Stereotaxis
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S-1/A
STEREOTAXIS, INC. filed this Form S-1/A on 05/12/2004
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                                                                   EXHIBIT 10.16

                                LETTER AGREEMENT
         STEREOTAXIS, INC. ("STEREOTAXIS") AND PHILIPS MEDICAL SYSTEMS
                              DMC GMBH ("PHILIPS")


1.    PREAMBLE

PURSUANT TO THIS LETTER AGREEMENT, PHILIPS AND STEREOTAXIS SET FORTH THE BINDING
HEADS OF AGREEMENT OUTLINING THE PRINCIPAL TERMS AND CONDITIONS FOR THEIR
STRATEGIC ALLIANCE FOR THE DEVELOPMENT OF IMPORTANT NEW TECHNOLOGIES FOCUSING ON
THE KEY ROLE OF PHILIPS' INTEGRIS ALLURA FLAT DETECTOR CATH LAB SYSTEM AND
STEREOTAXIS' NIOBE SYSTEM IN INTEGRATED DIGITAL CATH LAB OF THE FUTURE, ALL TO
BE FURTHER ELABORATED IN A DETAILED CO-DEVELOPMENT AND COMMERCIAL AGREEMENT
("DETAILED AGREEMENT") TO BE NEGOTIATED IN GOOD FAITH AND TO BE AGREED UPON
BETWEEN THE PARTIES AS PART OF THE DEVELOPMENT PROGRAM. The Detailed Agreement
shall contain commercially reasonable terms, conditions, representations,
warranties and covenants customary and appropriate for a transaction of the type
contemplated, that will be subject to and including those summarized in this
Letter Agreement.

The parties initial alliance focus is in the field of interventional cardiology,
with additional emphasis in the field of electrophysiology and on the
development of unique solutions as mutually agreed
 in the fields of
interventional radiology, interventional neuro-radiology and on potential
applications for their combined digital platform in additional fields of
medicine.

The parties agree to collaborate on the integration of a modified version of the
Stereotaxis' NIOBE System (an FDA cleared medical device) and Philips' latest
generation Integris Allura flat detector Cath lab system ("Philips X-Ray") to
provide clinicians with a user-friendly advanced interventional suite with
integration of digital instrument control and X-ray imaging comprising an
integrated system (collectively, "Integrated Cath Lab") and designed to ensure
effective and safe use of integrated imaging and instrument control.

The intention of the parties is that the Integrated Cath Lab will primarily be
designed to focus on interventional cardiology applications, while also
including features making the system suitable for use in electrophysiology
(including integration capability for third party three dimensional instrument
localization systems) and, to the extent mutually agreed by the parties from
time to time, in writing, in interventional radiology, interventional
neuro-radiology or other applications.

Features of the parties' collaborative alliance include, without limitation:

      o     Development of Integrated Cath Labs;

      o     Co-placement and co-marketing of Integrated Cath Labs;

      o     Co-development of new solutions & technologies (as mutually agreed
            in writing from time to time and primarily comprising applications
            for Integrated Cath Labs, primarily focusing in interventional
            cardiology as noted above);

      o     Service, training and support for Integrated Cath Labs;

      o     Development funding for Integrated Cath Labs;

and otherwise as set out below or agreed between the parties.


Initial Philips:                                            Initial Stereotaxis:

/s/ JURGEN TIEMANN                                             /s/ BEVIL HOGG



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