Corporate
HRM/Management Conditions & Remuneration






	
 Global
Philips Stock Option Program 2008




 

 

 

 

 



 GLOBAL
 PHILIPS STOCK OPTION PROGRAM 2008




 

 

 

 




Corporate
HRM/Management Conditions & Remuneration





TERMS
AND CONDITIONS
OF

GLOBAL
PHILIPS STOCK OPTION PROGRAM 2008

Article 1

Definitions

In this
Global Philips Stock Option Program 2008 the following definitions shall apply:


	 1. 
	Closing Price
	:
	 the price of a Share with dividend, if any, at the closing of the Official Segment of Euronext Amsterdam N.V.’s stock market (“Euronext
Amsterdam”) as published in the Official Price List of this stock exchange.

	2.
	Custody Account
	:
	a custody account maintained in the name of an Option Holder.  

	3. 
	Date of Grant
	:
	 the date at which the Options shall be deemed granted to the Option Holder pursuant to this Program. The Dates of Grant shall be the same dates as the dates
of publication of the Philips’ annual and/or quarterly results over the financial year 2008. The relevant Date of Grant with respect to any grant hereunder shall be determined by Philips. 

	4.
	Employing Company
	:
	any company within the Philips group of companies and such other company as Philips may from time to time designate or approve.

	5.
	Grant Price
	:
	 the price to be paid by the Option Holder to acquire a Share upon exercising an Option. Such price will be equal to the Closing Price on the applicable Date
of Grant.

	6.
	Option
	:
	a right granted by Philips under the Program to acquire one Share subject to the terms and conditions hereof.

	7. 
	Option Holder
	:
	a person holding any Options under this Program.

	8. 
	Option Period
	:
	the term for which an Option is granted as specified in Article 3.

	9. 
	Philips
	:
	Koninklijke Philips Electronics N.V.

	10.
	Program
	:
	this Global Philips Stock Option Program 2008.







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	11.
	Share
	:
	a common share of Philips.

	12.
	Share Price
	:
	 The price of a Share with dividend, if any, at the Amsterdam Euronext Stock Exchange or the New York Stock Exchange, whichever is applicable, at the moment
of exercise of an Option in accordance with Article 9 of this Program.







 Article 2

 Acquisition
 of Options

 Options
 may be granted to an eligible individual, subject to the (acceptance by such individual of the) terms and
 conditions of this Program and any other Philips’ policies or guidelines that may apply to such
 individual. Any Options offered to any such individual and the terms and conditions governing such Options
 shall be deemed accepted by such individual with effect from the applicable Date of Grant in case Philips has
 not received, in accordance with a procedure established by Philips, a notice of rejection of such Options
 within fourteen (14) days of the notice of grant of the Options or such later date as may be determined by
 Philips.

 Article 3

 Restrictions
 on Exercise and Option Period


 		1.     
	Options shall not be exercisable before the third anniversary of the Date of Grant. Unvested or lapsed Options cannot be exercised.






 		2.     
	The Option Period is in principle ten (10) years commencing on the Date of Grant, subject
 to this Article 3.2 and Article 4. Upon request of an Option Holder exercising Options pursuant to Article 6, the Option Period for the Options being exercised will be limited to the period from the Date of Grant up to, and including, the date
Philips receives the above request in accordance with a procedure established by Philips, provided that the Option Period is at least three (3) years.





 		3.     
	Options may in principle only be exercised (subject to a minimum of ten (10) units) at the last day of the prevailing
Option Period, subject to this Article 3 and Article 4. 





 Article
 4

 Termination
 of Employment


 		1.     
	Except as otherwise provided in Article 4.2, 4.3 and 4.4 hereof, in case an Option Holder is no longer employed by any Employing Company as a
 result of the termination of such Option Holder’s employment with an Employing Company for any reason whatsoever during the applicable Option Period, any Options held by such Option Holder at the date of such termination shall be forfeited effective
 as of the date of termination of such Option Holder's employment with the Employing Company without the Option Holder being entitled to any compensation or any obligation on the part of Philips or any Employing Company
 unless Philips determines, in its sole discretion, otherwise in writing. Any such 





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	determination shall be final, conclusive and binding and may be subject to such conditions as Philips may determine appropriate.





 		2.     
	 In case an Option Holder is no longer employed by any Employing Company during the applicable Option Period as a result of the termination of such Option Holder’s employment with an Employing Company for reasons of (i) disablement, (ii) retirement
 or (iii) the expiration of a temporary contract of employment, provided such temporary contract of employment has not been extended one or more times, any Options held by such Option Holder at the date of termination shall remain exercisable in
 accordance with Article 3, provided that in such case the Option Period will expire upon the earlier of (a) ten (10) years from the Date of Grant or (b) five (5) years from the date of such termination. For the purpose of this Program, an Option
 Holder’s employment shall be deemed terminated as a result of “retirement” if such Option Holder’s employment is terminated and such Option Holder satisfies at the date of such termination the eligibility requirements to receive an
 immediate (early) retirement benefit under an (early) retirement plan of an Employing Company under which such Option Holder was covered, provided  (i) payment of such (early) retirement benefit commences immediately following such termination, and
provided further (ii) that if such Option Holder is covered by an US retirement plan, such Option Holder must have at least five years of service with an US Employing Company and have attained the age of fifty-five (55) years.






 		3.     
	In case an Option Holder is no longer employed by any Employing Company during the applicable Option Period as a result of the termination of such Option Holder’s
 employment with an Employing Company for reasons of (i) death or (ii) legal incapacity of the Option Holder, the Options shall remain exercisable during the Option Period in accordance with Article 3, provided that in such case the Option Period will
 expire upon the earlier of (a) ten (10) years from the Date of Grant or (b) five (5) years from the date of such termination. In the event that the remaining Option Period as from the date of termination is less than twelve (12) months, then such Options
shall be exercisable for a period of twelve (12) months as of the date of such termination and the Option Period shall be deemed extended accordingly, provided that the Options shall only be exercisable in the manner as set forth in Article 9.





 		4.     
	In
 case the employment of an Option Holder with any Employing Company is terminated as a result of the sale or
 other divestment of a business, subsidiary, division or other business unit of Philips or subsidiary or any
 part thereof (“Divested Business”) and the Option Holder remains employed by the Divested Business
 upon such transfer, any Options held by such Option Holder at the date of
 such termination shall remain exercisable in accordance with the terms and conditions of this Program, provided
 that the Option Period will expire upon the earlier of (a) ten (10) years as from the Date of Grant or (b) five
(5) years as from the date of such termination. 






		       
	Upon
 termination of the employment of the Option Holder with the Divested Business, the terms of Article 4.1, 4.2
 and 4.3 shall apply mutatis mutandis, it being expressly understood that in case such Option Holder becomes
 re-employed by any Employing Company immediately upon such termination, any Options held by the Option Holder
 at such time shall not be forfeited, but shall remain exercisable
for the remainder of the term 






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	 of such Options as determined pursuant to this
 Article 4.4, subject to the terms and conditions of this Program. 






 Article
 5

 Non-transferability


 The Options
 are strictly personal, and may not be assigned, transferred (except that, in case of death of the Option Holder
 during the Option Period, any Options held by the Option Holder at the date of his death shall pass to his
 heirs or legatees), pledged, hypothecated, or otherwise encumbered or disposed of in any manner. The Option
 Holder may not engage in any transactions on any exchange on the basis of any Options. Any violation of the
 terms of this Article 5 will cause the Options to become immediately null and void without further notice and
 without the Option Holder being entitled to any compensation.


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 Article
 6

 Exercise
 of Options


 		1.     
	In
 order to exercise Options, which are exercisable in accordance with this Program, the Option Holder must notify
 Philips in accordance with a procedure determined by Philips. 

The notice shall state:





 		a.     
	 the
Date of Grant of the Options he wishes to exercise;






 		b.     
	 if
applicable, the confirmation that the Option Holder wants to limit the Option Period pursuant to Article 3.2;





 		c.     
	 the
number of Options to be exercised; and






 		d.     
	 whether
Shares to be obtained upon such exercise:





 (i)     be
 sold, on behalf of the Option Holder as soon as possible. Upon such sale, the aggregate revenue of the Shares
 sold upon exercise of the Options less the Grant Price multiplied by the number of such Options, and further
 costs, will be paid to the Option Holder in accordance with a procedure determined by Philips; or
(ii)     be
 delivered to the Option Holder as provided for in the Articles 6.3 and 6.4.

      In
 case the Option Holder elects to have the Shares to be delivered to him, his notice shall be accompanied by the
 payment in full of the Grant Price, multiplied by the number of Options so being exercised. Such payment shall
 be made: (a) in cash, (b) through simultaneous sale through a broker of Shares acquired on exercise, subject to
 it being permitted under the applicable regulations, (c) through additional methods prescribed by Philips or
 (d) by a combination of any such method.


 		2.     
	Philips
 may require an Option Holder to maintain a Custody Account in connection with this Program. Nothing contained
 in this Program shall obligate Philips to establish or maintain or cause to establish or maintain a Custody
 Account for any Option Holder. 






 		3.     
	Subject
 to the terms and conditions of this Program, if the Option Holder elects the Share to be delivered to him upon
 exercise as provided in Article 6.1.d (ii), Philips will deliver a Share to an Option Holder on or as soon as
 reasonably practicable after the exercise of an Option. In no event shall Philips have any obligation to
 deliver any Shares to an Option Holder prior to the exercise of any Options. 






 		4.     
	If
 the Option Holder elects to have Shares to be delivered to him pursuant to Article 6.1.d (ii), such Shares will
 be credited to the Option Holder’s Custody Account except if an Option Holder does not maintain a Custody
 Account at the date of delivery of such Shares. In case the foregoing sentence applies, the Option Holder shall
 be responsible to notify Philips in accordance with a procedure (including the period for notification)
 established by Philips on the details relating to such Custody Account. In case Philips determines in its sole
 discretion that the Option Holder has failed to notify Philips in accordance with such procedure, then the
 Option Holder shall be deemed to have requested Philips to sell or cause to sell such Shares. 






 		5.     
	Each
 Option Holder shall comply with any applicable “insider trading” laws and regulations and the Philips’
 Rules of Conduct with respect to Inside Information. 






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 Article 7

 Capital
 Dilution

 Philips may
 make equitable adjustment or substitution of (a) the number or kind of Shares subject to the Options, and/or
 (b) the Grant Price, as it, in its sole discretion, deems equitable to reflect any significant corporate event
 of or by Philips, for example a change in the outstanding Shares by reason of any stock dividend or split,
 recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other corporate change,
 or any distribution to holders of Shares other than regular cash dividends.

 The effect of
 the adjustment or substitution shall be to preserve both the aggregate difference and the aggregate ratio
 between the Grant Price and the fair market value of the Shares to be acquired upon exercise of the Options.
 The Option Holder shall be notified promptly of such adjustment or substitution.

 Article 8

 Costs and
 Taxes


 		1.     
	All
 costs of delivering any Shares under this Program to an Option Holder’s Custody Account and any other
 costs connected with the Shares shall be borne by the Option Holder. 






 		2.     
	Any
 and all taxes, duties, levies, charges or social security contributions (“Taxes”) which arise under
 any applicable national, state, local or supra-national laws, rules or regulations, whether already effective
 on the Date of Grant or becoming effective thereafter, and any changes or modifications therein and termination
 thereof which may result for the Option Holder in connection with this Program (including, but not limited to,
 the grant, the ownership and/or the exercise of the Options, and/or the delivery, ownership and/or the sale of
 any Shares acquired under this Program) shall be for the sole risk and account of the Option Holder. 






 		3.     
	Philips
 and its subsidiaries shall have the right to deduct or cause to be deducted from any salary payment or other
 sums due by Philips or any of its subsidiaries to an Option Holder, or requiring
 the Option Holder or beneficiary of the Option Holder,
 to pay to Philips an amount necessary to settle any Taxes determined by Philips necessary to be withheld
 in connection with this Program (including, but not limited to, the grant of the Options or the delivery of any
 Shares under this Program). 






 		4.     
	Philips
 shall not be required to deliver any Shares and Philips may delay (or cause to be delayed) the transfer of any
 Shares to a Custody Account, until Philips has received an amount, or the Option Holder has made such
 arrangements, required by Philips necessary to satisfy any withholding of any Taxes and any costs to be borne
 by the Option Holder in connection with this Program as determined by Philips. 






 Article 9

 Cash
 Alternative

 Upon receipt
 of a notice, as referred to in Article 6.1 hereof to exercise any Option, Philips may advise an Option Holder
 resident outside the Netherlands to request in writing an amount in cash 


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  as an alternative to Shares. Upon such
 request the Option Holder is entitled to receive an amount in Euros or in U.S. Dollars, as indicated by the
 Option Holder, equal to the Share Price upon receipt of such request minus the Grant Price, multiplied by the
 number of Options so being exercised. Further, any costs to be paid and any applicable Taxes shall be deducted
 from the amount to be received by the Option Holder. If on the date of receipt of the notice Shares have not
 been traded on Euronext Amsterdam or the New York Stock Exchange, whichever is applicable, the Closing Price
 will be that of the first subsequent trading day on Euronext Amsterdam or the New York Stock Exchange,
 whichever is applicable. The same method is being used for calculating the cash amount to which heirs and
 legatees of an Option Holder are entitled in accordance with Article 4.3.


 Article 10

 General Provisions


 		1.     
	 Philips shall have the authority to interpret this Program, to establish, amend, and rescind any rules and regulations relating to this Program, to determine the terms and
 conditions of any agreements entered into hereunder, and to make all other determinations necessary or advisable for the administration of this Program. Philips may delegate the authority to practice administrative and operational functions with respect
to the Program to officers or employees of subsidiaries of Philips and to service providers.






 		2.     
	 No Option Holder shall have any rights or privileges of shareholders (including the right to receive dividends and to vote) with respect to Shares to be delivered pursuant
 to the exercise of any Options until such Shares are actually delivered to such Option Holder in accordance with Article 6 of this Program. The Shares delivered shall carry the same rights as common shares of Philips traded on Euronext Amsterdam or the
New York Stock Exchange, as applicable, on the day on which these Shares are delivered.






 		3.     
	 The (value of) Options granted to, or Shares acquired by, an Option Holder pursuant to such Options under this Program shall not be considered as compensation in determining
an Option Holder’s benefits under any benefit plan of an Employing Company, including but not limited to, group life insurance, long-term disability, family survivors, or any retirement, pension or savings plan.






 		4.     
	 Nothing contained in this Program or in any grant made or agreement entered into pursuant hereto shall confer upon any Option Holder any right to be retained employed with
 any Employing Company, or to be entitled to any remuneration or benefits not set forth in this Program or interfere with or limit in any way with the right of any Employing Company or any of its subsidiaries to terminate such Option Holder’s
employment or to discharge or retire any Option Holder at any time.






 		5.     
	If a provision of this Program is deemed illegal or invalid, the illegality or invalidity shall not affect the remaining parts of this Program, this Program shall be construed as if the illegal or invalid provisions had not been included in this Program.





 		6.     
	Where
 the context requires, words in either gender shall include also the other gender. 





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 		7.     
	This
 Program shall be governed by and construed in accordance with the laws of The Netherlands, without regard to
 its principles of conflict of laws. 





 •
 • • • •


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