ARTICLES OF ASSOCIATION
OF
KONINKLIJKE PHILIPS ELECTRONICS N.V.
(ROYAL PHILIPS ELECTRONICS)
AS LAST AMENDED
ON AUGUST 1, 2000, PURSUANT TO THE RESOLUTION OF THE GENERAL
MEETING OF SHAREHOLDERS HELD ON MAY 29, 2000.
TRANSLATION OF THE ORIGINAL AND AUTHENTIC DUTCH TEXT.
NAME AND SEAT
ARTICLE 1
1. The name of the Company is: Koninklijke Philips Electronics N.V.
2. The Company is authorized to act as "Royal Philips Electronics".
3. Its registered office is situated in Eindhoven.
OBJECTS
ARTICLE 2
The objects of the Company are to establish, participate in, administer and
finance legal entities, companies and other legal forms for the purpose of the
manufacture and trading of electrical, electronic, mechanical or chemical
products, the development and exploitation of technical and other expertise,
including software, or for the purpose of other activities, and to do everything
pertaining thereto or connected therewith, all this in the widest sense, as may
also be conducive to the proper continuity of the collectivity of business
undertakings, in the Netherlands and abroad, which are carried on by the Company
and the companies in which it directly or indirectly participates.
SHARE CAPITAL, SHARES, SHAREHOLDERS, SHARE CERTIFICATES
AND SHARE REGISTER
ARTICLE 3
1. The share capital of the Company is one billion and three hundred million
euros (EUR 1,300,000,000), divided into ten priority shares of five hundred
euros (EUR 500) each, in
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these articles of association henceforth referred to as "priority shares",
three billion two hundred fifty million common shares of twenty euro cents
(EUR 0.20) each, in these articles of association henceforth referred to as
"common shares", and three billion two hundred fourty-nine million nine
hundred seventy-five thousand preference shares of twenty euro cents (EUR
0.20) each, in these articles of association henceforth referred to as
"preference shares."
2. Unless otherwise stated, the term "shares" in these articles shall refer
equally to priority, common and preference shares.
ARTICLE 4
1. The Board of Management shall have the power to issue common shares if and
insofar as the Board of Management has been designated by the General
Meeting of Shareholders as the authorized body for this purpose. Such a
designation shall only take place for a specific period of no more than
five years and may not be extended by more than five years on each
occasion. The Board of Management requires the approval of the Supervisory
Board and of the meeting of priority shareholders for such an issue.
2. If a designation as referred to in clause 1 is not in force, the General
Meeting of Shareholders shall have the power, upon the proposal of the
Board of Management - which proposal must be approved by the Supervisory
Board and by the meeting of priority shareholders - to resolve to issue
common shares.
3. In the event of a common share issue in return for a cash consideration,
holders of common shares shall have a pre-emption right in proportion to
the number of common shares which they own. The Board of Management shall
have the power to restrict or exclude the pre-emption right accruing to
these shareholders, if and insofar as the Board of Management has also been
designated by the General Meeting of Shareholders for this purpose as the
authorized body for the period of such designation. The provisions in the
second and third sentences of clause 1 shall apply accordingly.
4. If a designation as referred to in clause 3 is not in force, the General
Meeting of Shareholders shall have the power, upon the proposal of the
Board of Management - which proposal must be approved by the Supervisory
Board and by the meeting of priority shareholders - to restrict or exclude
the pre-emption right accruing to shareholders.
5. A resolution of the General Meeting of Shareholders in accordance with
clauses 3 and 4 of this article requires a majority of at least two-thirds
of the votes cast if less than half of the issued share capital is
represented at the meeting.
6. Clauses 1 and 2 of this article apply mutatis mutandis to an issue of
preference shares. An option to take preference shares was granted on 19
June 1989 to the Stichting Preferente Aandelen Philips under the power
vested in the Board of Management at that time in the articles of
association.
7. In order for resolutions of the General Meeting of Shareholders to issue
shares or to designate the Board of Management, as referred to in clauses
1, 2 and 6, to be valid, a prior
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or simultaneous resolution granting approval is required from each group of
holders of shares of the same type whose rights are affected by the issue.
8. The preceding clauses of this article shall apply accordingly mutatis
mutandis to the granting of rights to take shares, but shall not apply to
the issue of shares to someone who exercises a previously acquired right to
take shares. The Board of Management shall have the power to issue such
shares.
9. The issue price shall not be fixed below par, subject to deviations which
the law permits in this respect. The common and priority shares shall be
fully paid up when they are taken. At least a quarter of the nominal amount
shall be paid on preference shares when they are taken. Further payment on
the preference shares shall be made within one month after the Board of
Management, subject to the approval of the Supervisory Board and the
meeting of priority shareholders, has made a corresponding request in
writing to the shareholders concerned.
ARTICLE 5
1. Any acquisition by the Company of shares in its capital which are not fully
paid up shall be null and void.
2. The Company may acquire, for valuable consideration, common shares in its
own share capital if and insofar as:
a. its shareholders' equity less the purchase price of the common shares
is not less than is laid down in the relevant statutory provisions;
b. the nominal amount of the shares in its capital which the Company
acquires, holds or holds as pledgee, or which are held by a
subsidiary, is not more than one-tenth of the issued share capital;
and c. the General Meeting of Shareholders has authorized the Board of
Management to acquire such shares, which authorization may be given
for no more than 18 months on each occasion. Shares thus acquired may
again be disposed of. The Board of Management shall not acquire shares
in the Company's own share capital as referred to above - if an
authorization as referred to above is in force - or dispose of such
shares without the approval of the Supervisory Board.
3. The Board of Management shall have the power, without the authorization
referred to in clause 2 but with the approval of the Supervisory Board, to
acquire on behalf of the Company shares in its own share capital as
referred to above in order to transfer the shares to employees of the
Company or of a group company, in pursuance of a rule applying to them.
4. No voting right attaches to own shares referred to above. These shares
shall not rank for the purpose of determining any majority or for deciding
whether a specific proportion of the issued share capital is represented at
a general meeting of shareholders.
5. Upon the proposal of the Board of Management - which proposal must have the
prior approval of the Supervisory Board and the meeting of priority
shareholders - the General
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Meeting of Shareholders shall have the power to resolve, having regard to
the provisions of Section 99 of Book 2 of the Netherlands Civil Code, to
reduce the issued share capital:
o by a cancellation of common shares acquired by the Company in its own
share capital;
o by a reduction of the nominal amount of the shares by amendment of the
articles of association, with partial repayment on those shares;
o by a cancellation of preference shares, with repayment on the said
preference shares; or
o by a release from the obligation to make further payment on the
preference shares upon implementation of a resolution to reduce the
nominal amount of such shares.
It shall be indicated in this resolution whether and, if so, to what extent
this relates to common shares, to all or only to certain preference shares
or - insofar as this is permitted - to all shares, and rules shall be drawn
up for the implementation of the resolution. A partial repayment or release
from the obligation to make further payment must be made proportionally to
all shares concerned.
ARTICLE 6
1. Priority shares and preference shares shall be registered. Common shares
shall, at the option of the shareholder, be either in bearer or registered
form, as specified in the following clauses.
2. Where a share belongs to more than one person in any form of joint
ownership, or where limited rights in rem attach to any share, the Company
is entitled to require those concerned to designate in writing one person
to exercise the rights attached to the share.
3. The expression "shareholder", as used in these articles, shall, if the
ownership of a share is vested in more than one person, mean the joint
holders of such share, without prejudice, however, to the provisions of
clause 2 of this article. The expression "person", as used in these
articles, shall include a body corporate.
4. Share certificates for bearer shares consist of a main part with a dividend
sheet not consisting of separate dividend coupons. Such dividend sheets
shall be issued solely to "depositaries" who have been admitted to the
Centre for Securities Administration in Amsterdam and who are bound by the
regulations that apply to such depositaries. Share certificates for bearer
shares shall be available for such numbers, which may be subject to change,
as the Board of Management may determine.
5. Registered shares shall be available:
o in the form of an entry in the share register without issue of a share
certificate; shares of this type are referred to in these articles as
Type I shares;
o and - should the Board of Management so decide - in the form of an
entry in the share register with issue of a certificate, which
certificate shall consist of a main part without
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dividend sheet; shares of this type and share certificates of this
type for common shares are referred to in these articles as Type II
shares and share certificates,
these being available for such numbers, which may be subject to change, as
the Board of Management may determine.
6. The form in which share certificates are issued shall be determined by the
Board of Management.
7. The forms of share specified in clauses 4 and 5 may, on conditions to be
determined by the Company, be converted into other forms referred to in the
respective clauses.
ARTICLE 7
1. In respect of registered shares a register shall be kept by or on behalf of
the Company, which register shall be regularly updated and, in the form the
Board of Management will decide, may, in whole or in part, be maintained in
more than one copy and at more than one place. At least one copy will be
maintained at the office of the Company.
2. Each shareholder's name and address, the number and type of shares
registered in his name, the date on which registered shares were acquired,
the date of acknowledgement and/or service upon the Company of the
instrument of transfer, the amounts paid thereon and such further data as
the Board of Management shall deem desirable, whether at the request of a
shareholder or not, shall be entered in the register. The names and
addresses of persons who have a right of usufruct or pledge in respect of
those shares, the date on which they acquired such a right, the date of
acknowledgement or service upon the Company of the instrument of transfer,
as well as the other data required by law, shall also be entered in the
register.
3. Upon request, a shareholder shall be given free of charge an extract from
the register in respect of the shares registered in his name.
ARTICLE 8
1. Upon a written request from a person entitled to such certificates, missing
or damaged common share certificates, or parts thereof, may be replaced by
new certificates, or by duplicates bearing the same numbers and/or letters,
provided that the applicant proves his title and, in so far as applicable,
his loss to the satisfaction of the Board of Management, and further
subject to such conditions as the Board of Management may deem fit.
2. In appropriate cases, at its own discretion, the Board of Management may
stipulate that the identifying numbers and/or letters of missing documents
be published three times, at intervals of at least one month, in at least
three newspapers to be indicated by the Board of Management, announcing the
application made; in such a case new certificates or duplicates may not be
issued until six months have expired since the last publication, always
provided that the original documents have not been produced and shown to
the Board of Management before that time.
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3. The issue of new certificates or duplicates shall render the original
document invalid.
4. The issue of new certificates or duplicates for shares may in appropriate
cases, at the discretion of the Board of Management, be published in
newspapers to be indicated by the Board of Management.
ARTICLE 9
1. The transfer of a registered share, including:
o the allotment of registered shares in the event of a judicial
partition and division of any form of community of property or
interests;
o the transfer of a registered share as a consequence of a judgement
execution;
o the creation of limited rights in rem on a registered share shall
require an appropriate instrument of transfer that has to meet the
conditions stipulated by the Company and for which a model will be
available for shareholders at no costs, as well as an acknowledgement.
This acknowledgement may be made;
o in the instrument of transfer; or
o by a certificate with an officially recorded, or otherwise fixed, date
containing the acknowledgement on the instrument of transfer or of a
copy or extract thereof authenticated by a civil law notary or by the
transferor.
If a Type II share certificate has been issued, the share certificate is
also required to be handed over to the Company for the purpose of the share
transfer. In this case the acknowledgement may be made by making an
annotation on the share certificate or by replacing the certificate with a
new one in the name of the transferee.
In the case of preference shares which have not been paid up in full, the
acknowledgement may be made only if there is an instrument of transfer with
an officially recorded, or otherwise fixed, date. When preference shares
which have not been paid up in full are transferred, the date of transfer
shall be entered in the register.
2. The transfer of priority shares is subject to the provisions of article 10,
as well as to those of the preceding clause.
PRIORITY SHARES
ARTICLE 10
1. Without prejudice to the provisions of article 9, the transfer of priority
shares is subject to the conditions stated in the following clauses of this
article.
2. A priority share may only be transferred to a nominee nominated by the
meeting of priority shareholders, and upon payment of the nominal value of
such share, with interest at the rate
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of four per cent per annum - or such lower rate as the statutory interest
rate will be at the beginning of the relevant financial year - as from the
beginning of the current financial year until the date of the transfer.
3. A holder of a priority share wishing to transfer such share shall notify
the Board of Management of such intention by registered letter. The Board
of Management shall as soon as possible bring the contents of such
notification to the notice of the Chairman of the Supervisory Board and of
the holders of priority shares. In that event the Chairman of the
Supervisory Board shall convene a meeting of priority shareholders, which
shall be held within a month after receipt of the notification referred to
above and which shall propose a nominee.
4. However, the holder of a priority share who, by registered letter addressed
to the Board of Management, has requested the proposal of a nominee in
accordance with the provisions of the preceding clause shall be free to
transfer the share offered by him, if after a period of three months after
receipt of such notification the meeting of priority shareholders has not
proposed a nominee or no nominee has agreed to acquire the share.
5. In the event of transfer of any priority share upon the death of the holder
thereof or for any other reason, those who acquire the share shall, by
registered letter addressed to the Board of Management, offer such share
for transfer to a nominee to be proposed by the meeting of priority
shareholders. In that event the provisions of clauses 3 and 4 of this
article shall apply mutatis mutandis. In such a case the Company shall be
irrevocably authorized on behalf of the successor or successors in title to
effect the transfer to such nominee and to receive the payments on his or
their behalf. Until the transfer of the priority share has taken place in
the prescribed manner and is entered in the priority share register, no
vote may be cast in respect of such priority share at the meeting of
priority shareholders.
6. The provisions of clause 5 of this article shall apply mutatis mutandis to
a holder of priority shares who has been adjudicated bankrupt or granted a
moratorium of payments or placed in the care of a guardian, or is unable
for any other reason to dispose freely of his property.
7. The transfer of a priority share shall be entered in the priority share
register.
BOARD OF MANAGEMENT
ARTICLE 11
1. The Company shall be managed by a Board of Management, consisting of at
least three members, under the supervision of a Supervisory Board. The
Chairman of the Board of Management shall be President of the Company. The
other members shall be Executive Vice-Presidents[FN 1] of the Company. With
due observance of the minimum of three, the number of members shall be
decided by the meeting of priority shareholders in consultation with the
Supervisory Board.
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[FN 1] In the original Dutch version of these articles of associates the
term "Vice-President" is used.
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2. Members of the Board of Management, as well as the Chairman of the Board of
Management and President of the Company, shall be appointed by the General
Meeting of Shareholders from a binding list of two nominees for each
vacancy to be filled, drawn up by the Supervisory Board in agreement with
the meeting of priority shareholders. Votes in respect of persons who have
not been so nominated shall be invalid. In the event of an equality of
votes, the nominee who is placed first on the list shall be appointed.
3. The list of nominees shall be deposited for inspection by shareholders at
the office of the Company and at a bank at Amsterdam to be specified in the
notice convening the general meeting at which the appointments are to be
made, as from the date of serving the said notice until the close of that
meeting.
4. The list of nominees referred to in clause 2 of this article may be
deprived of its binding character by a resolution adopted at a general
meeting of shareholders by a majority of at least two-thirds of the votes
cast, representing more than one half of the issued share capital. In that
event a new binding list shall be submitted to a subsequent general meeting
of shareholders, with due observance of the provisions of the preceding
clauses of this article. Should such a second list also be deprived of its
binding character in the manner provided for in the first sentence, the
General Meeting of Shareholders shall be free to appoint.
5. Should the number of members of the Board of Management fall below three,
the powers of the Board of Management shall remain intact. In such a case a
general meeting of shareholders shall be held at the earliest opportunity
to fill the vacancies on the Board of Management.
6. Without prejudice to the provisions of clause 2 of this article, a proposal
to make appointments to the Board of Management may only be placed on the
agenda of the general meeting of shareholders by the Board of Management
and only in consultation with the meeting of priority shareholders and the
Supervisory Board.
ARTICLE 12
1. Members of the Board of Management may be suspended or removed by the
General Meeting of Shareholders. A resolution to suspend or remove a member
of the Board of Management, other than a resolution proposed by the Board
of Management, the Supervisory Board or the meeting of priority
shareholders, may only be adopted by a majority of at least two-thirds of
the votes cast, representing more than half of the issued share capital.
The provisions of Section 120 (3) of Book 2 of the Civil Code shall not
apply.
2. The members of the Board of Management may be suspended from office by the
Supervisory Board either collectively or individually. Within three months
of such suspension a general meeting of shareholders shall be held to
decide whether the suspension shall be cancelled or upheld. The person so
suspended shall be entitled to be heard at the meeting.
<PAGE>
ARTICLE 13
1. Two members of the Board of Management may jointly represent the Company at
law and otherwise.
a. The Board of Management may authorize each of its members separately
to represent the Company within the limits defined in the
authorization.
b. The authority of a member of the Board of Management to represent the
company does not cease to exist where there is a conflict of interest
with the company, unless a legal act between the company and a
director himself is involved, in which case, without prejudice to the
provisions of the last sentence of Section 146 of Book 2 of the Civil
Code, the other members of the Board of Management shall have the
authority to represent the Company with regard to that legal act.
ARTICLE 14
1. The Board of Management shall have the power to enter into contracts as
specified in Section 94 (1) of Book 2 of the Civil Code.
2. The Board of Management may grant powers of attorney to persons, whether or
not in the service of the Company, to represent the Company and may thereby
determine the scope of such powers of attorney and the titles of such
persons.
ARTICLE 15
Subject to the approval of the Supervisory Board, the Board of Management shall
draw up Standing Orders, regulating, inter alia, the mode of convening its
meetings and the internal procedure at such meetings.
ARTICLE 16
1. Without prejudice to the provisions made elsewhere in these articles,
resolutions of the Board of Management concerning the following matters
shall be subject to the approval of the Supervisory Board:
a. issue of shares in the Company, restricting or excluding the
pre-emption right in the event of an issue of shares, acquisition of
shares in the capital of the Company and the disposal of shares thus
acquired; issue of debentures chargeable to the Company;
b. cooperation in the issue of certificates of shares in the Company;
c. application for quotation or for withdrawal of the quotation of the
securities referred to under a. and b. in the price list of any stock
exchange;
d. long-term cooperation, directly or indirectly, with another company or
body corporate, and the discontinuation of such cooperation, if the
said cooperation or discontinuation thereof is of fundamental
significance;
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e. taking a direct or indirect participation in the share capital of
another company, the value of which is at least equal to the amount of
one quarter of the issued share capital plus the reserves of the
Company, as shown by its balance sheet and explanatory notes, and any
fundamental change in the scale of such participation;
f. any investment involving expenditure equal to at least one quarter of
the issued share capital plus the reserves of the Company, as shown by
its balance sheet and explanatory notes;
g. a proposal to amend the articles of association;
h. a proposal to dissolve the Company or for a legal merger of the
Company;
i. a petition for bankruptcy or for a moratorium of payments; j. a
proposal to reduce the issued share capital.
2. The Supervisory Board may grant the approvals required in accordance with
this article either for a specific legal act, or for a group of such legal
acts.
ARTICLE 17
Without prejudice to the statutory provisions, absence or inability to act of
members of the Board of Management is regulated in the Standing Orders of the
Board of Management.
ARTICLE 18
The remuneration and other terms of employment of the members of the Board of
Management shall be fixed by the Supervisory Board upon the proposal of the
President of the Company.
SUPERVISORY BOARD
ARTICLE 19
1. The Supervisory Board shall be responsible for supervising the policy
pursued by the Board of Management and the general course of affairs in the
group of companies within the Netherlands and abroad, of which the Company
forms part. The Supervisory Board shall assist the Board of Management with
advice relating to the general policy aspects connected with the activities
of the Company and of the group of companies associated with it.
2. The Board of Management shall provide the Supervisory Board in due time
with such information as the Supervisory Board needs for the performance of
its duties and shall regularly report on the course of business of the
Philips Group.
<PAGE>
ARTICLE 20
1. The members of the Supervisory Board shall be appointed and may be removed
by the General Meeting of Shareholders. The Supervisory Board shall consist
of at least five members.
2. Members of the Supervisory Board shall be appointed by the General Meeting
of Shareholders from a binding list of two nominees for each vacancy to be
filled, drawn up by the Supervisory Board in agreement with the meeting of
priority shareholders. Votes in respect of persons who have not been so
nominated shall be invalid. In the event of an equality of votes, the
person who is placed first on the list shall be appointed. A list of
nominees shall be deposited for inspection by shareholders at the office of
the Company and at a bank in Amsterdam to be specified in the notice
convening the general meeting on whose agenda the proposed appointment has
been placed, as from the date on which the said notice is served until the
close of that meeting. Without prejudice to the provisions of the first
sentence and in compliance with Section 142 (3) of Book 2 of the Civil
Code, a proposal to appoint a member of the Supervisory Board may only be
placed on the agenda of the general meeting by the Supervisory Board,
though only in consultation with the Board of Management and the meeting of
priority shareholders. Persons as referred to in Sections 142 (4) and 160
of Book 2 of the Civil Code shall not be appointed.
3. The list of nominees referred to in clause 2 of this article may be
deprived of its binding character by a resolution adopted at a general
meeting of shareholders by a majority of at least two-thirds of the votes
cast, representing more than one half of the issued share capital. In that
event, a new binding list shall be submitted to a subsequent general
meeting of shareholders with due observance of the provisions of the
preceding clauses of this article. Should such a second list also be
deprived of its binding character in the manner provided for in the first
sentence, the General Meeting of Shareholders shall then be free to
appoint.
4. A member of the Supervisory Board shall retire at the end of the next
general meeting of shareholders held after a period of four years following
his appointment. Should a member of the Supervisory Board reach the age of
72 in any financial year, he shall retire at the end of the ordinary
general meeting of shareholders held in that financial year. After having
held office for the first period of four years, members of the Supervisory
Board are eligible for reelection only twice for a full period of four
years. In specific cases the Supervisory Board and the meeting of priority
shareholders may resolve to deviate from this provision. The Supervisory
Board may establish a rotation schedule.
5. A resolution to suspend or remove a member of the Supervisory Board, other
than a resolution proposed by the Supervisory Board or the meeting of
priority shareholders, may only be adopted by a majority of at least
two-thirds of the votes cast, representing more than half of the issued
share capital. The provisions of Section 120 (3) of Book 2 of the Civil
Code shall not apply.
ARTICLE 21
1. The members of the Supervisory Board shall appoint from their number a
Chairman, a Vice-Chairman and a Secretary.
<PAGE>
2. The Supervisory Board may appoint one of its members to be a Delegate
Member and in so doing determine the period of such appointment. Without
prejudice to the duties and responsibilities of the Supervisory Board and
of its members, the Delegate Member shall, on behalf of the Supervisory
Board, maintain more frequent contact with the Board of Management with
regard to the general course of affairs within the scope of article 20 of
these articles of association. In so doing, the Delegate Member of the
Supervisory Board shall assist the Board of Management with advice.
3. Without prejudice to the duty and responsibility of the Supervisory Board
as such, the latter body may resolve to have certain tasks performed or
prepared and certain powers exercised or prepared by a commission from
their number. Such a resolution shall specify the chairman and the
secretary thereof and in what manner and how frequently such commission
shall render account to the Supervisory Board as such.
ARTICLE 22
1. The Supervisory Board may adopt resolutions by absolute majority of the
votes cast at a meeting attended by at least one-third of its members. The
Supervisory Board may adopt resolutions in writing outside a meeting
provided that the proposals for such resolutions have been sent in writing
to all members and no member is opposed to this method of adopting a
resolution, and provided that in such a case more than half of the members
declare themselves in favour of the proposals.
2. Minutes shall be kept of the proceedings of the Supervisory Board, which in
any case shall include the resolutions adopted by the meeting. In the event
that the resolutions are adopted outside a meeting, as referred to in the
second sentence of the preceding clause, the resolutions so adopted shall
be recorded in writing by the Secretary. Such record shall be signed by the
Chairman and the Secretary.
3. A certificate signed by two members to the effect that the Supervisory
Board has adopted a particular resolution shall constitute evidence of such
a resolution in dealings with third parties.
4. The members of the Board of Management shall, if so invited by the
Supervisory Board, attend the meetings of the Supervisory Board.
ARTICLE 23
1. The Supervisory Board shall draw up Standing Orders regulating the mode of
convening its meetings and the internal procedure at such meetings.
ARTICLE 24
1. Upon a proposal made by the Supervisory Board, the General Meeting of
Shareholders shall determine the remuneration of the members of the
Supervisory Board, which shall consist of a fixed yearly amount.
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2. The Supervisory Board may grant an additional remuneration to be borne by
the Company to its Chairman, to a Delegate Member or to members who
pursuant to a resolution of the Supervisory Board have been designated to
perform certain functions or activities of the Supervisory Board.
GENERAL MEETINGS OF SHAREHOLDERS
ARTICLE 25
1. The ordinary general meeting of shareholders shall be held each year not
later than 30 June and, at the Board of Management's option, at Eindhoven,
at Amsterdam, at The Hague or at Rotterdam; the notice convening the
meeting shall inform the shareholders accordingly. Extraordinary general
meetings of shareholders shall be held as often as deemed necessary by the
Supervisory Board or the Board of Management, and must be held if the
meeting of priority shareholders or one or more shareholders jointly
representing at least one-tenth of the issued share capital make a written
request to that effect to the Supervisory Board and the Board of
Management, specifying in detail the business to be dealt with.
If the Board of Management fails to comply with a request as referred to in
the preceding clause in such a manner that the general meeting of
shareholders can be held within six weeks after the request, the persons
making the request may be authorized by the President of the District Court
at `s - Hertogenbosch to convene the meeting themselves.
2. The general meeting of shareholders will in any case deal with and
deliberate on the following:
a. the Company's annual report, including at least:
o the Board of Management's report;
o the annual accounts with explanation and appendices;
o the Supervisory Board's report;
this being without prejudice to the possibility of a deferment granted to
the Board of Management, as provided in Section 101 of Book 2 of the Civil
Code.
b. proposals placed on the agenda by the Supervisory Board, the meeting
of priority shareholders, the Board of Management or shareholders in
accordance with the provisions of these articles;
c. the filling of vacancies on the Board of Management and/or the
Supervisory Board in accordance with the provisions of these articles.
ARTICLE 26
1. The notice convening a general meeting shall be published in the form of an
advertisement which in the Netherlands shall be inserted in at least one
national daily newspaper and, at
<PAGE>
the Board of Management's option, in one or more foreign newspapers. In
addition, holders of registered shares shall be notified by letter that the
meeting is being convened.
2. The notice convening the meeting shall be issued by the Board of
Management. In the case envisaged in the third paragraph of clause 1 of the
preceding article, the notice shall be issued by the shareholders therein
specified, subject to the relevant provisions of Section 111 of Book 2 of
the Civil Code.
3. The notice convening the meeting shall be issued no later than on the
fifteenth day prior to the meeting.
4. Without prejudice to what is provided in this respect elsewhere in these
articles, the agenda shall contain such business as may be placed thereon
by the Board of Management, the Supervisory Board or the meeting of
priority shareholders. Furthermore the agenda shall contain such business
as one or more shareholders representing at least one-hundredth of the
issued share capital have requested the Supervisory Board and the Board of
Management to place on the agenda, at least 60 days before the date of the
meeting. The Supervisory Board and the Board of Management may resolve not
to place such business proposed by shareholders on the agenda if they are
of the opinion that such request would be detrimental to the serious
interests of the Company. The meeting shall not adopt resolutions on
matters other than those which have been placed on the agenda.
5. Without prejudice to the provisions of Sections 99 and 123 of Book 2 of the
Civil Code, the notice convening the meeting shall either mention the
business on the agenda or state that the agenda is open to inspection by
shareholders at the office of the Company and at a specified bank at
Amsterdam.
ARTICLE 27
1. All shareholders are entitled, without prejudice to the provisions of
article 6, clause 2, to attend the general meeting of shareholders, to
address the meeting and, subject to the provisions of Section 118 (7) of
Book 2 of the Civil Code, to vote.
2. In order to exercise the rights mentioned in clause 1 of this article, the
holders of bearer share certificates shall deposit their share certificates
prior to the meeting at the office of the Company or at one of the banks or
other establishments to be indicated in the notice, at least one of which
shall be a depositary as mentioned in article 6, clause 4, situated at
Amsterdam. The notice shall also mention the last day on which this can be
done. The deposit shall be made in return for a card of admission to the
meeting.
3. In order to exercise the rights mentioned in clause 1 of this article, the
holders of registered common shares shall notify the Company in writing of
their intention to do so no later than on the day and at the place
mentioned in the notice convening the meeting, and also - insofar as Type
II common shares are concerned - stating the identifying number of the
common share certificate. They may only exercise the said rights at the
meeting for the common shares registered in their name both on the day
referred to above and on the day of the meeting.
4. In order to exercise the rights mentioned in clause 1 of this article, the
holders of preference shares shall notify the Company of their intention to
do so no later than on the day prior to
<PAGE>
the meeting. They may exercise the said rights at the meeting only for the
shares registered in their name on the day of the meeting.
5. The Company shall send a card of admission to the meeting to holders of
registered shares who have notified the Company of their intention in
accordance with the provisions of the two preceding clauses.
6. Shareholders, usufructuaries and pledgees who are entitled to attend a
general meeting may be represented by proxies with written authority.
Without prejudice to the provisions of the preceding clauses of this
article, the written authorization must be deposited not later than at the
time and at the place indicated in this article.
ARTICLE 28
With regard to the exercise of the rights referred to in the preceding article,
the Company is entitled to regard as correct the statements regarding the
depositing of share certificates and/or the granting of authorizations by
shareholders, and regarding the quantities to which the deposits and/or
authorizations relate, which are made to it in due time by the institutions
designated for that purpose in the notice convening the meeting.
ARTICLE 29
1. General meetings of shareholders shall be presided over by the Chairman of
the Supervisory Board or by any other person nominated by the Supervisory
Board. The Chairman may restrict the time for which shareholders may speak,
if he considers this to be desirable with a view to the orderly conduct of
the meeting.
2. The resolutions adopted at a general meeting of shareholders shall be
recorded by a civil law notary. Such record shall be co-signed by the
Chairman of the meeting. The latter shall ensure that a summary account is
made of the business transacted at the meeting.
ARTICLE 30
1. Unless otherwise stated in these articles, resolutions shall be adopted by
absolute majority of votes. Blank and invalid votes shall not be counted.
The Chairman shall decide on the method of voting, including the
possibility of voting by acclamation. In the event of voting by
acclamation, the votes against will be recorded if a request to this effect
is made.
2. Except as provided in article 11, clause 2 and article 20, clause 2, in the
event of an equality of votes the relevant proposal shall be deemed to have
been rejected.
ARTICLE 31
Each common share and each preference share shall entitle to one (1) vote. Each
priority share shall entitle to two thousand five hundred (2500) votes.
<PAGE>
ARTICLE 32
1. Separate meetings of holders of preference shares shall be held as often as
a resolution of the meeting of holders of preference shares is required by
statutory provisions or these articles of association, and further as often
as the Board of Management, the Supervisory Board or the meeting of
priority shareholders deems this necessary, and must be held if one or more
holders of preference shares representing at least one-tenth of the capital
issued in the form of preference shares make a written request to that
effect to the Board of Management, specifying in detail the business to be
dealt with.
2. A meeting of holders of preference shares shall be convened no later than
on the fifteenth day prior to the meeting by a letter addressed to the
persons entitled to attend this meeting.
3. Meetings of holders of preference shares shall be held at Eindhoven, at
Amsterdam, at The Hague or at Rotterdam. The notice convening the meeting
shall inform the holders of preference shares in respect thereof. Articles
27 to 31 inclusive shall apply accordingly to meetings of holders of
preference shares.
4. At a meeting of holders of preference shares at which the whole of the
capital issued in the form of preference shares is represented, valid
resolutions may be adopted, provided that the vote is unanimous, even if
the provisions governing the place of the meeting, the manner in which it
is convened, the period of notice and the specification in the notice of
the business to be dealt with have not been observed.
ARTICLE 33
Separate meetings of holders of common shares shall be held as often as a
resolution of the meeting of holders of common shares is required by statutory
provisions or these articles of association. The provisions of article 25,
clause 1 and articles 26 to 31 inclusive shall apply accordingly to such a
meeting.
MEETINGS OF PRIORITY SHAREHOLDERS
ARTICLE 34
1. Meetings of priority shareholders shall be held on the proposal of the
Board of Management. They shall be held at a place to be indicated by the
Chairman of the Board of Management.
2. Meetings of priority shareholders must be held if holders of priority
shares representing at least two-fifths of the issued priority share
capital make a written request to that effect to the Board of Management,
specifying in detail the business to be dealt with. If the meeting is not
convened within fourteen days after a request made by priority
shareholders, those shareholders shall be entitled to convene the meeting
themselves.
3. Meetings shall be convened by notice to every holder of a priority share. A
meeting shall not be deemed to be invalid by reason of a notice not having
been received or not received in due time, unless it cannot be shown that
the notice was indeed dispatched. The notices shall be issued by the
Chairman of the Board of Management or, in the case provided in
<PAGE>
clause 2, by the priority shareholders referred to therein. Notices shall
be served at least eight days prior to the meeting.
4. A meeting at which three-fifths of the priority share capital is
represented shall be exempted from all periods of notice and formalities
concerning the convening of the meeting.
5. The meeting of priority shareholders may adopt resolutions in writing
provided that the proposals for such resolutions have been sent in writing
to all holders of priority shares and no holder is opposed to this method
of adopting a resolution.
6. A certificate signed by the holder(s) of at least half of the priority
shares to the effect that the meeting of priority shareholders has adopted
a particular resolution shall constitute evidence of such a resolution in
dealings with third parties.
7. The consent of the meeting is required if a priority shareholder wishes to
be represented at the meeting by a proxy.
REPORT OF THE BOARD OF MANAGEMENT,
ANNUAL ACCOUNTS AND DISTRIBUTIONS
ARTICLE 35
1. The financial year shall be identical with the calendar year.
2. Without prejudice to the provisions of article 25, clause 2, the Board of
Management shall, within four months after the close of each financial
year, submit to the Supervisory Board annual accounts consisting of a
balance sheet as at 31 December of the preceding year and a profit and loss
account in respect of the financial year then ended, with the explanatory
notes thereto.
3. With the approval of the Supervisory Board and the meeting of priority
shareholders, the Board of Management shall have the power to determine
what portion of the profit - the positive balance of the profit and loss
account - shall be retained by way of reserve. Not available for retention
in this way are amounts needed for (a) the formation of legally required
reserves and/or (b) distributions as referred to in clauses 1 to 3 of
article 37.
4. The Supervisory Board shall cause the annual accounts to be examined by a
registered accountant designated for that purpose by the Company in
compliance with the provisions of Section 393 of Book 2 of the Civil Code
and shall report to the General Meeting of Shareholders on the annual
accounts. If the General Meeting of Shareholders does not designate such a
registered accountant, the Supervisory Board, and in default thereof, the
Board of Management, shall have the power to do so. Such a designation may
be made for an indefinite period.
5. The Board of Management shall then have the annual report drawn up, as
provided in article 25. Sufficient copies of the annual report shall be
made available to the shareholders from the day on which the annual general
meeting of shareholders is convened until the close of that meeting.
<PAGE>
ARTICLE 36
Adoption by the General Meeting of Shareholders of the annual accounts, as
referred to in article 39 and without any express reservation made by the
General Meeting of Shareholders, shall have the effect of fully discharging the
Board of Management and the Supervisory Board from liability for the performance
of their respective duties in the financial year concerned.
ARTICLE 37
1. From the profit shown in the annual accounts adopted by the General Meeting
of Shareholders, the percentage mentioned below of the amount required to
be paid from time to time in the course of the financial year concerned on
the preference shares shall, as far as possible and in compliance with the
provisions of Section 105 (2) of Book 2 of the Civil Code, first be
distributed on those shares. The dividend on the preference shares shall
only be distributed for the number of days that such shares were actually
outstanding in the financial year concerned.
2. The percentage referred to in clause 1 shall be equal to the Average Main
Refinancing Rates during the financial year for which the distribution is
made, plus two percent (2%). Average Main Refinancing Rate shall be
understood to mean the average value on each individual day during the
financial year for which the distribution is made of the Main Refinancing
Rates prevailing on such day. Main Refinancing Rate shall be understood to
mean the rate of the Main Refinancing Operation as determined and published
from time to time by the European Central Bank.
3. If the profit for a financial year is declared and one or more preference
shares have been withdrawn or preference shares have been fully repaid in
that financial year, those persons who according to the register referred
to in article 7 were holders of preference shares at the time of the said
withdrawal or repayment shall have an inalienable right to a distribution
of profit as described below. The profit which, if possible, shall be
distributed to the said persons shall be equal to the amount of the
distribution to which they would have been entitled under the provisions of
clause 1 if they had still been holders of the aforementioned preference
shares at the time when the profit was declared, this being calculated on
the basis of the period for which they were holders of preference shares in
the said financial year, a part of a month being counted as a full month.
With regard to an alteration to the provisions of this clause, the proviso
referred to in Section 122 of Book 2 of the Civil Code is made.
4. From the profit that remains after the application of clause 3 of article
35 and clauses 1 to 3 inclusive of this article, an amount of 20 euros
(euros 20) shall first be distributed on every priority share. The profit
that remains thereafter shall be at the disposal of the General Meeting of
Shareholders, which is empowered to withhold distribution in whole or in
part or to make a distribution in whole or in part to holders of common
shares in proportion to their holdings of common shares.
<PAGE>
ARTICLE 38
1. Upon the proposal of the Board of Management, which proposal shall have
received the prior approval of the Supervisory Board and of the meeting of
priority shareholders, the General Meeting of Shareholders shall be
entitled to resolve to make distributions charged to the "other reserves"
shown in the annual accounts or charged to "share premium account".
2. Upon the proposal of the Board of Management, which proposal shall have
received the prior approval of the Supervisory Board and of the meeting of
priority shareholders, the General Meeting of Shareholders shall be
entitled to make distributions to shareholders under article 37, article
38, clause 1 and article 39 in the form of the issue of common shares.
ARTICLE 39
At its own discretion and having regard to the statutory provisions relating
thereto, the Board of Management, with the prior approval of the Supervisory
Board and of the meeting of priority shareholders, may distribute from the
profits for the current financial year one or more interim dividends on the
shares before the annual accounts for any financial year have been approved and
adopted at a general meeting.
ARTICLE 40
1. The Board of Management determines for various types of shares on what
dates and in what form distributions will be payable.
Notices relating to such distributions shall in the Netherlands be given in
at least one national daily newspaper, and abroad in at least one daily
newspaper appearing in each of those countries where, on the application of
the Company, the Company's shares have been admitted for official
quotation, and further in such manner as the Board of Management may deem
desirable.
The provisions of this article shall apply accordingly in the event of a
share issue with pre-emption subscription rights.
2. Cash distributions in respect of shares for which Type II share
certificates are outstanding shall, if such distributions are made payable
only outside the Netherlands, be paid in the currency of the country
concerned, converted at the rate of exchange on the Amsterdam Stock
Exchange at the close of business on a date to be fixed and announced by
the Board of Management.
This date may not be set earlier than the day before the date on which the
distribution is declared and not later than the date which has been fixed
for the shares concerned in accordance with the provisions of clause 3.
3. With regard to the provisions of article 6, clause 2 and of article 7, the
person entitled to any distribution on registered shares shall be the
person in whose name the share is registered - or, in the case of limited
rights in rem, the person whose right appears well-founded - at the date to
be determined for that purpose by the Board of Management in respect of the
distribution for each of the different types of shares.
4. A person entitled to a distribution on a bearer share for which a share
certificate is outstanding shall, in order to exercise his right to such
distribution, arrange for the dividend sheet
<PAGE>
appertaining to that share to be in the safekeeping of a depositary as
mentioned in article 6, clause 4, at such a time as shall be specified by
the Board of Management. In respect of distributions referred to herein,
the Company shall have discharged its liability to the persons entitled
thereto by making these distributions available to the depositary referred
to in article 6, clause 4 or to one or more third parties designated by the
latter and the Company, in favour of the persons in whose name the dividend
sheets were held by the depositaries at the aforementioned time.
5. Rights of payment of distributions in cash shall lapse if such
distributions are not claimed within five years following the day after the
date on which they were made available.
6. In the case of a distribution in shares, any shares not claimed within a
period to be determined by the Board of Management shall be sold for the
account of the persons entitled to the distribution who failed to claim the
shares. These persons are entitled only to the net proceeds in cash of such
a sale. This entitlement will be forfeited if the proceeds are not claimed
within five years following the day after the date on which the
distribution in shares was made payable.
7. In the case of a distribution in the form of shares on registered shares,
those shares shall be added to the share register. A Type II share
certificate for a nominal amount equal to the number of shares added to the
register shall be issued to holders of Type II shares, without prejudice to
the provisions of article 6, clause 4.
8. The Board of Management may, for reasons which it considers sufficient, and
subject to such conditions as it may consider necessary, rule that the
provisions of clause 1, second paragraph and clause 4 of this article shall
not apply.
AMENDMENT OF ARTICLES OF ASSOCIATION AND DISSOLUTION
ARTICLE 41
1. A resolution to amend the articles of association or to dissolve the
Company shall be valid only provided that:
a. the consent of the Supervisory Board and of the meeting of priority
shareholders has been or will be obtained;
b. the consent of the meeting of priority shareholders is given at a
meeting at which more than half the issued priority share capital is
represented and by at least three-fourth of the votes cast; if this
requirement is not complied with, a further meeting shall be held
within four weeks thereof, at which, irrespective of the priority
share capital represented, the resolution can be adopted by at least
three-fourth of the votes cast;
c. the full proposals have been deposited for inspection by shareholders
at the office of the Company and at a bank at Amsterdam specified in
the notice convening the general meeting of shareholders, as from the
day on which the said notice is served until the close of that
meeting;
<PAGE>
d. the resolution is adopted at a general meeting of shareholders at
which more than half of the issued share capital is represented and by
at least three-fourth of the votes cast; if the requisite share
capital is not represented at a meeting called for that purpose, a
further meeting shall be convened, to be held within four weeks of the
first meeting, at which, irrespective of the share capital
represented, the resolution can be adopted by at least three-fourth of
the votes cast.
2. Where a resolution as referred to in the preceding clause of this article
is submitted by the Board of Management, the General Meeting of
Shareholders may, notwithstanding the provisions of clause 1 d., resolve by
absolute majority of votes to amend the articles of association or to
dissolve the Company, without more than half of the issued capital having
to be represented.
ARTICLE 42
Should the Company be dissolved, the liquidation and apportionment shall be
effected by the Board of Management in compliance with the relevant provisions
of Book 2 of the Civil Code and, insofar as they are not inconsistent with the
latter, the articles of association. In adopting a resolution to dissolve the
Company, the General Meeting of Shareholders may approve the payment of a
remuneration to the liquidators.
ARTICLE 43
From the balance of the liquidation, a distribution shall first be made on every
preference share to the amount paid thereon, then on every priority share to the
nominal amount thereof, and the residue thereafter shall be distributed on the
common shares.
TRANSITIONAL PROVISIONS
ARTICLE 44
Rights attached to common shares outstanding upon this amendment of the articles
of association (August 1, 2000) may not be exercised so long as these common
shares have not been converted into common shares with a nominal value of twenty
euro cents (EUR 0.20) in accordance with this notarial deed, and, as far as
applicable, in compliance with the amendments of the articles of association of
May 6, 1994, May 29, 1999 and April 17, 2000. Upon conversion the shareholder is
entitled to the payment of dividends insofar as this right has not lapsed under
the provisions of article 40, clause 5 of these articles of association.
<PAGE>
CERTIFICATE OF ENGLISH TRANSLATION
Pursuant to Rule 306 of Regulation S-T, the registrant certifies that the
Articles of Association, as amended, dated as of August 1, 2000, which is
included as part of the Form 6-K, dated August 15, 2000, is a fair and accurate
English translation.
KONINKLIJKE PHILIPS ELECTRONICS N.V.
(Registrant)
By: /s/ Arie Westerlaken
-------------------------------------
Name: Arie Westerlaken
Title: General Secretary
Date: August 15, 2000
