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STEREOTAXIS, INC. filed this Form S-1/A on 06/17/2004
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regarding this separation agreement, please refer to “— Agreements with Named Executive Officers” below.

Stock Option Grants in 2003

       The following table sets forth certain information with respect to stock options granted to each of our named executive officers during the fiscal year ended December 31, 2003.

Individual Grants

of Total Potential Realizable
Options Value at Assumed
Number of Granted to Annual Rates of Stock
Securities Employees Price Appreciation for
Underlying in Fiscal Exercise Option Term
Options 2003 Price Expiration
Name Granted (%) ($/Sh) Date 5% 10%

Bevil J. Hogg
    250,000       13.7 %     1.65       5/28/2013     $       $    
Michael P. Kaminski
    50,000       2.7 %     1.65       5/28/2013                  
Douglas M. Bruce
    25,000       1.4 %     1.65       5/28/2013                  
Melissa Walker
    50,000       5.5 %     1.65       5/28/2013                  
      50,000               1.65       11/19/2013                  
Nicola J.H. Young
    150,000       8.2 %     1.65       5/28/2013                  

       All options granted to these executive officers in 2003 were granted under the 2002 Stock Incentive Plan. The percent of total options is based on an aggregate of 1,824,500 shares granted to employees during 2003. Options vest at the rate of 25.0% after one year of service from the date of grant, and monthly thereafter, over 36 additional months. Options have a term of ten years but may terminate before their expiration dates if the optionee’s status as an employee is terminated or upon the optionee’s death or disability. The exercise price on the date of grant was equal to 100% of the fair market value at the date of grant, as determined by the board of directors at the time of grant.

       With respect to the amounts disclosed in the column captioned “Potential Realizable Value At Assumed Annual Rates of Stock Price Appreciation for Option Term”, the 5% and 10% assumed annual rates of compounded stock price appreciation are mandated by rules of the SEC based on the initial public offering price of $          per share and do not represent our estimate or projection of our future common stock prices.

       The potential realizable values are calculated by:

  •  multiplying the number of shares of common stock subject to a given stock option by the initial public offering price of $          per share;
  •  assuming that the aggregate stock value derived from that calculation compounds at the annual 5% or 10% rate shown in the table until the expiration of the offering; and
  •  subtracting from that result the aggregate option exercise price.

       Actual gains, if any, on stock option exercises are dependent on the future performance of our common stock and overall stock market conditions. The amounts reflected in the table may not necessarily be achieved.

Aggregate Option Exercises in Last Fiscal Year and Year-End Options Values

       There were no option exercises by the named executive officers in 2003. The following table sets forth the number and value of unexercised options held by each of the named executive officers on December 31, 2003. The value of “in-the-money” stock options represents the positive spread between the exercise price of stock options and the fair market value of the options, based upon an assumed public offering price of $          per share minus the exercise price per share.


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