DIONEX CORP /DE
EXHIBIT 10.12
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<TYPE>EX-10.12
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<DESCRIPTION>EXHIBIT 10.12
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<P align="right" style="font-size: 10pt"><B>Exhibit&nbsp;10.12</B>



<P align="center" style="font-size: 10pt"><B>THIS DOCUMENT CONSTITUTES PART OF THE PROSPECTUS COVERING THESE SECURITIES,<BR>
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.</B>



<P align="center" style="font-size: 10pt"><B>The date of this document is June&nbsp;30, 2003</B>



<P align="center" style="font-size: 10pt"><B>DIONEX CORPORATION</B>



<P align="center" style="font-size: 10pt"><B>STOCK OPTION PLAN</B>



<P align="left" style="font-size: 10pt"><B>To Our Optionees:</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are pleased with this opportunity to provide you with information regarding
our Stock Option Plan, referred to in these materials as the &#147;Option Plan.&#148; We
believe the Option Plan is an important part of the benefits provided to our
employees and consultants. Please take the time to carefully review this
information.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dionex Corporation (the &#147;Company&#148;) adopted the Option Plan in order to provide
you with an opportunity to share in the Company&#146;s growth. The Company believes
the Option Plan assists it in hiring qualified employees and consultants and in
building a satisfying long-term relationship with existing employees and
consultants through recognition of their contribution to the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have divided our discussion of the Option Plan into three parts. The first
part of this document describes the terms of the Option Plan, which provides
for the grant of what are called incentive stock options (tax-advantaged
options) and nonqualified stock options (options that do not have special tax
advantages). The second and third parts of this document describe the tax
consequences relating to your participation in the Option Plan.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following information is intended to be a summary. It may not answer all
the questions you have about the Option Plan or your option and is not intended
to go into every detail of the Option Plan or your option. In addition, please
be aware that the terms of options are not required to be the same for every
optionee. Please be sure to carefully review your option grant to be sure that
you understand its specific terms and conditions. A copy of the Option Plan or
your option(s) can be obtained from the Controller, at the Company&#146;s principal
offices at 501 Mercury Drive, Sunnyvale, California 94088, telephone (408)
737-0700, ext. 1406. The Chief Financial Officer and the Controller are also
available to answer further questions you may have.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you wish to exercise an option you will need to complete the option exercise
form provided with your option grant. You may always obtain extra copies of
the option exercise form from Investor Relations, Dionex Corporation, 501
Mercury Drive, Sunnyvale, California 94088, telephone (408)&nbsp;737-0700, ext.
1405.


<P align="center" style="font-size: 10pt">1.
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<P align="center" style="font-size: 10pt"><B>Information About Dionex Corporation</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An important part of your participation in the Option Plan is understanding the
Company, its products, operations and financial condition. Like any
stockholder of the Company, you can keep
yourself informed about the Company by reviewing reports and other documents
that the Company prepares for stockholders and the general public. If you
become a stockholder of the Company, you will be entitled to attend stockholder
meetings and to vote in the election of directors and other matters brought
before the stockholders.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you have not already received a copy of the Company&#146;s most recent annual
report containing audited financial statements, a copy of the annual report
should be delivered to you with these materials. Additional copies are
available from Investor Relations, Dionex Corporation, 501 Mercury Drive,
Sunnyvale, California 94088, telephone (408)&nbsp;737-0700, ext. 1405.
Alternatively, the Company&#146;s most annual report on Form 10-K is available
through the Company&#146;s filings with the Securities and Exchange Commission (the
&#147;Commission&#148;) located at the following web site: www.sec.gov.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The federal securities laws require the Company to provide information about
its business and financial status in annual reports, commonly known as &#147;10-Ks&#148;
and quarterly reports, commonly known as &#147;10-Qs.&#148; These reports are filed with
the Securities and Exchange Commission. In addition, it certain important
corporate events occur during the year, the Company may file reports commonly
known as &#147;8-Ks.&#148; The Company also prepares and files with the Commission a
proxy statement in connection with its annual meeting of stockholders. The
proxy statement provides further information about the Company and its
officers, directors and major stockholders. From time to time the Company may
also file other documents with the Securities and Exchange Commission. as
required by Sections&nbsp;13(a), 13(c), 14 and 15(d) of the Securities Exchange Act
of 1934 (the &#147;Exchange Act&#148;).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All of these documents constitute part of the information required by
securities laws to be provided or made available to you in connection with your
purchase of stock under the Option Plan; that is, these documents are
incorporated by reference into these materials, which constitute the prospectus
for the Option Plan.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For a copy of these documents, all of which are available without charge and
upon written or oral request, please contact Investor Relations, Dionex
Corporation, 501 Mercury Drive, Sunnyvale, California 94088, telephone (408)
737-0700, ext. 1405.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you are already a stockholder of the Company, you should receive copies of
the Company&#146;s proxy statement, reports to stockholders and other stockholder
communications. You may always request copies of this information, which can
be obtained without charge from Investor Relations.


<P align="center" style="font-size: 10pt">2.
</DIV>

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<P align="center" style="font-size: 10pt"><B>Questions Index</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" colspan="3"><B>Question</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Page</B></TD>
</TR>

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<TR valign="bottom" style="background: #eeeeee">
    <TD colspan="3" valign="top" align="left">Part I Terms of the Option Plan</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Who determines whether I receive an option and the terms of my option? How many shares of common stock will my option cover?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Will my stock option be an incentive stock option or a nonstatutory stock option? What is the difference?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">3.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">How is the exercise price of an option determined?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">When can I exercise my option?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">5.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">How do I exercise my option?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">6.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">How do I pay the exercise price?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">7.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">I have heard about cashless exercise programs through brokers. How do these work?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">8.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Will I continue to receive options as long as I stay with the Company?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">9.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Can the terms of the Option Plan be changed and, if so, do those changes affect options I received before the changes?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">What happens if I leave the Company or go on a leave of absence?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">11.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">What if I leave the Company because of disability?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">5</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">12.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">What are the rights of my heirs upon my death?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">5</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">13.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Can a relative or friend exercise my option?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">5</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">14.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Can I sell the stock I receive from exercising my option right away?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">5</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">15.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">If I am aware of important non-public information, can I sell my stock before this news is disclosed to the public? For example, if I know the Company is
having significant problems in developing an important product that previously was announced or that the Company is about to acquire a competitor, can I sell
my stock before the Company puts out a press release?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">6</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">16.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Do I have to pay a commission when I exercise my option or when I sell the stock?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">6</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">17.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">How can I make a gift of the stock I receive upon exercising an option?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">6</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">18.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Does the Company pay dividends on its Common Stock?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">7</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">19.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Does the Option Plan have any of the same benefits as a qualified retirement plan (including a 401(k) plan) and will my participation in the Option Plan
affect my participation in the Company&#146;s 401(k) plan?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">7</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">20.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Do special rules apply to me if I am an officer or director of the Company?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">7</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">Part II Tax Issues Relating to Your Participation in the Option Plan</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">8</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">21.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Do I have to pay tax when I receive a nonstatutory stock option or exercise the nonstatutory stock option?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">9</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

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<P align="center" style="font-size: 10pt">i.
</DIV>

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<P align="center" style="font-size: 10pt"><B>Questions Index</B><BR>(CONTINUED)




<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" colspan="3"><B>Question</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Page</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">22.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Will the Company withhold the amount of taxes due on exercise of a nonstatutory stock option?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">9</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">23.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">How much tax do I pay when I sell stock received pursuant to the exercise of a nonstatutory stock option?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">9</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">24.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">What is the difference between ordinary income and capital gains and losses for federal tax purposes?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">9</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">25.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Do I have to pay tax when I receive or exercise an incentive stock option?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">26.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">How is my profit taxed when I do dispose of the stock received on exercise of an incentive stock option? What if I lose money?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">27.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Is there any withholding on the exercise of my incentive stock option or the sale of the stock acquired on exercise?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">11</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">28.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Do I have to notify the Company after I sell my stock?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">11</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">29.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">What are the tax consequences if I use shares I already own to pay the exercise price of a nonstatutory stock option?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">11</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">30.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">What are the tax consequences if I use shares I already own to pay the exercise price of an incentive stock option?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">12</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">31.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">What are the tax consequences of my exercise of options if I am subject to the alternative minimum tax?
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">12</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">Part III Examples</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">13</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

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</DIV>



<P align="center" style="font-size: 10pt">ii.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="center" style="font-size: 10pt"><B>Part I</B>



<P align="center" style="font-size: 10pt"><B>Terms of the Option Plan</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Part&nbsp;I of this document provides general information about the Option Plan.
Parts II and III of this document describe the various tax consequences to you
of your participation in the Option Plan.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table should help you locate particular questions you may have
with regard to participation in the Option Plan.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="80%">
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    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="19%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Relevant Questions and</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Type of Information</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Answers</B><HR size="1" noshade></TD>
</TR>

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<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">For information regarding participation in the
Option Plan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">8, 9, 19</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">For information regarding the terms of options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">1, 2, 3</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">For information regarding the exercise of options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">4, 5, 6, 7, 12, 13</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">For information regarding the disposition (e.g.
sale) of stock received upon exercise of options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">14, 15, 16, 17, 20</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">For information regarding the status of options
if your employment is terminated or you take a
leave of absence</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">10, 11, 12</TD>
</TR>

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</TABLE>
</DIV>



<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>1.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Who determines whether I receive an option and the terms of my option? How
many shares of common stock will my option cover?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The decision to grant an option to any particular individual is made by
the Board of Directors of the Company (the &#147;Board&#148;). The Board may delegate
administration of the Option Plan to a committee (the &#147;Compensation
Committee&#148;). The Compensation Committee is composed of at least two
non-employee members of the Board. The Option Plan currently provides for the
grant of options to employees and consultants covering an aggregate of
7,650,000 shares of the Company&#146;s common stock. When the Board or Compensation
Committee grants an option, it has the discretion to determine the terms of the
option, including the number of shares the option will cover. There are
certain tax restrictions on the number of incentive stock options that can be
granted. In addition, no person is eligible to receive options in any 12-month
period covering more than 400,000 shares of the Company&#146;s common stock.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board or Compensation Committee also administers the Option Plan and has
the power to interpret the Plan. Information about the current members of the
Board is provided in the Company&#146;s proxy statement for its last annual meeting.
You may obtain additional information about the administration of the Option
Plan by calling the Company&#146;s Controller at (408)&nbsp;737-0700, ext. 1406, or the
Chief Financial Officer at (408)&nbsp;737-0700, ext. 1407.


<P align="center" style="font-size: 10pt">1.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If administration of the Option Plan has been delegated to a Compensation
Committee, the Board retains the right to revert authority to construe and
interpret the Option Plan back to itself. References to the Board in this
document should be
construed as references to the Compensation Committee, as applicable.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>2.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Will my stock option be an incentive stock option or a nonstatutory stock
option? What is the difference?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At the time the Board grants you an option, the Board will determine
whether the option is an incentive stock option or a nonstatutory stock option.
This determination generally is based on the Board&#146;s understanding of the
relative tax benefits to you and the Company in granting incentive stock
options versus nonstatutory stock options. In general, potentially favorable
tax treatment is provided to the holders of stock options that qualify as
<I>incentive </I>stock options under the Internal Revenue code.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon the exercise of an <I>incentive </I>stock option, an optionee is typically not
subject to tax except for the possible imposition of alternative minimum tax.
(See Question 25.) Upon the exercise of a <I>nonstatutory </I>stock option, however,
an optionee generally is taxed based on the difference between the exercise
price of the option and the fair market value of the stock on the date of
exercise. (See Question 21.) This deferral of the recognition of tax until
the time of sale of the stock, as well as the possible treatment of the
&#147;spread&#148; as capital gain, are the principal advantages of <I>incentive </I>stock
options. However, <I>incentive </I>stock options have certain limitations on their
exercise price, terms, transferability and duration.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the tax regulations restrict the Board&#146;s ability to grant
<I>incentive </I>stock options under certain circumstances. For example, if the
aggregate value of the shares under all <I>incentive </I>stock options held by you
that were granted after 1986 and that become exercisable for the first time
during any calendar year is greater than $100,000, then that number of those
shares with a value over $100,000 will be treated as <I>nonstatutory </I>stock
options.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The rules governing the tax effects of <I>incentive </I>stock options and <I>nonstatutory</I>
stock options are complex and you should carefully read the tax information
provided below in this prospectus.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>3.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>How is the exercise price of an option determined?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Internal Revenue Code requires that the exercise price of an <I>incentive</I>
stock option be at least 100% of the fair market value of the Company&#146;s common
stock on the date the option is granted. The Board typically will determine
the fair market value by reference to prices of the Company&#146;s common stock as
quoted by NASDAQ at the time of grant. We will refer to this price as the
&#147;market price.&#148; Special rules apply to the exercise price of incentive stock
options granted to anyone who owns 10% or more of the voting power of the
Company or its affiliates. You should speak with Investor Relations if you
believe these rules might apply to you.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Option Plan provides that the Board may set the exercise price for a
<I>nonstatutory </I>stock option at any price not less than 85% of the fair market
value of the Company&#146;s common stock at the time of grant.


<P align="center" style="font-size: 10pt">2.
</DIV>

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<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>4.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>When can I exercise my option?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;When the Board grants an option, the Board also determines certain terms of the
option, including the date or dates after which the option may be exercised.
Currently it is the general policy of the Board to grant options subject to
four-year vesting. This means that 25% of your option will vest on each
anniversary of the date of grant of your option until the option is completely
vested. Although you can exercise your option at any time once a portion of
the option has vested, you may exercise your option only for the number of
shares that have actually vested at the time of exercise. In addition, the
Board has the authority to accelerate the vesting schedule of any outstanding
option under the Option Plan. Options granted by the Board generally have a
term of ten years, so you must exercise your option before it expires at the
end of the ten-year period. For example, if your option was granted on January
15, 2003, it will expire on January&nbsp;14, 2013.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>5.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>How do I exercise my option?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You exercise your option by completing an option exercise form and delivering
the form, together with payment of the exercise price (see Question 6 below) to
Investor Relations, Dionex Corporation, 501 Mercury Drive, Sunnyvale,
California 94088, telephone (408)&nbsp;737-0700, ext. 1405. You should receive a
copy of the option exercise form with your option grant. You can obtain
additional copies of the form from Investor Relations.


<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>6.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>How do I pay the exercise price?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Generally, you pay the exercise price with cash unless the Board
determines, at the time it grants an option, that the exercise price may be
paid either (a)&nbsp;by delivery to the Company of other common stock of the Company
with a value equal to the aggregate option exercise price, or (b)&nbsp;in any other
form of legal consideration that may be acceptable to the Board.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You may be able to do a broker-assisted exercise. See Question 7 below.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>7.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>I have heard about cashless exercise programs through brokers. How do
these work?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cashless exercise programs involve the delivery to a broker of a copy of your
signed and completed option exercise form and your irrevocable instructions to
the Company to deliver stock to be received upon exercise of the option to the
broker rather than to you. You can obtain an instruction form for your broker
from Investor Relations. The broker can then deliver cash to the Company in
payment of the exercise price, and, in some cases, withholding taxes. The
Company then delivers the stock certificate to the broker. After the stock is
delivered to the broker, the stock can be maintained as margin stock in an
account designated by you or sold pursuant to your instructions. However, the
Company will not participate in any such program that causes stock certificates
to be delivered to the broker before payment for the exercise price or an
irrevocable guarantee of payment from the sales proceeds has been provided to
the
Company. You should contact Investor Relations to determine if such a program
is available.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you are a director or executive officer of the Company, see Question 20.


<P align="center" style="font-size: 10pt">3.
</DIV>

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<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>8.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Will I continue to receive options as long as I stay with the Company?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Whether or not you receive stock options will depend on many factors, such as
your performance, the Company&#146;s overall performance, the Board&#146;s then current
policy and the number of shares remaining in the Option Plan. Furthermore, the
Board has the authority to stop granting options and to terminate the Option
Plan at any time. The Option Plan, by its terms, and therefore the Board&#146;s
authority to grant options under the Option Plan, terminate on July&nbsp;27, 2009
unless the Board determines to terminate the Option Plan earlier. Any
termination of the Plan would not affect your rights under your outstanding
options without your consent, and your options would continue in full force and
effect until they expire in accordance with the terms of the options. You
should note that your receipt of options under the Option Plan does not alter
the Company&#146;s right to terminate your employment or engagement as a consultant
at any time and for any reason, with or without cause.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>9.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Can the terms of the Option Plan be changed and, if so, do those changes
affect options I received before the changes?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Generally, the Board decides whether to change the terms of the Option Plan.
Usually the Option Plan is amended to increase the number of shares available
under the Plan or to take into account changes in the tax or securities laws.
These changes may be presented to the stockholders of the Company for approval
at the Company&#146;s annual meeting if tax, securities or other laws require
stockholder approval of the changes.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any changes to the Option Plan would not affect your rights under your
outstanding options without your consent. If certain changes occur to the
Company&#146;s capitalization, e.g., a stock split or reverse stock split of its
common stock, the Board will appropriately adjust the exercise price and number
of shares subject to your options. In the event of (a)&nbsp;a dissolution,
liquidation or sale of substantially all of the assets of the Company, (b)&nbsp;a
merger or consolidation in which the Company is not the surviving corporation,
or (c)&nbsp;a reverse merger in which the Company is the surviving corporation but
the shares of the Company&#146;s common stock outstanding immediately prior to the
merger are converted by virtue of the merger into other property, then (i)&nbsp;any
surviving corporation shall assume any options outstanding under the Option
Plan or shall substitute similar options for those outstanding under the Option
Plan, or (ii)&nbsp;such options shall continue in full force and effect. If any
surviving corporation refuses to assume or continue such options, or to
substitute similar options for those outstanding under the Option Plan, then,
with respect to options held by persons then performing services as employees
or as consultants for the Company, the time during which such options may be
exercised shall be accelerated such that the options are immediately
exercisable in full and will terminate if not exercised prior to such event.


<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>10.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>What happens if I leave the Company or go on a leave of absence?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Whether you leave the Company voluntarily or your employment or engagement as a
consultant is terminated by the Company for any reason, your right to exercise
any vested portion of your option generally will terminate 30&nbsp;days after your
last day of employment or consulting with the Company. However, the terms of
your option may provide that it will


<P align="center" style="font-size: 10pt">4.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">terminate sooner than 30&nbsp;days after
termination of employment or your engagement as a consultant or that it may be
exercised more than 30&nbsp;days after such termination. (If the option is an
<I>incentive </I>stock option, it generally must be exercised within three months of
the date of termination or else it will become a <I>nonstatutory </I>stock option.)



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Usually, you will not be able to exercise any <I>unvested </I>portion of your option
once you have left the Company or terminated your engagement as a consultant.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you take a leave of absence, the Board has the unilateral right to determine
whether such leave of absence will be treated as a termination of your
employment or consulting relationship with the Company. Alternatively, the
Board may determine to suspend or otherwise delay the time or times at which
shares subject to your option vest during your leave.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>11.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>What if I leave the Company because of disability?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Your option may, but need not, provide that it can be exercised at any time
within one year of termination of employment or engagement as a consultant due
to a permanent and total disability. Because disability, for these purposes,
has a specific meaning found in the Internal Revenue Code, you should ask the
Controller or Chief Financial Officer of the Company if you have any questions
regarding what constitutes permanent and total disability.


<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>12.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>What are the rights of my heirs upon my death?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Your estate or persons having rights to your option by will or by the laws of
descent and distribution have the right to exercise your option as to any
<I>vested </I>portion if you were still employed by the Company or engaged as a
consultant at the time of death, or if so provided in your option, you died
within a specified period after your employment or engagement as a consultant
was terminated for any reason. Your option will specify the date by which the
option must be exercised. The option may, but need not, provide that it may be
exercised within eighteen months after your death.


<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>13.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Can a relative or friend exercise my option?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An option may only be exercised by the holder of the option. An incentive
stock option may not be transferred, and thus may only be exercised by you,
during your lifetime. In the case of a nonstatutory stock option, unless it
specifically provides for further transferability, it may be transferred during
your lifetime only pursuant to a qualified domestic relations order
(generally issued by a state court pursuant to a dissolution of marriage). You
can provide for the transfer of an incentive or nonstatutory option upon your
death, either (i)&nbsp;in your will, or (ii)&nbsp;by submitting a beneficiary designation
on a form approved by the Company to become effective upon your death. Under
certain circumstances, your spouse may have community property rights in the
option.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>14.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Can I sell the stock I receive from exercising my option right away?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Generally, yes. The stock you receive upon exercise of your option is freely
tradable in most cases. If you exercise an incentive stock option, an
immediate sale may have certain tax


<P align="center" style="font-size: 10pt">5.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">consequences, see Question 26. (See
Question 20 if you are an officer or director of the Company.)



<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>15.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>If I am aware of important non-public information, can I sell my stock
before this news is disclosed to the public? For example, if I know the
Company is having significant problems in developing an important product
that previously was announced or that the Company is about to acquire a
competitor, can I sell my stock before the Company puts out a press
release?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No.&nbsp;If you are aware of important inside information, you may not sell shares
of the Company&#146;s stock, whether received upon exercise of an option or
otherwise, before dissemination of the information to the public. Basically,
&#147;inside information&#148; is information that is both very important (material)&nbsp;and
nonpublic (not disclosed through press releases, newspaper articles or
otherwise to the public that buys and sells securities). Whether information
is material will depend on the specific circumstances. A general test is
whether dissemination of the information to the public would be likely to
affect the market price of the Company&#146;s stock or would be likely to be
considered important by people who are considering whether to buy or sell the
Company&#146;s stock. Certainly if the information makes you want to buy or sell,
it would probably have the same effect on others. Material information may
include projections, estimates or proposals.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you are contemplating selling your stock and think you might have &#147;inside
information&#148; you should discuss your possible sale with the Chief Financial
Officer of the Company. If, after this discussion, it is determined that the
information is in fact inside information, you must wait to sell your stock
until after the information has been made public.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>16.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Do I have to pay a commission when I exercise my option or when I sell the
stock?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You pay no commission on exercise of options. Generally, to sell your stock,
you must take the stock certificate to a stock broker who can arrange for its
sale. You can expect to be charged a fee or commission if you use a stock
broker. The Company will not buy from you or sell on your behalf, or assist
you in selling, stock that you have purchased under the Option Plan. Officers
and directors are subject to restrictions on the sale of their stock. See
Question 20 below.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>17.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>How can I make a gift of the stock I receive upon exercising an option?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You may make a gift of stock by delivering the stock certificate, with the
transfer block on the back filled in and signed with the signature guaranteed
by a bank or stock broker (or by delivering the stock certificate together with
an &#147;assignment separate from certificate&#148; filled in, signed and the signature
similarly guaranteed) to the recipient of the gift. The recipient may then
send the certificate and associated paperwork to the Company&#146;s transfer agent,
EquiServe Trust Company, N.A., 150 Royall Street, Canton, Massachusetts 02021,
to have the certificate transferred to the recipient&#146;s name. If you have a
brokerage account, your broker will generally


<P align="center" style="font-size: 10pt">6.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">be willing to take care of the
mechanics of transfer. Please note that a gift of stock acquired upon exercise
of an incentive stock option may result in a &#147;disqualifying disposition,&#148; for
tax purposes. See Question 26.



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>18.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Does the Company pay dividends on its Common Stock?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company currently is not paying dividends on its Common Stock and presently
intends to continue this policy in order to retain earnings for use in its
business.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>19.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Does the Option Plan have any of the same benefits as a qualified retirement
plan (including a </B><B>401(k)</B><B> plan) and will my participation in the Option
Plan affect my participation in the Company&#146;s </B><B>401(k)</B><B> plan?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Option Plan is not a qualified retirement plan and therefore does not have
the same tax deferral benefits, nor is the Option Plan subject to any
provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
Your participation in the Option Plan does not affect your ability to
participate in the Company&#146;s 401(k) plan.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>20.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Do special rules apply to me if I am an officer or director of the Company?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Yes. If you are an officer or director of the Company you should be aware of
securities laws that apply to grants of options to you and to your transactions
in stock received upon the exercise of options. In addition, you must comply
with the Company&#146;s policy permitting officers and directors to sell shares only
during certain &#147;window&#148; periods. Furthermore, you are expected to check with
the Chief Financial Officer of the Company before selling any shares. Your
sale also must be made in accordance with the applicable requirements of Rule
144 issued under the Securities Act of 1933 (<I>i.e</I>., selling through a broker,
possibly filing Form&nbsp;144 with the Securities and Exchange Commission, and not
selling more shares than is permitted under the Rule).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;One of the laws that will apply to you as a director, and may apply to you if
you are an officer, are the short swing trading rules under Section&nbsp;16 of the
Exchange Act. If you are an officer, the Company will have told you whether
you are subject to Section&nbsp;16. If you are subject to Section&nbsp;16 and need a
reminder about how Section&nbsp;16 operates, you should review the Memorandum to
Officers and Directors, which you should have received, or ask the Controller
of the Company for another copy of the Memorandum.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, when you are granted an option under the Option Plan, you are
deemed to have made a &#147;purchase&#148; on the grant date of the stock covered by the
option. However, this &#147;purchase&#148; is exempt from the application of Section&nbsp;16
short-swing trading liability if the option was granted by the full Board or by
a committee composed of at least two non-employee directors. Generally, the
exercise of an option is not deemed to be the purchase of the stock. However,
the sale of stock you receive upon exercise of an option is a &#147;sale&#148; for
Section&nbsp;16 purposes. If your sale of the stock acquired under the option occurs
within six months before or after any non-exempt purchase of Company stock by
you, then your sale could be matched with your non-exempt purchase. If your
sale of stock is subject to the short-swing trading rules of


<P align="center" style="font-size: 10pt">7.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">Section&nbsp;16, your
profit (as determined under those rules) may have to be turned over to the
Company.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Officers and directors should ensure that their broker-assisted exercises (see
Question 7) are properly structured with respect to timely settlement of such
exercises to avoid any violation of the prohibition against short sales found
in Section 16(c) of the Exchange Act and the prohibition on executive loans
under Section&nbsp;402 of the Sarbanes-Oxley Act of 2002.


<P align="center" style="font-size: 10pt"><B>Part II</B>



<P align="center" style="font-size: 10pt"><B>(Only Applicable For U.S. Employees)<BR>
Tax Issues Relating to Your Participation in the Option Plan</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information in this Part&nbsp;II and the examples in Part&nbsp;III respond to
questions you may have about the federal tax consequences of participating in
the Option Plan. You should understand, however, that this tax information is
not complete. For example, it does not address state or local tax laws or the
application of laws if you are subject to tax laws in other countries.
Furthermore, because tax laws and regulations may change, and interpretations
of these laws and regulations can change the way the laws and regulations apply
to you, this information may need to be updated after the issuance of this
prospectus. Therefore, you should consult with a tax advisor if you have
questions relating to the tax consequences of participation in, and the sale of
shares received under, the Option Plan.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table should help you locate particular questions you may have
with regard to the federal tax consequences of your participation in the Option
Plan.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="80%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="68%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="27%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Type of Information</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Relevant Questions and Answers</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">For information regarding the tax
consequences associated with the
exercise of a nonstatutory stock
option and transfer of the acquired
stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">21, 22, 23, 24</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">For information regarding the tax
consequences associated with the
exercise of an incentive stock
option and transfer of the acquired
stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">24, 25, 26, 27, 28</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">For information regarding the tax
consequences of using shares of
stock already owned to pay the
exercise price of an option</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">29, 30</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">For information relating to the
alternative minimum tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">31</TD>
</TR>

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</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">8.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>21.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Do I have to pay tax when I receive a nonstatutory stock option or exercise
the nonstatutory stock option?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You do not have to pay tax when you are granted a nonstatutory stock
option under the Option Plan.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you exercise a <I>nonstatutory </I>stock option when the market price of the stock
is higher than the exercise price of your option, you generally are required to
pay tax on the &#147;profit&#148;, that is, the difference between the exercise price and
the market price of the stock on the date of exercise. Your profit on the
exercise will be characterized as ordinary income.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>22.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Will the Company withhold the amount of taxes due on exercise of a
nonstatutory stock option?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Generally, when you exercise a nonstatutory stock option, the Company is
required by the IRS to withhold federal income and employment taxes from your
profit or to otherwise ensure that the tax due will be paid to the IRS.
Additional amounts usually will be withheld for state taxes. Generally, the
Company can take a business expense deduction on the amount of the profit you
received upon exercise of your nonstatutory option. The Board may provide you
with the choice of paying your withholding obligation by withholding shares
valued at the withholding amount from the shares that would otherwise be
delivered to you on exercise of the option or permitting you to deliver shares
you already own that have a value equal to the withholding amount. You should
check the terms of your option.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>23.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>How much tax do I pay when I </B><B><I>sell </I></B><B>stock received pursuant to the exercise of
a </B><B><I>nonstatutory </I></B><B>stock option?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you exercised your nonstatutory stock option when the exercise price was
lower than the market price, you generally should have paid tax on the &#147;profit&#148;
at the time of exercise. Upon the sale of your stock (or other taxable
transfer), you generally will recognize a gain or loss equal to the difference
between the sales price and the market price at the time of exercise. Your
gain or loss will be characterized as a long-term capital gain or loss if you
held the stock for more than one year from the date the option was exercised
and a short-term capital gain or loss if you held the stock for one year or
less.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>24.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>What is the difference between ordinary income and capital gains and losses
for federal tax purposes?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ordinary income and capital gains rates vary with income level. Currently, the
maximum marginal tax rate applicable to ordinary
income and short-term capital gains is 35% (in 2003). The maximum marginal tax
rate is 15% for long-term capital gains (after May&nbsp;5, 2003). Additionally,
capital gains and losses are subject to certain other provisions of the
Internal Revenue Code not applicable to ordinary income. Consult your tax
advisor for more information regarding the rates that apply to you.


<P align="center" style="font-size: 10pt">9.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>25.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Do I have to pay tax when I receive or exercise an </B><B><I>incentive </I></B><B>stock option?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You do not have to pay tax when you are granted an <I>incentive </I>stock option under
the Option Plans. Except for the possible application of the alternative
minimum tax (see Question 31), you pay no tax upon exercise of an incentive
stock option until you dispose of the stock you acquire.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>26.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>How is my profit taxed when I do dispose of the stock received on exercise of
an </B><B><I>incentive </I></B><B>stock option? What if I lose money?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;How your profit or loss is characterized will depend on how much time passed
after both the date the incentive stock option was granted and the date you
exercised the option.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You should be aware that transfer of legal title to the stock received upon
exercise of an incentive stock option in a transaction that is not a sale may
still be taxable as a disposition of the stock. Generally, such transfers
include gifts, but do not include a pledge of the stock as security for a loan,
a transfer into joint ownership with right of survivorship if you remain one of
the joint owners, or a transfer by bequest or inheritance, or certain transfers
to a spouse or former spouse incident to a divorce.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the date on which you dispose of the stock is more than two years from the
date on which the incentive stock option was granted <B>and </B>more than one year
from the date on which you exercised the option, your entire gain or loss is
characterized as long-term capital gain or loss.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you dispose of your stock within two years from the date on which the option
was granted <B>or </B>within one year from the date on which you exercised your
option, a portion of your profit will be characterized as ordinary income and
the transfer will be a &#147;disqualifying disposition.&#148; The portion of your profit
that is characterized as ordinary income upon a disqualifying disposition is
equal to the <B>lesser of:</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;the difference between the market price of the stock on the date you
exercised the option and the exercise price of the option, or


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;the difference between the sales price and the exercise price of the
option.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please note that if the disqualifying disposition occurs pursuant to a
transaction in which a loss (if sustained) could not be recognized, the amount
of ordinary income is equal to the amount specified in clause (a)&nbsp;even if the
amount in clause (b)&nbsp;is lower.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any profit you make over the amount characterized as ordinary income is
characterized as capital gain, which will be long-term or short-term depending
on whether the stock was held for more than one year from the date of exercise.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For an example of how these rules are applied, see Example A in Part&nbsp;III.


<P align="center" style="font-size: 10pt">10.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you lose money on the sale of the stock you generally will be able to report
the loss as a capital loss, which will be long-term or short-term depending on
whether the stock was held for more than one year from the date of exercise.
However, in some instances the Internal Revenue Code provides exceptions to
this general rule that prohibit reporting a loss on the sale of your stock.
Some examples of exceptions to the general rule are: (a)&nbsp;selling your stock to
certain family members such as your spouse or your parents, and (b)&nbsp;selling
your stock within thirty days before or after purchasing other stock of the
Company. For example, if you sell your stock to your spouse, whether or not at
a loss, you will be taxed on the difference between the market price of the
stock on the date of exercise and the exercise price. These are only some
examples of the application of the Internal Revenue Code. You should consult
with your personal tax advisor for more information on how the Internal Revenue
Code and other tax laws apply to your situation. Also, see Question 31 for a
general discussion of the possible effects of a disposition of the stock on
liability for alternative minimum tax.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>27.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Is there any withholding on the exercise of my </B><B><I>incentive </I></B><B>stock option or the
sale of the stock acquired on exercise?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Currently, there is no withholding required upon the exercise of an incentive
stock option or on the sale of stock acquired on exercise. The Company
generally is required to report to the IRS any ordinary income recognized by
you as a result of a sale that is a disqualifying disposition described in
Question 26.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>28.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Do I have to notify the Company after I sell my stock?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Yes, in some cases. If you dispose of stock received pursuant to an
<I>incentive </I>stock option within two years after the date the option was granted
to you <B>or </B>within one year after you exercise your option, you should notify
Investor Relations of the number of shares sold, the sales price and the option
the shares came from within fifteen days of the date on which you disposed of
the stock


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>29.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>What are the tax consequences if I use shares I already own to pay the
exercise price of a </B><B><I>nonstatutory </I></B><B>stock option?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you pay the exercise price of a <I>nonstatutory </I>stock option with shares of the
Company that you already own, you will have a tax-free exchange of the
previously held shares of stock for an equivalent number of the shares of stock
received under the option. If you receive additional shares in the exchange,
you will pay taxes on ordinary income equal to the difference between the
market value on the date of exercise of such additional shares and the amount
of cash, if any, you paid upon exercise.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The tax basis and capital gain holding period of the shares received under the
option in the tax-free exchange will be the same as the tax basis and holding
period of the shares used to pay the exercise price. The tax basis of the
additional shares you receive will equal the amount of ordinary income you had
to
report and the amount of any cash paid on exercise, and your holding period for
the additional shares will begin on the date of exercise.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For an example of how these rules are applied, see Example B in Part&nbsp;III.


<P align="center" style="font-size: 10pt">11.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>30.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>What are the tax consequences if I use shares I already own to pay the
exercise price of an </B><B><I>incentive </I></B><B>stock option?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under IRS proposed regulations, the use of Company shares to pay the exercise
price of an option is a tax-free exchange with respect to the shares being
surrendered. Therefore, the tax basis and capital gains holding period of an
equal number of shares you receive upon the exercise of the option will be the
same as the tax basis and holding period of the shares you use to pay the
exercise price. In general, the tax basis of the additional shares you
receive, if any, will equal the amount of any ordinary income you must report
and the amount of any cash you pay on exercise, and your holding period for the
additional shares will begin on the date of exercise.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Special tax rules apply, however, if the shares being surrendered to exercise a
stock option were acquired on the exercise of an incentive stock option (or
pursuant to a purchase right granted under an employee stock purchase plan that
meets the requirements of Section&nbsp;423 of the Internal Revenue Code) and have
not been held more than one year from exercise and more than two years from the
date the option (or purchase right) was granted. In such event, the surrender
of such shares may not be a tax-free exchange. Also, special tax basis and
holding period rules apply when the stock option being exercised is an
incentive stock option.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because these tax consequences can be complicated, you should consult your tax
advisor if your option agreement permits you to use Company shares to exercise
your option and you wish to do so.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For an example of how these rules might be applied, see Example C in Part&nbsp;III.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><B>31.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>What are the tax consequences of my exercise of options if I am subject to the
alternative minimum tax?</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The alternative minimum tax is a separately computed tax equal to 26% of so
much of your &#147;alternative minimum taxable income&#148; up to $175,000 as exceeds a
specified exemption amount and 28% on additional alternative minimum taxable
income. The alternative minimum tax is imposed only if and to the extent you
would pay more tax if your taxes are computed pursuant to the alternative
minimum tax rules than the tax you would pay if computed in the regular manner.
The alternative minimum tax takes into account what are called tax preference
items and other adjustments that are not taken into account when calculating
taxes in the regular manner. One of the adjustments is the inclusion in
taxable income of the excess between the exercise price of an incentive stock
option and the market price of the stock on the date of such option&#146;s exercise,
if that amount constitutes a profit. You can avoid such excess being included
in alternative minimum taxable income by selling that stock before the end of
that tax
year, but regular income tax may be due as a result. Any alternative minimum
tax paid entitles you to a possible credit against regular tax (but not
alternative minimum tax) in later tax years. When you sell your stock in a
later year than the year in which the option was exercised, you are allowed,
for purposes of calculating your alternative minimum tax in that later year of
sale, to increase your basis in your stock by the adjustment amount previously
included in your alternative minimum taxable income in the earlier year of
exercise.


<P align="center" style="font-size: 10pt">12.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>Part III</B>



<P align="center" style="font-size: 10pt"><B>Examples</B>



<P align="left" style="font-size: 10pt"><B><I>Example A &#151; Disqualifying Dispositions (Question 26):</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Assume you were granted an incentive stock option on January&nbsp;1, 2003 for 10
shares at an exercise price of $8.00 per share. You exercise the option on
January&nbsp;1, 2004 when the market price is $10.00 per share and you sell the
stock on July&nbsp;1, 2004 when the market price is $9.00 per share for a $10.00
aggregate gain. Because you did not hold the stock until a date that is more
than two years after the date of grant and more than one year from the date of
exercise, all or a portion of your gain is ordinary income. The amount of
ordinary income per share is equal to the <I>lesser </I>of (a) $10.00 (market price on
date of exercise) - $8.00 (exercise price) = $2.00 per share or (b) $9.00 (sale
price) - $8.00 (exercise price) = $1.00 per share. Therefore, the amount of
ordinary income is equal to $1.00 per share, or $100.00 in the aggregate.

<P align="left" style="font-size: 10pt"><B><I>Example B &#151; Stock for Stock Exercise of a Nonstatutory Stock Option (Question
29):</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Assume that on January&nbsp;1, 2003 you bought 10 shares of stock on the open market
when the market price was $6.00 per share. On January&nbsp;1, 2004, when the market
price is $10.00 per share, you exercise a non-qualified stock option to
purchase 20 shares at an exercise price of $9.00 per share for an aggregate
exercise price of $180.00. Using all of your previously owned shares to pay
$100.00 of the exercise price (10 shares x $10.00 market price), you pay $80.00
cash for the remainder of the exercise price. On the date of exercise, you are
deemed to have a tax-free exchange of the 10 previously owned shares for 10
equivalent new shares. You will also recognize ordinary income of $20.00 equal
to the market price of the 10 additional new shares you receive, $100.00, minus
the amount of cash you paid on exercise, $80.00.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you sell all 20 shares that you received upon exercise of the option for
$11.00 per share on March&nbsp;1, 2004, you will recognize a $5.00 per share gain on
the 10 equivalent new shares ($11.00 per share &#151; $6.00 per share (purchase
price of original shares)), which will be long-term capital gain because you
are allowed to add the period which you held the original 10 shares to the
period you held the 10 equivalent new shares. You will also recognize a $10.00
aggregate gain on the 10 additional new shares, calculated as follows: $110.00
(10 shares x $11.00 market price) minus the sum of (a) $80.00 (the amount of
cash paid for the shares) and (b) $20.00 (the amount of income recognized upon
exercise of the option). This gain will be characterized as
short-term capital gain because you held the stock for only two months.

<P align="left" style="font-size: 10pt"><B><I>Example C &#151; Stock for Stock Exercises of an Incentive Stock Option (Question
30):</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Assume you purchased 18 shares on the open market for $6.00 per share on
January&nbsp;1, 2003. On February&nbsp;1, 2004, when the market price is $10.00 per
share, you exercise an incentive stock option to purchase 20 shares at an
exercise price of $9.00 per share, for an aggregate exercise price of $180.00,
using all of your 18 previously-owned shares to pay the exercise price. On the
date of exercise, you are deemed to have made a tax-free exchange of the 18
previously owned shares for 18 equivalent new shares and to have acquired 2
additional new shares.


<P align="center" style="font-size: 10pt">13.
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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because the shares delivered in payment of the exercise price were
previously-owned shares not acquired upon exercise of an incentive stock option
or under an employee stock purchase plan as defined in Section&nbsp;423 of the Code,
no disqualifying disposition occurred in the exchange and no ordinary income
was recognized at the time of the exchange. However, you will recognize an
adjustment to your alternative minimum taxable income of $10.00 per additional
share or $20.00 for the 2 additional shares. Therefore the basis in the 18
equivalent new shares is the same as the basis of the original shares: $6.00
per share. However, for purposes of calculating ordinary income on a
disqualifying disposition, the amount treated as having been paid for such
equivalent new shares is equal to their fair market value on the date of
exercise ($10.00 per share). The basis in the 2 additional new shares is $0
per share.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you sell 15 of the shares on September&nbsp;1, 2004 at $11.00 per share, such
shares are deemed to be sold in a disqualifying disposition because the
disposition is less than one year after the date of exercise. Since the
additional new shares have a lower basis ($0 per share) than the equivalent new
shares ($6.00 per share), they will be treated as having been disposed of
first. Therefore you will be considered to have sold the 2 additional new
shares and 13 of the equivalent new shares.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You will recognize no ordinary income with respect to the equivalent new shares
since there is no difference between their fair market value on the date of
exercise and the amount treated as having been paid for such shares. However,
you will recognize capital gain with respect to the equivalent new shares in
the amount of $65.00 (13 shares times $5.00 per share ($11.00 sale price minus
$6.00 basis)). Such capital gain will be long-term since the holding period
for such equivalent new shares includes the holding period for the original
shares exchanged therefor and is, thus, 20&nbsp;months.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You will recognize ordinary income with respect to the additional new shares in
the amount of $20.00 (2 shares times $10.00 per share ($10 fair market value on
the date of exercise minus $0 basis in these shares)). You will recognize
capital gain on such additional new shares in the amount of $2.00 (2 shares
times $1.00 per share ($11.00 sale price minus $10.00 recognized as ordinary
income)). Such capital gain will be short-term since the holding period for
such additional new shares begins on the date of exercise and is therefore only
seven months.



<P align="center" style="font-size: 10pt">14.
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