ex_4-2.htm


    Exhibit
4.2


    
      
        
          
            

          

        

        Corporate
HRM/Global Reward

        
          

        

      

    


    


    
      	
               

              Global
      Philips Stock Option Program

               

            


    

    


    


    


    


    


    


     

    


    


    


    


    


    



    
      
         


      

      
         


        
          

        

      

      
         


        
          
            
              
                

              

            

            Corporate
HRM/Global Reward

            
              

            

          

        

      

    


    


    


    TERMS
AND CONDITIONS

    OF

    GLOBAL
PHILIPS STOCK OPTION PROGRAM

    


    Article
1

    Definitions

    


    In this
Global Philips Stock Option Program 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 concerned. 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.

               

            


    


    
      
        
          
            
              
                

              

            

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        Corporate
HRM/Global Reward

        
          

        

      

    


    


    
      	
              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

                


        

      


      
        
          
            
              
                
                  

                

              

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              Corporate
HRM/Global Reward

              
                

              

            

          

        

      

      
        
          	
                   
      

                	
                  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
      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

                


        

      


      
        
          
            
              
                
                  

                

              

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              Corporate
HRM/Global Reward

              
                

              

            

          

        

      

      
        
          	
                   
      

                	
                  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 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.

      


      


      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.

              


      


      
        
          
            
              
                
                  

                

              

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              Corporate
HRM/Global Reward

              
                

              

            

          

        

      


      


      


      
        	
                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.

              


      

      


      


      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.

      



      
        
          
            
              
                
                  

                

              

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              Corporate
HRM/Global Reward

              
                

              

            

          

        

      


      


      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 as an alternative to Shares. Upon such
request the Option Holder is entitled to receive an amount in Euros or in U.S.
Dollars, depending on where the Shares being the subject of the exercised Option
are traded, equal to the Share Price 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
Share Price will be the opening price 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.

      



      
        
          
            
              
                
                  

                

              

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              Corporate
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      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,
      except to the extent any such action would require shareholder approval
      under applicable law, rules or regulation. The terms and conditions in
      force from time to time are published on the Philips’ intranet and on the
      website of the administrator of this Program and apply to any and all
      Option granted under 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.

                	
                  If
      equity-based incentive compensation under this Program has been granted on
      the basis of incorrect financial or other data, Philips and the Employing
      Company may in its sole discretion but acting in good faith, resolve to
      recoup some or all of such incentive compensation -including any benefits
      derived therefrom- in all appropriate cases (taking into account all
      relevant factors, including whether the assertion of a recoupment claim
      may in its opinion prejudice the interests of Philips and its group
      companies in any related proceeding or investigation), granted to an
      individual under this Program, if and to the extent
  that:

                


        

        
          	
                   
      

                	
                  a.

                	
                  the
      size of the equity-based incentive grant was calculated based upon the
      achievement of certain financial or other data that were subsequently
      reduced or changed due to a correction thereof resulting from errors,
      omissions, fraud or otherwise, and

                


        

        
          	
                   
      

                	
                  b.

                	
                  the
      size of such grant that would have awarded to you, had the financial or
      other data been properly reported would have been lower than the amount
      actually awarded.

                


        

        
          	
                   
      

                	
                  By
      accepting any grants under this Program, the individual concerned agrees
      to fully co-operate with Philips and the Employing Company in order to
      give effect to this article.

                


        

        


        
          	
                  3.

                	
                  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.

                


        

        


        
          	
                  4.

                	
                  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.

                


        

        


        
          	
                  5.

                	
                  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

                


        

      


      
        
          
            
              
                
                  

                

              

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              Corporate
HRM/Global Reward

              
                

              

            

          

        

      

      
        
          	
                   
      

                	
                  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.

                


        

        


        
          	
                  6.

                	
                  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.

                


        

        


        
          	
                  7.

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

                


        

        


        
          	
                  8.

                	
                  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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