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                                                                     EXHIBIT 4.2

                    GLOBAL PHILIPS STOCK OPTION PROGRAM 2004

                    GLOBAL PHILIPS STOCK OPTION PROGRAM 2004

         -GRANTS APRIL 2004, JULY 2004, OCTOBER 2004, AND FEBRUARY 2005-

                                 MARCH 30, 2004

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                              TERMS AND CONDITIONS
                                       OF
                    GLOBAL PHILIPS STOCK OPTION PROGRAM 2004
         -GRANTS APRIL 2004, JULY 2004, OCTOBER 2004, AND FEBRUARY 2005-

                                    ARTICLE 1
                                   DEFINITIONS

In this Global Philips Stock Option Program 2004 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 other than a Nominee
                                    Account.

3. Date of Grant:                   the date at which the Options shall be
                                    deemed granted to the Option Holder under
                                    the Program shall be as follows:

<TABLE>
<CAPTION>
                  APRIL 2004      JULY 2004       OCTOBER 2004        FEBRUARY
                    GRANT           GRANT            GRANT           2005 GRANT
                    -----           -----            -----           ----------
<S>             <C>             <C>              <C>              <C>
Date of Grant   April 13, 2004  July 13, 2004   October 12, 2004  February 09, 2005
</TABLE>

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

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

8. Option Holder:                   a person holding any Options.

9. Option Period:                   the term for which an Option is granted as
                                    specified in Article 3 (subject to any
                                    extension as set forth in Article 4.3).

10. Philips:                        Koninklijke Philips Electronics N.V.

11. Program:                        this Global Philips Stock Option Program
                                    2004.

12. Share:                          a common share of Philips.

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                                    ARTICLE 2
                             ACQUISITION OF OPTIONS

Options may be granted to an eligible individual as per the applicable Date of
Grant, 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 you. 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 paragraph 2 and to 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 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.

4.    Subject to this Article 3 and Article 4, Members of the Group Management
      Committee of Philips, the Head of Corporate Control and the Head of
      Corporate Treasury, may only exercise Options during the period which
      commences on the date of publication of Philips' annual or quarterly
      results and ends ten business days thereafter.

                                    ARTICLE 4
                            TERMINATION OF EMPLOYMENT

1.    Except as 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 of its subsidiaries 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 an Option Holder

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      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 an Option Holder
      was covered, provided (ii) 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 shall be 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 and provided further that the Options shall
      only be exercisable in the manner as set forth in Article 9.

4.    In case an Option Holder is no longer employed by any Employing Company
      during the applicable Option Period 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"), 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, and provided further that such Options will be
      forfeited as of the date of termination of the Option Holder's employment
      with the company which acquired the Divested Business from Philips or any
      of its subsidiaries, without the Option Holder being entitled to any
      compensation or any obligation on the part of Philips or its subsidiaries
      or the transferee or its subsidiaries.

                                    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, paragraph 2;

      c.    the number of Options to be exercised; and

      d.    whether Shares to be obtained upon such exercise:

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            -     be sold, on behalf of the Option Holder, as soon as possible
                  and the revenue deducted by the Grant Price, multiplied by the
                  number of Options so being exercised, and further costs, be
                  paid to the Option Holder in accordance with a procedure
                  determined by Philips; or

            -     be delivered to the Option Holder as provided for in the
                  paragraphs 3, 4 and 5 below.

            Such 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 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 Option Holder.

3.    Subject to the terms and conditions of this Program, 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.    Any Shares to be delivered pursuant to Article 6.1 will be credited to the
      Nominee Account except if an Option Holder (i) requests Philips to credit
      such Shares to a Custody Account or (ii) does not maintain a Nominee
      Account at the date of delivery of such Shares. In case (i) or (ii) as
      described in 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.    Except as may be approved otherwise in writing by Philips in its sole
      discretion, in case an Option Holder is no longer employed by any
      Employing Company for any reason whatsoever, the Option Holder (or his or
      her legal representatives) shall withdraw all Shares credited to the
      Option Holder's Nominee Account within two (2) months of the date of such
      termination. In case the Option Holder (or his or her legal
      representatives, as the case may be) fails to comply with the foregoing
      obligation, then the Option Holder (or his or her legal representatives)
      shall be deemed to have requested Philips to sell or cause to sell such
      Shares.

6.    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

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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 to the Option Holder's Nominee Account
      upon exercise of any Options shall be borne by Philips. All costs of
      delivering any Shares under this Program to a 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 from a Nominee Account
      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 Euro or in U.S.
Dollars, as indicated by the Option Holder, equal to the Closing Price on the
date of 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 of Euronext
Amsterdam the Closing Price will be that of the first subsequent trading day on
of Euronext Amsterdam. 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

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      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 a 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.

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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