Corporate
HRM/Management Conditions & Remuneration

 


	
 Global
Philips Restricted Share Rights Program 2008




 

 

 

 



 GLOBAL
 PHILIPS RESTRICTED SHARE RIGHTS PROGRAM 2008


 

 

 

 




Corporate
HRM/Management Conditions & Remuneration

 





 TERMS
 AND CONDITIONS
OF

 GLOBAL
 PHILIPS RESTRICTED SHARE RIGHTS PROGRAM 2008

 Article
 1

 Definitions

 In
 this Global Philips Restricted Share Program 2008 the
 following definitions shall apply:

	 1. 
	Custody Account  
	:
	a custody account maintained in the name of a Participant other than a Nominee Account.  

	2. 
	Date of Grant
	:
	 the date at which a Restricted Share Right is granted pursuant to this Program. The Dates of Grant of any Restricted
 Share Rights 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 and categorization of any Restricted Share Right with respect to any grant
hereunder shall be determined by Philips. 

	3.
	Delivery Date
	:
	 depending on whether a Restricted
 Share Right is categorized as a “1 Year Term Restricted Share Right”, “2 Year Term Restricted Share Right” or “3 Year Term Restricted Share Right”, the Delivery Date shall be the
first, second or third anniversary of the Date of Grant of such Restricted Share Right. 

	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.
	Nominee Account
	:  
	a custody account maintained in the name of a Participant established by an administrator designated by Philips.

	6.
	Premium Date
	: 
	the date which is three years after the applicable Delivery Date.

	7. 
	Premium Shares
	:
	any Shares (to be) delivered to a Participant pursuant to Article 7 hereof.

	8. 
	Retainment Period
	: 
	 the period commencing on the Delivery Date applicable to a particular Restricted Share Right and ending on the Premium
Date applicable to such Restricted Share Right.




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	9.
	Participant
	:
	an individual who has accepted any Restricted Share Rights under this Program.

	10. 
	Philips
	:
	Koninklijke Philips Electronics N.V.

	11.
	Program
	:
	this Global Philips Restricted Share Rights Program 2008.

	12.
	Restricted Share Right
	:
	 the conditional right granted to a Participant to receive one Share, subject to the terms and conditions of this Program.
Restricted Share Rights will be categorized as “1 Year Term Restricted Share Rights”, “2 Year Term Restricted Share Rights” or “3 Year Term Restricted Share Rights”, as applicable. 

	13.
	Share
	:
	a common share of Philips (to be) delivered under this Program.






 Article
 2

 Grant of
 Restricted Share Rights

 Any
 Restricted Share Rights 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 Restricted Share Rights offered to any such individual and the terms and conditions
 governing such rights 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 rights within fourteen (14) days of the notice of grant of such rights or such later date as may be
 determined by Philips.

 Article 3

 Termination
 of Employment

 1.     Except
 as otherwise provided in Article 3.2 and 3.3 hereof, in case a Participant is no longer employed by any
 Employing Company as a result of the termination of such Participant’s employment with an Employing
 Company for any reason whatsoever prior to the applicable Delivery Date, such Participant’s Restricted
 Share Rights shall be forfeited effective as of the date of termination of such Participant's employment with
 the Employing Company without the Participant 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 determination shall be final, conclusive and binding and may be subject to such conditions as Philips
 may determine appropriate.

 2.     In
 case a Participant is no longer employed by any Employing Company as a result of the termination of such
 Participant’s employment with an Employing Company for reasons of 


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 (i) death, (ii) disablement, (iii) legal
 incapacity, (iv) retirement or (v) the expiration of a temporary contract of employment, provided such
 temporary contract of employment has not been extended one or more times, such Participant or, in case of death
 or legal incapacity of the Participant, the estate of the Participant or his or her legal representative(s), as
 the case may be, shall remain entitled to any Restricted Share Rights granted to such Participant prior to the
 date of such termination subject to the terms and conditions of this Program. For the purpose of this Program,
 a Participant’s employment shall be deemed terminated as a result of “retirement” if such
 Participant’s employment is terminated and such Participant 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 Participant was covered, provided (i) payment of such (early) retirement
 benefit commences immediately following such termination, and provided further (ii) that if such Participant is
 covered by an US retirement plan, such Participant 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 the employment of a Participant 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 any part thereof (“Divested
 Business”) and the Participant remains employed by the Divested Business upon such transfer, such
 Participant shall remain entitled to any Restricted Share Rights granted to such Participant prior to the date
 of the termination of such employment subject to the terms and conditions of this Program. 

      In
 case of termination of employment of a Participant with any Employing Company as a result of such sale or other
 divestment, the Participant shall no longer be eligible to receive any Premium Shares.

      Upon
 termination of the employment of the Participant with the Divested Business, the terms of Article 3.1 and 3.2
 shall apply mutatis mutandis, it being expressly understood that in case such Participant becomes re-employed
 by any Employing Company immediately upon such termination, such Participant shall remain entitled to any
 Restricted Share Rights held by such Participant at such time subject to the terms and conditions of this
 Program.

 Article 4

 Non-transferability

 The Restricted
 Share Rights are strictly personal and may not be assigned, transferred (except that, in case of death of the
 Participant any Restricted Share Rights granted to such Participant 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 Participant may not engage in any transactions on any exchange on the basis of
 any Restricted Shares Rights. Any violation of the terms of this Article 4 will cause the Restricted Share
 Rights to become immediately null and void without further notice and without the Participant being entitled to
 any compensation.



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 Article 5

 Delivery
 and Holding of Shares

 1.     Philips
 may require a Participant to maintain a Nominee 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 Nominee
 Account for any Participant.

 2.     Subject
 to the terms and conditions of this Program, and further to the Participants election via the website, Philips
 will deliver a Share pursuant to a Restricted Share Right to a Participant on or as soon as reasonably
 practicable after the relevant Delivery Date. In no event shall Philips have any obligation to deliver any
 Shares to a Participant prior to the relevant Delivery Date. 

 3.     Any
 Shares to be delivered pursuant to Article 5.2 will be credited to the Nominee Account.  

 4.     Except
 as may be otherwise approved in writing by Philips in its sole discretion, in case
 a Participant is no longer employed by any Employing Company for any reason
 whatsoever, the Participant (or his or her estate or legal representatives, as the case may be) shall withdraw
 all Shares credited to the Participant’s Nominee Account within two (2) months of the date of such
 termination. In case the Participant (or his or her estate or legal representatives, as the case may be) fails
 to comply with the foregoing obligation, then the Participant (or his or her estate or legal representatives,
 as the case may be) shall be deemed to have requested Philips to sell or cause to sell such Shares. 

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

 Article 6 

 Capital
 Dilution

 Philips may
 make equitable adjustment or substitution of the number or kind of Shares subject to the Restricted Shares
 Rights, 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.

 Article 7

 Premium
 Shares

 At a Premium
 Date, Philips will deliver a number of Premium Shares, which is equal to 20 % (twenty percent) of the number of
 Shares acquired by a Participant pursuant to the Restricted Share Rights, which are held by the Participant at,
 and are subject to, such Premium Date. The foregoing obligation shall be subject further to the requirements
 that: (i) the Participant is still employed by an Employing Company at the relevant Premium Date and (ii) such
 Shares have been 


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 deposited on the Participant’s Nominee Account during the entire Retainment Period in
 order to enable Philips to monitor whether Participant has retained the Shares during such period. Philips will
 not be required pursuant to the foregoing to deliver a fraction for a Premium Share but instead the number of
 Premium Shares shall be rounded upward to the next whole Share. 


 Article 8

 Costs and
 Taxes

 1.     All
 costs of delivering any Shares, including, but not limited to, any Premium Shares, under this Program to a
 Participant’s Custody Account and any other costs connected with the Shares shall be borne by the
 Participant.

 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 of any Restricted Shares Rights or becoming effective thereafter, and any changes or
 modifications therein and termination thereof which may result for the Participant in connection with this
 Program (including, but not limited to, the grant of the Restricted Shares Rights, the ownership of the
 Restricted Shares Rights and/or the delivery of any Shares under this Program, the ownership and/or the sale of
 any Shares acquired under this Program) shall be for the sole risk and account of the Participant.

 3.     Philips
 and any other Employing Company shall have the right to deduct or withhold (or cause to be deducted or
 withheld) from any salary payment or other sums due by Philips or any other Employing Company to Participant,
 or requiring the Participant or beneficiary of the Participant, to pay to Philips an amount necessary to
 settle any Taxes and any costs determined by Philips necessary to be withheld in connection with this Program
 (including, but not limited to, the grant of the Restricted Shares Rights or the delivery of any Shares
 (including, but not limited to, Premium 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 from a Nominee Account to a Custody Account until Philips has received an amount, or the Participant has
 made such arrangements required by Philips necessary to satisfy any withholding of any Taxes and any costs to
 be borne by the Participant in connection with this Program as determined by Philips.

 5.     Philips
 is herewith authorised by the Participant to sell (part of) Participant’s Shares credited to a Nominee
 Account and to maintain such part of the proceeds of this sale as payment to Philips necessary to satisfy any
 withholding of any Taxes and any costs to be borne by the Participant in connection with this Program as
 determined by Philips.


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 Article 9

 Dividend
 Payment on Shares 

 Philips is
 entitled, in its sole discretion, to determine the manner in which dividend on any Shares acquired by a
 Participant pursuant to this Program and deposited on the Nominee Account at the applicable record date, is
 paid to such Participant including, but not limited to, the payment of dividend by means of a dividend
 reinvestment plan pursuant to which the dividend will be reinvested in the purchase of Shares.

 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 shall
 further have the authority to waive, in its sole discretion, the requirement pursuant to Article 7 that the
 Shares have been and are deposited on the Nominee Account during the entire Retainment Period. Such waiver may
 be subject to such conditions as Philips may establish in its sole discretion. 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
 Participant 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 Restricted Share Rights until such Shares are
 actually delivered to such Participant in accordance with Article 5 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) Restricted Share Rights granted to, or Shares acquired by, a Participant pursuant to such Restricted
 Share Right under this Program shall not be considered as compensation in determining a Participant’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
 Participant any right to be retained in employment 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 to terminate such Participant’s employment or to discharge or retire a Participant
 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.


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

 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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