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CORPORATE NEWS [latest news list] May 12, 2005
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Notice of Grant of Stock Options



The Company announced today that the May 12, 2005, meeting of the Board of Directors passed a resolution to submit a proposal to the 102nd Annual General Shareholders' Meeting to be held on June 29, 2005, regarding the granting of stock options subject to Articles 280-20 and 280-21 of the Commercial Code.


1. Reason for granting of stock options under particularly favorable conditions

Under the company's stock option compensation plan, these stock options are to be granted free of charge to company directors, operating officers, executives, and employees who are entitled to special arrangements intended to raise morale and serve as an incentive toward enhancing corporate value.

According to the nature of stock options offered under a stock option compensation plan, these stock options are granted free of charge, and the amount to be paid upon the exercise of such stock options is the market value of Daikin's common stock as calculated in 2. (5) below.

2. Detailed conditions for granting stock options

1) Stock option holders
The holders of these stock options are Daikin's directors, operating officers, executives, and employees who are entitled to special arrangements with the company.

2) Type and number of shares to be granted through stock options
A maximum of 160,000 shares of Daikin's common stock shall be granted through stock options.

3) Number of stock options to be granted
A total of 1,600 stock options shall be granted, with each option permitting the acquisition of 100 shares of applicable stock.

4) Price of the stock options
The stock options shall be granted free of charge.

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5) Amount to be paid upon exercise of a stock option
The amount to be paid upon the exercise of each stock option shall be calculated by multiplying the number of shares available from the exercising of each stock option by the value of one share of the applicable stock calculated according to the formula below.

The value of one share of the applicable stock shall be calculated by multiplying by 1.05 the average closing price of our common stock on the Tokyo Stock Exchange during the month prior to the month in which the relevant stock options are granted (excluding the day[s] on which no effective trades take place). Any fraction of one yen obtained by the above calculation shall be rounded up to the next whole number.

However, if such value is less than the closing price of our common stock on the day before the granting of the relevant stock option (or on the business day nearest to the day of granting of such option), the value for calculation shall be the closing price of our common stock on the day before the granting of the relevant stock option.

In the event of a split or consolidation of Daikin stock after the granting of the stock options, the amount to be paid upon exercise of the relevant stock option shall be adjusted according to the formula below. Any fraction of one yen resulting from such adjustment shall be rounded up to the next whole number.

Also, in cases where Daikin common stock is granted or its treasury stock is sold for an amount less than the market value (excluding the granting of stock through the exercise of a stock option or transfer of treasury stock to a parent company), the amount to be paid upon the exercise of the relevant stock option shall be adjusted according to the formula provided below. Any fraction of one yen resulting from such adjustment shall be rounded up to the next whole number.


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6) Period for exercise of stock options
July 1, 2007-June 30, 2011

7) Other conditions relevant to the exercise of stock options
 (1)Stock option holders may not exercise their stock options in the event of the following.
Where one year has passed since a stock option holder has lost his/her status as either a director, operating officer, executive, or employee of the company, or as either a director or an employee of any of its subsidiaries (including the day of such loss of status) during the period of exercise of stock options as specified in the above paragraph (6). However, if the period of exercise of stock options as specified in the above paragraph (6) expires within one year of the occurrence of such loss of status, the relevant stock option holder may no longer exercise his/her stock option on or after the expiration day of the exercise period. In addition, where a stock option holder has lost his/her status as either a director, operating officer, executive, or employee of the company, or as either a director or employee of any of its subsidiaries, prior to the beginning of the exercise period as specified in the above paragraph (6), such stock option holder, irrespective of the provisions of the above paragraph (6), may exercise his/her stock option only between July 1, 2007, and June 30, 2008.
(2)The board of directors may determine other conditions as necessary.


8) Cancellation of stock options
Where any of the events as specified in above paragraph (7) cause a stock option holder to lose the right to exercise all or part of his/her stock options, the company may cancel the stock options concerned. In this case, the company shall provide no compensation to that stock option holder.

9) Restriction of assignment of a stock option
Any assignment of a stock option shall be subject to the approval of the Board of Directors.



Note: The granting of stock options announced herein shall be subject to approval of the shareholders at the 102nd Ordinary General Shareholders' Meeting to be held on June 29, 2005.



  For more information, please contact
     Daikin Industries, Ltd.
 
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