Foretravel, Inc. - Page 9

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            that Northwest would issue 1,000 shares of class B common stock                                
            to be purchased by petitioner for $1,000.  At the end of 3 years,                              
            Nicholson was granted an option to repurchase petitioner's 51-                                 
            percent stock holdings of class A common stock at book value if                                
            petitioner's loans to Northwest had been repaid and corporate                                  
            debts guaranteed by petitioner had been paid.  Nicholson viewed                                
            petitioner's ownership of the Northwest stock as a temporary                                   
            arrangement because he intended to purchase the stock back from                                
            petitioner in a very short time.  Petitioner granted Nicholson a                               
            further option to buy the shares of class B stock from petitioner                              
            at the end of 10 years for $1,000 plus interest, but only if                                   
            Northwest had repurchased petitioner's class A stock.  Petitioner                              
            also lent Northwest $22,983 to be repaid over 10 years.  In a                                  
            separate agreement dated September 9, 1985, petitioner and its                                 
            officers guaranteed the floorplan of Northwest up to $1.2 million                              
            financed by Idaho First National Bank (Idaho First).  Prior to                                 
            this time, Fishfader had guaranteed Northwest's floorplan.  Idaho                              
            First also required petitioner to pledge as additional collateral                              
            a certificate of deposit in the amount of $150,000.                                            
                  A floorplan arrangement works as follows.  The dealership                                
            wanting coaches for inventory makes the necessary arrangements                                 
            with a lender.  When the dealership orders a coach, the                                        
            manufacturer contacts the lender for approval to ship the coach                                
            to the dealership.  Title documents are sent through the banking                               






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Last modified: May 25, 2011