HISTORICAL SETTING In the 1920s, Loft Candy Company (Loft, Inc.), based in Long Island City New York, was a publicly held company witha $13 million candy-and-restaurant chain. The com- pany manufactured its own candies, syrups, and beverages and sold its products in its more than one hundred retail locations throughout theu Northeast. In 1930, Charles Guth became Loft's president after a contentious stockholders' meet head ing. His position there set the stage for the rise ofusurped a corpor the soft drink Pepsi-Cola PST Pepsi-Cola got its head of Loft Ca FACTS At the time Charles Guth became Loft's president, Guth and his family owned Grace Company, which made syrups for soft drinks in a plant in Baltimore, Maryland. Coca-Cola Company sup- plied Loft with cola syrup. Unhappy with what he felt was Coca-Colas high price, Guth entered into an agreement with Roy Megargel to acquire the trademark and formula for Pepsi-Cola and form Pepsi- Cola Corporation. Neither Guth nor Megargel could finance the new venture, and Grace Company was insolvent. Without the knowledge of Loft's board of directors, Guth used Loft's capital, credit, facilities, and employees to further the Pepsi enterprise. At Guth's direction, a Loft employee made the concentrate for the syrup, which was sent to Grace Com- pany to add sugar and water. Loft charged Grace Company for the concentrate but allowed forty months' credit. Grace charged Pepsi for the syrup but also granted substantial credit. Grace sold the syrup to Pepsi's customers, including Loft, which paid on delivery or within thirty days. Loft also paid for Pepsi's advertising