Stereotaxis
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S-1/A
STEREOTAXIS, INC. filed this Form S-1/A on 05/12/2004
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1.    INTEGRATION SCHEDULE AND JOINT DEVELOPMENT PLAN

o     The parties will use all reasonable commercial efforts and will coordinate
      and cooperate in good faith to achieve completion of the Integrated Cath
      Lab so as to allow demonstration of the first customer-ready system by TCT
      in September, 2004 or earlier

o     Immediately after signing of this Letter Agreement each party will appoint
      and will notify the other in writing of its integration project manager
      responsible for coordinating integration development work

o     The project managers will promptly coordinate and prepare a detailed
      schedule and joint development plan for achieving development of the
      Integrated Cath Labs, focusing in particular on inclusion of features
      tailored for high volume and important interventional cardiology
      applications and compliance with the integration schedule designated
      above. Such detailed schedule and joint development plan shall be subject
      to review and written approval of duly authorized officers of both
      parties.

2.    DEVELOPMENT WORK.

o     The development work will be carried out in close cooperation between the
      parties and based on a joint development plan which includes appropriate
      milestones in an effort to keep cost and expenditures to a minimum

o     The parties intend to negotiate in good faith regarding mutually agreeable
      research and development collaborations for future generations of the
      Integrated Cath Lab.

o     Guiding principles for the development work will be that Stereotaxis
      undertakes all work required to modify the NIOBE System (including user
      interface software compatibility, mechanical integration required to
      achieve requisite magnetic and C-arm angles for interventional cardiology
      etc.) and Philips undertakes all work required to modify the Philips X-Ray
      (user interface software compatibility, C-arm motion integration, magnetic
      shielding etc.). Each party provides the other with requisite permissions
      (and represents that is has associated authority) to integrate its
      products with those of the other party as comprised in the Integrated Cath
      Lab in the manner contemplated by this Letter Agreement.

o     Philips will pay Stereotaxis for its engineering and other resources and
      costs of the integration and related research and development work via a
      milestone driven research and development payment up to a maximum of
      $[***] ("R&D Milestone Payment") as set out below. Both parties will
      provide all commercially reasonable and expeditious completion of its
      development work and coordination with the other party in good faith in
      order to facilitate completion of development work by both parties.
      Stereotaxis' deliverables set out below are subject to change by mutual
      written agreement based upon the detailed schedule and joint development
      plan as referred to above or otherwise. Within 30 days of signing of this
      Letter Agreement, Philips will pay Stereotaxis [***]$ by way of prepayment
      of the estimated development work. The parties agree that any prepayment
      of research and development funding set out below are repayable to Philips
      in absence of fulfillment of Stereotaxis' contractual obligations in
      respect of research and development work pursuant to this agreement.

o     Development work to be undertaken by Stereotaxis will comprise:


          PHASE 1. CONCEPT & FEASIBILITY, INITIAL DESIGN.

          Working in full coordination with the dedicated Philips' integration
          team, during Phase 1 Stereotaxis will:


Initial Philips:                                            Initial Stereotaxis:

/s/ JURGEN TIEMANN                                             /s/ BEVIL HOGG


[*** Indicates portions of this exhibit that have been omitted and separately 
     filed with the Securities and Exchange Commission pursuant to a request 
     for confidential treatment.]


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