1992 Stock Plan - Procter & Gamble Co.


                      The Procter & Gamble 1992 Stock Plan





   2


                      THE PROCTER & GAMBLE 1992 STOCK PLAN
                           (as amended June 12, 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





                                       1
   3

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

to take into consideration the differences, limitations, and requirements of
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. Notwithstanding any terms or conditions
contained herein, the shares to be delivered by the Company upon exercise of
stock options or stock appreciation rights by a participant located in Italy
shall be authorized but unissued shares.

     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.




                                       2
   4

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 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





                                       3
   5

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

     (e)  If any of the provisions contained in this Article shall for any
          reason, whether by application of existing law or law which may
          develop after the recipient's acceptance of an offer of the granting
          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.





                                       4
   6

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 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.




                                       5
   7

     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 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 



                                       6
   8

forth in agreements between the Company and the employee or in the awards of
stock to them, all as the Committee determines. It is contemplated that the
conditions and restrictions established by the Committee will be consistent with
the objectives of this Plan and may be of the following types. In giving these
examples, it is not intended to restrict the Committee's authority to impose
other restrictions or conditions, or to waive restrictions or conditions under
circumstances deemed by the Committee to be appropriate and not contrary to the
best interests of the Company.

       (a)    Restrictions

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

       (b)    Lapse of Restrictions

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

ARTICLE J -- ADJUSTMENTS.

       The amount of shares authorized to be issued annually under this Plan
will be subject to appropriate adjustments in their numbers in the event of
future stock splits, stock dividends, or other changes in capitalization of the
Company occurring after the date of approval of this Plan by the Company's
shareholders to prevent the dilution or enlargement of rights under this 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. The number of
shares and exercise prices covered by outstanding stock options and stock
appreciation rights shall be adjusted to give effect to any such stock splits,
stock dividends, or other changes in the capitalization.

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 






                                       7
   9

right of the Company or any subsidiary to terminate the employment of any
employee with or without cause. None of the participants, either individually or
as a group, and no beneficiary or other person claiming under or through any
participant, shall have any right, title, or interest in any shares of the
Company purchased or reserved for the purpose of this Plan except as to such
shares, if any, as shall have been granted 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:





                                       8
   10

              (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.

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 






                                       9
   11

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

ARTICLE M -- DURATION OF PLAN.

       This Plan will terminate on July 14, 2002 unless a different termination
date is fixed by 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.































                                       10
   12


                             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.




                                       11
   13

         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, 1999;

          2.   The Company's Quarterly Reports on Form 10-Q for the quarters
               ended September 30, 1999, December 31, 1999 and March 31, 2000;
               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 



                                       12
   14

               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. Robert J. Thompson, 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.



























                                       13