<PAGE>
                                                                   EXHIBIT 10.11



                   Development Alliance and Supply Agreement

                                 by and between

                             Biosense Webster, Inc.

                                      and

                               Stereotaxis, Inc.

                               Dated May 7, 2002
<PAGE>
                               TABLE OF CONTENTS
<Caption>
<Table>
                                                                       PAGE
                                                                      ------
<S>      <C>      <C>                                                  <C>
1        DEFINITIONS....................................................1

         1.1      Construction......................................... 1
         1.2      Definitions.......................................... 2

2        LICENSE GRANTS................................................ 8

         2.1      Licenses Granted; Appointment.......................  8
         2.2      License Grant to Stereotaxis........................  9
         2.3      Exclusivity......................................... 10
         2.4      Stereotaxis Permitted Activities.................... 10
         2.5      Preferred Partner and Third Party Integrations...... 12
         2.6      Single Purchase Offers.............................. 14
         2.7      Latest Localization Platform........................ 14

3        DEVELOPMENT AND OVERSIGHT.................................... 14

         3.1      Joint Steering Committee............................ 14
         3.2      Development of the Compatible
                  CARTO System and Compatible NIOBE System............ 15
         3.3      Development of the Daughter Products and
                  Consulting.......................................... 17
         3.4      Additional Daughter Products........................ 17
         3.5      Major Delays........................................ 18
         3.6      Failure to Obtain Approval.......................... 18

4        MARKETING, DISTRIBUTION AND MANUFACTURE...................... 18

         4.1      Biosense as Manufacturer............................ 18
         4.2      Marketing and Promotions, Distribution
                  Obligations......................................... 18
         4.3      Forecast............................................ 19
         4.4      Identification of Stereotaxis and Biosense.......... 20
         4.5      Product Labeling.................................... 20

5        STEREOTAXIS COMPONENT SUPPLY..................................21

         5.1      Manufacture of Components........................... 21
         5.2      Forecasts........................................... 21
         5.3      Pricing............................................. 21
         5.4      Vendor Requirements................................. 21
         5.5      Purchase Orders..................................... 21
         5.6      Terms............................................... 21
         5.7      Taxes............................................... 21
</Table>
<PAGE>

<Table>
<S>  <C>   <C>                                                               <C>

     5.8   Conflicting Terms ................................................22
     5.9   Annual Stereotaxis Reports and Audits ............................22

6    STEREOTAXIS MARKETING AND DISTRIBUTION .................................22

     6.1   Right to Distribute ..............................................22
     6.2   Forecasts ........................................................22
     6.3   Pricing ..........................................................22
     6.4   Purchase Orders ..................................................23
     6.5   Terms ............................................................23
     6.6   Taxes ............................................................23
     6.7   Conflicting Terms ................................................23
     6.8   Annual Stereotaxis Reports .......................................23

7    REVENUE SHARE ..........................................................24

     7.1   Daughter Product Sales ...........................................24
     7.2   Compatible NIOBE System ..........................................24
     7.3   Discounting ......................................................25
     7.4   Exchange Rates ...................................................25
     7.5   Payment ..........................................................25
     7.6   Annual Biosense Reports and Audits ...............................25

8    MANUFACTURING QUALITY AND ACCEPTANCE ...................................26

     8.1   Conformance with Specifications ..................................26
     8.2   Manufacturing Specifications .....................................26
     8.3   Packaging of Lots and Lot Sizes ..................................27
     8.4   Quality Guidelines ...............................................27
     8.5   Quality Control ..................................................27
     8.6   Rejection ........................................................27
     8.7   Rejection by Lot .................................................28
     8.8   Rejection Procedure ..............................................28
     8.9   Presence At Facility .............................................29
     8.10  Exchange of Information ..........................................29

9    REGULATORY MATTERS .....................................................29

     9.1   Regulatory Approvals .............................................29
     9.2   Cooperation to Obtain and Maintain Approvals .....................30
     9.3   Exchange of Information ..........................................30
     9.4   Inspections ......................................................30

10   REPRESENTATIONS AND WARRANTIES .........................................30

     10.1  Stereotaxis ......................................................30
     10.2  Biosense .........................................................31
     10.3  Sole Remedy ......................................................32
     10.4  Warranty Procedures ..............................................32
</Table>

                                      iii

<PAGE>

     10.5  Recalls ................................................ 33
     10.6  Correction of Flaws .................................... 33
     10.7  LIMITATION OF WARRANTIES ............................... 34
11   INDEMNIFICATION .............................................. 34
     11.1  Indemnity .............................................. 34
     11.2  Procedure .............................................. 34
     11.3  Remedy ................................................. 34
     11.4  Indemnity .............................................. 34
     11.5  Procedure .............................................. 34
     11.6  Remedy ................................................. 35
12   PROPRIETARY RIGHTS ........................................... 35
     12.1  Stereotaxis ............................................ 35
     12.2  Biosense ............................................... 35
     12.3  Joint Ownership ........................................ 35
     12.4  Developed Intellectual Property ........................ 37
13   CONFIDENTIALITY .............................................. 38
     13.1  Definition ............................................. 38
     13.2  Protection of Information .............................. 39
14   TERM AND TERMINATION ......................................... 40
     14.1  Term ................................................... 40
     14.2  Termination ............................................ 40
     14.3  Effect of Termination or Expiration - Survival ......... 41
15   DISPUTE RESOLUTION ........................................... 41
16   ASSIGNMENT ................................................... 42
17   GENERAL ...................................................... 42
     17.1  Force Majeure .......................................... 42
     17.2  Insurance .............................................. 43
     17.3  Notices ................................................ 43
     17.4  Entire Agreement ....................................... 43
     17.5  Captions and Section Headings .......................... 44
     17.6  Partial Invalidity ..................................... 44
     17.7  Presumptions ........................................... 44
     17.8  Waiver ................................................. 44
     17.9  Cumulative Remedies .................................... 44
     17.10 Independent Contractors ................................ 44
     17.11 Confidentiality of Agreement ........................... 44
     17.12 Authority .............................................. 45




                                       iv
<PAGE>
<Table>
<S>   <C>                                                                <C>
17.13 Counterparts...................................................... 45
</Table>









                                       v
<PAGE>
                                                                  EXECUTION COPY

                    DEVELOPMENT ALLIANCE AND SUPPLY AGREEMENT

         This Development Alliance and Supply Agreement (the "Agreement") is
made and entered into on May          2002 (the "Effective Date") by and between
Biosense Webster, Inc., a California corporation, having a place of business at
3333 Diamond Canyon Rd., Diamond Bar CA 91765 ("Biosense") and Stereotaxis,
Inc., a Delaware corporation, having a principal place of business at 4041
Forest Park Avenue, St. Louis, MO, 63108 ("Stereotaxis").

                                    RECITALS

         WHEREAS, Stereotaxis has developed a computerized instrument control
system. ("Stereotaxis NIOBE System", as defined below) that enables navigation
utilizing externally applied magnetic fields of inter alia associated
proprietary, interventional, disposable, electrophysiology devices;

         WHEREAS, Biosense has developed and commercialized an electrophysiology
mapping and Localization system known as the CARTO(TM) system ("CARTO System",
as defined below) and associated proprietary, interventional, disposable,
electrophysiology devices;

         WHEREAS Stereotaxis and Biosense desire to jointly develop a Compatible
NIOBE - CARTO System (as defined below) and to jointly develop certain
associated proprietary, interventional, disposable, electrophysiology devices
("Daughter Products", as defined below) and to manufacture, market and sell such
Daughter Products; and

         "WHEREAS Biosense will contribute to the costs of the development of
the Compatible NIOBE - CARTO System and the Daughter Products by inter alia
providing development facilities, manufacturing, engineering and administrative
support, regulatory resources and intellectual property rights and Biosense will
also contribute certain costs allocated to the marketing, promotions and
distribution of products as set forth in this Agreement;

         WHEREAS Stereotaxis will contribute inter alia intellectual property
rights and certain development support and financial contributions to the
development of the Compatible NIOBE - CARTO Systems (it being acknowledged by
the parties that certain financial burdens in accordance with this Agreement
also rest with Biosense);

         NOW THEREFORE, in consideration of the mutual promises, covenants and
conditions herein, the Parties agree as follows:

                                    AGREEMENT

1 DEFINITIONS

1.1 Construction. All references in this Agreement to "Articles" "Sections and
"Exhibit" refer to the articles, sections and exhibits of this Agreement.



                                       1
<PAGE>





1.1.1    As used in this Agreement, neutral pronouns and any variations thereof
         shall be deemed to include the feminine and masculine and all terms
         used in the singular shall be deemed to include the plural, and vice
         versa, as the context may require.

1.1.2    The words "hereof", "herein" and "hereunder" and other words of similar
         import refer to this Agreement as a whole, as the same may from time to
         time be amended or supplemented, and not to any subdivision contained
         in this Agreement.

1.1.3    The word "including" when used herein is not intended to be exclusive
         and means "including, without limitation."

1.2      Definitions. As used herein:

1.2.1    "510K Submission" will mean acceptance by the U.S. FDA of an
         application for 510K clearance. As used herein, "acceptance" will mean
         that the U.S. FDA has received the application and assigned a control
         number for such application.

1.2.2    "Additional Daughter Products" will have the meaning set forth in
         Section 3.4.

1.2.3    "Affiliates" will mean any corporation or other entity that is directly
         or indirectly controlling, controlled by or under common control with a
         Party. For the purpose of this definition, "control" will mean the
         direct or indirect ownership of more than fifty percent (50%) of the
         capital stock of the subject entity entitled to vote in the election of
         directors (or, in the case of an entity that is not a corporation,
         interests entitled to vote in the election of the corresponding
         managing authority).

1.2.4    "Business Days" will mean any day, other than a Saturday or Sunday, on
         which banks are open for business in New Jersey.

1.2.5    "Restricted Parties" will mean Medtronic, Guidant, St. Jude Medical,
         Boston Scientific and EP Medsystems, their Affiliates and successors in
         interest. The Parties acknowledge that Stereotaxis's existing contract
         Localization developer, Internav Inc., is not a Restricted Party.

1.2.6    "Biosense Field" will mean the field of Localization and
         electrophysiologic mapping technologies for electrophysiology.

1.2.7    "Paragraph Biosense IP" will have the meaning set forth in Section 12.

1.2.8    "CARTO System" will mean the Biosense product that is marketed under
         the name "CARTO XP Navigation System" and any successor name, which is
         an electrophysiologic navigation and mapping technology that inter
         alia associates local electrical activity with catheter location and
         determines the 3D coordinates of catheter location, using proprietary
         catheters and associated products.


                                       2
<PAGE>






1.2.9    "Clinical" will mean in respect of interventional procedures, and
         procedures on human subjects; and "clinic" will have a corresponding
         meaning.

1.2.10   "Commercial Failure" will have occurred (i) if the sales of Daughter
         Products at any time following the first anniversary of the Commercial
         Launch Date are at an aggregate run rate of less than one catheter
         month Compatible NIOBE-CARTO System, provided that Compatible NIOBE
         Systems sold for less than $450,000 will be excluded from such
         calculation; (ii) the Compatible CARTO Installation Ratio is less than
         25%; or (iii) Stereotaxis' installed base of Compatible NIOBE Systems
         comprises less than 25% of the Stereotaxis' forecast provided to
         Biosense in a letter of even date herewith.

1.2.11   "Commercial Launch Date" will mean the first date upon which a Daughter
         Product is made commercially available in the U.S. market (or where
         otherwise specified herein, an alternative geographical market) and on
         which the Compatible CARTO System and the Compatible NIOBE System are
         also commercially available the U.S. market (or where otherwise
         specified herein, an alternative geographical market).

1.2.12   "Components" will mean any components included in the Daughter Products
         that are manufactured by or on behalf of Stereotaxis and supplied to
         Biosense by Stereotaxis hereunder.

1.2.13   "Component Specifications" will mean the specifications for the
         Components agreed upon by the Joint Steering Committee (which will,
         with full cooperation of the Parties, use reasonable efforts to
         integrate into Components improvements in cost, performance or
         reliability of features).

1.2.14   "Component Manufacturing Specifications" means the detailed
         manufacturing release specifications for the Components established in
         accordance with Section 8.

1.2.15   "Component Transfer Price" will have the meaning set forth in
         Section 5.

1.2.16   "Control" of Stereotaxis' will mean a direct or indirect ownership or
         control of more than fifty percent (50%) of the relevant voting stock
         entitled to elect directors, or more than a fifty percent (50%)
         interest in the decision-making authority of such corporation.
         "Relevant voting stock" will be considered stock issued to or acquired
         by venture capital or other financial investors (other than those
         venture capital or financial investors affiliated with a Restricted
         Party), to Stereotaxis management or employees, to Siemens AG, Philips
         Medical System, GE Medical Systems, Toshiba Medical Systems, Meditec
         Corporation (Marubeni affiliate), Sumitomo Corporation, Mitsui Bussain
         Medical Inc., MC Medical, Inc. (Mitsubishi affiliate) and to Hitachi
         Medical Corp., will not be included in calculating whether a change of
         Control of Stereotaxis has occurred.

1.2.17   "Compatible CARTO Installation Ratio" means at any time the aggregate
         number of Compatible CARTO System installations then completed, divided
         by the aggregate number of Compatible NIOBE System installations as at
         the time 6 months prior, provided that



                                       3
<PAGE>






         Compatible NIOBE Systems installed prior to the Commercial Launch Date
         and any Compatible CARTO systems installed together therewith will be
         excluded from such calculation for a period of 2 years from the
         Commercial Launch Date.

1.2.18   "Cost of Goods" will mean, with respect to each Party's relevant cost
         of goods, the cost of goods calculated in accordance with US GAAP,
         applied on a consistent basis and in a manner consistent with
         Stereotaxis' or Biosense's, as the case may be, audited financials. In
         the event that in respect of the Cost of Goods of Daughter Products the
         Parties are unable to agree on the cost of a catheter product or on
         such definition or there is a bona fide dispute as to the application
         of the agreed upon definition, "Cost of Goods" will have the meaning
         set forth in Exhibit B.

1.2.19   "Daughter Product One" will mean Parent Product One modified in such a
         manner as enables it to be navigable and perform its original mapping,
         Localization, ablation or other functions when used with a Compatible
         Stereotaxis NIOBE - CARTO System and in accordance with the terms of
         this Agreement.

1.2.20   "Daughter Product Two" will mean Parent Product Two modified in such a
         manner to enable such product to be navigable and perform its original
         mapping, Localization, ablation or other functions when used with a
         Compatible Stereotaxis NIOBE - CARTO System and in accordance with the
         terms of this Agreement.

1.2.21   "Daughter Products" will mean Daughter Product One, Daughter Product
         Two and any Additional Daughter Products nominated pursuant to Section
         3.4, each of which comprises one of the proprietary, interventional,
         disposable, electrophysiology devices developed or marketed by Biosense
         for use with the CARTO System and modified in such a manner as enables
         it to be navigable and perform its original mapping, Localization,
         ablation or other functions when used with an Compatible Stereotaxis
         NIOBE - CARTO System in accordance with the terms of this Agreement.

1.2.22   "Daughter Products Specifications" will mean the feature specifications
         for Daughter Product Two or any Additional Daughter Products to be
         determined by the Joint Steering Committee (which will, with full
         cooperation of the Parties, use reasonable efforts to integrate into
         Daughter Products improvements in cost performance or reliability of
         features) as the same may be revised from time to time and provided
         that such specifications will be revised in timely fashion to reflect
         such modifications to the corresponding Parent Products as are of
         material clinical or commercial relevance to the usage of the Daughter
         Products

1.2.23   "Daughter Products Transfer Price" will have the meaning set forth in
         Section 6.3.

1.2.24   "Defects" will mean defects contained in Daughter Products or
         Components, as the case may be, prior to delivery of such Daughter
         Products to Stereotaxis or Components to Biosense, latent or non-latent
         consisting of the failure of Daughter Products or Components to comply
         with the applicable Manufacturing Specifications, or any requirement
         the FDC Act, including



                                       4
<PAGE>



         without limitation, of FDA QSR or other regulatory agency requirements
         with which the relevant Party has agreed to comply, or is obligated to
         comply, pursuant to Section 8.

1.2.25   "Distribute" shall mean, in respect of a product, its distribution to
         customers, including (subject to the terms of this Agreement) setting
         pricing policy, taking purchase orders, delivering and effecting
         transfer of title, either directly or through multiple tiers of
         distribution. "Distribution" shall have a corresponding meaning.

1.2.26   "electrophysiology" will mean in respect of the electrical
         characteristics and activity of the heart. "Electrophysiological" and
         "electrophysiologic" will have corresponding meanings.

1.2.27   "electrophysiologic mapping" will mean using a catheter having a
         transmitter or receiver at the distal tip to record, in respect of
         points or areas of heart tissue, the electrical signals being generated
         by such tissue.

1.2.28   "FDA QSR" will mean the U.S. FDA medical device Quality System
         Regulations, as amended from time to time, and any successor
         regulations or comparable regulations of any successor agency(ies)
         thereafter.

1.2.29   "Gross Profits" will mean, with respect to each Party's relevant gross
         profits, gross profits calculated in accordance with U.S. GAAP, applied
         on a consistent basis and in a manner consistent with such Party's
         audited financials. In the event that the Parties are unable to agree
         on such definition or there is a bona fide dispute as to the
         application of the agreed upon definition, "Gross Profits" will have
         the meaning set forth in Exhibit B.

1.2.30   "Initial Daughter Products" will mean Daughter Product One and Daughter
         Product Two.

1.2.31   "Compatible CARTO System" will mean the CARTO System, made compatible
         with the Compatible Stereotaxis NIOBE System in accordance with the
         Compatible CARTO Specifications and the terms of Exhibit A.

1.2.32   "Compatible CARTO Specifications" will mean the feature specifications
         for the Compatible CARTO System to be determined by Biosense in
         consultation with the Joint Steering Committee and in a manner
         consistent with Exhibit A, as the same may be revised from time to
         time. Upon completion of such specification it will be deemed an
         Exhibit to this Agreement.

1.2.33   "Compatible NIOBE System" will mean the Stereotaxis NIOBE System,
         including such modifications as determined by Stereotaxis in
         consultation with the Joint Steering Committee, as are reasonably
         required to make it compatible with Compatible CARTO System.

1.2.34   "Compatible NIOBE-CARTO System" will mean a Compatible computerized
         interventional electrophysiological Localization, mapping, ablation and
         instrument control system comprising one Compatible NIOBE System and
         one Compatible CARTO System.




                                       5
<PAGE>



1.2.35   "Intellectual Property Rights" will mean all rights in or arising
         under: (i) Patents; (ii) all copyrights in both published and
         unpublished works, all registrations and applications therefor and all
         associated moral rights; (iii) all know-how, trade secrets,
         confidential information, software, technical information, data,
         process technology, plans, drawings and blueprints required to be
         disclosed by the Parties to one another hereunder; and (iv) databases,
         data compilations and collections and technical data; and (v) any other
         similar rights in or arising under Technology worldwide, in each case,
         whether arising under the laws of the United States or any other state,
         country or jurisdiction.

1.2.36   "Joint IP" will have the meaning set forth in Section 12.3.1.

1.2.37   "Localization" will mean the determination of the three dimensional
         coordinates, relative to a fixed or control point or points, of the
         distal (internal) tip of a catheter where such catheter has a signal
         transmitter and/or receiver in its distal tip which, either directly or
         indirectly through another catheter, sends and/or receives data (that
         is used to determine such three dimensional coordinates) to or from an
         external transmitter and/or receiver via electromagnetic, ultrasound or
         other signals but shall not be taken to include imaging technologies
         such as ultrasonic imaging, imaging through optical fibers or other
         optical means, other imaging modalities or electrophysiologic recording
         systems.

1.2.38   "Marketing and Promotions" will mean in respect of a product (i)
         interacting (using written materials or otherwise) with actual and
         potential customers to facilitate their placing purchase orders for the
         product (and such other activities other than Distribution as are
         generally considered to be marketing activities in respect of a product
         in the medical devices industry); and (ii) conducting promotions (using
         written materials or otherwise) at trade shows and other relevant
         forums (and such other activities as are generally considered to be
         promotions activities in respect of a product in the medical devices
         industry) respectively.

12.39    "Milestones" will mean the development milestones with respect to
         development of the Compatible CARTO System and Daughter Products as set
         forth in Exhibit A and "Milestone" will have a corresponding meaning.

1.2.40   "Net Revenue" for Daughter Products will mean the bona fide price of
         sale or other transfer, after deduction of the following: prompt
         payment discounts, quantity discounts, rebates, returns, refunds and
         other similar discounts or amounts, including taxes, actually allowed
         and given, at which Biosense or any of its Affiliates sells or
         otherwise transfers Daughter Products to its customers (other than
         other Affiliates) as determined in accordance with U.S. GAAP applied on
         a consistent basis and in manner consistent with procedures used by
         Biosense to calculate revenues for its other relevant product lines for
         financial reporting purposes. In the event Daughter Products are
         sold together with other products at a single price, such single price
         will be allocated (pro rata where applicable) among Daughter Products
         and the other products based on the market price for such products when
         sold separately. In reference to products other than Daughter Products,
         "Net Revenue" will have a corresponding meaning.


                                       6
<PAGE>






1.2.41   "Parent Product One" will mean the Biosense Navi-Star catheter used as
         the electrophysiological mapping catheter for data acquisition in the
         CARTO System, which contains a miniature sensor embedded in the
         catheter tip that collects data and relays it to the CARTO System.

1.2.42   "Parent Product Two" will mean the Biosense Navi-Star TC ablation
         catheter used to ablate heart tissue in electrophysiological
         procedures.

1.2.43   "Parent Products" will mean any of the proprietary, interventional,
         disposable, electrophysiology devices developed and/or marketed by
         Biosense for use with the CARTO System, as modified or improved from
         time to time, and includes, without limitation, Parent Product One and
         Parent Product Two.

1.2.44   "Party" will mean a Party to this Agreement. "Parties" will have a
         corresponding meaning.

1.2.45   "Patent Rights" will mean all classes or types of patents, utility
         models and design patents including, without limitation, originals,
         divisions, continuations, continuations-in-part, extensions or reissues
         and patent applications for these classes or types of patent rights, in
         all countries of the world.

1.2.46   "PMA" will mean premarket approval by U.S. FDA in respect of an
         application for such approval pursuant to the Federal Food, Drug, and
         Cosmetic Act.

1.2.47   "preclinical" will mean in respect of procedures or research, animal or
         phantom procedures or other research not conducted on human subjects.

1.2.48   "Revenue Share" will have the meaning set forth in Section 7.

1.2.49   "Stereotaxis Field" will mean the field of computerized control of the
         motion of interventional or other percutaneous devices using externally
         applied magnetic fields.

1.2.50   "Stereotaxis NIOBE System" will mean the NIOBE advanced permanent
         magnet system designed by Stereotaxis that provides computerized remote
         control and guidance of the distal (internal), end of proprietary
         catheters guidewires and other percutaneous devices during certain
         interventional procedures.

1.2.51   "Stereotaxis Localization System" will mean Stereotaxis' catheter-based
         electromagnetic Localization system having only a basic level of
         Localization functionality, as more fully described in Exhibit D.

1.2.52   "Stereotaxis IP" will have the meaning set forth in Section 12.1.

1.2.53   "Target Completion Date" in respect of a Milestone will mean the date
         for such Milestone determined in accordance with Exhibit A.


                                       7
<PAGE>





1.2.54   "Technical Failure" will mean, (i) in respect of the Compatible NIOBE
         -- CARTO System, (a) its failure as reasonably determined by Biosense,
         to perform the functions of the CARTO System and of the NIOBE System in
         accordance with clinically acceptable quality standards or (b) a
         determination by Biosense that the Compatible NIOBE-CARTO will not
         produce acceptable technical results within acceptable budgetary
         limits; or (ii) in respect of the Initial Daughter Products, their
         failure to conform with the relevant Daughter Product Specifications.

1.2.55   "Technology" will mean (i) works of authorship including, without
         limitation, computer programs, algorithms, routines, source code and
         executable code, whether embodied in software or otherwise,
         documentation, designs, files, records and data; (ii) inventions
         (whether or not patentable), improvements, and technology, (iii)
         proprietary and confidential information, including technical data and
         customer and supplier lists, trade secrets, show how, know how and
         techniques; and (iv) processes, devices, prototypes, schematics, bread
         boards, net lists, mask works, test methodologies and hardware
         development tools and all instantiations of the foregoing in any form
         and embodied in any media.

1.2.56   Term" will have the meaning set forth in Section 14.1.

1.2.57   "U.S. FDA" will mean United States Food and Drug Administration, and
         any successor agency thereto.

1.2.58   "Year 1" will mean the twelve (12) months commencing on the first day
         of the first month immediately following the Commercial Launch Date.
         "Year 2", "Year 3", etc. will mean the twelve (12) month periods
         following Year 1, Year 2, etc. respectively.

2        LICENSE GRANTS

2.1      Licenses Granted: Appointment

2.1.1    Daughter Products. Stereotaxis hereby grants to Biosense a limited,
         non-exclusive (subject to Sections 2.4 and 4.4), worldwide,
         non-transferable (except as set forth in Section 2.4 and Article 16),
         license under Stereotaxis' Intellectual Property Rights in and to the
         Stereotaxis' IP, to make, have made, use, import, sell, offer for sale,
         or otherwise dispose of (directly or through multiple tiers of
         distribution) Daughter Products.

2.1.2    Stereotaxis NIOBE System. Stereotaxis hereby grants to Biosense a
         limited, (subject to Sections 2.4 and 4.4), non-transferable (except as
         set forth in Section 2.4 and Article 16), worldwide license, under
         Stereotaxis' Intellectual Property Rights in the Stereotaxis IP, to
         make, have made, use, import, sell, offer for sale, or otherwise
         dispose of (directly or through multiple tiers of distribution) the
         Compatible CARTO Systems for use with the Daughter Products.

2.1.3    Development License. Stereotaxis hereby grants to Biosense a limited,
         non-transferable (except as set forth in Section 2.4 and Article 16),
         worldwide license under Stereotaxis'



                                       8
<PAGE>





         Intellectual Property Rights in the Stereotaxis IP, to use the
         Stereotaxis IP for the purpose of, internally at Biosense, completing
         the development, integration and testing work in connection with
         development of the Compatible CARTO System, the Compatible NIOBE System
         and the Daughter Products as is required to give effect to the terms of
         this Agreement.

2.1.4    No Implied Rights. No rights or licenses are granted hereunder by
         implication, estoppel or otherwise. The only non-exclusive licenses
         granted or to be granted to Biosense pursuant to this Agreement are as
         expressly stated in this Section 2.1.

2.2      License Grant to Stereotaxis.

2.2.1    Daughter Products. For the purposes of giving effect to Section 2.4 and
         4.4 Biosense hereby grants to Stereotaxis a limited, non-exclusive,
         worldwide, non-transferable (except as set forth in Section 2.4 and
         Article 16), license under Biosense' Intellectual Property Rights in
         and to the Biosense' IP, to make, have made, use, import, sell, offer
         for sale, or otherwise dispose of (directly or through multiple tiers
         of distribution) Daughter Products.

2.2.2    CARTO System. Biosense hereby grants to Stereotaxis a limited,
         non-exclusive (subject to Sections 2.4), non-transferable (except as
         set forth in Article 16), worldwide license, under Biosense'
         Intellectual Property Rights in the Biosense IP, to make, have made,
         use, import, sell, offer for sale, or otherwise dispose of (directly or
         through multiple tiers of distribution) the Compatible NIOBE Systems
         for use with the Daughter Products.

2.2.3    Development License. Biosense hereby grants to Stereotaxis a limited,
         non-transferable (except as set forth in Article 16), worldwide license
         under Biosense' Intellectual Property Rights in the Biosense IP, to use
         the Biosense IP for the purpose of, initially at Stereotaxis,
         completing such development, integration and testing work in connection
         with development of the Compatible CARTO System, the Compatible NIOBE
         System and the Daughter Products as is required to give effect to the
         terms of this Agreement.

2.2.4    Localization System Placements. Subject to Section 2.4, Biosense hereby
         grants to Stereotaxis a limited, non-transferable (except as set forth
         in Article 16), worldwide license (the "Localization License"), under
         Biosense's Intellectual Property Rights in the Biosense IP (to the
         extent if any, required) to make, have made, use, import, sell, offer
         for sale or otherwise make available (directly or through multiple
         tiers of distribution) the Stereotaxis Localization System (and
         associated interventional disposable devices) pursuant to the
         provisions, including the royalty provisions, of Section 2.4. For the
         avoidance of doubt, the "associated interventional disposable devices"
         referred to in the above sentence, applies to Stereotaxis developed
         catheters and devices, and not to Biosense developed catheters and
         devices.

2.2.5    No Implied Rights. No other rights or licenses are granted hereunder by
         implication, estoppel or otherwise. The only non-exclusive licenses
         granted or to be granted to Stereotaxis pursuant to this Agreement are
         as expressly stated in this Section 2.2.


                                       9
<PAGE>




2.3      Exclusivity.

2.3.1    Stereotaxis. During the Term (subject to Sections 2.3.4, 2.4 and 4.4),
         Stereotaxis will not engage in research and development, clinical
         development, Marketing and Promotions or Distribution activities in the
         Biosense Field; and

2.3.2    Biosense. During the Term, Biosense will not engage in research and
         development, clinical development or Marketing and Promotions or
         Distribution activities in the Stereotaxis Field.

2.3.3    Clinical Development. Neither Party will be taken to be in breach of
         its obligations pursuant to Sections 2.3.1 and 2.3.2 above by reason of
         any pre-clinical or clinical development activities initiated and
         conducted by a Party or by third party physicians or hospitals with
         technical, systems, service or financial support from such Party,
         provided that the Party is obligated to provide such support pursuant
         to a sponsored research agreement between the Party and such physician
         or hospital and provided that such sponsored research agreement was:
         entered into in the ordinary course; will not delay performance under
         this Agreement; such support is not development engineering services
         provided for a third party; and such support and agreement are
         provided on terms both consistent with past practices of the Party and
         consistent with relevant industry standards.

2.3.4    Termination. This Agreement will terminate (except in respect of any
         antecedent breach) upon the occurrence of:

2.3.4.1  Technical Failure;

2.3.4.2  Commercial Failure; or

2.3.4.3  Seven (7) years from the Effective Date, contingent in respect of that
         during Years Six (6) and Seven (7), on Biosense being generally
         regarded in the field of electrophysiologic Localization as having one
         of the leading market shares, or otherwise as provided for in Section
         14 herein.

2.4      Stereotaxis Permitted Activities.

2.4.1    Own Development. Nothing in this Agreement will be taken to prevent
         Stereotaxis development, Marketing and Promotions, Distribution or
         other activities in respect of catheters or other interventional
         instruments designed for non-Localized electrophysiological procedures.

2.4.1.1  Stereotaxis may continue with its own development program and
         subsequent commercial activities with [***] (or, in the event of a
         technical failure or a commercial failure of the activities with [***],
         as determined by Stereotaxis, with one or more other manufacturers of a
         Localization mechanism, provided that Stereotaxis with use reasonable
         commercial efforts to work with only one such additional manufacturer)
         in respect of the


[*** Indicates portions of this exhibit have been omitted and filed separately
with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]



                                       10
<PAGE>






         Stereotaxis Localization System and associated proprietary disposable
         localized devices until such time as the Commercial Launch Date,
         provided that such development program:

2.4.1.2  does not involve collaboration with a Restricted Party, and

2.4.1.3  includes contract development from independent parties.

2.4.2    Localization System Placements.

2.4.2.1  Limit on Number of Placements. In connection with exercising its rights
         under Section 2.4.1 and subject to Section 2.4.2.2, Stereotaxis agrees
         that it may sell and/or license ("Stereotaxis Customer Localization
         License") to third parties (each a "Stereotaxis Customer") only up to,
         but not more than fifty (50) Stereotaxis Localization Systems.

2.4.2.2  The Localization License is granted by Biosense as a limited
         non-exclusive license to Stereotaxis under any necessary Biosense IP at
         a royalty rate according to the table below:

                                     [***]


2.4.2.3   In the case of units sold using a different subcontractor (i.e., other
          than [***]), then the above royalty rates shall be [***]. In addition,
          if:

2.4.2.3.1 Stereotaxis exercises its rights pursuant to the Localization License;
          or

2.4.2.3.2 Biosense loses distribution rights following Commercial Failure,
          Technical Failure or other termination of placements of Compatible
          NIOBE-CARTO Systems pursuant to this Agreement (including expiration
          of the Term),

2.4.2.3.3 then Biosense shall be entitled to [***] of Stereotaxis' Net Revenues
          in respect of it sales of disposable Localization catheters and
          devices comprising Daughter Products or such devices as are utilized
          subject to the Localization License. The Parties recognize that
          Biosense grants the licenses herein only to the extent if any,
          required to permit Stereotaxis to sell Stereotaxis Localization
          Systems and/or grant such Stereotaxis Customer Localization Licenses
          (and licenses in respect of proprietary localized disposable devices
          to be used with the Stereotaxis Localization System) as permitted
          pursuant to this Section 2.4.

2.4.2.4   Conversion of Stereotaxis Customers. Stereotaxis and Biosense will,
          prior to and following the Commercial Launch Date, use all
          commercially reasonable efforts, to convert Stereotaxis Customers to
          usage of the Compatible CARTO System.

[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]


                                       11
<PAGE>





2.4.2.5  Limits on Localization License. Pursuant to the Localization License,
         each Stereotaxis Customer Localization License (and licenses in respect
         of electrophysiological localized disposable devices to he used with
         the Stereotaxis Localization System) will be limited to a term ending
         24 months following the Commercial Launch Date. Where this limitation
         results in any Stereotaxis Customer having permitted usage of its
         Stereotaxis Localization System for a period of less than five (5)
         years ("Diminished Usage Period"), Biosense will make available to each
         such customer by way of discounts, rebates or otherwise ("Rebate") in
         respect of the Compatible CARTO System or other Biosense products
         (other than the Daughter Products) purchased by the customer, a
         reasonable discount to its list price on such products, such discount
         pro rated inversely to the number of years of ownership by the customer
         of the Stereotaxis Localization System.

2.4.3    Technical Failure. Commercial Failure or Delay.

2.4.3.1  Additional Stereotaxis Localization System Placements. In the event of
         Technical Failure or Commercial Failure or delay in the Commercial
         Launch Date for Compatible NIOBE-CARTO Systems (with relevant
         disposable products that customers can use therewith) beyond April 30,
         2004 ("Delay"), Stereotaxis will have the right to place additional
         Stereotaxis Localization Systems (and proprietary localized disposable
         devices to be used therewith) in the manner set out in this Section
         2.4.3.

2.4.3.2  Failure. In the event of Technical Failure or Commercial Failure or
         other termination as referred to in Section 14.2.3, Stereotaxis will
         have the right to grant up to 500 licenses to third parties under its
         Localization License having terms ending no later than three (3) years
         following the date of such Technical Failure or Commercial Failure in
         order to enable Stereotaxis to secure access to an alternative catheter
         based Localization system that is compatible with the Stereotaxis NIOBE
         System. The parties recognize herein that after the expiration of the
         three (3) year period following any Commercial Failure or Technical
         Failure, the Localization Licenses under the Biosense IP shall no
         longer exist.

2.4.3.3  Delay. In the case of Delay, Stereotaxis will have the right to grant
         up to 500 licenses pursuant to Section 2.4.3.2 until such time as the
         Commercial Launch Date.

2.4.3.4  Biosense Distribution. In the case of Technical Failure, Commercial
         Failure or Delay, Biosense will have the right to act as sole
         distributor of such additional Stereotaxis Localization Systems (and
         proprietary electrophysiological localized disposable devices to be
         used therewith), based on reasonable commercial terms to be mutually
         agreed upon by Biosense and Stereotaxis.

2.5      Preferred Partner and Third Party Integrations.

2.5.1    Outside Biosense Field. The Parties shall use reasonable commercial
         efforts to cooperate (but without obligation) to bring the integration
         of the Compatible NIOBE-CARTO System with additional imaging and
         information modalities relevant to electrophysiology (including,
         without limitation, digital x-ray fluoroscopy and intraoperative and
         pre-operative 3D data



                                       12
<PAGE>




         sets). Biosense will be Stereotaxis's preferred partner for the
         Localization of Stereotaxis' medical devices outside of the Biosense
         Field. Accordingly, Stereotaxis will grant Biosense a right of first
         notice for all product development activities that are undertaken by
         Stereotaxis relating to Localization of Stereotaxis' medical devices
         outside of the Biosense Field as set forth in Section 2.5.2.
         Additionally, the Parties will, within a reasonable period after the
         Effective Date, enter into good faith discussions to consider
         collaboration in the fields of neurology and interventional
         neuroradiology.

2.5.2    Notice.

2.5.2.1  During the Term, at least sixty (60) days prior to Stereotaxis entering
         into material and substantial negotiations regarding a potential
         agreement regarding the Localization of medical devices outside of the
         Biosense Field Stereotaxis agrees to notify Biosense in writing,
         together with a summary description of the proposed potential agreement
         that would be the subject of such negotiations ("Initial Notice"). Upon
         request by Biosense given within ten (10) days of the date of such
         Initial Notice, Stereotaxis and Biosense will discuss the terms and
         conditions under which Stereotaxis and Biosense would enter into an
         agreement like the proposed potential agreement with a third party. In
         the event that Stereotaxis and Biosense have not agreed upon such terms
         and conditions within thirty (30) days after the date Stereotaxis
         provided the Initial Notice to Biosense, Stereotaxis will be free to
         enter into such agreement with a third party without further
         obligations to Biosense, and on any terms that Stereotaxis considers
         appropriate. It is understood that, because Stereotaxis will be
         providing the Initial Notice to Biosense prior to the commencement of
         material and substantial negotiations with a third party, Stereotaxis
         may not be able to define the entire or exact scope of the rights and
         obligations of the potential agreement, and accordingly, so long as the
         Initial Notice describes in general terms a product, field or rights
         that overlap with the product, field or rights actually negotiated
         with, or granted to, a third party, Stereotaxis will be deemed to have
         satisfied its obligations, under this Section 2.5.2; also, it is
         understood that Stereotaxis need only provide one (1) such Initial
         Notice in any twelve (12) month period before engaging in such material
         and substantial negotiations with any third party or parties.

2.5.2.2  Stereotaxis also agrees to notify Biosense in the event that
         Stereotaxis reasonably considers it is engaged in substantive
         discussions in respect of the sale of the company or substantially all
         of its assets. For the avoidance of doubt, the provisions of Section
         2.5.2.1 will not apply in respect of any such notice.

2.5.2.3  No Implied Obligation. The only obligations of Biosense and Stereotaxis
         under this Section 2.5.2 are as expressly stated herein, and there are
         no further implied obligations relating to the matters contemplated
         therein. Without limiting the foregoing, it is further acknowledged and
         agreed that this Section 2.5.2:

2.5.2.3.1 will not be deemed to apply to a change of Control of Stereotaxis; and

2.5.2.3.2 Stereotaxis is not obligated under this Section 2.5.2 to provide to
          Biosense any particular information other than as expressly stated in
          this Section 2.5.2.



                                       13
<PAGE>


2.5.2.3.3 If Biosense disputes Stereotaxis' right to proceed with a transaction
          with a third party, Biosense will request that such dispute be
          resolved in accordance with Section 15.

2.6       Single Purchase Offers. The parties agree to discuss in good faith
          whether to implement distribution arrangements whereby customers are
          provided with a single offer to purchase a Compatible NIOBE-CARTO
          system.

2.7       Latest Localization Platform. The Parties acknowledge that the latest
          generation Biosense's Localization technology platform used as of the
          Effective Date is the CARTO XP system. In the event that Biosense at
          any time during the Term launches a new Localization technology
          platform Biosense will use reasonable efforts to develop and commence
          distribution of a NIOBE compatible upgrade to the new Localization
          technology platform. In such case the parties will enter into good
          faith negotiations to determine the technically feasible and
          commercially reasonable development cycle for such upgrade and to
          determine the contributions of the Parties to its development funding,
          provided that in the event the new Localization technology platform
          includes technologies that are reasonably determined by Biosense as
          not being reasonably capable of being made compatible with the NIOBE
          System, Biosense will notify Stereotaxis in writing of the same (and
          of the reasons therefor) at the earliest practicable opportunity in
          the development cycle of the new Localization technology platform and
          the Parties will enter into good faith negotiations to consider
          amending this Agreement in a manner that adequately and reasonably
          addresses any substantially negative consequences for Stereotaxis as a
          result of the such incompatibility. This Section 2.7 will apply to any
          new Localization technology platform in the same manner as it is
          applicable to the Compatible CARTO System.

3         DEVELOPMENT AND OVERSIGHT

3.1       Joint Steering Committee.

3.1.1     Establishment. The Parties will establish a Joint Steering Committee.
          Each Party may appoint up to three (3) representatives to the Joint
          Steering Committee. The initial representatives of each Party are as
          set forth in Exhibit E. Subject to the foregoing, replacement
          representatives maybe appointed by either Party on written notice to
          the other Party. All decisions of the Joint Steering Committee shall
          be taken by a majority vote of all of the representatives on the Joint
          Steering Committee and in the event of deadlock after ninety (90)
          days, either Party may refer that decision in question to settlement
          by the presidents of the Parties. In the event the presidents are
          unable to agree within a period of ninety (90) days after being
          presented with the question, a Party may elect to take the matter to
          arbitration on the terms set out in Section 15 or otherwise as
          mutually agreed in writing by the parties. The Joint Steering
          Committee shall not meet or take any actions unless at least one
          representative of each Party is in attendance.

3.1.2     Responsibilities. Each Party's representative to the Joint Steering
          Committee will act reasonably and in good faith. The Joint Steering
          Committee will oversee the Parties' performance in accordance with
          Agreement including, without limitation:


                                       14
<PAGE>





3.1.2.1  coordinating the Parties' activities and responsibilities under the
         Agreement;

3.1.2.2  encouraging and facilitating ongoing cooperation between the Parties;

3.1.2.3  subject to the guidelines set forth in Section 9.1.2, determining the
         regulatory strategy and timetable in respect of the Daughter Products
         and allocating responsibilities for effecting the same between the
         Parties;

3.1.2.4  determining the development strategy and timetable in respect of the
         Daughter Products and the Daughter Product Specifications, and
         allocating responsibilities for effecting the same between the Parties;

3.1.2.5  subject to the provisions of Exhibit A and Section 9.1.2, determining
         the regulatory strategy and timetable in respect of the Compatible
         CARTO System and, where applicable, the Compatible NIOBE System, and
         allocating responsibilities for effecting the same between the Parties;

3.1.2.6  subject to the guidelines set forth in Exhibit A, determining the
         development strategy and timetable in respect of the Compatible CARTO
         System and consulting with Stereotaxis as to the development strategy
         and timetable for the Compatible NIOBE System, and allocating
         responsibilities for affecting the same between the Parties;

3.1.2.7  discussing with Biosense once per quarter Biosense's then current sales
         forecasts (whether finalized or preliminary) for the Daughter Products
         and in respect of the placement of Compatible NIOBE--CARTO Systems for
         each quarter in the next 12 months, and where available, the next 24
         months. Biosense agrees to reasonably cooperate in this regard, but
         will be under no obligation to take account of input from the Joint
         Steering Committee in relation to any such forecasts; and

3.1.2.8  Where appropriate requesting Biosense to provide relevant information
         to the Joint Steering Committee in respect of the issue of whether a
         Technical Failure has occurred.

3.1.3    Meetings. The Joint Steering Committee will hold its first meeting
         within thirty (30) days of the Effective Date. Thereafter, the Joint
         Steering Committee will determine its meeting schedule, provided that
         it will meet at least monthly by teleconference and semi-annually with
         personal attendance of representatives (where reasonably practicable).

3.2      Development of the Compatible CARTO System and Compatible NIOBE System.

3.2.2.   Development.

3.2.2.1  Biosense will use reasonable commercial efforts to develop the
         Compatible CARTO System in accordance with the Compatible CARTO
         Specifications and the Milestones and four development stages
         ("Development Stage") described in Exhibit A and otherwise in the
         manner determined by the Joint Steering Committee pursuant to Section
         3.1.2.6 and in this



                                       15
<PAGE>



         regard Biosense will be responsible for providing all development
         engineers and other personnel, facilities, Biosense IP and Biosense
         Intellectual Property Rights and relevant regulatory resources required
         for the development of the Compatible CARTO System. Stereotaxis will be
         responsible for coordinating with and providing such information to
         Biosense in respect of the such development as may be reasonably
         required and further will make payments contributing to the costs of
         the development of the Compatible CARTO System in accordance with the
         terms of this Section 3.2 and with the terms and payment schedule set
         forth in Exhibit A. Stereotaxis's contribution to funding of
         development of the Compatible CARTO System will not exceed a maximum of
         [***]. All payments will be made in US Dollars ($). Subject to Section
         3.1.2.6, Stereotaxis will be responsible for developing the Compatible
         NIOBE System.

3.2.2.2  Parties also agree to use reasonable commercial efforts to cooperate
         (but without obligation) to consider the development of a hybrid
         Compatible NIOBE System utilizing Biosense mapping and software and
         Stereotaxis Localization System hardware for the purpose of providing
         expedited entry to human clinical procedures by key common physician
         customers. In the event of Technical Failure that leads to the
         termination of the Development Program prior to the Critical Design
         Review milestone outlined in Exhibit A, Biosense will bear no risk of
         loss, but in any case, any unused portion of the finds provided to
         Biosense will be refunded to Stereotaxis.

3.2.2.3  In the event of Technical Failure that leads to the termination of the
         Development Program after the Critical Design Review milestone outlined
         in Exhibit A, Biosense will promptly refund to Stereotaxis and unused
         portion of its contribution to development funding of the Compatible
         CARTO System (which will be calculated by crediting to Stereotaxis
         amounts in the same manner as set out in Section 3.2.3 below) and also
         promptly refund to Stereotaxis one half of Stereotaxis' aggregate
         contribution for the period beyond the Critical Design Review milestone
         outlined in Exhibit A, to development funding of the Compatible CARTO
         System not otherwise repaid to Stereotaxis pursuant to Section 323
         below.

3.2.3    Invoicing of Expenditures. Within ten (10) days of completion of each
         Development Stage, Biosense will provide Stereotaxis a written invoice
         stating the approximate the sum and breakdown of the following
         development expenditures ("Expenditures") incurred by Biosense in such
         stage:

3.2.3.1  [***]

3.2.3.2  [***]

3.2.3.3  [***]

[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]

                                       16
<PAGE>





3.2.3.4  [***]

3.2.3.5  [***]

3.2.4    Diligence. Each Party will complete its responsibilities hereunder in
         respect of the Milestones set forth in Exhibit A and bring about
         completion of such Milestones on a timely basis. Each Party will
         promptly inform the other Party if it reasonably believes that there
         will be a delay in meeting any Milestone, and keep the other Party
         apprised of its progress in completing its responsibilities in respect
         of such Milestone.

3.3      Development of the Daughter Products and Consulting. Biosense agrees to
         coordinate with and provide information to Stereotaxis to an extent
         reasonably required to allow Stereotaxis to develop the Daughter
         Products in accordance with the Daughter Products Specifications, the
         Milestones described in Exhibit A and otherwise as determined by the
         Joint Steering Committee pursuant to Section 3.1.4 and will use
         diligent efforts in this regard to complete its responsibilities and
         bring about completion of such Milestones on a timely basis. Each Party
         will promptly inform the other Party if it reasonably believes that
         there will be a delay in meeting any Milestone, and keep the other
         Party apprised of its progress in completing its responsibilities in
         respect of such Milestone. At Stereotaxis' election, Biosense will
         provide Stereotaxis with consulting on development and manufacturing of
         non-localized disposable devices on a reasonable consulting fee basis
         (to be mutually agreed upon).

3.4      Additional Daughter Products. Biosense agrees to coordinate with and
         provide information to Stereotaxis to an extent reasonably required to
         allow Stereotaxis to develop such additional Daughter Products
         ("Additional Daughter Products", which will be deemed to include any
         Localized devices developed or to be developed by Stereotaxis and
         having no corresponding Parent Products (but only products developed
         based on Stereotaxis IP and not including any products developed in
         concert with or based on the intellectual property of third parties))
         as are reasonably nominated in writing by either Party, and to complete
         such development and relevant regulatory filings for clinical or
         commercial use (as the case may be) within a maximum period of one (1)
         year from the date of such nomination. Biosense will have the right to
         decline to distribute any such Additional Daughter Product, provided
         that in such event, Stereotaxis will have the right to distribute such
         product directly, through contract sales or

[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]


                                       17
<PAGE>

         through other third party distribution but not through a Restricted
         Party. Development, manufacture by Biosense and purchase by Stereotaxis
         from Biosense of any such Additional Daughter Products will be
         accomplished in accordance with the provisions of this Agreement.

3.5      Major Delays. In the event Biosense fails to meet a Milestone on
         Exhibit A within six (6) calendar months after the Target Completion
         Date for such Milestone, or in aggregate the period of delay in meeting
         Target Completion Dates exceeds nine (9) months, Stereotaxis will have
         the right to terminate this Agreement immediately upon written notice.

3.6      Failure to Obtain Approval. In the event that the Parties fail to
         obtain applicable 510K, PMA and CE Mark regulatory approvals or
         clearances required by U.S. FDA or the relevant Notified Body in
         Europe, in respect of the Compatible NIOBE-CARTO System or components
         thereof prior to April 30, 2005, or in respect of the Initial Daughter
         Products, on April 30 2005, have not obtained or do not have prospects
         for obtaining such approvals or clearances in the near term (and
         thereafter do not obtain such approvals or clearances in the near
         term), then either Party may terminate this Agreement immediately upon
         written notice.

4        MARKETING, DISTRIBUTION AND MANUFACTURE

4.1      Biosense as Manufacturer. Daughter Products used for clinical trials
         and research in respect of the Daughter Products will be manufactured
         and supplied by Stereotaxis unless otherwise determined by the Joint
         Steering Committee. The Parties agree that Biosense will serve as
         manufacturer of the Daughter Products for commercial sale. To the
         extent required, the Parties agree to fully cooperate in the transfer
         of manufacturing know-how in respect of Daughter Products from
         Stereotaxis to Biosense in advance of commercialization thereof.

4.2      Marketing and Promotions, Distribution Obligations.

4.2.1    Daughter Products.

4.2.1.1  Biosense will Distribute and conduct Marketing and Promotions in
         respect of the Daughter Products and will use all reasonable commercial
         efforts in this regard to maximize the dollar sales volume of the
         Daughter Products. Biosense will be solely responsible for all costs
         and expenses related to the Marketing and Promotions and Distribution
         of Daughter Products and for performing its obligations and exercising
         its rights hereunder. Biosense agrees to provide at least the same
         economic incentives to its sales force to distribute Daughter Products
         as apply to comparable Biosense products.

4.2.1.2  Stereotaxis will have the right (at its own expense unless otherwise
         determined by the Joint Steering Committee), to conduct supplementary
         Marketing and Promotions in respect of the, Daughter Products. In
         exercising this right, Stereotaxis will consult in advance, to the
         extent permissible under relevant law, and thereafter on a regular
         basis, with the Joint Steering Committee to ensure that such
         Stereotaxis' Marketing and Promotions activities are sufficiently
         coordinated with Biosense' Marketing and Promotions activities in
         respect of the Daughter Products to avoid creating customer confusion
         or other negative effects.


                                       18
<PAGE>


         Stereotaxis will be solely responsible for all costs and expenses
         related to performing its obligations and exercising its rights
         hereunder.

4.2.2    Compatible Stereotaxis NIOBE-CARTO Systems.

4.2.2.1  Biosense will be solely responsible for all costs and expenses related
         to the Marketing and Promotions and Distribution the Compatible CARTO
         System.

4.2.2.2  Stereotaxis will be solely responsible for all costs and expenses
         related to the Marketing and Promotions and Distribution of the
         Compatible NIOBE System.

4.2.2.3  The Parties further agree to cooperate in a commercially reasonable
         manner in respect of optimizing the number Compatible Stereotaxis
         NIOBE-CARTO Systems installed at hospital sites.

4.2.3    Biosense will provide commercially reasonable written proposals for
         sales of Compatible CARTO Systems to customers nominated by Stereotaxis
         within 45 days of such request. Such written proposals will be preceded
         or followed by at least the reasonable and customary level of Biosense
         sales force interaction with the prospective customer site as is
         typically required to secure sale of a CARTO System.

4.2.4    Biosense Distribution of Products. The parties recognize that in the
         event that Biosense is permitted to distribute any products under this
         Agreement, Biosense will be the Party solely responsible for setting
         price on products it distributes.

4.2.5    Stereotaxis Distribution of Products. In the event Stereotaxis has the
         right to distribute products under this Agreement (for instance, as
         specifically provided for, or by agreement of the Parties) Stereotaxis
         herein agrees that it shall not distribute any such products through a
         Restricted Party, except in the event where Stereotaxis is acquired by
         such Restricted Party. The parties recognize that in the event that
         Stereotaxis permitted to distribute any products under this Agreement,
         Stereotaxis will be the Party solely responsible for setting price on
         products it distributes.

4.2.6    Placement of Compatible CARTO Systems. In the event that the Compatible
         CARTO Installation Ratio is [***], Biosense agrees that it will sell
         Compatible CARTO Systems to Stereotaxis at [***] per system for resale
         to prior users of any CARTO system, and at [***] per system for resale
         to new users of the CARTO System, until such time as a [***] is
         reached.

4.3      Forecast. Ninety (90) days prior to the beginning of each calendar
         quarter, Biosense will provide Stereotaxis with a non-binding twelve
         (12) month rolling forecast (for the period commencing at the beginning
         of such calendar quarter) of Biosense's anticipated unit and dollar
         volume sales of Daughter Products in respect of each month and quarter
         during the such twelve month period. Additionally, in the event that
         Stereotaxis Distributes Daughter Products in accordance with the terms
         of this Agreement, Stereotaxis will provide a non-binding twelve


[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]

                                       19
<PAGE>


         (12) month rolling forecast to Biosense in the same manner. Biosense
         will consult with the Joint Steering Committee in respect of
         preparation of such forecasts.

4.4      Identification of Stereotaxis and Biosense.

4.4.1    The packaging and package insert for the Daughter Products will
         incorporate Stereotaxis's name and logo (which will be in a form as
         provided by Stereotaxis to Biosense from time to time). The size,
         prominence, location and other aspects of the incorporation of the
         Stereotaxis name and logo into such packaging and package insert will
         be at least of the size and prominence as is reasonable and customary
         for arrangements of this type and in any event will be co-located with
         the relevant Biosense' name and logo and not less than seventy-five
         percent (75%) of the size of such Biosense' name and logo.

4.4.2    Each Party agrees to incorporate the name and logo of the other Party,
         where reasonably practicable, into the visual and written output of its
         Compatible NIOBE System and Compatible CARTO System (at the case may
         be) in respect of electrophysiological procedures for which such
         systems are utilized together as an Compatible NIOBE System CARTO
         System. The size, prominence, location and other aspects of the
         incorporation of such other Party's name and logo into such output will
         be at least of the size and prominence as is reasonable and customary
         for arrangements of this type and in any event will be co-located with
         the relevant first Party's name and logo and not less than seventy-five
         percent (75%) of the size of such first Party's name and logo.

4.4.3    Each Party will submit all materials of any kind containing the other
         Party's Trademarks to the other Party before release to the public for
         inspection, and such other Party will have the right to approve such
         material prior to its distribution, and in absence of prompt approval
         will be deemed to have provided approval. Each Party agrees that their
         respective products and/or services that are associated with the other
         Party's Trademarks shall meet the same general level of quality as is
         provided by the other Party in connection with its own Trademarks.
         Except as set forth in this Section, nothing in this Agreement shall
         grant or shall be deemed to grant to one Party any right, title or
         interest in or to the other Party's Trademarks. All use by each Party
         of the other Party's Trademarks (including any goodwill associated
         therewith) shall inure to the benefit of the Party that owns such
         Trademarks.

4.5      Product Labeling. Biosense will be responsible for developing all
         product packaging and labeling, including without limitation,
         Instructions for Use which will comply with all applicable laws for all
         Daughter Products. Biosense will include Stereotaxis patent and patent
         pending labeling on the Daughter Products or Compatible CARTO System as
         applicable. Stereotaxis will include Biosense patent and patent pending
         labeling on the Compatible NIOBE System as applicable.


                                       20
<PAGE>

5        STEREOTAXIS COMPONENT SUPPLY

5.1      Manufacture of Components. Stereotaxis, at the direction of the Joint
         Steering Committee, will manufacture and supply to Biosense such
         Components as are specified by the committee provided that Biosense
         will have the option to source directly from relevant vendors.

5.2      Forecasts. Ninety (90) days prior to the beginning of each calendar
         quarter, Biosense will provide Stereotaxis with a non-binding twelve
         (12) month rolling forecast of Biosense's anticipated requirements for
         delivery of Components in each respective quarter ("Component
         Forecast").

5.3      Pricing. Biosense will pay Stereotaxis a transfer price for each
         Stereotaxis Component equal to the Stereotaxis's Cost of Goods for such
         Components (including packaging) plus [***] in respect of delivery
         costs ("Component Transfer Price").

5.4      Vendor Requirements. Stereotaxis will conform to Biosense's vendor
         requirements set forth in Exhibit C.

5.5      Purchase Orders. Stereotaxis will accept all Biosense Purchase Orders
         that comply in all material respects with the terms of this Agreement.
         Stereotaxis will deliver a written acknowledgment of such a Purchase
         Order within ten (10) Business Days of receipt of the Purchase Order.
         No Biosense Purchase Order may modify or changes the terms set forth
         herein and any such terms changing or purporting to change the terms
         hereof are hereby rejected.

5.6      Terms. All prices set forth in this Section 5 will be F.O.B. Irwindale,
         California ("Biosense Delivery Point"). All Components delivered under
         this Agreement will be suitably packed for shipment, marked for
         shipment to the address specified in Biosense's written purchase order
         ("Purchase Order"), and delivered at the Delivery Point to a carrier or
         forwarding agent chosen by Biosense, at which time risk of loss and
         title pass to Biosense. Should Biosense fail to designate a carrier,
         forwarding agent or type of conveyance, Stereotaxis will make such
         designation in conformance with its standard shipping practices. All
         freight, insurance and other shipping expenses, as well as any special
         packing expenses, incurred prior to delivery at the Biosense Delivery
         Point will be incurred by Stereotaxis, and after delivery to the
         Biosense Delivery Point will be borne by Biosense. Stereotaxis will use
         reasonable efforts to ship all Components within the same calendar
         month as the Biosense Delivery Date as defined in Section 5.5.1.

5.7      Taxes. Biosense will be responsible for the payment of any excise,
         sales, use, value added, withholding or other taxes, tariffs or duties
         that may be applicable on the transfer of Components to Biosense at the
         Delivery Point, all of which will be Biosense's responsibility, and the
         amounts owing to Stereotaxis hereunder will be paid without deduction
         for, or with respect to, any of the foregoing.


[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]

                                       21
<PAGE>


5.8      Conflicting Terms. In ordering and delivering the Components, Biosense
         and Stereotaxis may use their standard forms, but nothing in such forms
         will be construed to amend or modify the terms of this Agreement and in
         case of conflict herewith, the terms of this Agreement will control. No
         Biosense Purchase Order may modify or changes the terms set forth
         herein and any such terms changing or purporting to change the terms
         hereof are hereby rejected.

5.9      Annual Stereotaxis Reports and Audits.

5.9.1    Reports. Within forty-five (45) days after the close of each
         Stereotaxis fiscal year, Stereotaxis will provide a report to Biosense
         which sets forth the Cost of Goods for Components, including a
         breakdown of the components and assumptions used to calculate such Cost
         of Goods and a schedule of the number of Components sold to Biosense
         during the applicable period.

5.9.2    Audits. Stereotaxis will keep accurate records in sufficient detail to
         enable the Cost of Goods for the Components to be determined. Upon the
         request of Biosense, Stereotaxis will permit an independent certified
         public accountant selected by Biosense to have access, once in each
         Biosense fiscal year during regular business hours and upon reasonable
         notice to Stereotaxis, to such of the records of Stereotaxis as may be
         necessary to verify the accuracy of the reports made during the
         previous Biosense fiscal year. The fees and expense of such accountant
         will be paid by Biosense; provided that if the audit reveals that the
         Cost of Goods reported by Stereotaxis are more than one-hundred and
         five percent (105%) of the actual Cost of Goods, such fees and expenses
         will be paid by Stereotaxis. The records from which the reports are
         prepared will be retained by Stereotaxis in keeping with Stereotaxis's
         document retention policy, but in no event less than three (3) years
         after preparation thereof. In the event an adjustment is made to the
         Cost of Goods that results in an adjustment to the applicable Component
         Transfer Price, Biosense will promptly pay Stereotaxis any
         underpayments resulting from such adjustment.

6.       STEREOTAXIS MARKETING AND DISTRIBUTION

6.1      Right to Distribute. If Stereotaxis exercises its right to distribute
         the Daughter Products pursuant to this Agreement, Biosense will fulfill
         Stereotaxis' order for the Daughter Products in a timely manner as set
         forth in this Section 6, subject to a minimum order of at least 60
         catheters per type per month for each year, to be transferred to
         Stereotaxis at Biosense's cost plus [***].

6.2      Forecast. Ninety (90) days prior to the beginning of each calendar
         quarter, Stereotaxis will provide Biosense with a non-binding twelve
         (12) month rolling forecast of Stereotaxis' anticipated requirements
         for delivery of Daughter Products in each respective quarter ("Daughter
         Product Forecast").

6.3      Pricing. Stereotaxis will pay Biosense a transfer price for each
         Daughter Product equal to [***] of the Cost of Goods (provided that in
         calculating the transfer price for the Daughter Product as a whole, the
         cost for Components will be deemed equal to their actual


[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]

                                       22
<PAGE>



         transfer price to Biosense from Stereotaxis) for a unit of such
         Daughter Product ("Daughter Product Transfer Price").

6.4      Purchase Orders.

6.4.1    Each delivery of the Daughter Products will be initiated by a written
         or electronic Stereotaxis Purchase Order in accordance with Section
         6.4.2 below. All Purchase Orders will state unit quantities, unit
         descriptions, Purchase Order coverage dates, and shipping instructions;
         and all Purchase Orders will also state the requested delivery date for
         the Daughter Products ("Delivery Date").

6.4.2    Stereotaxis will accept all Stereotaxis Purchase Orders that comply in
         all material respects with the terms of this Agreement. Stereotaxis
         will deliver a written acknowledgment of such a Purchase Order within
         ten (10) Business Days of receipt of the Purchase Order.

6.5      Terms. All prices set forth in this Section 6 will be F.O.B. Irwindale
         CA ("Biosense Delivery Point"). All Daughter Products delivered under
         this Agreement will be suitably packed for shipment, marked for
         shipment to the address specified in Stereotaxis' written purchase
         order ("Purchase Order"), and delivered at the Biosense Delivery Point
         to a carrier or forwarding agent chosen by Stereotaxis, at which time
         risk of loss and title pass to Stereotaxis. Should Stereotaxis fail to
         designate a carrier, forwarding agent or type of conveyance, Biosense
         will make such designation in conformance with its standard shipping
         practices. All freight, insurance and other shipping expenses, as well
         as any special packing expenses, incurred prior to delivery at the
         Biosense Delivery Point will be incurred by Biosense, and after
         delivery to the Biosense Delivery Point will be borne by Stereotaxis.
         Biosense will use reasonable efforts to ship all Daughter Products
         within the same calendar month as the Delivery Date as defined in
         Section 6.4.1.

6.6      Taxes. Stereotaxis will be responsible for the payment of any excise,
         sales, use, value added, withholding or other taxes, tariffs or duties
         that may be applicable on the transfer of Daughter Products to
         Stereotaxis at the Delivery Point, all of which will be Stereotaxis'
         responsibility, and the amounts owing to Stereotaxis hereunder will be
         paid without deduction for, or with respect to, any of the foregoing.

6.7      Conflicting Terms. In ordering and delivering the Daughter Products,
         Biosense and Stereotaxis may use their standard forms, but nothing in
         such forms will be construed to amend or modify the terms of this
         Agreement and in case of conflict herewith, the terms of this Agreement
         will control. No Stereotaxis Purchase Order may modify or changes the
         terms set forth herein and any such terms changing or purporting to
         change the terms hereof are hereby rejected.

6.8      Annual Stereotaxis Reports.

6.8.1    Reports. Within sixty (60) days after the close of each Biosense fiscal
         year, Biosense will provide a report to Stereotaxis which sets forth
         the average Cost of Goods for a unit of each of the Daughter Products,
         including a breakdown of the components and assumptions used to


                                       23
<PAGE>


         calculate such average Cost of Goods and a schedule of the number of
         Daughter Products sold to Stereotaxis during the applicable period.

6.8.2    Audits. Biosense will keep accurate records in sufficient detail to
         enable the average Cost of Goods for the Daughter Products to be
         determined. Upon the request of Stereotaxis, Biosense will permit an
         independent certified public accountant selected by Stereotaxis to have
         access, once in each Biosense fiscal year during regular business hours
         and upon reasonable notice to Biosense, to such of the records of
         Biosense as may be necessary to verify the accuracy of the reports made
         during the previous Stereotaxis fiscal year. The fees and expense of
         such accountant will be paid by Stereotaxis; provided that if the audit
         reveals that the Cost of Goods reported by Stereotaxis are more than
         one-hundred and five percent (105%) of the actual Cost of Goods, such
         fees and expenses will be paid by Biosense. This audit right may not be
         exercised more than once in any one Stereotaxis fiscal year. Biosense
         will retain the records from which the reports are prepared for a
         length of time in keeping with its document retention policy, but in no
         event less than three (3) years after preparation thereof. In the event
         an adjustment is made to the average Cost of Goods for the Daughter
         Products that results in an adjustment to the applicable Daughter
         Product Transfer Price, Biosense will promptly pay Stereotaxis any
         underpayments resulting from such adjustment.

7        REVENUE SHARE

7.1      Daughter Product Sales. In respect of each quarter in each calendar
         year of the Term, Biosense will pay Stereotaxis a revenue share upon
         the sales of Daughter Products according to the following ("Revenue
         Share"):

7.1.1    [***]

7.1.2    [***]

7.2      Compatible NIOBE System.

7.2.1    [***]


[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]

                                       24
<PAGE>


7.2.2    [***]

7.2.3    [***]

7.2.4    [***]

7.2.5    [***]

7.2.6    [***]

7.3      Discounting. Biosense agrees that for computations made under
         Paragraphs 7.1 and 7.2 hereunder, the average discount applied to the
         list price for the sale of all Daughter Products in any given year will
         not exceed the average discount to the list price for corresponding
         Parent Products during the same period.

7.4      Exchange Rates. If any currency conversion is required to calculate the
         sales applied against the Net Revenue for Daughter Products, such
         conversion will be made by using the exchange rates used by Biosense in
         calculating Biosense's own revenues for financial reporting purposes in
         the United States in accordance with U.S. GAAP. If any currency
         conversion is required to calculate the Cost of Goods for Daughter
         Products, such conversion will be made by using the exchange rates used
         by Stereotaxis in calculating Stereotaxis's own costs for financial
         reporting purposes in the U.S. accordance with U.S. GAAP.

7.5      Payment. Biosense will pay Stereotaxis the applicable Revenue Share on
         a quarterly basis within thirty (30) days of the end of each quarter.
         With each such payment Biosense will include a report that sets forth
         in sufficient detail. the manner in which Biosense calculated the
         Revenue Share for the applicable quarter. All payments will be made in
         US Dollars($).

7.6      Annual Biosense Reports and Audits.

7.6.1    Reports. Within sixty (60) days after the end of each calendar year,
         Biosense will provide a report to Stereotaxis which sets forth: the
         Gross Profits and Cost of Goods, for Daughter Products sold (including
         the calculation thereof), and any difference in the Revenue Share


[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]

                                       25
<PAGE>


         payments actually made to Stereotaxis pursuant to Section 7.5 and the
         amounts due per the calculation. The Parties will review such report
         and agree upon the differences in amounts due. In the event the amounts
         of Net Revenue paid by Biosense to Stereotaxis during such fiscal year
         are less than the amounts due, Biosense will pay such difference to
         Stereotaxis within forty-five (45) days of submitting such report to
         Stereotaxis. In the event the amounts paid by Biosense in Revenue Share
         during such fiscal year are greater than the amounts due, Biosense can
         apply such amount to future Revenue Share amounts or, at Stereotaxis
         election, Stereotaxis will pay such difference to Biosense within sixty
         (60) days of receiving such report from Biosense.

7.6.2    Audits. Biosense will keep accurate records in sufficient detail to
         enable the aforesaid payment due under this Agreement to be determined.
         Upon the request of Stereotaxis, Biosense will permit a "big five"
         independent certified public accountant selected by Stereotaxis to have
         access, once in each Biosense fiscal year during regular business hours
         and upon reasonable notice to Biosense, to such of the records of
         Biosense and its Affiliates as may be necessary to verity the accuracy
         of the reports made during the previous Biosense fiscal year as
         provided for under Section 6.8.2.

8        MANUFACTURING QUALITY AND ACCEPTANCE

8.1      Conformance with Specifications. Biosense will manufacture or have
         manufactured Daughter Products, and Stereotaxis will manufacture or
         have manufactured the Components in a competent and workmanlike manner.

8.1.1    All Daughter Products delivered by Biosense to Stereotaxis, if any, and
         Components delivered by Stereotaxis, if any, hereunder will conform in
         all respects to the Daughter Product Specifications or Component
         Specifications, as the case may be, and to all applicable manufacturing
         specifications and all manufacturing processes.

8.1.2    All Daughter Products and Components will comply with all relevant
         provisions of the FDC Act, including without limitation, wherever
         applicable, the FDA QSR and other regulatory agency requirements.

8.1.3    All Daughter Products and Components will be CE-marked and ISO 9001
         certified and not adulterated or misbranded under FDA guidelines.

8.2      Manufacturing Specifications. In the event that Stereotaxis exercises
         its rights to market and distribute the Daughter Products under Section
         4.5, prior to the first delivery to Stereotaxis of Daughter Products,
         Biosense will provide to Stereotaxis a detailed manufacturing
         specification (the "DP Manufacturing Specifications") for the Daughter
         Products. Such DP Manufacturing Specifications will be consistent with
         the Daughter Product Specifications agreed upon by the Parties, and
         will be sufficient in all events to ensure that Daughter Products meet
         all criteria and specifications set forth in the applicable Daughter
         Product Specifications (including without limitation, performance
         specifications). At Biosense's direction, such DP Manufacturing
         Specifications will contain a level of detail necessary to make such
         products. Stereotaxis will


                                       26
<PAGE>


         provide similar Manufacturing Specifications to Biosense for the
         Components prior to Stereotaxis' first shipment of commercial
         quantities of the Components to Biosense ("Component Manufacturing
         Specifications"). From and after the delivery of such Manufacturing
         Specifications, the Daughter Products and Components will mean for all
         purposes of this Agreement those certain Daughter Products and
         Components reflected by and defined in the Manufacturing
         Specifications. Biosense, in the case of the DP Manufacturing
         Specifications, and Stereotaxis, in the case of the Component
         Manufacturing Specifications, will have the right to modify and will
         modify such Manufacturing Specifications from time to time to reflect
         modifications made by Biosense to the Daughter Products and by
         Stereotaxis to the Components, and in all cases, one party shall
         communicate such changes to the other party. Such modifications will in
         all cases be consistent with all applicable Daughter Product
         Specifications and Component Specifications. Any modifications not
         consistent with such specifications will require the unanimous approval
         of the Joint Steering Committee.

8.3      Packaging of Lots and Lot Sizes. The Daughter Products, in the case of
         Biosense, and Components, in the case of Stereotaxis, will be packaged
         and shipped in lots in accordance with the Daughter Product
         Specifications and the Component Specifications. Biosense will be
         solely responsible for all packaging of Daughter Products and
         Stereotaxis will be solely responsible for packaging of Components.

8.4      Quality Guidelines.

8.4.1    All Components supplied to Biosense by Stereotaxis will meet the
         requirements of the Component Specifications and the Component
         Manufacturing Specifications and the requirements of any applicable
         health regulatory agency.

8.4.2    All Daughter Products supplied by Biosense will be manufactured in
         accordance with the FDC Act, including, without limitation, the FDA QSR
         requirements at Biosense's plant located at Irwindale CA or other
         plants established by Biosense from time to time, including plants of
         Biosense's suppliers, if applicable (the "Facility"). It is understood
         that for all purposes of this Agreement "health regulatory agency" will
         include, without limitation, the European Commission.

8.5      Quality Control. Prior to each shipment of Daughter Products or
         Components, Stereotaxis or Biosense, as the case may be, will perform
         quality control procedures set forth in Section 8.4, to verify that
         such Daughter Products or Components, as the case may be, meet such
         Quality Guidelines and will provide the other Party with a certificate
         of compliance with each lot delivered to it.

8.6      Rejection. Biosense and Stereotaxis will have thirty (30) days
         following its receipt of a shipment of Daughter Products or Components,
         as the case may be, to reject Daughter Products or Components which
         fail to conform to the Quality Guidelines set forth in Section 8.4,
         which rejection will be accomplished in accordance with the provisions
         of Section 8.8 below. Each Party will have the right to reject shipment
         in lots based on prior agreed standards of statistically significant
         rejection rates of samples of such lot in accordance with the
         procedures


                                       27
<PAGE>
            set forth in Section 8.7 below. If a Party rejects a shipment before
            the date on which payment therefore is due, it may withhold payment
            for such shipment or the rejected portion thereof. The limited
            warranties given by each of the Parties in Section 10 will survive
            any failure to reject by the other Party under this Section 8.6.
            Each Party will use commercially reasonable efforts to replace the
            quantities of Daughter Products or Components returned by the other
            Party within the shortest possible time, but no later than sixty
            (60) days from the return of such quantities.

8.6.1       If a Party fails to replace returned Daughter Products or
            Components, as the case may be, within ninety (90) days from the
            date such Daughter Products or Components are returned, the
            purchasing Party will have the right to:

8.6.1.1     cancel such replacement shipment by written notice; and

8.6.1.2     reclaim immediately the Daughter Product Transfer Price paid to
            Biosense or the Component Transfer Price paid to Stereotaxis, as the
            case may be, with respect to the Daughter Products or Components
            that were returned but not replaced, if payment for such Daughter
            Products or Components had already been made to Stereotaxis or
            Biosense.

8.7         Rejection by Lot. In the event that Biosense or Stereotaxis rejects
            an entire lot pursuant to Sections 8.6 and 8.8 (the "Rejecting
            Party"), the Parties will take the following actions. The rejecting
            Party will ship back to supplier an agreed upon sample size from
            such lot with written notice setting forth the reason for such
            rejection. Within fifteen (15) Business Days of receipt of the
            sample, Biosense or Stereotaxis, (the "Supplier"), will test the
            sample and provide notice of its determination to Rejecting Party.
            If, after testing the sample, Supplier determines that the lot was
            improperly rejected, the Supplier will so notify the rejecting
            Party. If the Parties cannot resolve the discrepancies within
            fifteen (15) Business Days, the Supplier will dispatch a quality
            assurance representative to the Rejecting Party's location. Such
            quality assurance representative will work with the Rejecting Party
            to determine the discrepancy in the finding with regards to the lot.
            If the Supplier representative and the Rejecting Party
            representative cannot come to agreement on the disposition of the
            lot within ten (10) days, then the matter will be submitted to an
            independent lab for determination.

8.8         Rejection Procedure. With respect to Daughter Products and
            Components which a Party intends to reject pursuant to Sections 8.6
            or 8.7 above, the Rejecting Party will, within thirty (30) days
            following receipt of such Daughter Products or Components, as the
            case may be, give written notice to the Supplier specifying the
            manner in which such Daughter Products of Components, as the case
            may be, fail to conform to the Quality Guidelines set forth in
            Section 8.4 and in conjunction with such notice, the Rejecting Party
            will request authorization from the supplier prior to the return of
            each lot of such Daughter Products or Components, as the case may
            be. Upon such request, the Supplier will provide the Rejecting Party
            with an RMA tracer number to be prominently displayed on the
            shipping container for the returned Daughter Products or Components,
            as the case may be. The foregoing thirty (30) day period may be
            extended for up to an additional thirty (30) days upon written
            request by the Rejecting Party to the supplier if received prior to
            the expiration of the original notice period and stating a
            legitimate reason for such request for extension. If returned
            Daughter Products or Components,



                                       28

<PAGE>

            as the case may be, are determined by the Supplier to conform to the
            applicable Quality Standards set forth in Section 8.4 the Rejecting
            Party will reimburse the Supplier's shipping costs associated with
            the return of such conforming or out-of-warranty Daughter Products
            or Components, as the case may be, and, at the request of the
            Rejecting Party, the Supplier will return such Daughter Products or
            Components, as the case may be, to the Rejecting Party at the
            Rejecting Party's expense. Biosense's and Stereotaxis's sole
            liability and the other Party's exclusive remedy in connection with
            rejected Daughter Products or Components under this Section 8 will
            be replacement of the rejected Daughter Products or Components.

8.9         Presence At Facility. Upon reasonable notice given by one party to
            the other and at reasonable frequency (not more than once per
            calendar year unless the party can demonstrate a reason for more
            frequent audits), such party will have the right to assign no more
            than two employees or consultants of such party to inspect and audit
            the Facility at which a product is manufactured during normal
            business hours; provided, however that:

8.9.1       such employees or consultants will not unreasonably interfere with
            other activities being carried out at the Facility;

8.9.2       such employees or consultants will observe all rules and
            regulations applicable to visitors and to individuals employed at
            the Facility; and

8.9.3       such employees or consultants will be bound by Section 16 hereof.

8.10        Exchange of Information. In the event that Stereotaxis markets and
            distributes the Daughter Products, Biosense agrees to provide
            technical information regarding Daughter Products as needed by
            Stereotaxis for packaging, labeling, package inserts, and customer
            support.

9           REGULATORY MATTERS

9.1         Regulatory Approvals.

9.1.1       Manufacturing. Biosense will obtain and maintain all regulatory
            licenses, permits and registrations necessary to manufacture the
            Daughter Products and Compatible CARTO System and Stereotaxis will
            obtain and maintain such regulatory licenses, permits and
            registrations as are necessary to manufacture the Components, in
            each case to supply them for sale in the United States and such
            other countries as are mutually agreed upon in writing-by the
            Parties.

9.1.2       U.S. 510K and/or PMA Clearance/Approval. Biosense will be
            responsible for obtaining 510K Clearance or, where applicable, PMA
            approval the Compatible CARTO System in the United States and, at
            Stereotaxis expenses, for the Daughter Products in the United States
            and Stereotaxis will be responsible for obtaining any such approvals
            required in respect of the Compatible NIOBE System; provided that
            the Parties agree to fully cooperate and coordinate their activities
            in order to achieve the most expeditious regulatory mechanisms
            reasonably available in respect of the Daughter Products, the
            Compatible NIOBE System and the



                                       29

<PAGE>


            Compatible CARTO System, including coordinating with one another so
            as to jointly manage clinical and regulatory activities including
            without limitation protocol selection and site selection and so as
            to jointly participate, where practicable, in communications with
            FDA, provided that in case of disagreement in any respect, the final
            decision will be made by the sponsor of the relevant regulatory
            submission

9.1.3       Foreign Approvals. Subject to the direction of the Joint Steering
            Committee or as mutually agreed by the Parties, the Parties will
            file for and pursue applications for regulatory approval to sell the
            Daughter Products (at Stereotaxis expense) and Compatible CARTO
            System and Compatible NIOBE System in countries outside the United
            States comprising at least the filing and pursuing a CE Mark in
            Europe for such products.

9.2         Cooperation to Obtain and Maintain Approvals. The Parties agree to
            maintain all information regarding the Daughter Products and
            Compatible CARTO System and the Compatible NIOBE System filed with
            the FDA and other regulatory bodies current and reflective of
            current manufacturing practices and product specifications and to
            update this information as required. From time to time dining the
            term of this Agreement, Stereotaxis and Biosense will provide such
            further letters of authorization, instruments and/or documents, and
            take such other actions, as the other may reasonably request for
            purposes of obtaining regulatory approvals, in accordance with this
            Article 9, to Distribute the Daughter Products.

9.3         Exchange of Information. Each Party will keep appropriate records
            relating to its activities with respect to regulatory approvals
            hereunder and will report to the other Party on the status of such
            activities on a regular basis.

9.4         Inspections. The Parties will permit (and will use commercially
            reasonable efforts to cause its vendors to permit) the FDA and other
            regulatory agencies to conduct such inspections of the facilities at
            which the products are manufactured pursuant to this Agreement upon
            request by such agencies and will cooperate with the FDA or such
            other regulatory agencies with respect to such inspections and any
            related matters. Each Party will give the other Party prompt written
            notice of any such inspections and will keep such other Party
            informed about the results and conclusions of each such regulatory
            inspection, including actions taken by the relevant Party or Parties
            to remedy conditions cited in such inspections. Each Party will
            provide the other Party with copies of any written inspection
            reports issued by such agencies and all correspondence between it
            and the agency involved pertaining to such inspections or products.

10          REPRESENTATIONS AND WARRANTIES

10.1        Stereotaxis. Stereotaxis represents and warrants that:

10.1.1      it has full power to enter into the Agreement and to perform its
            obligations hereunder,

10.1.2      it has obtained all necessary corporate approvals to enter and
            execute into this Agreement;



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<PAGE>

10.1.3      it is the owner or licensee of the Intellectual Property Rights in
            and to the Stereotaxis IP and has the right to grant to Biosense the
            rights granted herein;

10.1.4      to the best of Stereotaxis' knowledge, use, manufacture, sale, offer
            for sale or importation of the NIOBE System does not infringe any
            patent rights, trade secrets or other proprietary rights of any
            third party;

10.1.5      it has not previously granted and, subject to Sections 2.4 and 4.4,
            will not grant in the future, any rights that conflict with the
            rights and licenses granted to Biosense herein;

10.1.6      all Components sold by Stereotaxis to Biosense will be free from
            Defects in construction, materials, processing and workmanship until
            the end of the applicable warrant period specified by the Joint
            Steering Committee pursuant to this Agreement when used in and
            maintained in accordance with the specifications, instructions and
            packaging therefor.

10.2        Biosense.

10.2.1      General. Biosense represents and warrants that:

10.2.1.1    it has full power to enter into the Agreement and to perform its
            obligations hereunder; and

10.2.1.2    it has obtained all necessary corporate approvals to enter and
            execute into this Agreement.

10.2.2      Ownership. Biosense further represents, warrants and covenants that:

10.2.2.1    it is the owner or licensee of the Intellectual Property Rights in
            and to the Parent Products and CARTO System and has the right to
            grant to Stereotaxis the rights granted herein; and

10.2.2.2    to the best of Biosense's knowledge, use, manufacture, sale, offer
            for sale or importation of the Daughter Products and the CARTO
            System does not infringe any patent rights, trade secrets or other
            proprietary rights of any third party.

10.2.3      Process and Product Warranties. The parties represent, warrant and
            covenant:

10.2.3.1    all products sold by one party to the other hereunder will be free
            from Defects in construction, materials, processing and workmanship
            until the expiration date affixed thereto which date will be
            determined;

10.2.3.2    all products sold by one party to the other hereunder will comply in
            all material respects with the Specification, Manufacturing
            Specifications, the FDC Act including, without limitation, all FDA
            QSR requirements, for the products, and any other regulatory agency
            requirements agreed to by the Parties in accordance with Section 9
            above;

10.2.3.3    all of the products sold by one party to the other hereunder will
            have been manufactured, packaged stored and shipped in conformance
            with the FDC Act including, without limitation, all applicable
            current FDA QSR or similar regulations which are hereinafter



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<PAGE>


            adopted by the FDA or any successor agency thereto and any other
            regulatory agency requirements agreed to by the Parties in
            accordance with Section 9 above; and

10.2.3.4    title to all products sold by one party to the other hereunder will
            pass to such party as provided herein free and clear of any security
            interest, lien, or other encumbrance.

10.3        Sole Remedy. The foregoing warranties will survive inspections,
            acceptance and payment by Biosense and Stereotaxis. Subject to
            Section 12, each Party's sole and exclusive remedy for breach of the
            warranty in this Section 10 will be:

10.3.1      to have replaced products which are the subject of the warranty
            claim in accordance with the provisions of Section 10.4; and

10.3.2      return and have replaced unused Daughter Products and Components,
            as the case may be, with respect to which Biosense or Stereotaxis
            has discovered Defects upon inspection in accordance with the
            provisions of Section 10.4, as applicable.

10.3.3      Each Party will use its commercially reasonable efforts to provide
            replacement products within the shortest possible time, but no later
            than sixty (60) days from return.

10.4        Warranty Procedures.

10.4.1      The following warranty procedures will apply with respect to a
            product or component of a product sold by one party to the other:
            first, a party will provide the other with written notice of such
            claims. After receiving such notice, the receiving party will
            provide the reporting party with a Return Materials Authorization
            ("RMA") number, after which the reporting party will return the
            defective product or component to the manufacturing party. The
            returning party will display the RMA number prominently on the
            packaging, and must return the product or component in its original
            packaging, with shipping charges prepaid. The parties will not
            accept collect shipments. The receiving party in its sole discretion
            may refuse any product or component not returned in accordance with
            the terms of this Agreement.

10.4.1.1    In the event that the party determines that a returned product or
            component is defective, the party will have the right, at its sole
            option, to either:

10.4.1.2    repair or remedy the Defects; or

10.4.1.3    replace with conforming product or component. The foregoing sets
            forth the parties' sole remedy and sole liability, for any breach of
            the warranty set forth in this Section 10.

10.4.2      Daughter Products. The following warranty procedures will apply with
            respect to Daughter Products marketed and sold by Stereotaxis that
            are the subject of a customer complaint under the applicable
            Daughter Product warranty. Stereotaxis will notify Biosense of such
            Daughter Products to be replaced in response to customer complaints
            (and return of product) and



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<PAGE>


            Biosense will replace all such products without charge to
            Stereotaxis or the customer and will bear all costs associated with
            such replacement.

10.5        Recalls.

10.5.1      In the event that any recall of Daughter Products supplied
            by Biosense hereunder is

10.5.1.1    required by the US FDA; or

10.5.1.2    mutually agreed upon, in writing, by Biosense and Stereotaxis, which
            agreement will not be unreasonably withheld by either Party,

10.5.1.3    the Parties will confer for the purpose of determining how to
            conduct the recall in an efficient and economic manner prior to
            commencement of such recall.

10.5.2      The costs of any such recall will be allocated as follows:

10.5.2.1    to the extent that such recall is due to Biosense's failure to meet
            the Quality Guidelines set forth in Section 8.1.5 in manufacturing
            Daughter Products, the manufacture or sale of such products by
            Biosense, or the design of the Parent Product despite modification
            thereof to create the Daughter Product, Biosense will be responsible
            for all of the reasonably incurred costs of effecting such recall
            and will use commercially reasonable efforts to replace the
            defective Daughter Products within the shortest possible time, but
            no later than sixty (60) days following such recall;

10.5.2.2    to the extent that such recall is due to Stereotaxis' mislabeling,
            mishandling, modification or promotion of any Daughter Product sold
            hereunder (except if caused by incorrect information provided by
            Biosense), or the design of the Daughter Products, Stereotaxis will
            be responsible for the costs of such recall; or

10.5.2.3    if neither 10.5.2.1 nor 10.5.2.2 above is applicable:

10.5.2.3.1  in the event of a mutually agreed upon recall, the Parties will
            share equally in the costs of such recall (including, without
            limitation, the cost of replacement Daughter Products and Biosense's
            normal and customary catheter replacement and communications
            costs); or

10.5.2.3.2  in the event that either Party does not agree that a recall should
            be conducted, the other Party may trigger the recall at its own
            expense.

10.5.2.4    The Parties will cooperate and mutually agree upon the manner in
            which the recall is conducted; provided that in all cases, Biosense
            will have the first right to conduct the recall.

10.6        Correction of Flaws. Biosense will on a regular basis provide to
            Stereotaxis a summary of its customer error reports highlighting the
            most regularly occurring concerns reported by customers regarding
            Daughter Products



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<PAGE>




10.7        LIMITATION OF WARRANTIES. NEITHER PARTY MAKES ANY REPRESENTATIONS OR
            WARRANTIES OTHER THAN THOSE EXPRESSLY STATED IN THIS SECTION 10,
            AND EACH PARTY SPECIFICALLY DISCLAIMS ALL OTHER EXPRESS OR IMPLIED
            WARRANTIES OF NONINFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A
            PARTICULAR PURPOSE. STEREOTAXIS EXPRESSLY DISCLAIMS ANY AND ALL
            WARRANTIES REGARDING THE PARENT PRODUCTS, CARTO SYSTEM, DAUGHTER
            PRODUCTS AND COMPATIBLE CARTO SYSTEM.

11          INDEMNIFICATION

11.1        Indemnity. Biosense will indemnify, defend and hold harmless
            Stereotaxis, its directors, officers, employees and agents (each a
            "Stereotaxis Indemnitee") from and against any liabilities
            (including without limitation damages awarded to third parties),
            expenses or costs (including reasonable attorneys' and professional
            fees) ("Liabilities") resulting from any claim(s) brought by a third
            party against a Stereotaxis Indemnitee relating to the manufacture,
            marketing, promotion, sale or use of the Daughter Products,
            Compatible CARTO System or Biosense IP.

11.2        Procedure. In connection with indemnification under Section 11.1
            Stereotaxis will:

11.2.1      provide Biosense with prompt notice of any such claim, demand or
            cause of action;

11.2.2      give Biosense sole control of the defense and all related settlement
            negotiations at Biosense's expense (which expenses will be included
            in the calculation of Liabilities hereunder); and

11.2.3      provide Biosense, at Biosense's reasonable expense, all assistance,
            information, and authority reasonably requested by Biosense to
            perform the foregoing.

11.3        Remedy. In the event the use, sale or manufacture of Daughter
            Products is enjoined, the indemnifying Party will use diligent
            efforts to either:

11.3.1      procure a license to allow the indemnified Party or to enjoy the
            rights granted under this Agreement, or

11.3.2      modify the Daughter Products to make them non-infringing.

11.4        Indemnity. Stereotaxis will indemnify, defend and hold harmless
            Biosense, its directors, officers, employees and agents (each a
            "Biosense Indemnitee") from and against any liabilities (including
            without limitation damages awarded to third parties), expenses or
            costs (including reasonable attorneys' and professional fees)
            ("Liabilities") resulting from any claim(s) brought by a third party
            against a Biosense Indemnitee relating to the manufacture,
            marketing, promotion, sale or use of the Compatible NIOBE System or
            Stereotaxis IP.

11.5        Procedure. In connection with indemnification under Section 11.4,
            Biosense will:



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<PAGE>






11.5.1      provide Stereotaxis with prompt notice of any such claim, demand or
            cause of action;

11.5.2      give Stereotaxis sole control of the defense and all related
            settlement negotiations at Stereotaxis' expense (which expenses will
            be included in the calculation of Liabilities hereunder); and

11.5.3      provide Stereotaxis, at Stereotaxis' reasonable expense, all
            assistance, information, and authority reasonably requested by
            Stereotaxis to perform the foregoing.

11.6        Remedy. In the event the use, sale or manufacture of Components is
            enjoined, the indemnifying Party will use diligent efforts to
            either:

11.6.1      procure a license to allow the indemnified Party or to enjoy the
            rights granted under this Agreement; or

11.6.2      modify the Components to make them non-infringing.

12          PROPRIETARY RIGHTS

12.1        Stereotaxis. The Parties agree that, as between them, Stereotaxis
            retains all right, title, and interest in and to the Technology and
            Intellectual Property Rights that Stereotaxis owned prior to the
            commencement of this Agreement, including, without limitation, the
            Stereotaxis NIOBE System and all Intellectual Property Rights in or
            arising from such Technology and to all Technology and Intellectual
            Property Rights that which are created or made during the term of
            this Agreement by Stereotaxis, its employees, agents or other third
            parties acting under the authority from Stereotaxis working on
            matters relating to this Agreement ("Stereotaxis Personnel") (all
            such Technology and Intellectual Property Rights collectively
            "Stereotaxis IP").

12.2        Biosense. The Parties agree that, as between the Parties, Biosense
            retains all right, title, and interest in and to the Technology and
            Intellectual Property Rights that Biosense owned prior to the
            commencement of this Agreement, including, without limitation, the
            CARTO System, the Parent Products and all Intellectual Property
            Rights in or arising from such Technology and to all Technology and
            Intellectual Property Rights which are created or made during the
            term of this Agreement by Biosense, its employees, agents or other
            third parties acting under the authority from Biosense working on
            matters relating to this Agreement ("Biosense Personnel") (all such
            Technology and Intellectual Property Rights collectively "Biosense
            IP").

12.3        Joint Ownership.

12.3.1      Joint IP. The Parties will own jointly any Technology or
            Intellectual Property Rights made or created jointly by Biosense
            Personnel and Stereotaxis Personnel ("Joint IP"). For the purposes
            of the foregoing, a Patent will be considered to have been jointly
            created if at least one employee of Stereotaxis and Biosense are
            named inventors on such Patent as issued and a copyrighted work will
            be considered to be jointly created if it is a joint work within the



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<PAGE>






            meaning of the United States Copyright Act. Except as set forth in
            this Section 12.3.1, the Parties intend that each Party hereto will
            have an equal and undivided joint ownership interest in the Joint IP
            related thereto. Each Party will have the right to use and exploit
            such Joint IP subject to the provisions of Sections 2.3, 2.4 and 4.5
            and subject to each Party's obligations of confidentiality under
            Section 13. Neither Party will have any duty of accounting to the
            other Party with respect to such joint ownership interest. Each
            Party hereby unconditionally and irrevocably assigns to the other
            Party the joint ownership interest set forth in this Section 12.3.1
            with respect to the portions of the Joint IP developed by such
            Party.

12.3.2      Licenses.

12.3.2.1    Stereotaxis hereby grants Biosense a non-exclusive, irrevocable,
            worldwide, non-transferable (except as set forth in Section 16.2),
            fully paid up, royalty-free, perpetual and sub-licensable right and
            license under all of its Intellectual Property Rights in and to its
            equal and undivided interest in the Joint Technology, to use,
            manufacture, have manufactured, sell, have sold and import products
            in the Biosense Field.

12.3.2.2    Biosense hereby grants Stereotaxis a non-exclusive, irrevocable,
            worldwide, non-transferable (except as set forth in Section 16.2),
            fully paid up, royalty-free, perpetual, and sub-licensable right and
            license under all of its Intellectual Property Rights in and to its
            equal and undivided interest in the Joint Technology, to use,
            manufacture, have manufactured, sell, have sold and import products
            in the Stereotaxis Field.

12.3.3      Applications and Registrations. To the extent that an application,
            registration, or other governmental procedure (collectively, a
            "Procedure") is required to obtain, perfect, or protect any
            Intellectual Property Right in the Joint Technology that the Parties
            may jointly own pursuant to Section 12.3.1 and either Party desires
            to pursue such Procedure, such Party will first consult with the
            other Party. If the other Party desires to participate in such
            Procedure, the Parties will then jointly and cooperatively pursue
            such Procedure, in which event they will bear all costs equally and
            jointly own any rights thereby obtained. If a Party declines to
            participate in such Procedure, the other Party will then have the
            right to pursue such Procedure alone, in which case such other Party
            will bear all costs of and, notwithstanding Section 12.3.1,
            exclusively own all rights resulting from, such Procedure.

12.3.4      Actions Against Third Party Infringers. Each Party will promptly
            notify the other Party if such former Party becomes aware of any
            possible infringement or misappropriation by a third Party of any of
            the Joint IP in which the Parties share a joint ownership interest
            under this Section 12. If either Party desires to take any action
            against such an infringing or misappropriating third Party, such
            Party will first notify the other Party hereto and consult with such
            other Party regarding such action. If the other Party desires to
            participate in such action, the Parties will then jointly and
            cooperatively pursue such action, in which event they will bear all
            costs equally and share in any damages or other recoveries equally.
            Either Party may at any time decide not to participate further in
            any such action, in which case any further costs will be borne by
            and all damages and other recoveries will be received by the Party
            that



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<PAGE>

            continues to pursue such action. If a Party declines to participate
            in any such action, the other Party will then have the right to
            pursue such action alone, and will bear all costs of and receive all
            damages and other recoveries from such action. Notwithstanding the
            foregoing, if a Party declines to participate in such an action or
            withdraws from such an action, such Party will nevertheless, at the
            request of the other Party, cooperate with the other Party, at the
            cost of the other Party and subject to any reasonable conditions
            (including indemnification against counterclaims by the third
            party), to the extent necessary to enable the other Party to pursue
            such action effectively.

12.3.5      Cooperation. Each Party will execute all documents and take such
            further actions as may be reasonably required to evidence, perfect,
            or enforce any assignment of rights set forth in this Section 12.

12.4        Developed Intellectual Property.

12.4.1      Subject to the provisions in this Agreement, Biosense hereby grants
            to Stereotaxis a fully paid, irrevocable, nonexclusive license under
            any Biosense Improvement Patents, to make, use, sell, offer to sell
            and import any product (or component for a product) that is
            substantially similar to the Stereotaxis NIOBE System.

12.4.2      "Biosense Improvement Patents" will mean any Patent rights of any
            kind that cover an invention made by Biosense Personnel that would
            infringe any Stereotaxis Intellectual Property Rights or an
            improvement based on any Stereotaxis IP during the term of this
            Agreement.

12.4.3      The license granted to Stereotaxis hereunder will include the right
            to grant and authorize sublicenses, but only in connection with the
            grant by Stereotaxis of a right to make, use and/or sell any product
            (or component for a product) that is substantially similar to the
            Stereotaxis NIOBE System. It is understood that the foregoing
            restriction on sublicensing will not impair Stereotaxis' rights
            under the license grant to have products or components thereof
            manufactured for Stereotaxis.

12.4.4      Subject to the provisions in this Agreement, Stereotaxis hereby
            grants to Biosense a fully paid, irrevocable, nonexclusive license
            under any Stereotaxis Improvement Patents, to make, use, sell, offer
            to sell and import any product (or component for a product) that is
            substantially similar to the CARTO System.

12.4.5      "Stereotaxis Improvement Patents" will mean any patent rights of any
            kind that cover an invention made by Stereotaxis Personnel that
            would infringe any Biosense Intellectual Property Rights or an
            improvement based on any Biosense IP or Intellectual Property Rights
            during the term of this Agreement.

12.4.6      The license granted to Biosense hereunder will include the right to
            grant and authorize sublicenses, but only in connection with the
            grant by Biosense of a right to make, use and/or sell any product
            (or component for a product) that is substantially similar to the
            CARTO



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            System. It is understood that the foregoing restriction on
            sublicensing will not impair Biosense's rights under the license
            grant to have products or components thereof manufactured for
            Biosense.

13          CONFIDENTIALITY

13.1        Definition.

13.1.1      "Confidential Information" as used herein will include:

13.1.1.1    written, recorded, graphical or other information in tangible form
            disclosed, during the term of this Agreement, by one Party to the
            other Party which is stamped "Proprietary," "Confidential," or with
            a similar legend denoting the proprietary interest therein of the
            disclosing Party,

13.1.1.2    oral information which is disclosed by one Party to the other Party
            to the extent it is identified as "Proprietary" or "Confidential" at
            the time of oral disclosure, is reduced to written or other tangible
            form within thirty (30) days of oral disclosure, and such written or
            tangible form is stamped "Proprietary", "Confidential", or with a
            similar legend denoting the proprietary interest therein of the
            disclosing Party;

13.1.1.3    the following information, whether or not marked "Proprietary" or
            "Confidential": any reports or forecasts provided hereunder;

13.1.1.4    information, data, or know-how derived from any information
            contained in items this Section 13.1.1 ("Derivative Information").

13.1.2      Notwithstanding the above, Confidential Information will not include
            information:

13.1.2.1    In the possession of the receiving Party prior to its disclosure by
            the disclosing Party and not subject to other restrictions on
            disclosure;

13.1.2.2    is or later becomes part of the public domain through no fault of
            the recipient Party;

13.1.2.3    independently developed by the receiving Party;

13.1.2.4    publicly disclosed by the disclosing Party;

13.1.2.5    rightfully received by the receiving Party from a third party
            without restrictions on disclosure; or

13.1.2.6    approved for unrestricted release or unrestricted disclosure by the
            disclosing Party.



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13.2        Protection of Information.

13.2.1      Period of Protection. The Parties agree to comply with the
            obligations set forth herein regarding the other Party's
            confidential information for a period of ten (10) years from the
            date of disclosure.

13.2.2      Method of Protection. To protect the other Party's Confidential
            Information each Party agrees:

13.2.2.1    that it will not disclose to any third party, any Confidential
            Information of the disclosing Party without the disclosing Party's
            prior written consent;

13.2.2.2    to limit dissemination of the other Party's Confidential Information
            to only those of the receiving Party's officers, directors, agents
            and employees who require access thereto to perform their functions
            regarding the purposes of this Agreement;

13.2.2.3    to ensure that each person (including without limitation all
            individuals (excluding employees who are, as a condition to their
            employment, required to maintain the confidentiality of third party
            confidential information), corporations, partnerships and other
            entities) who receives or has access to Confidential Information has
            previously executed a written nondisclosure agreement containing
            terms substantially similar to those contained herein; and

13.2.2.4    to return to the disclosing Party, or destroy, all Confidential
            Information of the disclosing Party upon receipt of a written
            request therefor from the disclosing Party, without retaining any
            copy thereof, with the exception of documents containing Derivative
            Information which a receiving Party has a right to retain.

13.2.3      Standard of Care. The standard of care to be exercised by the
            receiving Party to meet these obligations will be the standard
            exercised by the receiving Party with respect to its own proprietary
            information of a similar nature, but in no event less than due care.

13.2.4      Exceptions. Nothing contained in this Section 13 will prevent
            either Party from disclosing any Confidential Information of the
            other Party:

13.2.4.1    to regulatory agencies for the purpose of obtaining approval to
            distribute and market Daughter Products and Compatible CARTO System
            which are the subject of this Agreement; provided, however, that all
            reasonable steps are taken to maintain the confidentiality of such
            Confidential Information to be disclosed;

13.2.4.2    to accountants, banks, or another financing source (or their
            advisors) or in connection with a merger, acquisition or securities
            offering, subject in each case to the recipient entering into an
            confidentiality agreement containing terms substantially similar to
            those contained herein to protect such Confidential Information from
            disclosure; or



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13.2.4.3    it is required by law or regulation to be disclosed; provided,
            however, that the Party subject to such disclosure requirement has
            provided written notice to the other Party promptly upon receiving
            notice of such requirement in order to enable the other Party to
            seek a protective order or otherwise prevent disclosure of the other
            Party's Confidential Information.

13.2.5      Proprietary Notices. Any reproduction of any Confidential
            Information by the receiving Party to the extent permitted under
            this Agreement will contain any and all confidential or proprietary
            notices or legends, which appear on the original.

13.2.6      Biosense IP. In order to ensure that the Biosense IP is not
            disseminated unintentionally or otherwise by Stereotaxis to any
            permitted Localization contract developer, Stereotaxis agrees that
            during the Term:

13.2.6.1    In respect of material communications, it will communicate with the
            developer only in writing.

13.2.6.2    All such written communications will be copied to Biosense. and

13.2.6.3    Any such communication that contains, or could reasonably be
            interpreted as disclosing information comprised in the Biosense IP
            or Biosense Intellectual Property will be submitted for pre-approval
            by Biosense (which approval will not be unreasonably withheld and
            which will be provided within twenty-four (24) hours of written
            request from Stereotaxis to Biosense' such employee or employees as
            nominated by Biosense from time to time for the purpose of
            responding to such requests) before being sent to such Localization
            contractor. Email will comprise written communication for the
            purposes hereof.

14          TERM AND TERMINATION

14.1        Term. This Agreement will become effective on the Effective Date and
            will remain in force and effect for seven (7) years or until
            terminated pursuant to the terms hereof, including pursuant to the
            provisions of Sections 2.3,4 and 14.2 (such period to be referred to
            as the "Term").

14.2        Termination.

14.2.1      For Breach. Either Party may terminate this Agreement effective upon
            written notice to the other if the other Party materially breaches
            any provision herein in any or fails to make any payment when due
            (provided such payment is not subject to bona fide dispute of which
            prior written notice has been given), which breach is not cured
            within thirty (30) days from the non-defaulting Party stating its
            intention to terminate this Agreement by reason of that default or
            failure or, provided that the defaulting Party has taken significant
            steps toward remedying the default, such longer period of time as is
            reasonably necessary defaulting Party to cure.



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<PAGE>


14.2.2      Change of Control to Restricted Party. In the event of a Change of
            Control of Stereotaxis to a Restricted Party, either Party may
            terminate this Agreement effective upon written notice to the other
            Party within ninety (90) days of the Change of Control becoming
            effective. In the event that one Party exercises the provisions of
            this Section 14.2.2, the Termination shall become effective one year
            after the Change of Control. In the event that Stereotaxis exercises
            its right under this Section 14.2.2, then Stereotaxis will pay a
            one-time cash termination fee to Biosense of five percent (5%) of
            the total equity valuation of Stereotaxis in the Change of Control
            transaction, up to a maximum of Ten Million Dollars (US)
            ($10,000,000).

14.2.3      For Commercial Failure, Technical Failure, Delay or Expiration of
            the Term and Certain Change of Control. In the event there has not
            been a termination according to Section 14.2.2 above, and this
            Agreement is terminated in accordance with the provisions of
            Sections 2.3.4 and Section 3.7 (in respect of Technical Failure,
            Commercial Failure, expiration of the Term, or Delay) or where
            terminated by Stereotaxis for breach pursuant to Section 14.2.1
            above, the Localization License granted herein will continue for a
            period of three (3) years as provided for in Section 2.4.3, provided
            that where a Change of Control of Stereotaxis to a Restricted Party
            occurs within such three (3) year period, such license will continue
            until the earlier of one (1) year after such Change of Control or
            the expiration of such three (3) year period. For the avoidance of
            doubt, such license is, as provided herein, limited only to the
            Stereotaxis Localization System and not to any third party system.
            Thereafter, at its option, each Party will continue to have the
            right to distribute Daughter Products on a non-exclusive basis.

14.3        Effect of Termination or Expiration - Survival. The respective
            rights and obligations of the Parties under the provisions of
            Sections 2.4.3 , 3.2.2.3, 7.6, 10.4, 10.5, 12.3.2, 14.2.3 and all of
            Articles 11, 13 and 15 will survive any termination or expiration of
            this Agreement In addition, in case of termination by either Party,
            Biosense will have the right to continue to Distribute then
            commercially available Daughter Products to customers, for use with
            Compatible NIOBE -- CARTO Systems installed or purchased prior to
            such termination, on reasonable commercial terms (and, where
            applicable, on terms consistent with its then commercial practice in
            respect of like products) during the commercial life of such
            systems.

15          DISPUTE RESOLUTION

Any controversy or claim arising out of or relating to this Agreement or the
validity, inducement, or breach thereof, shall be settled by arbitration before
a single arbitrator in accordance with the Commercial Arbitration Rules of the
American Arbitration Association ("AAA") then pertaining, except where those
rules conflict with this provision,- in which case this provision controls. The
decision of such arbitrator will be final and binding and will not be subject to
appeal except in the case of substantive evidence that such decision was tainted
by Wand. The parties hereby consent to the jurisdiction of the Federal District
Court for the District of Delaware for the enforcement of these provisions and
the entry of judgment on any award rendered hereunder. Should such court for any
reason lack jurisdiction, any court with jurisdiction shall enforce this clause
and enter judgment on any award. The arbitrator shall be an attorney
specializing in business litigation who has at least 15



                                       41

<PAGE>



years of experience with a law firm of over 25 lawyers or was a judge of a court
of general jurisdiction. The arbitration shall be held in Chicago IL, and the
arbitrator shall apply the substantive law of Illinois, except that the
interpretation and enforcement of this arbitration provision shall be governed
by the Federal Arbitration Act. Within 30 days of initiation of arbitration, the
parties shall reach agreement upon and thereafter follow procedures assuring
that the arbitration will be concluded and the award rendered within no more
than six months from selection of the arbitrator. Failing such agreement, the
AAA will design and the parties will follow such procedures. Each party has the
right before or during the arbitration to seek and obtain from the appropriate
court provisional remedies such as attachment, preliminary injunction, replevin,
etc., to avoid irreparable harm, maintain the status quo or preserve the subject
matter of the arbitration. THE ARBITRATOR SHALL NOT AWARD ANY PARTY PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES, AND EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT TO SEEK SUCH DAMAGES.

16          ASSIGNMENT

Neither Party may assign this Agreement without the prior written consent of the
other Party, except that each Party may assign this Agreement to a person or
entity into which it has merged or which has otherwise succeeded to all or
substantially all of its business or assets and which has assumed in writing or
by operation of law its obligations under this Agreement. Each Party agrees that
in any merger in which it is not the surviving company, the surviving company
will assume, in writing or by operation of law, such Party's obligations under
this Agreement. Any purported assignment in violation of the foregoing will be
null and void. Subject to the foregoing, the provisions of this Agreement will
apply to and bind the successors and permitted assigns of the Parties. Upon a
permitted assignment of this Agreement, all references to the assigning Party
herein will be deemed references to the assignee.

17          GENERAL

17.1        Force Majeure. Either Party will be excused from any delay or
            failure in performance hereunder, caused by reason of any occurrence
            or contingency beyond its reasonable control, including but not
            limited to, acts of God, earthquake, floods, lightning, labor
            disputes and strikes, other labor or industrial disturbances, riots,
            war, acts of the public enemy, insurrections, embargoes, blockages,
            regulations or orders of any government, agency or subdivision
            thereof, shortage of materials, rationing, utility or communication
            failures, casualty, and governmental requirements. The obligations
            and rights of the Party so excused will be extended on a day-to-day
            basis for the period of time equal to that of the underlying cause
            of the delay; provided that such Party will give notice of such
            force majeure event to the other Party and cure such delay as soon
            as reasonably possible. In the event such force majeure event does
            result or would result in an inability of Stereotaxis to supply
            Components to Biosense or Biosense to supply the Daughter Products
            to Stereotaxis for a period greater than ninety (90) days, the
            Parties agree to discuss in good faith alternate solutions to
            restore supply to Biosense or Stereotaxis as the case may be.



                                       42

<PAGE>



17.2        Insurance. During the Term, Stereotaxis will maintain liability
            insurance of not less than one million dollar ($1,000,000) per
            occurrence and five million dollars ($5,000,000) in aggregate.

17.3        Notices. All notices, payments, reports and other communications
            required or permitted hereunder will be in writing and will be
            mailed by first class, certified mail, postage prepaid, or otherwise
            delivered by hand, by messenger (including express mail courier
            services) or by facsimile, addressed to the addresses first set
            forth above or at such other address furnished with a notice in
            manner set forth herein. Such notices will be deemed to have been
            served when delivered or, if delivery is not accomplished by reason
            of some fault of the addressee, when tendered. Notices will be
            addressed as follows:

            If to Stereotaxis:


                 Stereotaxis, Inc.
                 4041 Forest Park Avenue
                 St. Louis, MO, 63108
                 Attn.: Chief Executive Officer
            With copy to: Chief Financial Officer, at the same address.

            If to Biosense:


                 Biosense Webster, Inc.
                 3333 Diamond Canyon Rd.
                 Diamond Bar CA 91765
                 Attn.: Vice President, New Business Development


            With copy to:


                 Office of General Counsel
                 Johnson & Johnson
                 1 Johnson & Johnson Plaza
                 New Brunswick NJ 08933

17.4        Entire Agreement. This Agreement sets forth the entire agreement and
            understanding between the Parties as to the subject matter hereof
            and merges all prior discussions between them, and neither of the
            Parties will be bound by any conditions, definitions, warranties,
            understandings or representations with respect to such subject
            matter other than as expressly provided herein or as duly set forth
            on or subsequent to the Effective Date in writing and signed by a
            proper and duly authorized representative of the Party to be bound
            thereby. No provision appearing on any



                                       43
<PAGE>


             form originated by either Party will be applicable unless such
             provision is expressly accepting in writing by the other Party.

      17.5   Captions and Section Headings. The captions and section and
             paragraph headings used in this Agreement are inserted for
             convenience only and will not affect the meaning or interpretation
             of this Agreement.

      17.6   Partial Invalidity. If any paragraph, provision, or clause thereof
             in this Agreement will be found or be held to be invalid or
             unenforceable in any jurisdiction, in which this Agreement is being
             performed, the remainder of this Agreement will be valid and
             enforceable and the Parties will negotiate, in good faith, a
             substitute, valid and enforceable provision that most nearly
             reflects the Parties' intent in entering into this Agreement.

      17.7   Presumptions. In construing the terms of this Agreement, no
             presumption will operate in either Party's favor as a result of its
             counsel's role in drafting the terms or provisions hereof.

      17.8   Waiver. The failure of either Party to enforce at any time the
             provisions of this Agreement, or the failure to require at any time
             performance by the other Party of any of the provisions of this
             Agreement, will in no way be construed to be a present or future
             waiver of such provisions, nor in any way affect the right of
             either Party to enforce each and every such provision thereafter.
             The express waiver by either Party of any provision, condition or
             requirement of this Agreement will not constitute a waiver of any
             future obligation to comply with such provision, condition or
             requirement.

      17.9   Cumulative Remedies. The remedies under this Agreement will be
             cumulative and not alternative and the election of one remedy for a
             breach will not preclude pursuit of other remedies unless as
             expressly provided in this Agreement.

      17.10  Independent Contractors. In performing their respective services
             hereunder, each of the Parties will operate as, and have the status
             of, an independent contractor and will not act as or be an agent,
             partner, co-venturer or employee of the other Party. Neither Party
             will have the right or authority to assume or create any
             obligations or to make any representations or warranties on behalf
             of any other Party, whether express or implied, or to bind the
             other Party in any respect whatsoever.

      17.11. Confidentiality of Agreement. Each Party agrees that the terms and
             conditions of this Agreement will be treated as confidential
             information and that neither Party will disclose the terms or
             conditions to any third party without the prior written consent of
             the other Party; provided, however, that each Party may disclose
             the terms and conditions of this Agreement, to the extent
             necessary;

      17.11.1 as required by any court or other governmental body;

      17.11.2 as otherwise required by law;



                                       44


<PAGE>


      17.11.3   to legal counsel of the Parties, accountants, and other
                professional advisors;

      17.11.4   in confidence:

      17.11.4.1 to banks, investors and other financing sources and their
                advisors, or

      17.11.4.2 to Parties with whom the disclosing Party has or is proposing to
                enter into a business relationship not prohibited by the terms
                of this Agreement and only to the extent such Parties have a
                need to know such terms and conditions in order to conduct or
                assess such business relationship.

      17.11.5   in connection with the enforcement of this Agreement or rights
                under this Agreement; or

      17.11.6   in confidence, in connection with an actual or prospective
                merger or acquisition or similar transaction

      17.11.7   With respect to disclosure required by a court order, the
                disclosing Party will provide prior notification of such
                impending disclosure to the non-disclosing Party. All reasonable
                efforts to preserve the confidentiality of the terms of this
                Agreement will be expended by the disclosing Party in complying
                with such an order, including obtaining a protective order to
                the extent reasonably possible. The Parties will cooperate in
                preparing and releasing an announcement or other form of
                publicity, if any, relating to this Agreement.

      17.12     Authority. Each Party represents that all corporate action
                necessary for the authorization, execution and delivery of this
                Agreement by such Party and the performance of its obligations
                hereunder has been taken.

      17.13     Counterparts. This Agreement may be executed in two (2) or more
                counterparts, all of which, taken together, will be regarded as
                one and the same instrument.

         IN WITNESS WHEREOF, the Parties hereto have caused this Development and
      Supply Agreement to be signed by duly authorized officers or
      representatives.


         STEREOTAXIS, INC.                    BIOSENSE WEBSTER, INC.

      By: /s/ BJ HOGG                         By: /s/ GUY LEBEAU
         -------------------------------         -------------------------------
      Print Name:   BJ Hogg                   Print Name:   Guy Lebeau
                 -----------------------                 -----------------------
      Title:           CEO                    Title:     WW President
            ----------------------------            ----------------------------
      Date:       May 9, 2002                 Date:          May 9, 2002
           -----------------------------           -----------------------------


                                       45


<PAGE>


                                    EXHIBIT A

               GUIDELINES FOR COMPATIBLE CARTO SYSTEM DEVELOPMENT
                        AND DEVELOPMENT PAYMENT SCHEDULE

                                     [***]


[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]

                                       A-1


<PAGE>
                                     [***]




[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]




                                       A-2

<PAGE>
                                     [***]




[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]

                                       A-3

<PAGE>
                                     [***]




[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]




                                       A-4


<PAGE>


                                   EXHIBIT B

                  DEFINITION OF GROSS PROFIT AND COST OF GOODS

       The default calculation of Gross Profits and/or Costs of Goods, will be
according to the following formulas:

                                     [***]




[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]

                                      B-1

<PAGE>
                                     [***]




[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]


                                      B-2
<PAGE>


                                    EXHIBIT C

                          BIOSENSE VENDOR REQUIREMENTS

The following requirements must be achieved and maintained in order for
Stereotaxis to become and remain an Approved Supplier for Products.

1.    Quality System Requirements

1.1   Assessment: Biosense Webster will perform a Quality System Audit of
      Stereotaxis' quality systems to determine that the requirements of this
      section have been satisfied. Once the Biosense Webster auditor has
      performed the audit with satisfactory results, Biosense Webster will
      notify Stereotaxis in writing that the supplier approval process is
      complete. Minor deficiencies or non-conformances identified during these
      audits that are not indicative of a lack of control and will not preclude
      Stereotaxis from supplier approval. However, such observations will be
      brought to the attention of Stereotaxis and Biosense Webster and
      Stereotaxis will identify actions that will be taken to correct these
      items and agree upon a time schedule in which these actions will be
      implemented.

1.2   Stereotaxis will attain a general state of compliance with the FDA and
      international medical device requirements.

1.3   Stereotaxis will have, or will develop, quality systems which comply with
      current GMP QSR (CFR 820), ISO9000, ISO14001, and EN46001, as determined
      by Biosense Webster and or FDA or EC Notified Body assessment. However,
      the development of appropriate quality systems will occur in a timely
      fashion so as to permit commercialization of Products as soon as other
      factors permit.

1.4   Written requirements, including but not limited to specifications,
      drawings, test methods and procedures, will be utilized by Stereotaxis for
      all Products manufactured for Biosense Webster. All requirements will be
      mutually developed and agreed upon by Stereotaxis and Biosense Webster.

1.5   Stereotaxis will not make any changes to components, processes, systems
      (e.g. quality, measurement, testing) which are relevant to the admission
      of the products or suppliers used to produce, test and or release Products
      manufactured for Biosense Webster without prior written approval from
      Biosense Webster Quality Assurance management.

1.6   Stereotaxis will establish and implement a system that ensures Device
      History Records (DHR) for each batch, lot, or unit are created to
      demonstrate that the Product is manufactured in accordance with all
      applicable specifications and requirements.

1.6.1 DHR's will contain adequate information to provide traceability of all
      components and manufacturing aids (if any) used in the manufacture of a
      finished Product.


                                      C-1

<PAGE>

1.6.2 DHR's will contain adequate information to identify the processing methods
      and personnel involved in the manufacture of a finished Product.

1.6.3 DHR's will contain adequate information to demonstrate that the
      manufactured Product was evaluated (tested and/or inspected) and found to
      meet the appropriate specifications.

1.7   Stereotaxis will establish written requirements, including specifications
      and drawings, for purchased materials and components and will implement a
      system to ensure that the materials and components supplied meet these
      specifications.

1.8   Stereotaxis will obtain agreements with suitable suppliers for all
      components, materials and services used in the manufacture of Products and
      that no changes in the goods or services supplied will be made without
      adequate notification to Stereotaxis.

1.9   Stereotaxis will have a system for assisting Biosense Webster with
      handling customer complaints.

1.9.1 All complaints involving Products supplied to Biosense Webster will be
      initially reported to Biosense Webster customer service. Stereotaxis will
      be promptly informed if the complaint involves a product supplied by
      Stereotaxis, and within seven (7) calendar days, provide a written
      preliminary investigation report to Biosense Webster Quality Assurance.
      This preliminary report will include an initial assessment of device
      reporting under MDR or Vigilance reporting requirements.

1.9.2 Stereotaxis will cooperate fully and promptly in the investigation of
      complaints involving supplied Products. All complaints should be
      investigated and a written response provided to Biosense Webster Quality
      Assurance within thirty (30) days of receipt. All correspondence with the
      complainant will be handled by Biosense Webster, unless other arrangements
      are made by Stereotaxis with Biosense Webster on a case-by-case basis.

1.9.3 Biosense Webster will be responsible for filing any device report under
      MDR or Vigilance reporting requirements.

1.9.4 In the event that corrective actions are warranted as the result of
      customer complaints for the supplied Products, these corrective actions
      will be incorporated and tracked as part of the Biosense Webster
      Corrective Action system.

1.10  If a problem that potentially affects the safety, efficacy or reliability
      of the Products is identified by either Stereotaxis or Biosense Webster,
      the problem and all known facts will be brought to the attention of both
      company's Quality Assurance management as soon as possible, but within 24
      hours of the identification of the problem. In the event that a field
      action is contemplated, Biosense Webster and Stereotaxis will work
      together to determine whether a field action should take place; however,
      the final decision to implement a field action will be made by the
      Biosense Webster Quality Management. Biosense Webster will be responsible
      for implementing any


                                       C-2


<PAGE>


      field action, including informing customers and defining the logistics of
      the field action. Stereotaxis will cooperate fully in the implementation
      of any field action.

1.11  Stereotaxis will establish a document retention procedure to ensure that
      all documents required to meet the quality requirements herein set forth,
      including distribution records, are retained for a minimum of 5 years
      from the date of Product, including but not limited to Design History
      Files and Complaint Files will be retained for a minimum of 10 years.

1.12  Biosense Webster may provide assistance to conduct interim audits of
      Stereotaxis' quality systems to ensure that those systems are being
      developed in accordance with Biosense Webster's supplier qualification
      requirements.

1.13  Stereotaxis will maintain 97% on time delivery and 99% quality acceptance
      of Products.

2  PRODUCT REQUIREMENT

Assessment. Biosense Webster will conduct Design Validation, Design Verification
and Product Performance Qualification (PPQ) testing to determine if the Current
Products or Modified Products meet their pre-established specifications and
quality attributes. Once the Products have successfully met all requirements of
the Design Validation Verification and PPQ testing, and all Quality Systems
Requirements stated above have been met, Stereotaxis will be considered a
Qualified Supplier and added to the Biosense Webster QSIL (Qualified Supplier
Items List).

                                       C-3
<PAGE>


                                   EXHIBIT D

                 DESCRIPTION OF STEREOTAXIS LOCALIZATION SYSTEM

1     Hardware

The Stereotaxis Localization System (currently being developed by a Stereotaxis
subcontractor) is designed to use AC magnetic fields to localize single coil
receivers, and provides five degree-of-freedom Localization for up to six coils.
The sample rate is 50 samples per second per channel.

2     Applications currently targeted

2.1   Expected to be in the clinic (i.e. human clinical trials) by Q3 2002: User
      interface for electrophysiology navigation in which the system changes the
      magnet field in real-time in response to input from the user, via a 3D
      input device. The catheter advancer will also be fully compatible into the
      user interface to provide telemetric control to the physician. Other
      features include three dimensional (3D) point capture and tissue contact
      estimation.

2.2   Expected to be in the clinic by Q4 2002: This phase adds 3D visualization
      and target-based navigation. A pre-operative CT will be imported to the
      system and registered, such that the localized EP catheter can be
      graphically rendered within the 3D CT heart chamber rendering. This
      enables the physician to visualize precisely where the catheter lies,
      relative to the complex anatomy he/she is trying to ablate. Additionally
      the physician will be able to point-and-click on 3D anatomic targets
      within the image, and the system will, via the magnet field.

                                       D-1

<PAGE>


                                    EXHIBIT E

                INITIAL JOINT STEERING COMMITTEE REPRESENTATIVES

Biosense:

       1.   Shlomi Nachman,

       2.   Uri Yaron

       3.   Avinoam Dayan


Stereotaxis:

       1.   Doug Bruce, Senior Vice President, Research & Development

       2.   Paul Burmeister, Vice President, Product Development

       3.   Nicola Young, Chief Financial Officer


                                       E-1