Jorge O. and Clelia E. Svoboda - Page 3

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          administration.  Petitioner was employed by Fluor as an                     
          electrical engineer and manager from September 1966 until                   
          February 2002.  He remained a consultant to Fluor after his                 
          retirement until 2004.3  Petitioner has also taught applied                 
          economics.                                                                  
               Fluor granted stock options to petitioner at various times             
          during 1994 through 1998 pursuant to its "Executive Incentive               
          Performance Plan".  On two occasions in 2002, petitioner acted              
          through a brokerage firm to exercise certain of his stock options           
          and immediately sell the acquired shares at the market price.               
          Petitioner accomplished these transactions through a process                
          known as the Cashless Exercise Program (CEP) at the brokerage               
          firm Morgan Stanley Dean Witter & Co. (Morgan Stanley).  The CEP            
          was designed to allow participants to obtain the value of their             
          stock options without having to advance the purchase price for              
          the stock upon exercise of the option.  Under the CEP, petitioner           
          would direct Morgan Stanley to exercise specified stock options             
          of his and immediately sell the acquired stock at the prevailing            
          market price.  Petitioner would then receive the proceeds of the            
          sale less the stock's acquisition cost (at the option price),               
          withholding taxes, and brokerage commissions.                               

               3 The record does not disclose whether petitioner performed            
          these consulting services as an employee of Fluor or as an                  
          independent contractor.                                                     






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