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STEREOTAXIS, INC. filed this Form S-1/A on 05/12/2004
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Within ten (10) days of completion of each Phase of integration Research and
Development, Stereotaxis will provide Philips a written invoice stating the
approximate sum and breakdown of the following development expenditures
("Expenditures") incurred by Stereotaxis in such stage:

      1.    The number of Stereotaxis employees allocated to the development
            work in such Phase and their titles;

      2.    The percentage of each such employees' time allocated to work on the
            Phase (on a monthly basis);

      3.    The remuneration (on a fully loaded basis) of each such employee in
            the pertinent Phase;

      4.    A statement of related materials and/or other related third party
            costs expended during such Development Phase as included in the


The parties will establish a minimum of three promotional "Center of Excellence"
Integrated Cath Labs. The parties intend that the Centers of Excellence will be
the focus of development of unique solutions in areas of technology leadership
to be mutually agreed. The Centers of Excellence will be installed at mutually
agreed sites, which could include:

      o     St. Georg, Hamburg

      o     University of California at San Francisco

      o     Others to be determined.

The installation timeline for Centers of Excellence will be mutually agreed
promptly after signing of this Letter Agreement.

Philips will purchase a maximum of three NIOBE Systems (comprising components of
Integrated Cath Labs to be placed by Philips at Centers of Excellence) by
purchase order issued by no later than December 31, 2004 (or, at Stereotaxis
election, January 1, 2005) each system individually payable in three terms
(first term upon placing the order, second term upon delivery of the system and
a final term upon hand-over to the customer) at [***].


      o     The parties will work together to maximize sales through
            co-placement and co-marketing of Integrated Cath Labs, including
            cooperating in good faith to achieve co-ordination and cooperation
            of sales forces to facilitate co-placements at mutually agreed
            targeted sites, provided that the parties continue to maintain
            distinct and separate sales operations and identities

      o     Philips will provide project management at customer sites for
            Integrated Cath Labs addressing room preparation and installation

      o     By way of sharing of co placement economics Philips will pay to
            Stereotaxis a co placement fee according to the following schedule:

                  o     [***]

                  o     [***]

                  o     [***]

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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