunded, unsecured promise by the
Company, in accordance with these Terms and Conditions and the provisions
of the Plan, to issue to you one share of Common Stock on the later of the
Original Settlement Date or the Agreed Settlement Date.
2. TRANSFER AND RESTRICTIONS.
(a) Neither Restricted Stock Units nor your interest in them may be sold,
exchanged, transferred, pledged, hypothecated, given or otherwise disposed
of by you at any time, except by will or by the laws of descent and
distribution. Any attempted transfer of a Restricted Stock Unit,
whether voluntary or involuntary on your part, will result in the
immediate forfeiture to the Company, and cancellation, of the Restricted
Stock Unit (including all rights to Dividend Equivalents).
(b) During the Forfeiture Period, your Restricted Stock Units (including
all rights to receive Dividend Equivalents) will be forfeited and
cancelled if you leave your employment with Procter & Gamble for any
reason, except due to: (i) your Disability; (ii) your retirement in
accordance with the provisions of any appropriate retirement plan of
Procter & Gamble; or (iii) in certain circumstances, your Special
Separation. In the event of your Disability during the Forfeiture Period,
unless otherwise agreed to in writing by the Company, your Original
Settlement Date will automatically and immediately become, without any
further action by you or the Company, the date of your Disability. In the
event of your retirement in accordance with the provisions of any
appropriate retirement plan of Procter & Gamble during the Forfeiture
Period, you will retain your Restricted Stock Units subject to the Plan
and these Terms and Conditions. In the event of your Special Separation
during the Forfeiture Period, your Restricted Stock Units will be
forfeited and cancelled unless otherwise agreed to in writing by the
Company.
(c) At any time at least one calendar year prior to the Original
Settlement Date, you and the Company may agree to postpone the date on
which you are entitled to receive one share of Common Stock for each
Restricted Stock Unit you hold until January 15th of any later year (the
"Agreed Settlement Date"). During the Post-Forfeiture Period, if you leave
your employment with Procter & Gamble for any reason other than: (i)
Disability; (ii) Special Separation; or (iii) retirement in accordance
with the provisions of any appropriate retirement plan of Procter &
Gamble, your Original Settlement Date or Agreed Settlement Date, as
applicable, will automatically and immediately become, without any further
action by you or the Company, the date of your termination of employment.
In the event of your Disability or Special Separation during the
Post-Forfeiture period, unless otherwise agreed to in writing by the
Company, your Original Settlement Date or Agreed Settlement Date, as
applicable, will automatically and immediately become, without any further
action by you or the Company, the date of your Disability or Special
Separation, as applicable. In the event of your retirement in accordance
with the provisions of any appropriate retirement plan of Procter & Gamble
during the Post-Forfeiture Period, you will retain your Restricted Stock
Units subject to the Plan and these Terms and Conditions.
(d) Upon your death or the occurrence of a Change in Control at any time
while you hold Restricted Stock Units and/or Dividend Equivalents, your
Original Settlement Date or Agreed Settlement Date, as applicable, will
automatically and immediately become, without any further action by you or
the Company, the date of your death or of the Change in Control, as
applicable.
(e) From time to time, the Company and/or the Committee may establish
procedures with which you must comply in order to accept an award of
Restricted Stock Units, to agree to an Agreed Settlement Date, or to
settle your Restricted Stock Units, including requiring you to do so by
means of electronic signature, or charging you an administrative fee for
doing so.
(f) Once your Restricted Stock Units have been settled by delivery to you
of an equivalent number of shares of Common Stock, the Restricted Stock
Units will have no further value, force or effect and you will cease to
receive Dividend Equivalents associated with the Restricted Stock Units.
3. CONFIDENTIALITY AND NON-COMPETITION
(a) In order to better protect the goodwill of Procter & Gamble and to
prevent the disclosure of Procter & Gamble's trade secrets and
confidential information, and thereby help ensure the long-term success of
Procter & Gamble's business, in consideration of your being awarded
Restricted Stock Units, you (without prior written consent of Procter &
Gamble), will not engage
in any activity or provide any services, whether as a director, manager,
supervisor, employee, advisor, consultant or otherwise, for a period of
three (3) years following the date your employment with Procter & Gamble
is terminated (except for terminations 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 Procter & Gamble (including
both existing products as well as products known to you, as a consequence
of your employment with Procter & Gamble, to be in development):
(i) with respect to which your work has been directly concerned at
any time during the two (2) years preceding the termination of your
employment with Procter & Gamble; or
(ii) with respect to which, during the two (2) years preceding the
termination of your employment with Procter & Gamble, you, as a
consequence of your job performance and duties, acquired knowledge
of trade secrets or other confidential information of Procter &
Gamble.
For purposes of this Section 3(a), it will be conclusively presumed that
you have knowledge of information you were directly exposed to through
actual receipt or review of memoranda or documents containing such
information, or through attendance at meetings at which such information
was discussed or disclosed.
(b) The provisions of Section 3(a) are not in lieu of, but are in addition
to your continuing obligation (which you acknowledge by accepting an award
of Restricted Stock Units) to not use or disclose Procter & Gamble's trade
secrets or confidential information known to you until any particular
trade secret or confidential information becomes generally known (through
no fault of yours). As used in this Section 3(b), "generally known" means
known throughout the domestic United States industry or, if you have job
responsibilities partially or entirely outside of the United States, the
appropriate domestic United States and/or appropriate foreign country or
countries' industry(ies). Information regarding products in development,
in test marketing, or being marketed or promoted in a discrete geographic
region, which information Procter & Gamble is considering for broader use,
will not be deemed to be "generally known" until such broader use is
actually commercially implemented.
(c) By accepting an award of Restricted Stock Units, you agree that, if
you were, without authority, to use or disclose Procter & Gamble's trade
secrets or confidential information or threaten to do so, Procter & Gamble
would be entitled to injunctive and other appropriate relief to prevent
you from doing so. You further agree that the harm caused to Procter &
Gamble by the breach or anticipated breach of this Section 3(c) is, by its
nature, irreparable because, among other things, it is not readily
susceptible of proof as to the monetary harm that would ensue. You agree
that any interim or final equitable relief entered by a court of competent
jurisdiction will, at the request of Procter & Gamble, be entered on
consent and enforced by any court having jurisdiction over you, without
prejudice to any rights you or Procter & Gamble may have to appeal from
the proceedings which resulted in any grant of such relief.
(d) If any of the provisions contained in Sections 3(a) through (c) are
for any reason, whether by application of existing law or law which may
develop after your acceptance of an award of Restricted Stock Units,
determined by a court of competent jurisdiction to be overly broad as to
scope of activity, duration, or territory, then by accepting an award of
Restricted Stock Units you agree to join Procter & Gamble in requesting
such court to construe such provision by limiting or reducing it so as to
be enforceable to the extent compatible with then-applicable law. If any
one or more of the provisions contained in Section 3(a) through (c) are
determined by a court of competent jurisdiction to be invalid, void or
unenforceable, then the remainder of the provisions will remain in full
force and effect and will not be affected, impaired or invalidated in any
way.
4. DIVIDEND EQUIVALENTS.
As a holder of Restricted Stock Units, during the period from the Grant
Date until the Original Settlement Date or the Agreed Settlement Date, whichever
is later, each time a cash dividend or other cash distribution is paid with
respect to Common Stock, you will receive additional Restricted Stock Units
("Dividend Equivalents"). The number of such additional Restricted Stock Units
will be determined as follows: multiply the number of Restricted Stock Units
currently held by the per share amount of the cash dividend or other cash
distribution on the Common Stock, and then divide the result by the price of the
Common Stock on the date of the dividend or distribution. These Dividend
Equivalent Restricted Stock Units will be subject to the same terms and
conditions as the original Restricted Stock Units that gave rise to them,
including forfeiture and settlement terms, except that if there is a fractional
number of Dividend Equivalent Restricted Stock Units on the date they are to be
settled, you will receive one share of Common Stock for the fractional Dividend
Equivalent Restricted Stock Units.
5. VOTING AND OTHER SHAREHOLDER RIGHTS.
A Restricted Stock Unit is not a share of Common Stock, and thus you are
not entitled to any voting, dividend or other rights as a shareholder of the
Company with respect to the Restricted Stock Units you hold.
6. ADJUSTMENTS IN CASE OF STOCK DIVIDENDS, STOCK SPLITS, ETC.
In the event of a future reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger, consolidation, rights offering,
share exchange, reclassification, distribution, spin-off, or other change
affecting the corporate structure, capitalization or Common Stock, the number of
Restricted Stock Units you hold will be adjusted appropriately and equitably to
prevent dilution or enlargement of your rights.
7. TAX WITHHOLDING.
To the extent Procter & Gamble is required to withhold federal, state,
local or foreign taxes in connection with your Restricted Stock Units or
Dividend Equivalents, the Committee may require you to make such arrangements as
Procter & Gamble may deem appropriate for the payment of such taxes required to
be withheld, including without limitation, relinquishment of some of the shares
of Common Stock that would otherwise be given to you. However, regardless of any
action taken by Procter & Gamble with respect to any income tax, social
insurance, payroll tax, or other tax, by accepting a Restricted Stock Unit or
Dividend Equivalent, you acknowledge that the ultimate liability for any such
tax owed by you is and remains your responsibility, and that Procter & Gamble
makes no representations about the tax treatment of your Restricted Stock Units
or Dividend Equivalents, and does not commit to structure any aspect of the
Restricted Stock Units or Dividend Equivalents to reduce or eliminate your tax
liability.
8. SUSPENSION PERIODS AND TERMINATION.
The Company reserves the right from time to time to temporarily suspend
your right to settle your Restricted Stock Units for shares of Common Stock
where such suspension is deemed by the Company as necessary or appropriate.
9. PROCTER & GAMBLE RIGHT TO TERMINATE EMPLOYMENT AND OTHER REMEDIES.
(a) Nothing in these Terms and Conditions, or the fact that you have been
awarded Restricted Stock Units, affects in any way the right or power of
Procter & Gamble to terminate your employment at any time for any reason,
with or without cause, or precludes Procter & Gamble from taking any
action or enforcing any remedy available to it with respect to any action
or conduct on your part. Without limiting the previous sentence, the
Committee may, for
example, suspend or terminate any outstanding Restricted Stock Units for
actions taken by you prior to the termination of your employment if the
Committee determines that you have acted significantly contrary to the
best interests of Procter & Gamble.
(b) By accepting a Restricted Stock Unit, you acknowledge that: (i) the
Plan is established voluntarily by The Procter & Gamble Company, is
discretionary in nature, and may be amended, suspended or terminated at
any time; (ii) the award of Restricted Stock Units is voluntary and
occasional and does not create any contractual or other right to receive
future awards of Restricted Stock Units, or benefits in lieu of Restricted
Stock Units, even if Restricted Stock Units have been awarded repeatedly
in the past; (iii) all decisions with respect to future Restricted Stock
Unit awards, if any, will be at the sole discretion of the Company; (iv)
your participation in the Plan is voluntary; (v) Restricted Stock Units
are an extraordinary item and not part of normal or expected compensation
or salary for any purpose, including without limitation calculating any
termination, severance, resignation, redundancy, or end-of-service
payments, bonuses, long-service awards, pension or retirement benefits or
similar payments; (vi) in the event that your employer is not the Company,
the award of Restricted Stock Units will not be interpreted to form an
employment relationship with the Company; and, furthermore, the award of
Restricted Stock Units will not be interpreted to form an employment
contract with any Procter & Gamble entity; (vii) the future value of
Common Stock is unknown and cannot be predicted with certainty; and (viii)
no claim or entitlement to compensation or damages arises from termination
or forfeiture of Restricted Stock Units, or diminution in value of
Restricted Stock Units or Common Stock received in settlement thereof, and
you irrevocably release Procter & Gamble from any such claim that may
arise.
10. DATA PRIVACY.
By accepting a Restricted Stock Unit, you explicitly and unambiguously
consent to the collection, use and transfer, in electronic or other form, of
your personal data as described in this document by and among, as applicable,
any Procter & Gamble entity or third party for the purpose of implementing,
administering and managing your participation in the Plan. You understand that
Procter & Gamble holds certain personal information about you, including without
limitation your name, home address and telephone number, date of birth, social
insurance number or other identification number, salary, nationality, job title,
any shares of stock or directorships held in a Procter & Gamble entity, details
of all options, Restricted Stock Units, or any other entitlement to shares of
stock awarded, canceled, exercised, vested, unvested or outstanding in your
favor, for the purpose of implementing, administering and managing the Plan
("Data"). You understand that Data may be transferred to any third parties
assisting in the implementation, administration and management of the Plan, that
these recipients may be located in your country or elsewhere, and that the
recipient's country may have different data privacy laws and protections than
your country. You understand that you may request a list with the names and
addresses of any potential recipients of Data by contacting your local human
resources representative. You authorize the recipients to receive, possess, use,
retain and transfer the Data, in electronic or other form, for the purposes of
implementing, administering and managing your participation in the Plan,
including any requisite transfer of such Data to any broker or other third party
with whom you may elect to deposit any shares of Common Stock in connection with
the settlement of your Restricted Stock Units. You understand that Data will be
held only as long as is necessary to implement, administer and manage your
participation in the plan. You understand that you may, at any time, view Data,
request additional information about the storage and processing of Data, require
any necessary amendments to Data, or refuse or withdraw the consents contained
in this paragraph, in any case without cost, by contacting in writing your local
human resources representative. You understand, however, that refusing or
withdrawing your consent may affect your ability to participate in the Plan. For
more information on the consequences of your refusal to consent or withdrawal of
consent, you understand that you may contact your local human resources
representative.
11. NOTICES.
(a) Any notice to Procter & Gamble that is required or appropriate with
respect to Restricted Stock Units held by you must be in writing and
addressed to:
The Procter & Gamble Company
ATTN: Corporate Secretary's Office
P.O. Box 599
Cincinnati, OH 45201
or such other address as Procter & Gamble may from time to time provide to
you in writing.
(b) Any notice to you that is required or appropriate with respect to
Restricted Stock Units held or to be awarded to you will be provided to
you in written or electronic form at any physical or electronic mail
address for you that is on file with Procter & Gamble.
12. SUCCESSORS AND ASSIGNS.
These Terms and Conditions are binding on, and inure to the benefit of,
(a) The Procter & Gamble Company and its successors and assigns; and (b) you
and, if applicable, the representative of your estate.
13. GOVERNING LAW.
The validity, interpretation, performance and enforcement of these Terms
and Conditions, the Plan and your Restricted Stock Units will be governed by the
laws of the State of Ohio, U.S.A. without giving effect to any other
jurisdiction's conflicts of law principles. With respect to any dispute
concerning these Terms and Conditions, the Plan and your Restricted Stock Units,
you consent to the exclusive jurisdiction of the federal or state courts located
in Hamilton County, Ohio, U.S.A.
14. THE PLAN.
All Restricted Stock Units awarded to you have been awarded under the
Plan. Certain provisions of the Plan may have been repeated or emphasized in
these Terms and Conditions; however, all terms of the Plan apply to you and your
Restricted Stock Units whether or not they have been called out in these Terms
and Conditions.
15. EFFECT OF THESE TERMS AND CONDITIONS.
These Terms and Conditions and the terms of the Plan, which are
incorporated herein by reference, describe the contractual rights awarded to you
in the form of Restricted Stock Units, and the obligations imposed on you in
connection with those rights. No right exists with respect to Restricted Stock
Units except as described in these Terms and Conditions and the Plan.
[INSERT DATE]
[INSERT NAME]
SUBJECT: AWARD OF RESTRICTED STOCK UNITS
This is to advise you that The Procter & Gamble Company, an Ohio corporation, is
awarding you with Restricted Stock Units, on the dates and in the amounts listed
below, pursuant to The Procter & Gamble 2001 Stock and Incentive Compensation
Plan, and subject to the attached Statement of Terms and Conditions Form OPN.
Grant Date: [DATE]
Original Settlement Date: [DATE]
Number of Restricted Stock Units: [AMOUNT]
Paragraph 3(a) of Statement of Terms and Conditions Form OPN [is/is not] waived.
As you will see from the Statement of Terms and Conditions Form OPN, under
certain circumstances you may agree with The Procter & Gamble Company to delay
the settlement of your Restricted Stock Units beyond the Original Settlement
Date. You may want to consult your personal tax advisor before making a decision
about this matter.
THE PROCTER & GAMBLE COMPANY
[ ] I hereby accept the Award of Restricted Stock Units set forth above in
accordance with and subject to the terms of The Procter & Gamble 2001
Stock and Incentive Compensation Plan and the attached Statement of Terms
and Conditions for Restricted Stock Units, with which I am familiar. I
agree that the Award of Restricted Stock Units, The Procter & Gamble 2001
Stock and Incentive Compensation Plan, and the attached Statement of Terms
and Conditions for Restricted Stock Units together constitute an agreement
between the Company and me in accordance with the terms thereof and
hereof, and I further agree that any legal action related to this Award of
Restricted Stock Units may be brought in any federal or state court
located in Hamilton County, Ohio, USA, and I hereby accept the
jurisdiction of these courts and consent to service of process from said
courts solely for legal actions related to this Award of Restricted Stock
Units.
[ ] I hereby reject the Award of Restricted Stock Units set forth above.
- ------------------- -------------------------------------------
Date Signature
FORM OPN
THE PROCTER & GAMBLE COMPANY
STATEMENT OF TERMS AND CONDITIONS FOR RESTRICTED STOCK UNITS
THE PROCTER & GAMBLE 2001 STOCK AND INCENTIVE COMPENSATION PLAN
The Restricted Stock Units awarded to you as set forth in the letter you
received from the Company (your "Award Letter"), and your ownership thereof, are
subject to the following terms and conditions.
1. DEFINITIONS.
For purposes of this Statement of Terms and Conditions for Restricted
Stock Units ("Terms and Conditions"), all capitalized terms not defined in these
Terms and Conditions will have the meanings described in The Procter & Gamble
2001 Stock and Incentive Compensation Plan (the "Plan"), and the following terms
will have the following meanings.
(a) "AGREED SETTLEMENT DATE" has the meaning described in Section 2(b);
(b) "DATA" has the meaning described in Section 10;
(c) "DISABILITY" means termination of employment under the permanent
disability provision of any retirement plan of Procter & Gamble;
(d) "DIVIDEND EQUIVALENTS" has the meaning described in Section 4;
(e) "GRANT DATE" means the date a Restricted Stock Unit was awarded to
you, as identified in your Award Letter;
(f) "ORIGINAL SETTLEMENT DATE" is the date identified as such in your
Award Letter, as adjusted, if applicable, by Section 2;
(g) "PROCTER & GAMBLE" means the Company and/or its Subsidiaries;
(h) "RESTRICTED STOCK UNIT" means an unfunded, unsecured promise by the
Company, in accordance with these Terms and Conditions and the provisions
of the Plan, to issue to you one share of Common Stock on the later of the
Original Settlement Date or the Agreed Settlement Date.
(i) "SETTLEMENT PERIOD" means the period from the Grant Date until the
later of the Original Settlement Date or the Agreed Settlement Date.
2. TRANSFER AND RESTRICTIONS.
(a) Neither Restricted Stock Units nor your interest in them may be sold,
exchanged, transferred, pledged, hypothecated, given or otherwise disposed
of by you at any time, except by will or by the laws of descent and
distribution. Any attempted transfer of a Restricted Stock Unit, whether
voluntary or involuntary on your part, will result in the immediate
forfeiture to the Company, and cancellation, of the Restricted Stock Unit
(including all rights to Dividend Equivalents).
(b) At any time at least one calendar year prior to the Original
Settlement Date, you and the Company may agree to postpone the date on
which you are entitled to receive one share of Common Stock for each
Restricted Stock Unit you hold until January 15th of any later year (the
"Agreed Settlement Date"). During the Settlement Period, if you leave your
employment with Procter & Gamble for any reason other than: (i)
Disability; (ii) Special Separation; or (iii) retirement in accordance
with the provisions of any appropriate retirement plan of Procter &
Gamble, your Original Settlement Date or Agreed Settlement Date, as
applicable, will automatically and immediately become, without any further
action by you or the Company, the date of your termination of employment.
In the event of your Disability or Special Separation during the
Settlement Period, unless otherwise agreed to in writing by the Company,
your Original Settlement Date or Agreed Settlement Date, as applicable,
will automatically and immediately become, without any further action by
you or the Company, the date of your Disability or Special Separation, as
applicable. In the event of your retirement in accordance with the
provisions of any appropriate retirement plan of Procter & Gamble during
the Settlement Period, you will retain your Restricted Stock Units subject
to the Plan and these Terms and Conditions.
(c) Upon your death or the occurrence of a Change in Control at any time
while you hold Restricted Stock Units and/or Dividend Equivalents, your
Original Settlement Date or Agreed Settlement Date, as applicable, will
automatically and immediately become, without any further action by you or
the Company, the date of your death or of the Change in Control, as
applicable.
(d) From time to time, the Company and/or the Committee may establish
procedures with which you must comply in order to accept an award of
Restricted Stock Units, to agree to an Agreed Settlement Date, or to
settle your Restricted Stock Units, including requiring you to do so by
means of electronic signature, or charging you an administrative fee for
doing so.
(e) Once your Restricted Stock Units have been settled by delivery to you
of an equivalent number of shares of Common Stock, the Restricted Stock
Units will have no further value, force or effect and you will cease to
receive Dividend Equivalents associated with the Restricted Stock Units.
3. CONFIDENTIALITY AND NON-COMPETITION
(a) In order to better protect the goodwill of Procter & Gamble and to
prevent the disclosure of Procter & Gamble's trade secrets and
confidential information, and thereby help ensure the long-term success of
Procter & Gamble's business, in consideration of your being awarded
Restricted Stock Units, you (without prior written consent of Procter &
Gamble), will not engage in any activity or provide any services, whether
as a director, manager, supervisor, employee, advisor, consultant or
otherwise, for a period of three (3) years following the date your
employment with Procter & Gamble is terminated (except for terminations
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
Procter & Gamble (including both existing products as well as products
known to you, as a consequence of your employment with Procter & Gamble,
to be in development):
(i) with respect to which your work has been directly concerned at
any time during the two (2) years preceding the termination of your
employment with Procter & Gamble; or
(ii) with respect to which, during the two (2) years preceding the
termination of your employment with Procter & Gamble, you, as a
consequence of your job performance and duties, acquired knowledge
of trade secrets or other confidential information of Procter &
Gamble.
For purposes of this Section 3(a), it will be conclusively presumed that
you have knowledge of information you were directly exposed to through
actual receipt or review of memoranda or documents containing such
information, or through attendance at meetings at which such information
was discussed or disclosed.
(b) The provisions of Section 3(a) are not in lieu of, but are in addition
to your continuing obligation (which you acknowledge by accepting an award
of Restricted Stock Units) to not use or disclose Procter & Gamble's trade
secrets or confidential information known to you until any particular
trade secret or confidential information becomes generally known (through
no fault of yours). As used in this Section 3(b), "generally known" means
known throughout the domestic United States industry or, if you have job
responsibilities partially or entirely outside of the United States, the
appropriate domestic United States and/or appropriate foreign country or
countries' industry(ies). Information regarding products in development,
in test marketing, or being marketed or promoted in a discrete geographic
region, which information Procter & Gamble is considering for broader use,
will not be deemed to be "generally known" until such broader use is
actually commercially implemented.
(c) By accepting an award of Restricted Stock Units, you agree that, if
you were, without authority, to use or disclose Procter & Gamble's trade
secrets or confidential information or threaten to do so, Procter & Gamble
would be entitled to injunctive and other appropriate relief to prevent
you from doing so. You further agree that the harm caused to Procter &
Gamble by the breach or anticipated breach of this Section 3(c) is, by its
nature, irreparable because, among other things, it is not readily
susceptible of proof as to the monetary harm that would ensue. You agree
that any interim or final equitable relief entered by a court of competent
jurisdiction will, at the request of Procter & Gamble, be entered on
consent and enforced by any court having jurisdiction over you, without
prejudice to any rights you or Procter & Gamble may have to appeal from
the proceedings which resulted in any grant of such relief.
(d) If any of the provisions contained in Sections 3(a) through (c) are
for any reason, whether by application of existing law or law which may
develop after your acceptance of an award of Restricted Stock Units,
determined by a court of competent jurisdiction to be overly broad as to
scope of activity, duration, or territory, then by accepting an award of
Restricted Stock Units you agree to join Procter & Gamble in requesting
such court to construe such provision by limiting or reducing it so as to
be enforceable to the extent compatible with then-applicable law. If any
one or more of the provisions contained in Section 3(a) through (c) are
determined by a court of competent jurisdiction to be invalid, void or
unenforceable, then the remainder of the provisions will remain in full
force and effect and will not be affected, impaired or invalidated in any
way.
4. DIVIDEND EQUIVALENTS.
As a holder of Restricted Stock Units, during the period from the Grant
Date until the Original Settlement Date or the Agreed Settlement Date, whichever
is later, each time a cash dividend or other cash distribution is paid with
respect to Common Stock, you will receive additional Restricted Stock Units
("Dividend Equivalents"). The number of such additional Restricted Stock Units
will be determined as follows: multiply the number of Restricted Stock Units
currently held by the per share amount of the cash dividend or other cash
distribution on the Common Stock, and then divide the result by the price of the
Common Stock on the date of the dividend or distribution. These Dividend
Equivalent Restricted Stock Units will be subject to the same terms and
conditions as the original Restricted Stock Units that gave rise to them,
including forfeiture and settlement terms, except that if there is a fractional
number of Dividend Equivalent Restricted Stock Units on the date they are to be
settled, you will receive one share of Common Stock for the fractional Dividend
Equivalent Restricted Stock Units.
5. VOTING AND OTHER SHAREHOLDER RIGHTS.
A Restricted Stock Unit is not a share of Common Stock, and thus you are
not entitled to any voting, dividend or other rights as a shareholder of the
Company with respect to the Restricted Stock Units you hold.
6. ADJUSTMENTS IN CASE OF STOCK DIVIDENDS, STOCK SPLITS, ETC.
In the event of a future reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger, consolidation, rights offering,
share exchange, reclassification, distribution, spin-off, or other change
affecting the corporate structure, capitalization or Common Stock, the number of
Restricted Stock Units you hold will be adjusted appropriately and equitably to
prevent dilution or enlargement of your rights.
7. TAX WITHHOLDING.
To the extent Procter & Gamble is required to withhold federal, state,
local or foreign taxes in connection with your Restricted Stock Units or
Dividend Equivalents, the Committee may require you to make such arrangements as
Procter & Gamble may deem appropriate for the payment of such taxes required to
be withheld, including without limitation, relinquishment of some of the shares
of Common Stock that would otherwise be given to you. However, regardless of any
action taken by Procter & Gamble with respect to any income tax, social
insurance, payroll tax, or other tax, by accepting a Restricted Stock Unit or
Dividend Equivalent, you acknowledge that the ultimate liability for any such
tax owed by you is and remains your responsibility, and that Procter & Gamble
makes no representations about the tax treatment of your Restricted Stock Units
or Dividend Equivalents, and does not commit to structure any aspect of the
Restricted Stock Units or Dividend Equivalents to reduce or eliminate your tax
liability.
8. SUSPENSION PERIODS AND TERMINATION.
The Company reserves the right from time to time to temporarily suspend
your right to settle your Restricted Stock Units for shares of Common Stock
where such suspension is deemed by the Company as necessary or appropriate.
9. PROCTER & GAMBLE RIGHT TO TERMINATE EMPLOYMENT AND OTHER REMEDIES.
(a) Nothing in these Terms and Conditions, or the fact that you have been
awarded Restricted Stock Units, affects in any way the right or power of
Procter & Gamble to terminate your employment at any time for any reason,
with or without cause, or precludes Procter & Gamble from taking any
action or enforcing any remedy available to it with respect to any action
or conduct on your part. Without limiting the previous sentence, the
Committee may, for example, suspend or terminate any outstanding
Restricted Stock Units for actions taken by you prior to the termination
of your employment if the Committee determines that you have acted
significantly contrary to the best interests of Procter & Gamble.
(b) By accepting a Restricted Stock Unit, you acknowledge that: (i) the
Plan is established voluntarily by the Company, is discretionary in
nature, and may be amended, suspended or terminated at any time; (ii) the
award of Restricted Stock Units is voluntary and occasional and does not
create any contractual or other right to receive future awards of
Restricted Stock Units, or benefits in lieu of Restricted Stock Units,
even if Restricted Stock Units have been awarded repeatedly in the past;
(iii) all decisions with respect to future Restricted Stock Unit awards,
if any, will be at the sole discretion of the Company; (iv) your
participation in the Plan is voluntary; (v) Restricted Stock Units are an
extraordinary item and not part of normal or expected compensation or
salary for any purpose, including without limitation calculating any
termination, severance, resignation, redundancy, or end-of-service
payments, bonuses, long-service awards,
pension or retirement benefits or similar payments; (vi) in the event that
your employer is not the Company, the award of Restricted Stock Units will
not be interpreted to form an employment relationship with the Company;
and, furthermore, the award of Restricted Stock Units will not be
interpreted to form an employment contract with any Procter & Gamble
entity; (vii) the future value of Common Stock is unknown and cannot be
predicted with certainty; and (viii) no claim or entitlement to
compensation or damages arises from termination or forfeiture of
Restricted Stock Units, or diminution in value of Restricted Stock Units
or Common Stock received in settlement thereof, and you irrevocably
release Procter & Gamble from any such claim that may arise.
10. DATA PRIVACY.
By accepting a Restricted Stock Unit, you explicitly and unambiguously
consent to the collection, use and transfer, in electronic or other form, of
your personal data as described in this document by and among, as applicable,
any Procter & Gamble entity or third party for the purpose of implementing,
administering and managing your participation in the Plan. You understand that
Procter & Gamble holds certain personal information about you, including without
limitation your name, home address and telephone number, date of birth, social
insurance number or other identification number, salary, nationality, job title,
any shares of stock or directorships held in a Procter & Gamble entity, details
of all options, Restricted Stock Units, or any other entitlement to shares of
stock awarded, canceled, exercised, vested, unvested or outstanding in your
favor, for the purpose of implementing, administering and managing the Plan
("Data"). You understand that Data may be transferred to any third parties
assisting in the implementation, administration and management of the Plan, that
these recipients may be located in your country or elsewhere, and that the
recipient's country may have different data privacy laws and protections than
your country. You understand that you may request a list with the names and
addresses of any potential recipients of Data by contacting your local human
resources representative. You authorize the recipients to receive, possess, use,
retain and transfer the Data, in electronic or other form, for the purposes of
implementing, administering and managing your participation in the Plan,
including any requisite transfer of such Data to any broker or other third party
with whom you may elect to deposit any shares of Common Stock in connection with
the settlement of your Restricted Stock Units. You understand that Data will be
held only as long as is necessary to implement, administer and manage your
participation in the plan. You understand that you may, at any time, view Data,
request additional information about the storage and processing of Data, require
any necessary amendments to Data, or refuse or withdraw the consents contained
in this paragraph, in any case without cost, by contacting in writing your local
human resources representative. You understand, however, that refusing or
withdrawing your consent may affect your ability to participate in the Plan. For
more information on the consequences of your refusal to consent or withdrawal of
consent, you understand that you may contact your local human resources
representative.
11. NOTICES.
(a) Any notice to Procter & Gamble that is required or appropriate with
respect to Restricted Stock Units held by you must be in writing and
addressed to:
The Procter & Gamble Company
ATTN: Corporate Secretary's Office
P.O. Box 599
Cincinnati, OH 45201
or such other address as Procter & Gamble may from time to time provide to
you in writing.
(b) Any notice to you that is required or appropriate with respect to
Restricted Stock Units held or to be awarded to you will be provided to
you in written or electronic form at any physical or electronic mail
address for you that is on file with Procter & Gamble.
12. SUCCESSORS AND ASSIGNS.
These Terms and Conditions are binding on, and inure to the benefit of,
(a) the Company and its successors and assigns; and (b) you and, if applicable,
the representative of your estate.
13. GOVERNING LAW.
The validity, interpretation, performance and enforcements of these Terms
and Conditions, the Plan and your Restricted Stock Units will be governed by the
laws of the State of Ohio, U.S.A. without giving effect to any other
jurisdiction's conflicts of law principles. With respect to any dispute
concerning these Terms and Conditions, the Plan and your Restricted Stock Units,
you consent to the exclusive jurisdiction of the federal or state courts located
in Hamilton County, Ohio, U.S.A.
14. THE PLAN.
All Restricted Stock Units awarded to you have been awarded under the
Plan. Certain provisions of the Plan may have been repeated or emphasized in
these Terms and Conditions; however, all terms of the Plan apply to you and your
Restricted Stock Units whether or not they have been called out in these Terms
and Conditions.
15. EFFECT OF THESE TERMS AND CONDITIONS.
These Terms and Conditions and the terms of the Plan, which are
incorporated herein by reference, describe the contractual rights awarded to you
in the form of Restricted Stock Units, and the obligations imposed on you in
connection with those rights. No right exists with respect to Restricted Stock
Units except as described in these Terms and Conditions and the Plan.
[PROCTER & GAMBLE LOGO]
The Procter & Gamble Company
Executive Offices
1 Procter & Gamble Plaza, Cincinnati, Ohio 45202-3315
[Date]
[Name]
Subject: Restricted Stock Award
As authorized by the Compensation Committee of the Board of Directors on [Date],
I hereby award you [amount] shares of Procter & Gamble Restricted Stock under
The Procter & Gamble 2001 Stock and Incentive Plan.
These shares will vest 100% on [date] (the vesting date) and are subject to the
attached Statement of Conditions and Restrictions, Form SRS.
These restricted shares will be forfeited as a result of any separation from the
Company (except separation due to death or permanent disability) prior to the
vesting date.
As a reminder, since you are subject to U.S. taxation, you may make a Section
83(b) election, which includes the value of the restricted stock in your gross
income in the year it is granted. You must make the election within 30 days of
the grant by filing the required notification with both the IRS and the Company.
You may want to consult your personal tax advisor before making any Section
83(b) election.
THE PROCTER & GAMBLE COMPANY
FORM SRS
PROCTER & GAMBLE
STATEMENT OF CONDITIONS AND RESTRICTIONS
THE PROCTER & GAMBLE 2001 STOCK AND INCENTIVE COMPENSATION PLAN
The shares of Common Stock of The Procter & Gamble Company (the
"Restricted Shares") awarded to you as stated in the accompanying letter have
been transferred to you on the express condition that these Restricted Shares,
and your ownership thereof, are subject to the following conditions and
restrictions:
1. RESTRICTIONS AND CONDITIONS ON SHARES --
(a) Neither these Restricted Shares nor any of your interest therein may
be sold, exchanged, transferred, pledged, hypothecated, given or otherwise
disposed of by you at any time except as specifically permitted or otherwise
required by the terms of this Statement.
(b) In the event that your employment with Procter & Gamble terminates for
any reason except as set forth in Section 4(a)(ii) below prior to the vesting
date shown in the accompanying letter, you will be deemed to have received
delivery on the date of the termination of your employment a written demand by
the Company to sell to the Company within ten (10) days any of these Restricted
Shares where the conditions and restrictions have not lapsed as set forth in
paragraph 4 below at a price of ten cents ($.10) per share, which price is
subject to adjustment as hereinafter provided. For the purpose of this
subparagraph, your employment with Procter & Gamble shall not be deemed to
terminate by reason of your being on leave of absence for any purpose approved
in writing by the Company.
(c) In the event that you shall at any time attempt to sell, exchange,
transfer, pledge, hypothecate, give or otherwise dispose of any of the
Restricted Shares, or any interest therein, in violation of the terms and
conditions of this Statement, you will be required, within ten (10) days after
delivery to you of a written demand by the Company made within ninety (90) days
after the occurrence of such event, to sell to the Company all Restricted Shares
then registered in your name with respect to which the conditions and
restrictions set forth in this Statement are still in effect at a price of ten
cents ($.10) per share, which price is subject to adjustment as hereinafter
provided.
(d) (i) The determination as to whether an event has occurred requiring
a sale of Restricted Shares to the Company in accordance with any provision of
this paragraph 1, paragraph 7 following or any other provision of this Statement
shall be made by the Compensation Committee (the "Committee") in its sole
discretion, and all determinations of the Committee with respect thereto shall
in all respects be conclusive upon you and any persons claiming under or through
you.
(ii) If you shall at any time be required to sell any or all of
these Restricted Shares to the Company pursuant to any provisions of this
paragraph 1, paragraph 7 following or any other provision in this Statement, you
shall, effective on the date of the delivery or deemed delivery of the Company's
demand to you, cease to have any rights as a shareholder with respect to the
Restricted Shares so required to be sold, or any interest therein; and, without
limitation, you shall cease to be entitled to receive any future dividends upon
such Restricted Shares with record dates occurring after the date of delivery of
such demand; and in the event that for any reason you shall receive any such
dividends upon such Restricted Shares you will be required to repay the Company
an amount equal to such dividends.
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
(iii) If you shall at any time be required to sell any or all of
these Restricted Shares to the Company pursuant to the provisions of this
paragraph 1, paragraph 7 following or any other provision in this Statement, and
if within thirty (30) days after delivery or deemed delivery to you of the
Company's demand you have not delivered a stock power or other instrument of
transfer appropriately executed in blank, together with any certificates which
you may hold representing such Restricted Shares to the Secretary of the Company
at the Executive Offices of The Procter & Gamble Company, P. O. Box 599,
Cincinnati, Ohio 45201, the Company may thereupon cause to be mailed to you, in
the manner and at the address specified in paragraph 8(b) following, its check
payable to your order in the amount of the purchase price for such shares
provided for in this Statement and direct the Transfer Agent and Registrar of
the Company's Common Stock to make appropriate entries upon their records
showing the cancellation of such certificates and return the shares represented
thereby to the Company.
2. SHAREHOLDER RIGHTS --
Effective upon the date of award of these Restricted Shares you shall for
all purposes be a holder of record of these Restricted Shares and shall
thereafter have all rights of a common shareholder with respect to such shares
(including the right to vote such shares at any meeting of common shareholders
of The Procter & Gamble Company and the right to receive all dividends paid with
respect to such shares), subject only to the conditions and restrictions imposed
by this Statement. Until such conditions and restrictions have lapsed with
respect to any restricted Shares, any certificate for such shares will bear a
legend to the effect that they were issued or transferred subject to, and may be
sold or otherwise disposed of only in accordance with, the terms of this
Statement.
3. ADJUSTMENTS IN CASE OF STOCK DIVIDENDS, STOCK SPLITS, ETC. --
In the event that, as the result of a stock dividend, stock split,
recapitalization, merger, consolidation, reorganization, or other event, you
shall, as the owner of Restricted Shares, be entitled to new, additional or
different shares or securities: (a) such new, additional or different shares or
securities shall for all purposes be deemed "Restricted Shares," (b) all of the
terms of this Statement shall be applicable thereto as modified by this
paragraph 3, (c) the purchase price of ten cents ($.10) per share and all of the
computations provided for in this Statement shall, if and to the extent
required, be appropriately adjusted, and (d) any certificates or other
instruments evidencing such new, additional or different shares or securities
shall bear the legend referred to in paragraph 2; provided, however, any
fractional shares and any pre-emptive or other rights or warrants to purchase
securities issued to you as a holder of Restricted Shares in connection with a
public offering will be issued to you free and clear of all conditions and
restrictions imposed by this Statement.
4. LAPSE OF CONDITIONS AND RESTRICTIONS --
(a) The conditions and restrictions set forth in paragraph 1 above shall
lapse as follows:
(i) The conditions and restrictions on the Restricted Shares shall
lapse on the dates set forth in the accompanying letter.
(ii) In the event your employment with Procter & Gamble terminates
as a result of your death or permanent disability, the conditions and
restrictions on these Restricted Shares shall lapse in their entirety.
(b) The Committee may accelerate the lapse of conditions and restrictions
on all or any part of the Restricted Shares in the case of hardship which in the
sole judgment of the Committee justifies such action.
(c) When the conditions and restrictions lapse with respect to Restricted
Shares pursuant to this paragraph 4, the Company will deliver to you, or your
legal representative in case of death, promptly after surrender of any
certificate(s) for such Restricted Shares to the Treasurer of The Procter &
Gamble Company, Cincinnati, Ohio 45201, one or more certificates for a like
number of shares, free of any legend.
5. COMPANY RIGHT TO TERMINATE EMPLOYMENT AND OTHER REMEDIES --
Nothing provided herein shall be construed to affect in any way the right
or power of the Company to terminate your employment at any time for any reason
with or without cause, nor to preclude the Company from taking any action or
enforcing any remedy available to it with respect to any action or conduct on
your part.
6. DEFINITIONS --
(a) The term "Company" as used in this Statement shall mean the
corporation which awarded the Restricted Shares to you.
(b) The term "Procter & Gamble" as used in this Statement shall include
The Procter & Gamble Company and all corporations, more than 50% of whose
capital stock entitled to vote for the election of directors is owned or
controlled, directly or indirectly, by The Procter & Gamble Company or by any
corporation so controlled by The Procter & Gamble Company, if and as long as
such corporations are so controlled.
7. ADDITIONAL DOCUMENTS --
a It is the intention of the Company that this grant of Restricted Shares
shall meet the requirements of, and result in the application of, the rules
prescribed by Section 83 of the Internal Revenue Code of 1986, as in effect at
the date hereof, and applicable Regulations thereunder. Accordingly, each and
every provision shall be construed and interpreted in such manner as to conform
with such intention and the Company reserves the right to execute and to require
you to execute any further agreements or other instruments which may be
effective as of the date of award of these Restricted Shares, including, but
without limitation, an instrument modifying or correcting any provision hereof,
or of the letter advising you of the award or any action taken hereunder or
contemporaneously herewith, and to take any other action, which may be effective
as of the date of award of these Restricted Shares, that, in the opinion of
counsel for the Company, may be necessary or desirable to carry out such
intention.
(b) If you fail, refuse or neglect to execute and deliver any instrument
or document or to take any action requested by the Company or Committee to be
executed or taken by you pursuant to the provisions of paragraph 7(a) above for
a period of thirty (30) days after the date of such request, the Committee may
require you, within ten (10) days after delivery to you of a written demand by
the Company, to sell to the Company all of the Restricted Shares then registered
in your name with respect to which the conditions and restrictions set forth in
this Statement are still in effect at a price of ten cents ($.10) per share,
which price is subject to adjustment as herein provided.
8. NOTICES --
(a) Any notice to the Company under or pursuant to the conditions and
restrictions of this Statement shall be deemed to have been delivered to the
Company when delivered in person to the Secretary of the Company or when
deposited in the mails, by certified or registered mail, addressed to the
Secretary of the Company at the Executive Offices of The Procter & Gamble
Company, P.O. Box 599, Cincinnati, Ohio 45201, or such other address as the
Company may from time to time designate in writing by notice to you given
pursuant to paragraph 8(b) hereof.
(b) Any notice or demand to you under or pursuant to any provisions of
this Statement shall be deemed to have been delivered to you when delivered to
you in person or when deposited in the mails, by certified or registered mail,
addressed to you at the address on record in the Shareholder Services Department
or such other address as you may from time to time designate in writing by
notice to the Company given pursuant to paragraph 8(a) above.
9. THE PROCTER & GAMBLE 2001 STOCK AND INCENTIVE COMPENSATION PLAN --
The Restricted Shares have been awarded to you pursuant to The Procter &
Gamble 2001 Stock and Incentive Compensation Plan adopted and approved by the
shareholders of The Procter & Gamble Company on October 9, 2001, and such shares
and your ownership thereof shall be in all respects subject to the terms of such
Plan, the terms and provisions of which are incorporated herein by reference as
applicable.
10. SUCCESSORS AND ASSIGNS --
The provisions of this Statement shall be binding upon and inure to the
benefit of
(a) the Company, its successors and assigns, and
(b) you and, to the extent applicable, your legal representative.
11. GOVERNING LAW --
The validity, interpretation, performance and enforcement of the
conditions and restrictions contained in this Statement and your rights in, to
and under the Restricted Shares shall for all purposes be governed by the laws
of the State of Ohio.
12. ADDITIONAL INFORMATION CONCERNING COMMON STOCK --
The following information which appears on certificates representing
shares of the Common Stock of the Company is provided pursuant to Section
1701.24(F) of the Ohio Revised Code as pertinent to Restricted Shares awarded or
held without issuance of certificates:
(a) The Procter & Gamble Company is organized under the laws of the State
of Ohio.
(b) The Restricted Shares are fully paid and non-assessable shares of the
Common Stock without par value of the Company.
(c) The name of the person to whom the shares are issued and the number of
shares so issued and made subject to this Statement of Conditions and
Restrictions are set forth in the accompanying letter.
(d) A copy of the express terms of such shares and of all other classes
and series of shares authorized will be mailed to any shareholder without charge
within five (5) days after receipt from such shareholder of a written request
therefor addressed to the Secretary of The Procter & Gamble Company, P.O. Box
599, Cincinnati, Ohio 45201.
[PROCTER & GAMBLE LOGO]
The Procter & Gamble Company
2 P&G Plaza
Cincinnati, Ohio 45202-3315
www.pg.com
[Date]
[Name]
The Procter & Gamble Profit Sharing Trust and Employee Stock Ownership Plan (PST
Plan) is the oldest continuous profit sharing plan in the United States. This
year the Company celebrates the [number] anniversary of employee profit sharing!
As you know, the Company's contribution to your PST Plan account is a percentage
of the Base Wages paid to you during the Plan Year [date] while you were a
participant in the Plan. However, Federal Regulations limit the amount of wages
that can be used for making contributions to a qualified retirement plan, such
as the PST Plan. For the Plan Year ended [Date], the available wages were
limited to [amount].
The Company's strategy is to make up the difference between the allowable PST
Plan credit and what would otherwise be your credit (if wages were not limited)
by making a Retirement Supplement award in the form of stock with restrictions
until retirement. This credit in Restricted Stock is known as the ERISA Excess
(previously called the OBRA Excess), as ERISA, and its many amendments, is the
law that governs US qualified retirement plans. ERISA stands for the Employee
Retirement Income Security Act.
- - Value of ERISA Excess Award for Restricted Stock allocation
(based on wages of [amount]): [amount]
NOTICE OF ERISA EXCESS AWARD: Your Restricted Stock account has now been updated
to include your [date] non-qualified retirement plan credit award. As a
reminder, we have a `certificateless" restricted stock system, so instead of
issuing a certificate to you for your [date] award, you can view your account
on-line.
As a reminder, if you are subject to U.S. taxation, you may make an Section
83(b) election, which includes the value of the restricted stock in your gross
income in the year it is granted. YOU MUST MAKE THE ELECTION WITHIN 30 DAYS OF
THE GRANT BY FILING THE REQUIRED NOTIFICATION WITH BOTH THE IRS AND THE COMPANY.
Attached is a general information sheet on the U.S. taxation of restricted
stock, including the tax consequences of the Section 83(b) election. You may
want to consult your personal tax advisor before making any Section 83(b)
election.
IF YOU HAVE QUESTIONS REGARDING YOUR RESTRICTED STOCK ACCOUNT, PLEASE CONTACT
[NAME] IN GLOBAL PROCESSES & SYSTEMS.
FORM RRS
PROCTER & GAMBLE
STATEMENT OF CONDITIONS AND RESTRICTIONS
THE PROCTER & GAMBLE 2001 STOCK AND INCENTIVE COMPENSATION PLAN
The shares of Common Stock of The Procter & Gamble Company (the
"Restricted Shares") awarded to you as stated in the accompanying letter have
been transferred to you on the express condition that these Restricted Shares,
and your ownership thereof, are subject to the following conditions and
restrictions:
1. RESTRICTIONS AND CONDITIONS ON SHARES --
(a) Neither these Restricted Shares nor any of your interest therein may
be sold, exchanged, transferred, pledged, hypothecated, given or otherwise
disposed of by you at any time except as specifically permitted or otherwise
required by the terms of this Statement.
(b) In the event that your employment with Procter & Gamble terminates,
except as the result of your death or disability or your retirement under
circumstances permitted by the terms of a Procter & Gamble retirement plan in
which you are then a participant, you will be deemed to have received on the
date of the termination of your employment a written demand by the Company to
sell to the Company within ten (10) days these Restricted Shares at a price of
ten cents ($.10) per share, which price is subject to adjustment as hereinafter
provided. For the purpose of this subparagraph, your employment with Procter &
Gamble shall not be deemed to terminate by reason of your being on leave of
absence for any purpose approved in writing by the Company.
(c) In the event that you shall at any time attempt to sell, exchange,
transfer, pledge, hypothecate, give or otherwise dispose of any of the
Restricted Shares, or any interest therein, in violation of the terms and
conditions of this Statement, you will be required, within ten (10) days after
delivery to you of a written demand by the Company made within ninety (90) days
after the occurrence of such event, to sell to the Company all Restricted Shares
then registered in your name with respect to which the conditions and
restrictions set forth in this Statement are still in effect at a price of ten
cents ($.10) per share, which price is subject to adjustment as hereinafter
provided.
(d) (i) The determination as to whether an event has occurred requiring
a sale of Restricted Shares to the Company in accordance with any provision of
this paragraph 1, paragraph 7 following or any other provision of this Statement
shall be made by the Compensation Committee (the "Committee") in its sole
discretion, and all determinations of the Committee with respect thereto shall
in all respects be conclusive upon you and any persons claiming under or through
you.
(ii) If you shall at any time be required to sell any or all of
these Restricted Shares to the Company pursuant to any provisions of this
paragraph 1, paragraph 7 following or any other provision in this Statement, you
shall, effective on the date of the delivery of the Company's demand to you,
cease to have any rights as a shareholder with respect to the Restricted Shares
so required to be sold, or any interest therein; and, without limitation, you
shall cease to be entitled to receive any future dividends upon such Restricted
Shares with record dates occurring after the date of delivery of such demand;
and in the event that for any reason you shall receive any such dividends upon
such Restricted Shares you will be required to repay the Company an amount equal
to such dividends.
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
(iii) If you shall at any time be required to sell any or all of
these Restricted Shares to the Company pursuant to the provisions of this
paragraph 1, paragraph 7 following or any other provision in this Statement, and
if within thirty (30) days after delivery to you of the Company's demand you
have not delivered a stock power or other instrument of transfer appropriately
executed in blank, together with any certificates which you may hold
representing such Restricted Shares to the Secretary of the Company at the
Executive Offices of The Procter & Gamble Company, P. O. Box 599, Cincinnati,
Ohio 45201, the Company may thereupon cause to be mailed to you, in the manner
and at the address specified in paragraph 8(b) following, its check payable to
your order in the amount of the purchase price for such shares provided for in
this Statement and direct the Transfer Agent and Registrar of the Company's
Common Stock to make appropriate entries upon their records showing the
cancellation of such certificates and return the shares represented thereby to
the Company.
2. SHAREHOLDER RIGHTS --
Effective upon the date of award of these Restricted Shares you shall for
all purposes be a holder of record of these Restricted Shares and shall
thereafter have all rights of a common shareholder with respect to such shares
(including the right to vote such shares at any meeting of common shareholders
of The Procter & Gamble Company and the right to receive all dividends paid with
respect to such shares), subject only to the conditions and restrictions imposed
by this Statement. Until such conditions and restrictions have lapsed with
respect to any restricted Shares, any certificate for such shares will bear a
legend to the effect that they were issued or transferred subject to, and may be
sold or otherwise disposed of only in accordance with, the terms of this
Statement.
3. ADJUSTMENTS IN CASE OF STOCK DIVIDENDS, STOCK SPLITS, ETC. --
In the event that, as the result of a stock dividend, stock split,
recapitalization, merger, consolidation, reorganization, or other event, you
shall, as the owner of Restricted Shares, be entitled to new, additional or
different shares or securities: (a) such new, additional or different shares or
securities shall for all purposes be deemed "Restricted Shares," (b) all of the
terms of this Statement shall be applicable thereto as modified by this
paragraph 3, (c) the purchase price of ten cents ($.10) per share and all of the
computations provided for in this Statement shall, if and to the extent
required, be appropriately adjusted, and (d) any certificates or other
instruments evidencing such new, additional or different shares or securities
shall bear the legend referred to in paragraph 2; provided, however, any
fractional shares and any pre-emptive or other rights or warrants to purchase
securities issued to you as a holder of Restricted Shares in connection with a
public offering will be issued to you free and clear of all conditions and
restrictions imposed by this Statement.
4. LAPSE OF CONDITIONS AND RESTRICTIONS --
(a) The conditions and restrictions set forth in paragraph 1 above shall
lapse in their entirety on the earliest of
(i) the date your employment with Procter & Gamble terminates as the
result of your death or disability or your retirement under circumstances
permitted by the terms of a Procter & Gamble retirement plan in which you are
then a participant, provided, however, that the Treasurer of The Procter &
Gamble Company may agree to extend the restrictions to a date after retirement
to provide for expiration (a) on a date not later than December 15 of the year
of retirement; (b) on January 15 of the year following retirement; or (c) in
five or ten annual installments beginning on January 15 of the year following
retirement, with any such extension to be agreed to only upon your written
request made prior to January 1 of the year of your retirement and your
agreement not to engage in competitive employment (as defined in Article F(1) of
The Procter & Gamble 2001 Stock and Incentive Compensation Plan following
retirement until expiration of the restrictions without first obtaining written
permission from the Company; or
(ii) there is a "change in control" (as defined in the Plan) of
Procter & Gamble; or
(iii) the date the Committee, in its sole discretion, accepts in
writing your written request to accelerate the lapse of conditions and
restrictions due to Company approval in writing of your planned retirement under
circumstances permitted by the terms of a Procter & Gamble retirement plan in
which you are then a participant. In no case will the Committee accept your
request to accelerate the lapse of conditions and restrictions prior to October
1 of the calendar year preceding the calendar year of your approved retirement.
(b) The Committee may accelerate the lapse of conditions and restrictions
on all or any part of the Restricted Shares in the case of hardship which in the
sole judgment of the Committee justifies such action.
(c) When the conditions and restrictions lapse with respect to Restricted
Shares pursuant to this paragraph 4, the Company will deliver to you, or your
legal representative in case of death, promptly after surrender of any
certificate(s) for such Restricted Shares to the Treasurer of The Procter &
Gamble Company, Cincinnati, Ohio 45201, one or more certificates for a like
number of shares, free of any legend.
5. COMPANY RIGHT TO TERMINATE EMPLOYMENT AND OTHER REMEDIES --
Nothing provided herein shall be construed to affect in any way the right
or power of the Company to terminate your employment at any time for any reason
with or without cause, nor to preclude the Company from taking any action or
enforcing any remedy available to it with respect to any action or conduct on
your part.
6. DEFINITIONS --
(a) The term "Company" as used in this Statement shall mean the
corporation which awarded the Restricted Shares to you.
(b) The term "Procter & Gamble" as used in this Statement shall include
The Procter & Gamble Company and all corporations, more than 50% of whose
capital stock entitled to vote for the election of directors is owned or
controlled, directly or indirectly, by The Procter & Gamble Company or by any
corporation so controlled by The Procter & Gamble Company, if and as long as
such corporations are so controlled.
7. ADDITIONAL DOCUMENTS --
a It is the intention of the Company that this transaction shall meet the
requirements of, and result in the application of, the rules prescribed by
Section 83 of the Internal Revenue Code of 1986, as in effect at the date
hereof, and applicable Regulations thereunder. Accordingly, each and every
provision shall be construed and interpreted in such manner as to conform with
such intention and the Company reserves the right to execute and to require you
to execute any further agreements or other instruments which may be effective as
of the date of award of these Restricted Shares, including, but without
limitation, an instrument modifying or correcting any provision hereof, or of
the letter advising you of the award or any action taken hereunder or
contemporaneously herewith, and to take any other action, which may be effective
as of the date of award of these Restricted Shares, that, in the opinion of
counsel for the Company, may be necessary or desirable to carry out such
intention.
(b) If you fail, refuse or neglect to execute and deliver any instrument
or document or to take any action requested by the Company or Committee to be
executed or taken by you pursuant to the provisions of paragraph 7(a) above for
a period of thirty (30) days after the date of such request, the Committee may
require you, within ten (10) days after delivery to you of a written demand by
the Company, to sell to the Company all of the Restricted Shares then registered
in your name with respect to which the conditions and restrictions set forth in
this Statement are still in effect at a price of ten cents ($.10) per share,
which price is subject to adjustment as herein provided.
8. NOTICES --
(a) Any notice to the Company under or pursuant to the conditions and
restrictions of this Statement shall be deemed to have been delivered to the
Company when delivered in person to the Secretary of the Company or when
deposited in the mails, by certified or registered mail, addressed to the
Secretary of the Company at the Executive Offices of The Procter & Gamble
Company, P.O. Box 599, Cincinnati, Ohio 45201, or such other address as the
Company may from time to time designate in writing by notice to you given
pursuant to paragraph 8(b) hereof.
(b) Any notice or demand to you under or pursuant to any provisions of
this Statement shall be deemed to have been delivered to you when delivered to
you in person or when deposited in the mails, by certified or registered mail,
addressed to you at the address on record in the Shareholder Services Department
or such other address as you may from time to time designate in writing by
notice to the Company given pursuant to paragraph 8(a) above.
9. THE PROCTER & GAMBLE 2001 STOCK AND INCENTIVE COMPENSATION PLAN --
The Restricted Shares have been awarded to you pursuant to The Procter &
Gamble 2001 Stock and Incentive Compensation Plan adopted and approved by the
shareholders of The Procter & Gamble Company on October 9, 2001, and such shares
and your ownership thereof shall be in all respects subject to the terms of such
Plan, the terms and provisions of which are incorporated herein by reference as
applicable.
10. SUCCESSORS AND ASSIGNS --
The provisions of this Statement shall be binding upon and inure to the
benefit of
(a) the Company, its successors and assigns, and
(b) you and, to the extent applicable, your legal representative.
11. GOVERNING LAW --
The validity, interpretation, performance and enforcement of the
conditions and restrictions contained in this Statement and your rights in, to
and under the Restricted Shares shall for all purposes be governed by the laws
of the State of Ohio.
12. ADDITIONAL INFORMATION CONCERNING COMMON STOCK --
The following information which appears on certificates representing
shares of the Common Stock of the Company is provided pursuant to Section
1701.24(F) of the Ohio Revised Code as pertinent to Restricted Shares awarded or
held without issuance of certificates:
(a) The Procter & Gamble Company is organized under the laws of the State
of Ohio.
(b) The Restricted Shares are fully paid and non-assessable shares of the
Common Stock without par value of the Company.
(c) The name of the person to whom the shares are issued and the number of
shares so issued and made subject to this Statement of Conditions and
Restrictions are set forth in the accompanying letter.
(d) A copy of the express terms of such shares and of all other classes
and series of shares authorized will be mailed to any shareholder without charge
within five (5) days after receipt from such shareholder of a written request
therefor addressed to the Secretary of The Procter & Gamble Company, P.O. Box
599, Cincinnati, Ohio 45201.