PROCTER & GAMBLE CO
EX-10.2 1992 STOCK PLAN
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>6
<FILENAME>l02788aexv10w2.txt
<DESCRIPTION>EX-10.2 1992 STOCK PLAN
<TEXT>
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                                 EXHIBIT (10-2)



                      The Procter & Gamble 1992 Stock Plan


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                      THE PROCTER & GAMBLE 1992 STOCK PLAN
                         (as amended December 11, 2001)

ARTICLE A - Purpose.

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

ARTICLE B - Administration.

       1.     The Plan shall be administered by the Compensation Committee
(hereinafter referred to as the "Committee") of the Board of Directors of the
Company (hereinafter referred to as the "Board"), or such other committee as may
be designated by the Board. The Committee shall consist of not less than three
(3) members of the Board who are neither officers nor employees, or members of
the Board who are "Non-Employee Directors" as defined in Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (hereinafter referred to as the
"1934 Act"), or any successor rule or definition adopted by the Securities and
Exchange Commission, to be appointed by the Board from time to time and to serve
at the discretion of the Board.

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

       3.     Subject to the express provisions of this Plan, the Committee
shall have authority: to grant nonstatutory and incentive stock options; to
grant to recipients stock appreciation rights either freestanding, in tandem
with simultaneously granted stock options, or in parallel with simultaneously
granted stock options; to award a portion of a recipient's remuneration in
shares of Common Stock of the Company subject to such conditions or
restrictions, if any, as the Committee may determine; to determine all the terms
and provisions of the respective stock option, stock appreciation right, and
stock award agreements including setting the dates when each stock option or
stock appreciation right or part thereof may be exercised and determining the
conditions and restrictions, if any, of any shares of Common Stock acquired
through the exercise of any stock option; and to make all other determinations
it deems necessary or advisable for administering this Plan; provided, however,
the Committee shall have the further authority at time of grant to:

       (a)    waive the provisions of Article F, paragraph 1(a);

       (b)     waive the provisions of Article F, paragraph 1(b);

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

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


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

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

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

ARTICLE C -- Participation.

       The Committee shall select those employees of the Company and its
subsidiaries who, in the opinion of the Committee, have demonstrated a capacity
for contributing in a substantial manner to the success of such companies and
shall determine the number of shares of the Common Stock of the Company to be
transferred under this Plan subject to such conditions or restrictions as the
Committee may determine and the number of shares with respect to which stock
options or stock appreciation rights will be granted. The Committee may consult
with the Chief Executive, but nevertheless the Committee has the full authority
to act, and the Committee's actions shall be final.

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

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

       2.     Any of the authorized shares may be used in respect of any of the
types of awards described in this Plan, except that no more than twenty-five
percent (25%) of the authorized shares in any calendar year may be issued as
restricted or unrestricted stock and no more than 50,000,000 of the authorized
shares during the term of the Plan may be issued as incentive stock options.

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

ARTICLE E -- Shares Subject to Use under the Plan.

       1.     The shares to be delivered by the Company upon exercise of stock
options or stock appreciation rights shall be either authorized but unissued
shares or treasury shares, as determined by the Board. In the case of redemption
of stock appreciation rights by one of the Company's subsidiaries, such shares
shall be shares acquired by that subsidiary.

       2.     For purposes of this Plan, restricted or unrestricted stock
awarded under the terms of this Plan shall be authorized but unissued shares,
treasury shares, or shares acquired for purposes of the Plan by the Company or a
subsidiary, as determined by the Board.

ARTICLE F -- Stock Options and Stock Appreciation Rights.


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       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 this Plan, the recipient agrees as
follows:

       (a)    The right to exercise any stock option or stock appreciation right
              shall be conditional upon certification by the recipient at time
              of exercise that the recipient intends to remain in the employ of
              the Company or one of its subsidiaries (except in cases of
              retirement, disability or Special Separation as defined in section
              6 of Article G) for at least one (1) year following the date of
              the exercise of the stock option or stock appreciation right, and,

       (b)    In order to better protect the goodwill of the Company and its
              subsidiaries and to prevent the disclosure of the Company's or it
              subsidiaries' trade secrets and confidential information and
              thereby help insure the long-term success of the business, the
              recipient, without prior written consent of the Company, will not
              engage in any activity or provide any services, whether as a
              director, manager, supervisor, employee, adviser, consultant or
              otherwise, for a period of three (3) years following the date of
              the recipient's termination of employment with the Company (except
              for terminations of employment resulting from retirement or
              Special Separation), in connection with the manufacture,
              development, advertising, promotion, or sale of any product which
              is the same as or similar to or competitive with any products of
              the Company or its subsidiaries (including both existing products
              as well as products known to the recipient, as a consequence of
              the recipient's employment with the Company or one of its
              subsidiaries, to be in development):

              (1)    with respect to which the recipient's work has been
                     directly concerned at any time during the two (2) years
                     preceding termination of employment with the Company or one
                     of its subsidiaries or

              (2)    with respect to which during that period of time the
                     recipient, as a consequence of the recipient's job
                     performance and duties, acquired knowledge of trade secrets
                     or other confidential information of the Company or its
                     subsidiaries.

              For purposes of this section, it shall be conclusively presumed
              that recipients have knowledge of information they were directly
              exposed to through actual receipt or review of memos or documents
              containing such information, or through actual attendance at
              meetings at which such information was discussed or disclosed.

       (c)    The provisions of this Article are not in lieu of, but are in
              addition to the continuing obligation of the recipient (which
              recipient hereby acknowledges) to not use or disclose the
              Company's or its subsidiaries' trade secrets and confidential
              information known to the recipient until any particular trade
              secret or confidential information become generally known (through
              no fault of the recipient), whereupon the restriction on use and
              disclosure shall cease as to that item. Information regarding
              products in development, in test marketing or being marketed or
              promoted in a discrete geographic region, which information the
              Company or one of its subsidiaries is considering for broader use,
              shall not be deemed generally known until such broader use is
              actually commercially implemented. As used in this Article,
              "generally known" means known throughout the domestic U. S.
              industry or, in the case of recipients who have job
              responsibilities outside of the United States, the appropriate
              foreign country or countries' industry.

       (d)    By acceptance of any offered stock option or stock appreciation
              rights granted under the terms of this Plan, the recipient
              acknowledges that if the recipient were, without authority, to use
              or disclose the Company's or any of its subsidiaries' trade
              secrets or confidential information or threaten to do so, the
              Company or one of its subsidiaries would be entitled to injunctive
              and other appropriate


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              relief to prevent the recipient from doing so. The recipient
              acknowledges that the harm caused to the Company by the breach or
              anticipated breach of this Article is by its nature irreparable
              because, among other things, it is not readily susceptible of
              proof as to the monetary harm that would ensue. The recipient
              consents that any interim or final equitable relief entered by a
              court of competent jurisdiction shall, at the request of the
              Company or one of its subsidiaries, be entered on consent and
              enforced by any court having jurisdiction over the recipient,
              without prejudice to any rights either party may have to appeal
              from the proceedings which resulted in any grant of such relief.

       (e)    If any of the provisions contained in this Article shall for any
              reason, whether by application of existing law or law which may
              develop after the recipient's acceptance of an offer of the
              granting of stock appreciation rights or stock options, be
              determined by a court of competent jurisdiction to be overly broad
              as to scope of activity, duration, or territory, the recipient
              agrees to join the Company or any of its subsidiaries in
              requesting such court to construe such provision by limiting or
              reducing it so as to be enforceable to the extent compatible with
              then applicable law. If any one or more of the terms, provisions,
              covenants, or restrictions of this Article shall be determined by
              a court of competent jurisdiction to be invalid, void or
              unenforceable, then the remainder of the terms, provisions,
              covenants, and restrictions of this Article shall remain in full
              force and effect and shall in no way be affected, impaired, or
              invalidated.

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

       3.     More than one stock option or stock appreciation right may be
granted to any employee under this Plan but the maximum number of shares with
respect to which stock options or stock appreciation rights may be granted to
any employee in any calendar year shall not exceed five percent (5%) of the
number of shares which can be issued or transferred annually hereunder.

       4.     The aggregate fair market value (determined at the time when the
incentive stock option is exercisable for the first time by an employee during
any calendar year) of the shares for which any employee may be granted incentive
stock options under this Plan and all other stock option plans of the Company
and its subsidiaries in any calendar year shall not exceed $100,000 (or such
other amount as reflected in the limits imposed by Section 422(d) of the
Internal Revenue Code of 1986, as it may be amended from time to time).

       5.     If the Committee grants 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 or parallel
to stock appreciation rights, the exercise of either such stock options or such
stock appreciation rights will result in the simultaneous cancellation of the
same number of tandem or parallel stock appreciation rights or stock options, as
the case may be.

       7.     The exercise price for all stock options and stock appreciation
rights shall be established by the Committee at the time of their grant and
shall be not less than one hundred percent (100%) of the fair market value of
the Common Stock of the Company on the date of grant.

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


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       1.     All stock options and stock appreciation rights granted hereunder
shall have a maximum life of no more than fifteen (15) years from the date of
grant; provided, however, that any stock options or stock appreciation rights
with a life of more than ten (10) years from the date of grant that have been
conditionally granted to the Chief Executive or to any other executive officer
subject to the provisions of Section 162(m) of the Internal Revenue Code and
subject to taxation under United States law, as it may be amended from time to
time, prior to the annual meeting of shareholders scheduled for October 12, 1999
shall automatically be canceled effective October 12, 1999 if the shareholders
do not adopt a resolution at such annual meeting approving grants to such
officers with a maximum life of up to fifteen (15) 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 recipient.

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

       4.     In case a recipient of stock options or stock appreciation rights
ceases to be an employee of the Company or any of its subsidiaries while holding
an unexercised stock option or stock appreciation right:

       (a)    Any unexercisable portions thereof are then void, except in the
              case of: (1) death of the recipient; (2) any Special Separation
              (as defined in section 6 of this Article G) that occurs more than
              six months from the date the options were granted; or (3) any
              option as to which the Committee has waived, at the time of grant,
              the provisions of this Article G, paragraph 4(a) pursuant to the
              authority granted by Article B, paragraph 3.

       (b)    Any exercisable portions thereof are then void, except in the case
              of death, retirement in accordance with the provisions of any
              appropriate profit sharing or retirement plan of the Company or
              any of its subsidiaries, or Special Separation (as defined in
              section 6 of this Article G) of the recipient.

       5.     In the case of the death of a recipient of stock options or stock
appreciation rights while an employee of the Company or any of its subsidiaries,
the persons to whom the stock options or stock appreciation rights have been
transferred by will or the laws of descent and distribution shall have the
privilege of exercising remaining stock options, stock appreciation rights or
parts thereof, whether or not exercisable on the date of death of such employee,
at any time prior to the expiration date of the stock options or stock
appreciation rights.

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

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


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have the same rights with respect to the stock options and stock appreciation
rights as legatees or distributees would have after distribution to them from
the recipient's estate.

       8.     Upon the exercise of stock appreciation rights, the recipient
shall be entitled to receive a redemption differential for each such stock
appreciation right which shall be the difference between the then fair market
value of one share of the Common Stock of the Company and the exercise price of
one stock appreciation right then being exercised. In the case of the redemption
of stock appreciation rights by a subsidiary of the Company not located in the
United States, the redemption differential shall be calculated in United States
dollars and converted to the appropriate local currency on the exercise date. As
determined by the Committee, the redemption differential may be paid in cash,
Common Stock of the Company to be valued at its fair market value on the date of
exercise, any other mode of payment deemed appropriate by the Committee or any
combination thereof. The number of shares with respect to which stock
appreciation rights are being exercised shall not be available for granting
future stock options or stock appreciation rights under this Plan.

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

       10.    Time spent on leave of absence shall be considered as employment
for the purposes of this Plan. Leave of absence means any period of time away
from work granted to any employee by his or her employer because of illness,
injury, or other reasons satisfactory to the employer.

       11.    The Company reserves the right from time to time to suspend the
exercise of any stock option or stock appreciation right where such suspension
is deemed by it necessary or appropriate for corporate purposes. No such
suspension shall extend the life of the stock option or stock appreciation right
beyond its expiration date, and in no event will there be a suspension in the
five (5) calendar days immediately preceding the expiration date.

ARTICLE H -- Payment for Stock Options.

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

ARTICLE I -- Transfer of Shares.

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


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or conditions under circumstances deemed by the Committee to be appropriate and
not contrary to the best interests of the Company.

       (a)    Restrictions

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

       (b)    Lapse of Restrictions

              In order to have the restrictions lapse, an employee may be
              required to continue in the employ of the Company or a subsidiary
              for a prescribed period of time. Exemption from this requirement
              may be prescribed in the case of death, disability, or retirement,
              or as otherwise prescribed by the Committee.

ARTICLE J -- Adjustments.

In the event of any future reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, rights offering, share
exchange, reclassification, distribution, spin-off or other change affecting the
corporate structure, capitalization or Common Stock of the Company occuring
after the date of approval of the Plan by the Company's shareholders, (i) the
amount of shares authorized to be issued under the Plan and (ii) the number of
shares and/or the exercise prices covered by outstanding stock options and stock
appreciation rights shall be adjusted appropriately and equitably to prevent
dilution or enlargement of rights under the Plan. Following any such change, the
term "Common Stock" shall be deemed to refer to such class of shares or other
securities as may be applicable.

ARTICLE K -- Additional Provisions.

       1.     The Board may, at any time, repeal this Plan or may amend it from
time to time except that no such amendment may amend this paragraph, increase
the annual aggregate number of shares subject to this Plan, reduce the price at
which stock options or stock appreciation rights may be granted, exercised, or
surrendered, 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. The recipient of awards under this Plan and the Company
shall be bound by any such amendments as of their effective dates, but if any
outstanding stock options or stock appreciation rights are affected, notice
thereof shall be given to the holders of such stock options and stock
appreciation rights and such amendments shall not be applicable to such holder
without his or her written consent. If this Plan is repealed in its entirety,
all theretofore granted unexercised stock options or stock appreciation rights
shall continue to be exercisable in accordance with their terms and shares
subject to conditions or restrictions transferred pursuant to this Plan shall
continue to be subject to such conditions or restrictions.

       2.     In the case of an employee of a subsidiary company, performance
under this Plan, including the transfer of shares of the Company, may be by the
subsidiary. Nothing in this Plan shall affect the right of the Company or any
subsidiary to terminate the employment of any employee with or without cause.
None of the participants, either individually or as a group, and no beneficiary
or other person claiming under or through any participant, shall have any right,
title, or interest in any shares of the Company purchased or reserved for the


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purpose of this Plan except as to such shares, if any, as shall have been
granted or transferred to him or her. Nothing in this Plan shall preclude the
issuance or transfer of shares of the Company to employees under any other plan
or arrangement now or hereafter in effect.

       3.     "Subsidiary" means any company in which greater than fifty percent
(50%) of the total combined voting power of all classes of stock is owned,
directly or indirectly, by the Company. In addition, the Board may designate for
participation in this Plan as a "subsidiary," except for the granting of
incentive stock options, those additional companies affiliated with the Company
in which the Company's direct or indirect stock ownership is less than fifty
percent (50%) of the total combined voting power of all classes of such
company's stock.

       4.     Notwithstanding anything to the contrary in the this Plan, stock
options and stock appreciation rights granted hereunder shall vest immediately
and any conditions or restrictions on Common Stock shall lapse upon a "Change in
Control." A "Change in Control" shall mean the occurrence of any of the
following:

       (a)    An acquisition (other than directly from the Company) of any
              voting securities of the Company (the "Voting Securities") by any
              "Person" (as the term person is used for purposes of Section 13(d)
              or 14(d) of the Exchange Act), immediately after which such Person
              has "Beneficial Ownership" (within the meaning of Rule 13d-3
              promulgated under the Exchange Act) of twenty percent (20%) or
              more of the then outstanding Shares or the combined voting power
              of the Company's then outstanding Voting Securities; provided,
              however, in determining whether a Change in Control has occurred
              pursuant to this Section 4(a), Shares or Voting Securities which
              are acquired in a "Non-Control Acquisition" (as hereinafter
              defined) shall not constitute an acquisition which would cause a
              Change in Control. A "Non-Control Acquisition" shall mean an
              acquisition by (i) an employee benefit plan (or a trust forming a
              part thereof) maintained by (A) the Company or (B) any corporation
              or other Person of which a majority of its voting power or its
              voting equity securities or equity interest is owned, directly or
              indirectly, by the Company (for purposes of this definition, a
              "Related Entity"), (ii) the Company or any Related Entity, or
              (iii) any Person in connection with a "Non-Control Transaction"
              (as hereinafter defined);

       (b)    The individuals who, as of July 11, 2000 are members of the Board
              (the "Incumbent Board"), cease for any reason to constitute at
              least half of the members of the Board; or, following a Merger (as
              hereinafter defined) which results in a Parent Corporation (as
              hereinafter defined), the board of directors of the ultimate
              Parent Corporation; provided, however, that if the election, or
              nomination for election by the Company's common stockholders, of
              any new director was approved by a vote of at least two-thirds of
              the Incumbent Board, such new director shall, for purposes of this
              Plan, be considered as a member of the Incumbent Board; provided
              further, however, that no individual shall be considered a member
              of the Incumbent Board if such individual initially assumed office
              as a result of either an actual or threatened "Election Contest"
              (as described in Rule 14a-11 promulgated under the Exchange Act)
              or other actual or threatened solicitation of proxies or consents
              by or on behalf of a Person other than the Board (a "Proxy
              Contest") including by reason of any agreement intended to avoid
              or settle any Election Contest or Proxy Contest; or

       (c)    The consummation of:

              (i)    A merger, consolidation or reorganization with or into the
                     Company or in which securities of the Company are issued (a
                     "Merger"), unless such Merger is a "Non-Control
                     Transaction." A "Non-Control Transaction" shall mean a
                     Merger where:

                     (A)    the stockholders of the Company, immediately before
                            such Merger own directly or indirectly immediately
                            following such Merger at least fifty percent (50%)
                            of the


<PAGE>


                            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.

ARTICLE L -- Consent.

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

ARTICLE M -- Duration of Plan.


<PAGE>


       This Plan will terminate on July 14, 2002 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 this 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.


<PAGE>


                             ADDITIONAL INFORMATION


1.     Shares Awarded as a Portion of Remuneration

       Any shares of Common Stock of the Company awarded as a portion of a
participant's remuneration shall be valued at not less than one hundred percent
(100%) of the fair market value of the Company's Common Stock on the date of the
award. These shares may be subject to such conditions or restrictions as the
Committee may determine, including a requirement that the participant remain in
the employ of the Company or one of its subsidiaries for a set period of time,
or until retirement. Failure to abide by any applicable restriction will result
in forfeiture of the shares.

2.     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.


<PAGE>


       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, 2001;
       2. The Company's Quarterly Report on Form 10-Q for the quarter ended
          September 30, 2001; 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.


<PAGE>


       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 Mr. Terry L. Overbey, Secretary, The Procter & Gamble Company, One
Procter & Gamble Plaza, Cincinnati, Ohio 45202, (513) 983-4463.


</TEXT>
</DOCUMENT>
