EX-99.(A).(1).(IV) 5 dex99a1iv.htm SLIDE PRESENTATION EXPLAINING THE EXCHANGE OFFER Slide Presentation explaining the Exchange Offer
2009 Exchange Program for
Stock Options and Stock
Appreciation Rights
Exhibit (a)(1)(iv)


2
Agenda –
2009 Exchange Program for Stock Options
and Stock Appreciation Rights
Reason for Offering
Program Materials
Program Highlights
Eligibility
Option Valuation Basics
Replacement Awards Vesting Details
Election Process


3
Why This Program Is Being Offered
Approximately 84% of employees’
stock options and SAR’s
currently
“underwater”
Opportunity
to
exchange
current
“out
of
the
money”
options
currently
held
by
active
employees
for
“at
the
money”
options
Restore the long-term incentive and retention value that stock
options and SAR’s
were originally intended to provide


4
Program Materials
All information in today’s meetings can be found in one of the following:
Initial e-mail sent August 17, 2009
Offering Memorandum
Program Highlights
Individual Grant Election Forms


5
Program Highlights
Approved by Shareholders at annual meeting in June
Participation is VOLUNTARY
Exchange Eligible Options/SAR Awards for Replacement
Options/SAR Awards
Replacement Awards will cover fewer shares at a lower exercise
price per share than the Eligible Awards for which they are
exchanged
Exchange ratio and pricing of Replacement Awards will be
determined
on
the
closing
day
of
the
exchange
offer
September
14, 2009
Choose
on
a
“grant-by-grant”
basis


6
Program Highlights (continued)
Exchange will be “value for value”
The company will calculate the value of an individual option as
currently structured and compare it to the value of a newly
issued option, with an exercise price equal to the closing price
on the date of offer expiration.
The ratio of the value of a new option to the value of an old
option
will
be
the
exchange
ratio
the
ratio
of
old
options
to
be
surrendered in exchange for the smaller number of new options.
Vesting schedule and expiration date of Replacement Awards may
change, but all other terms of the Awards will remain the same
Exchange intended to be a non-taxable exchange
Tax consequences for employees subject to taxation outside of
the US may differ
We advise all employee to consult their own tax advisors with
respect to the federal, state, local, and non-US tax
consequences of participating in this exchange offer.
NOTE: Stereotaxis will not advise individuals on best course of
action. 


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Eligibility
Eligible Participants:
Active employees with options eligible for exchange on
Exchange Date
Board members, CEO, and CFO are not eligible to participate
Eligible Options:
Fair value of old option must be less than 67% of the value of a
new option, or the exchange ratio must be at least 1.5 old
options turned in for 1 new option.
No option with strike price less than $6.50 will be eligible
Must have been outstanding for more than one year at Exchange
Date


8
Option Valuation Basics
Value of an option is dependent on several factors:
Share price at date of valuation compared to exercise price of
option
Remaining term to expiration of the option
Two items which are more or less constant –
The “risk free interest rate”, and
The volatility of the underlying common stock


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Option Valuation Basics
Impact of variables on valuation
Term to expiration
The longer the time from date of issuance (or for an
outstanding
option
the
valuation
date)
to
expiration
date,
the more valuable the option will be.
Whether the exercise price is “in the money”, “at the money”, or
“out of the money”
The lower the exercise price compared to the share price at
issuance or valuation date, the more valuable the option will
be.
Volatility will be virtually the same for all calculations, because
this is inherent in the historical performance of the company’s
stock in the marketplace
Risk free interest rate, although not identical for all option
valuations, has very little to no impact on the calculation of value
of individual options.


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Option Valuation Basics
Impact of variables on valuation
1 year
1 year
5 years
Time to Expiration
$0.39
$12.00
$6.00
$1.54
$6.00
$6.00
$3.25
$6.00
$6.00
Value of Option
Exercise Price
Share Price
At Issuance/Valuation
Date


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Option Valuation Basics
Option Value as a Function of Time to Expiration and % of Share Price at Grant
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
100%
120%
140%
160%
180%
200%
220%
240%
Strike Price as % of Share Price
1 Year
2 Year
3 Year
4 Year
5 Year


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Option Exchange Program
3.60
Exchange Ratio
2.6
2.6
Term to Expiration
$4.00
$8.00
Exercise Price
278
1,000
Number of Options
$1.37
$0.38
Black-Scholes
Value
$4.00
$4.00
Current Market Price
Replacement Option
Current Option


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Replacement Award Vesting Details
Replacement Awards will have a term equal to the greater of
the remaining term of the surrendered Eligible Awards or one
year and two weeks
Replacement Awards will be subject to an extended vesting
schedule:
Exercisable on the first anniversary of the Exchange Date with
respect to the same percentage of your exchanged Eligible
Awards that would have vested on or prior to such date
Replacement Awards will vest on the same schedule and with
respect to the same percentage amounts as the as the
exchanged Eligible Awards they are replacing.
Vesting is conditioned upon continued employment with STXS
through each applicable vesting date


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Vesting Example
Example 1:  Jane Smith holds a grant of 2,000 Eligible Options granted on September
1, 2007.  1,000 Eligible Options have vested prior to the Exchange Date of September
14, 2009.  The remaining 1,000 Eligible Options vest in equal monthly installments and
will be fully vested on September 1, 2011.  Jane elects to exchange her grant of
Eligible Options for 1,000 Replacement Options (assuming a 2:1 exchange ratio). 
None of her Replacement Options will be vested on September 14, 2009.  750
replacement options will vest on September 14, 2010.  The remaining 250
Replacement Options will vest in equal monthly installments thereafter so that Jane’s
Replacement Options are fully vested on September 1, 2011. The Replacement
Options will expire on August 31, 2017, consistent with the expiration of the Eligible
Options.
8/31/2017
As stated in original
agreement
Options Expiration Date
750 fully vested 9/14/2010,
remaining 250 vest monthly,
fully vested 9/1/2011
Monthly, fully vested
by 6/1/2011
Vesting Schedule on remaining
options
1000
1000
Remaining Options
0
1000
# Options Vested by 9/14/09
9/14/2009
7/1/2007
Grant Date
1000
2000
# Options
Replacement Award
Eligible Award


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Vesting Example
John
Smith
holds
a
grant
of
2,000
Eligible
SARS,
granted
on
July
1,
2005,
all
of
which
are
vested prior to the Exchange Date, September 14, 2009.  John elects to exchange his
grant of Eligible SARS for 1,000 Replacement SARS.  None of his Replacement SARS
will be vested on the Exchange Date.  All 1,000 of his Replacement SARS will vest on
September 14, 2010.  The Replacement SARS will expire on September 28, 2010, which
is one year and two weeks after the Exchange Date.
9/28/2010
As stated in original
agreement
SARs
Expiration Date
1000 fully vested 9/14/2010
N/A
Vesting Schedule on remaining SARs
1000
0
Remaining SARs
0
2000
# SARs
Vested by 9/14/09
9/14/2009
7/1/2005
Grant Date
1000
2000
# SARs
Replacement Award
Eligible Award


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Election Process
Individual election forms include a table reflecting exchange ratios and
replacement options at a variety of closing market prices.  These are
estimates only and actual exchange ratios will be determined on
September
14
th
.
Complete
and
submit
election
forms
to
Sarah
Kamp
by
11:59
pm
CDT
on
September
14,
2009
(unless
extended
by
the
Company):
hand delivered to Sarah Kamp at 4320 Forest Park Avenue, Suite
100, St. Louis, Missouri 63108;
faxed to: (314) 678-6119, Attention:  Sarah Kamp; or
scanned
and
e-mailed
to:
sarah.kamp@stereotaxis.com
Interoffice and US Mail not acceptable
Can select grant by grant, however, you may not select partial grants
Eligible awards not exchanged will retain existing terms
If election form is not received by stated deadline, all awards currently
held by you will remain unchanged and retain existing terms.


3
3


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Withdraw/Change Election
Withdraw or change election at any time prior to the
deadline
Must submit a replacement Election Form in the
same manner (check the box at the bottom to
indicate replacement)
Same deadline applies


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Questions?