<DOCUMENT>
<TYPE>EX-4.2
<SEQUENCE>2
<FILENAME>y09496exv4w2.txt
<DESCRIPTION>EX-4.2: GLOBAL PHILIPS STOCK OPTION PROGRAM 2005
<TEXT>
<PAGE>
                                                                     Exhibit 4.2





                    GLOBAL PHILIPS STOCK OPTION PROGRAM 2005





                                     4.2-1
<PAGE>
        TERMS AND CONDITIONS OF GLOBAL PHILIPS STOCK OPTION PROGRAM 2005

                                   ARTICLE 1
                                  DEFINITIONS

      In this Global Philips Stock Option Program 2005 the following definitions
shall apply:

<TABLE>
<S>                 <C>    <C>
                    :      the price of a Share with dividend, if any, at the
Closing                    Price 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.

                    :      a custody account maintained in the name of an Option
Custody Account            Holder other than a Nominee Account.

                    :      the date at which the Options shall be deemed granted to
Date of Grant              the Option Holder under the 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 2005. The relevant Date of Grant with
                           respect to any grant hereunder shall be determined by
                           Philips.

                    :      any company within the Philips group of companies and
Employing                  Company such other company as Philips may from time to
                           time designate or approve.

                    :      the price to be paid by the Option Holder to acquire a
Grant Price                Share upon exercising an Option. Such price will be equal
                           to the Closing Price on the applicable Date of Grant.

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

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

                    :      a person holding any Options.
Option Holder

                    :      the term for which an Option is granted as specified in
Option Period              Article 3.

                    :      Koninklijke Philips Electronics N.V.
Philips

                    :      this Global Philips Stock Option Program 2005.
Program

                    :      a common share of Philips.
Share
</TABLE>


                                     4.2-2
<PAGE>
                                   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.

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

                                   ARTICLE 4
                           TERMINATION OF EMPLOYMENT

      1.    Except as 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 Company without the Option Holder being entitled to any
compensation or any obligation on the part of Philips or any of its subsidiaries
unless Philips determines, in its sole discretion, otherwise in writing. Any
such determination shall be final, conclusive and binding and may be subject to
such conditions as Philips may determine appropriate.

      2.    In case an Option Holder is no longer employed by any Employing
Company during the applicable Option Period as a result of the termination of
such Option Holder's employment with an Employing Company for reasons of (i)
disablement, (ii) retirement or (iii) the expiration of a temporary contract of
employment, provided such temporary contract of employment has not been extended
one or more times, any Options held by such Option Holder at the date of
termination shall


                                     4.2-3
<PAGE>
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 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
exerciseable 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.


                                     4.2-4
<PAGE>
                                   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, 6.4 and 6.5.

      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 Nominee Account
in connection with this Program. Nothing contained in this Program shall
obligate Philips to establish or maintain or cause to establish or maintain a
Nominee Account for any Option Holder.

      3.    Subject to the terms and conditions of this Program, 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 Nominee
Account except if an Option Holder (i) requests Philips to credit such Shares to
a Custody Account or (ii) does not maintain a Nominee Account at the date of
delivery of such Shares. In case (i) or (ii) as described in the foregoing
sentence applies, the Option Holder shall be responsible to notify Philips in
accordance with a procedure (including the period for notification) established
by Philips on the details relating to such Custody Account. In case Philips
determines in its sole discretion that the Option Holder has failed to notify
Philips in accordance with such procedure, then the Option Holder shall be
deemed to have requested Philips to sell or cause to sell such Shares.


                                     4.2-5
<PAGE>
      5.    Except as may be approved otherwise in writing by Philips in its
sole discretion, in case an Option Holder is no longer employed by any Employing
Company for any reason whatsoever, the Option Holder (or his or her legal
representatives) shall withdraw all Shares credited to the Option Holder's
Nominee Account within two (2) months of the date of such termination. In case
the Option Holder (or his or her legal representatives, as the case may be)
fails to comply with the foregoing obligation, then the Option Holder (or his or
her legal representatives) shall be deemed to have requested Philips to sell or
cause to sell such Shares.

      6.    Each Option Holder shall comply with any applicable "insider
trading" laws and regulations and the Philips' Rules of Conduct with respect to
Inside Information.

                                   ARTICLE 7

                                CAPITAL DILUTION

      Philips may make equitable adjustment or substitution of (a) the number or
kind of Shares subject to the Options, and/or (b) the Grant Price, as it, in its
sole discretion, deems equitable to reflect any significant corporate event of
or by Philips, for example a change in the outstanding Shares by reason of any
stock dividend or split, recapitalization, merger, consolidation, spin-off,
combination or exchange of shares or other corporate change, or any distribution
to holders of Shares other than regular cash dividends.

      The effect of the adjustment or substitution shall be to preserve both the
aggregate difference and the aggregate ratio between the Grant Price and the
fair market value of the Shares to be acquired upon exercise of the Options. The
Option Holder shall be notified promptly of such adjustment or substitution.

                                   ARTICLE 8

                                COSTS AND TAXES

      1.    All costs of delivering any Shares to the Option Holder's Nominee
Account upon exercise of any Options shall be borne by Philips. All costs of
delivering any Shares under this Program to 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).


                                     4.2-6
<PAGE>
      4.    Philips shall not be required to deliver any Shares and Philips may
delay (or cause to be delayed) the transfer of any Shares from a Nominee Account
to a Custody Account, until Philips has received an amount, or the Option Holder
has made such arrangements, required by Philips necessary to satisfy any
withholding of any Taxes and any costs to be borne by the Option Holder in
connection with this Program as determined by Philips.

                                   ARTICLE 9

                                CASH ALTERNATIVE

      Upon receipt of a notice, as referred to in Article 6.1 hereof to exercise
any Option, Philips may advise an Option Holder resident outside the Netherlands
to request in writing an amount in cash as an alternative to Shares. Upon such
request the Option Holder is entitled to receive an amount in Euros or in U.S.
Dollars, as indicated by the Option Holder, equal to the Closing Price on the
date of receipt of such request minus the Grant Price, multiplied by the number
of Options so being exercised. Further, any costs to be paid and any applicable
Taxes shall be deducted from the amount to be received by the Option Holder. If
on the date of receipt of the notice Shares have not been traded on Euronext
Amsterdam the Closing Price will be that of the first subsequent trading day on
Euronext Amsterdam. The same method is being used for calculating the cash
amount to which heirs and legatees of an Option Holder are entitled in
accordance with Article 4.3.

                                   ARTICLE 10

                               GENERAL PROVISIONS

      1.    Philips shall have the authority to interpret this Program, to
establish, amend, and rescind any rules and regulations relating to this
Program, to determine the terms and conditions of any agreements entered into
hereunder, and to make all other determinations necessary or advisable for the
administration of this Program. Philips may delegate the authority to practice
administrative and operational functions with respect to the Program to officers
or employees of subsidiaries of Philips and to service providers.

      2.    No Option Holder shall have any rights or privileges of shareholders
(including the right to receive dividends and to vote) with respect to Shares to
be delivered pursuant to the exercise of any Options until such Shares are
actually delivered to such Option Holder in accordance with Article 6 of this
Program. The Shares delivered shall carry the same rights as common shares of
Philips traded on Euronext Amsterdam or the New York Stock Exchange, as
applicable, on the day on which these Shares are delivered.

      3.    The (value of) Options granted to, or Shares acquired by, an Option
Holder pursuant to such Options under this Program shall not be considered as
compensation in determining an Option Holder's benefits under any benefit plan
of an Employing Company, including but not limited to, group life insurance,
long-term disability, family survivors, or any retirement, pension or savings
plan.

      4.    Nothing contained in this Program or in any grant made or agreement
entered into pursuant hereto shall confer upon any Option Holder any right to be
retained employed with any Employing Company, or to be entitled to any
remuneration or benefits not set forth in this Program or interfere with or
limit in any way with the right of any Employing Company or any of its
subsidiaries to terminate such Option Holder's employment or to discharge or
retire any Option Holder at any time.


                                     4.2-7
<PAGE>
      5.    If a provision of this Program is deemed illegal or invalid, the
illegality or invalidity shall not affect the remaining parts of this Program,
this Program shall be construed as if the illegal or invalid provisions had not
been included in this Program.

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

      7.    This Program shall be governed by and construed in accordance with
the laws of The Netherlands, without regard to its principles of conflict of
laws.

                                   - - - - -


                                     4.2-8
</TEXT>
</DOCUMENT>
