Exhibit (10-1)
THE PROCTER & GAMBLE 1992 STOCK PLAN
(as amended July 11, 2000)
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 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 at time of grant 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.
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 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.
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.
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 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. In addition, an employee may be
required, following termination of employment other than by retirement
or disability, to render limited consulting and advisory services and
to refrain from conduct deemed contrary to the best interests of the
Company.
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 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 fifty percent (50%) or more 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 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.
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.
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.
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 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.
