Exhibit 10.5

 

NOTICE OF PERFORMANCE SHARE AWARD

 

To:      From:   

                     Committee of the Board of Directors (“Committee”)

Subject:   

Stereotaxis, Inc. 2002 Stock Incentive Plan (“Plan”)

 

1. Award. The Committee has awarded to you              Performance Shares under
the terms of the Plan (“Award”). The Award is subject to all of the terms of the
Plan, a copy of which has been delivered to you.

 

2. Terms. The following are the terms of the Award:

 

(a) If you are still employed on             , 200    , you will earn 100% of
the Award provided you comply with the terms of the remainder of this Notice of
Award.

 

(b) Notwithstanding (a), above, if, during the Period of the Award, the
[earnings per share/average value per share of company stock/other performance
measure] reaches the amount set forth in column (A), you will nevertheless earn
the percentage of the Award set forth under column (B) provided you comply with
the terms of the remainder of this Notice of Award.

 

A

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B

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If the [Performance Measure]

reaches:

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The Cumulative

Percent of Award

Earned shall be:

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             or more

   100%

_____

   85%

_____

   70%

_____

   55%

_____

   40%

_____

   20%

Less than             

   0%

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(c) The following additional terms will apply to the Award:

 

(i) No portion of this Award may be earned prior to             , 200    . Not
more than one-third of the total Award may be earned by the end of the Fiscal
Year ending             , 200     and not more than two-thirds of the total
Award may be earned by the end of the Fiscal Year ending             , 200    .
If a greater portion of the Award would have been earned in the applicable
period but for the foregoing limitations, the portion in excess of the
limitations must be re-earned in a subsequent Fiscal Year.

 

(ii) Once a portion of the Award is earned under subparagraph (b), you must
remain employed with the Company or a subsidiary of the Company until the
             following the end of the Fiscal Year in which that portion of the
Award is earned. If you terminate employment prior to such time, you will
forfeit that portion of the Award. Provided, however, that if you terminate
employment on account of death, or total and permanent disability the foregoing
employment requirement shall not apply.

 

(iii) If there is a Change of Control (as hereinafter defined) and you are
employed by the Company on the date of the Change of Control, the employment
requirement of subparagraph (ii) shall cease to apply to the portion of the
Award which is earned and the number of shares representing that portion of the
Award which is earned as of the date of the Change of Control shall be paid to
you. In addition, the dollar value of the Award which is unearned shall be
determined and paid in cash to you at the end of the Fiscal Year in which the
Change of Control occurred provided you are still employed on such date, in lieu
of all other provisions of this Award. If you are not employed by the Company as
of the end of such Fiscal Year, no such payment will be made; provided, however,
that if you are involuntarily terminated for reasons other than Cause or if you
terminate for Good Reason the remaining unpaid portion shall be paid in full
upon such termination of employment.

 

(a) Notwithstanding the foregoing provisions of this subparagraph (iii), in the
event a certified public accounting firm designated by the Committee (the
“Accounting Firm”) shall determine that any payment, whether paid or payable
pursuant to the terms of this Award or otherwise (each such payment hereinafter
defined as a “Payment” and all Payments in the aggregate hereinafter defined as
the “Aggregate Payment”), would subject you to tax under Section 4999 of the
Internal Revenue Code of 1986 (“Code”) such Accounting Firm shall determine
whether some amount of payments would meet the definition of a “Reduced Amount”.
If the Accounting Firm determines that there is a Reduced Amount, payments shall
be reduced so that the Aggregate Payments shall equal such Reduced Amount. For
purposes of this subparagraph, the “Reduced Amount” shall be the largest
Aggregate Payment which (a) is less than the sum of all Payments and (b) results
in aggregate Net After Tax Receipts which are equal to or greater than the Net
After Tax Receipts which would result if Payments were made without regard to
this subsection (a). “Net After Tax Receipt” means the Present Value (defined
under Section 280G(d)(4) of the Code) of a Payment net of all taxes imposed on
you under Section 1 and 4999 of the Code by applying the highest marginal rate
under Section 1 of the Code.

 

(b) As a result of the uncertainty in the application of Section 4999 of the
Code at the time of the initial determination of the Accounting Firm hereunder,
it is possible that Payments will be made by the Company which should not have
been made (the “Overpayments”) or that additional Payments which the Company has
not made could have been made (the “Underpayments”), in each case consistent
with the calculations of the Accounting Firm. In the

 

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event that the Accounting Firm, based either upon (A) the assertion of a
deficiency by the Internal Revenue Service against the Company or you which the
Accounting Firm believes has a high probability of success or (B) controlling
precedent or other substantial authority, determines that an Overpayment has
been made, any such Overpayment shall be treated for all purposes as a loan to
you which you shall repay to the Company together with interest at the
applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code;
provided, however, that no amount shall be payable by you to the Company if and
to the extent such payment would not reduce the amount which is subject to
taxation under Section 1 and Section 4999 of the Code or if the period of
limitations for assessment of tax has expired. In the event that the Accounting
Firm, based upon controlling precedent or other substantial authority,
determines that an Underpayment has occurred, any such Underpayment shall be
promptly paid by the Company to you together with interest at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Code.

 

3. Definitions. For purposes of the Award, the following terms shall have the
following meanings:

 

  (a) [Define Performance Measure]

 

  (b) “Cause” shall mean:

 

(i) The willful and continued failure to perform substantially your duties with
the Company or one of its subsidiaries (other than any such failure resulting
from incapacity due to physical or mental illness), after a written demand for
such performance is delivered to you by the Board of Directors of the Company
which specifically identifies the manner in which such Board believes that you
have not substantially performed your duties; or

 

(ii) The willful engaging in (A) illegal conduct (other than minor traffic
offenses), or (B) conduct which is in breach of your fiduciary duty to the
Company or one of its subsidiaries and which is demonstrably injurious to the
Company or one of its subsidiaries, any of their reputations, or any of their
business prospects. For purposes of this subparagraph (ii) and subparagraph (i)
above, no act or failure to act on your part shall be considered “willful”
unless it is done, or omitted to be done, by you in bad faith or without
reasonable belief that your action or omission was in the best interests of the
Company or one of its subsidiaries. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board of Directors
of the Company or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by you in good faith
and in the best interests of the Company or one of its subsidiaries; or

 

(iii) A knowing violation of any federal procurement law or regulation.

 

The cessation of your employment shall not be deemed to be for “Cause” unless
and until there shall have been delivered to you a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths of the entire

 

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membership of such Board of Directors of the Company (but excluding you if you
are a member of such Board) at a meeting of such Board called and held for such
purpose (after reasonable notice is provided to you and you are given an
opportunity, together with counsel, to be heard before such Board), finding
that, in the good-faith opinion of such Board, you are guilty of the conduct
described in subparagraph (i), (ii) or (iii) above, and specifying the
particulars thereof in detail.

 

(c) “Change of Control” shall mean:

 

(1) 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

 

(2) 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
this section, considered as though such person were a member of the Incumbent
Board; or

 

(3) 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) “Fiscal Year” shall mean the fiscal year of the Company which, as of the
date hereof, is the twelve month period commencing              and ending
            .

 

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(g) “Good Reason” shall mean:

 

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

 

(ii) The assignment to you of any duties inconsistent in any respect with your
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 you object in writing by notice to the Company within 10 business days
after you receive 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 you provided such notice, or

 

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

 

  (h) Period of the Award” means the period commencing             , 200     and
ending on            , 200    .

 

4. Medium of Payment. Payment of the Award shall be made in shares of Company
Stock except that the Committee may direct that a portion of the payment shall
be withheld or paid in cash to satisfy income tax requirements in respect of
such payment.

 

5. Award Subject to Shareholder Approval of Plan. This Award is subject to
approval of the Plan by the shareholders of the Company within twelve (12)
months of its adoption. If such approval is not obtained, this Award shall be
void and of no force or effect, and no payment of any kind shall be due
hereunder.

 

6. Amendment. The Award may be amended by written consent between the Committee
and you.

 

Executed this      day of                     , 200    

 

STEREOTAXIS, INC.

   

By:

 

 

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AGREED TO ACCEPTED:

   

Vice President

           

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ATTEST:

 

 

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Secretary

   

 

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