Exhibit 10.1

 

STEREOTAXIS, INC.

 

NOTE AND WARRANT PURCHASE AGREEMENT

 

THIS NOTE AND WARRANT PURCHASE AGREEMENT (this “Agreement”) is made as of
November 10, 2005 by and among Stereotaxis, Inc., a Delaware corporation (the
“Company”) and the persons on the attached signature pages (sometimes
hereinafter individually referred to as a “Lender” or collectively as the
“Lenders”).

 

Recitals

 

  A. The Company wishes to obtain a commitment for additional financing which
would allow the Company to draw funds as needed;

 

  B. The Lenders wish to provide such commitment to the Company; and

 

  C. In consideration of the above and the mutual covenants hereinafter set
forth, the Company and the Lenders desire to agree on the terms of the Notes to
be issued upon execution of this Agreement , and accordingly agree as follows:

 

1. The Notes.

 

1.1 The Notes. The Lenders are hereby committing to make available to the
Company up to an aggregate original principal amount as set forth on the
attached Schedule 1.1 (the “Committed Funds”) during the Commitment Period, as
defined in Section 1.2. Subject to and upon the terms and conditions set forth
herein, and upon the draw by the Company and advance of funds by the Lenders as
set forth in Section 1.3, the Company shall issue and sell to each Lender, and
each Lender shall purchase from the Company, the Company’s promissory notes (the
“Notes”), in the form attached hereto as Exhibit A, up to the aggregate original
principal amount set forth on the attached Schedule 1.1.

 

1.2 Commitment Period. The Lenders without condition make the Committed Funds
available for the Company’s use for a term which shall terminate upon the
earlier of (i) May 10, 2006, and (ii) the date on which the Company actually
receives additional financing from an institution engaged in the business of
providing goods or services in the field of medical technology or devices in the
form of new equity and/or new debt that is not subject to escrow or other
condition(s) (“Strategic Financing”) in the aggregate amount of not less than
Thirty Million Dollars ($30,000,000), (the “Commitment Period”). The Company
shall have the option to extend the Commitment Period through November 10, 2006.
To extend the Commitment Period, the Company shall notify the Lender of its
election in writing, pursuant to the Notification Provision set out in
Section 6.8, no less than 15 days before the original Commitment Period is
scheduled to expire. In no event shall the Commitment Period extend beyond
November 10, 2006.

 

1.3 Election to Draw on Committed Funds. The Company shall be entitled to draw
on the Committed Funds in no more than ten (10) tranches, in minimum amounts of
$2,000,000 each, up to an aggregate amount as set forth on the attached Schedule
1.1. To draw on the Committed Funds, the Company shall notify the Lender of its
election in writing, pursuant to the

 

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Notification Provision set out in Section 6.8, no less than fourteen (14) days
before the requested advance. The Lender shall advance to the Company such
amount no later than fourteen (14) days after receiving such notification from
the Company. There shall be no preconditions or additional requirements with
respect to the Company’s ability to draw on the Committed Funds. The Lenders
hereby acknowledge that the determination as to whether to make a draw at any
time shall be at the discretion of the executive officers of the Company.

 

1.4 Maturity Date. All amounts due under the Note shall become due and payable
on the earlier of (i) May 10, 2006, and (ii) the date on which the Company
procures Strategic Financing in the amount of not less than Thirty Million
Dollars ($30,000,000), (the “Maturity Date”). The Company shall have the option
to extend the Maturity Date to November 10, 2006. To extend the Maturity Date,
the Company shall notify the Lenders of its election in writing, pursuant to the
Notification Provision set out in Section 6.8, no less than thirty days before
the original Maturity Date. In no event shall the Maturity Date be extendable to
beyond November 10, 2006.

 

1.5 Optional Prepayment. The Company may at any time, prepay the unpaid
principal amount of the Note, or any part thereof, without penalty or premium,
but with interest accrued to the date fixed for prepayment. Notice of prepayment
shall be given by the Company by mail and shall be mailed to the Lenders not
less than 30 days prior to the date fixed for prepayment. Upon giving of notice
of prepayment as aforesaid, the Note (or the portion thereof to be prepaid, as
the case may be) shall on the prepayment date specified in such notice become
due and payable; and from and after the prepayment date so specified (unless the
Company shall default in making such prepayment) interest on the Note (or the
portion thereof to be prepaid, as the case may be) shall cease to accrue and, on
presentation and surrender hereof to the Company for cancellation, the Note (or
the portion thereof to be prepaid as the case may be) shall be paid by the
Company at the prepayment price aforesaid.

 

1.6 Interest. The Company shall pay interest on the unpaid balance of each
advance under the Notes at a per annum interest rate equal to the greater of
(i) six percent (6%) and (ii) the Prime Rate as published in The Wall Street
Journal as of the date of such advance hereunder less one percent (1%). Such
interest shall be paid by the Company to the Lenders with the unpaid principal
balance on the Maturity Date.

 

2. Warrants.

 

2.1 In consideration for entering into and performing this Agreement, the
Company shall grant to the Lender warrants to purchase the Company’s common
stock, par value .001 per share (“Common Stock”). Such warrants shall be in the
form attached as Exhibit B (the “Warrants”), and shall be issued to the Lender
no later than 10 Trading Days following the determination of the Exercise Price.
Each Lender shall receive the number of Warrants as follows:

 

(a) upon execution and delivery of this Agreement, a number of warrants equal to
the that portion of the Committed Funds to be loaned by each such Lender to the
Company multiplied by 0.10, divided by the Exercise Price;

 

(b) upon advance, if any, by each such Lender under Section 1.3, a number of
additional warrants equal to the portion of the Committed Funds so advanced
multiplied by 0.10, divided by the Exercise Price; and

 

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(c) upon the first to occur of any extension of either (1) the Commitment Period
under Section 1.2 or (2) the Maturity Date under Section 1.4, a number of
additional warrants equal to that portion of the Committed Funds to be loaned by
each such Lender multiplied by 0.10, divided by the Exercise Price, provided
that only one adjustment shall be made pursuant to this Section 2.1(c).

 

In no event shall the number of shares issuable upon exercise of such Warrants
exceed 19.9% of the outstanding Common Stock of the Company.

 

2.2 Registration Rights.

 

(a) Promptly following the execution and delivery of this Agreement, the Company
shall use its reasonable best efforts to obtain an amendment, waiver or other
similar document, from the Holders of Registrable Securities under that certain
that certain Fourth Amended and Restated Investor Rights Agreement dated as of
December 17, 2002, as amended, including without limitation a waiver of any
incidental or piggyback registration rights thereunder, to permit the
registration of the shares of Common Stock isssuable upon exercise of the
Warrants (“Warrant Shares”). Within sixty (60) days after the date hereof (or
immediately following receipt of such waiver or amendment, if later), the
Company shall file with the SEC a registration statement with respect to the
maximum number of Warrant Shares isssuable upon exercise of the Warrants
(assuming all Warrants are issued pursuant to Section 2.1 above) and use its
diligent best efforts to cause such registration statement to become effective,
and to keep such registration statement effective for up to ninety (90) days or
until the Lenders have completed the distribution relating thereto (or in the
alternative at the Company’s election cause such Warrant Shares to be included
on an amendment to a shelf registration statement previously filed by the
Company). The Company shall not have any obligation to sell such shares in an
underwritten offering.

 

(b) In connection therewith, the Company shall:

 

i. Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act of 1933, as amended (the “Securities Act”) with respect to the
disposition of all securities covered by such registration statement.

 

ii. Furnish to the Lenders such numbers of copies of a prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Warrant Shares owned by them.

 

iii. Use its best efforts to register and qualify the securities covered by such
registration statement under such other securities or blue sky laws of such
jurisdictions as shall be reasonably requested by the Lenders, provided that the
Company shall not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of process in
any such states or jurisdictions.

 

iv. Notify each Lender of Warrant Shares covered by such registration statement
at any time when a prospectus relating thereto is required to be delivered under
the

 

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Securities Act of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing.

 

(b) The Parties agree that they shall have such indemnification obligations as
set forth on Schedule 2.2 hereto.

 

(c) Each Lender or other permitted holder of Warrant Shares included in any
registration shall furnish to the Company such information regarding such person
and the distribution proposed by such person as the Company may reasonably
request in writing and as shall be required in connection with any registration,
qualification, or compliance referred to in this Section.

 

2.3 All expenses incurred in connection with the registration effected pursuant
to Section 2.2, including without limitation all registration, filing, and
qualification fees (including blue sky fees and expenses), printing expenses,
escrow fees, fees and disbursements of counsel for the Company, reasonable fees
and disbursements of one special counsel for the participating Lenders
(collectively, “Registration Expenses”), shall be borne by the Company;
provided, however, that the term Registration Expenses shall not include, and in
no event will the Company be obligated to pay, stock transfer taxes or
underwriters’ discounts, or commissions relating to the Warrant Shares.

 

2.4 The Warrants shall provide that if the per share Closing Price of the Common
Stock shall exceed an amount that is three (3) times the Exercise Price for 20
consecutive Trading Days ending no later than March 31, 2006, the Company may
require that the Lender exercise such Warrants, provided that such notice may be
given no later than 5:00 p.m. St. Louis time on April 10, 2006. The Warrants
shall be exercised on such date specified in the notice, but no fewer than three
and no more than 10 Trading Days following the date of such Notice.

 

2.5 Certain Definitions.

 

“Trading Day” shall mean a day on which the principal national securities
exchange on which the Common Stock is listed or admitted to trading is open for
business.

 

“Closing Price” with respect to Common Stock on any day means the reported last
sales price regular way on NASDAQ, or, if no such reported sale occurs on such
day, the average of the closing bid and asked prices regular way on such day, in
each case as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which such class of security is listed or admitted to trading as reported by
NASDAQ or any comparable system then in use or, if not so reported, as reported
by any New York Stock Exchange member firm reasonably selected by the Company
for such purpose.

 

“Exercise Price” shall mean the average of the daily Closing Prices of a share
of the Common Stock for 10 consecutive Trading Days commencing on and including
November 4, 2005 and ending on and including November 17, 2005.

 

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3. Representations and Warranties of the Company.

 

3.1 Organization and Standing. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware.
The Company has the requisite corporate power and authority to conduct its
business as it is presently being conducted and to own and operate its
properties and assets.

 

3.2 Corporate Power. The Company will have at Closing all requisite corporate
power and authority and has taken all corporate action necessary to execute and
deliver this Agreement, to issue the Note and to carry out and perform its
obligations under the terms of this Agreement.

 

3.3 Authorization. The execution, delivery and performance of this Agreement by
the Company has been duly authorized by all requisite corporate action, and
constitutes the valid and binding obligations of the Company, enforceable, in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, or similar laws relating to or affecting the
enforcement of creditors’ rights.

 

4. Representations and Warranties of the Lenders.

 

4.1 Representations and Warranties of the Lenders. Each Lender severably
represents and warrants to the Company as of the Closing Date as follows:

 

(a) The Lender has all requisite power and authority to execute and deliver this
Agreement, to consummate the transactions contemplated hereby and to perform its
obligations hereunder. The execution and delivery of this Agreement by the
Lender, and the consummation by the Lender of the transactions contemplated
hereby have been duly approved and no other corporate or other proceedings on
the part of the Lender are or will be necessary to authorize this Agreement and
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Lender and is a legal, valid and binding obligation of the
Lender enforceable against the Lender in accordance with its respective terms,
except as may be limited by applicable bankruptcy, insolvency, reorganization,
or similar laws relating to or affecting the enforcement of creditors’ rights.

 

(b) The Lender is experienced in evaluating and investing in new companies such
as the Company. The Lender is a sophisticated investor with such knowledge and
experience in financial and business matters so as to be capable of evaluating
the merits and risks of a prospective investment in the Notes, the Warrants and
the Common Stock issuable upon exercise of the Warrants (collectively, the
“Securities”) and who is capable of bearing the economic risks of such
investment.

 

(c) The Lender is acquiring the Securities for investment for its own account
and not with a view to, or for resale in connection with, any distribution
thereof. The Lender understands that the Securities to be acquired have not been
registered under the Act by reason of a specific exemption from the registration
provisions of the Act which depends upon, among other things, the bona fide
nature of the investment intent as expressed herein. The Lender further
represents that it does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participation to any
third person with respect to any of the Securities. The Lender understands and
acknowledges that the offering of the Securities pursuant to this Agreement will
not be registered under the Act on the ground that the sale provided for in this
Agreement and the issuance of securities hereunder is exempt from the
registration requirements of the Act.

 

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(d) The Lender acknowledges that the Securities must be held indefinitely unless
subsequently registered under the Act or unless an exemption from such
registration is available. The Lender is aware of the provisions of Rule 144
promulgated under the Act which permit limited resale of securities purchased in
a private placement subject to the satisfaction of certain conditions. The
Lender covenants that, in the absence of an effective registration statement
covering the Securities in question, the Lender will sell, transfer, or
otherwise dispose of the Securities only in a manner consistent with the
Lender’s representations and covenants set forth in this Section 4. In
connection therewith, the Lender acknowledges that the Company will make a
notation on its stock books regarding the restrictions on transfers set forth in
this Section 4 and will transfer Securities on the books of the Company only to
the extent not inconsistent therewith.

 

(e) The Lender understands that no public market now exists for any of the
Securities issued by the Company and there can be no assurance that a public
market will ever exist for the Securities.

 

(f) The Lender (or its authorized representative) has had an opportunity to
discuss the Company’s business, management and financial affairs with the
Company’s management and to review the Company’s facilities. The Lender
understands that such discussions, as well as the written information issued by
the Company, were intended to describe the aspects of the Company’s business and
prospects which it believes to be material but were not necessarily a thorough
or exhaustive description.

 

(g) The Lender represents that Lender is an “accredited investor” as such term
is defined in Regulation D promulgated under the Act. The Lender has the
financial ability to perform or cause this Agreement to be performed, and shall
provide to the Company reasonable evidence of such ability upon written request
from time to time, subject to confidentiality reasonably requested by such
Lender.

 

4.2 Legend. The Note shall be endorsed with the following legend:

 

THE NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
‘SECURITIES ACT”), AS AMENDED, OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY,
THE NOTE MAY ONLY BE SOLD OR OTHERWISE TRANSFERRED TO A “PERMITTED TRANSFEREE”
(AS DEFINED HEREIN) OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR IN A TRANSACTION EXEMPT
FROM THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

THE INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT IS SUBORDINATED TO THE PRIOR
PAYMENT IN FULL OF SENIOR INDEBTEDNESS (AS DEFINED BELOW) TO THE EXTENT PROVIDED
HEREIN.

 

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4.3 Each Lender agrees that in no event will it make a transfer or disposition
of any of the Notes or Warrants (other than pursuant to an effective
registration statement under the 1933 Act), unless and until (i) it shall have
notified the Company of the proposed disposition and shall have furnished the
Company with a statement of the circumstances surrounding the disposition and
assurance that the proposed disposition is in compliance with all applicable
laws, and (ii) if reasonably requested by the Company, at the expense of such
Lender or its transferee, it shall have furnished to the Company an opinion of
counsel, reasonably satisfactory to the Company, to the effect that such
transfer may be made without registration under the 1933 Act. Notwithstanding
the foregoing, no formal notice or opinion of counsel shall be required for the
transfer by an Lender to: (x) any partner of a Lender or to a retired partner of
a Lender, who retires after the date of this Agreement, (y) the estate of any
such partner or a retired partner or for the transfer by gift, will or intestate
succession of any partner to his spouse or lineal descendants or ancestors or
(z) any entity which is a wholly-owned subsidiary of the Lender or which is
under common control with the Lender; provided, however, in all cases where no
legal opinion is required that the transferee shall agree in writing to be
subject to the terms of this Agreement to the same extent as if it were the
original Lender hereunder.

 

5. Subordination. The indebtedness evidenced by the Notes shall be expressly
subordinated, to the extent and in the manner set forth in the Notes, in right
of payment to the prior payment in full of all the Company’s Senior
Indebtedness, as defined in the Notes. All other terms related to the
subordination set forth in the Note are incorporated herein by reference. The
Company agrees that any future Junior Indebtedness, as defined in the Notes,
shall be subordinate to the Notes on as set forth therein.

 

6. Miscellaneous.

 

6.1 Waivers and Amendments. Any term of this Agreement may be amended or waived
only with the written consent of the Company and all of the Lenders.

 

6.2 Governing Law. This Agreement shall be governed in all respects by the
internal laws of the State of Delaware, without giving effect to principles of
conflicts of law.

 

6.3 Attorney’s Fees. If any action at law or in equity (including arbitration)
is necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorney’s fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.

 

6.4 Successors and Assigns. Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.

 

6.5 Entire Agreement; Conflict. This Agreement and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof. Except as
expressly provided herein, in the event of any conflict between the terms of
this Agreement and the other documents as attached hereto, this Agreement shall
control.

 

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6.6 Severability of this Agreement. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

 

6.7 Titles and Subtitles; Construction. The titles of the Sections and
Subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement. All words used in this Agreement
will be construed to be of such gender or number as the circumstances require.

 

6.8 Notices. Any notice required or permitted by this Agreement shall be in
writing and shall be deemed sufficient upon receipt, when delivered personally
or by courier, overnight delivery service or confirmed facsimile, or forty-eight
(48) hours after being deposited in the U.S. mail as certified or registered
mail with postage prepaid, if such notice is addressed to the party to be
notified at such party’s address or facsimile number as set forth below or as
subsequently modified by written notice.

 

To the Company:

 

Stereotaxis, Inc.

4041 Forest Park Avenue

St. Louis, Missouri 63108

Fax: (314) 615-6922

  Attention: Chief Executive Officer

       Chief Financial Officer

 

Copy to:

 

Bryan Cave LLP

One Metropolitan Square

Suite 3600

St. Louis, MO 63102

Fax: (314) 259-2020

  Attn: James L. Nouss, Jr., Esq.

       Robert J. Endicott, Esq.

 

To the Lenders:

 

[To the addresses specified on Schedule 1.1 hereto]

 

6.9 Counterparts. This Agreement may be executed by facsimile and in any number
of counterparts, each of which shall be deemed an original, and all of which
together shall constitute one instrument.

 

[THE REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered as of the day and year first written above.

 

THE COMPANY:   STEREOTAXIS, INC.     a Delaware corporation     By:  

 

/s/ Bevil J. Hogg

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    Name:   Bevil J. Hogg     Title:   President and Chief Executive Officer

 

THE LENDERS:  

SANDERLING VENTURE PARTNERS VI CO-INVESTMENT FUND, L.P.

    By:   Middleton, McNeil, Mills & Associates, VI, LLC     By:  

/s/ Fred A. Middleton

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        Fred A. Middleton         Managing Director

 

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ALAFI CAPITAL COMPANY LLC By:  

/s/ Christopher Alafi

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Name:   Christopher Alafi Title:   Manager

 

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Schedule A

 

Lender Name and Address

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   Committed Funds

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Sanderling Venture Partners VI CO-investment fund, L.P.

[Separately on file with the Company]

   $ 10,000,000

Alafi Capital Company

[Separately on file with the Company]

   $ 10,000,000

Total

   $ 20,000,000

 

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Schedule 2.2

 

Indemnification

 

(a) The Company will, and does hereby undertake to, indemnify and hold harmless
each Lender of Warrant Shares, each of such Lender’s officers, directors,
partners and agents, and each person controlling such Lender, with respect to
any registration, qualification, or compliance of the Warrant Shares held by or
issuable to such Lender effected pursuant to this Section 1, and each
underwriter of such registration, if any, and each person who controls any
underwriter, against all claims, losses, damages, and liabilities (or actions in
respect thereto) to which they may become subject under the Securities Act, the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), or other
federal or state law arising out of or based on (i) any untrue statement (or
alleged untrue statement) of a material fact contained in any prospectus,
offering circular, or other similar document (including any related registration
statement, notification, or the like) incident to any such registration,
qualification, or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or (ii) any violation or alleged
violation by the Company of any federal, state or common law rule or regulation
applicable to the Company in connection with any such registration,
qualification, or compliance, and will reimburse, as incurred, each such Lender,
each such underwriter, and each such director, officer, partner, agent and
controlling person, for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability, or action; provided that the Company will not be liable in any such
case to the extent that any such claim, loss, damage, liability or expense,
arises out of or is based on any untrue statement or omission based upon written
information furnished to the Company by an instrument duly executed by such
Lender or underwriter and stated to be specifically for use therein.

 

(b) Each Lender will, if Warrant Shares held by or issuable to such Lender are
included in such registration, qualification, or compliance of the Company’s
securities, severally and not jointly, indemnify the Company, each of its
directors, and each officer who signs a registration statement in connection
therewith, and each person controlling the Company, each underwriter of such
registration, if any, and each person who controls any such underwriter, and
each other Lender, each of such other Lender’s officers, partners, directors and
agents and each person controlling such other Lender, against all claims,
losses, damages, and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any prospectus, offering circular, or other similar document
(including any related registration statement, notification, or the like)
incident to any such registration, qualification, or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse, as incurred, the Company, each such underwriter, each such other
Lender, and each such director, officer, partner, and controlling person, for
any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability, or action,
in each case to the extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged omission) was made in such
registration statement, prospectus, offering circular, or other document, in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Lender and stated to be
specifically for use therein. In no event will any Lender be required to enter
into any agreement or undertaking in connection with any registration under this
Section 1 providing for any indemnification or contribution obligations on the
part of such Lender greater than such Lender’s obligations under

 

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this Schedule 2.2. The liability of each Lender hereunder shall be limited to
the proportion of any such loss, claim, damage, liability or expense which is
equal to the proportion that the public offering price of the shares sold by
such Lender under such registration statement bears to the total public offering
price of all securities sold thereunder, but not in any event to exceed the net
proceeds received by such Lender from the sale of Warrant Shares covered by such
registration statement.

 

(c) Each party entitled to indemnification under this Schedule 2.2 (the
“Indemnified Party”) shall give notice to the party required to provide such
indemnification (the “Indemnifying Party”) of any claim as to which
indemnification may be sought promptly after such Indemnified Party has actual
knowledge thereof, and shall permit the Indemnifying Party to assume the defense
of any such claim or any litigation resulting therefrom; provided that counsel
for the Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be subject to approval by the Indemnified Party (whose
approval shall not be unreasonably withheld) and the Indemnified Party may
participate in such defense at the Indemnifying Party’s expense if
representation of such Indemnified Party would be inappropriate due to actual or
potential differing interests between such indemnified party and any other party
represented by such counsel in such proceeding; and provided further that the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 1, except
to the extent that such failure to give notice shall materially adversely affect
the Indemnifying Party in the defense of any such claim or any such litigation.
No Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff therein, to such
Indemnified Party, of a release from all liability in respect to such claim or
litigation.

 

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Exhibit A

 

Form of Note

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
‘SECURITIES ACT”), AS AMENDED, OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY,
THIS NOTE MAY ONLY BE SOLD OR OTHERWISE TRANSFERRED TO A “PERMITTED TRANSFEREE”
(AS DEFINED HEREIN) OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR IN A TRANSACTION EXEMPT
FROM THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

THE INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT IS SUBORDINATED TO THE PRIOR
PAYMENT IN FULL OF SENIOR INDEBTEDNESS (AS DEFINED BELOW) TO THE EXTENT PROVIDED
HEREIN.

 

STEREOTAXIS, INC.

TERM NOTE

 

$                    

                           , 200    

St. Louis, Missouri

1. General. Stereotaxis, Inc., a Delaware corporation (the “Company”), for value
received, hereby promises to pay to the order of
                                 (the “Holder”) the principal sum of
                                 Dollars ($            ), on the date (the
“Maturity Date”) which is the earlier of (i) May 10, 2006, or (ii) the date upon
which the Company obtains up to Thirty Million Dollars ($30,000,000) of
Strategic Financing (as such term is defined in the Purchase Agreement referred
to below), in such coin or currency of the United States of America as at the
time of payment shall be legal tender therein for the payment of public and
private debts, and to pay interest on the unpaid balance of the principal hereof
from the date hereof, at the times and in the amounts as provided in that
certain Note and Warrant Purchase Agreement between the Company and the Holder
and certain other lenders set forth therein, dated November 10, 2005, as the
same may from time to time be amended, modified or supplemented (the “Purchase
Agreement”); provided that the Company shall have the option, pursuant to the
terms of the Purchase Agreement, to extend the Maturity Date to November 10,
2006. Notice of extension of the Maturity Date shall be given by the Company by
mail and shall be mailed to the Holder not less than 30 days prior to the date
fixed for such Maturity Date extension. All payments of principal and interest
on this Note shall be made at the offices of the Company. In the event that the
principal amount of this Note is not paid in full when such amount becomes due
and payable, interest at the rate of [            ] percent ([    ]%) (the
“Default Rate”) shall continue to accrue on the balance of any unpaid principal
until such balance is paid.

 

1

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This Note is issued in connection with the Purchase Agreement and the Holder is
subject to certain restrictions set forth in this Note and the Purchase
Agreement and shall be entitled to certain rights and privileges set forth in
the same.

 

2. Optional Prepayment. The Company may at any time, prepay the unpaid principal
amount of this Note, or any part thereof, without penalty or premium, but with
interest accrued to the date fixed for prepayment. Notice of prepayment shall be
given by the Company by mail and shall be mailed to the Holder not less than 15
days prior to the date fixed for prepayment. Upon giving of notice of prepayment
as aforesaid, this Note (or the portion thereof to be prepaid, as the case may
be) shall on the prepayment date specified in such notice become due and
payable; and from and after the prepayment date so specified (unless the Company
shall default in making such prepayment) interest on this Note (or the portion
thereof to be prepaid, as the case may be) shall cease to accrue and, on
presentation and surrender hereof to the Company for cancellation, this Note (or
the portion thereof to be prepaid as the case may be) shall be paid by the
Company at the prepayment price aforesaid.

 

3. Events of Default. If any of the events specified in this Section 3 shall
occur (herein individually referred to as an “Event of Default”), the Holder of
the Note may, so long as such condition exists, declare the entire principal and
unpaid accrued interest hereon immediately due and payable, by notice in writing
to the Company:

 

(i) Default in the payment of the principal and unpaid accrued interest of this
Note when due and payable if such default is not cured by the Company within ten
(10) days after the Holder has given the Company written notice of such default;
or

 

(ii) The institution by the Company of proceedings to be adjudicated as bankrupt
or insolvent, or the consent by it to institution of bankruptcy or insolvency
proceedings against it or the filing by it of a petition or answer or consent
seeking reorganization or release under the federal Bankruptcy Code, or any
other applicable federal or state law, or the consent by it to the filing of any
such petition or the appointment of a receiver, liquidator, assignee, trustee or
other similar official of the Company, or of any substantial part of its
property, or the making by it of an assignment for the benefit of creditors, or
the taking of corporate action by the Company in furtherance of any such action;
or

 

(iii) If, within sixty (60) days after the commencement of an action against the
Company (and service of process in connection therewith on the Company) seeking
any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, such action shall
not have been resolved in favor of the Company or all orders or proceedings
thereunder affecting the operations or the business of the Company stayed, or if
the stay of any such order or proceeding shall thereafter be set aside, or if,
within sixty (60) days after the appointment without the consent or acquiescence
of the Company of any trustee, receiver or liquidator of the Company or of all
or any substantial part of the properties of the Company, such appointment shall
not have been vacated.

 

2

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At any time that the unpaid principal balance of this Note, together with all
accrued and unpaid interest owing thereon, shall have become due and payable in
full pursuant to this Section 3, the aggregate of all such sums shall thereafter
bear interest, both before and after judgment, at the Default Rate until such
sums have been paid. In such event, all payments made thereafter shall be
applied first to unpaid interest hereon, then to the principal of this Note.

 

4. Subordination. The indebtedness evidenced by this Note is hereby expressly
subordinated, to the extent and in the manner hereinafter set forth, in right of
payment to the prior payment in full of all the Company’s Senior Indebtedness,
as hereinafter defined.

 

4.1. Senior Indebtedness. As used in this Note, the term “Senior Indebtedness”
shall mean the principal of and unpaid accrued interest on: (i) all indebtedness
of the Company to Silicon Valley Bank or its affiliates or any other banks,
commercial finance lenders or similar financial institutions, which is for money
borrowed by the Company (whether or not secured) (“Financial Institution Debt”),
and (ii) any such indebtedness or any debentures, notes or other evidence of
indebtedness issued in exchange for or to refinance such Financial Institution
Debt, or any indebtedness arising from the satisfaction of such Financial
Institution Debt by a guarantor.

 

4.2. Default on Senior Indebtedness. If there should occur any receivership,
insolvency, assignment for the benefit of creditors, bankruptcy, reorganization
or arrangements with creditors (whether or not pursuant to bankruptcy or other
insolvency laws), sale of all or substantially all of the assets, dissolution,
liquidation or any other marshalling of the assets and liabilities of the
Company, then (i) no amount shall be paid by the Company in respect of the
principal of or interest on this Note at the time outstanding, unless and until
the principal of and interest on the Senior Indebtedness then outstanding shall
be paid in full, and (ii) no claim or proof of claim shall be filed with the
Company by or on behalf of the Holder of this Note that shall assert any right
to receive any payments in respect of the principal of and interest on this
Note, except subject to the payment in full of the principal of and interest on
all of the Senior Indebtedness then outstanding. If there occurs an event of
default that has been declared in writing with respect to any Senior
Indebtedness, or in the instrument under which any Senior Indebtedness is
outstanding, permitting the holder of such Senior Indebtedness to accelerate the
maturity thereof, then, unless and until such event of default shall have been
cured or waived or shall have ceased to exist, or all Senior Indebtedness shall
have been paid in full, no payment shall be made in respect of the principal of
or interest on this Note.

 

4.3. Effect of Subordination. Subject to the rights, if any, of the holders of
Senior Indebtedness under this Section 4 to receive cash, securities or other
properties otherwise payable or deliverable to the Holder of this Note, nothing
contained in this Section 4 shall impair, as between the Company and the Holder,
the obligation of the Company, subject to the terms and conditions hereof, to
pay to the Holder the principal hereof and interest hereon as and when the same
become due and payable, or shall prevent the Holder of this Note, upon default
hereunder, from exercising all rights, powers and remedies otherwise provided
herein or by applicable law.

 

3

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4.4. Subrogation. Subject to the payment in full of all Senior Indebtedness and
until this Note shall be paid in full, the Holder shall be subrogated to the
rights of the holders of Senior Indebtedness (to the extent of payments or
distributions previously made to such holders of Senior Indebtedness pursuant to
the provisions of Section 4.2 above) to receive payments or distributions of
assets of the Company applicable to the Senior Indebtedness. No such payments or
distributions applicable to the Senior Indebtedness shall, as between the
Company and its creditors, other than the holders of Senior Indebtedness and the
Holder, be deemed to be a payment by the Company to or on account of this Note;
and for the purposes of such subrogation, no payments or distributions to the
holders of Senior Indebtedness to which the Holder would be entitled except for
the provisions of this Section 4 shall, as between the Company and its
creditors, other than the holders of Senior Indebtedness and the Holder, be
deemed to be a payment by the Company to or on account of the Senior
Indebtedness.

 

4.5. Undertaking. By its acceptance of this Note, the Holder agrees to execute
and deliver such documents as may be reasonably requested from time to time by
the Company or the lender of any Senior Indebtedness in order to implement the
foregoing provisions of this Section 4.

 

4.6. Subordination of Junior Indebtedness. In connection with the Company’s
incurrence of any future convertible indebtedness or other indebtedness of the
Company in respect of borrowed money evidenced by bonds, notes, debentures or
similar instruments or letters of credit that is other than Financial
Institution Debt (“Junior Indebtedness”), the Company agrees that any such
Junior Indebtedness shall be subordinate to this Note on substantially the same
terms as are provided under this Article 4.

 

5. Warrant Agreement. Warrants shall be issued by the Company pursuant to the
Purchase Agreement, which together with the Form of Warrant to be issued
thereunder shall govern all aspects of the Warrants, including without
limitation the term, exercise price and all adjustments to the number of shares
of common stock issuable upon exercise thereof.

 

6. Assignment. Subject to the restrictions on transfer described in Section 12
below, the rights and obligations of the Company and the Holder of this Note
shall be binding upon and benefit the successors, assigns, heirs, administrators
and transferees of the parties.

 

7. Waiver and Amendment. Any provision of this Note may be amended, waived or
modified pursuant to the terms of the Purchase Agreement.

 

8. Heading; References. All headings used herein are used for convenience only
and shall not be used to construe or interpret this Note. Except where otherwise
indicated, all references herein to Sections refer to Sections hereof.

 

4

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9. Notices. Any notice, request or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered or if faxed or mailed by registered or certified mail,
postage prepaid, at the respective addresses of the parties as set forth herein.
Any party hereto may by notice so given change its address for future notice
hereunder. Notice shall conclusively be deemed to have been given when
personally delivered or when deposited in the mail or faxed in the manner set
forth above and shall be deemed to have been received when delivered.

 

10. No Stockholder Rights. Nothing contained in this Note shall be construed as
conferring upon the Holder or any other person the right to vote or to consent
or to receive notice as a stockholder in respect of meetings of stockholders for
the election of directors of the Company or any other matters or any rights
whatsoever as a stockholder of the Company.

 

11. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, excluding that body of law
relating to conflict of laws.

 

12. Transfer Restrictions. The Holder agrees that in no event will it make a
transfer or disposition of any of this Note (other than pursuant to an effective
registration statement under the 1933 Act), unless and until (i) it shall have
notified the Company of the proposed disposition and shall have furnished the
Company with a statement of the circumstances surrounding the disposition and
assurance that the proposed disposition is in compliance with all applicable
laws, and (ii) if reasonably requested by the Company, at the expense of such
Holder or its transferee, it shall have furnished to the Company an opinion of
counsel, reasonably satisfactory to the Company, to the effect that such
transfer may be made without registration under the 1933 Act. Notwithstanding
the foregoing, no formal notice or opinion of counsel shall be required for the
transfer by an Holder to: (x) any partner of a Holder or to a retired partner of
a Holder, who retires after the date of this Agreement, (y) the estate of any
such partner or a retired partner or for the transfer by gift, will or intestate
succession of any partner to his spouse or lineal descendants or ancestors or
(z) any entity which is a wholly-owned subsidiary of the Holder or which is
under common control with the Holder; provided, however, in all cases where no
legal opinion is required that the transferee shall agree in writing to be
subject to the terms of this Agreement to the same extent as if it were the
original Holder hereunder.

 

[THE REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]

 

5

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IN WITNESS WHEREOF, the Company has caused this Note to be issued this      day
of November, 2005.

 

STEREOTAXIS, INC.

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

 

Name of Holder:

Address:

 

 

--------------------------------------------------------------------------------

   

 

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6

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Exhibit B

 

Form of Warrant

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), OR UNDER ANY STATE SECURITIES LAWS, IN RELIANCE UPON
EXEMPTIONS FROM REGISTRATION FOR NON-PUBLIC OFFERINGS. THIS SECURITY MAY NOT BE
SOLD OR TRANSFERRED UNLESS IT IS REGISTERED UNDER THE ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR UNLESS THE ISSUER RECEIVES AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO IT THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

 

Issuance Date:                     , 2005

   Warrant No.:                 

 

STEREOTAXIS, INC.

 

COMMON STOCK PURCHASE WARRANT

 

TO PURCHASE SHARES OF

COMMON STOCK, $0.001 PAR VALUE PER SHARE

 

This is to certify that, FOR VALUE RECEIVED,                                 
(“Warrantholder”), is entitled to purchase, subject to the provisions of this
Common Stock Purchase Warrant (“Warrant”), from Stereotaxis, Inc., a corporation
organized under the laws of Delaware (“Company”), at any time and from time to
time after the issuance date hereof (“Exercise Date”) but not later than 5:00
P.M., Eastern time, on the fifth (5th) anniversary of such issuance date
(“Expiration Date”),                  shares (“Warrant Shares”) of Common Stock,
$0.001 par value (“Common Stock”), of the Company, at an exercise price per
share equal to $              (the exercise price in effect from time to time
hereafter being herein called the “Warrant Price”).1 The number of Warrant
Shares purchasable upon exercise of this Warrant and the Warrant Price shall be
subject to adjustment from time to time as described herein.

 

This Warrant has been issued pursuant to the terms of the Note and Warrant
Purchase Agreement (“Purchase Agreement”) dated November 10, 2005 between the
Company and the Warrantholder. Capitalized terms used herein and not defined
shall have the meaning specified in the Purchase Agreement.

 

1. Registration. The Company shall maintain books for the transfer and
registration of the Warrant. Upon the initial issuance of the Warrant, the
Company shall issue and register the Warrant in the name of the Warrantholder.

 

2. Transfers. As provided herein, this Warrant may be transferred only pursuant
to a registration statement filed under the Securities Act of 1933, as amended
(“Securities Act”), or an exemption from registration thereunder. Subject to
such restrictions, the Company shall transfer this Warrant from time to time,
upon the books to be maintained by the Company for that purpose, upon surrender
hereof for transfer properly endorsed or accompanied by appropriate instructions
for transfer upon any such transfer, and a new Warrant shall be issued to the
transferee and the surrendered Warrant shall be canceled by the Company.
References to Warrantholder or holder shall include any such transferee.

 

--------------------------------------------------------------------------------

1. To be determined in accordance with the Purchase Agreement.

 

1

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3. Exercise of Warrant.

 

(a) Subject to the provisions hereof, the Warrantholder may exercise this
Warrant to purchase the Warrant Shares, in whole or in part, at any time and
from time to time on and after the Exercise Date and before the Expiration Date
upon surrender of the Warrant, together with delivery of the duly executed
Warrant exercise form attached hereto (the “Exercise Agreement”) (which may be
by fax), to the Company during normal business hours on any business day at the
Company’s principal executive offices (or such other office or agency of the
Company as it may designate by notice to the holder hereof), and upon payment to
the Company in cash, by certified or official bank check or by wire transfer for
the account of the Company of the Warrant Price for the Warrant Shares specified
in the Exercise Agreement. The Warrant Shares so purchased shall be deemed to be
issued to the holder hereof or such holder’s designee, as the record owner of
such shares, as of the close of business on the date on which the completed
Exercise Agreement shall have been delivered to the Company (or such later date
as may be specified in the Exercise Agreement). Certificates for the Warrant
Shares so purchased, representing the aggregate number of shares specified in
the Exercise Agreement, shall be delivered to the holder hereof within a
reasonable time, not exceeding five (5) business days, after this Warrant shall
have been so exercised. The certificates so delivered shall be in such
denominations as may be requested by the holder hereof and shall be registered
in the name of such holder or such other name as shall be designated by such
holder. If this Warrant shall have been exercised only in part, then, unless
this Warrant has expired, the Company shall, at its expense, at the time of
delivery of such certificates, deliver to the holder a new Warrant representing
the number of shares with respect to which this Warrant shall not then have been
exercised.

 

(b) If the per share Closing Price of the Common Stock shall exceed an amount
that is three (3) times the Warrant Price for 20 consecutive Trading Days ending
no later than March 31, 2006, the Company may require that the Warrantholder
exercise this Warrant, provided that such notice may be given no later than 5:00
p.m. St. Louis time April 10, 2006. Such exercise shall be treated as if a
voluntary exercise had been effected pursuant to Section 3 above. The Warrants
shall be exercised on such date specified in the notice, but no fewer than three
and no more than 10 Trading Days following the date of such Notice.

 

(c) Certain Definitions.

 

“Trading Day” shall mean a day on which the principal national securities
exchange on which the Common Stock is listed or admitted to trading is open for
business.

 

“Closing Price” with respect to Common Stock on any day means the reported last
sales price regular way on NASDAQ, or, if no such reported sale occurs on such
day, the average of the closing bid and asked prices regular way on such day, in
each case as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which such class of security is listed or admitted to trading as reported by
NASDAQ or any comparable system then in use or, if not so reported, as reported
by any New York Stock Exchange member firm reasonably selected by the Company
for such purpose.

 

4. Cashless Exercise. The Warrantholder may, at its election exercised in its
sole discretion, exercise this Warrant and, in lieu of making the cash payment
otherwise

 

2

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contemplated to be made to the Company upon such exercise in payment of the
Warrant Price for the Warrant Shares specified in the Exercise Agreement, elect
instead to receive upon such exercise the “Net Number” of shares of Common Stock
determined according to the following formula (a “Cashless Exercise”):

 

Net Number =

 

(A x B) - (A x C)

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    B

 

For purposes of the foregoing formula:

 

A= the total number of shares with respect to which this Warrant is then being
exercised.

 

B= the closing sale price of the Common Stock on the Nasdaq National Market on
the trading day immediately preceding the date of the Exercise Notice.

 

C= the Warrant Price then in effect for the applicable Warrant Shares at the
time of such exercise.

 

5. Compliance with the Securities Act of 1933. Neither this Warrant nor the
Common Stock issued upon exercise hereof nor any other security issued or
issuable upon exercise of this Warrant may be offered or sold except as provided
in this Warrant and in conformity with the Securities Act of 1933, as amended,
and then only against receipt of an agreement of such person to whom such offer
of sale is made to comply with the provisions of this Section 5 with respect to
any resale or other disposition of such security. The Company may cause the
legend set forth on the first page of this Warrant to be set forth on each
Warrant or similar legend on the Warrant Shares or any other security issued or
issuable upon exercise of this Warrant until the Warrant Shares have been
registered for resale under the Investor Rights Agreement, unless counsel for
the Company is of the opinion as to any such security that such legend is
unnecessary.

 

6. Payment of Taxes. The Company will pay any documentary stamp taxes
attributable to the initial issuance of Warrant Shares issuable upon the
exercise of the Warrant; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificates for Warrant Shares in a
name other than that of the registered holder of this Warrant in respect of
which such shares are issued. The holder shall be responsible for income taxes
due under federal or state law, if any such tax is due.

 

7. Mutilated or Missing Warrants. In case this Warrant shall be mutilated, lost,
stolen, or destroyed, the Company shall issue in exchange and substitution of
and upon cancellation of the mutilated Warrant, or in lieu of and substitution
for the Warrant lost, stolen or destroyed, a new Warrant of like tenor and for
the purchase of a like number of Warrant Shares, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or
destruction of the Warrant, and with respect to a lost, stolen or destroyed
Warrant, reasonable indemnity or bond with respect thereto, if reasonably
requested by the Company.

 

8. Reservation of Common Stock. The Company hereby represents and warrants that
there have been reserved, and the Company shall at all applicable times keep

 

3

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reserved, out of the authorized and unissued Common Stock, a number of shares
sufficient to provide for the exercise of the rights of purchase represented by
the Warrant in full (without regard to any restrictions on beneficial ownership
contained herein), and the transfer agent for the Common Stock, including every
subsequent transfer agent for the Common Stock or other shares of the Company’s
capital stock issuable upon the exercise of any of the right of purchase
aforesaid (“Transfer Agent”), shall be irrevocably authorized and directed at
all times to reserve such number of authorized and unissued shares of Common
Stock as shall be requisite for such purpose. The Company agrees that all
Warrant Shares issued upon exercise of the Warrant in accordance with its terms
shall be, at the time of delivery of the certificates for such Warrant Shares,
duly authorized, validly issued, fully paid and non-assessable shares of Common
Stock of the Company.

 

9. Warrant Price. The Warrant Price, subject to adjustment as provided in
Section 10 hereof, shall, if payment is made in cash or by certified check, be
payable in lawful money of the United States of America.

 

10. Adjustment of Warrant Exercise Price and Number of Shares. If the Company at
any time after the date of issuance of this Warrant subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares, the Warrant
Price in effect immediately prior to such subdivision will be proportionately
reduced and the number of shares of Common Stock obtainable upon exercise of
this Warrant will be proportionately increased. If the Company at any time after
the date of issuance of this Warrant combines (by combination, reverse stock
split or otherwise) one or more classes of its outstanding shares of Common
Stock into a smaller number of shares, the Warrant Price in effect immediately
prior to such combination will be proportionately increased and the number of
shares of Common Stock obtainable upon exercise of this Warrant will be
proportionately decreased. Any adjustment under this Section 10 shall become
effective at the close of business on the date the subdivision or combination
becomes effective.

 

11. Replacement Warrants. The Company agrees that within ten (10) business days
after any request from time to time of the Warrantholder, it shall deliver to
such holder a new Warrant in substitution of this Warrant which is identical in
all respects except that the then Warrant Price shall be appropriately specified
in the Warrant, and the Warrant shall specify the fixed number of Warrant Shares
into which this Warrant is then exercisable. Such changes are intended not as
amendments to the Warrant but only as clarification of the adjustment in the
preceding Section for convenience purposes, and such adjustments shall not
affect any provisions concerning adjustments to the Warrant Price or number of
Warrant Shares contained herein.

 

12. Fractional Interest. The Company shall not be required to issue fractions of
Warrant Shares upon the exercise of the Warrant. If any fraction of a Warrant
Share would, except for the provisions of this Section, be issuable upon the
exercise of the Warrant (or specified portions thereof), the Company shall round
such calculation to the nearest whole number and disregard the fraction.

 

13. Benefits. Nothing in this Warrant shall be construed to give any person,
firm or corporation (other than the Company and the Warrantholder) any legal or
equitable right, remedy or claim, it being agreed that this Warrant shall be for
the sole and exclusive benefit of the Company and the Warrantholder.

 

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14. Notices to Warrantholder. Upon the happening of any event requiring an
adjustment of the Warrant Price, the Company shall forthwith give written notice
thereof to the Warrantholder at the address appearing in the records of the
Company, stating the adjusted Warrant Price and the adjusted number of Warrant
Shares resulting from such event and setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based. In the
event of a dispute with respect to any such calculation, the certificate of the
Company’s independent certified public accountants shall be conclusive evidence
of the correctness of any computation made, absent manifest error. Failure to
give such notice to the Warrantholder or any defect therein shall not affect the
legality or validity of the subject adjustment.

 

15. Identity of Transfer Agent. The Transfer Agent for the Common Stock is Bank
of New York. Forthwith upon the appointment of any subsequent transfer agent for
the Common Stock or other shares of the Company’s capital stock issuable upon
the exercise of the rights of purchase represented by the Warrant, the Company
will fax to the Warrantholder a statement setting forth the name and address of
such transfer agent.

 

16. Notices. Any notice pursuant hereto to be given or made by the Warrantholder
to or on the Company shall be sufficiently given or made if delivered personally
or by facsimile or if sent by an internationally recognized courier, addressed
as follows:

 

Stereotaxis, Inc.

4041 Forest Park Avenue

St. Louis, Missouri 63108

(314) 615-6940

Fax: (314) 615-6922

Attention: Chief Financial Officer

 

or such other address as the Company may specify in writing by notice to the
Warrantholder complying as to delivery with the terms of this Section 16.

 

Any notice pursuant hereto to be given or made by the Company to or on the
Warrantholder shall be sufficiently given or made if personally delivered or if
sent by an internationally recognized courier service by overnight or two-day
service, to the address set forth on the books of the Company or, as to each of
the Company and the Warrantholder, at such other address as shall be designated
by such party by written notice to the other party complying as to delivery with
the terms of this Section 16.

 

All such notices, requests, demands, directions and other communications shall,
when sent by courier, be effective two (2) days after delivery to such courier
as provided and addressed as aforesaid. All faxes shall be effective upon
receipt.

 

17. Registration Rights. The holder of this Warrant is entitled to the benefit
of certain registration rights in respect of the Warrant Shares as provided in
the Purchase Agreement.

 

5

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18. Successors. All the covenants and provisions hereof by or for the benefit of
the Warrantholder shall bind and inure to the benefit of its respective
successors and assigns hereunder.

 

19. Governing Law. This Warrant shall be deemed to be a contract made under the
laws of the State of Delaware, without giving effect to its conflict of law
principles, and for all purposes shall be construed in accordance with the laws
of said State.

 

20. Absolute Obligation to Issue Warrant Shares. The Company’s obligations to
issue and deliver Warrant Shares in accordance with the terms hereof are
absolute and unconditional, irrespective of any action or inaction by the holder
hereof to enforce the same, any waiver or consent with respect to any provision
hereof, the recovery of any judgment against any person or entity or any action
to enforce the same, or any setoff, counterclaim, recoupment, limitation or
termination, or any breach or alleged breach by the holder hereof or any other
Person of any obligation to the Company or any violation or alleged violation of
law by the holder or any other Person, and irrespective of any other
circumstance which might otherwise limit such obligation of the Company to the
holder hereof in connection with the issuance of Warrant Shares. The Company
will at no time close its shareholder books or records in any manner which
interferes with the timely exercise of this Warrant.

 

21. Assignment, etc. The Warrantholder agrees that in no event will it make a
transfer or disposition of any of this Warrant (other than pursuant to an
effective registration statement under the 1933 Act), unless and until (i) it
shall have notified the Company of the proposed disposition and shall have
furnished the Company with a statement of the circumstances surrounding the
disposition and assurance that the proposed disposition is in compliance with
all applicable laws, and (ii) if reasonably requested by the Company, at the
expense of such Warrantholder or its transferee, it shall have furnished to the
Company an opinion of counsel, reasonably satisfactory to the Company, to the
effect that such transfer may be made without registration under the 1933 Act.
Notwithstanding the foregoing, no formal notice or opinion of counsel shall be
required for the transfer by an Warrantholder to: (x) any partner of a
Warrantholder or to a retired partner of a Warrantholder, who retires after the
date of this Agreement, (y) the estate of any such partner or a retired partner
or for the transfer by gift, will or intestate succession of any partner to his
spouse or lineal descendants or ancestors or (z) any entity which is a
wholly-owned subsidiary of the Warrantholder or which is under common control
with the Warrantholder; provided, however, in all cases where no legal opinion
is required that the transferee shall agree in writing to be subject to the
terms of this Agreement to the same extent as if it were the original
Warrantholder hereunder.

 

IN WITNESS WHEREOF, the Company has caused this Common Stock Purchase Warrant to
be duly executed as of the date first written above.

 

STEREOTAXIS, INC. By:  

 

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Name:     Title:    

 

Attest:

Sign:

 

 

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Print Name:

 

6

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STEREOTAXIS, INC.

WARRANT EXERCISE FORM

 

Stereotaxis, Inc.

 

4041 Forest Park Avenue

 

St. Louis, Missouri 63108

 

Fax: (314)0615-6922

 

Attention: Chief Financial Officer

 

This undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Common Stock Purchase Warrant (“Warrant”) for, and to
purchase thereunder              shares of Common Stock (“Warrant Shares”)
provided for therein, and requests that certificates for the Warrant Shares be
issued as follows:

 

    Name:  

 

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          Address:  

 

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and, if the number of Warrant Shares shall not be all the Warrant Shares
purchasable upon exercise of the Warrant, that a new Warrant for the balance of
the Warrant Shares. Dated:  

 

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   Signature:  

 

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Print Name:   

 

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  Address:   

 

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