UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
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STEREOTAXIS, INC.
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(Name of Registrant as Specified in Its Charter)
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[Stereotaxis Logo]
STEREOTAXIS, INC.
4320 Forest Park Avenue
Suite 100
St. Louis, Missouri 63108
(314) 678-6100
April 24, 2006
Dear Stockholder:
You are cordially invited to attend the Company's Annual Meeting of
Stockholders on May 25, 2006. We will hold the meeting at 9:00 a.m. at 4320
Forest Park Avenue, Suite 100, St. Louis, Missouri 63108. In connection
with the meeting, we enclose a notice of the meeting, a proxy statement and
a proxy card. Detailed information relating to the Company's activities and
operating performance is contained in our 2005 Annual Report to
Stockholders and Form 10-K, which are also enclosed.
At the meeting you will be asked to elect four directors, to ratify
the appointment of Ernst & Young LLP as the Company's independent
registered public accounting firm for the Company's current fiscal year,
and to transact such other business as may properly come before the
meeting.
Whether or not you plan to attend the Annual Meeting of
Stockholders, we encourage you to vote your shares. If your shares are held
in the name of a bank, broker or other holder of record, you must present
proof of your ownership, such as a bank or brokerage account statement, to
be admitted to the meeting. All stockholders must also present a form of
personal identification in order to be admitted to the meeting. You may
vote by mail, Internet, telephone, or in person at the meeting.
On behalf of the entire board, we look forward to seeing you at the
meeting.
Sincerely,
/s/ Fred A. Middleton
Fred A. Middleton
Chairman of the Board of Directors
[Stereotaxis Logo]
STEREOTAXIS, INC.
4320 Forest Park Avenue
Suite 100
St. Louis, Missouri 63108
(314) 678-6100
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 25, 2006
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The Annual Meeting of Stockholders of Stereotaxis, Inc. will be held
at 4320 Forest Park Avenue, Suite 100, St. Louis, Missouri, on Thursday,
May 25, 2006, at 9:00 a.m., Central Daylight Time, for the following
purposes:
1. To elect four directors to serve until our 2009 Annual Meeting;
2. To ratify the appointment of Ernst & Young LLP as principal
independent registered public accounting firm for fiscal year 2006;
and
3. To transact such other business as may properly come before the
meeting.
We first began delivering to all stockholders of record this proxy
statement and the accompanying form of proxy on April 24, 2006. We sent our
Annual Report for the fiscal year ended December 31, 2005, including Form
10-K, but excluding exhibits, to stockholders at the same time.
By Order of the Board of Directors,
STEREOTAXIS, INC.
/s/ James L. Nouss, Jr.
James L. Nouss, Jr.
Secretary
St. Louis, Missouri
April 24, 2006
IMPORTANT NOTICE
PLEASE VOTE YOUR SHARES PROMPTLY
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TABLE OF CONTENTS
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Page
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I. Questions and Answers About the Annual Meeting................. 1
II. Proposal I: Election of Directors.............................. 3
III. Directors and Executive Officers............................... 4
IV. Security Ownership of Certain Beneficial Owners and
Management................................................... 10
V. Committee Reports.............................................. 15
VI. Compensation of Directors and Officers......................... 17
VII. Proposal II: Ratification of Independent Registered Public
Accountants.................................................. 19
VIII. Principal Accounting Fees and Services......................... 20
IX. Stock Price Performance Graph.................................. 21
X. Certain Relationships and Related Party Transactions........... 22
XI. Section 16(a) Beneficial Ownership Reporting Compliance........ 23
XII. General Information............................................ 23
I. QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
Q. WHY AM I RECEIVING THESE MATERIALS?
The Board of Directors of Stereotaxis, Inc. (the "Company") is soliciting
proxies from the Company's stockholders in connection with its 2006 Annual
Meeting of Stockholders to be held on Thursday, May 25, 2006, and any and
all adjournments thereof. These materials were first sent to our
stockholders on or about April 24, 2006. You are encouraged to vote on the
proposals presented in these proxy materials. You are invited to attend the
annual meeting, but you do not have to attend to vote.
Q. WHEN AND WHERE IS THE ANNUAL MEETING?
We will hold the annual meeting of stockholders on Thursday, May 25, 2006,
at 9:00 a.m., Central Daylight Time, at 4320 Forest Park Avenue, Suite 100,
St. Louis, Missouri 63108.
Q. WHO IS ENTITLED TO VOTE AT THE MEETING?
You are entitled to vote (in person or by proxy) if you were a stockholder
of record of shares of our common stock at the close of business on March
28, 2006, the record date for the meeting. On March 28, 2006, there were
33,768,508 shares of our common stock outstanding and entitled to vote and
no shares of our preferred stock outstanding.
Q. WHAT AM I BEING ASKED TO VOTE ON AT THE MEETING?
We are asking our stockholders to elect four Class II directors to serve
until our 2009 Annual Meeting of Stockholders and to ratify the appointment
of Ernst & Young LLP as our independent registered public accounting firm
for the 2006 fiscal year.
Q. HOW DO I VOTE?
Whether or not you expect to be present in person at the annual meeting,
you are requested to vote your shares. Most stockholders will be able to
choose whether they wish to vote using the Internet, by telephone or mail.
The availability of Internet voting or telephone voting for stockholders
whose shares are held in street name by a bank or a broker may depend on
the voting processes of that organization. If you vote using the Internet,
you may incur costs such as telephone and Internet access charges for which
you will be responsible. Internet and telephone voting facilities will be
available 24 hours a day and will close at 5:00 p.m., Central time, on May
24, 2006. If you vote using the Internet or by telephone, you do not need
to return your proxy card.
Internet - The website for Internet voting is
www.proxyvotenow.com/stxs. Please have your proxy card available and
follow the simple instructions on the screen.
Telephone - The toll-free telephone number for telephone voting is
866-353-7811. Please have your proxy card available and follow the
simple recorded instructions.
Mail - Please complete, sign, date, and return the enclosed form of
proxy. The shares represented thereby will be voted in accordance
with your instructions.
In-person - You may vote by ballot.
If you do not attend the meeting, your shares of common stock may be voted
only when represented by a properly executed proxy. If you hold your shares
in street name through a bank or broker, your bank or broker will send you
a separate package describing the procedures and options for voting your
shares.
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Q. WHAT IF I WANT TO CHANGE MY VOTE?
If you are a stockholder of record, you can revoke your proxy at any time
before it is exercised by:
--timely delivery of a properly executed, later-dated proxy;
--submission of a later vote by Internet or telephone any time
prior to 5:00 p.m., Central time, on May 24, 2006;
--delivery of a written revocation of your proxy to our Secretary; or
--voting by ballot at the meeting.
If your shares are held in the name of a bank or brokerage firm, you may
change your vote by submitting new voting instructions to your bank or
broker. If your bank or broker permits you to vote by Internet or
telephone, you may also be permitted to change your vote by Internet or
telephone, depending on the processes of that organization.
Q. WHAT VOTE OF THE STOCKHOLDERS IS NEEDED?
No business can be conducted at the annual meeting unless a majority of the
outstanding shares of common stock entitled to vote is present in person or
represented by proxy at the meeting. Each share of our common stock is
entitled to one vote with respect to each matter on which it is entitled to
vote. A plurality of the shares entitled to vote and present in person or
by proxy at the meeting must be voted "FOR" a director nominee. A majority
of shares entitled to vote and present in person or by proxy at the meeting
must be voted "FOR" the ratification of Ernst & Young LLP as our
independent registered public accounting firm for the 2006 fiscal year and
"FOR" such other business as may properly come before the meeting.
Q. WHAT DO I DO IF MY SHARES OF COMMON STOCK ARE HELD IN "STREET NAME" AT A
BANK OR BROKERAGE FIRM?
If your shares are held in street name by a bank or brokerage firm as your
nominee, your bank or broker will send you a separate package describing
the procedure for voting your shares. You should follow the instructions
provided by your bank or brokerage firm.
Q. WHAT HAPPENS IF I RETURN MY SIGNED PROXY CARD BUT FORGET TO INDICATE HOW
I WANT MY SHARES OF COMMON STOCK VOTED?
If you sign, date and return your proxy and do not mark how you want to
vote, your proxy will be counted as a vote "FOR" all of the nominees for
directors and "FOR" the ratification of our independent registered public
accounting firm, and in the discretion of the proxy holders for such other
business as may properly come before the meeting.
Q. WHAT HAPPENS IF I DO NOT INSTRUCT MY BROKER HOW TO VOTE OR IF I MARK
"ABSTAIN" ON THE PROXY?
If you mark your proxy "abstain," your vote will have the same effect as a
vote against the proposal or the election of the applicable director. If
you do not instruct your broker how to vote, your broker will vote your
shares for you at his or her discretion on routine matters such as the
election of directors and ratification of the independent registered public
accounting firm. Broker non-votes with respect to a matter will not be
considered as present and entitled to vote with respect to that matter and
thus will have no effect on the vote for that matter.
Q. CAN I CHANGE MY VOTING INSTRUCTIONS BEFORE THE MEETING?
Yes. You can revoke your proxy at any time before it is exercised by timely
delivery of a properly executed, later-dated proxy, by a written revocation
of your proxy sent to the Secretary of Stereotaxis, Inc., or by voting at
the
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meeting. The method by which you vote by a proxy will in no way limit your
right to vote at the meeting if you decide to attend in person. If your
shares are held in the name of a bank or brokerage firm, you must obtain a
proxy, executed in your favor, from the bank or broker, to be able to vote
at the meeting.
Q. WHAT DO I NEED TO DO IF I PLAN TO ATTEND THE MEETING IN PERSON?
If your shares are held in the name of a bank, broker or other holder of
record, you must present proof of your ownership, such as a bank or
brokerage account statement, to be admitted to the meeting. All
stockholders must also present a form of personal identification in order
to be admitted to the meeting.
II. PROPOSAL I: ELECTION OF DIRECTORS
Under the Company's restated certificate of incorporation, the
number of directors shall be fixed by the board of directors in the manner
provided in the Company's bylaws. Under the Company's restated bylaws,
subject to the rights of the holders of any series of preferred stock, the
number of directors of the Company may be fixed or changed from time to
time by resolution of a majority of the board of directors; provided the
number shall be no less than three (3) and no more than fifteen (15), or,
if the number is not fixed, the number shall be ten (10). Currently, we
have authorized a thirteen (13) member board of directors. Under the
Company's restated bylaws, the directors are divided into three (3)
classes, Class I, Class II and Class III, each class to be as nearly equal
in number as possible. The term of office of each director shall be until
the third annual meeting following his or her election and until the
election and qualification of his or her successor, provided however that
the directors first serving as Class II directors shall serve for a term
expiring at this Annual Meeting of Stockholders, and the directors first
serving as Class III directors shall serve for a term expiring at the
annual meeting of stockholders next following December 31, 2006.
The nominating and corporate governance committee of the board of
directors has nominated the Class II Directors, Christopher Alafi, Ph.D.,
Ralph G. Dacey, Jr., M.D., Abhijeet J. Lele and Robert J. Messey, to serve
as directors until the 2009 Annual Meeting of Stockholders. Certain
information with respect to the nominees for election and the other
directors whose terms of office as directors will continue after the Annual
Meeting of Stockholders is set forth under the heading "Directors and
Officers" below. Proxies cannot be voted for a greater number of persons
than the number of nominees named in each Class.
The board of directors does not contemplate that any of the nominees
will be unable to stand for election, but should any nominee become unable
to serve or for good cause will not serve, all proxies (except proxies
marked to the contrary) will be voted for the election of a substitute
nominee as our board may recommend.
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE ELECTION OF THE NAMED NOMINEES AS DIRECTORS
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III. DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is the name, age, position and a brief account of
the business experience of each of the executive officers, directors, and
nominees. There are no family relationships between any of our directors
and executive officers.
NAME AGE POSITION(S)
---- --- -----------
Bevil J. Hogg 57 President and Chief Executive Officer, Director
Michael P. Kaminski 46 Chief Operating Officer
James M. Stolze 62 Vice President and Chief Financial Officer
Douglas M. Bruce 48 Senior Vice President, Research & Development
Melissa C. Walker 49 Senior Vice President, Regulatory, Quality, and Compliance
Ruchir Sehra, M.D. 37 Vice President, Clinical Affairs and Chief Medical Officer
Fred A. Middleton 56 Chairman of the Board of Directors
Abhi Acharya, Ph.D. 65 Director
Christopher Alafi, Ph.D. 42 Director
David W. Benfer 59 Director
Ralph G. Dacey, Jr., M.D. 57 Director
Gregory R. Johnson, Ph.D. 62 Director
William M. Kelley 70 Director
Abhijeet J. Lele 40 Director
Robert J. Messey 60 Director
William C. Mills III 50 Director
Bevil J. Hogg has served as our President, Chief Executive Officer
and a director since June 1997. From 1994 through 1996, Mr. Hogg served as
President and Chief Executive Officer of Everest & Jennings International
Ltd., a manufacturer of wheelchairs and other hospital, home care and
nursing home products. Prior to Everest & Jennings, he was a founder or
co-founder of three companies, including Trek Bicycle Corporation. Mr. Hogg
received a Diplome Superior d'Etudes Francaises from the Sorbonne
(University of Paris, France).
Michael P. Kaminski has served as our Chief Operating Officer since
he joined the Company in April 2002. Prior to joining the Company, Mr.
Kaminski spent nearly 20 years with Hill-Rom Company (Hillenbrand
Industries). In his last position with Hill-Rom, Mr. Kaminski served as
Senior Vice President of North American Sales and Service. Prior to that,
he served as General Manager of the Acute Care Hospital Division of
Hill-Rom. Mr. Kaminski earned an M.B.A. from Xavier University and a B.S.
in Marketing from Indiana University.
James M. Stolze has served as our Vice President and Chief Financial
Officer since he joined the Company in May 2004. Prior to joining the
Company, Mr. Stolze spent eight years as Executive Vice President and Chief
Financial Officer of MEMC Electronic Materials, Inc., from 1995 to 2003.
Prior to MEMC, Mr. Stolze was an audit partner with KPMG LLP. Mr. Stolze
currently sits on the board of directors and audit committee of ESCO
Technologies, Inc., a public company listed on the New York Stock Exchange.
Mr. Stolze earned an M.B.A. from the University of Michigan and a B.S. in
Mechanical Engineering from the University of Notre Dame and is a certified
public accountant.
Douglas M. Bruce has served as our Senior Vice President, Research &
Development since he joined the Company in May 2001. Prior to joining the
Company, Mr. Bruce was Vice President, Product Development and Marketing,
for Intuitive Surgical, Inc., a developer and manufacturer of
computer-enhanced minimally invasive surgery systems, from 1997 to 2001.
Prior to Intuitive Surgical, Mr. Bruce was a Vice President of Engineering
at Acuson Corp, a manufacturer of diagnostic ultrasound systems, and has
held positions in mechanical, process and manufacturing engineering at
Tandon Corp, ISS Sperry Univac and IBM. Mr. Bruce received a M.S. in
Mechanical
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Engineering from the University of Santa Clara and a B.S. in Mechanical
Engineering from the University of California at Berkeley.
Melissa Walker has served as our Senior Vice President, Regulatory,
Quality, and Compliance since March 2006. From 2005 to March 2006 she
served as our Vice President, Regulatory Affairs and Quality Systems, and,
since joining the Company in 2001 to 2005 she served as our Vice President
Regulatory, Quality, and Clinical Affairs. Prior to joining the Company,
Ms. Walker led the global regulatory team at Bausch & Lomb Surgical, Inc.,
a subsidiary of Bausch & Lomb, Inc. and a leading manufacturer of surgical
instruments for the eye, from 1997 to 2000. Prior to Bausch & Lomb
Surgical, Inc., Ms. Walker was Director of Regulatory Affairs at Ethicon
Endo-Surgery, Inc., a Johnson & Johnson Company and a recognized leader in
the manufacture of surgical instruments used for minimally invasive
surgery, from 1992 to 1997. Ms. Walker served on the board of directors for
the Regulatory Affairs Professionals Society from 1997 to 2002 and was
formerly the Board Chairman. Ms. Walker received a M.S. degree in Zoology
and a B.S. in Biology from East Texas State University.
Ruchir Sehra, M.D., has served as our Vice President and Chief
Medical Officer since joining the Company in 2005. Prior to joining the
Company, Dr. Sehra spent nearly two years as Vice President of Clinical
Affairs and Medical Director for CryoCor, Inc. a privately held cardiac
medical device manufacturer. Prior to his employment at CryoCor, Dr. Sehra
served from 1999 to 2004 as Associate Professor of Pediatrics and Medicine
at Loma Linda University where he practiced full time electrophysiology and
was Director of Business Operations for an 85 physician practice. Dr. Sehra
received his B.A. from Wabash College and his M.D. from Indiana University
School of Medicine. He also received an MBA from the University of
California, Irvine. He is fellow of the American College of Cardiology.
Fred A. Middleton has served as the Chairman of our board of
directors since June 1990. Mr. Middleton has been a General Partner and
Managing Director of Sanderling Ventures since 1987. Prior to that time,
from 1984 to 1986 Mr. Middleton was Managing General Partner of Morgan
Stanley Ventures. He joined Genentech, Inc. in 1978 and was a part of the
start-up management team from 1978 to 1984 serving in the roles of Vice
Presidencies of Finance, Administration, and Corporate Development, and
Chief Financial Officer. Mr. Middleton also served as President of
Genentech Development Corporation. Prior to that time, he served as a
consultant with McKinsey & Company and as a Vice President of Chase
Manhattan Bank. Mr. Middleton also serves as a Director of Favrille, Inc. a
public biotechnology company, and several private companies in the
biomedical field. He holds an M.B.A., with Distinction, from Harvard
University and a B.S. degree in Chemistry from the Massachusetts Institute
of Technology.
Abhi Acharya, Ph.D. has served as a director since February 2005.
Dr. Acharya is currently self-employed as a consultant in the medical
device industry. From 1994 to 1997, he was the Vice President Regulatory
Affairs, Quality Assurance and Clinical Research at Target Therapeutics and
from 1993 to 1994, he was a Senior Technical Advisor at Biometric Research
Institute. From 1977 to 1993, Dr. Acharya held various positions at the
U.S. Food and Drug Administration including Director of the Division of
Cardiovascular, Respiratory and Neurological Devices. He currently serves
as a director at Neomend, Inc, InfraReDx, Inc. and Regen Biologics after
having previously served as a director of Somnus. Dr. Acharya holds a B.
Tech degree in Metallurgical Engineering from the Indian Institute of
Technology (Kharagpur, India) and an M.S. and Ph.D. in Biomaterials
Engineering from Northwestern University.
Christopher Alafi, Ph.D., has served as a director since August
2000. Dr. Alafi has been a General Partner of Alafi Capital Company, LLC, a
venture capital firm, since 1995. He was previously a Physiology and
Anatomy teacher at Santa Monica College, a visiting scholar at Stanford
University (Chemistry Department) and a researcher at DNAX. Dr. Alafi
received a B.A. in Biology from Pomona College and a D.Phil. in
Biochemistry from the University of Oxford.
David W. Benfer has served as a director since February 2005. Since
1999, Mr. Benfer has served as President and Chief Executive Officer of
Saint Raphael Healthcare System and the Hospital of Saint Raphael, New
Haven, Connecticut. Previously, he was the President and Chief Executive
Officer of the Provena-Saint Joseph/Morris Health Network in Joliet,
Illinois from 1992 to 1999. Mr. Benfer served as Senior Vice President for
Hospital and Urban Affairs for the Henry Ford Health System in Detroit and
Chief Executive Officer of the Henry Ford Hospital from 1985 to 1992. He
served as the Chairman of the Americal College of Healthcare Executives
(ACHE) from 1998
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to 1999 and on their Board of Governors from 1992 to 2000. Mr. Benfer was
named a Fellow of ACHE in 1981 and serves on the Board of the Catholic
Health Association. He earned his B.S.B.A. from Wittenburg University and
his M.B.A. from Xavier University.
Ralph G. Dacey, Jr., M.D., has served as a director since March
2003. Dr. Dacey has been Professor and Chairman of the Department of
Neurosurgery at Washington University School of Medicine in St. Louis since
1989. Prior to joining Washington University, he was an Assistant Professor
of Neurological Surgery at the University of Washington and Professor and
Chief of the Division of Neurosurgery at the University of North Carolina
at Chapel Hill. Dr. Dacey received his B.A. from Harvard University and his
M.D. from the University of Virginia School of Medicine. He has served as
the Secretary and then Chairman of the American Board of Neurological
Surgeons and as Chairman of the Editorial Board of the Journal of
Neurosurgery. Dr. Dacey is also the Chairman of our Scientific Advisory
Board and served as Principal Investigator of our first Human Clinical
Trial (frontal lobe biopsy).
Gregory R. Johnson, Ph.D., has served as a director since October
1994. Currently, Dr. Johnson is a Managing Director of Prolog Ventures,
LLC, a life sciences focused venture capital management firm based in St.
Louis. Dr. Johnson organized Prolog in 2000 following 13 years as a General
Partner with Gateway Associates. Prior to joining Gateway, Dr. Johnson
served as Vice President of Monsanto Venture Capital Company. Dr. Johnson
is currently a director of Everest Biomedical Instruments Company and
Singulex, Inc. Dr. Johnson received a Ph.D. and M.A. in Physics from the
University of Rochester and a B.S. in Physics from the Massachusetts
Institute of Technology.
William M. Kelley has served as a director since January 2003. Mr.
Kelley is the current Chairman of Hill-Rom Company, a position he has held
since 1995. While at Hill-Rom, Mr. Kelley also served as President and CEO
from 1992 to 1995, Sr. Vice President, Sales and Operations from 1989 to
1992 and Sr. Vice President, Sales and Marketing from 1980 to 1989. He
currently serves on the Board of National Committee for Quality Health Care
and is a member of HRDI (Healthcare, Research & Development Institute) and
Health Insights. He has been honored numerous times for his contributions
to the healthcare industry including as an Honorary Fellow of the American
College of Health Care Executives. He was educated at Hanover College and
George Washington University.
Abhijeet J. Lele has served as a director since April 2004. Mr. Lele
is a Managing Member of EGS Healthcare Capital Partners, a venture capital
firm based in Rowayton, Connecticut, focusing on investments in medical
device, biopharmaceutical and specialty pharmaceutical companies. He joined
EGS in 1998, after spending four years in the health care practice of
McKinsey & Company. Before McKinsey, Mr. Lele held operating positions with
Lederle Laboratories, Progenics Pharmaceuticals and Clontech Laboratories.
He is currently a director of EP MedSystems, CryoCath Technologies,
OptiScan Biomedical and Ekos Corporation. Mr. Lele received his M.A. in
molecular biology from Cambridge University and his M.B.A. with distinction
from Cornell University.
William C. Mills III has served as a director since June 2000. In
August 2004, Mr. Mills became a managing member of a new management company
being formed by EGS Healthcare Capital Partners to manage EGS Private
Healthcare Partnership III. Before joining EGS, Mr. Mills was a Partner in
the Boston office of Advent International, a venture capital firm, for five
years. At Advent, he was co-responsible for healthcare venture capital
investments and focused on investments in the medical technology and
biopharmaceutical sectors. He has over 25 years of venture capital
experience. Before joining Advent, Mr. Mills spent over 11 years with the
Venture Capital Fund of New England where he was a General Partner. Prior
to that, he spent seven years at PaineWebber Ventures/Ampersand Ventures as
Managing General Partner. He is a member of the Board of Managers of
Ascension Health Ventures. Mr. Mills received his A.B. in Chemistry, cum
laude, from Princeton University, his S.M. in Chemistry from the
Massachusetts Institute of Technology and his M.S. in Management from MIT's
Sloan School of Management.
Robert J. Messey has served as a director since May 2005. Mr. Messey
has served as the Senior Vice President and Chief Financial Officer of Arch
Coal, Inc. since December 2000. Prior to joining Arch Coal, he served as
the Vice President of Financial Services of Jacobs Engineering Group, Inc.
from 1999 to 2000 and as Senior Vice President and Chief Financial Officer
of Sverdrup Corporation from 1992-1999. Mr. Messey was an audit partner at
Ernst & Young from 1981 to 1992. He currently serves as a director and
chairman of the audit committee of Baldor Electric Company. Mr. Messey
earned his B.S.B.A. from Washington University.
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CORPORATE GOVERNANCE
Our board of directors has determined that each of our directors
other than Mr. Hogg, and each member of the audit committee, compensation
committee, and nominating and corporate governance committee is independent
under the rules of the Nasdaq National Market. As a result, our board
currently has a majority of independent directors consistent with the rules
of the Nasdaq National Market. Our independent directors have regularly
scheduled meetings at which only the independent directors are present.
Our board of directors has established an audit committee, a
compensation committee and a nominating and corporate governance committee
and adopted charters for each of these committees. We believe that the
composition of each of these committees meets the criteria for independence
under, and the functioning of these committees complies with, the
applicable requirements of, the current rules and regulations of the Nasdaq
National Market and Securities and Exchange Commission ("SEC").
BOARD MEETINGS AND COMMITTEES
During fiscal year 2005, the board of directors met six times.
During fiscal year 2005, all incumbent directors attended 75% or more of
the aggregate meetings of the board and of the board committees on which
they served during the period they held office. Directors are encouraged,
but not required, to attend our annual meetings of stockholders.
AUDIT COMMITTEE
Our audit committee currently consists of Messrs. Mills, Messey and
Benfer, all of whom qualify as "independent directors" and as audit
committee members under the Nasdaq National Market rules, and Mr. Mills
serves as the chair of the audit committee. Mr. Messey qualifies as an
audit committee financial expert under SEC rules and regulations. Our board
of directors has determined that each of our current audit committee
members is financially sophisticated as set forth in Rule 4350(d)(2)(A) of
the Nasdaq National Market.
The audit committee assists our board of directors in its oversight of:
* the integrity of our financial statements;
* our accounting and financial reporting process, including our
internal controls;
* our compliance with legal and regulatory requirements;
* the independent registered public accountants' qualifications and
independence; and
* the performance of our independent registered public accountants.
The audit committee has direct responsibility for the appointment,
compensation, retention and oversight of our independent registered public
accountants. In addition, the audit committee must approve in advance:
* any related-party transaction that creates a conflict of interest
situation;
* all audit services; and
* all non-audit services, except for de minimis non-audit services,
provided the audit committee has approved such de minimis services
prior to the completion of the audit.
During fiscal year 2005, the audit committee met seven times. Our
written audit committee charter was previously attached as Exhibit A to our
Proxy Statement filed with the SEC on April 14, 2005.
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COMPENSATION COMMITTEE
Our compensation committee currently consists of Messrs. Middleton,
Johnson and Kelley, each of whom qualify as "independent directors" under
the Nasdaq National Market rules and as "outside directors" under the
Internal Revenue Code of 1986. Mr. Middleton serves as the chair of the
compensation committee.
The compensation committee assists management and our board of
directors in:
* defining an executive compensation policy;
* determining the total compensation package for our chief executive
officer and other executive officers; and
* administering each of our equity-based compensation plans and
profit sharing plans, including our 1994 Stock Option Plan, our
2002 Stock Incentive Plan, our 2002 Non-Employee Directors' Stock
Plan and our 2004 Employee Stock Purchase Plan.
During fiscal year 2005, the compensation committee met five times.
Our written compensation committee charter was previously attached as
Exhibit B to our Proxy Statement filed with the SEC on April 14, 2005.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
Our nominating and corporate governance committee currently consists
of Messrs. Mills, Acharya and Lele, each of whom qualify as "independent
directors" under the Nasdaq National Market rules. Mr. Mills serves as
chairman of the nominating and corporate governance committee. The
nominating and corporate governance committee assists the board of
directors in:
* identifying and evaluating individuals qualified to become board
members;
* reviewing director nominees received from stockholders;
* selecting director nominees for submission to the stockholders at
our annual meeting; and
* selecting director candidates to fill any vacancies on the board
of directors.
The nominating and corporate governance committee is also
responsible for developing and recommending to the board of directors a set
of corporate governance guidelines and principles applicable to us.
During fiscal year 2005, the nominating and corporate governance
committee met four times. Our written nominating and corporate governance
committee charter was attached as Exhibit C to our Proxy Statement filed
with the SEC on April 14, 2005.
DIRECTOR NOMINATIONS
Our restated bylaws provide that stockholders seeking to bring
business before an annual meeting of stockholders, or to nominate
candidates for election as directors at an annual meeting of stockholders,
must provide timely notice in writing. To be timely, a stockholder's notice
must be delivered to or mailed and received at our principal executive
offices not more than 120 days or less than 90 days prior to the
anniversary date of the immediately preceding annual meeting of
stockholders. However, in the event that the annual meeting is called for a
date that is not within 30 days before or after such anniversary date,
notice by the stockholder in order to be timely must be received not later
than the close of business on the 10th day following the date on which
notice of the date of the annual meeting was mailed to stockholders or made
public, whichever first occurs. Our restated bylaws specify requirements as
to the form and content of a stockholder's notice. These provisions may
preclude stockholders from bringing matters before an annual meeting of
stockholders or from making nominations for directors at an annual meeting
of stockholders.
8
Any stockholder wishing to submit a candidate for consideration
should send the following information to the Corporate Secretary,
Stereotaxis, Inc., 4320 Forest Park Avenue, Suite 100, St. Louis, Missouri
63108:
* Stockholder's name, number of shares owned, length of period held,
and proof of ownership;
* Name, age, business and residential address of candidate;
* A detailed resume describing among other things the candidate's
educational background, occupation, employment history, and
material outside commitments (e.g., memberships on other boards
and committees, charitable foundations);
* A supporting statement which describes the candidate's reasons for
seeking election to the board, and documents his/her ability to
satisfy the director qualifications described herein;
* Any information relating to the candidate that is required to be
disclosed in the solicitation of proxies for election of director;
* The class and number of shares of our capital stock that are
beneficially owned by the candidate;
* A description of any arrangements or understandings between the
stockholder and the candidate; and
* A signed statement from the candidate, confirming his/her
willingness to serve on the board.
Our Corporate Secretary will promptly forward such materials to the
chair of our nominating and corporate governance committee and our Chairman
of the Board. Our Corporate Secretary will also maintain copies of such
materials for future reference by the committee when filling board
positions. Stockholders may submit potential director candidates at any
time pursuant to these procedures. The committee will consider such
candidates if a vacancy arises and at such other appropriate times.
Notwithstanding the foregoing, the committee is not obligated to review any
candidate for which the required information is not provided by the time
set forth in our restated bylaws for the nomination of director candidates
by a stockholder that is not approved by the committee or the board. See
also "General Information - Stockholder Proposals."
STOCKHOLDER COMMUNICATIONS POLICY
Any security holder wishing to send communications to our board
should send the written communication and the following information to our
Corporate Secretary, Stereotaxis, Inc., 4320 Forest Park Avenue, Suite 100,
St. Louis, Missouri 63108:
* Security holder's name, number of shares owned, length of period
held, and proof of ownership;
* Name, age, business and residential address of security holder;
and
* Any individual director or committee to which the security holder
would like to have the written statement and other information
sent.
The Corporate Secretary will forward the information to the Chairman
of the Board, if addressed to the full board, or to the specific director
to which the communication is addressed.
9
CODE OF ETHICS AND BUSINESS CONDUCT
Our Board of Directors adopted a Code of Business Conduct and Ethics
for all of our directors, officers and employees effective August 1, 2004.
Stockholders may request a free copy of our Code of Ethics and Business
Conduct from our Chief Financial Officer as follows:
Stereotaxis, Inc.
Attention: James M. Stolze
4320 Forest Park Avenue, Suite 100
St. Louis, MO 63108
314-678-6100
To the extent required by law or the rules of the Nasdaq National
Market, any amendments to, or waivers from, any provision of the Code of
Business Conduct and Ethics will be promptly disclosed publicly. To the
extent permitted by such requirements, we intend to make such public
disclosure by posting the relevant material on our website
(www.stereotaxis.com) in accordance with SEC rules.
IV. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to us with
respect to the beneficial ownership of our common stock as of March 31,
2006 by:
* each person known by us to own beneficially more than 5% of our
outstanding common stock;
* each of our directors or nominees;
* each of our named executive officers; and
* all of our directors, nominees and executive officers as a group.
10
There were 33,800,107 shares of common stock outstanding as of March
31, 2006. The table below includes the number of shares underlying options
and warrants that are currently exercisable or exercisable within 60 days
of March 31, 2006. Shares of common stock subject to options and warrants
that are currently exercisable or exercisable within 60 days of March 31,
2006 are considered outstanding and beneficially owned by the person
holding the options or warrants for the purposes of computing beneficial
ownership of that person but are not treated as outstanding for the purpose
of computing the percentage ownership of any other person. To our
knowledge, except as set forth in the footnotes to this table and subject
to applicable community property laws where applicable, each person named
in the table has sole voting and investment power with respect to the
shares set forth opposite such person's name. Except as otherwise
indicated, the address of each of the persons in this table is as follows:
c/o Stereotaxis, Inc., 4320 Forest Park Avenue, Suite 100, St. Louis,
Missouri 63108.
PERCENTAGE OF SHARES OF
NAME AND ADDRESS OF NUMBER OF SHARES OF COMMON COMMON STOCK
BENEFICIAL OWNER OF COMMON STOCK STOCK BENEFICIALLY OWNED BENEFICIALLY OWNED
-------------------------------- -------------------------- -----------------------
FIVE PERCENT STOCKHOLDERS
Fidelity Management & Research Company(1) 3,600,592 10.66%
82 Devonshire Street
Boston, Massachusetts 02109
Entities affiliated with Sanderling Ventures(2) 3,392,868 9.94%
400 S. El Camino Real, Suite 1200
San Mateo, CA 94402
Alafi Capital Company LLC(3) 2,537,169 7.44%
9 Commodore Drive, Suite 405
Emeryville, CA 94608
Entities affiliated with EGS Healthcare(4) 2,096,880 6.17%
105 Rowayton Avenue, 2nd Floor
Rowayton, CT 06853
Times Square Capital Management, LLC(5) 1,723,200 5.10%
Four Times Square, 25th Floor
New York, NY 10036
DIRECTORS AND NAMED EXECUTIVE OFFICERS
Fred A. Middleton(6) 3,569,443 10.45%
Abhi Acharya(7) 20,484 *
Christopher Alafi(8) 2,724,805 7.99%
David W. Benfer(9) 12,375 *
Abhijeet Lele(10) 2,105,213 6.19%
Gregory R. Johnson(11) 419,491 1.24%
Ralph G. Dacey, Jr.(12) 62,498 *
William M. Kelley(13) 54,527 *
Robert J. Messey 700 *
William C. Mills III(14) 44,564 *
Bevil J. Hogg(15) 723,717 2.12%
Douglas M. Bruce(16) 179,664 *
Michael P. Kaminski(17) 227,610 *
Ruchir Sehra 31,907 *
James M. Stolze(18) 93,956 *
Melissa Walker(19) 92,520 *
---------- -----
All directors, nominees and officers as a group (16 persons) 10,363,474 29.12%
--------
* Indicates ownership of less than 1%
(1) Fidelity Management & Research Company ("Fidelity"), a wholly-owned
subsidiary of FMR Corp. and an investment adviser registered under
Section 203 of the Investment Advisers Act of 1940, is the beneficial
owner of shares of our common stock as a result of acting as investment
adviser to various investment companies registered under Section 8 of
the Investment Company Act of 1940. The ownership of one investment
company, Fidelity Small Cap Independence, amounted to 1,572,292 shares
of our common stock. Edward C. Johnson 3d and FMR Corp., through its
control of Fidelity, and the funds each has sole power to dispose of
the 3,600,592 shares owned by the Funds. Neither FMR Corp. nor Edward
C. Johnson 3d,
11
Chairman of FMR Corp., has the sole power to vote or direct the voting of
the shares owned directly by the Fidelity Funds, which power resides
with the Funds' Boards of Trustees. Fidelity carries out the voting of
the shares under written guidelines established by the Funds' Boards of
Trustees. All information regarding ownership by Fidelity is based
solely on a Schedule 13G filed by Fidelity on February 10, 2006.
(2) Includes (a) 781,351 shares held by Sanderling Venture Partners II,
L.P., (b) 301,745 shares held by Sanderling Management Limited,
Custodian FBO The Investors of Sanderling Ventures Limited, (c) 532,758
shares held by and 9,480 shares issuable under warrants held by
Sanderling IV Biomedical Co-Investment Fund, L.P., (d) 224,515 shares
held by Sanderling Venture Partners IV Co-Investment Fund, L.P., (e)
617,411 shares held by and 84,996 shares issuable under warrants held
by Sanderling Venture Partners V Co-Investment Fund, L.P., (f) 89,834
shares held by and 24,702 shares issuable under warrants held by
Sanderling V Beteiligungs GmbH & Co. KG., (g) 100,970 shares held by
and 22,602 shares issuable under warrants held by Sanderling V Limited
Partnership, (h) 374,313 shares held by and 37,705 shares issuable
under warrants held by Sanderling V Biomedical Co-Investment Fund,
L.P., (i) 25,487 shares held by and 3,138 shares issuable under
warrants held by Sanderling Ventures Management V, (j) 480 shares
issuable under warrants held by Sanderling II Limited Partnership, (k)
8,172 shares held by Sanderling Management LLC 401K Pension and Profit
Sharing Plan, and (l) 153,209 shares issuable under warrants held by
Sanderling Venture Partners VI Co-Investment Fund, L.P.
Middleton-McNeil Associates, L.P. is the general partner of Sanderling
Venture Partners II, L.P. and has voting and dispositive authority over
the shares owned by Sanderling Venture Partners II, L.P.
Middleton-McNeil Associates, L.P. is managed by its general partners,
Fred A. Middleton, one of our directors, and Robert G. McNeil.
Middleton-McNeil Associates, L.P. is the general partner of Sanderling
Venture Partners II, L.P. and has voting and dispositive authority over
the shares owned by Sanderling Venture Partners II, L.P.
Middleton-McNeil Associates, L.P. is managed by its general partners,
Fred A. Middleton and Robert G. McNeil. Such individuals disclaim
beneficial ownership of all such shares held by the foregoing funds,
except to the extent of their proportionate pecuniary interests
therein.
Middleton-McNeil, L.P. is the general partner of Sanderling II
Limited Partnership and has voting and dispositive authority over the
shares owned by such entities. Middleton-McNeil, L.P. is managed by its
general partners, Fred A. Middleton and Robert G. McNeil. Such
individuals disclaim beneficial ownership of all such shares held by
the foregoing funds, except to the extent of their proportionate
pecuniary interests therein.
Middleton-McNeil Associates IV, LLC is the general partner of Sanderling
IV Biomedical Co-Investment Fund, L.P. and has voting and dispositive
authority over the shares owned by Sanderling IV Biomedical
Co-Investment Fund, L.P. Middleton-McNeil Associates IV, LLC is managed
by its members, Fred A. Middleton and Robert G. McNeil. Such
individuals disclaim beneficial ownership of all such shares held by
the foregoing funds, except to the extent of their proportionate
pecuniary interests therein.
Middleton-McNeil Associates IV, L.P. is the general partner of Sanderling
Venture Partners IV Co-Investment Fund, L.P. and has voting and
dispositive power over the shares owned by Sanderling Venture Partners
IV Co-Investment Fund, L.P. Middleton-McNeil Associates IV, L.P. is
managed by its general partners, Fred A. Middleton and Robert G.
McNeil. Such individuals disclaim beneficial ownership of all such
shares held by the foregoing funds, except to the extent of their
proportionate pecuniary interests therein.
Middleton, McNeil & Mills Associates V, LLC is the Investment
General Partner of Sanderling V Limited Partnership and Sanderling V
Beteiligungs GmbH & Co. KG and the General Partner of Sanderling V
Biomedical Co-Investment Fund, L.P. and Sanderling Venture Partners V
Co-Investment Fund, L.P. and has voting and dispositive authority over
the shares owned by such entities. Middleton, McNeil & Mills Associates
V, LLC is managed by its managing directors, Fred A. Middleton, Robert
G. McNeil, Timothy C.
12
Mills, Timothy J. Wollaeger and Paul Grayson. Such individuals disclaim
beneficial ownership of all such shares held by the foregoing funds,
except to the extent of their proportionate pecuniary interests
therein.
Sanderling Ventures Management V is managed by Fred A. Middleton and
Robert G. McNeil, Timothy C. Mills and Timothy J. Wollaeger, the
individuals who have invested under the d/b/a Sanderling Ventures
Management V, which individuals have voting and dispositive power over
the shares owned by Sanderling Ventures Management V. Such individuals
disclaim beneficial ownership of all such shares held by the foregoing
funds, except to the extent of their proportionate pecuniary interests
therein.
Middelton, McNeil, Mills & Associates, VI, LLC is the Investment
General Partner of Sanderling Venture Partners VI Co-Investment Fund,
L.P. and has voting and dispositive power over the shares owned by such
entity. Sanderling Venture Partners VI Co-Investment Fund, L.P. is
managed by its managing directors, Fred A. Middleton and Robert G.
McNeil, Timothy C. Mills and Timothy J. Wollaeger. Such individuals
disclaim beneficial ownership of all such shares held by the foregoing
funds, except to the extent of their proportionate pecuniary interests
therein.
(3) Includes 2,242,449 shares held by and 294,720 shares issuable under
warrants held by Alafi Capital Company LLC ("Alafi Capital").
Christopher Alafi, one of our directors, and Moshe Alafi are the
managing partners of Alafi Capital and have full voting and investment
power with respect to the shares owned by Alafi Capital.
(4) Includes (a)583,941 shares held by and 42,001 shares issuable under
warrants held by EGS Private Healthcare Partnership, L.P., (b) 83,419
shares held by and 6,000 shares issuable under warrants held by EGS
Private Healthcare Counterpart, L.P., (c) 916,586 shares held by and
130,212 shares issuable under warrants held by EGS Private Healthcare
Partnership II L.P., (d) 144,554 held by and 20,535 shares issuable
under warrants held by EGS Private Healthcare Investors II, L.P., (e)
137,924 shares held by and 19,593 shares issuable under warrants held
by EGS Private Healthcare Canadian Partners, L.P., and (f) 10,609
shares held by and 1,506 shares issuable under warrants held by EGS
Private Healthcare President's Fund, L.P. (collectively, "EGS").
EGS Private Healthcare Investors, L.L.C. is the general partner of EGS
Private Healthcare Partnership II L.P., EGS Private Healthcare
Investors II, L.P., EGS Private Healthcare Canadian Partners, L.P. and
EGS Private Healthcare President's Fund, L.P. and has voting and
dispositive power over the shares owned by such entities. EGS Private
Healthcare Investors, L.L.C. is managed by a board of managers
comprised of Abhijeet Lele and Terry Vance. Such individuals disclaim
beneficial ownership of all such shares held by the foregoing funds,
except to the extent of their proportionate pecuniary interests
therein.
EGS Private Healthcare Associates, LLC is the general partner of EGS
Private Healthcare Partnership, L.P. and EGS Private Healthcare
Counterpart, L.P. and has voting and dispositive power over the shares
owned by such entities. EGS Private Healthcare Associates, LLC is
managed by Fred Greenberg, its managing member. Mr. Lele has also been
delegated authority to act on behalf of such entity. Such individuals
disclaim beneficial ownership of all such shares held by the foregoing
funds, except to the extent of their proportionate pecuniary interests
therein.
(5) Represents shares held by investment advisory clients of TimesSquare
Capital Management, LLC ("TimesSquare"). In its role as investment
adviser, TimesSquare has sole voting power for 1,444,200 shares and
sole dispositive power for 1,723,200 shares. All information regarding
ownership by TimesSquare is based solely on a Schedule 13G filed by
TimesSquare on February 10, 2006.
(6) Includes 3,056,556 shares held by and 336,312 shares issuable under
warrants held by Sanderling as described above. Mr. Middleton disclaims
beneficial ownership of the shares and warrants held by Sanderling and
Middleton-McNeil L.P. except to the extent of his proportionate
ownership interest therein. Also includes options to purchase 25,000
shares of common stock.
13
(7) Includes options to purchase 9,375 shares.
(8) Includes 2,242,449 shares held by and 294,720 shares issuable under
warrants held by Alafi Capital as described above. Dr. Alafi is a
general partner of Alafi Capital and disclaims beneficial ownership of
the shares and warrants held by Alafi Capital except to the extent of
his proportionate partnership interest therein. Also includes 19,201
shares issuable under warrants and options to purchase 12,500 shares of
common stock held by Dr. Alafi.
(9) Includes options to purchase 9,375 shares.
(10) Includes 1,877,033 shares held by and 219,847 shares issuable under
warrants held by EGS as described above. Mr. Lele is a general partner
of EGS and member of the board of managers of EGS Private Healthcare
Investments, L.L.C. and EGS Private Healthcare Associates, L.L.C.,
which control the EGS entities, and disclaims beneficial ownership of
such shares and warrants held by the EGS entities except to the extent
of his proportionate ownership interest therein. Also includes options
to purchase 8,333 shares of common stock.
(11) Includes 216,533 shares held by and 31,681 shares issuable under
warrants held by Prolog Capital A, L.P. and 111,626 shares held by and
16,320 shares issuable under warrants held by Prolog Capital B, L.P.
Dr. Johnson is a Principal of each of such entities and disclaims
beneficial ownership of the shares and warrants held by such entities
except to the extent of his proportionate partnership interest therein.
Also includes options to purchase 12,500 shares of common stock.
(12) Includes options to purchase 12,500 shares.
(13) Includes 4,000 shares held by Advisors to Healthcare Suppliers (ATHS),
formerly MedTech Partners. Mr. Kelley is a partner of ATHS and
disclaims beneficial ownership of the shares held by ATHS except to the
extent of his proportionate partnership interest therein. Also includes
options to purchase 46,527 shares.
(14) Includes 88 shares held by Advent Partners HLS II Limited Partnership
and 449 shares held by Advent Partners Limited Partnership. Prior to
August 1, 2004, Mr. Mills was an officer of Advent International
Corporation and a partner of various entities associated with Advent
International ("Advent"). Mr. Mills resigned from Advent International
effective July 31, 2004. Accordingly, Mr. Mills no longer has voting or
dispositive power with respect to any of the securities held by Advent,
and he disclaims beneficial ownership of such securities. Mr. Mills
continues to hold an ownership interest in the Advent entities. Also
includes options to purchase 34,027 shares of common stock. Advent has
the right to require Mr. Mills to exercise certain of the options
listed in the table and pay the net proceeds thereof to Advent. In
August 2004, Mr. Mills became a managing member of a new management
company being formed by EGS Healthcare Capital Partners III. Mr. Mills
does not have voting or dispositive power over any of the securities of
Stereotaxis owned by EGS.
(15) Includes options to purchase 337,817 shares.
(16) Includes options to purchase 64,452 shares. Also includes 100 shares
owned by Mr. Bruce's minor daughter.
(17) Includes options to purchase 185,760 shares.
(18) Includes options to purchase 55,556 shares.
(19) Includes options to purchase 70,020 shares.
14
V. COMMITTEE REPORTS
A. REPORT OF THE AUDIT COMMITTEE
Three non-employee directors comprise the audit committee. All are
independent as defined in Rule 4200 (a)(15) of the Rules of the NASD. The
Board of Directors has adopted a written charter for the audit committee
which was attached as Exhibit A to the Company's Proxy statement filed on
April 14, 2005.
The audit committee assists the board of directors in its oversight
of the Company's accounting and financial reporting process. Management has
the primary responsibility for the financial statements and the reporting
process, including the Company's systems of internal control, while the
independent registered public accountants are responsible for performing an
independent audit of the Company's financial statements in accordance with
auditing standards generally accepted in the United States and expressing
an opinion on the conformity of those financial statements with accounting
principles generally accepted in the United States.
In fulfilling its oversight responsibilities the Committee reviewed
and discussed the audited financial statements to be included in the Annual
Report on Form 10-K for the year ended December 31, 2005 with management,
including a discussion of the quality and the acceptability of the
Company's financial reporting practices and the internal controls over
financial reporting.
The committee reviewed with the independent registered public
accounting firm their judgments as to the quality and the acceptability of
the Company's financial reporting and such other matters as are required to
be discussed with the Committee under auditing standards generally accepted
in the United States, including the matters required to be discussed by
Statement on Auditing Standards No. 61. In addition, the Committee
discussed with the independent registered public accounting firm, the
auditor's independence from management of the Company including the matters
in the auditors' written disclosure and the letter required by Standard No.
l of the Independence Standards Board received by the Company.
The Company's independent registered public accountants did not
provide any non-audit services to the Company during 2005.
In reliance on the reviews and discussions referred to above, the
committee recommended to the board of directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2005 for filing with the Securities and
Exchange Commission. The committee has appointed Ernst & Young LLP as the
Company's independent registered public accountants for fiscal 2006.
William C. Mills III, Chair
Robert J. Messey
David W. Benfer
B. REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The compensation committee, which is currently comprised of three
non-employee directors, administers our executive compensation program. The
committee works with management to develop general compensation plans and
is responsible for determining the compensation of each executive officer.
The compensation committee also has the authority to administer and to
grant stock awards under our stock plans.
Our executive compensation program is intended to align executive
compensation with our business objectives and the executive's individual
performance and to enable us to attract, retain and reward executive
officers who contribute, and are expected to continue to contribute, to our
long-term success. In analyzing executive compensation, the committee is
guided by the following principles: (i) the total compensation payable to
executive officers should be sufficiently competitive with the compensation
paid by other public companies of a similar size which design, manufacture
and market medical devices for officers in comparable positions so that we
can attract and
15
retain qualified executives, and (ii) individual compensation should
include components which reflect both the financial performance of the
Company and the performance of the individual.
The compensation of our executive officers consists of a combination
of base salary, bonus and equity-based compensation. The committee believes
that executive compensation should be designed to motivate executives to
increase stockholder value and further believes that executive officers can
best increase stockholder value by focusing on our sales and operating
results. Factors such as position, individual performance and contribution
to past and future Company success are considered when establishing
executive compensation levels. In addition, in 2005 the compensation
committee retained the services of a nationally recognized compensation and
benefits consultant to assist in developing overall compensation
strategies, including equity incentive plans.
Our executive officers total cash compensation is comprised of an
annual base salary plus an annual incentive bonus. The annual incentive
target for senior management represents up to 25% of total base cash
compensation for all of the executive officers. Payment of the incentive
bonus is based on performance of the Company against pre-established
targets relating to financial performance, product development and other
strategic measures. In addition, the executive officers are eligible for
long-term incentive awards of stock options, stock appreciation rights and
performance based restricted shares. Vesting of restricted share incentive
awards to senior management is contingent on achievement of revenue and
profitability goals established by the board of directors.
COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER
Mr. Hogg's salary is comprised of a base salary plus an annual
incentive bonus payable based on the achievement of corporate objectives
set by the compensation committee and long-term incentive compensation in
the form of stock appreciation rights and performance based restricted
shares. To determine Mr. Hogg's 2005 compensation package, the compensation
committee considered his performance, competitive compensation data from
similar companies within the medical device industry as well as the other
criteria indicated above. During 2005, the compensation committee increased
Mr. Hogg's base salary to $365,000 and awarded a performance bonus of
$45,625 based on the achievement of 2005 objectives. In addition the
compensation committee granted him 92,500 stock appreciation rights and
47,500 performance based restricted shares.
INTERNAL REVENUE CODE SECTION 162(m)
Section 162(m) of the Internal Revenue Code limits the tax deduction
allowable for executive compensation to $1.0 million per year for certain
executive officers unless such compensation is performance based. As the
cash compensation paid to our executive officers is below $1.0 million and
the compensation committee believes that the options and performance based
restricted shares granted would meet the requirements for performance based
compensation, the Company believes that these limitations did not impact
the Company in 2005.
Fred A. Middleton, Chair
Gregory R. Johnson, Ph.D.
William M. Kelley
The report of the audit committee, the report of the compensation
committee on executive compensation and the performance graph below will
not be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement or portions thereof into
any filing under the Securities Act of 1933 or the Securities Exchange Act
of 1934, except to the extent that the Company specifically incorporates
this information by reference, and will not otherwise be deemed filed under
such Acts.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Middleton served as a member of our compensation committee
during our last fiscal year and as our president from December 1996 through
June 1997. Otherwise, none of our compensation committee members and none
of our executive officers have a relationship that would constitute an
interlocking relationship with executive officers or directors of another
entity or insider participation in compensation decisions.
16
VI. COMPENSATION OF DIRECTORS AND OFFICERS
A. DIRECTOR COMPENSATION
In March 2002, we adopted the 2002 Non-Employee Directors' Stock
Option Plan to provide for the automatic grant of options to purchase
shares of common stock to our non-employee directors. Under this Plan, at
each annual stockholder meeting, all non-employee directors receive an
annual option to purchase 7,500 shares of common stock, or 15,000 in the
case of the chairman. Newly elected directors will receive an initial
option to purchase 15,000 shares of common stock which will vest over a
2-year period with 50% vesting after the first year and the remainder
vesting monthly thereafter. In addition, the Chairman and/or Designated
Financial Expert of the audit committee will receive an annual grant of
5,000 shares and the chairman of the compensation committee and the
chairman of the nominating/governance committee will each receive an annual
grant of 2,500 shares. Such options are granted at a price equal to the
fair market value of the stock on the date of grant and have a term of 10
years.
In addition, non-employee directors receive cash compensation for
their services as board members in addition to being reimbursed for their
out-of-pocket expenses incurred in connection with attending board and
committee meetings. Each non-employee director is entitled to an $18,000
annual retainer ($24,000 for the chairman) for board membership and an
additional payment of $1,500 per in-person board meeting and $500 per
telephonic board meeting. Each member of the audit committee, compensation
committee and nominating/governance committee is entitled to a $2,500
annual retainer. The chairman/designated financial expert of the audit
committee is entitled to a $7,500 annual retainer and the chairman of the
compensation committee and the chairman of the nominating/governance
committee are each entitled to a $5,000 annual retainer in lieu of the
member retainer.
B. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning the
compensation of our chief executive officer and each of our other four most
highly compensated executive officers whose aggregate cash compensation
exceeded $100,000 during the year ended December 31, 2005. We refer to
these persons as the "named executive officers" elsewhere herein.
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------- ----------------------------------
AWARDS PAYOUTS
------------------------ -------
RESTRICTED SECURITIES
STOCK UNDERLYING LTIP ALL OTHER
FISCAL SALARY BONUS AWARDS OPTIONS/SARS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) ($)(2) (#) ($) ($)(3)
--------------------------- ------ -------- ------- ---------- ------------ ------- ------------
Bevil J. Hogg 2005 $362,917 $45,625 $370,500 92,500 0 $14,258
President and 2004 337,667 76,500 -- 97,222 0 13,268
Chief Executive Officer 2003 306,000 70,200 -- 69,444 0 11,987
Michael P. Kaminski 2005 287,186 36,041 175,500 47,500 0 10,829
Chief Operating 2004 272,517 61,875 -- 69,444 0 10,220
Officer 2003 244,800 56,160 -- 13,888 0 8,412
James M. Stolze(4) 2005 282,562 35,406 175,500 37,500 0 11,165
Vice President and 2004 163,590 36,808 -- 111,111 0 5,049
Chief Financial Officer 2003 -- -- -- -- 0 --
Douglas M. Bruce 2005 268,860 37,087 136,500 22,500 0 $27,297(5)
Senior Vice President, 2004 258,329 56,733 -- 20,832 0 9,778
Research & Development 2003 243,003 55,598 -- 6,944 0 9,723(5)
Melissa C. Walker 2005 204,143 35,639 97,500 17,500 0 7,707
Senior Vice President, Regulatory, 2004 191,417 43,538 -- -- 0 7,135
Quality and Compliance 2003 165,250 37,913 -- 27,777 0 5,798
--------
(1) These amounts represent bonuses earned during the fiscal years ended
December 31, 2005, 2004 and 2003, respectively. Annual bonuses earned
during a fiscal year are generally paid in the first quarter of the
subsequent fiscal year.
17
(2) Restricted stock shown in this column are performance based restricted
shares that will vest only if certain performance criteria, determined
by the Compensation Committee of the Board of Directors, are achieved.
If the performance criteria are not achieved by June 16, 2010, these
shares will be forfeited by the recipient. The amounts represent the
fair market value of $7.80 per share for the shares awarded at the time
of the award as follows: Mr. Hogg - 47,500; Mr. Kaminski - 22,500; Mr.
Stolze - 22,500; Mr. Bruce -17,500; and Ms. Walker - 12,500.
At December 31, 2005 each of these individuals held unvested performance
based restricted shares in aggregate amount as stated above, with an
aggregate fair market value as follows: Mr. Hogg - $408,975; Mr.
Kaminski -$193,725; Mr. Stolze - $193,725; Mr. Bruce - $150,675; Ms.
Walker - $107,625.
(3) Represents the Company contribution to the executive's 401(k) plan and
payment of group term life insurance premiums.
(4) Mr. Stolze became our Vice President and Chief Financial Officer
effective May 27, 2004.
(5) Includes moving expenses of $17,169 and $923 in 2005 and 2003,
respectively.
OPTION/SARS GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information with respect to
SARs granted to each of our named executive officers during the fiscal year
ended December 31, 2005.
PERCENTAGE OF POTENTIAL REALIZABLE VALUE
NUMBER OF TOTAL AT STOCK PRICE
SECURITIES OPTIONS/SARS APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM
OPTIONS/SARS EMPLOYEES IN EXERCISE EXPIRATION ---------------------------
NAME GRANTED FISCAL 2005 PRICE DATE 5% 10%
---- ------------ ------------- ------------ ---------- ---------- ----------
Bevil J. Hogg 92,500 14.2% $7.80 6/15/2010 $199,337 $440,483
Michael P. Kaminski 47,500 7.3% $7.80 6/15/2010 $102,362 $226,194
James M. Stolze 37,500 5.8% $7.80 6/15/2010 $ 80,812 $178,574
Douglas M. Bruce 22,500 3.5% $7.80 6/15/2010 $ 48,487 $107,145
Melissa C. Walker 17,500 2.7% $7.80 6/15/2010 $ 37,712 $ 83,335
--------
(1) All SARs granted to these executive officers in 2005 were granted under
the 2004 Stock Incentive Plan. The percent of total options/SARS is
based on an aggregate of 649,550 options/SARS granted to employees
during 2005. SARs vest at the rate of 25% after one year of service
from the date of grant, and monthly thereafter, over 36 additional
months. SARs have a term of five years but may terminate before their
expiration dates if the optionee's status as an employee is terminated
or upon the optionee's death or disability. The exercise price on the
date of grant was equal to 100% of the fair market value at the date of
grant.
(2) As required by the rules of the SEC, potential values are stated based
on the prescribed assumptions that common stock will appreciate in
value from the date of grant to the end of the option term at the
indicated rates (compounded annually) and therefore are not intended to
forecast possible future appreciation, if any, in the price of common
stock.
OPTION/SAR EXERCISES IN LAST FISCAL YEAR
The table below sets forth, for the named executives, the number of
shares for which stock options were exercised in fiscal 2005, the realized
value or spread (the difference between the exercise price and market value
on the date of exercise) and the number and unrealized spread of the
unexercised options/SARs held by each at fiscal year end. The value of
"in-the-money" stock options/SARs represents the positive spread between
the exercise price
18
of the common stock underlying the stock options/SARs and the fair market
value of the common stock underlying the options/SARs at December 31, 2005.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS AT
ACQUIRED ON VALUE DECEMBER 31, 2005(1) DECEMBER 31, 2005
EXERCISE REALIZED ------------------------------ ------------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
Bevil J. Hogg -- -- 316,403 178,873 $1,502,955 $222,586
Michael Kaminski 4,063 $13,205 161,432 104,225 $ 572,857 $208,539
James M. Stolze -- -- 43,981 104,630 $ 69,930 $137,112
Douglas M. Bruce -- -- 59,532 39,355 $ 203,092 $ 46,831
Melissa C. Walker -- -- 68,862 29,653 $ 379,533 $ 47,313
--------
(1) Certain shares acquired or to be acquired upon exercise are subject to
a right of repurchase by us. Our right to repurchase lapses as to 25%
of the shares covered by the respective options on the first
anniversary of the vesting start date, and lapses ratably on a monthly
basis thereafter, with the repurchase right terminating in full on the
fourth anniversary of the vesting start date.
VII. PROPOSAL II: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
Our audit committee, pursuant to its charter, has appointed Ernst &
Young LLP as the Company's independent registered public accountants to
examine the financial statements of the Company for our 2006 fiscal year.
While the audit committee is responsible for the appointment,
compensation, retention, termination and oversight of the independent
registered public accounting firm, the audit committee and our board are
requesting, as a matter of policy, that the stockholders ratify the
appointment of Ernst & Young LLP as the Company's independent registered
public accountants for 2006. The audit committee is not required to take
any action as a result of the outcome of the vote on this proposal.
However, if the stockholders do not ratify the appointment, the audit
committee may investigate the reasons for stockholder rejection and may
consider whether to retain Ernst & Young LLP or to appoint another firm.
Furthermore, even if the appointment is ratified, the audit committee in
their discretion may direct the appointment of a different independent
registered public accounting firm at any time during the year if they
determine that such a change would be in the best interests of the Company
and its stockholders.
A formal statement by representatives of Ernst & Young LLP is not
planned for the annual meeting. However, Ernst & Young LLP representatives
are expected to be present at the meeting and available to respond to
appropriate questions.
----------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S PRINCIPAL INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2006.
19
VIII. PRINCIPAL ACCOUNTING FEES AND SERVICES
The following fees were paid to Ernst & Young LLP, our independent
auditors, for services rendered in fiscal year 2004 and fiscal year 2005:
AMOUNT BILLED FOR
FISCAL YEAR
---------------------
DESCRIPTION OF PROFESSIONAL SERVICE 2004 2005
----------------------------------- ---- ----
AUDIT FEES - professional services rendered for the audit of $171,500 $467,583
our annual financial statements and review of financial
statements included in our Form 10-Q or services that are
normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those
fiscal years.
AUDIT-RELATED FEES - assurance and related services by Ernst $456,666 $ 26,800
& Young LLP that are reasonably related to the performance
of the audit or review of financial statements and are not
reported as "Audit Fees"
TAX FEES - professional services rendered by Ernst & Young -- --
LLP for tax compliance, tax advice and tax planning.
ALL OTHER -- --
TOTAL ERNST & YOUNG LLP FEES $628,166 $494,383
PRE-APPROVAL POLICY
As described in the audit committee charter, which was amended and
restated in March 2004, it is the audit committee's policy and procedure to
review and consider and ultimately pre-approve, where appropriate, all
audit and non-audit engagement services to be performed by our independent
registered public accountants.
20
IX. STOCK PRICE PERFORMANCE GRAPH
The following graph shows the total shareholder return of an
investment of $100 in cash since Stereotaxis' initial public offering of
common stock on August 11, 2004 through December 31, 2005, the NASDAQ
Composite (U.S.) Index and the NASDAQ Medical Device Index. All values
assume reinvestment of the full amount of all dividends although dividends
have never been declared on Stereotaxis' common stock.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG STEREOTAXIS, INC., THE NASDAQ STOCK MARKET,
AND THE NASDAQ MEDICAL DEVICE MANUFACTURER'S INDEX
[graph]
--------------------------------------------------------------------------------------
8/12/04 9/30/04 12/31/04 3/31/05 6/30/05 9/30/05 12/31/05
--------------------------------------------------------------------------------------
Stereotaxis, Inc. $100.00 124.55 125.70 99.11 102.43 94.76 110.10
NASDAQ $100.00 107.96 123.83 113.75 117.60 123.22 126.45
NASDAQ Medical Device Index $100.00 108.69 118.94 112.34 118.56 125.45 130.65
----------------------------
In accordance with the rules of the SEC, the information contained
in the Report of the Compensation Committee on Executive Compensation, the
Report of the Audit Committee and the Stock Price Performance Graph shall
not be deemed to be "soliciting material," or to be "filed" with the SEC or
subject to the SEC's Regulation 14A, or to the liabilities of Section 18 of
the Securities Exchange Act of 1934, as amended, except to the extent that
the Company specifically requests that the information be treated as
soliciting material or specifically incorporates it by reference into a
document filed under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended.
21
X. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Since January 1, 2000, there has not been, nor is there currently
planned, any transaction or series of similar transactions to which we were
or are a party in which the amount involved exceeds $60,000 and in which
any director, executive officer or holder of more than 5% of our common
stock or any member of such persons' immediate families had or will have a
direct or indirect material interest other than agreements which are
described described below.
Nasdaq Rules. The Nasdaq rules defining "independent" director
status also govern conflict of interest situations. Each of our directors
other than Mr. Hogg qualifies as "independent" in accordance with Nasdaq
rules. The Nasdaq rules include a series of objective tests that would not
allow a director to be considered independent if the director had certain
employment, business or family relationships with the Company. The Nasdaq
independence definition includes a requirement that the board also review
the relations of each independent director to the Company on a subjective
basis. In accordance with that review, the board has made a subjective
determination as to each independent director that no relationships exist
that, in the opinion of the board, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a director. In
making these determinations, the directors reviewed and discussed
information provided by the directors and the Company with regard to each
director's business and personal activities as they may relate to the
Company and the Company's management.
SEC Rules. In addition to the Company and Nasdaq policies and rules
described above, the SEC has specific disclosure requirements covering
certain types of transactions involving the Company and a director,
executive officer or other specified party. There were no such transactions
in fiscal year 2005. Further, with regard to SEC rules, we have not engaged
in any transaction, or series of similar transactions, since the beginning
of fiscal year 2005, or any currently proposed transaction, or series of
similar transactions, to which the Company was or is to be a party, in
which the amount involved exceeds $60,000 and in which any of our
directors, executive officers, nominees for election as a director,
beneficial owners of more than 5% of our Common Stock, or members of their
immediate family had, or will have, a direct or indirect material interest.
In addition, except as noted in the following paragraph, none of the
following persons has been indebted to the Company or its subsidiaries at
any time since the beginning of fiscal year 2005: any of our directors or
executive officers; any nominee for election as a director; any member of
the immediate family of any of our directors, executive officers or
nominees for director; any corporation or organization of which any of our
directors, executive officers or nominees is an executive officer or
partner or is, directly or indirectly, the beneficial owner of 10% or more
of any class of equity securities (except trade debt entered into in the
ordinary course of business); and any trust or other estate in which any of
the directors, executive officers or nominees for director has a
substantial beneficial interest or for which such person serves as a
trustee or in a similar capacity.
In November 2001 we loaned $134,700 to Doug Bruce in connection with
the exercise of options to purchase 83,333 shares of common stock. The note
is full recourse and bears interest at the rate of 7% per annum. As of
March 31, 2006 the outstanding principal and interest on the note was
$182,627. Principal and interest are due on November 20, 2006.
STOCK OPTION GRANTS
In 2005 we have granted stock appreciation rights to purchase shares
of our common stock and performance shares to our executive officers and
stock options and other compensation to our directors. See "Compensation of
Directors and Officers--Director Compensation" and "--Executive
Compensation" above.
NOTE AND WARRANT PURCHASE AGREEMENT
In November 2005, we entered into a Note and Warrant Purchase
Agreement with Sanderling Venture Partners VI Co-Investment Fund, L.P. and
Alafi Capital Company LLC relating to (i) the commitment by these investors
to lend to us up to an aggregate principal amount of $20 million (the
"Committed Funds") to be evidenced by promissory notes (the "Notes"), and
(ii) the issuance of warrants to purchase shares of our common stock. The
22
private placement was conducted pursuant to Section 4(2) of the Securities
Act of 1933, as amended. Net proceeds from the private placement, if drawn,
would be used for working capital and other general corporate purposes.
The Committed Funds will be available for us to draw until, and the
Notes will become due and payable upon, the earlier of May 10, 2006 or the
receipt by us of not less than $30 million in connection with a future
equity or debt strategic financing with a medical device or technology
company (the "Commitment Period"). We have the option to extend the
Commitment Period and the term of the Notes through November 10, 2006. We
may elect to draw on the Committed Funds in minimum amounts of $2 million
at any time during the Commitment Period. The interest rate on the Notes
will be the prime rate as of the date of the advance less 1%, but in no
event less than 6% per annum. All interest and unpaid principal on drawn
funds will be due upon the expiration of the term of the Notes. The Notes
may be prepaid by us, in whole or in part, at any time without penalty.
In addition, each of the investors received five-year warrants to
purchase 153,209 shares of our common stock at an exercise price of $6.527
per share, which was equal to the average daily closing price of our common
stock for 10 consecutive trading days commencing November 4, 2005 and
ending on November 17, 2005. The number of shares of common stock issued
was equal to the portion of such investor's Committed Funds multiplied by
10%, divided by the exercise price. If we draw down on the Committed Funds,
we will issue additional warrants to each investor equal to such investor's
pro rata portion of Committed Funds drawn multiplied by 10%, divided by the
exercise price. If we elect to extend the Commitment Period or the term of
the Notes to November 10, 2006, we will issue additional warrants to each
investor equal to the portion of such investor's Committed Funds multiplied
by 10%, divided by the exercise price. In connection with the private
placement, we agreed to file a resale registration statement on Form S-3
covering the shares of common stock underlying the common stock warrants.
Our chairman, Fred A. Middleton, is a managing director of an entity
that is the general partner of Sanderling Venture Partners VI Co-Investment
Fund, L.P. Christopher Alafi, one of our board members, is a manager of
Alafi Capital Company.
XI. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires all Company executive officers, directors, and persons owning more
than 10% of any registered class of our capital stock to file reports of
ownership and changes in ownership with the SEC. Based solely on the
reports received by us and on written representations from reporting
persons, we believe that all such persons timely filed such reports during
the last fiscal year with the exception of Messrs. Acharya and Benfer, who
each filed a late Form 3 and Form 4 in April 2005, reporting their initial
ownership and subsequent option grants in connection with their appointment
to the board of directors, and Mr. Sehra, who filed a late Form 3 in June
5, reporting his initial ownership of our common stock in connection with
his promotion to Chief Medical Officer in April 2005.
XII. GENERAL INFORMATION
A. STOCKHOLDER PROPOSALS
PROPOSALS INCLUDED IN PROXY STATEMENT
Proposals of stockholders of the Company that are intended to be
presented by such stockholders at the Company's 2007 annual meeting and
that stockholders desire to have included in the Company's proxy materials
relating to such meeting must be received by the Company at its principal
executive offices no later than December 26, 2006, which is 120 calendar
days prior to the anniversary of this year's mailing date. Upon timely
receipt of any such proposal, the Company will determine whether or not to
include such proposal in the proxy statement and proxy in accordance with
applicable regulations governing the solicitation of proxies.
23
PROPOSALS NOT INCLUDED IN THE PROXY STATEMENT
Our restated bylaws provide that stockholders seeking to bring
business before an annual meeting of stockholders, or to nominate
candidates for election as directors at an annual meeting of stockholders,
must provide timely notice in writing. To be timely, a stockholder's notice
must be delivered to or mailed and received at our principal executive
offices not more than 120 days or less than 90 days prior to the
anniversary date of the immediately preceding annual meeting of
stockholders. However, in the event that the annual meeting is called for a
date that is not within 30 days before or after such anniversary date,
notice by the stockholder in order to be timely must be received not later
than the close of business on the 10th day following the date on which
notice of the date of the annual meeting was mailed to stockholders or made
public, whichever first occurs. Our restated bylaws specify requirements as
to the form and content of a stockholder's notice. These provisions may
preclude stockholders from bringing matters before an annual meeting of
stockholders or from making nominations for directors at an annual meeting
of stockholders.
Any stockholder wishing to submit a candidate for election to our
board of directors should follow the procedures outlined in "Director
Nominations." For all other proposals, as to each matter of business
proposed, the stockholder should send the following information to the
Corporate Secretary, Stereotaxis, Inc., 4320 Forest Park Avenue, Suite 100,
St. Louis, Missouri 63108:
* A brief description of the business desired to be brought before
the meeting and the reasons for conducting such business;
* The text of the business (including the text of any resolutions
proposed and the language of any proposed amendment to our charter
documents);
* The name and address, as they appear in our stockholder records,
of the stockholder(s) proposing such business;
* The class and number of shares of the stock which are beneficially
owned by the proposing stockholder(s);
* Any material interest of the proposing stockholder(s) in such
business; and
* A statement as to whether either the proposing stockholder(s)
intend(s) to deliver a proxy statement and form of proxy to
holders of, in the case of the proposal, at least the percentage
of the Company's voting shares required under applicable law to
carry the proposal.
A more complete description of this process is set forth in our
bylaws.
B. HOUSEHOLDING OF PROXIES
The Securities and Exchange Commission has adopted rules that permit
companies and intermediaries such as brokers to satisfy delivery
requirements for annual reports and proxy statements with respect to two or
more stockholders sharing the same address by delivering a single annual
report and/or proxy statement addressed to those stockholders. This process
is commonly referred to as "householding." The Company and some brokers
household annual reports and proxy materials, delivering a single annual
report and/or proxy statement to multiple stockholders sharing an address
unless contrary instructions have been received from the affected
stockholders.
Once you have received notice from your broker or the Company that
your broker or we will be householding materials to your address,
householding will continue until you are notified otherwise or until you
revoke your consent. If, at any time, you no longer wish to participate in
householding and would prefer to receive a separate annual report and/or
proxy statement in the future, please notify your broker if your shares are
held in a brokerage account or us if you hold registered shares. If, at any
time, you and another stockholder sharing the same address wish to
participate in householding and prefer to receive a single copy of our
annual report and/or proxy statement, please notify your broker if your
shares are held in a brokerage account or us if you hold registered shares.
24
You may request to receive at any time a separate copy of our annual
report or proxy statement, or notify us that you do or do not wish to
participate in householding by sending a written request to our Corporate
Secretary at 4320 Forest Park Avenue, Suite 100, St. Louis, Missouri 63108,
or by telephoning 314-678-6100.
C. OTHER INFORMATION
The board of directors knows of no matter, other than those referred
to in this proxy statement, which will be presented at the meeting.
However, if any other matters, including a stockholder proposal excluded
from this proxy statement pursuant to the rules of the SEC, properly come
before the meeting or any of its adjournments, the person or persons voting
the proxies will vote in accordance with their best judgment on such
matters. Should any nominee for director be unable to serve or for good
cause will not serve at the time of the meeting or any adjournments
thereof, the persons named in the proxy will vote for the election of such
other person for such directorship as the board of directors may recommend,
unless, prior to the meeting, the board has eliminated that directorship by
reducing the size of the board. The board is not aware that any nominee
herein will be unable to serve or for good cause will not serve as a
director.
The Company will bear the expense of preparing, printing and mailing
this proxy material, as well as the cost of any required solicitation.
Directors, officers or employees of the Company may solicit proxies on
behalf of the Company. In addition, the Company will reimburse banks,
brokerage firms, and other custodians, nominees and fiduciaries for
reasonable expenses incurred in forwarding proxy materials to beneficial
owners of the Company's stock and obtaining their proxies.
You are urged to vote promptly by marking, signing, dating, and
returning your proxy card. You may revoke your proxy at any time before it
is voted; and if you attend the meeting, as we hope you will, you may vote
your shares in person.
ANNUAL REPORT
This proxy statement has been accompanied with or preceded by our
Annual Report to Stockholders, which contains our Annual Report on Form
10-K, excluding exhibits, as filed with the SEC.
April 24, 2006
25
YOUR VOTE IS IMPORTANT
STEREOTAXIS, INC. VOTE BY INTERNET / TELEPHONE
24 HOURS A DAY, 7 DAYS A WEEK
INTERNET TELEPHONE MAIL
------------------------------------- ------------------------------- --------------------------------------
https://www.proxyvotenow.com/stxs 1-866-353-7811
o Go to the website address listed o Use any touch-tone telephone. o Mark, sign and date your proxy card.
above. OR o Have your proxy card ready. OR o Detach your proxy card.
o Have your proxy card ready. o Follow the simple recorded o Return your proxy card in the
o Follow the simple instructions that instructions. postage-paid envelope provided.
appear on your computer screen.
1-866-353-7811
CALL TOLL-FREE TO VOTE
[ ] | DETACH PROXY CARD HERE |
----------------------------------------------------------------------------------------------------------------------------------
PLEASE SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY [X]
USING THE ENCLOSED ENVELOPE. VOTES MUST BE INDICATED
(x) IN BLACK OR BLUE INK.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.
FOR AGAINST ABSTAIN
1. To elect four Class II directors to serve 2. To ratify the appointment of [ ] [ ] [ ]
until our 2009 annual meeting of stockholders; Ernst & Young LLP as our
independent registered public
FOR WITHHOLD accounting firm for fiscal year
ALL [ ] FOR ALL [ ] EXCEPTIONS [ ] 2006; and
Nominee Class II: 01 - Christoper Alafi, Ph.D.; 3. In their discretion, the proxies are authorized to vote
02 - Ralph G. Dacey, Jr., M.D.; upon any other business as may properly come before the
03 - Abhijeet J. Lele; meeting.
04 - Robert J. Messey
(INSTRUCTIONS: To withhold authority to vote for any To change your address, please mark this box. [ ]
individual nominee, strike a line through that nominee's name
and check the "Exceptions" box above.) To include any comments, please mark this box. [ ]
---------------------------------------------------------
[ SCAN LINE
---------------------------------------------------------
Please sign exactly as name(s) appear hereon. Joint owners
should each sign personally. When signing as executor,
administrator, corporation officer, attorney, agent,
trustee, guardian or in other representative capacity,
please state your full title as such.
] _________________________________ __________________________
Date Share Owner sign here Co-Owner sign here
--------------------------------------------------------------------------------
STEREOTAXIS, INC
SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING OF
STOCKHOLDERS OF STEREOTAXIS, INC. - MAY 25, 2006
The undersigned hereby appoints Fred A. Middleton, Bevil J. Hogg and
James M. Stolze or any of them, attorneys and proxies, with full power of
substitution and revocation in each, for and on behalf of the undersigned, and
with all the powers the undersigned would possess if personally present, to vote
at the above Annual Meeting to be held at Company's principal offices at 4320
Forest Park Avenue, Suite 100, St. Louis, Missouri 63108 on Thursday, May 25,
2006, commencing at 9:00 a.m. Central time.
This proxy, when properly executed, will be voted as directed by the
stockholder. If no direction is given, when the duly executed proxy is returned,
the shares represented by this proxy will be voted FOR proposals 1 and 2 and, in
the discretion of the proxies, on such other business as may properly come
before the meeting. All in accordance with the Company's proxy statement,
receipt of which is hereby acknowledged.
(Continued, and to be signed and dated, on the reverse side.)
STEREOTAXIS, INC.
P.O. BOX 11200
NEW YORK, N.Y. 10203-0200
APPENDIX
Page 21 of the proxy statement contains a Stock Price Performance Graph.
The information contained within the graph is presented in a tabular format
immediately following the graph.