Document:

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
HRM/Global Reward

              
                

              

            

          

        

      

      

      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.

                

        

        

        • • • •
•

      

      
        
          
             

            

            

            

            

            
              
                
                  
                    
                      
                        

                      

                    

                    Page 9 of
9ex_4-3.htm

    
      
        
          
            Exhibit
4.3

             

            
              

            

          

          Corporate
HRM/Global Reward

        

        
          
            

          

        

      

    

    

    
      	
               

              Global
      Philips Restricted Share Rights Program

               

            

    

    

    

    

    

    

    

    

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

        
          
            
              
                

              

            

            Corporate
HRM/Global Reward

          

          
            
              

            

          

        

      

    

    

    

    TERMS
AND CONDITIONS

    OF

    GLOBAL
PHILIPS RESTRICTED SHARE RIGHTS PROGRAM

    

    Article
1

    Definitions

    

    In this
Global Philips Restricted Share Program 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 concerned. 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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8

          

        

         

      

      
         

        
          

        

      

      
         

        
          
            
              
                

              

            

            Corporate
HRM/Global Reward

          

          
            
              

            

          

        

      

    

    

    

    
      	
              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.

               

            
	
              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 (i) death, (ii) disablement, (iii) legal
      incapacity, (iv) retirement or
(v)

            

    

    
      
        
          
            
              
                

              

            

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            Corporate
HRM/Global Reward

          

          
            
              

            

          

        

      

    

    

    
      	
               
      

            	
              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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            Corporate
HRM/Global Reward

          

          
            
              

            

          

        

      

    

    

    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.

    

    
      
        
          
            
              
                

              

            

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            Corporate
HRM/Global Reward

          

          
            
              

            

          

        

      

    

    

    

    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 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.

            

    

    
      
        
          
            
              
                

              

            

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            Corporate
HRM/Global Reward

          

          
            
              

            

          

        

      

    

     

    
      	
              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.

            

    

    

    

    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,
      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
      Restricted Share Rights granted under 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.

            	
              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:

            

    

    
      	
               
      

            	
              i.

            	
              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

            

    

    

    
      
        
          
            
              
                

              

            

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            Corporate
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              ii.

            	
              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.

            

    

    

    
      	
               
      

            	
              Furthermore
      by accepting any grants under this Program, the individual provides an
      irrevocable power of attorney to Philips and the Employing Company to
      transfer any Shares held by such individual in the account administered by
      Philips’ global Program administrator and any other acts necessary or
      desirable to give effect to this article. This power of attorney is
      governed by Dutch law exclusively.

            

    

    

    
      	
              3.

            	
              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.

            

    

    

    
      	
              4.

            	
              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.

            

    

    

    
      	
              5.

            	
              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.

            

    

    

    
      	
              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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