Exhibit 4.1
PLAN SPECIFICATIONS FOR KONINKLIJKE PHILIPS ELECTRONICS N.V.
NONQUALIFIED STOCK PURCHASE PLAN
--------------------------------------------------------------------------------
PLAN ITEM SPECIFICATIONS
--------------------------------------------------------------------------------
Plan Name Koninklijke Philips Electronics N.V.
Nonqualified Stock Purchase Plan
Effective Date August 1, 2000
DEFINITIONS
"Affiliate" Present or future subsidiary corporation of
the Company, where the Company owns
directly or indirectly at least 50% of the
subsidiary corporation.
"Board" Board of Management of the Company
"Closing Price" Last trade of Common Shares on the NYSE for a
Trading Date.
"Code" Internal Revenue Code of 1986, as amended.
"Committee" Committee of not less than 3, nor more than
5 members appointed by the Board or its
designee and responsible for administration
of the Plan.
"Common Shares" Common shares of Koninklijke Philips
Electronics N.V.
"Company" Koninklijke Philips Electronics N.V.
"Contribution Account" A participant's accumulated
payroll deductions in a Participation
Period.
"Disability" Participant leaves active employment of
Employer on account of a condition that
would be treated as a total and permanent
disability under Code section 22(e)(3).
"Earnings" Earnings include a Participant's cash
compensation received during the Participation
Period from salary and wages.
o Salary and wages include overtime pay,
bonuses (except as provided below),
holiday pay, vacation pay, and short-
term disability payments.
o Earnings include salary deferrals
pursuant to Code sections 125 and
401(k).
o Earnings exclude bonuses exceeding
100% of a participant's annual base
salary in effect at the time bonuses
are paid. Earnings also do not
include expense reimbursements,
deferred compensation, lump sum
severance payments, stock options,
money received for declining medical
or dental coverage, patent
<PAGE>
--------------------------------------------------------------------------------
PLAN ITEM SPECIFICATIONS
--------------------------------------------------------------------------------
and similar awards, distributions from
any long-term incentive plan,
perquisites, long-term disability
payments, payments made from an Accident
and Sickness program, or any long-term
key employee compensation program.
"Eligible Employee" Each U.S. based salaried or hourly Full-time
Employee other than an Excluded Employee who
is employed by an Employer. For purposes of
this Plan, the term "employee" includes only
persons treated as such on the Employer's
payroll and personnel records at the time such
determination is made. Persons treated by the
Employer as contingent workers (including
independent contractors, third-party payroll
workers, employees of consulting firms and
temporary help agencies, even if leased
employees within the meaning of Section
414(n)(2) of the Code) at the time of the
determination of the person's status are
specifically excluded. Eligibility status at
the time of a determination of a person's
employment status shall not be changed as a
result of the retroactive re-classification of
the person's employment status. Therefore,
notwithstanding anything else herein to the
contrary, any person treated as a contingent
worker on the payroll and personnel records of
the Employer at the time the determination is
made shall in no event be retroactively
eligible for participation in the plan during
the period covered by such determination.
"Employer" Employers may include the Company and each
subsidiary which adopts the Plan for the
benefit of its Eligible Employees with the
approval of the Board. As of August 1, 2000,
the following will be Employers:
o U.S. Philips Corporation
o Philips Holding USA Inc.
o Philips Electronics North America
Corporation
o Philips Semiconductors Inc.
"Excluded Employee" A Level 1, 2 or 3 executive of any Employer.
"Exercise Date" Last Trading Date of the applicable
Participation Period.
"Exercise Price" Lesser of:
o 85 percent of the Closing Price on the
first Trading Date of the applicable
Participation Period; or
o 85 percent of the Closing Price on the
Exercise Date of the applicable
Participation Period.
"Full-time Employee" Any employee scheduled to work at least 1,000
hours per calendar year.
"NYSE" New York Stock Exchange
-2-
<PAGE>
--------------------------------------------------------------------------------
PLAN ITEM SPECIFICATIONS
--------------------------------------------------------------------------------
"Participant" An Eligible Employee who has enrolled in
the Plan pursuant to procedures set out in
the Plan.
"Participation Period" Each three-month period beginning
each January 1, April 1, July 1 and October
1, with the exception of the first
Participation Period which will consist of
the two-month period beginning August 1,
2000.
"Retirement" Termination of employment on or after the
first day of the month in which Participant
commences a retirement benefit.
"Trading Date" Each date on which stocks in the United States
are traded on the NYSE.
"Share Purchase Right" Right to apply the cash
balance in each Eligible Employee's
Contribution Account to the purchase of
Common Shares in accordance with the terms
of the Plan.
PARTICIPATION
Eligibility Each Eligible Employee may become a
Participant on the first day of the month
following 30 days of full-time employment,
except that Eligible Employees covered by a
collective bargaining agreement (Union
Employees) will be eligible upon acceptance
of the plan offering by their respective
union leadership.
Enrollment Subject to the other terms and conditions
of the Plan, each Eligible Employee may
enroll as a Participant upon attaining
eligibility.
o As part of enrollment, each Eligible
Employee shall authorize payroll
deduction from Earnings.
o Enrollment and payroll deduction shall
remain in effect for subsequent
Participation Periods, unless changed by
the Eligible Employee or otherwise
limited under the terms of the Plan.
o Payroll deduction percent changes may be
made at any time during the
Participation Period. See TERMINATION OF
PARTICIPATION section below for further
information on a voluntary
discontinuance of deductions.
Re-hire A person who returns to active employment
with an Employer as an Eligible Employee
following termination of employment,
retirement or Disability may re-enroll in
the Plan on the first day of the month
following 30 days of full-time employment.
An Eligible Employee who has voluntarily
discontinued payroll deductions may
re-enroll in the Plan at any time.
TERMINATION OF PARTICIPATION
-3-
<PAGE>
--------------------------------------------------------------------------------
PLAN ITEM SPECIFICATIONS
--------------------------------------------------------------------------------
Voluntary Participants may discontinue payroll
Discontinuance deductions for a Participation Period by
requesting a change to zero payroll
deductions. Following such discontinuance, the
Participant may sell the Common Shares held in
the Contribution Account. Any balance in the
Participant's Contribution Account at the end
of the Participation Period shall be used to
purchase Common Shares on the Exercise Date
for the Participation Period in which the
voluntary discontinuance occurs. Following
such discontinuance, the Participant may sell
the Common Shares held in the Contribution
Account.
Employment Termination Except for Retirement, death, Disability or
layoff, a Participant who terminates
employment with the Company and its Affiliates
during a Participation Period will be deemed
to have discontinued Plan participation on the
first day of such Participation Period. Any
balance in the Participant's Contribution
Account at the time that the employment
termination is effective shall be refunded
without interest to the Participant by the
15th day of the month following the month of
termination.
Retirement Payroll deductions cease at Retirement. The
balance credited to the Participant's
Contribution Account shall be used to
purchase Common Shares on the Exercise Date
of the Participation Period in which
Retirement occurs.
Death If the Participant dies during the
Participation Period, the balance credited
to the Participant's Contribution Account
shall be used to purchase Common Shares on
the Exercise Date of the Participation
Period in which the Participant died. The
Common Shares shall be paid to the
Participant's estate within 30 days
following the Exercise Date.
Disability Payroll deductions cease at Disability. The
balance credited to the Participant's
Contribution Account shall be used to
purchase Common Shares on the Exercise Date
for the Participation Period in which
Disability occurs.
Unpaid Leave of Absence Payroll deductions cease
when the Participant begins an unpaid leave
of absence. The balance credited to the
Participant's Contribution Account shall be
used to purchase Common Shares on the
Exercise Date for the Participation Period
in which the unpaid leave of absence
begins.
-4-
<PAGE>
--------------------------------------------------------------------------------
PLAN ITEM SPECIFICATIONS
--------------------------------------------------------------------------------
Transfer to Payroll deductions cease when the Participant
Nonparticipating Affiliate transfers from an Employer to a
nonparticipating Affiliate. The balance
credited to the Participant's Contribution
Account at the time of such transfer shall be
used to purchase Common Shares on the Exercise
Date for the Participation Period in which the
transfer occurs.
Sale of Shares A participant may sell any shares in the Plan
at any time without restriction with the
following limitation on future participation:
If a Participant sells Common Shares, or
transfers Common Shares to an account outside
the Plan, within 12 months after the Exercise
Date on which the Common Shares were acquired
by the Contribution Account under this Plan,
the Participant shall be suspended from making
further payroll deductions for the subsequent
two full Participation Periods after the sale
or transfer is completed. Such suspension
shall not apply to a sale or transfer of
Common Shares purchased with dividends, which
may be sold or transferred at any time without
restrictions. To begin making payroll
deductions after the expiration of the
suspension period, the Participant must
re-enroll in accordance with procedures
established by the Committee.
AVAILABLE SHARES
Authorized Shares Initially, 1,000,000 Common Shares
shall be available for purchase under the
Plan. Such shares will be authorized and
issued Common Shares held in the Company's
treasury or acquired by the Company for the
purposes of the Plan.
If the total number of Common Shares to be
purchased on an Exercise Date exceeds the
maximum number of shares available for the
Participation Period, the balance credited
to the Participant's Contribution Account
shall be refunded without interest to the
Participant by the 30th of the month
following the end of the Participation
Period in which the shortfall occurs.
Changes in Capitalization Common Shares available under the Plan and the
Exercise Price may be adjusted by the Board to
reflect any increase or decrease in the number
of issued Common Shares resulting from any
subdivision or consolidation of shares, the
payment of any stock dividend, or other
increases or decreases in the number of
outstanding Common Shares effected without the
receipt of consideration. Adjustments shall be
made in the sole discretion of the Board,
whose decision shall be final and binding.
-5-
<PAGE>
--------------------------------------------------------------------------------
PLAN ITEM SPECIFICATIONS
--------------------------------------------------------------------------------
Dissolution, Merger, and Upon dissolution or liquidation of the Company
Consolidation or upon a merger or consolidation of the
Company or a subsidiary or division of the
Company in which the Company or the relevant
subsidiary or division is not the surviving
corporation, each Participant who holds Share
Purchase Rights under the Plan shall be
entitled to receive at the next Exercise Date
the same cash, securities, and/or property
which a holder of Common Shares was entitled
to upon and at the time of such transaction.
The Board shall take whatever action is deemed
reasonably necessary to assure that
Participants receive the benefits described
here.
PURCHASING SHARES
Accounts Payroll deductions authorized by the
Participant shall be credited to the
Participant's Contribution Account, without
interest. The Contribution Account will be
maintained by the Plan's outside
administrator. Amounts credited to the
Participant's Contribution Account as of an
Exercise Date shall be used to purchase Common
Shares for the Participant on the Exercise
Date at the Exercise Price. Any dividends will
be reinvested annually (after withholding of
applicable Dutch tax) into the Participant's
Contribution Account and the net amount (after
withholding tax) used to purchase additional
Common Shares at the prevailing market price.
Dividends are first declared in euros, but
will be paid to participants in U.S. dollars
converted at the rate of exchange on the
Amsterdam Stock Exchange at the close of
business on a date announced by the Company
(which is typically the day preceding the
Annual General Meeting of the Company's
Shareholders).
Contributions Any whole percentage between 1 percent and
10 percent of Earnings. No Eligible
Employee shall be permitted to contribute
more than a total of $20,000 to his
Contribution Account for all Participation
Periods during the calendar year. The
Committee will establish procedures for
making changes in the level of payroll
deductions.
Share Certificates As soon as reasonably practicable following
each Exercise Date, Common Shares purchased
under this Plan shall be credited to an
account in the Participant's name with the
Plan's outside administrator designated by the
Committee. Physical delivery of stock
certificates to the Participant is not
required, but is permitted upon payment of a
fee, which is subject to change.
-6-
<PAGE>
--------------------------------------------------------------------------------
PLAN ITEM SPECIFICATIONS
--------------------------------------------------------------------------------
AMENDMENT AND TERMINATION
Amendment The Company, the Board, or the Committee may
amend the Plan. However, no amendment may:
o Increase the aggregate number of Common
Shares which may be issued under the
Plan without approval from the Board; or
o Add new Employers without the approval
of the Board or delete participation by
an Employer without the approval of
either the Board or the affected
Employer.
Termination The Company, the Board, or the Committee may
suspend or terminate the Plan at any time. If
the Plan is suspended or terminated, the
Committee shall give notice to affected
Participants, terminate all payroll deduction
and, at its discretion, apply any balances
remaining in the Contribution Accounts to the
purchase of Common Shares or pay Participants
any balances (without interest) remaining in
their Contribution Accounts as soon as
practicable following the termination of the
Plan.
-7-
<PAGE>
--------------------------------------------------------------------------------
PLAN ITEM SPECIFICATIONS
--------------------------------------------------------------------------------
GENERAL PROVISIONS
Administration The Committee shall be responsible for the
administration of the Plan. The Committee
shall have full authority to administer the
Plan (except the power to designate an
Affiliate as an Employer) including
authority to:
o Establish rules and procedures for Plan
administration not inconsistent with the
terms of the Plan document;
o Interpret terms and provisions of the
Plan;
o Determine all questions arising under
the Plan, including correction of any
defect, omission or inconsistency of the
Plan;
o Amend or terminate the Plan, including
amending the Plan to reflect changes in
applicable law; and
o Delegate administrative responsibilities
under the Plan, including the
responsibility to keep records of
individual benefits, but not its power
to amend or terminate the Plan.
Rights not Transferable Participants may not transfer Share Purchase
Rights granted under the Plan, except by will
or by the laws of descent and distribution. No
Share Purchase Right shall be subject to
execution, attachment, or similar process. Any
attempt to assign, transfer, attach, or
otherwise dispose of any Share Purchase Right
shall be null and void and may be treated, at
the discretion of the committee, as notice of
Voluntary Discontinuance. Share Purchase
Rights may be exercised only by the
Participant or by the Participant's legal
representative during the Participant's
lifetime.
Shareholder Rights Participants do not have any rights
of shareholders with respect to Common
Shares issuable pursuant to the Share
Purchase Rights granted under the Plan
until a certificate is issued to the
Participant or the transfer agent for the
Common Shares reflects the Participant's
ownership in its ledger or other
appropriate record of stock ownership.
No Contract of Nothing in the Plan shall be deemed to give
Employment any Eligible Employee the right to be retained
in the service of the Company or any Employer,
or to interfere in any way with the right of
the Company or any Employer or to discharge or
retire any Eligible Employee at any time.
Tax Withholding Taxable income attributable to
the discount and appreciation will be
subject to income tax, FICA and other
applicable withholding and such amounts
will be deducted from the Participant's
next available paycheck following the
purchase of Common Shares. Alternative
withholding arrangements may be made in
unusual circumstances.
Application of Funds Proceeds received by the Company from the sale
of Common Shares will be available and used
for general corporate purposes.
-8-
<PAGE>
--------------------------------------------------------------------------------
PLAN ITEM SPECIFICATIONS
--------------------------------------------------------------------------------
Applicable Law The obligation to sell and deliver Common
Shares shall be subject to all applicable
laws, regulations, rules and approvals,
including, but not limited to, effectiveness
of a registration statement under the
Securities Act of 1933, if deemed necessary or
appropriate by the Company. Certificates of
Common Shares issued hereunder may be
legended, as the Company deems appropriate.
Questions relating to the validity,
construction, and administration of the
Plan shall be determined under the laws of
the State of New York.
Severability If a provision of the Plan is deemed
illegal or invalid, the illegality or
invalidity shall not affect the remaining
parts of the Plan. The Plan shall be
construed and enforced as if the illegal or
invalid provision had not been included in
the Plan.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
-9-
