Walter and Susan Moore - Page 12




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               CTI paid petitioner a bonus in 2001 for the work she had               
          performed for CTI while employed by it in 2000.  Petitioner did             
          not receive a bonus in 2002 for the work she performed for CTI in           
          2001.                                                                       
               At or about the beginning of 2002, the parties to the                  
          consulting agreement agreed that the term of the agreement should           
          be extended through March 3, 2002, so that petitioner could                 
          review the performance of CTI’s employees.  The consulting                  
          agreement was so extended, and it terminated on March 3, 2002.              
          C.  Exercise of Stock Options                                               
               On March 5, 2002, petitioner exercised some of her options             
          to buy CTI common stock.  On that date, each of her purchased               
          shares had a fair market value of $23.19.  As to one option,                
          petitioner paid an exercise price of $46,496 to purchase (at                
          $2.906 per share) 16,000 shares of CTI common stock with a total            
          fair market value of $371,040.  Upon exercise of that option, she           
          also paid $97,596.57 to CTI so CTI could withhold and pay Federal           
          income, Social Security, and Medicare taxes associated with the             
          exercise.  As to another option, petitioner paid an exercise                
          price of $58,120 to purchase (at $2.906 per share) 20,000 shares            
          of CTI common stock with a total fair market value of $463,800.             
          Upon exercise of that option, she also paid $115,415.96 to CTI so           
          CTI could withhold and pay Federal income, Social Security, and             
          Medicare taxes associated with the exercise.  As to another                 







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