“Prior to his death, Mr. Hubbard's literary affairs, including matters relating to the copyrights and patents that are included in Mr. Hubbard's bequest to [Church of Spiritual Technology
("CST")], were managed by Author Services, Inc. ("ASI"), a for-profit California corporation. Since Mr. Hubbard's death ASI has continued to carry out the same function for the executor of Mr. Hubbard's estate and, subsequently, the Trustee of his testamentary trust. Although ASI was incorporated as a for-profit corporation, throughout its existence all of its shares have been owned by a few members of its staff subject to Stock Redemption Agreements which prohibit them from selling their stock except upon separation from employment and then only to ASI for $1.00 a share. No shareholder of ASO has ever received any dividend or other distribution of ASI's profits as a result of their status as shareholders.
“Once CST's tax-exempt status is recognized and Mr. Hubbard's estate is distributed to CST, ASI will become a wholly-owned subsidiary of CST and continue managing the properties bequeathed by Mr. Hubbard to CST. CST will receive all income from such properties and will compensate ASI for its services at a rate equal to ASI's cost plus ten percent. ASI currently produces and sells various special properties derived from Mr. Hubbard's intellectual properties, such as art work and leatherbound books. When ASI becomes CST's wholly-owned subsidiary, CST will receive any profits ASI may realize as a form of dividends and donations.
“Once ASI becomes a wholly-owned subsidiary of CST it will conduct fundraising activities for CST by selling special properties with part of the purchase price earmarked as a donation to go to CST to support CST's preservation project.” (1993)