Exhibit 10.4

 

PERFORMANCE SHARE AGREEMENT

UNDER

STEREOTAXIS, INC. 2002 STOCK INCENTIVE PLAN

THIS AGREEMENT, made effective as of the ____ day of _____, 20__, by and between
Stereotaxis, Inc., a Delaware corporation (the “Company”), and _______________
(the “Awardee”).

WITNESSETH THAT:

WHEREAS, the Board of Directors of the Company (the “Board of Directors”) has
adopted the Stereotaxis, Inc. 2002 Stock Incentive Plan (as amended and/or
restated from time to time, the “Plan”) pursuant to which options, performance
share awards, restricted stock and stock appreciation rights with respect to
shares of the common stock of the Company may be granted to employees of the
Company and its subsidiaries and certain other individuals; and

WHEREAS, the Company desires to grant to Awardee a performance share award for
________________ (__________) shares of its stock under the terms hereinafter
set forth (“Award”);

NOW, THEREFORE, in consideration of the premises, and of the mutual agreements
hereinafter set forth, it is covenanted and agreed as follows:

1.       Award Subject to Plan. This award is granted under and is expressly
subject to, all the terms and provisions of the Plan, which terms are
incorporated herein by reference. The Optionee hereby acknowledges receipt of a
copy of the Plan and agrees to be bound by all the terms and provisions thereof.
Terms not defined herein shall have the meaning ascribed thereto in the Plan.
The Committee referred to in Paragraph 4 of the Plan (“Committee”) has been
appointed by the Board of Directors, and designated by it, as the Committee to
make grants of Performance Shares.

2.         Grant and Terms of Award. Pursuant to action of the Committee, which
action was taken on ________, 20__ (“Date of Award”), the Company awards to
Awardee _________________ (_________) shares of the Common Stock of the Company,
of the par value of $.001 per share (“Shares” or “Performance Shares”);
provided, however, that the Shares hereby awarded are subject to the risks of
forfeiture described below and are nontransferable by the Awardee for a period
commencing on the Date of Award and ending upon the later of (i) the date on
which certain Performance Criteria set forth in Exhibit A to this Agreement have
been achieved and (ii) one (1) year after the Date of Award (the “Restriction
Periods”). During the Restriction Periods, the nontransferable Shares shall bear
a legend indicating their nontransferability. Further, during the period ending
immediately before the date one year after the Date of Award, all Shares will be
subject to forfeiture and nontransferable by the Awardee. If the Awardee
terminates service with the Company for any reason, including without
limitation, upon death or Disability, prior to later of (i) the date on which
the Performance Criteria with

respect to the applicable portion of the Award have been achieved and (ii) one
(1) year after the Date of Award, Awardee shall forfeit the Shares which remain
nontransferable at that time. Notwithstanding the foregoing, if there is a
Change of Control (as hereinafter defined) and Awardee is involuntarily
terminated for reasons other than Cause or terminates for Good Reason on or
within one (1) year after the date of the Change of Control, the total number of
Shares to which this grant relates shall vest immediately and become
nonforfeitable. Notwithstanding anything herein to the contrary, in the event
that any of the Performance Criteria are not met within five (5) years after the
Date of Award, any Shares remaining unvested and nontransferable under the terms
of the Award will be forfeited by Awardee and returned to the Company. Subject
to the terms hereof and of the Plan, to the extent a Share is vested, it shall
be transferable.

3.         Definitions. For purposes of the Award, the following terms shall
have the following meanings, except where otherwise noted:

(a)       The Performance Criteria and the applicable vesting percentages
related to achievement of each Performance Criteria are set forth in Exhibit A
to this Agreement.

(b)       “Cause” shall mean Awardee’s fraud or willful misconduct as determined
by the Committee.

(c)       “Change of Control” shall mean:
                                                                           

 

(i)        The purchase or other acquisition (other than from the Company) by
any person, entity or group of persons, within the meaning of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
(excluding, for this purpose, the Company or its subsidiaries or any employee
benefit plan of the Company or its subsidiaries), of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of either the then-outstanding shares of common stock of the Company or the
combined voting power of the Company’s then-outstanding voting securities
entitled to vote generally in the election of directors; or

 

(ii)       Individuals who, as of the date hereof, constitute the Board of
Directors of the Company (the “Board” and, as of the date hereof, the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board,
provided that any person who becomes a director subsequent to the date hereof
whose election, or nomination for election by the Company’s shareholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board (other than an individual whose initial assumption of office is
in connection with an actual or threatened election contest relating to the
election of directors of the Company, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) shall be, for purposes of

 

2

this section, considered as though such person were a member of the Incumbent
Board; or

(iii)      The consummation of a reorganization, merger or consolidation, in
each case with respect to which persons who were the stockholders of the Company
immediately prior to such reorganization, merger or consolidation do not,
immediately thereafter, own more than 50% of, respectively, the common stock and
the combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated corporation’s
then-outstanding voting securities, or of a liquidation or dissolution of the
Company or of the sale of all or substantially all of the assets of the Company.

(d)       “Company” shall mean Stereotaxis, Inc., a Delaware corporation.
                                                                           

(e)       “Company Stock” shall mean common stock of the Company.
                                                                           

(f)        “Disability” or “Disabled” shall mean Awardee is permanently and
totally disabled within the meaning of Section 422(c)(6) of the Internal Revenue
Code of 1986, as amended, which, as of the date hereof, shall mean that Awardee
is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a continuous
period of not less than 12 months. Awardee shall be considered Disabled only if
Awardee furnishes such proof of Disability as the Committee may require.

(g)       “Good Reason” shall mean”:                                           
                                

 

(i)        Requiring Awardee to be based at any office or location more than 50
miles from Awardee’s office or location as of the date of the Change of Control;

(ii)       The assignment to Awardee of any duties inconsistent in any respect
with Awardee’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as of the date of the
Change of Control or any action by the Company or any of its subsidiaries which
results in a diminution in such position, authority, duties or responsibilities,
excluding for this purpose an action taken by the Company or one of its
subsidiaries, to which Optionee objects in writing by notice to the Company
within 10 business days after Optionee receives actual notice of such action,
which is remedied by the Company or one of its subsidiaries promptly but in any
event no later than 5 business days after Optionee provided such notice; or

(iii)      The reduction in Awardee’s total compensation and benefits below the
level in effect as of the date of the Change of Control.

 

3

4.         Medium of Payment. The Award shall be made or otherwise settled in
shares of Company Stock. The Company shall withhold sufficient shares to satisfy
the Company’s obligation to withhold for tax requirements at the time of
delivery or vesting of shares hereunder, as appropriate, if Awardee is at the
time of vesting subject to the Company’s policies regarding restrictions on
trading within specified trading “windows”, and the Company may, in its sole
discretion, so withhold if Awardee is not subject to such restrictions upon
Awardee’s request. In the event that the Company withholds shares as
contemplated in this Section, the Awardee shall receive a net number of shares
equal to the shares to which the Awardee is otherwise entitled hereunder, less
the number of shares withheld by the Company hereunder. In the event that the
Company determines not to withhold shares for an Awardee who is not subject to
the trading restrictions prior to the payment or settlement of the Award, as
appropriate, the Awardee must pay, or make arrangements acceptable to the
Company for the payment of, any and all tax withholding that in the opinion of
the Company is required by law. Such arrangements for payment of withholding may
include, for example, directing an appropriate broker to sell such number of
shares as necessary to result in a cash amount equal to the withholding
requirements.

5.         Termination of Service. Awardee shall forfeit the Shares to the
extent not vested prior to Awardee’s termination of service. The Shares hereby
granted shall not be affected by any change of service so long as Awardee
continues to be a service provider to the Company or a subsidiary thereof.
Nothing herein shall confer on Awardee the right to continue in the service of
the Company or any subsidiary or interfere in any way with the right of the
Company or any subsidiary thereof to terminate Awardee’s service at any time.

6.         Committee Administration. These Awards have been granted pursuant to
a determination made by the Committee, and such Committee or any successor or
substitute committee authorized by the Board of Directors or the Board of
Directors itself, subject to the express terms of these Awards, shall have
plenary authority to interpret any provision of this grant and to make any
determinations necessary or advisable for the administration of this grant and
the exercise of the rights herein granted, and may waive or amend any provisions
hereof in any manner not adversely affecting the rights granted to Awardee by
the express terms hereof.

7.         Choice of Law. This Agreement shall be governed by the laws of the
State of Delaware, excluding any conflicts or choice of law rule or principle
that might otherwise refer construction or interpretation of the Agreement to
the substantive law of another jurisdiction. Awardee is deemed to submit to the
exclusive jurisdiction and venue of the federal or sate courts of Missouri,
County of St. Louis, to resolve any and all issues that may arise out of or
relate to this Agreement.

Executed this _____ day of __________, 200_

 

STEREOTAXIS, INC.

 

 

 

By:

 

 

 

 

 

 

 

4

ATTEST:

 

 

 

 

 

 

 

 

AWARDEE

 

 

 

 

 

 

 

5

EXHIBIT A

PERFORMANCE SHARE AWARD

PERFORMANCE CRITERIA

This Exhibit A, Performance Criteria, sets forth the performance measures
required to achieve vesting of the Performance Shares awarded under the
Performance Share Agreement this _____day of ________, 200__, in the percentages
described below, between the Company and __________________ (“Awardee”).

With respect to the Performance Shares granted to Awardee, subject to all
provisions of the Performance Share Agreement, including this Exhibit A, the
following Performance Criteria must be met by the Company in order for the
respective portion of Shares to vest and become transferable. Until the date on
which such criteria are met, if at all, the related Shares will remain unvested
and nontransferable.

 

Performance Criteria

Percentage of Award Vesting and

Becoming Transferable

 

 

 

(a)

Achieving Net Income Before Extraordinary Items of at least $1 million in one
calendar quarter and at least $5 million cumulatively for such quarter and the
immediately succeeding calendar quarter.

50%

 

 

 

 

(b)

Achieving revenue recognition related to one hundred (100) cumulative Niobe or
successor systems

25%

 

 

 

 

(c)

Achieving revenue for a trailing twelve month period (i.e., a 12 consecutive
month period) of at least $100 million

25%

 

 

Additional Criteria

It is a requirement for vesting of Shares under items (b) and (c) above that
vesting has occurred under item (a). If vesting would otherwise occur under
either item (b) or (c), but vesting under item (a) has not occurred, no vesting
or transferability of any Shares awarded under this Award shall occur. If the
Performance Criteria under item (a) above are met after the Performance Criteria
in either or both of items (b) and/or (c), the applicable percentage of Shares
under all items (a) and (b) and/or (c) for which Performance Criteria have been
met shall vest at such time.

 

6

Determination of Vesting

For purposes of determining whether the criteria in paragraphs (a) through (c)
above, reference will be made to the financial statements of the Company as of
the end of the calendar quarter related to the achievement of the related
criterion. The financial statements will be those included in the Company’s
quarterly report on Form 10-Q as filed with the Securities and Exchange
Commission, on the date such filing is made, provided the quarter is other than
the fourth quarter of the calendar year. If the related quarter is the fourth
quarter of a calendar year, such financial statements will be those prepared by
management and forming the basis for the Company’s release of its earnings to
the public markets as of the close of business on the date of such release.

 

7