May 19, 2001

VIA FAX to 412/761-0212


Ray Howard
President,
ALSA, Inc.
607 California Ave.
Pittsburgh, PA 15202


Re: Your Request for a Legal Opinion

Dear Mr. Howard;

I received your undated letter re: "Conflict of Interest" on May 17, requesting legal guidance by May 23.

I have reviewed the limited material (highlighted portions from the "AOBA Show Handbook" that accompanied your letter.

Ms. Schofield contacted me on May 18 and requested my fax number so she could forward items to me as well. I have reviewed the 10 pages of materials she sent consisting of a "Show Administrator Agreement" an opinion letter from her lawyers and other correspondence.

From the review of these materials, I feel that I am seeing the mere tip of the iceberg. The materials raise many questions, however, I do not feel that I possess sufficient knowledge of the facts to offer helpful guidance at this point in time.

To competently advise ALSA, I feel that I must be brought into the loop, permitted a significant opportunity to discussion with persons with first-hand knowledge of the facts, and participate with the ALSA board in a discussion of the organization's legal objectives in light of the facts, once they are established.

From review of the limited materials; however, I do appreciate your concerns. I do not believe the opinion letter of Ms. Schofield's lawyer, which suggest Ms. Schofield is legally free to accept employment as the Show Administrator for AOBA, was based upon rigorous review of the facts nor the broad range of fiduciary duties that directors owe to the corporations they have been selected to run. I am concerned that those lawyers failed to appreciate the significant nor application to these facts of a director's fiduciary duty neither to compete directly against, nor usurp the business opportunities of the corporation.

To explain this doctrine, I provide two quotations from a legal encyclopedia. The first quote explains the general rule; the second discusses how the rule has been applied to specific cases: "A corporate officer or director is under a fiduciary obligation not to divert a corporate business opportunity for his own personal gain. The rule is that if there is presented to a corporate officer or director a business opportunity which the corporation is financially able to undertake, which is from its nature in the line of the corporations business and is of practical advantage to it, and which is one in which the corporation has an interest or a reasonable expectancy, and if, by embracing the opportunity, the self interest of the officer or director will be brought into conflict with that of this corporation, the law will not permit him to seize the opportunity for himself. If he does, the corporation may claim the benefit of the transaction. This doctrine of corporate opportunity is a species of the duty of a fiduciary to act with undivided loyalty; it is one of the manifestations of the general rule that demands of an officer or director the utmost good faith in his relation to the corporation which he represents."

18B Am. Jur.2d "Corporations" S1770 "Appropriate of Corporate Opportunities, Generally" "Since the question whether a director or officer has appropriated for himself something that in fairness should belong to his corporation is a factual one to be decided by reasonable inference from objective facts, the result in any particular case has hinged on the surrounding circumstances and particular actions that allegedly constituted a breach of the corporate opportunity doctrine. Thus most cases involving the taking of a corporation's customers by an officer or director have resulted in the officer or director involved being held liable for a breach of the doctrine. Similar results have been reached in cases involving interference by officers or directors with their corporations' interest or expectancy in the lease of business premises, sale of stock in competition with their corporations, and the purchase by officers or directors of outstanding financial obligations of their corporations. Cases involving opportunities to take advantage of interests in oil, gas or mineral properties appear to turn largely on whether the opportunity presented is speculative and in the line of the corporation's business. When the opportunity is in the line of the corporation's business, a violation of the doctrine is likely to be held supportable, while opportunities that are highly speculative or of a different type than that ordinarily pursued by the corporation are likely to result in a contrary determination. Similarly, actions involving the providing of goods and services, the purchase of property or manufacturing machinery, or the purchase of shares in other corporations, appear to have results that depend on whether the corporations involved had taken an active interest in the opportunities presented."

I also share your concerns that the wholesale plagiarism of ALSA materials (assuming they were published with copyright notices; and further complicated by uncertainty about the origin and authorship of the materials in question), and their republication by AOBA under claim of copyright, violates ALSA'S rights protected by the federal copyright laws.

I offer a few statements of the rules which may have been violated by AOBA'S usurpation of ALSA'S handbook. "The Copyright Act of 1976 lists five fundamental exclusive rights which the statute gives to copyright owners; the rights of reproduction, adaption, distribution, performance, and display. These exclusive rights, which comprise the so-called 'bundle of rights', are cumulative and may overlap in some cases. The copyright owner has the sole right to exercise any of the exclusive rights of copyright and conversely, to exclude others from exercising any such rights, but these broad rights are qualified by various limitations enumerated in the statute. The protection accorded a copyright owner by the statute has never accorded the copyright owner complete control over all possible uses of his work; rather, the Copyright Act grants the copyright holder 'exclusive' rights to use and to authorize the use of his works in only five qualified ways. Hence, an unlicensed use of a copyright is not an infringement unless it conflicts with one of the specific exclusive rights conferred by the copyright statute. Each of the five enumerated rights may be subdivided indefinitely and each subdivision may be owned and enforced separately."

18 Am.Jur.2d. "Copyright and Literary Property" S70, "Statutory Rights Generally"

Unfortunately, I will be out of my office from May 21 to May 28, and cannot participate in your board meeting scheduled for May 23. I would be willing to undertake an assignment to pursue the legal questions raised by your correspondence and this reply, if retained by the ALSA board. In June and July, I would be able to devote a significant block of time to the assignment.

Very truly yours,
Terry Price
Thornton W. Price III