Hernandez plans to open a convenience store. Prior to taking any steps to form a business entity, Hernandez

executes a lease for a storefront in his own name. He intends to ultimately assign the lease to a newly-formed

business entity after he rounds up enough investors to pay the lawyers. Unfortunately, he is unsuccessful in his

efforts to raise the necessary capital fails to make any lease payments.

5. Does the landlord have a claim against Hernandez personally for the missing lease payments?

a. Yes.

b. No.

6. Same facts as 5 above, except that Hernandez signed the lease as follows:

Lots 'O Snacks, Inc.,

a corporation to be formed

AJ Hernandez, Promoter

Now, will Hernandez have personal liability for the missing lease payments?

a. Yes.

b. No.

c. Probably not, assuming Hernandez can prove that the landlord agreed to look solely to the named

corporation on the contract

7. Same facts as 5 above, except that Hernandez is ultimately able to raise sufficient capital and actually

forms the corporation, "Lot 'O Snacks, Inc." At its first board meeting, the Lot 'O Snacks' board adopted

the lease and made payments on it for several months until the business ran into financial difficulty and

stop making payments. The landlord brings a claim against Lot 'O Snacks and Hernandez for the missing

rent. Will the landlord be able to maintain its claim against Hernandez personally?

a. No. Once adopted by the corporation, Hernandez has no further obligations under the lease.

b. No. By accepting the payments from Lot 'O Snacks, the landlord implicitly agreed to release

Hernandez from any liability.

c. Yes. As the founding shareholder of the corporation, Hernandez is responsible for its ongoing

activities.

d. Yes. Unless the landlord has agreed to a "novation."

8. What documents must be filed with the Secretary of State in order for a corporation to be validly formed?

a. Statement of Qualification

b. Charter (e.g., Articles of Incorporation or Certificate of Incorporation)

c. Charter, Bylaws, and Initial Board Meeting Minutes

d. Shareholder Register

e. All of the above

9. What SEC form does a corporation registered under the Securities Exchange Act of 1934 use to report its

quarterly results?

a. Form 10-K

b. Form 10-Q

c. Form 8-K

d. Schedule 14A

10. What is NOT an activity that implicates a director's duty of loyalty?

a. Engaging in a conflicting interest transaction

b. Monitoring/Providing oversight to the corporation's business

c. Exercising due care in making decisions

d. Usurping a Corporate Opportunity