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CORPORATE NEWS [latest news list] June 29, 2005
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Notice of Details of Granting of Stock Options



The Company today announced the details of the granting of stock options, subject to Articles 280-20 and 280-21 of the Commercial Code, as decided at the Board of Directors meeting held on June 29, 2005.

1. Type and number of shares to be made available through stock options

A total of 153,000 shares of Daikin's common stock shall be made available.

2. Total of stock options to be granted

A total of 1,530 stock options shall be granted, with each stock option granting the holder the right to acquire 100 shares of applicable common stock.

3. Stock option holders and allocation ratio

Number of stock options
470 stock options shall be made available to nine directors.
580 stock options shall be made available to 22 operating officers.
220 stock options shall be made available to nine executives.
260 stock options shall be made available to 13 employees who have special arrangements with the company.

4. Pricing of the stock options

The stock options shall be made available free of charge.

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5. Amount to be paid upon exercise of the stock options

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 a 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 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 exercise of the relevant stock options 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. Total amount of shares to be granted by exercising of stock options

Information not yet available

7. Day of granting of stock options

The stock options are scheduled to be granted on July 29, 2005.

8. Issuance of stock option certificates

Stock option certificates shall be issued upon the request of a stock option holder.

9. Amount of capitalized shares

The value of the shares granted by exercise of a stock option and incorporated into the company's capital shall be calculated by multiplying the number of granted shares by 0.5. Any fraction of one yen resulting from such calculation shall be rounded up to the next whole number.

10. Starting date for calculating dividends from shares granted through exercise of stock options

In calculating the amount of an initial or interim dividend from shares granted through exercise of a stock option, a stock option exercised between April 1 and September 30 shall be deemed to have been exercised on April 1, and a stock option exercised between October 1 and March 31 of the following year shall be deemed to have been exercised on October 1.

11. Period for exercise of stock options

July 1, 2007-June 30, 2011

12. Other conditions relevant to the exercise of stock options

(1) A stock option holder may not exercise his/her stock option in the event of any of the following.
 1)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 (11). However, provided that the period of exercise of stock options as specified in the above paragraph (11) 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 (11), such stock option holder, irrespective of the provisions of the above paragraph (11), may exercise his/her stock options only between July 1, 2007, and June 30, 2008.
2) Where any of the following events has occurred:
(a) The stock option holder is deceased.
(b) The stock option holder has wrongfully used or disclosed confidential company information.
(c) The stock option holder has been employed as an officer of another company without obtaining the Company's prior written approval.
3) Where allowing a stock option holder to exercise his/her stock option does not seem reasonable because Article 4-1-4 (Resignation Under Instruction) or Article 4-1-5 (Punitive Dismissal) of the company's Punitive Regulations has been applied, or has been deemed to have been applied by the company, to the stock option holder.
4) The stock option holder has been sentenced to imprisonment or a more severe punishment.
5) The company has filed a notice of waiver of all or part of his/her stock options.

(2) A stock option holder may not assign, donate, pledge, create any other kind of security interest with, or dispose of a stock option through any other method in favor of a third party.

(3) A stock option granted to a stock option holder is the personal property of that stock option holder; therefore, no stock option can be inherited or bequeathed.

(4) A stock option holder may exercise stock options on multiple occasions.

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13. Restriction of assignment of stock options

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

14. Share exchange with or share transfer to a parent company

In the event of a share exchange with or share transfer to a parent company that becomes the sole owner of Daikin, such parent company shall inherit all obligations concerning the Company's stock options.

The details and policies regarding the inheritance of stock options shall be as follows:
 (a) Type of stock of the parent company
The same type of stock of the parent company
(b) Number of shares of the parent company
The number of shares of the parent company shall be adjusted according to the stock exchange/transfer ratio. Any fractional number of shares resulting from such adjustment shall be rounded up to the next whole number.
(c)Amount to be paid upon exercise of a stock option
The amount to be paid upon exercise of a stock option shall be adjusted according to the share exchange/transfer ratio. Any fraction of one yen resulting from such adjustment shall be rounded up to the next whole number.
(d)Period of exercise of stock options, other conditions, and cancellation of stock options
The Board of Directors of Daikin shall determine the period of exercise of stock options, other conditions, and the cancellation of stock options as well as any other necessary matters during the share exchange or share transfer.
(e)Approval of assignment by the Board of Directors
Any assignment of a stock option shall be subject to the approval of the Board of Directors of the parent company.

15. Cancellation of stock options

(1) The company may choose to cancel a relevant stock option in the event of any of the following.
 1)The stock option holder loses the right to exercise all or part of his/her stock option because of the occurrence of any of the events specified in paragraph (12) above.
2)A parent company becomes the sole owner of Daikin through an exchange of shares and the relevant share exchange agreement does not stipulate the measures specified in paragraph 14 above.
3)A parent company becomes the sole owner of Daikin through a transfer of shares and the measures specified in paragraph 14 above are not proposed for discussion at the shareholders' meeting held to approve such share transfer.
(2) No compensation shall be provided to a stock option holder upon the cancellation of his/her stock options as a result of any of the above causes.



Reference
  • Date of the meeting of the Board of Directors at which the resolution was passed to submit a proposal to the Ordinary General Shareholders' Meeting to grant stock options: May 12, 2005
  • Date of the Ordinary General Shareholders' Meeting at which the resolution was passed to grant stock options: June 29, 2005



  For more information, please contact
     Daikin Industries, Ltd.
 
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