’WPC6 ²ZŅÄĪQ„_vŅÄΐ€0ŁćöˆŚ|sÅ”U¤õ©:›?łv^A_̷Ц%¬9Ø7I±¾KJRB§ŚŚ4Õ2­įc‘9Źµ½źĒ,"Ąe,«¬l|Ū °€‰ēęמžMļ›nšu²eęo³A×O@%=Ū„z9\æļX»üæ.@ Ć%qWŠ’g8³óŅņĒå7U¤@SŽK„œ`[ kȾCA[±óĪP–U½Æš{9 f酅r…ļ=ź!™‚žļ\ķ[:eÓ8ęQÜp‘-–ćĶ€M óTWS„ĶŹ=/Yi;öWĪ\‹#M2]›Z V’ÜME`‰äP¶ĖÜi7ˆ6äéļĄ•é ±Fcw^ŽŅvåÄOBƒ_ÄęLÖ&'X^PĆ BÄŪtėn…™kĻ7y©-Ś0Sŗ «¾mø~GĢ1Ä*^VvÄx†|(LYÖŁß„*/щÜpšZ„~bŪŲŸŸYŠ€ZÖgÉį'iASīõ6K€ūßrN••U'¹]ČĘF.ݚĮXÅīc+%äØM8Ÿ`0RŠBÄŚw¶šß./N,?¤ŽąLWø®÷‘V]ī£46Ņ"łõXĪlU.čč %n­ 0xÉĘA B #Į$ ^ å U Nń  ? ?  dK "ģÆ U›T³!  )·N½½wæ4Ć× mŁU Nšš:> xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx AQ~ĘĻ 0•• 0•* 0Dææ D3H Œ 9`(CourierX«H Œ 9`(Courierōōx Œ @ɧĶĒ;ō@(P/ó$””Ó  ÓŃ7€ģßōXdČ7ŃŃ € сLevel 1Level 2Level 3Level 4Level 5 d˜HP DeskJet 820C Series Printer,(,,,,,(0F‰6* (ÖĆ9 Z‹6Times New Roman RegularąŻ0”< Œ 9p`(<žž9p`+†2Courier 10RomanSpeedo’’zNxxx,,XxU^’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’Ō3s4ddd,,ōdŠšž’ž’ž’ž’ž’ž’ž’’’ž’’’’’’’ž’’’’’ž’’’’’ž’’’ž’ž’’’ž’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’ž’ž’ž’ž’ž’ž’’’’’’’’’< Œ 9p`(’MCI’’Tojama’’Prez’’Konfusion’#|xuž’"BIP[rƒ’’’’’’’’’’’’ń÷Ćó’’’’’’ż’’’’’?’’÷’’’Ļ’’Ļ’ü=Ą//’’’’’N·’’ń’Ź£ü«żššhłŸž &@€ģFRŃĄ@FL .±t)ƃ‚ ĢO„ ’U‹’ĄĄĄ(ÖĆ9 Z‹6Times New Roman Regular Riker WorfKlingonHĢfghikCž’<<C’’ƒLevel 1Level 2Level 3Level 4Level 5(m3F$¢¢Ż ƒ/ó!ŻÓ  ÓŃ8€Ÿōņd“dŌ8ŃŃ € ŃŻ  Ż(m3F$££Ż ƒ/ó!ŻÓ  ÓŃ8€Ÿōņd“dŌ8ŃŃ € ŃŻ  Ż($$””ņ ņŚ  Ś1Ś  Śó ó'’’dxdŻ ƒ/ó!ŻÓ  ÓŃ8€·ōņd“dČ8ŃŃ € ŃŻ  ŻŌ_ŌŌ€X÷ĮXXXŌŃ8€÷ĮXXdģōņd“8ŃŌ% € Ōą@&&$ģąņ ņŌ‡„Ū „XX÷ĮŌCORPORATIONSŌ#†X÷ĮX„„Ū õ#ԈŠ ° Šó óÓ  ÓProfessor€BradfordŠ ` ŠÓ\ÓĢą@"ģąDecember€4,€2000ˆŠ č8 Šą@vv&ģą9:00€a.m.ˆŠ Ō$ Šą@ģąņ ņ3€Hours€and€Fifteen€Minutesó óˆŠ Ą  ŠĢą@$ģąņņINSTRUCTIONSóóˆŠ ˜ č Šą@` ` ģą(ņ ņPLEASE€READ€BEFORE€PROCEEDING!ó ó)ˆŠ „ Ō ŠĢą  ą1.€€This€is€a€partially€open€book€exam.€€You€may€use€the€OššKelley€&€Thompson€casebook,Š `°  Šthe€Bradford€&€Ames€book,€and€the€statutory€supplement€required€for€this€course.€€Those€booksŠ Lœ  Šmay€contain€any€handwritten€annotations€you€want,€but€may€not€contain€any€additional€printed€orŠ 8ˆ  Štyped€materials.€€ņ ņYou€may€not€use€any€other€materialsó ó€and€you€may€not€consult€with€orŠ $t  Šcommunicate€with€any€other€person€during€this€exam.€€If€you€have€any€other€books,€notes,Š d  Šbriefcases,€book€bags,€or€other€items,€you€must€bring€them€to€the€front€of€this€room.€€You€mayŠ P Šnot€take€any€of€these€items€to€the€special€purpose€rooms.€Š ģ< ŠĢą  ą2.€€You€have€ņ ņthree€hours€and€fifteen€minutes€(3:15)ó ó€to€complete€the€exam.€€The€time€atŠ Ä Šwhich€the€exam€ends€will€be€posted€on€the€board.€€Writing€anything€after€time€is€called€is€anŠ “ ŠHonor€Code€violation.€€You€may€not€even€finish€a€word€or€sentence.Š  š ŠŌ‡ X÷ĮXXX÷ĮŌĢą  ą3.€€If€you€finish€the€exam€more€than€five€minutes€early,€you€may€turn€in€your€answers€inŠ xČ Šthe€Dean's€Office.€€Otherwise,€you€must€turn€in€your€answers€in€this€roomš!šregardless€of€whereŠ d“ Šyou€take€the€exam.Ō#†X÷ĮXX X÷Į"#ŌŠ P  ŠĢą  ą4.€€This€exam€has€ņ ņnine€(9)€pagesó ó,€including€the€instructions.€€The€page€numbers€appear€onŠ (x Šthe€top€right„hand€corner€of€each€page.€€Please€check€to€be€sure€that€this€copy€has€all€the€pages.Š h ŠĢą  ą5.€€The€exam€consists€ofņ ņ€five€(5)€questionsó ó.€€The€recommended€time€for€each€question€isŠ š@ Šas€follows:Š ą 0 ŠĢÓ  ÓQuestion€1.................................40€MinutesŠ ø"  ŠQuestion€2.................................70€MinutesŠ ¤#ō! ŠQuestion€3.................................25€MinutesŠ $ą" ŠQuestion€4.................................40€MinutesŠ |%Ģ # ŠQuestion€5.................................20€MinutesŠ h&ø!$ ŠÓ ÓĢEach€question€will€be€weighted€in€accordance€with€its€recommended€time.Š @(#& ŠĢĢą€ąą1(#ąņ ņCONTINUE€TO€THE€NEXT€PAGE.ó óˆŠ  +T&)÷ ŠŌ‡ X÷ĮXXX÷ĮŌą  ą6.€€You€may€take€the€exam€in€this€room€or€in€a€designated€special€purpose€room€(typing€orŠ d Šoverflow€room)€posted€on€the€board.€€If€you€decide€to€take€the€exam€in€a€special€purpose€room,Š Pģ Šremember€that€(1)€time€will€be€called€only€in€this€room,€and€(2)€when€time€is€called,€you€mustŠ <Ų Šeither€be€present€in€this€room€or€have€already€turned€in€your€answers.Š ( Ä ŠĢŌ#†X÷ĮXX X÷ĮK #Ōą  ą7.€€Do€not€spend€all€of€your€time€writing.€€THINK€AND€ORGANIZE€YOUR€ANSWERSŠ  œ ŠBEFORE€WRITING.€€Be€concise.€€Be€organized.€€Long,€disorganized,€rambling€answers€will€beŠ ģ ˆ Špenalized.Š Ų t ŠĢą  ą8.€€Please€write€legibly.€€I€canššt€give€you€credit€for€what€I€canššt€read.Š °L  ŠĢą  ą9.€€For€each€question,€assume,€unless€the€question€indicates€otherwise,€that€the€mostŠ ˆ$  Šrecent€versions€of€the€Revised€Uniform€Partnership€Act,€the€Uniform€Limited€Partnership€Act,Š t  Šand€the€Revised€Model€Business€Corporation€Act€apply.Š `ü  ŠĢą  ą10.€€If€one€of€the€statutes€we€have€studied€applies,€cite€the€relevant€sections€andŠ 8Ō  Šsubsections€and€explain€how€those€provisions€apply€to€the€facts€of€the€problem.Š $Ą ŠĢą  ą11.€€If€you€believe€that€additional€facts€are€necessary€to€answer€a€question,€state€exactlyŠ ü˜ Šwhat€those€facts€are€and€how€they€would€affect€your€answer.€€If€you€believe€that€a€question€isŠ č„ Šambiguous€or€unclear,€note€the€ambiguity€or€lack€of€clarity€and€indicate€how€it€affects€yourŠ Ōp Šanswer.Š Ą\ ŠĢą  ą12.€€The€questions€should€be€answered€in€blue€books,€or€on€typing€paper€if€you€type€yourŠ ˜4 Šexam.€€Please€write€or€type€on€only€one€side€of€each€page.€€Double„space€if€you€type.€€ņ ņBE€SUREŠ „  ŠTO€WRITE€YOUR€EXAM€IDENTIFICATION€NUMBER€ON€EACH€BLUE€BOOK€ORŠ t ŠPIECE€OF€TYPING€PAPER€THAT€YOU€USEó ó.€€Do€not€put€your€name€on€any€materials€youŠ `ü Šturn€in.Š Pģ ŠĢą  ą13.€€The€Honor€Code€is€in€effect.Š (!Ä ŠĢą  ą14.€€Good€luck€and€have€a€pleasant€holiday.Š #œ ŠĢĢĢĢĢĢĢĢņ ņDO€NOT€TURN€THIS€PAGE€UNTIL€YOU€ARE€GIVEN€THE€SIGNAL€TO€START.ó óŠ  L+č$( Šņ ņŌ‡ X÷ĮXXX÷ĮŌÓ  ÓQUESTION€ONEó óŠ d ŠĢ(40€Minutes)Š <Ų ŠÓÓĢĢą  ąMary€Hatch€(š šMaryšš)€is€the€president€of€Bedford€Falls€Development€Corporation€(š šBFšš),Š  œ Šwhose€common€stock€is€traded€on€the€New€York€Stock€Exchange.€€George€Bailey€(š šGeorgešš)€isŠ ģ ˆ ŠMaryššs€close€friend.€€George€owns€no€BF€stock€and€has€no€position€with€BF.Š Ų t ŠĢą  ąRecently,€George€was€at€his€weekly€massage€appointment€when€he€told€Violet,€theŠ °L  Šmasseuse,€š šMake€it€quick€today.€€Donššt€tell€anyone,€but€my€friend€Maryššs€company€is€announcingŠ œ8  Ša€tender€offer€today€at€4:00€and€I€want€to€be€there€to€support€her.šš€€George€had€promised€MaryŠ ˆ$  Šnot€to€tell€anyone,€but€he€didnššt€tell€Violet€that.€€Violet€just€ignored€Georgeššs€comment€and€saidŠ t  Šnothing.Š `ü  ŠĢą  ąPrecisely€at€4:00€that€day,€BF€announced€it€was€merging€with€Potter€ChemicalŠ 8Ō  ŠCorporation,€another€large€public€company.€€(The€transaction€was€actually€a€merger,€not€a€tenderŠ $Ą Šoffer€as€George€believed.)Š ¬ ŠĢą  ąViolet€got€off€work€at€4:00€that€day.€€She€called€her€broker€three€minutes€later€andŠ č„ Šordered€him€to€buy€500€shares€of€BF€common€stock€for€her€account.€€The€order€was€filled€shortlyŠ Ōp Šthereafter.Š Ą\ ŠĢą  ąDiscuss€Violetššs€possible€liability€under€federal€securities€law.€€(If€you€need€it,€Rule€10b5„2Š ˜4 Šfollows€this€question.)Š  „  Šņ ņŌ‡ īøīX X÷ĮŌRule€10b5-2.€Duties€of€trust€or€confidence€in€misappropriation€insiderŠ d Štrading€cases.ó óŌ#† X÷ĮXī īø›#ŌŠ , ŠĢņņPreliminary€Note€to€Rule€10b5-2óó:€This€section€provides€a€non-exclusive€definition€ofŠ Ø D Šcircumstances€in€which€a€person€has€a€duty€of€trust€or€confidence€for€purposes€of€theŠ ” 0 Š"misappropriation"€theory€of€insider€trading€under€Section€10(b)€of€the€Act€and€Rule€10b-5.€TheŠ €  Šlaw€of€insider€trading€is€otherwise€defined€by€judicial€opinions€construing€Rule€10b-5,€and€RuleŠ l  Š10b5-2€does€not€modify€the€scope€of€insider€trading€law€in€any€other€respect.€Š X ō ŠĢņņ(a)€Scope€of€Ruleóó.€This€section€shall€apply€to€any€violation€of€Section€10(b)€of€the€Act€and€RuleŠ 0Ģ  Š10b-5€thereunder€that€is€based€on€the€purchase€or€sale€of€securities€on€the€basis€of,€or€theŠ ø  Šcommunication€of,€material€nonpublic€information€misappropriated€in€breach€of€a€duty€of€trust€orŠ ¤  Šconfidence.€Š ō  ŠĢņņ(b)€Enumerated€"duties€of€trust€or€confidence."óó€For€purposes€of€this€section,€a€"duty€of€trust€orŠ Ģh  Šconfidence"€exists€in€the€following€circumstances,€among€others:Š øT Šą0  ą(1)€Whenever€a€person€agrees€to€maintain€information€in€confidence;Ф@(#(# Šą0  ą(2)€Whenever€the€person€communicating€the€material€nonpublic€information€and€theŠ , Šperson€to€whom€it€is€communicated€have€a€history,€pattern,€or€practice€of€sharingŠ | Šconfidences,€such€that€the€recipient€of€the€information€knows€or€reasonably€should€knowŠ h Šthat€the€person€communicating€the€material€nonpublic€information€expects€that€theŠ Tš Šrecipient€will€maintain€its€confidentiality;€orŠ@Ü(#(# Šą0  ą(3)€Whenever€a€person€receives€or€obtains€material€nonpublic€information€from€his€or€herŠ ,Č Šspouse,€parent,€child,€or€sibling;€provided,€however,€that€the€person€receiving€or€obtainingŠ “ Šthe€information€may€demonstrate€that€no€duty€of€trust€or€confidence€existed€with€respectŠ   Što€the€information,€by€establishing€that€he€or€she€neither€knew€nor€reasonably€should€haveŠ šŒ Šknown€that€the€person€who€was€the€source€of€the€information€expected€that€the€personŠ Üx Šwould€keep€the€information€confidential,€because€of€the€parties'€history,€pattern,€orŠ Čd Špractice€of€sharing€and€maintaining€confidences,€and€because€there€was€no€agreement€orŠ “ P Šunderstanding€to€maintain€the€confidentiality€of€the€information.Ō#†X÷ĮXX X÷Įō#ŌŠ  !<(#(# ŠÓ  Óņ ņŌ‡ X÷ĮXXX÷ĮŌQUESTION€TWOó óŠ d ŠĢ(70€Minutes)Š <Ų ŠÓ  ÓĢĢą  ąOn€July€1,€1999,€Allan€Ames€(š šAmesšš),€Bertha€Burns€(š šBurnsšš),€and€Christine€CarterŠ  œ Š(š šCarteršš)€agreed€to€start€a€new€business,€Widgets„R„Us€(š šWUSšš),€to€manufacture€and€sellŠ ģ ˆ Šwidgets.€€The€three€agreed€that€it€would€take€about€18€months€to€get€the€business€going,€butŠ Ų t Šthought€it€would€be€profitable€after€that.Š Ä ` ŠĢą  ąThe€only€step€Ames,€Burns,€and€Carter€took€to€create€their€business€was€to€draft€and€signŠ œ8  Ša€š šBusiness€Agreement.šš€€In€the€Business€Agreement,€Ames€agreed€to€contribute€a€widget„Š ˆ$  Šmaking€machine€he€owned,€Burns€agreed€to€contribute€$50,000€cash,€and€Carter,€who€contributedŠ t  Šnothing,€agreed€to€manage€the€business€for€two€years.€€Ō#†X÷ĮXX X÷ĮÕ'#ŌŌ‡ X÷ĮXXX÷ĮŌThe€Business€Agreement€provided€that€theŠ `ü  Šfair€market€value€of€the€machine€Ames€contributed€was€$50,000.€€The€Agreement€also€provided:Š Lč  Šš šWhen€the€business€is€completed,€any€one€of€us€may€buy€any€of€WUSššs€property€or€equipment,€ifŠ 8Ō  Šapproved€by€WUS.ššŌ#†X÷ĮXX X÷Į©+#ŌŌ‡ X÷ĮXXX÷ĮŌŠ $Ą ŠĢą  ąAs€they€predicted,€the€business€was€not€initially€profitable,€losing€money€every€month€untilŠ ü˜ Šthis€August.€€WUS€had€a€small€profit€in€August,€small€losses€in€September€and€October,€and€aŠ č„ Šfairly€significant€profit€in€November€of€this€year.Š Ōp ŠĢą  ąOn€November€1,€2000,€Ames€and€Burns€prepared€articles€of€incorporation€for€XYZŠ ¬H ŠCorporation,€an€entity€to€be€owned€jointly€by€Ames€and€Burns.€€They€mailed€XYZššs€articles€ofŠ ˜4 Šincorporation€to€the€Secretary€of€State€on€November€2.Š „  ŠĢą  ąOn€November€6,€Ames€and€Burns€began€drafting€a€contract€to€sell€WUSššs€widget„makingŠ \ų Šmachine€to€XYZ€for€$50,000.€€On€November€10,€Carter€discovered€a€copy€of€this€contract€in€theŠ Hä ŠWUS€office,€and€angrily€told€Ames€and€Burns€that€she€never€approved€such€a€sale.€€AmesŠ 4 Š Šresponded,€š šO.K.,€weššll€count€you€as€a€vote€against€it.€€The€contract€is€approved€2„1,€right€now.šš€Š  !¼ ŠAmes€and€Burns€then€signed€the€contract€as€follows:Š  "Ø ŠĢÓ  Óš šWIDGETS„R„USŠ ä#€  ŠBy:€/s/€Allan€AmesŠ Š$l! Š/s/€Bertha€BurnsŠ ¼%X" ŠĢ€XYZ€CORPORATIONŠ ”'0!$ ŠBy:/s/€Bertha€Burns,€on€behalf€of€XYZ€CORPORATIONššŠ €("% ŠÓ  ÓĢą  ąThe€next€day,€the€XYZ€articles€of€incorporation€were€returned€in€the€mail€because€theyŠ X*ō#' Šwere€ten€cents€short€of€the€required€70€cents€postage.€€Ames€personally€delivered€the€articles€toŠ D+ą$( Šthe€Secretary€of€State€on€November€12,€and€they€were€properly€filed€that€day.€€Ames€and€BurnsŠ 0,Ģ%) Šhave€invested€only€$10€in€the€corporation,€for€one€share€each€of€no„par€common€stock.Š -ø&* Їą  ąOn€November€14,€Ames€and€Burns€notified€Carter€that€they€were€ending€their€relationshipŠ d Šwith€Carter€and€terminating€the€WUS€business,€effective€immediately.€€After€paying€all€its€bills,Š Pģ ŠWUS€has€$35,000€cash,€not€including€the€$50,000€it€is€supposed€to€receive€under€the€contractŠ <Ų Šwith€XYZ.Š ( Ä ŠĢą  ąAmes€and€Burns€have€told€Carter€she€wonššt€get€a€penny€of€WUSššs€money.€€Burns€toldŠ  œ ŠCarter,€š šMy€lawyer€says€you€might€even€owe€us€money.€€And,€if€you€give€us€any€trouble,€XYZŠ ģ ˆ Šwill€cancel€the€contract,€because€we€donššt€think€the€widget„making€machine€is€really€worthŠ Ų t Š$50,000.ššŠ Ä ` ŠĢą  ąDiscuss€Carterššs€rights.Ō#†X÷ĮXX X÷Į%-#ŌŠ  œ8  Šņ ņÓ  ÓQUESTION€THREEó óŠ d ŠĢ(25€Minutes)Š <Ų ŠÓ8ÓĢĢą  ąIn€ņņSmith€v.€Van€Gorkomóó,€the€Delaware€Supreme€Court€held€that€directors€may€be€liableŠ  œ Šfor€failing€to€adequately€inform€themselves€before€making€a€decision.€€Discuss€the€policyŠ ģ ˆ Šarguments€for€and€against€such€a€duty„to„inform€rule.€€(Donššt€waste€your€time€telling€me€the€factsŠ Ų t Šof€the€case€or€repeating€what€the€court€said.€€Just€discuss€the€policy€of€the€rule.)Š  Ä ` Šņ ņÓ  ÓQUESTION€FOURó óŠ d ŠĢ(40€Minutes)Š <Ų ŠÓ5:ÓĢĢą  ąStooge€Corporation€(š šStoogešš)€is€incorporated€in€a€state€that€has€adopted€the€ModelŠ  œ ŠBusiness€Corporation€Act.€€Stooge€has€four€25%€shareholdersš!šLarry,€Curly,€Moe,€and€Shemp.Š ģ ˆ ŠĢą  ąOn€January€1,€1992,€shortly€after€Stooge€was€formed,€Larry,€Curly€and€Moe€entered€into€aŠ Ä ` Šwritten€agreement€providing€that:€(1)€Larry,€Curly,€and€Moe€would€vote€their€shares€for€eachŠ °L  Šother€in€the€annual€election€of€directors;€and€(2)€as€directors,€Larry,€Curly,€and€Moe€would€notŠ œ8  Švote€to€approve€any€action€unless€the€three€of€them€unanimously€agreed€on€the€action.Š ˆ$  ŠĢą  ąLately,€Shempššs€productivity€has€fallen.€€Larry,€Moe,€and€Curly€concluded€that€a€newŠ `ü  Šperson€would€do€a€better€job.€€However,€Shemp€refused€to€retire€voluntarily€because€he€didnšštŠ Lč  Šhave€enough€money€saved.€€Shemp€could€not€be€fired€because€he€had€a€long„term€contract€and€hisŠ 8Ō  Šperformance,€although€slipping,€was€still€acceptable.Š $Ą ŠĢą  ąShemp€said€he€would€retire€if€the€company€would€purchase€all€of€his€stock.€€Larry€andŠ ü˜ ŠMoe€thought€that€was€a€good€idea,€but€Curly€refused€to€approve€the€repurchase€unless€theŠ č„ Šcompany€also€bought€Curlyššs€shares.€€Larry€and€Moe€told€Curly€that€Stooge€didnššt€have€enoughŠ Ōp Šmoney€available€to€buy€out€both€Curly€and€Shemp,€and€Curly,€unlike€Shemp,€is€still€veryŠ Ą\ Šproductive.€€Curly€responded,€š šThen€I€wonššt€agree€to€the€buyout,€and,€under€our€agreement,€youŠ ¬H Šcanššt€do€it.€€Nyuk,€nyuk.ššŠ ˜4 ŠĢą  ąAt€the€most€recent€directorsšš€meeting,€Larry,€Moe,€and€Shemp€voted€for€Stooge€toŠ p  Šrepurchase€Shempššs€stock€for€$100€a€share,€a€price€$10€a€share€above€the€most€recent€appraisal.€Š \ų ŠCurly€voted€against€the€repurchase.€€Larry€and€Moe€announced€that€the€proposal€passed,€andŠ Hä Šwrote€Shemp€a€corporate€check€for€his€shares.Š 4 Š ŠĢą  ąDiscuss€the€result€if€Curly€challenges€this€action.Š   "Ø Šņ ņŌ‡ X÷ĮXXX÷ĮŌÓ  ÓQUESTION€FIVEó óŠ d ŠĢ(20€Minutes)Š <Ų ŠÓ„CÓĢĢą  ąJack€is€the€CEO€and€Chairman€of€the€Board€of€Acme€Corporation,€a€DelawareŠ  œ Šcorporation.€€On€November€1,€2000,€Jack,€as€CEO,€caused€Acme€to€pay€$10,000€for€a€bondŠ ģ ˆ Šissued€by€Techno€Corporation,€a€new€company€Jack€owns.€€The€bond€obligates€Techno€to€payŠ Ų t ŠAcme€$14,000€on€November€1,€2005.€€The€transaction€was€not€approved€by€Acmeššs€board€or€itsŠ Ä ` Šshareholders,€but€Jack€had€authority€as€CEO€to€purchase€bonds€on€behalf€of€Acme.Ō#†X÷ĮXX X÷ĮeC#ŌŌ‡ X÷ĮXXX÷ĮŌŠ °L  ŠĢą  ąJack€argues€that€the€transaction€clearly€does€not€breach€his€duty€of€loyalty€to€AcmeŠ ˆ$  Šbecause€it€is€profitable€and€therefore€is€fair€to€the€corporation.€€Briefly€discuss€the€possibleŠ t  Šproblems€with€Jackššs€fairness€argument.Ō#†X÷ĮXX X÷ĮF#Ō