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TECHNOLOGY ACQUISITION AND FUNDING AGREEMENT

THIS AGREEMENT is dated for reference as of the 22 day of March, 2004.

BETWEEN:

> > > > TSI MEDICAL CORP.
> > > > a Nevada corporation
> > > > ("TSI")

OF THE FIRST PART

AND:

> > > > EXELAR CORPORATION,
> > > > a Delaware corporation
> > > > ("Exelar")

OF THE SECOND PART

AND:

> > > > EXELAR MEDICAL CORPORATION
> > > > a Nevada corporation
> > > > ("OPCO")

OF THE THIRD PART

WHEREAS:

A.                Exelar has acquired and developed a technology utilizing
super-conducting magnets to control therapeutic radiation doses delivered by
photon linear accelerators (the "Technology").

B.                TSI is desirous of participating in the development and
commercialization of the Technology by funding the acquisition and development
of the Technology.

C.                Exelar and TSI have caused OPCO to be incorporated for the
purposes of completing the development and commercialization of the Technology.

THE PARTIES HEREBY AGREE AS FOLLOWS:

ARTICLE 1.
DEFINITIONS

1.1   The following terms will have the following meanings for all purposes of
this Agreement.         (a)     
"Agreement" shall mean this Agreement and all schedules and amendments to this
Agreement;
        (b)     
"Apparatus" means an apparatus for control of therapeutic radiation doses using
superconducting magnets described in the Patents and that incorporates any of
the Patents, the Know- how and/or the Intellectual Property;

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  (c)     
"Closing" means the closing of the Transactions described in paragraphs 2.2 and
3.1(a);
    (d)     
"Closing Date" means the 5th business day following the execution of this
Agreement;
    (e)     
"Closing Documents" means the documents to be executed and/ or delivered by each
respective party on Closing;
    (f)     
"Common Stock" means the common stock of OPCO, par value $0.001 per share;
    (g)     
"Employment Agreement" means the agreement attached hereto as Schedule F;
    (h)     
"Improvement" means any modification or variant of the Apparatus and the
Invention, whether patentable or not, which, if manufactured, used, or sold,
would fall within the scope of the Apparatus, the Invention or at least one
claim of at least one of the Patents;
    (i)     
"Intellectual Property" means all copyrights, patent rights, trade secret
rights, trade names, trademark rights, process information, technical
information, designs, drawings, inventions and all other intellectual and
industrial property rights of any sort related to or associated with Invention
and the Apparatus;
    (j)     
"Invention" means the invention described in the Patents and embodied in the
Apparatus";
    (k)     
"Inventor" means Len Reiffel.
    (l)     
"Know- how" means all know- how, knowledge, expertise, inventions, works of
authorship, prototypes, technology, information, know- how, materials and tools
relating thereto or to the design, development, manufacture, use and commercial
application of the Invention and the Apparatus;
    (m)     
"Patents" means the Patents, patent applications and foreign patent applications
described in Schedule A and any other patent that may be issued in connection
with the Invention or the Apparatus or any Improvement;
    (n)     
"Promissory Note" means the Secured Promissory Note to be issued to the Inventor
under the Technology Transfer Agreement
    (o)     
"Shareholders Agreement" means a unanimous shareholders agreement to be entered
into between TSI and Exelar in the form attached hereto as Schedule D;
    (p)     
"Technology" means the Apparatus, the Invention, the Patents, the Know- How and
the Intellectual Property;
    (q)     
Technology Transfer Agreement" means the agreement among OPCO, Exelar and the
Inventor attached hereto as Schedule C;

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1.2   The following schedules are attached to and form part of this Agreement:

    Schedule A  Description of Patents              Schedule B  Intentionally
Deleted              Schedule C  Technology Transfer Agreement             
Schedule D  Shareholders Agreement              Schedule E  Budget             
Schedule F  Employment Agreement          1.3   All dollar amounts referred to
in this agreement are in United States funds, unless expressly stated otherwise.

ARTICLE 2.
PURCHASE AND SALE OF TECHNOLOGY

2.1                                    Exelar has contributed, assigned and
transferred the Technology to OPCO in exchange for and in consideration for OPCO
assuming Exelar's obligations under the Promissory Note and Technology Transfer
Agreement and the issuance to Exelar of 2,280,000 shares of OPCO's common stock,
par value $0.001.

2.2                                    Exelar and OPCO will enter into, and
Exelar will cause the Inventor to enter into, the Technology Transfer Agreement
at closing.

ARTICLE 3.
FUNDING BY TSI

3.1                                    TSI agrees to provide cash in same day
funds of U.S. Dollars to OPCO as follows:

 
(a)     
$325,000 (the "Initial Funding") at Closing;
   
(b)     
a further $4,425,000 (the "Post Closing Funding") in tranches as follows:
     
(i)     
$575,000 on or before the date that is 90 days following closing;      
(ii)     
$1,550,000 on or before the date that is 180 days following closing;      
(iii)     
$1,000,000 on or before the date that is 270 days following closing; and      
(iv)     
$1,300,000 on or before the date that is 360 days following closing.      
Any payments made by TSI to Exelar under the Promissory Note, whether to pay the
obligations thereunder or cure defaults thereunder, shall be credited against
TSI's Post - Closing Funding obligations.
  3.2     

Subject to section 12 hereof, TSI shall be issued one common share of OPCO for
each $2.00 of funding forthwith upon receipt of each tranche of funding.
  3.3     

Notwithstanding the dates set forth in section 3.1(b) above, OPCO may request
such dates to be accelerated, upon 10 days written notice to TSI, if OPCO
provides written affirmation that it has specific uses for such funds which are
consistent with the overall

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purposes and uses of those funds in the future, provided that TSI shall not be
obligated to so accelerate. purposes and uses of those funds in the future,
provided that TSI shall not be obligated to so accelerate. v

ARTICLE 4.
EXPENDITURE OF TSI FUNDING

               4.1                      OPCO agrees to expend the funds provided
by TSI substantially in accordance with the budget attached as Schedule E to
this Agreement (the "Budget"), with the understanding that changes may need to
be made based on unexpected events and based on the evolution of the
commercialization process. Nothing contained herein shall in any event change
the payment schedule of the Promissory Note unless agreed to in writing by TSI
and Exelar.

               4.2                      The board of directors of OPCO may make
changes to the Budget as they deem necessary to the proper development and
commercialization of the Technology provided that no changes shall be made that
would prevent OPCO from being able to make payment of the Promissory Note when
such notes are due.

ARTICLE 5.
TSI ADDITIONAL FUNDING OPTION

               5.1                       In the event that, following completion
of the entire amounts contemplated by the Post-Closing Funding by TSI, the Board
(as defined in the Shareholders Agreement) determines that additional funding is
required to complete the development and commercialization of the Technology,
TSI shall have the option to provide an additional $1,500,000 of funding (the
TSI Additional Funding") in consideration of the issuance to TSI of such number
of common shares of OPCO as shall, after their issuance, when aggregated with
the shares of OPCO previously acquired by TSI, result in TSI holding 60% of the
issued and outstanding shares of OPCO. It is understood that the 60% figure
assumes that there has been no future issuances of common stock, or instruments
convertible into stock (such as warrants or options). The right to infuse the
TSI Additional Funding shall expire two (2) years from the initial closing. If
the Board determines that all or a portion of such TSI Additional Funding is
needed, but determines that such TSI Additional Funding may be obtained from
other source(s) more expeditiously and/or at a lower cost, the Board need not
extend such option to TSI.

               5.2                      TSI shall provide the TSI Additional
Funding within 30 days following receipt of notice from OPCO that its board of
directors have determined that the funding is required from TSI. or else the
provisions of section 5.1 shall be terminated, null and void

ARTICLE 6.
EXELAR OPTION

               6.1                      Upon the first to occur of (a) the
completion of the Post-Closing Funding by TSI, (b) a default by TSI in making
any investment of Post-Closing Funding, (c) March 1, 2005 or (d) the initial
public offering of shares of TSI or any subsidiary thereof (an "IPO"), and prior
to any TSI Additional Funding, Exelar shall have the option, exercisable by
written notice to TSI, to convert up to 100% of its shares of OPCO into such
number of common shares or shares convertible into common shares of TSI as
shall, after their issuance, represent 49% (the "Conversion Percentage") of the
number of issued and outstanding common shares and shares, options and other
debt and equity instruments convertible into common shares of TSI then
outstanding on a fully-diluted basis (the "Exelar Put Option").

               6.2                      In the event that Exelar exercises the
Exelar Put Option and at the time of such exercise TSI shall have any options or
warrants outstanding, Exelar shall be entitled to be issued options and warrants
exercisable at the same price and on the same terms as the outstanding options
and warrants such that, assuming all outstanding warrants and options were
exercised, would result in Exelar and its directors, officers and shareholders
maintaining its 49% interest in the outstanding common shares of TSI.

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               6.3                      In the event that TSI (and its
affiliates on a consolidated basis even if such affiliates are not actually
consolidated) shall have current assets exceeding its current and long-term
liabilities (as well as reasonable estimate of liabilities which are not
recorded on the balance sheet of TSI) at the time Exelar exercises the Exelar
Put Option, TSI will have the Option to distribute such excess to its existing
securities holders prior to the issuance of its securities to Exelar. In the
event that the difference in the preceding sentence is a negative number, then
the Conversion Percentage shall be increased by 1% for every $43,750 which is
negative (pro rated for partial percentages).

               6.4                      Prior to the exercise of the Exelar Put
Option, (a) TSI shall make no dividends, distributions, spin-offs, split-offs or
other sale, transfer or assignment of its stock in Techniscan Medical Systems,
Inc. except that it may pledge the shares of Techniscan Medical Systems, Inc. in
exchange for cash which will be used in part to fund the Purchase Price, (b)
Exelar and its representatives and agents shall have the right to conduct a
normal and complete due diligence of TSI and its subsidiaries and affiliates to
fully and comprehensively understand TSI's business, assets, liabilities,
financial condition and prospects and TSI shall provide normal and customary
representations and warranties regarding TSI, its subsidiaries and affiliates
and such information and (c) TSI shall keep Exelar informed regarding TSI's
fundraising efforts and status, will give Exelar access to TSI and affiliates
books and records, shareholder lists, financial statements and results of
operations on a periodic basis, in a reasonable manner and so as not to be
unduly burdensome or disruptive.

ARTICLE 7.
REPRESENTATIONS AND WARRANTIES OF EXELAR

Exelar represents and warrants to OPCO and TSI and acknowledges that OPCO and
TSI are relying upon such representations and warranties in connection with the
execution, delivery and performance of this Agreement.

               7.1                      Organization and Good Standing. Exelar
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware.

               7.2                      Authority. Exelar has all requisite
corporate power and authority to execute and deliver this Agreement and any
other Closing Documents to be signed by it, to perform its obligations under
this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and any other Closing
Documents by Exelar and the consummation by Exelar of the transactions
contemplated by this Agreement and any other Closing Documents have been duly
authorized by its board of directors and no other corporate or shareholder
proceedings on the part of Exelar are necessary to authorize such documents or
to consummate the transactions contemplated thereby. This Agreement has been,
and the Closing Documents when executed and delivered by Exelar as contemplated
by this Agreement will be, duly executed and delivered by Exelar. This Agreement
is and the Closing Documents will be valid and binding obligations of Exelar
enforceable in accordance with their respective terms, except (1) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally, and
(2) as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies.

               7.3                      Noncontravention. Neither the execution,
delivery and performance of this Agreement or the Closing Documents, nor the
consummation of the transactions contemplated by this Agreement, will:

              (1)                      Conflict with, result in a violation of,
cause a default under (with or without notice, lapse of time or both) or give
rise to a right of termination, amendment, cancellation or acceleration under
any agreement to which Exelar is a party or by which the Technology are bound
except for its obligations under that certain Subagreement No.
2000-106800-Exelar-Reiffel by and between National Medical Technology Testbed
Inc. and Exelar (the "NMTB Agreement");

              (2)                      Violate any provision of the articles of
incorporation or by-laws of Exelar; or

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              (3)                      Violate any order, writ, injunction,
decree, statute, rule, or regulation of any court or governmental or regulatory
authority applicable to Exelar or any of its respective property or assets.

               7.4                      Actions and Proceedings. There is no
claim, charge, arbitration, grievance, action, suit, investigation or proceeding
by or before any court, arbiter, administrative agency or other governmental
authority now pending or, to the best knowledge of Exelar, threatened against
Exelar which involves the Technology.

               7.5                      Compliance. Exelar is in compliance
with, is not in default or violation in any material respect under, and has not
been charged with or received any notice at any time of any material violation
by it of, any statute, law, ordinance, regulation, rule, decree or other
regulation applicable to the business or operations of Exelar.

               7.6                      Filings, Consents and Approvals. No
filing or registration with, no notice to and no permit, authorization, consent,
or approval of any public or governmental body or authority or other person or
entity is necessary for the consummation by Exelar of the transactions
contemplated by this Agreement and the Closing Documents.

               7.7                      Property. Exelar is the beneficial owner
of the Technology free and clear of any liens, charges or encumbrances and no
other person has any interest in the Technology except for the rights of the
Inventor under the Promissory Note.

               7.8                      Exelar understands that all shares of
OPCO's common stock issued by OPCO and any shares that may be issued of TSI
under paragraph 6.2 pursuant to this Agreement (the "Shares") will be governed
by the following:

    (1)     
All Shares will be issued as "restricted shares", as contemplated by the
Securities Act of 1933 (the "1933 Act"). Exelar acknowledges and agrees that the
Shares have not been registered under the 1933 Act or applicable state "Blue
Sky" laws and, therefore, the Shares may not be resold, transferred or
hypothecated without the registration of the Shares, or an opinion of counsel
satisfactory to OPCO to the effect that such registration is not necessary;
      (2)     
All certificates representing the Shares will be endorsed with the following
legend:
       
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT"), AND HAVE BEEN OFFERED AND SOLD IN
RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT. SUCH
SECURITIES MAY NOT BE OFFERED FOR SALE, TRANSFERRED, PLEDGED OR RESOLD OR
OTHERWISE TRANSFERRED UNLESS THEY ARE REGISTERED UNDER THE APPLICABLE PROVISIONS
OF THE ACT OR ARE EXEMPT FROM SUCH REGISTRATION REQUIREMENTS." ;
      (3)     
All Shares will be issued to Exelar based on the representations and warranties
of Exelar that:
       
(i)     
Exelar has not offered or sold the Shares within the meaning of the 1933 Act;
       
(ii)     
Exelar is acquiring the Shares for its own account for investment, with no
present intention of dividing any interest with others or of reselling or
otherwise disposing of all or any portion of the same;

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      (iii) 
Exelar does not intend any sale of the Shares either currently or after the
passage of a fixed or determinable period of time or upon the occurrence or
non-occurrence of any predetermined event or circumstance;
                (iv) 
Exelar has no present or contemplated agreement, undertaking, arrangement,
obligation, indebtedness or commitment providing for or which is likely to
compel a disposition of the Shares;
                (r) 
Exelar is not aware of any circumstances presently in existence which are likely
in the future to prompt a disposition of the Shares;
                (vi) 
The Shares were offered to Exelar in direct communication and not through any
advertisement of any kind;
                (vii) 
Exelar has the financial means to bear the economic risk of an investment in the
Shares.

ARTICLE 8.
REPRESENTATIONS AND WARRANTIES OF TSI

TSI represents and warrants to Exelar and OPCO and acknowledges that Exelar and
OPCO are relying upon such representations and warranties in connection with the
execution, delivery and performance of this Agreement.

               8.1                      Organization and Good Standing. TSI is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada.

               8.2                      Authority. TSI has all requisite
corporate power and authority to execute and deliver this Agreement and any
other Closing Documents to be signed by it, to perform its obligations under
this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and any other Closing
Documents by TSI and the consummation by TSI of the transactions contemplated by
this Agreement and any other Closing Documents have been duly authorized by its
board of directors and no other corporate or shareholder proceedings on the part
of TSI are necessary to authorize such documents or to consummate the
Transaction or the transactions contemplated thereby. This Agreement has been,
and the Closing Documents when executed and delivered by TSI as contemplated by
this Agreement will be, duly executed and delivered by TSI. This Agreement is
and the Closing Documents will be valid and binding obligations of TSI
enforceable in accordance with their respective terms, except (1) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally, and
(2) as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies. Neither TSI has nor any of its
shareholders are parties to any shareholder agreement, voting trust agreement,
voting agreement, proxy, or similar agreement regarding the voting of any shares
of TSI or any affiliate thereof and shall not enter into any such agreement
without Exelar's prior written approval.

               8.3                      Noncontravention. Neither the execution,
delivery and performance of this Agreement or the Closing Documents, nor the
consummation of the Transaction, will:

               (1)                      Conflict with, result in a violation of,
cause a default under (with or without notice, lapse of time or both) or give
rise to a right of termination, amendment, cancellation or acceleration under
any agreement to which TSI is a party or by which its assets or properties are
bound;

               (2)                      Violate any provision of the articles of
incorporation or by-laws of TSI; or

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               (3)                      Violate any order, writ, injunction,
decree, statute, rule, or regulation of any court or governmental or regulatory
authority applicable to TSI or any of its respective property or assets.

               8.4                      Actions and Proceedings. There is no
claim, charge, arbitration, grievance, action, suit, investigation or proceeding
by or before any court, arbiter, administrative agency or other governmental
authority now pending or, to the best knowledge of TSI, threatened against TSI
which involves the Technology or its ability to provide the funding contemplated
herein. TSI believes in good faith that it has access to the financing to timely
fulfill its obligations under Article 3 hereof. TSI will use its best efforts to
obtain the financing contemplated herein although it makes no guarantee that
such financing will be obtained.

               8.5                      Compliance. TSI is in compliance with,
is not in default or violation in any material respect under, and has not been
charged with or received any notice at any time of any material violation by it
of, any statute, law, ordinance, regulation, rule, decree or other regulation
applicable to the business or operations of TSI. TSI and its affiliates and
agents have complied with all Canadian, U.S. and state laws, rules and
regulations in selling securities in TSI and raising funds which will be
invested in OPCO pursuant to this Agreement.

               8.6                      Filings, Consents and Approvals. No
filing or registration with, no notice to and no permit, authorization, consent,
or approval of any public or governmental body or authority or other person or
entity is necessary for the consummation by TSI of the transactions contemplated
by this Agreement and the Closing Documents.

               8.7                      TSI acknowledges that all shares of
OPCO's common stock issued by OPCO pursuant to this Agreement (the "Shares")
will be governed by the following:

    (1)     
All Shares will be issued as "restricted shares", as contemplated by the
Securities Act of 1933 (the "1933 Act"). Exelar acknowledges and agrees that the
Shares have not been registered under the 1933 Act or applicable state "Blue
Sky" laws and, therefore, the Shares may not be resold, transferred or
hypothecated without the registration of the Shares, or an opinion of counsel
satisfactory to OPCO to the effect that such registration is not necessary;
      (2)     
All certificates representing the Shares will be endorsed with the following
legend:
       
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT"), AND HAVE BEEN OFFERED AND SOLD IN
RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT. SUCH
SECURITIES MAY NOT BE OFFERED FOR SALE, TRANSFERRED, PLEDGED OR RESOLD OR
OTHERWISE TRANSFERRED UNLESS THEY ARE REGISTERED UNDER THE APPLICABLE PROVISIONS
OF THE ACT OR ARE EXEMPT FROM SUCH REGISTRATION REQUIREMENTS.";
      (3)     
All Shares will be issued to TSI based on the representations and warranties of
Exelar that:
       
(i)     
TSI has not offered or sold the Shares within the meaning of the 1933 Act;
       
(ii)     
TSI is acquiring the Shares for its own account for investment, with no present
intention of dividing any interest with others or of reselling or otherwise
disposing of all or any portion of the same;

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      (i) 
TSI does not intend any sale of the Shares either currently or after the passage
of a fixed or determinable period of time or upon the occurrence or non-
occurrence of any predetermined event or circumstance;
                (ii) 
TSI has no present or contemplated agreement, undertaking, arrangement,
obligation, indebtedness or commitment providing for or which is likely to
compel a disposition of the Shares;
                (b) 
TSI is not aware of any circumstances presently in existence which are likely in
the future to prompt a disposition of the Shares;
                (vii) 
The Shares were offered to TSI in direct communication and not through any
advertisement of any kind;
                (vii) 
TSI has the financial means to bear the economic risk of an investment in the
Shares.

ARTICLE 9.
REPRESENTATIONS AND WARRANTIES OF OPCO

As of the date hereof, OPCO represents and warrants to the Investor and
acknowledges that the Investor is relying upon such representations and
warranties in connection with the execution, delivery and performance of this
Agreement.

               9.1                      Organization and Good Standing. OPCO is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada contemplated by this Agreement.

               9.2                      Authority. OPCO has all requisite
corporate power and authority to execute and deliver this Agreement and any
other Closing Documents to be signed by it, to perform its obligations under
this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and any other Closing
Documents by OPCO and the consummation by OPCO of the transactions contemplated
by this Agreement and any other Closing Documents have been duly authorized by
its board of directors and no other corporate or shareholder proceedings on the
part of OPCO are necessary to authorize such documents or to consummate the
transactions contemplated thereby. This Agreement has been, and the Closing
Documents when executed and delivered by OPCO as contemplated by this Agreement
will be, duly executed and delivered by OPCO. This Agreement is and the Closing
Documents will be valid and binding obligations of OPCO enforceable in
accordance with their respective terms, except (1) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally, and (2) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies.

                9.3                      Capitalization of OPCO. The entire
authorized capital stock of OPCO consists of 100,000,000 shares of Common Stock,
of which no shares are issued and outstanding. Except for this Agreement and the
Shareholders Agreement, there are no outstanding options, warrants,
subscriptions, conversion rights, or other rights, agreements, or commitments
obligating OPCO to issue any additional shares of the Common Stock, or any other
securities convertible into, exchangeable for, or evidencing the right to
subscribe for or acquire from OPCO any shares of Common Stock. There are no
agreements other than the Shareholders Agreement purporting to restrict the
transfer of the Common Stock or affecting the voting of the outstanding shares
of Common Stock.

               9.4                      Valid Issuance of Purchased Securities.
The Shares to be issued as contemplated by this Agreement, when issued, sold,
paid for and delivered in accordance with the terms of this Agreement, will be
duly and validly issued, fully paid and nonassessable and will be free from
restrictions on transfer other than restrictions on transfer under this
Agreement and the Shareholders Agreement and under applicable state and federal
securities laws.

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               9.5                      Subsidiaries. OPCO does not have any
subsidiaries as of the date hereof.

               9.6                      Noncontravention. Neither the execution,
delivery and performance of this Agreement or the Closing Documents, nor the
consummation of the Transaction, will:

               (1)                      Conflict with, result in a violation of,
cause a default under (with or without notice, lapse of time or both) or give
rise to a right of termination, amendment, cancellation or acceleration under
any agreement to which OPCO is a party or by which its assets or properties are
bound;

               (2)                      Violate any provision of the articles of
incorporation or by-laws of OPCO; or

               (3)                      Violate any order, writ, injunction,
decree, statute, rule, or regulation of any court or governmental or regulatory
authority applicable to OPCO or any of its respective property or assets.

               9.7                      Actions and Proceedings. There is no
claim, charge, arbitration, grievance, action, suit, investigation or proceeding
by or before any court, arbiter, administrative agency or other governmental
authority now pending or, to the best knowledge of OPCO, threatened against
OPCO.

               9.8                      Compliance. OPCO is in compliance with,
is not in default or violation in any material respect under, and has not been
charged with or received any notice at any time of any material violation by it
of, any statute, law, ordinance, regulation, rule, decree or other regulation
applicable to the business or operations of OPCO.

               9.9                      Filings, Consents and Approvals. No
filing or registration with, no notice to and no permit, authorization, consent,
or approval of any public or governmental body or authority or other person or
entity is necessary for the consummation by OPCO of the transactions
contemplated by this Agreement and the Closing Documents except under the NMTB
Agreement.

               9.10                     Real Property. OPCO does not own any
real property.

               9.11                      Material Assets & Liabilities. OPCO
does not have and will not have at Closing any material assets or liabilities
other than those to be acquired by it under this Agreement and the other Closing
Documents.

               9.12                      No Brokers. OPCO has not incurred any
obligation or liability to any party for any brokerage fees, agent's
commissions, or finder's fees in connection with the transactions contemplated
by this Agreement.

               9.13                      Minute Books. The minute books of OPCO
contain a complete summary of all meetings of directors and shareholders since
the time of incorporation of such entity and reflect all transactions referred
to in such minutes accurately in all material respects.

               9.14                      Completeness of Disclosure. No
representation or warranty by OPCO in this Agreement nor any certificate,
schedule, statement, document or instrument furnished or to be furnished
pursuant hereto contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact required to be stated herein or
therein or necessary to make any statement herein or therein not materially
misleading.

ARTICLE 10.
CLOSING CONDITIONS

               10.1                      Conditions Precedent to Closing by
Exelar. The obligation of Exelar to consummate the transactions contemplated by
this Agreement is subject to the satisfaction of the conditions set forth below
in favour of Exelar, unless any such condition is waived by Exelar at the
Closing.

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                              (a)                       Representations and
Warranties. The representations and warranties of OPCO and TSI set forth in this
Agreement will be true, correct and complete in all material respects as of the
Closing Date, as though made on and as of the Closing Date.

                              (b)                        Performance. All of the
covenants and obligations that OPCO and TSI are required to perform or to comply
with pursuant to this Agreement at or prior to the Closing must have been
performed and complied with in all material respects. OPCO and TSI must have
delivered each of the documents required to be delivered by OPCO and TSI
pursuant to this Agreement.

                              (c)                       Closing Documents. This
Agreement and all Closing Documents to be executed by OPCO and TSI, as necessary
or reasonably required to consummate the transactions contemplated by this
Agreement in accordance with this Agreement, will have been executed and
delivered to Exelar.

                              (d)                      Amendment to the NMTB
Agreement. The NMTB Agreement shall have been amended to provide that NMTB:

                              (i)                      has no further rights
under the NMTB Agreement including without limitation any rights to the T
echnology, or to any equity in Exelar or OPCO, or to any royalties or rights to
receive any fees, royalties, costs or expenses from Exelar or OPCO except as set
froth in clauses (ii) and (iii) below;

                              (ii)                      OPCO shall pay NMTB the
sum of $100,000 on or before the date that is ninety (90) days following the
Closing; and

                              (iii)                    OPCO shall pay a royalty
(the "Royalty") to NMTB equal to 3.5% of OPCO's Net Sales (as defined) from
sales or licenses of any products (the "Products") sold or licensed by OPCO
which Products have been directly made, used or sold as a result of the
Technology. Notwithstanding the foregoing, the aggregate Royalty shall not
exceed $1 million and all obligations hereunder shall terminate and be null and
void when and if such sum has been received by NMTB or its successor or assigns.
The Royalty shall be paid quarterly within 45 days after the end of the
preceding calendar quarter. "Net Sales" shall mean gross sales from the Products
less returns, allowances, shipping and handling, insurance, sales and related
taxes, and similar deductions.

               10.2                      Conditions Precedent to Closing by TSI.
The obligation of TSI to consummate the transactions contemplated by this
Agreement is subject to the satisfaction of the conditions set forth below in
favour of TSI, unless any such condition is waived by TSI at the Closing.

                              (a)                       Representations and
Warranties. The representations and warranties of Exelar and OPCO set forth in
this Agreement will be true, correct and complete in all material respects as of
the Closing Date, as though made on and as of the Closing Date.

                              (b)                      Performance. All of the
covenants and obligations that Exelar and OPCO are required to perform or to
comply with pursuant to this Agreement at or prior to the Closing must have been
performed and complied with in all material respects. Exelar and OPCO must have
delivered each of the documents required to be delivered by Exelar and OPCO
pursuant to this Agreement

                              (c)                      Closing Documents. This
Agreement and all Closing Documents to be executed by Exelar, OPCO and the
Inventor, as necessary or reasonably required to consummate the transactions
contemplated by this Agreement in accordance with this Agreement, will have been
executed and delivered to TSI.

                              (d)                      Amendment to the NMTB
Agreement. The NMTB Agreement shall have been amended to provide that NMTB:

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                              (i)                      has no further rights
under the NMTB Agreement including without limitation any rights to the
Technology, or to any equity in Exelar or OPCO, or to any royalties or rights to
receive any fees, royalties, costs or expenses from Exelar or OPCO except as set
froth in clauses (ii) and (iii) below;

                              (ii)                     OPCO shall pay NMTB the
sum of $100,000 on or before the date that is ninety (90) days following the
Closing; and

                              (iii)                     OPCO shall pay a royalty
(the "Royalty") to NMTB equal to 3.5% of OPCO's Net Sales (as defined) from
sales or licenses of any products (the "Products") sold or licensed by OPCO
which Products have been directly made, used or sold as a result of the
Technology. Notwithstanding the foregoing, the aggregate Royalty shall not
exceed $1 million and all obligations hereunder shall terminate and be null and
void when and if such sum has been received by NMTB or its successor or assigns.
The Royalty shall be paid quarterly within 45 days after the end of the
preceding calendar quarter. "Net Sales" shall mean gross sales from the Products
less returns, allowances, shipping and handling, insurance, sales and related
taxes, and similar deductions.

               10.3                      Conditions Precedent to Closing by
OPCO. The obligation of OPCO to consummate the transactions contemplated by this
Agreement is subject to the satisfaction of the conditions set forth below in
favour of OPCO, unless any such condition is waived by OPCO at the Closing.

                              (a)                      Representations and
Warranties. The representations and warranties of Exelar and TSI set forth in
this Agreement will be true, correct and complete in all material respects as of
the Closing Date, as though made on and as of the Closing Date.

                              (b)                      Performance. All of the
covenants and obligations that Exelar and TSI are required to perform or to
comply with pursuant to this Agreement at or prior to the Closing must have been
performed and complied with in all material respects. Exelar and TSI must have
delivered each of the documents required to be delivered by Exelar and TSI
pursuant to this Agreement

                              (c)                      Closing Documents. This
Agreement and all Closing Documents to be executed by Exelar, TSI and the
Inventor, as necessary or reasonably required to consummate the transactions
contemplated by this Agreement in accordance with this Agreement, will have been
executed and delivered to OPCO.

ARTICLE 11.
CLOSING

               11.1                      Closing. The Closing shall take place
on the Closing Date at the offices of OPCO or at such other location as agreed
to by the parties (or by fax, mail or other means). Notwithstanding the location
of the Closing, each party agrees that the Closing may completed by the exchange
of undertakings between the respective legal counsel for Exelar and TSI,
provided such undertakings are satisfactory to each party's respective legal
counsel.

               11.2                      Closing Deliveries of Exelar. At
Closing, Exelar will deliver or cause to be delivered the following, fully
executed and in form and substance reasonably satisfactory to TSI and OPCO:

  (a)     
copies of all resolutions and/or consent actions adopted by or on behalf of the
boards of directors of Exelar evidencing approval of this Agreement, the
transactions contemplated by this Agreement, the Technology Transfer Agreement
and the Shareholders Agreement;
        (b)     
a certificate of an officer of Exelar, dated as of Closing, certifying that (i)
each covenant and obligation of Exelar has been complied with in all material
respects; and (ii) each representation, warranty and covenant of Exelar is true
and correct in all material respects at the Closing as if made on and as of the
Closing;

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  (c)     
the Shareholders Agreement, executed by Exelar;
    (d)     
the Technology Transfer Agreement executed by the Inventor and Exelar;
    (e)     
the opinion of legal counsel to Exelar as to the due authorization, execution,
delivery and enforceability of this Agreement and the other Closing Documents;
    (f)     
the Employment Agreement executed by Len Reiffel;

               11.3                      Closing Deliveries of TSI. At Closing,
TSI will deliver or cause to be delivered to OPCO & Exelar the following, fully
executed and in form and substance reasonably satisfactory to OPCO & Exelar:

  (a)     
copies of all resolutions and/or consent actions adopted by or on behalf of the
boards of directors of TSI evidencing approval of this Agreement, the
transactions contemplated by this Agreement, the Technology Transfer Agreement
and the Shareholders Agreement;
    (b)     
a certificate of an officer of TSI, dated as of Closing, certifying that (i)
each covenant and obligation of TSI has been complied with; and (ii) each
representation, warranty and covenant of TSI is true and correct in all material
respects at the Closing as if made on and as of the Closing;
    (c)     
the Shareholders Agreement, executed by TSI;
    (d)     
the opinion of legal counsel to TSI as to the due authorization, execution,
delivery and enforceability of this Agreement and the other Closing Documents;
and
    (e)     
a check payable to OPCO for the Initial Funding.

               11.3                      Closing Deliveries of OPCO. At Closing,
OPCO will deliver or cause to be delivered to TSI, Exelar, and the Inventor the
following, fully executed and in form and substance reasonably satisfactory to
TSI, Exelar, and the Inventor:

  (a)     
copies of all resolutions and/or consent actions adopted by or on behalf of the
boards of directors of OPCO evidencing approval of this Agreement, the
transactions contemplated by this Agreement, the Technology Transfer Agreement
and the Shareholders Agreement;
    (b)     
a certificate of an officer of OPCO, dated as of Closing, certifying that (i)
each covenant and obligation of OPCO has been complied with in all material
respects; and (ii) each representation, warranty and covenant of OPCO is true
and correct in all material respects at the Closing as if made on and as of the
Closing;
    (c)     
the Shareholders Agreement, executed by OPCO;
    (d)     
the opinion of legal counsel to OPCO as to the due authorization, execution,
delivery and enforceability of this Agreement and the other Closing Documents;
    (e)     
the Promissory Note in favour of the Inventor;
    (f)     
the Share Certificates for the shares to be issued to Exelar under the
Technology Transfer Agreement; and
    (g)     
the Share Certificates for the shares to be issued to TSI in respect of the
Initial Funding.

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ARTICLE 12.
TSI DEFAULT

               12.1                      TSI shall provide written notice to
Exelar and OPCO at least 30 days prior to a Post-Closing Funding date, that TSI
believes that it is likely to be in default on such payment date and the
approximate number of days it expects to be in default. In the event that TSI
shall fail to provide any of the Post-Closing Funding in a timely manner as
contemplated by paragraph 3.2, Exelar shall have the option to provide a notice
of default to TSI.

               12.2                      In the event that TSI shall not cure
any default within 20 days of receipt by TSI of a notice of default in
accordance with paragraph 12.1 above, unless OPCO and Exelar shall otherwise
agree in writing, TSI shall forfeit its rights to provide any further funding
and acquire any additional shares of OPCO under this Agreement. In addition,
Exelar may elect one or more of the following remedies: (a) Exelar may cause
OPCO to reclassify all shares of common stock of OPCO owned by TSI and its
transferees into non-voting shares (and TSI will cooperate with Exelar and vote
in accordance with Exelar's request to amend OPCO's articles of incorporation to
provide for such non-voting shares), (b) in the event of a default under
sections 3.1(b)(i) or (ii) hereof, OPCO may issue new shares to Exelar at no
cost in an amount to bring Exelar to a percentage ownership of the common shares
of OPCO equal to the percentage ownership in OPCO which Exelar would have owned
had the price per share set forth in section 3.2 hereof been $3 per share
instead of $2, (c) in the event of a default under sections 3.1(b)(iii) or (iv)
hereof, OPCO may issue new shares to Exelar at no cost in an amount to bring
Exelar to a percentage ownership of the common shares of OPCO equal to the
percentage ownership in OPCO which Exelar would have owned had the price per
share set forth in section 3.2 hereof been $2.50 per share instead of $2 and (d)
all TSI designees to the Board of Directors of OPCO (and all subsidiaries
thereof) shall be removed and replaced with designees by Exelar,.

               12.3                      In the event that TSI's rights to
provide funding are terminated or Exelar avails itself of any of the remedies as
set out in paragraph 12.2 above, the Shareholders Agreement shall, upon Exelar's
written notice, terminate (except for section 15 thereunder with respect to TSI)
and TSI's rights in respect of OPCO shall be limited to those afforded minority
shareholders by law.

ARTICLE 13.
TERMINATION

               13.1                      Termination. This Agreement may be
terminated at any time prior to the Closing by:

               (a)                      Mutual written agreement of TSI and
Exelar;

               (b)                      Exelar, if there has been a breach by
TSI or OPCO of any material representation, warranty, covenant or agreement set
forth in this Agreement on the part of TSI or OPCO that is not cured, to the
reasonable satisfaction of Exelar, within five business days after notice of
such breach is given by Exelar (except that no cure period will be provided for
a breach by the Company that by its nature cannot be cured);

               (c)                      TSI, if there has been a breach by
Exelar or OPCO of any material representation, warranty, covenant or agreement
set forth in this Agreement on the part of Exelar or OPCO that is not cured by
Exelar or OPCO, to the reasonable satisfaction of TSI, within five business days
after notice of such breach is given by TSI (except that no cure period will be
provided for a breach by the Investor that by its nature cannot be cured); or

               (d)                      any of the parties transactions
contemplated by this Agreement have not been consummated prior to or on March
31, 2004, unless the parties agree to extend such date and which date may be
extended to April 30, 2004 to receive any necessary consents and amendments to
the NMTB Agreement.

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               13.2                      Effect of Termination. In the event of
the termination of this Agreement as provided in Section 13.1, this Agreement
will be of no further force or effect, provided, however, that no termination of
this Agreement will relieve any party of liability for any breaches of this
Agreement that are based on a wrongful refusal or failure to perform any
obligations.

ARTICLE 14.
MISCELLANEOUS PROVISIONS

               14.1                      Effectiveness of Representations;
Survival. Each party is entitled to rely on the representations, warranties and
agreements of each of the other parties and all such representation, warranties
and agreement will be effective regardless of any investigation that any party
has undertaken or failed to undertake. The representation, warranties and
agreements will survive the Closing Date and continue in full force and effect
until the two (2) year anniversary of the Closing Date.

               14.2                      Further Assurances. Each of the parties
hereto will cooperate with the others and execute and deliver to the other
parties hereto such other instruments and documents and take such other actions
as may be reasonably requested from time to time by any other party hereto as
necessary to carry out, evidence, and confirm the intended purposes of this
Agreement.

               14.3                      Amendment. This Agreement may not be
amended except by an instrument in writing signed by each of the parties.

               14.4                      Expenses. Each party to this Agreement
will bear its respective expenses incurred in connection with the preparation,
execution, and performance of this Agreement and the transactions contemplated
hereby, including all fees and expenses of agents, representatives, counsel, and
accountants.

               14.5                      Entire Agreement. This Agreement, the
exhibits, schedules attached hereto and the other Closing Documents contain the
entire agreement between the parties with respect to the subject matter hereof
and supersede all prior arrangements and understandings, both written and oral,
expressed or implied, with respect thereto. Any preceding correspondence or
offers are expressly superseded and terminated by this Agreement.

               14.6                      Severability. If one or more provisions
of this Agreement or any Closing Document is held to be unenforceable under
applicable law, such provision will be excluded from the respective Agreement or
Closing Document and the balance of this Agreement or Closing Document, as
applicable, will be enforceable in accordance with its terms.

               14.                      7 Notices. All notices and other
communications required or permitted under to this Agreement must be in writing
and will be deemed given if sent by personal delivery, faxed with electronic
confirmation of delivery, internationally-recognized express courier (fare
prepaid) e-mail to the parties at the following addresses (or at such other
address for a party as will be specified by like notice):

               If to Exelar:

                               EXELAR CORPORATION
                               602 Deming Place
                               Chicago, IL 60614
                               Facsimile: •773-871-0171
                               E-Mail: lreiffel@aol.com

               With a copy (which will not constitute notice) to:

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                              Gould & Ratner
                               222 N. LaSalle Street
                              Suite 800
                              Chicago, IL 60601
                              Facsimile: 312-236-3241
                              E-Mail: ftannenbaum@gouldratner.com
                              Attention: Fredric D. Tannenbaum

               If to TSI:

                              TSI MEDICAL CORP.
                              810 Peace Portal Drive, Suite 202
                              Blaine, WA 98230
                              Facsimile: 360-•

               With a copy (which will not constitute notice) to:

                               Stephen F.X. O'Neill
                              O'Neill & Taylor PLLC
                              435 Martin Street, Suite 1010
                              Blaine, WA 98230
                              604-687-5792 / 360-332-3300
                              604-687-6650 / 360-332-2291 (fax)
                              "son@stockslaw.com"

               If to OPCO:

                               Logan B. Anderson
                              810 Peace Portal Drive
                              Suite 203
                              Blaine, WA 98230

               With a copy (which will not constitute notice) to:

                               Cane & Associates
                              3199 E. Warm Springs Road, Suite 200
                              Las Vegas, NV 89120

All such notices and other communications will be deemed to have been received
(a) in the case of personal delivery, on the date of such delivery, and (b) in
the case of a fax, e-mail or delivery by internationally-recognized express
courier, one business day after such notice or communications has been sent

               14.8                      Headings. The headings contained in
this Agreement are for convenience purposes only and will not affect in any way
the meaning or interpretation of this Agreement.

               14.9                      Benefits. This Agreement is and will
only be construed as for the benefit of or enforceable by those persons party to
this Agreement.

               14.10                     Assignment. This Agreement may not be
assigned (except by operation of law) by any party without the consent of the
other parties.

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               14.11                     Governing Law. This Agreement will be
governed by and construed in accordance with the laws of the State of Nevada
applicable to contracts made and to be performed therein. All actions brought to
interpret or enforce this Agreement shall be exclusively brought either in the
courts located in Seattle, Washington or in Chicago, Illinois and each party
waives any defenses regarding lack of personal jurisdiction, lack of venue or
forum non conveniens.

               14.12                      Construction. The language used in
this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rule of strict construction will be applied
against any party.

               14.13                      Counterparts. This Agreement may be
executed in one or more counterparts, all of which will be considered one and
the same agreement and will become effective when one or more counterparts have
been signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.

               14.14                      Fax or E-Mail Execution. This
Agreement may be executed by delivery of executed signature pages by fax or
e-mail and such fax or e-mail execution will be effective for all purposes
provided that the signatories will promptly provide originals to the other
signatories.

               14.15                      Schedules and Exhibits. The schedules
and exhibits are attached to this Agreement and incorporated herein.

               14.16                      Independent Legal Advice. Exelar
acknowledges that O'Neill & Taylor PLLC have acted solely for TSI in the
negotiation and execution of this Agreement and Exelar has received the
independent legal advice of its independent legal counsel.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

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               IN WITNESS WHEREOF the parties hereto have executed this
agreement as of the day and year first above written.

EXELAR CORPORATION
a Delaware corporation by its
authorized signatory:       /s/ Leonard Reiffel   Signature of Authorized
Signatory           Name of Authorized Signatory           Position of
Authorized Signatory               TSI MEDICAL CORP.
a Nevada corporation by its
authorized signatory:       /s/ Harold C. Moll   Signature of Authorized
Signatory           Name of Authorized Signatory           Position of
Authorized Signatory               EXELAR MEDICAL CORPORATION
a Nevada corporation by its
authorized signatory:       /s/ Logan B. Anderson   Signature of Authorized
Signatory           Name of Authorized Signatory           Position of
Authorized Signatory  

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SCHEDULE A
To
Technology Acquisition and Funding Agreement
Among Exelar Corporation and
TSI Medical Corp. and OPCO
Dated March 22, 2004

 

 

DESCRIPTION OF PATENTS

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PATENTS AND PATENT APPLICATIONS

1.      US Provisional 60/506,792 "HYDRA"   2.      US Provisional 60/472,080
"SOCC"   3.      US Patent 5,974,112--"SHIELD"   4..      European Patent Appln
No 98960301.4 "SHIELD-EPO"

 

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SCHEDULE B
To
Technology Acquisition and Funding Agreement
Among Exelar Corporation and
TSI Medical Corp. and OPCO
Dated March 22, 2004

 

 

INTENTIONALLY DELETED

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

SCHEDULE C
To
Technology Acquisition and Funding Agreement
Among Exelar Corporation and
TSI Medical Corp. and OPCO
Dated March 22, 2004

 

 

TECHNOLOGY TRANSFER AGREEMENT

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

TECHNOLOGY TRANSFER AGREEMENT

THIS AGREEMENT made effective as of the • day of March, 2004, between:

AMONG:

> > > > EXELAR CORPORATION, a Delaware corporation of 602 Deming Place, Chicago,
> > > > IL 60614
> > > > 
> > > > (hereafter called "Exelar")

AND:

> > > > LEN REIFFEL, of 602 Deming Place, Chicago, IL 60614
> > > > 
> > > > (hereafter called the "Inventor")

AND:

> > > > EXELAR MEDICAL CORPORATION, a Nevada corporation having its registered
> > > > address at 3199 E. Warm Springs Road, Suite 200 Las Vegas, NV 89120
> > > > 
> > > > (hereafter called "OPCO")

WHEREAS:

I.     
Exelar is the owner of an invention and related apparatus that has been granted
and has applied for United States and foreign patents which invention is held in
the name of the Inventor.
  II.     
The parties have agreed to enter into this agreement to reflect the sale by
Exelar and the purchase by OPCO of all property, including all patents, know
-how and intellectual property, relating to the invention and the apparatus.

NOW THEREFORE, in consideration of the mutual covenants contained in this
Agreement and other valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties agree as follows:

DEFINITIONS

1. In this Agreement:

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

  (a)     
"Apparatus" means an apparatus for control of photon beam therapeutic radiation
doses using superconducting magnets described in the Patents and that
incorporates any of the Patents, the Know-how and/or the Intellectual Property;
    (b)     
"Improvement" means any modification or variant of the Apparatus and the
Invention, whether patentable or not, which, if manufactured, used, or sold,
would fall within the scope of the Apparatus, the Invention or at least one
claim of at least one of the Patents;
    (c)     
"Intellectual Property" means all copyrights, patent rights, trade secret
rights, trade names, trademark rights, process information, technical
information, contract rights and obligations including those under that certain
Subagreement No. 2000-106800-Exelar -Reiffel by and between National Medical
Technology Testbed Inc. and Exelar (the "NMTB Agreement"), designs, drawings,
inventions and all other intellectual and industrial property rights of any sort
related to or associated with Invention and the Apparatus;
    (d)     
"Invention" means the inventions described in the Patents and embodied in the
Apparatus;
    (e)     
"Inventor" means Len Reiffel;
    (f)     
"Know-how" means all know-how, knowledge, expertise, inventions, works of
authorship, prototypes, technology, information, know-how, materials and tools
relating thereto or to the design, development, manufacture, use and commercial
application of the Invention and the Apparatus;
    (g)     
"Patents" means the Patents and patent applications described in Schedule A and
any other patent that may be issued in connection with the Invention or the
Apparatus or any Improvement;
    (h)     
"Technology" means the Apparatus, the Invention, the Patents, the Know-How and
the Intellectual Property.
  TRANSFER BY EXELAR   2.  

  (a)     
Subject to the terms and conditions of this Agreement, and the delivery of the
consideration as provided in this Agreement, Exelar hereby sells, assigns and
transfers to OPCO all of the Exelar's right, title and interest in and to the
Technology including the following assets free and clear of all liens, charges,
encumbrances and security interests except for any rights of National Medical
Technology Testbed Inc. under the NMTB Agreement and Promissory Note:
     
(i)
the Invention;

2

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

   
(ii)     
the Apparatus;
     
(iii)     
the Patents;
     
(iv)     
the Know-how;
     
(v)     
the Intellectual Property.
    (b)     
Exelar and the Inventor agree to assist OPCO in every legal way to evidence,
record and perfect the assignment evidenced by this Agreement and to apply for
and obtain recordation of and from time to time enforce, maintain, and defend
the assigned rights. To the extent that any of the Intellectual Property is a
provisional patent, Inventor will cooperate with Exelar and the U.S. Patent and
Trademark Office to attempt to obtain a final grant of said provisional patents
and, to the extent any such provisional patents are actually issued in
Inventor's name, Inventor shall promptly assign and transfer, for no cost
(except the filing and recordation fees which will be borne by OPCO), to OPCO.
If OPCO is unable for any reason whatsoever to secure Exelar or the Inventor's
signatures to any document it is entitled to under this Agreement, Exelar and
the Inventor hereby each irrevocably designate and appoint OPCO and its duly
authorized officers and agents, as their respective agents and attorneys -in-
fact with full power of substitution to act for and on their behalf and instead
of each of Exelar and the Inventor, to execute and file any such document or
documents and to do all other lawfully permitted acts to further the purposes of
the foregoing with the same legal force and effect as if executed by each of
Exelar and the Inventor.
    (c)     
If, after the date of this Agreement, Exelar or the Inventor develops or
discovers, or is a co-developer or co-discoverer of any Improvement, then the
Inventor or Exelar shall promptly sell, assign and transfer the Improvement to
OPCO without the payment of any additional payment or consideration.
    (d)     
OPCO will have full control and discretion over the manufacturing of the
Apparatus, including the selection and specification of components and
materials.
    (e)     
OPCO will have full control and discretion over the marketing and commercial
exploitation of the Apparatus, the Invention, Patents, Know-how and Intellectual
Property.
    (f)     
Exelar and the Inventor shall communicate to OPCO all Know-how and Intellectual
Property in the possession of Exelar and the Inventor reasonably relevant to the
design, manufacture, marketing, and use of the Apparatus and the Invention.
Exelar and the Inventor will continue to communicate to OPCO all such further
Know-how and Intellectual Property as comes into Exelar or the Inventor's
possession.
    (g)     
All Know-how and technical information in the possession of Exelar and the
Inventor reasonably relevant to the design, manufacture, marketing, and use of
the Apparatus shall be deemed to be confidential information. Exelar and the

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Inventor shall not disclose or authorize the disclosure of such information to
any third party, except as expressly permitted by OPCO in writing. Exelar and
the Inventor shall take reasonable precautions to prevent the unauthorised
disclosure to third parties of all such confidential information.
    (h)     
The obligations of Exelar and Inventor hereunder are subject to and conditioned
on compliance in full, after all applicable cure periods, by OPCO under the
Promissory Note (as defined under the Funding Agreement). In the event of a
default under the Promissory Note, after all applicable cure periods, Inventor
may terminate and cancel its obligations under this Agreement and receive an
immediate reconveyance by OPCO of its respective conveyances, free and clear of
all liens, claims, security interests and encumbrances of the Patents (together
with any Improvements thereon and Intellectual Property related thereto) as
indicated on Schedule A., of the Patents of Inventor. If in such case Inventor
is unable for any reason whatsoever to secure OPCO's signatures to any document
it is entitled to under this section, OPCO hereby irrevocably designate and
appoint Inventor and its duly authorized officers and agents, as their
respective agents and attorneys -in-fact with full power of substitution to act
for and on their behalf and instead of OPCO, to execute and file any such
document or documents and to do all other lawfully permitted acts to further the
purposes of the foregoing with the same legal force and effect as if executed by
OPCO.

CONSIDERATION

3.          
(a)     
The consideration of the sale, assignment and transfer of the Invention,
Apparatus, Patents, Know-how and Intellectual Property, shall be as follows:
     
(i)     
the assumption by OPCO of Exelar's obligation to pay the Inventor $500,000 in
respect of the acquisition of the Technology from the Inventor (the "Exelar
Obligation");
     
(ii)     
the issuance by OPCO to Exelar of a total of 2,280,000 shares of its common
stock (the "Shares") on execution of this Agreement.
   
(b)     
All shares of OPCO's common stock issued by OPCO pursuant to this Agreement (the
"Shares") will be governed by the following:
     
(i)     
All Shares will be issued as "restricted shares", as contemplated by the
Securities Act of 1933 (the "1933 Act"). Exelar acknowledges and agree that the
Shares have not been registered under the 1933 Act or applicable state "Blue
Sky" laws and, therefore, the Shares may not be resold, transferred or
hypothecated without the registration of the Shares, or an opinion of counsel
satisfactory to OPCO to the effect that such registration is not necessary;

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    (ii) 
All certificates representing the Shares will be endorsed with the following
legend:
             
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT"), AND HAVE BEEN OFFERED AND SOLD IN
RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT. SUCH
SECURITIES MAY NOT BE OFFERED FOR SALE, TRANSFERRED, PLEDGED OR RESOLD OR
OTHERWISE TRANSFERRED UNLESS THEY ARE REGISTERED UNDER THE APPLICABLE PROVISIONS
OF THE ACT OR ARE EXEMPT FROM SUCH REGISTRATION REQUIREMENTS.";
      (iii)     
All Shares will be issued to Exelar based on the representations and warranties
of Exelar that:
       
(A)     
Exelar has not offered or sold the Shares within the meaning of the 1933 Act;
       
(B)     
Exelar is acquiring the Shares for its own account for investment, with no
present intention of dividing any interest with others or of reselling or
otherwise disposing of all or any portion of the same;
       
(C)     
Exelar does not intend any sale of the Shares either currently or after the
passage of a fixed or determinable period of time or upon the occurrence or non
-occurrence of any predetermined event or circumstance;
       
(D)     
Exelar has no present or contemplated agreement, undertaking, arrangement,
obligation, indebtedness or commitment providing for or which is likely to
compel a disposition of the Shares;
       
(E)     
Exelar is not aware of any circumstances presently in existence which are likely
in the future to prompt a disposition of the Shares;
       
(F)     
The Shares were offered to Exelar in direct communication between Exelar and
OPCO and not through any advertisement of any kind;
       
(G)     
Exelar has the financial means to bear the economic risk of an investment in the
Shares.

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ACCEPTANCE OF ASSUMPTION BY INVENTOR

4.     
The Inventor hereby consents and accepts the assumption of the Exelar Obligation
by OPCO and agrees to extinguish the liability of Exelar to him in consideration
of the issuance at closing of promissory notes of OPCO in favour of the Inventor
as follows:
     
(i)     
a promissory note in the principal amount of $200,000 payable with no interest
on the date which is 90 days following closing and a payment in the principal
amount of $300,000 payable with no interest on the date which is 180 days
following closing.

PATENTS

5.     
The Inventor agrees to execute assignments of the Patents, including any patent
applications, in forms registerable with the applicable Patent authorities, at
closing and without the payment of any further amount to Inventor. OPCO will
undertake all steps and incur all expenses to maintain the Patents in good
standing with the United States Patent Office. OPCO will pursue the granting of
any patents pending and foreign patents with respect to the Patents in Canada,
the European Economic Community, Australia and Japan and such other
jurisdictions as the parties may agree with respect to the HYDRA and SOCC
Patents. The Inventor will assist OPCO in pursuing the granting of foreign
patents.

WARRANTIES AND REPRESENTATIONS

6.             (a)     
The Inventor and Exelar jointly and severally warrant and represent to OPCO
that:
     
(i)     
Exelar is the sole owner of the Invention, the Apparatus, the Patents, the
Know-how and the Intellectual Property free and clear of all liens, charges,
encumbrances and security interests except for the NMTB Agreement;
     
(ii)     
the Inventor holds the Patents in his name as trustee for Exelar;
     
(iii)     
Exelar has the power to sell, assign and transfer all of its right, title and
interest in and to the Invention, the Apparatus, the Patents, the Know-how and
the Intellectual Property to OPCO except for rights under the NMTB Agreement;
     
(iv)     
Exelar and the Inventor have not made, granted or entered into any assignment,
encumbrance, license or other agreement affecting the

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Invention, the Apparatus, the Patents, the Know- how and the Intellectual
Property except pursuant to the NMTB Agreement;
            (v) 
Exelar and the Inventor are not aware of any violation, infringement or
misappropriation of any third party's rights (or any claim thereof) by the
ownership, development, manufacture, sale or use of the Invention, the
Apparatus, the Patents, the Know-how and the Intellectual Property;
            (vi) 
the use of the Apparatus by Exelar and the Inventor has never given rise to any
complaint alleging infringement of any patent, trademarks or other intellectual
property rights of any other person;
            (vii) 
Exelar and the Inventor were not acting within the scope of employment of any
third party when conceiving, creating or otherwise performing any activity with
respect to the Invention, the Apparatus, the Patents, the Know-how and the
Intellectual Property;
            (viii) 
Exelar and the Inventor are not aware of any questions or challenges with
respect to the patentability or validity of any claims of any existing patents
or patent pendings relating to the Invention, the Apparatus, the Patents, the
Know-how and the Intellectual Property;
            (ix)  The Patents, including any patent applications, have been
filed with the appropriate Patent authorities in accordance with all required
laws and regulations and are in good standing.

JOINT AND SEVERAL OBLIGATIONS

7.      All obligations, agreements and representations and warranties of the
Inventor and Exelar in this Agreement are joint and several.

ENTIRE AGREEMENT

8.     
This Agreement constitutes the entire agreement between the parties, relating to
the subject matter hereof and supersedes every previous agreement,
communication, expectation, negotiation, representation or understanding,
whether oral or written, express or implied, statutory or otherwise.

GOVERNING LAW

9.     
This Agreement shall be construed in accordance with, and governed by, the laws
of the State of Nevada. All actions brought to interpret or enforce this
Agreement shall be exclusively brought either in the courts located in Seattle,
Washington or in Chicago, Illinois and each party waives any defenses regarding
lack of personal jurisdiction, lack of venue or forum non conveniens.

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HEADINGS

10.     
The headings are inserted solely for convenience of reference and shall not be
deemed to restrict or modify the meaning of the Articles to which they pertain.

MODIFICATION AND WAIVER

11.     
No cancellation, modification, amendment, deletion, addition or other change in
this Agreement or any provision hereof, or waiver of any right or remedy hereby
provided, shall be effective for any purpose unless specifically set forth in
writing, signed by the party to be bound thereby. No waiver of any right or
remedy in respect of any occurrence or event on one occasion shall be deemed a
waiver of such right or remedy in respect of such occurrence or event on any
other occasion.

FURTHER ASSURANCE

12.     
The Parties shall execute such further documents and do such further things as
may be necessary to give full effect to the provisions of this Agreement and the
intent embodied herein.

GENDER

13.     
Words importing the masculine gender include the feminine or neuter, words in
the singular include the plural, words importing a corporate entity include
individuals and vice versa.

EQUAL PARTICIPATION IN DRAFTING

14.     
The parties have equally participated in the drafting of the within Agreement,
each having had the opportunity to be independently represented by counsel. The
Inventor and Exelar acknowledge that O'Neill & Taylor PLLC have acted solely for
OPCO in connection with the preparation, negotiation and execution of this
Agreement and the Inventor and Exelar have been advised to obtain the advice of
their independent legal counsel in entering into this Agreement.

CLOSING

15.     
Closing shall take place at the offices of OPCO forthwith on execution of this
Agreement. At the closing, OPCO shall deliver the Shares to Exelar, OPCO shall
deliver the promissory notes referred to in Paragraph 4 of this Agreement to the
Inventor and the Inventor and Exelar shall deliver the assignments of Patents
referred to in Paragraph 5 of this Agreement.

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TIME OF THE ESSENCE

16.
Time shall be of the essence of this Agreement and all provisions hereof.

IN WITNESS WHEREOF, the parties hereto have caused these presents to be executed
under their corporate seals and the hands of their proper officers duly
authorized in that behalf.

SIGNED, SEALED AND DELIVERED  )      BY LEN REIFFEL  )      in the presence of: 
)        )        )        )      Signature  )        )        )    LEN REIFFEL 
Name  )        )        )      Address  )        )        )        )     

EXELAR CORPORATION
By its authorized signatory:               Name
Title           EXELAR MEDICAL CORPORATION
By its authorized signatory:               Name
Title  

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SCHEDULE A

PATENTS AND PATENT APPLICATIONS

1.      US Provisional 60/506,792 "HYDRA"   2.      US Provisional 60/472,080
"SOCC"   3.      US Patent 5,974,112--"SHIELD"   4..      European Patent Appln
No 98960301.4 "SHIELD-EPO"

Items 1 and 2 above are two provisional patents and are part of the Patents
under this Agreement. In the event of an event of default under the Promissory
Note, after all cure periods, OPCO will promptly re-convey free and clear
ownership to items 3 and 4 to Inventor.

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SCHEDULE D
To
Technology Acquisition and Funding Agreement
Among Exelar Corporation and
TSI Medical Corp. and OPCO
Dated March 22, 2004

 

 

SHAREHOLDERS AGREEMENT

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

SHAREHOLDERS AGREEMENT

THIS AGREEMENT dated for reference the • day of March, 2004.

AMONG:

> > > > > TSI MEDICAL CORP.
> > > > > a Nevada corporation
> > > > > ("TSI")

OF THE FIRST PART

AND:

> > > > > EXELAR CORPORATION,
> > > > > a Delaware corporation
> > > > > ("Exelar")

OF THE SECOND PART

AND:

> > > > > EXELAR MEDICAL CORPORATION
> > > > > a Nevada corporation
> > > > > (the "Corporation")

OF THE THIRD PART

WHEREAS:

A.                    TSI and Exelar (collectively the "Shareholders") are all
of the shareholders of the Corporation, a Nevada close corporation, governed by
Nevada Revised Statutes 78A.

B.                    The Shareholders are entering into this Agreement to
regulate the exercise of the corporate power and the management of the business
and affairs of the Corporation and the relationship between the parties as
shareholders.

C.                    The Shareholders intend that this Agreement shall be a
shareholders agreement within the meaning of Section 78A.070 of the Nevada
Revised Statutes and be binding on the Corporation and its directors.

NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the foregoing
and of the mutual covenants and agreements hereinafter contained, and of $1.00
now paid by each of the parties hereto to the other, the receipt and sufficiency
of which is hereby

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acknowledged, and for other good and valuable consideration, the parties hereto
have agreed and do hereby agree as follows:

1..                     Definitions. The following terms will have the following
meanings for all purposes of this Agreement.

  (a)     
"Agreement" shall mean this Agreement, and all schedules and amendments to in
the Agreement.
    (b)     
"Budget" means the budget that is attached as Schedule E to the Technology
Acquisition and Funding Agreement;
    (c)     
"Common Stock" means the common stock of the Corporation, par value $0.001 per
share.
    (d)     
"Corporation" shall mean Exelar Medical Corporation, a Nevada corporation.
    (e)     
"Technology Acquisition and Funding Agreement" means the agreement among the
parties with respect to the acquisition of Technology by and funding of the
Corporation being executed concurrent with this Agreement.

2.                     Agreement to Vote. Each of the Shareholders, as holders
of Common Stock, hereby agrees on behalf of itself and any transferee or
assignee of any such shares of the Common Stock, to hold all of the shares of
Common Stock registered in its name (and any securities of the Corporation
issued with respect to, upon conversion of, or in exchange or substitution of
the Common Stock, and any other voting securities of the Corporation
subsequently acquired by such Party) (hereinafter collectively referred to as
the "Covered Shares") subject to, and to vote the Covered Shares at a regular or
special meeting of Shareholders (or by written consent) in accordance with, the
provisions of this Agreement.

3.                    Board Size. The holders of Covered Shares shall vote at a
regular or special meeting of Shareholders (or by written consent) such shares
that they own (or as to which they have voting power) to ensure that the size of
the Board shall be set and remain at five (5) directors;

4.                    Election of Directors. In any election of directors of the
Corporation, the Shareholders shall each vote at any regular or special meeting
of Shareholders (or by written consent) such number of shares of Common Stock
then owned by them (or as to which they then have voting power) as may be
necessary to elect two (2) directors nominated by TSI and three (3) directors
nominated by Exelar. Any subsidiaries of the Corporation shall also have Boards
of Directors comprised the same way, except that they shall be selected by the
Board of the Corporation.

5.                    Removal. Any director of the Corporation may be removed
from the Board in the manner allowed by law and the Corporation's Certificate of
Incorporation and Bylaws, but with respect to a director designated pursuant to
Section 4 above, only upon the vote or written consent of the Shareholder
entitled to designate such director. Upon any such removal, the Shareholders
shall vote on behalf of a successor director based on the nomination of the
party whose director was removed.

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6.                    Quorum. During the term of this agreement, the quorum for
a meeting of the Board of Directors shall be four directors and no business
shall be conducted unless four directors are present.

7.                    Prohibitions. The parties agree that during the term of
this Agreement, the Corporation will not without the prior written consent of
TSI and Exelar:

    (i)     
alter or change the Corporation's Articles of Incorporation or Bylaws;
      (ii)     
authorize or designate any equity security (or security convertible into an
equity security such as a warrant, option or convertible instrument) other than
the Common Stock;
      (iii)     
increase the number of shares of capital stock reserved for issuance under, or
authorize the creation of any employee, officer, director or consultant stock
purchase or stock option plan;
      (iv)     
change the size of the Board of Directors;
      (v)     
increase or decrease the total number of authorized shares of Common Stock or
any other class of stock;
      (vi)     
incur borrowings or other indebtedness individually or in the aggregate in
excess of $50,000, excluding trade payables incurred in the ordinary course of
business;
            (vii) 
pay or declare any dividend or distribution on, or redeem, repurchase, or
otherwise acquire, any shares of capital stock (or make any payment or set aside
a sinking fund for such purpose);
            (viii) 
make loans or advances except in the ordinary course of business; 
            (ix) 
approve any merger or consolidation of the Corporation or any sale of all or
substantially all of the assets of the Corporation or approve or facilitate any
other event resulting in a change in control of the Corporation;
            (x) 
mortgage or pledge, or create a security interest in, or otherwise dispose of
any material asset; 
            (xi) 
form or constitute any audit, compensation, executive or other committee of the
Board;
            (xii) 
authorize any action that results in any voluntary bankruptcy, assignment for
the benefit of creditors, acceleration of third party obligations, assignment
for the benefit of creditors, confession of judgment, dissolution or liquidation
of the Corporation or any reclassification of the Corporation's capital stock;

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    (xiii) 
hire or fire the CEO, COO, CFO or any other officer having similar
 responsibilities;
            (xiv) 
enter into any transaction with an affiliate;
            (xv) 
incur capital expenditures in excess of $250,000 in any calendar year; or
            (xvi) 
pay total compensation to any officer, director or employee of the  Corporation
(other than as provided in the Budget) including the granting  of any option,
warrant or other convertible security.

8.                   Legend on Share Certificates. Each certificate representing
any Covered Shares shall be endorsed by the Corporation with a legend reading
substantially as follows:

> "The shares evidenced hereby are subject to a Shareholder Agreement (a copy of
> which may be obtained upon written request from the issuer), and by accepting
> any interest in such shares the person accepting such interest shall be deemed
> to agree to and shall become bound by all the provisions of said Shareholder
> Agreement."

9.                   No Liability for Election of Recommended Directors. Neither
the Corporation, the parties, nor any officer, director, Shareholder, partner,
employee or agent of such Party, makes any representation or warranty as to the
fitness or competence of the nominee of any Party hereunder to serve on the
Corporation's Board by virtue of such Party's execution of this Agreement or by
the act of such Party in voting for such nominee pursuant to this Agreement. The
Corporation's by-laws and certificate of incorporation shall have the broadest
indemnification provisions possible for directors and the Board shall purchase,
to the extent feasible and cost effective, directors and officers liability
insurance policies.

10.                  Grant of Proxy. Should the provisions of this Agreement be
construed to constitute the granting of proxies, such proxies shall be deemed
coupled with an interest and are irrevocable for the term of this Agreement.

11.                  Specific Enforcement. It is agreed and understood that
monetary damages would not adequately compensate an injured Party for the breach
of this Agreement by any Party, that this Agreement shall be specifically
enforceable, and that any breach or threatened breach of this Agreement shall be
the proper subject of a temporary or permanent injunction or restraining order.
Further, each Party hereto waives any claim or defense that there is an adequate
remedy at law for such breach or threatened breach.

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12.                  Execution by the Corporation. The Corporation, by its
execution in the space provided below, agrees that it will cause the
certificates evidencing the Covered Shares to bear the legend required by
Section 8 herein, and it shall supply, free of charge, a copy of this Agreement
to any holder of a certificate evidencing shares of capital stock of the
Corporation upon written request from such holder to the Corporation at its
principal office. The parties hereto do hereby agree that the failure to cause
the certificates evidencing the Covered Shares to bear the legend required by
Section 8 herein and/or failure of the Corporation to supply, free of charge, a
copy of this Agreement as provided under this Section 12 shall not affect the
validity or enforcement of this Agreement.

13.                  Captions. The captions, headings and arrangements used in
this Agreement are for convenience only and do not in any way limit or amplify
the terms and provisions hereof.

14.                  Notices. Any notice required or permitted by this Agreement
shall be in writing and shall be sent prepaid registered or certified mail,
return receipt requested, addressed to the other Parties at the addresses shown
below or at such other addresses for which such Party gives notice hereunder.
Such notice shall be deemed to have been given three (3) days after deposit in
the mail.

15.     
Term. This Agreement shall terminate and be of no further force or effect upon
(a) the termination of TSI's funding obligations or exercise of other remedies
by Exelar under paragraph 12.3 of the Technology Acquisition and Funding
Agreement, (b) the acquisition of the Corporation by another entity by means of
any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation) that results in the
transfer of fifty percent (50%) or more of the outstanding voting power of the
Corporation or a sale of all or substantially all of the assets of the
Corporation, (c) February 15, 2010 or (d) the written consent of all the
parties.
   
Notwithstanding any termination of this Agreement, if at any time after the
termination of this Agreement either of TSI or Exelar (or their transferees,
successors or assigns) (a "Seller") desires to sell all or any part of the
Covered Shares owned by such Seller to any person or entity other than the
Corporation or the other shareholder (the "Buyer"), TSI (if it is not the
Seller) or Exelar if it is not the Seller) (the "Tagger") shall have the right
to sell to the Buyer, as a condition to such sale by the Seller at the same
price per share and on the same terms and conditions as the proposed sale by the
Seller, the number of Covered Shares equal to the product of (i) the aggregate
number of Covered Shares proposed to be sold by the Seller multiplied by (ii) a
fraction with a numerator equal to the number of Covered Shares that Seller owns
and a denominator equal to the total number of Covered Shares owned by such
Seller and each Tagger who wishes to exercise tag-along rights in accordance
with this section. Prior to any such proposed sale, such Seller shall deliver to
the Tagger and to the Corporation a notice of proposed sale (the "Notice"),
which discloses the identity of the Buyer, the Covered Shares proposed to be
sold, the total number of Covered Shares owned by the Seller, the terms and
conditions, including price, of the proposed sale, and any other material facts
relating to the proposed sale. If the Tagger wishes to so participate in any
sale under this section 15, it shall notify the Seller in writing of such
intention as soon as practicable after such holder's receipt of the Notice, and
in any event within twenty days after the date the Notice was received. Prior to
the sale of any Covered Shares to be sold by Seller and/or Tagger hereunder,
such person shall deliver to the Corporation (in a form reasonably acceptable to
the Corporation) a written

5

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agreement of the proposed Buyer agreeing to become a party to this Agreement as
a Shareholder.

Notwithstanding any termination of this Agreement, (a) in the event that
Shareholders owning a majority of the Covered Shares on a fully-diluted as if
converted basis (the "Majority") desires to sell all or in excess of 50% of
their Covered Shares pursuant to a binding agreement with a non-affiliate in an
arm's length transaction for an all cash non-contingent price (the "Offer"), the
Majority shall send to the other Shareholders (the "Others") a written notice of
the price, terms and conditions of the Offer, a copy of the Offer, the name,
address and business of the proposed purchaser ("Buyer"), and such other
information concerning the Buyer as the Others may reasonably require.

In the event that the Offer requires that the Others sell the same percentage of
its Shares to be sold by the Majority pursuant to the Offer (the "Drag-Along
Shares"), or the Majority believes in its reasonable opinion that the Offer
would be enhanced if the Others sold the Drag-Along Shares (the "Drag-Along"),
then the Majority shall provide written notice to the Others of the Drag-Along.
The Others (including their transferees) shall be obligated to sell the
Drag-Along Shares on the same economic terms and conditions as the Majority
sells its Shares pursuant to the Offer.

If at any time a bona fide offer from an unaffiliated third party is made to the
Corporation to purchase the Corporation, whether by merger, consolidation, sale
of all or substantially all of the assets of the Corporation or a sale of all or
substantially all of the capital stock of the Corporation, in one transaction or
a series of transactions for a purchase price at least 90% in cash (an "Approved
Sale") and the Approved Sale is approved by the Majority, each Shareholder will
consent to and raise no objections to the Approved Sale, and (a) if the Approved
Sale is structured as a sale of stock, each Shareholder will agree to sell, and
will sell, all of such holder's equity securities in the Corporation on the
terms and conditions (including any escrow or indemnification provisions)
approved by the holders of a majority of the voting power of the Corporation,
(b) if the Approved Sale is structured as a merger or consolidation, each
Shareholder will vote in favor thereof and will not exercise any dissenters'
rights of appraisal such Shareholder may have under law, including Delaware
Corporation law and (c) if the Approved Sale is structured as a sale of all or
substantially all of the assets of the Corporation and a subsequent dissolution
and liquidation of the Corporation, each Shareholder will vote in favor thereof
and will vote in favor of the subsequent dissolution and liquidation of the
Corporation. Each Shareholder will take all necessary actions in connection with
consummation of the Approved Sale as are reasonably requested by the holders of
a majority of the voting power of the Corporation. The Corporation and each
Shareholder hereby agree to cooperate fully in any Approved Sale and not to take
any action prejudicial to or inconsistent with such Approved Sale. Without
limiting the generality of the foregoing, each Shareholder will, upon request,
deliver an executed instrument of transfer with respect to their equity
securities in the Corporation in escrow (pending receipt of the purchase price
therefor) to counsel for the Corporation.

6

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16.                  Manner of Voting. The voting of shares pursuant to this
Agreement may be effected in person, by proxy, by written consent, or in any
other manner permitted by applicable law.

17.                  Amendments and Waivers. Any term hereof may be amended and
the observance of any term hereof may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the Party or Parties benefited by such term. Any amendment or
waiver so effected shall be binding upon the Parties hereto.

18.                  Stock Splits, Stock Dividends, etc. In the event of any
issuance of shares of the Corporation's voting securities hereafter to any of
the Parties hereto (including, without limitation, in connection with any stock
split, stock dividend, recapitalization, reorganization, or the like), such
shares shall become subject to this Agreement and shall be endorsed with the
legend set forth in Section 8.

19.                  Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

20.                  Resale or Transfer. During the currency of this Agreement,
Exelar and TSI shall not transfer and the Company shall not approve a transfer
of any of the Covered Shares without the written approval of the other.

21.                  Binding Effect. In addition to any restriction or transfer
that may be imposed by any other agreement by which any Party hereto may be
bound, this Agreement shall be binding upon the Parties, their respective heirs,
successors, assigns and transferees of any of the Covered Securities affected
hereby and to such additional individuals or entities that may become
Shareholders of the Corporation and that desire to become Parties hereto;
provided that for any such transfer to be deemed effective, the transferee shall
have executed and delivered an Adoption Agreement substantially in the form
attached hereto as Exhibit A. Upon the execution and delivery of an Adoption
Agreement by any transferee reasonably acceptable to the Corporation, such
transferee shall be deemed to be a Party hereto as if such transferee's
signature appeared on the signature pages hereto. By their execution hereof or
any Adoption Agreement, each of the Parties hereto appoints the Corporation as
its attorney-in-fact for the purpose of executing any Adoption Agreement which
may be required to be delivered hereunder.

21.                  Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada, without regard to
conflicts of law principles thereof. All actions brought to interpret or enforce
this Agreement shall be exclusively brought either in the courts located in
Seattle, Washington or in Chicago, Illinois and each party waives any defenses
regarding lack of personal jurisdiction, lack of venue or forum non conveniens.

22.                  Entire Agreement. This Agreement is intended to be the sole
agreement of the Parties as it relates to this subject matter and does hereby
supersede all other agreements of the Parties relating to the subject matter
hereof.

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23.                  Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first above written.

EXELAR CORPORATION
a Delaware corporation by its
authorized signatory:           Signature of Authorized Signatory           Name
of Authorized Signatory           Position of Authorized Signatory           TSI
MEDICAL CORP.
a Nevada corporation by its
authorized signatory:           Signature of Authorized Signatory           Name
of Authorized Signatory           Position of Authorized Signatory          
EXELAR MEDICAL CORPORATION
a Nevada corporation by its
authorized signatory:           Signature of Authorized Signatory           Name
of Authorized Signatory           Position of Authorized Signatory  

8

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SCHEDULE A
ADOPTION AGREEMENT

This Adoption Agreement ("Adoption Agreement") is executed by the undersigned
(the "Transferee") pursuant to the terms of that certain Shareholders Agreement
dated as of ________, _______ (the "Agreement") by and among the Corporation and
certain of its Shareholders. Capitalized terms used but not defined herein shall
have the respective meanings ascribed to such terms in the Agreement. By the
execution of this Adoption Agreement, the Transferee agrees as follows:

(a)         Acknowledgment. Transferee acknowledges that Transferee is acquiring
certain shares of the capital stock of the Corporation (the "Stock"), subject to
the terms and conditions of the Agreement.

(b)         Agreement. Transferee (i) agrees that the Stock acquired by
Transferee shall be bound by and subject to the terms of the Agreement, and (ii)
hereby adopts the Agreement with the same force and effect as if Transferee were
originally a Party thereto.

(c)         Notice. Any notice required or permitted by the Agreement shall be
given to Transferee at the address listed beside Transferee's signature below.

SIGNED, SEALED AND DELIVERED
by the Transferee in the presence of:                 Signature of Witness  
Signature of Transferee                   Name of Witness                      
Address of Witness    

 

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SCHEDULE E
To
Technology Acquisition and Funding Agreement
Among Exelar Corporation and
TSI Medical Corp. and OPCO
Dated March 22, 2004

 

 

BUDGET

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EXELAR MEDICAL

BUDGET

  Sources & Uses              Funding                    1      2      3      4 
    5    Sources                              - proceeds from funding by TSI  $
325,000    $  575,000    $  1,550,000    $  1,000,000    $  1,300,000           
                            Total Sources  $ 325,000    $  575,000    $ 
1,550,000    $  1,000,000    $  1,300,000                                       
Uses                             -   NMTB Contract Buyout  $ 50,000    $ 
50,000    $  50,000    $  0    $  0    -   Purchase of IP      $  200,000    $ 
300,000    $  0    $  0    Corporate Uses                              - 
 Selling, General &  $ 113,000    $  119,000    $  255,000    $  153,000    $ 
200,000       Administrative                              -   Clinical Studies &
Research  $ 156,000    $  200,000    $  262,000    $  259,000    $  335,000   
-   Capital Expenditures  $ 6,000    $  6,000    $  36,000    $  36,000    $ 
47,000    -   Reserve  $ 0    $  0    $  647,000    $  552,000    $  718,000   
                                    Total Uses  $ 325,000    $  575,000    $ 
1,550,000    $  1,000,000    $  1,300,000   

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SCHEDULE F
To
Technology Acquisition and Funding Agreement
Among Exelar Corporation and
TSI Medical Corp. and OPCO
Dated March 22, 2004

 

 

EMPLOYMENT AGREEMENT

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EMPLOYMENT AGREEMENT

THIS AGREEMENT made as of the 15th day of March, 2004

BETWEEN:

> > > > Exelar Medical Corporation of NV
> > > > 
> > > > (the "Corporation")

OF THE FIRST PART

AND:

> > > > LEN REIFFEL, of 602 Deming Place, Chicago, II 60614
> > > > 
> > > > (the "Employee")

OF THE SECOND PART

WHEREAS:

A.                    The Corporation wishes to engage the services of the
Employee to act as Chairman and Chief Technical Officer of the Corporation.

B.                    The Employee has agreed to accept such engagement upon the
terms and conditions as hereinafter set forth.

NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the premises and
the mutual covenants herein contained the parties agree as follows:

1.                    The Corporation hereby appoints the Employee to the
position of Chairman of the Board and Chief Technical officer of the Corporation
and retains him to supervise and deal with the following responsibilities:

(a) Perform the usual duties of Chairman of the Board

(b) Assemble the Corporation's staff

(c) Manage the Corporation's technical activities

(d) In concert with other key officers and interested parties, devise and
implement product development and commercialization strategies for the company's
technology

(e) Represent the company, as appropriate, in scientific, public-relations,
financial and other contexts.

(f) Protect and enhance, where possible, the Intellectual Property of the
Corporation.

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2.                    This Agreement shall be for an initial term of three (3)
years commencing on the date of this Agreement and shall be automatically
renewed at the end of each term for an additional one (1) year unless notice to
the contrary is given by either the Corporation or the Employee to the other at
least six months prior to the expiration of any term.

3.                    The remuneration payable to the Employee shall be $175,000
per year payable monthly in two equal payments on the 15th day and last business
day of each month commencing on the date of this Agreement.

4.                    In addition to the compensation provided for in paragraph
3, the Employee shall be entitled to such stock options as may be approved by
the Board of Directors of the Corporation and shall be entitled to participate
in any employee share purchase or benefit plans as may from time to time be
established by the Board of Directors of the Corporation.

5.                    The Employee shall not, during the term of his employment
or at any time thereafter, disclose to any person, firm or corporation any
information concerning the business or affairs of the Corporation which the
Employee may have acquired in the course of or incidental to his employment or
otherwise for his own benefit or to the detriment or intended or probable
detriment of the Corporation.

6.                    The Employee shall at all times abide by all directions
given by the Board of Directors of the Corporation.

7.                    Any notice required to be given under this Agreement shall
be in writing and delivered or sent from a post office by prepaid ordinary post
addressed to the Employee and to the Corporation at the addresses set out as
aforesaid. Any notice shall be deemed given when personally delivered or on the
second business day following the day of mailing when mailed.

8.                    This Agreement is a personal service contract and may not
be assigned or transferred by the Employee. It is understood that employee has
certain other business interests. Employee is permitted to reasonably engage in
such other activities so long as such activities do not involve a conflict of
interest or interfere with employee's satisfactory discharge of his duties and
responsibilities as defined in Section 1

9.                    Notwithstanding Section 2, the Corporation may, terminate
the employee for Cause (as defined herein) and the Employee may terminate this
Agreement for Good Reason (as defined herein).

10.                   The term "Cause" shall mean: (i) any willful violation by
Employee of any material provision of this Agreement causing demonstrable and
serious injury to the Corporation; (ii) embezzlement by Employee of funds or
property of the Corporation; (iii) fraud or willful misconduct on the part of
Employee in the performance of his duties as an employee of the Corporation, or
gross negligence on the part of Employee in the performance of his duties as an
employee of the Corporation causing demonstrable and serious injury to the
Corporation,; or (iv) a felony conviction of Employee based on the actual
conduct of the Employee, provided that Cause shall not be deemed to have
occurred under sections (i) and (iii) hereof unless the Corporation has given
written notice which notice describes in detail the breach asserted and stating
that it constitutes notice pursuant to this section, and which breach, if
capable of being cured, has not been cured within 60 days after such notice or
such longer period of time if Employee proceeds with due diligence not later
than ten days after such notice to cure such breach.

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11.                   The term "Good Reason" shall mean (i) any breach by the
Corporation of any material provision of this Agreement, including, without
limitation, the assignment to the Employee of duties inconsistent with his
position specified in this Agreement; (ii) relocation of Employee's offices in
excess of 20 miles from its current headquarters office location; or (iii) a
substantial and continued reduction in the level of support, services, staff,
secretarial, office space and accoutrements to a level below which is reasonably
necessary or the performance of Employee's duties hereunder, consistent with
that of other key Employee employees.

12.                   Upon a termination for Cause, the Corporation shall pay
Employee his Base and benefits including vacation pay through the date of
termination of employment; and Employee shall receive no severance hereunder.
Upon a termination for Good Reason, the Corporation shall immediately pay
Employee his remaining base salary for the balance of the term and continue the
other benefits in place for the balance of the term.

13.                    The Corporation shall indemnify and hold harmless
Employee to the full extent authorized or permitted by law with respect to any
claim, liability, action or proceeding instituted or threatened against or
incurred by Employee or his legal representatives and arising in connection with
Employee's conduct or position at any time as a director, officer, employee or
agent of the Corporation or any subsidiary thereof. The Corporation shall not
change, modify, alter or in any way limit the existing indemnification and
reimbursement provisions relating to and for the benefit of its directors and
officers without the prior written consent of the Employee, including any
modification or limitation of any directors and officers liability insurance
policy.

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14.                    This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada irrespective of conflict of laws
principles. All actions brought to interpret or enforce this Agreement shall be
brought in courts located in federal or state Cook County, Illinois.

IN WITNESS WHEREOF the parties have set their hands and seals as of the day and
year first above written.

Exelar Medical Corporation
By its authorized signatory:                   Name
Title  

SIGNED, SEALED AND DELIVERED
BY LEN REIFFEL
in the presence of:                       Signature of Witness   LEN REIFFEL    
              Name of Witness                       Address of Witness    

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