SCIL » Topics » 15. Related Party Transactions

These excerpts taken from the SCIL 10-K filed Mar 5, 2009.

15. Related Party Transactions

On September 30, 2003, we entered into an agreement with Posit Science Corporation (“Posit Science”), formerly Neuroscience Solutions Corporation, to provide Posit Science with exclusive rights in the healthcare field to certain intellectual property, patents and software we own or license, along with transfer of certain healthcare research projects. A co-founder, substantial shareholder, and former member of our Board of Directors is a co-founder, officer, director and substantial shareholder of Posit Science.

The rights were acquired by Posit Science for a combination of cash, stock and future royalties. Posit Science paid $500,000 cash, of which $448,000 was recognized as other income during the year ended December 31, 2003. The balance was recognized over the next nine months as services were provided to Posit Science. Amounts received to date and any future receipts are being reported as other income as we do not consider the sale of these rights to be part of our recurring operations. Under the agreement, we will receive net royalties between 2% to 4% on products sold by Posit Science that use our patents or software.

We have a 3.5% equity interest in Posit Science. We recorded royalty income from Posit Science of $150,000, $246,000, and $150,000 in fiscal years 2008, 2007 and 2006, respectively.

In July 2007 Michael A. Moses joined our Board of Directors as Vice Chair and also entered into a consulting agreement with us. The consulting agreement provides for a consulting fee of $40,000 per year and two stock option grants, both with a five year term and at a per share exercise price of $7.15, the closing price of the Company’s Common Stock on July 25, 2007. The first option grant for 80,000 shares vests over four years, with a one year cliff with ratable monthly vesting thereafter. The second option for 100,000 shares vests only in the event the per share price of the Company’s common stock reaches and maintains for 20 consecutive business days a specified target closing price as follows: 25,000 shares vesting at each target stock price of $15, $20, $25, and $30.

We also have in place consulting agreements with two of our founders, who are or were also members of our Board of Directors. Dr. Paula Tallal, who is a current Board member, provides ongoing consulting in the areas of customer relationships and research planning and in fiscal 2008, 2007 and 2006 received total compensation of approximately $111,000, $107,000 and $105,000, respectively. Dr. Michael Merzenich, who retired as a Board member in October 2008, provides consulting services including public speaking, meetings with third parties and other projects as agreed from time to time, and in fiscal 2008, 2007 and 2006 received total compensation of approximately $28,000, $21,000 and $16,000, respectively.

Page 65



Notes to Financial Statements

15. Related Party Transactions



On September 30, 2003, we entered into an agreement with Posit Science Corporation (“Posit Science”), formerly Neuroscience Solutions Corporation, to provide Posit Science with exclusive rights in the healthcare field to certain intellectual property, patents and software we own or license, along with transfer of certain healthcare research projects. A co-founder, substantial shareholder, and former member of our
Board of Directors is a co-founder, officer, director and substantial shareholder of Posit Science.



The rights were acquired by Posit Science for a combination of cash, stock and future royalties. Posit Science paid $500,000 cash, of which $448,000 was recognized as other income during the year ended December 31, 2003. The balance was recognized over the next nine months as services were provided to Posit Science. Amounts received to date and any future receipts are being reported as other income as we do not consider the sale
of these rights to be part of our recurring operations. Under the agreement, we will receive net royalties between 2% to 4% on products sold by Posit Science that use our patents or software.



We have a 3.5% equity interest in Posit Science. We recorded royalty income from Posit Science of $150,000, $246,000, and $150,000 in fiscal years 2008, 2007 and 2006, respectively.



In July 2007 Michael A. Moses joined our Board of Directors as Vice Chair and also entered into a consulting agreement with us. The consulting agreement provides for a consulting fee of $40,000 per year and two stock option grants, both with a five year term and at a per share exercise price of $7.15, the closing price of the Company’s Common Stock on July 25, 2007. The first option grant for 80,000 shares vests over four
years, with a one year cliff with ratable monthly vesting thereafter. The second option for 100,000 shares vests only in the event the per share price of the Company’s common stock reaches and maintains for 20 consecutive business days a specified target closing price as follows: 25,000 shares vesting at each target stock price of $15, $20, $25, and $30.



We also have in place consulting agreements with two of our founders, who are or were also members of our Board of Directors. Dr. Paula Tallal, who is a current Board member, provides ongoing consulting in the areas of customer relationships and research planning and in fiscal 2008, 2007 and 2006 received total compensation of approximately $111,000, $107,000 and $105,000, respectively. Dr. Michael Merzenich, who retired as a
Board member in October 2008, provides consulting services including public speaking, meetings with third parties and other projects as agreed from time to time, and in fiscal 2008, 2007 and 2006 received total compensation of approximately $28,000, $21,000 and $16,000, respectively.



Page 65









Notes to Financial Statements



These excerpts taken from the SCIL 10-K filed Mar 11, 2008.

15. Related Party Transactions

On September 30, 2003, we entered into an agreement with Posit Science Corporation (“Posit Science”), formerly Neuroscience Solutions Corporation, to provide Posit Science with exclusive rights in the healthcare field to certain intellectual property, patents and software we own or license, along with transfer of certain healthcare research projects. A co-founder, substantial shareholder, and member of our Board of Directors is a co-founder, officer, director and substantial shareholder of Posit Science.

The rights were acquired by Posit Science for a combination of cash, stock and future royalties. Posit Science paid $500,000 cash, of which $448,000 was recognized as other income during the year ended December 31, 2003. The balance was recognized over the next nine months as services were provided to Posit Science. Amounts received to date and any future receipts are being reported as other income as we do not consider the sale of these rights to be part of our recurring operations. Under the agreement, we will receive net royalties between 2% to 4% on products sold by Posit Science that use our patents or software.

We have a 3.5% equity interest in Posit Science. We recorded royalty income from Posit Science of $246,000, $150,000, and $50,000 in fiscal years 2007, 2006 and 2005, respectively. There is an amount of $158,000 due from Posit Science at December 31, 2007.

In July 2007 Michael A. Moses joined our Board of Directors as Vice Chair and also entered into a consulting agreement with us. The consulting agreement provides for a consulting fee of $40,000 per year and two stock options, both with a five year term and at a per share exercise price of $7.15, the closing price of the Company’s Common Stock on July 25, 2007. The first option grant for 80,000 shares vests over four years, with a one year cliff with ratable monthly vesting thereafter. The second option for 100,000 shares vests only in the event the per share price of the Company’s common stock reaches and maintains for 20 consecutive business days a specified target closing price as follows: 25,000 shares vesting at each target stock price of $15, $20, $25, and $30.

Page 62



Notes to Financial Statements

15. Related Party Transactions (continued)

We also have in place consulting agreements with two of our founders, who are also members of our Board of Directors. Dr. Tallal provides ongoing consulting in the areas of customer relationships and research planning and in 2007, received a retainer of approximately $83,000 for those services. Dr. Merzenich provides consulting services including public speaking, meetings with third parties and other projects as agreed from time to time. Dr. Merzenich is paid a consulting fee of $2,000 per day.

15. Related Party
Transactions



On September 30, 2003, we
entered into an agreement with Posit Science Corporation (“Posit Science”),
formerly Neuroscience Solutions Corporation, to provide Posit Science with exclusive
rights in the healthcare field to certain intellectual property, patents and software
we own or license, along with transfer of certain healthcare research projects. A
co-founder, substantial shareholder, and member of our Board of Directors is a
co-founder, officer, director and substantial shareholder of Posit Science.



The rights were acquired by
Posit Science for a combination of cash, stock and future royalties. Posit Science paid
$500,000 cash, of which $448,000 was recognized as other income during the year ended
December 31, 2003. The balance was recognized over the next nine months as services
were provided to Posit Science. Amounts received to date and any future receipts are
being reported as other income as we do not consider the sale of these rights to be
part of our recurring operations. Under the agreement, we will receive net royalties
between 2% to 4% on products sold by Posit Science that use our patents or
software.



We have a 3.5% equity interest
in Posit Science. We recorded royalty income from Posit Science of $246,000, $150,000,
and $50,000 in fiscal years 2007, 2006 and 2005, respectively. There is an amount of
$158,000 due from Posit Science at December 31, 2007.



In July 2007 Michael A. Moses
joined our Board of Directors as Vice Chair and also entered into a consulting
agreement with us. The consulting agreement provides for a consulting fee of $40,000
per year and two stock options, both with a five year term and at a per share exercise
price of $7.15, the closing price of the Company’s Common Stock on July 25, 2007.
The first option grant for 80,000 shares vests over four years, with a one year cliff
with ratable monthly vesting thereafter. The second option for 100,000 shares vests
only in the event the per share price of the Company’s common stock reaches and
maintains for 20 consecutive business days a specified target closing price as follows:
25,000 shares vesting at each target stock price of $15, $20, $25, and $30.



Page
62









Notes to Financial
Statements



15. Related Party
Transactions (continued)



We also have in place consulting
agreements with two of our founders, who are also members of our Board of Directors.
Dr. Tallal provides ongoing consulting in the areas of customer relationships and
research planning and in 2007, received a retainer of approximately $83,000 for those
services. Dr. Merzenich provides consulting services including public speaking,
meetings with third parties and other projects as agreed from time to time. Dr.
Merzenich is paid a consulting fee of $2,000 per day.



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